Managing Growth

managing

GROWTH Nov/dec 2007

€8/£5

Fast Track Technology 500 EMEA

Technology Fast500 EMEA 2007

Inward Investment Report Malta, Bulgaria & Hungary

E-procurement

Avoiding the pitfalls - a checklist for the back office

MBAs

Business School Rankings

plus e-commerce • air charter • videoconferencing • rfid

Editor’s letter

Contact us | editorial@managingrowth.com | Nov/Dec 2007

Malta

© William Attard Mccarthy | Dreamstime.com

page 43

Editor Charles Vandeleur editorial@managingrowth.com Print Design & Production Phillip Wentworth design@gamutplanet.net

COVER © Photo: Loke Yek Mang | Dreamstime.com

All rights reserved. All material in Managing Growth is wholly copyrighted and reproduction without the written permission of the publisher is strictly forbidden. The views expressed in this publication are entirely those of the authors and do not necessarily represent those of Raellen Communications Ltd. The information in this publication is carefully researched and produced in good faith, however, neither the publisher nor the editors accept responsibility for any errors.

W

elcome to this issue of Managing Growth. We are now living in a global business market where we can buy and sell around

the world with a speed that merchant adventur-

Website Design & Hosting www.d2media.co.uk

ers of the past could only dream of. Whereas

Advertising Sales Guy Bonnaire James Stone Colin Gilmore-Smith Email: sales@managingrowth.com

Columbus and Cook risked their capital, ships

Finance Director Andrew Lidstone

navigate the treacherous waters of modern busi-

Special thanks to our contributors & media partners Deloitte Equis Euro Info Centres WAIPA International Chambers of Commerce Published by Raellen Communications Ltd 145-157 St John Street, London EC1V 4PY Tel: +44 207 639 3311 Email: editorial@managingrowth.com Web: www.managingrowth.com

and lives to take trade to the ends of the earth, today’s entrepreneurs face similar dangers as they ness. From concept and start up, to fast-growing enterprise, to global mid-sized companies and beyond, the present-day captains of commerce need modern instruments to successfully chart the new boundaries of trade. Managing Growth seeks to provide these tools.

Charles Vandeleur Editor

managinggrowth | 3

Contents

Contact us | editorial@managingrowth.com | Nov/Dec 2007

49 Hungary

cover story

12 Deloitte’s Fast Track 500 Awards news

Eastern Gateway to the EU

8 Growth Finance News info technology & communication

16 E-Commerce - accepting online payments by Caroline Angas

23 E-Procurement - avoiding the pitfalls - a checklist for the back office by Christiaan van der Valk

26 Information Technology - global management of ICT and the internet by Guy Sebban

46 Smart City - the success of the Dubai Internet City comes to Malta in 2008

by Baiju Francis

52 Videoconferencing - how to increase productivity and help to save the planet

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65 RFID - protecting the consumer and defending the brand with product-tracking strategies by Simon King banking & finance

14 Europe Arab Bank - building financial bridges by Phillip Monks CEO EAB plc

62 Factoring Growth - the continued growth of this important finance tool by Erik Timmermanns

71

68 Credit Management - delivering the cash and more besides by Philip King

30

46

education 56 Entrepreneurial Education - entrepreneurs are made, not born

by Caroline Jenner

58 MBAs - business school rankings - content and context by Kai Peters inward investment

34 Inward Investment Report - next on the global investment scene - enter the SME

by Kai Hammerich

38 Bulgaria - one of the EU’s newest members by Ivan Iliev

43 Malta - booming with business opportunities by Nadine Castillo

49 Hungary - the eastern gateway to the EU

by Monika Madarasz

23

34 Inward Investment Report next on the global investment scene enter the SME

general interest

20 Business Support - the EIC network - plugging small firms into the single market

by Simon Blackley

30 Air Charter - private jets - giving you the ultimate edge and control by David Saville

73 Business Fun - a wry look at business 74 Editor’s Choice - each issue we unearth luxury places to stay and do business - this issue we visit Malta’s Excelsior Grand Hotel.

managinggrowth | 7

growthfinance news Business leaders review the economic future of Europe The Deloitte Global Forum, hosted for the first time in Europe, brought together Spain’s former prime minister and Deloitte’s new CEO Business leaders gathered at the Deloitte Global Forum in Rome to address the economic challenges in Europe and related corporate governance and talent management issues—two essential ingredients to protect and create shareholder value for European and global companies, and for sustainable business and economic development.

José María Aznar, the former prime minister of Spain, who was the guest speaker at the Deloitte Global Forum shared his thoughts on the development of Europe.

According to Mr. Aznar, “Europe as a whole is now growing at practically half the rate of growth of the world economy. It is disappointing that Europe is only able to expand at the same rate as the US economy.

The current European rate of growth is not especially high, therefore economic reforms in Europe are necessary. Europe’s leaders must, first of all, re-launch the Lisbon Agenda and approve an action plan based on reform and liberalization measures, and ensure a successful conclusion to the Doha Round. In my opinion, Europe should work to create an Atlantic Area of Prosperity, one that is also open to the rest of the world.”

The Forum, which brought together 120 business leaders, is part of a series of knowledge-sharing events organized around the world by Deloitte Touche Tohmatsu, to address critical business issues.

James H. Quigley, the new CEO of Deloitte Touche Tohmatsu, who made his first public

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speech at the Deloitte Global Forum after beginning his tenure this week, said, “In order to sustain economic development there must be trust in the capital markets systems.

Current corporate governance models, regardless of where they are in the world, were developed to generate such trust, and companies that embrace good governance will have a competitive advantage and be sustainable in the long term.”

Mr. Quigley continued, “Corporate governance is more important today than ever because there are higher expectations, and increased scrutiny from investors, regulators and other capital market players. Good governance protects value and mitigates risk, which is important in an ever changing business environment.”

Libero Milone, chairman of Deloitte Italy, who hosted the Forum, added that Italian companies have successfully started their journey toward internationalization and meeting the highest standards of corporate governance.

Another topic discussed at the Forum was talent management. It is fast becoming a top priority for many businesses around the world, as they address how the challenge will impact their performance in the long term.

European Investment Bank loans in Bulgaria After fifteen years of financing projects supporting Bulgaria’s convergence with the European Union, the European Investment Bank’s lending operations now cover all of the country’s key economic sectors, ranging from basic infrastructure to manufacturing and services, including support for small and medium-sized companies as well as municipalities through local financial institutions.

Since 1990, the EIB’s lending in Bulgaria has totalled around EUR 1.24 billion for financing investment projects in connection with meeting the EU accession criteria.

Turkey: EUR 300 million to support SME investments The European Investment Bank (EIB) is lending EUR 300 million in the form of a dedicated group facility to four state-supported intermediary financial institutions to improve the access of small and medium-sized companies in Turkey to long-term finance.

The EIB funds will support small and medium-scale projects usually promoted by SMEs in the fields of manufacturing and services, including tourism. The loan will serve to further develop the SME sector in line with the strong growth of the Turkish economy and help to meet the growing demand from the private sector for the financing of productive investments.

To these ends the EIB has joined forces with Türkiye Sinai Kalkınma Bankası (“TSKB”), Türkiye Vakıflar Bankası (“Vakıfbank”), Türkiye Kalkınma Bankası (“TKB”) and Türkiye Halk Bankası (“Halkbank”). These banks are the most active Turkish partners for EIB intermediated loans and all have a successful track record in channelling EIB financing to SMEs in Turkey. They have a profound knowledge of the Turkish market and a well developed network of branches in the country with small and medium-sized entrepreneurs as their customers.

EIB loans to partner banks have been developed as a successful tool for providing long-term funding for co-financing smaller projects with total costs from EUR 40 000 to EUR 25 million up to 50% of their total costs. They constitute credit lines to financial intermediaries that on-lend EIB funds under their own management, at their own risk and on their own term.

EIF and the Hellenic Republic sign the first Funding Agreement in Europe under the JEREMIE initiative The Chief Executive of European Investment Fund (EIF), Mr. Francis Carpenter and the Ministry of Economy and Finance of the Hellenic Republic, represented by Mr. Folias, Vice Minister, have today signed the first Funding Agreement (FA) to be agreed under the JEREMIE initiative.

This follows the signature of a Memorandum of Understanding between EIF and the Hellenic Republic for the general framework and implementation of JEREMIE, signed in October 2006, to improve the access to finance for Small and Medium-sized enterprises (SMEs) in Greece, in the context of the EU structural funds for the period 2007 – 2013.

EIF will act as Holding Fund to implement the JEREMIE initiative in Greece. The initial mandate amounts to EUR 100 million for the period 2007-2013.

EIF will set up a JEREMIE representation in Athens.

EIF’s Chief Executive, Francis Carpenter, said: “With this very important agreement, the Hellenic Republic takes up a pioneering role, showing its readiness to promote and adopt a sophisticated and efficient financial engineering approach. We look forward to a dynamic and fruitful cooperation in the framework of the JEREMIE initiative.”

Background information JEREMIE - Joint European Resources for Micro to Medium Enterprises – is a joint initiative launched by the European Commission, the European Investment Bank (EIB) and EIF to improve access to finance for SMEs in Europe in the framework of the 2007 - 2013 Cohesion policy. It enables the EU Member States and regions to set-up holding

funds in order to support SMEs, start-ups and micro-enterprises in a flexible way and with a long term approach. Holding funds will provide financial intermediaries with a wide range of financial instruments like equity, venture capital, guarantees and micro-loans together with potential leverage of EIB loans. Sustainable, tailor-made and revolving financial instruments, aiming to develop and foster the role of entrepreneurship within the EU support are key elements of the Lisbon agenda and help the structural funding to deliver greater benefits to the market.

About EIF As the only European Union body with a specialised focus on SME financing, EIF has an essential role to play in pursuing core EU objectives such as innovation, regional development, research and development, entrepreneurship, growth, and job creation.

EIF’s activity is centred upon two areas, Venture Capital (VC) and Guarantees: • EIF is a Fund-of-Funds investing in venture, notably in early-stage high-tech funds that support SMEs, • EIF provides Guarantees to banks and guarantee schemes for SMEs. With over EUR 4.3bn invested in about 260 funds and over EUR 11.4bn in guarantees, EIF is a major player in improving access to finance for European SMEs. With a focus on high-tech and early-stage investments, EIF is a major investor in both core and emerging European venture markets while EIF’s guarantee activity has provided indirect support to over 670,000 SMEs since 1994 – of which some 180,000 in 2006 – with a significant role in microfinance.

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growthfinance news EIF welcomes a second RZB Group shareholder: Raiffeisen International European Investment Fund (EIF) has brought its number of shareholders to 30 with Raiffeisen International becoming its fourth Austrian shareholder. Raiffeisen International has purchased two shares in EIF through a sale of shares by the European Investment Bank, bringing the total RZB Group shareholding to five shares. Raiffeisen Zentralbank Österreich AG (RZB) holds three EIF shares in its own right.

Raiffeisen International acts as RZB Group’s steering unit for its banking and leasing subsidiaries in Central and Eastern Europe (CEE). It services both retail and corporate clients, with a particular focus on local business communities in contrast to its chief competitors which often target only international corporations.

EIF is a member of the EIB Group (EIB currently holds 66% of EIF’s equity) and works in close cooperation with the European Commission (which holds 25% of EIF equity; due to increase progressively to 30%) and, currently, 31 banks and financial institutions which hold the remaining 9%. EIF’s authorised capital amounts to EUR 3 billion while own funds amount to some EUR 950m as a result of EIF’s recent 50% increase in capital.

Mr Herbert Stepic, CEO of Raiffeisen International, commented: “In becoming an EIF shareholder, we hope to build on the strong relationship which exists between EIF and RZB Group, while we see significant scope for cooperation in our key business areas. This should be seen as a positive development for SMEs across Central and Eastern Europe as EIF and Raiffeisen International work well together to enhance their ability to access finance”.

Mr Francis Carpenter, EIF’s Chief Executive, added: “EIF is delighted to see Raiffeisen International becoming a shareholder, adding a truly

10 | managinggrowth

international dimension to the participation of RZB Group. This is particularly salient in light of EIF’s stated goal of reinforcing and expanding its SME support activities in Central and Eastern Europe, Raiffeisen International’s core theatre of operations.”

About Raiffeisen International Raiffeisen International operates one of the largest banking networks in Central and Eastern Europe.

A total of 18 markets of Europe’s growth region are covered by subsidiary banks, finance leasing companies, two representative offices and a number of other financial service providers. The company serves about 12.7 million customers through more than 2,950 business outlets. Its network banks are among the top three banks in eight markets, being market leaders in Albania and Serbia. Raiffeisen International is the leading Western-owned banking group in the CIS. Raiffeisen International is a fully consolidated subsidiary of Raiffeisen Zentralbank Österreich AG (RZB).

About EIF EIF, the risk capital arm of the EIB focuses on venture capital and SME guarantees and has AAA/ Aaa/AAA ratings from Standard & Poor’s, Moody’s and Fitch respectively. With investments in 265 funds, and commitments in excess of EUR 4.2bn in venture and equity and EUR 11.1bn in guarantees, EIF is a major player in supporting access to finance for SMEs in Europe. EIF supports small and medium sized businesses in European Member States and Candidate countries while ensuring an appropriate return for EIF shareholders.

About EIB Group activity in Austria In Austria itself, EIB’s annual lending has averaged more than EUR 1bn over the last 5 years, reaching some EUR 1355m in 2006, of which 1070m accounted for individual loans covering a range of infrastructure projects with the remainder accounting for credit lines extended to support the financing of SMEs. EIB also has significant activities across the CEE region in which Raiffeisen International operates. Apart from RZB Group, two further Austria Banks – Bank Austria Creditanstalt and Erste Bank – are EIF shareholders holding three shares each.

EIF has venture capital exposure to the Austrian SME market for some EUR 70m with an exposure of some EUR 350m in guarantees.

Europe Arab Bank completes €20 million re-financing deal for Amanresorts Le Mélézin.

Molinaro Koger Capital Markets has arranged a €20 million re-financing for Amanresorts Le Mélézin, a luxury ski hotel in Courchevel 1850 in the French Alps, on behalf of the resort’s existing owner Canyon Equity. Funding was provided

by Europe Arab Bank plc (EAB), who successfully bid against Bear Stearns for the business.

“Le Mélézin benefits from the finest facilities, an excellent location and a strong historical financial performance. It is rated as the “premier” 5*hotel in Courchevel 1850 ski village and we are delighted to be associated with the brand,” said Rod Taylor, EAB’s Head of Hospitality and Tourism.

Croatia: EUR 40 million for projects of SMEs and municipalities

FEMIP invests in innovative small and medium-sized enterprises in Lebanon Creation of a risk capital fund, the building block equity fund FEMIP (Facility for Euro-Mediterranean Investment and Partnership), the European Investment Bank’s facility focusing on the Euro-Mediterranean area, is investing EUR 5 million from the European Union’s budget in a new investment company, the Building Block Equity Fund. This Luxembourg-registered Beirutbased Fund will make equity investments in innovative small and medium-sized enterprises (SMEs) in Lebanon. The signing ceremony took place today in Beirut in the presence of, among others, EIB Vice-President Mr Philippe de Fontaine Vive, Pascal Pierra, representing Averroès Finance, and Etienne Viard, representing PROPARCO (AFD group).

The driving force behind this Fund is the Lebanese organisation Bader, whose goal since May 2006 has been to promote business start-ups and an entrepreneurial culture in Lebanon. The EIB was the first European institutional investor to participate in this operation, thus sending out a signal of confidence in Lebanon’s economic prospects and acting as a catalyst for other local and international investors.

This investment forms part of the strategy of FEMIP, which aims to stimulate the private sector in the Mediterranean partner countries. Priority is given to supporting local SMEs, particularly through the use of tailored financial products – in this case private equity, a relatively recent phenomenon in Lebanon which is not widely available.

The Fund’s capital is USD 17 million (EUR 12.3 million). The EIB, with 22.5% of the shares, and Averroès Finance, with 24.2%, are the two main shareholders.

The remainder of the capital has been subscribed by a number of members of Bader and eight Lebanese banks – BLOM, Banque Libano Française, Fransa Bank, Bank Audi, Bank Med, Lebanese Canadian Bank, Crédit Libanais and BBAC Bank – who have joined in this initiative to encourage and develop investment activity for the benefit of the Lebanese economy.

The European Investment Bank (EIB) is lending EUR 40 million to Hrvatska Banka za Obnovu I Razvitak (HBOR – the Croatian Reconstruction and Development Bank) to finance indirectly the smaller projects of Croatian SMEs and municipalities in the areas of environmental protection, energy saving, infrastructure, industry and services, including tourism.

The EIB is joining forces with HBOR, a State bank with a profound knowledge of the Croatian market and a well developed network of branches in the country. In addition, SMEs, regional and municipal authorities, to whom the loan is directed, are customers of HBOR and will profit from the improved access to long-term finance provided by the loan.

The current EIB loan is a continuation of the successful cooperation between the EIB and HBOR. The first loan of EUR 10 million signed in 2001 has been fully disbursed in favour of six SME projects.

EIB intermediated loans finance small and mediumsized projects with a total investment cost of normally less than EUR 25 million. These are usually promoted by small and medium-sized companies and smaller municipalities. Intermediated loans are arranged with an EIB partner bank operating in the individual countries. The intermediary banks on-lend the EIB funds to final beneficiaries at their own risk, assessing each project individually. Promoters of small to medium-scale projects must contact the EIB partner banks directly.

Background: The European Investment Bank’s lending operations in Croatia support projects designed to help the country to meet EU accession criteria and integrate rapidly into the Union. Since 2001, EIB lending in Croatia, including the present loan, has reached EUR 1.3 billion. In total, the EIB has provided about EUR 116 million to five EIB partner banks for financing the smaller projects of SMEs and municipalities in Croatia.

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cover story

What is the

Deloitte Techno

W

hat is the Deloitte Technology Fast 500?

The Deloitte Technology Fast 500 EMEA is one of Europe’s most objective rankings for the technology, media and telecommunications industries. It was created to recognize the effort and dedication of those 500 fastest-growing technology companies in Europe, the Middle East and Africa (EMEA) and includes all areas of technology: from Internet to biotechnology; from medical and scientific to computers. It includes both public and private companies.

Why did Deloitte establish a Technology Fast 500?

The original program, the Deloitte Technology Fast 500 North America, was founded in 1995. The technology market in EMEA also is significant - in terms of size and growth - so, in 2001, Deloitte expanded the programme to Europe. The ranking of established and emerging high-growth companies in the region is a tribute to those that continue to thrive - even during times of economic slowdown. While the stock market may be more volatile and investors more cautious, it is companies such as these that will be key forces behind economic growth in Europe for years to come.

Furthermore, since award winners likely will continue to grow at a rapid pace and be the source of future technological advances, this Deloitte program recognizes, rewards and raises the profile of the fastest-growing firms - not only in EMEA, but within a global context where technology chief executives operate.

How can a company apply for the Deloitte Technology Fast 500 and how are the winners determined?

To qualify for the ranking, firms must be involved in proprietary technology that contributes significantly to their operating revenues, manufacture a technology product or be deeply involved in technology research and development.

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The firm must also have: • Been in business at least five consecutive years.

• Had operating revenues of at least 50,000 euros in the first year of calculation and a minimum of 800,000 euros in the fifth year used for calculating the growth.

• Have its headquarters in Europe, the Middle East or Africa or have its shares listed on a European stock exchange.

Entrants may be either public or private. However, private companies must provide a nomination form that contains financial information, as well as supporting documentation, such as audited financial statements.

How does Deloitte determine the winners?

The Deloitte Technology Fast 500 EMEA winners are based on fiveyear average percentage growth for each technology company. For example, for the 2007 ranking, companies are ranked on percentage of revenue growth between 2002 and 2006 . The 500 that meet the strict definition of “technology companies with the fastest-growth over five years” make the list.

What are the benefits from participating in the Deloitte Technology Fast 500?

A position in the Deloitte Technology Fast 500 EMEA ranking helps companies to create awareness, build credibility, attract business partners and increase employee pride. It also generates immense media coverage. Additional value comes from the fact that the program is one of only a few that focuses on pure technology, media and telecommunications industry segments.

Deloitte Technology Fast 500 EMEA winners are part of an elite global group, with the potential to network and create a community of companies that, in turn, can promote a platform of best practices.

ology Fast 500?

Which countries and industries have the best track record amongst the Fast 500 since its inception?

Looking at the results, excluding this years which have still be be announced, companies in Western Europe have always had the biggest representation in the ranking, and as you may have expected software companies have been always been the largest grouping of ranked companies.

Is the future for technology companies in EMEA a bright one, and where can improvements be made?

The future continues to look good in EMEA with companies showing some fantastic growth rates over the last five years. The ability to find high quality personnel is a pivotal issue for the future of European companies. Given the strategic importance of talent, EMEA CEO’s prescribe “training and education” as the best way to stimulate growth in the tech sectors. Improvements can always be made in R&D processes, Intellectual property management and business strategy.

Based upon your experience, which factors contribute the most to a successful fast growth enterprise sustaining this growth?

The Deloitte CEO survey indicates that there are one significant factor which has helped companies grow. It is “Organic growth based on new products and technologies” and it is cited as the biggest factor for growth; however the ability of companies to develop and enhance their products to meet changing client requirements’ is fundamental to their long term success.

Do you feel that Europe is moving towards a healthier business environment for fast growth enterprises with regards to cross border trade and expansion and are these fast growth enterprises taking full advantage of this?

The majority of firms in our CEO survey of fast growing technology firms year on year have indicated that Europe, Middle East and Africa represents the best opportunity for significant growth over the next 5 years. This would tend to indicate that most believe themselves to be in a position to make the most of the European customer base.

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© Photo: Youssouf Cader | Dreamstime.com

cover story

e-commerce

16 | managinggrowth Š Photo: Mayangsari | Dreamstime.com

e-commerce

Accepting

online payments Any business that fails to optimise use of the internet puts itself at a competitive disadvantage, so accepting orders and payment on-line is vital. There are a number of options available and choice is largely dictated by anticipated volumes.

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or low volumes using E-Bay and associated Pay-Pal systems to receive payment is a good choice. There are tax considerations to take into account but this offers a low cost mechanism without having to pay for web site or payment software. Alternatively wire transfer, e.g. Western Union or direct transfer between bank accounts using internet banking technology can be used.

In these instances the web site acts as a brochure to display goods, services and prices with electronic payments made outside of the web environment.

If the business already processes debit and credit card payments face to face, and on-line transactions are likely to be low, then consider accepting payment by telephone or e-mail using existing equipment. If it is expected that a reasonably high number of straight forward on-line transactions will take place then applying for an internet merchant account from their existing bank is possible. This involves asking for an additional Internet merchant account ID for use exclusively with Internet transactions. This process is normally quick, since the bank already holds much of the information required. Payments can be expected into the bank account three to four days after the transaction takes place on line.

Full e-commerce, however, can create major changes necessitating a review of, for example, order placement since the customer will not be able to talk face to face. Thought will also have to be given to order confirmation, invoicing and payment, and deliveries and returns. The web site itself must attract customers, make products easy to find,

provide clear pricing and delivery information and enable straight forward check out and payment.

The legal requirements of The Data Protection Act 1998,The Consumer Protection (Distance Selling) Regulations 2000 and The Electronic Commerce Regulations 2002 must also be met.

If there is no existing facility to accept cards and the business want to take payments

Because the card holder is not physically in front of the seller, the chances of fraud are increased, so tightly defined rules have to be followed. on-line it is necessary to set up an Internet merchant account with either a bank or other processor (merchant acquirers or acquiring banks).

The application involves providing a lot of information to the bank. This includes a business plan including a cash flow and how online activities will be promoted, an estimate of average online transaction values, estimated turnover from online sales and number of card transactions as well as operational and business performance information.

Alternatively, if it is not anticipated that the level of transactions will be high, then the services of a payment-processing company could be considered. This is especially attractive if the business has not been trading very long so has no track record.

Some advantages of a payment processing company over a bank are a lower level of administration and that secure payment systems are included as part of the package.

Disadvantages are that anyone making payment on the site can see that the payment is not going directly to the business plus it can be up to sixty days before payment is received into the bank account.

Because the card holder is not physically in front of the seller (hence these are known as “card not present” or CNP transactions) the chances of fraud are increased so tightly defined rules have to be followed.

Businesses should be aware that a CNP transaction, even once authorised by the cardholder’s bank, doesn’t guarantee payment if the transaction is fraudulent and money can be reclaimed from the bank account.

If the business is small then they could consider joining one of the On Line Shopping Malls provided by many Internet service providers (ISPs), some specialist companies, and trade associations. This can be a quick and easy way of getting on-line facilities with a level of support provided to get things working.

However, the down side is that it is more expensive than the other options and often the web site needs to be in a fixed format for the mall. There can also be a long delay in receipt of funds.

More detailed information on all these topics is freely downloadable from the Business Link London web site. www.bllondon.co.uk

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e-commerce

multicards more shoppers online than ever before E-commerce sales have increased significantly as consumers continue to shop online

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ata from comScore Networks showed that in 2006 consumers spent more online than ever before. A late holiday push sent the overall spending for the year to $102.1 billion -- the first time spending for one year has topped $100 billion. For 2005, spending was $82.3 billion for the full year and $19.6 billion for the holiday season.

E-Commerce boosts local economies enormously and especially the upcoming younger generation has hardly any concerns about security and use of credit cards online.

Fewer shoppers are still worried about the security of their financial information when making online purchases. Although some are concerned about providing their credit card information, despite assurance of card companies to compensate a possible loss, most of these shoppers really do want to shop online as online shopping has a lot of advantages.

There are new tools available, and more on the way, that aim to reduce online fraud and therefore reduce opportunities for chargebacks. It’s no secret that online merchants are at a disadvantage when it comes to chargebacks. With no credit card to swipe or receipt to sign, verification of a sale is voodoo at best. When customers offer their credit card over the internet they want assurance that their account information is safe.

Most payment service providers support the authenticated payment programs by VISA and MasterCard where the chargeback risk is shifted to the issuing bank, instead of the merchant.

Each major credit card issuer has come up with a secure system online that involves use of a password known only to the credit

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card owner. Customers should look for sites that support these new standards, ‘Verified

by Visa’ and ‘MasterCard SecureCode’. It’s just like entering your PIN at an ATM. If an incorrect code/password is entered, the purchase will not be completed. Even if someone knows the credit or debit card number, the purchase cannot be completed without the private code.

MultiCards’ Gateway --which integrates seamlessly with call center systems, websites and other business systems—reduces fraud and subsequently delivers lower transaction rates. Payment processing can

be provided for both single- and multi-site merchant operations to provide a full audit trail with reporting functions. Of course, with operations facilitated by PCI compliant easy back- and front office integration.

The new Payment Card Industry (PCI) data security standards are network security and business practice guidelines developed by Visa, MasterCard, American Express and Discover Card.

This programme was developed in order to further improve the security of card data processing and storage on credit card processing payment systems and are intended to protect cardholder data ensuring that members, merchants, and service providers maintain the highest information

security standard. MultiCards is one of the payment service providers (PSP) that have successfully completed the participation in this programme and have reached PCI compliant and certification status.

“The e-commerce business is all about making money and finding ways to make more money. It’s hard to make (more) money, when some consumers don’t feel safe or comfortable executing a transaction on your website.”

That’s where SSL (Secure Socket Layer) comes into play. SSL is all about encryption.

SSL encrypts data, like credit cards numbers (as well other personally identifiable information) which prevents the “bad guys” from stealing your information for malicious intent.

You know that you’re on an SSL protected page when the address begins with “https” and there is a padlock icon at the bottom of the page.

Moreover, recent surveys show that 93 percent of online shoppers surveyed by VeriSign reported that they felt it important for an e-commerce site to include a trust mark of some kind on their site. Moreover 64 percent have abandoned a shopping cart/basket because they didn’t get a sense of security and trust when it came time to provide payment information and 75 percent of online shoppers will only make purchases through sites that include a trust mark.

“Online brand preferences are hardening as consumers become more loyal and increasingly accustomed to the design and organization of their preferred sites.” according to Nick Hendriks. “In mature Internet markets, we are starting to see the same types of consumer brand loyalty you would see in the offline world. Early adaptors have an advantage, but it’s not too late…”

business support The Europe-wide network of Euro Info Centres (EICs) was created by the European Commission in 1987 specifically to help small companies adapt to the rules of the Single Market and make full use of the opportunities it offers. Each EIC offers businesses in its area a direct, local interface with the European Commission.

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wenty years later, the EIC network is the largest small business support network in the world, with 251 offices in the 27 EU Member States and a further 17 Correspondence Centres in non-EU countries, employing a total of around 1,500 professional business advisers. Most EICs are hosted by chambers of commerce or regional development agencies that are already well-connected with their local business communities. The EICs in each EU Member State also support one another through national networks.

How it works

THE

EIC NETWORK Case Study

EICs have a four-fold role: • They inform companies on European matters through websites, newsletters, information campaigns, seminars and site visits.

• They offer individual advice on the correct application of EU legislation and regulations, and can call on a Central Support Structure in Brussels for help with especially complex legal questions. They also advise on access to EU programmes and initiatives, as well as on subjects such as public procurement, business co-operation, financing and market research.

• They assist firms that trade – or wish to trade – in the single European market, using a common Business Cooperation Database to identify potential partners among the client companies of EICs in other Member States. They also organise brokerage events.

Finally, they investigate and log any problems that their client • companies encounter in implementing EU rules, and provide feedback to the European Commission.

The future of the network From the start of 2008, the functions of the Euro Info Centre network will be taken over by a new EU Business Support network including many of the ex-EICs. At the same time, the new network will add to its portfolio of services support for innovation and the transnational transfer of technology and knowledge.

The EIC network: http://ec.europa.eu/enterprise/networks/eic/eic.html The UK national network of EICs: http://www.euro-info.org.uk/

Plugging small firms into the single market

© Photo: Wojciech Plonka | Dreamstime.com

A

lfatronix first came across the UK’s Southern Area EIC, based in Southampton, at a seminar on matchmaking events organised by the EIC. Martyn Savage and his colleagues liked what they heard, and have since been regular users of the EIC service.

“Client companies tend to use us as a reference point for any questions about trading in the EU,” explains

20 | managinggrowth

the EIC’s Toni Saraiva. Alfatronix has received a free grant search, participated in a tender workshop and used the EIC’s tender search service. The company has also taken part in brokerage events in Lithuania, the Czech Republic and Hungary.

At the Hungarian event, EIC Budapest introduced Alfatronix to a Hungarian firm which in early 2007 placed an order worth more than 140,000 euro for

1,500 of the British company’s voltage converters and power supplies. “That order was a direct result of our meeting at the matchmaking event a couple of years before,” confirms Mr Savage, the firm’s European Sales Manager.

Southern Area EIC: http://www.euro-info-centre.co.uk Alfatronix: http://www.alfatronix.co.uk

e-procurement

Š Photo: Norebbo | Dreamstime.com

Avoiding the pitfalls of

e-procurement a checklist for the back office

By Christiaan van der Valk, Vice President Compliance, TrustWeaver, and Co-Chair of the Task Force on Security and Authentication for the Commission on E-Business, IT and Telecoms, International Chamber of Commerce.

S

Christiaan van der Valk

mall and medium-sized suppliers are often requested to use e-procurement portals provided or prescribed by larger buyers. While these e-procurement systems make the administrative side of a business transaction much smoother, a supplier must seriously consider several legal and security issues critical for managing business risk and complying with regulations. If not, a supplier could be subject to stiff sanctions and penalties.

Back office operations must make sure these issues are sorted out before converting from paper-based B2B processes to an all-electronic system. Reading the fine print in a contract with an e-portal and double-checking to make sure the portal has fulfilled all of a firm’s tax and customs obligations is also crucial to ensure adequate safeguards for sensitive personal and commercial data.

You would not want your competitors seeing your prices or catalogues. So the data your business provides to an e-procurement source must be protected to prevent theft, espionage or corruption − not only when it travels over the network, but within the procurement system.

An adequate level of security with your e-procurement portal must also include measures to create a good information trail. You must be able to demonstrate the invoice data you entered if a

managinggrowth | 23

© Photo: Melissa King | Dreamstime.com

e-procurement

customer claims the amount which comes out on the other end has fewer zeroes.

These safeguards concern the private sphere, where it will not be held against your firm if data diligence flags a bit.

Tax and Customs Requirements But protecting your data to meet tax and customs requirements is another matter entirely. Here a company is at major risk of incurring official sanctions − regardless of the business risk involved.

If the B2B communications of a company routinely include personal data, the company should make sure it clearly states in its contract with the e-procurement portal that the data will be handled in accordance with the strict limitations of applicable data protection law.

It gets a bit more complicated when making sure your company has adequate safeguards in place with e-portals on taxes and customs obligations. Paper originals of trade documents, such as invoices, are recognized as originals by fiscal administrations in all countries. This is not always the case with electronic documents. So before you convert from paper originals, double-check that your electronic B2B communications meet the requirements of all jurisdictions.

When supplying goods across national borders, some customs authorities accept electronic data but may require the data be presented in specific formats or be authenticated using specific methods.

Make sure your export documents meet these requirements. The data from the procurement process must be available in the right format to give to your transporter or customs agent.

When supplying goods domestically within some Latin American countries or trade blocs such as the European Union,

a company must pay careful attention to the electronic invoice. Tax administrations in these jurisdictions often impose specific rules on security safeguards. A company that has not scrutinized the tax compliance of an e-procurement portal risks incurring a hefty fine.

In data transmission and storage, tax rules for electronic invoicing usually require that a company ensures its data has not been changed and verifies the claimed source of the data. Many tax laws detail the security measures to be taken and usually require a digital signature, thus building on e-signature laws that have been in place in most countries since the late 1990s.

A digital signatures is a data “fingerprint” which is encrypted by a key and can be easily decrypted and matched to an original invoice, and it is fast becoming the reliable authentication standard.

Because tax law harmonization on data transmission and storage is in a nascent stage, a supplier is often forced to meet specific national tax standards for each country it supplies. In an attempt to simplify these requirements, B2B service providers from countries such as EU member states may offer a short cut. Called ‘e-invoice issuance outsourcing,’ the e-portal offers to issue an invoice ‘in name and on behalf of’ suppliers. But beware: the supplier remains responsible for all tax obligations – so before signing on the dotted e-line, a supplier must make sure the e-portal has fulfilled all the supplier’s tax requirements.

In addition, such ‘e-invoice issuance outsourcing’ arrangements often require explicit contracts between the supplier and the B2B service provider. If the e-portal does not offer issuance outsourcing and signatures that meet compliance requirements, a supplier will need to integrate

compliant signature technology into its own system. This often requires close collaboration with the B2B service provider that processes the signed invoice. Accompanying the digital signature, the supplier or B2B service provider must acquire a ‘public key certificate’ from an approved ‘certification authority.’

Whichever issuance method is used, both parties to the sales transaction must store the invoice in a way that guarantees integrity and authenticity during the mandatory storage period, which varies from three to 11 years.

Using a digital signature for issuance and transmission has another important benefit: the ease of auditing a stored e-invoice. But whichever archiving solution a company chooses, it should be robust enough to protect against file corruption or destruction of the signed e-invoices. A company’s usual data storage methods may not be enough to please the taxman.

One last thing: storage abroad is not always permitted, and even when it is there may be specific conditions. But wherever you store e-invoices, relevant national tax authorities must be given access to them after giving a reasonable notice period to the supplier. If your back office follows this list of tips, you will be able to rest easy, knowing communications with your customers are safe, reliable and protect you against a host of possible risks.

As the Co-Chair of the International Chamber of Commerce’s (ICC) task force on security and authentication, I am part of a team that is raising awareness of the need to improve network and information security in companies. To that end, we will publish shortly a toolkit for small businesses on the importance of network and information security. Our work is part of the ICC Commission on E-business, IT and Telecoms (EBITT), which consists of users and providers of information and communications technology and network services from developed and developing countries.

EBITT develops best practices and global voluntary rules on a range of critical issues for business. Many of the tools and policy positions developed by EBITT receive a global hearing through another ICC initiative, Business Action to Support the Information Society (BASIS), which serves as the voice of business in the emerging global dialogue among business, government, civil society and the technical community over the future shape of the information society.

For more information, please visit www.iccwbo.org.

managinggrowth | 25

information technology

GLOBAL MAN

of ICTs and t

F

By Guy Sebban, Secretary General, International Chamber of Commerce

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rom 12-15 November, the 2nd Annual Internet Governance Forum (IGF) will take place in Rio de Janeiro, Brazil. This global gathering of government, business, civil society and technical experts was established by the UN Secretary-General to discuss issues of crucial importance to the continued development of the Internet. Representing business from around the world at forums like this is an example of what the International Chamber of Commerce (ICC) does best: bringing business experience and expertise to global discussions, engaging in the dialogue among varied interest groups and voicing world business interests on complex issues vital to commercial growth and development. ICC Secretary General Guy Sebban outlines the ambitious work programme of ICC’s new initiative, Business Action to Support the Information Society (BASIS).

ICC is guided today by the same belief

dating back to its founding in 1919 – in short, business must seize the initiative to address some of the major challenges facing economies around the world. A new set of challenges to world businesses is now emanating from the increased use and reliance upon information and communications technologies (ICTs), which are important drivers of economic growth.

To get the most out of these tools, the conditions have to be right. This means all stakeholders need to work together to understand and address Internet governance issues, such as security and authentication, data protection and privacy, and technical coordination and management of the Internet. They must also address broader ICT issues, such as the liberalization of the telecoms markets.

What is more, to widen access to information and knowledge by more people around the world through the use of these technologies, the conditions to accomplish this must also be a topic of ongoing discussion.

information technology

ANAGEMENT

the Internet

The Chair of BASIS, Talal Abu-Ghazaleh, who has a well-established track record of IT consulting in the Middle East as Chairman of TAGI Egypt, often puts it this way: “Multi-stakeholder initiatives are a powerful engine to accelerate diffusion of the information society’s benefits across the globe.”

Adding further complexity to these global ICT challenges, some governments and other actors are asking how they can have a greater say on how ICTs and the Internet are managed. ICC believes that sharing the experience and pooling the expertise of all concerned parties – government, business, civil society and the technical community – will be crucial to finding enduring solutions to these challenges.

So that business perspectives and experience are regularly taken into account in this emerging global dialogue, ICC set up BASIS in mid-2006. In its short tenure, BASIS has attracted a diverse and global membership of company and association members from a range of business sectors. BASIS

counts among its key contributors some of the world’s most innovative multinational IT companies as well as medium-sized enterprises and business associations.

Worldwide, BASIS has been hard at work over the past year, helping to bring people together and providing business input on various information society issues. In recognition of the good work ICC has been doing on Internet governance and ICT issues long before BASIS was established, several BASIS members were appointed last August by the United Nations Secretary-General, Ban Ki-moon, to the multistakeholder advisory group of the Internet Governance Forum (IGF). This group helped plan the IGF event in Rio and informed the IGF Secretariat and the UN Secretary-General on the preparations.

At the Global Youth Forum, staged in September by the Global Alliance for ICT and Development in Geneva, another UNlinked forum, I spelled out the three conditions which are needed for young people to

managinggrowth | 27

information technology

flourish as entrepreneurs and innovators in ICT industries: education and skills training, investment-friendly policies and regulations, and less red tape for startups.

When the UN Commission on Science and Technology for Development (CSTD) met last May, I counseled the CSTD on the legal and policy frameworks business needs to innovate and increase its investment in ICTs, especially the need for the right legal and policy frameworks.

BASIS has been active this year on all major continents. Last March at CeBIT – the world-renowned technology trade fair that takes place every year in Hannover, Germany – ICC, along with ICC Germany, the German Ministry of Economy and CeBIT, hosted a CEO and ministerial round table to encourage closer collaboration between government and business. ICC believes these partnerships are key to scaling up access to ICTs, especially in the developing world.

In Silicon Valley last February, BASIS took part in a meeting of the captains of high-tech industries with venture capitalists and academia to discuss ways to bring the benefits of ICTs to more developing countries. I also spoke at the ITU Telecom World in Hong Kong last December on the pivotal role of public-private partnerships in furthering ICT development.

During the first IGF meeting in Athens last year, BASIS co- hosted a workshop with the Government of Canada on developing ICT skills, a precondition to building a more inclusive information society, especially in developing countries. At the workshop, BASIS underscored the importance of all stakeholders participating on an equal footing in Internet governance and ICT- related issues, and the urgent

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need for human and institutional capacity building so more people can take part in policy development at national, regional and international levels.

The first IGF meeting was a success, particularly in assembling people from different backgrounds who would not have exchanged views otherwise, and in enlarging the pool of people who participate in international discussions.

At the second IGF meeting this month, we still believe a continued emphasis should remain on dialogue, capacity building, an exchange of best practices, and maintaining an equal playing field for all stakeholders. The strength of the IGF is that it is not an intergovernmental negotiation process. The IGF is that rare global forum which gives business the opportunity to discuss its concerns and share its experience on Internet governance issues with concerned parties and hear from other actors. At a preparatory meeting in September, BASIS members asked that the agenda incorporate a balanced approach to the discussions on access, critical Internet resources, security, openness and diversity.

In Rio, BASIS will co-host a workshop with the Oxford Internet Institute involving business, government, technical experts and civil society on security issues. Panelists will focus on the policy issues surrounding user authentication systems in online transactions and other issues of digital identity management and how they can best be addressed.

BASIS often shares the policy positions and practical tools developed in the ICC Commission on E-Business, IT and Telecoms in global forums such as the IGF. EBITT has a long history of helping busi-

ness articulate its concerns to governments and policymaking bodies on critical ICT issues.

With information as the currency of the digital economy and with ICTs providing the architecture for markets, the security of information and networks has become a pressing issue for companies in all sectors.

For chambers of commerce, promoting BASIS in addition to the work of EBITT offers chambers an opportunity to reach out to their local business community on technology issues of critical importance. Since ICTs and the Internet are global issues with local repercussions that permeate virtually every business activity, chambers should also encourage businesses to sign on to BASIS and to contribute their expertise.

Businesses of all sizes and sectors are seeking products and services to demystify and build their confidence in using ICTs to expand their activities. The policies and tools ICC provides through EBITT offer pragmatic and easily understandable solutions to a rash of ICT challenges and opportunities.

To that end, e-business and IT were highlighted at a workshop during this year’s World Chambers Congress, which took place in Istanbul in July. The World Chambers Federation, a specialized division of ICC with a global network of 12,000 chambers, hosted the biennial event, the premier global gathering for chambers to share best practices.

ICC welcomes feedback from chambers on BASIS. I encourage you to contact our executive in charge of ICT policy, Ayesha Hassan (Ayesha.hassan@iccwbo.org), with your comments and suggestions. The initiative is in its infancy, but it is off to an ambitious and auspicious start.

air charter

PRIVATE J

A

ircraft were meant to allow us to cross borders effortlessly, we were supposed to be able to live our lives in multiple cities and maintain face-toface relationships across the world. Sadly today, for many passengers, this is not the case. Air travel has become a grind and the passenger has lost all elements of control; queues to increasingly full international airports; limited parking; sloppy concierge; queues at check-in, the lounge, security and customs. Add in airport buses, delays for missing passengers and extraordinarily long taxi times, and it is no wonder that many people are tired of commercial air travel.

Once airborne, things do not get much better. Space is limited; service is often patchy

30 | managinggrowth

at best. Meals are not inspirational and like the aircraft arrive when the airline chooses rather than when it is convenient. Discussions with colleagues or family are hard to keep confidential.

So having killed off the golden age of flying, are we now seeing the emergence of a golden age of private aviation? Customers have total control; they avoid the hassles and throngs of the airports – the endless queues, invasive security searches and delays. Instead, they fly on their own schedule – any time, any place. The service is seamless, from home to the aircraft to the final destination and can typically save time and money. A European road show of X cities, takes a whole extra day and half flown commercial and the expense of this can be exuberant.

By any measure, the private jet industry is currently experiencing explosive growth. Even at the recent National Business Aviation Association’s (NBAA) annual convention, it was difficult to find a company that wasn’t using the adjective ‘record’ as the default descriptor for their business.

Pundits forecast 24,000 private jet sales over the next two decades. The upshot is that demand vastly exceeds supply. Talk to any heavy jet salesman and ask for immediate delivery, and you’ll find none can provide you with a new aircraft before 2010 or, in some cases, 2011.

So will the growth continue, or might economic cyclicality provide us with a very different picture in the medium term? Having seen the wealth creation of the last decade,

air charter

JETS the rise of a global society , the value of time to corporate and having experienced private aviation first hand, I believe the answer is no.

For my ‘check-in’ process on a recent industry trip, all I had to do was say ‘hello’, present my passport, walk 20 paces to the aircraft steps and climb aboard; no ticket, no formalities and my passport information already pre-cleared. I was a secure passenger, known to the industry colleagues on board and happy to be travelling in closed company among friends.

Far away from scanners and security staff asking me to surrender my bottled water, halfstrip and join 500 others in the crushing experience of a typical airport terminal, I relaxed in my seat and unwound for an experience that

Giving you the ultimate edge and control

was more akin to being in a private dining club than flying on an airliner.

En route, I talked constructive business with my co-passengers for a few hours, dined with them at 37,000 feet, slept soundly and even had the opportunity to shower and pen a draft of this editorial before arriving at my destination refreshed and ready for the next day’s business.

While the Airbus corporate jet is complete luxury for most, a similar experience in a similar environment, with the same productivity, can be enjoyed by flying on a Learjet 45, to name but one popular aircraft model. A new light aircraft will cost £6m, although buyers should be prepared to wait more than a year for the one of their choice.

However, while waiting, customers can

use a private jet without owning one via companies like Air Partner. Clients can either charter for a one off flights or buy a JetCard, which typically start at around £83,000 for 25 flight hours with guaranteed aircraft availability on a choice of aircraft types (or they can opt to pay two per cent extra for an environmentally kinder CarbonNeutral JetCard).

In today’s cash-rich, time-poor society, for many corporate or individuals that have suffered the exasperations of travelling on airlines within Europe once too often, there is a growing mantra: save time, do smarter business – fly private.

David Savile, Chief Executive Air Partner plc

managinggrowth | 31

air charter

Flying with the

JETSTREAM

the beauty of business aviation

Five years ago, it was still very difficult to find not only a business jet operator, but even a business jet based in Prague or Bratislava. Most of the business aviation flights in the Czech or Slovak airspace were in reality flyovers with only random landings at Prague Ruzyne Airport or Bratislava Airport. One year ago, most people would have taken ABS Jets for a supplier of automobile parts or simply not cared the least.

32 | managinggrowth

T

oday, ABS Jets (www.absjets.cz), domicile in Prague, Czech Republic, represents one of the rather typical success stories of the rapidly growing Central and Eastern European market.

Let the ABS Jets motto: “You Fly We Care� lead you in the right direction towards the profile of ABS Jets.

When speaking about ABS Jets, we have in mind the largest business and executive jets company of all the recently admitted European Union countries. Even though ABS Jets was only established at the end of the year 2004, today this date already seems ancient history In the middle of 2007, the situation is very different compared with 2000. Prague Ruzyne Airport is one of the fastest growing airports in Central Europe. In 2006, it accommodated more than 11 million passengers, and this year, it expects more than 12 million of them. Most are, of course, clients of commercial airlines, but the General Aviation terminal at Prague Ruzyne Airport South is also very much alive.

air charter Main picture left: The Embraer Legacy, capturing the beauty of business aviation Bottom left: Interior of an Embraer Legacy operated by ABS Jets.

Right: ABS Jets takes delivery of 100th Legacy manufactured by Embraer (left to right Luis Carlos Affonso, Executive Vice President, Executive Jets, Embraer; Marian Jančařík, CEO ABS Jets; Mauricio Botelho, former Chariman, President and CEO Embraer)

It is an ideal place for very smooth operations, such as are required when striving to meet the high standards of business aviation clients. For example with ABS Jets, you are required to show up at the terminal door only 10-15 minutes prior to departure., You are met by the captain of your aircraft and in a matter of minutes you are seated at your seat, while the aircraft waits on the apron, just for you. Everything of course takes place in an environment of strict security and full discreetness expected and dictated by the industry standards.

ABS Jets currently operates and manages two types of business jets. Three Embraer Legacy aircrafts: large jets with more than 6000 km range, seating up to 13 passengers. Today, ABS Jets is already one of the largest Embraer Legacy operators in Europe and its fleet will soon enlarge – in March 2008, a fourth Legacy will join ABS Jets ́ fleet and the fifth and sixth will follow in January and Febreary 2009 respectiverly. Besides Embraer Legacy, ABS Jets also operates two Cessna Citation Bravos, real intra-European workhorses. The well-proven Cessna aircraft can seat 7 passengers and has more than 3200 km range. Last year, ABS Jets clicked a total of 1410 flights, this year, with a fleet of six, it plans about 2500 flights. If you are wondering where the sixth plane is, please note that this November, ABS Jets will be delivering another aircraft to the Czech Republic, the first of its kind in the country. The Bombardier Learjet 60XR will be a nice addition to the ABS Jets fleet in the category of mid-sized business jets. As a result, clients will be offered a full range of options, starting with entry level Bravo, through mid-sized Learjet up to large Legacy.

Building on traditional Czechoslovak aviation foundations ABS Jets is not only a business jet operator. Aircraft management services, complete with chartering and brokerage activities, are important parts, though not the most important, of the ABS Jets business.

Also thanks to its excellent geographical location in the middle of Europe, ABS Jets can well benefit from its most important core

business activity represented by Maintenance and Repair Organization. The Czech Republic, as well as the former Czechoslovakia, has always been a place of well developed aviation industry. More than three thousand jet trainers were produced in Aero Vodochody, hundreds of turboprops commuters in the former Let Kunovice, not to mention thousands of light sport aircrafts, gliders etc., produced by smaller manufacturers. The Czech Republic has not only tradition, but also presentable results, represented by a very skilful workforce and engineering experiences. One of its examples is the newly introduced Embraer Executive Aircraft Service Centre (EASC), which was just opened by ABS Jets on the 1st of June of this year. The EASC takes up the central part of the ABS Jets Centre at the Prague Ruzyne Airport. Fifth of its kind in Europe, it started providing service to the Embraer aircraft owners and operators, with an emphasis on Central and Eastern Europe.

There is no doubt that business aviation is recently enjoying a significant growth in this part of the world. For example, at the end of last year, there were twelve Embraer Legacy based in Moscow. By the end of this year, there will be twenty! In the ABS Jets EASC you can find a full scope of services for Embraer products, including warranty works, scheduled maintenances up and including 24 month maintenance checks. Moreover, starting from 2008, ABS Jets will start with 48 month maintenance checks, which are, at this point, the highest level of maintenance works on Legacy aircrafts. Besides Legacy maintenance and Cessna Bravo Line and Base maintenance, already available for some time, ABS Jets is also preparing for the upcoming invasion of new very light jets aircrafts. With the first Embraer Phenom 100 delivery expected in the middle of 2008, the ABS Jets EASC is getting ready for providing maintenance for these types of aircrafts as well. You can be sure that besides Legacy and Bravo ABS Jets is equipped to provide for basic maintenance of other types of business jet aircrafts as well and is prepared to offer to its clients full scope of services 24 hours a day 7 days a week.

The development of ABS Jets is an opportunity for further business in Prague and in the Czech Republic Following the acquisition of a large hangar at the beginning of 2007, ABS Jets will start constructing another new hangar later this year. With a total of 11000 m2 of hangar space, ABS Jets will be able to offer, starting in 2009, vast space and excellent handling services for virtually any kind of business aircraft arriving or staying in Prague.

ABS Jets is thus well on the way towards operating the first FBO, located in Prague, one of the most beautiful cities around the world.

The largest, ever growing and the most experienced aviation company, situated in the charming capital of the one of the most rapidly growing economies in Europe – a blend available as a gateway for your business, as well as leisure, with ABS Jets, Prague, Czech Republic. “You Fly We Care” is not only a slogan. It is an honest expression of the daily dedication of ABS Jets to its clients and customers around the world which already do or plan to introduce their business in the Czech Republic.

Aircraft must be maintained regardless if it is flying or not One of the golden rules of aviation managers say that aircraft must be maintained (in other words “continuous airworthiness must be assured”) regardless how many hours aircraft is flying or even if it is flying at all.

One can than say that aircraft maintenance is much more secure business for its providers than aircraft operations (flying with the aircraft) as such.

Although the real life is never so simple, many examples in the aviation industry can be found when the operators offset their operational risks with additional businesses, which is considered more secure like maintenance and repair of the aircraft.

ABS Jets, a business jet operator based in Prague Czech Republic is one of it. Both major businesses ABS Jets is currently running are well complementary. Management of currently six business jets is supported by MRO (Maintenance and Repair Organisation) services, which is provided not just for aircraft under ABS JETs’ flag, but for the third party customers as well. Not just thanks to its excellent geographical location in the middle of Europe, but also due to highly skilled personnel with a very strong background from the Czech aviation industry, the ABS Jets’ MRO is already known as a strong player on pan-European market especially for Embraer Legacy aircraft. ABS Jets holds not just PART-145 authorisations but is also Embraer Executive Aircraft Service Centre. This is important not just for today, but given the expected invasion of very light jets into Europe, ABS Jets is well positioned to serve that market segment as well. Embraer is expected to play a very significant role on Very Liight Jet market with its Phenom100 and Phenom 300 aircraft for which ABS Jets is going to be a service centre as well. Even though there is a lot of discussion how the invasion of VLJ will change the aviation industry in Europe especially from the point of view of air traffic control, airport congestions, pilots availability, the golden rule of aviation will remain unchanged – aircraft must be maintained regardless if it is flying or not.

managinggrowth | 33

inward investment

Next on the

global investment scene Enter the

SMEs!

By Kai Hammerich, President, World Association of Investment Promotion Agencies (WAIPA), Director-General, Invest in Sweden Agency (ISA)

B

efore I make my case for the reasons why any business leader who is thinking about taking his or her SME abroad should turn to an investment promotion agency (IPA) for assistance, allow me to put my invitation into a global context.

Š Photo: Arthur Matkovskiy | Dreamstime.com

34 | managinggrowth

Winners and losers There is no reason to downplay what is happening around us. We are experiencing an unprecedented rise in prosperity across the globe. More and more countries are reaping the benefits of economic globalization, which is spearheaded by international trade and investment. More and more people are acquiring the means to lift themselves out of poverty each day. For developing countries, globalization is turning out to be a phenomenal driver of economic empowerment.

This is all very good news. But the overall picture should not cloud the fact that there are some major challenges related to the effects of globalization. Yes, there will be mostly winners, but also a number of losers. In some countries, whole industries may disappear as borders open up and competition intensifies. In the OECD countries, future tradability and off-shoring of services may be an important source of insecurity for the highly skilled – just like today’s off-shoring of production is felt like a threat to the less skilled. And rapid

economic progress in emerging economies may put strains on social cohesion, the environment and the provision of natural resources. The poorest countries may be left out and fall further behind.

How can the negative effects of globalization be cushioned? Leaving aside major challenges to the international community like climate change and so on, there is clearly an important role for national governments to support individuals whose jobs have been made redundant in the process. Skills upgrading and better matching in the labor market may be an answer. Most important, however, is to provide a good business climate for SMEs, which are crucial to structural change and national job creation.

SMEs key to the future This brings me to the essence of this editorial. The importance of SMEs will increase even further in the coming years, as they enter the global investment scene. The dramatically changing landscape of global foreign direct investment (FDI), that is, cross-border investment with full investor control and a long-term perspective (usually in the form of subsidiaries abroad), will contain two new interesting ingredients: multinationals from emerging markets and SMEs (from any country).

Today, international investment is the domain of large multinationals. In five to ten years, large multinationals will still dominate,

inward investment

‘

but outward investment by SMEs will have International expansion is no longer grown tremendously in seen as the final step for a importance. SMEs with well-established company - it may even ambitions to expand mark the start of a new business. abroad will mainly invest on a small scale, in joint ventures or strategic partnerships, and more rarely in stand-alone establishments. Most of them will try their wings in the geographical and cultural neighborhood before they move to faraway markets, where finding a local partner (for product development and adaptation, production, distribution and so on) will be crucial for the investment decision. The impact of SMEs in terms of capital flows will still be small – but their impact in terms of providing new skills and new business opportunities (“a two-way street” between countries of origin and host countries) will be large. professional and sales-oriented. Their client is As I see it, there are a number of reasons always the foreign investor. why this will happen. National barriers to inYou might even say that investment provestment are coming down. Communications motion has become a business in its own and transportation are becoming ever faster, right. IPAs these days are an integral part of easier and less costly. Financial services (never the investment puzzle that includes law firms, mind the recent turbulence) are becoming a auditors, employment service providers, incommodity. The mindset is changing. Internavestment banks and many others. And as tional expansion is no longer seen as the final competition for investment has become instep for a well-established company – it may creasingly tougher over the last decades, IPAs have continuously improved their services and even mark the start of a new business. their appeal to investors. Whether it is about But no matter the competencies and energy identifying concrete business and investment level of their management, SMEs often need opportunities, finding local partners, connecthelp to go abroad. They may not have the reing with private and public decision-makers sources of the large multinationals to examine or providing establishment assistance and business opportunities in foreign markets or advice (how? who? what to do – what not to the network capabilities to find the right partdo?) – the IPA should be your service provider ners abroad. That is why they should turn to of choice. the IPA in their market(s) of choice.

From my position as President of the World Association of Investment Promotion AgenWhy IPAs matter cies (WAIPA), I see this development very To be frank, investment promotion was once clearly. In many developed as well as developa subordinated task for public officials with liting countries foreign investment has become tle business experience. As global investment a national priority. Policy-makers realize that surged in the 1990s and it became evident competitiveness on the global investment that FDI would have a major impact on the scene requires not only a good business clieconomic fate of countries and regions, things mate but also efficient investment promotion. started to change. Today, hundreds of naThis in turn requires top quality services and tional and regional IPAs are scattered across hands-on support to foreign investors. the globe. Their services are often highly

’

Located among other international organizations in Geneva, WAIPA has many means to support national and regional IPAs in their striving for excellence. With 218 members from 153 countries, WAIPA offers training, knowledge sharing and networking opportunities. On a personal note, I believe WAIPA is a formidable forum for the exchange of best practices in investment promotion and capacity building. For example, WAIPA organizes every year its World Investment Conference, with over 300 delegates from governments, organizations, academia and business. The role of SMEs in global investment is high on the agenda.

Required: a new mindset If I began on an optimistic note, let me now strike a note of caution.

The process of economic globalization is not on autopilot. Although trade and investment are the main drivers on the global scene, the importance of good national policies to support economic progress has probably never been higher. Contrary to popular belief, national borders play and will play a major role in a country’s economic fate for many years to come. A business climate that fosters competitive companies – often starting as SMEs – is created at home and nowhere else. There is much to be gained from joining the ranks of open and competitive countries. Correspondingly, hiding behind trade and investment barriers is associated with higher costs than in the past.

I will not conceal that I am worried about some recent nationalist reflexes that may be referred to as “the new protectionism”, most notably in the U.S. and in Europe. Anxiety over the rise of emerging economies, especially in Asia, runs high in the U.S. And instead of promoting competitiveness, much of continental Europe is spending political energy on nurturing protectionist attitudes to globalization – which will inevitably lead to a dead end. I deeply regret this current mindset among leading politicians, since it may hamper our ability to make the most of some of the great economic opportunities of our time. Not least the potential of SMEs to become important global investors deserves all our support.

So as my final message, I would like to invite you, a business leader who is thinking about taking your SME abroad: Call us! We know our market. We are there for you.

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inward investmen Managing Growth offers a full and comprehensive inward investment review.

We sought out the experts and the result is three country reports packed with essential information and useful advice.

Bulgaria - page 38 Malta - page 43 Hungary - page 49

Bulgaria

Year of EU entry 2007

FDI Explained

In the years after the Second World War global FDI was dominated by the United States, as much of the world recovered from the destruction brought by the conflict. The US accounted for around three-quarters of new FDI (including reinvested profits) between 1945 and 1960. Since that time FDI has spread to become a truly global phenomenon, no longer the exclusive preserve of OECD countries. FDI has grown in importance in the global economy with FDI stocks now constituting over 20 percent of global GDP.

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Total area

111,000 km2

Population

7.8 million

Currency

Lev

2006

Sofia

2005

C

Capital city

2004

Foreign direct investment (FDI) is defined as “investment made to acquire lasting interest in enterprises operating outside of the economy of the investor. The FDI relationship, consists of a parent enterprise and a foreign affiliate which together form a transnational corporation (TNC). In order to qualify as FDI the investment must afford the parent enterprise control over its foreign affiliate. The UN defines control in this case as owning 10% or more of the ordinary shares or voting power of an incorporated firm or its equivalent for an unincorporated firm; lower ownership shares are known as portfolio investment.

Political system Republic

2004: €2.74 billion 2005: €3.10 billion 2006: €4.36 billion FDI Growth

nt roundup Hungary

In association with

Note *depicted countries and their geographic location are inaccurate and intended for illustrative purposes only

C

Budapest

Total area

93,000km2

Population

10.1 million

Currency

Forint

2006

Capital city

2004

Political system Republic

2005

Year of EU entry 2004

2004: €3.5 billion 2005: €6 billion 2006: €3.5 billion FDI Growth

Year of EU entry 2004 Political system Republic

C

Capital city

Valletta

Total area

316 km2

Population

0.4 million

Currency

Maltese lira

2005

2004

2006

Malta

2004: €303 million 2005: €450 million 2006: €1,350 million FDI Growth

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Bulgaria invest in

Bulgaria is one of the oldest European States with 20-century-old history and traditions. Modern Bulgaria is a stable, progressive Eastern European country with ample business potential.

B

ulgaria is one of the oldest European States with 20century-old history and traditions. Modern Bulgaria is perceived as a stable, progressive Eastern European country. Its strategic geographical location is on the crossroad of four European transport corridors, connecting Western and Northern Europe with the Eastern and Southern part of the continent. Bulgaria is also known for its picturesque nature and rich cultural heritage.

The country is among the youngest members of the European Union. The EU membership has raised the general awareness of the country and increased the interest of foreign investors. The great potential represented by the free access to the single European market (the biggest market in the world), the proximity to new, not yet saturated markets, and the country’s logistically strategic location in Southeastern Europe have recently attracted a number of new investors.

INVESTMENT CLIMATE For the last three years Bulgaria has been leading most of the European economies in terms of economic growth, achieving over 6% real GDP growth per annum. In 2007, Bulgaria’s economy keeps on developing at the same pace; IMF forecasts real GDP growth to exceed again 6% by year end. Foreign Direct Investment (FDI) continues to be a key driver of the economic growth; unemployment is falling down and inflation is under control. Growing investments and exports have been the major contributors to the economic development of the country. The challenge ahead is to maintain the GDP growth rate and support it by an adequate level of FDI and exports.

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Macroeconomic and political stability is already in place in Bulgaria.

The legislation is harmonized with the EU standards. The fiscal policy of the government is one of the most attractive. The corporate income tax is 10%, the lowest in the EU. Due to the fact that Bulgarian currency “Lev” (BGN) is pegged to Euro (EUR 1:BGN 1.95583), practically, there is no currency risk in doing business in Bulgaria.

Since 2000, Bulgaria’s credit rating has been raised over 25 times and now the country enjoys investment grade credit rating by the major credit rating agencies, Fitch, Japan Credit Rating, Standard & Poor’s and Moody’s.

Bulgaria can offer highly qualified, multilingual labour force, well motivated, flexible and loyal to the employer. 22% of population

Ivan Vazov Theatre, Sofia. © Photo: Mlan61 | Dreamstime.com

Invest in Bulgaria now Why Bulgaria?

Financial & political stability • The lowest operation cost in Europe • Low levels of tax rates: 10% corporate income tax (lowest in EU together with Cyprus): 0% for manufacturing companies in areas with high unemployment • Equal treatment of foreign and domestic investors • Well educated and highly skilled labour force • Governmental support to priority investment projects • Bulgaria a linkage between Europe and Asia • Favourable climate

The South-East gateway to the EU

IBA Services: Macroeconomic data on Bulgaria • Legal advice • Data on operational costs • Regional information related to economy, unemployment data, availability of skilled labour force, education level, infrastructure, industrial zones • Offering investment Sites • Individual administrative services to the investors • Identification of potential suppliers, contract manufacturing or joint venture partners • Creating linkages with central and local governments • Creating linkages with branch chambers and other NGO’s

INVEST BULGARIA AGENCY 31 Aksakov Street, 1000, Sofia, Bulgaria Tel: +359 2/9855500 • Fax: +359 2/9801320 Email: iba@investbg.government.bg Web: www.investbg.government.bg

inward investment

Invest in Bulgaria

holds a university degree. A high percentage of the work force has completed general secondary or vocational education. Many Bulgarians have strong background in IT, engineering, medicine or economics. The aptitude of workers and the reasonable labour cost are considerable incentives for foreign companies to invest in Bulgaria.

Moreover, this is the country with the lowest operational cost in Europe. The society is tolerant and friendly to foreigners and last but not least, Bulgaria offers excellent climate, natural scenery, food and hospitality.

For all these reasons, Bulgaria is considered a good investment destination. With USD 5.1 billion FDI attracted in 2006, Bulgaria ranks first in Europe in terms of FDI to GDP ratio (16.4% for 2006).

This record-high inflow represents a quarter of the FDI stock (around USD 20 billion) for the whole 17-year transition period. Half of these investments – around USD 10 billion, were accumulated during the past thee years only. This proves that the EU membership of Bulgaria is a strong motivation for the entrepreneurs; their confidence in the country is increasing and this is quite positively affecting the investment process. We expect this trend to continue.

Many new fields for business development exist in Bulgaria. So far, manufacturing has attracted the lion’s share of the investment (25% of the FDI stock) followed by finance (21%), trade (15%) and real estate (16%) – the latter being considered the fastest growing sector in the country with 2006 FDI inflow amounting to EUR 1,262 million. The biggest investor countries are Austria (16%), followed by the Netherlands, Greece, the UK and Germany, most of the investors being drawn to the country by the same shared reasons: to maintain/ increase market share, deliver new products, reduce costs, stretch R&D budget, but most importantly − to develop knowledge-based industry as well as find quality and new talent.

BUSINESS SECTORS OF HIGHEST POTENTIAL Electrical and mechanical engineering, electronics and manufacturing of miscellaneous automotive parts are areas where Bulgaria has

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traditions, offers skills at reasonable cost as well as reliable suppliers and subcontractors. Greenfield operations, acquisition of existing companies, joint-ventures as well as contract manufacturing in these business fields are considered profitable.

For the last two years, BPO operations, mainly for IT support as well as administrative and financial services, have been rapidly expanding in Bulgaria due to the talent pool with good language skills and the competitive real estate prices.

In power engineering sector the investment opportunities are in: new nuclear power plants, modernization and construction of new thermal power plants, wind parks and solar plants. Modernization and development in this sector is a priority for the government.

INVESTMENT LEGISLATION The Investment Encouragement Act regulates the terms and procedures of investing in Bulgaria. According to this law, certified investors are getting a wide package of information services, speeded-up administrative services, as well as infrastructure support and assistance with real estate “titling” issues. Investors could also get certain benefits under the Corporate Income Tax Act, the Value Added Tax Act and Encouragement of Employment Act on meeting certain conditions. In addition, investors in Bulgaria could use the EU Structural Funds to further support the execution of their investment projects.

InvestBugaria Agency is a Government Agency having a mission to attract investments to Bulgaria, assist project set-up and ensure successful project development resulting in new jobs, as well exports and know-how transfer for the Bulgarian economy.

We would kindly invite you to explore the conditions for doing business in Bulgaria and the investment opportunities in the country by visiting www.investbg.government.bg.

We would also like to extend our warmest invitation to you to visit Bulgaria − the new hot EU business destination.

Welcome to Bulgaria, your business partner in New Europe!

inward investment

MALTA booming with business opportunities

The island of Malta set in the heart of the Mediterranean is renowned for its enviable lifestyle steeped in a rich cultural heritage and glorious sunny climate, though few are also aware of its great business potential.

M

alta offers a highly competitive and diverse The answer is simple – Value! Malta has more to offer than most investment location for high value added inof its European neighbours. A highly attractive incentive package, dustries and service providers particularly in stable economic and political environment, excellent language skills, the fields of aviation services, automotive and a productive labour-force are just some of the reasons technologies, electronics, ICT, why so many companies are now looking to Malta as back office operations and the obvious choice for foreign investment. And healthcare. Malta’s highly productive manuthe Maltese government has had no small facturing sector is home to more than 250 part in this. The current administration international companies, including large has pledged to capitalise on the above multinationals like ST Microelectronassets and further the country’s ecoics, Lufthansa Technik, Trelleborg, nomic strength through the pillars of Baxter, Methode Electronics, ActICT, Financial Services, Healthcare avis and Brandstatter, all of which and Education. have major production plants in The Maltese multi-lingual and Malta. Together, these top firms highly trained workforce is by far employ more than 30,000 people the island’s most valuable asset. and account for more than 85% of Ron Feenan, General Manager Malta’s business output. of De La Rue Currency & Security And new foreign investment conPrint says, “Malta was a natural tinues to swell Malta’s growing econchoice when De La Rue came to omy. Testament to Malta’s sound ecodeciding where to locate its new comArial view of Freeport harbour. nomic principle and attractive investment pany to produce biometric passports.

Above: Malta’s famous boat, the Luzzu. opportunities is the country’s ranking in the The industrial incentives package along top 20 global countries most likely to sustain with workers’ skills and flexibility were the maeconomic growth over the medium and long term. jor pluses for the company to increase its presence So why is this island, 60 miles south of Sicily and 220 miles in Malta.” His view is reiterated by Shaun Wallis, CEO of north of Libya, emerging as a major international business hub?

HSBC Malta who stated, “This has been a very positive experience

managinggrowth | 43

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Clockwise from left: The popular St Julians Tourist Village, microchip preparation at ST Microelectronics, Malta’s Freeport container cargo deck.

for HSBC in comparable global terms of customer experience and satisfaction, efficiency and cost effectiveness. Maltese employees share a very strong work ethic and a willingness to learn,” he said, adding that they also have excellent language skills, familiarity with modern banking and high productivity levels.

Unlike many other destinations, Malta has the significant advantage of a workforce fully familiar with business terminology and colloquial English, and who can speak it without the impediment of a thick accent. Of course Malta also has the benefit of working in a Central European Time zone, which together with the country’s strategic location in Europe and excellent shipping and aviation links has ensured a ready supply of raw materials and imports into the country, as well as providing excellent market opportunities for Maltese exports within Europe and beyond.

Malta’s sophisticated business environment, its strategic position and its cultural links with North African markets and the Middle East makes it an ideal hub for trading, distribution and marketing operations between the three continents. Such an opportunity was exploited by the developers of the renowned Dubai Internet City, who are investing over US$300 million to set up SmartCity@Malta, a state-of-the-art ICT Park acting as a global outpost for those hightech companies wanting to establish a presence in Europe and North Africa. Furthermore, the ongoing investment by the Maltese Government in Malta’s ICT infrastructure places Malta among the top knowledge economies in the world, offering one of the most progressive environments for IT, iGaming and e-Business activities.

Microsoft, Cisco, and Oracle have all established a significant presence on the island with the aim of using Malta as a research and development testing ground for e-government solutions.

The results of Malta’s solid economic opportunities speak for themselves. Eurostat identifies Malta as a high profitability location delivering 15% plus return on European FDI. In fact, Malta’s professional workforce is rated the most productive in the EU-25. Figures also show that within a five-year timeframe a fifth of all companies in the manufacturing and distribution sector in Malta would have undergone major expansion programmes. What’s more, foreign shareholders report their Maltese companies have performed well beyond their original expectations Malta’s unique business experience is enhanced by its superb quality of life. Malta is the Happiest Place in the World according to Erasmus University of Rotterdam’s Life Satisfaction Index, whilst International Living’s 2007 Quality of Life Index claims that Malta has the “best climate in the world”.

The Maltese are renowned for being friendly and hospitable and non-residents are readily welcomed and accepted, so it is easy to become involved in a wide range of sporting, social and cultural activities. Bosse Malmberg, CEO of Uniblue Systems states, “We scouted the Mediterranean region and researched countries such as Greece, Spain and Gibraltar, and Malta stood out as a new base for us because English is one of Malta’s two official languages, and the country is renowned for its hospitality, culture and zest for life.”

Residents enjoy an exceptional standard of living, with annual living costs substantially lower than countries like the UK, Spain, Portugal, France, Italy and Cyprus, and high standards of very affordable accommodation. The educational system is top notch, with numerous private and public schools and a university which is the oldest in the Commonwealth outside the United Kingdom with a long-standing reputation for academic excellence. Malta also boasts first-class medical services with a world class general hospital and a number of private hospitals all commanding state-of-the art healthcare facilities. It is no wonder that the WHO World Health Report ranks Malta 5th out of 190 countries on its overall health system performance, way ahead of the UK, US, or Canada.

At the same time, the island’s very low crime rate means it is a safe place to bring up children. Adults can feel equally assured that they can walk down any street at night on their own with complete confidence.

As a business destination Malta has so much to offer and as a home, who would not want to live in the happiest place on Earth?!

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Smar City A Network of Opportunities

E

arly October, excavators descended on the Ricasoli Industrial Estate in Malta to demolish the old industrial structures on the site. About 20 buildings dating back to the 1970s are being dismantled to make way for the creation of SmartCity Malta, a new selfsustained industry township for knowledgebased companies.

The demolition is symbolic of a larger transformation in Malta’s economy. The old economy based on low-cost manufacturing is giving way to a new economy based on services and knowledge-based sectors like information and communication technology (ICT) and media.

SmartCity Malta is one of the centrepieces of this economic transformation. Being developed by Dubai-based SmartCity in partnership with the Government of Malta, SmartCity Malta seeks to create a Mediterranean hub for knowledge-based industries.

The agreement to develop SmartCity Malta was signed in April 2007 between SmartCity, a joint venture between TECOM Investments and Sama Dubai (both members of Dubai Holding) and the Government of Malta.

Based on Proven Cluster Model SmartCity Malta is based on the successful models of Dubai Internet City (DIC), Dubai Media City (DMC) and Dubai Knowledge Vil-

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lage, enormously successful industry clusters in Dubai managed by TECOM Investments.

Drawing from the experience of these clusters, SmartCity Malta will build a cutting-edge business and community infrastructure to attract a rich and vibrant industry cluster of primarily ICT and media companies.

SmartCity Malta will be adapting customer service concepts from Dubai Internet City, Dubai Media City and Dubai Knowledge Village. Prime among this is the concept of a one-stop-shop of business support services.

“To facilitate the one-stop-shop at SmartCity Malta, we will be working with the Government of Malta to create a Government Services Unit (GSU),” says Fareed Abdulrahman, Executive Director of SmartCity. “This unit will operate hand in hand with various Ministries, to offer a range of support services like licensing, registration, incorporation and other governmentrelated services from one single window.”

Cutting-Edge Business Infrastructure The entire SmartCity Malta development is being designed to enable knowledge-based companies to maximize their growth potential, explains Mr. Abdulrahman.

The masterplan of the development, launched by the Prime Minister of Malta in Dubai in September, reveals a thoughtfully designed business community.

The main component is a commercial complex that provides over 100,000

square metres of intelligent office space.

Designed to the highest global standards of commercial and sustainable development, this complex will form the core business infrastructure for SmartCity Malta’s knowledgeindustry community.

SmartCity Malta will provide a harmonious and productive environment for knowledgebased companies to develop their business.

“While companies will benefit from high-quality infrastructure and support systems, knowledge workers will have the ideal environment to work, network and share ideas.

Work-Life Balance SmartCity Malta’s other components include residential, retail, hospitality and recreational facilities, which provide both a high-quality work environment and lifestyle for knowledge workers. These facilities will enable a rich community life, which in turn will facilitate an optimum work-life balance.

Over 30 per cent of the land for SmartCity Malta will be open to the public. This will feature green boulevards and avenues, an amphitheatre, a lagoon, a coastal route and vista points on the edge of a coastal cliff.

SmartCity Malta will have three urban squares and a main shopping parade. The highlight of the public space is a lagoon surrounded by a promenade which will have outdoor cafes and restaurants to serve as a meeting point and networking destination.

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rt A community centre will provide services such as a crèche, health centre, library and outdoor sports facilities such as tennis courts, playgrounds and informal green spaces. The masterplan also features a residential complex.

Economic Benefits and Business Opportunities The creation of SmartCity Malta is poised to bring a host of benefits and opportunities to Malta’s economy. At an initial investment of $300 million, SmartCity Malta is the largest foreign investment initiative in the ICT sector in Malta. It is projected to generate four per cent growth in the Maltese job market, of which, 65% will be new jobs in knowledgebased industries. The project is expected to be the largest job-creator under one roof in Malta’s history. Several other benefits are expected to be generated not only by direct development activity but also through inter-industry linkages and multiplier effects.

SmartCity Malta will have productive linkages with other knowledge-industry centres across the world by being part of a global network of industry townships that SmartCity aims to build. This global network will foster productive linkages and tap synergies between knowledge-industry centres worldwide, thereby contributing to economic development. The network will enable companies located in SmartCity Malta to access resources, skills, partnerships and business development opportunities across the world.

Talent One of the key criteria for the success of the project will be the generation of talent to cater to an expanded knowledge-based industry.

“Knowledge-based industries are hungry for talent. The world over, talent is seen as the primary resource for the ICT and media industries. So, for the success of this project, it is vitally important to have a large pool of skilled knowledge workers available in Malta,” says Mr. Abdulrahman.

‘

Our vision is to develop a global network of SmartCitys in different geographic regions worldwide.

’

Fareed Abdulrahman, Executive Director of SmartCity

“We hope sufficient talent will be generated within Malta to cater to the demand that SmartCity Malta will create. We understand that Malta’s education sector is gearing up for the large demand for knowledge workers the project will generate,” he says.

In building the project, overseas Maltese business communities around the globe could also play an important role, says Mr. Abdulrahman. “We believe they are very proud that

Malta has been chosen as the location for the first SmartCity. They can play a huge role in attracting investment to Malta,” he said.

“SmartCity Malta will also be looking to attract back some of the Maltese talent that has left the Island to work in other markets. Many industry experts in Malta have expressed concerns over the flight of scientific and technological talent. This project will contribute towards reversing that trend,” he added.

Strategic partnership What augurs well for the success of the project is that Dubai and Malta are natural knowledge-economy partners. “In terms of strategic location, size, connectivity, access to key markets, and high tourism orientation, Malta and Dubai share a natural affinity. Malta and Dubai have similar knowledge-economy aspirations. Malta’s vision for knowledgebased development finds a parallel in Dubai’s strategic plans to develop itself into a knowledge-based economy.”

“Strategically, SmartCity Malta represents an important alliance for us. Our vision is to develop a global network of SmartCitys in different geographic regions worldwide,” says Abdulrahman. “Through each SmartCity, our objective is to create a new hub for innovation and excellence in knowledge-based industries. SmartCity Malta will bring a set of unique competencies and resources to this global network.”

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© Photo: Aleksandar Jovanovic | Dreamstime.com

Hungary Your Eastern Gateway to the EU

Hungary offers countless advantages to foreign businesses, but among the most important is its strategic location in the heart of Europe. It provides an ideal base for investors looking to tap more distant markets or planning further expansion within Central Europe or the European Union

A

s a result of EU accession on 1 May 2004, investors in Hungary find themselves in a single market of 493 million consumers with enormous potential for developing new markets and new horizons. At the geographical centre of the region, Hungary is destined to become a bridge between present EU members and those countries on the verge of joining. Hungary’s increasing importance in offering logistics services to regions such as the Ukraine, Russia and the Balkan Peninsula is also a key factor for consideration. For any company entering the European market, Hungary’s central location is impossible to overlook.

A genuine business centre in the heart of Europe Hungary is one of the most successful countries in Central Eastern Europe and has developed a sound market economy. The country boasts a robust, skilled and educated workforce recognised as one of the

most innovative and productive in the world.

In addition, there has been an average 13% rise in overall productivity in Hungary annually over the past ten years. In the same period, the number of students receiving college degrees has more than doubled with a large majority speaking English and at least one other language. The country’s technological infrastructure is one of the most advanced in Central and Eastern Europe - Hungary’s vast technology sector has made it home to an advanced fibre optic network spanning the entire country.

The enlargement of the EU has also enhanced Hungary’s attractiveness as an investment location, resulting in a significant in increase in foreign direct investment into Hungary, as well as improved reinvestment of profit. Even after privatisation had practically come to an end in Hungary, FDI inflows showed a confidence in the country’s business environment. Hungary is one of the most attractive locations in the Central and Eastern European region for upgraded and high value-added investments.

A warm welcome to foreign investors Since the beginning of the transition to a democratic market economy at the end of the 1980s, Hungary has attracted a steady stream of foreign capital distributed across the various sectors of the economy. The average capital influx of 2.5 – 4.5 billion euros per year over the past 15 years shows just how effective the Hungarian economy has been at integrating foreign investment. A country of ten million inhabitants, Hungary can currently boast cumulative foreign direct investment of more than 55.2 billion euros.

In the early 1990s, privatisation, conducted freely and in accordance with the rules of the market - a unique phenomenon in the region at the time - was the main incentive for foreign investment, although investment in new industrial facilities was also gaining popularity. Today, new incentives for foreign businesses are available and a new direction for incoming capital has evolved.

Hungary is truly a welcoming land for foreign investors - and a land of opportunities. To date, more than 30,000 foreign

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A new structure for FDI One of Hungary’s most important advantages is its location in the centre of Europe, both figuratively and geographically, as well as in terms of history, culture and economy. North and south, east and west can all be easily reached from here thanks to the four PanEuropean transport corridors that cross Hungary and intersect in the capital Budapest.

This makes it possible for Hungary to serve as a base for further expansion for investors with greater business objectives that target more remote areas.

Hungary is a top destination for foreign suppliers in the automotive, electronics, biotechnology and IT sectors. A significant number of leading multinationals have established their shared service centres and regional headquarters in Hungary. Deutsche Telekom, GE, Audi, Siemens, Philips, Suzuki, Denso E-On Energie, Ericsson, Nokia and many others have chosen Hungary as an investment destination.

Today, both investors and the government, through its pro-active investment promotion strategy, are focusing on higher valueadded manufacturing and development activities. These include the automotive and aerospace and aviation industries, as well as IT development and related high-tech production operations. Further attention is paid to services emphasising shared service centres, call centres and outsourcing activities. Logistics is another important sector in Hungary. The country’s favourable location makes it an ideal European or regional hub for large foreign corporations, perfect for expanding towards less developed markets and within easy reach of all 493 million people in the EU. Although this alone would be sufficient to account for a highly developed logistics industry, the present standard of service and potential for growth also stems from a tradition of work done by Fortune 100 multinationals in Hungary. Last, but definitely not least, Hungary is making great strides in biotechnology and life sciences promised by its traditionally strong pharmaceutical industry and high levels of education.

This apparent shift from labour- to knowledge-intensive activities in the past one and a half decades is a result of a natural development of the country’s economy, driven by government incentives and special attention given to priority sectors. The working culture of multinational companies has been adopted though a painful but overwhelmingly rewarding process. Ability to work in this environment has now developed into a

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key feature of the Hungarian labour market, but wages and associated costs are still well below those in Western Europe.

A great place to live and work The quality of life that Hungary offers to foreign investors and employees in Budapest and throughout the country is an important factor when businesses consider locating here. Expats working in Hungary for extended periods have not been disappointed: they have found living in Hungary pleasant and Budapest exciting and less expensive than other major European capitals. Moreover, the country boasts a rich and internationally recognised culture, distinctive cuisine, superb wines, a spa tradition stretching back centuries, excellent international schools (British, American, Japanese and Chinese, for example) and countless leisure activities and facilities.

ITDH - Your password to Hungary ITDH is the Hungarian government’s Investment and Trade Development Agency and serves as the information and consulting centre for foreign investors in Hungary.

The agency assists investors through its extensive network of contacts in the private sector and in government office, and through its representatives both abroad and in Hungary.

ITDH is a non-profit organization and one-stop-shop for information and mediation, helping foreign companies prepare investment decisions by finding suitable sites for operations in Hungary, as well offering comprehensive advice on government incentives.

ITDH was established in 1993 to promote international economic relations and business affairs that affect the Hungarian economy. As a state agency, ITDH is directly involved with the implementation of Hungary’s economic policy.

With a pro-active stance, ITDH promotes FDI towards Hungary, particularly in the technology sector and in areas where investments can produce higher added-value, such as the country’s world-renowned R&D capabilities. Participating in 30-40% of new foreign investment projects in Hungary, ITDH is well placed to promote Hungary’s international competitiveness. As well as encouraging inward investment, it helps local companies diversify their export markets, promote working capital exports and enhance third market investment cooperation. By assisting firms in promotional activities and helping them identify new marketing opportunities, ITDH also helps promote Hungarian exports abroad.

To improve administrative efficiency, ITDH

introduced the one-stop shop operating model in 2005 to provide free and confidential service for improved administrative efficiency. It helps cut through the red tape associated with doing business abroad and provides essential information for sound investment decisions in Hungary. Its areas of expertise include the labour market, the education system, availability of industrial sites, trends in macro-infrastructure development projects and maintenance of interactive supplier databases.

© Photo: Andreea Székely | Dreamstime.com

companies have settled here and this figure is increasing every day.

ITDH IN BRIEF Many of the greenfield foreign investments undertaken in Hungary since the establishment of ITDH in 1993 have been initiated or assisted by the agency. Foreign companies supported by ITDH include: Aikawa, Artesyn Technologies, Asahi, Audi, Bosch, Bridgestone, Delco Remy, Delphi-Calsonic, Denso, Diageo, EDS, Elcoteq, Flextronics, Foxconn, GE, Grundfos, Hankook, Ibiden, IBM PLI, Jabil, Michelin, National Instruments, Renault, Ringier AG, Sanyo, Samsung, Sumitomo Interconnect, Suzuki, Toyo Seat, Thyssen, TDK, Visteon and Wescast-Linamar.

The agency managed more than 5.5 billion euros of Foreign Direct Investment (FDI) in Hungary between 1998 and 2006. Total FDI stock in Hungary currently equals 55.2 billion euros. ITDH employs trade commissioners with profound knowledge of the world’s business markets and boasts a comprehensive network of offices all over the globe.

For more information please contact: ITDH The Hungarian Investment and Trade Development Agency Budapest, H-1061 Andrássy út 12.

Tel.: +36 1 472 8100 Fax: +36 1 472 8101 Trade Development: info@itd.hu Investment Projects: investment@itd.hu www.itd.hu

videoconferencing

VIDEOCONFERENCING from cost savings to complete collaboration

Videoconferencing has come a long way since it was first demonstrated in 1968, and in the last five years has taken a quantum leap in terms of quality and usability

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W

hen thinking about videoconferencing, many people’s views are stuck in something of a time warp - believing it to be a poor quality, awkward means of communicating with colleagues. But videoconferencing has come a long way since it was first demonstrated in 1968, and in the last five years has taken a quantum leap in terms of quality and usability, with Polycom in particular pioneering the way with High-Definition (HD) seamless collaborative communications.

What’s making videoconferencing so important in today’s modern, globalised business environment and why is the term ‘collaboration’ becoming a new buzzword?

Whilst the immediacy of a videoconference and collaborative communications meeting is plain to see, exactly how does this translate into giving organisations a competitive edge?

As the world’s leading provider of unified collaborative communications Polycom recently sponsored analyst house IDC to explore the reasons why so many Fortune 1000 companies have decided to invest in videoconferencing technology solutions.

Steve Leyland, EMEA MD, Polycom, believes that there is still a lot of work to be

done before senior executives from outside large, multinational companies, start to recognise the true potential in videoconferencing, aside from the cost savings and reduced carbon footprint that it brings.

“IDC’s research shows that collaboration is extremely valuable to an organisation, especially to a large, multinational company where offices are often dispersed, creating geographical silos of expertise,” explains Steve Leyland. “These companies know that to stay ahead of the game, they need to have something cutting edge, immediate and productive to keep the cogs of the company functioning in today’s ‘real-time’ business world. This is where videoconferencing plays a major role for them.”

The research found a 30 per cent increase in productivity as companies started delivering a faster turnaround of projects as videoconferencing took place in meetings that no longer had to be delivered in person. In addition, where disputes occurred within a company, respondents from the research attested to quicker resolutions via videoconferencing; in fact, one global pharmaceutical company saw a 75 per cent increase in resolving disputes faster as videoconferencing cut-through cultural and language barriers.

“Video collaboration affects business processes such as development and design by bringing disparate teams together

videoconferencing

‘

Video collaboration affects business processes such as development and design by bringing disparate teams together in real-time.

Steve Leyland, EMEA MD, Polycom

in real-time,” adds Steve Leyland. “When virtual teams are created ad hoc and use video, faster decisions can be made. Videoconferencing is not about diffusing communications over large distances, but about diffusing information accurately and instantaneously to those who need it at the optimum point of the decision-making process.

Getting employees to use videoconferencing as a collaborative tool will immediately be presented with the advantages, in a very tangible manner.”

Polycom’s research has shown consistently, through customer examples, that videoconferencing is more than just a means to lower costs and carbon footprint. It has emerged as an important collaborative and indispensable tool that can remove geographical boundaries, encourage cross-cultural and frequent discussions between disparate business units, increase productivity and deliver a competitive advantage.

The near future will see HD videoconferencing systems becoming an increasingly important part of the corporate collaboration toolset delivering crystal-clear audio and visual experiences that will enable users to catch even the most subtle of changes in facial expression. Polycom leads the way with the industry’s only complete high definition (HD) communications and collaboration solution, UltimateHD. Unlike other solutions,

’

this goes above and beyond high quality HD video, enabling total high definition for every aspect of the collaboration experience including voice, multimedia content, and support services. Such a change in multimedia conferencing can revolutionise the way businesses make decisions. The high quality of the virtual experience delivered allows people from thousands of miles away to study products and people in unrivalled detail, again allowing for high speed decision making and ultimate remote working.

UltimateHD is available to the desktop, the conference room, even in the classroom or hospital, opening doors for further environmentally friendly and productive business practice.

The recent emergence of ‘telepresence’, where end users experience a realistic meeting by combining very-high-quality audio and video communications within two nearly identical physical environments, show that the videoconferencing future is here with real-time, distortion-free collaborative communication available today. Stunningly realistic, on-demand virtual meetings can be achieved with the Polycom RealPresence Experience suite (RPX). This telepresence suite, including a high resolution screen wall to create a virtual meeting room, couples technology for perfect eye-to-eye contact with real-time sound and image quality that is second to none, creating a new standard for communication and collaborative technology. The RPX meeting environment is so lifelike that the personal touch of a face-toface meeting is recreated. For organisations looking to remove the cost and time implications of board level and senior management travel across multiple geographic locations, an RPX suite can lead to higher productivity, increasing face time and in many situations accelerate the decision making process.

Clockwise from top left: The HDX4000 Executive Office, RPX204 Large Conference Suite, the HDX MicPod Small Conference Room, HDX4000 console.

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videoconferencing

Videoconferencing linking you to the globe You only have the choice between a $300k Telepresence environment and a $30k videoconferencing system.

Do you?

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Y

es, if you look at the offering of leading conferencing systems vendors and no, when considering end-user requirements. There is a considerable market for conferencing solutions which address important features of Telepresence systems but are closer to the costs of a videoconferencing unit.

Giant IT vendors such as Cisco and HP have entered the Telepresence market place. The videoconferencing industry with its market leader Polycom profits from the boost these two key players have generated. Large multinational organisations have deployed videoconfer-

encing systems for years and have recently rolled out or are about to procure Telepresence facilities for their executive teams. The ratio of videoconferencing to Telepresence rooms is around 70 to 1 for organisations which already deploy Telepresence systems. It is currently out of question for these corporations to substantially grow the Telepresence network because of the immense procurement and recurring costs. Most small or medium sized enterprises do not even consider investing into a Telepresence suite.

Telepresence environment Along with the high costs, the other factor preventing Telepresence from taking off are the compatibility issues. Due to missing

what is high definition telepresence?

videoconferencing

Main picture opposite: Telepresence environment by Polycom RPX. Above: HP Halo Telepresence facility. Below: Video quality also depends on the image resolution:

standards, the Telepresence systems of different vendors cannot connect to each other. Also the compatibility between Telepresence facilities and videoconferencing systems does almost not exist except for vendors such as Polycom which manufactures both, Telepresence and videoconferencing systems.

Telepresence facilities are typically designed as a total solution even including furniture and lighting, network connectivity and operation services. The approach for setting up a videoconferencing room starts very often with the procurement of videoconference base unit which then will be integrated into an unchanged meeting room, connected to the existing projector and using the existing network. This can be done with success in some cases. However, such an approach very often leads to an unreliable conferencing network and does not deliver the necessary audio and video quality for a productive meeting. A first step to improving the user experience is the investment into integrated videoconferencing equipment.

Such environments combine the videoconferencing system with the camera, displays, microphones, loudspeakers and a stand into a well aligned solution. Such an integrated system is suitable for small and medium sized rooms for 6 to 8 persons. The 50 inch displays are too small for larger room environments. Especially when it comes to document presentations a projector is the preferred device for large rooms. The image

Telepresence is a high quality videoconference with which the conference partners at the far end site are being perceived in an authentic manner. Based on High Definition (HD) video and audio quality, the remote person is being seen and heard almost as if he or she were in the same room. Telepresence only came in vogue last year. HP, a market leader, has an installed base of around 120 Telepresence facilities in 22 countries.

The exorbitant recurring costs of $10k to $30k per month are due to the immense network bandwidth requirement of such solutions and the staff required operating these environments.

One of the technical key elements of a Telepresence system is the use of several people cameras which simultaneously capture the individuals in life-size video.

The total incompatibility in between Telepresence systems of different vendors and the very limited compatibility from a Telepresence facility to a videoconferencing system are mostly due to the multi camera deployment.

Key arguments for using Telepresence and Managed Videoconferencing facilities: • Executives, Boards of Directors and subject matter experts use their time in meetings more effectively because their focus is on the discussion at hand, not the technology. • Productivity is increased because workers spend more time working and less time travelling.

• Business relationships develop and become more solid through continual, face-to-face Telepresence communications. • Sharing of ideas across distances is enhanced through content sharing and collaboration in conjunction with a real-life video presence. • Limited financial and human resources that were spent on travel can be channelled into more productive efforts that will promote the value of the organization.

size may be scaled to the necessary size for any content being readable for the conference attendees.

Choosing the right peripheral devices to the videoconferencing system is obviously one of the critical success factors. The integration of the various devices into a monolithic system and the manageability are further challenges to address. For cost reasons you want to avoid a regular on-site technician for the day to day use of a videoconferencing facility. That may be ensured by integrating a device management system which can fully be operated remotely. As a consequence a “Managed Videoconferencing facility” has finally been developed. The investment costs would be around $100k and considerable lower than the price for a Telepresence system. The barrier for any organization to invest into high quality and reliable conference technology has further come down.

Symetria Ltd www.symetria.com +41 (0) 52 354 59 00

Videoconferencing - a brief history Videoconferencing has been around since more than a decade. All manufacturers adhere to industry standards ensuring compatibility in between systems of different vendors. Almost 50’000 room videoconferencing systems were sold worldwide in the second quarter of 2007.

Videoconferencing has passed the cross-road of entering the High Definition (HD) era last year. HD audio and video quality considerably improves the user experience.

People from three or more locations meeting in the same virtual conference room is being called a Multipoint conference. The use of Multipoint applications, involving videoconferencing systems and telephones, is a standard application today.

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entepreneurial education

entrepreneurs

are made, not born JA-YE “Too many young people still believe it is enough if they simply manage to find a job. But we need more entrepreneurs who realize that the secret of success lies in creating jobs”, Caroline Jenner, CEO of JA-YE Europe.

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left to the rest of us to put into action. The reality is that less than 5% of young people in Europe actually have access to entrepreneurship education in school. The EU’s new business start-up rate at 5%, is half that of the OECD. So, we need dedicated space in our school curriculum, as we have for all the other competences; dedicated space out of our work time to volunteer as a mentor or adviser; dedicated space in our teacher training; dedicated space inside our tax and legal systems to support these programmes for people under 18. While we believe JAYE is contributing a healthy portion of those numbers—we represent the largest enrollment in Europe--and have set our own goal of 5 million by 2010, we are certain that Europe can be doing much more to facilitate access to enterprise education.

According to our own research, we know that 77% of our graduates want to be selfemployed. We know that 29% will go on to start their own businesses within 10 years of completing the Company Programme.

This means that such programmes are adding tremendous long term economic impact. The difference between 29% and 5%, means that with our company programme alone we are producing approximately 4800 new businesses every year.

One of our biggest struggles is to get the business community engaged. The Euro-

pean Commission and many national governments (though not all) have picked up the ball and are taking important steps forward, but unless Europe’s business leaders choose to enter this space, we will never create the enterprising culture that we know Europe needs. There has to be a concert of input and participation, a balance between educators, policy-makers and business people for it to work. Bridging this gap is a matter of urgency and the responsibility lies with business and community, as much as with government.

“The JA-YE Company Programme was an excellent opportunity to try out running a business. Going through the aspects of company formation, accounts, business planning, sales and marketing was a great experience. If it wasn’t for JA-YE I would never have started my own business so early”, said Anders Riedel, founder of 2proceed, Denmark.

© Photo: Yuri Arcurs | Dreamstime.com

G

etting young people engaged in entrepreneurship is about appealing to their individuality, creativity and personal interests. Innovation comes naturally if young people have high inner motivation and are given the opportunity, early in their education, to think of solutions to the many needs there are in their communities.

Entrepreneurship education is something we have to think about in 360°. It does not ‘belong’ to the education world or the business world or a particular government ministry. It is cross-curricular and engages a multitude of disciplines. It has to be addressed by all kinds of participants in the community. This diversity of participation is precisely what makes this kind of education work. Student companies, for example, are a methodology that allows us to bring young people into active and creative contact with the community around them; they work with their teachers and their advisers from the business world, but they are also in touch with the public, with partners and suppliers, and of course with their competitors.

Much has been said about ‘entrepreneurship education’ at the political level, but as we all know those are just words that are

business education

Business School

RANKINGS content & context How Kai Peters came to love the rankings and learn to ‘play the game’ MBA rankings affect business. The Wharton School at the University of Pennsylvania ranked number one in Business Week’s biannual ranking four consecutive times between 1994 and 2000. During that period, Wharton’s applicant pool grew from 4,300 in 1993 to 8,400 in 1999. Following the 2001 Wall Street Journal ranking placing Dartmouth’s Tuck School first, enquiries increased from about 7,500 in September 2000 to more than 12,000 a year later.

A

ccording to the Graduate Management Admission Council’s (GMAC) Global MBA Survey of 2001 and confirmed in subsequent surveys, 95% of graduating MBAs said that school rankings had more influence on their decision-making process than any other media source.

Schools confirm this driver. In extended telephone interviews with 12 European schools ranked in the Financial Times fulltime MBA ranking, respondents unanimously stated that rankings strongly influenced prospective students.

By extension, positive rankings improve quality. The increased selectivity at admissions allows schools to pick the best possible candidates. These candidates are more attractive prior to their MBA and are logically more attractive with the added value of their MBA. Not only are they inherently more attractive but, of course, recruiters also read rankings and will recruit from highly ranked schools Since there are simply too many schools to choose from in the total pool, recruiters

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select ten to 15 schools that fit the profiles they seek.

“The snowball effect of the rankings promotes a ‘rich get richer and poor get poorer’ cycle and creates a ‘Catch-22’ trap from which it is difficult to extricate oneself, win or lose,” researchers Dr Kevin G Corley and Prof Dennis Gioia reported in 2000.

History The ranking of business schools is not new. The Carter Report, the Ladd & Lipset Survey and the survey of the now defunct MBA Magazine all appeared in 1977. Carter measured research output; Ladd & Lipset questioned business school faculty about which schools they thought were best; and MBA Magazine asked deans to vote. Inevitably, different results appeared as different criteria were used. These early surveys were fundamentally based on insider perspectives and were not widely circulated.

The breakthrough came in 1988 when John Byrne at Business Week constructed a survey that moved beyond industry insiders and effectively began a trend in which salaries formed the key component of busi-

ness school success. This was the first survey to receive wide circulation. The ranking measured student (45 %), recruiter (45%) and intellectual capital (10%) scores.

US News and World Report launched a US-based MBA ranking in 1990 measuring reputation (40%), placement success (35%) and student selectivity (25%).

The Financial Times, responding to criticism that both Business Week and US News were too US-biased, launched an international ranking of MBAs in 1997. To differentiate, the FT awarded 20% for international diversity and 25% for research performance in addition to 40% based on salary progression and 15% based on student selectivity and quality.

To complicate matters further, in 2001 the Wall Street Journal hired Harris Interactive, a polling firm, to conduct a survey based 100% on recruiter opinions.

Since then, additional surveys have been created by Forbes Magazine, the Economist Intelligence Unit, the Aspen Institute, America Economia, Asia Inc, Handelsblatt, Intermediair and a range of others.

Inevitably, there has even been a consoli-

business education

95% of graduating MBAs said that school rankings had more influence on their decision-making process than any other media source

This article was first published in Global Focus, the business magazine from the European Foundation for Management Development (EFMD) www.efmd.org © Photo: Trout55 | Dreamstime.com

dated ranking stitching all of these rankings together. The proliferation of rankings has led to a parallel proliferation of academic commentary. There are basically two streams of response.

The first attacks the methodologies employed in the rankings and attempts to undermine the statistical veracity of the results.

The second, generally using grounded theory, looks at business school reactions to the “game”. Both deserve attention.

Critique of methodologies Criticism of the statistical validity, the weightings given, the methodologies employed and the factors used is easy. US News reportedly accepted information based on the response of “at least three students, or 1% of the graduates” up until 2001. Dr Martin Schatz states that the methodology used by Business Week “would not rate a passing grade in any of the schools that the survey ranks”.

Some academics then attempt to redefine methodologies. Dr Joseph Tracy and Prof Joel Waldvogel created a complex algorithm to isolate the economic value added of a business school to distinguish the quality of the programme from the quality of the students.

Working parties have been launched in Europe to attempt to find commonality around criteria and methodologies in a mar-

ketplace where schools actually agree about very little. Others, either out of frustration or light-heartedly, have analysed existing ranking results, with Dr Schatz indicating that he “delivered a ranking which is essentially the same as Business Week and US News combined” by averaging the relative scores for GMAT test results and starting salaries of MBAs. Not to be outdone, your contributor has correlated MBA tuition fees and rankings based on the 2006 Financial Times MBA survey. Acknowledging issues of currency fluctuations and a need for absolute rather than relative scores for schools, the correlation is nevertheless there, explaining 30% per cent of ranking results. R 2 increases to 0.4 when the 2006 price is correlated with the 2004 ranking.

This suggests that a positive ranking raises a school’s confidence to increase prices for future programmes. The top decile of schools, on average, charges $79,959, indicating a rankings premium substantially above the “best-fit” line, while the bottom decile charges $36,966. This is not that surprising as many of the criteria on which schools are evaluated are resource-dependent: more leads to more and exclusivity is self-fulfilling.

Critique of ‘the game’ The other academic stream to emerge

from the rankings literature is ultimately more fruitful and emerges from articles concerning reputation and behaviour. Luis Martins completed his doctoral dissertation Organizational adaptation to reputational rankings: the role of managers’ strategic issue interpretations in 1997.

Dr Martins looked at responses from 59 ranked schools to good or bad rankings and controlled against a group of 60 unranked schools. Unsurprisingly, well-ranked schools thought rankings were valid. Poorly ranked schools disputed their validity.

Strangely, ranked schools took more action to address underlying issues that the rankings brought up and to the rankings process than did unranked schools, who evidently felt that getting into the rankings was next to impossible and thus futile.

Dr Corley and Prof Gioia and Ilja van Roon respectively focussed on the behaviour of ranked schools in America and in Europe.

Both studies noted high degrees of frustration among business school professionals. Rankings criteria are defined outside business schools and change over time, making them capricious. Complicating matters further, criteria among different rankings, as noted earlier, measure different attributes. Even if a school wanted to, optimising Schools are attempting to contradict the rules set out in ‘the game’. Both in North America and Europe, some schools are not supplying data to the rankers in relation to all rankings would be impossible. Just between US News and Business Week, over 90 attributes are measured.

Given these constraints, business schools nevertheless acknowledge the influence that rankings exert. Dr Corley and Prof Gioia anchor their Catch-22 thesis in the idea that the game has a number of rules:

• You must play the game or be

significantly disadvantaged

• Once you are in the game, you cannot quit without serious consequences

• Protest is futile and can antagonise

rankings organisations

• Criteria change over time • You cannot really win The future With these sobering admonitions in mind, what can one observe in the landscape today? Judging by interaction with colleagues in a number of settings (such as the EFMD Annual Deans Meeting rankings debate in Rotterdam in January 2006 a frustration with rankings.

Schools are attempting to contradict the rules set out in “the game”. Both in North

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business education America and Europe, some schools are not supplying data to the rankers. Others are convening working parties in which to review all potential criteria, proposing, inter alia, to expand the list of academic work included, to review international factors including job placement and the cost of living in various locations, and to propose ways of measuring reputation.

These initiatives arise because schools are frustrated with journalists determining criteria in a “one size fits all” manner in different ways for different publications.

On the other hand, many schools have come to terms with the reality of rankings and they are learning how to work with them. Rankings cause schools management to reflect on a broad range of conditions and outcomes related to their schools.

They can tackle issues where they feel that a particular criterion does touch upon a real issue.

Additionally, due to the profusion of rankings and because they have been part of the business school environment for quite a few years, one can observe less rankingsrelated tension both among schools and among rankings journalists.

The profusion of rankings means that there

$79,959 The top decile of schools, on average, charges $79,959, indicating a rankings premium substantially above the ‘best-fit’ line, while the bottom decile charges $36,966

is always a criterion or a previous iteration of the rankings in which one’s school has done particularly well and which is then proudly advertised in the schools advertising or collateral material whether it be ”the greatest diversity” or “highest salary increases” or simply “the best school in Berkhamsted”.

Rankings are here to stay and they will continue to affect the fortunes of business schools. The criteria upon which the rankings are based will continue to change and deans and marketing directors will continue to search, in vain, for a proactive strategy in the rankings marketplace.

That said, research indicates that it is better to “play the game” than to boycott the rankings, since bad publicity is better than no publicity.

Lastly, rankings have brought some external scrutiny to the performance of business schools and have, in part, contributed to quality improvement among MBA programmes specifically and business schools generally.

ABOUT THE AUTHOR Kai Peters is chief executive of Ashridge Business School in Berkhamsted, UK. www.ashridge.org.uk

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factoring

FACTORING

© Photo: Linda & Colin Mckie | Dreamstime.com

GROWTH Factoring activities in Europe continue to grow with double digit figures year after year.

M

ore and more companies find their way to a factoring company to finance their accounts receivables, often in combination with credit protection and outsourcing of the collection activities (more than 100.000 European companies are estimated to use factoring). On request of the European Investment Fund (EIF), the International Factors Group (IFG) has recently conducted a survey on Factoring in the 27 European Member states.

On average, factoring is 26 years old in Europe, but the first factoring activities started at the end of the fifties-early sixties. More than 300 factoring companies are active in Europe today, of which the most impressive number in the UK, Italy and France. (more than thirty factoring companies are active in each of these countries). But in general the factoring market is still relatively concentrated with the three biggest players per country sharing together over 80% of market share on average. From this top 3 of factoring companies in each country, more than 80% is a subsidiary of a bank and more than 12 % is a division of a bank. It is clear that the industry is dominated by banks, and with Basel II approach-

ing, the strategic importance of factoring for commercial banks will probably even increase in the near future.

The European countries where factoring is mostly used are the UK and Ireland (turnover of 226 Billion Euro in 2006), followed

by Italy (111 Billion Eur), France (89 Billion Eur), Spain (56 Billion Eur) and Germany (55 Billion Eur). More than 80% of the factoring users are SME’s with an average turnover of 2,8 million Euro and who obtain on average approximately 450.000,00 € of financing facility through their factoring agreement. The total factoring market in Europe being 653 Billion Euro, one cannot underestimate the importance of this financial service for a sound development of SME’s.

Big differences between European countries can however be observed: some countries such as the UK have high penetration rates (factoring turnover compared to Gross Domestic Product) of more than 10%, while other countries such as Malta, Romania or Bulgaria remain under 1% of factoring penetration.

The conclusions of the EIF-report on factoring were that a continued growth can be expected (first and foremost with confidential “invoice discounting” factoring agreements, but also in more and more so-

phisticated forms of asset based financing).

Another conclusion is the necessity for the industry to organize itself in order to reserve its own place at the table of high finance, because even though banks own most of the factoring activities, factoring is very different from banking and asks for other people skills, other operational procedures, other information technology...

Another reason to organize the industry on an international level is the lack of awareness and the poor image of factoring, which is quite amazing for an industry which exists since more than 50 years. And also in the legal environment, it is necessary to try and come to a more homogenous playing field for factoring activities.

The International Factors Group has accepted this challenge and is today the leading global Industry association, assisting its members in their cross-border business and by giving them access to industry information, training, education and networking activities.

For more information: please contact IFG’s Secretary General, Erik Timmermans at e.timmermans@ifgroup.com or go to www.ifgroup.com.

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RFID

An introduction to

RFID © Photo: Albert Lozano | Dreamstime.com

Radio Frequency Identification (RFID) is evolving as a major technology enabler for tracking goods and assets around the world.

I

t can help hospitals locate expensive equipment more quickly to improve patient care, pharmaceutical companies to reduce counterfeiting and logistics providers to improve the management of moveable assets. It also promises to enable new efficiencies in the supply chain by tracking goods from the point of manufacture through to the retail point of sale (POS).

As a result of the potential benefits of RFID, many of the world’s major retailers have adopted RFID tagging for pallets and cases shipped into their distribution centres. The consequence of this RFID activity in the retail sector is likely to impact on around 200,000 manufacturers and suppliers globally, and will fuel the market for hardware and software to support RFID. RFID has many applications outside of the retail supply chain including some surprisingly familiar ones such as car key-fobs, mass transit (such as the London Transport Oyster card), ski resort lift passes and security badges for access control into buildings.

It is often described as a transformational technology in terms of its potential impact on business processes and systems. However, in many ways it is a logical evolutionary step on from the barcode as a way of gaining increased labour productivity through automation.

When used in conjunction with allied technologies it can remotely sense objects to determine their identity, track their position and detect properties such as pressure and temperature.

RFID equipment has steadily fallen in price as volumes increase and microchip unit production costs fall. With the ability to store several k bytes of data in addition to the ‘number plate’ identifier it could be viewed as a form of ‘mass distributed database’ that has the potential to become ubiquitous - billions of tags in daily use throughout the world on all objects that are produced, stored, moved, sold and maintained.

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RFID

Protecting the consumer and defending the brand with

Product Tracking

Strategies

By Simon King, Director of Domino Integrated Solutions Group*

Traceability is playing an increasingly important role in the everyday transactions that we conduct as consumers. As society becomes ever more litigious, so the need to monitor production flow right through to the consumer assumes greater significance.

O

ne only needs to look at the recent recall involving sense that each utility bill we receive and each scratch card we buy is world-leading toy manufacturer Mattel to realise the result of mass production but each carries a unique identity. the importance of transparency and traceability in The difference between these applications and mass serialisation as the supply chain. To put the recall into commercial applied for traceability purposes in manufacturing is how these unique context, Mattel has made a provision of $30 million identities are used. With a utility bill, for example, the identity serves to to cover the direct costs of retrieving products from ensure that we pay the correct amount for the volume of product we the field but analysts forecast that the cost of restoring the company’s have consumed and that the resulting bill reaches us safely. Full tracetarnished image will be many millions of dollars more. ability, by comparison, demands that we can track and record indiWhat this incident proves is that although the models may differ, tracevidual items from the point of manufacture, through highly complex and ability is just as relevant to low-value, high-volume products – many of often international supply chains right to the consumer. Accordingly, the Mattel toys involved in the recall cost a sophisticated database documentlittle more than a dollar apiece – as it is ing each transaction in the supply chain to high-value items. Pharmaceuticals, is required so that the location and food, fashion items, toys, parts/compoprogress of any item can be pinpointed nents, luxury goods: whether the need on demand. begins at item or at batch level, traceThe construction of any such track ability is a topic that affects every sector and trace system involves choices relatof the supply chain. ing to the means of assigning the idenTraceability systems offer numertity (typically known as the data carrier) ous potential benefits: protecting the and how that identity will be applied (by consumer, safeguarding the reputation an on-line printer or label applicator). of the manufacturer and the brand, Much debate centres on the choice combating counterfeiting. Perhaps less of data carrier: few in industry can be critical but certainly of considerable unaware of the furore surrounding RFID commercial significance is the pos(Radio Frequency Identification) or of sibility for manufacturers to establish a the dramatic projections about its updirect relationship with end users via a take and potential relative to other data traceability system. Brand loyalty is a carriers such as bar- and two-dimen© Markus Gann | Dreamstime.com priceless commodity that depends on sional matrix codes. engaging the customer via every available channel and the odds on The pharmaceutical sector is leading the way in the development of achieving this marketing ‘Holy Grail’ are shortened considerably when the track and trace systems, with perhaps the most notable aspect of curmanufacturer knows precisely who is buying his products, when and rent pilot schemes is how expectations of the role of RFID have shifted from where. during development. Initial predictions that RFID was a ‘silver bullet’ A pre-requisite of any such scenario is product tracking – typically that would address every aspect of identification have not yet been known as ‘track and trace’ – where machine- or human-readable codes borne out. that can be tracked right through the supply chain are applied, typically Over the past twelve months there has been technological consoliat batch level but increasingly at item level for high-value or high-risk dation around the 2D (two-dimensional) Data Matrix code as the ‘data items. From a straightforward technical point of view, applying unique carrier of choice’ at item or patient pack level at the present time, in codes at item level represents no real challenge – it’s been happening preference to other technologies – in particular, to RFID. Regulatory in the document production and gaming fields for many years, in the bodies in Europe and the US have both endorsed 2D Data Matrix as the

managinggrowth | 65

RFID

Clockwise from top: Camera mobile phones can now be used to provide on-the-spot real-time verification of codes. Coding of products at unit-of-use and pack level forms the basis of a transparent traceability system. Use of RFID tags at case and pallet level adds flexibility and additional features to supply chain security. Data Matrix is an ideal format for encoding a large amount of information in a small space

best current basis for establishing so-called electronic pedigrees within the pharmaceutical supply chain.

It is worth reviewing the respective features and capabilities of 2D Data Matrix and RFID. 2D Data Matrix is highly regarded for its ease of application, robust structure and the volume of data that it can encode in a very small space.

Using 2D Data Matrix, then, randomised numbers can be assigned at patient pack level – or even below. From an aggregation point of view, these unique codes can then be assigned to secondary packaging and onwards in increments as each additional packaging step – bundle, case, and pallet – is completed. These codes are the building blocks of a completely transparent traceability system which associates packaged items at every level with each other, so that every individual ‘unit’, whether a tablet, blister strip or complete pallet, can be traced through a structured relative hierarchy up and down the supply chain.

A further important benefit of 2D Data Matrix is the availability of accessible and affordable verification technologies to provide in-the-field product authentication. Codes can be read using online packaging security systems common in pharmaceutical plants as well as by handheld scanners used in pharmacies. Recent advances even enable camera mobile phones programmed with specially-adapted decoding software to verify a code on-the-spot, thereby delivering real-time product identification and authentication anywhere in the world, around the clock.

These are persuasive arguments for a prompt move to a track and trace infrastructure based on 2D Data Matrix. But RFID offers the potential to add new features to supply chain security. As a line-of-sight technology, 2D Data Matrix depends on a fixed physical relationship between the reading device and the data carrier, and so is not as flexible as RFID in certain applications. For example, UHF RFID delivers a combination of longer read ranges and higher data handling rates that enables the technology to simultaneously monitor multiple pallets as

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they pass through a warehouse. The latest RFID tags can also incorporate sensors to monitor the environmental conditions that a product is subjected to in the supply chain – for example, shock, temperature and humidity – and adding GPS technology can provide real-time information on the exact location of products.

Such possibilities make it an odds-on certainty that the role of RFID in securing the supply chain will steadily expand, but technical obstacles remain for now. RFID may be able to read tags remotely, but this is often impractical on very small items simply because the smaller the tag, the smaller the antenna and hence the shorter the ‘read distance’, i.e., how close the reading device has to be to the tag to ensure an accurate results. Consequently, RFID tags are ideal for cases and pallets but 2D Data Matrix is preferable at pack, item, and unit dose level and below.

Other current hindrances to widespread RFID adoption include consistency of read rates (which need to be 100% if the supply chain is to be 100% secure), cost, disruption to radio signals caused by liquids or metals and the suspicion in some quarters that the technology may be detrimental to sensitive live products such as vaccines.

Not surprisingly, intensive R&D efforts are being mobilised to overcome these obstacles and every prediction about the future structure of secure supply chains envisages an important role for RFID. *Domino’s Integrated Solutions Group is a leading innovator of technologies and solutions that provide full traceability and product security systems ranging from initial needs-based consultation, technology evaluation and testing through to full systems implementation. The successful integration of RFID and its inter-operability with common alpha/numeric and 2D codes is central to Domino’s total systems/open platform approach. By integrating leading AIDC (automatic identification and data capture) technologies, combined with powerful data management platforms, Domino delivers bespoke, scaleable track and trace solutions embracing every stage of the supply chain.

© Photo: Vladislav Susoy | Dreamstime.com

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About Domino Printing Sciences Founded in 1978 and headquartered in Cambridge, UK, Domino Printing Sciences plc is a world-leader in providing total coding, marking, printing, traceability and RFID solutions. Through constant product development and acquisition, Domino now offers complete end to end solutions incorporating primary, secondary and tertiary applications. The company has established a global reputation for innovative ink jet, laser, print & apply and thermal transfer overprinting technologies for the application of variable data, bar codes and unique traceability codes onto products and packaging in industries such as food, beverage, construction and pharmaceutical.

In 2006 Domino had a turnover in excess of £208M. It employs 1,800 people worldwide and sells to more than 120 countries through a global network of 16 subsidiary offices and more than 75 distributors.

Domino’s manufacturing facilities are situated in China, Germany, India, UK and USA.

Domino.

Leading the world in variable printing and coding solutions

Domino Integrated Solutions Group Domino’s Integrated Solutions Group is a leading innovator of technologies and solutions that provide full traceability and product security systems ranging from initial needs-based consultation, technology evaluation and testing through to full systems implementation.

The successful integration of RFID and its inter-operability with common alpha/numeric and 2D codes is central to Domino’s total systems/open platform approach. By integrating leading AIDC (automatic identification and data capture) technologies, combined with powerful data management platforms, Domino delivers bespoke, scaleable track and trace solutions embracing every stage of the supply chain.

Simon King is the Director of Domino’s Global Integrated Solutions Business Group, with headquarters in the UK and operations throughout North America, Europe and Asia.

With 15 years experience in the industry, Simon has managed a number of Domino’s channels and run product based strategic business units. He is currently focused on ensuring that Domino is at the forefront of the developing Track, Trace and product authentication industry.

For more information, please contact: Simon King Director of Domino Integrated Solutions Group Domino Printing Science plc T: +44 (0) 1954 782551 simon.king@domino-uk.com www.domino-printing.com

managinggrowth | 67

DELIVERING THE CASH and more besides

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By Philip King, Director General of the Institute of Credit Management

ash flow, so we will all tell you, is the lifeblood of business. Getting paid by a customer for goods or services delivered in a timely fashion is essential to staying in business. Two obvious statements, perhaps, but the Credit Manager – the professional tasked with managing what is usually the largest asset on a company’s balance sheet – is not always given the recognition he/she deserves. And yet without them, business would be unsustainable.

Credit Management is defined simply as the policies and practices businesses follow in receiving payments from their customers. The Credit Manager is the individual tasked with ensuring these processes are properly followed. The modern Credit Manager can proactively and positively input to many departments, functions and procedures to improve business flow and customer service, as well as focusing on their main role in ‘delivering the cash’.

Their remit of course varies from organisation to organisation, and industry to industry, but is increasingly now being seen much more strategically, given that large organisations are known to have strategies for either non-payment to help their own bottom line profit, or at least significantly delaying payment causing the supplier to finance them at no cost. At its most fundamental, a Credit Manager will oversee the Sales Ledger function, including raising invoices in a timely and accurate manner, speedy cash posting and accurate allocation of that cash, agreeing invoice formats with larger customers, and ensuring sales teams are inputting data accurately to prevent invoice queries subsequently. There are a number of increasingly sophisticated tools now available to help them do their job, which means that good customers are able to obtain the credit the need, when they need it.

Credit Managers may be assessing risk on new accounts and accounts overtrading by way of credit information providers, reading financial accounts and establishing trading histories; they may be involved in the creation, maintenance and management of a full credit policy - internal documents that identify all set and agreed procedures and policies that govern the credit function. They may also be negotiating and agreeing terms of business with new and

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existing customers, including payment terms and setting up service level agreements and credit limits, and reporting to Directors on age and profile of debt, potential risks of bad debt, overtrading accounts, areas of suggested training and general customer service observations.

As well as their direct ‘financial’ responsibilities, they are typically tasked with identifying system or software improvements and playing a key role in their implementation, documentation and training those who will be affected. They also, of course, not untypically have a wider ‘management’ role, responsible for motivating, coaching and setting targets for the credit team, usually collection targets, debtor day reduction targets, unallocated cash reduction targets and ongoing desk side coaching to get the best out of each call and account contact.

Far from being a ‘back-office’ function of the Old School, Credit Managers today need to have what the recruitment companies might describe as “superior” communication and persuasion skills, being able to converse in any kind of environment with the strongest level of commercial awareness. They are professionals there to help the business relationship, not hinder it.

So from one perspective, perhaps, a Credit Manager prevents business failure by ensuring adequate cash flow within a business; looking at it more positively, good credit management is not just about minimising bad debts, but rather maximising sales, making maximum use of new technology, products and services that are there to assist.

An effective Credit Manager can play an essential role in creating, supporting and maintaining business growth, and giving their employers the competitive advantage. Despite the actions of bodies such as the ICM, the Credit Manager still remains one of the most under-rated and under-valued professionals in a business. Publications such as this, and articles that prompt debate and challenge stereotypes, will perhaps help to redress that balance.

Good credit management helps finds the right customers, exploits the sales potential, protects the balance sheet, and creates repeat business. Good credit management also delivers the cash.

direct marketing

FEDMA

A resource for dialogue, digital and direct marketing in Europe

by Alastair Tempest, Director General Federation of European Direct and Interactive Marketing

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who are the main element of FEDMA’s membership, FEDMA can provide market information to newcomers in cross-border marketing in Europe.

FEDMA also provides leadership in education and informational seminars at the European level. Our Seminars, held twice a year, give both our members and non-members information on the European marketplace on broad issues (e.g. legal, postal services, list broking, etc.) and also at each one we introduce a new country (the most recent was DM in Turkey).

Promoting DM is one major aspect of FEDMA’s work, the other is the protection of the sector from restrictive regulations. We represent the sector at the European Union level, e.g. with the European Commission or European Parliament. We also prepare ‘best practices” – codes of self-regulation on a variety of issues from data protection to the environment which we design to help business and other DM users, such as fundraisers. These codes are written by business for business, and as far as possible, are expressed in terms that avoid complex legalese or bureaucratic language.

They are available on: http://www.fedma.org/codes-and-self-regulation.59917.en.html FEDMA also has a range of publications including basic ‘Fact Packs’ designed specifically for business, as well as more detailed guides on, for example, sales promotion (2nd edition in preparation) and data protection FEDMA 439 Avenue de Tervuren, 1150 Brussels, Belgium Tel : +32 2 779 4268 • Fax : +32 2 779 4269 Email: info@fedma.org • www.fedma.org

© Photo : Feng Yu | Dreamstime.com

T

his special section looking at direct marketing shows the vast power of the direct, dialogue and digital marketing discipline. As Mrs. Elena Gomes, the CEO of an on-line SME in Spain, Secretaria.com, said recently: “Direct marketing has become with the internet and other new electronic media the most powerful and persuasive marketing tool that exists, greatly out-stripping display advertising”. In FEDMA we (half jokingly) refer to the 3Ds – Direct, Dialogue and Digital - and to the enormous power these provide marketers as 3DM2!

Direct marketing has always been the marketing discipline of preference for SMEs: it guarantees that the right audience is reached and it provides an immediate return on investment (ROI) with the sale of products, as well as acting as an advertisement or reminder to the consumer/customer that the seller is there waiting with offers of products.

From the very first and least costly unaddressed flyers which soletraders or local tradesmen put into the consumers’letterbox in their vicinity to the targeted mailing to existing clients, or catalogue, or website which the specialist SME prepares to retain existing clients and find new customers, the preference for direct marketing is very obvious. Classical advertising which has no response mechanism is very seldom going to benefit SMEs (whether they are advertising to consumers or to other businesses). For SMEs return on investment and a strong loyalty amongst their customers are essential.

With the expansion of e-commerce an increasing number of SMEs see the attraction of markets outside their own national market place. However, there are also all sorts of pitfalls – some of which are only perceived and others are real. One of FEDMA’s primary roles is to promote direct marketing across Europe. Using the extensive experience of the national direct marketing associations (DMAs)

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Managing Growth has teamed up with Air Malta to give you the chance to win two return tickets to Malta.

Air Malta flies from London Gatwick, offering you regular opportunities to visit the island of opportunity and sunshine.

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Closing date for entries is Friday 7 December 2007.

business fun

a wry look at

business

You’re either in business for fun or profit, preferably both. If not, you might as well go fishing. At least you will have had a good day out and can eat the result for dinner.

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he main reason that Businessmen get up in the morning and go to work is to grow their business. This is how one German Businessman, a Saxon nobleman, Hans von Hacke auf Stuelpe (near Jueterbog) solved a temporary cash flow problem. There was a monk called Johannes Tetzel (1465-1519) who made a nice living selling indulgences for the remission of sins. Hans von Hacke who had heard Tetzel preaching at Leipzig, thoroughly disapproved of his methods. Approaching the monk, he asked him if he had the power to pardon sins that men intended to commit. To which Tetzel, replied that he had. The knight, said he wished to take revenge upon one of his enemies without endangering his life, and offered Tetzel ten crowns if he would give him a letter of indulgence that would fully indemnify

him. Tetzel drove a hard bargain; however, they came to an agreement for thirty crowns. The monk left Leipzig shortly after. The nobleman and his attendants lay in wait for him in a wood between Juterbock and Treblin; they fell upon him, gave him a light beating, and took away the well-stocked indulgence-chest the monk was carrying with him. Tetzel was very indignant, and carried his complaint before the courts. But Hans von Hacke showed the letter of indemnity which Tetzel had signed himself, and which exempted him beforehand from every penalty. Duke George, who was the sitting Judge was at first exceedingly exasperated, but no sooner read the document than he ordered the accused to be acquitted.

History doesn’t relate what return Hans von Hacke made on his initial investment of thirty crowns, but who said the Germans have no sense of humour!

Illustration: www.benovision.co.uk

managinggrowth | 73

editors choice

Living

Luxury Each issue, we unearth some of the most luxurious places to stay on the planet, for business or pleasure.

EDITOR’S CHOICE

© Michael Currie | Dreamstime.com

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he Excelsior Grand Hotel Malta is a new deluxe five-star resort in Floriana which just opened in September 2007. Nestled between the 16th century bastion walls of Valletta, it commands the island’s premier waterfront location with breathtaking sea views over Marsamxett Harbour and Manoel Island. As member of Preferred Hotels & Resorts, the hotel delivers and exceeds expectations on a level of 5-star service excellence that underwrites every function of the property.

All 426 deluxe rooms and suites, spread over ten levels of which three are executive floors, enjoy a harmonious blend of classic and contemporary design mixed with modern 5-star convenience including complimentary WiFi and multichannel flat screen TV. Many of the rooms and suites enjoy stunning harbour views. Superb facilities include a private 30-berth marina, large outdoor and indoor swimming pool, health & beauty centre, four restaurants, four bars. In addition to that, the hotel offers versatile conference & banqueting facilities of over 4000m² in 13 different venues, part of them with natural daylight pouring in through vast picture windows. Further enhancing the MICE potential of the hotel is the Mediterranean Conference Centre with an auditorium capacity for up to 1,400 – a stone’s throw from the resort.

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Excelsior Grand Hotel Malta Great Siege Road Valletta, FRN 1810 Malta Tel: +356 2125 0520

GRAND HOTEL MALTA

www.excelsior.com.mt

Technology Fast500 EMEA 2007

www.fast500europe.com