A case for more females up the corporate ladder! (part 3)

By Patrick Mayoh

At last! This is the ultimate part of my series on gender diversity in top management positions. There is a strong case to articulate around the need for major corporations to make it much easier for female workers to climb the corporate ladder in major corporations.

The need to increase the workforce in Europe order to maintain or increase current productivity levels, the increasing roles women play in affecting purchasing decisions across households in Europe and the world and improved corporate images are just some of the main reasons that were highlighted in the previous posts about the need for more women to lead.

This last post is going to reveal that companies that are more diverse gender wise have achieve the following:

· Greater operational performance

· Greater financial performance i.e. Greater ROE, Greater EBIT and Greater Stock price growth

Greater Operational performance

MC Kinsey traditionally measures performance in corporations against the following nine criteria:

1. · Direction: vision, mission statement, sense of purpose in general
2. · Accountability: evaluation and proper reporting of results as well as clear guidelines to assess individual responsibilities
3. · External orientation: interactions with customers, suppliers and other external stakeholders
4. · Capabilities: the process of creating and sustaining competitive advantage
5. · Environment and values: organizational cohesion and understanding of shared values by employees
6. · Motivation: Inspired and driven employees
7. · Innovation: thinking ahead of the competition and the industry in general
8. · Coordination and control: evaluating performance
9. · Leadership: how leaders shape and encourage employees to achieve

MC Kinsey posits that organizations that achieve high scores on the following criteria equally achieve greater profitability and market capitalization. But more interestingly was the survey carried out by the organization to assess how much gender diversity affects performance within a specific organization. Out of the 101 companies from America, Asia and Europe and out of the 58,240 respondents it was found that organizations that achieved the highest on each organizational criterion outlined above had three or more females on their corporate boards than those who had fewer females on their corporate teams.

Greater financial performance

In conjunction with Amazone Euro Fund MC Kinsey conducted a study on 89 listed European companies to investigate the effect gender diversity had on the financial performance of companies. The companies were selected on the following criteria:

• · A market capitalization of €150 million
• · The share of women on the executive committee (CEO or CFO)
• · The presence of more than two women on the corporate board

Results indicate that companies that have higher proportions of women on their committee outperform their competitors and have financial performances above the industry’s averages. The Average ROE for the companies selected in the survey was 10, 3% while company with higher proportions of females on their corporate boards achieved an average ROE of 11.4%; this is equally the case with EBIT of 5.8% versus 11.1% and stock price growth of 47% versus 64%.

Conclusively although higher performances in the companies identified in the study cannot be directly attributed to having more females on the executive team, the correlation appears to be quite striking in this case and should therefore be taken into consideration by CEOs and change management professionals within organizations.

Best practices for Gender Diversity

MC Kinsey to conclude the study outlined four best practices that companies could implement to encourage and create gender diversity in their organizations. The case for more corporate female leaders in this series has been made quite clear, and the data as well as the information made available by MC Kinsey are compelling enough. Therefore the following four points are necessary to generate gender diversity:

• · Gender diversity KPIs
• · Measures to facilitate the work-life balance
• · Evaluation of the HR management process
• · Support to leadership

Gender diversity KPIs

This is assessing or investigating the proportion of women within an organization against the following performance indicators:

• · Pay levels
• · Recruitment
• · Turnover
• · Training
• · Satisfaction
• · Promotion

How many women as opposed to men have been promoted in your organization say on a yearly basis? And how does it affect gender diversity in your organization?

Measures to facilitate the work life balance

Measures to facilitate the work life balance should revolve around the following:

• · Work flexibility: how the organization adapt its culture and work environment to be more supportive of females
• · Career Flexibility: the support given to female workers before, during and after their breaks say like Maternity leaves

Those two central elements could be progressively modified to encourage and help women to climb the rungs of the corporate ladder.

Evolution of the HR management process

The HR management process to encourage gender diversity should be articulated around the following:

• · Making sure recruitment sessions both have female candidates and female interviewers
• · Ensuring the neutrality of the appraisal process within HR department
• · Supporting and individualizing career management
• · Making sure women are equally shortlisted for promotion
• · Caring and helping high potential achievers (both males and females)

Support to leadership

This will take place through the following:

• · Mentoring
• · Coaching and training
• · Networking
• · Role modelling

I started this series with the conviction that females were necessary and could be the future of business. I still hold the same belief and I hope more corporations will increasingly see the need to appoint female CFOs or CEOs. Of course this is not to say we don’t need men anymore. I advocate for balance, an equilibrium that could change many organizations across the world.

References

Georges Desvaux, Sandrine Devillard-Hoelinger and Pascal Baumgarter (2007) Women matter: gender diversity, a corporate driver

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What 21st century company should know about change management!

"In the introduction to my last post I mentioned an article I had read from the latest edition of Reader's Digest by management guru Belden Menkus a former employee at management consultancy powerhouse Mc Kinsey about Change Management. Hope you enjoy it and leave a few comments about how you think change should be implemented within organizations today"

Remember when a change was as good as a rest? When life stayed pretty much the same, year in, year out? Back then, if you wanted to perk things up a bit, you’d just shift a few elements around—maybe have a break or take up a hobby. But these days it feels as if life is in a constant state of change, with very little staying as it was. The last thing you probably need is yet more change.

What’s more, because so many things are changing at the same time, they often combine in unexpected ways. Who’d have thought, for example, that steps taken by governments to promote home ownerships, and businesses offering ways to make that affordable, would lead to financial meltdown, the credit crunch and the nationalisation of major banks?

Or that an ash from an Icelandic volcano most of us had never heard of would cause the Europe-wide disruption to everything from food exports to taxi services?

Or that Apple, once just a computer manufacturer would become a major player in the music business, mobile phones, and now e-readers—all in just a few years.

These are examples of what I call the Age of Discontinuity; when what happens next feels almost disconnected from what has gone before.

As a result, the future seems increasingly unpredictable. This can create problems for businesses—lost opportunities, misguided investments—which is why so many of them, big and small, are wrestling with the issues. But how did we get to this point?

The Age of stability: 1920s-early 1960s

For businesses, this was a slower, simpler time. Business was mainly local, because life was local. Information processing tools—from typewriters to adding machines—were mechanical. Record keeping and communications were largely paper-based: letters, newspapers, memos, forms, files. It was a time when someone could have fallen asleep at their desk for two decades and woken up to find that the way business was done hadn’t changed much.

The Age of change: mid-60s – early 1980s

Somewhere around the mid 1960s, things shifted. Computers and photocopiers became widespread, making it faster, easier and cheaper to create, manipulated and communicate information. Business leaders had to deal with social change and shifting values. Japan and other countries, started to make their presence felt in the global economy, not just as sources of raw materials and cheap labours but as competitors and innovators, too. At the same time—both driving and driven by these changes—came academic theories about strategy, organization, and change itself: theories that in many cases are still influencing how businesses operate.

The Age of Acceleration: Mid-80s – early 2000s

By the mid-1980s, change—once difficult and time-consuming—had become easier: something we knew how to do and did all the time. Computer no longer remote, were now on your desk and in your home. Mobile phones broke the link between work and workplace. Mass containerisation of shipping and road transport made fast global supply chains possible. New business models—such as First Direct’s online banking—started to bypass traditional methods of sales and distribution. Not surprisingly more new theories arose to address the new challenges—and again many are still in use today.

The Age of Discontinuity: mid-00s – now

More recently, things shifted again—with the internet at the centre of the change. For many people, a laptop has become where they work, much more than any other physical place. The Internet is also where more and more of us shop, learn and interact. Thanks to Broadband access, we can now become “experts” in medicine, law, culture, and politics. Innovations such as the IPod have changed how we acquire, use, and pay for music and other entertainment. Meanwhile, globalisation continues, as China and India become major players in the world economy. The recent financial meltdown demonstrates how rapidly things change and what an unpredictable world we live in.

So where do we go from here?

Most current middle managers started work in the age of acceleration and most senior leaders started in the age of change—but the organisations they joined were often built on practices from the age of stability! Many management patterns established in all these periods are still in use today. But the challenges of the age of Discontinuity are very different, and very different approaches are needed.

Update your mind models

Everyone has a “mind model” of how the world works, which we create from what we see around us and what people, tell us. We can’t often explain the model to others and rarely question it ourselves. Yet every day, we make decisions based on it, usually without much conscious thought.

In a time when things didn’t change, this wasn’t a problem. Now our thinking can soon become out of date. Most of us, for instance can recall when photographic evidence was conclusive enough to convict. But now that we know how easy it is to manipulate photos, a “seeing is believing” mind model is out of date.

Or take a straightforward business example. I once worked with some clients who wanted new customers for their core product. They believed they made most of their money from that product, and everything else they sold had been introduced to keep core customers happy, rather than to make money. But when the market took a downturn, we took a hard look at where their profits really came from. It turned out very few were from the core products, and most were from the add-ons. They’ve now shifted their focus.

In earlier times, businesses could survive with a top team that didn’t examine whether their mind models matched reality. Things changed slowly enough to allow these models to be updated in the same way they’d been constructed in the first place: bit by bit.

But that drip-feed approach will no longer work. Businesses need once clear, up-to-date view of the world—which means re-examining their approach and seeing where it needs refreshing.

Create new meaning

“Meaning” might sound a bit fluffy, but it’s vital for making sense of what’s happening. Many businesses have some sort of mission statement, which is meant to create a sense of purpose of the organisation as a whole. But a different level of meaning is needed in today’s uncertain times.

It’s what I call “Us, plus”, and it’s more manifesto than mission statement: “The world is this way, but it could be that way, which is better, so we’re going to help make it that way. Oh, and we think can make some money while we’re doing so. We’re doing something valuable, so we ought to get rewarded”

In fact when old certainties are breaking down, creating new meaning is the key to leadership. With it, employees, customers and suppliers will be engaged and supportive—even when mistakes happen. Without it, a business can end up like BP: attacked by politicians and public because it’s seen as having focussed on profit at the expense of the bigger picture.

Be quick on your feet

Businesses won’t survive if they can’t respond to a fast changing world. Yet most use an inherently slow approach. Management ask a small group to figure out what to do (usually in secret). Sometime later, they hear the recommendations and decide what to do. They then tell the staff.

If you’ve ever been in an organization that’s had consultants in, you know how it works: months of data-gathering and huge reports, before the answer is communicated from on high. But employees often resist change if they haven’t been part of developing the solution. Besides, information often now often changes faster than it can be gathered and analysed.

Some business leaders are using better approaches. They accept that you can’t analyse everything. They involve more people inside their company. They reach out to anyone, anywhere, who can help identify workable solutions and move them forward.

In today’s world, you don’t have the luxury of figuring it all out first, then implementing the answer. In the age of Discontinuity, an agile, open mind is the biggest asset of all.

1. Belden Menkus has advised business leaders around the world for 25 years
2. Republished from the January 2011 edition of the Reader's Digest (page 131-136)

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Why your marketing department should seriously be thinking about mobile advertising!

By Patrick Mayoh

Apologies

I was going to conclude my series on the need to have more corporate female leaders in organizations when I was distracted (I believe for the good reason) by interesting and edifying reports about the Consumer Electronics show in Las Vegas last week end and a very fascinating article I read in the last edition of the Reader’s Digest by management guru Belden Menkus on the “age of discontinuity”.

As a result, I am sorry to say that those of you guys that have been following with keen interest my reasoning on the need for more corporate female leaders will be disappointed as I have chosen to discuss in my post this week, the need for marketing departments or consultancies to seriously consider the possibility of introducing mobile advertising to their portfolio of promotion activities.

The main reason why I have chosen to discuss about this topic is to highlight the ever-fast growing influence of technology especially how it affects the promotion and distribution of product and services. The Consumer Electronics Show reinforced this fact with hundred of futuristic new gadgets that will change the way we do business in the future and mobile advertising our topic for this week is just one of the many ways in which technology continuously revolutionize our business processes and activities.

Now about Mobile Advertising

Reading about the Consumer Electronics Show in my copy of the CITY A.M last Monday I was quite struck by what marketing and advertising guru Martin Sorell C.E.O of WPP declared about traditional advertising strategy processes. In his words he revealed “we used to perform three fundamental tasks: work with our clients to develop strategy, execute the strategy and distribute it. While we still perform these functions we are now far more focused on the application of technology and how we can use to interact with clients and their customers”. Sorell then went on to declare that mobile advertising had become the most important trend in the industry minimizing the traditional roles played by TV advertising and Internet advertising via personal computers. I fully agree with Martin Sorell for the following reasons:

• · The fast growing number of mobile phone users on the planet
• · Cheap internet access on mobile
• · Smarter mobiles

Fast growing number of mobile users

Approximately 4 in 6 people use a phone today on planet earth that is about 4 billion people around the world according to data by the Mc Kinsey Global institute. Sorell estimate that 600 million mobile users have access to internet in china while half a billion can access online contents in India. Those figures are just reflective of the dizzying figures that pertain to mobile phone usage across the market. Actually reaching customers through their mobile phone seems to be even more effective than other traditional means of advertising. Advertisers should take notice!

Cheaper Internet access on mobile

Most major network operators today, usually offer some form of internet access usually through packages that include free minutes, sms and free internet. Virtually all phones are built with the possibility for users to access all major social networks and the cost of going online via a mobile phone is cheaper than other traditional methods. The UK for example contains 2 million free Wi-Fi locations which means many Iphone users for example can directly connect to the Internet without any special subscription. Therefore it is even more likely that a growing proportion of individuals will likely access the internet from their mobile phones than their personal computers or laptop.

Super Mobiles

I was quite amused by the term used in the Economist this week to describe the new generation of phones about to enter the market. One of the sections in the report about the Consumer Electronics Show was actually entitled “from smart phones to super phones”. I believe the last thing you want to do with a phone nowadays is just to make, receive a call or send a text. New phones allow so many more possibilities that laptop or computers are increasingly appearing to be obsolete in. As I earlier said, the challenge of reaching out to people for any advertising message will have to consider the assumption that people spend more time using their mobiles than any other gadgets they possess. I will actually be curious to know the amount of time people spend utilizing their mobile phones as compared to other items. The reason why people actually spend more time with their mobile resides in the fact that those have become smarter and provide the possibility of doing what you would normally do with other gadgets. You can network, play games, work, email process your banking transactions, organize your diary and so much more on your mobile and therefore having other gadgets are not as necessary. The Economist actually noted “Jen-Hsun Huan, the boss of Nvidia which makes chips for smart phones and other devices, claims these will have enough capabilities to make them plausible alternatives to some kind of computers and the first ones could make their debut at next year’s show”; food for thought.

So what

If I was heading a marketing department I would seriously consider the following:

• · Obtaining data about mobile phone users from major mobile network operators
• · Analysing them to identify emerging patterns and
• · Delivering relevant contents to specific mobile phone users

The first move would be to approach major mobile network operators to obtain specific figures about your target groups. Say you are targeting teenager boys for your new video game, the first step would be to contact say Vodafone and possibly obtain figures about mobile phone use (about male teenagers) from their network.

Then you can analyse those data for example to differentiate between those who access Internet through their mobiles from those who do not. Possibly you could look at the website they are most likely to visit when they use their mobiles and possibly contact those companies to discuss the possibility of advertising your products on their webpage say on Facebook for example or YouTube.

You could then finally design your advert to be visually appealing and attractive on mobiles and therefore draw attention from users. You can then monitor the whole process and evaluate for improvement. I hope to do a more detailed article on that.

For now, see you next week, with this time my conclusion on female corporate leadership.

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A case for more females up the corporate ladder (part 2))

By Patrick Mayoh

Following from last week, this will be the second part of my entreaty to have more women up the corporate ladder

Why women matter

There are three reasons why women do matter in our society. Integrating more women not only into corporate quarters but also within the workforce is likely to deliver the following benefits:

1) Averting the scarcity in the workforce in Europe especially

2) Generating a better understanding of households purchasing decisions in the world

3) Improving the corporate image of an organization

The study from MC Kinsey mentioned in the previous post outlines some interesting statistics about the shortfall likely to affect Europe in the future. If the figure were to remain the same in Europe in terms of labour or the workforce, then the continent risks losing 24 million active workers by 2040. However if the number of women in the workforce could be raised to the same level as for men, the expected shortfall will only amount to 3 million. I have already indicated that European Universities produce more female than male graduates. Assuming more women had access to employment, the potentials for a workforce shortfall will be substantially less than they could be in the future. Such a compelling figure in itself is enough to bolster initiatives regarding gender diversity in corporations across the many businesses in Europe. Keeping the big picture in mind that could mean encouraging gender diversity not only in Europe but across the world. It is not guaranteed that the workforce shortage experience in Europe will not occur in other parts of the world like China whose one child policy might be detrimental to its economy in the future.

Secondly and very interestingly women seem to influence purchasing decisions in many households in fact according to the MC Kinsey study women alone account for 70% of purchasing decisions in Europe. It would be therefore precarious for a Multi National Corporation in Europe not to include a female in its board. More females in corporate quarters would mean a better and more accurate understanding of consumer behaviour and elicit better customer relationship management programmes across organizations. The old cliché holds that men are usually the master, dominating and imposing decisions in all areas of household management. But this figure alone suggest that this old pattern of thought is completely depassé and is clear enough to indicate the fact that with more women at the top corporations could rip more benefits. Understanding customers is definitely central to marketing and branding. More interestingly MC Kinsey went further to reveal that women influence purchasing decisions even in industries that are predominantly dominated by male like the car or computer industry. 60% of car purchases in Japan are influenced by female and 47% of computer users in Europe are women.

Lastly although it might seem obvious to some, increasing access to corporate quarters for women is likely to improve if not change the traditional perceptions external stakeholders have about different organizations. According to a study by the European Commission in 2003 on "cost and;effectiveness of diversity"; companies that have implemented gender diversity across their boards have ripped substantial benefits in such areas as motivation with 58% of organizations acknowledging the fact that gender diversity had generated more motivated employees across the organization. Also 57% thought gender diversity had a direct impact on customer satisfaction while 69% noted a real improvement in their corporate image.

Next week I will be looking at the correlation the MC Kinsey study established between gender diversity and financial performance across different organizations. Also I will be suggesting some thoughts on how to design and implement a gender diversity programme within an organization. CIAO

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A case for more females up the corporate ladder (part 1)

By Patrick Mayoh

This will be a three articles about "why we need more women at the top". It is a case for female empowerment within the business world and especially how this can concretely take place within the business world today.

A research paper by MC Kinsey in 2007 indicates a correlation between financial performance and the presence of more women on corporate boards. In other words, those organizations that champion gender diversity, design and implement policies that make it more possible for female workers to occupy top positions within corporations will likely generate greater financial returns than those who do not.

In “coaching women to lead” by Averill Leimon, Francois Moscovici and Helen Goodier a book released just a few weeks ago, the authors argue that a more male-female balance could make companies 11% better off.

Although women account for a larger portion of university graduates in European Universities, they only make up 21% of the workforce of European companies. In addition women only make 11% of the number of board members of corporate boards of all European corporate listed companies.

Those two pieces of information and research are enough in themselves to make a case for new corporate ladder. One in which women will be able to compete with their male counterparts to grab top positions on corporate boards. With 15 female CEOS on the list of Fortune 500 companies, more could still be done in terms of helping women to have easier access to spots on the corporate boards.

The present situation

Firstly according to the study by MC Kinsey—which will be referred to a lot in this article—the present corporate ladder advocates extreme flexibility and availability. This in a nutshell means those that are likely to be promoted are usually ready to assume virtually all assignments and are able to demonstrate multi-tasking skills while being flexible in terms of work hours and job locations. A prospect that is highly disadvantageous to women who bear the largest share of the burden in terms of domestic duties and activities. Women continue to contribute twice the number of hours men contribute to domestic duties in certain countries like Italy. In France 96% of female graduates from Business School admit childcare and rearing is a major obstacle to career advancement while 62% of US female graduates complain that building a family and other personal duties are hurdles to overcome for promotion. Given those conditions alone, it is easier to understand why the corporate ladder as it is applied in most corporations today seems hostile to women’s progress to top positions on corporate boards.

Secondly and not the least the fact that they are just very few examples of females’ success stories up the corporate ladder convey the feeling especially to women that accessing top positions within their respective corporations is a far-fetched dream. With just 11% of female on corporate boards in European companies and just 15 female Ceos at the helm of fortune 500 companies. The image which easily comes across seems to indicate that women are unlikely to make it to the top or that doing so will usually requires more sacrifices or concessions than male counterparts. This might mean choosing to remain single or childless to name just a few.

Part II next week hopefully will look at some of the benefits attached to women empowerment within the corporate world and provide a roadmap for this to effectively happen.

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Online shopping spree

By Patrick Mayoh

I needed a new pair of trainers a couple of weeks ago and my natural instinct was to log on to Amazon to find the best deal for my product. I do the same when I need a book or another electronic gadget. I do not mean to say Amazon is the only website I research when I need to buy items online, there are a host of other online shopping services like E-bay to name just an example. I cannot just wait for the time where I will be able to order a burger from mc Donald's or Burger king online.
Well according to a recent edition of the Guardian newspaper that will soon be possible. Google recently commissioned the Business Consulting Group to issue a report about the scope and the share of the online shopping industry in the UK. Online shopping and other related transactions account for more 7% of the total GDP. A bigger share than transports, communications, restaurants and hotels to mention just a few sectors; the UK alone is worth £100bn in terms of online related money transactions.
While the rate of UK Internet related transactions is set to grow by 10% a year according to the BCG report it is worth scrutinizing three key points that already underscore or will in a very near future this recent sector of online shopping.
Business and marketing professionals and practitioners will need to be wary of the following factors with regard to online shopping:
• Advertising
• New job opportunities
• Marketing strategy vs. online Marketing strategy
Advertising
Online shopping means advertising practitioners will need to change and definitely improve what is available on their website. Not only do customers try to research products or services before purchasing them, but they also look at the best possible reviews about those items they desire to acquire before making a purchasing decision. Online advertising could take advantage of the online shopping boom by:
Providing customers with the best possible information on the products or services they are looking to buy. This will mean brevity as opposed to redundancy. In that sense online shoppers will have access to the most relevant content on the products or services they are looking to obtain. Less but precise and specific information will only save time to buyers and may mean they will come for even more products and services. Especially for the websites that will save them the greatest amount of time. Have you ever been on a website where you have to browse through many irrelevant categories only to find out the items you are looking for is more expensive than you thought or worse unavailable?
Secondly targeting specific audience will be instrumental for success in the new online shopping spree area. Online advertising planning and designing is and should be done with the targeted audience in mine. Their demographics, interests, age groups, preferences and shopping habits should be systematically monitored in order to determine the best possible formats for adverts.
Thirdly because the number of websites selling the same items grow at an exponential rate, it is quite difficult sometimes for customers to make purchasing decisions. Most of the time convenience and affordability determine where customers buy their products and why they do so on through a particular website rather than another. Therefore credibility should be given priority when advertising products and services online. If online shoppers and that include me have the assurance that they will receive the goods they order on time, at an affordable price, without any extra hidden charges and even get more value as a result of a transaction like vouchers; there is no reason why they would change their shopping habits or online shopping websites. I have been faithful to Amazon ever since for these reasons.
JOBS
The online industry according to the Guardian newspaper employs 250,000 people and is set to create even more jobs as it grows in the future. Online professionals and marketing managers are very much in demand on the job markets and this is only set to continue with time.
Also new fields are likely to emerge from this as well. Specialists in specific aspects of online shopping will emerge with time and dictate as well articulate strategies to reach out specific online customers and shoppers. Online professionals of various markets across the globe will help international organization determine how they reach out to specific clients in different regions of the world. China with more than 420 million users and 6 million adding each month according to a Mc Kinsey is set to be the biggest online market of the future.
Also new business courses focussing on online transactions and advertising will probably be created. There are already web marketing and online marketing subjects in some Master degree curriculum. But what I am envisioning here is a situation where some leading business schools start creating courses revolving around online marketing or online customer relationship management. More organizations will need such professionals to reach an ever growing online public. Facebook alone is a country in itself with more than half a billion users from diverse origins, tastes, interests, age groups and preferences.
Marketing strategy vs. Online Marketing Strategy
I see organizations in the future creating two different departments or sub departments within a marketing one. New resources allocated to online marketing department to focus solely on online operations. I believe soon there will be a great amount on discussions on a new type of marketing mix. Taking into account more than the four traditional elements of the marketing mix and looking at other factors like demographics and habits which really affect how and why customers buy products.
Also different strategies will need to be articulated as different priorities will emerge between traditional marketing divisions and new online marketing divisions within organizations. More traditional marketing department might maybe focus on local customers while online marketing units will look at expansion and foreign markets to take just an example. Or online marketing department could help reach out audiences that traditional marketing department will be unable to appeal to. Teenagers who like Nike products might not read magazines as adult customers but will probably go on YouTube to discover the latest models for new trainers.
Conclusively even though I might not get a burger through online shopping tomorrow, I think this will be the case in a very near future and therefore I believe Internet users will soon dictate the way marketing should be conducted across organizations.

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Why Multinationals Companies should be optimistic about Africa's economic growth

By Patrick Mayoh

Most people rightly associate Africa with poverty, political coups, famine, displaced families and economic stagnation to name just a few. I wonder who has not heard of Ethiopia, Dar four or Rwanda. Yet this state of things seems to be about to change. And I would not be surprised just as my title suggests, if Africa becomes the next economic success story of the next decade

Now to the fact; I have been reading a couple of articles and reports on the continents from the Mc Kinsey Global institute, when it comes to data and facts, Mc Kinsey is definitely the best in the game. Therefore when recently I realised they had not only one but quite a fair amount of reports and encouraging figures about the continent I became quite intrigued. One of those articles actually looked into those factors that account for the economic growth of the continent. Others focused on investment opportunities and some interestingly emphasized on those areas of the continent where growth would be more likely to take place. Personally I believe three things are to be learned from this research and for potential investors on the continent.

Firstly Mc Kinsey Global Institute made frequent mentions to the rise of the "African Consumer". A term that simply indicates that more and more Africans have seen their income increased. In fact according to figures released by the MKGI in 2009 at least 80 million households on the continent earned $5000 per annum, the level at which a family can start making savings and spend on items other than food or clothing. According to Norbert Dorr managing director of Mc Kinsey in South Africa this is set to grow and to increase in the future; as a matter of fact in 2014 such households will reach 106 million. African even has more middle class households than India which means in a very near future strong demand for local and more sophisticated products will soar. No wonder why the giant retailer Wal Mart recently made a move to South Africa in what could be described as an unprecedented move for the American retail giants on the continent.

Secondly The collective GDP of the 53 economies of the continent in 2008 amounted to $1.6 trillion roughly equal to Brazil or Russia. The continent's GDP rose by almost 5% between 2000 and 2008 the double of what would happen in the 1990s. True,natural resources may have a great deal to with that namely the sharp increase in oil prices and other mineral but MKGI research also indicate that natural resources only account for 1/3 of the continent's real growth. Actually, structural and internal reforms across the continent's governments have a great part to play. With average inflation rate reducing from 22% in the 1990s t0 8% in the 2000s, Africa's economies were able to reduce their foreign debt by 1/4 as well as reducing their budget deficit by 2/3. The message is clear, given the right internals changes and provided the same policies are applied across all the countries at a consistent rate, Africa could be braced for the same level of foreign direct investments seen in china.

Urbanization will spearhead the economic boom of the continent. In the 1990s just 28% of Africans lived in the city, this is just set to change as approximately 40% of Africans live in cities even more than in India and roughly about the same like in China. The good news is, by 2030 this percentage will increase to 50% and Africa's top 18 cities will cumulate a spending power of $1.3 trillion according to the MKGI. Although urbanization usually brings misery and even more poverty like in mumbai of India, in Africa the trends are set to be reversed with a boost in productivity and greater investments in infrastructure and other related industrial activities, creating jobs and allowing companies to have a greater economies of scale. Africa is expected to have a working force of 1.1 billion by 2030 even more than China and India boosting economic growth and infrastructure investment between 2006 and 2009 averaged $19 billion.

Conclusively there are definitely good reasons to invest on the continent. The stereotypes attached to the Africa's economies might be detrimental to investors as the continent seems to be booming with opportunities. Indeed Africa is changing.

References

Acha Leke, Susan Lund, Charles Roxburgh, and Arend van Wamelen (2010) What is driving Africa's growth

available on the following link: https://www.mckinseyquarterly.com/Economic_Studies/Productivity_Performance/Whats_driving_Africas_growth_2601

McKinsey Global Institute (2010) Sizing Africa's opportunities growth

available on the following link:

https://www.mckinseyquarterly.com/Economic_Studies/Productivity_Performance/Sizing_Africas_business_opportunities_2633

McKinsey Global Institute (2010) Can Africa continue to grow?

Available on the following link:

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