The Big Mac Index is back …. with a few burgernomic improvements

‘THE Big Mac index was invented by The Economist in 1986 as a lighthearted guide to whether currencies are at their “correct” level. It is based on the theory of purchasing-power parity (PPP), the notion that in the long run exchange rates should move towards the rate that would equalise the prices of an identical basket of goods and services (in this case, a burger) in any two countries. For example, the average price of a Big Mac in America in July 2013 was $4.56; in China it was only $2.61 at market exchange rates. So the “raw” Big Mac index says that the yuan was undervalued by 43% at that time.

Burgernomics was never intended as a precise gauge of currency misalignment, merely a tool to make exchange-rate theory more digestible. Yet the Big Mac index has become a global standard, included in several economic textbooks and the subject of at least 20 academic studies. For those who take their fast food more seriously, we have also calculated a gourmet version of the index.

This adjusted index addresses the criticism that you would expect average burger prices to be cheaper in poor countries than in rich ones because labour costs are lower. PPP signals where exchange rates should be heading in the long run, as a country like China gets richer, but it says little about today’s equilibrium rate. The relationship between prices and GDP per person may be a better guide to the current fair value of a currency. The adjusted index uses the “line of best fit” between Big Mac prices and GDP per person for 48 countries (plus the euro area). The difference between the price predicted by the red line for each country, given its income per person, and its actual price gives a supersized measure of currency under- and over-valuation.’

….. always worth looking at: http://www.economist.com/content/big-mac-index

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Like the ‘controlled experiment’ approach to innovation across every aspect of business.

John Leach's Blog

Fast growing companies are likely to be more innovative than those that exhibit a more pedestrian approach to life. Gazelles display an edge; this in turn makes them memorable within the market place therefore delivering enhanced customer connectivity. Innovation is more than research and development in its purest form; it’s about looking at everything you do through a different pair of glasses. Innovation spans a wide spectrum – office décor, staff development, strategic partnerships, the way you communicate and work with customers, financing your business, packaging of your products and services, IP and brands – this list goes on.

So many entrepreneurs ask me – how can we become more innovative? There is no switch or magic wand to turn it on. It’s about leadership and culture. Innovation comes from people and if you are the leader/founder it starts with you. Are you set in your ways? Do you avoid…

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Innovation Vouchers are back

Have you got a great idea? A small amount of money can give companies and individuals significant encouragement and the boost to get a great idea up and running.

The UK government ran a very successful Innovation Voucher scheme until it was withdrawn in one of the spending reviews and it is great to learn that it has returned in a slightly different form. Details can be obtained from the TSB website and, in short, the scheme details are:

  • Available if you are a start-up, micro, small and medium-sized business (as defined by the EC) located anywhere in the UK
  • Your idea should be applicable to one of the priority sectors: Agrifood, Built Environment and Space
  • Up to £5,000 for your business to obtain the help of an external expert to develop ideas and improve performance (up to £8k for Space)

Applications for Innovation Vouchers are entered into a draw, every three months and the
allocation dates are:

24th October 2012
23rd January 2013
10th April 2013
24th July 2013
23rd October 2013

Some of the important words and phrases used by the TSB are:
….. innovative approach to the specific challenge you identify …. can support all types of innovation – for example ideas for new or improved products, processes and services, using design to improve your ideas or managing your intellectual property …..key is that this should represent a real challenge for your business, not just a small improvement or change to what you currently do …… there to help you obtain expert advice from a type of knowledge provider you haven’t worked with before, not to help you buy equipment or training for your business.

Are there other voucher schemes?
The Technology Strategy Board has brought together a list of other Innovation Voucher schemes currently available in the UK. Before making an application the advice is to check should which scheme best meets your needs.

GrowthAccelerator – a new BIS initiative to support high growth SMEs [England]

After much anticipation, Vince Cable has announced the £200m GrowthAccelerator programme.  Previously branded as, ‘Business Coaching for Growth’,  by the Department for Business Innovation & Skills (BIS), the GrowthAccelerator is designed to provide coaching for small to medium sized companies with the potential for high growth (roughly doubling turnover or employees over three years).

The BIS announcement states that:

  • The aim is to help up to 26,000 of England’s brightest businesses achieve their ambition and potential over 3 years (6,000 companies in the first year)
  • The new partnership between the Government and the private sector will see proven business experts working with companies to identify their barriers to growth and how to overcome them. This will include tackling ‘problems’ such as: Securing finance; commercialising innovation; developing leadership and management capability.

The programme is being delivered by a consortium including Grant Thornton, Pera, Winning Pitch, Oxford Innovation and local delivery partners.

GrowthAccelerator is subsidised, and qualifying companies must pay according to their size:

  • Micro and start-up businesses (up to 9 employees) – £600 for 4 days coaching
  • Small businesses (10 to 49 employees) – £1,500 for 7 days coaching
  • Medium-sized companies (50 to 249 employees) – £3,000 for 10 days coaching
To qualify, companies must be registered in England; have less than 250 employees; and a turnover of less than £40m.
Definitely worth a punt.
For companies which are not assessed in this programme as being GrowthAccelerators, do not despair! Many recent successes in the business world have been written off by conventional business gurus only to thrive in an unconventional world …….. if this programme is not for you, there are many other options.
To follow the GrowthAccelerator programme:
Website – http://www.growthaccelerator.com/#&panel1-1 (gives details of how to apply to join the programme)
There is also an independent blog – http://growthaccelerator.wordpress.com/
and this blog, of course …… https://yorkiementor.wordpress.com/ 

Is it time to think about bringing work back to the UK? BCG report sparks debate in ‘reshoring’ or ‘backsourcing’

Since the Boston Consulting Group [BCG] published a report in August 2011, ‘Made in America, Again: Why Manufacturing Will Return to the USA,’ there has been an increasing volume of debate on whether or not it was starting to make business sense to bring certain, previously ‘off-shored’ businesses or activities back to the UK.

Have things really changed? The BCG study makes a case for the USA, but the logic and conclusions should not be discounted purely on the basis that we are not the USA and developments in the UK and Europe are so different.

The, ‘At a glance’, conclusions are, and I quote:

China’s overwhelming manufacturing cost advantage over the USA is shrinking fast. Within five years, a BCG analysis concludes, rising Chinese wages, higher USA productivity, weaker dollar, and other factors will virtually close the cost gap between the USA and China for many good consumed in North America.

LOOK AT TOTAL COSTS

Companies should undertake a rigorous, product-by-product analysis of their global supply networks that fully accounts for the total costs, rather than just factory wages. For many products sold in North America, the USA will become a more attractive manufacturing option.

REASSESS YOUR CHINA STRATEGY

For many products that have a high labour content and are destined for Asian markets, manufacturing in China will remain the best choice because of technological leadership or economies of scale. But China should no longer be treated as the default option.

Certainly something for the UK to think about, particularly as Europe continues to devalue on the world stage.

The decision to ‘reshore’ and bring operations back to the UK depends on many factors and needs careful consideration but do not rule it out.

Here are some additional thoughts and insight:

Reshoring Initiative (USA) –> click here
B
uzzworthy Benefits of ‘Reshoring’ Companies [Forbes] –> click here
R
eshoring: Five reasons why China will remain the world’s factory [The Financial Times] –> click here
R
eshoringMFG –> click here
Re-shoring [New York Times, Opinion Pages] –> click here
China Cups to Clitheroe – UK Manufacturing Grows [Levantar blog] –> click here
A New Chinese Export – Jobs [TIME Business] –> click here
Re-shoring firms head for home [China Daily] –> click here
Jobs lost to Asia reappear in UK [This is Money] –> click here
UK Manufacturing is Coming Home [Telegraph] –> click here

Open Data – Making publicly held data available to all …… slow progress, but progress

Governments, and companies hold an enormous amount of data which has considerable commercial value were it accessible to entrepreneurial, commercially-driven companies – an opportunity for growth!

The UK Cabinet Office has an Open Data and Transparency team which is working to release government-held data sets.  There are already 7,500 data sets in the public domain [Dec 2011] which are accessible via http://data.gov.uk/ but this is the tip of the iceberg and more was promised [Autumn Statement].

The intention of the Open Data and Transparency team is to:

  • Boost investment in UK medical research and digital technology, including SMEs;
  • Improve medical knowledge and practice – data transparency in medicine and pharmaceutics.  Companies and the NHS could benefit in R&D and treatment and patients could benefit if the knowledge was more transparent.
  • Improve business logistics an commuting – real-time data on buses, trains, cars/trucks etc across the UK; and developments in smarter-cities where data is analysed and shared across city departments and functions.
  • Allow entrepreneurs to develop applications for business – examples include using weather, ordnance-survey and land-registry data; the Office of National Statistics (ONS); and
  • Allow patients access to their personal records
The UK government will establish an Open Data Institute in Shoreditch, to innovate and exploit open data opportunities.  Time will tell whether the cost of operating this institute brings value – in my experience, SMEs and larger organisations just need to have open access to the data and the time and space to develop their ideas.  Currently, SMEs are looking for help with access to finance and credit without the constraints imposed by the banks, which are in turn constrained by the Bank of England and government policies.
 
So, where are the examples of the commercial use of open data?
These are just a few examples of the mining of data held by the UK government and companies.  The need is for speed and the opening up of data …… entrepreneurs do not need the interference and control of government departments or quangos …….. open up!
 
Athough the emphasis of this bog has been on government data, and the opportunities for companies to use it creatively, the dream of the open data movement is to open up information far more widely – not personal or confidential data but data or information which would improve our lives were it to be accessible.
 
 Some additional info:
Francis Maude praises progress but private sector sees work to do –> click here
How open data is making cities smarter –> click here
Talk at Lift 2012: Open Data – How we got here, and where we’re going, Rufus Pollock –> click here
The Open Knowledge Foundation –> click here
 
#opendata
#openuk

 

Contracts Finder – Public sector procurement

This is what the government says:

Contracts Finder is a free new service for businesses, central government buyers and the public. It is now the main source of government procurement opportunities with a value greater than £10,000. People can also use Contracts Finder to access and search for closed tender and contract documentation published by central government departments and agencies. Contracts Finder is accessible from the Business Link website, enabling users to easily click through to guidance on public sector procurement, as well as wider business support information and resources.’