Tag Archives: Business

Government and the Global CEO: Redefining success in a changing world

Government and business leaders across the world are facing the challenge of rising geopolitical uncertainty and a more connected, yet in many ways more divergent, world.

PwC lacunched today Government and the Global CEO: Redefining success in a changing world, a survey of 1,409 company leaders alongside 38 government representatives and state backed CEOs.

In this report, PwC looks at how public sector organisations can get ready for tomorrow’s challenges by:

  • Redefining their purpose to drive success and channel their resources.
  • Collaborating with business to build the foundations for growth.
  • Measuring success and impact in smarter ways.

More about the latest developments in the Public Sector available at PwC’s Public Sector Research Centre website – http://www.psrc.pwc.com.

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strategy+business

For some time I’m working on the KM integration of Strategy& (former Booz & Company) with PwC and I can say there is more than finance about this acquisition. They are good. PwC has probably acquired the best in strategy consulting.

You can make your own mind by having a look at their magazine – strategy+business (s+b). Forbes nominated it among the top 25 websites for CEOs and its readership now spans more than 1,000,000 business leaders around the world. The magazine publishes ideas from chief executives, prominent business thinkers, academics from leading universities, and subject matter specialists from across the PwC network.

In s+b‘s latest reader survey, 90% of respondents reported taking action after reading an s+b article. You may also find it to be an insightful resource.

The true impact of an economic crime

Organisations often don’t grasp the true financial impact of an economic crime until after it has happened — sometimes well after. As in previous years, The Global Economic Crime Survey underscores that the cost of fraud — both in financial and non-financial terms — is significant.

Nearly one in five (18%) organisations suffering fraud experienced a financial impact of between US$1 million and US$100 million. And the percentage of respondents reporting losses in excess of US$100 doubled, from one to two percent.

These large losses may be connected to the reported increase in incidents of bribery and corruption — frauds which can be especially costly to organisations, with regulatory fines, legal fees and remedial expenses easily reaching billions of dollars.

But economic loss is not the only concern that companies face when combating fraud. Survey respondents pointed at damage to employee morale, corporate and brand reputation, and business relations as some of the most severe non-financial impacts of economic crime.

When taking into account the secondary damage, the true cost of an incidence of economic crime can be long lasting. Consider the long chain of adverse events can follow a single, high-profile incident of economic crime:

  • lost revenues, as customers look for other business partners;
  • delayed entry to new markets due to regulatory issues;
  • a battered stock price; and
  • declining productivity and morale.

Fortunately, top management appear to understand the importance of collateral impacts: the 2014 Global CEO Survey reports that half of chief executives (a sharp increase from 37% just a year ago) see a “lack of trust in business” as a key marketplace issue, with significant majorities recognizing that business has a wider role to play in society than just building shareholder value.

Delusions of Safety: Getting to grips with today’s growing cyber-threat

“Delusions of Safety – The Cyber Savvy CEO: Getting to grips with today’s growing cyber-threats” video addresses a serious cyber security issue, using a fictitious scenario.
It illustrates why leadership by a CEO who truly understands the risks and opportunities of the cyber world, will be a defining characteristic of those organisations, whether public or private sector, and will realize the benefits most effectively.

This video can be used as supporting material for a Crisis Management exercise or Security Awareness program.

A new direction for global M&A

Investment Conference
(Photo credit: Salmaan Taseer)

The geography of deal-making is changing fast. Over the last five years there have been more deal value flow from the largest high growth markets (HGM) to mature market economies than in the other direction. Between 2008 and 2012 HGM companies invested US$161 billion into mature market companies, outstripping the opposite flow of US$151 billion. In 2012 alone, HGM companies closed deals for mature market targets worth US$32.6 billion, almost three times the amount they invested in 2005.

In a recent report, PwC looks at how dealflows are changing and we also consider how new types of HGM investors are turning to M&A and the factors driving their investment choices. Large and mid-sized private companies have now joined the state-backed investors who were among
the first to acquire mature market targets. HGM investors’ scope is also widening, with HGM to mature market M&A activity ranging from energy, raw materials and engineering to media, retail and consumer goods companies.

The past is no guide to the future

In some regions, inflated valuation expectations are based on past deals. Some investors can be keen to dispel the notion that they are prepared to pay ‘over the odds’ and may be more recalcitrant about their price. This may have been a factor in Qatar National Bank’s bidding for Franco-Belgian owned Denizbank, which operates in Turkey. Denizbank’s parent, Dexia, also received a bid from Sberbank of Russia. Despite assumptions about Qatar’s readiness to spend, they did not increase their offer and Russia’s state-owned savings bank won the deal. Buyers from the Gulf Region typically do not like public transactions and, where this is unavoidable, will not want to be perceived as having paid more than fair market value. Some Gulf investors are able to deploy larger amounts of capital for longer periods of time but they expect the deal terms to reflect this, in their favour. However, ability and willingness to pay are very different and indeed, Chinese and Indian buyers are just as keen as their developed market counterparts to win deals on the most favourable terms they can achieve.

Perspectives

Deal-making is always a complex mix of strategy, economics and personalities. Cultural differences add another layer of complexity; competition for investment is also growing, as mature market companies are far from being the only targets HGM companies are considering. PwC suggests that HGM to mature market M&A has the potential to grow a very long way and we will see acceleration in this type of M&A over the coming years. A better understanding of the make or break areas – valuation mismatches; differing completion timeframes; the need to connect with decision makers; and process differences – can only improve the chances of a successful deal. The HGM buyers and mature market sellers best prepared for those differences may have a lot to gain.

Will social media soon become an indispensable retail channel?

Social Media Outposts
Social Media (Photo credit: the tartanpodcast)

The use of social media sites like Facebook has exploded in recent years – the site recently hit one billion users. But while people are checking out social media sites daily, how many of them actually shop?

A recent study showed that seven out of ten online shoppers who took the survey say they never shop this way. That should also remain the status quo for the immediate future, as only about 5% say they’ll shop more via social media in the next 12 months.

But still, what are online shoppers doing on social media? Essentially they’re commenting on companies and products they know and discovering new ones. However, there are differences in motivation among these social media users, divided into three groups based on their behavior: “brand lovers,” “deal hunters” and “social addicts”.

Out of those brand lovers who say they interact with brands via social media, 53% go shopping in a physical store daily or weekly, compared to 45% of the overall sample, and 58% buy something in a physical store at least once a week. The deal hunters say they’ll click through to a specific online store if offered a good sale or an attractive special offer. Appealing to deal hunters looking for good offers and contests can be a great way to drive traffic to the provider’s website. Noone can afford to ignore the social addicts – they use social media to talk about their  experiences with brands, learn what their friends like and recommend, find customer service answers, and submit ideas and product feedback to companies. Getting the message out to social addicts can support the brand, while ignoring them carries significant reputational risk, as these very active online users tend to have huge social media networks and wield an outsized influence among them.

So, will social media be an indispensable sales channel? Not likely but there’s good reason for retailers to continue focusing on social media investment.  Campalyst analysed the world’s 250 biggest internet retailers and found that 97% of them are already on Facebook, 96% have a presence on Twitter, and 90% use YouTube. The social media traffic generated in many cases is impressive; 43 of the 250 can claim more than one million followers on Facebook.

More details here: http://pwc.to/Xfl6r0

How do “gaming techniques” address the disengagement challenge?

The application of game-based design to human factors is an extension of business process improvement efforts. During the last 20 years, enterprises have focused on improving most business processes by establishing consistent ways of performing and consistent data descriptions for those processes. How employees think and feel about the work (what’s called engagement) has not been part of this process improvement. The more the human part of work moves online, the easier it is to capture and study how it is performed and how to improve it.

The body of scientific research around human motivation is substantial, but some of the most relevant research for online environments is informed by gaming. In contrast to other business verticals, the gaming industry has been fully attuned for decades to the challenge of motivating users. The industry is now starting to directly share its knowledge with other businesses.

Ryan, the self-determination theorist, confesses, “I got into this field, in part, because I was impressed by the motivational power that games had. Most people in psychology were looking at the negative effects of video games because of overuse and other side effects. I thought, if people are overusing video games, we need to know what’s motivating them.”

Through trial and error, the best game designers managed to crack the motivation code needed for successful gaming environments. One central element of their success is their focus on intrinsic motivators and the associated mechanics used to deepen engagement.

Within the past several years, vendors such as Bunchball have taken the simpler mechanics of games into online business environments and mapped those to the potential motivators they could tap.

The figure below illustrates the interaction of basic human desires and gameplay. The red dots signify the primary desire a particular game mechanic fulfills, and the gray dots show the other areas that it affects. Each human desire listed is tied to deeper intrinsic motivators, including autonomy, competence, and relatedness of self-determination theory. Rewards come when underpinned by intrinsic motivators, gain more effectiveness.

The Game Mechanics

These game mechanics and design strategies provide ways to motivate the disengaged. As long as they’re well thought through, the use of game mechanics can be helpful in a range of applications. Online business environments, like gaming environments before them, are now becoming laboratories for experimentation.

Mario Herger, technology strategist and community manager at SAP Labs, points to four traditional and emerging business concerns that are seeing the most adoption: marketing and branding, training, community management, and human resources. PwC gives some examples in the last issue of Technology Forecast.

Gallup survey results show consistently high levels of workforce or customer disengagement. These results don’t necessarily indicate that enterprises aren’t interacting with user constituencies. But they do indicate that the nature of the interaction is shallow and uninspiring. As Fulton points out, more interactions should include more feeling as well as thinking and learning components.

Online environments offer unprecedented opportunities to stimulate user engagement, but adoption of the mechanics to encourage greater engagement has been slow. Emotion and overall responsiveness are lacking from many online business environments. So it’s no wonder that users have been disengaged. The good news is that there are numerous proven techniques from the gaming industry that everyone else can build on.

IFRS pocket guide 2012

Historical financial statement
Historical financial statement (Photo credit: Wikipedia)

PwC released its “IFRS pocket guide 2012” which provides a summary of the recognition and measurement requirements of International Financial Reporting Standards published up to August 2012. This quick-reference guide is intended for a variety of audiences, including finance directors, financial controllers and other members of the finance team, as well as broader management, actuaries, lawyers, merchant bankers and analysts.

Contents

The information in this guide is arranged in six sections:

  • Accounting principles
  • Income statement and related notes.
  • Balance sheet and related notes.
  • Consolidated and separate financial statements.
  • Other subjects.
  • Industry-specific topics.

More detailed guidance and information on these topics can be found in the IFRS manual of accounting and other PwC IFRS publications.

Benchmark your security programs against your peers

Information Security Wordle: RFC2196 - Site Se...
Photo credit: purpleslog

In 2011, economic uncertainty continued to impact the security programmes of many organisations. The effects of a recovering economy converged with strong confidence in the efficacy of security programmes to create an environment in which security practices are often weakened. As a result, organisations have become vulnerable to increasingly sophisticated threats to information security, with potentially harmful consequences to businesses across industries and across the globe.

I believe we all understand that information security can make or break the success of business goals and competitive advantage. As a result, many of the organisations today are taking a hard look at what’s needed to design, implement and manage an effective information security programme, one that addresses today’s evolving business practices and heightened security threats.

PwC, in conjunction with CIO and CSO magazines, carried out a global survey of more than 9,300 security and business executives from February 1 to April 15, 2012. The survey examined how executives viewed the scope and efficacy of their security policies, strategies and technologies. To gauge how you stack up against your peers, you may use their custom tool to benchmark your organisation’s security profile. Once you have entered your responses, you can create a customized PDF file that explores how your views compare with others, with insights from PwC’s Security Advisory team.

Compare your security profile against The Global State of Information Security Survey 2013 results

The Eurozone Crises and its Scenarios. What does this mean to your business?

Eurozone 02
Eurozone (Photo credit: slolee)

The chances of Greece departing the Eurozone are rising sharply so what chances are there that Grece will remain in the Euro as a compromise? Spanish banks are still holding an estimated Euro 600bn of mortgages at full value on their books so Spain will be the next big test for Europe. Spanish and other Eurozone banks are going to require hundreds of billions of Euro recapitalisation in the next 12 months.

On January 2012, Congressional Research Services looked into possible scenarios regarding the Eurozone and their impact on US economy. Latest indicators from the US are mixed and patchy but this economy is out-performing the Eurozone. CEEMEA’s central outlook remains 3-5 years of sub-par economic growth, continuous Eurozone crises and tough global business conditions. PwC also provided four scenarios, including one where Greece would exit the Eurozone.

What does this mean to your business?

The risks for a worse outlook have intensified since March/April and Eurozone restructuring has the potential to create significant change and disruption to the operations of many organisations. Global companies (both headquartered in the Eurozone and ones with extensive links with it) will be impacted across their whole value chain.

There will be:

  • Treasury changes (e.g. liquidity and financing, security over banking arrangements);
  • Operational changes (e.g. documentation, pricing arrangements, customer payment mechanisms);
  • IT changes (e.g. systems configuration, payment and billing systems changes, master data, transaction data migration, package applications and support arrangements);
  • Planning, benchmarking and forecasting (e.g. contingencies, restatement of historical data, costs to implement the Eurozone restructuring);
  • Challenges in communications to shareholders, stakeholders, customers and suppliers regarding organisational impact and arrangements to manage the impact.

How one can cope with all these challenges? Here are some suggestions:

  • Evaluate your supply chain risk, particularly where raw materials become expensive for suppliers no longer in the euro-zone;
  • Develope business cases / risk analysis to take advantage of potential new sourcing opportunities and provide delivery support to realise these benefits;
  • Run rapid diagnostic tools that can be deployed simultaneously across Finance (EPM Blueprint, Finance Effectiveness);
  • The break-up of the Eurozone may even give rise to opportunities from a tax perspective: identify them and work to build them into existing contingency plans should the right commercial fact patterns arise in the future.

Other suggestions?