FACING THE DARK SIDE OF INTERNATIONAL BUSINESS

(excerpted from the “Fluent In Foreign Business” Chapter 10)

 dibujo 02

Can you handle the flip side of the coin?

Several years ago, the European Bank of Reconstruction and Development (EBRD) approved a sizeable ‎loan to partially ‎rehabilitate a badly deteriorated municipal water system in the Ukrainian city of Dnipropetrovsk. ‎Given the tremendous difficulties municipalities in emerging countries face in obtaining financing, an ‎announcement like this should have brought joy to the people everywhere in the city and in the water ‎utility authority itself.  Instead it brought fear, intrigue, resistance and sabotage.‎

The Bank put out a tender for a project management company to implement the financing, for which ‎our firm co-bid with one of the world’s leading Dutch engineering consortiums. We were unsuccessful, ‎but in the process we uncovered a fascinating textbook case on how a dark flip side can seriously ‎interfere with what on its face appears to be a win-win situation.‎

As we started to interact with the officials from the water utility authority and the municipality, it ‎became clear that most of the senior officials and most of the 3,200 employees were opposed to the project.  On the surface it made absolutely no ‎sense, as the project promised to improve the quality of the city’s drinking water, improve sewer ‎cleaning facilities, improve the water pressure of the residents, conserve water, and reduce water ‎main ruptures. Ostensibly, the reason for the resistance was a fear that the municipality would not be ‎able to repay its debt obligations without impacting its financial condition.  Although a fairly valid ‎reason, it did not seem sufficiently compelling to justify all the intrigue and stall tactics that plagued the ‎project.

What was going on? Well, as part of the conditions for extending an economically viable loan, ‎the bank required that the debts be cleared from the balance sheet, the tariffs subsidies removed, ‎that international financial accounting standards be applied, and that periodic audits would take place. ‎This threatened to uncover a number of financial irregularities. Further, the accounting department would have to be reduced from 50 employees to ‎four and the entire staff would have to be pared down to 800 from 3,200 as part of transforming the utility from a bloated and inefficient Soviet-style organization ‎to a modern well functioning profitable enterprise.

‎But the project was still good and well-intentioned, right? Wrong! The municipal politicians did ‎not want to raise the water and sewer tariffs, because it would hurt them in the upcoming election. ‎Many workers were afraid of losing their jobs and illegal side businesses, and of having to work harder ‎in a leaner, high-pressure environment. And they were doing everything in their power to stall or ‎kill the deal. Their pay was low and the working conditions poor, but the workers in this case preferred the status quo. This is a very important lesson when working on the side of radical organizational change.‎

The Deputy Director who had championed the deal and was primarily ‎responsible for arranging the loan was now faced with significant and unexpected ‎resistance from a number of directions.  As the financing process began, he eventually ‎lost his job and implementation of the loan sputtered.‎

Although our firm ended up not participating, we identified some critical concerns: (i) the need to communicate and win support of the key project ‎participants and constituents prior to commencing a project, (ii) the need to examine in advance the ‎organizational dynamics of the enterprise set to undergo significant changes, and (iii) the need to ‎extensively shape and counsel the organization to maximize the project’s chances for success.

Chapter 13 addresses issues of overt corruption. Here, I address issues of conduct and human behavior that can engulf you like quicksand and hamper your ability to do business in a foreign country. I am talking about malaise, self-interest, fear, greed and jealousy, to name just a few of the obstacles. Unless you thoroughly understand the issues and characters behind particular transactions, markets and business dealings, you will have an extremely tough time doing business abroad. Things that make perfect business and social sense on the surface will not get done. Your offers of lowering prices, increasing efficiency, bringing prosperity to the population in your chosen market will be enthusiastically received at the top, even announced to the world, and then fizzle in the execution and die a slow death. READ MORE

 

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A NEW, MUST-READ REPORT ON AFRICAN ENTREPRENEURSHIP IS OUT

Omidyar Network releases Accelerating Entrepreneurship in Africa report 

 

Nur Bremmen: Staff reporterBy VentureBurn.com

Orthographic map of Africa

Orthographic map of Africa (Photo credit: Wikipedia)

 

 

We have the pleasure of presenting the Accelerating Entrepreneurship in Africa report compiled by theOmidyar Network, the philanthropic foundation established by Pierre Omidyar — the founder of eBay — in partnership with global strategy consulting film, Monitor Group. This epic 48-page report is the result of a three-phase research project launched in 2012 aimed to better understand the state of entrepreneurship in Africa.

 

The project started with a survey of 582 entrepreneurs across six Sub-Saharan African countries: Ethiopia, Ghana, Kenya, Nigeria, South Africa and Tanzania which was then augmented into 72 in-depth interviews. It promises to be one of the most comprehensive studies done on African entrepreneurship to date.

Benchmarked against 19 global peers like China, India, the USA and the UK, the issues addressed were divided into four critical aspects of entrepreneurship:

  • Entrepreneurial assets: financing, skills and talent, and infrastructure
  • Business support: government programmes and incubation
  • Policy accelerators: legislation and administrative burdens
  • Motivations and mindset: legitimacy, attitudes, and culture

READ MORE

 

 

6 Ways to Reduce Jet Lag Naturally

6 Ways to Reduce Jet Lag Naturally

Jet lag is as much a part of business travel as flight delays, but it can cloud your brain and drain you of energy. “Jet lag happens when there is a misalignment between the actual time zone and your circadian clock,” says Vancouver-based naturopathic doctor Melanie DesChâtelets. She says that travelers typically experience jet lag when flying over five or more time zones.

The body’s internal clock releases certain hormones at set times in the day. These hormones regulate body temperature, sleep and other processes. The misalignment of hormones with time zone changes means you may experience difficulty sleeping, headaches, fatigue and trouble concentrating. While DesChâtelets says these symptoms typically subside within two days, that can be of little comfort when you’re trying to hold your head up in an important client meeting.

Rest assured, there are things you can do to control jet lag. Here are six tips for controling it naturally.

1. Re-set your body clock before taking off.
“Try to advance or delay your sleep a few days before going away so that when you leave your circadian clock has already started to adjust to the change,” says DesChâtelets. Advancing your bedtime by an hour or two if heading east, and delaying if heading west can help you adjust to the new time zone easier and have you falling asleep faster.

2. Change your watch when you depart.
Changing the time before you take off can help you suffer less time dislocation.

3. Pack Melatonin if you are flying east.
While sleeping pills may have your head hitting the pillow in no time, they can also cause dehydration and have you feeling worse than normal jet lag symptoms. “Melatonin is released by the pineal gland before sleep,” says DesChâtelets. “It’s one of the circadian hormones that makes you sleepy at night.”

When traveling, consider taking three milligrams of a melatonin supplement two hours before bedtime to help reset your circadian rhythm that gets disrupted by the change in time zones. And unlike sleeping pills, taken in small quantities, melatonin is nontoxic, non-addictive and safe.

4. Get Outdoors.
To help your body adjust to its new time zone, DesChâtelets recommends getting out in the sun first thing in the morning. “Sunlight also affects your circadian [rhythm], so you want to expose yourself to as much light as possible,” she says.

5. Use light therapy when flying west.
Even though you’ll be tired early in the evening when flying west, DesChâtelets recommends staying up until a reasonable evening hour before allowing yourself to doze off. Too much caffeine can interrupt your sleep patterns, so opt instead to remain your brain of the new time with light. Bright lights can help you to awake, so keep the curtains open and the lights on in your room to let in as much light as possible.

6. Minimize sleep distractions.
Disrupted sleep plus jet lag equals disaster. So make sure that you can stay asleep once you call it a night by using an eye mask or earplugs to eliminate light or sound that may wake you up, just make sure you can hear your alarm.

Related: Richard Branson’s Travel Tips

WHEN LOOKING FOR OVERSEAS INVESTORS, NOT ALL THAT GLITTERS IS GOLD

RoseSmellingFelix

When it looks like a rose and smells like a rose, is it really a rose?

One of the biggest time wasters in international business is pursuing what I call the Potemkin village opportunities (after Grigori Aleksandrovich Potemkin who erected ornate fake villages to impress Catherine the Great when she toured Ukraine and Crimea). So many things appear glamorous and outsized. But talk of fast money in the air is usually plagued with scams, promoters, crooks, gangsters, dreamers and time wasters. Common characteristics of a booming market, they are no different from the fast talking stock promoters of the Gold Rush, the railroad boom in England, or the Internet bubble.

So here are some proven tactics, which will help you avoid time wasters.

Be many times more skeptical towards any project abroad than you would be evaluating a similar project at home.  Do not be dazzled by official looking letters with seals and wink-wink promises that the promoters have “everything under control.” Demand the due diligence upfront. If it is not available to your satisfaction, walk away. If it sounds even remotely too good to be true, run, don’t walk, because it definitely is.

Develop a broad in-country network of contacts and run any potential projects by them. You will be surprised how small most of emerging markets really are and how well-informed the people in them are.

Scour the Internet and poll your contacts that do business abroad about the typical scams prevalent in your target country. Learn about them, how they work and avoid them like the plague.  (Excerpted from the Fluent In Foreign Business Ch 17 ) The article below is a very good illustration on the importance of doing one’s due diligence when seeking to attract a foreign investor who “glitters” on the surface.

Confidence Ebbs in Chinese Tycoon’s Ambitious Deals

2013 Fi3E INDEX™ RANKS APPEAL OF 180 NATIONS FOR U.S. EXPORT OPPORTUNITIES

           FifLOGO

Fi3E Badge

FI3Indices

NEW YORK, NY—April 4, 2013  — Fi3E™, an annual proprietary and forward-looking index that measures the relative attractiveness of 180 nations to companies looking to export goods and services abroad, is being introduced today by Fluent in Foreign™ LLC, a New York City advisory group that guides companies as they seek to establish or expand their business beyond U.S. borders.

The Fi3E Export Country Appeal Index™ is the third and final index to be introduced.  All three indexes are designed to help companies do business abroad. The Fi3F™ index, for franchisors, launched in February and Fluent in Foreign Business  Fi3I™, geared for companies and individuals looking to make direct investments abroad, will be released next month.

China again ranks as the country that’s most appealing for exporters, followed by Australia, Poland, South Korea, Turkey, Canada, Singapore, Thailand, Malaysia and Mexico. To obtain the rankings of all 180 countries, visit www.academy.fluentinforeign.com .

“There are enormous opportunities for companies both large and small, to sell goods and services overseas,” said Alexander Gordin, Managing Director of Fluent In Foreign Business and Author of the eponymous book.  “Export opportunities presents new places to sell products, which translates to the creation of more jobs.  President Obama’s National Export Initiative has served as a catalyst to spur job growth and a resurgence of manufacturing activity through exports.  More needs to be done, and companies should focus on exports as a fundamental part of their business activities, rather than an afterthought when the economy slows down at home.”

The Fi3E Export Country Appeal Index™ uses proven factors to evaluate each country, with proprietary data combined with information from the World Bank, the United Nations, Transparency International and the International Monetary Fund. The index also looks at influencing factors including each country’s GDP growth, population, availability of export credit insurance and financing, corruption, ease of exporting, protection and the legal framework for contract enforcement.

“The Fi3E Index serves as a significant reference tool for businesses and investors looking abroad for export markets and opportunities,” Alexander Gordin said.  “It will save countless hours of preparation and research, and it offers important cautionary signs where appropriate.”

Fluent in Foreign Business  is a unique advisory and information platform designed to help direct investors, franchisors and exporters enter foreign markets or expand existing international operations and assist clients doing business with new countries and governments. Services include financing, political risk insurance, legal compliance and strategic business development.

For more information confact agordin@fluentinforeign.com or  +1 212-490-4323.

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