| |
Wednesday, August 20, 2003 |
|
|
| |
LESSONS FROM THE PRINCE |
|
|
| |
American companies have
long understood the importance of having a ‘local
presence’ when successfully integrating new
companies or managing change in foreign entities. |
|
|
| |
|
|
|
| |
Take Cisco, for example.
Cisco was probably the most acquisitive company in the
technology sector during its early growth years. Cisco’s
ability to integrate, by bringing its acquisitions early
into the fold, allowed it to merge cultures seamlessly.
Cisco not only nurtured the acquired company to
capitalise on its strengths, but was able to cut costs of
both organisations by adding capabilities which were
mutually beneficial while leveraging existing strong
administrative, marketing and distribution assets of
Cisco. It was a win, win for all parties. |
|
|
| |
|
|
|
| |
My own experience in
managing change for U.S. companies bears this out. When
foreign entities are going through a major restructuring,
the only way to achieve results rapidly is to have a U.S.
presence in the foreign entity. I replaced the Finance
Director in Liverpool when a compression and drilling
unit received a ten-fold increase in orders. There wasn’t
the time to find talent locally who could manage the
organisational change required to handle such an influx
of business and the system upgrades required to ensure
profitability at such a critical moment. It took a
herculean effort and someone who understood frontwards
and backwards the culture of the U.S. parent company. For
the same reasons, I was sent to Germany when it became
critical to establish credibility with the French tax
office over a tax audit, which threatened the U.S. parent’s
tax strategy in Europe. |
|
|
| |
|
|
|
| |
But none of this is a
surprise for the great master of strategy, Niccolò
Machiavelli in The Prince, wrote it. "But when
states are acquired in a province differing in language,
in customs, and in institutions, then difficulties arise;
and to hold them one must be very fortunate and very
assiduous. One of the best, most effective
expedients would be for the conqueror to go to live there
in person. This course of action would make a
new possession more secure and more permanent." |
|
|
| |
|
|
|
| |
"The
other superior expedient is to establish settlements in
one or two places; these will, as it were, fetter the
state to you. Unless you establish settlements, you will
have to garrison large numbers of mounted troops and
infantry. Settlements do not cost much, and the
prince can found them and maintain them at little or no
personal expense. " |
|
|
| |
|
|
|
| |
The British utilised
these two methods successfully time and again during
their own conquest of nations at the height of the
British Empire. Here we are, one hundred years on, and
perhaps there are still lessons to be learned,
particularly in the handling of relations in Iraq. |
|
|
| |
|
|
|
| |
Whilst we may
intrinsically oppose the use of force and prefer the
patient approach of philosophical enlightenment and
persuasion, Machiavelli warns about the difference
between innovators who stand alone and those who depend
on others. He says, "The populace is by nature
fickle; it is easy to persuade them of
something, but difficult to confirm them in that
persuasion. Therefore, one must urgently arrange matters
so that when they no longer believe they can be made to
believe by force." |
|
|
| |
|
|
|
| |
"Violence
must be inflicted once for all; people will then
forget what it tastes like and so be less resentful. Benefits
must be conferred gradually; and in that way
they will taste better. Above all, a prince must live
with his subjects in such a way that no development,
either favourable or adverse, makes him vary his conduct." |
|
|
| |
|
|
|
| |
Once in the new
territory, "a prince far more easily wins
the friendship of those who
were formerly satisfied with the existing government, and
so were hostile to him then, than of
those who, because they were dissatisfied, became his
friends and favoured his occupation." |
|
|
| |
|
|
|
| |
Currently the chips are
down for the U.S. and allied forces in Iraq. We have
entered not to conquer but to liberate. Iraq has a long
history of conflict. It is accustomed to a dictator. It
has not known ‘freedom’ in the western sense.
The people have a different faith with over 97% Muslim
versus 1% of the population in the U.S. The literacy rate
is 58% versus 97% in the U.S. The official language is
Arabic and 80% of the population is Arab. |
|
|
| |
|
|
|
| |
The people of Iraq,
having suffered at the hand of both Saddam and the U.S.
invasion, must begin to receive a pay-off from their
liberation. Soldiers are trained to soldier, not to
create governments. A great deal of effort has gone into
tracking down Saddam’s aids, because that’s
what soldiers do best but where is the prince and where
are the settlements? They’ve not arrived because
this is a liberation NOT AN OCCUPATION. |
|
|
| |
|
|
|
| |
Though clearly these
problems would have been better thought through before
the invasion, the Americans must now do what they do best.
They must make it happen. Now that they’re in,
results are expected. The people of Iraq have seen
leaders come and go. As for tracking down the dissidents,
perhaps they should be gaining their favour. The only way
to change the government in Iraq to one of real freedom
is to show them how. Take the British example. They
established themselves within the country. They
transferred technology, education and skills. When they
were no longer required, they left. We should do likewise. |
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
Thursday, April 28, 2003 |
|
|
| |
INTEREST RATES TELL THE
STORY |
|
|
| |
Today’s Financial
Times reported that America faces a future of
chronic federal budget deficits totalling at least $44,200
bn in current U.S. dollars. On the same day The Wall
Street Journal reported that more jobs continue to
be shed in this recovery which raises the question of
whether or not the economy is still in recession. |
|
|
| |
|
|
|
| |
The Bush administration
is literally betting the bank that measures implemented
to increase market liquidity will keep the economic
engine churning. Just like Equitable Life paid out
current period surplus without a thought to how it would
cover future obligations, the Bush administration began
it’s term promising to pay back Americans their hard
earned cash at a time when they were already rolling in
the excesses of the 90’s. The question is, will the
full faith and credit of the U.S. government go the way
of the Equitable? |
|
|
| |
|
|
|
| |
First, the dollar is
weakening against other currencies. Because U.S.
mutinationals will convert these foreign currencies into
dollars at the transaction rate when earned, earnings
will increase regardless of whether or not sales are
higher in the local currency. So a weak currency is good
for the S & P 500 and any other U.S. players in
foreign markets. |
|
|
| |
|
|
|
| |
If investors have a high
percentage of assets in the market, this should be good
for them and their portfolios generating more incentive
to spend from the feel-good factor. At the same time,
however, a weak currency will raise the price of goods
which the ordinary American will buy. If prices rise,
inflation will start to kick in. If inflation increases,
interest rates will rise. If interest rates rise, the
budget deficit will rise. If the increase in the budget
deficit results in an inability to fund current interest
payments, taxes will have to rise or spending will have
to be massively cut. Both of these measures would have a
severe negative impact on the economy. |
|
|
| |
|
|
|
| |
Many Americans have their
money tied up in property. If interest rates rise, the
fuel, which has generated substantial increases in home
values, will be cut-off resulting in declining values and
defaults due to substantial borrowing against home equity
throughout the 90’s. |
|
|
| |
|
|
|
| |
But what about the
prospect of deflation? China and other Asian markets
suffered dramatically from the impact of Sars earlier
this year. Before this event, China was already enrolling
more and more people in public works projects to keep
rural workers coming to the cities from becoming
disgruntled. Now with Sars having taken a toll on tourism
and trade, there will be more incentive to make up the
shortfall. So with labour rates already low, they can
afford to charge even less and still make a profit.
Whilst the weak dollar theoretically will increase the
price of goods to U.S. consumers, the ability of Asian
traders to competitively price their commodities may keep
the cost of U.S. goods even or slightly lower than
current levels thus avoiding increases and the
inflationary bubble trap. |
|
|
| |
|
|
|
| |
 |
|
|
| |
Public Debt/ Gross
National Product; Total Interest Expense/ Total Annual
Government Expenditure; Weighted Avg. Interest Rate Paid.
Statistics from the U.S. Treasury Office of Public Debt
and U.S. Commerce Department. 1980 to 2002. |
|
|
| |
|
|
|
| |
And if the inflationary
bubble trap is avoided, perhaps the U.S. currency can
strengthen, the economy can gather speed and financial
Armageddon can be avoided. The chart above tells the
story remarkably well. The blue top line represents the
percentage of U.S. Public Debt to GNP from 1980 to 2002.
This percentage was generally on the increase until the
mid 90’s when it began to decline. It is currently
staging another increase given the budget deficit of last
year. The amazing phenomenon throughout this time is the
percentage of interest paid out of annual budget outlays.
The U.S. has experienced a highly favourable period of
declining interest rates. This trend over the last 20
years has resulted in extremely positive conditions for
servicing an increase in the public debt. But how low can
interest rates go and for how long? |
|
|
| |
|
|
|
| |
The answer will determine
the future of this economy. |
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
Monday, April 28, 2003 |
|
|
| |
EXPEDIENCY VS. THE LONG ROAD |
|
|
| |
Last week the old film, Voyage
to the Bottom of the Sea, provided an unexpected
glimpse into the attitudes of Americans to their global
counterparts. In a scene of general mayhem at the United
Nations a U.S. general put forth a proposal to wipe out a
raging fire with a nuclear blast. Naturally he had all
the right calculations to hand backed up by an eminent
scientist, but the preposterous idea to fight fire with
fire was dismissed by all as out of hand. The general
quickly escaped to a nearby elevator with the slogan,
"we’re Americans," and set off on his hell
bent course of action to save the world. There
were many difficult trials along the way, but in the end,
the theory worked and the U.S. general prevailed. |
|
|
| |
|
|
|
| |
This can-do attitude has
served America well over the course of the last two
hundred twenty seven years and is largely responsible for
the rapid ascent to its current super power status. In
the old days, it was indeed the U.S. against a world they
perceived had lost its way. Unimpeded by strangling
bureaucracy and as one nation under God, they merged the
forces of God, patriotism, capitalism and military might
under one umbrella of righteousness. They could do no
wrong. |
|
|
| |
|
|
|
| |
In the American psyche,
the individual holds the keys to the kingdom. Nothing is
impossible that hard work and desire will not overcome
and no one else is going to tell them what to do. These
virtues have been ingrained into the minds of Americans
and now represent the fundamental DNA of their core
values. But is it possible that there are other core
values which now must be nurtured for Americans to be
effective in this new millennium? |
|
|
| |
|
|
|
| |
Thirty years from now, it
might just be China that holds world super power status.
If the Chinese follow the U.S. example, they will do what
they choose to do rather than what the rest of the world,
including America implores. America, with its intricate
judicial system, surely must recognise the precedent that
is being set for the future world super power. Can they
really say that they support the forces of righteousness
in their inability to work together with the rest of the
world for a greener planet? And just as they may believe
that they are on the force of truth with regard to their
largely Christian faith, signing up for a world court
would surely help to instill these values in other rogue
nations, would it not? If we have the right to change a
regime by force, what is going to stop China from
destabilising governments in Asia or even further afield
to support their interests? |
|
|
| |
|
|
|
| |
America must recognise
the folly of the current path of expediency or the world
handed over to future generations will not be fit for
human habitation. Do we want to live in a world where
military might is the key ingredient of superpower status
or do we want to recognise that together we can achieve
the virtues of life, liberty and justice for all? |
|
|
| |
|
|
|
| |
Americans are some of the
friendliest and most generous human beings on this planet.
It’s time for them to use these gifts of kindness
and generosity to look outside of themselves. The
reigning superpower must stand up and take its seat in
the world theatre. No special interests but responsible
world interests and global security, safety, health and
freedom should prevail. Up until now, it has been
perceived as almost anti-American to espouse such heresy.
|
|
|
| |
|
|
|
| |
President Bush must
deliver a new vision to the American people. Take that
vast pool of untapped generosity and energy and use it to
learn how to understand the global world in which they
now reside. It is not the expedient road but the long
road of patient understanding and diplomacy. And perhaps
it might even save the airlines. If every American were
encouraged to obtain a passport and take a trip to a
place they’ve never been, it would send a sign that
relationship building is more important than command
control. |
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
Friday, March 21, 2003 |
|
|
| |
A CHANGE IN THE WIND |
|
|
| |
Watching the opening
salvos of the ‘liberation’ of Iraq I find
myself asking, what next? What will it take to stay ahead
in this high stakes game of war? |
|
|
| |
|
|
|
| |
According to a 2001-2002
report from the International Institute for Strategic
Studies, year 2000 defense expenditure was staggering. |
|
|
| |
|
|
|
| |
Country
|
Defense Spend ($bil)
|
Population (mil)
|
Per Capita Spend $
|
| United States |
291.2
|
280.6
|
1,038.78
|
| India |
65.5
|
1,045.8
|
62.63
|
| Russia |
60.0
|
145.0
|
413.79
|
| China |
42.0
|
1,284.3
|
32.70
|
| Japan |
40.8
|
127.0
|
321.26
|
| France |
37.1
|
60.0
|
618.33
|
| United Kingdom |
36.4
|
60.0
|
606.67
|
|
|
|
| |
|
|
|
| |
Clearly western nations
take the lead in per capita spend. With India and China
making economic strides, what will tomorrow’s world
look like in terms of the percentage of earth’s
resources applied to the business of mass destruction? Is
there an alternative? |
|
|
| |
|
|
|
| |
Edward de Bono talks
about changing behaviour of corporations spewing
chemicals and waste directly into rivers. In constructing
new plant, rather than putting the discharge downstream
at the furthest point from the facility, it was suggested
that it be repositioned upstream in front of the pipe
where water is admitted to support production. This
change resulted in immediate action to reduce pollutants
since their subsequent intake would result in
contamination of products and equipment. |
|
|
| |
|
|
|
| |
The west has successfully
exported the majority of its pollution to other nations
by increasing imports from the east. Cities along coastal
regions of eastern China are regularly ensnared in high
levels of smog. Even if the weather moves mostly from
west to east, by the time this air reaches the shores of
sunny California, it has been largely purged of
significant contaminants. |
|
|
| |
|
|
|
| |
Still, the one thing we
all share is the air we breathe. This common air, like
the seas and rivers that surround us, is ‘free’
to all. No-one owns it but it is necessary for human
survival. At what point will this common air and water
spew out more poison than nutrition? |
|
|
| |
|
|
|
| |
So what if Iraq can be
‘liberated’ by a quick hit with minimal
destruction and few casualties? Will other oppressed
people cry out for liberation? And if liberated, would we
still require such staggering sums in defense? If a
government’s main purpose is to provide security,
what better way to ensure that all nations will continue
to thrive than to adopt pro-active policies for
sustainable economics. Imagine the power of those vast
budgets on natural solutions versus destructive forces. |
|
|
| |
|
|
|
| |
I ask the question, if
Islam is all about peace and Christianity is all about
love, why can’t they work together? Perhaps this war
can be the beginning of a change in the wind. |
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
Saturday, February 1, 2003 |
|
|
| |
THE CRITICAL PATIENT |
|
|
| |
President Bush delivered
a rousing State of the Union address Tuesday night to
thundering applause. If ever there was a time for the
full faith and credit of the U.S. government to stir the
American public to action, it is now. Were the general
public to become aware of just how close the very
infrastructure they have worked so hard to create was to
collapse, a panic similar to the 1929 banking crisis
would ensue. |
|
|
| |
|
|
|
| |
The declining stock
market has put the savings and investments of millions of
Americans at risk. It is not just those who have directly
participated in the markets, it is everyone who has
prudently and responsibly set aside money for the future
in the form of pensions, annuities, and insurance. Those
who wouldn’t dream of taking a dime of sympathy from
anyone and who have worked hard all their lives to save
for the future would be most affected. The future of
their country, the future of their retirements and the
future of their children are at risk. |
|
|
| |
|
|
|
| |
President Bush and Alan
Greenspan have pulled out the throttles. They haven’t
and won’t waiver from this policy of tax cuts and
rate reductions for the patient is indeed critical.
Learning lessons from history, rather than raising
interest rates as Japan did at the beginning of their
meltdown in the 90’s and as the U.S. did in the
aftermath of the 1929 collapse, the Fed has reduced them
by massive percentages. Whilst these low rates may
themselves be contributing to another bust bubble in the
form of higher housing prices, in the short term they
will help flood markets with the liquidity required to
stimulate an economy restructuring from the excesses of
the 90’s. |
|
|
| |
|
|
|
| |
Pension plans are now
grossly underfunded as a result of market declines and
sagging returns on fixed investments. This hasn’t
eliminated the current obligations of the plans to pay
today's retirees. With markets off, capital is being
returned rather than income. If there is no turn-around,
there will be a flood of defaults resulting in a crisis
of confidence, which unchecked could result in a total
collapse of the banking system. There are already
rumblings of this with insurance companies, particularly
smaller firms, close to default. |
|
|
| |
|
|
|
| |
So it is all about faith
and President Bush has rallied the troops. The system
works as long as everyone buys into it. Let the Americans
and their faith not waiver. Let us begin again to invest,
spend and save wisely for the future. Our very way of
life depends upon it. |
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
Friday, January 3, 2003 |
|
|
| |
SWITCHING FROM AN LCD TO AN
HCF WORLD |
|
|
| |
After several years of
declining markets, Wall Street achieved it’s 3rd
highest opening day percentage gain on the first day of
trading in 2003. Manufacturing engines have begun to rev
up and everyone everywhere is unashamedly ecstatic at the
passing of 2002. |
|
|
| |
|
|
|
| |
There has been a tendency
towards what I call the lowest common denominator over
the last decade. Management training to develop consensus
resulted in averaging towards the mean rather than
inspirational leadership. The special interest groups
which peaked during the Clinton administration asserted
that there was no such thing as a standard. Walmart’s
star was rising and McDonalds went into a decline that
recently resulted in resignation of its CEO after less
than two years on the job. Asian imports flood the market
and now account for a significant percentage of both
prestige and mainstream brands. Travel is a commodity and
anyone can go anywhere at any price |
|
|
| |
|
|
|
| |
I sense the beginning of
a new trend in the making. A graduation of the mean from
the lowest common denominator to the highest common
factor. If so, it will likely begin with today’s
youth and this is where I see a glimmer of hope. Where
once I saw my younger nephews spending willy nilly, they
have now reduced consumption, increased savings and gone
for the higher value purchase. Whatever today’s
youth think of how the world is run, they are setting
goals for themselves which are more outward looking and
thoughtful than the standard formulaic solutions chosen
by many over the last twenty years. They are not afraid
to be different and are sceptical of the media. |
|
|
| |
|
|
|
| |
All of this bodes well
for graduation to an HCF world. But what’s good for
an HCF world may not be good for the likes of Walmart
whose sales declined in December and other discount
retailers. No, they’re not likely to go out of
business and the market will remain steady but saturation
points have been reached in this segment of U.S. markets.
Other drivers should be ready to take their cues. Ah,
graduation to HCF. Yes, there is reason to be positive in
2003 for sure. |
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
Wednesday, December 11, 2002 |
|
|
| |
AWAY FROM ME YOU VIPERS! |
|
|
| |
The concerted attack to
defame the character of Cherie Blair has been the top
news story for the last week. I would like to ask whether
or not any prudent businessman would consider this type
of reporting to be ‘good value for money.’ |
|
|
| |
|
|
|
| |
Last Saturday, at a news
agent, we took a quick view of all the headlines and
decided this country is well and truly going to the dogs.
If these salacious headlines are actually tempting the
circa 40 million adult population in this country to
purchase papers, what does that say about this nation?
How many papers continue to be sold on the basis of
another tantalising tid-bit about ‘Diana?’ We
have it here at Brantwood with the character of John
Ruskin constantly assassinated for falling in love with a
young woman and having episodes of madness in his later
years. We have allowed the mob to rule, the media being
its greatest ally. |
|
|
| |
|
|
|
| |
Cherie is under attack
because she actually dares to make a difference. Not
content to sit back and lead a quiet life, she is a woman
with a mission. John Ruskin was a man who dared to
question the way the world was headed. He questioned the
large chasm that separated wealth-builders from their
employees, who worked in appalling conditions and were
turned into machines for someone else’s gain. The
mechanistic view of the world was gaining increasing
momentum not least of all from the revelations of Charles
Darwin. If man was nothing more than an animal, a machine
to be turned on and off, there was no room for a soul.
Ruskin saw only too well the result of this way of
thinking and his prophecies have been borne out in this
post modernist material world in which we live. |
|
|
| |
|
|
|
| |
Is it any wonder that
Americans are afraid to travel? The main news headline
since September 11 has been America at War. If the
news is a reflection of our souls, the prognosis is grim.
|
|
|
| |
|
|
|
| |
Perhaps the best action
we can take is to ignore the tripe and get on with living.
Stop buying newspapers, stop watching the news, ignore
all attempts by the media to influence what we think and
go out and change the world. I hope Cherie Blair is
listening. |
|
|
| |
|
|
|
| |
|
|
|