BizResearch

Global Fraud Report 2009

This survey is an annual, worldwide survey which investigates fraud and its impact on business.  This year’s survey, commissioned by Kroll was carried out by the Economist Intelligence Unit. A total of 729 senior executives took part in this survey. A little over a third of the respondents were based in North and South America, 25% in Asia-Pacific, just over a quarter in Europe and 11% in the Middle East and Africa.  Ten industries were covered, with no fewer than 50 respondents drawn from each industry. The highest number of respondents came from the financial services industry (12%). A total of 46% of the companies polled had global annual revenues in excess of $1 billion.

The results from the survey show that the financial crisis has had a huge impact on the risks underlying fraud. Those risks that grow as companies expand – entry into new markets, for example – have actually declined in importance. In simple terms, less money coming into a company and more oversight of spending despite financial constraints limit the opportunity for crime. Pay cuts/freezes have also provided a motive for fraud.  The survey found that 30% respondents said that the global financial crisis has increased the levels of fraud at their organizations, compared with just 5% who saw a decline

However, levels of reported fraud vary by sector, the financial services and construction sectors illustrate this perfectly.  Those closer to the original crisis i.e. financial and professional services have seen an increase in their incidence and level of fraud.  The combined average losses to fraud over the last three years rise to $15.2 million or 18% above the 2008 survey figure. The number of sector companies suffering at least one fraud rose to 87%, slightly above the survey norm, from 79%, comfortably below.  Most notably, over one-half of respondents indicated that the crisis had led to an increase in the number of cases of fraud at their companies.  It is a very different picture for the construction, engineering and infrastructure industry. In these sectors, the combined average fraud figure dropped by more than one-half, to $6.4 million from $14.2 million, making the sector’s losses, for once, below the average level.

The full report can be downloaded from the Kroll website

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Online High Street Ecommerce: Usability for UK High Street Retailers in 2009

According to the Office for National Statistics, 64% of all Internet users have made a purchase online. With 63% of households on broadband connections, shopping on the Internet has never been more convenient.  This is illustrated by the amount of money being spent on Internet purchases. Online spend has been steadily rising over the years and UK consumers have spent £31 billion so far this calendar year, with the busiest trading period at Christmas yet to come. By April 2010, online spending is expected to almost double to £60 billion per year.

Historically, such phenomenal growth hasn’t been matched on the high street, and this past year, with many economies feeling the effects of the recession, the difference has only become more marked. While many big brands have disappeared from the high street, UK e-retailing has grown 15% year-on-year during 2009. So despite the economic downturn, the Internet as a channel for commerce is stronger than ever and retailers are responding by expanding and investing in their online presence.

For this survey, Webcredible investigated the usability of the websites of 20 of the UK’s leading high street shops. Last year, the top high street retailers weren’t doing enough to maximise their share of this potential revenue in preparation for Christmas. This year, Webcredible has decided to re-investigate against the same essential usability criteria to see if there’s been any change in the run-up to Christmas this year. 
 
The survey found that four of the top scoring sites have increased their position dramatically this year – 9 points in the case of John Lewis, 15 for Woolworths and M&S, and Boots has increased the most with 16 points difference. M&S had relaunched its site just before this report was written, incorporating quite a few user experience improvements. It’s interesting to note that since Woolworths has become an online-only proposition, there seems to be an improved strategy in place for user experience. Additionally, Mothercare has also improved by 10 points this year.

The dramatic changes observed in these four websites have undoubtedly contributed to the wholesale increase in the average across the sample. Whilst this is good news for these particular sites, it’s clear that the many sites scoring in the 50s and 60s can do much more to improve the usability of their online offering.

Click here to read the report

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Managing Tomorrow’s People

The credit crisis and subsequent global recession has forced many companies to cut their workforce and reduce their expenditure on people.  It has also raised fundamental questions about the institutions and practices of modern business life. Belief in a self-regulating financial system has been shaken, confidence in the foundations of business has been eroded and a new generation of workers are reassessing the relationship between employer and employee.

This latest report from PwC, looks at the impact of the downturn on people management, exploring how the actions of businesses as a result of the crisis determines their readiness for the upturn and their ability to compete in the second decade.  PwC present three possible business models which they believe will co-exist in the future:

Green World  - demands for greater transparency and social responsibility in business have been magnified by the crisis and combine with the call for environmental responsibility already present in the green agenda. This will impact many areas of people management, particularly in relation to how people are rewarded.

Blue World - Increased focus on hard people metrics to measure performance and productivity as companies look at a long-term reality of having to do more with less. The Blue World scenario imagines the performance and efficiency culture necessary for global companies (some larger than many individual countries) to succeed within a new order of economic superpowers.

Orange World - the opportunity for radical new ways of working will emerge. PwC take the concept of outsourcing and globalisation of the workforce to an extreme portfolio working model where people organise their working lives like individual businesses in a highly networked world.

The global economic downturn has forced many companies to make important and difficult choices about how they manage and motivate people, with both immediate and long-term consequences.

The full report can be downloaded from the PricewaterhouseCoopers website

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The Conference Board Task Force on Executive Compensation

The current economic crisis has led to a loss of public trust in corporations and other institutions. Executive compensation, in particular has come under increasing scrutiny.  One of the missions of The Conference Board and its Governance Center is to encourage leaders to participate in a substantive dialogue on the most pressing governance matters. As part of this mission, the Governance Center established the Task Force on Executive Compensation to provide an independent review of the issues related to executive compensation. In addressing these issues, the task force and its advisory group brought together directors, shareholders, experts in compensation, governance and law, and members of academia.
 
The task force’s report and recommendations set forth five guiding principles, which it believes, if appropriately implemented, can restore corporate credibility with shareholders and other stakeholders and trust in executive compensation pay processes and oversight. The report provides guidance to boards, compensation committees, and management in implementing these guiding principles, and its appendixes contain additional information on executive pay practices and standards.
 
The Guiding Principles state that public companies should:

• Principle One: compensation programs should be designed to drive a company’s business strategy and objectives and create shareholder value, consistent with an acceptable risk profile and through legal and ethical means. To that end, a significant portion of pay should be incentive compensation, with payouts demonstrably tied to performance and paid only when performance can be reasonably assessed.
  
• Principle Two: total compensation should be attractive to executives, affordable for the company, proportional to the executive’s contribution, and fair to shareholders and employees, while providing payouts clearly aligned with actual performance.
   
• Principle Three: companies should avoid controversial pay practices, unless special justification is present.
  
• Principle Four - credible board oversight of executive compensation committees should demonstrate credible oversight of executive compensation. To effectively fulfil this role, compensation committees should be independent, experienced, and knowledgeable about the company’s business.
  
• Principle Five - compensation should be transparent, understandable, and effectively communicated to shareholders. When questions arise, boards and shareholders should have meaningful dialogue about executive compensation.

The full report is available to current London Business School students, faculty, staff and alumni from the Conference Board Research database which can be found on the A-Z list of library databases via Portal.

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The Euro at Ten - Lessons and Challenges

The European Central Bank was established on 1 June 1998. It began operating the single monetary policy the day on which the euro came into existence, 1 January 1999. The Fifth ECB Central Banking Conference took place in November 2008, a few months after the tenth anniversary of the establishment of the ECB, and a few weeks before the tenth anniversary of the launch of the euro. Not surprisingly, four out of six sessions of the conference focused on the challenges of and the lessons from the first decade of EMU. This volume presents the papers presented at the conference as well as the discussions and the speeches.

The first session examined the macroeconomic performance of Economic and Monetary Union, its achievements and challenges, over the past ten years.  Several key questions were addressed including: has the euro and the single monetary policy established a zone of monetary stability as envisaged, with all the direct and indirect benefits this entails for the 320 million citizens of the euro area?; Secondly, to what extent has the euro has contributed to boosting the trend growth of the euro area economy by strengthening competition, enhancing market efficiency, raising productivity growth and increasing labour utilisation.

Another important set of issues that were addressed in the second session involved the role of the euro in fostering the integration of financial markets in Europe and in promoting the efficiency and stability of the European financial system – and through it – of the broader economy in the euro area.  The increasing interconnectedness and interdependence of our economies and financial systems have important implications both for the conduct of monetary policy and for the performance of the central banking task of safeguarding financial stability. These implications were examined and assessed in the third session on the basis of the paper presented by Kashyap, Rajan and Stein and in the concluding policy panel.

The keynote speech of the conference, by President Trichet, discusses the sources of, and the lessons from, the global financial crisis, both for monetary policy and for regulation of financial institutions. In addition, Trichet outlines the policy response of the ECB to the crisis, in particular the policy response in cooperation with other central banks. In the closing address of the conference the Executive Board Member Stark emphasises that the first decade of EMU has not been calm: The ECB had to confront the aftermath of the Asian crisis, the bursting of the dot-com bubble, the attack of 11 September 2001, and the recent sharp rise in commodity prices.

Click here to read the report in full

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Global Corruption Barometer 2009

The Global Corruption Barometer (the Barometer) produced by Transparency International’s (TI) is a public opinion survey that assesses the general public’s perceptions and experiences of corruption and bribery.  It assesses the extent to which key institutions and public services are perceived to be corrupt and measures citizens’ views on government efforts to fight corruption.

This year, for the first time, the Barometer asked citizens about the extent to which they feel the private sector uses bribery to distort the policy-making process in their country; a phenomenon often referred to as state capture. The Barometer found that 54% of survey respondents believe bribery is commonly used by the private sector to shape policies and regulations. This contrasts sharply with what the private sector reports. TI’s 2008 Bribe Payers Index found that only 32% of senior business executives claimed that bribery was often used to influence specific policy outcomes.  Sixty five per cent of Barometer respondents in upper-middle income countries - many of these emerging economies where growth and political transition mean markets and regulation are in a state of flux - reported that state capture by the private sector is a common phenomenon. While 55% of respondents in high-income countries reported that it is common for bribes to influence the policy-making process, 45% of respondents in low-income countries claimed the same.

Other findings include:

Globally, respondents perceived political parties as the single most corrupt domestic institution, followed closely by the civil service.

Aggregate results, however, mask important country differences. In 13 of the countries sampled, the private sector was deemed to be the most corrupt, while in 11 countries respondents identified the judiciary

Corruption matters to consumers. Half of those interviewed expressed a willingness to pay a premium to buy from a company that is ‘corruption-free’.

Overall, the general public consider their governments’ efforts to tackle corruption to be ineffective. Only 31% perceived them as effective, compared to the 56% that viewed government anti-corruption measures to be ineffective.

The full report can be downloaded from the Transparency International’s website

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Financial Services Inquiry report

This report from the Equality and Human Rights Commission focuses specifically on gender pay gaps within the Finance Sector. Its scope extends from regional high-street banks to investment houses in and around the City of London, and in terms of jobs, from high-street bank cashiers to investment bankers. The Inquiry was initiated in early 2009, largely because it was already known that the financial services sector has a bigger overall pay gap than any other part of the economy. The Commission found that women working full-time in the finance sector earn 55% less per year than men working full-time. The gap between male and female full-time earnings is twice as large as the average gap across the economy as a whole.

The inquiry took a detailed look into the pay, policies and practices of 44 organisations employing the equivalent to 22.6% of the workforce in the sector. This has revealed that bonuses are a significant factor behind the gender pay gap within the organisations with men receiving five times the performance pay of women, an average of £14,554 in annual performance related pay compared to the female average of £2,875 (based on full-time equivalent earnings).  Significantly, the Inquiry found that no improvements appear to have been made. Responses to the questionnaire showed that women in new jobs were still on average receiving lower salaries than men. The high proportion of workers in the 25-39 age group - the age at which employees tend to have children - also makes it harder for women to have a viable career in the sector that balances family life.

The report sheds light on some of the reasons why the financial sector has such a wide pay gap:

• In many firms, employees do not know how much their colleagues are paid, and this lack of transparency allows inequalities to grow.
• In some roles, bonuses often form a significant element of take-home pay, and sometimes appear to be based more on an individual’s readiness to ask for more than rewards based just on their performance.
• Stereotyping and unwritten assumptions about ‘whose face fits’ distort recruitment processes.
• The sector’s unusually young age profile makes balancing work and family a particularly acute issue.
• In some parts of the sector, a long hours’ culture can be tough on those with caring responsibilities.
• For some, the move away from local branches to separate centralised head offices and call centres has closed the path from the shop floor to management to the boardroom.
• Some senior leaders are unwilling to acknowledge that there is a problem, or to do anything about it.
• Even where there are good equality policies on paper, they do not always translate into good practice.

The full report can be downloaded from the Commission’s website

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The State of Agricultural Commodity Markets 2009

In the first half of 2008, the world was facing the highest food price levels in 30 years and a global food insecurity crisis. Although international food prices have since fallen, they are still above the levels seen in recent years and are expected to remain so. The FAO estimates that soaring food prices pushed another 115 million people into chronic hunger in 2007 and 2008, bringing the world total to nearly one billion hungry people.

This latest report from the FAO aims to provide an objective and straightforward treatment of economic issues for all those interested in agricultural commodity market developments and their impact on developing countries. It attempts to explain why food prices increased, as well as discussing the steps needed to ensure that high food prices become an opportunity for developing country farmers in order to safeguard world food supplies at affordable prices. Many factors have contributed to the dramatic increase in food prices, but new biofuel demands and record oil prices are considered to be the major drivers.  High product prices have not helped farmers in developing countries, mainly due to the fact that high prices did not filter through. In addition, the necessary infrastructure and institutions were lacking and some policy responses (such as price controls and tariff reductions) actually reduced incentives.

The report also points out that the need to protect consumers from higher food prices must be balanced against maintaining incentives for productivity-raising investment and supply response. Policy measures need to be targeted, non-distortionary and positive towards agricultural investment.  Many developing countries need international support to overcome budgetary constraints and to identify and implement appropriate policies. Developed countries also need to consider the impacts of their agriculture, trade and energy policies on international food prices and availability.

The full report can be downloaded from the FAO website

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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

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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

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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

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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

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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

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Millennials at Work: Perspectives From a New Generation

This latest report from PwC follows on from a report released in 2007 ‘Managing tomorrow’s people’, which used scenario planning to explore the future of people management. The focus of this report is on the new generation of workers, referred to as the millennials,  Although much has been written about millennials or Generation Y, how much do we really understand about their expectations of work? Demographic shifts show a steady increase in life expectancy in many parts of the world, whilst at the same time declining birth rates in most developed economies. These dramatic shifts will lead to an unprecedented shortage of younger workers and the need to keep employees working until well past current retirement ages.

PricewaterhouseCoopers surveyed a total of 4,271 graduates about their expectations of work.  Graduates from 44 countries took part in the research in September 2008. The regional breakdown included: 1,004 in North America and the Caribbean, 943 in Asia, 759 in Western Europe, 481 in Central and Eastern Europe, 215 in South and Central America, 139 in Australia and the Pacific Islands, 67 in the Middle East and Africa.

Findings from the report:

• Millennials expect job mobility with 80% wanting to work abroad and 70% expecting to use other languages during their career.
• Corporate responsibility is critical – 88% of millennials said they will choose employers who have corporate social responsibility (CSR) values that reflect their own and 86% would consider leaving an employer if CSR values no longer matched their expectations.
• The majority expect some element of office based work and only 3% expect to work mainly at home/ other locations. Most expect to be working mainly regular office hours with only 18% expecting mainly flexible hours.
• The notion of portfolio careers is not likely to become a reality for this group – 75% of whom believe they will have between two and five employers in a lifetime.
• Training and development is the most highly valued employee benefit. The number choosing training and development as their first choice of benefit is three times higher than those who chose cash bonuses. 98% believe working with strong coaches and mentors is an important part of their development.
• Only 7% of the sample said time off to do community/charity work would be one of the top three benefits they would value over the next five years.
• Over half the sample believes they will personally fund their retirement with only 5% believing their retirement would be funded by the government/ state and 17% by their employer.

The full report can be downloaded from the PwC website (pre-registration required)

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Reforming Financial Markets

The world economy has been hit by a severe financial crisis, resulting in the worst global economic downturn for over 60 years. Triggered by difficulties in the housing market that exposed the way that banks and other lenders had been underestimating real risks for too long, the crisis quickly spread throughout global financial markets destabilising banking systems around the world. As a result, the impact has spread beyond the financial system, hitting economic growth, prosperity and jobs throughout the world.

This document for H M Treasury sets out the Government’s analysis of the causes of this financial crisis, the action already taken to restore financial stability and the regulatory reforms necessary to strengthen the financial system for the future, so that consumers, businesses of all sectors and the economy as a whole continue to have access to the stable credit, essential for future growth, investment and innovation.  It argues that the crisis has been caused by the failure of the banking sector across the world, to understand the true risks created by the innovation and rapid growth of interconnected, globalized markets for financial services in recent years. The firms that have failed in the typically allowed their businesses to become overextended through: excessive leverage and risk taking; over-reliance on wholesale funding; overdependence on particularly risky product streams, such as buy-to-let mortgages or derivatives; or poor management decisions in respect of acquisitions.

 

As a result, Government intervention has been necessary to: protect depositors in banks and building societies; enable banks to continue to lend to the economy during the recession; and to restore financial stability. In the Budget 2009, the Treasury estimated that the cost of Government action could eventually be as high as £50bn. But the costs of Government inaction would have been far higher, as a modern economy cannot function without a stable banking system. The way firms manage risk, the quality and quantity of capital they hold, and the way regulators monitor firms need to change. Further regulations on how banks operate globally are also necessary in order to prevent global financial crises from recurring in the future.

 

Direct link to report

Direct link to impact assessment

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File-Sharing and Copyright

The advent of file sharing has considerably weakened effective copyright protection. Today, more than 60% of internet traffic is made up of consumers sharing music, movies, books and games. Yet, despite its popularity, a recent working paper from the Harvard Business School argues that file-sharing technology has not undermined the incentives of artists and entertainment companies to create market and distribute new works.  While policy discussion surrounding file-sharing has largely focused on the legality of the new technology and the question of whether declining sales in music are due to file-sharing, the paper suggests that the debate has been too narrow. Copyright protection exists to encourage innovation and the creation of new works—in other words, to promote social welfare.  The working paper analyzes the landscape and identifies areas for more research.

Main findings:

• Empirical work suggests that in music, no more than 20% of the recent decline in sales is due to sharing.

• Digital technology has lowered the cost of producing movies and music and allowed artists to reach their audience in novel ways.  It’s difficult to argue that weaker copyright protection has had a negative impact on artists’ incentives to be creative.

• File-sharing has not discouraged authors and publishers. The publication of new books rose by 66% during 2002-2007. Since 2000, the annual release of new albums has more than doubled, and worldwide feature film production since 2003 is up by more than 30%.

• File-sharing has been shown to increase the demand for complementary goods (such as concerts, electronics, and communications infrastructure) adding to artists' incomes.

Click on the link to read the paper in full (HBS Working Paper Number: 09-132)

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Global Trends in Venture Capital: 2009 Report

Are venture capitalists battling the global recession blues or feeling optimistic about the new opportunities for investing in technology?  When Deloitte conducted the first global venture capital (VC) survey five years ago, the community was recovering from the tech bubble bursting and was just beginning to see significant movement toward globalization of the industry. Given the severity of the current global recession, this year’s survey focused on issues surrounding its impact on venture capitalists. The survey questions asked how the global recession is affecting strategy; how future investments are being planned, both by sector and region; what the anticipated size of the next fund will be and who VCs think their limited partners will be. This year’s report looks broadly at the results in a global context, but an appendix is included that breaks out survey responses by geographic regions.

The survey was conducted with venture capitalists (VCs) in the Americas, Asia Pacific, Europe and Israel. There were 725 responses from general partners of venture capital firms with assets under management ranging from less than $100 million to greater than $1 billion.  Multiple responses from the same firm were allowed, as the survey was a general measurement of the state of global investing from all general partners, not attitudes of specific firms. If respondents did not answer a question, the count for the question was adjusted accordingly.

The findings uncovered that globalization of the venture capital industry will intensify in coming years, posing significant competitive questions for the United States, and opportunities for emerging markets such as China. Additional findings include:  The clean tech sector is poised to become the leading investment category.  Levels are more likely to increase in countries outside the US Governments of all countries have a crucial role to play in fostering competitiveness and innovation.  Just over half of VCs surveyed remain optimistic that it is a terrific time to invest in promising entrepreneurial companies.

The full report can be downloaded from the Deloitte website

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Entertainment in the UK in 2028

This latest report from Ofcom assesses the spectrum requirements for both the distribution and production of entertainment by 2028. It compares spectrum demand with likely supply, identify problems of increased scarcity, and suggest possible ways of dealing with them.  For the purposes of this study the term entertainment covers four main headings: watching, listening, reading and playing

The main trends which shape Ofcom’s scenarios for 2028 include the following:

There is an enduring consumer need for entertainment. The average consumer spends 4.5 hours per day consuming various entertainment services, a figure which is likely to grow slightly as the UK population ages and becomes more sedentary

The revenues generated by entertainment are in decline. Revenues shrank by 0.7% per annum over the last five years1 while UK GDP grew at 2.2% per annum. The decline reflects a shift in advertising spend, away from entertainment-based and toward search-based Internet advertising. Public funding and end user spend, the other two components of entertainment revenues, have remained roughly constant over the past five years.

Consumers’ willingness to pay for entertainment has changed with the growth of Internet-based entertainment. Large amounts of what was premium video content are now available free of charge on the Internet, albeit often in low quality formats. So the basis on which consumers are willing to pay for entertainment is shifting towards a high-quality viewing experience and physical ownership.

Entertainment on the move is increasingly important to consumers as ownership of personal devices like the MP3 players, net books and iPhone-like personal devices grows. But most consumers prefer to read or to listen rather than to watch on the move. Those who own mobile devices with Internet capability are more likely to use them to check e-mails or browse the web than to watch streaming videos.

In combination these trends suggest that we might see radical changes to the business models used to deliver entertainment over the next 20 years. For example it might be reasonable to expect that:

• Internet-based entertainment will lead to disruptive new value chains
• Targeted advertising will help shape future value chains. In particular the organisations which are best able to collect information on entertainment consumption patterns are likely to exert strong control over the entertainment value chains.
• There will be a move from value chains based on vertical integration and bundling to value chains based around horizontal specialists.
• Mobile personal devices will play an important, but uncertain, role in the delivery of entertainment services in future.

The report can be downloaded from Ofcom’s website

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2009 World Wealth Report

Capgemini and Merrill Lynch Global Wealth Management have released the 13th World Wealth Report. The annual report looks at the macroeconomic factors that drive wealth creation in order to gain a better understanding of the key trends that affect High Net Worth Individuals (HNWIs) around the globe. It covers 71 countries, accounting for more than 98% of global gross national income and 99% of world stock market capitalization The model used for these calculations is built in two stages: first, the estimation of total wealth by country, and second, the distribution of this wealth across the adult population in that country. Total wealth levels by country are estimated using national account statistics from recognized sources, such as the International Monetary Fund and the World Bank, to identify the total amount of national savings in each year.

Highlights from this years report:

At the end of last year the world’s population of high net worth individuals (HNWIs) was down 14.9% from the year before, while their wealth had dropped 19.5%. The most significant declines in the HNWI population in 2008 occurred in the three largest regions: North America (-19.0%), Europe (-14.4%) and Asia-Pacific (-14.2%). But behind the aggregate numbers lie some interesting developments in the HNWI populations of those regions. The number of HNWIs in the US fell 18.5% in 2008, but the US is still the single largest home to HNWIs, with its 2.5 million, which is 28.7% of the global HNWI population.

The report also finds that the current financial crisis and economic uncertainty has had a large impact on HNWIs and their lifestyle spending, with luxury goods makers, auction houses, and high-end service providers reporting significantly reduced demand worldwide.  Fine art has remained the primary passion investment for ultra-HNWIs in 2008 (27% of their total passion investments). Lifestyle spending rose on Health/Wellness, where 54% of HNWIs globally said they increased spending, but dropped on luxury travel and luxury consumables.

It seems that the recession has taken its toll on charitable giving as the year progressed, with little change in the first half the year but severely impacted in Q4 as HNWIs gave less and focused on fewer causes.  The outlook for Philanthropy in 2009 is poor with 60% of North American HNWIs saying they would be giving less due to the economic downturn. Japan was the only country that forecasted a growth in charitable donations.

The full report is available for downloading from the Capgemini website (pre-registration is required)

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Mine: When the going gets tough...

PricewaterhouseCoopers have released their sixth annual review of global trends in the mining industry. The review provides a comprehensive analysis of the financial performance and position of the global mining industry as represented by the largest 40 mining companies by market capitalisation.

Despite a strong financial start in 2008 things quickly took a turn for the worst as the global economic crisis took hold in the last quarter and commodity prices went into freefall. So where does this leave the industry?   According to PwC the full effect of the downturn is not evident in the 2008 financial information, however first quarter releases of a number of companies report significantly reduced profits and in some cases operating losses. There is no doubt that the industry is facing tougher times, and steering a path through this downturn will require tough decisions from the leaders of the Top 40. 

Some of the key findings of the analysis include

• Despite a record year in terms of revenue and EBITDA, market capitalisation declined 62%, primarily due to the fall in commodity prices and the impact of the global economic crisis on shareholder confidence;
• Operating costs continued to rise at a greater speed than revenue, further eroding margins;
  In the current climate there is no more valuable an asset than cash, and for cash rich companies opportunities exist as asset values fall. The timing of action could be a lead indicator as to the industry's assessment of value and when asset prices have declined sufficiently to best utilise their cash resources; and
• The boom encouraged the industry to invest heavily in capital projects and grow the top line. In these more cautious times, the ability to turn the cost tap on and off quickly may be the difference between success and failure.

The full report can be downloaded from the PwC website

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Digital Britain: Final Report

Building a digital knowledge economy in the 21st Century is fundamental to the UK’s future prosperity according to the final report from the Department for Culture, Media and Sport and Department for Business, Innovation and Skills. The UK is already digitally enabled and to a significant degree a digitally dependent economy and society.The communications sector underpins everything we do as an economy and society. Electronic systems and new technology have transformed core elements of UK industry, the media and public services. In the City, digital technologies are vital to the billions of transactions carried out each day by the stock exchange and financial institutions. In the high street, stock ordering, inventory control and the cash tills are all completely dependent on electronic communications. As consumers, some 90% of our high street purchases are transacted by plastic which depends on wired and wireless communications to work. That is in addition to the £50bn of consumer purchases and sales through e-commerce that takes place wholly online.  

The Digital Britain Report underscores the importance of understanding, appreciating and planning for a fully digital Britain by providing an analysis of the following areas:

• The levels of digital participation, skills and access needed for the digital future, with a plan for increasing participation, and more coherent public structures to deal with it.

• An analysis of our communications infrastructure capabilities, an identification of the gaps and recommendations on how to fill them.

• A statement of ambition for the future growth of our creative industries, proposals for a legal and regulatory framework for intellectual property in a digital world, proposals on skills and a recognition of the need for investment support and innovation.

• A restatement of the need for specific market intervention in the UK content market, and what that will demand of the BBC and its role in Digital Britain. What that means for the future of the C4 Corporation. An analysis of the importance of other forms of independent and suitably funded news, and what clarification and changes are needed to the existing framework.

• An analysis of the skills, research and training markets, and what supply side issues need addressing for a fully functioning digital economy.

• A framework for digital security and digital safety at international and national levels and recognition that in a world of high speed connectivity we need a digital framework not an analogue one.

• A review of what all of this means for the Government and how digital governance in the information age demands new structures, new safeguards, and new data management, access and transparency rules.

Click here to read the report in full

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European fraud survey 2009: Is integrity a casualty of the downturn?

The current state of the market has had an impact on all areas of corporate financial performance. This has, for many companies, become a time when survival rather than growth. It is in this context that this year’s European fraud survey from Ernst & Young was undertaken, and the issues it raises demonstrate that now, more than ever, fraud should be high on the agenda of boards and senior management.

The 2009 survey conducted a total of 2,246 interviews with employees across 22 European countries. Participants were employed in companies with over 1,000 employees, stock exchange-listed or multinationals. The report highlights a number of important themes, including the perceived depth of commitment of management to fraud risk mitigation and what employees expect from the regulators of their companies.

The survey finds an alarmingly high tolerance of unethical business behaviour within organisations, with many employees tolerating unethical behaviour including bribery by their company in order to survive the current economic storm. Indeed senior management are even more likely than rank and file to condone activities such as cash bribes and financial statement fraud.  The research also suggests that employees expect regulators to do more to protect them from wayward management and to ensure their business leaders are compelled to conduct business in an ethical manner.

Other key findings include:

• Survey respondents believe the likelihood of fraud and corruption is set to rise further still. 55% of the respondents expect corporate fraud to increase over the next few years.

• Corporate responses to the downturn can create new opportunities for fraudsters if staff redundancies open gaps in financial controls. 36% of our respondents believe that normal policies and procedures are likely to be overlooked as staff redundancies are made.

• The trend of consolidation during an economic downturn can also disrupt ongoing efforts by corporates to prevent fraud. Almost half of our respondents believe that the differing standards of behaviour that are held by two merging companies poses a major challenge to anti-fraud efforts.

The full report can be downloaded from the Ernst & Young website

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Helping Out A National Survey of Volunteering and Charitable Giving

Recent years have seen increased government attention to supporting charitable giving by developing new forms of tax-efficient methods and encouraging employers to support giving among their employees. This study, carried out for the Office of the Third Sector by the National Centre for Social Research (NatCen) in partnership with the Institute for Volunteering Research (IVR) in 2006/07, explores why people take part in formal volunteering, and how and why they give money to charity.  It builds on the Institute for Volunteering Research’s National Survey of Volunteering and provides insights into changes over the last ten years.

Main findings

• Levels of formal volunteering varied across key socio-demographic groups. The proportion of volunteers tended to be higher among those in the 34–44 and 55–64 age brackets, women, respondents in work, those actively practising a religion and those not in a group at risk of social exclusion (which is a particular focus of government efforts on volunteering).

• The most common types of volunteering activity were raising and handling money (67% of volunteers) and organising and helping to run events (50%). Most (71%) volunteers undertook more than one volunteering activity.

• Three in ten employees worked for an employer with both a volunteering and giving scheme, and a further fifth had access to one type or the other. Where an employer-supported volunteering scheme was available, 29% of employees had participated in the last year. Take-up of employer-supported giving schemes was higher, with 42% of employees making use of a giving scheme available to them.

• The most popular causes donated to were health and disability, followed by overseas aid or disaster relief.

The survey interviewed over 2,700 adults (aged 16 and over) in households in England, who had previously been interviewed for the Citizenship Survey.  The results of the survey provide a wealth of data that will enable the Office of the Third Sector, practitioners and funders to target and manage programmes in support of volunteering and giving, and to help overcome the barriers people face in taking part, especially those from disadvantaged backgrounds.

Click here to read the full report

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A World Beyond Recession: Utilities Global Survey 2009

Utility companies are facing a difficult challenge as they balance the constraints of the downturn with the investment required to meet future energy demand, security of supply, and climate change concerns. This year’s annual Utilities global survey - A world beyond recession highlights the dilemmas of steering through the downturn while remaining focused on the long-term. The PwC survey goes to the heart of boardroom interviewing 69 senior executives from 65 utility companies across 39 countries. Research covered the four major regions of the Americas, Europe, Asia Pacific, Middle East and Africa. The survey sample is comprised of power and gas utilities (suppliers, transmission companies, traders or generators) that have developed a broad range of interests in a number of complementary utility sectors or other regions.

Key observations from the report:

• Two thirds (67%) of survey respondents reported that a shortage of capital is having a high or very high impact on their activities.

• The development of new generation capacity and the renewal of existing generation plant is a priority area for most companies. 83% are seeking to make medium to large investment in new generation and 79% are seeking to do likewise in transmission.

• 86% of respondents indicated that reduced liquidity in energy trading markets was having an impact on their companies with 60% of all respondents rating this impact as high or very high. Customer credit risk is also identified as an area of major concern. Asked if the economic recession would slow down responses to climate change, 79% felt it would with two thirds of those saying it would have a high or very high slowdown impact.

• 59% feel that their renewable energy investment programmes are being affected by the lack of clarity from governments on renewable energy targets and financial support for renewable energy.

• The importance of technology for key developments, such as energy efficiency and the expansion of nuclear power, has led many respondents to pinpoint power equipment and technology companies as a more significant competitive threat than even direct competition in the retail market by other utility company home market rivals. Technological innovation is seen as central to a range of key developments in the sector.

The full report can be downloaded from the PricewaterhouseCooper’s website

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2009 Industry Outlook: Challenging Times, Emerging Opportunities

Through a series of in-depth interviews, Deloitte’s sector leaders and subject-matter specialists have detailed their anticipated, industry-specific challenges and opportunities for 2009. The report identifies a number of shared trends across all the industry sectors including the economic crisis, greening/sustainability, globalization, the increased application of technology to industry, talent challenges, building brand value, and International Financial Reporting Standards (IFRS) implementation.

This 2009 industry outlook covers the following industry sectors: Aerospace and Defense; Automotive; Banking & Securities; Consumer Products; Energy & Resources; Health Sciences; Media & Entertainment; Process & Industrial Products; Real Estate; Retail; Technology; Telecom; Tourism, Hospitality & Leisure; US Federal and State Government

Highlights:

Among the industries profiled in this report, the economic crisis has hit some harder than others. Banking & Securities, Insurance and Asset Management have all suffered mass redundancies, crippling asset losses and serious damage to their brand reputation. This sector is depending on the government’s $700 billion Troubled Asset Relief Program (TARP) and other initiatives to help them survive.

Orders for manufactured items plunged 6.2% in October – the biggest drop in two years – signalling continued trouble for the Consumer Products and Process & Industrial Products industries. The crisis’s impact on the global economy is slowing demands for energy and pushing down prices for crude oil and natural gas, a trend that is expected to continue impacting profits in the Energy & Resources sector in the coming year.

The Retail industry is clearly feeling the effects of the consumer cash and credit crunch, as many retailers find themselves confronted by liquidity issues, reduced consumer spending, and weak credit market conditions.

It is impossible to say how far into 2009 this economic downturn will last; however, forward-thinking companies should focus on right-sizing their organizations, maintaining margins, aggressively pursuing cost and operational efficiencies, optimizing their supply chains, and evaluating their current situation against long-term objectives so that they are prepared to move forward when the economy turns for the better.

The full report can be downloaded from the Deloitte website

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Hunger and Markets

Hunger is on the increase throughout the world according to the latest report from the World Food Programme. During 2007 and 2008, 115 million people were added to the ranks of the urgently hungry. Today, almost 1 billion people struggle to find their next meal, and a child dies every six seconds from hunger-related causes.

This third edition of the World Hunger Series examines the complex relationship between markets and hunger. It argues that affordable and adequate access to nutrition for all people is one of the most pressing challenges of our time. Well-functioning food markets are central to ending hunger. Not only must enough food be produced to meet consumption needs, but this food must also be accessible. Food markets link food production and consumption sectors. But they can do much more. When food markets are functioning well, they can create jobs and stimulate economic growth by spurring diversification of food systems based on comparative advantage. This can lead to more equal distributions of income and purchasing power, and thus increased nutritional well-being and enhanced food security.

The report It is divided into four parts: Part 1 sets the stage by presenting the basic concepts related to hunger and the importance of markets; Part II provides a broad analysis of key aspects of the relationship between hunger and markets, including livelihoods and food security at the household level, market access for the poor, determinants of food availability, risks faced by the hungry poor in relation to markets and the impact of emergencies on market performance; Part III identifies policy options and actions that various stakeholders may adopt for the benefit of the hungry poor; and Part IV is a compendium of data on the state of hunger, malnutrition, food availability and access and other aspects of the effort to fight hunger.

To use markets as instruments in the fight against hunger, the report suggests that governments, international actors, the private sector and other stakeholders all have roles to play in ten market-based priority actions.

The full report can be downloaded from the World Food Programme website

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Future of Broadcasting

The European and US television industry has seen better times according to the latest report from Capgemini. Over the past 18 months revenue growth has started to dry up for most free to air (FTA) broadcasters, resulting in a sharp decline in their share prices and the need to make redundancy plans. Channel 4 is in the process of reducing its workforce by 15%, in an attempt to cut costs by £200 million to counter the effects of declining advertising revenues. Similarly, the share price of Britain’s largest commercial broadcaster, ITV has fallen over 63% from the peak of January 2007.

Capgemini identifies two main trends affecting the TV landscape: the rise of digital TV and a change in consumer viewing behaviours. The emergence of devices such as personal video recorders, the increasing penetration of fixed and mobile broadband,  the proliferation of multiple media platforms, and the move towards time-shifted and on-demand content are giving TV viewers unlimited flexibility. Consumer behaviours are also undergoing dramatic changes and a key consequence has been the impact on TV advertising revenues. In addition, the current economic slowdown is having a significant impact on both advertising and TV subscription revenues. The result is a very challenging financial outlook with total TV revenues likely to fall by 10% between 2009 and the end of 2010.

The full report can be downloaded from the Capgemini website (pre-registration required)

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Healthy Work: Challenges and Opportunities to 2030

This report, led by Bupa and published in partnership with The Work Foundation, The Oxford Health Alliance and RAND Europe, brings together for the first time more than 200 pieces of research to provide in-depth insight into how the health of British workers will change over the next 20 years. It argues that work –and in particular good work –must be placed at the centre of efforts to improve health.

The health of the UK workforce is vital to the economy. The Confederation of British Industry estimates that every year days lost due to sickness absence alone cost the economy nearly £14 billion. This figure is set to increase as the average age of the workforce rises to nearly 43 by 2030.  The UK workforce of the future will be older and sicker, and the nature of illness will change so more people will be living and working in ill-health. At the same time, interventions in the workplace will become increasingly important for productivity and public health; and changes in the society and culture of the UK are likely to mean that more people will be engaging in lifestyle behaviours that increase their risk of disease.

The report argues that the workplace is an effective location to address these challenges, not least because the average person spends over a third of their waking hours for up to 40 years of their life at work. Employers are well placed to support UK workers to exercise more, smoke less and eat more healthily, because they can make the kind of physical changes to the working environment that help people sustain behaviour changes and integrate them into their daily life. The workplace also offers the opportunity to target those in society at risk of disease, and those who would otherwise be unlikely to access health services in the community. And it can do this whilst delivering value for money to employers, through improved employee productivity and wellbeing.

Click here to read the full report

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Are we being served? Career mobility and skills in the UK workforce

In 2001 over half of all UK businesses were struggling to recruit sufficient skilled workers – the highest proportion ever according to some surveys. A skills survey carried in 2002 by the Institute of Employment Studies and MORI on behalf of the Department for Education found that the main areas of skill deficiency were in communication, customer handling and problem-solving. This latest study from the Work Foundation considers the skills shortage in the British workforce and its affects on the UK economy. It looks particularly at the organisations that are the leaders in taking employees from little or no skills to the higher skills that are of significant benefit to the wider labour market, namely the service sector.

The report argues that the much-maligned retail and hospitality sectors have brought new characteristics to the labour market above and beyond the skills that its employers and employees might need. However, the UK seems to have a blind spot or a kind of job snobbery towards this sector, assuming that it is dominated by exploitative employers and by low pay, low prestige, low dignity, low benefit, no future jobs. However, many employers in this sector are doing more than most to develop their own workforces’ skills and also those of the wider labour market.  Companies such as Tesco, ASDA, James Beattie plc, Whitbread, and McDonald's are providing some of the most innovative and widespread training and development programmes which the report profiles,

In the last thirty years the service sector has completely changed the UK labour market. It now dwarfs the more traditional manufacturing sector in job terms and is directly responsible for keeping UK unemployment at a level way below other EU countries. The report argues that we urgently need to re-evaluate the reputation of the service sector and to look very closely at how they approach recruitment, training and career development.

Click here to read the report.

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Knowledge Workers and Knowledge Work

The aim of this report from the Work Foundation is to present a portrait of the work and the workforce in the knowledge economy.  There are many different definitions of the term ‘knowledge economy’,  in this report it is defined as a ‘transformed economy where investment in ‘knowledge based’ assets such as R&D, design, software, and human and organisational capital has become the dominant form of investment compared with investment in physical assets – machines, equipment, buildings and vehicles. Thus, the term ‘knowledge economy’ captures the subsequently changed industrial structure, ways of working, and the basis on which organisations compete and excel’.

The survey looked at the work-lives of 2011 workers in order to gage the level of 'cognitive complexity' of different jobs and so get a view of the scale of knowledge work.  Respondents were asked what they actually do at work and how often they perform particular tasks. This information was then used to assess the knowledge content of their jobs. The key test was the cognitive complexity required for each task – the use of high level ‘tacit’ knowledge that resides in people’s minds rather than being written down (or codified) in manuals, guides, lists and procedures. The participants were then grouped into seven distinct clusters of jobs ranging from ‘expert thinkers, innovators and leaders’ (the most knowledge intensive groups) to ‘assistants and clerks’ (the least knowledge intensive). The two highest knowledge groups are described as the ‘core’ knowledge worker.

Main findings

The UK has a 30-30-40 shaped workforce: about a third of jobs have a high knowledge content, a third have some and about 40% have less knowledge content. In addition, the report argues employers are poorly equipped to weather the recession because they use workers’ skills and talents poorly, tie them up in rules and procedures, and give them little say over how they do their work.

The most knowledge intensive jobs were almost equally likely to be held by men and women, but those jobs with some knowledge content – such as care and welfare workers, information handlers, and sellers and servers – were overwhelmingly female. Women have benefited from the growth of knowledge work, but this has not helped to overcome the gender pay gap.

Click here to read the full report

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Corporate Governance Review 2008

Grant Thornton has published their seventh annual review of the UK’s FTSE corporate governance disclosures. Each year the review assesses companies for compliance with the policies and provisions of the Combined Code (the Code) and looks at the quality of explanations of underlying practices among the UK’s largest listed companies. In addition, the review covers aspects of the Business Review legislation, introduced within the 2006 Companies Act. This seeks to address the EU transparency agenda of providing greater insight to stakeholders on how management assess and manage business performance. The enhanced disclosure requires companies to move beyond the narrative by disclosing key performance indicators and business metrics. 

The 2008 review uncovers mixed messages as to the state of corporate governance among the FTSE 350.

Positive trends include:

• More informed levels of explanation where companies choose not to comply with the Code

• Continued strengthening of the presence of independent non-executives on the boards of the Mid 250

• High level of disclosure in line with the new Business Review requirements. However, a number of challenges remain:

However, a number of challenges remain. Of the 44% of companies who claim full compliance with the Code, the review found that only a quarter make all the disclosures necessary to support their claim. This leaves a hard core of nearly a fifth who choose not to comply. The quality and usefulness of the explanations given for non-compliance also varies greatly, with significant numbers providing only the bare minimum of information. However, on a more positive note, the review concludes that despite the hard core of ‘reluctants’, the FRC’s recent finding to leave regulation and guidance largely well alone is the right one. The challenge remains one of application.

Click here to read the full report

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Deloitte 6th Annual Global Security Survey

Deloitte have published the results of their annual Global Security Survey, which benchmarks IT security and privacy in the financial services industry. The top three information security priorities of financial institutions identified by the survey are: security regulatory compliance, followed by data protection and information leakage, and access and identity management.

The scope of this survey is global, including financial institutions with worldwide presence and head office operations in one of the following geographic regions: North America; Europe, Middle East, Africa (EMEA); Asia Pacific (APAC); Japan; and Latin America and the Caribbean (LACRO). To promote consistency, and to preserve the value of the answers, the majority of financial institutions were interviewed in their country of headquarters.

Some of the survey’s main findings include:

Security vigilance is even more important during hard economic times, when the increased stress levels can lead people to behave in atypical ways. Even though both internal and external security breaches at financial institutions worldwide have fallen over the past 12 months, employee misconduct is a growing concern.

The growing popularity of social networks and the proliferation of mobile media such as USB keys, MP3 players and PDAs, all cause an extra load on internal and external security. These devices present opportunities for unauthorized download and storage of confidential information in an unprotected medium.

In 2008, financial institutions saw a decline in the number of both external (47% vs. 65% in 2007) and internal (27% vs. 30% in 2007) security breaches.

The leading drivers for financial institutions to protect the privacy of their clients information are privacy regulatory requirements (79%) followed by reputation and brand concerns (70%).

The full report is available from the Deloitte website

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Drawing on experience –older women workers in Europe

Increased life expectancy and a falling birth rate across Europe are presenting growing challenges to both the workplace and society as a whole. This report from the European Foundation for the Improvement of Living and Working Conditions (Eurofound) looks at the situation of older women workers in Europe.  Employment rates for women remain substantially below those for men in most of the EU Member States, despite the continuing reduction in the disparity between male and female employment rates. Data from recent Eurofound and Eurostat publications show considerable differences remain in relation to work. While it is true that women have caught up in terms of educational qualifications and have increased their employment rate, family responsibilities are still the main reason for women’s above average inactivity rate. Moreover, a gender-based entrepreneurial gap remains and women remain underrepresented in labour market policy interventions.
 
Key findings from the report:

• Older women workers represent an increasing proportion of the workforce in the European Union, especially in the 55–64 years age group. Employment rates for older women workers have been increasing in Europe.
  
  
• Older women workers tend to work part time and a higher proportion are on temporary contracts; women aged 55 years and over are much more likely to be working on insecure contracts than men of the same age.
  
  
• The gender pay gap still exists for both older and younger women workers.
  
  
• Women are still concentrated in certain occupational groups, such as care workers, clerical workers and service and sales workers.
  
  
• The likelihood of a woman being a boss is highest in the 55+ age group.
  
  
• Older women are more likely than men to play a dual role of both working and caring, if there are care responsibilities in the family.
  
  
• Only a small proportion of companies pay specific attention to gender and there is little evidence that gender considerations have become more prominent over time. However, with the rise in the employment rate of older women workers, some companies have introduced specific policies to improve the working life of their older women workers and increase their level of recruitment.
  
  
• Women are still retiring earlier than their male colleagues. But this situation may change in coming years with the growing need to keep older people longer in the workforce.

Click here to read the full report

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Global private equity report 2008

The world has changed for private equity. Out is the virtuous circle of low interest rates, steady economic growth, easy leverage and rising portfolio company valuations. Instead, tough economic times are beginning and capital markets are having a crisis of confidence.  The 2008 global private equity report from PricewaterhouseCoopers highlights the challenges private equity firms are currently facing. Based on conversations with leading industry players, this report highlights some of the challenges and opportunities shaping private equity’s future; ranging from issues that all agree are fundamental, such as how to create sustainable value, through to those that many private equity houses have yet to take seriously, in particular sustainability.

The topics covered in the report include:

• Creating sustainable value
• Accessing emerging market growth
• Building the business model
• Appreciating the business case for responsibility
• Reporting fair value
• Addressing tax in a wider world

The report also includes data from PricewaterhouseCoopers’ most recent survey of private equity, confirming the rise of the emerging markets as a destination for private equity investment. It also illustrates the generally buoyant level of private equity activity globally, as at the end of 2007. Demonstrating the rapid growth of private equity investment in emerging markets, eight out of the ten fastest growing countries for private equity investment in the ten years to end 2007 were either from the Asia Pacific or Africa.  In 2007, India ranked third in terms of funds invested with US$17.5 billion invested, representing a growth of 136% over the previous year. China ranked third, with US$10.62 billion invested, although the year-on-year expansion here was only 3%. In Asia Pacific as a whole, private equity investment rose by 36% to US$86.3 billion in 2007, which was equivalent to 0.68% of GDP – almost as high as in North America, the home of private equity.

The full report is available from the PricewaterhouseCoopers website (pre-registration is required)

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Changing Relationships at Work

In the 21st century it is not just human capital that matters to successful organisations but also social capital: building and sustaining strong personal and professional networks. This report from the Work Foundation demonstrates the importance of workplace relationships to job satisfaction and highlights the role that technologies can play in creating and maintaining these links. It also demonstrates that social media is playing a real and surprising role in complementing traditional methods of communication to help people develop and retain their contacts at work.

Highlights from the report include:

When social capital is high, job satisfaction is high too: so being satisfied with your relationships at work makes it much more likely that you will also be satisfied with your job

Nearly half of respondents (45%) have access to and use one or more forms of new technology a day at work, where ‘new technologies’ include instant messaging, wikis, professional networking, social networking, the virtual world, blogs and integrated voicemail/email (‘unified communications’).

The least widespread technologies at work are Virtual World Technologies (used by 3% of respondents), Miniblogs (4%), Social Networking (13%), Blogs (13%) and Wikis (18%).

When people are asked to describe the organisational culture they prefer 60% of respondents said they would prefer an organisation characterised by a culture of loyalty and mutual trust. Although organisations seem to structure themselves with formal processes to ensure smooth running of the organisation, it is working relationships that really keep people going.

The full report is available from the Work Foundation website

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Food Futures: Rethinking UK Strategy

According to a report published by Chatham House, the global food system will come under renewed pressure from the combined effects of seven fundamental factors: population growth, the nutrition transition, energy, land, water, labour and climate change. The combined effects will create constraints on food supply presenting a very real threat for demand growth to outstrip increases in global food production.

This report argues that action is needed now if our future food supply needs are to be met. The environmental impacts of modern agriculture and of the wider food chain can no longer be ignored. It will also be important to establish a clearer description of a sustainable diet and to develop communication and education strategies to engage the public on key food issues. The UK will continue to rely heavily on the EU for its food supplies and as a market for its food exports. Many of the mechanisms to deliver the transformation lie at this level. UK isolation is not an option and the UK will need to work closely with the EU to develop the right policy frameworks.

The report is based on the findings of a two-year programme of research designed to evaluate the effects on the UK’s food supply of changes in the global dynamic. Focused on the UK’s wheat and dairy supply systems, the study’s aim has been to deliver an assessment of the UK’s capacity to respond to the new challenges. An important aspect of the project has been the development and use of scenarios to identify significant indicators of the future. The project’s scenario development process began with 45 research interviews conducted with food supply industry participants and stakeholders throughout 2007. They were used to collect participants’ perceptions of key food supply issues and future prospects for the UK’s wheat and dairy industries. The results were taken as the starting point for constructing a set of descriptions of possible ‘future situations’. These ideas and concerns were then complemented by desk research to identify key drivers shaping the present and emerging situation.

The full report can be downloaded from the Chatham House website

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Global Megatrends 2009

The world economy is experiencing a financial crisis bringing with it uncertainty about the future.  An aging population and the different demands of the younger generation (Gen Y) are challenging the workforce model that has existed for decades. Technology continues to alter how we communicate and act and climate change concerns challenge how businesses operate. This report from Ernst & Young presents some of the most significant trends in today’s in the marketplace that are likely to play out in the medium to long term. It offers a snapshot of the main themes and concepts within each trend in order to raise questions and spark new ideas. The megatrends include:

The shift of power from West to East: discusses how growth has moved from developed to emerging countries, how commodities and the advent of a new middle class are accelerating this move, and how emerging market multinationals are likely to become global champions in many industries.

The changing financial landscape: looks at the rise of the new power brokers (sovereign wealth funds, PE, hedge funds etc.) and how the financial crisis will impact their trajectory, as well as discussing how banking is being transformed and how governments are taking a more active role in financial markets.

Globalisation of the regulatory environment: discusses two key trends in regulation: 1) the move toward greater regulation and 2) the move toward more globally consistent regulation

Energy and commodities: looks at the scarcity challenge, the impact of uncertainty in oil price, the rise of cleantech and the drive toward greater energy efficiency.

The corporate agenda: considers the increasing environmental, social and ethical expectations on businesses and the associated opportunities and risks.

Technological innovation: how will technology developments continue to drive change for businesses and consumers and how will the next wave of digital technology takes this even further.

Managing and developing talent: discusses the difficulties in attracting, managing and developing a global workforce — a challenge compounded by changing demographics, the different demands of Gen Y and increasing diversity

The full report can be downloaded from the Ernst & Young website

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PricewaterhouseCoopers 12th Annual Global CEO Survey

The 12th Annual Global CEO Survey shows how the financial crisis has shattered short-term confidence. The percentage of CEOs who were ‘very confident’ about their one-year revenue growth prospects dropped to 21%, the lowest level in six years.  For this years survey 1,124 interviews were conducted with CEOs in 50 countries during the last quarter of 2008. By regions, 500 interviews were conducted in Europe, 276 in Asia Pacific, 168 in Latin America, 138 in North America and 42 in the Middle East and Africa. The majority of interviews were conducted by telephone. Main findings from the report:

Nearly 70% of CEOs believe their companies will be affected by the credit crisis. Of those, nearly 80% say that they face higher financing costs, and nearly 70% say that they will delay planned investments as a result. Companies in the banking, utilities, construction, entertainment and automotive sectors are most likely to be affected. Only 15% of CEOs in North America and 15% in Western Europe express confidence about their growth prospects for the next 12 months. This compares with 21% in the emerging economies of Central and Eastern Europe, 31% in Asia Pacific, and 21% in Latin America. Most CEOs around the world are planning for a slow recovery.

In terms of energy and environmental issues, more than 80% of CEOs are taking steps to reduce energy costs by finding efficiencies in their operations, and more than half are seeking alternative sources of energy. Sixty-one percent of CEOs say that the dependence on carbon-based energy will have an impact on the long-term success of their businesses. Fifty-six percent say the same about climate change, 55% about overpopulation, and 50% about a scarcity of fresh water.  

The full report and supplements to the survey can be downloaded from the PricewaterhouseCoopers website.

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Digital Britain - The Interim Report

The Communications sector is one of the three largest sectors in the UK economy alongside energy and financial services, accounting for around 8% of GDP. It has been one of the fastest growing successes of the past decade. Take up of first generation broadband has grown faster than that of almost all the other major economies. Britain has the highest proportion of internet advertising of any developed economy. By 2012 £1 in every £5 of all new commerce in this country will be online.  More importantly, the digital economy underpins our whole economy and builds our national competitiveness. Our readiness to adopt digital technology has driven productivity gains throughout our wider economy. Over the last ten years the UK has been consistently closing its historic productivity gap with the other leading European economies, based largely on our take-up and adoption of digital technology. However our productivity still lags well behind the USA and we face new challenges from the innovative companies of the successful Asian economies. At their best, they combine fierce competition, providing innovation and consumer services, with a regulatory framework that balances the value of investment in the next generation of technologies against the benefits for the consumer of a competitive market place.

Against this backdrop, this latest report from Department for Culture, Media and Sport assesses the UK’s readiness to fully to exploit the dramatic shift to digital technology. This revolution is still in its infancy and our demands and expectations of it will continue to rise at an accelerating pace. Are we positioned to meet those demands and expectations? 

The interim report contains more than 20 recommendations, including specific proposals on:

• next generation networks
• universal access to broadband
• the creation of a second public service provider of scale
• the modernisation of wireless radio spectrum holdings
• a digital future for radio
• a new deal for digital content rights
• enhancing the digital delivery of public services

The full report can be downloaded from the DCMS website

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The comScore 2008 Digital Year in Review

The comScore 2008 Digital Year in Review offers a birds-eye view of the overarching trends in digital marketing usage in 2008 and considers their implications for the year ahead. This report examines the trends in US internet usage, search activity, e-commerce, online video consumption, online advertising, and mobile, and what digital strategies will be critical to effectively navigating the uncertain 2009 environment

Key findings highlighted in the report include:

Nearly 137 billion searches were conducted on the five US core search engines with Google Sites accounting for nearly 90% of this growth.

Online video viewing accounted for 12.5% of Americans’ total time spent on the Internet in November 2008, up from 8.5% the previous year.

US Internet users viewed a total of 4.5 trillion display ads during the past twelve months, with the average person viewing more than 2,000 ads per month.

The fastest-growing retail category in 2008 was Video Games, Consoles & Accessories (up 29% vs. 2007), which continued to benefit from online sales of popular game consoles like the Nintendo Wii, Microsoft Xbox 360 and Sony PlayStation 3.

The mobile industry continued to witness the growing popularity of smartphones in 2008 with subscriptions to smartphones increasing more than 100% during the year.

The report can be downloaded form the comScore website (Registration required,free)

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Business views of organised crime

This research report from the Home Office presents the findings of a study commissioned to look at the harms caused by organised crime to businesses located in high crime residential neighbourhoods, and methods of measuring them. The research was conducted in three areas London, East Midlands and the West Midlands between November 2006 and January 2007.  After consultation, it was decided to take organised crime to include any deliberate, co-operative criminal activity engaged in over a sustained period by the same set of three or more collaborating individuals or groups.

The main findings of the study were as follows:

Levels of crime and organised crime: All businesses that took part in the survey had experienced at least one incident of crime over the recall period. A total of 42% of respondents had experienced an incident of shop theft, 30% vandalism and 30% intimidation. Only 1% of businesses had experienced an incident of extortion

Opportunities to collaborate in organised crime: many businesses in high crime residential areas are routinely invited to trade in stolen, counterfeit or smuggled goods. The survey suggested that receiving offers of stolen and counterfeit goods is a normal feature of business life in the high crime neighbourhoods under review

Area ‘crime chemistries’:  data from the survey, police intelligence and community interviews show that there are substantially different patterns of organised crime in different high crime residential neighbourhoods. The three areas appeared to have quite different ‘organised crime chemistries’, and presented contrasting opportunities, forms of organisation, histories of criminal activity, and community conditions

Variations in business vulnerability to organised crime: the study tried to identify what characteristics of businesses are associated – and might generate -- OC victimisation. This analysis highlighted that the following:

• Businesses employing more staff were significantly more likely to become victim of an incident of OC. Those businesses that employed ten or more staff had a prevalence rate of organised crime of 47%, as compared to 28% for those employing two or fewer staff. However, smaller businesses were more often invited to receive illicit goods.
• Retailers, bars and restaurants are at relatively high risk of organised crime and of invitations to receive illicit goods, compared to other business types.
• Businesses belonging to locally majority but nationally minority ethnic groups suffer crime at a relatively high rate by national standards but a relatively low one by local area standards

Click here to read the full report

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Bullion markets 2009

The bullion market is a unique 24 hours per day market for the purchase and sale of gold and silver. The market’s special character is based on the various uses of gold and silver as industrial and retail commodities, investments and monetary assets. The latest report from IFSL provides an overview of the global bullion market and London’s importance as the largest market in the world for gold and silver trading.

According to the report gold and silver trading has posted record activity since the start of the credit crisis. The traditional “safe-haven” appeal of precious metals has attracted many investors to this asset class. Gold turnover increased 58% in 2008 to a record $20.2 trillion. Silver trading increased 39% during the year to a record $2.6 trillion (see table below). The growth in turnover was partly due to an increase in prices of precious metals during the year with gold posting an all time high in March of $1,011 per ounce.
 
Other highlights include: 

The OTC market accounted for nearly three-quarters of gold trading and 56% of silver trading. Most of this activity was transacted through the LBMA (London Bullion Market Association). Daily reported net trading in gold on the LBMA averaged $20 billion in the first 11 months of 2008, up 45% on the same period last year. Daily trading in silver on the LBMA increased 32% to $2bn. The actual volume of London market turnover is probably three to five times the reported turnover because transactions which are netted out do not appear in the published statistics.
 
Futures and options trading of gold on exchanges increased more 80% in 2008 to a record $5.1 trillion. Trading of silver increased 60% to a record $1.2 trillion. Exchange traded gold and silver funds have been the strongest source of growth in demand since their introduction in 2003. Comex in New York, MCX in India and Tocom in Tokyo account for most of exchange traded activity.

The full report is available from the IFSL website

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Digital world, digital life

In this report TNS explore how the internet fits into people’s lives. The survey, which included respondents from sixteen countries, asked the following questions:  How digital are their lives? How do they use the internet? Is a digital life the same as a social life or does a social life today require a complementary digital life?  Perhaps the most surprising finding of the report is the question of the importance of the internet. Almost a quarter of respondents rated the internet at 10 out of 10 for importance in their personal life, and 56% of people rated it as 8 or higher in importance. In fact, the average across all people surveyed was 7.5. This goes some way to explaining why usage of the internet takes up so much of our leisure time. In countries where the proportion of leisure time spent on online is highest, the internet is also seen as being more important. Around three quarters of all internet users in China and Japan thought it was very important (scoring 8 or higher) and Korea is not far behind.

The top 10 things people have done on the internet in the last month (all countries)

81% used a search engine to find information
76% looked up the news
74% used online banking
65% looked up the weather
63% researched a product or service before buying it
61% visited a brand or product website
56% paid bills
51% watched a video clip
50% used a price comparison site
44% listened to an audio clip

Click here to read the full report

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Manufacturing in 2020

This is a joint study conducted by Capgemini and IDG Global Solutions which asks manufacturing companies how they expect to do business in 2020.  The study was based on telephone interviews with 152 respondents in manufacturing companies from China, France, Germany, India, Netherlands, Sweden, the UK and the US.  The individuals interviewed were of a senior level and involved in strategic decision making. Survey participants were spread across the following sectors: general manufacturing (40%); automotive, aerospace and defense (16%); high tech (20%); industrials: chemicals, steel, industrials and medical devices (24%)

Respondents answered questions regarding the way they expect to do business in 2020 in the areas of: research and development; manufacturing, supply chain and logistics; and sales and marketing, and how this compares with their current operations. Based on the responses and current industry trends, the report shows paints a picture of what manufacturing operations will look like in ten years’ time and where companies will need to focus in the next few years if they are to succeed going forward.

Selected findings:

Accelerated competition at home and the growing sophistication of developing markets will have driven manufacturers increasingly to source, manufacture and sell internationally.

By 2020, around 80% of manufacturers expect to have multi-country operations whereas currently just over half do. Manufacturing will have become more collaborative in nature, with companies involving suppliers and customers to a greater degree at all stages of the manufacturing process.

Supply chains will have adapted by changing shape: half the companies surveyed said they will be using fewer suppliers by 2020, and 40% expect to be using more distributors as increased competition drives them to reach new markets.  In the developed nations, supply chains will be more complex according to the majority of respondents, so as to cope with input from customers and suppliers at all stages of the product lifecycle from R&D to end-of-life disposal.

The full report can be downloaded from the Capgemini website (pre-registration required)

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The pharmaceutical market outlook to 2018

The latest research report from Business Insights examines the key threats and opportunities that lay ahead for the pharmaceutical industry.  Last year the global pharmaceutical market reached sales of $634.7bn, up 9.5% from the previous year. The Industry experts surveyed by Business Insights predict that the growth rate for pharma in the next 10 will be less than when the same question was asked 3 years ago. Nearly half of those surveyed estimate that growth will be between 3-5%. Highlights from the report include:

Key challenges:
The biggest challenges identified to the pharma industry include: reduced R&D productivity; economic pressures, including increased costs of drug development; regulatory hurdles; generics and biosimilars; political changes concerning pricing and reimbursement.  Indeed, competition from generics and biosimilars were identified as a major threat to the pharma market with over $17bn of branded drugs having lost exclusivity in 2007. The extent and rate of generic erosion following patent expiry varies across the 7 major markets, being most intense in the US, where it is estimated at 88% for standard oral solids 2 years after generic entry.

Key opportunities
Although the pharmaceutical market is facing challenging times, biotech is still seeing high sales growth. According to IMS data, global sales of biotech drugs increased 12.5% in 2007 to more than $75bn. For this reason pharmaceutical companies are aiming to become more ‘Biotech-like’ as a way to increase productivity and gain access to more innovative drugs. So the recent trend for partnering with and/or acquiring Biotechs is likely to continue. The biggest source of impetus for the pharma industry over recent years has been the emerging markets such as China and India, this trend is likely to continue over the next 5 years. This growth is driven by greater access to generic and innovative new medicines as primary care improves and becomes more available in rural areas, and as more people take out private health insurance

Top 10 companies
The report also provides analysis for the top ten pharma companies. The leading global pharmaceutical company is Pfizer with sales in 2007 of over $44bn. It is interesting to note that out of the leading 10 pharmaceutical companies, Pfizer saw the lowest sales growth last year. This low sales growth is mostly attributed to poor new product sales, most notably Exubera, and imminent generic erosion of Lipitor. It is anticipated that with Lipitor off patent, Pfizer’s decline in sales will continue over the next few years unless it manages to fill the gap left from the loss of sales of the highest selling branded drug in the world.

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

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Banking banana skins 2008: an industry in turmoil

The Centre for the Study of Financial Innovation (CSFI) has recently completed its 12th banana skins survey of leading members of the finance industry.  The survey, sponsored by PricewaterhouseCoopers, puts together a league table identifying perceived risks to the industry and ranks them by severity.

The survey questionnaire was in three parts. In the first, respondents were asked to describe, in their own words, their main concerns about the financial system over the next 2-3 years. In the second, they were asked to rate a list of potential risks, selected by a CSFI/PricewaterhouseCoopers panel, by severity on a scale of 1-5 and whether they were rising, steady or falling. In the third, they were asked to rate the preparedness of financial institutions to handle the risks they identified. Replies were confidential, but respondents could choose to be identified. The survey was conducted in February and March 2008 and received 376 responses from 38 countries.

Unsurprisingly this year’s poll is dominated by concerns over current market conditions. The top 10 concerns identified are:

1 Liquidity
2 Credit risk
3 Credit spreads
4 Derivatives
5 Macro-economic trends
6 Risk management techniques
7 Equities
8 Too much regulation
9 Interest rates
10 Hedge funds

The full report can be downloaded from the PricewaterhouseCooper’s website (pre-registration is required)

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CEO challenge 2008: top 10 challenges – financial crisis edition

Every year the Conference Board CEO challenge survey asks hundreds of senior executives from around the world to identify and rank their most pressing concerns. This report presents the top 10 challenges from the survey.  Comments from those interviewed, along with complementary survey results, will be published early next year in the CEO challenge perspectives and analysis

This year the Top 10 report was in its final stages when the financial crisis hit. So, the original responses were returned to those who had completed the survey back in July and August, nearly 200 updated surveys were received back. The differences between their original and resubmitted responses offers a unique “pre” and “post” insight into how the financial crisis of 2008 is affecting what’s on the minds of CEOs around the world.

A turbulent global economy has led CEOs to focus on “bread and butter” survival issues, rather than longer-term challenges, such as talent management. The number who rate speed, flexibility, adaptability to change as being one of their greatest concerns almost doubles, moving up to 3rd place from 7th.  Both profit growth and top line growth give way to the challenges of global economic performance, which rose to 4th place from 16th, and financial risk, including liquidity, volatility, and credit risk, which rose to 5th place from 11th.

The top ten challenges identified are:

Excellence in execution
Consistent execution of strategy by top management
Speed, flexibility, adaptability to change
Global economic performance
Financial risk, including liquidity, volatility, and credit risk
Sustained and steady top-line growth
Customer loyalty/retention
Improving productivity
Business confidence
Profit growth

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

International communications market 2008

This is Ofcom’s third report on developments in international communications markets. The report sets out the availability, take-up and use of communications services among seven countries (the UK, France, Germany, Italy, the US, Canada and Japan). Where data are available, the report also includes a further five European countries (Poland, Spain, the Netherlands, Sweden and the Republic of Ireland) and discusses the development of communications markets in the large emerging economies of Brazil, Russia, India and China.

Highlights from the report:

There is nearly one broadband connection for every four people across the countries in this report. With 26 connections per 100 people, the UK is third among our comparator countries, behind the Netherlands (35%) and Sweden (31%). Average growth in connections between 2004 and 2007 was highest in the UK, France, Germany, the Netherlands, Sweden and Ireland, at 5% per year.

Internet users in the US spend the most time online – 15 hours online each week; those in Spain spend the least amount of time online, at just 7.5 hours per week. UK users rank second behind the US, at nearly 14 hours per week. Internet use per user has risen the fastest in the UK over the last four years, at an average annual rate of 30%.

The rate of migration to digital TV in 2007 resulted in the UK having the highest proportion (86%) of main sets connected to digital, (up from 77% in 2006), followed by the US (70%), France (66%) and Japan (65%). In the Netherlands and Sweden analogue terrestrial TV has already been switched off.

Global television industry revenue reached an estimated £166bn in 2007 (of which £10.4bn was from the UK), up by 6% year-on-year. Advertising was the largest component, at £81bn, although for the first time, it didn’t account for the majority of all television industry revenue Owing to strong growth in subscription revenue

The full report is available from the Ofcom website

Financial stability report

Following a year of severe stress in the banking system, growing evidence has emerged of a slowdown in the economy and further bank losses. This has heightened fears of continued falling asset prices, tighter credit conditions and slower economic growth. Failures of some institutions were followed by severe dislocation in the global interbank funding network. This has led to acute strains in banking systems both internationally and in the United Kingdom.

In October of this year, the UK authorities announced a set of system-wide measures that addressed the perceived weaknesses in banks’ capital and funding structures. The package supports capital raising to strengthen banks’ resilience and offers assurance about banks’ liquidity positions. Other countries have subsequently announced measures with similar underlying principles. Early signs suggest these measures have helped underpin the banking system. However, risks in the financial system still remain. Over time, against the backdrop of an economic downturn, banks will need to adjust their balance sheets and funding models, weaning themselves off current exceptional levels of official sector support. Recapitalisation should ease this adjustment, but lending growth will take time to recover. As the system stabilises, a fundamental rethink will be needed of how to address systemic risks, both through improved regulatory frameworks and developing new macroprudential policies to dampen the credit cycle.

This latest report from the Bank of England provides:

• An analysis of developments that culminated in the turmoil of recent months.
  
• The reasons for the exceptional measures taken by the UK authorities and those in other countries.
  
• The Bank’s view on the short-term prospects for the financial system and on the medium-term reforms necessary to address systemic risks.

Click here to read the report in full

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Leisure in the home

This Key Note market review covers the UK market for leisure in the home. In 2008, UK consumers are predicted to have spent £40.7bn on leisure in the home, compared to around £63.8bn on leisure activities outside the home. Leisure is simply defined as time spent outside the hours of working, household or family chores, and sleeping.  In a 2008 survey commissioned by Key Note and conducted by NEMS Market Research, 72% of adults said they regularly entertained in the home, but by far the most common leisure pursuits are watching television, reading and listening to the radio or recorded music. Typically, leisure activities in the home can be split into four main sectors:

• home viewing and home listening — driven partly by broadcasting and partly by recorded media (treated as a separate chapter in this Review)
• home computing and the Internet — a sector that is having an impact on the viewing and listening markets
• playing with toys and games (either electronic or traditional) — and engaging in hobbies such as collecting or crafts
• home-improvement activities (DIY and gardening) — allied to which is entertaining in the home.

The most significant growth market identified by the consumer survey was `surfing the Internet', occupying 68.9% of adults in 2008, up from 58% in a similar survey conducted in 2006.  The survey also found that consumers are more actively engaged when using the internet thanks to social networking and websites that encourage hobbies such as collecting (eBay), contacting long-lost friends and relatives (Friends Reunited or Ancestry.com) or downloading music. Alongside these hobbies, and the rise in reading books, Key Note suggests there is evidence of a movement away from purely passive leisure. Symbolic of this has been the phenomenally popular gaming console Wii, from Nintendo, which may be the most important development in home leisure this decade.

Want to read more? This Key note report can be found in the market research collection located on the first floor of the library.

Alternatively, current London Business School students, faculty and staff can access this report from Key Note Online, from the A-Z list of library databases via the Portal

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