Private Sector Qatar English | September 2014

WE DON'T JUST WORK WITH THE BEST SUPPLIERS. WE ALSO WORK WITH THE BEST LOCAL SUPPLIERS. At Shell, we seek out ways to support Qatar's National Vision 2030 - in social, human, environmental and economic development. This includes helping Qatari entrepreneurs and encouraging growth by sourcing materials and services from local suppliers. At our state-of-the-art Pearl GTL plant, the need for large amounts of hydrochloric acid within the production process is met by Qatar Vinyl Company (QVC), a world–class chemicals and materials manufacturer.

It’s just one example of Shell’s commitment to ‘local content’ in everything we do.

To register your interest in becoming a supplier to Qatar Shell, please contact Qatar.Shell.Vendors@shell.com

@Shell_Qatar

Pearl GTL at Ras Laffan is the largest Gas-To-Liquids plant in the world.

ADVISORY BOARD Private Sector Qatar is pleased to introduce you to top industry champions who will be bringing added value to the publication. These key Ć‚IWTGU YKNN PQV QPN[ UJCTG VJGKT YQTNF ENCUU GZRGTVKUG DWV YKNN CNUQ QHHGT KPUKIJVU QP NGCFGTUJKR OCPCIGOGPV CPF ITQYVJ UMKNNU VJTQWIJ VJGKT EQPVKPWCN EQPVTKDWVKQP VQ VJG OCIC\KPG +V KU YKVJ ITGCV FGNKIJV VJCV YG YGNEQOG VJG HQNNQYKPI NGCFKPI RGTUQPCNKVKGU

Amal Al-Mannai 'ZGEWVKXG &KTGEVQT 5QEKCN &GXGNQROGPV %GPVGT

Abdulaziz Bin Nasser Al Khalifa %JKGH 'ZGEWVKXG 1HHKEGT 3CVCT &GXGNQROGPV $CPM

Professor Nitham M. Hindi &GCP %QNNGIG QH $WUKPGUU CPF 'EQPQOKEU Qatar University.

Dr. Ivan Misner (QWPFGT %JCKTOCP $0+

Vikram Shroff &KTGEVQT 4GICN )TQWR &WDCK

Raed Al-Emadi %JKGH 1RGTCVKPI 1HĆ‚EGT Silatech.

George M. White, Ph.D. #UUQEKCVG 6GCEJKPI 2TQHGUUQT QH 'PVTGRTGPGWTUJKR %CTPGIKG /GNNQP 7PKXGTUKV[ 3CVCT

Hamad Mohammed Al-Kuwari /CPCIKPI &KTGEVQT 3CVCT 5EKGPEG Technology Park.

Wael Sawan /CPCIKPI &KTGEVQT CPF %JCKTOCP Qatar Shell.

Gail Gosse &GCP 5EJQQN QH $WUKPGUU %QNNGIG QH 0QTVJ #VNCPVKE 3CVCT

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MANAGEMENT Dominic De Sousa Chairman Nadeem Hood Group CEO Georgina O’Hara Group COO EDITORIAL Group Director of Editorial Paul Godfrey paul.godfrey@cpimediagroup.com +971 4 440 9105 Group Managing Editor Melanie Mingas melanie.mingas@cpimediagroup.com +971 4 440 9152 Associate Editor Victoria Connolly victoria.connolly@cpimediagroup.com ADVERTISING Group Director of Sales Carol Owen carol.owen@cpimediagroup.com +971 4 440 9110 Commercial Director - Business Division Chris Stevenson chris.stevenson@cpimediagroup.com +971 4 440 9138 Sales Manager Jason Bowman jason.bowman@cpimediagroup.com +971 4 440 9154 Media Sales Executive Emma Hughes emma.hughes@ cpimediagroup.com +971 4 440 9120 Event Sponsorship Manager Gill Fairclough gill.fairclough@ cpimediagroup.com +971 4 440 9120

FROM THE EDITOR

Why quality is the best USP for Qatar’s private sector Qatar’s SMEs have always faced a virtually unique challenge, in that they co-exist starkly with big, multinational businesses that set some of the highest standards in the world.

There simply isn’t the buffer of enterprise-level, mid-sized businesses that, in every other GCC market, provide the transition from the small to the massive. A Qatari SME is all too easily judged by the standards of a business that is perhaps 500 times larger and replete YKVJ 3WCNKV[ CPF $GUV 2TCEVKEG ETGFGPVKCNU HTQO CNN VJG YQTNFoU NGCFKPI EGTVKĆ‚ECVKQP DQFKGU This has traditionally led to a two-tier business culture, whereby expectations of many UOCNNGT Ć‚TOU JCU TGOCKPGF SWKVG FKHHGTGPV HTQO VJQUG YG YQWNF GZRGEV HTQO VJG OCLQT players, whether in terms of service, product quality, delivery logistics or the ability to provide anything other than a ‘plain vanilla’ option.

Yet perhaps, in the spirit of ‘every cloud has a silver lining’, there is in reality a huge opportunity here. The fact is that none of the region’s nations have as yet been able to develop a ‘quality-driven’ SME culture, where factors such as internal audit, the pursuit of best practice and the employment of staff on an equal opportunities basis have been prized as highly as the ability to compete on sheer price alone. It’s notable that even in the UAE - with a highly developed SME sector - the much-praised Companies Act 2013 incudes very little in the way of quality audit, standards benchmarking and corporate governance URGEKĆ‚ECNN[ HQT 5/'U +VoU CNUQ IGPGTCNN[ VJG ECUG VJCV VJTQWIJQWV VJG )%% QPN[ C XGT[ NQY percentage of SMEs will pay attention to the quality standards inscribed in systems such as ISO, BSI and DIN - still less are these a legal obligation in most areas of the economy. All of which represents a clear window of opportunity for Qatar’s private sector: the chance to be quality-driven and set new levels of qualitative performance as a matter of course.

It’s often said that SMEs have the advantage of being nimble, adaptable and quick. Well, combine these admirable traits with a commitment to quality, and you have a very real, RGTUWCUKXG TGCUQP YJ[ [QW UJQWNF FQ DWUKPGUU YKVJ CP 5/' TCVJGT VJCP CP /0% # RTQƂNG of this kind would also enable Qatar’s private sector to outreach every other in the GCC, and truly take on the industry leaders in the USA and Singapore, for example. You might CNUQ ƂPF VJCV KP RTCEVKECN VGTOU VJGTG YQWNF DG XGT[ NKVVNG PGGF VQ IQ VJG NKMGU QH CP /0% for anything other than the very largest projects (which is, after all, what they excel at delivering). Just a pipe dream? No doubt that’s what they said about the private sector in Singapore 20 years ago, too. Qatar can equal those same standards and imprint the quality remit straight across its SME population - and when it comes to starting a fresh initiative of this kind, there’s truly no time like the present.

Enjoy this issue of Private Sector!

DESIGN Head of Design Glenn Roxas Production Manager James Tharian Distribution Manager Rochelle Almeida Data Manager Rajeesh Melath

Paul Godfrey Senior Editor

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CONTENTS

02 ADVISORY BOARD A high-powered panel of industry leaders who bring world-class expertise to the publication.

03 EDITOR’S NOTE Paul Godfrey on quality benchmarking in the Qatari private sector.

Factfile 08 $ QHZ VHFWLRQ ŵOOHG ZLWK GHWDLOHG and graphic information on the key market trends that will help your SMEs move upwards and forward.

Empowering Growth 14 BEDAYA AND QATAR SHELL LAUNCH ‘THE ENTERPRISE CHALLENGE’ 2014 4DWDU 6KHOO DQG %HGD\D &HQWUH RIŵFLDOO\ welcome over 700 schools and universities for this premier competition.

IP and trademarking are extremely important for companies to protect themselves.

16 BRAND BUILDING Associate Editor Victoria Connolly reviews the brand agenda and how it can enhance an SME’s competitiveness DQG SURŵWDELOLW\

p24

20 ENTERPRISE MOBILITY: ARE GCC SMEs EQUIPPED TO COMPETE? We explore how SMEs can keep up with the international trends and maintain a sustainable competitive advantage.

Enterprise 24 LOCAL SMEs, GLOBAL ASPIRATIONS Sarah Cocker, Head of Communications and Investor Relations, Just Falafel, shares exclusive insights on expansion strategies that can help every SME widen its horizons…

28 TO CFO OR NOT TO CFO Victoria Connolly takes a look at the FUXFLDO UROH RI D &KLHI )LQDQFLDO 2IŵFHU (CFO) and explains why it’s so important to invest in the ‘money man’…

CONTENTS

Businesses now operate in a world in which information is more readily and publicly available than ever before. p32

GCC countries have traditionally faced the challenge of an imbalance between the native population and their foreign expat workforce. p36

Access to funds whenever and wherever you need it gives businesses more malleability to scale up. p50

Analysis 32 MARKET INTELLIGENCE AND GLOBAL COMPETITION Can an SME increase its competitiveness with a thorough and substantial gathering of market intelligence? Victoria Connolly investigates‌ 36 THE GCC SME REVOLUTION – IT ALL STARTS HERE We assess the dramatic pace of FKDQJH DQG WKH EHQHžWV WKDW DUH beginning to emerge in the GCC region’s SME scene Business Opportunities 42 SMALL ENTERPRISE – BIG BUSINESS The advantages and challenges of working in an integrated global market‌ 46 OPPORTUNITY OR MINEFIELD? Legal experts Richard Bell, Partner, Clyde & Co, and Rebecca Soquier, Associate, Clyde & Co, examine the linkage between manufacturer and local distributors in the MENA region.

Trade and Finance 50 PLASTIC FANTASTIC Find out how a global payment solutions provider can help your SME.

54 KATARA HOSPITALITY An insightful interview with the company’s CEO and board member Hamad $EGXOODK $O 0XOOD RQ WKHLU VLJQLžFDQW UROH in Qatar’s thriving hospitality industry.

Business Toolkit 58 MANAGING YOUR MOBILE WORKFORCE Keeping your team at the forefront of mobility and productivity.

62 CFO – THE NEW CORPORATE LEADER Private Sector Qatar takes a look at how CFOs have transformed to become new corporate leaders.

66 RISKY BUSINESS Finding the right insurance partner is PRUH WKDQ VLPSO\ žQGLQJ D SURYLGHU with a famous name. Senior Editor Paul Godfrey - a former insurance professional - investigates the advantages, pitfalls and potentials‌ Downtown 70 A MEETING WITH JAIREK ROBBINS Motivational speaker and business guru, Jairek Robbins, shares excellent insights on growth, leadership and success‌ 74 APPS FOR BIZ Trendy mobile apps to help make your business more productive.

Understanding family business ecosystem p.8 SME roadmap to success p.10 Innovation - trends shaping the marketplace p.12

FACTFILE

FACTFILE

THE STATE OF FAMILY BUSINESSES

COMPETITIVE STRENGTHS AND PERFORMANCE INDICATORS

US$88.5B

GENERATED BY MENA’S TOP 10 FAMILY BUSINESSES IN 2012 221,740

BARRIERS TO GROWTH

ATTRACTING SKILLED TALENT

55%

Consider recruiting the right skills as a key emerging issue in the Middle East

« Þi` LÞ č½- Ì « £ä v> Þ LÕà iÃÃià Óä£Ó

75%

40%

Economic activity in the private sector constituted by family-owned businesses in the Middle East

80%

Approximate GDP generated by familyowned businesses in the Middle East

FAILURE TO IMPLEMENT SUCCESSION PLANNING

Middle Eastern respondents are concerned that the transfer of the business to the next generation might cause problems (compare Ì Ã Ì > w}ÕÀi v ÎÓ¯ } L> Þt®

49%

review succession plans when a change in management requires it

58%

consider family business to be more entrepreneurial than other sectors of the economy in the Middle East

45%

v `` i >ÃÌiÀ v> Þ wÀ Ã intend to pass on both the ownership and management of their business to the next generation

65%

v `` i >ÃÌiÀ wÀ Ã believe that family businesses play an important role in ensuring economic stability

45%

believe that family businesses are able to reinvent themselves with each new generation

1 to 49

50 to 246

LACK OF ACCESS TO FINANCE

250 to 999

1,000+

0 About the same as before

20%

40%

Becoming easier to obtain

60%

100%

Becoming more FKHƂEWNV VQ QDVCKP

SOURCES: PwC’s Family Business Survey 2012 – The Family Firm: Central to the success of the Middle East PwC’s Next Generation Survey 2014 – Bridging the gap: Handing over the family business to the next generation

8

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FACTFILE

LOOKING TO THE FUTURE

1 IN 6

wÀ Ã Li iÛi` Ì >Ì LÀ } } v> Þ i LiÀÃ Ì iÞ positions was a motivator of governance change (in the past three years prior to the survey)

43%

see retaining key staff as an issue

BRIDGING THE SKILLS GAP

63%

28%

7%

31%

of Middle Eastern family businesses have non-family directors

of the next generation had gone into the family business straight from school

12%

v v> Þ wÀ Ã > i Ì Ì a third generation

BUILDING A SUCCESSION PLAN

42%

of non-executive family members often are not aware of succession plans

15%

v v> Þ wÀ Ã the region have a ‘family council’ embedded within their governance framework

of Middle Eastern family businesses plan to pass on their shares but bring in professional managers

46%

went to Õ ÛiÀÃ ÌÞ wÀÃÌ

had worked for another company before taking a role Ì i v> Þ wÀ

What is a family council? It’s the means to conduct a formal discussion with all family members involved within the business to iron out any issues or concerns, giving the business the ‘green light’ to move smoothly ahead!)

Developing Innovation, new products, new technology Support investment into new markets

OTHER ISSUES:

45%

innovation

48% 34%

price competition

PUTTING YOUR FINANCES TO WORK

regulation

Mergers and acquisition related investment Support growth in current market Mixed investments New staff

Relocation 0

10%

20%

30%

40%

50%

Deloitte’s Perspectives on family-owned businesses – Governance and Succession Planning EY Family Business Yearbook 2014 Ernst & Young’s Built to last – Family businesses lead the way to sustainable growth (in collaboration with FBN International)

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9

FACTFILE

10

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FACTFILE

SME ROADMAP TO SUCCESS

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11

FACTFILE

29%

54%

of respondents (globally) expect decision-makers to encourage a stronger believe the CEO is responsible entrepreneurial culture in the education system for spearheading their through better linkages between students and company’s innovations. business-savvy individuals

62% believe attracting and retaining innovative people is another key driver for innovation

81%

89% of UAE businesses regard innovation as a strategic priority to help drive business growth

believe innovating or improving products and services will drive business performance

INNOVATION TRENDS SHAPING THE MARKETPLACE

80% expect to step up their innovation investment

57% 62%

say that innovation has ĬåÚ ƋŅ ĜĵŞųŅƴåÚ ĀűĹÏĜ±Ĭ performance

69% 79%

say their organisation constantly keeps itself up-to-date by adopting best practices

say their company directly involves customers in the innovation process by asking for their feedback

WHAT DOES THIS MEAN FOR YOUR SME? Innovation has been a long-standing debate within the SME ŸåÏƋŅųţ Ęåųå ʱŸ ÆååĹ ± ÏŅĹŸƋ±ĹƋ ÚĜŸÏƚŸŸĜŅĹ ŅĹ ƋĘå ÚĜýåųåĹƋ ƋƼŞåŸ Ņü ĜĹĹŅƴ±ƋĜŅĹØ Ƶ±ƼŸ ƋŅ ĜĹĹŅƴ±Ƌå åýåÏƋĜƴåĬƼØ ĵ屟ƚųå ƋĘå ŅƚƋÏŅĵåŸ Ņü ĜĹĹŅƴ±ƋĜŅĹ ±ĹÚ ŸŅ ŅĹţ BŅƵåƴåųØ ŅĹå ƋĘĜĹč ĜŸ ÚåĀĹĜƋå ô ĜĹĹŅƴ±ƋĜŅĹ ĜŸ ± ÏųƚÏĜ±Ĭ åĬåĵåĹƋ ƵĜƋĘĜĹ ƋĘå a) åÏŅŸƼŸƋåĵ that is here to stay. Every SME needs to create an innovative åĹƴĜųŅĹĵåĹƋ ĜĹ ŅųÚåų ƋŅ üŅŸƋåų čųŅƵƋĘ ±ĹÚ ŸƚÏÏ域ţ åÏĘĹŅĬŅčĜϱĬ ±Úƴ±ĹÏåĵåĹƋ ʱŸ åűÆĬåÚ a)Ÿ ƋŅ ÚŅ ƋĘĜĹčŸ ÚĜýåųåĹƋĬƼ ±ĹÚ č±ĜĹ ± ÏŅĵŞåƋĜƋĜƴå åÚčå ĹŅ ĵ±ƋƋåų ƵʱƋ ĜĹÚƚŸƋųƼ ŸåÏƋŅų ƋĘåƼ ĵ±Ƽ Æå in. Using such technology as a catalyst, SME owners need to

12

anticipate ‘breakthrough’ or ‘radical’ changes that include technical and business model innovation

SOURCE: - The third annual GE Global Innovation Barometer survey - PwC’s Middle East Innovation Survey - KPMG Technology Innovation Survey 2012 and KPMG International 2012 - The Bayt.com ‘Innovation in the MENA’ poll

åĵÆų±Ïå ĜĹĹŅƴ±ƋĜŅĹ ±Ÿ ± ĵ±ƋƋåų Ņü ŞųĜŅųĜƋƼţ åĵåĵÆåųØ ĜƋűŸ ÆåƋƋåų late than never!

WHAT ARE THE INDUSTRY EXPERTS SAYING? In a recent interview with Private Sector QatarØ Ĝĩų±ĵ ĘųŅýØ %ĜųåÏƋŅų ±Ƌ åč±Ĭ :ųŅƚŞØ Ÿ±ĜÚ× ŮFĹĹŅƴ±ƋĜŅĹ ĜŸ ƵʱƋ ĜŸ čŅĜĹč ƋŅ Ƌ±ĩå ±Ĺ a) ƋŅ ƋĘå ĹåƻƋ ĬåƴåĬţ FƋűŸ ƵʱƋ ÚĜŸƋĜĹčƚĜŸĘåŸ ƋĘå ÆåŸƋ üųŅĵ ƋĘå also-rans, and what really attracts not only investors, but – just as ŸĜčĹĜĀϱĹƋĬƼ ô ÏƚŸƋŅĵåųŸţ )ƴåųƼ a) ŅƵĹåų Ņų %ĜųåÏƋŅų ĹååÚŸ ƋŅ ±Ÿĩ ƵĘåƋĘåų ƋĘåĜų ÆƚŸĜĹ域 ŅýåųŸ ± ŸŅĬƚƋĜŅĹ ƋʱƋ ĜŸ ÏŅĵŞųåĘåĹŸĜƴåĬƼ ÚĜýåųåĹƋ üųŅĵ ƋʱƋ ŅýåųåÚ ÆƼ ±ĹƼŅĹå åĬŸåţŰ

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Bedaya and Qatar Shell launch ‘The Enterprise Challenge’ 2014 p.14 Brand building p.16 Enterprise mobility: are GCC SMEs equipped to compete? p.20

EMPOWERING GROWTH

EMPOWERING GROWTH

BEDAYA AND QATAR SHELL LAUNCH ‘ENTERPRISE CHALLENGE QATAR’ 2014 COMPETITION WELCOMES OVER 700 SCHOOL AND UNIVERSITY PARTICIPANTS FROM ACROSS QATAR Enterprise Qatar 2014 team and volunteers

The ‘Enterprise Challenge Qatar’ 2014 competition was launched in universities this month and in schools next month, with more than 700 student participants from across Qatar. Now in its third year, the annual challenge is designed to encourage and inspire the entrepreneurial spirit among young people in Qatar and this year involves 12 independent schools and nine universities from Doha and the Northern Communities.

Over the coming weeks, more than 100 volunteer mentors, the vast majority of whom are Qatari, will deliver coaching sessions for the student participants on ethical business, and train them on how to

14

navigate a computer-based business simulation ahead of the competition.

The volunteer mentors, who themselves have received coachingskills training from professionals at Bedaya Centre for Entrepreneurship and Career Development and Qatar Shell, will mentor the students and support the FRPSHWLQJ WHDPV XQWLO WKH VHPL ¿QDOV LQ October. Grand Final events will be held for the Universities on 15th November and for Schools on 15th December 2014, ZKHUH ¿QDOLVW WHDPV ZLOO FRPSHWH KHDG to-head for The ‘Enterprise Challenge Qatar’ trophy.

Abdulaziz Al Khalifa, Chairman of Bedaya and Chief Executive Officer of Qatar Development Bank (QDB), said: “We are proud of the success

of ‘Enterprise Challenge Qatar’ and we are delighted to be part of this initiative for the third consecutive year. ‘Enterprise Challenge Qatar’ is fully aligned with QDB’s mandate to develop and encourage an entrepreneurial culture within Qatar’s society. Therefore, we believe that through Bedaya, we will continue to support and develop the spirit of entrepreneurship among the local community, as well as promote the pivotal role it plays in advancing the economy thorough investing in our youth, and laying the infrastructure for a knowledgebased society.”

Since its inauguration in 2012, ‘Enterprise Challenge Qatar’ has

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EMPOWERING GROWTH

Enterprise Qatar 2014 volunteers’ training session

quickly garnered a strong following.

Last year’s competition ran in nine universities in Doha and six schools in the Northern Communities in Qatar, with 430 student participants in the business challenge that culminated during Global Entrepreneurship Week 2013.

This year the current ‘Enterprise Challenge Qatar’ reaches out to 12 schools and nine universities across Qatar.

Wael Sawan, Managing Director DQG &KLHI ([HFXWLYH 2IÂżFHU RI 4DWDU Shell, said: “I am extremely proud WR VHH D VLJQLÂżFDQW JURZWK LQ WKH number of students and mentors participating in the ‘Enterprise Challenge Qatar’ programme this year.

We really feel that in the ‘Enterprise

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Challenge Qatar’, Bedaya under the Chairmanship of Abdulaziz Al Khalifa and Qatar Shell have developed a tool that nurtures entrepreneurial skills and empowers young people.

It is particularly pleasing to see so many mentors, including so many Qataris, volunteering their time as mentors, each of whom also receives training that I hope supports their own professional development. We hope this competition will spark a passion among our young people to become future entrepreneurs.â€? “By training young people and their mentors, and by sowing the seeds IRU WKH IXWXUH GLYHUVLÂżFDWLRQ RI WKH economy, ‘Enterprise Challenge Qatar’ is directly supporting and contributing

to both human and economic development within Qatar, which are vital pillars of the Qatar National Vision 2030.� added Sawan.

The entrepreneurship programme has different tiers for high school and university students, and is made up of two parts comprising: the Ethical Business Challenge, which tests participants’ ability to balance the economic, environmental and social performance of their company; and the Business Simulation element which familiarises students with general business concepts from inception through to trading, ¿QDQFH VDOHV PDUNHWLQJ DQG production.

The independent schools participating in this year’s competition from Doha include Al Bayyan Girls School, Qatar Complex Girls School, Al Rayyan Al Jadid Girls School, Ad Doha Boys School, Umar Bin Abdul-Aziz Boys School and Ahmad bin Hanbal Boys School.

The independent schools taking part from the Northern Communities of Doha include Al Khor Girls School, Al Shamal Girls School, Al Guwairiya Girls School, Al Shamal Boys School, Abdullah Bin A Al-Misned Boys School and Az-Zubarah Boys School.

The nine universities also participating this year include Qatar University, Texas A&M University at Qatar, the Community College of Qatar, Stenden University Qatar, Carnegie Mellon University in Qatar, North Western University in Qatar, College of the North Atlantic Qatar, Georgetown University School of Foreign Service in Qatar and Virginia Commonwealth University in Qatar. ‘The Enterprise Challenge’ competition was created by Mosaic, a 8. EDVHG QRW IRU SURÂżW RUJDQLVDWLRQ established by HRH the Prince of Wales in 2007 with a range of mentoring programmes aimed at fostering opportunities for young people. Qatar Shell is the founding partner of Mosaic in Qatar, and together with Bedaya, has worked to bring ‘the Enterprise Challenge’ to Qatar.

15

EMPOWERING GROWTH

BRAND BUILDING THE KEY TO ENHANCING SME PERFORMANCE AND PROFITABILITY

You might think that with the huge challenges RI VHFXULQJ FDVKŜRZ DGHTXDWH žQDQFH DQG PDUNHW SRVLWLRQ WKH development of a unique brand for your business isn’t a key concern. Yet you would be wrong: brand building is a fundamental route to market edge and competitive leadership. +HUH $VVRFLDWH (GLWRU Victoria Connolly reviews the brand agenda and KRZ WR JR DERXW WKRVH žUVW pioneering steps‌ 16

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EMPOWERING GROWTH

“A brand is the intangible sum of a product’s attributes: its name, packaging, and price, its history, its reputation, and the way it’s advertised.” David Ogilvy A brand is a complex structure containing many elements; it can essentially be described as a recognisable product, service, person or place, which the buyer or user perceives as relevant, unique, or sustainable. Consumers judge a brand by its added value. Value that is created by providing a good or service that matches consumer needs closely and provides them with the most satisfaction. For SMEs building a strong brand has become increasingly important as markets have globalised and competition increases. Building strong brands not only increases an SME’s visibility and credibility with consumers, but also distinguishes them from larger competitors and as a result allows small and medium sized firms to successfully win market share away from larger more powerful organisations.

Brand building issues Evidence suggests that many managers do not understand what brand management is. Owners and directors should take the lead in building their brand and yet they are often unfamiliar with the concepts and activities involved. This is due to a lack of comprehension and exposure to the real meaning of branding with many small businesses failing to recognise that they already exist as a brand.

Entrepreneurs often do not see branding as an important aspect of their business and therefore fail to incorporate it into their strategic planning with owners viewing brand management as being restricted to advertising and the creation of a brand name and company logo.

Another common issue facing SMEs is lack of time, resources, structures and processes available

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17

EMPOWERING GROWTH

AS AN ENTREPRENEUR, IT IS IMPORTANT TO MAKE STRONG CONNECTIONS WITH THE MARKET AND CONSUMERS TO ENCOURAGE BRAND LOYALTY.

to carry out branding activities.

These limitations can hinder small businesses and force owners and managers to focus on short-term survival strategies. This shortterm approach focusing on daily chores can become an obstacle for a company and can make it difficult for an entrepreneur to remain focused on the long-term success and direction of their business.

The role of the entrepreneur As an entrepreneur, it is important to make strong connections with the market and consumers to encourage brand loyalty. The activities of the business owner have a significant impact on the behaviour of staff. If staff feel valued and respected by their employers, they are likely to develop a sense of responsibility to the firm, which will in turn create a positive relationship between employees and consumers.

Creating a supportive company structure Having a company structure that not only recognises but also supports the importance of brand

18

management in its day-to-day operations can have a significant impact on SMEs standing in the business community. A company structure that focuses attention on the reputation of a business in its chosen market requires staff to increase brand awareness as part of their daily duties and responsibilities. It is through the influence of the entrepreneur and the structures put in place to support branding that employees begin to value a company’s image and communicate this pride to consumers.

The influence of the market In order to successfully enter and grow within a market an SME needs to be aware of the conditions in which it operates.

Customer service and satisfaction are vitally important and in order to ensure both are achieved, SMEs must have detailed knowledge of the strengths and weaknesses of competitor firms. This data can then be used to inform a companywide strategy that ensures that a business communicates its unique

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EMPOWERING GROWTH

OWNERS AND MANAGERS ARE THE DRIVING FORCES BEHIND THE CREATION AND MANAGEMENT OF A SUCCESSFUL BRAND.

selling point (USP) to their chosen market successfully.

Brand management is beneficial for both consumers and businesses A successful brand can help a company to distinguish themselves from competitors, be held in high esteem, and establish a relationship with target markets. Regardless of the size of the business, evidence supports the idea that a well established and recognisable brand name is often worth more than the total value of the company itself and that building a strong brand can improve customer loyalty and therefore generate higher revenues in the long term.

By addressing the initial problem of the lack of exposure to branding by entrepreneurs, SMEs should begin to differentiate their brand within their chosen market. Owners and managers are often forced to focus on short-term business strategy, and this WUDQVODWHV LQWR GLI¿FXOW\ ¿QGLQJ WLPH and resources to engage in branding activity. However, the short-term focus on daily tasks can become an

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obstacle for companies when seeking to gain competitive advantage in their chosen markets. Owners and managers are the driving forces behind the creation and management of a successful brand and should therefore be responsible for ensuring the recognition, understanding and promotion of a positive business image throughout DOO OHYHOV RI D ¿UP The creation of a successful brand may not always be at the top of an entrepreneurs to-do list: however, by considering the development of the brand and the relationship between business and consumer, SME owners are not only ensuring that their company communicates successfully with existing customers but also that new customers are identified and attracted resulting in increased market share and revenue.

In a global business environment where competitive advantage is not necessarily dictated by a company’s size or access to resources, it would appear that successful brand management is one of the major keys to success.

19

EMPOWERING GROWTH

ENTERPRISE MOBILITY: ARE GCC SMEs EQUIPPED TO COMPETE?

SMEs are today faced with the critical issue of how to create and maintain a sustainable competitive advantage in the light of the increased complexity of international trade and the host of business channels, new media and tightening regulation. In an environment where the rules (and the opportunities) change almost daily, what are the effective strategies for an SME to use?

Associate Editor Victoria Connolly investigates‌ 20

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EMPOWERING GROWTH

In the post-recession business environment, a key challenge facing firms of all sizes is how to respond to the double pressures of trade liberalisation and increasing international competition. Traditional ways of competing whereby the firm could differentiate itself on the basis of technology, product or price are fast disappearing and SMEs must now look to new solutions.

Firms able to access the benefits of international markets, including low cost production facilities and economies of scale in distribution, marketing and management are beginning to translate these benefits into lower prices, allowing them to successfully challenge those enterprises still operating under the old assumption that size is key when it comes to successful entry into a globalized market.

Domestic markets are no longer the excusive domains of native companies since the latter are increasingly coming under attack from overseas competitors. SMEs are not immune to this threat and as a result must begin to formulate a strategic response. Increasingly this response has been to enter overseas markets, usually motivated by a combination of strong push factors arising from challenges at home such as increased international competition or market saturation and pull factors enticing companies away from their domestic markets towards exciting new international consumers.

To what extent are SMEs in the GCC at the mercy of international trends and taste and what is the chance of GCC-based SMEs becoming global leaders?

Playing with the big boys When we consider Gulf-based business ventures and their ability to compete internationally it is easy to concentrate on one sector only - aviation. Three local airlines now compete to pull millions of

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21

EMPOWERING GROWTH

SMALL FIRMS WILL NEVER WIN ON PRICE, BUT THEY CAN COMPETE ON VALUE AND SERVICE, WHILE THE MORE SPECIALISED THEIR PRODUCT OR SERVICE, THE BETTER. international travellers worldwide to their Middle Eastern operations: Emirates, the trailblazer and now elder VWDWHVPDQ ZLWK LWV XQSDUDOOHOHG ÀHHW RI JLDQW DLUFUDIW LQ 'XEDL (WLKDG EDVHG LQ WKH QHLJKERXULQJ HPLUDWH RI $EX 'KDEL DQG WKH HYHU PRUH SURPLQHQW 4DWDU $LUZD\V $V PDMRU DLUOLQHV DQG DLUSRUWV WDNH root in the region, so do the attractions WKDW DUH SHUVXDGLQJ PLOOLRQV RI YLVLWRUV WR XVH WKHLU KXEV ,Q SODFHV ZKHUH OLWWOH LQIUDVWUXFWXUH H[LVWHG GHFDGHV DJR WKH abundant oil and gas wealth is being converted into global iconic structures VXFK DV WKH %XUM .KDOLID LQ 'XEDL DORQJVLGH $EX 'KDEL¶V SODQQHG /RXYUH and Guggenheim museums and - in WKH ODWHVW LQGLFDWRU RI WKH UHJLRQ¶V surge to global prominence - the 2022 IRRWEDOO :RUOG &XS ZLOO VHH 4DWDU KRVW DQ LQÀX[ RI YLVLWRUV RQ D PDVVLYH VFDOH But what about smaller businesses, ones with great ideas but without DFFHVV WR DQ LQ¿QLWH SRW RI PDUNHWLQJ DQG SURPRWLRQDO UHVRXUFHV" 0DUNHWV GRPLQDWHG E\ PDMRU SOD\HUV ZLWK KXJH promotional budgets and economies RI VFDOH FDQ VHHP LPSHQHWUDEOH E\ VPDOO EXVLQHVVHV +RZHYHU mainstream media advertising campaigns and lower prices are QRW WKH RQO\ IDFWRUV WKDW LQÀXHQFH FXVWRPHU FKRLFHV LQ WRGD\¶V PDUNHWV DV PDQ\ VPDOO ¿UPV DUH GLVFRYHULQJ 4XDOLW\ ÀH[LELOLW\ DQG SHUVRQDO VHUYLFH DUH SURYLQJ WR EH HIIHFWLYH WRROV IRU FDUYLQJ RXW D QLFKH LQ HYHQ WKH PRVW FRPSHWLWLYH RI PDUNHWV

22

Enterprise  mobility  a  key  driver  of  innovation 0DQ\ 60(V DUH IRFXVLQJ RQ HQWHUSULVH PRELOLW\ DV D NH\ GULYHU RI LQQRYDWLRQ (QWHUSULVH PRELOLW\ WKH VHW RI SHRSOH SURFHVVHV DQG WHFKQRORJ\ IRFXVHG on managing the bourgeoning DUUD\ RI PRELOH GHYLFHV ZLUHOHVV QHWZRUNV DQG UHODWHG VHUYLFHV LV DV DQ LQFUHDVLQJO\ LPSRUWDQW UHVRXUFH WR 60(V DQG RQH WKDW HQDEOHV them to compete with larger more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¶V D VWUDWHJ\ WKDW¶V FOHDUO\ SD\LQJ RII 60(V PXVW EH SUHSDUHG IRU WKH ORQJ haul and show long-term commitment WR H[SRUW PDUNHWV :LQQLQJ RYHUVHDV RUGHUV DQG FRQWUDFWV WDNHV WLPH DQG HQWUHSUHQHXUV PXVW UHVSRQG SRVLWLYHO\ WR REVWDFOHV DQG H[SHFW WR PDNH PLVWDNHV %XW WKURXJK WKH WKRURXJK UHVHDUFKLQJ RI QHZ PDUNHWV JDWKHULQJ LQIRUPDWLRQ ¿UVW KDQG DQG EHLQJ ÀH[LEOH HQRXJK WR SUHSDUH IRU FXOWXUDO DQG VRFLDO GLIIHUHQFHV HQWUHSUHQHXUV will start to advance into new and H[FLWLQJ LQWHUQDWLRQDO PDUNHWV 6PDOO ¿UPV ZLOO QHYHU ZLQ RQ SULFH EXW WKH\ FDQ FRPSHWH RQ YDOXH DQG service, while the more specialised WKHLU SURGXFW RU VHUYLFH WKH EHWWHU 7KH\ FDQ EH ÀH[LEOH DQG DGDSWDEOH WR PHHW FXVWRPHUV¶ QHHGV DQG WKURXJK WKH FOHYHU XVH RI VRFLDO PHGLD WKH\ FDQ PDNH WKHLU EUDQG PRUH µORYHDEOH¶ ZKLFK JLYHV WKHP WKH HGJH ,Q D FURZGHG PDUNHWSODFH WKH UHDO WULFN LV ¿QGLQJ D JDS DQG KDYLQJ WKH ULJKW SURGXFW WR ¿OO LW

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Local SMEs, Global aspirations p.24 To CFO or not to CFO p.28

ENTERPRISE

ENTERPRISE

LOCAL SMEs, GLOBAL ASPIRATIONS IS YOUR SME ENTERING NEW MARKETS AND EYEING INTERNATIONAL EXPANSION?

In an exciting interview with Private Sector Qatar, Sarah Cocker shares exclusive insights on Just Falafel’s worldspanning ambition, her role as Head of Communications and Investor Relations and expansion strategies that can help every SME widen its horizons…

24

What was the biggest challenge that Just Falafel faced when undergoing international expansion?

Making sure that we had the right people deployed in geographic and operational areas to support our expansion; this is a crucial area that must be watched and meticulously planned for.

A lot of businesses fail to customise their offer to best suit the expectations of the foreign market they are in. What are key considerations to bear in mind?

Research is of paramount importance here as is local knowledge. For example, we are just about to open in India in November and we have already carried out extensive research and revised our core menu to take account of local tastes. Also, you have to assure that you have sound supply chains and of course great partners to set up with you. Even then there will be surprises! Like any new venture, you cannot completely eliminate risk but you can minimise it.

How important is the role of a ‘brand image’ for a company looking at international expansion? %UDQG LPDJH LV LPSRUWDQW IURP \RXU ¿UVW day as an operating company until your ODVW 7KH GLI¿FXOW\ RI H[SDQGLQJ DW KRPH or abroad is to keep everyone aligned with your brand and more importantly your brand values. This should come from your core brand values. You have to know very clearly who you are and what you are trying to achieve. Then HYHU\WKLQJ ÀRZV IURP WKLV At Just Falafel, we are on a journey ZLWK RXU FXVWRPHUV WR UHGH¿QH VWUHHW food; offering eating enjoyment by HVFDSLQJ WR ROG ZRUOG ÀDYRXUV :H ZDQW WR GR WKLV ZLWK WKH ¿QHVW LQJUHGLHQWV at a good price whilst being part of our community. Our mission is to “Feed the Hungry”, which obviously plays to our intentions as a food group but is core to our objective of working with the UN :RUOG )RRG 3URJUDPPH Your brand values have to percolate through your organisation otherwise they are hollow and ineffective. For instance, Mohammed Bitar, who is the Managing Director here at Just Falafel, does not want us to clock in and out but to treat the Just Falafel brand as RXU RZQ :H GRQ¶W MXVW FRPH WR ZRUN DQG WKHQ OHDYH LW¶V PRUH OLNH D VWDUW XS mentality with pizza feasts and cable TV. If you are working till late, it feels like \RX DUH HVVHQWLDOO\ µKDQJLQJ RXW¶ EHFDXVH you have work to get done rather than watching the clock and escaping as soon as you can.

Do you think PR and marketing can be crucial to a company entering a new market?

35 DQG PDUNHWLQJ DUH FUXFLDO WR D company entering or growing in a market. However, it goes without saying that your product or service

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ENTERPRISE

LISTED OR NOT, TRANSPARENCY IS KEY ESPECIALLY WITH SOCIAL MEDIA EFFECTIVELY ACTING AS A GLOBAL REGULATOR FOR COMPANIES AND THEIR ACTIONS. has to be the best otherwise you will soon be found out. Marketing can “boost” awareness of your product but it cannot “make” it a good product.

For companies looking to expand overseas, how important is it to have a division dedicated to investor relations? Is it necessary at all?

Investor Relations is most traditionally associated with listed companies.

However, in my role as Head of Communications and Investor Relations, my job is to make sure investors, customers, partners and employees all understand what our strategy is and what part they play in that, which is what makes it so fascinating. Investor relations, especially for a listed company, is a sign that the company takes its obligations to shareholders very seriously.

However, listed or not, transparency is key especially with social media effectively acting as a global regulator for companies and their actions.

Dealing with local investors can be quite different from international investors. How do you maintain a healthy balance?

Sarah Cocker, Head of Communications and Investor Relations, Just Falafel

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All investors – public, private, local, international – are all people that have invested in your company as they

25

ENTERPRISE

IP AND TRADEMARKING ARE EXTREMELY IMPORTANT FOR COMPANIES TO PROTECT THEMSELVES.

believe in you. Therefore, in any jurisdiction they should be treated equally and properly, despite differing legislative requirements.

They are backing you and can move their money elsewhere, so treating them correctly is key.

What top tips would you give SMEs to effectively manage investor relations?

Good relationships with investors and banks (risk-partners) are often key to an SME’s success. Building such strong relationships means that these entities are familiarised with the management and personality of the brand really well so you are not starting from zero when you really

need funds, advice and so on. The Middle East has several entities that can help SMEs understand their roles and obligations such as the Middle East Investor Relations Society.

How do you use social media and digital platforms to benefit the company’s investment proposition?

Social media and digital platforms have been instrumental in Just Falafel’s growth, as you know Facebook has done two cases studies on our use of social media to elevate and engage people with our brand.

That said it is just not possible to engage as a company anymore, especially a global company unless

The different stages of an SME’s growth cycle

9KVJKP 5/'U VJGTG CTG XGT[ URGEKĆ‚E UVCIGU QH ITQYVJ quite similar to those of growing children. In both scenarios, at every stage, there are challenges and, not to forget, huge rewards! Here, we present an overview of the different stages:

Another challenging aspect is hiring the right talent as they are still buying into the company’s story and the management. At this stage, you are essentially playing the balancing act as the wrong hire can negatively affect your small team or if you do not hire quickly enough, your expansion can be affected as you do not have enough manpower get things done.

Baby stage This is the stage wherein your SME is operating one store/ restaurant and you take care of its every need. You oversee every aspect, which is a great learning process and enables you to understand the nuances of your business very well. This stands you in good stead for your next stage. It’s emotionally exhausting, you learn a lot but once you are through it you are wiser and more relaxed leader.

Toddler stage At this stage, the business is more mature – operating around three to four stores or restaurants – and requires you to devise operating systems that can oversee your new business and are also strong enough to withstand the next stage of growth which can be domestic or international. Like a toddler, they can run away from you every now and then so you have to keep a close eye and make sure that you don’t run into trouble. You also have to learn at this point how to let go and delegate certain functions and start to hire URGEKCNKUVU YJGTGXGT ƂPCPEKCNN[ CPF UVTCVGIKECNN[ RQUUKDNG

26

Teen stage This is where you need to make certain rules and stick to them.

That does not mean being rigid and unwilling to change – because the market place is dynamic. However, putting into place key frameworks, checks and balances and standards will help safeguard future expansion. This is quite frankly where mistakes will be made, as any parent will tell you, as you try to calibrate constantly to make UWTG [QWT QTICPKUCVKQP KU QRGTCVKPI CPF EQOOWPKECVKPI ĆƒWKFN[ CPF no black holes are developing.

Adulthood stage By the time you’ve reached this stage, all the lessons you have learnt along the way – both good and bad – come to fruition. You UVCTV VQ DGEQOG OQTG HQEWUGF CPF EQPƂFGPV QH [QWT QDLGEVKXGU +H your systems are strong, you can tolerate extremely high rates of growth.

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ENTERPRISE

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

A LOT OF TIMES YOU FIND THAT SMEs ARE ON A TRAIL TO PUBLICLY LIST THEMSELVES AND SEE THIS AS THE ULTIMATE GOAL, WHEN IN FACT BEING LISTED DOES NOT NECESSARILY SUIT EVERY BUSINESS AND ITS OWNERS.

FAST FIVE WITH SARAH – quick tips on international expansion r *KTG VJG TKIJV RGQRNG YJQ JCXG KPVGTPCVKQPCN GZRGTKGPEG CPF KPFWUVT[ MPQYNGFIG r .KPM WR YKVJ NQECN RCTVPGTU YJGTGXGT CRRTQRTKCVG s VJKU ECP DG VJG MG[ VQ UWEEGUU r +ORNGOGPV U[UVGOU VJCV ECP VQNGTCVG KPETGCUGF XQNWOGU s DG VJG[ ƂPCPEKCN QRGTCVKQPCN QT EQOOWPKECVKQPU r -PQY [QWT UVTCVGI[ CPF FQPoV IGV ECTTKGF CYC[ /CMG C UVTCVGI[ CPF GPUWTG VJCV [QW ECP UWRRQTV KV GKVJGT XKC GZVGTPCN RCTVPGTU QT YKVJ KP JQWUG VCNGPV r &Q [QWT TGUGCTEJ DWV FQPoV CNUQ DGEQOG RCTCN[UGF D[ HGCT

Intellectual Property (IP), and its proper management, can be a major concern for investors and other stakeholders. What is the best way to tackle issues surrounding IP? ,3 DQG WUDGHPDUNLQJ DUH H[WUHPHO\ LPSRUWDQW IRU FRPSDQLHV WR SURWHFW WKHPVHOYHV ,Q PDQ\ FRXQWULHV D WUDGHPDUN LV REOLJDWRU\ EHIRUH \RX FDQ HYHQ EHJLQ WR RSHUDWH 7KLV FDQ EH D FRVWO\ SURFHVV DQG FDQ WKHUHIRUH EH D EDUULHU WR WKH JOREDO DPELWLRQV RI VPDOOHU 60(V

In light of the fact that the Just Falafel family is rapidly growing, how important has creating and maintaining the corporate culture been?

7KH EHDWLQJ KHDUW RI D FRPSDQ\ LV LWV FRUH YDOXHV :LWKRXW WKRVH D FRPSDQ\ FDQ EH RSHUDWLQJ EXW ZLOO QHYHU DFKLHYH WUXH VXFFHVV LQ P\ YLHZ 7KH UHDVRQ EHLQJ WKDW LI \RX GR QRW NQRZ ZKR

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\RX DUH RU ZKDW \RX VWDQG IRU KRZ ZLOO \RX EH FOHDU RQ ZKHUH \RX DUH JRLQJ" 7KLV KDV KXJH UDPL¿FDWLRQV IRU \RXU FRPSDQ\ VWUDWHJ\ SROLF\ DQG HPSOR\HH DOLJQPHQW HWF

Just Falafel is of course a privately owned company, but it has expressed interest in being publicly listed. What are key considerations to bear in mind before taking this big step? $ ORW RI WLPHV \RX ¿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

27

ENTERPRISE

TO CFO OR NOT TO CFO? CUTTING COSTS IN RECRUITMENT CAN LEAD AN SME TO FINANCIAL DISASTER…

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ENTERPRISE

Much has been written about the changing role of the CFO and how this key C-suite executive is increasingly becoming both strategist and corporate gatekeeper – and often tagged as the ‘CEO in waiting’. Yet what does this mean for SMEs? Aren’t we getting ahead of ourselves, when many SMEs still have UHODWLYHO\ XQTXDOLĹľHG DFFRXQWLQJ staff, or a visiting accountant at best? Victoria Connolly explains it’s so important to invest in the ‘money man’‌

There are many reasons why a business fails; one of which is that they run out of cash. With the dawn of globalisation, businesses aspire to grow beyond their local, regional & national boundaries.

It is at times like this that a Chief )LQDQFLDO 2IÂżFHU &)2 QHHGV WR SOD\ a crucial role in steering an SME away from the pitfalls that can often result in disaster.

Company founders and CEOs are rarely equipped with the knowledge RU H[SHULHQFH WR KDQGOH ÂżQDQFLQJ strategies, budgets and dealing with LQYHVWRUV %XW EULQJLQJ D FKLHI ÂżQDQFLDO RIÂżFHU RQ ERDUG LV QRW FKHDS DQG traditionally, SMEs have made the often costly mistake of not recruiting experienced people because they are concerned with keeping business costs down. Entrepreneurs will sometimes try to address their lack of accounting skills by reaching out to existing networks of friends and family in the KRSH WKDW WKH\ ZLOO ÂżQG SHRSOH ZLWK the correct knowledge and experience to advise and guide their business.

Business owners will often start their venture under the impression that launching their product and PDNLQJ VDOHV LV PRVW LPSRUWDQW QRW to mention, of course, that’s precisely what most new business owners happen to have most experience LQ 7UDGLWLRQDOO\ WKH VPDOOHU DQG mid-sized SMEs hired part-time accountants and bookkeepers that visit who visited businesses sporadically WR ¾GR WKH ERRNVœ ZKLOH WKH ¿UPV accountant visits every quarter to make VXUH WKH EXVLQHVV UHPDLQV ¿QDQFLDOO\ on track. Sounds like a sensible way to keep start-up costs down? Or could this short-term approach actually be the road to longer-term ruin?

The  role  of  the  SME  CFO A great CFO makes it a point to understand what drives a business and begins to institute policies and ‘controls’ that are needed when an SME is geared for growth. There is a ORW WKDW VHSDUDWHV WKH ÂżQDQFH IXQFWLRQ of a static business from that of a business that is expanding. A key

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29

ENTERPRISE

CFOs AND FINANCIAL DIRECTORS OF GROWING BUSINESSES MUST BECOME THE CENTRAL INFORMATION HUB FOR THE BUSINESS, CONSOLIDATING, SYNTHESISING AND DISSEMINATING INFORMATION TO WHERE IT IS REQUIRED.

starting point is the notion that growth is not something businesses can dip in and out of at will; it requires constant management and analysis using timely and accurate data. Without this, rapid growth can be undone by what might seem to be very simple risks, such as overlooking loyal customers. The secret to unlocking the potential of a business that it is fertile for growth is WKH SLYRWDO UROH RI WKH ÂżQDQFH IXQFWLRQ and the CFO. Finance leaders must start acting as business partners, getting their hands dirty and being more intimate with the day-to-day workings of the organisation. &)2V DQG ÂżQDQFLDO GLUHFWRUV RI growing businesses must become the central information hub for the business, consolidating, synthesising and disseminating information to where it is required, be it to meet new regulatory and compliance targets, scan their environment for funding or business opportunities or make the case for new activities such as exporting. .H\ DFWLYLWLHV RI DQ H̆HFWLYH &)2 include: ‡ (QVXULQJ EXVLQHVV SODQV IRU JURZWK are designed to be ‘living documents’ – focusing on aligning everyone’s efforts in the relatively short- and medium-term while being the central point for updates on any changes and developments. The business plan must EH DEOH WR DGDSW WR WKH Ă€H[LELOLW\ RI WKH markets it operates within. ‡ ,QYHVWLQJ LQ GDWD LQIUDVWUXFWXUH - a growing business needs to be able to perform data extraction and have access to actionable real-time information. This information will also reveal where the cracks and gaps

30

are as the business goes through rapid growth. ‡ )RFXVLQJ RQ EDODQFLQJ WKH EHQH¿WV of outsourcing with the need for selfVXI¿FLHQF\ WKURXJK EXLOGLQJ LQ KRXVH capacity - both must be developed together to ensure growth that is robust against external challenges. ‡ 'HYHORSLQJ VWURQJ ¿QDQFLDO OHDGHUVKLS - this may require building a network where advice can be readily sought: for example, the board, support staff and external advisers. ‡ 8QGHUVWDQGLQJ ZKDW JURZWK ZLOO look like for the business over the long term - growth is not the same for all businesses; it is important to monitor how growth may be impacted by factors such as where it occurs in the business F\FOH PDUNHW FKDQJHV DQG ¿QDQFHV ,W LV also crucial to understand how growth may impact on the business including staff fatigue and customer attrition.

Growth has many challenges and a ODUJH SURSRUWLRQ RI \RXQJ 60(V IDLO WR grow because of a lack of appropriate and timely support, including inhouse resources. Research has shown the importance of a developing the ÂżQDQFH IXQFWLRQ DQG LWV LQWHUGHSHQGHQW relationship with the growth of a business, from its informal setting-up of processes and systems onwards.

The facts emerging form larger businesses and MNCs tend to indicate that a great CFO walks around and talks to employees, understands customers’ needs and understands where the business is going. They do QRW VLW LQ WKHLU RI¿FH RQO\ FUXQFKLQJ numbers; they should have a feel for where those numbers come from and be able to draw a road map showing where the numbers are heading.

Whatever stage you’re at in your business, whether you’re just starting out or rapidly growing, you should always assess your accounting and ¿QDQFH VWDWXV ZKDW \RXU QHHGV DUH DQG where you need to be going. We’re all under pressure to save money and be PRUH HI¿FLHQW ZLWK H[SHQVHV VSHQGLQJ VRPH PRQH\ RQ JUHDW ¿QDQFH DQG accounting people can actually help in both areas!

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Market intelligence and global competition p.32 The GCC SME revolution – It all starts here p.36

ANALYSIS

ANALYSIS

MARKET INTELLIGENCE AND GLOBAL COMPETITION Are you leading the changes in your sector - or being dragged along by scores of competitors who are doing a better job? How GR \RX ŵQG RXW ZKR \RXU competitors are and what they’re doing - and how do you establish a true set of USPs in line with the global benchmarks? Associate Editor Victoria Connolly reports on an area that is UDSLGO\ EHFRPLQJ D WRS ŵYH concern for regional SMEs.

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ANALYSIS

Companies that are able to identify, collect and analyse information about the external market environment make better decisions. Those SMEs that use marketing information frequently are seen to be more successful than those that do not and because of their socio-economic impact at both local and national level, nurturing the success of SMEs is frequently at the top of policy makers’ agendas.

In Qatar, business development has been targeted for investment with training and related forms of support being given a priority by government initiatives. The focus on encouraging entrepreneurial growth has taken on a new dynamic this year with the opening of the Qatar Business Incubation Centre, which has the capacity and facilities to accommodate around 300 workshops.

Qatar Development Bank (QDB) has also strengthened the financial services being made available to SMEs under its Al Dhameen programme and with other banks quickly following suit, the support available to entrepreneurs in the region confirms the government’s commitment to encouraging the success and expansion of new business ventures.

IN ITS BROADEST SENSE, MARKET INTELLIGENCE IS THE CAPTURING OF INFORMATION RELEVANT TO A SPECIFIC MARKET.

So what is market intelligence?

In its broadest sense, Market Intelligence is the capturing of information relevant to a specific market. In a more practical context, it is the gathering, analysis, and broadcasting of information that is significant to the market segments a company participates or wishes to participate in. Market Intelligence incorporates four major activities; competitor intelligence, product intelligence, market analysis, and market research. It is not just about the collection of data. Market intelligence is the combination of data collection and analysis to generate the information that is relevant to making strategic decisions.

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33

ANALYSIS

BUSINESSES NOW OPERATE IN A WORLD IN WHICH INFORMATION IS MORE READILY AND PUBLICLY AVAILABLE THAN EVER BEFORE.

It is recognised that those companies who are making best use of information show an improved ability to develop an effective response to changes in the marketplace. Marketing intelligence enables a company to collect information about both the internal and external environment that can be used to improve the accuracy and precision of marketing decisions as well as allowing the company to react faster to changes in the market or environment. Businesses now operate in a world in which information is more readily and publicly available than ever before and thanks to the development of the Internet, information on market trends, legislation, customers, suppliers, competitors, distributors, product development and almost every other conceivable topic is available at the click of a mouse. Search engines, online libraries, company websites and other sources provide information in an increasingly plentiful, easy to find, and easy to digest way and yet the types and sources of marketing information used by SMEs are still mostly of an informal nature. What SMEs need is

34

formalised marketing information including data on: suppliers, buyers, competitors and trends (i.e. national, global, economic, socio-cultural and technological).

The quality and reliability of the sources of information used should be instrumental to the strategic decision-making process. It is vital that business owners adopt a systematic, skilful way of collecting, analysing and monitoring quality information from the marketplace in order to minimise risk when planning marketing activities. The more marketing information is used to support decision making, the greater the probability that the company will make the right choices within their competitive environment.

So what does it take to deliver world-­class market intelligence?

There are four key main components an SME must consider to ensure their approach to market intelligence is world-class: 'DWD VRXUFHV DQG ILHOG UHVRXUFHV $QDO\WLFDO VNLOOV DQG SURFHVVHV WR pull the data together 7HFKQRORJ\ IRXQGDWLRQ DQG

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ANALYSIS

MARKETING INTELLIGENCE GIVES DECISION MAKERS A 360 DEGREE VIEW OF THEIR ORGANISATION.

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platforms to deliver, store, process, and distribute the information ‡ 7KH VXSSRUW RI DQG DFFHVV WR WRS management Data gathering and field resources are the foundation for any Market ,QWHOOLJHQFH DFWLYLW\ 7KLV LV WKH set of individuals, processes, and information services that provide the basic data on product shipments, competitor profiling, and other data relevant to the market. An organisation that successfully uses this data finds ways to turn the entire organisation into one large LQWHOOLJHQFH JDWKHULQJ XQLW 7KURXJK the use of incentives, education and existing communication infrastructure such as email and online discussion forums, the entire organisation including sales, purchasing, finance, and development can become a source of relevant market data. However, the gathering of such facts and figures is not enough. Without extensive analysis and discerning reporting, the data remains simply that data, it never becomes useful information. In order for market data to be useful it must be merged together into information that is relevant to key decision makers and the decisions they are making.

7KH XOWLPDWH WHVW RI WKH HIIHFWLYHQHVV of market intelligence is whether it provides the right information in order to let business owners make decisions with confidence.

Identifying the way in which SMEs are likely to make best use of market information is paramount if the potential benefits of the collection and analysis of such data are to be maximised. A second issue that must be considered is the importance of marketing training as it is only through understanding existing and potential market behaviour that a company will be able to make best use of market data. SMEs with relevant marketing know-how can identify their information needs better and can lean towards a more

structured approach to the marketing activity. However, this also carries implications for business owners and managers who should try to invest in their own training so as to be able to improve their understanding of marketing and aid in the decision making process.

Marketing intelligence can be used to assist with more or less every decision faced by a company.

7KH RYHUULGLQJ SXUSRVH RI PRVW market intelligence, however, is to help the company grow and to increase revenue, profit and market share. Good market intelligence can therefore have a huge return on investment in terms of the generation of increased customer revenue or the avoidance of a bad investment or marketing decisions.

But perhaps most importantly it is vital that market intelligence reaches and is valued by business decision makers; this can be a challenge for many reasons. Often this is due to the decision-makers believing that Market Intelligence has little value relative to their own gut instinct. Sometimes an entrepreneur may have had past experience with poorly-executed market data that has had little impact on company performance and therefore has little perceived value.

If collected, analysed and presented in a bespoke fashion that is tailored to the needs of a business, market data is proven to be an invaluable tool when it comes to entering a new market as part of a strategic expansion plan or reacting profitably to changes in existing markets.

Marketing intelligence gives decision makers a 360 degree view of their organisation, the market they operate in and their future direction.

While in the past, SMEs may have considered it to be an expensive activity accessible only by large corporations, in today’s rapidly changing business environment, many entrepreneurs believe market intelligence is a fundamental part of their long term success.

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ANALYSIS

THE GCC SME REVOLUTION

IT ALL STARTS HERE

7KH JOREDO ŵQDQFLDO FULVLV VDZ WKH ZRUOG RI EXVLQHVV FKDQJH LQ GUDPDWLF ZD\V ZLWK D IUHVK HPSKDVLV RQ WKH UROH RI GLYHUVLŵHG EXVLQHVV FXOWXUH DV W\SLŵHG E\ WKH 60( +RZ LV WKH *&& VKDSLQJ XS LQ WKH ŐUDFH RI WKH 60(Vő" :KDW DUH WKH SUHVVXUH SRLQWV JRDOV DQG RSSRUWXQLWLHV" $VVRFLDWH (GLWRU 9LFWRULD &RQQROO\ DVVHVVHV WKH GUDPDWLF SDFH RI FKDQJH DQG WKH EHQHŵWV WKDW DUH EHJLQQLQJ WR HPHUJH 36

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ANALYSIS

As temperatures started to cool following the global economic meltdown and economies around the world embarked on a programme of recovery, it soon became apparent that the existing business landscape had changed significantly. Western economies were quickly realising that small and medium sized enterprises had become the main drivers of economic development and that while big businesses were necessary to maintain the structure of an economy, in recent years large corporations had started to lose market share to smaller, more versatile ventures.

The fact is that the Middle East has now become a hub for the next phase of the worldwide SME revolution and with SME development being at the centre of QNV2030, it looks likely that Qatar will be at the epicentre of this significant change.

Critical  Mass SMEs are a dynamic and vibrant sector of any economy. They FRQWULEXWH VLJQL¿FDQWO\ WR D FRXQWU\œV GDP and provide jobs for the majority of private sector employees, an important asset in the GCC where most countries have employee nationalisation programs. GCC nations, Qatar included, are going through a major transition: something so dramatic and so powerful that when it comes to new business development, there is a mass incubation of new enterprises all over the region. In NHHSLQJ ZLWK WKH JRYHUQPHQWœV strategic vision of 2030, the Qatar approach towards harnessing the power of SME development is built around four key concepts: ‡ 7KH GHYHORSPHQW RI KXPDQ FDSLWDO through support and training. ‡ $ SXVK IRU HFRQRPLF GLYHUVLILFDWLRQ liberalisation and deregulation. ‡ $ WUDQVLWLRQ WR NQRZOHGJH EDVHG economies through infrastructure development. ‡ 7KH FUHDWLRQ RI SXEOLF SULYDWH partnerships.

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37

ANALYSIS

GCC COUNTRIES HAVE TRADITIONALLY FACED THE CHALLENGE OF AN IMBALANCE BETWEEN THE NATIVE POPULATION AND THEIR FOREIGN EXPAT WORKFORCE.

The speed at which this change is occurring in Qatar is dramatic and although such rapid growth will certainly face challenges, it is gathering momentum and amassing its own critical mass with encouraging signs of longevity.

Successful integration The many forms and features of extreme economic diversity combined with a variety of new and dynamic ideas and concepts can become a tremendous driving force with the crudest ideas often developing into great original business models. With its untapped assortment of traditions, styles, personalities, and nationalities, Qatar’s potential to become a centre for global innovation is impressive and as part of QNV 2030 the government’s plans to capitalise on the region’s culture and traditions are ambitious. Here diversification and cultural incorporation are forming the foundations for a new generation of entrepreneurs while technological advances and government sponsored

38

developments in infrastructure are offering business innovators the tools to make their ideas and dreams a reality.

Building the brand Since history of trading began, everyone has been branded, either by his or her origins, ideologies, socioeconomic class or a plethora of other characteristics. From world famous personalities to everyday individuals, from government institutions and multinational organisations to small businesses and sole traders, we are all being constantly profiled and categorised, nothing and no-one is left untouched.

There is nothing wrong with this, but the ability to acquire an advanced understanding of branding activity is crucial for an SME. The skill to recognise and combat undesired images with a professionally executed counter-action strategy aimed to continuously achieve a sharper and slicker company image is key to the success of SMEs competing on a

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([FHOOHQFH $W &DUQHJLH 0HOORQ

'PS NPSF UIBO B DFOUVSZ $BSOFHJF .FMMPO 6OJWFSTJUZ IBT CFFO JOTQJSJOH JOOPWBUJPOT UIBU DIBOHF UIF XPSME $POTJTUFOUMZ UPQ SBOLFE $BSOFHJF .FMMPO IBT NPSF UIBO TUVEFOUT BMVNOJ BOE GBDVMUZ BOE TUBGG HMPCBMMZ *O 2BUBS 'PVOEBUJPO JOWJUFE $BSOFHJF .FMMPO UP KPJO &EVDBUJPO $JUZ B HSPVOECSFBLJOH DFOUFS GPS TDIPMBSTIJQ BOE SFTFBSDI 4UVEFOUT GSPN EJGGFSFOU DPVOUSJFT FOSPMM BU PVS XPSME DMBTT GBDJMJUJFT JO &EVDBUJPO $JUZ $BSOFHJF .FMMPO 2BUBS PGGFST VOEFSHSBEVBUF QSPHSBNT JO CJPMPHJDBM TDJFODFT CVTJOFTT BENJOJTUSBUJPO DPNQVUBUJPOBM CJPMPHZ DPNQVUFS TDJFODF BOE JOGPSNBUJPO TZTUFNT $BSOFHJF .FMMPO JT ÙSNMZ DPNNJUUFE UP 2BUBSmT /BUJPOBM 7JTJPO CZ EFWFMPQJOH QFPQMF TPDJFUZ UIF FDPOPNZ BOE UIF FOWJSPONFOU -FBSO NPSF BU XXX RBUBS DNV FEV

ANALYSIS

THE ABILITY TO ACQUIRE AN ADVANCED UNDERSTANDING OF BRANDING ACTIVITY IS CRUCIAL FOR AN SME.

global scale. Smart internationally savvy entrepreneurs know this very well and this smartness is now slowly creeping throughout SMEs across the Gulf region.

Nationalisation GCC countries have traditionally faced the challenge of an imbalance between the native population and their foreign expat workforce.

Governments want to create and train their own nationals to be at the forefront of all sectors and also to become the driving force behind business start-ups in their home countries. This strategy of employee nationalisation is creating a positive interaction among nationals to take direct active roles in SMEs rather than passive managerial positions.

Nationalization is fuelling education and active engagement. This when blended with a foreign workforce, creates a new kind of energy of its own and this energy is exactly what the new business climate needs. A blend of integrated highly effective

40

working environments based upon an efficient and profitable mixture of local talent and expat experience.

Global  Opportunities There will of course be challenges faced by entrepreneurs across the region. Access to long-term capital, a lack of a culture of strategic planning and limited internal and external resources for expansion and development are real issues faced by business start-ups every day. However, with SMEs rapidly becoming the backbone of economic development across the GCC and with the Qatar governments vision of a vibrant, prosperous country, driven by exceptional economic growth but with a continued respect for the modernisation and preservation of local values, traditions and culture, the SME revolution has without a doubt arrived in the Middle East and all evidence suggests that Qatar is rapidly becoming the centre of all of the action.

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Small enterprise – big business p.42

BUSINESS OPPORTUNITY

BUSINESS OPPORTUNITY

SMALL ENTERPRISE - BIG BUSINESS

Any business with a presence on the web is essentially competing on a global stage - but also, going global is a positive choice that an increasing number of SMEs are making, leveraging a wealth of fresh opportunities and markets. Victoria Connolly assesses the advantages and challenges of working in an integrated global market.

“No-one ever got great through downsizing�

- Tom Peters

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BUSINESS OPPORTUNITY

Globalisation is a source of opportunity as well as a source of threat. So often, the specific advantages resulting from operating in a global market seem to be exploitable only by large organisations: SMEs need to find a strategic solution allowing them to exploit global business opportunities without suffering from limited resources and without exposing themselves to the risk of direct investment. It is a common view that in a highly integrated global market, SMEs suffer from a twofold problem: ‡ 2Q WKH RQH KDQG OLPLWDWLRQV in critical resources restrict the capability to compete in a global environment ‡ 7KHQ DJDLQ ORFDO PDUNHWV DQG niches are being attacked by powerful international organisations.

If the ability to cope in global markets is essential for SME expansion and growth, it is clear that many of the competitive advantages are indeed size-related and as a consequence we must consider the ability of SMEs to effectively compete against large firms in global markets.

7KH QHZV LV QRW DOO EDG KRZHYHU while some business opportunities might be successfully exploited by large organisations due to their ability to access and control the resources and competencies necessary for expansion, niche ventures may also exist that big companies would find too complex, RU WRR ULVN\ WR FRPPLW WR 7KHVH opportunities might well be exploited by a network of SMEs with the flexibility to enter a niche market and compete on aspects other than size.

An SME operating in a global business environment can take advantage of several benefits over and above those enjoyed by competitors operating only in local markets.

Economies  of  scale 7KH GLIIHUHQFH EHWZHHQ JOREDO DQG non-global firms is much more

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43

BUSINESS OPPORTUNITY

TAKING ADVANTAGE OF LOWER INPUT COSTS IS THE MOST OBVIOUS BENEFIT OF DISTRIBUTED PRODUCTION PROCESSES.

Risk  compensation Another benefit in an SME entering international markets is the reduction of risk originating from cyclical downturns. A portfolio of world-wide activities is less risky than one concentrated in a single or a few local markets.

evident in niche markets. A global company can serve a very small segment in one country together with several others in the rest of the world so as to reach a scale of production and technology that would be impossible to obtain in each single market. This economy of scale model is, quite literally, what makes many areas of the business world go round. Global players also, of course, have a natural advantage in mass markets, too, but their impact as competitors is greater in niche segments: SMEs who believe they can comfortably operate in a small niche had better guess again.

Is  globalisation  size-­dependent?

Past arguments have suggested that traditional drivers of globalisation may not apply or even be accessible WR VPDOO ÂżUPV DQG WKDW WKHVH GULYHUV are in fact different from those of large companies. However, evidence from recent years has shown a noticeable trend towards WKH JOREDOLVDWLRQ RI ÂżUPV RSHUDWLQJ in industries where economies of VFDOH SOD\ D VLJQLÂżFDQW UROH H J automotive production, electronics, petrochemical and construction sectors. The same trend is visible in those industries where cyclical downturns were quite common and often had dramatic consequences for ÂżUPV H J FLYLO DYLDWLRQ ÂżQDQFLQJ and heavy machinery as well as for those marketing-intensive sectors ZKHUH WKHUH ZDV D VLJQLÂżFDQW PHUJLQJ of tastes and consumption habits e.g. soft drinks, sport-shoes, and hotels.

Exploitation  of  lower  input  costs Taking advantage of lower input costs is the most obvious benefit of distributed production processes.

Such benefits however, are better exploited in an international setting since it provides the opportunity for the use of different resources with a better cost/utility ratio (e.g., unskilled labour in Asia, skilled labour in Europe).

44

Optimising  market  segmentation SMEs operating in global markets can also take advantage of the trade-off between global standardisation and increasing marginal revenue coming from differentiation. As tastes and consumption habits around the world become homogenised, opportunities are created for standardisation as well as global brand-images, therefore, having a presence in VHYHUDO FRXQWULHV DOORZV D ¿UP WR exploit newly emerging markets and increase marginal revenues with restricted risk.

Staying  local  or  going  global?

As part of QNV 2030 the government of Qatar recognises that SMEs are

an important source of innovative processes, products and services and can be as significant - if not more so - than large firms when it comes to economic development and expansion. When considering entering global markets, evidence suggests that SMEs should concentrate on a specialisation and niche strategy, one that places customer service and innovation at the centre of their competitive advantage. The risk in devoting themselves to specific local segments is clear since the opening of global markets makes it easier for big companies to attack these firms from a domestic front. A very small segment in a local context can be easily exploited together with several similar ones globally so that there is wide production devoted to many niches spreading the risk of expansion. It is doubtful that small companies working exclusively in local markets can survive the cost difference between themselves and larger competitors. While SMEs can successfully exploit their flexibility in overcoming cyclical downturns, when compared to larger local competitors, this weapon is ineffective as larger companies can easily counterbalance poor performances in one particular market with better performances somewhere else.

Small enterprises mean big business for Qatar. While they may not be international brand names yet, the Qatar SME sector is expanding rapidly both at home and abroad. This growth did not just happen by chance. It is a reflection of the passion and enterprising spirit of the country’s entrepreneurs, coupled with the efforts of the government as part of QNV 2030 to create and maintain a probusiness environment that allows enterprises to grow and flourish.

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Selling products in the Middle East and North Africa: opportunity or minefield? p.46

LEGAL

LEGAL

SELLING PRODUCTS IN THE MIDDLE EAST AND NORTH AFRICA: OPPORTUNITY OR MINEFIELD? More and more international manufacturers are looking to the MENA region as a burgeoning growth market - and locally-based SMEs will often look to region’s tried and tested export routes as a traditional way of taking their business to the next level. Yet the linkage between manufacturer and local distributor can be complex and weighted towards local interests. Richard Bell, Partner, Clyde & Co, and Rebecca Soquier, Associate, Clyde & Co, investigate.

With its oil wealth, population growth and strong demand for all manner of industrial and consumer goods, the Middle East and North Africa (MENA) region is an attractive market for many manufacturers. There are, however, potential pitfalls in doing business in the region, particularly when it comes to appointing local agents to distribute products in the region. Many states in the MENA region have enacted commercial agency laws which provide that products may only be distributed in that country by a local company or agent. In some states, the commercial agency laws grant local distributors VLJQLÂżFDQW VWDWXWRU\ SURWHFWLRQV which override the express terms of a distribution or agency agreement.

This can often come as an unpleasant surprise to manufacturers seeking to re-organise their distribution

46

arrangements. For the purposes of this update, we refer to commercial agency agreements and distribution contracts interchangeably as “distribution agreements� (although in some jurisdictions there are differences between the two terms) and local agents as “distributors�.

We will examine the types of commercial agency laws manufacturers typically encounter in the MENA region. )RU HDVH RI UHIHUHQFH ZH KDYH FODVVL¿HG the different commercial agency regimes into three categories: ‡ 3URWHFWLRQLVW WKLV FDWHJRU\ LQFOXGHV states which have commercial agency laws that heavily favour the local distributor; ‡ 0RGHUDWH WKLV FDWHJRU\ LQFOXGHV states which have commercial agency laws that grant the local distributor a certain degree of statutory protection

ZKLOH PDLQWDLQLQJ VRPH ÀH[LELOLW\ IRU the manufacturer to terminate the distribution agreement and appoint other distributors; ‡ )UHH PDUNHW WKLV FDWHJRU\ LQFOXGHV states which do not have commercial agency laws and where the courts will generally uphold the manufacturer’s contractual right to terminate the distribution agreement and appoint other distributors.

For each category, we consider the common traits in the laws, focusing in particular on the rules relating to termination of the agreement, the remedies available to the local distributor and the possibility to contract out of application of the laws. We also highlight some issues manufacturers should be aware of when entering into or terminating a distribution agreement.

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LEGAL

OFTEN, COMPENSATION WILL BE AWARDED EVEN IF THE LOCAL DISTRIBUTOR HAS BREACHED THE TERMS OF THE AGREEMENT, SUCH AS BY FAILING TO REACH AGREED SALES TARGETS OR FAILING TO ADEQUATELY PROMOTE THE PRODUCTS.

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Protectionist  states ,Q FRXQWULHV VXFK DV WKH 8$( 6\ULD (J\SW DQG <HPHQ ORFDO GLVWULEXWRUV ZKR KDYH EHHQ JUDQWHG H[FOXVLYH GLVWULEXWLRQ ULJKWV WR D VSHFL¿F SURGXFW KDYH WKH ULJKW WR UHJLVWHU WKHLU DJUHHPHQW ZLWK WKH VWDWH¶V FRPPHUFLDO DJHQF\ UHJLVWU\ 8SRQ registration, the local distributor will ZLWK VRPH PLQRU YDULDWLRQV EH JUDQWHG WKH IROORZLQJ ULJKWV DQG SURWHFWLRQV Â&#x2021; 5HIHUUDO RI GLVSXWHV WR WKH ORFDO FRXUWV WKH ORFDO FRXUWV ZLOO KDYH H[FOXVLYH MXULVGLFWLRQ RYHU DQ\ GLVSXWH DULVLQJ XQGHU WKH GLVWULEXWLRQ DJUHHPHQW $ clause providing that disputes will be referred to arbitration or to a court in D IRUHLJQ MXULVGLFWLRQ ZLOO JHQHUDOO\ EH unenforceable. Â&#x2021; $SSOLFDWLRQ RI ORFDO ODZ WKH ORFDO FRXUWV ZLOO DSSO\ WKH SURYLVLRQV RI WKH QDWLRQDO law irrespective of the governing law SURYLVLRQV LQ WKH DJUHHPHQW *RYHUQLQJ

law clauses providing for the application of a foreign law will be unenforceable. Â&#x2021; 5HVWULFWLRQ RQ WKH PDQXIDFWXUHU¶V ULJKW WR WHUPLQDWH WKH GLVWULEXWLRQ DJUHHPHQW ZLOO JHQHUDOO\ RQO\ EH DEOH WR EH WHUPLQDWHG E\ PXWXDO FRQVHQW RU E\ RUGHU RI WKH FRXUW 7KLV ZLOO EH WKH FDVH HYHQ LI WKH DJUHHPHQW KDV H[SLUHG LQ DFFRUGDQFH ZLWK LWV WHUPV )XUWKHU WKH PDQXIDFWXUHU ZLOO QRW EH DEOH WR WHUPLQDWH WKH DJUHHPHQW E\ JLYLQJ VLPSOH notice, even if this is provided for in the DJUHHPHQW LWVHOI DQG HYHQ LI WKH ORFDO distributor is in breach. Â&#x2021; 5LJKW WR VHHN D EORFN RQ WKH LPSRUW RI SURGXFWV ZKHUH D PDQXIDFWXUHU KDV VRXJKW WR WHUPLQDWH WKH GLVWULEXWLRQ DJUHHPHQW DQG DSSRLQW D QHZ GLVWULEXWRU WKH ³UHJLVWHUHG´ ORFDO GLVWULEXWRU PD\ DSSO\ WR EORFN WKH LPSRUW RI SURGXFWV WKURXJK WKH QHZ GLVWULEXWRU 7KLV FDQ HIIHFWLYHO\ SUHYHQW WKH PDQXIDFWXUHU IURP VXSSO\LQJ WKH PDUNHW WKURXJK DQ\RQH RWKHU WKDQ WKH UHJLVWHUHG distributor. Â&#x2021; 5LJKW WR FRPSHQVDWLRQ LI WKH PDQXIDFWXUHU VHHNV WR WHUPLQDWH WKH GLVWULEXWLRQ DJUHHPHQW WKURXJK WKH courts, the local distributor will be HQWLWOHG WR VHHN FRPSHQVDWLRQ $V D general rule, the courts will award GDPDJHV WR WKH GLVWULEXWRU IRU GLUHFW FRVWV incurred (such as hiring and training VWDII DGYHUWLVLQJ FRVWV DQG ¿QDQFH FRVWV RQ ORDQ IDFLOLWLHV FDSLWDO LQYHVWPHQW LQ WKH EXVLQHVV VHWWLQJ XS VKRZURRPV VKRSV DQG VHUYLFH IDFLOLWLHV DQG LQ PDQ\ FDVHV ORVV RI SUR¿W ,Q DVVHVVLQJ D FODLP IRU ORVV RI SUR¿W WKH FRXUWV ZLOO XVXDOO\ ORRN DW QHW SUR¿W JHQHUDWHG E\ WKH ORFDO GLVWULEXWRU RYHU SUHYLRXV \HDUV DQG XVH WKLV DV D EDVLV WR FDOFXODWH WKH QHW SUR¿W that would have been earned had the DJUHHPHQW QRW EHHQ WHUPLQDWHG 2IWHQ FRPSHQVDWLRQ ZLOO EH DZDUGHG HYHQ LI WKH ORFDO GLVWULEXWRU KDV EUHDFKHG WKH WHUPV RI WKH DJUHHPHQW VXFK DV E\ IDLOLQJ WR reach agreed sales targets or failing to DGHTXDWHO\ SURPRWH WKH SURGXFWV Moderate  states 7KLV FDWHJRU\ LQFOXGHV FRXQWULHV VXFK DV 6DXGL $UDELD .XZDLW -RUGDQ ,UDT /LE\D DQG %DKUDLQ ZKHUH WKH FRPPHUFLDO DJHQF\ ODZV SURYLGH FHUWDLQ

47

LEGAL

statutory provisions favourable to local distributors but allow the manufacturer VRPH Ã&#x20AC;H[LELOLW\ WR WHUPLQDWH DQ H[LVWLQJ GLVWULEXWLRQ DJUHHPHQW DQG RU DSSRLQW a new distributor. The typical features of WKHVH PRGHUDWH UHJLPHV DUH DV IROORZV Â&#x2021; )RUHLJQ ODZ DQG DUELWUDWLRQ FODXVHV DUH JHQHUDOO\ DFFHSWHG DV D JHQHUDO UXOH WKH courts will uphold and enforce clauses that SURYLGH IRU D IRUHLJQ JRYHUQLQJ ODZ DQG for disputes to be referred to the courts of D IRUHLJQ MXULVGLFWLRQ RU WR DUELWUDWLRQ Â&#x2021; 3RVVLELOLW\ WR GH UHJLVWHU WKH DJUHHPHQW XSRQ WKH H[SLUDWLRQ RI WKH WHUP ZKLOH WKH ORFDO GLVWULEXWRU ZLOO EH HQWLWOHG WR UHJLVWHU WKH DJUHHPHQW this does not necessarily prohibit the PDQXIDFWXUHU IURP WHUPLQDWLQJ WKH DJUHHPHQW ,Q 6DXGL $UDELD IRU H[DPSOH RQFH WKH WHUP RI DQ DJUHHPHQW KDV H[SLUHG WKH FRXUWV ZLOO JHQHUDOO\ DFFHSW WKDW WKH PDQXIDFWXUHU PD\ H[HUFLVH LWV ULJKW WR QRW UHQHZ WKH DJUHHPHQW ZLWKRXW KDYLQJ WR SURYLGH IXUWKHU MXVWL¿FDWLRQ Â&#x2021; 8QOLNHO\ IRU WKH SURGXFWV WR EH EORFNHG DW FXVWRPV WKHUH DUH QR OHJDO provisions or mechanisms which allow a ORFDO GLVWULEXWRU WR UHTXHVW D EORFN RI WKH import of products into the state. There PD\ KRZHYHU EH LQIRUPDO PHFKDQLVPV that allow the distributor to disrupt the relationship with customers or interfere ZLWK PDUNHW DFFHVV Â&#x2021; /LPLWHG ULJKWV IRU FRPSHQVDWLRQ 7KH ORFDO GLVWULEXWRU ZLOO JHQHUDOO\ KDYH D ULJKW WR FRPSHQVDWLRQ RQ WKH WHUPLQDWLRQ RU H[SLU\ RI WKH GLVWULEXWLRQ DJUHHPHQW but this will usually be limited to GDPDJHV WR DFWXDO FRVWV LQFXUUHG UDWKHU WKDQ VSHFXODWLYH ORVV RI SUR¿WV RU SXQLWLYH GDPDJHV Free  market  states 7KLV FDWHJRU\ LQFOXGHV FRXQWULHV VXFK DV WKH WHUULWRU\ RI 3DOHVWLQH DQG $OJHULD ZKHUH WKHUH DUH QR VSHFL¿F FRPPHUFLDO DJHQF\ ODZV DQG WKH PDQXIDFWXUHU KDV D ODUJHO\ XQIHWWHUHG ULJKW WR WHUPLQDWH DQG appoint distributors in accordance with WKH WHUPV RI WKH DJUHHPHQW 7KH W\SLFDO IHDWXUHV RI WKHVH IUHH PDUNHW MXULVGLFWLRQV DUH DV IROORZV Â&#x2021; 7KH ULJKW WR FKRRVH IRUHLJQ ODZ DQG DUELWUDWLRQ FODXVHV DV D JHQHUDO UXOH the courts will uphold and enforce

48

IN LIGHT OF THE LEGAL RISKS INVOLVED, MANUFACTURERS SELLING PRODUCTS ACROSS THE MENA REGION ARE WELL ADVISED TO LOOK AT EACH JURISDICTION INDIVIDUALLY AND SEEK ADVICE BEFORE ENTERING INTO, OR TERMINATING A DISTRIBUTION AGREEMENT. contractual clauses that provide for a IRUHLJQ JRYHUQLQJ ODZ DQG IRU GLVSXWHV WR EH UHIHUUHG WR WKH FRXUWV RI D IRUHLJQ MXULVGLFWLRQ RU WR DUELWUDWLRQ Â&#x2021; 7KH ULJKW WR WHUPLQDWH WKH DJUHHPHQW in accordance with the terms of the DJUHHPHQW WKH SDUWLHV DUH JHQHUDOO\ DOORZHG WR DJUHH RQ WKH FLUFXPVWDQFHV XQGHU ZKLFK WKH DJUHHPHQW PD\ EH WHUPLQDWHG (YHQ LI WKH DJUHHPHQW LV WHUPLQDWHG ZLWKRXW MXVWL¿DEOH FDXVH WKH courts will not force the manufacturer WR UHPDLQ D SDUW\ WR WKH DJUHHPHQW DOWKRXJK WKH GLVWULEXWRU PD\ VWLOO KDYH D FRQWUDFWXDO ULJKW WR FODLP GDPDJHV Â&#x2021; $ OLPLWHG ULJKW WR VHHN FRPSHQVDWLRQ IURP WKH PDQXIDFWXUHU VKRXOG WKH GLVWULEXWRU ZLVK WR VHHN FRPSHQVDWLRQ from the manufacturer for breach or ZURQJIXO WHUPLQDWLRQ RI WKH GLVWULEXWLRQ DJUHHPHQW GDPDJHV ZLOO EH DVVHVVHG LQ DFFRUGDQFH ZLWK JHQHUDO UXOHV RI FRQWUDFW law rather than in accordance with some statutory formula. Â&#x2021; 1R ULJKW WR EORFN LPSRUWV WKH distributor does not have the ability to EORFN WKH PDQXIDFWXUHU IURP LPSRUWLQJ SURGXFWV LQWR WKH PDUNHW WKURXJK another distributor.

Key  issues  for  manufacturers  ,Q HQWHULQJ LQWR DQG WHUPLQDWLQJ GLVWULEXWLRQ FRQWUDFWV LQ WKH 0(1$ UHJLRQ LW LV LPSRUWDQW IRU PDQXIDFWXUHUV to be familiar with the applicable laws DQG VHHN DGYLFH ZKHQ DSSURSULDWH ,Q SURWHFWLRQLVW VWDWHV WKH DSSOLFDWLRQ

RI GUDFRQLDQ FRPPHUFLDO DJHQF\ ODZV FDQ RIWHQ EH DYRLGHG E\ FDUHIXO GUDIWLQJ RI WKH DJUHHPHQW DQG GXH GLOLJHQFH RQ WKH GLVWULEXWRU :KHUH DQ DJUHHPHQW KDV EHHQ UHJLVWHUHG KRZHYHU LW ZLOO XVXDOO\ EH YHU\ GLI¿FXOW WR WHUPLQDWH DQG GHUHJLVWHU LW XQOHVV WKH GLVWULEXWRU DJUHHV :KLOH LW PD\ EH SRVVLEOH IRU the manufacturer to obtain a court RUGHU WHUPLQDWLQJ DQG GHUHJLVWHULQJ WKH DJUHHPHQW FRXUW SURFHHGLQJV FDQ EH OHQJWK\ DQG H[SHQVLYH DQG WKH manufacturer may be ordered to pay compensation to the distributor at the HQG RI WKH FDVH 0RUHRYHU WKH GLVWULEXWRU PD\ EH EORFNHG IURP DFFHVVLQJ WKH PDUNHW ZKLOH WKH FRXUW SURFHHGLQJV DUH RQJRLQJ $V D UHVXOW LW LV LPSRUWDQW for manufacturers to approach the WHUPLQDWLRQ RI D GLVWULEXWLRQ DJUHHPHQW LQ D SURWHFWLRQLVW MXULVGLFWLRQ YHU\ FDUHIXOO\ DQG ZKHUH SRVVLEOH WU\ DQG QHJRWLDWH D VHWWOHPHQW ,Q PRGHUDWH DQG IUHH PDUNHW MXULVGLFWLRQV WKH manufacturer may be able to adopt a PRUH UREXVW DSSURDFK DOWKRXJK FDXWLRQ LV VWLOO DGYLVHG ,Q RXU H[SHULHQFH UHJDUGOHVV RI WKH MXULVGLFWLRQ D GLVJUXQWOHG GLVWULEXWRU ZLOO DOPRVW DOZD\V threaten to sue the manufacturer when the prospect of termination is raised. The NH\ LV WR DVVHVV ZKHWKHU LQ OLJKW RI WKH DSSOLFDEOH ODZ WKDW WKUHDW LV D FUHGLEOH RQH DQG DFW DFFRUGLQJO\ ,Q OLJKW RI WKH OHJDO ULVNV LQYROYHG PDQXIDFWXUHUV VHOOLQJ SURGXFWV LQ DFURVV WKH 0(1$ UHJLRQ DUH ZHOO DGYLVHG WR ORRN DW HDFK MXULVGLFWLRQ LQGLYLGXDOO\ DQG VHHN DGYLFH EHIRUH HQWHULQJ LQWR RU WHUPLQDWLQJ D GLVWULEXWLRQ DJUHHPHQW Authorâ&#x20AC;&#x2122;s  note:  $W WKH WLPH RI ZULWLQJ WKLV DUWLFOH 2PDQ KDG MXVW LVVXHG D GHFUHH DPHQGLQJ LWV FRPPHUFLDO DJHQF\ ODZV 2Q LWV IDFH YDOXH WKH GHFUHH DOWHUV 2PDQ¶V VWDWXV from a protectionist state to a moderate VWDWH :H ZLOO EH SXEOLVKLQJ D VHSDUDWH DUWLFOH RQ 2PDQ ZKHQ WKH HIIHFW RI WKH ODZ FKDQJH LV PRUH IXOO\ XQGHUVWRRG

Clyde & Co accepts no responsibility IRU ORVV RFFDVLRQHG WR DQ\ SHUVRQ DFWLQJ RU UHIUDLQLQJ IURP DFWLQJ DV D UHVXOW RI material contained in this summary.

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Plastic fantastic p.50

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PLASTIC FANTASTIC: HOW A GLOBAL PAYMENT SOLUTIONS PROVIDER CAN HELP YOUR SME

Weâ&#x20AC;&#x2122;ve often argued that cash is the ultimate SME dream and have offered advice on a myriad of ways to liberate your EXVLQHVV FDVK ĹśRZ ,Q the following feature, however, we present a fresh perspective on PDQDJLQJ FDVK ĹśRZ controlling your business spending, increasing revenues and improving FRVW HIĹľFLHQF\ 0DUFHOOR Baricordi, Visaâ&#x20AC;&#x2122;s General Manager for the UAE and Global Accounts Lead MENA, tells Rushika Bhatia about Visaâ&#x20AC;&#x2122;s attractive SME offerâ&#x20AC;Ś

Businesses often argue that cash is king. How do you think a global payment solutions provider steps in and makes a difference?

From our experience in working with small businesses around the world, we know that they have similar issues of growing their business, managing FDVK Ă&#x20AC;RZ DQG PHHWLQJ PRQWKO\ H[SHQVHV &DVK Ă&#x20AC;RZ PDQDJHPHQW LV critical for any company to survive and electronic payments can improve cash management. Electronic payments can help improve areas such as managing payments, create HIÂżFLHQW SD\PHQW FROOHFWLRQV SURFHVV ease moving of funds and reduce administrative process.

A vast majority of small businesses today accept debit and credit cards. What are top reasons you attribute to this trend? Do you have key statistics on the uptake of POS systems within the SME retail industry?

While cards are the generally accepted form of payment for everyday spends, retail and hospitality, a vast majority of small businesses today, trade with non-card payments. This trend is due to the dependence on cash and the perceived convenience that cash RIIHUV 7KHUH LV VLJQLÂżFDQW YDOXH LQ terms of doing away with cash and Visa has been working closely with its member banks to tap this largely non-carded segment and get them to commence card acceptance.

How can global payment solutions provider â&#x20AC;&#x201C; such as  Marcello  Baricordi,  yourselves â&#x20AC;&#x201C; help an SME in its Visaâ&#x20AC;&#x2122;s  General  Manager  for  the  UAE  and  Global  quest for international expansion and growth?

Accounts  Lead  MENA

50

For SMEs, networks and relationships are that much more vital to their success. In 2011, the World Travel & Tourism Council released their ÂżQGLQJV LQ D SDSHU %XVLQHVV 7UDYHO A Catalyst for Economic Performance, indicating that the majority of executive respondents believe business travel to be essential in increasing sales (75 per cent) and developing supplier partnerships (70 per cent). %XVLQHVV WUDYHOOHUV DOVR HVWLPDWHG that 50 per cent of prospects became customers when an in-person meeting took place, compared to only 31 per cent when meetings were not conducted face-to-face.

This is unsurprising, as culturally, this is how business relationships are made and strengthened in this region. It is clear that small businesses need to travel to achieve their growth ambitions. As a global company with a local presence, Visa believes it is essential to make travel as safe, HIÂżFLHQW DQG UHOHYDQW DV SRVVLEOH Creating a bespoke travel experience for SMEs can be a trigger for economic growth. Visa has worked with local and LQWHUQDWLRQDO ÂżQDQFLDO LQVWLWXWLRQV WR FUHDWH SURGXFWV HQDEOLQJ HIÂżFLHQF\ DQG safety. Depending on their needs, SMEs can choose from a suite of features, including cards that come with travel insurance and even cards that provide immigration services.

Do you have any solutions that help ease the accounts receivables process?

Accepting card-based electronic solutions offers small businesses many EHQHÂżWV )RU LQVWDQFH FUHGLW DQG GHELW cards are widely used all over the world; enable faster receipt of funds ZKLFK LPSURYHV FDVK Ă&#x20AC;RZ HQKDQFHV working capital; creates convenience; reduces risk and processing time i.e. no hassles associated with wire transfers or letters of credit etc. A rising trend that we are seeing is being driven by innovation in the mobile space. The

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Business travel

75%

believe itâ&#x20AC;&#x2122;s essential in increasing sales

70%

believe itâ&#x20AC;&#x2122;s essential in developing supplier partnerships

50% Source: Business Travel: A Catalyst for Economic Performance

evolution of smartphones & tablets to be used as mobile terminals to accept cards is a convenient & cost effective way to receive payments & manage UHFHLYDEOHV 6PDUWSKRQHV RU WDEOHWV makes card acceptance portable and therefore easy to use.

What kind of data protection measures are in place today to ensure complete confidentiality of business information?

Visa has developed numerous resources including best practice guides, webinars and a website dedicated to consumer and small business security with simple, cost effective, easy-to-understand steps small business owners can take to greatly improve their security. Data security is fundamental to securing payments and maintaining customer WUXVW 7KH EHVW DGYLFH IRU VPDOO businesses is: be proactive. Donâ&#x20AC;&#x2122;t wait until you have had a breach or lost

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valuable data to take stock of your companyâ&#x20AC;&#x2122;s data security practices.

Make security a priority and start by taking common sense measures to make your cyber security as strong as the padlock you put on your storeâ&#x20AC;&#x2122;s front door.

Additional resources for small businesses: Â&#x2021; 7LSV DQG 7RROV IRU 6PDOO 0HUFKDQW %XVLQHVVHV Â&#x2021;7LSV DQG 7RROV IRU E-Commerce Businesses: http://usa. visa.com/download/merchants/datasecurity-ecommerce-small-merchanttips.pdf

What happens in case of a cyberattack? What kind of remedial measures can businesses take?

We know that hackers are opportunisticâ&#x20AC;&#x201D;they change tactics to ÂżQG SRLQWV RI ZHDNQHVV DQG H[SORLW YXOQHUDELOLWLHV 7RGD\ÂśV FULPLQDOV ORRN for weaknesses across a companyâ&#x20AC;&#x2122;s

of prospects became customers when a faceto-face meeting was conducted

systemâ&#x20AC;&#x201D;in both payment areas and non-payment areas. For example, a hacker may gain access to a companyâ&#x20AC;&#x2122;s non-payment area, then inject malware into the system to gain access to the SD\PHQW DUHD 7KLV WDFWLF KLJKOLJKWV the impact that security issues outside the payment space can have on the payment side. It also reminds us that basic risk management practices such as using strong passwords and optimizing tools to detect malware are important across a companyâ&#x20AC;&#x2122;s system. Once criminals get the data, they follow one of two strategies.

7KH\ XVH WKH GDWD IRU IUDXGXOHQW XVH OLNH WKH $70 FDVK RXWV 7KH\ KDYH D strong network of criminals, and are global and geographically distributed.

Alternately they sell stolen credentials to other criminals.

7R PDLQWDLQ FRQÂżGHQFH RI V\VWHP users, Visa and other stakeholders have made enormous investments in GDWD VHFXULW\ DQG IUDXG SUHYHQWLRQ 7R ensure we protect Visa cardholders, we employ multiple layers of security that work together to help us manage

51

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IF A BUSINESS ACCEPTS PAYMENT CARDS, IT IS IMPORTANT TO HAVE SECURITY STEPS IN PLACE TO ENSURE THEIR CUSTOMERSâ&#x20AC;&#x2122; INFORMATION IS SAFE. fraud. From anti-counterfeit features, to network-based fraud detection, to data security standards to help keep sensitive information secure.

At Visa, we describe our approach as a â&#x20AC;&#x153;Layered Defence.â&#x20AC;? We employ multiple, interconnected strategies that work together to create a strong defence. Keeping fraud rates at alltime lows at that scale is no small feat. What weâ&#x20AC;&#x2122;ve learned and applied over the years is that there is no single approach to security â&#x20AC;&#x201C; there are many.

If a business accepts payment cards, it is important to have security steps in place to ensure their customersâ&#x20AC;&#x2122; information is safe.

Their respective bank or payment services processor can help them prevent fraud. In addition there are free resources and general security tips available to learn how to keep sensitive informationâ&#x20AC;&#x201D;beyond payment informationâ&#x20AC;&#x201D;safe. Below are some quick tips that can help: Know  the  Who,  What,  Where  of  Your  Sensitive  Data Make a list of the type of customer and card information you collect and storeâ&#x20AC;&#x201D;names, addresses, LGHQWLÂżFDWLRQ LQIRUPDWLRQ SD\PHQW card numbers, bank account details and social security numbers. Itâ&#x20AC;&#x2122;s not only card numbers criminals want; theyâ&#x20AC;&#x2122;re looking for all types of personal information, especially if it helps them commit identity fraud.

52

Ask yourself, where do you keep this information and how is it protected?

Determine who has access to this data and if they need to have access.

If  You  Donâ&#x20AC;&#x2122;t  Need  It,  Donâ&#x20AC;&#x2122;t  Keep  It Once you know what information you collect and store, evaluate whether you really need to keep it.

Businesses may not realize theyâ&#x20AC;&#x2122;re keeping unnecessary data until they conduct an audit. Removing and destroying sensitive data from storage makes it harder for criminals to steal it. Work with your bank or payment processor if you are unsure what data to keep or delete and ask if they have any rules governing data storage that you should be aware of.

If youâ&#x20AC;&#x2122;ve been using card numbers for purposes other than payment transactions, such as a customer loyalty programme, ask your merchant processor if you can use tokenization instead. Tokenization is a new technology that replaces card numbers with an alternate number that canâ&#x20AC;&#x2122;t be used for fraud When  You  Choose  Tools  or  Services,  Make  sure  theyâ&#x20AC;&#x2122;re  secure The payments industry maintains lists of hardware and software providers that have been validated against industry security requirements.

Visa also maintains a list of service providers that have been validated against industry security requirements.

If you outsource your payment application and/or network installation and maintenance, have a conversation with your third-party integrator or reseller about security and ask if the payment software installed is compliant with the latest version of the Payment Application Data Security Standard (PA-DSS).

Isolate payment systems from other, less secure programmes, especially those connected to the Internet. For example, donâ&#x20AC;&#x2122;t use the same computer or point of sale system to process payments and surf the Internet.

If you use a computer at your business to handle cardholder data or facilitate payment card transactions, make sure you install an anti-virus programme and update it regularly. If your business has an outward-facing Internet protocol address (these are Internet-facing entry points to your network), it also is essential to LPSOHPHQW D ÂżUHZDOO DQG FRQGXFW quarterly vulnerability scans.

Control or limit access to payment systems to only employees who need access.

Make sure you implement remote access applications securely or eliminate remote access if you donâ&#x20AC;&#x2122;t need it so that criminals cannot LQÂżOWUDWH \RXU V\VWHP IURP WKH Internet.

Take  Advantage  of  Security  Tools   and  Resources Work with your bank or processor and ask about the anti-fraud measures, tools and services you can use to ensure criminals cannot use stolen card information at your business.

Consider using encryption or tokenization to help secure payment data and minimize its value to data thieves.

For e-commerce retailers: We recommend that retailers verify the CVV2 code. A CVV2 is the three digit number on the signature panel that can help verify that the customer has physical possession of the card and not just the account number.

For an additional layer of security, retailers can use services such as 9HULÂżHG E\ 9LVD ZKLFK SURPSW the cardholder to enter a personal SDVVZRUG FRQÂżUPLQJ WKHLU identity.

For brick and mortar retailers: Retailers should swipe the card and get an electronic authorization for the transaction Retailers may also want to consider upgrading their payment terminals to accept EMV chip technology.

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EMV chip technology introduces unique dynamic values for each transaction, making account data less attractive to steal.

When working with a merchant (in this case a SME), do you evaluate and discuss key risks and put together a risk management template?

Visa collaborates with the broader payment community on innovative data security technologies and fraud prevention strategies to keep payments safe. No entity can protect the system E\ LWVHOI 7KDWÂśV ZK\ ZH ZRUN WR IRVWHU an environment of partnership, engagement and accountability DFURVV WKH LQGXVWU\ :H ZRUN KDQG in-hand with the broader payments community â&#x20AC;&#x201C; from cardholders to PHUFKDQWV ÂżQDQFLDO LQVWLWXWLRQV WR service providers, regulators to law enforcement. Our collective success PDLQWDLQLQJ WUXVW DQG FRQÂżGHQFH RI consumers depends on our ability to work together, share information and coordinate our defences.

Risk considerations would be similar, regardless of the size of a retailer. Visa has updated content on its webpages, security conferences and webinars which are targeted at merchants of all sizes. Visa provides acquirers and merchants alike an exhaustive list of information, whether it be best practices, guides, education, data security, encryption or risk tools and solutions.

As a small business in the trading sector, what are the costs associated with setting up a payment solution?

As mentioned above, merchant relationships are owned by acquiring banks. A small business wishing to set up a Payment Solution for their

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business, need to factor in the bank charges, which are usually structured as an upfront deposit, equipment rental and transaction based fees. Exact costs differ by type of service required and acquiring bank chosen.

Do you offer any customised solutions tailor-made to suit a SMEâ&#x20AC;&#x2122;s individual needs?

For payment solutions providers such as Visa, who have strong local ties to businesses in the region while also capable of offering global solutions and platforms, providing targeted and relevant access is the next step to helping local SMEs achieve their goals. Our commercial payment solutions â&#x20AC;&#x201C; such as the Visa Business card â&#x20AC;&#x201C; are designed to meet the needs of small businesses.

The Visa Business card is an easy way to separate company and personal expenses, manage business and travel spending, and simplify bookkeeping. Many business commercial card programmes also offer discounts and deals, which are not normally available to personal credit card cardholders, to help businesses save on essentials. For instance, Visa Commercial Offers features a wide range of business products and services from established merchants to help cardholders achieve costs savings. These programmes include discounts on business travel and accommodation, support services such DV FRXULHU DQG RIÂżFH VXSSOLHV DV ZHOO DV other professional products and services GHVLJQHG IRU 60(V :H DUH FRPPLWWHG to creating commercial products and solutions that enable entrepreneurship and SMEs to prosper â&#x20AC;&#x201C; through our commercial payment solutions like the Visa Business card and Visa Commercial Offers.

How do you see the benefits of company credit cards in terms of managing staff expenses and evaluating individual staff behaviour?

ACCESS TO FUNDS WHENEVER AND WHEREVER YOU NEED IT GIVES BUSINESSES MORE MALLEABILITY TO SCALE UP.

Managing outgoings on a business card allows small businesses greater control of business spending - you can track expenses by category; issue cards to key employee; set spending limits; and EHWWHU PDQDJH \RXU FRPSDQ\ÂśV FDVK Ă&#x20AC;RZ To further aid small businesses, Visa is introducing two new platforms: Visa IntelliLink for Small Business, which allows businesses to track and manage WKHLU H[SHQVHV PRUH HIÂżFLHQWO\ DQG 9LVD Payment Controls, which allows business owners to customize how, when and where their Visa Business Card and their HPSOR\HHVÂś 9LVD %XVLQHVV FDUGV FDQ EH used by setting rules based on merchant categories and various other criteria.

Do you believe that â&#x20AC;&#x2DC;cleared fundsâ&#x20AC;&#x2122; have advantages that even cash doesnâ&#x20AC;&#x2122;t have?

Access to funds whenever and wherever you need it gives businesses more malleability to scale up, increases UHYHQXH DQG FRVW HIÂżFLHQF\ :LWK D Visa Business Debit Card, businesses can conveniently access their funds from their checking account. On the other hand, Visa Business Credit Card allows businesses to take control of purchasing convenience with generous DYDLODEOH FUHGLW :KDWÂśV EHWWHU LV WKDW our commercial cards can be used DQ\ZKHUH WKDW DFFHSWV 9LVD WKDWÂśV WHQV of millions of merchants worldwide.

53

TRADE & FINANCE

KATARA HOSPITALITY THE HOSPITALITY INDUSTRY WILL PLAY A SIGNIFICANT ROLE IN QATAR’S AMBITION TO SECURE ITS REPUTATION AS A TOP GLOBAL BUSINESS AND INVESTMENT DESTINATION AND THE STATE-BACKED KATARA HOSPITALITY IS POISED TO DRIVE THE INDUSTRY’S GROWTH. CEO AND BOARD MEMBER HAMAD ABDULLAH AL MULLA TELLS MELANIE MINGAS HOW THE COMPANY IS DRAWING ON FOUR DECADES OF EXPERIENCE TO MAKE THE DREAM COME TRUE

54

Hospitality in the Middle East is known for its world class status and its combination of private sector and part government backed brands have competed to such an extent, standards have been driven far beyond the international benchmarks.

But unlike the home-grown industry giants of the UAE, from Jumeirah to Rotana, Katara Hospitality – formerly known as Qatar National Hotels – was directly established and tasked by the Qatari Government to lead the development of Qatar’s hospitality industry and assist in economic GLYHUVL¿FDWLRQ RI WKH ULFKHVW FRXQWU\ LQ the world per capita.

Not only would Qatar emerge from its oil state prestige as an international business and investment hub, but in doing so it would become a leader on

WKH JOREDO KRVSLWDOLW\ SOD\LQJ ¿HOG Re-branded in 2012 to align with the country’s hospitality ambitions, at both a national and international level, Katara’s immediate focus is on rapid portfolio expansion after four decades of measured growth on other shores.

While state control has been somewhat distilled – and Katara’s DSSURDFK WR UHYHDOLQJ LWV ¿QDQFLDO performance has taken a very private sector approach – it remains under the ownership of Qatar Holding LLC (QH), an entity itself founded by Qatar Investment Authority (QIA).

The company today is valued at “more than tens of billions of US dollars”.

Owners and operators, although not of the same properties, Katara conducts its business under two models with an

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and diverse portfolio of hotels. â&#x20AC;&#x153;Our collection includes iconic hotels that have created a lasting legacy in the hospitality industry, a healthy base of business hotels and resorts located in key destinations, without missing the opportunity of being pioneers in developing markets where we commit to support the local communities and we foresee emerging tourist destinations,â&#x20AC;? he continues to add.

Hamad Abdullah Al Mulla, CEO and board member, Katara Hospitality

ON HOME SOIL, THE GROWTH IN POPULARITY OF MERWEB HAS ADDED A NEW DIMENSION TO DOHAâ&#x20AC;&#x2122;S LIMITED BUSINESS HOTEL STOCK.

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80/20 strategy; 80 per cent of future growth driven by property ownerships and 20 per cent driven by hotels operated under two existing brands, the Qatar-focused Merweb and Swissbased Burgenstock Selection.

The company also converts properties into what it describes as â&#x20AC;&#x153;hospitality gemsâ&#x20AC;?, such as the Tazi Palace in Tangier. Combined they total a portfolio of 29 assets with an aim to hit 30 before 2016. Today it is believed the target could be exceeded within that deadline.

Displaying the same penchant for lavish European souvenirs as the Qatari royal family â&#x20AC;&#x201C; think the recent purchases of Valentino and most of the ZRUOGÂśV ÂżQH DUW Âą LQ -XQH .DWDUD +RVSLWDOLW\ VQDSSHG XS ÂżYH ,+* KRWHOV in Europe from a private investor, all heritage properties, taking the number of its hospitality operating partners to six (see box on the following page).

With solid foundations, the race to become â&#x20AC;&#x153;one of the leading hospitality organisations in the worldâ&#x20AC;?, has truly begun. â&#x20AC;&#x153;Looking ahead, our plan is to continue investing in peerless hotels in Qatar while also growing our collection of iconic properties in key international PDUNHWV ´ H[SODLQV .DWDUD +RVSLWDOLW\ CEO and board member, Hamad Abdullah Al Mulla. â&#x20AC;&#x153;We are continuing to explore investment opportunities in hospitality assets in a range of global destinations, with an overall goal to create a balanced

Spinning   a  web On home soil, the growth in popularity of Merweb has added a new dimension to Dohaâ&#x20AC;&#x2122;s limited business hotel stock.

7KH FRXQWU\ÂśV H[LVWLQJ SURSHUWLHV WRWDO URRPV DQG WKH FRQÂżUPHG pipeline today stands at 38 properties; 9,251 rooms according to data from 675 *OREDO RevPAR performance in Doha has EHHQ VWURQJ WKLV \HDU ZLWK -XQH Âą WKH last calendar month prior to Ramadan â&#x20AC;&#x201C; demonstrating a 15.6 per cent increase, to US$130.05 driven by an increase in occupancy of 75.2 per cent; LWVHOI XS SHU FHQW With so few international operators PDQDJLQJ D VLJQLÂżFDQW VLQJOH EUDQG portfolio, Merweb is well positioned to take a lionâ&#x20AC;&#x2122;s share of the capitalâ&#x20AC;&#x2122;s pipelineâ&#x20AC;Ś. Not to mention success.

The second Merweb property ZLOO RSHQ LQ HDUO\ VSHFLÂżFDOO\ positioned for Dohaâ&#x20AC;&#x2122;s business arrivals and local business community, joining Merweb Hotel Al Sadd. Two further properties are under development in 'RKD ZKLFK FRPELQHG ZLWK .DWDUDÂśV owned properties will take the total portfolio in the city to 11, more than one third of the 2016 target. â&#x20AC;&#x153;Currently, our operator business is focused in Qatar. We will manage some of our local properties under our Qatarborn and grown Merweb brand, which is based on a concept intimately related to the history of the country,â&#x20AC;? Al Mulla explains. ,Q EHFRPLQJ RQH RI WKH ZRUOGÂśV KRVSLWDOLW\ OHDGHUV .DWDUD KDV OHDUQW from the best, taking best practice tips from its operating partners, from The Ritz-Carlton to Movenpick.

55

TRADE & FINANCE

WHILE THE GROUP TODAY EVEN HAS ITS OWN HOSPITALITY SCHOOL, ITS TECHNIQUE OF DREAM TEAM AMALGAMATION IS THE CRUX OF ITS SUCCESS.

UNDER DEVELOPMENT ØÀ}i ÃÌ V ,ià ÀÌ > i ÕViÀ i , Þ> ->Û Þ >ÕÃ> i ÝVi à À Ìi > >] > ÕÝÕÀÞ

iVÌ Ìi ] > />â *> >Vi Ìi ] /> } iÀ

À à i>V ,ià ÀÌ OWNED PROPERTIES ÌiÀ Ì i Ì> À> vÕÀÌ ÌiÀ Ì i Ì> Ƃ ÃÌi Ƃ ÃÌiÀ`> ÌiÀ Ì i Ì> >À Ì > ià InterContinental de la Ville Rome InterContinental Madrid Chiva-Som - iÀÃiÌ 7iÃÌ >Þ > Õ`` > >À Ìi *>À à Hotel Schweizerhof-Bern / i *i ÃÕ > *>À à i , Þ> Vi>Õ q ,>vyià *>À à ,>vyià Ìi - }>« Ài / i , Ìâ >À Ì ] > - iÀ>Ì > ,ià ÀÌ E Convention Hotel - >Àµ 6 >}i E -«> -i> i i>V ,ià ÀÌ ,i > ÃÃ> Vi - >À - i `i 6 iÜ i>V ,ià ÀÌ Ûi « V Ìi >

> >ÀÀ ÌÌ Ìi

56

“Our work with our internationally acclaimed operating partners has given us the depth of expertise and confidence to venture into becoming a trusted hotel management company, while being able to deliver hospitality complexes that meet international standards.” He continues.

It’s at this point in Katara’s story that it’s only natural to assess the exponential rise of its UAE counterpart, Jumeirah Group.

A group itself owned by a quasigovernment entity, Jumeirah’s difference is that in creating its version of ‘world class hospitality’, inspiration was drawn from the guest-facing operational touches of the world’s finest hotels and the knowledge garnered from management teams imported from around the world.

While the group today even has its own hospitality school, its technique of dream team amalgamation is the crux of its success.

On the other hand, Katara’s approach has been to forge legitimate business partnerships with major global brands from a number of different countries and with an entire spectrum of approaches to hospitality; each providing a different aspect to the group’s industry education, sometimes over the course of decades long relationships.

The combination of intelligence this now feeds into Merweb – and

KATARA’S INTERNATIONAL OPERATING PARTNERS The Ritz-Carlton Sheraton ,>vyià Marriott Movenpick IHG

to a similar extent the Burgenstock Selection – could create a very different hospitality landscape in Qatar, one where nationals are already armed with the skills needed for successful operations and talent doesn’t need to be imported.

Economically, this will also paint a different picture to that of the UAE, with less wealth flowing into foreign bank accounts and a significantly more robust employment model. For a country accustomed to a certain way of life, these will be key elements in the success of its transition into global financial and business hub.

Furthermore, as with the stories of Dubai and Oman, once a corporate tourism business has been established the leisure sector will follow, creating a dynamic hospitality industry – the foundations for which have already been firmed by Doha’s vibrant F&B scene.

As Al Mulla concludes: “As we embarked on a new wave of strategic expansion in 2011, we seized the opportunity to redefine the brand and set the scene for the future growth of not only our rapidly expanding portfolio, but of Qatar’s reputation as a key player in the global tourism market.

“Qatar’s goal is to become a major international centre for finance and investment management, a vision shared by its government, people and institutions.”

KATARA MARKETS Qatar France Switzerland Italy / i iÌ iÀ > `Ã Germany -«> À Ã Ã > `Ã] ƂvÀ V> Egypt Morocco Thailand Singapore

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Managing your mobile workforce p.58 CFO â&#x20AC;&#x201C; the new corporate leader p.62 Risky Business p.66

BUSINESS TOOLKIT

BUSINESS TOOLKIT

MANAGING YOUR MOBILE WORKFORCE In a business ecosystem where change is the only constant, leading your business to the forefront of connectivity, mobility and technological readiness can be a mammoth task.

However, what you should really be worried about is â&#x20AC;&#x201C; how will you manage your team, and its productivity, once you get there?

How often do you hear people using WKH SKUDVH ÂłJRLQJ WR ZRUN´" ,Q todayâ&#x20AC;&#x2122;s era of global connectivity, chances are not very many. Fastpaced technology, increased used of mobile devices and emerging trends such as BYOD and cloud computing have blurred the concept of a traditional workplace. Business owners experience this almost every day; you may be based out

of Singapore, finalising details of a project with an employee located in Dubai.

Weâ&#x20AC;&#x2122;ve now entered into this new era of the â&#x20AC;&#x2DC;mobile workforceâ&#x20AC;&#x2122;, where HPSOR\HHV DUH QR ORQJHU FRQÂżQHG WR WKHLU RIÂżFH FXELFOHV 7KH UHDOLW\ however, is that a mobile workspace extends to be much more than just WKDW $ &LWUL[ UHVHDUFK SDSHU GHÂżQHV the mobile workspace as â&#x20AC;&#x153;a portable,

Statistics and key data

42%

growth in the remote workforce from 2006-2012

80%

upsurge in engagement by organisations offering workplace mobility

Sources: Survey on Workplace Flexibility 2013, WorldatWork; American Community Survey 2013, United States Census Bureau; IDC

58

1.5 BILLION more mobile workers by 2015 as forecasted by the TGUGCTEJ Ć&#x201A;TO +&%

always on, always connected working environment that follows an employee no matter where they go, no matter what device they chose to use, and no matter what connectivity they happen to be leveragingâ&#x20AC;?.

7KH DUWLFOH IXUWKHU H[SODLQV Âł7KHUH DUH D YDULHW\ RI WHFKQRORJLHV that enable the mobile workspace.

For users to get the most out of these new solutions, a mobile workspace incorporates the following six FKDUDFWHULVWLFV Â&#x2021; $FFHVV WR DQ\ DQG DOO DSSOLFDWLRQV Â&#x2021; $FFHVV WR FRUSRUDWH GDWD Â&#x2021; $FFHVV WR FROODERUDWLRQ WRROV Â&#x2021; $FFHVV WR WKH LQWUDQHW DQG RWKHU internal resources Â&#x2021; &RQWHQW DFFHVV ZKHUH SHRSOH are and from the device of their choice Â&#x2021; )OH[LELOLW\ IRU ,7 WR SURYLGH services over any network from any cloudâ&#x20AC;?

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LIFE IN A MOBILE WORKSPACE That was quick!

Who can I get to fill this shift IMMEDIATELY?

The manager gets an alert and needs to reach multiple employees to resolve the issue.

REMEMBER FACE-TO-FACE CONVERSATIONS ARE STILL THE MOST EFFECTIVE WAY TO ENGAGE WITH EMPLOYEES.

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The manager quickly selects ŧƚ±ĬĜĀåÚ åĵŞĬŅƼååŸ ±ĹÚ ŸåĹÚŸ a text message to all of them with just a few clicks.

Apart from connectivity – and the ability to speed up business processes – mobilising your workforce to be truly ‘on-thego’ can have terrific benefits.

It enables your business to effectively lower its costs, sparks creativity within employees, improves operational efficiency, enhances collaboration and puts you in a position of complete control.

However, as a business owner, leader and manager, keeping your employees in check can be difficult; with the new mobile workforce, managers are finding it increasingly difficult to master the balancing act between productivity and flexibility. In such a scenario, considering some of the following tips can be hugely beneficial in being able to smoothly transition into this new style of working:

When the shift is claimed all employees are instantly ĹŅƋĜĀåÚ ±ĹÚ ŸÏĘåÚƚĬåŸ ±ųå automatically updated – while the manager moves on to other critical tasks.

1. Keeping all lines of communication open: Don’t let the geographical distance get between you and your employees. As a business owner, make it a priority to continually interact with key staff members through telephone calls, video conferencing and even visiting them from time to time. Remember face-to-face conversations are still the most effective way to engage with employees. Constant communication will allow you to be in touch with the real-time operations – and needs – of your business.

2. Implementing the right KPIs: Brief all your employees on their role within the company and what is expected out of them. Putting into place Key Performance Indicators (KPIs), which are results-oriented versus time-based, will eliminate the chance of any future disputes. For

59

BUSINESS TOOLKIT

SERVICED OFFICES HAVE GAINED A LOT OF POPULARITY OVER THE LAST FEW YEARS AND HAVE BECOME SYNONYMOUS TO CONNECTIVITY. instance, measuring the productivity of your design team based on the number of projects they have been able to deliver in a month, instead of the number of hours they’ve spent on each project. This takes-out the traditional ‘9-5’ working template out of the picture giving employees better flexibility, without employers losing control.

3. Use technological tools to help you: With sophisticated project management software, productivity apps, cloud computing and several other data-sharing mechanisms, working remotely is certainly much easier. Incorporating these within the day-to-day operations of your business can be a huge advantage.

It gives you, and your team, access to the raft of company data anytime, and from anywhere.

4. Incorporate team-­building activities: Working away from the usual office environment can significantly reduce the amount of face-to-face interaction employees have with one another. Hence, it is essential for managers to organise team-building exercises, office parties and other events that can bring the team together. These don’t have to be work-related at all; meeting once in three months for a hiking trip or a Christmas dinner ensures that team members know one another and have a strong professional bond.

60

Don’t forget about security and compliance: The downside of seamless data sharing is the increased possibility of breach of security. It is surely a good idea to invest time and money in making sure that all the platforms and devices you use are as secured as possible.

For instance, companies have been increasingly adopting Mobile Device Management (MDM), which allows employees to switch between personal and professional use when using their mobile devices. This means all company data is secured when your staff is outside working hours.

5.

6. Achieving the right work-­life balance: Working remotely or ‘onthe-go’ allows for a flexible working model but very often managers use this as a way to control their employees 24/7. It’s crucial for managers to understand the need to give employees some time off even when they are working away from their office space. Maintaining a work-life balance is a significant aspect for all employees and will ensure that they aren’t fatigued or experiencing ‘burn-out’.

,QYHVW LQ D VHUYLFHG ṘFH Serviced offices have gained a lot of popularity over the last few years and have become synonymous to connectivity. Equipped with state-ofthe-art technology, serviced offices offer a comfortable office setting anywhere in the world. With their large branch network, no matter where you or your employees are located, you can access sophisticated office suites and stay connected with one another. Most serviced offices also offer packaged deals with mobile software featuring advanced functions such as team-chat, file-sharing, booking flights and so on.

7.

Finally, remember that a ‘mobile workforce’ remains at the core of the future of business. So, implement these strategies - and the future would be yours!

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BUSINESS TOOLKIT

CFO â&#x20AC;&#x201C; THE NEW CORPORATE LEADER Tradition dictates that the primary function of the CFO is to ensure that his FRPSDQ\ VWD\V ŵQDQFLDOO\ safe and can meet its OLDELOLWLHV RU REOLJDWLRQV 8QGRXEWHGO\ WKLV UHVSRQVLELOLW\ UHPDLQV imperative even WRGD\ %XW WKH UROH RI the modern CFO has HYROYHG LQWR D ZLGHU DQG PRUH JHQHULF UDQJH RI UHVSRQVLELOLWLHV ZKLFK require expansion into PDQ\ ŵHOGV RWKHU WKDQ EDUH ŵQDQFLDOV 3ULYDWH 6HFWRU 4DWDU LQYHVWLJDWHV KRZ &)2V KDYH HPHUJHG WR EHFRPH QHZ FRUSRUDWH OHDGHUVÅ&#x2122;

62

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BUSINESS TOOLKIT

A CFO is increasingly considered to be the public face of a company as the survival of the company depends RQ WKH ERWWRP OLQH ÂżJXUHV 7KLV crossover role from CEOs emanates from the need of transparency in issues such as corporate governance, risk management and the maintenance of effective systems. ,QFUHDVHG VFUXWLQ\ RI UHYHQXH SURÂżWV (and every expense in between) has transformed CFOs from custodian of the balance sheet to the saviours of a companyâ&#x20AC;&#x2122;s reputation.

The  role  of  a  CFO Core responsibilities of a CFO can be summarised as the following: 1. In order to cater to the unprecedented and ever changing business environment, CFOs have to be abreast with market trends, threats from competitors and the avenue for new opportunities.

They have to work hand in hand with management on budgeting, IRUHFDVWLQJ DQG ÂżQDQFLDO UHSRUWLQJ 2. CFOs are expected to reassure investors and analysts on the companyâ&#x20AC;&#x2122;s behalf. In addition, they must also convince internal stakeholders and employees on VWUDWHJ\ DQG ÂżQDQFLDO SHUIRUPDQFH They should be transparent with information and also - of course - defend business decisions and strategies undertaken by the company.

3. CFOs are expected to take SURÂżWDELOLW\ PDQDJHPHQW WR QHZ levels and establish marketing as more than just a discretionary expense. Vital information and management skills are important when managing such complexities.

Businesses are constantly bombarded ZLWK PDUNHW Ă&#x20AC;XFWXDWLRQV DQG confusing external factors. The need of the hour is to integrate with LQWHUQDO ÂżQDQFLDO DQG RSHUDWLRQDO management to form decisions and opinions. In addition, CFOs will

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have to justify decisions by modelling scenarios and reporting.

People management has also evolved as a prominent factor in the CFO remit. Teams and departments are streamlined and made smaller and diverse, due to cost cutting. So it is imperative to know who is more apt for which role and who is dispensable, when making job cutting moves.

4.

5. CFOs have to keep themselves attuned to technical and technological XSJUDGHV LQ WKHLU VSHFLÂżF LQGXVWULHV They should take the lead to apply analytics to meaningful operational decisions as well. This will help them strengthen ties throughout the business DQG H[SDQG LQĂ&#x20AC;XHQFH RXWVLGH FRUH ÂżQDQFH IXQFWLRQV 6. Mergers and acquisitions (M&A) add value to every enterprise and contribute to the organisationâ&#x20AC;&#x2122;s long-term growth.

The CFO has to determine which M&A adds money to the balance sheet while adding to the reputation and goodwill of the company at large.

On  a  strategic  frontâ&#x20AC;Ś $V WKH SLQQDFOH SRVLWLRQ LQ ÂżQDQFH DQG accounting, CFOs are being expected to take on more strategic responsibilities and participate in decision-making processes. CFOs of the day are not merely bean-counters. He or she is on par with the CEO in managing a business.

CFOs are now considered to be the strategist and trusted advisors to WKHLU QRQ ÂżQDQFH FROOHDJXHV DVVLVWLQJ in constructive discussions that help PDNH ÂżQDQFH VHQVH RXW RI WKH EXVLQHVV propositions. They must also be able to tackle issues quickly and decisively in the fast business environment.

There is also a greater focus on risk management due to uncertainties.

They must have the ability to seize opportunities as well as address threats. Itâ&#x20AC;&#x2122;s all about juggling and balancing the short term needs and long term objectives.

63

BUSINESS TOOLKIT

AS THE PINNACLE POSITION IN FINANCE AND ACCOUNTING, CFOs ARE BEING EXPECTED TO TAKE ON MORE STRATEGIC RESPONSIBILITIES AND PARTICIPATE IN DECISIONMAKING PROCESSES. It is increasingly important to possess an exceptionally rigorous NQRZOHGJH RI ÂżQDQFH DQG WR understand both internal and external strategy, including a companyâ&#x20AC;&#x2122;s growth potential and the independent needs of various operational sectors. This varied SURÂżFLHQF\ SODFHV WKH &)2 LQ D XQLTXH position of being able to apply skills to numerous areas and conceive ways in which such sectors might cooperate or be integrated.

For a company to succeed today, the CFO must work closely with various departments like Human Resources and Information Technology, to externally or generally-focused branches including Corporate Governance and Overall Corporate Planning CFOs, far from being just relegated to the cost reduction agenda, are being drawn into providing expert advice to support boardroom decisions.

Finance is being tasked with providing forecasts, managing risks and providing insights into issues ranging from pricing to production. The extent of the role played by the CFO in nonÂżQDQFLDO PHWULFV GHSHQGV RQ LQGXVWU\ organisational size and maturity.

CFOs must use their deep XQGHUVWDQGLQJ RI ÂżQDQFLDOV DQG liquidity to predict how volatile prices and demand will affect the performance of their companies. They should have the expertise to manage potentially lethal threats and to HQVXUH WKH DYDLODELOLW\ RI WKH ÂżQDQFLDO

64

resources required for countercyclical investments.

comply with different local laws and to respect diverse cultures and customs.

Leading  international  expansion As organisations move into a new era of globalisation, they face the risk of complex dynamics and decision making.

This has resulted in the role of the CFO having to focus on the success of global initiatives. Many CFOs are rising to the task and stepping up to manage a broader set of business issues than those faced at home or in core markets.

Conducting cross-border operations in multinational companies is no simple endeavour. Added to this is the complexity of legal and cultural differences. Given the magnitude of the work involved, management can never be prepared enough when it comes to its investigation protocols and procedures.

Excessive rules and regulations have caught companies in an intricate web of complex bureaucracy and legal stipulations. Ultimately it results in much more expensive audits and liability insurance premiums.

CFOs must proactively develop case management and investigative procedures that align with the companyâ&#x20AC;&#x2122;s values, standards, and principles and take into account UHJLRQ VSHFLÂżF RU FRXQWU\ VSHFLÂżF requirements, customs, and practices. $ ÂľRQH VL]H ÂżWV DOOÂś DSSURDFK ZLOO QRW work with cross broader operations.

Procedures need to be customised to meet the requirements of a particular jurisdiction.

Foreign data privacy laws and regulations pose some of the greatest challenges to conducting cross-border mergers, because of restrictions on the kinds of data that can be collected and transferred out of the jurisdiction.

Many countries have enacted laws that place a high priority on protecting personal data, including establishing a fundamental legal right on the privacy of personal data.

Cultural differences remain another mammoth task to conquer. No longer can companies rely on procedures and resources used for domestic operations.

Instead, they must be customised to

The  CFO  as  a  communicator In the light of numerous worldwide scandals they have brought, the CFOâ&#x20AC;&#x2122;s role as a communicator has increased.

They are now more responsible for educating the board of directors about the companyâ&#x20AC;&#x2122;s legal responsibilities to disclose information. Especially in an SME, decisions that would normally have been made at a management level are now going up to the board. That means the CFO has to keep the board EHWWHU XSGDWHG LQ GHÂżQLQJ LWV PDQGDWH reporting relationship, power, composition, roles and responsibilities.

The present stage of the economic cycle indicates that there are more concerns from consumers about investments, and more complaints about disclosure and scams. When a company collapses, the notion in the industry and amongst general public is that there has been a breach of the law.

7KH ODZ H[SHFWV FRUSRUDWH RIÂżFHUV WR assume responsibility for the actions of the company.

CFOs are assuming a leadership role in reducing the likelihood of corporate fraud by promoting an ethical business climate, backed by a written code of ethics that stresses honesty, trust and integrity. They are deploying strategies for tracking regulations and providing compliant employee training. As regulatory demands grow in complexity, training and continuous learning become crucial in meeting a broad range of mandates, from ÂżQDQFLDO UHSRUWLQJ DQG WD[ ODZV WR affordable sales targets.

The same prudence should be applied before taking any action with regard to an allegation of misconduct.

Taking the time to assess the matter is critically important for the sake of FRQÂżGHQWLDOLW\ DQG SULYDF\ DV ZHOO as the credibility of the compliance programme, the integrity of the investigation progress, and the reputation of those involved. Balancing the integrity of the investigative process with the legal rights that overseas

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BUSINESS TOOLKIT

Food for thought

2/3 73%

agree that increasingly the CFO has to act as the face of company performance of CFOs surveyed see their role as a destination in its own right and only 10% have an ambition to be a CEO

Source: EYâ&#x20AC;&#x2122;s The DNA of the CFO

subjects enjoy under local law is both an art and a science.

Treasury  management In the radically changing economic environment, treasury is both central and critical to many of the key tasks facing a CFO, like risk management, ensuring availability of credit, GULYLQJ ZRUNLQJ FDSLWDO HI¿FLHQF\ DQG restructuring banking relations to work in a shared services environment.

Beyond simple productivity improvements, the next level treasury IXQFWLRQV LQFOXGH EXVLQHVV EHQHÂżWV DQG HQKDQFHG SURFHVVHV DPRQJ ÂżQDQFH DQG IT departments.

Proper management of the treasury SURYLGHV YDOXDEOH EHQHÂżWV IRU WKH &)2 such as: Â&#x2021; 2SSRUWXQLW\ WR PDNH EHWWHU ÂżQDQFLDO decisions through improved visibility into cash, treasury, and risk management Â&#x2021; 0LQLPLVHG RSHUDWLRQDO ULVN WKURXJK enhanced controls and compliance Â&#x2021; ,PSURYHG HIÂżFLHQF\ DQG OHVV FRVW WR manage a treasury function The need for tight cash management is greater than ever in the competitive PDUNHWV WKDW 60(V IDFH WRGD\ ([SHUWLVH LQ WKH WUHDVXU\ GHSDUWPHQWV LV KLJKO\ YDOXHG E\ ÂżQDQFH departments and by boards and EXVLQHVV XQLWV :LWK WKH ÂżQDQFLDO crisis coming to centre stage, the role

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of treasury in protecting a companyâ&#x20AC;&#x2122;s ÂżQDQFLDO DVVHWV LV EHFRPLQJ PRUH widely recognised.

As a result, CFOs are revisiting the priorities of the treasury function. Is it focusing on the right tasks among its jumble of responsibilities? And are those tasks delivering value to the company? The consensus is that treasury can play a more strategic role by concentrating on three areas: the care and feeding of banking relationships, the management of working capital, and the screening of capital investments.

Treasury departments now spend a VLJQLÂżFDQW DPRXQW RI WLPH DQG HQHUJ\ SURELQJ IRU ODQG PLQHV LQ WKH ÂżQDQFLDO markets. The main thing is to protect the assets you do have under your control. CFOs and treasurers are now more likely to monitor key metrics OLNH ÂżQDQFLDO YLDELOLW\ DQG FDVK management services.

One broad goal for treasury operations is to evolve to the point of providing insights for cash management planning and freeing up cash for the business to use for growth opportunities.

The end goal is to optimise their companyâ&#x20AC;&#x2122;s liquidity, raise capital and PDQDJH ÂżQDQFLDO ULVNV 7KH LPSURYLQJ but volatile economic outlook has made this an increasingly challenging task.

Corporate  Governance  and   Best  Practice As corporations increasingly consider WKH ¿QDQFLDO FDXVHV DQG RXWFRPHV RI corporate strategy, a CFO can play a particularly vital role in donating H[SHUWLVH WR WKH GHFLVLRQ PDNLQJ process. The CFO should stand for investor concerns when participating in strategy meetings, as well as applying insight into such concerns when designing possible business models. As the CFO ideally becomes involved in other aspects of company operations, he will have the ability to bring their knowledge of these arenas to strategic meetings.

New legislation and reporting requirements have helped increase

corporate discipline. A stronger ethical climate has been created in which the CFO is likely to receive greater assistance from management and staff ZLWK DFFRXQWLQJ SUDFWLFHV ÂżQDQFLDO reporting and internal controls.

Corporate culture has become more receptive to whistle blowing in response to a breach of ethics.

The connection between corporate governance and corporate performance has never been more critical or more complex. Good corporate governance ranks very high on the agenda of shareholder and board of directors meetings.

The presence of good governance practices can dramatically contribute to economic strength, and the absence of them will compromise it. Because the increased workload of boards forces the delegation of many responsibilities to committees and individuals, the CFO now has more opportunity and obligation to play a stronger role in both setting and overseeing processes and procedures.

One of the most overwhelming obligations of the governance committee involves making decisions about who has the expertise to guide the strategy. Once that has been established, the CFOâ&#x20AC;&#x2122;s responsibility will be to make sure those candidates KDYH WKH ÂżQDQFLDO NQRZOHGJH WR SXW WKH strategy into motion.

Another key to good governance lies in leveraging your directorsâ&#x20AC;&#x2122; contributions better. Therefore, they should be encouraged to communicate regularly about their experience and expertise. The CFO should know how to extract this information from the directors when required.

Conclusion CFOs who can bridge the gap between VWUDWHJLF DQG RSHUDWLRQDO GHFLVLRQ making with analytical information, will be successful in driving the FRPSDQ\ WR DFKLHYH LWV ÂżQDQFLDO goals. In short, modern day CFOs are H[SHFWHG WR PHUJH WKH GHÂżQLQJ OLQHV between â&#x20AC;&#x2DC;managing a businessâ&#x20AC;&#x2122; and â&#x20AC;&#x2DC;running a businessâ&#x20AC;&#x2122;.

65

BUSINESS TOOLKIT

RISKY BUSINESS

As anyone whoâ&#x20AC;&#x2122;s had to make an insurance claim will tell you, thereâ&#x20AC;&#x2122;s much, much more to insurance than simply ŵQGLQJ D SURYLGHU ZLWK D IDPRXV QDPH 'LIIHUHQW LQVXUHUV DUH ULJKW IRU GLIIHUHQW NLQGV RI EXVLQHVV DQG LW SD\V WR PDNH D FKRLFH WKDW FRPSOHPHQWV \RXU PXWXDO VWUHQJWKV 6HQLRU (GLWRU 3DXO *RGIUH\ D IRUPHU LQVXUDQFH SURIHVVLRQDO LQYHVWLJDWHV WKH DGYDQWDJHV SLWIDOOV DQG SRWHQWLDOVÅ&#x2122;

66

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BUSINESS TOOLKIT

There is a common misunderstanding about why a business needs insurance. You might suppose that the objective is to ensure that you have a payout if and when the building catches fire, or a delivery driver crashes the car. Yet actually this is a misunderstanding of the wider role of insurance, which is in reality a financial and business management tool, not simply a safety net when the going gets tough. The key objectives of insurance are: Â&#x2021; 7R TXDQWLI\ ULVN DQG LGHQWLI\ DQG isolate the cost of risk on the balance sheet. Â&#x2021; 7R PLQLPL]H ULVN LQ WKUHH ZD\V 1) Provide a safe environment for the directors, staff and customers 2) Lessen the financial cost of incidents and accidents 3) Create a platform for the smooth continuation of business if a disaster should occur Â&#x2021; 7R HQKDQFH WKH OLNHOLKRRG RI other business relationships being successful, in the knowledge that the majority of your exposures are taken care of.

All of which means that insurance is far from being an â&#x20AC;&#x2DC;afterthoughtâ&#x20AC;&#x2122; - itâ&#x20AC;&#x2122;s actually part of the core strategic planning of how you run, build and direct your business. Yet the price a business has to pay for this understanding is the knowledge that, because insurance is so critical to your values and objectives, not every insurer will be aligned with the way you want to work. Insurance isnâ&#x20AC;&#x2122;t just about price or availability: itâ&#x20AC;&#x2122;s also about whether an insurer fits your EXVLQHVVÂś XQLTXH FXOWXUH DQG VW\OH of working. If it isnâ&#x20AC;&#x2122;t, you might find that the vital risk dialogue becomes much harder work than youâ&#x20AC;&#x2122;d ever expected it to be.

Whatâ&#x20AC;&#x2122;s  your  appetite  for  risk?

The first thing to understand is that while you work with an insurer to PLQLPL]H ULVN HYHU\ IRUP RI EXVLQHVV activity involves one kind of risk or

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another, and if you stop all risk, you will also stifle the vast majority of business. Different levels of risk are appropriate for different types of business: for example, the kind of risks that a Wall Street brokerage will entertain during a leveraged buyout are vastly different from those seen as appropriate for a community health centre. Yet even the health centre will introduce new technologies and materials which it hasnâ&#x20AC;&#x2122;t used before in order to enhance the customer experience and increase business. In other words, the risk appetite reflects WKH OHYHO RI ULVN WKDW DQ RUJDQL]DWLRQ is prepared to accept, before action is thought necessary to reduce it.

It represents a balance between the potential benefits of innovation and the threats that change will inevitably bring.

The point is that the kind of insurance you buy should reflect this â&#x20AC;&#x2DC;appetiteâ&#x20AC;&#x2122; for risk, as deemed compatible with your business and its aspirations. It should give your business a long enough leash to experience good, productive risk, because if it doesnâ&#x20AC;&#x2122;t, youâ&#x20AC;&#x2122;re wasting money on cover you donâ&#x20AC;&#x2122;t need.

A classic example of this is the case of Trade Credit Insurance (TCI), where, instead of protecting all your receivables after, say, 140 days non-payment, you decide that your organisation has the ability to chase the majority of debts successfully, and you only need cover for invoices above, eg, US$60,000.

Similarly, youâ&#x20AC;&#x2122;re more likely to entertain having a high risk threshold when developing an innovative project (e.g. early development of a creative computer programme), where youâ&#x20AC;&#x2122;re able to accept short term failure if it paves the way to longer term success.

Test  your  taste  for  risk!

Which one of the following terms best GHÂżQHV \RXU RUJDQLVDWLRQÂśV DSSHWLWH for risk? Each answer will actually determine the type and style of insurer you should be working with.

INSURANCE ISNâ&#x20AC;&#x2122;T JUST ABOUT PRICE OR AVAILABILITY: ITâ&#x20AC;&#x2122;S ALSO ABOUT WHETHER AN INSURER FITS YOUR BUSINESSâ&#x20AC;&#x2122; UNIQUE CULTURE AND STYLE OF WORKING. Is  your  business  -­  Risk  Averse - Avoidance of risk and uncertainty is a key organisation objective.

Risk  Minimal - Preference for ultrasafe options that are low risk and only have a potential for limited reward.

Risk  Cautious - Preference for safe options that have a low degree of risk and may only have limited potential for reward.

Risk  Open - Willing to consider all potential options and choose the one most likely to result in successful delivery, while also providing an acceptable level of reward and value for money.

Risk  Hungry - Eager to be innovative and to choose options offering potentially higher business rewards, despite greater inherent risk.

The point is, when you define what style of business you are, your SME can arrive at an appropriate balance between uncontrolled innovation and excessive caution. Thereâ&#x20AC;&#x2122;s another benefit, too: defining the risk appetite can guide people on the level of risk permitted and encourage consistency of approach and working practices right across the business, from sales and marketing to R&D, finance and the media team. Not - of course forgetting the sheer cost element: a defined, acceptable level of risk also

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BUSINESS TOOLKIT

THE MESSAGE TO ALL SME OWNERS AND DIRECTORS IS â&#x20AC;&#x2DC;KNOW YOUR RISK - AND SOURCE THE RIGHT RISK SPECIALIST WITH ANSWERS TAILORED TO YOUR NEEDS.â&#x20AC;&#x2122;

means that resources arenâ&#x20AC;&#x2122;t spent on further reducing risks that are already at an acceptable level.

All of this risk evaluation will impact the style of insurer you are best-suited to work with. Typically, if you have a higher appetite for risk, you will want to work with a global provider well-used to coming up with tailored solutions - a company that recognizes your business doesnâ&#x20AC;&#x2122;t work according to a â&#x20AC;&#x2DC;plain vanillaâ&#x20AC;&#x2122; formula.

Alternatively, if you are more riskaverse, the majority of local providers will be well-placed to understand your requirements, and may also have a good in-depth understanding of your industry sector.

Knowing  your  risks  and  exposures $FFRUGLQJ WR WKH 8.ÂśV )HGHUDWLRQ RI 6PDOO %XVLQHVVHV WKH ODUJHVW 60( organisation in the world, with more than 230,000 active members - the single largest cause of workplace accidents is a lack of awareness of what the risks actually are. In their 2012 report titled â&#x20AC;&#x2DC;Cost factors driving and constraining business: what directors sayâ&#x20AC;&#x2122;, the following comment spells out a challenging warning: â&#x20AC;&#x153;About 43 per cent of businesses who had suffered losses said that they had never thought of such an accident ever happening; there was

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no possibility of prevention because there was no cognizance of the risk.â&#x20AC;?

What are the key risks for which your business needs insurance?

Have you stopped to think what they might be? Unless you know the answer, not only might an accident prove to be a costly awakening, but you wonâ&#x20AC;&#x2122;t be able to identify the insurers best-matched to delivering your requirements. The prevalence of warehouse fires in the northern emirates, for example, suggests that even relatively large warehousing facilities had never considered the perils of putting kitchens - often fuelled by LPG gas - adjacent to a paper storage plant, or thought about putting non-smoking signage in prominent locations next to shelving holding 55,000 cans of cellulose paint.

Compile  a  â&#x20AC;&#x2DC;Risk  Registerâ&#x20AC;&#x2122; Stop to list the kinds of risk you face according to the style of business you run. If these are generally property-based, the majority of insurers will be able to approximate and handle your risk. If they are more personnel-based or connected with intellectual property and the danger of online fraud or security breach, you may need to source an international specialist.

Is your business: Predominantly  an  online  trader? Â&#x2021; <RXU RIILFH EDVH PD\ EH PLQLPDO so there is less emphasis on property cover as such. Â&#x2021; <RX PD\ QHHG WR LQVXUH considerable levels of computer equipment - PCs, server, etc. against theft. Â&#x2021; <RX ZLOO DOVR QHHG ,QWHOOHFWXDO Property (IP) cover and anti-fraud cover. Â&#x2021; ,PSOHPHQW D IXOO RQOLQH GLVDVWHU recovery plan. Â&#x2021; 1RWH LWÂśV H[WUHPHO\ LPSRUWDQW WR install hacker-prevention software to prevent security breaches which may endanger your credibility for customers and public alike.

Predominantly  a  trading  business  moving  physical  commodities? Â&#x2021; )LUVW DQG IRUHPRVW \RX QHHG WR carry out a detailed risk audit of your warehousing facilities. Source an insurer who will provide you with a technical risk manager, willing to â&#x20AC;&#x2DC;walkâ&#x20AC;&#x2122; the premises with you and devise a strong risk checklist. Â&#x2021; ,PSOHPHQW D IXOO GLVDVWHU UHFRYHU\ plan. Â&#x2021; 3URWHFW UHFHLYDEOHV ZLWK 7UDGH Credit Insurance and other relevant ILQDQFLDO LQVWUXPHQWV <RXU ERRN of receivables can account for up to 40 per cent of the value of your business, and protecting payments due is a powerful way to ensure cashflow when you need it most. Â&#x2021; <RXU LQVXUHU VKRXOG SURYLGH engineering professionals able to examine and audit the condition of all powered equipment. Â&#x2021; (QVXUH SURSHU KHDOWK DQG VDIHW\ signage is in place and provide structured health and safety training courses.

Predominantly  an  office  environment? Â&#x2021; 3XUFKDVH WKH IXOO UDIW RI SURSHUW\ insurances including packages covering the theft of personal belongings, accidents affecting personnel, fire and flood damage and third-party liability. Â&#x2021; 3URWHFW DOO FDVK RIILFHV ZLWK comprehensive security techniques. Â&#x2021; ,QVXUH WKH UDQJH RI FRPSXWHU and IT equipment held on-site, including staff laptops, and provide a lockable storage facility.

7KH PHVVDJH WR DOO 60( RZQHUV and directors is â&#x20AC;&#x2DC;know your risk and source the right risk specialist with answers tailored to your needs.â&#x20AC;&#x2122; The exposures faced, for example, by a cement exporter in Al Hamriya free zone and a marketing business in Downtown are intrinsically far removed from one another - and so are the style of insurers who feel comfortable covering the risks.

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A meeting with Jairek Robbins p.70 Apps for biz p.74

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A MEETING WITH JAIREK ROBBINS MOTIVATION IS SOMETHING THAT KEEPS MOST OF US GOING. AND, THIS IS ESPECIALLY TRUE FOR ENTREPRENEURS AND BUSINESS OWNERS IN THE REGION LOOKING TO MOVE TO THE NEXT LEVEL AND TAKE THEIR BUSINESSES TO NEW HEIGHTS. THIS IS EXACTLY WHY PRIVATE SECTOR QATAR MET WITH WORLD-RENOWNED MOTIVATIONAL SPEAKER, LEADERSHIP COACH AND BUSINESS GURU JAIREK ROBBINS. IN AN EXCLUSIVE CHAT WITH US, JAIREK SHARES EXCELLENT INSIGHTS ON GROWTH, LEADERSHIP AND SUCCESSâ&#x20AC;Ś

In terms of the business culture, do you think the Middle East is different from rest of the world? If yes, what would you say are key differences?

I have always been fascinated how the people of the Middle East are able to take their vision and turn it into reality! I teach people how to do this with their life, it fascinates me when someone is able to do it with an entire region!

Our partner â&#x20AC;&#x153;Right Selectionâ&#x20AC;? has done an amazing job at reaching out and connecting us with some of the most innovative and forward thinking entrepreneurs, corporate executives and business owners. We are very excited to bring a fresh new and innovative set of ideas and strategies to share with them!

What are some common traits that you find in every entrepreneur? Is there is a pre-defined template?

I love this question! There is no preGHÂżQHG WHPSODWH IRU DQ HQWUHSUHQHXU but there are certainly a couple traits, which all entrepreneurs have in common, which greatly set them apart from your average manager

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and even C-level executives. A true entrepreneur has a crystal clear vision, a high level of risk tolerance, insane passion for their product or service and are incredibly resilient, meaning they would rather fail over and over again before giving up a project they truly believe in.

The resilience piece is the most important this day in age because we have become so used to â&#x20AC;&#x2DC;instant JUDWLÂżFDWLRQÂś WKDW WKH LGHD RI WUXO\ sticking it out has lost a lot of its meaning. Nowadays, there are not immediate results or returns, many quit and move onto the next project.

A successful entrepreneur doesnâ&#x20AC;&#x2122;t bounce around, they know how to stick it out, how to make people get behind your vision, and how to make it work.

Do you think being an entrepreneur is perceived as being â&#x20AC;&#x2DC;glamorousâ&#x20AC;&#x2122; in todayâ&#x20AC;&#x2122;s age?

Entrepreneur is definitely glamorised these days and itâ&#x20AC;&#x2122;s NOT necessarily a good thing. While I work with many entrepreneurs and help people turn their dreams into reality, itâ&#x20AC;&#x2122;s no easy feat. The problem is, when entrepreneurship appears glamorous, itâ&#x20AC;&#x2122;s kind of like false advertisement because

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A SUCCESSFUL ENTREPRENEUR DOESN’T BOUNCE AROUND, THEY KNOW HOW TO STICK IT OUT, HOW TO MAKE PEOPLE GET BEHIND YOUR VISION, AND HOW TO MAKE IT WORK.

Jairek Robbins

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71

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LIKE A RACE CAR CANNOT MOVE WITHOUT GAS, YOU NEED EMOTIONAL ROCKET FUEL TO KEEP YOU GOING THROUGH THE WINS AND LOSSES OF BUSINESS.

it’s starting or owning your own business is not always easy or and it’s certainly not always glamorous, ask any entrepreneur. To think you can quit your job and have a successful business “overnight”, couldn’t be farther from the truth.

In fact, the likelihood of overnight success probably has comparable odds to winning the lottery, possibly worse considering that 95 per cent RI EXVLQHVV IDLO LQ WKH ¿UVW ¿YH \HDUV The truth is, even businesses that appear to have overnight success were in fact YEARS in the making.

Even Dubai wasn’t an overnight success, it took years to build and grow and it still hasn’t reached its full potential. The beauty in a greater awareness and attraction to entrepreneurship is that it does give people hope and show them what is possible. It’s simply a matter of having appropriate expectations of what life and business is like as an early entrepreneur that is important.

What, according to you, is the formula for unstoppable business growth?

This is a great question and something I talk about extensively in my book, Live it, available for presale on

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Amazon.com. In summary, the formula for unstoppable business growth would be three things: 1.

Crystal clear vision of what it is you want and how you’re going to make it happen. 2. Emotional rocket fuel.

Like a race car cannot move without gas, you need emotional rocket fuel to keep you going through the wins and losses of business. 3. Raving Fans. This means people want to get behind your product and are ambassadors of it. When you have a ‘pull system’ in place versus a ‘push system’, the masses will want and demand your product or service instead of you having to force them into liking it.

The word ‘innovation’ is being increasingly used across the business community worldwide.

What does innovation mean to you?

Today, I believe innovation is forward thinking and creativity that knows no limits or boundaries.

Innovation used to be just taking what has been done and making it better. Now, innovation is truly RE-inventing the greatest ideas on the planet, or innovating on innovations to come, that’s how far ahead a great ‘innovator’ thinks.

What tips would you give to a business looking to embrace innovation?

First and foremost, if you’re a business NOT willing to embrace innovation, your business is dead or dying. So for any business looking to stay alive and grow you must have a hunger for knowledge and growth and a willingness to adapt quickly. The most important thing to remember is this “the only thing certain, is that there is no certainty.”

meaning all things are likely to change, and your ability to adapt equals your ability to grow.

Have you been able to develop a particular ‘toolkit’ or ‘success strategy’ that’s available to business professionals who want to boost their own leadership potential and performance?

Absolutely! We have a couple options depending on your needs. We offer performance and accountability coaching, leadership training, rapid results workshops and digital coaching programmes.

I only offer training, services and products which has proven success within my own business and other businesses I work with. Therefore, every person (from business owners, C-level execs, and sales reps) has been wildly successful utilising any of our services. Depending on your need you can find out more at JairekRobbins.com for coaching and products. For events and training please connect with Right Selection (www.JRobbinsDubai.com) for trainings in the Gulf Coast region.

If you had three ‘top tips’ for aspiring entrepreneurs, what would they be? a. You have a unique gift, know and understand what that gift is. Then, share it fearlessly with the world! b. Remember life doesn’t owe you anything. If you want to want be successful, it’s not about what you can get from life, it’s about what you will give to life. I believe “Life supports that, which supports Life.”

F 6WXG\ ³LQÀXHQFH´ REVHVVLYHO\ +DYLQJ WKH DELOLW\ WR LQÀXHQFH LV comparable to having a superpower.

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Having worked with some of the leading companies in the world, what would you say are the biggest challenges that hinder growth in businesses? How can businesses overcome these hurdles?

As mentioned before, itâ&#x20AC;&#x2122;s important to have a crystal clear vision which people believe in and want to get behind. Do your people know your mission? Do they believe in it? If not, you have a problem. Likewise, you must have a hunger for growth, not MXVW JURZWK LQ SURÂżWV EXW HVSHFLDOO\ the personal growth of each employee.

When an employee doesnâ&#x20AC;&#x2122;t feel valued, guess what? They wonâ&#x20AC;&#x2122;t value YOU or the business. This is a MAJOR problem for the business, culture, morale, and is certainly DIIHFWLQJ \RXU SURÂżWDELOLW\ :KHQ \RX combine these two forces of having a mission and vision along with personal development within your organisation, youâ&#x20AC;&#x2122;ve created a culture that fuels growth, innovation, and prosperous future.

What advice would you give to business owners trying to achieve a work-life balance?

This is actually one of the most common reasons business owners come to me for one on one coaching.

It really varies case by case, but in the simplest of terms Iâ&#x20AC;&#x2122;d say start with designing your ideal day (visit JairekRobbins.com for a free ideal GD\ GHVLJQ NLW )URP WKHUH ÂżJXUH out what needs to change to start living your ideal day. Then create an action plan: this starts with a 1, 5, and 10 vision for your life. After creating your vision, set goals to compliment them. Ask yourself these questions, â&#x20AC;&#x153;what needs to change, why it needs to change, by when does it need to

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change, and how will I change it.â&#x20AC;?

Itâ&#x20AC;&#x2122;s really about breaking down the big picture vision into smaller action LWHPV 3LHFH E\ SLHFH JRDO E\ JRDO youâ&#x20AC;&#x2122;ll start to transform your life from wherever you are now to living your ideal day. Iâ&#x20AC;&#x2122;ll never forget the day one of my coaching clients, IURP D WRS ÂżYH JOREDO ÂżQDQFLDO ÂżUP told me on a call that after working together for a couple years, he was truly living his ideal deal, he did it!

It took focus and dedication to his plan and never before did he feel more alive.

Tell us a little about your very popular â&#x20AC;&#x2DC;Learn it, Live it, Give itâ&#x20AC;&#x2122; mantra. What are some lessons business owners can take away from it and implement within their businesses?

A personal philosophy of mine is â&#x20AC;&#x153;Learn it. Live it. Give itâ&#x20AC;?, the â&#x20AC;&#x153;Give itâ&#x20AC;? piece certainly does encompass the â&#x20AC;&#x153;pay it forwardâ&#x20AC;? concept.

However, this is just one of three pieces of what I believe truly leads to achieving success with purpose. Â&#x2021; /HDUQ LW *R RXW DQG OHDUQ ZKDW it takes to turn your dreams into reality! Â&#x2021; /LYH LW $SSO\ ZKDW \RX OHDUQHG and LIVE IT like you really mean it. You may talk the talk, but do you walk the walk? This is a vital piece to truly living with purpose! Â&#x2021; *LYH LW 3D\ LW IRUZDUG E\ KHOSLQJ others learn the tools which helped you achieve success so that others can do the same!

What attracted you to the field of motivational speaking? At what point did you decide to share your insights and become a pioneering coach and world-renowned leadership figure?

SO FOR ANY BUSINESS LOOKING TO STAY ALIVE AND GROW YOU MUST HAVE A HUNGER FOR KNOWLEDGE AND GROWTH AND A WILLINGNESS TO ADAPT QUICKLY.

I wasnâ&#x20AC;&#x2122;t initially looking to become a motivational speaker.

I knew I loved coaching and I LOVED helping people. However, it was a real wakeup call that happened in my life, a couple actually. The first was when I was in Africa and told I had five days left to live. The second was when I found myself completely miserable with my job and unhappy with my health. I knew I need to take massive action to change and that there was more to life that stuffing boxes in a warehouse. More importantly, in Africa, I realised youâ&#x20AC;&#x2122;re not guaranteed a tomorrow. It was that moment, that I decided to live life on my terms, start truly living, and to do what I believe I want meant to put on this planet to do. Today, my mission is to travel the world and help people.

I believe my purpose on this planet is to help as many people as possible turn their dreams into reality and live to their fullest potential as well.

Who is your personal inspiration?

My FiancĂŠe, she inspires me every day to be the best man I can be!

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Currently, this app covers major cities such as New York, Boston, Paris, London, Madrid and many more. All in all, use Citymapper to avoid congested areas and enjoy real-time travel data while on-the-go!

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Wickr With rising security concerns across the cyber world, Wickr introduces a sound solution.

This messaging app allows users to encrypt messages that they send out in order to «À ÌiVÌ V w`i Ì > v À >Ì ° " Þ Ì i intended receiver is able to decrypt these iÃÃ>}ið 1ÃiÀà > à >Ûi Ì i «Ì v selecting a certain time period during which their message and media will be available – v Ü } Ì Ã > iÃÃ>}iÃ Ü iÝ« Ài > ` Li `i iÌi`° Ƃ Ì iÀ >`Û> Vi` vi>ÌÕÀi vviÀi` LÞ Wickr is the ‘shredder’, which ensures that all Ì i w iÃ Þ Õ½Ûi `i iÌi` vÀ Þ ÕÀ `iÛ Vi >Ài completely erased. The app requires little to «iÀà > v À >Ì >Ì Ì i Ì i v à } } Õ«] Ü V `iw Ìi Þ >``Ã Ì Ìà >««i> t

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Together we make legal matters as easy as solving this maze What is OQOOD? OQOOD is a 70% subsidised legal services programme offered by Enterprise Qatar to Qatari entrepreneurs and SMEs. The programme entails the provision of intellectual property rights and trademark registration, and the development of contracts, agreements and article of association.

The objective of this programme is to give Qataris access to subsidised, professional legal services to ensure a sound legal framework for their business.

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OQOOD is offered to Qatari entrepreneurs and SMEs who need assistance in developing contracts and agreements and who are interested in the intellectual property and trademark registration.

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To apply, please contact Enterprise Qatar Tel: 4012 5000 | Website: www.eq.gov.qa E-â&#x20AC;?mail: oqood@eq.gov.qa | Fax: 4012 5001 Address: The Gate, Bay Tower 4 â&#x20AC;&#x201C; Floor: 16, West Bay, Doha.

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