Japan; what will be the impact on the (global) economy?

At this moment economists of well known resources world wide come with their adjustments (and similar explanations) on Japanese economic growth (GDP) expectations for 2011 and beyond, including currencies and other leading indicators.

Now the damage, the delays and the recovery will have an impact, here is no disagreement. The question here is what this will do to your economy and business?

Some say it is too early to tell and adjust modestly, others heavily correct their forecasts downwards of Japan or other countries. Probably the truth will be somewhere in the middle but what are you going to tell your management or stakeholders? Following a heavy paid opinion in case it goes wrong?

If Japan is a key country to your business or Japanese firms are competing it will be helpful to access reliable data and to integrate them efficiently at any corporate level. Now who can deliver that? What resource outperforms others about Japan? What fits nowadays in your budgets?

Let us not tell each other stories and fairy tales about forecasting. There is no resource (or economist) able to tell you what exactly this impact will be in the short, long term, in size, in dollars or yen or in your industry. It is all guessing, constantly adjusting and no one will afterward tell how wrong they were.

Some professionals do not care and rely blindly on that brand name provider where paying the price seems of lesser concern. As corporate pays the employees follow without benchmarking or doubt. A too common vicious circle of business - market intelligence with no tangible synergies or contribution.

Others tell their planning, market intelligence, finance or other data teams to search on internet looking for more (free) information about Japan. Here extra labor costs and outdated info seem not questionable because it is for free. Sure!

When knowing all the alternatives, what is your price for reliable economic data of Japan and the effects globally? What is your tool or provider? Do you care about quality, synergy and fees when using macro parameters?

If so, please contact me because on Tuesday the 5th of April we will release our new monthly edition of Major Economies, including the last changes of 25 selected national and international institutions for 10-15 key Japanese macro parameters (2-5 year forecasts).

Key differences with other alternatives; hard to beat average forecasts, more cost / time savings and faster ROI. Is that welcome in this business climate or not?

I´d be pleased to inform you how to get this Japanese update without charge. Thanks in advance!

Request

Request:

This week I was asked to explain more about our company, what we do and where we distinguish ourselves. Referring to our website seems not always enough and I do prefer personal contact by sending some recent reports and exchange thoughts by phone later.

I decided to make an exception. In this blog normally I only would like to have an indirect motive to combine my opinion with my work.

Nevertheless it seems a lot of professionals have no idea what we do or what we do for their competitor, government, central bank or even university.

Lacking the time to make a real fancy article I decided to keep it simple. At the end it is simple;

We improve your macroeconomic forecasts data of 50+ countries world wide by offering more quality, creating costs and valuable time savings while our fees can be up to 90% lower than your alternatives.


Get your economic forecast differences in 2010!

One of the most difficult parts of economic forecasting is avoiding damage while having very high costs.

The past years due to the economic slowdown forecasts lost most of their value. All forecasting sources lacked visibility and 2010 looks like a bumpy ride. So, what is then left? Synergies?

When talking about economic forecasts in general people claim only to look at them once or twice a year. When dealing with domestic markets, a small business or in non management position this might be possible but not in a regional or global role.

Some firms are less hurt by fast economic changes but they still make costs of monitoring.

When dealing with for example financial/strategic/demand/ planning, treasury activities, management reporting, business decisions, international salary calculations, new market entries etc. this is absolutely more frequently.

The past years should have wake up professionals and increased their demand for better economic forecasting tools or at least more efficient ones.

The combination of no value and high cost in a downturn can no longer be ignored. Let’s have a look at how most companies deal with this kind of forecasts during a period of 12 months.


Alternatives for economic forecast data:

1. Companies use the same source for macro as for industrial specific / sector data; the large traditional global providers.

While it might look efficient to keep all under the same roof there is hardly any advantage, especially in the past years.

Why relying on a single source? Would you accept that when your Pension Fund is managed by one person?

Sure, it is easier to administrate or to get approval. But cost / benefits remain at a very low level and there are no extras such as savings.

In fact people need more time to separate industrial from macro while others to avoid one opinion only use extra core time on internet to find more forecasts.

2. Companies cancel all or most of their external data providers to save costs.

A good example of mismanagement; cutting subscription costs but creating more labor costs as people now have to do their own data searching and compiling.

Sure, cancel what you do not need but what you need, do not do yourself by inventing the wheel.

Here costs can increase with almost 100%. Being on the payroll is a definitive direct cost, even when having lesser personnel, extra hours are directly wasted and much higher than fees of external providers.


Labor cost example:

Professionals on an average look at a certain country economy (outlook, indicators, forecasts) at least one hour a week. A variety here can occur as some months might be more important but per month a total of 4-5 hours is easily reached.

As these man hours are coming from mid and higher management the average hourly salary would around US$ 50. This brings costs of only monitoring macro per year at US$ 3,000 for one person.

Excluded are risks of using wrong data and the total expense depends on the size of the company. But either having 100 or 10 people the costs are too much.


Conclusion:

Some do not care. They have a budget and they order without looking at the benefits. Purchasing a brand identity is easier than purchasing value.

Others see improvements as a threat or believe appointing the management of the differences cannot lead to positive contributions (for them).

When using data providers it is important to choose those that can really help. Look at the alternatives for example. What is overlapping and what has the best ROI for example?

Keep core data about your industry or sector separated. Besides your own internal knowledge it is easier to integrate than combine it with macroeconomics.

Do not underestimate macroeconomic data by copying it from free sources. Out of date information can do more damage than good. And stop wasting corporate time on own economic research. It is not your core business, so why getting paid or budgets for it?

On top of core business changes a difference can also be made for non core, such as economic data. Instead of extra costs this can result in cost savings up to 90% and time savings which can be used better for core activities.

As long as traditional providers do not add extras or can demonstrates their values in downturns people should keep looking for better alternatives and smarter spending.

Remember in good times it is easier to make results or develop research but has your company already left the uncertain market conditions? Are budget restrictions off line and cost cuttings are no longer necessary?


How will your company deal with costs and values of macroeconomics in 2010?

When you are interested FocusEconomics can demonstrate the difference in terms of labor costs and valuable time for macroeconomic data inside your company.

Remember no one can predict economies. Why then spending more than necessary?

For a special offer for 2010 please contact me at; moostveen@focus-economics.com

Please select from the following regions; Americas, Asia Pacific or Europe.

Thanks and good luck with the business in 2010!

"It's the economy, stupid"

"It's the economy, stupid" was a phrase in American politics widely used during Bill Clinton's successful 1992 presidential campaign against George H.W. Bush.

The recession at that time cannot be compared to the current one (in size and matters) but when looking at corporate campaigns the phrase has lost a lot of value.

Corporate spending on information has drastically been reduced as part of a total cost cut. This looks relevant and necessarily but what about economic intelligence?

Since May experience learn a lot about corporate spending behavior. Where outlooks remain grey and lacked with visibility it is not a surprise budgets for information have been cut.

Market conditions still show a volatility that should keep professionals informed of the potential business opportunity, even the smallest, which world wide is much decentralized.

This requires more time and stress testing to make sure when getting back into markets risks remain under control as far as possible.

Professionals in prosper times easier can make decisions as market conditions remain profitable but why not exploring better tools in desperate times?

To answer this it might be a false accusation but is it logical when economic outlooks are missing any visibility to continue with existing data providers or tools?

What makes decision makers decide to maintain essential economic information to support operations while the past 12 months no additional value was seen?

There can be five explanations for these questions:

1. They simply do not care or miss time to care. Business leaders, although referring to the economic impact on corporate development, do not look at macroeconomics or find them relevant in their decisions. They have other priorities.

This can be true because at certain levels, at the top, there is not time to monitor every country of interest. But what about lower levels of corporate finance & control, strategic planning, business development, market intelligence etc?

Why would in these departments managers not consider more effective tools for macroeconomics?

2. They leave these decisions up to their teams. Why would professionals not inform their upper management of possible improvements?

3. Only in good times it is allowed to spend on secondary information, such as macroeconomics. In other words when there is a budget left over.

4. A change would implement extra attention and labor to make the change successful. The fear of a change to distract people and learn another tool seems to override the potential benefits.

5. As discussed in other blogs it is fear itself of making a wrong decision. Rather no changes than any change that can jeopardize someone’s position.

Combining the above it still does not justify not welcoming improvements in terms of less spending, more time efficiency and overall benefits for each employee using macro to complete micro. What happens when nothing changes?

1. Total costs remain at the same high level or are even increased. While with current information providers discounts could be achieved any kind of synergy will be missed as long as additional benefits cannot be integrated.

2. Besides costs such as fees labor expenses are often higher because not all employees have access and need to find alternatives (internet is the worst alternative). People often forget to be on the pay roll.

3. Costs of risks cannot be calculated but when not improving any efficiency level operational results will rather decline than remain stable. Professionals in downturns often face higher work pressure and risks will be higher.

What can happen when making the right changes?

1. Total costs will be reduced as no longer (over) expensive and overvalued information providers are used or new tools are added to compensate them.

2. Corporate time savings will lead to lower labor expenses. As people have more time for core business, core business will directly benefit which increases the ROI.

3. Less stress and better time management can help risk assessments in for example market analyzes, financial reporting or strategic planning. Even business decisions are better supported.

Conclusions;

Instead of walking away from changes or being afraid of them it is better to consider them. It is too easy to claim satisfaction or sufficient access to available alternatives.

The past period has learn there is no such thing as “security”. When not being open for change will harm your corporation. It is then no longer the economy but corporate inefficiency, stupid!

p.s. This blog is written on personal title but related to my work as Global Sales Manager of FocusEconomics

Only efficient market research is vital

Please read first at:

www.marketresearchbulletin.com

Top B2B Tips For Emerging Markets

These are my comments:

I especially like the tip that market research is vital and the need of using independent sources.

Still many believe what can be found for free (internet) is better because it is for free. The fact this info is out of date, increase labor costs or can harm results seems of lesser importance.

On top who is best? What market information provider really makes a difference or has done a good job the past 12 months?

I have no doubt many have good knowledge about certain industries or call themselves sector experts.

Still predicting a trend is not the same as explaining one.

Therefore I believe professionals using market research have to divide this in two groups:
1. One for all information directly related to the core business, i.e. industrial analyzes and competitive intelligence.
2. One for all information about the operational countries, especially those where it is hard to find reliable macro data.

For 1. there is a wide range of providers. Most of our clients use one of them or even let them overlap to secure each specialty per provider (for their core business).
For 2. they have our macroeconomic consensus forecast reports because they do not want to rely on single sources (1.) only for different scenario planning.

Furthermore without 2. more valuable research time is spent during core business hours and already time limited professionals are further cut back or delayed.
On top every one complains about costs. Well, in a cost driven climate you should look for more efficient tools and not postpone a small investment.

Unfortunately even the smallest investments on market research are examined or are simply postponed / canceled because the upper management can no longer fly first class or spend corporate money at fancy restaurants.
This is a time for solutions and every contribution should be welcomed.

Now those not being able to use our reports will spend 10, 20 and sometimes even 100 times more the coming 6-12 months in extra labor costs, hence not even including the risks on the results of bad data.
Imagine you can choose between spending 5K or 500K? Would you not go for the 5K and impress your upper management with the cost saving?

Finally emerging markets remain volatile, unstable and less predictable. Still some have clearly become more developed but the information stream remains difficult in regards to economic forecasts.
This cannot be solved (only) by the other steps mentioned by Matthew Harrison.

There is also no one-stop-shop for market research. Like with doing your private shopping also for corporate shopping you must change and become a smarter spender.
Look around or look at our website. I look forward to send you a copy of our global regional reports or any country in special.

Yes, market research is vital but those the one which is most efficient. Or otherwise do not complain about lost revenues due to the crisis.
When for macro intelligence there is no interest in improvements, what is then to worry?