Tag Archives: risk

Savvy Sunday July 10, 2016

“People who don’t take risks generally make about two big mistakes a year. People who do take risks generally make about two big mistakes a year.” – Peter Drucker

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Savvy Saturday August 22, 2015

You don’t climb mountains without a team, you don’t climb mountains without being fit, you don’t climb mountains without being prepared and you don’t climb mountains without balancing the risks and rewards. And you never climb a mountain on accident – it has to be intentional.

Mark Udall
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Savvy Saturday November 1st, 2014

November: the last month of autumn, but the beginning of a new adventure; time to take risks and do the unexpected.

– Author unknown.

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Why Latin America? 5 ways that opportunity knocks

fabric

Opportunity: we look for it every day. It’s what our organizations are built upon, it inspires us to create new products and it helps us set our sights and company vision on creating something of value; today’s best new ventures are those that act on an opportunity of changing (even just slightly) the status quo. But if there is opportunity at home, why consider expansion to a region like Latin America?

And that’s exactly the question posed to me this year by a group of executives in a stuffy office in downtown Quito, Ecuador. It’s an all too familiar question according to my colleagues in trade and investment promotion. Partners, clients and sponsors all want to know: “What’s the big deal about Latin America?”

Based on ten years of working in Latin America and conversations with hundreds of investors, entrepreneurs, employees and corporate executives, there are 5 reasons that seem to resurface when we talk about the “why” behind business expansion and opportunities in the region:

1) Heterogeneous
The fact that Latin America is a heterogeneous region gives companies a wide range of possibilities for market entry, collaboration and how they manage their operations. Countries in the region vary in their acceptance of foreign investment and ease of setting up a business representing opportunities for innovation, partnerships, and use of local resources. I have collaborated with international brands that have been wildly successful in this dynamic region – mainly because they didn’t try a monolithic approach to market entry and expansion in the region. BMW Group and their country specific local partnership strategy (usually allowing one well established business group to manage the brand in each country) is one example of a successful approach tailored to specific markets in the Latin American region.

2) Economic Powerhouse
Latin America represents a $4.8 trillion economy with about 600 million citizens. Brazil is seen as an economic powerhouse but there is no denying that rapidly growing Mexico and resource-rich countries like Chile, Colombia and Peru (the Andean Region) also have tremendous buying power. Buying power and growing number of consumers represents an opportunity for new ventures as well as entrenched players.

3) Burgeoning Middle Class
In the last 10 years, 50 Million Latin Americans have joined the middle class and present an opportunity for foreign companies not just as consumers but also as sources of talent from an increasingly well-educated and globally savvy middle class.

Apple is aiming to launch its first retail store in Rio de Janeiro, Brazil by March 2014 in time for the 2014 FIFA World Cup; the rising middle class is driving demand for consumer products and electronics and, in the future, may be a factor in the establishment of more manufacturing plants if public and private sector are able to convince the manufacturing side of business that the talent and opportunity exist in the region.

4) Connected
Mobile penetration in the region is above 100% and Latin America will have nearly 300 million Internet users by the end of 2013 and nearly 400 million by 2017. Public and private sector organizations in Latin American countries are bringing most of their service and product offerings on line making the dynamic region more connected and transparent for doing business. This also brings ample opportunity for brands – from startups to large corporations- to engage with their customers, suppliers and stakeholders.

5) People
Latin American countries have high context cultures meaning there is a real focus on relationship- building and the “context” associated with doing business. While international companies studying their market entry strategy may find these nuances daunting – such as how connected you are – it is an opportunity for foreign firms to start with a clean slate and connect with the right people – and make the right impression – from the very start.

The risk-reward argument in favor of doing business in Latin America doesn’t quite cut it anymore; Latin America used to be touted as an opportunity for brave companies to make large amounts of money: “high risk brings high reward” people would say. But after helping organizations understand, engage and grow their market in Latin America in the last ten years, I have learnt that risk-reward is not the answer to why companies should “bother” with Latin America. Ventures that want to take advantage of opportunities in the region will likely enjoy monetary rewards as well as foster innovation and learning in their organization by diversifying their market, accessing new talent and resources, building a loyal following and creating a strategic contact network.

EMC

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What is corporate governance?

Corporate Governance is more than just restoring or maintaining (public) confidence in a company; it’s about organizations making better decisions.

A few months ago I was in touch with a former colleague who I greatly admire – not only for his excellent management skills but also for the person that he is – kind, generous, honest and down to earth. We were talking about my consulting business and he asked me: “what is corporate governance”?

I realized that while many people (including very smart and skilled managers) might know that corporate governance relates to managing a corporation, they might not know exactly what it means. And it got me thinking that if more people know about corporate governance it might influence a shift towards creating more responsible and relevant organizations – especially those companies that we interact with as investors, employees, consumers, partners, etc.

Corporate governance to me, as a consultant, means helping boards (board of directors) make better decisions. It is a framework and a practice (within that framework) that ensures that corporate decisions benefit all stakeholders.

It is said that the introduction of the Sarbanes-Oxley Act in the US in 2002 ushered in a (renewed) interest in corporate governance because it was seen as a way to restore confidence in a “system”.

There is no doubt that corporate governance is a balancing act; organizations are good corporate citizens when they are not just concerned with profit but also short, medium and long term effects of their actions on the environment, community and their investors (including employees, suppliers, government etc.) It’s as much about PR as it is about internal controls, disclosure and performance management and compensation. For example, executive pay and benefits is a corporate governance issue if bonuses are tied to making short term decisions that could harm the organization. Such issues are kept in check by having an oversight committee or board of directors that examines executive actions, pay and risk.

So what does corporate governance mean to you? To me it means making sure that different voices are heard and that key decisions are not biased towards just making money or keeping a special interest group quiet. Corporate governance means that key decisions are made by taking into consideration different stakeholders in order to support the well-being of the entire organization.

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