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Ken Langdon. Andy Bruce. Alan Bonham. Lita Epstein. John Middleton. Ebooks Corporation.

ISBN 10: 1841125148

Elisabeth Wilson. Tim Phillips. Nikki Cartwright. Fiona Green. Czech Republic and Slovakia. Only Books by Ken Langdon X. Only Unknown Binding Books X. Thank you also to the editor, Fiona Biggs, for her constructive feedback and huge contribution to i Experienced and novice managers alike can benefit from these compact guides. The dream starts to loom larger more quickly when you look at the process of taking over going concerns. After all, you have applied KISS, Jumping off the hamster wheel of relentless grind energises you very fast indeed.

In the whole lifetime of the factory the number exceeded Idea 5 — Check your mortgage at 3. Certainly, sir First Direct Customer service and banking are two concepts that do not always go together. The retail banking business has been under constant pressure for some years, as competition erodes lending margins and technology continuously reduces the need for face-to-face transactions. This is an industry more known historically for its conservatism and resistance to change than for welcoming new ideas.

I know the other managers well, they are first class people and there is plenty of business for everyone. First Direct started in to offer a completely untested and, to the majority of people, completely new idea — telephone banking. Since 1 October that year, the bank has never closed. It has proved to be a very successful method of making financial transactions. Maybe the boldest part of the move was the setting up of an autonomous banking service, affiliated to another bank but not seeking wholly to offer the new service to existing bank customers.

On the contrary, it sought customers who were frustrated with the existing high-street way of doing business. Many such customers had the impression that the branch cashiers took their lunch break at the same time as everyone else who, of course, wanted to do their banking during their lunch hour. From the original telephone service, First Direct added PC banking in This is another mutually beneficial move as the customer has no delay in accessing their banking information and First Direct replaces people with technology.

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The PC offering is very wide. Customers can view and print transactions on their accounts, move money, pay bills, view standing orders and direct debits, send e-mail to the bank and apply for all the other services of the bank such as personal loans.

The non-core services have also been built up. Home and car insurance, share dealing and First Direct shopping offers are all available. This last service exploits 01i Users of the service can make enquiries of the bank on any topic. Researchers will find any product or service on which information is requested, from holiday and travel information to ideas for birthdays and Christmas gifts. For the future, First Direct depends on the continuing trend for people to work longer and have less, and therefore more valued, leisure time. This, plus flexibility in work hours and working practices, means that people will be more and more under pressure.

First Direct sees this as the driver of its long-term philosophy. Another revolution in banking practices lies behind the customer interface, and that is the requirement for a totally different type of human resource management with an emphasis on the attractiveness of the workplace. First Direct currently employs around people based at three sites — two in Leeds and one in Hamilton, Glasgow. They are organised in a network of teams and there are forums for staff to meet and discuss suggestions and changes.

The workplace has to encourage the hour working of predominately female staff, so security, safety, childcare as well as sports and social facilities are an important part of the plan. If First Direct stands still of course it will rapidly be replaced by other banks coming through. This is particularly true with Internet banking. This offers pretty much all the facilities of a banking hall on your PC in your office or home. You can pay your bills, move money around and so on, once again at any time of the day or month.

The banks also reflect the cost-effectiveness of the Internet approach by offering better deals on the Internet. Such are the cost savings on offer to the banks for people carrying out their own transactions. Idea 6 — Bringing sex to the living room Why is it that women talking about sex and, for example, watching male strippers find it absolutely hilarious, whilst men in strip clubs are completely quiet and, a lot of people would say, sad?

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The movie The Full Monty, about a group of unemployed Sheffield steel workers who set up a male stripping group, was a tremendous success and had cinemas all over the world falling about laughing. Whereas the MP and minister Glenda Jackson is complaining about a lap-dancing club opening in her Hampstead constituency. The Ann Summers lingerie and sex aids shops first opened in They now have 17 high-street retailers in key cities across the UK, attracting 1. Ann Summers is a family company owned by the brothers Ralph and David Gold.

Not only did the move offer a new channel, it gave a new 01i It works like this. Someone volunteers to house a party and invite as many of her friends and their friends to attend. There are drinks and games as well as a presentation of the Ann Summers product range and the usual product party invitation to buy.

There are party organisers who do the presentations and more than 2 million ladies attend in a year. In the lead-up to the Christmas period some parties are held in a week. Quite right too: men would probably make the parties quiet and sad. The fact that they kept losing Scrabble tiles meant that it was their eighth brand new game of Scrabble.

Sensing a business opportunity well, if every household had eight sets of Scrabble , they decided to invent a new game. They were, of course, newspeople by profession, so the theme was current events. The questions all dealt with the 5 Ws — who, what, when, where and why. One of the original 34 investors was a copyboy 01i These were newspeople, not businessmen, so play Trivial their misunderstanding of profits led to a rapid understanding of debt. It hired a PR consultant who sent a direct mail campaign to of guages — not the top buyers at the New York Toy Fair.

And then, for good meabad for an idea based on sure, it was mailed to all kinds of Hollywood stars. The mailshot included a Trivial Pursuit card, often one that had the names of the recipients as the premise the answer or the question. By late , 3. In , 20 million were sold. And Chris, Scott and their partners have become quite familiar Scrabble. Today, people play Trivial Pursuit in 19 different languages — not bad for an idea based on the premise that every household has eight games of Scrabble. Idea 8 — Pay in advance Vodaphone Up front money is worth more than the stuff you have to invoice and wait for see discounted cashflows Idea So, proving to consumers that they would be wise to do so is an interesting marketing challenge.

The mobile telephone company Vodafone 01i The product is a telephone handset, charger and battery for a fixed price. Calls and texting charges just get lower. A standard call at the moment is 25 pence for the first three minutes and 5 pence thereafter. The call credit is kept on a card and reduces as you use the telephone. For people whose children have run up huge telephone bills and, for example, for students who want to keep to a budget, this method of payment prevents any nasty surprises when the bills come in.

Since it is soon to be possible to access the Internet from a mobile phone this could enhance the benefits of the service. They were sure that it was possible, for anyone who put the energy and work in, to own his or her own business and grow it to the size they preferred. They resolved to work together towards their dream when they finished military service.

Their first venture was a drive-in restaurant, but it was after a break to sail in South America that their first real success came when they became independent distributors of Nutrilite vitamins. Their version of the American dream evolved into the realisation that direct person-to-person marketing could build a business fast.

Real growth, they discovered, would come when they attracted others into the selling side of the business. Using the same person-to-person method they recruited distributors for their new company Amway. The Amway Sales and Marketing Plan told future distributors how to start selling and getting their own distributors. To begin with, the main product that these channels sold was a multi-purpose cleaner. In its first year of business Amway sold more than half a million dollars worth of product.

Growth was rapid in all areas, but it is when you look at the ratio of employees to distributors that you see the potential of pushing out to more and more friends and acquaintances to bring them into the distributing fold. By the end of the s they offered products and had employees. The number of distributors in the USA and Canada who were, in the jargon of the company, building Amway businesses had reached , The product line continued to grow with Nutrilite Dietary Supplements and the Personal Shoppers catalogues allowing further diversification.

By the end of the 01i In the company turnover broke the billion-dollar barrier and more plant was added to keep up with demand. Another new product direction followed with the introduction of the Amway Water Treatment System, distributed in the same way as before. This is what happens if you would like to become an Amway Water Treatment distributor. The selling is done by the sponsor talking about the success they are enjoying. The sponsor also shows the potential distributor a video which, amongst other things, includes a series of endorsements from as eminent people as will agree to do it.

At some point the prospective distributor will be provided with the Amway Business Kit, which contains basic Amway products and literature for use in making sales. The prospect is then invited to produce his or her first prospect list. The sponsor then goes through the list and probably keeps a copy in case you drop out. The sponsor also helps you to sort your people into good, medium and poor prospects by discussing their income level, lifestyle and so on. You then place an order for the products you wish to buy and for some stock.

You are required to pay for your products immediately but have time to pay for the stock as you, it is to be hoped, sell them. You make money out of your sales to customers and so does your sponsor and his in turn. You are supposed to be building a business. The number of employees worldwide reached 14, It gives a title to the concept that every business should be able to summarise, in a few words, its direction, purpose and strategy in a single sentence. Getting a team to work together towards an agreed common goal is difficult, and the bumper sticker strategy helps with this process.

The ones I have picked are at corporate level, but sometimes bumper sticker strategies would be better expressed at lower levels in the business as well. Here is another use for the bumper sticker strategy. In complex sales campaigns where a lot of people are involved it is helpful for the team leader to express the whole campaign goal and strategy in a single sentence. It helps to brief people and gives them a filter to put their comments through when any member of the team, from technician to managing director, is communicating with the customer.

Suppose an account team is trying to sell a computer facilities management contract to, say, an engineering firm. But they are not the existing supplier, this would be a new customer. The team will include technicians, support managers, finance people, other customer references, the top management team of the supplier and so on. All of these people need to be briefed on how to react during their, possibly very short, meetings with the prospect. Does it promise something of value to not only the shareholders and employees of the business, but also to existing and potential customers?

Can I as a customer see what is in it for me? Is it a slogan or a strategy? Do the core competencies of the business underpin the strategy? Is the business organised in a distinctive way to give it the best chance of carrying out the strategy? Is everyone in the business committed to it? A bumper strategy that sets the hearts of Board members racing may not work when applied to the storekeeper in a remote location in the western Highlands. This last one may be impossible. This is why many companies have a bumper sticker strategy that they publish to the world, while encouraging managers to adapt it to a local requirement.

Here are some bumper sticker strategies which are well on the way to meeting all these criteria. Idea 10 — 3M Innovation working for you. Idea 11 — BMW The ultimate driving machine. Idea 13 — Ikea Stylish furniture at low prices for young families.

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Idea 14 — Virgin Debunk the establishment, business as fun. Idea 15 — Honda Greatest engines. Idea 19 — Volvo Safe durable cars. Sometimes this monopoly comes as the result of winning a contract in a heavily regulated industry. He said it in relation to independent television licenses. It works equally well when the government of the day has brought in prohibition Idea One that you may be surprised to find in this section is Eurotunnel Idea The reason for surprise is that the tunnel is famous not for being a licence to print money, but rather the biggest black hole of all time into which shareholders and banks poured money.

But we need to think forwards as well as back if we are to spot the greatest ideas of all time. I could not leave out the people who are physically responsible for making money, the Royal Mint Idea But we start with a most recent example of an ancient way of printing money — running a lottery. Idea 20 — Betting with the odds approximately 14 million to one in your favour. A game of chance where, usually, each of many people has an equal opportunity of winning the main or subsidiary prizes existed in Roman times.

Roman emperors used the drawing of lots to give away property and slaves during festivals. The purpose of public lotteries was to provide improved defences of cities, or to aid the poor. The very first public lottery to have paid money as prizes was La Lotto de Firenza. Later, when Italy was united, it hosted the first national lottery. In the UK, Elizabeth I used lottery money to repair harbours and to finance other public works. The Virginia Company was allowed to hold lotteries to fund its pioneering work in the New World. Interestingly, business people regarded the chances of a lottery fulfilling its purpose as very good.

It is hard to know how such enterprises as the British Museum and the infrastructure of America would have otherwise been financed. While the state ran a fair competition, there were various ways that private individuals could make money on the side. They would obtain tickets at From the low prices and sell them on at high mark-ups, and there was a thriving earliest exbusiness in insurance bets. Since the state made nothing out of these sideamples of the lines, they were cited as part of the reason for banning lotteries after Almost all countries in Europe, North America of people have and Asia have national or state lotteries, the notable exceptions being China been happy to and India.

Australia is sometimes known as the home of lotteries since it accept huge uses them to finance much of its public works. An awful lot of people will regularly venture a pound or more for the small chance of being able to tell the boss what they think of him. Camelot won the seven-year licence in May against seven other bidders. The risks they took were cleverly mitigated in a number of ways.

First of all, the 03i The current shareholders are as follows. Royal Mail Enterprises are the largest retailer of National Lottery tickets. De La Rue has the expertise and ability to print the high security materials necessary. Fujitsu Services — at the beginning the Fujitsu subsidiary ICL produced the lottery terminals and did the huge training job. They had to train more than 34, retailer staff in 10, retailers. Thales Electronics are providers of electronic products and advanced systems. The figures for the half year to September make sobering reading for the shareholders. Camelot publicity makes much of the fact that they had an awful lot to do in a very short time when the lottery was launched, and that the penalties for being late were heavy.

Quite so, but the risk that people would not flock to a well-advertised opportunity to get away from the humdrum of work was historically quite low. In , against very stiff competition, Camelot won the renewal of their licence to run the National Lottery in a bitter and political campaign.

They changed the name of the main draw to Lotto; but at this time they are failing to reverse a sharp decline in their sales. Maybe people are catching on to the real chances of becoming a multi-millionaire and telling their boss where to stuff their job. If you do the lottery, stop it at once. The chances of winning anything are 15, to one for each bond you hold. But at the end of the day at least the Government has the grace to give you your pound back, some of which you might care to give directly to charity. Sometimes in the wrong: their judgement is a mere lottery.

Such interference can be on the supply side or the demand side. Nowhere did the effect of regulation have such an enormous impact on social as well as business life than in the USA when the Volstead Act Volstead was the congressman who promoted it was passed in This prohibited the manufacture and distribution of alcoholic beverages. The regulation obviously hit at the supply side, but the demand for alcohol hardly changed. They held sway in the rural areas of the country and were generally opposed to the growth of cities and towns.

Their attack on liquor was successful because it was assisted by the rural domination of the state legislatures.

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  6. The result of prohibition was that liquor was more or less unknown in these rural areas, while reasonably obtainable in the towns and cities. The people who wanted to drink and lost out were the working classes who could not pay the inflated prices that prohibition had guaranteed. Successful businessmen in the liquor industry were very successful indeed. Al Capone counted his annual earnings in tens of millions of dollars. There was a downside. The gang wars, which accompanied the distribution of liquor, cost a lot of people their lives. Historians of crime, however, maintain that a stable semimonopoly was emerging towards the end of the s.

    Also emerging at that time was a new attitude in the temperance movement itself. Major supporters of prohibition gradually lost faith in it as they saw the increase in criminal liquor production, the development of the speakeasy and the increased restriction on individual freedom. The Democrats adopted a platform to repeal the prohibition act in the presidential election of , which they won.

    Most states immediately repealed their own laws, but some kept on until Since then liquor control in the USA has remained at local level. Join me in lobbying for the complete prohibition of business books. A lot of newspaper columns remind potential investors that they should put money into the stock exchange with a timespan in mind of at least five years.

    In this regard Eurotunnel is the reductio ad absurdum that proves the rule. But, like the pundits say, look at the long term. After all, the debate The sharehold- on whether a fixed link should be built started years before the treaty ers should have signed between the UK and France in made the tunnel possible.

    If you think the shareholders have a descendants long wait for return, consider the case of Thom de Gamond who worked should. Some progress was made in tunnelling in until the British Government got cold feet and called it off. Political opposition remained the stumbling block in the first half of the twentieth century, although some big guns, such as Winston Churchill and Aneurin Bevan, supported it. The need for political support changed in the Thatcher years when a joint study indicated that a two-tunnel scheme was a possibility and tenders were invited for a privately financed fixed link.

    It was hard to argue with the international panel of construction industry executives and editors when they named the tunnel as the top construction achieve- 03i The original licence was due to expire in , but extra years were granted and the company has sole rights to charging for use of the tunnel until Eventually this will be another licence to print money — the opposite of Camelot, which is relatively fast in fast out.

    The shareholders should have plenty to look forward to, or at least their descendants should. Now that is planning in the long term. This was not always the case. People laboured in what were little more than blacksmith shops hammering blanks between a pair of dies. A single mint was set up in within the Tower of London and operated there until it then moved into purpose-built premises on Tower Hill.

    The present modern coinage plant was built to start the process of minting coins for decimalisation in the UK in These premises are in Llantrisant in South Wales. The Royal Mint now boasts some of the most advanced coining machinery in the world. It works like this: In the foundry, strips of metal are drawn from large electric furnaces, reduced to the required thickness in a tandem rolling mill and transferred to large blank presses where coin blanks can be punched out at the rate of 10, per minute.

    The blanks are softened and cleaned in the Annealing and Pickling Plant before the final process in the Coining Press Room. Here the blanks are fed into coining presses where the obverse and reverse designs, as well as the milling edge, are stamped onto the blank simultaneously. To ensure that the composition of the alloy is correct, samples of the molten metal are routinely checked by X-ray fluorescence spectrometry. Each year samples of coins struck both for the UK and overseas are presented to the annual Trial of the Pyx where they go through rigorous quality examination by the Worshipful Company of Goldsmiths.

    In the Mint was established as a Government Trading Fund, operationally very similar to a government-owned company. For many years half its sales have gone abroad. This role as an exporter was emphasised when it became an Executive Agency, providing it with greater freedom to develop its business further.

    During —96 the Royal Mint produced coins and blanks for 82 countries, from Albania to Zimbabwe. The Royal Mint can satisfy any requirement of a country for a complete range of coinage. This enables advice to be given to countries considering new coins so that they can avoid specifications identical to existing coins in other countries. The Royal Mint also maintains close contact with the vending industry worldwide and continuously increases the range of security features that it can offer to discourage counterfeiting.

    Of all the distinguished people to have served the Royal Mint perhaps the most unexpected and highest ranked is Isaac Newton. The scientist had a year association with the Mint as Warden and then Master. He took a lot of interest in the Mint despite being informed on his appointment that it should not take up too much of his time. In fact the Government wanted the Mint to provide Newton with an income that still left him relatively free to pursue what they regarded as more important matters. He was actively involved in the setting up of five mints elsewhere in the country.

    This drew him into the underworld, where his usual zeal turned him into a doughty and persistent opponent of such as the infamous William Chaloner, who paid for his forgery on the gallows. As the Master he was more responsible for the production of coins, where his desire for accuracy kept variations in the weight of new coins within very small tolerances.

    It must have been a brave Company of Goldsmiths who challenged the composition of the sample coins in It was particularly brave since it turned out not to be true. His name lent huge prestige to the Royal Mint and his advice was sought by many. It was even sought by the Scots during the recoinage of the old Scots money in caused by the Union of the Crowns.

    This legacy is maintained to this day, and the reputation of the Royal Mint is still held very high. Are they vulnerable? They were claiming, as they all do, that on past performance they were the natural choice. They chose to demonstrate this by looking at the value of policies over a period of time. The period they had chosen was seven years and two months that ended some time ago. It was obvious that they chose this particular period because it illustrated the point they wished to make.

    It also makes the point that any system for investing, from throwing darts at the Financial Times to the most complicated computerised chart research, will probably succeed for some interval of time. With this is mind, we have chosen two investment methods that have some rationale behind them as being as good as any dealing when the directors do Idea 27 and choosing the worst performing unit trusts from a management stable Idea The investment club Idea 25 route also has a lot of logic behind it but is more likely to produce steady gains over a long period of time than spectacular ones from inspired trading.

    If that is not fast enough for you, then the section on hedging Idea 26 shows how a sensible idea can be made to win or lose a lot of money in a very short period of time. But we must start with the people who regularly and consistently make money out of the stock market — the people in the City itself. The concept is simple. If they double your money in a year they take their 1. If using a unit If using a unit trust reduces the risk of having too many eggs in the trust reduces the same basket for investors, then how much more is the risk reduced for the risk of having too fund managers who develop a range of unit trusts?

    A well-known con in racing is for someone, apthe same basket parently in the know, to sell tips for a fixed price plus a percentage of any for investors, winnings. Oracle is certainly the right word if the tipster is actually reduced for the tipping every runner to someone and therefore always has a winner to fund managers advertise to new punters. You would never fall for that, would you?

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    They offer a multiplicity of trusts in this country and trusts? The chances have got to be pretty good that at any moment in time the unit trust manager will be able to point to at least one of his trusts that is performing well. They are able to buy into a spread of shares, which is difficult to do if they are only investing small amounts, and the opportunity to get easily into foreign shares is a definite advantage over doing it yourself. The second main argu- 04i The managers will claim that they are experts in picking shares that are going to perform well.

    This is a compound rate of return of just under 9. Could the private investor have done better? But they could have picked the other end of the spectrum and lost more than half the original stake. Of course they have their expenses to find out of that, but arguably they have very little risk. That describes the good times when people were investing in unit trusts in a long bull market. March saw the start of what now looks like an equally long bear market, and investors are seeing the value of their funds and pensions diminishing very rapidly — over three and a half years at the time of writing.

    Again, it does seem to be a heads-you-lose, tails-the-unit-trust-manager-wins situation, since most unit trusts are losing much more money than the general stock market. They are simply not appearing to be the hedge or buffer against hard times that they boasted of in the past. And they still draw their initial fees and annual charges — great idea or what? The one advantage of unit trusts over doing your own investing as an individual is that a unit trust gives you instant access to the widely spread portfolio that the unit trust manager has established. If your resources are limited this can be very useful, as it avoids the overexposure to a small number of shares in the early years of a portfolio.

    Ken Langdon

    In passing it is worth noting the number of people who hold shares only in their own company. This is the opposite of good portfolio management, which recommends that you hold a spread of at least 15 shares, so that if one bit goes wrong it may be balanced by another bit doing well. Not only that, but if you only have shares in your own company, if the share price goes south it could presage your job going west. Investment clubs offer a neat way of gaining the benefit of a portfolio without losing control of the investment strategy, or paying the fees of the professionals.

    I have to declare an interest here. I have been the treasurer of an investment club for its lifetime of five years. It is a steady, some would say boring, club with simple objectives. It is a long-term savings scheme for its members and the benchmark it attempts to beat is the performance of the average unit trust as reported on Saturdays in the Financial Times. The beauty of investment clubs is that they are essentially informal. They have almost no expenses, since none of the people involved in running the club are paid. But this informality must be balanced by a well drawn-up constitution and rules.

    What happens is this. A group of up to 20 people, neighbours, friends, colleagues or members of the same golf club, for example, agree to form an investment club. Some clubs have as few as three or four members. One of the members gets hold of a sample constitution and rules, understands them and writes the first description of the club for other prospective members to read. The club needs a chairman, a secretary and a treasurer. The treasurer is highly significant in the club as he or she will keep the records of the portfolio and all transactions.

    Number of meetings per year. Some clubs meet monthly and others less often. It depends on the subscription income and, to some extent, on the social aspects of the club. Some clubs are primarily social and will meet frequently to socialise as well as make investment decisions. Others are more serious in terms of the objectives of the club and the likely level of the fund as it grows.

    In any case there will be an annual general meeting. How members are elected. Probably new members will be proposed by existing members and their invitation to join ratified at a monthly meeting. The members must decide on the amount of the joining fee, the upper and lower limits of monthly subscription, and upper and lower limits on lump sum investments.

    The rules also need to be clear on how the portfolio is valued for purposes of buying units in the fund, or selling units back in order for a member to realise some or all of his or her holding. Normally this valuation is made on the last day of the month and the price used is the mid-price of each share as quoted in the Financial Times. Members of an investment club need to have a common goal for the building up of the portfolio. Individual reasons for being in the club may be very different, but the investment goal needs to have the support of everyone.

    It is probably useful to set it fairly wide. Taking that goal into account, individuals can then calculate an appropriate subscription amount. The investment strategy is the next important step. This should certainly include the level of risk to be taken. The members must agree what proportion of 04i Our club is a savings scheme so more than half of the money is invested in FTSE companies. If some members are less interested in the nitty gritty of investment decisions, they may leave that to others or even to a sub-committee; but the people with the delegated authority to make such decisions will be bound to operate according to the strategy or to go back to the whole membership if they wish to suggest changes.

    The members, or the sub-committee, then choose shares in the way that the members have agreed. Here is a summary of a more logical way of team share choice. Using their strategy and current spread of the portfolio they choose the correct level of risk. They get the annual reports of these companies. They probably action one or two members to do the evaluation work.

    Using published information they discuss the company strategy. From the same information they calculate the key business ratios, discuss whether they support the business strategy and possibly compare them with industry averages. They finally evaluate whether they believe the managers of the business can carry out the strategy successfully and make a decision.

    If we take the periods to June 6 , just as an example, we beat the average unit trust as follows. Time will tell if we can repeat this competitive performance in hard times as well as good. I suspect we will. Indeed, get a group of city types together someone will and they will find something to bet on.

    Wherever there is a degree of uncertake positions tainty, for example of supply and demand, someone will take positions on it. If you are dependent on crops that only grow once a year, you are dependent first of all on the vagaries of demand. How much cocoa will the chocolate manufactures buy and use over the next one or two years? There is also risk to supply as it depends on what the weather is going to be like. Commodity suppliers sell some or part of their future crops forward. That is, they agree a price and a volume of product with a trader before all the uncertainties become known.

    The timing in the cocoa market of this is up to 21 months ahead. Farmers can now sleep soundly knowing that a proportion of their income is protected whatever the outcome at harvest time. The great idea is as simple as that. But, of course, then the complications cut in.

    Producers have an interest in concealing the true size and condition of their crops. News of impending shortages will drive prices up; the prospect of a bumper harvest will take prices in the opposite direction. Since there is active trading in these futures, the original buyer can sell the contract on at a profit or loss. Usually producers work out just how much of the crop they want to sell forward so that if there is a shortage and higher prices are available they will be able to take advantage of these for at least some of their produce. The chocolate manufacturers are also playing a careful game.

    Their wish is to guarantee a minimum amount of cocoa whilst at the same time trying to achieve the minimum average price they can. They will buy forward only if they think the price is likely to rise. This is the classic role of the commodities futures market, providing a way of hedging risk due to uncertainty about the supply and demand for basic materials and the pricing consequences that follow.

    The great idea of hedging has been expanded to allow futures trading on stocks and shares. In this way an investor can buy call options at a price set at that time for a trade to occur at a fixed time in the future. Either side in this transaction can thus increase the potential reward of a share price rise by using gearing. Suppose you believe, for whatever reason, that the price of shares in Example Company PLC ECP is going to rise over the next few months, so you can buy an option in the futures market.

    Take these numbers as an example. The share price of ECP is currently pence. You believe that it could rise 04i In this example I am going to ignore the costs of dealing to keep it simple. Remember every trade you make whether in actual shares or options is accompanied by a cost which will have the affect of reducing the numbers you are about to read. But suppose you want more. You could buy a call option for 31p giving you the right to buy shares at p in three months time.

    When the price goes up to p you can buy for p and sell for p at the same time. But a huge reward implies a huge risk. If the market goes against your prediction the outcome can be dire. In effect you are buying the shares for p, the option price, plus 31p, the price of the option making a total of p. If the price is below that you lose. If the price drops below of course then you have lost the lot. The only people who cannot lose, naturally, are the ones taking commissions on each transaction. This principal of hedging and speculating can be applied to almost anything in the stock market.

    You can, for example, hedge or speculate on movements of the main market indices such as the FTSE This means that your portfolio is protected if you were thinking of selling shares at a given point in the future. You can bet on spreads of prices and so it goes on. If you need an insurance policy hedging is a great idea, but if you decide to speculate, be sure you do it with money you can afford to lose.

    Most financial advisers steer their clients away from speculating in futures because of the huge risks, but as long as you can write the money off when you place the bet its an excellent return if you are lucky. It comes without guarantee and involves buying shares when the directors have done so and following their lead also in selling. It is extraordinary how news announced by companies comes, almost always, after there has been a related move in the price of the shares involved.

    A simple test of this is to look at what happens on the day a company announces its results. If the results are in the middle of the range predicted by analysts there may be It is extraordilittle or no movement. If they are at the top end of predictions the price nary how news quite often goes down. The good news was already in the price. The main announced by players knew roughly what was going to happen before the announcecompanies ment was made.

    The sources that the private investors have at their disposal are there has been dominated by what they read in papers or magazines, or from material a related move such as annual reports, which they can get from the companies themin the price of selves. The people in the know, i. The people closest to the real situation of the company are, of course, the directors.

    At other times of the year they are permitted to deal and they do. It is easy to find out when this has occurred by reading the financial pages although the timing problems mentioned above do exist. The rule is, if three or more 04i It has worked in the past and it will almost certainly work in the future.

    The only problem you are left with is knowing when. So here is a possible strategy to pick the right unit trust by studying the form. This probably presupposes your agreement with my thinking that choosing unit trusts is something of a lottery. The main boast of any unit trust provider is that with the skills and knowledge of their management teams they will tend to outperform their sector, index or benchmark. As we have already seen they will then advertise those funds that do actually achieve this result. The ones that have done really badly get no publicity and no advertising budget.

    Because marketers need to attract new money, performance has become more and more important. This means that successful fund managers have become superstars on huge salary and bonus packages. They are also very mobile. According to the publication Successful Personal Investing, the average time an individual fund manager has responsibility for a fund is 2. So, impressed by the performance of one trust and determined to invest in that management team, investors, unless they are careful, could be buying the expertise of a team new to the fund, with a poorer track record.

    This means that if you want to follow a manager you may have to switch funds or even provider. This is often expensive with the payment of initial charges. They do not want the fund to bring down their average and place in the league tables for ever. A change of management may be all that is required to pick up performance and do better for their investors. At that point you switch and again buy the worst performer. It has worked in the past, from time to time of course. There is another piece of logic behind this strategy.

    At present most funds are dual priced. This means that they have a bid and offer price with a spread that includes the initial charge the managers take for managing your money you remember the basic premise. As well as this there is a cancellation price. This is the lowest price the management group is allowed to buy back units from you according to the official price calculation.

    When the bid price is at or near this, the unit is said to be on a bid basis. This cancellation price is a useful guide to the current popularity of individual funds. If the cancellation price is below the bid price, the price at which the managers will buy back your units, then it is a reasonable conclusion that more units are being bought by investors than sold. The price is known as on an offer basis. It also means that there is scope for a widening of the offer to bid price when the fund becomes less popular.

    What you want to do is to buy when the price is on a bid basis, and sell when it has moved to an offer basis. This is more likely to happen if you buy the worst performing fund in a stable. There is a problem. I said that knowing the cancellation price was useful to the investor, so it is no surprise to find that the rules have been changed. Up until unit trusts were required to publish their cancellation prices each day.

    Now they are not, but if you request the information from them they must tell you.

    How Bill Gates reads books

    Most business people use open questions to elicit information from customers, markets, colleagues and so on. Everyone is aware that if you ask the right open question you can get people to talk about themselves, what they do and what they like. One of the greatest business ideas, therefore, has to be to hone your skills in asking closing questions and set stretching but achievable objectives every time you communicate with colleagues, customers and suppliers. The manager had requested an opportunity to make a half-hour pitch to his senior colleagues. He had been talking about a new channel of distribution that he was in the process of setting up, and the reason he had asked for the meeting was to help to remove an uncomfortable feeling that some other managers did not think the new idea as brilliant as he did.

    Such scenes are played out in business millions of times a day. Such managers should learn from salespeople, who use closing techniques throughout a sales campaign to make sure that they are on course to their final objective of a sale. It is hard to find the source of the greatest closing techniques as they have been around for ever, or at least since people tried to persuade others to follow their line of thought or action. It happens when, in a competitive situation, the prospective customer tells the salesperson that they have a problem with price.

    Here is a selection of their replies. Often in this last case, the clients are actually trying to persuade themselves that the bit extra is worth it. Incidentally the other selling technique that is tested by this method Frequently the of handling price objections is the ability to remain silent.

    What Happens When We All Live to 100?

    Keep your mouth shut were the same and wait for the response. Keep your mouth shut and wait for the response. Idea 30 — The puppy dog close This close is based on the activities of a person who sell pets. A small army? The salesperson knows that by the end of the weekend the kids will be as willing to give up the little dog as they are to give up breathing or having a birthday. This technique is used by many industries in various ways, and is linked to the idea of making sales by inertia. When did you last get an offer to send in a direct debit for a magazine subscription with the promise that no debits would be made until you had received your four free issues?

    They are using it for credit cards nowadays and even IT equipment and software. Book clubs would hardly exist without this close. I have just received the Wall Street Journal free for four weeks. If you choose not to continue, the four weeks are yours to keep free of charge. Idea 31 — The cup of coffee close Many decisions in business are taken by a group of people, a committee or a board for example, and many a sale has been lost because the seller is unaware of the cup of coffee close.

    The manager has made his pitch, or the salesperson his final presentation to a group of decision-making managers. It is the easiest thing in the world for the chairman to thank the speaker for making the case so well, and say that the managers will give it serious thought and discussion. If they decide against, they can tell the salesperson by phone or by letter, always easier than face to face.

    Pre-empt the situation with the cup of coffee close. If it feels good and the vibrations are positive, offer to leave the group on its own for ten minutes. If when you return everyone looks at you, you have got the order. If only the Chairman is looking at you and some people are having their own quiet discussion you can be sure you have more work to do or that you have lost. Ginger up your communication skills by practising and using good closing and trial closing technique.

    Idea 33 — Tell them what you are going to ask for If you have to persuade someone to change their minds or move from a neutral position on a decision to a positive one, it is easy to duck the issue at the beginning of your persuasive activity. Again using the medium of a presentation, let us look at this. You are trying to get agreement to the board putting two new people into your team over six months to take charge of arranging trade shows.

    Prior to this the trade shows had somehow happened, but with a lot of last-minute panic and favours being asked of various people within and without the company. These last-minute panics tend to cost a lot of money as the alternative of not being ready for opening day is unacceptable. The professionalism of your exhibits is also, you are convinced, inferior to the other companies at the show. From what has gone before in this section you have prepared your closing question. Now think about your opening. A lot of people would fudge the opening, preferring to launch into horror stories of what has happened in the past, Remember, showing the board the list of extra shows that you could put on if you had the resources and so on.

    This tends to put the board on its guard. Re- very few manmember, very few managers go to the board with any suggestion that does agers go to the not require additional resources and it is frustrating when they do not board with any suggestion that have a clue about how much you are going to ask for. I am going to cover three topics in the ten minutes. First I am and it is frustratgoing to go over the current situation we face in arranging and setting up ing when they exhibition stands, then I am going to ask your permission to hire two extra do not have a grade 4 people to carry out that role in the future, and with any time that clue about how much you are is left show you our current ideas for the next big show.

    Is that OK? It can lead to a huge row. At least you are arguing about the point you are trying to make. Sometimes you will get a more positive response and you will wonder why you are making the presentation at all. But many other products have become successful through this medium, and some large companies built. You can buy cosmetics Idea 36 or cleaning products Idea 35 , but I start with what was a genuine win—win for door-to-door sales technique, good for the company and good for the householder. Their loan and life products were offered only to the affluent.

    Companies at the time were unwilling to take on the risks involved in insuring the working classes. It was a deputation of factory workers combined with a recommendation from Parliament that persuaded the company to issue life policies for small sums. The fear of the poor, that they would not have a proper funeral, led to life policies for small sums, with weekly or monthly payments to cover, in the first place, funeral costs.

    A leading light in all of this was Henry Harben, the secretary of the company. He put down values of simple product design, effective distribution and efficient service. The door-to-door salespeople were central to all of these values. In the building, which is still its HQ, was opened in Holborn Bars.

    The Pru was also engaged in the pioneering work of the day, to introduce women into the work force. The new building included facilities for women clerks. Across the country, one person in three held a Prudential policy. The branding of the Prudential as more than a commercial company continued with the ending of gender segregation in offices. They also took on women and retired men to replace those called up for World War I and did not charge extra premiums to enlisted men.

    This time period also saw the expansion of the company into overseas markets, with a network of agencies across Europe and the British Empire. After World War II the Prudential started to use their agent organisation as part of their advertising, and a real agent, Fred Sawyer from Kent, became well known all over the world as the Man from the Pru.

    From the s most expansion came from the acquisition of other companies. The Prudential is now a market leader in most areas of personal finance.