‘Spare change, please?’

I had a very interesting encounter with a beggar while I was in Shenzhen a while go. I was approached by a beggar while waiting for a friend outside a well known mall in Shenzhen.

He asked me for some spare change. I had some time, so I asked him why he came to me.

‘I saw you from afar. … You are loaded with shopping bags, so you must have just spent some money in the mall and should not mind handing some change from the shopping. You also look like a generous person so I decided to ask you for some spare change’

I was amazed by his informed comment.

In general, people are afraid of beggars because of they way they look – scruffy, dirty, torn clothes and sometimes smelly. This beggar is different. Although he has most of the begging characteristics, but he is clean. He pointed out that he needs to stand out of other beggars to be less intimidating.

‘I know my SWOT’

‘I am conscious of my own strengths. People don’t find me intimidating if I have a clean look – and that is my strength.

‘I look at my opportunities too. The huge population and its flow offer me opportunities. Only if the passers-by outside this mall are willing to give ¥1 a day, the opportunities would be ¥30,000 a month. Of course in reality, not everyone would spare me a yuan, and I can’t ask all of them in a day either’.

He strategically identified his targets – the passers-by of the mall. He continued his business forecasting.

‘If 30% of the flow around this mall is my reachable patrons, and if my success rate is 70%, my chance of success would be 21% of those approached.’

Selecting the patrons

‘There are several groups of people I regard as potential patrons. They should be around 20-30 years old. If they are too young, they would not have the money and if they are too mature, or already married, their partners often have control of their money. My targets are:

1. Relatively young ones and well dressed – they would be more free with spending money;

2. Young couples – they would at least, act generous to avoid embarrassments in front of their partners;

3. Singles and pretty girls – they are always scared of being harassed by strangers and willing to spend money to avoid them.’

He works eight hours a day and applying his chance of success, he could end up with ¥300 a day. He confirmed that he makes about ¥200 a day on weekdays and around ¥500 on weekends

He went on to disclose his marketing tactics. ‘You cannot keep chasing your patrons. You would easily waste time on chasing a customer without any success. I need to decide at which time to give up and find a new target.’

‘The business of a beggar cannot rely on luck. I need to plan on every ¥1 of my taking.’

SWOT is a well known planning tool for evaluating the internal competitiveness of organisations. It is also a useful technique for anyone to assess his own Strengths, Weaknesses, Opportunities, and Threats when applying for a job, choosing a course of study or even courting for a life time mate.

SWOT is valuable for the understanding the ‘elements’ within organisation and helping in decision-making. It involves stating the objective of the business or project and identifying the internal and external factors that are either supportive or unfavourable to achieving that objective.

History The SWOT analysis technique is not that old. Researcher Albert Humphrey at Stanford University in the 1960s was trying to identify why corporate planning failed in some companies. He looked into the analysis and planning methods used by big organisations and probed into their operations such as marketing and finance. He found that particularly for organisations with multiple products or services, he needed details about their people, resources, innovation, marketing, operations and finance. In the process, he developed tools to help his research, and he found the technique of SOFT – Satisfactory, Opportunity, Fault and Threat. He defined each of these elements as follows:

­ Positives:

• Satisfactory is for the present
• Opportunities are for the future

Negatives:

• Faults are mistakes today
• Threats are potential problems of the future

From SOFT to SWOT In 1964, management researchers Urick and Orr refined the technique and changed the F in SOFT to W, so giving birth to SWOT (or WOTS up!) and SWOT has stayed with us as that for the last 40 years. New schools of thoughts are emerging as many academics and consultants think that SWOT as a single assessment technique is not enough for business planning. They feel that extensions are need, and came up with a process of assessment which is similar to our planning cycle:

Goals or objectives setting -> SWOT -> Evaluation -> Action

Merits and Demerits Unarguably, SWOT as a planning tool has many advantages:

• It is simple
• Strengths and Weaknesses become easier to understand and to be reviewed
• It promotes strategic thinking, prompting management to focus on strengths and build opportunities, and to correct weaknesses and take action to avoid the impact of threats
• It also makes organisations more alert to new opportunities and exploit them fully.

However, SWOT may be too simple and sometimes key elements could be missed.

• Some users over simplify the amount of data needed for decisions. For an effective SWOT, managers may need vast amounts of data but data may not be easy to get especially in organisations with a complicated structure or having multiple products or services. On the other hand, too much data could cloud the scenario and points can be missed.
• SWOT has to be done by different people being involved each having a different perspective.
• To be effective SWOT needs to be a regular exercise. The pace of change is so fast that analysis will have to be done regularly.

The value of SWOT lies mainly in the fact that it promotes management to make self-assessments. The problem, however, is that the elements appear deceptively simple. Actually deciding what the strengths and weaknesses of an organisation are, as well as assessing the impact and probability of opportunities and threats, is far more complex than it appears. Indeed, a Strength could be a Weakness as well and sorting out the dilemma is not easy.

The inherent risk of making incorrect assumptions when assessing the SWOT elements often causes management to procrastinate when it comes to deciding between various strategic alternatives, frequently resulting in unnecessary and undesirable delays.

Adapted from any article by Mike Morrison
The Chartered Institute of Personnel & Development
March 2008

When he took office in 1985, Peruvian President Alan Garcia ordered controls on the price of rice, sugar and other goods to try to keep those staples within reach of the poor. But when shortages continued and a black market arose, five years later, his presidency was dissolved in a spiral of hyperinflation.

Peru is not alone in facing spiralling prices. From Argentina and Venezuela to Russia, China and Thailand, governments are meeting the challenge of rising food prices by imposing price controls – fixing prices below market level – hoping to ease the burden on their populations and avoid social unrest. But history shows that such measures do not reverse price trends – they can end up having the opposite effect.

The current round of rising food prices began since 2001, and last year, the situation collided with sharply higher oil prices, forcing many governments to look for quick fixes. The quickest, easiest and most popular are price controls.

In China, where inflation is at an 11-year high, authorities introduced controls on a range of goods from instant noodles to milk, calling it a temporary intervention to battle “unreasonable price hikes”. It was the first time in over a decade that Beijing waded into the food market.
In Thailand, the government is taking similar steps on instant noodles and cooking oil, and in Russia, authorities are trying to cap prices of bread, eggs and milk. In Mexico, the government is trying to control the price of tortillas after protests there, and Venezuela is capping prices on staples including milk and sugar. So far, the World Bank has found 21 countries exercising controls on strategic staples.

Economists warn that price controls and other interventions can lead to market distortions because they have the effect of discouraging domestic production, processing and trade, and ultimately reducing supply. By dampening the underlying causes of inflation, price controls prevent market solutions, these experts say. Already, some countries are finding this to be true.
Argentina, which imposed an export tax on grains, in addition to controls on domestic food prices, has been shaken by nationwide protests by farmers. Meanwhile, Malaysia is reviewing controls on 21 food items, including milk, salt, wheat flour and rice, because they have led to severe shortages and smuggling.

According to experts, controls are only likely to work where staple foods are a small share of total household spending, or when controls are implemented for a very short time, such as in Morocco over the Ramadan period. If price controls are kept too long, odds increase for a precipitous and destabilizing jump in prices.

In poor countries, where food makes up a large share of what people buy, a general increase in food prices has a bigger impact. While price controls may be seen as a tempting quick fix, there is little proof that they have worked to dampen inflation.

"The historical experience is that price control rarely works for very long," said David Orden, a senior research fellow at the International Food Policy Research Institute.

"For developing countries relying on food imports, it becomes very expensive to the government." Countries with limited fiscal resources resort to printing money, which in turn creates inflation.

In 1971, US President Nixon imposed a 90-day freeze on wages and prices to tame inflation. The 90-day freeze turned into nearly 1,000 days and when the wage and price controls were mostly dismantled by April 1974, US inflation had exceeded 10%. "Governments need to take focused action, with direct subsidies for the poor rather than the whole country," said World Bank economist Don Mitchell. Mitchell argues that food assistance for poor people (so transferring income) will work more efficiently and sustainably than more general steps at the national level.

"In general we don't like price controls," IMF chief economist Simon Johnson said. The key to dealing with higher prices is to tackle the problem with targeted income transfers programs, steering away from country-wide subsidies or unpredictable trade policies.

Re-elected 20 years after his first term in office, Peru's Garcia has drawn on past experience and rejected price controls. He is focusing this time on tighter monetary policy to control inflation. "Prices of basic products are rising – gas, oil, corn, chicken and bread," Garcia told a local radio station. "This is what the people feel, and I understand that, but there is no miracle I can perform to force the world to lower prices."

Adapted from an article
by Lesley Wroughton, REUTERS Reprinted by the Standard, April, 2008