November 2007


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Brett Nelson from Forbes tries to ask and answer the 20 most important questions in business for us …

 1. What is your value proposition?

This is the single most important question of the bunch. If you can’t explain–in three, jargon-free sentences or less–why customers need your product, you do not have a value proposition. Without a need, there is no incentive for customers to pay. And without sales, you have no business. Period.

ALT2. Does your product address a viable market?

Entrepreneurs are passionate to a fault. Many fall in love with an idea before confirming that there’s any viable market for it, let alone one large enough to attract investment capital. If a market doesn’t yet exist–the toxic term of art here is “white space”–they assume they can create one. (Hint: There may be a reason for all that white space.)

3. What differentiates your product from competitors’?

Few companies can rely on–let alone afford–clever marketing schemes to separate themselves from the competition. Yes, Starbucks made people believe they wanted $4 caffeinated concoctions, and Louis Vuitton lulled people into shelling out $1,500 for denim handbags, but those are the exceptions that prove the rule. If you want to win in business, you need to offer something tangibly valuable that the competition doesn’t. Examples: rock-bottom prices (Wal-Mart); ingenious product design (Apple); extreme convenience (Fed Ex).

ALT4. How big is the threat of new entrants?

If you’re smart enough to spy a profitable business opportunity, you can bet competition isn’t far behind. Some barriers to entry–patented technology, a storied brand–are more fortified than others, but eventually someone will find a way to do what you do faster, cheaper and maybe even better. If not a direct competitor, then a substitute technology might take a chunk out of your hide. (Think what digital film did to Kodak.) The trick: building a loyal following before that happens.

ALT5. How much start-up capital do you need?

Any early stage investor or small business consultant will tell you that most businesses fail because they were undercapitalized. The lesson: Figure out how much you think you need, and then add plenty of extra cushion.

ALT6. How much cash do you need to survive the early years?

In case you didn’t pay attention to the previous question, take this one to heart. It doesn’t matter how much money your business might make down the road if you can’t get out of your garage. Plenty of business plans boast hockey-stick-style financial projections but run out of cash before the good times kick in. (Remember all those busted dot-com companies from the tech boom?) Three words: Mind the cash.

ALT7. How will you finance the business?

You have a few choices: Aunt Sally, credit cards (dangerous), angel investors, and if you’re really onto something, venture capital. Forget bank loans (at least until the cash is flowing in a positive direction). As for selling shares to the public, what with all the regulatory hurdles, you might find the price of that exposure a tad steep. If you can bootstrap your business, do it; raising money is difficult and distracting. If you plan on stumping for capital, consider how much equity and control you’re willing to give up. (The more you need the money, the stiffer the terms will get, so ask for it sooner than later.) Finally, always remember to match the timing of cash inflows from your assets and the outflows to cover liabilities. A mismatch can sting.

ALT8. What are your strengths?

Google writes powerful search algorithms; Steinway works wonders with wood; Cisco sniffs out promising new technologies and buys them. Figure out what you’re good at and stick to it. An obvious notion, perhaps, but plenty of zealous entrepreneurs lose their way–especially when the world seems so full of possibilities.

ALT9. What are your weaknesses?

You may know how to design a widget, but not know a thing about running an efficient manufacturing plant. Apple designs and markets its nifty iPods and iPhones, but lets someone else slap them together. Countless Webpreneurs farm out the design of their sites and back-office payment systems. Wasting resources just to be mediocre is suicide. Stick to core competencies and find trusted partners to handle the rest.

ALT10. How much power do your suppliers have?

Convincing customers to buy your products is tough enough without suppliers giving you a hard time. Basic rule of thumb: The fewer the number of suppliers, the more sway they have. Take the steel industry, which relies on a handful of companies for its iron feedstock. If two of those big guys should get together–as BHP Billton and Rio Tinto have been discussing–they would have significant pricing power, potentially crimping steel producers’ margins. On the flipside, beware getting hooked on low-cost providers who don’t keep an eye on quality. (“Lead-laced” Barbie, anyone?)

11. How much power do your buyers have?

Take a lesson from Delphi, the giant auto parts supplier stuck in Chapter 11 despite its $26 billion in annual sales: It’s no fun to be in a business where a few big customers can demand price cuts with each passing year. Meanwhile, movie theaters–even while besieged by video-on-demand and other services–still manage to push higher prices on the disaggregated masses. The cost of a seat at a Regal Entertainment Group theater in lower Manhattan is now $12–up 20% in less than three years.

ALT12. How should you sell your product?

There is no one-size-fits-all solution to wooing customers. For two decades, Dell Computer bypassed retailers and sold directly to customers, with limited tech support. General Motors and Coca Cola rely on distributors to move their cars and cans. Clothing companies like Ralph Lauren work both internal and external channels. And thanks to daily, intensive sales training, privately held Lazy Days moves some $800 million worth of RVs out of one sprawling location near Tampa, Fla. Whatever sales method you choose, make sure it aligns with your overall business strategy.

ALT13. How should you market your product?

Young companies have to get the word out, but they also can go broke doing it. A decade ago, America Online spent so much money flooding the planet with free trial software that it tried to mask the bleeding by capitalizing those expenses on its balance sheet. (Regulators later nixed that accounting treatment, wiping out millions in accounting profits.) What percentage of sales should go toward marketing? As with sales, there is no one rule of thumb. For more, check out Six Marketing Strategies Worth Paying For.

ALT14. Does the business scale?

Bill Gates plowed piles of money into developing the first copy of Microsoft Office. The beauty: Each additional copy of that software program costs next to nothing to produce. That’s called scale–and it’s the difference between modest wealth and obscene riches. What models don’t scale? Think service businesses, where the need for people grows along with revenues.

ALT15. What are your financial projections?

You can’t lead if you don’t have a destination. Two critical milestones: 1) the point where more cash is coming into the business than going out in a given period, and 2) the point at which you finally recuperate your cumulative initial investment (including an adjustment for the time value of money). Financial projections should be reasonable. Paint too rosy a picture and seasoned investors will run; more to the point, you might run out of cash.

ALT16. What price will consumers pay?

Get this answer wrong and you could leave bags of money on the table–or worse, send customers running into the arms of the competition. When Apple sliced the price of its iPhone by a third after only two months on the market, even loyal customers screamed, forcing chief Steve Jobs to apologize and offer a partial rebate. Consultants get paid handsomely to help companies arrive at the right price. For more affordable advice, check out “The Six-Step Guide To Pricing Your Product.” Wannabe consultants should read “How To Price Your Consulting Services.”

ALT17. How do you protect your intellectual property?

Imagine slaving for years on a new cellphone battery that lasts more than two days, only to watch it reverse-engineered and patented by someone else. Before you ask anyone to crank out a few prototypes, file for a provisional patent. It protects your idea for a year while you work out the kinks. For more on intellectual-property protection, check out Protect Your Prototype and The Patented Path To Profits.

ALT18. How do you keep the help happy?

What’s Google worth without its super-geeks? Goldman Sachs without its number crunchers (and their golden Rolodexes)? The local bar without old Jim manning the tap? Not much, which is why attracting and retaining talent is critical to so many businesses. For starters, that means crafting the right benefits package. Starbucks sets a fairly high standard: Health benefits are available to any Starbucks employee who works at least 20 hours a week and has been with the company for more than 90 days.

ALT19. How committed are you to making this happen?

About a year ago, Chuck Prince, recently resigned chief executive of Citigroup, addressed a group at New York University’s Stern School of Business. An audience member asked what life looked like at the helm of such a colossal firm. Prince responded that, save for a few exceptions, every evening for the next five months was already accounted for. Fair warning: If you want to run the show, get ready to give everything–and then some.

ALT20. What is your end game?

Running a business with an eye toward flipping it to a strategic buyer is a lot different than digging in for the long haul. (Will YouTube ever turn a profit? Who knows, but that’s Google’s problem now; the same goes for MySpace and News Corp.) Not sure whether you want to build the next great empire or just make a decent buck? Ask yourself the following eight questions.

NB:Some aspects of this article have been edited to fit our format …

 

 

 

 

 

 

 

 

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27 November 2007

Interview With Zenzo Nkomo audio clip

This week’s decision by Zambia Airlines to discontinue service to Harare dealt another blow to Zimbabwe’s battered international image, coming just a month after British Airways flights on the run saying they were no longer economically viable.

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Zambia Airlines also cited business losses which have been aggravated by the sharp decline of the Zimbabwe dollar reflecting hyperinflation of 15,000% annually.

South African-based political analyst Zenzo Nkomo told reporter Chris Gande of VOA’s Studio 7 for Zimbabwe that the Zambian carrier’s discontinuation of the Harare-Lusaka route reflects the regional impact of Zimbabwe’s economic crisis.

Source: Voice Of America

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LUSAKA (Reuters) – The head of Zambia’s anti-drug unit has been arrested and charged with theft of public funds in a crackdown against corruption in Zambia, an official statement said on Wednesday.

Ryan Chitoba, 53, a former senior police officer who was recalled from retirement to head the Drug Enforcement Commission (DEC) was arrested and charged with theft of about 345 million Zambian kwacha.

Chitoba is the latest high profile figure to face corruption charges in the southern African country’s widest anti-graft crackdown, launched by President Levy Mwanawasa in 2002.

“The ACC has arrested … Ryan Chitoba on one count of theft of public funds totalling over 344.8 million,” Anti-Corruption Commission (ACC) spokesman Timothy Moono said in a statement.

Moono said Chitoba, who was already under suspension, had been charged together with two other top officials from the anti-drug agency.

Former Zambia President Frederick Chiluba is currently facing charges of theft of $488,000 in Treasury funds during the time he ruled the country between 1991 and 2001.

A number of key figures in Chiluba’s government have either been jailed for corruption or are facing serious graft charges.

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LUSAKA, November (28) – A unit of South Africa’s Standard Bank has tendered to finance a $1.07 billion crude oil feedstock purchase deal for mineral-rich Zambia, a senior government official said on Wednesday.

Energy and Water Development acting permanent secretary, Oscar Kalumiana, said Stanbic Bank Zambia Plc and Finance Bank Ltd., another local bank were competing for a two-year financing contract for Zambia’s 1.4 million tonnes crude oil requirements.

Zambia, which has faced intermittent fuel shortages due to problems in procuring crude oil for its vast copper and cobalt mines and other sectors of the economy will announce the successful bank by mid-December, Kalumiana said.

“The two banks submitted technical financial proposals through the Zambia National Tender Board (ZNTB). We are evaluating the proposals and will select one of them before mid-December,” Kalumiana told journalists from state media.

Officials say the government is currently scrutinizing tender documents for five foreign oil trading firms which want to start procuring oil for the country.

Kalumiana said the government had requested local banks to participate in the financing to pay for the feedstock supplied in order to access funds quicker, especially for upfront costs.

“It (oil deal financing) will be a revolving facility with each shipment to last one and a half months at $67 million per oil shipment at current prices and we need eight shipments in a year. The banks have other charges and their bids will be graded depending on who has the best structure,” Kalumiana added.

He said Zambia and French oil major Total, which are equal shareholders of the country’s sole Indeni Oil Refinery, had agreed to get a local bank to finance the purchase of oil.

“We agreed with Total that instead of the two shareholders providing the money, we should let the money come from the private sector because the business is profitable. The local banks will be getting their money (after) the fuel is sold,” Kalumiana said.

In October, Zambia — which uses huge amounts of diesel to run its vast copper mines, the country’s economic lifeblood, and other industries — faced severe fuel shortages after Total stopped crude oil imports for the country over a pricing dispute.

Commoditex International of the United Kingdom, Russia’s Lukoil International Trading and Supply Company, Trafigura of Italy, Addax and Oryx Group of France and Independent Petroleum Group of Kuwait are the firms that tendered to procure oil for Zambia.

According to ZNTB data, the oil traders have submitted bids with prices ranging from $65.69 per tonne for crude oil from Iran to $76.15 per tonne of Oman.

Officials say the government turned to local banks for financing after Citi Bank of the United States in October declined to provide financing for crude oil Zambia wanted to purchase from Iran due to an embargo for U.S firms against dealing with Iran.

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MUMBAI: The Anil Agarwal-controlled Vedanta Resources is close to increasing its stake in Konkola Copper Mines in Zambia to 79.4% by buying out a portion of the Zambian government’s holding.

The London-listed Vedanta, which owns 51% stake in Konkola, wants to increase the stake by buying out Zambia Copper Investments’ (ZCI) 28.4% stake in the largest copper mine there. The state-run ZCCM Investment Holdings holds 20.6% stake in Konkola.

“For the acquisition of 51% stake, Vedanta had paid $48.2 million in 2004. As the valuation of the copper mines doubled in three years, it will be curious to know how much Vedanta would be paying for ZCI’s stake,” said a source close to the development. Senior Vedanta officials said the process of acquiring the stake is on. They declined to reveal further details.

Vedanta has been discussing with ZCI the call option, which was agreed when Vedanta bought a 51% stake from the Zambian government in 2004. The company could not exercise the call option as the two parties failed to agree on the valuation of ZCI’s shares.

Adding fuel to fire, Zambian economists and investment analysts have voiced their opposition to Vedanta’s buy-out of national resource. ZCI has only Konkola stake as its asset at present. Vedanta chairman Anil Agarwal recently announced that the two parties had resolved their differences and that an independent valuation is in progress.

While ZCI chairman Tom Kamwendo was quoted by a Zambian daily, “With the resolution of differences over valuation, the next step for the company is to offer its interest to Vedanta.”

Vedanta shares were hoverng below 2,030 pence on London Stock Exchange on Tuesday, down 1.36% on speculation that ZCI may sell its stake through the Lusaka Stock Exchange. On November 23, the share had shot up 12% on market buzz that a Chinese mining company may buy out the promoters’ stake in Vedanta.

“ZCI’s shares in Konkola are being offered to Vedanta rather than being sold through the Lusaka exchange or sold in any other way because that is the provision of the legal agreement that was reached at the time Vedanta was acquiring its current 51% shareholding in Konkola,” said Mr Kamwendo. On public misgivings about the stake increase, Mr Kamwendo said such concerns were better resolved between the Zambian authorities and Vedanta.

Source: Economic Times

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2007-05-16-zambia-3_200.jpgElection results are very interesting to analyze because they are a true indicator of the actual demographical sentiment and performance during campaigns.

A closer look at the last elections reveals a tonne of information; some of it too scary to explore. 

For instance, the MMD performed exemplary well among the illiterate and the semi-literate segments of the population while the elites voted for the opposition en masse. 

They (MMD) performed well among the low to lower income earning classes but poorly among the middle to upper income classes … 

Their performance (MMD’s) among the village to rural dwellers outclassed theirs among the city to urban counterparts.  

These stats are critical to an overall analysis of party performance and could be very important for future tactical and strategic considerations. 

All things being equal, it would therefore be safe to say that the MMD is a party run by the elites that sell well among the illiterate to semi-illiterate.  

These elites find it easy to convince village dweller and lower class people than they do otherwise among compatriot of diametric segments. 

So, what then is the future of such a party? Would such a party be self-interested in keeping the majority of the population village-wise and uneducated so it could keep winning among the base? 

Would such a party evolve and start to find ways to attract those of the other dichotomies or would it continue to encourage bwembwarism to keep its hold on power?  

If human development is the cry of every free human spirit then it is just a question of time and the MMD will be no more … 

The last election results present the opposition with a challenge to soul search and decide as to whether they are actually different from the incumbents. 

They need to realize that together they got the majority vote but because the vote was split, the MMD got the presidency back and it is time they strongly considered a two party democracy if progress has to be achieved. 

Having sad the above, things may be different should the first lady get her party nomination due to the G Factor. The G stands for gender because women tend to stick together more as they show support using girl power. classy-daddy-3.gif

As CSO figures currently stand, we have more women than men in our population; consented voter-drives might prove very powerful and usher the MMD back into State House come 2011 with different demographics.

We don’t even know if the first lady would be interested in running but if she is, things would be changed forever and the stakes may move in a different direction.  

And that’s this week’s memo from us here at the Zambian Chronicle.  Happy holidays … thanks a trillion.  

Brainwave R Mumba, Sr.

CEO & President – Zambian Chronicle

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LUSAKA, Zambia, Nov. 23 (UPI) —

Zambia’s parliament has rejected a report recommending changes to the national constitution act that would increase the influence of trade unions.

Parliament voted against the report submitted by the Committee on Legal Affairs, Governance, Human Rights and Gender on a 63-61 vote Thursday.

The vote was the latest milestone in a politically charged debate in the African nation. The Times of Zambia said further debate on changing the National Constitution Conference (NCC) had been blocked until the NCC Act had been passed.

The proposed constitutional changes would have increased the representation of trade unions on the committee reviewing proposed changes to the constitution itself.

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