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Posts Tagged ‘BUSINESS’

Investors who want to beat the market should be followers of the business cycle. The business cycle is a long-term pattern of changes in Gross Domestic Product (GDP) that follows four stages: expansion, prosperity, contraction, and recession. After a recessionary phase, the expansionary phase can start again.

Business Cycle Phases

The phases of the business cycle are characterized by changing employment, industrial productivity, and interest rates. Some economists believe that stock price trends precede business cycle stages. As a result, the phases of the business cycle provide the strategic framework for economic activity and investing. The business cycle affects employees, employers and investors. For example:

·         The economy is strong; people are employed and making money. Demand for goods — food, consumer appliances, electronics, and services — increases to the point where it outstrips supply. This demand fuels a rise in prices, or inflation.

·         As prices increase, people ask for higher wages. Higher employment costs translate into higher prices for goods, fueling an upward spiral effect.

·         When prices get too high, consumers decide goods are too expensive and demand decreases. When demand decreases, companies lay off workers because they do not need to make as many goods or provide as much service.

·         Decreasing demand fuels declining prices, which means the economy is in a recession.

·         Lower prices spur demand. As demand picks up, people begin buying again, fueling the need for greater supply. The cycle goes back to the beginning.

Government Intervention

When the business cycle does not run smoothly, it can have consequences as disastrous as the Great Depression. That is why governments intervene to try to manage the economy. For example, if it appears that inflation is rising too quickly, the Federal Reserve (the central bank of the U.S. charged with handling monetary policy) may decide to raise interest rates to curtail spending. On the other hand, if the economy is performing poorly, the government may lower taxes and increase spending to spur consumption and investment.

Interest rates and the yield curve play a very important role in determining economic activity and the performance of the stock market. Higher interest rates increase the costs to businesses and individuals. Companies must pay more to borrow money for capital investments or to fund daily business operations. Individuals pay more for mortgages as well as other loans they may take out to purchase products. Higher interest rates also increase the demand for money to invest in bonds taking money that could or was invested in the stock market.

The yield curve is a plot of the yield on bonds with the same credit quality across different maturities. The basic assumption is you get more interest on your investment in a bond by holding it longer. The theory states there is more risk for holding a bond for 10 years than for 5 years, or for 5 years than for 90 days. Bloomberg provides a current chart of the yield curve for U.S. Treasuries at Bloomberg, an interesting interactive model of the \”living\” yield curve.

Implication for Investors

The business cycle has implications for markets and investors. Broadly, a recession often corresponds with a sustained period of weak stock prices, or a bear market. A healthy, expanding economy that keeps inflation from rising too quickly often corresponds with a bull market, or period of sustained market growth.

Fortunately, there are investment strategies for all parts of the business cycle, thanks to the diverse economy we have. Companies that do well when the economy is experiencing good times are called cyclical stocks. Industries that fall under this group include travel and leisure companies, airlines, consumer electronics firms and jewelry makers. Companies that make goods that are necessities, such as food and health care are called non-cyclical stocks. These stocks tend to provide more stability during an economic downturn. During an economic expansion, one should invest in cyclical stocks. On the other hand, during an economic contraction one should consider investing in non-cyclical stocks.

Sam Stovall\’s Sector Investing, 1996 states that different sectors are stronger at different points along the business cycle. Be forewarned, this is a very expensive book, however it is worthwhile, as it is the best explanation of sector rotation.

The hard part is to identify phase of the business cycle. As you might realize, this is no easy matter and many economists get it wrong. Many indicators are published on a regular basis that people use to monitor the economy. Unfortunately, there is not a simple way to make this strategic decision. The best policy is to try not to predict the business cycle, but rather to monitor the economy looking for signs that it is change in leadership. This change takes several months, so you have time to make your assessment. Keep in mind that the stock market is a leading indicator and will attempt to forecast that the economy is beginning to level off or contract and pull back. Unfortunately, these can be false indications as well.

Sector Rotation Strategy

As an investor, I seek to understand where we are in the business cycle to help guide me where to look for opportunities. However, I do not try to forecast the cycle since I realize I am no better than many economists who make it a full time job to make these predictions. Sector rotation can produce excellent opportunities and must be carefully examined when evaluating the business cycle. Just keep in mind that many investors and gurus are wrong when they claim that we are entering a new stage in the business cycle. Fortunately, one strategy works and is simple to implement.

Identify the most significant fundamental factors that influence each sector. For example, in healthcare, the aging population and expansion of healthcare coverage by the U.S. government are major drivers for the sector. These factors should help push the healthcare to be one of the top sectors. Each sector has their factors that are the major drivers. This type of review gives improves your chances to identify which sectors have the most potential and which ones do not. Using this type of analysis, you can rank each sector based on its fundamentals.

A sector tends to stay in a trend for a number of months. Moreover, when a sector starts to trend, up or down, it tends to stay in that trend for many months. Using technical analysis, you can see the trend changes in each sector, as well as, compare the performance of all the sectors over different time periods. This gives you a view of the sector that are leading and the ones that are trailing. You can also rank the sectors based on your technical analysis.

Finally, you can combine the fundamental and technical rankings into a blended order that provides a simple way to see which sectors are expected to do well and which ones are not. Moreover, if you maintain this list over time adjusting for changes in the ranking factors, you can see which sectors are improving and which ones are falling back. This gives you an opportunity to anticipate where you should start to place capital and where you should start to close out positions.

The Bottom Line

The business cycle offers investors a good way to beat the market. A sector rotation strategy that follows the business cycle, offers an excellent way to align one’s portfolio. It also provides a way to create some diversification, since you should invest in several sectors that span the current stage of the economic cycle, rather than just one. This provides your portfolio some diversification while still following the sector rotation model.

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Introduction

The business environment is too complex especially with increased globalization and hence have to be understood adequately for the continuous operation of the business. Business environment refers to the surrounding atmosphere on which the business operates and the environment encompass the cultural aspect, political dimension and environmental aspect. The business has to analyse the effect of these dimensions and ways of adapting so as to operate profitably and ensure survival in the long term. Business environment refers to all external forces, which have a bearing on the functioning of business. The business environment factors “are largely if not totally, external and beyond the control of individual industrial enterprises and their managements. The business environment poses threats to a firm or offers immense opportunities for potential market exploitation.

Business has to adapt to its environment to ensure survival. The role of business is crucial and involves that it is an important institution in society, it supplies of goods and services, creation of job opportunities and contribute to the economic growth of the country among others. Hence business survival should be ensured, as its success transforms to better economy and standards of living of workers and the society around. The environment includes technological environment, international environment, economic, political, natural environment and social or cultural environment.

There is symbolic relationship between business and its environment and among the environmental factors. Generally, business is influenced by its environment to certain degree and it will influence the external forces. These environmental forces are dynamic. They keep on changing as years roll by, so does business. A particular business firm, by itself, may not be in a position to change its environment, but along with other firms, business will be in a position to mould the environment in its favor.

The benefits of environmental study include the development of broad strategies and long-term policies of the firm, development of action plans to deal with technological advancements, to foresee the impact of socio-economic changes at the national and international levels on the firm’s stability, analysis of competitor’s strategies and formulation of effective countermeasures and to keep oneself dynamic.

The environmental analysis process involves four sequential processes namely scanning, monitoring, forecasting and assessment. Scanning involves general surveillance of all environmental factors and their interactions. Monitoring involves tracking the environmental trends, sequences of events, or streams of activities. Forecasting is concerned with developing plausible projections of the direction, scope, and intensity of environmental change. Assessment, tries to answer questions such as what are the key issues presented by the environment, and what are the implications of such issues for the organization.

Importance of business to adapt to its environment

(a)   To meet Business Goals

If the business adapts to its environment it will be able to meet its business goals. Business goals include profit making, growth, power, employee satisfaction and development, quality services and products, market leadership, joy of creation and service to society.

If the business understands the culture around it, it will be easy for it to operate at a profit because after adapting to the environment it is now easy to strategies way s of conducting business profitably. The business can now afford to separate activities that lead to profit generation from other products. The business can be able to compete for market share for its products and services.

For the achievement of every goal, the business has to adapt to the business environment it operates. If a business is not achieving its goals then its very unnecessary to operate especially if it cannot achieve profitability for a long time. Hence managers should quickly understands and adapt to the environment.

(b)   Enhances Decision Making

Understanding the works of the economy is a means to an end of improving decision making. The decision makers should therefore analyse the economic environment and how it acts as an external constraint on the decision making process. This involves understanding both the micro and macro environments and quickly adapting to the environments.

Adapting to the political environment will also aid decision making. This involves organisation making decision that are in line with the current political environment. Due to the power of politics an organization that fails to comply with such laws and regulations is likely to be punished to the extent of losing operating license. This is very crucial especially to organization in the export sector, banking sector and mining sector. These sectors attract a lot of attention as they derive the economy through linkages.

Understanding the cultural environment also helps in decision making environment. Adapting will mean that as the company advances its products and operations should make sure it does not violate the norms of the society as it risks losing support. If the form diverts from society tastes and preferences its products may be rejected in the market and hence losses are likely to arise. The R&D department should research thoroughly for innovation to be in line with society cultures.

(c)    Product Development

When a firm needs to develop its products it is highly recommended for it to have adapted to its environment. Products and services should be developed in line with the cultural environment in place, legal or political mandates as well as economic bindings. For example in the clothing industry each culture has its own type of clothing and it will only be profitable to develop and sell those type of clothes related to the cultural environment. Even if the business decides to update their products version, it still should be acceptable culturally. This only possible when the business has adapted to the environment and understands it.

Most importantly, adaptation to the political environment is necessary for product development. Firms should develop those products that are legally acceptable. This is only possible if the business understands its political environment and quickly adjust to adapt to the environment. This is very crucial to the services offered by various non-governmental organizations.

(d)   Staff Motivation

Firms usually recruit the bulk of its employees from the local market. So it is wise that the business understands and adapt to its environment. The cultural dimension is the most important in this case, managers should understand the cultures that governs the local people and hence strategies how best to work with them.    Managers should not blame their workers for the behavior related to their culture rather should aim to transform or shape their skills to suit business standards. The political environment should also be taken into account for staff motivation, this refers mainly to the way managers choose to motivate its workers, it should not go against what is legal in those times.

(e)    Competition

For firms to compete in the markets they should understand and adapt to the business environment. There is no way they can effectively compete without understanding the business environment. This ensures long term survival of the business. Addressing of barriers to entry can be effected by organizations that have adapted to the political environment.

(f)    Investment and Business Growth

Efficient investment and business growth are some important factors that cause businesses to adapt to their operating environments. Economic environment is very crucial in this case especially for foreign investors. Foreign investors should adapt to the economic environment in order for them to effectively explore business opportunities  and ensure growth. Mining and transport sectors are good examples in this case.    

Conclusion

Adapting to business environments is a crucial to the survival of business. It is very crucial especially for foreign managers to quickly adjust and adapt to the environment they operate. This will enhance their leadership style and be a good leader. The business manager should avoid using the wrong approach to a certain environment which is suitable for another environment. This means that managers should be flexible and willing to learn whenever they join new locations. With increased globalization the business environment has become too complex. Managers and business should not be resistance to change.

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Shared by Sustainable Energy

Why Are Energy Monitoring Systems Important?

There are a number of energy monitoring systems available on the market. What do these systems do? Fundamentally they monitor energy usage in a facility. This is a very vital system that many companies do not have in place. The only resource they have is their power bill that comes once a month. They look at their regular monthly costs rising, but they do not know where they can help you save energy. Imagine operating a business without an accounting system. You do not know your income or your expenditures. This is the exact same for a company with no energy monitoring system; they have not a clue that there are energy efficiencies in the organization. Now some corporations prefer to get an energy audit, instead than investing in a system. But what use is that in a year, in 5 years. Equipment improvements, consumers change and all that knowledge is lost. If you install a system that monitors energy usage, then it is there for a very extended time, and it works 24/7.

How Does It Work?
The program will assess energy utilization on phases in the main distribution panel. This is done by setting up CT’s (Current Transformers) on electrical loads in the main distribution panel. The information then is fed to an Internet based interface that will allow users to download reports, alter set-points and compare energy usage by size, location etc. In addition, energy monitoring systems can be used to authenticate energy usage reductions from “energy saving” equipment like new compressors, lighting, control systems etc.
The energy supervisor can do facility benchmarking, view energy usage by equipment type and verify financial savings from commissioned facilities. The energy monitoring system made by EG Energy Controls is capable of monitoring up to 2500 stores within the company’s network. The system can keep track of any desired electrical, gas or oil loads.
Examples of loads that can be measured are:

Main entrance, Lighting, Low and Medium temperature compressors (can monitor pending equipment failure), HVAC, Motors (can monitor pending equipment failure), Parking Lot Lights, Water usage, Oil/Propane Usage
The system will monitor equipment kWh usage and send e-mails to alert the Energy Manager of abnormal energy usage. The system will also contact the weather station daily to gather weather information to allow it to accurately predict energy usage for the next day and avoid inaccurate alerts. This is a very important feature, since the problem with some energy monitoring systems is that they send redundant emails that end up annoying people.

The other good aspect of an energy monitoring system is the capacity to foresee pending equipment failures. This is called motor performance tracking:
Motor performance. Traffic monitoring motor current levels and unbalances is a main component of a superior online monitoring system. Often it’s found that current level is identified as the average current level for all phases. For predictive maintenance reasons, however, the highest line current level developed is of much greater importance. The heat in each motor winding is interdependent on the amount of current that flows through it. Hence, the the most fragile point of the motor’s insulation with respect to current level is the phase with the largest current

Energy Monitoring and Energy Awareness

It is incredible how energy usage drops in a facility when employees know that there is a system that is monitoring what they are doing. Since the system can also be used to monitor sections of a facility, or even individual departments, people become naturally more energy conscious. For example, turning of lights when they leave the room or not leaving the computer on at night. These may seem to be minor changes; however the mindset is already being changed to become more energy conscious. These people then come to their own home and start noticing energy efficiencies, and they start doing changes in their own home.
By: Edward Herniak

About Sustainable Energy Coalition: The Sustainable Energy Coalition (SEC) brings together more than 60 national and state-level business, environmental, consumer, and energy policy organizations. Founded in 1992, the Coalition promotes increased federal support for ENERGY EFFICIENCY and RENEWABLE ENERGY technologies and reduced federal support for unsafe or polluting energy resources.

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What kind of environment is the right environment for your business success? Are you someone who likes to work in a relaxed, calm, quiet environment, or someone who likes a more interactive, invigorating, exciting environment?

There is probably a range of environments you can put up with and get by in. But, have you ever thought about what kind of environment is optimal if you want to create success? Most of us haven’t thought about how our environment affects our business success. Instead, we’ve learned to adapt to less-than-favorable conditions, blaming our sagging energy, increased body aches, and decreased productivity on other factors.

The Effects of a Negative Environment

Psychologists and industrial engineers have long reported that a negative work environment adversely affects our health, sleep habits, interactions with people, sex life, tolerance levels, ability to cope, and ability to process new information.

The longer we are exposed to a negative environment, the more our productivity and success decrease. It also takes its toll on our psychological, emotional, and physiological well-being.

The problem is that researchers have not been able to come up with a single work environment that is best for everyone. Human beings are such a complex, multifaceted group. It is impossible to take into account everyone’s changing needs to create a work environment that is ideal for every individual.

Whether you work from the comfort of your home as a solo preneur or go to work in an office building, it’s up to you to create the perfect environment for your business success. If not, you will find yourself gulping for air.

Are You Gulping For Air?

I have a small pond in my back yard. It’s a modest pond, home to five gold fish, two shubunkins, and two koi, Jack and Casper. It’s a peaceful little pond where birds and deer come to drink and neighborhood cats come with high hopes. There are benches nearby for quiet reflection, and the beauty of nature surrounds.

Not too long ago, the pond wasn’t so peaceful. We were in the middle of a heat wave when I went out to feed my fish. Much to my surprise and alarm, all the fish were at the surface of the pond bunched together and gulping for air. I could see they were in distress, though I didn’t know why. Until . . . I dipped my hand into the pond and felt the temperature of the water. It was very warm.

I immediately flew into action and began pumping warm water out of the top of the pond while simultaneously adding cold water to it. Within a couple of hours the water temperature had stabilized and my fish were back to swimming tranquilly around the pond.

When you are working in an environment that is detrimental to you, you soon end up like my fish on that hot day. You end up gulping for air. Gulping for air leaves us exhausted, depleted, and in desperate need of relief. We’ve all had times when we have felt as if we were just barely making it, scarcely holding it all together, and stressed beyond our limit.

Are you gulping for air? Here are some ways to know.

Top 10 Ways to Tell If You Are Gulping For Air

1. You’re too busy for your family and friends.

2. You do a lot of explaining about why you are so busy.

3. You find yourself just trying to keep your head above water.

4. You’re feeling unheard, misunderstood, and devalued.

5. You’re feeling overwhelmed.

6. You’re caught up in the drama of your business.

7. You’re still at work in your head after you’ve physically left your office.

8. You’re making do by making excuses.

9. You’re not sleeping, exercising, or eating to your benefit.

10. You’re emotionally maxed out.

What do you do if you find yourself gulping for air?

3 Steps to Creating Your Ideal Environment

1. The first thing to do is acknowledge where you are.

2. The second is to create some space to move around. Whether that be actual physical space (like taking a walk) or psychological and emotional space (such as meditating, journaling, or reading a book for pleasure), it’s important to create space.

3. Next, go within and ask, “What environment is in my highest good and greatest well-being right now?” This one question will open up even more space for you to begin creating the perfect environment for your personality, needs and goals.

You will know what that right environment is because in it you will feel expansive, open, allowing, and inviting. You will feel as if you have plenty of room to explore, maneuver, and swim around. You will have time for family, friends, and for yourself. You will thrive, flourish, and prosper.

Why merely put up with or get by in your environment? Instead, stop gulping air and focus on creating just the right environment for your business success.

Product Description
The goal of the IJGSB is to explore the opportunities and threats of globalisation for small businesses as well as small businesses’ strategic options in an increasingly global world. Dramatic changes in contemporary soc… More >>

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There are several things to consider when thinking about starting a home based business. The first being whether or not you are motivated enough to work without being told what to do or how to do it. A successful home based business entrepreneur is a self starter who enjoys personal success. Small business owners work well independently, thrive on challenges, and do not fear learning new things or bringing their unique ideas to others.

The good news for all of the clean-tech entrepreneurs is the added boost that the U.S. Government is placing in the ACESA stimulus legislation. The American Clean Energy and Security Act of 2009 has a few main parts or provisions; all of which lead many people who wish to start a small business straight in the direction of solar energy.

1. A clean energy section that promotes renewable sources of energy; such as residential and commercial solar energy on a very large scale.

2. An energy efficiency section that increases energy efficiency across all sectors of the economy, including buildings, appliances, transportation, and industry.

3. A global warming provision that places restrictions on the carbon equivalent emissions and other environmentally damaging pollutants.

4. A transitional program that protects U.S. job seekers, consumers, businesses in these tough economical times with training, career adjustment, and transitioning support.

5. A very large program that promotes green jobs during the transition to a clean solar energy economy.

Having a home based solar energy business is work. Even with large incentives and the backing of the government, industry, and most citizens, you must still do the work in order to enjoy success. If you are the type who is self directed and motivated then the next consideration is what will you do? Consider what you are passionate about. What gets you excited enough to want to share it with others?

Use this information to create an ideal home based solar energy business.

Do some Internet searches or talk to other small business owners related to home based work that they made into a successful business and see if you might want to do the same. A clean-energy entrepreneur can create a operational statement for the way and type of solar energy business the wish to operate. This will be the bases for the services they can offer. Ask yourself the question “what will set my home based solar energy business apart from others?” Then write out a small business plan.

If you know that starting a home based solar energy business is right for you, then your next step is educating yourself about the requirements that govern home based businesses locally within your state, county and also with the US government and IRS. After completing due diligence, as a person should for any type of business consideration, decide if they possess the financial capital to get the business started. Fortunately, many new solar energy opportunities really do not take any investment (other than marketing costs) to get started. A person can just plug into a larger system. The landscape is change in a great way towards renewable, solar energy. This provides unparalleled opportunity for businesses as it relates to the U.S. Government’s interest in fast-tracking our transition to a clean energy environment.

United States Green Jobs: Worker Transition to Solar Energy Industry

The latest draft legislation related to an economic stimulus, a plan to address climate change, and a strategy to move into a renewable energy environment includes several provisions to promote solar energy jobs. One section authorizes the Secretary of Education to award grants to universities and colleges to develop curriculum and training programs that prepare students for careers in renewable solar energy, energy efficiency, and other forms of climate change mitigation. Under another section, the Secretary of Labor is authorized to carry out such training programs.

There are good opportunities out there that do not require an upfront investment. Emerging technology in renewable energy is creating what are called green collar jobs. Solar energy is now a viable business opportunity for the home based business owner. The outlook for renewable energy in 2009-2010 is very bright.

In fact renewable energy is in the forefront of business opportunities right now. For those who are passionate about saving money, going green and creating a home based business, a solar energy business is a golden opportunity.

The solar energy market is a largely untapped sector of the business and renewable energy industry. Home based business owner’s need this type of information and the support the U.S. Government is showing to really kick start exciting new career options for many U.S. citizens.

It is the win-win business of 2009 because everyone benefits from a solar energy business.