Translation services procured as if they were a commodity

Translation services are procured as if they were a commodity

Are Ad/Translation Agencies Stuck with Commodity Fee Levels?

Many similarities between Translation Agencies and Ad Agency business in terms of the market challenges… especially when it comes to how services are procured as if they were commodity (intersting parallels)

Translation and Ad agency services are procured as if they were a commodity. Is there any way out?
Unlike other professional services, ad agencies are constantly under price pressure. Consequently, shrinking margins have led to intense consolidation. The industry today is dominated by a handful of vast holding companies that offer every service imaginable, yet still struggle with profitability.

Despite their huge market share and broad scope, the combined value of these corporations is less than $30 billion – a mere trifle compared to what is probably a trillion dollar global market for marketing services.

The industry is not doomed, but as consolidation has neared its limit, a new model needs to emerge if the industry is to prosper.

“Good Enough” Commodities
Clayton Christensen, in his book The Innovator’s Dilemma, provides a useful model for understanding the industry’s woes. He points out that once consumers are satisfied with industry performance, they are only willing to pay commodity prices.

Innovative industries. , on the other hand, thrive where performance is not good enough. Being just a little bit better has enormous value when quality is an issue. When it isn’t, price becomes the primary differentiator.

A good example is the computer industry. Once processor speed became fast enough, it ceased to be an effective selling point. In the 1990’s, Dell computer thrived not because of product performance, but because of price, convenience and service.


Ad agencies need to perform everyday. Familiarity not only breeds contempt, but also intense fee negotiations. There is a vast pool of very talented people created by decades of “good enough” performance. The industry does not suffer from a lack of proficiency, but its excess.
In order to gain some insight into the problem, let’s look at some other professional services who command the fee levels that the agency world covets.

Management Consulting
Companies like McKinsey and Bain specialize in the realm of “not good enough.” They take on projects that companies are unwilling or unable to do themselves. They are able to generate vast fees for finite projects that have a beginning and an end. Sometimes they have specialized knowledge in the project area, but often they don’t.

Other companies specialize in restructurings. When a business hits the rocks, investors are more than happy to bring in a 3rd party. Management is suspect and an outsider with no internal loyalties can slash and burn like no insider can. There’s huge money at stake, so fees don’t endure much scrutiny.

In both cases, a one-time expense, even a big one, can be amortized financially almost as if it was a capital asset. Conversely, ongoing service inevitably becomes a procurement issue. Even a small fee reduction will flow nicely through a five year financial model.

Accounting, Auditing and Legal Services
Accounting firms, like advertising agencies, provide an ongoing service that is “good enough.” There is a vast pool of qualified professionals and innovation is incremental. According to Christensen’s model, they should also be priced as a commodity.

However, there is a crucial difference. Accounting and auditing are legally mandated functions. Moreover, accountants need to be certified. Both of these facts make the negotiating positions of accounting firms vastly superior to ad agencies.

Corporations who think nothing of putting their ad business out to pitch on a regular basis would not do so with their accounting or law firm. A corporation who switches ad agencies is often seen hard driving and cost conscious; one who changes auditors often raises red flags and sees its market value plummet.

Law firms, on the other hand, are a “port in a storm.” You go to them when you are in trouble. When you need them, negotiating their fee is the last thing on your mind. Human nature being what it is, we will always pay more to assuage fear than to engender hope.

Financial Planning
Another analogous industry is financial planning. Skilled practitioners are contracted to manage money, much like media agencies. They do so for commissions that are usually between 1% and 2% (hedge funds and venture capital firms who manage money more actively also get success fees).

Yet again, there is a crucial difference. Financial management has enormous economies of scale. It’s not much harder to buy a $100 million dollar security than it is to buy a $1 million dollar security. Big funds buy big assets.

Ad agencies, on the other hand, do not enjoy economies of scale to the same extent. They still need to buy individual TV spots, ad pages etc. Campaigns have specific objectives and need to be bought individually. They can’t be lumped together.

IBM and Free Newspapers
While marketers do not enjoy the natural benefits of other disciplines, much can be learned from industries outside professional services.

In 1993, Lou Gerstner arrived at IBM, a company with a great legacy and tons of red ink. He realized that the vast scope of the business gave them unique insight into technology and developed a great high-margin business in consulting services. By mining internal information he created a whole that was immensely more valuable than the sum of its parts.

Free newspapers employ a similar strategy. On the daily edition, they break even at best. Daily newspapers are a losing proposition. However, they do reach a lot of people and money can be made through high margin weekly supplements.

The result was the second fastest growing medium (behind digital) of the last decade, although the industry has had some problems since the onset of the financial crises.

In both cases, low margin, commoditized businesses were used as a substrate to create highly profitable products. It’s not a “freemium” model, but it’s a similar idea.

The Way Forward
The advertising holding companies do seem to realize the value of high-end consultancy services. They all have built up impressive capabilities in econometrics, non-standard promotions, brand and new media consultancy, etc. However, integration remains poor and therefore the bottom line impact is minimized.

The same problem continues to drive industry profit levels. Sooner or later,ongoing strategic consulting becomes a commodity business. The inevitable result will always be escalating demands and shrinking margins.

Project based consulting, however, is a time tested, winning strategy. Services based on the street level data accumulated though regular service combined with highly skilled advice and one-time fees could be the industry’s salvation. While it won’t change annual negotiations, short term projects with sky high margins can change the overall profit picture.

To achieve this, agency networks need to de-balkanize and skill levels need to be raised. Front line personnel should be encouraged to spend time in a variety of divisions to encourage cross-pollination, discourage group-think and minimize the ridiculous interdisciplinary rivalry that the industry has raised to an art form. Sabbatical and graduate study programs also need to be adopted.

The only alternative is…well…there really isn’t one.

Standard
How to increase revenue

Increase your revenue…this is how

Strategy – How To Increase Your Business Revenue – Seven Tactics

I read this article which I thought some of us can benefit:
One of the most valuable business activities you can invest time in is to create a strategy to increase your business revenue. Many business owners never think of doing this. Instead, they muddle along doing the same thing year after year. They get the same results and wish their bottom line was more profitable, but they don’t understand that they could strategize to change it. You can intentionally change this experience. You simply must put aside time to plan your strategy, and to execute the plan. Here are some ideas for tactics you could consider for a strategy to increase your business revenue.

1. Explore your ideas for profitable services.
How can you add additional value to something you already do? What unfilled demands have you noticed? What new variations can you come up to fill a demand? What could you do that none of your competitors is doing? How can you greatly increase perceived value to your clients and prospects by combining services, or adding products to your services?

2. Is it time to eliminate low-profit services?
Often, these are areas that attract low value clients who are also problematic. What activities consume inordinate amounts of your business time, while producing little revenue to show for it?

3. Consider new directions for your business.
Is there a new trend that would be more profitable? Do you want to pursue additional training and add some specialized services? Are there areas of your past experience that can be combined with new or present skills to create a new and more valuable offering?

4. Look at new markets you could pursue.
How could you venture into more lucrative markets? What would be required to do this? What would make your business attractive and more valuable to these markets?

5. Examine the possibilities of joint ventures.
Are there ways that you could work with another person – where your services compliment not compete? What kind of ways could you create combinations that would be lucrative for both parties?

6. Look at adding some sort of web-based tactic to your strategy.
Can you add a web site selling associated products – where your services are also promoted? You might have a type of “best of” (your industry) where you get affiliate income from all purchases on your site. Perhaps you can sell information you’ve gathered or originated. This could be in the form of e-books, MP3’s, podcast subscriptions, e-classes or lessons. Look for ways,using the web, to sell the information that you’ve created.

7. Add subcontractors to increase your business capacity.
You create the additional work and your subcontractors fulfill the orders. You get a fair percentage of all this revenue and it goes straight to your bottom line.

These are seven tactics you can consider to create a strategy to increase your business revenue. Do this intentionally and you are sure to profit.

Standard
Social Meida

Social Media Marketing Plan

8 Steps to Creating Your Social Media Marketing Plan

Creating and online marketing strategy is vital when making the decision to add social media to your marketing campaigns/plans. A plan is needed to assess the viability, know what steps you will need to take and to aid you in staying focused on your goals.

Your plan can also help you save time by ensuring you follow a systematic approach to the tie you will invest in social marketing and network. The social networking part can easily take you off track and eat up your time if you do not pay attention to the overall picture of what you are trying to accomplish.

Here are the basics steps to any social media plan we setup for clients:

1- Assess
Look at what is available in your market, what competitors are doing and find out if your customers in fact using these social media channels. These answers may help you determine the goals

2-Purpose
Define your main purpose for using Social Media and identify the various social media channels to use.

3-Goals
Set at least 3 SMART (Specific, Measurable, Attainable, Realistic, Timely) goals and create an action plan to help you reach these goals. What steps will you take to reach these goals.

4-Content
Create a plan for what content will be published – blog posts, tweets, facebook page updates, youtube videos. This plan should include the topic of content and also how often and via what channel it will be published

5-Keywords
Part of the content planning would be finding the keywords your customers use when searching for your service or product online. If your business has some technical jargon that customers rarely pick up on – it is unlikely that is how they will search online for the solution to their problem (your service or product). It is imperative to find keywords they are using and add these targeted key words into your content..

6-Optimize
Look at all the platforms available and link them together as much as possible to help you save time. ie. Link your blog to twitter and your facebook page so when a blog post is published it will automatically feed an update to the other networks. Be certain to make a flowchart so you understand what automatically goes to what network in order to avoid any cross posting.

7-Track
As much as you can track your results do it. Keep a record of your contacts/ facebook friends/page likes/twitter followers/linked in contact /newsletter subscribers and results on Google for your name, business and keywords. Check the results every month and see how it changes. Read your analytics on your website and adjust keywords/tactics to fit with what is working well or not form these reports. With social media marketing, businesses may set goals related to brand identity and levels of engagement.

8-Schedule
Take time to schedule in all the aspects of your plan and work at it to keep on top of it and following the plan. Stay focused and use your time wisely.


Following these steps will help you network much more effectively and in a way that does not find you looking up from your computer wondering where the last hour went. Stay focused!

Standard
7 Steps sales and marketing

Understanding the 7 Step Sales and Marketing Cycle

As some of you know my passion is sales and business development although my education is in the technology field, I found a great pleasure in building and developing businesses…I decided to start a series of articles and blogs on sales and business developement, I hope you will find them helpful:

One of the biggest myths as it relates to business comes from one of my favorite movies of all time, ‘Field of Dreams’. In the movie, Ray Kinsella, is inspired by a mysterious voice telling him to follow his dreams. The voice says, ‘If you build it, they will come’. True to Hollywood storytelling, Ray does build ‘it’ and ‘they’ do indeed come.

Unfortunately, it doesn’t work the same in business. Many business owners have the false idea that if they have the very best product or service, they are guaranteed instant success. In essence, ‘if [they] build ‘it’, ‘they’ will come.

An incredible, ‘knock your socks off’ product or service does not guarantee success.
If you’re like most small business owners, you’ve doing everything you know how to do, but you’re still not attracting enough new customers. You’ve tweaked your website. You’ve increased the size of your yellow pages ad. You’ve even sent out direct mail pieces designed to generate some quick holiday business, but none of it seems to be working.

What most small business owners fail to realize is that there is a very specific process for creating demand for your ‘it’ so that in turn ‘they’ will come. Just as they miraculously did for Ray Kinsella. This process is called the Sales and Marketing Cycle.

By understanding each step in the Sales and Marketing Cycle, you will have the knowledge necessary to create a marketing ‘system’ that will allow you to build your very own ‘Field of Dreams’.

Step 1. Create a Marketing Plan
This step is undoubtedly the most important step in the cycle. You must clearly define where you want to go and how you plan to get there. As Steven Covey says, ‘begin with the end in mind.’

To create a clear vision of what you want to accomplish, you must define your target market, determine your Unique Selling Proposition (USP), write out your goals, and finally establish a marketing budget. Without each of these ingredients clearly defined, your vision will be murky and you won’t know when it’s time to make course corrections.

Step 2. Get the Attention of Your Target Market
If you’ve done your homework in Step 1, you’re well on your way to capturing your prospects attention because you already know who your ideal customers are and what problems they’re trying to solve. Now it’s just a matter of finding the proper medium to convey these benefits to your target prospects.

If you’re an offline business, a sequence of mailings to a targested list, lead generation advertising, television or radio spots, joint ventures, and even leaving flyers on car windows are ways to let your target prospects know that you have the answer they seek. For online businesses there is ‘Pay Per Click’ advertising such as Google AdWords, ezine advertising, joint ventures, or writing and submitting articles to online publishers.

One key to keep in mind, no matter the medium selected to convey your message, you always want to stress the BENEFITS. Sell the sizzle, not the steak.

Step 3. Educate Your Prospect about Your Product or Service
This step is more often than not the most OVERLOOKED step in the cycle. This step is where you begin to actually convert your prospects into paying customers.

Each day consumers are bombarded with hundreds, if not thousands of advertisements and offers for competing products and services. Often times the consumer is unsure of how to differentiate between competing solutions. By educating your customer about the benefits offered by your solution, you set yourself apart from your competition and it will go a long way towards gaining their trust and ultimately their business.

Some of the ways that you can educate your prospects include free reports via recorded messages, snail mail, or delivered via email spread out over several days. Tele-seminars are also popular these days and are an excellent way to educate your prospects about the benefits of using your product or service.

Step 4. The Sales Transaction Occurs
If you’ve been able to successfully educate your prospect and have shown how your solution can fill their ‘need’, a sales transaction should be the likely result. Keep in mind however, that this is not always the case. When possible, you want to try to find out what it was that kept your prospect from becoming a customer. Some of these reasons may include price, skepticism, they no longer have a need, or they weren’t fully educated about the benefits your solution offered.

Once you’re able to determine WHY they chose not to purchase and if you’ve seen a pattern with other customers, you should then work to improve your Step 3 in order to better educate them as to why you offer the ONLY possible solution to their problem.

Step 5. Deliver Exceptional Customer Service
I don’t know if you’ve noticed this or not, but the meaning of the phrase ‘Customer Service’ has changed considerably over the years. No longer do you see ‘Full Service’ gas stations. Receptionists have been replaced by automated phone systems. Airlines no longer offer complimentary meals on flights. This decline gives you a significant opportunity to stand out from the crowd and create immediate loyalty by going above and beyond expectations.

‘Thank You’ notes, gift baskets, courtesy calls, or special discounts are a few examples of ways to provide service that goes ‘above and beyond.’

Step 6. Encourage Your Customers to ‘Spread the Word’
While Step 3 might be the most overlooked step in the cycle, this step is undoubtedly the most powerful step if done properly. If your customer has had a positive experience with your solution, it is possible to enlist this customer into your very own unpaid sales force.

There are many ways to create this army of marketers for you and here are two that I use quite frequently. The first is to simply ASK for referrals. If you don’t ask, they may never know that you expect them to spread the word.

The second way is to ask for and use testimonials. A short, but concise testimonial from a satisfied customer is a very powerful tool for removing skepticism in other prospects considering your solution.

Step 7. Repeat Steps 3-6 with Your Existing Customer Base
After going through the effort and expense of identifying, educating, and ultimately selling to your customer, does that mean the relationship must end? Absolutely not! A sad but true fact is that the asset most often overlooked by businesses today is their existing customer base.

Once you have a customer that has purchased products or services from you, simply begin steps 3-6 again with bigger and better products. Marketing to your existing customer base is the cheapest marketing you can do and it has the potential for delivering the greatest returns.

What do you do if you don’t have additional products or services to offer your existing customers? In two words, FIND SOME. Create an information product. Assemble smaller, related products into a ‘package deal’. Become an affiliate or licensee of someone else’s product or service. Whatever it takes, you MUST find more opportunities to sell more ‘stuff’ on a more frequent basis to your existing customers.

Understand These 7 Steps and You Will Be Able to ‘Go The Distance’
As a small business owner, it’s imperative that you understand this 7 step Sales and Marketing Cycle and how it relates to growing your business. Once you do, you will no longer wonder why even though you’ve built ‘it’, ‘they’ aren’t coming. You will instead know the exact steps needed to not only fulfill the first prompting Ray Kinsella received, but you will also have the knowledge and understanding needed to fulfill the next prompting the mysterious voice whispered to Ray: ‘Go the Distance.’

Standard
Cheap translation

Be extra careful when selecting cheap translation service provider

Beware of Cheap Translation – You Get What You Pay For

In today’s business world and amid the ongoing economic crises, companies are trying to cut operational costs to stay in business. This is also true for companies that offer translation services. While some make sure that the quality of their translation services is not affected by cutting operational costs, others don’t.

These translation companies sacrifice human translation, which is much more accurate and reliable and replace it with machine translation. By doing that, they are able to drop their prices in the hope of attracting more customers. However, most of these customers realize that the quality of the translation is bellow average and do not come back. No company is going to stay in business by offering low-price services over a long period of time.

Finding a translation company to carry out your translation is not difficult. However, finding the right translation company to fit both your company’s needs and budget will require a little more investigating. And, though not universally true, you often do “get what you pay for.”

When you hire professional translation services, make sure you carefully consider all of your options in terms of quality, price, and experience. If your goal is to pay the lowest price possible, unfortunately a mistake made by many, it might end up costing you a great deal more.

When considering costs, consider that if you pay rock-bottom prices, you will get what you pay for. Good quality has its cost. However, good professional translation services don’t necessarily have to cost you a lot off money. A good agency will be able to offer reasonable prices, while maintaining quality standards.

Look for an agency that uses a second professional to proofread the work of the first and look for client testimonials on the translation agency’s website, or ask for the contact information of previous clients. If you’re finding your translation service agency through an Internet business networking service, make sure you spend some time looking at reviews and scoring from past clients.

A high-quality business translation won’t be cheap, but the long-term rewards make working with a professional translation agency a good investment.

Don’t Gamble With Translation…Trust CLS Lexi-tech!
CLS Lexi-tech is a translation company offering customized translation and communication solutions. Being part of the CLS Communication family, our global presence allows us to respond to the most complex requirements in any language. Our professional linguists provide a wide range of services, including translation, writing, editing, translation, proofreading, final formatting and French translation.

Make CLS Lexi-tech your all-inclusive translation services partner of choice.

Standard
translation myths

Translation Myths

Top Myths About Translation

a) If you’re very good this year, Santa Claus will bring you a new car.
b) If you kiss a frog, he will turn into Brad Pitt.
c) If you send a translator a fifty-page document tonight, you can have the translation back by tomorrow.

If you answered “true” to the third statement, it’s time for a reality check. Below is a list of the most common myths about translation. Have you fallen victim to any of these misconceptions?

Myth # 1: “I don’t need to pay for translations — I can get free ones online.”
Reality: Machine translations and human translations are different, and should not be used for the same purposes.

A human translator understands the meaning of a document and tries to communicate that meaning effectively in another language. A machine translator does not have a brain and cannot understand anything.
What a machine translator does is replace words and phrases in one language with words or phrases in another. However, there is often more than one possible translation for a word (think of the word “rock,” which can refer either to a mineral or a type of music), and there is always more than one way to express an idea. A machine cannot make these choices the way a human would. The machine doesn’t know what it’s talking about!

As a result, machine translators often make mistakes, and machine translations often sound awkward or even ridiculous.

When is it okay to get a free online translation? When you just want to look up a single word, or to get a general understanding of something written in a foreign language. For example, if you are trying to navigate a foreign language website, a machine translator can help you find your way around.

Myth # 2: “I studied Spanish in school, so I can translate our company website to Spanish.”
Reality: Speaking languages is not the same as being able to translate them. And even a professional translator should generally only translate into his or her native language.

Translation is more than just replacing words. A translator needs to be able to transfer meaning from one language to another in a way that sounds natural in the new language (the “target language”). Since different languages express ideas in different ways, this is more challenging than it may sound. It is a special skill which professional translators learn through training and experience. For important translations, such as the translation of a company website, it is therefore safer to go to a professional.

Part of a translator’s job is writing. The translator is actually creating a new text in the target language, the final language of the translation. If your translation is from English to Spanish, the translator should be a native speaker of Spanish, not English, since that is the language in which he or she will be writing. People can almost never write in a foreign language exactly the way a native speaker would. A native speaker would know the difference.

Myth # 3: “It just makes sense to choose the translation agency that asks for the lowest price.”

Reality: A translation agency that charges very low prices has to keep its costs correspondingly low. That is likely to mean that they are working with less professional translators and that they are taking short-cuts on quality control.

When quality matters, going for a cheap solution can end up costing you more in the long-run.

Myth # 4: “Fifty pages in 24 hours: no problem.”

Reality: Translation takes time. The amount of time varies depending on the specific text, so it is important to discuss timing with your translation partner before making any assumptions.

Machine translators, which input words in one language and output translations in another, can translate translate almost instantly. The work of a human translator, however, is considerably more complicated. This work requires careful reading of the original text to avoid missing any levels of meaning. In many cases, it requires terminology research. And the translator has to write an effective, fluent text in the translation’s target language.

Before asking for fifty pages overnight, think about how long it took you to write the original and remember that the translator needs enough time to write it again in another language.

Bottom Line
Keep in mind the truth behind these myths, and avoid falling into the temptations of wishful thinking when planning your translation. While it’s pleasant to dream, you’re likely to get better results with your translation project if you go in with a realistic understanding of what’s involved.

Standard
Why Businesses needs professional translation services

Translation Service – Why Businesses Need Translation Services in Today’s Business Society

In today’s business society, companies who conduct businesses globally need professional translation services. Many people think that they can just depend on free translation tool to translate their business documents. This is true if you are only having an email translated – if you need to translate your business documents such as proposals or reports of anything, it is best to get a professional service for the task.

Free translation tools can only do so much – as different countries have different dialects and language styles, it makes translation from the free tools not accurate. Many people take translation too lightly. It is a complex matter and needs to be approached sensibly so that you will not get inaccurate translation results.

You may think that if you know a foreign language, you can be a translator too. Nothing is further from the truth. Being able to write and read a foreign language does not give you any license to undertake translation work. This is because in order to translate accurately, you need to be well-verse in at least two languages, which is the foreign and the mother tongue language. Moreover, you need to be able to write well and command excellent linguistic nuances.

As you can see, translation is not easy at all. It is a complex and painstaking work. Translation is also very tiring for your mind. This is because when you are translating a work, you need to continuously move between two different languages. If you do not possess a passion for translation, you will soon lose the motivation carry on working.

Another common misconception about translation is that computers can now do translations. As I have mentioned earlier on in this article, free computer translation tool will never be able to translate a work with 100% accuracy. When computers translate a work, they are simply relying on the meaning of a word and replacing it from one language to another. Therefore, it is very common to see that the sentence structures are all in a mess and lead to misunderstanding of texts.

So if you need to translate business documents, especially those for prints, it is better to get a professional translator to do the job for you. Yes, I understand that sometimes you really do not need a professional translation service, such as having a brief email translated. However, if you want to translate a document accurately and professionally, you need to get an experienced translator for the job. Poor translation results in misunderstanding and bad corporate image. My advice will be always: do it once, do it good.

Standard
Global Economic Outlook

2011 Global Economic Outlook

This article written early 2011,  and still has some value…

“The era of good feelings associated with the heyday of globalization has gone forever,” say top economists. I will agree and believe this is an entirely good thing that will enable our shattered world to recover from a devastating global recession. Often times we mix up what feels good at the time with what is the right course of action over the long term. The great recession has taken its last breath but has taught us a great many valuable lessons during its pre-destiny and ultimate reign. The main lesson being that open competition is good. Once we start regulating how much we can achieve we start sabotaging our own continued growth and prosperity. Linking a global currency to a global government would have been a catastrophe. I’m glad that the wise and learned have taken this lesson out of the tragedies of the past 3 years.

Recovery will continue to be slow around the world, but we are in a state of recovery nonetheless. The biggest difference from days past will be which countries will lead the charge to mending our torn financial fabric. In this edition be prepared for some surprise trends and projections unlike many are foreseeing. I caution you however as you digest this information that you may think I’m totally off my rocker on some of my predictions, but recall, I was almost entirely correct about last year’s winners and losers. I will begin evaluating several countries and then streamline my analysis with industries to watch. Happy New Year and good health in 2011.

CONDITION OF THE US
US academics are projecting a 3.4% growth in the US this year. I will disagree. My mark for US growth in 2011 will top off at 1.5% but we are most likely to experience a 0.9% growth by year’s end December 31st 2011. The US is riding high after strong 2010 end of year retail figures rose by 3.1% over 2009 but it is overlooking that the expectation was at 3.4% and November figures were a full 2.1% higher than December. The trend should have been reversed to justify complete optimism in a stronger growth pattern. Economic growth and sales will also continue to weaken as inventory cycles top out.

Meanwhile, households and banks are still fixing their balance sheets and will keep a wary eye on credit expansion further crippling any long-term sustained growth above 1.5%. Banks will loosen credit by the third quarter of 2012.

Further, the dark cloud of unemployment still looms heavy over the United States horizon. Consequently, corporate gains should peak in the first quarter and then level off as high unemployment and consumer confidence subside and take their toll on the momentum of profit increases by businesses. Indeed the unemployment rate in the US fell in December; however the 103,000 jobs that were created last month are well short of the 200,000 per month figure needed to sustain stronger growth and lasting improvements to an economic condition. Our average pace for job creation last year was 94,000 per month. Moreover, 8.4 million jobs were shed over the span of the last 3 years, but only 1.1 million were added in the private sector. Government expansion does not contribute to an economic recovery, neither has it done so historically nor will it do so in the future.

Though in fact, the government has itself cut 20,000 jobs last month. At December’s employment pace, it will take until 2016 to make up for the jobs lost and finally establish a balance in the marketplace. As of today, 6.76 million Americans have stopped looking for work and in a recent survey say they will not look until the middle of next year. With those not receiving unemployment and those who have forgone the application thereof altogether our real national unemployment figure is closer to 10.8% as opposed to the public figure of 9.4%. Though, recovery in the US will be faster than 2016, I anticipate tolerable levels of employment by the end of 2012. However, we expect a 5.8% decrease in average salaries from $50,303 to $47,382 by this time.

CLASH WITH CHINA
Continued conflicts with China will further hinder US economic expansion. In addition to the gap between political ideologies the following factors will heighten the tensions between the two nations. First, the rise of China is becoming increasingly associated with job losses for ordinary Americans and a rising threat to American power. Second, China’s currency policy which is aimed at keeping the Yuan undervalued against the dollar will further aggravate trade relations between the two nations and protectionist legislation in the US will rise sharply. The move to make the Yuan (renminbi) a global currency for international trade has already begun. It has launched trading of it in the US. Third, the Chinese military buildup in the Pacific has gotten the US business population and governing bodies on edge and up in arms. The J-20, a new Chinese stealth fighter has just debuted on the global stage. In response the US will step up military exercises in the region opening the doors to economic policies as the weapon of choice. Additionally, China’s continued reluctance to tighten the squeeze on Iran while instead pursuing their own energy strategies will further harm relations with the US.

China’s economy will see an 8.4% growth in GDP but look for hostilities between the Communist party and the rising tide of young intellectuals from within who disagree with the current order. The US will be blamed for this movement. China will engineer a slowdown in the Asian markets.

ASIA
Uzbekistan will lead Asia in economic growth this year with an 8.5% increase, followed by China then India with a GDP of 8.2% and we will see inflation in India begin to fall back to normal levels from last year’s 10% to about 6.4%. Afghanistan holds a commanding fourth place in Asia with my prediction of a 7.2% growth this year, followed by Sri Lanka at 6.6%, Indonesia at 6%, and Kazakhstan at 5.5%. Australia will be a safe place to put money as it is expected to achieve a 2.6% growth this year.

MIDDLE-EAST AND AFRICA
This region’s predictions bear the most surprises of all. Ethiopia will carry the torch for the Mid-East and North Africa with a solid 10% GDP this year; it will be followed by Tanzania at 7.1%, Angola at 7%, Iraq with 6%; Lebanon with 5.8% despite the government collapse last week, and Syria with 4.6%. The Gulf States will remain solid hovering at an average 3% GDP, but the greatest gains will be made with the countries mentioned hereto.

EUROPE
Europe is a battered child that will require a great deal of rehabilitation for the next five years. It will demonstrate the least impressive gains next to North America but leading the pack will be Russia with a 4% GDP improvement over last year. Ukraine will be firmly on Russia’s heels with a 3.9% GDP, trailed by Turkey at 3.6%, Poland at 3.4%, Estonia with 3.2%, Latvia 3%, Lithuania with 2.9%. Greece will play the largest role in stifling the European economy as a whole with a negative growth of -3.5%, Portugal will play second anchor with a negative growth of -1%. Germany, the Netherlands, France and Switzerland will stay fast with a GDP figure lingering between a 1% to 1.6% growth pattern.

LATIN AMERICA
Chile will champion the greatest growth in the Latin American economies, though smaller in size then Brazil will outpace it by 1.2% growth reaching 5.7% by year’s end. Brazil will experience the second greatest growth with 4.5%, followed by Colombia at 4.4%, but tied with Paraguay and Peru for second place. Colombia will grow at the same pace as Uruguay.

Mexico will expand its economy by 3.5% by the middle of the year but will soften in response to slower US growth to 3% by December 31st.

Overall global GDP growth will be a strong and promising 4%, while World trade growth will exceed 6% to 6.3%. We can attribute this to the rise in trade with emerging markets including India, North Africa, the Middle East, Eastern Europe and segments of Latin America.

INDUSTRY STRENGTH

Banking
Western banks will continue to shed jobs amid tightened fiscal policies in these territories while China and Hong Kong are expected to boost their workforces in three quarters of their banks. Lending will remain slow with a net overall increase in lending of 1.3% in the US. Industry Strength – Weak

Real-estate
The worst may be over for this sector but recovery to pre 2006 levels is still a good 3 years away. Commercial rents will fall across all categories in the US with industrial being the worst hit and retail sites the least hit. In some parts of Europe commercial property prices will fall another 15% and housing prices in the US will slip another 7%. Industry Strength – Weak

Travel and Tourism
The travel industry will experience a 5% rise in international tourist travel, France will see the largest gain in visitors. Leisure travel is still expected to bounce back faster than business travel as I expect business travel rates will take at least another 3 years before returning to pre-2008 levels. Revenue per available room in the US will climb by at least 6.7% this year taking a commanding position ahead of any other country. Industry Strength – Good

Health Care
Global health care spending as a share of GDP will increase to 9.9% though the US is expected to outlay nearly 16.2% of its GDP far outpacing the rest of the world as health care costs rise due to sweeping legislation passed last year.

Luxury
Spending on luxury items will increase by 4%. Industry Strength – Good

Food and Farming
Expect overall food prices to increase by 5% this year due to supply disruptions and health department regulations. Wheat prices will increase by approximately 8%. Sugar prices will drop by 10%, and coffee prices will decline by 5%. Good news for coffee lovers. Industry Strength – Mild

Entertainment
Television and movie enterprises will experience a 5% and 7% increase in demand this year respectively while music and digital music outlets will expand by a mere.5%. Actors are more likely to find work in 2011 than musicians. Industry Strength – Mild

Information Technology
Far and wide, IT is the most stable industry to enter into in 2011. Hardware purchases will slow to 7% from 10% but will remain strong for the duration of the year. Software services will increase by 4% while spending on IT will increase to 4.6% for a total industry capitalization of $2 trillion. Industry Strength – Strong

CONCLUSION
I’ve made some bold and perhaps at times controversial predictions above. This coming year will not be without its challenges, as with all years. In some instances over the course of 2011 some of us may experience anxieties about the uncertainties we will undoubtedly face as we try to make sense of all the “expert” predictions for the future. But we must remember that as leaders it is imperative that we listen to and consider all opinions, while remaining true to ourselves, our values, our beliefs and focusing on our business’ core strengths. It has become incumbent upon us that we continue to move forward with realistic expectations until the tea leaves change and the dust from this calamitous crisis finally settles. As I embarked upon bringing all this information together for you it was my hope that I could at least present a practical foundation to stand upon as we spy out into the ever-changing world and scan the horizons for an indicator of what’s to come.

Article Written by: Merahs Diab

Standard