To Buy the Competitor or Not to Buy

Although the state of the economy is still uncertain, this should not affect whether a company should pursue acquisition of a competitor, if that is its intent. Rather, one should be somewhat more prudent and disciplined in how one evaluates the potential purchase.

During these recent difficult times, the markets have naturally focused their attention on companies in distress. This should not translate into a belief that the entire business sector is in ruins. However, as the competition may be in dire straits due to the present financial crisis should not be a reason to abandon ideas of purchasing that company. Careful assessment of the competitor is crucial. Seek to understand why that company is losing money. Will your investment merely save a struggling enterprise that was on its way to closure anyway or are there other factors at play that will make this a worthwhile purchase?

It is important to dissect the company and understand how it works. Were there management problems? Did the company mismanage its relationships with its customers and suppliers? Were the employees mistreated and, therefore, did they not perform well? Is the machinery sub-standard, thus affecting the product? Examining the company with a fine-toothed comb will allow you to make an effective decision as to whether this company can merge with yours. Similarly, it is important to do a proper evaluation of your own company. Are you in a position to absorb this company? Do you have the management capabilities for this merge? Will your staff cope with the additional production and sales? Will you need capital to overhaul machinery? Similarly, examine your goals. Perhaps you are only interested in expanding your customer base. In that case, go directly to the competitor's customers, rather than affecting a buyout.

Research is your best business ally.

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Cyber-Shopping Anyone?

In a country that is so highly attached to Internet access and the latest high-tech gadgetry, Canadians are slow to adopt the trend of cyber-shopping – shopping online. Online sales have certainly been growing at a steady pace - a 61% rise in three years – but they still lag behind online sales in the United States.

Analysts attribute Canadian reluctance to become cyber-shoppers to several factors. High shipping costs in Canada have caused a large number of shoppers to abandon their online purchase before completing the transaction. Additionally, when it comes to security, Canadians are far more sensitive than most other nations around the world. Simply put, many Canadians have an abiding fear of credit card fraud and are skeptical about revealing their credit card details online.

On the other hand, the rise of specialty brands online is winning over Canadian reluctance. The allure of securing hard-to-get brands or one-of-a-kind items has been a boon for many online retailers.

Some of the nation's larger retail outlets use their websites primarily for marketing and rely upon their sites to attract buyers to their stores. This has allowed a market to open up for smaller retailers whose "primary store" is located on the Internet.

Consumers still expect top service wherever they buy. For online stores, this translates into speedy and affordable delivery as well as reliable customer service. Moreover, online stores must market their sites in a variety of ways if they are to be noticed.

The variables of the economy affect the online stores as much as traditional shopping outlets. When consumers are in a spending mood, they are more likely to shop for items online that may be frivolous or unnecessary. However, when belt tightening begins, online retailers have to rapidly shift their focus to marketing items that are more affordable.

With annual sales in excess of $15 billion, and growing, cyber-sales seem to have carved out a niche with the Canadian consumer.

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Visa to the U.S.

Gone are the days when a Canadian family would hop in the car and drive down for a day to the closest city in the U.S. to do a little shopping. But the desire to purchase certain goods in the U.S. still exists. Now, in the world of eCommerce, a British company has made shopping in the U.S. available to Canadians while staying at home.

Borderlinx, headquartered in the U.K. with additional offices in Brussels, was established by experts in eCommerce, logistics management and international trade. The company enables U.S. retailers to sell their products to a global marketplace by providing innovative eCommerce management solutions. Similarly, consumers globally are provided access to the best quality products at the best possible prices.

Canadian Visa credit card holders are now able to purchase goods online from American retailers with relative ease. Through Borderlinx, Canadian shoppers are provided with a U.S. address and shipping services. This makes previously hard to access stores as simple as shopping from the store around the corner. Studies conducted by Visa revealed that 37% of Canadian online shoppers prefer shopping from U.S. stores due to the variety of products available. The Borderlinx service simplifies the shopping procedures and provides an on-screen calculator that allows shoppers to know exactly what will be the final price of their purchase. Additionally, shoppers through this service have the option of consolidating their purchases from several U.S. stores into one shipment, thus reducing shipping prices.

Canada is the first country to utilize this shopping agreement with Visa although other countries are expected to join later this year.

In the current economic climate, when consumers are careful how they spend their money, this new service affords shoppers an excellent way to make informed shopping decisions.

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Introducing CanNor, Canadian Northern Development Agency

Following promises made in last fall's election campaign and, more recently, in last November's throne speech, Canadian Prime Minister Stephen Harper revealed that the headquarters for the new Canadian Northern Development Agency (CanNor) will be built in Iqaluit, capital of Nunavut.

The Prime Minister's announcement was made during a recent tour of the North, his third tour of the region this summer. CanNor will deliver funding for economic development, advocacy, and research. The newly established agency will receive $50 million in federal funds over the next five years.

The decision to locate the new agency's headquarters in Iqaluit has been met opposition from several senior government officials, stating difficulties finding enough housing and staff. Mr. Harper responded that challenges such as these are exactly the reason for establishing an economic development agency and, therefore, the government must place the agency directly where the challenges are the greatest.

CanNor will also have satellite offices located in Whitehorse and Yellowknife, as the agency is designed to work cooperatively with all the Northern territories. The new agency will take over some existing federal programs and will develop new programs adapted to the territories' realities.

As several other nations have their sights on the resource-rich northern territories, the Harper government is determined to concretize Canadian sovereignty over the region. Establishment of this stand-alone regional economic development agency will allow the Federal government to work with the region to help it reach its full potential, both human and economic.

The Premiers of both the Yukon and Northwest territories welcomed Mr. Harper's announcement but added that additional key economic developments are crucial to their respective territories in order to strengthen the entire Arctic region.
 
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Promoting Your Business on Social Networks

"The times they are a changin". Bob Dylan wrote these words nearly 45 years ago. He must have been predicting the future.
It used to be quite common that people assembled at social events and exchanged ideas, recipes, political viewpoints, and suggestions on where to shop for the best value. The 21st century has not replaced the traditional social gathering. However, it has augmented that with the modern and very powerful equivalent – the social media network.

Marketing studies have shown that recommendations from friends and family have the greatest influence on what people purchase. As millions have become attached to various social networking sites that connect people with similar interests worldwide, the circle of influence grows much larger.

While most social media sites are not designed as shopping venues, marketing specialists know that exposure on these sites can be extremely valuable. A prime example is Facebook. Facebook has more than 200 million subscribers worldwide. Members enter their profile on the site. Generally, this includes your demographics, preferences and, often, your occupation. Marketing pros at a company will post an attractive profile for their product or service. As soon as a Facebook member visits that company's profile, they are identified as a potential customer. Most Facebook members openly display their friends' networks. This enables the same company to view this circle of friends also as potential customers. Moreover, as the company can obtain a substantial amount of personal information about its online customers, this information can be extremely helpful in future marketing strategies and product development.
Businesses have discovered that social networks afford exposure to their companies that otherwise might not occur. However, it is wise to keep in mind that these are social networks and acceptance of a commercial presence will require imaginative marketing, rather than mere technical placement of corporate material.
 
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Breaking the Arctic Ice

Canadian Prime Minister Stephen Harper has been investing time, money, and energy to assert Canadian sovereignty over Arctic territories that are sparsely populated yet richly endowed in natural resources.

The Prime Minister recently visited the community of Iqaluit, the capital of Nunavut. Nunavut's population is thinly spread over a territory equal in size to both Alaska and Texas combined. Poverty and suicide are quite rampant in these northern communities, as are serious problems of substance abuse. Unfortunately, there are limited resources available for treatment centres. This issue was one of several discussed with the Prime Minister on his visit.

Canada is not the only nation looking towards these northern regions. The area is rich in natural resources, including huge oil deposits. The U.S. Geological Service estimates that the Arctic regions contain enough oil to supply global demand for three years. Global warming has contributed to an erosion of sea ice thus making passage to the Arctic via the Northwest Passage easier. Canada claims that the Northwest Passage is sovereign Canadian territory while the U.S. claims that it is an international waterway. Joining the U.S. claim are other countries with eyes trained on the Arctic and its treasure trove of natural resources. Russia and Denmark have been heard to lay sovereignty claims to areas in the Arctic in recent years.

Prime Minister Harper's move to enhance the communities of the Arctic is intended to spur economic and social growth, thus creating a contiguous territory. His government intends to relinquish much regional economic planning to local regional councils. Nunavut Premier Eva Aariak has called on Ottawa to give the Arctic region more control over its offshore energy resources as well as its derived benefits.

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Is a Second Round of the Recession on the Horizon?

Speculation has been growing in some economic circles that a "double-dip" recession – a second wave – is a distinct possibility. Some investors and economists fear that the government stimulus programs in various countries have managed to stabilize economies but have failed to jump start any long term growth.

Countries like Japan, Germany, and France have recently posted positive growth figures for the second quarter. However, world stock markets have remained fairly volatile.

The growing fear is that growth generated by the trillion of government stimulus dollars is only temporary and will cease as soon as the governments cease funding the various programs, most probably within the coming year. Thus, the term "double-dip" has come into use.

In order to truly declare an end to the recession, countries should be experiencing substantial sustained growth in consecutive quarters. This has failed to materialize yet in any significant fashion. Certainly, there is reason to be optimistic but consumers have yet to display a return to a strong buying mentality. Many are still in a savings mode, particularly in the United States. Even though interest rates are at an historic low in the U.S., many consumers fear taking on any more debt. Canadians are faring better than their neighbours in the U.S., but they, too, are still leery about the economy, as unemployment is still rampant in the nation, especially in the manufacturing sectors.

Economists hope that governments will not make the mistake of ending the stimulus packages too early. A good beginning can lead to a stable financial future if the elements of recovery are managed properly and timely.

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Is Deflation Good for Business?

Energy prices have truly influenced the global economy over the last couple of years. As gasoline prices have moved down in 2009, one result, in June 2009, was a negative annual inflation rate in Canada. This was the first time this has occurred since November 1994. Similarly, the country's Consumer Price Index (CPI) is expected to be down, marking a decline for the second consecutive year. Overall, though, core inflation is expected to remain fairly stable and close out the year at or near two per cent, as predicted by the Bank of Canada.

Analysts predict that this period of deflation is merely transitory and will likely be take in stride by markets. The Bank of Canada is expected to maintain its promise to keep interest rates at a floor of 0.25 per cent until next year, assuming that inflation remains stable.

As the deflation is attributed to the movement in gasoline prices, the effects are not considered to be ominous. The Bank of Canada had predicted that there would be a period of falling prices, but also predicted that the effects would taper off towards the end of the third quarter of 2009.

When the rather volatile gasoline prices are removed from the inflation index, the country's economic factors are fairly stable. During the recession, some economists described to the core inflation rate as "sticky." Despite the weakening of the economy, the Canadian dollar was fairly strong and food prices were slow to come down. Thus, the core inflation rate did not vary much. As food costs begin to drift down in the coming months, they are expected to bring down the core inflation rate.

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How to Reduce Your Business Costs

Desperate times call for desperate measures.

This old adage has become the modern modus operandi for many companies. As many companies have had their operating budgets reduced, the time has come to re-think how to operate a business. Specifically, is it possible to continue serving one's customer base on a reduced budget?

The answer is a resounding yes. The key to successful continuation of one's business operations requires re-featuring, not actual cost cutting. Understanding what the customer really wants and what can be done without is the best way to re-feature. This will allow the business owner to provide the goods or service while lowering costs at the same time.

A careful evaluation of one's business is crucial. Take the time to carefully evaluate which areas of the business should be highlighted, owing to their profitability, and which areas should be downplayed, as they truly don't matter as much to the customer. By reducing or removing non-essential services, improved pricing can be offered to the customer, thus strengthening customer loyalty.

It may be time to evaluate your raw materials. Is it possible to change to less expensive raw materials without compromising quality? Similarly, while few people want to dismiss staff, is your staff being utilized to the optimum? Some services can easily be offered to the public via internet services, thus freeing your human staff for tasks that computers cannot perform.

Rarely is cost cutting an enjoyable task. However, by figuring out the best and most innovative ways to improve your productivity and profitability of existing services, products, and processes, cost cutting is an inevitable positive by-product.

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Negative Reviews about your Business are Positive

It may sound illogical and absurd but analysts and businesses alike have found that inviting negative criticism can be used to your advantage.

While negative criticism of a service or product is hardly a novel concept, providing a forum for, and encouraging, this type of feedback has only recently come into vogue. Online businesses, which have highly accessible conduits of information, have learned that negative reviews by customers need not be damaging. In most instances, the customer has a legitimate concern. Listening and responding to the customer may be in the best interest of the business. For example, a customer who has used a product may be able to suggest a subtle improvement that will seriously enhance the product. If several customers make the same or similar suggestion, the prudent business owner may be wise to employ this suggestion. Similarly, the average consumer is aware that opinions are as different as people. However, being able to express that opinion, and knowing that it is being listened to, is extremely important.

While many websites print customer reviews, the savvy buyer knows that only glowing reviews of a product or service are hardly unlikely. Studies have shown that less than 25 per cent of only shoppers will not consider shopping on a site that contains some negative reviews. On the other hand, similar studies have shown that customers are most likely to shift their loyalty to sites that have responded to complaints or criticism, offering either compensation or replacement. The finest product has no value without purchasing customers. Listening and responding to customers is an ideal way to secure their loyalty. Another study recently concluded that customers want to know if a product has any weaknesses. It helps set realistic expectations of a product. In an imperfect world, we all learn to cope with reality. Online shopping is a major part of our world and business owners should not forget that real people are shopping in their virtual stores.

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