Competitive horizon

Citation

(2006), "Competitive horizon", Strategic Direction, Vol. 22 No. 3. https://doi.org/10.1108/sd.2006.05622cab.001

Competitive horizon

Economists polled by Reuters (www.reuters.com) predict that the US economy will grow by around 3.3 percent in 2006, slightly down from the previous year. The slowdown is expected to gather pace during 2006, falling to around 3.0 percent in the last quarter. Analysts believe that the lower growth rate will occur as a succession of interest rate rises begin to impact on the housing market. This in turn will lead to a decrease in consumer spending, one of the main growth drivers over the last two years. Some analysts believe that the impact will force the Federal Reserve to refrain from further rate hikes but others believe that inflationary pressures caused by high energy and food prices indicate otherwise. As a result, the survey predicted that rate levels could be anywhere between 3.5 percent and 5.00 percent at the end of 2006.

Why owners should think hard about keeping it in the family

A report published by the Australian (www.theaustralian.news.com.au) claims that harmony at work is not always easy to achieve where family-run businesses are concerned. Family members may show less respect to the owner than an employee would, while there is also a real possibility of sibling rivalry at home spilling over into the workplace. It’s perhaps little wonder that almost half of Australia’s family businesses plan to look outside for their next CEO, as research carried out by the country’s Institute of Chartered Accountants reveals. Many experts believe this to be a shrewd move, not least because choosing a successor from within the family is often fraught with difficulty. Sometimes there will be no obvious candidate, while there is also the sensitive issue of whom to select without alienating others. The Institute suggests that this could at least partly account for the fact that current owners often seem reluctant to stand down, and for the inadequate succession planning that exists within many family concerns.

Will cotton prices rise in 2006?

World production of cotton is expected to reach 111.71 million bales during the 2005-2006 crop year. While this figure is 0.27 million higher than earlier estimates, output is still expected to be almost 9 million lower than the previous year. The United States Department of Agriculture (USDA) predicts that around 850,000 fewer bales will be produced in Brazil, where consumption will fall by 100,000 bales and exports rise by 250,000 bales. On the contrary, USDA expects production to increase in Central Asia and French West Africa by 420,000 and 130,000 bales respectively. But greater demand from Pakistan and China is forecast to have the biggest impact in the sector. Pakistan may need to increase its imports by around 400,000 bales because production is set to remain at last year’s levels. Likewise, consumption in China is predicted to rise by one million bales, with imports accounting for half this increase. According to a report published by The News International (www.jang-group.com), consumption in these two countries is set to increase further and widen the gap between supply and demand. Some analysts believe that this will impact upon prices in both the local and international markets, though others believe that local prices could remain largely unaffected.

How to collect outstanding payments

In an ideal world, every business would be paid on time. The reality is, however, often different and many companies routinely face the sensitive issue of chasing outstanding accounts. A report published by Forbes (www.forbes.com) claims that companies should follow set procedures when the situation arises. Often payments will be late for a genuine reason and an initial approach by letter can act as a gentle reminder. If this doesn’t bring results, then telephone contact should be the next step. At this stage, it may be necessary to formally agree a payment plan with the customer, with penalties for defaulting on future installments. Unfortunately, however, even these tried and trusted methods can’t guarantee a result and it may subsequently become necessary to call in a lawyer or debt recovery service. The report indicates that any such decision should be taken sooner rather than later, not least because a collection agency’s fees are usually higher for older debts. Some companies offer a discount on outstanding payments but many analysts point out that this rewards bad behavior. Of course, later problems might be avoided if a company sets out a clear credit policy at the outset, while shrewd organizations will vet prospective customers before doing any business with them in the first place.