Risk Management
4 Tips to remember when Outsourcing to China and beyond
I have spoken and written about outsourcing to China for a couple of years now. Although China does require special handling, many of the high level recommendations are the same as regardless of where you decide to outsource. So here is a summary style high level overview of some of the important considerations: Ask Why: Ask yourself exactly why you are outsourcing. It is because you want to reduce your costs, access specialized skills or as a risk management exercise? Understanding exactly why you want to outsource should be your first question.
Weather Trends 360 predicts weather 1 year out
My local news station weatherman seems to have a 50/50 success rating predicting the 5 day forecast. Imagine my surprise when I learned about a company called Weather Trends International that claims to provide weather prediction for up to 365 days into the future. At first I thought this was another fly by nights hocus pocus type website, then I checked out their client list. It includes names like Walmart, Loblaws, Target, Coca Cola, Heinz and many more. The prediction
DEALING WITH CHINA (PART 3)
The importance of “Saving Face” Having spent many years in Asia, I quickly learned the importance of maintaining “face” when dealing with Asian businessmen. This becomes important when engaging in negotiations (for example). You must always allow the other participant to have a little wiggle room [even after submitting their best offer]. Even tough the new offer may be only minimally better, it should allow the Chinese participant (whether customer, partner or other) to have the final say and maintain face.
DEALING WITH CHINA (PART 2)
... continuation Intellectual Property The previous paragraph highlighted the difference between laws “on the books” and the extent to which business people are willing to bend them for profit. As a foreign company entering into the Chinese market, you should be thinking about how you will protect your Intellectual Property. A common example of this is that of Will-Burt. Will-Burt is a company that manufactures and sells Night-Scan telescoping masts for police or military use. They entered the Chinese market and sales boomed.
Dealing with China (part 1)
If you have spend any time at a multinational company, the one topic that comes up is how to benefit from the rise of the dragon (aka China). Over the next couple of entries, I will provide some information about China that I hope you will find useful. The socialist impact Although it is easy to overlook China’s socialist political system, it is important to understand that it influences every aspect of their business style. As an example, they have very little creditor protection.
GHSA determines road risk of using a mobile phone while driving
An American association called the Governor’s Highway Safety Association recently released a report that use of a mobile phone correlates with increased risk of accidents in the United States of America (USA). To arrive at their conclusion, the association reviewed 350 scientific papers, published between 2000 and 2010, related to highway safety. Their review clearly showed that distracted driving accounts for 15-25% of all crashes (ranging from small fender benders to accidents with fatalities). Nothing here should be surprising as it based on common sense.
Risk Management when outsourcing (part 2)
This is a multipart discussion that will be posted over the next several days. Understanding how your company seems risk and the different types of risks will allow you to frame your risk management efforts with the proper light. Defining whether your risks are endogenous, exogenous or both is also critically important. Managing Risks The next question that comes up is “how do I handle risk?” For the purposes of our discussion: Do Nothing Hedge the risk by investing in risk mitigation processes, technologies and tools Transfer the risk via insurance or securitization Switch to a provider with a “better” risk profile Exit the business or relationship generating the risk The debate about outsourcing
Risk Management when outsourcing (part1)
This is a multipart discussion that will be posted over the next several days. Over the last 5 years, I have seen a huge surge in the number of companies adopting formal risk management frameworks and methodologies. This is sometimes driven by regulatory requirements and other times by experienced executives that understand the importance of risk management. I wanted to take a quickly look at risk management in the context of outsourcing. What is risk? The definition of risk is intuitive but can be summarized as “an event that may have a material impact on your business and its success or desired outcome”.