BizResearch

Recent Developments in the UK Housing Market

Over the last decade the UK housing market has generated a large amount of interest and discussion. Between 1998 and 2007 house prices rose dramatically, generating large increases in equity for homeowners but also making homeownership unaffordable for a large segment of the population.  Rising house prices have also led to an unprecedented increase in the level of household debt. With the UK economy now in the midst of what is likely to be its worst ever recession, the fragility of household balance sheets may then feed back into weaker demand, prolonging the extent of the downturn.

The purpose of this article by Graeme Chamberlin is to outline key developments in the UK housing market since 1998. The first part of this article describes trends in UK house prices, presenting the recent boom and bust in a historical and regional context. Next, the effect of house price movements on affordability is analysed to see whether house prices have now fallen to sustainable levels or still have further to go. The article then goes on to discuss housing finance, specifically the growth in mortgage lending to households. Finishing off with a look at current housing stocks and how these compare to future needs based on likely changes in the size and characteristics of the population.

Key findings:

• Average house price to income ratios have fallen back towards but are not quite at their long-term averages. But for first time buyers the ratio is still significantly above the long-term average

• Repossessions have not reached the same level as in the early 1990s, reflecting sharp cuts in interest rates and lenders treating possession as a last resort

• The proportion of first time buyers has fallen, but this might reflect changing preferences to homeownership as well as affordability constraints. Their presence in the market had been replaced by buy to let investors until the credit crunch limited funding,

• The UK housing market continues to exhibit strong evidence of undersupply based on low house building, growing numbers of households and a mismatch between the types of properties demanded and supplied. The fall in residential new orders brought on by the current recession and credit crunch will exacerbate these supply issues

This article can be downloaded from the August edition of the Economic & Labour Market Review (Vol 3:8)

Photo from Creative Commons: Flickr: Woodleywonderworks

Geo-Engineering – Giving us time to act?

This report from the Institution of Mechanical Engineers argues that geo-engineering could be a vital component for tackling climate change, providing the world with extra time to decarbonise the global economy.

With global temperatures continuing to raise due to greenhouse gases many believe that we are fast approaching a critical point in dealing with climate change.  The consensus is that we cannot allow global average temperature to rise by 2oC above pre-industrial levels.  If we do, many believe that this will cause dramatic changes to our climate which could jeopardise modern civilisation.  For many years, governments have primarily focused reducing the amount of CO2 each nation emits into the atmosphere.  More recently, climate change adaptation has been embraced: an approach which sets out to ensure that critical assets, such as power generation, transport links and the urban environment, are redesigned and rebuilt to protect against future changes in climate.   A third, less explored approach, is geo-engineering: where technology is used to remove CO2 from the atmosphere, or where the planet is cooled by reflecting solar radiation back into space. 

The Institution of Mechanical Engineers has undertaken an assessment of a range of potential geo-engineering options available under its ‘Cooling the Planet’ programme.  Of the many options reviewed, the three most promising have been outlined in this report. 

• Artificial trees: research is being undertaken into building machines which, like trees, can remove CO2 from the atmosphere.  This occurs when air passes through the device and CO2 sticks to a sorbent material.  The CO2 is then removed and buried underground in the same way as conventional carbon capture and storage (CCS).  

• Algae-coated buildings: algae naturally absorbs CO2 through photosynthesis.  Strips of algae can be fitted to the outside of buildings and then periodically harvested from e the surfaces and used as biofuel.  

• Reflective buildings: reducing the amount of solar radiation absorbed by the earth’s climate has the potential to cool the planet. This can simply be achieved by making surfaces more reflective and thus lowering the heating effect the sun’s rays have on us. 

The Institution proposes a climate change roadmap over the next 75 to 100 years, in which geo-engineering is an integrated supporting element in global climate mitigation and adaptation plans.

Click here to read the report

Photo from Creative Commons: Flickr: nima

Industrial Relations Developments in Europe 2008

A number of key trends in industrial relations were observed last year, in particular reflecting the impact of the economic downturn. Nominal pay increases across Europe in 2008 were generally higher than in 2007, being negotiated earlier in the year, before the full effects of the economic downturn had become apparent; later in the year, however, pressure grew for limiting increases or instituting pay freezes. Similarly, towards the end of 2008, the enforced reduction of working time and pay moved onto the agenda, with short-time working becoming increasingly prevalent. Likewise, redundancy arrangements were given greater priority than before on the bargaining agenda as unemployment increased

This latest report from the European Industrial Relations Observatory (EIRO) provides a comparative overview of the most significant developments in industrial relations at a national level and reviews the year’s main events and trends in European social dialogue, plus employment legislation and policy. The report examines the key issues covered by collective bargaining such as pay, working time, pensions and retirement arrangements, and training. It also looks at developments in the area of social partner activity and industrial action.

Divided into 3 main chapters, the first chapter looks at relevant political and legislative developments, collective bargaining levels, industrial action, changes in the organisation and the role of social partners. Developments in company restructuring and the impact of the global economic crisis is also discussed. The second chapter focuses on the main trends in social dialogue at European level over the course of 2008. This includes rulings of the European Court of Justice (ECJ) that have imposed serious limitations on the right to set standards in employment conditions in the context of posted workers. It also reviews the impact of restructuring and the economic crisis at EU level. The final part explores the regulation, industrial relations, and employment and working conditions of self-employed workers, drawing on an EIRO comparative study entitled Self-employed workers: industrial relations and working conditions.

The full report can be downloaded from the Eurofound website

Photo from Creative Commons: Flickr: Lumaxart

2009 Inc. 500

This year’s Inc. 500, unveiled in the September issue of Inc. magazine reported aggregate revenue of $18.4 billion, up significantly from last year’s $13.7 billion. The companies on this year’s list are also responsible for creating more than 55,000 jobs since their founding; making the Inc. 500 perhaps the best example of the impact private, fast-growing companies can have on the overall US economy. The largest company on the list, flat-panel-TV maker Vizio, broke the $2 billion revenue mark.

This year’s ranking measured revenue growth from 2005 through 2008. To qualify, companies must have been founded and generating revenue by the first week of 2005, and therefore able to show four full calendar years of sales. Additionally, they had to be US.-based, privately held, for profit, and independent, not subsidiaries or divisions of other companies. The minimum revenue required for 2005 is $200,000; the minimum for 2008 is $2 million.

Highlights from this year’s rankings:

• Insurance was by far the fastest-growing industry, with an average growth rate of 6,195%. Other strong performers include Logistics & Transportation (2,487%) and Food & Beverage (2,153%).

• Government Services are the top employer with 6,895 jobs, followed by Telecommunications (6,338), Health (5,803), IT Services (5,179), and Energy (4,559).

• IT Services boasted the most companies on this year’s list with 57, followed by Government Services (50), Advertising & Marketing (48), Consumer Products & Services (44), and Health (43).

• The top woman-owned company is P3S (No. 17 overall). The company provide IT network security and physical security services, mostly to the Defence Department. Owner, Mary Ellen Trevino, recorded revenue of $13.5 million in 2008 and a three-year growth rate of 5,898%.

• The top five industries by total revenue include Consumer Products & Services ($3.1 billion), Energy ($2.5 billion), Government Services ($1.9 billion), Advertising & Marketing ($1.3 billion), and Real Estate ($1.2 billion).

Complete results of the Inc. 500, including company profiles and an interactive database that can be sorted by industry, region, and other criteria, can be found on Inc.com.

Photo from Creative Commons: Flickr: Powerhouse Museum

Anatomy of an Entrepreneur

The Anatomy of an Entrepreneur, a newly released study from the Ewing Marion Kauffman Foundation, seeks to provide an understanding of how entrepreneurs develop, the circumstances that can foster or induce entrepreneurship, and insight into the mindset and beliefs of entrepreneurs.  The paper aims to fill in some of the existing information gaps in this area by providing high-level insights into the backgrounds (socio-economic, educational, and familial) and motivations of entrepreneurs. This is a follow-up to several research projects by the Global Engineering and Entrepreneurship project at Duke University, which has been researching the effect of globalization on the engineering profession and on U.S. competitiveness.

For this project, 549 company founders were surveyed from a variety of industries, including aerospace and defence, computer and electronics, health care, and services. Founders were asked a series of detailed questions about their backgrounds, motivations, and experiences in launching companies.

Selected findings:

• 74.8% of respondents indicated desire to build wealth as an important motivation in becoming an entrepreneur. This factor was rated as important by 82.1% of respondents who grew up in “lower-upper-class” families.

• 64.2 % of respondents said they have always wanted to own their own companies. This was a stronger factor for those from lower-upper-class backgrounds—78.6% ranked this as important.

• The average and median age of company founders in the sample when they started their current companies was 40.

• 71.5% of respondents came from middle-class backgrounds (34.6%upper-middle class and 36.9% lower-middle class). Additionally, 21.8% said they came from upper-lower-class families (blue-collar workers in some form of manual labour).

The full report can be downloaded from the Ewing Marion Kauffman Foundation website

Photo from Creative Commons: Flickr: SkyWhisperer

Paying Taxes 2009: The Global Picture

Paying Taxes provides a comparison of the world’s tax systems from the point of view of a case study company. The study from PricewaterhouseCoopers and the World Bank provides individual rankings on the ease of paying taxes globally and also highlights how businesses are affected not only by corporate income taxes, but also by many other taxes. In addition, it shows how the procedural burden of tax compliance impacts companies. 

Data from the study, produced as part of the World Bank – IFC’s Doing Business project includes a measure of the ease of paying taxes for small to medium sized domestic companies in 181 economies around the world.  The indicators used by the project are based on a case study company and assesses taxes from this company’s perspective using three indicators: the total tax rate (the cost of all taxes borne by the company); the time taken to comply with the major taxes; The number of tax payments for the major taxes. 

Key findings of the study

Economies that rank highly on the ease of paying taxes tend to have lower and less complex taxes with simple administrative processes for paying taxes and filing tax returns.

As in previous years, the study confirms that corporate income tax is only one of many taxes that business has to bear. It accounts for only 13% of payments, 26% of compliance time and 37% of the Total Tax Rate (TTR) so any reform agenda needs to look beyond corporate income tax.

Thirty-six economies made it easier to pay taxes in 2007/08. As in previous years, the most popular reform feature was reducing the profit tax rate, which happened in no fewer than 21 economies. The second most popular was introducing and improving electronic filing and payment systems. This reform, carried out in 12 economies, reduced the frequency of payments and the time spent paying taxes and filing returns. Eight economies reduced the number of taxes paid by businesses by eliminating smaller taxes such as stamp duties. The top 10 reformers for paying taxes this year reduced the number of payments by almost half. Bosnia and Herzegovina, Bulgaria, Morocco, Mozambique and Zambia revised their tax codes.

The full report and data can be downloaded from the PwC website

Photo from Creative Commons: Flickr: Sune Frack

The Cone Nonprofit Power Brand 100

This report from Crone, in collaboration with Intangible Business, explores the unique relationship between nonprofit brand image and financial performance.  The Cone Nonprofit Power Brand 100, is the first public ranking in the United States to value nonprofit organizations by more than financial standing alone. The ranking was compiled using sources such as the “Forbes 200 Largest Nonprofits,” the “Nonprofit Times Top 100” and the “Chronicle of Philanthropy Top 100,” to identify the largest nonprofits.  Additional filters were then applied to determine the final list. This included: tax status: 501(c)(3); organizations dedicated to providing social, environmental and/or animal-related services; US.-based organizations but with an international scope; and organizations with national or international audiences and not limited to specific regions of the US.

The power of a brand is an essential and often-underestimated measure of organizational success.  US businesses have long understood the importance of brand, but in the non-profit sector, this factor can be overlooked. This is no surprise as the concept of a “brand” is traditionally been associated with business and the sale of commercial goods, rather than with charities. But, in a sector where more than 1.5 million organizations are competing for resources a solid brand identity is essential. It can set expectations, gains attention, fosters relationships and ultimately helps ensure long term survival.  In most cases, nonprofits raise revenue on the basis of the “promise” of helping their cause, an implicit trust that is embodied by the brand. Therefore the nonprofit brand plays a significant role in generating future revenue. What it stands for should be absolutely clear, with no compromise. Valuing brands gives organizations a license to demonstrate to companies and other partners that there is an established and justified cost to aligning with nonprofits. A compelling brand is an invaluable tool in the arsenal to generate critical funds, secure rewarding corporate and government partnerships and appeal to consumers, employees and volunteers.

The full report and rankings can be downloaded from the Crone website (pre-registration is required)

Photo from Creative Commons: Flickr: diP

Understanding and Preventing Greenwash: A Business Guide

Despite indicators that consumers are seeking out deep discounts and shopping for necessities only, recent studies show that demand for environmentally low-impact products remains high. The 2009 “Cone Environmental Survey,” for example, found that attitudes toward environmentally responsible products remain strong despite a weak economy.  Paradoxically, it would seem that many consumers remain sceptical about the green messages that frequently accompany these products, many of which are perceived as misguided, unsubstantiated, or, worst of all, just “noise.” In other words, the messages are construed as "greenwash."  According to a 2009 Edelman study of more than 20 countries, global trust in business is at an all-time low and diminishing, with people less trustful of all sources of information about companies.  From a business standpoint, demand for environmentally sensitive products is growing, but communicating accurately and credibly is becoming more challenging.

The term greenwashing, is now in the lexicon of most industries. Whether real or perceived, when consumers see greenwashing, they are likely to punish companies with less sales. When NGOs see it, they are motivated to drive negative campaigns and press. And when regulators see it, they can determine that an environmental claim is a “deceptive practice” and fine companies.  The report argues that the problem of greenwashing should be a concern to all companies, because even if your company is not singled out, greenwashing by your competitors hurts the industry as a whole. The more companies are seen as greenwashing, the less likely customers are to trust environmental-related claims in general, and the more likely regulators are to step in and impose restrictions.

Ultimately, this practice is a barrier to developing a sustainable economy. It can slow down sustainability efforts by making more people sceptical of environmental initiatives.  It also impedes consumers from understanding the impacts of their purchasing decisions as they struggle to differentiate between valid and invalid claims. Fighting greenwash uses time and resources that could be better spent on initiatives with positive environmental impacts.

This latest report from BSR (Business for Social Responsibility) in conjunction with Futerra Sustainability Communications, explores the concept of greenwashing and provides advice on how companies can avoid.

The full report can be downloaded from the BSR website

Photo from Creative Commons: flickr: velo city

Twitter Study

A study looking at the micro-blogging site Twitter found that a high proportion of the messages sent via this service can be classed as "Pointless Babble." The aim of the study from US-based market research firm Pear Analytics was to identify how people really use Twitter. The main assumption has been that it is predominantly used for self-promotion or to push a product or service. However, the data shows that this is not the case. Only 8.7% of all messages could be said to have "value" as they passed along news of interest. 

The study was conducted by taking random samples from the Tweet stream every 30 minutes between certain times during weekdays for a two week period. The tweets were then categorized into six main areas of usage: News; Spam; Self-promotion; Pointless Babble; Conversational; and Pass-Along Value.

So who users Twitter? Demographic data from Quantcast.com carried out in earlier this year found Twitter reaches 27 million people per month in the US. Of these 55% are female and 43% are between 18 and 34. They also found that 1% of the addicts contribute 35% of the visits. 

The results of the study showed that ‘Pointless Babble’ won with 40.55% of the total tweets captured; however, ‘Conversational’ was a very close second at 37.55%, and ‘Pass-Along Value’ was third at 8.7% of the tweets captured.

Other Results:

• 11:30am and Monday’s have the most frequent tweets with Pass-Along Value
• Spam seemed pretty consistent throughout the study, but luckily was second-to-last on frequency.
• News seemed heavier at 2:00p and on Tuesday’s
• Conversational tweets were high between 2:00 and 4:00p throughout the study, and heaviest on Tuesdays.  Pear Analytics suggest that most people are busy on Monday catching up with work, so perhaps it takes until Tuesday to get into the swing of Twittering again.

The same study will be carried out every quarter to identify new trends in usage.

Click here to read the full report

Photo from Creative Commons: Flickr: 7son75

The State Of Retailing Online 2009

The State of Retailing Online, the Shop.org study conducted by Forrester Research, asks retailers to assess their current and planned merchandising initiatives.  In 2009, improvements to the most basic of Web functions (e.g., checkout) topped the list of retailer priorities. A minority of retailers also appear to be focusing in the coming year on other key areas and are considering eCommerce tactics such as user-influenced content and greater transparency around shipping information.  Specifically, retailers ranked their focus on merchandising initiatives in the following order for 2009:

Checkout: enhanced checkout flow and improving the throughput of eCommerce transactions topped retailers’ to-do lists for 2009, with 79% saying that they would focus on this site feature.  58% of Web-based retailers, said improvements to the cart page is a significant priority for the coming year.

Product detail pages: this year retailers are pushing changes in one of two areas — either through image enhancement or through richer text-based content in the form of customer ratings and reviews on product detail pages. Indeed, more than half of retailers surveyed noted that they would focus on zoom functionality as well as customer ratings and reviews in the coming months.

Search results pages: Because most Web buyers are looking for specific products, the critical nature of the site search box and the subsequent results are particularly important for retailers. For this reason, retailers continue to hone the effectiveness, adding new features such as site search filters to their on-site search functionality. 71% of retailers in fact say that they will make site search/ browse results a priority for the coming year.

Home pages: With the rise in popularity of comparison sites, consumers are more likely to be introduced to a Web site on a page much deeper within the site. Therefore, Forrester argue that retailers should focus not only on the home page as a consumer entry point but also on other entry-point pages within the site. Consequently, while 60% of retailers designate the home page as a key priority in the coming year, this percentage represents a lower one than reported in previous years.

Help sections: despite stagnant conversion rates and a heightened interest in improving the checkout experience, retailers nonetheless seem less than eager to ensure that customer questions are answered at critical points during the transaction process. Only 35% said that they would focus on it in the coming year.

This report is available to current London Business School staff, students and faculty from the Forrester database located on the A-Z list of library database within Portal. (Pre-registration required).
 
Photo from Creative Commons: Flickr: jaded one

Private Equity 2009

According to the latest research bulletin from the IFSL (International Financial Services London) the UK private equity market is the most developed outside the US, managing 17% of global investments and 15% of funds raised in 2008.
 
Selected highlights:
 
Last year private equity investments fell 40% to $189bn, with buyout activity dropping as private equity firms struggled to obtain debt finance from banks to complete deals. The report also states that private equity investments hit a 12 year low in the first half of 2009, dropping to $24bn, 80% down on the same period in 2008. Private-equity backed deals generated only 7% of global merger & acquisition volume in 2008, the lowest level since 2001 and down from the record high of 21% in 2006. This figure fell even further to 3.5%in the first half of 2009.
 
Despite the financial crisis fund-raising levels were only down 8% in 2008 to $450bn, a figure influenced heavily by the relatively strong start to the year. The slowdown in fund-raising accelerated in 2009, with under $100bn being raised between January and June, equivalent to a two-thirds drop on the same period in 2008. The secondary market for private equity, where existing stakes in private equity holdings are bought and sold, has seen a record $15.6bn raised in the first half of 2009, already setting a new annual record with six months left in the year.
 
Meanwhile, global private equity funds under management totalled $2.5 trillion at the end of 2008. The 15% increase during the year was due to strong fund raising activity and an increase in unrealised portfolio investments as firms were reluctant to exit their stakes in market conditions of falling valuations.
 
Worldwide investments of UK private equity firms mirrored falls on global markets, declining by 38 per cent in 2008 to £19.5bn, while the aggregate value of funds raised fell by a fifth to £23.1bn. The UK private equity market, which remains the most developed outside the US, managed 17% of global investments and 14% of funds raised in 2008. London has successfully held its position as the largest European private equity centre, second only to New York globally.
 
The full report can be downloaded from the IFSL website

Photo from Creative Commons: Flickr: raspberreh

Travel Trends 2008

The Office for National Statistics have just release the 2008 edition of Travel Trends. This annual publication presents the main findings from the International Passenger Survey (IPS).  It provides detailed analyses on visits overseas residents made to the UK and on visits UK residents made abroad. It also gives information on the long-term trends in travel to and from the UK, over a twenty-year period, plus shorter term trends, over a five-year period.

Selected findings:

The number of visits to the UK has fallen for the first time since 2001, the year that saw the outbreak of foot and mouth disease and the terrorist attacks of 9/11. UK residents also made fewer visits abroad. In total, 69.0 million visits were made, down 0.6% on 2007.

The destination of UK residents travelling overseas remained broadly the same as in previous years. Spain and France dominated the list, accounting for 36% of all visits, followed by the USA, the Irish Republic, Italy, Germany and Portugal. Visits to many countries fell during 2008, but there were some exceptions with large increases in visits to Romania, Mexico, Egypt and Slovakia (all up 30% or more).

The highest number of visits to all regions was made by European residents. In Scotland, the second largest group was visitors from North America, but in Wales, London and the rest of England, North American visits were outnumbered by visits from residents of other, non-European countries

Once again London hosted more overnight stays by overseas residents than any other city or region of the UK, while the rest of the top 10 stayed much the same as in 2007.

From the top 50 most visited towns and cities, overseas visitors stayed longest in Bradford, averaging 19 days per visit, and Bournemouth and Exeter, both with 13. Dover had the shortest average stay, with two nights.

The full report and previous edition going back to 1999 can be downloaded from the Office For National Statistics website.

Photo from Creative Commons: Flickr: James Cridland

Review of Corporate Governance in UK Banks & Other Financial Industry Entities

The Walker Review was set up to look at corporate governance in UK banks in the light of recent critical loss and failure throughout the banking system.  The principal focus of this Review is on banks, but many of the issues, and associated conclusions and recommendations, are relevant to other major financial institutions such as life assurance companies.  The review concludes that governance failures contributed heavily to excessive risk taking in the lead up to the financial crisis. Weaknesses in risk management, board quality and practice, control of remuneration, and in the exercise of ownership rights need to be addressed in the UK and internationally to minimise the risk of a recurrence. Better governance will not guarantee that there will be no repetition of the recent highly negative experience for the economy and for society as a whole but will make a rerun of these events materially less likely.

The review process has led to the 39 recommendations. The second phase of the consultative process is to seek comment and reaction, and interested parties are invited to comment not only on the recommendations, but also on any relevant issues which they do not cover. Specific proposals include:

• Board level risk committees chaired by a non-executive
• Risk committees to have power to scrutinise and if necessary block big transactions
• More power for remuneration committees to scrutinise firm-wide pay
• Remuneration committee to oversee pay of high-paid executives not on the board
• Significant deferred element in bonus schemes for all high-paid executives
• Increased public disclosure about pay of high-paid executives
• Chairman of remuneration committee to face re-election if report gets less than 75% approval
• Non-executives to spend up to 50% more time on the job
• Non-executives to face tougher scrutiny under FSA authorisation process
• Chairman of board to face annual re-election
• Financial Reporting Council to sponsor institutional shareholder code
• FSA to monitor conformity and disclosure by fund managers
• Institutional shareholders to agree Memorandum of Understanding on collective action

This is intended as a consultative document, proposing most of the recommendations should be enforced through inclusion in the Combined Code on Corporate Governance, which operates on a 'comply or explain' basis. It would be for the Financial Reporting Council, which is currently reviewing the Combined Code, to decide exactly how this would be done.

Click here to read the report

Photo from Creative Commons: Flickr: Rogue Soul

Annual 401(k) Benchmarking Survey: 2009

Sponsored jointly by Deloitte, the International Foundation of Employee Benefit Plans, and the International Society of Certified Employee Benefit Specialists, the Annual 401(k) Benchmarking Survey measures the essential aspects of 401(k) plans for major US companies. The annual survey offers a detailed snapshot of the 401(k) policies, features, objectives and expectations of hundreds of diverse employers. This year a total of 606 companies responded to the survey, representing a wide distribution of employers in terms of geography, size, and industry and ownership structure (publicly or privately held).

The continuing economic downturn is a source of anxiety for employers and employees alike. Combined with the uncertainty of what recovery will eventually mean to participants, it is understandable that both employers and employees are adopting a “wait and see”  This year’s survey shows that employers are concerned about their employees’ financial preparations for retirement, sufficiently supporting their plans, and considering them important tools in overall benefit program design.

Among the notable findings:

17% of plan providers surveyed indicated an increase in deferral rate changes, hardship withdrawals, loans, and other similar activities. 

A third (38%) reported their employees decreased their deferral rates for 2009, with the majority (60%) holding steady at their current level of contribution.

12% of employers surveyed indicated an upswing in opt-outs from auto-enrolment programs.

Almost one-fifth (19%, up 2 percentage points from last year) of plan sponsors believe “very few” of their employees will be financially prepared for retirement.

More than three-quarters (79%) of employers surveyed are still fairly confident that their plan is effective for recruiting talent, and 68% say it helps with retention.

In addition to the full report, industry data is also available for:

• Consumer & Industrial Products/Services
• Energy & Resources
• Financial Services/Insurance
• Health Care & Life Sciences
• Public Sector/Not for Profit
• Technology, Media & Telecommunications

The full report and industry data can be downloaded from the Deloitte website

Photo from Creative Commons: Flickr: Steve Weavers

Digital Music Attitudes and Behaviour Report

This annual survey commissioned by UK Music, the industry's new collective body,  profiles the music consumption habits of 14-24 year olds across the UK. The findings are based on a large-scale survey of 1808 UK respondents carried out the University Of Hertfordshire.

Key findings on the music consumption of 14-24 year-olds:

The computer is now their main entertainment hub: 68% listen to music on their computer every day. By comparison, only 15% use their CD player on a daily basis.

Size of digital music collections: the average computer or hard drive contains over 8,000 tracks (approximately 17 days worth of music).

Ownership: young people are using the growing range of licensed digital music stores and they still want to own music on physical formats.

Music remains their most popular form of entertainment: however, there remains a significant "value gap" between the popularity of music and the amount of money spent on it, especially compared to other entertainment types.

File-sharing:  61% of respondents download music using P2P networks or torrent trackers. This is unchanged from last year. Of this group, 83% are doing so on a weekly or daily basis.
The main reason for file-sharing is cost: it's free. However, respondents also use P2P to find music that is not commercially available (for instance, before a piece of music is released commercially) or to experiment and 'try-before-they-buy'.

Paying for digital music: 85% of P2P downloaders would be interested in paying for an unlimited, MP3 download service. 57% of these said such a service would stop them using unlicensed P2P services, and 77% that they would still continue to buy CDs.

Streaming music online: 78% of respondents said they would not pay for such a service.

Digital music consumption is getting more complex: 86% of respondents have copied a CD for a friend; 75% have sent music by email, Bluetooth, Skype or MSN; 57% have copied a friend's entire music collection; 39% have downloaded music from an online storage site; and 38% have ripped a TV, radio or internet stream.

Copyright: The vast majority of respondents knew that sharing copyrighted content (as above) is not legal - yet continue to do so anyway.

The survey is presented in two separate reports - qualitative focus group report / quantitative survey report

Photo from Creative Commons: Flickr: Morrisey

UK Film Industry - Statistical Yearbook 09

The Statistical Yearbook 09 produced annually by the UK Film Council is a rich source of industry data and analysis, drawn from a range of reputable suppliers and detailing the full value chain for film.

Highlights:

Admissions surged at the end of 2008, boosted by films like High School Musical 3 and Quantum of Solace and revenues for film on DVD and television also grew, confirming evidence that film revenues are recession-resistant. The box office for summer 2008 was the best since 1969, led by The Dark Knight, Hancock and Mamma Mia!, the highest grossing film of all time at the UK box office. 

The UK box office grew to a record £850 million. UK films took 31% of the UK box office and internationally UK films accounted for 15% of the global box office.  The upward trend in the performance of UK film in the global market was reflected in the 2007 export figures, which saw UK film exports reaching a record £1,050 million. This figure captures the exports of production services and income from royalties, underlining the UK’s international competitiveness.

The UK took 32 major awards, 15% of the top awards presented in the course of the year. Both anticipating and reflecting the strong box office performance, the number of cinema screens in the UK grew by 96, on top of growth in 2006 and 2007, to take the total to 3,610 screens. Among these, 310 screens were digital, with the UK having the highest number of digital screens in Europe. At the same time, there was massive international growth in digital screens, particularly in North America, with the global total rising to 8,797 from only 848 in 2005.

Last year also saw increased interest in 3D, with 69 UK screens with 3D-capability with more on the way. Cinemas are finding they get better screen averages from 3D cinema (more people per screen), an effect which also applies to alternative content, such as live streaming of opera and popular music concerts to digital screens, which supports a much higher ticket price.

The yearbook is available for downloading from the UK Film Council’s website

Photo from Creative Commons: Flickr: Hector Milla

The Top 10 Beer Companies

This report from Business Insights profiles the leading players in the global beer industry.  Low malt alcoholic beverages such as happoshu and new genre beers as well as quasi beer have been included. The industry is analyzes in terms of market size (estimated based on on-trade sales), key drivers and resistors, trends and competitive positioning in the global alcohol market. It includes profiles of the top ten companies in the industry and also involves a brief summary of the top 11 to 20 players.

The global beer market was valued at approximately $507bn in 2008, an increase of 1.8% over 2007. Business Insights forecasts that the value of the global beer market will grow at a CAGR of 1.6% during 2007–12 to reach a total value of $540bn in 2012. A shift in preference for premium beer in emerging markets and product differentiation will help to drive an increase in beer market value through 2012. However, the recession and down-trading might reduce the pace of premiumization of beer. In addition, increase in preference for spirits, wines and healthy drinks will to some extent dent the market size of beer.

Selected highlights:

Europe accounted for 49.1% of the global beer market by value in 2008, followed by Asia-Pacific (22.9%), North America (17.7%), South and Central America (8.6%) and Africa and Middle East (1.8%).

Consolidation in the beer industry has changed the leading company, with A-B InBev becoming the market leader based on sales of $21,727m in 2008, followed by Heineken ($16,854m), pushing SABMiller ($15,751m) down to third rank.  Carlsberg had the highest sales growth of 25.5% during 2005–08 primarily driven by its acquisition of Scottish & Newcastle’s (S&N’s) operations in Russia.

Consolidation in the beer industry is set to continue, but deal sizes will decline, owing to the limited availability of funds in the challenging economic environment. Most of the focus will be on the emerging beer markets in Asia, Latin America and Eastern Europe.

This report is available to current London Business School staff, students and faculty from the Business Insights database located on the A-Z list of library databases via Portal.

Photo from Creative Commons: flicker: Placbo

Global Development Finance: Charting a Global Recovery

Global Development Finance is the World Bank’s annual review of global financial conditions facing developing countries. The current volume provides analysis of key trends and prospects, including coverage of the role of international banking in developing countries.  This year’s report warns that the world is entering an era of slower growth that will require tighter and more effective oversight of the financial system. Developing countries are expected to grow by only 1.2% this year, after 8.1% growth in 2007 and 5.9% growth in 2008. When China and India are excluded, GDP in the remaining developing countries is projected to fall by 1.6%, causing continued job losses and throwing more people into poverty.  Charting a worldwide recovery will require quick implementation of detailed reforms and an eventual shift away from governments having high stakes in the financial system to a resumption of private sector control of the banking system, the report says. In addition, the big expansion of the money supply in advanced countries will need to be unwound and fiscal deficits will need to be cut in the medium term, to maintain debt sustainability and avoid another debt crisis as seen in the 1970s and 1980s.
 
Outlook for the Developing Regions
 

• East Asia and Pacific:  recovery across the region is expected to begin in the second half of 2009 and into 2010, reflecting substantial fiscal stimulus in China and a modest recovery of export demand in rich countries.
  
• Europe and Central Asia: large current account deficits and domestic overheating made many countries vulnerable to the abrupt reversal of capital flows and weaker export demand that the crisis generated. GDP is projected to fall by 4.7% in 2009, recovering to grow by about 1.6% in 2010.
  
• Latin America and the Caribbean: entered the crisis supported by stronger fiscal, currency, and financial fundamentals than in the past. Flexible exchange rates were able to absorb much of the initial shock and avoid systemic problems even as equity markets tumbled.
  
• The Middle East and North Africa:  less directly affected by the credit crunch than other regions. Growth is projected to halve to 3.1% in 2009, then edge up to 3.8% in 2010 and 4.6% in 2011, partly because the slowdown has been less pronounced in MENA than in other regions and oil demand and prices are expected to remain low.
  
• South Asia: have experienced considerably diminished capital inflows and a falloff in investment growth. GDP is projected to expand 4.6% in 2009, down from 6.1% in 2008. Regional output is then expected to increase by 7% in 2010 and 7.8% in 2011. However, threats to long-term growth include the possibility of heightened fiscal pressures if the global recession is prolonged, and large fiscal deficits.
  
• Sub-Saharan Africa: growth is expected to decelerate sharply this year to 1%.  Sharp cuts in remittances and official aid flows also represent a risk for the region, because many Sub-Saharan countries rely on aid flows for budget support and because remittances are a vital cushion against poverty.

Click here to read the report. 

Photo from Creative Commons: flickr: Viking 79

The Right Media Mix To Reach UK Moms

Mums around the world are a key marketing target, as it is this group that tend to make or influence a large proportion of household purchases. In the UK, more than half have children between 6 and 12 years old. Most work outside of the home and have access to broadband. Yet, UK mums can be hard to reach because:

On average they spend 32 hours per week with media, compared with 36 hours for the average UK consumer. They surf the Web as much as their counterparts, but the Internet is the exception: TV, newspapers and radio usage is lower than average.

Although UK mums might not spend as much time with media as other consumers, they do rely on a wide array of sources to help make informed purchase decisions. The Internet is the main resource, but they will also consider information obtained from magazines, TV and newspapers, plus in-store promotions.

The average UK mum is a complex media user: Whilst TV is the medium she spends the most time with, she won’t necessarily depend on TV as her top sources of product information. Although the Internet is the main resource for purchase information, UK mums tend not to trust banner ads or search engine ads.

This latest research report from Forrester discusses the best media mix to effectively engage with these complex consumers.

The full report is available to current London Business School staff, students and faculty from the Forrester database available on the A-Z list of library databases via Portal

Photo from Creative Commons: Flickr: Cesar R

Entrepreneurship UK: 2009/10

Deloitte’s second survey on entrepreneurship provides insight into the mindset and intentions of the people who run entrepreneurial companies.  The survey presents opinions from new companies just starting out to more established entrepreneurial businesses. This year’s report comes at a time when economic prospects appear finely balanced.  The effects of the current crises on the UK’s largest firms have been well publicised, less well reported is the impact on our entrepreneurial businesses. 

This year's report also includes analysis from James Caan, entrepreneur and Dragon’s Den panellist and Associate Professor from the London Business School Keith Willey.

Selected highlights:

• Top line growth is not the main focus this year with a fifth of companies expecting no revenue growth at all for 2009. Companies are focusing on survival tactics such as cost reduction.

• Nearly a third of companies say that banks have reduced their facilities. Deloitte believe that the funding model of many companies needs to be reassessed, as existing relationships with banks are likely to break down, which in turn will give rise to new debt and equity relationships

• Although 36% of businesses feel that the UK encourages and supports entrepreneurs, the majority do not share this view.  Despite the fact that the Government has unveiled a number of measures to help entrepreneurial businesses, many feel that better communication is needed, not just in terms of the existence of such schemes but also about their benefits. 

• Nearly a third of respondents are planning to sell up within the next three to five years. It appears that the recession has brought the issue of exits into sharp focus. Last year’s survey found 39% of business owners who had not planned an exit, compared to 24% this year.  Similarly, last year found 35% of entrepreneurs who said that their exit would be opportunistic falling to 18% this year.

The full report can be downloaded from the Deloitte website

Picture from Creative Commons: Flickr: Mobilestreetlife

Digital Competitiveness report

The European Commission's latest report outlines the results of five years of EU policy under the Barroso Commission promoting the latest communication technologies, new networks and services and creative media content,. Its findings show that Europe's digital sector has made strong progress since 2005.

Main findings

56% of Europeans now regularly use the internet, 80% of them via a high-speed connection (compared to only one third in 2004), making Europe the world leader in broadband internet. Europe is the world's first truly mobile continent with more mobile subscribers than citizens (a take up rate of 119%).

People aged 16 to 24 are the most active internet users: 73% of them regularly use advanced services to create and share online content, twice the EU population average (35%). 66% of all Europeans under 24 use the internet every day, compared to the EU average of 43%. They also have more advanced internet skills than the rest of the population, according to a Commission study on digital literacy, also released today.

Although the "digital generation" seems reluctant to pay to download or view online content like videos or music (33%), in reality twice as many of them have paid for these services compared to the rest of the population (10% of young users, compared to an EU average of 5%). They are also more willing to pay for offers of better service and quality.

Despite progress, a third of EU citizens have never used the internet. Only 7% of consumers have shopped online in another Member State. Europe is still behind the US and Japan in R&D investments in information and communication technologies (ICT), high-speed broadband communications, and developing innovative markets like online advertising.

Upcoming challenges for Digital Europe are raised in a public consultation launched by the Commission, open until 9 October 2009. This is the first step towards a new European ICT strategy which the Commission aims to present in 2010 as part of the next wave of the Lisbon Agenda.

Click here to read the report

Photo from Creative Commons: Flickr: Arjan Almekinders 

Consumer Behaviour Online: A 2009 Deep Dive

People’s online behaviours are becoming more integrated into their offline interactions and it’s critical that companies understand where and how to reach them across media channels, according to a recent Forrester report. Forrester has been collecting self-reported data from consumers in the US since 1998.  Every year respondents are asked a variety of questions covering a range of behaviours in a benchmark mail survey. In this year’s survey, North American consumers were questioned about their participation (or lack of) in more than 125 online behaviours.  Data from the survey shows a stabilization of consumers’ overall time spent with online media. However, engagement with the online channel has deepened, as evidenced by the widespread adoption of such activities as social networking.

Selected highlights:

• There are almost 6.5 million new broadband households this year. This means that there are now almost 71 million households that report they have access to the abundance of activities on the Internet that are enabled by faster connection speeds.

• Gen Yers (ages 18 to 29) still spend the most time online. On average, they log on for slightly more than 19 hours per week. Gen Xers (ages 30 to 43) are logging on for 17 hours per week. While Gen Y dominates usage in most areas, there are some things that other generations do more of. For example, Gen Xers are more likely to be searching for sports content online, while Older Boomers (ages 54 to 64) are more likely to be checking on finance content.

• Just less than one-third of online consumers are using social networking sites monthly, up from only 15% in 2007. Sixty eight percent indicate they visit Facebook weekly, while 59% say they visit MySpace.

• Between 2008 and 2009, more mobile owners indicated using functions like emailing, sending pictures, texting, and instant messaging.  In fact, the percent of consumers sending or receiving picture messages jumped from 20% in 2008 to 29% in 2009. As the services improve, growth will follow. With continued price drops and bundled offerings, it will only become easier for consumers to make the jump from these activities to more complex ones like using the mobile Web.

This report is available to current London Business School staff, students and faculty from the Forrester database (pre-registration required) which can be found on the A-Z list of library databases via Portal.

Photo from Creative Commons: Flickr: ydhsu

Welcome to World 2.0: The New Digital Ecosystem

This paper from Fahri Karakas introduces the concept of World 2.0 and aims to provide managers and professionals with a fresh perspective and an integrative vision of the twenty-first century business and innovation landscape. The new generation of internet tools, Web 2.0 tools, have fostered the growth and popularization of web-based communities, social networking sites, video sharing, wikis, blogs, and social tagging. These tools have made it possible for professionals from all over the world to collaborate, interact, and participate in the process of innovation and value creation, Karakas refers to this process as a World 2.0 ecosystem.
 
Companies facing World 2.0 are adopting new business models to harness the collective intelligence of people outside their organizations. Instead of relying on internal R&D groups, companies are tapping into the global talent pool to encourage innovation and creativity in the digital ecosystem. An example of this open innovation model is the case of InnoCentive, a global community of scientists from diverse disciplines and from 170 countries that helps companies find solutions to their R&D problems.
 
The author identifies six organizational strategies for managers and professionals to cope with the unique innovation challenges of World 2.0.

• Expand the innovation ecosystem outside firm boundaries to tap into the global brain
• Bring together the best minds from diverse disciplines and form cross-disciplinary virtual Teams
• Find and attract best global talent for innovation projects
• Foster a positive climate to nurture group genius and collective creativity
• Give employees time, opportunity, and resources to build innovative projects based on their interests and passion
• Encourage employees to pursue lifelong and boundless learning in the digital Web 2.0 platforms

Full-text access to this article issue (Journal of Business Strategy, Vol. 30:4) is available to current staff, students and faculty via Article Finder which can be found on the A-Z list of library database via Portal.

The print edition of this journal can be found in the journals collection located on the first floor of the library.

Photo from Creative Commons: Flickr: Darren Hester