Red Zebra Business Centre - Management Memos
September 2011 Making Measurably More For Your Business Since 1985! Page 1
MaxProfile
The road can get very bumpy - and just when you least expect it!

Max Williams, Principal Consultant

Every now and again you undertake a big project, and with all the planning in the world, a smooth road can get very bumpy. 

At the beginning of 2011, we decided to add a new range of tools for our clients to use.  The 'My Red Zebra' program has always had a range of tools to make managing a business easier and more productive for clients and users of the program.

The range of tools available has gradually grown, not only in range and number, but also in sophistication and power.  With the need now to take businesses online to ensure their success, a new range of tools was needed so clients can succeed in the online world without doing the drudgery themselves.

Later, as we reviewed the project, better informed by several months of progress, we saw that the underlying strategy needed to change.

Our plan had been to make it possible for our clients to develop their online selling capability without the technical stuff, and allowing a focus on the marketing, sales, and customer relations aspects of the process.  Just as in our commercial management, marketing planning and recruiting tools, the emphasis is on enabling the client to achieve a great business outcome, without first having to learn (and practice) all the related underlying disciplines.

For example, some years ago a client needed a cash forecast urgently, and wanted to do it for himself.  While he understood all about cash forecasting, he just didn't really know how to do it.  Fortunately, My Red Zebra tools had already done it for him.

Similarly with the internet.  It's fairly easy to understand what's required, and how it works. But then to actually commit to working in the internet space to do it, and to do it properly, takes a whole lot more.  So, our new tool is a platform to enable clients to get online simply,  and concentrate on working with us on the really important, business fundamentals underlying their new internet trading.

All this was going to plan, until we lost a staff member - quite unexpectedly.  At that point our September 1 launch date still looked good.  But with one down on the team, it was going to be challenging!

Even when the road gets a bit bumpy, good things can happen.  A new candidate appeared with equal, perhaps superior skills, and was able to hit the ground running.  Finally we were back on track, just a little behind. How much behind?  Hard to tell on a new project where we are breaking new ground.

Now the jury is back.  We'll hit the market about two and a half weeks late. In a nine month project, that may not be too bad, but it is disappointing we did not make the original date. 

It is magnificent that now we'll have both our new online sales platform for clients - and  a really good new staff member, determined to be a permanent part of the team.

Retail. It's a new Age

S

ometimes the immediate response to a new perceived threat is not the best response. More careful analysis is required. Without that, the most obvious move now, will probably create problems further down the track. In fact, it's like a tug o' war - a lot of huffing and puffing, without much permanent progress being made. What a waste of energy!


Internet 'Tug o' War' Leads to Potential Winners
 - and Losers! 

In the on-going (some would say, never ending) argie-bargie about internet retailing, some bizarre responses by suppliers and retailers are leading to looming problems for some who should know better.


A recent submission to the Productivity Commission's inquiry into the retail industry claims that well-known bricks-and-mortar retailers are pressuring distributors and resellers to stop selling items online that are also available in their stores. The submission was made by well known online retailer, eBay.

The allegation comes as the Productivity Commission continues to hear evidence about competitive pressures on traditional retailers due to the growing popularity of buying from online sites such as eBay.

eBay has alleged that certain unnamed Australian retailers have engaged in anti-competitive behaviour to limit the availability of products at online sites. Its submission said eBay was pleased that the Productivity Commission had referred concerns about restrictive distribution practices to the Australian Competition and Consumer Commission.

And that means that this kind of uncompetitive behaviour is probably illegal - and that makes it highly questionable. Even dumb! Just a pointless, ultimately failed, tug o' war.

It is surprising that, almost forty years after anti-competitive behaviour was made illegal in 1974,the 'first-sight' response of business people would be to risk breaking the law, rather than to find new ways to compete. Remember the 'Visy' price-fixing case!

All up, that makes it a strategy for losing!

column1 picIn stark contrast to that kind of probably illegal strategy, Woolworths has lured back Myer head of merchandise, Penny Winn, to rejoin the supermarket group as its new head of multi-channel activities.

Ms Winn will take charge of the supermarket giant's online offering, adding merchandising clout to generate more sales and earnings from its online presence.

Now, there's a strategy for wining - no pun intended!
Unemployment is Patchy - Troubling Indicator of Business Variability

The headline Unemployment Rate for August increased slightly and was greeted with some surprise. These patchy results need clear interpretation.


NSW Rate ChartConsider this chart of the rates of unemployment in New South Wales.

In the south-east of the state, the rate reaches its lowest, recording just 2.6%. That is over-full employment by any definition, and suggests booming sales and high inflation.

By contrast, the most industrialised areas of Fairfield-Liverpool and Canterbury-Bankstown recorded 7.2% and 7.3% respectively. This is worryingly high unemployment by any measure. There is no doubt that unemployment at such high levels kills every business with a market in the area

Across New South Wales, unemployment is varying by a ratio of almost 3:1, dramatically changing the commercial environment from one region to the other.

In other states, the story is about the same. The 'mining boom' states of Western Australia and Queensland, reports range from a WA low of 2.7%, with 2.8% in Queensland - to a WA high of 5.4% in the south-west corner, and Queensland high of 9.4% in the Wide Bay-Burnett region.

There are neither micro-economic nor macro-economic reforms in the works to change this picture any time soon. For business managers, there has never been a more important time to look carefully at market segments.

In the full employment regions, cutting promotional discounts, and marketing up-scale products along with premium accessories or options will build cash flow. In other regions, value offers will help build volume. You may not have differential prices, but offering different options and accessory packs, supported by varying discount programs will make a difference.

While this situation exists, there are many, many, opportunities for price maximisation in some segments, and volume maximisation in others. Your success depends absolutely on the skills you apply to your market segmentation.

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