The economy has slowed down and many economists predict continued
sluggish growth for a considerable amount of time. There has also been
mention of a double dip
recession and how the European crisis may push the entire global
economy into a dire situation. This has caused quite a bit of volatility
as news has caused rapid spikes and drops in the market.
As an investor looking at a long time horizon, you may wonder when the
right time to invest in the stock market is (if you haven't invested
already) or whether to get out of the market until the economic
environment has more clarity. The problem with this strategy is that it
is very difficult to accurately time the market and many studies have
shown that if an investor misses the beginning of a bull market, their
long-term returns will be sub-par. So the key is to stay in the market
and manage risk by adjusting your exposures. But how?
Well, there are several mutual funds and ETFs
that have much lower volatility than other funds within the same asset
class. The majority of these mutual funds are in the alternative space.
But in the ETF world, there are several ETFs that can be great ways for
investors to participate in the stock market and still be able to sleep
at night.
The Easily RepeatableThe PowerShares S&P 500 Low Volatility Portfolio ETF
(SPLV) is based on the S&P 500 Low Volatility Index. It is probably
the easiest low volatility index to explain and if an investor really
wanted to, they could also duplicate it. Basically, the S&P Low Vol
index measures the standard deviation
of the 500 companies in the Standard & Poor's 500 Index for the
preceding 12 months. It then ranks all 500 companies from lowest
standard deviation (lowest volatility) to highest standard deviation
(highest volatility). It then assigns a pro-rated share to each stock,
based on its standard deviation versus the standard deviation of other
stocks; the highest weighted stock is the one with the lowest standard
deviation.
The result is that the index typically has only 70% of
the volatility of the S&P 500. That means, for every 1% drop in the
S&P 500, the S&P Low Volatility index will tend to decline by
0.7%. However, the same may hold true for bull markets. In fact, in a
very strong bull market, the S&P Low Vol Index will underperform. In
addition to the lower volatility, however, the stocks in the index tend
to have attractive yields, which as of June 29, 2012, was 2.87%.
By
looking at the underlying sectors, we also notice that there tends to
be concentrations in the consumer staples, utilities and healthcare
sectors. This makes sense, since these sectors tend to be more defensive
in nature and, hence, less volatile.
The Sophisticated MethodologyInvestors can also choose to invest in the iShares MSCI Minimum Volatility Index Fund
(USMV), which is based on the MSCI Minimum Volatility Index. This index
is constructed using a much more sophisticated optimization process
designed to minimize the absolute risk of the index, within a certain
set of constraints. These constraints may include replicability,
investability, turnover,
and minimums and maximums for each stock, sector and country. In many
cases, it will not include those stocks with the least volatility, but
rather, it strives to create the combination of stocks that together
will have the least amount of absolute risk. Needless to say, it would
be very hard to explain this to grandma, much less replicate it
yourself.
Sunday, 12 August 2012
Thursday, 12 July 2012
An Introduction To LIBOR
What Is LIBOR?
LIBOR is equivalent to the federal funds rate, or the interest rate one bank charges another for a loan. The advent of LIBOR can be traced to 1984, when the British Bankers Association (BBA) sought to add proper trading terms to actively traded markets, such as foreign currency, forward rate agreements and interest rate swaps. LIBOR rates were first used in financial markets in 1986 after test runs were conducted in the previous two years. Today, LIBOR has reached such stature that the rate is published daily by the BBA at about 11:45am GMT.
LIBOR is equivalent to the federal funds rate, or the interest rate one bank charges another for a loan. The advent of LIBOR can be traced to 1984, when the British Bankers Association (BBA) sought to add proper trading terms to actively traded markets, such as foreign currency, forward rate agreements and interest rate swaps. LIBOR rates were first used in financial markets in 1986 after test runs were conducted in the previous two years. Today, LIBOR has reached such stature that the rate is published daily by the BBA at about 11:45am GMT.
LIBOR's reach is felt thousands of miles away from the Thames; it is
used as the key point of reference for financial instruments, such as futures contracts, the U.S. dollar, interest rate swaps and variable rate mortgages.
LIBOR takes on added significance in times of tight credit as foreign
banks yearn for U.S. dollars. This scenario usually sends LIBOR for
dollars soaring, which is generally a sign of imminent economic peril.
The Reach of LIBOR
LIBOR is set by 16 international member banks and, by some estimates, places rates on a staggering $360 trillion of financial products across the globe. Included in those products are adjustable rate mortgages (ARMs). In periods of stable interest rates, LIBOR ARMs can be attractive options for homebuyers. These mortgages have no negative amortization and, in many cases, offer fair rates for prepayment. The typical ARM is indexed to the six-month LIBOR rate plus 2-3%.
LIBOR's reach doesn't end with the homeowner. The rate is also used to calculate rates for small business loans, student loans and credit cards. More often than not, LIBOR's heavy hand isn't felt directly by homeowners or others in need of a loan. When the U.S. interest rate environment is stable and the economy flourishes, all is usually well with LIBOR. Unfortunately, there is another side to that coin. During times of economic uncertainty, especially in developed countries, LIBOR rates show signs of excessive volatility, making it harder for banks to make and receive loans among each other. That problem is passed down to people seeking loans from the bank. If cash is scarce or at a premium for your local bank, the bank simply charges you, the borrower, a higher interest rate, or worse, doesn't loan you the money at all.
If Times Are Bad, Watch LIBOR
Another prominent trait of LIBOR is that it can dilute the effects of Fed rate cuts. Most investors think it's great when the Fed cuts rates, or at least they welcome the news. If LIBOR rates are high, the Fed cuts look a lot like taking a vacation to Hawaii and getting rain every day. High LIBOR rates restrict people from getting loans, making a lower Fed discount rate a nonevent for the average person. If you have a subprime mortgage, you need to watch LIBOR rates with a close eye as almost $1 trillion in subprime ARMs are indexed to LIBOR.
The Reach of LIBOR
LIBOR is set by 16 international member banks and, by some estimates, places rates on a staggering $360 trillion of financial products across the globe. Included in those products are adjustable rate mortgages (ARMs). In periods of stable interest rates, LIBOR ARMs can be attractive options for homebuyers. These mortgages have no negative amortization and, in many cases, offer fair rates for prepayment. The typical ARM is indexed to the six-month LIBOR rate plus 2-3%.
LIBOR's reach doesn't end with the homeowner. The rate is also used to calculate rates for small business loans, student loans and credit cards. More often than not, LIBOR's heavy hand isn't felt directly by homeowners or others in need of a loan. When the U.S. interest rate environment is stable and the economy flourishes, all is usually well with LIBOR. Unfortunately, there is another side to that coin. During times of economic uncertainty, especially in developed countries, LIBOR rates show signs of excessive volatility, making it harder for banks to make and receive loans among each other. That problem is passed down to people seeking loans from the bank. If cash is scarce or at a premium for your local bank, the bank simply charges you, the borrower, a higher interest rate, or worse, doesn't loan you the money at all.
If Times Are Bad, Watch LIBOR
Another prominent trait of LIBOR is that it can dilute the effects of Fed rate cuts. Most investors think it's great when the Fed cuts rates, or at least they welcome the news. If LIBOR rates are high, the Fed cuts look a lot like taking a vacation to Hawaii and getting rain every day. High LIBOR rates restrict people from getting loans, making a lower Fed discount rate a nonevent for the average person. If you have a subprime mortgage, you need to watch LIBOR rates with a close eye as almost $1 trillion in subprime ARMs are indexed to LIBOR.
While LIBOR action in relation to the foreign exchange markets pertains more to currencies, such as the euro,
the British pound, the Japanese yen, and others, its daily impact on
the value of the dollars spent in the United States is negligible,
though it is worth noting that LIBOR is very relevant to rates on the
euro, or U.S. dollars held by foreign banks. The euro accounts for
roughly 20% of total dollar reserves.
Bottom Line
LIBOR isn't sexy, and it's doubtful anyone is looking forward to the next release of LIBOR data with the same anticipation of seeing the next James Bond movie. That said, anyone with a credit card or a desire to own a home needs to be of aware of LIBOR. LIBOR is the true British monarchy, at least for the global financial markets - and your personal bottom line.
Bottom Line
LIBOR isn't sexy, and it's doubtful anyone is looking forward to the next release of LIBOR data with the same anticipation of seeing the next James Bond movie. That said, anyone with a credit card or a desire to own a home needs to be of aware of LIBOR. LIBOR is the true British monarchy, at least for the global financial markets - and your personal bottom line.
Source: Investopedia
Friday, 6 July 2012
African Consumers 'Underestimated' By Western Firms
Western companies operating in Africa have long underestimated the
continent's consumers, according to a top executive in one of the
world's biggest consumer goods groups.
Frank Braeken, executive vice president of Unilever
in Africa, said that for a long time multinationals have thought of the
vast continent as a "monolithic" market, failing to address its
diversity.
"The African consumer has
been underestimated, underserved and underserviced," said Braeken.
"What I mean is we have looked at it a little bit generically, like 'the
Africans,' a little bit patronizing generically. Now we start to take
the African consumer seriously."
Unilever, the maker of
brands such as Lipton and Knorr, has been active in the continent for
more than a century, with a presence in 15 countries and employing
thousands of workers there.
Yet, despite its long
history and deep presence, Braeken acknowledged that the company had
been slow in engaging with the diverse types of consumers in the
continent.
"I'm almost somewhat
ashamed to admit that we are still very much in learning mode about what
the differences are within Africa."
Braeken said that it was
becoming increasingly clear that there were major differences between
the different countries in the continent.
"What we now increasingly
do is we think much more in terms of sub-clusters, where you have east
Africa, where you have west Africa, where you have southern Africa," he
said.
The human side of market research
"It is more about how
you define the brand mix, how you bring it to the consumer, that we
localize and that we make it relevant for the local consumer."
A recent survey by Nielsen has identified seven types of consumers that companies targeting African markets need to be aware of.
"Rather than just a
continent, Africa must be viewed as 54 separate and distinct countries
with a wide array of political, economic, geographical, cultural and
social features," said Nielsen's "The Diverse People of Africa" report.
According to the
research firm, there is no "single African consumer." Instead, Nielsen
says its seven types of consumers can be grouped in three tiers based on
monthly income and average spending.
In the first tier belong
the "Trendy Aspirants" and "Progressive Affluents" (wealthy, urban,
well-educated Africans with high income and consumer packaged goods
spending (CPG)).
The second group is
comprised of "Balanced Seniors" and "Struggling Traditionals" (middle
aged, mid-income Africans with average CPG category spend), while the
third one includes "Evolving Juniors," "Wannabe Bachelors" and "Female
Conservatives" (this is the continent's biggest tier, consisting of
consumers who spend much less than average on CPG categories -- see fact
box).
Meanwhile, household
spending in Africa is projected to increase from $860 billion in 2008 to
$1.4 trillion in 2020, according to a report by McKinsey.
The growth in spending
on consumer goods, telecoms and banking can turn Africa's consumers into
an increasingly attractive business proposition, creating markets large
enough to be appealing for multinational firms, said McKinsey.
Braeken said the emergence of a stronger middle class
is only one part of the story. He argued that the focus should be on
how companies can foster innovation and organizational capability to tap
the collective spending power of both the high and low ends of the
continent's consumer market.
"By having a product
that is more affordable you reach down, so certainly you have more
consumers in your catchment area," he said, noting that Unilever has
doubled the number of stores it goes to physically in the last few years
to over 400,000. "So certainly your products can be found in more
places in Africa, so you expand your catchment area -- that to us is the
real story of our growth in Africa at this moment."
Looking ahead, Braeken
said he was very positive about the continent's future but warned that
there were still many issues that needed to be addressed, citing
infrastructure, good governance, corruption and fostering local talent.
"I'm very optimistic
about Africa, but I say it always with a tinge of hesitation because one
of the big risks is that we get carried away and therefore forget to
talk about the real challenges that are still ahead of it," he said.
"We have to keep on
talking about the real issues and then I am sure that Africa can
continue that path that it's on now, and we will see not only Unilever
but many other companies easily double in size from what they are
today."
Source: CNN Marketplace Africa
China Cuts Interest Rates
China's central bank said Thursday it would cut interest rates, the
second time in less than a month that the bank has acted to jumpstart a
slowing economy.The People's Bank of China brought its one-year lending rate down by 0.31 percentage point to 6%. The bank trimmed one-year benchmark deposit rates by 0.25 percentage point to 3%.
The rate cuts follow a slew of recent disappointing economic data, causing concern about a slowdown in growth. Economists are especially watchful, since China is now the world's second-largest economy behind the United States.
Readings earlier this week showed that China's manufacturing sector weakened in June. The Chinese government, in its survey of purchasing managers, noted that there was a sharp drop in new export orders as weakness in other parts of the world affected the Chinese economy.
In June, the central bank responded to economic concerns by cutting interest rates for the first time since 2008. The bank also tried to spur growth in May by cutting the amount of money banks are required to hold in reserves, freeing up those funds in order to boost investment.
While China's gross domestic product, the broadest measure of economic health, continued to grow at an 8.1% annual rate for the first quarter, the number was down sharply from the 8.9% growth at the end of last year.
Economists were surprised by the announcement, expecting the next benchmark rate cut no earlier than the end of July.
"There was widespread anticipation that the required reserve ratio would be cut again soon, but most were expecting the next benchmark rate cut to be delayed," said Mark Williams, chief Asia economist at Capital Economics. "This is a step beyond what was expected from policymakers."
Williams said that there are two explanations for why the decision came earlier than he initially thought. The first reason, he said, is that policymakers weren't happy with June data and decided to take swift action.
"Reports in the last couple of days have suggested that lending by the major banks was lower in June than in May, when economic recovery depends on a rebound in credit growth," he said.
The second reason is that the central bank wanted to keep pace with Europe's central bank, which cut its main lending rate to 0.75% on Thursday.
"Policymakers may have felt that cutting rates on the day that the ECB is widely expected to do the same would deliver a bigger impact, encouraging talk of a coordinated response to the slowdown in the global economy."
The announcement is seen as another step toward liberalizing the Chinese economy, something that Jay Bryson, global economist at Wells Fargo Securities, said the nation has been working toward for the last two years.
"In the U.S., the Fed isn't telling banks how much they can charge or pay for deposits ... in China, they're moving away from that," he said. "If China wants to have a world-class financial system, it needs to have a liberalized financial market, and this shows that they're moving in that direction."
Source: CNN
Top 10 Highest-Paying Jobs For 2011
If you're deciding how you'd like to break into the job market, or if
you're looking to embark on your second (or third, or fourth) career,
there are a lot of factors to consider. While your ideal career should
primarily be something that interests you, you would do well to check
out the pay, type of education required, number of jobs available and
years of experience required for the position. With the help of online
salary database and career site PayScale.com,
we have compiled a list of 10 high-paying jobs that scored the best
when considering all of these factors together. (Do you dream of
ditching your long commute to work in the comfort of your home? These
jobs could be for you!
Civil Engineer - $80,000If designing functional, necessary components such as roads, bridges, buildings or airports interests you, civil engineering might be right up your alley. You can specialize in a particular type of civil engineering, but almost all of them will require a bachelor's degree in engineering, and a license from the state. According to the Bureau of Labor Statistics (BLS), to be licensed, you will have to complete at least four years of relevant work experience and pass an exam.
This career scored the highest for ease of employment – that is, how common the available jobs are, and how easy it is to get them once you have the required skills, education and experience. Experience is key for this profession; the salary of $80,000 is based on at least six years of relevant work in the field.
Nurse Anesthetist - $156,000These registered nurses specialize in administering anesthesia and monitoring patients who are recovering from anesthesia. They are independent practitioners, but may be supervised by anesthesiologists, surgeons or dentists, and, according to the BLS, they require a specialized graduate education above and beyond their registered nursing degrees.
Although it will take a few extra years to get the advanced degree this career requires, the salary given is based on only two years of experience, making this career quick to pay off.
Physician Assistant - $92,000Physician's assistants, or PAs, practice medicine under the supervision of a doctor or surgeon. They work as part of a healthcare team and, unlike medical assistants, are able to examine and treat patients, and make diagnoses.
Physician's assistants must complete a college degree, and often have some health-related work experience before entering a post-graduate program that takes about two years to complete, versus the standard four year medical degree. They must also pass a national exam to be licensed practitioners. The salary quoted is based on four years of experience.
Construction Estimator - $68,000If you are building something, it is crucial to know what it's going to cost you. Construction estimators do just what their title suggests - they create cost estimates for construction companies based on materials, labor, location and projected timelines. A bachelor's degree (in a related field such as construction management) and work experience will be required to step into this career. The salary estimated is based on five years of experience. (Find out how professional resume writers can help you land a coveted career.
Actuary - $133,000Do you love statistics? Actuaries do. They evaluate and quantify the likelihood of events, and apply that knowledge to help minimize losses to companies. For example, insurance companies employ actuaries to determine how likely it is that you will crash your car, and then assign a premium to you that reflects that likelihood. According to a study done by CareerCast.com in 2010, actuary was the number one job. The same study for 2011 puts this number-crunching career at number three on the list. The salary listed based on four years' experience.
Project Manager, Construction - $90,000While construction estimator may not have been exactly what you were looking for, if construction is still where your heart lies, consider being a project manager. According to the BLS, 61% of these hard-working individuals are self-employed.
Since it requires the most years of experience on this list at ten years, make sure working in this industry is what you want to do!
Management Consultant - $117,000Companies will hire a management consultant to improve their systems, efficiency and overall profits. To work as a management consultant, you will need a bachelor's degree or higher in a business or management program, and likely several years on the job. The salary here is based on five years of experience.
Account Manager, Sales - $83,000Basically, a sales account manager is in charge of a company's sales team. They manage accounts and oversee their team's goals. They usually require a bachelor's degree, although a proven sales record is arguably more important. The salary above is based on only a year's experience.
Overall employment for sales managers is expected to increase by 13% through 2018, according to the BLS.
Structural Engineer - $83,000
If being a civil engineer didn't sound quite right, consider taking that engineering degree a slightly different way. Structural engineering is often considered a specialized form of civil engineering, but there are programs that deal specifically with structural engineering. As with civil engineering, you will need to be licensed by your state to work. The salary quoted is based on four years of experience
Physical Therapist - $75,000If you have suffered an injury or are dealing with any number of medical conditions, you may have been referred to a physical therapist (PT). These individuals work to promote the health of those with injuries, arthritis, or diseases such as cerebral palsy in order to help manage symptoms and pain and improve the quality of life. You will need a master's degree to work in this profession, but the salary estimated is based on four years of experience – not too long of a wait.
Civil Engineer - $80,000If designing functional, necessary components such as roads, bridges, buildings or airports interests you, civil engineering might be right up your alley. You can specialize in a particular type of civil engineering, but almost all of them will require a bachelor's degree in engineering, and a license from the state. According to the Bureau of Labor Statistics (BLS), to be licensed, you will have to complete at least four years of relevant work experience and pass an exam.
This career scored the highest for ease of employment – that is, how common the available jobs are, and how easy it is to get them once you have the required skills, education and experience. Experience is key for this profession; the salary of $80,000 is based on at least six years of relevant work in the field.
Nurse Anesthetist - $156,000These registered nurses specialize in administering anesthesia and monitoring patients who are recovering from anesthesia. They are independent practitioners, but may be supervised by anesthesiologists, surgeons or dentists, and, according to the BLS, they require a specialized graduate education above and beyond their registered nursing degrees.
Although it will take a few extra years to get the advanced degree this career requires, the salary given is based on only two years of experience, making this career quick to pay off.
Physician Assistant - $92,000Physician's assistants, or PAs, practice medicine under the supervision of a doctor or surgeon. They work as part of a healthcare team and, unlike medical assistants, are able to examine and treat patients, and make diagnoses.
Physician's assistants must complete a college degree, and often have some health-related work experience before entering a post-graduate program that takes about two years to complete, versus the standard four year medical degree. They must also pass a national exam to be licensed practitioners. The salary quoted is based on four years of experience.
Construction Estimator - $68,000If you are building something, it is crucial to know what it's going to cost you. Construction estimators do just what their title suggests - they create cost estimates for construction companies based on materials, labor, location and projected timelines. A bachelor's degree (in a related field such as construction management) and work experience will be required to step into this career. The salary estimated is based on five years of experience. (Find out how professional resume writers can help you land a coveted career.
Actuary - $133,000Do you love statistics? Actuaries do. They evaluate and quantify the likelihood of events, and apply that knowledge to help minimize losses to companies. For example, insurance companies employ actuaries to determine how likely it is that you will crash your car, and then assign a premium to you that reflects that likelihood. According to a study done by CareerCast.com in 2010, actuary was the number one job. The same study for 2011 puts this number-crunching career at number three on the list. The salary listed based on four years' experience.
Project Manager, Construction - $90,000While construction estimator may not have been exactly what you were looking for, if construction is still where your heart lies, consider being a project manager. According to the BLS, 61% of these hard-working individuals are self-employed.
Since it requires the most years of experience on this list at ten years, make sure working in this industry is what you want to do!
Management Consultant - $117,000Companies will hire a management consultant to improve their systems, efficiency and overall profits. To work as a management consultant, you will need a bachelor's degree or higher in a business or management program, and likely several years on the job. The salary here is based on five years of experience.
Account Manager, Sales - $83,000Basically, a sales account manager is in charge of a company's sales team. They manage accounts and oversee their team's goals. They usually require a bachelor's degree, although a proven sales record is arguably more important. The salary above is based on only a year's experience.
Overall employment for sales managers is expected to increase by 13% through 2018, according to the BLS.
Structural Engineer - $83,000
If being a civil engineer didn't sound quite right, consider taking that engineering degree a slightly different way. Structural engineering is often considered a specialized form of civil engineering, but there are programs that deal specifically with structural engineering. As with civil engineering, you will need to be licensed by your state to work. The salary quoted is based on four years of experience
Physical Therapist - $75,000If you have suffered an injury or are dealing with any number of medical conditions, you may have been referred to a physical therapist (PT). These individuals work to promote the health of those with injuries, arthritis, or diseases such as cerebral palsy in order to help manage symptoms and pain and improve the quality of life. You will need a master's degree to work in this profession, but the salary estimated is based on four years of experience – not too long of a wait.
Friday, 29 June 2012
Six Women Who Turned Failing Companies Into Success
For decades they were denied the
top executive jobs in American corporations, but now women (as of
mid-May 2012) run 18 of the Fortune 500 companies, among the nation's
biggest. Twenty-one women CEOs also run companies in the Fortune
501-1000 category. Despite this narrowing of the gender gap at the top
of the executive pyramid, women still only account for a small
percentage of CEOs in America's largest corporations.
Those women who have ascended to the top job, however, have been
successful in running their respective companies.
Although some women CEOs have failed to improve their firm's bottom line, a significant number of them have boosted company profits and have positioned their companies for future expansion and increased revenues. Among them are the following:
Ursula M. Burns The first African American woman to head a Fortune 500 company, Ursula Burns has been CEO of Xerox Corporation since July 2009 and is now also chairman. She began her tenure at Xerox in 1980 as a mechanical engineering summer intern. Under her leadership, Xerox made the largest acquisition in its history when the firm bought Affiliated Computer Services for $6.4 billion, thus establishing a profitable foothold in the $500 billion business services sector.
Although some women CEOs have failed to improve their firm's bottom line, a significant number of them have boosted company profits and have positioned their companies for future expansion and increased revenues. Among them are the following:
Ursula M. Burns The first African American woman to head a Fortune 500 company, Ursula Burns has been CEO of Xerox Corporation since July 2009 and is now also chairman. She began her tenure at Xerox in 1980 as a mechanical engineering summer intern. Under her leadership, Xerox made the largest acquisition in its history when the firm bought Affiliated Computer Services for $6.4 billion, thus establishing a profitable foothold in the $500 billion business services sector.
Ellen J. KullmanAs the top executive and chairman
of E.I. du Pont de Nemours and Company, the world's third largest
chemical company since 2009, Kullman transformed the firm's customer
relations division to concentrate on customer needs, which subsequently
drove innovation and decision making at the firm. Her focus on
innovation was responsible for a record 40% of DuPont's revenue coming
from new products during the recent recession.
Irene B. RosenfeldRosenfeld is CEO and chairman of Kraft Foods, an international packaged foods company which operates in about 170 countries. Among its well-known 12 brands are Kraft cheeses, Oreo cookies, Nabisco, Maxwell House coffee and Oscar Mayer meats. Profits in both the domestic and foreign markets increased initially under her leadership. In 2011 her incentive bonus was cut by 46% because the firm failed to meet its targeted financial goals despite the continuing profitability of the company.
Indra K. Nooyi Widely celebrated in the business world as one of the most successful current CEOs, Nooyi has run PepsiCo since October 2006. A global food and beverage firm whose brands include Quaker Oats, Tropicana orange juice, Gatorade, Frito Lay and of course, Pepsi Cola, the company share price has dropped 1% during Nooyi's tenure. As of mid-May, Wall Street analysts say the stock is undervalued by about $10. Despite these problems, Nooyi substantially increased the firm's revenue from its "healthy" products line - fruit, grain and dairy products - and will continue to promote these company divisions. PepsiCo revenue has increased 72% during her tenure, along with a doubling of profits.
Lynn L. ElsenhansShe was chairman, CEO and president of Sunoco, the only woman to run a major energy company. Demand for fuel was at a 27-year low when Elsenhans was appointed CEO in 2008. To offset the losses, she cut personnel, sold or closed the firm's refineries and sold off unprofitable or losing businesses. During her term as CEO, the company value increased by 52%. She left Sunoco early in 2012.
Irene B. RosenfeldRosenfeld is CEO and chairman of Kraft Foods, an international packaged foods company which operates in about 170 countries. Among its well-known 12 brands are Kraft cheeses, Oreo cookies, Nabisco, Maxwell House coffee and Oscar Mayer meats. Profits in both the domestic and foreign markets increased initially under her leadership. In 2011 her incentive bonus was cut by 46% because the firm failed to meet its targeted financial goals despite the continuing profitability of the company.
Indra K. Nooyi Widely celebrated in the business world as one of the most successful current CEOs, Nooyi has run PepsiCo since October 2006. A global food and beverage firm whose brands include Quaker Oats, Tropicana orange juice, Gatorade, Frito Lay and of course, Pepsi Cola, the company share price has dropped 1% during Nooyi's tenure. As of mid-May, Wall Street analysts say the stock is undervalued by about $10. Despite these problems, Nooyi substantially increased the firm's revenue from its "healthy" products line - fruit, grain and dairy products - and will continue to promote these company divisions. PepsiCo revenue has increased 72% during her tenure, along with a doubling of profits.
Lynn L. ElsenhansShe was chairman, CEO and president of Sunoco, the only woman to run a major energy company. Demand for fuel was at a 27-year low when Elsenhans was appointed CEO in 2008. To offset the losses, she cut personnel, sold or closed the firm's refineries and sold off unprofitable or losing businesses. During her term as CEO, the company value increased by 52%. She left Sunoco early in 2012.
Patricia WoertzAs Chairman, president and CEO of
agribusiness giant Archer Daniels Midland, an international agricultural
processing firm and purveyor of consumer and industrial foods and
products, Woertz led the firm to a record high profitability. Under her
watch the firm recently posted sales of $61 billion and improved its
operations and strategic investments and planning, which helped account
for the company's increased bottom line. Woertz is reportedly seeking
new acquisitions for the firm and building new plants and processing
centers for its various operations. Among her principle concerns is
stopping the after-harvest waste of food - waste of wheat and rice that
can be salvaged to feed hundreds of millions of people.
There are now, and were, other women CEOs of major American corporations who have led their firms to increased profits. As in most businesses, however, some years were good, other years there was no growth and sometimes a decline or a major loss.
Among other notable and successful women CEOs are Laura J. Sen, BJ's Wholesale Club; Margaret Whitman, former CEO of eBay and later CEO of Hewlett-Packard and Beth Mooney, CEO and chairman of KeyCorp, a $90 billion financial services firm.
The Bottom LineAlthough more women than ever before now run Fortune 500 and Fortune 1000 companies, women still find it difficult in the corporate community to get mentors to help them advance, and to be paid equal to men holding positions of similar responsibility. The gender gap still exists and progress toward the top job for women executives remain slow.
There are now, and were, other women CEOs of major American corporations who have led their firms to increased profits. As in most businesses, however, some years were good, other years there was no growth and sometimes a decline or a major loss.
Among other notable and successful women CEOs are Laura J. Sen, BJ's Wholesale Club; Margaret Whitman, former CEO of eBay and later CEO of Hewlett-Packard and Beth Mooney, CEO and chairman of KeyCorp, a $90 billion financial services firm.
The Bottom LineAlthough more women than ever before now run Fortune 500 and Fortune 1000 companies, women still find it difficult in the corporate community to get mentors to help them advance, and to be paid equal to men holding positions of similar responsibility. The gender gap still exists and progress toward the top job for women executives remain slow.
Thursday, 28 June 2012
Challengs Female-Own Companies Face
(Investopedia)--Women-owned companies face challenges landing investors
that their male-owned counterparts just don't have to deal with. It's
not just anecdotal, either. A recent study at the University of Utah
questioned over 200 MBA students on their opinions of fictional
companies. The students were reluctant to invest in the companies owned
by women, while the companies owned by men received a much more positive
response in the study.
Why the Negative Response?
Is there a reason for this negative perception of women-owned companies? No one wants to point to stereotypes, but there are some statistics that show that companies owned by women are less likely to grow past $1 million in revenue. Data drawn from the 2010 U.S. Census shows that businesses whose majority owners are women make up 29% of all U.S. based companies, but only 1.8% of those women-owned companies bring in more than $1 million a year. That number has been essentially flat since 1997. Slow growth can be a good thing for a company, but it's not appealing to investors. The lack of access to investments can also create self-fulfilling prophecies about the growth of women-owned companies.
Why the Negative Response?
Is there a reason for this negative perception of women-owned companies? No one wants to point to stereotypes, but there are some statistics that show that companies owned by women are less likely to grow past $1 million in revenue. Data drawn from the 2010 U.S. Census shows that businesses whose majority owners are women make up 29% of all U.S. based companies, but only 1.8% of those women-owned companies bring in more than $1 million a year. That number has been essentially flat since 1997. Slow growth can be a good thing for a company, but it's not appealing to investors. The lack of access to investments can also create self-fulfilling prophecies about the growth of women-owned companies.
"If companies led by females are disadvantaged in their ability to raise cash through the stock market,
it can impact the viability and financial health of their companies,
their ability to expand and compete in an increasingly global and
competitive environment, and, if they are unable to remain viable, their
employees' livelihoods," noted Robert Wuebker, Leif Lundmark and Judi
McLean Parks, the authors of the study.
Other Reasons
There are other factors that correlate with gender: many people suggest that women are more likely to need time away from work for family needs and point to that as a reason investors find women-owned companies less appealing. Women are more likely to be first-time entrepreneurs because of the number of women who have recently started new companies. Investors will almost always choose an entrepreneur with prior experience running a company over one without that same experience.
It's not directly an issue of gender in all cases. Jessica Livingston, a founding partner at Y Combinator, wrote on her blog that "It's been true in the past, and probably is still true to some extent, that investors discriminate against women. Not necessarily consciously, but their models of the ideal founder are current successful founders, who are mostly men."
Simply attributing the difficulties that a woman may face in interesting investors in her company to a question of whether or not those investors want to work with a woman does not address the reality that most investors don't think of themselves as holding negative views of women-owned companies. Rather, women, who may look at different fields, plan different schedules or even describe themselves differently than their male counterparts, just don't fit the mold some investors believe is necessary for a successful company.
The Bottom Line
For the most part, these factors are generalizations. There are many examples out there of women who have built fast-growing companies that offer investors an excellent return on their investment. While saying that women-owned businesses are categorically undervalued is not really correct, reluctance on the part of many investors to even consider a company owned by a woman means that there are many individual companies out there that are grossly undervalued. Companies that embrace diversity have a clear advantage and, provided that the company itself is a good investment, an investor willing to look at women-owned companies may find something truly worthwhile. There are even some investors who have actively built connections with organizations that work with women entrepreneurs to create businesses that are more appealing and less risky for investors.
Other Reasons
There are other factors that correlate with gender: many people suggest that women are more likely to need time away from work for family needs and point to that as a reason investors find women-owned companies less appealing. Women are more likely to be first-time entrepreneurs because of the number of women who have recently started new companies. Investors will almost always choose an entrepreneur with prior experience running a company over one without that same experience.
It's not directly an issue of gender in all cases. Jessica Livingston, a founding partner at Y Combinator, wrote on her blog that "It's been true in the past, and probably is still true to some extent, that investors discriminate against women. Not necessarily consciously, but their models of the ideal founder are current successful founders, who are mostly men."
Simply attributing the difficulties that a woman may face in interesting investors in her company to a question of whether or not those investors want to work with a woman does not address the reality that most investors don't think of themselves as holding negative views of women-owned companies. Rather, women, who may look at different fields, plan different schedules or even describe themselves differently than their male counterparts, just don't fit the mold some investors believe is necessary for a successful company.
The Bottom Line
For the most part, these factors are generalizations. There are many examples out there of women who have built fast-growing companies that offer investors an excellent return on their investment. While saying that women-owned businesses are categorically undervalued is not really correct, reluctance on the part of many investors to even consider a company owned by a woman means that there are many individual companies out there that are grossly undervalued. Companies that embrace diversity have a clear advantage and, provided that the company itself is a good investment, an investor willing to look at women-owned companies may find something truly worthwhile. There are even some investors who have actively built connections with organizations that work with women entrepreneurs to create businesses that are more appealing and less risky for investors.
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