Sunday, June 26, 2016

BrExit vs. Impact

Over the last few days, there has been considerable media coverage of “BrExit”. Various opinions, viewpoints, insights continue to be heard from all perspectives around the globe. These include, but not limited to, potential impact on political, bureaucratic, socio-economic, and cultural issues.

On a “secular” economic-financial level, as the days, weeks and months unfold, it may also be very important to observe the global impact on; monetary policy, fiscal & financial policy, regulatory policy, macroeconomics and microeconomics. Further, potential scenarios regarding inflation vs. deflation, deleveraging, asset valuations, mark-to-market, competitive currency markets, as well as geo-political issues and their impact on various commercial markets, sectors and industries.

Based on the above, on a practical level, potential impact must be assessed on various stakeholders across Governments-Corporates-Academia-Individuals.

Specifically, based on stakeholder demographics and consumer segmentation, it will be important to clearly determine and monitor key metrics as highlighted in adjacent figure.

The key driver and metrics for viable risk mitigation is emphasis and focus on sound and sustainable Asset Class(s), Income Stream(s) and positive Cashflow(s). In this regard, there can be a positive renewal in increased emphasis on re-building Balance Sheet(s) of various stakeholders. A plausible path forward for achieving above may be to advocate and enable increased focus on “Science-Technology-Engineering-Arts-Mathematics-Innovation-Entrepreneurship” (S-T-E-A-M-I-E). In addition, an enhanced commitment to; Holistic Solutions, Social Responsibility, Empowerment, Sustainability and other related positive areas.

Wednesday, June 8, 2016

Understanding Elasticity of Demand

The global conventional market value chain is based on fundamentals of Supply and Demand. Whether it is products and/or services, Supply Chain sources intrinsically are interlinked to Demand uses consisting of wholesale and retail customers and consumers. It is important to note that Revenues flow in the opposite direction of the Supply Chain.

Depending on the specific industry(s) or sector(s), basic commercial market scenario(s) are driven by key components:

·         Supply-Demand
·         Unmet Demand Gap
·         Elasticity of Demand
·         Existing and New Infrastructure
·         Regulatory & Policy Framework and Policy
·         Alternative Supply Sources & Competition
·         Influencing Factors (Political-Bureaucracy-Socioeconomic etc.)
·         Macroeconomics and Microeconomics

A key interrelationship which is paramount for a viable, sustainable and balanced commercial market scenario is Elasticity of Demand. As shown below, both Income and Price have a direct impact on Demand. In order to achieve effective Demand Side Management (DSM) as compared to Supply Side, a better understanding of Income and Price is essential as a prerequisite to just “build it and they will come”.

As part of any prudent strategy and planning, it is important to correlate the various components which comprise both and Income and Price Elasticity. Further, in order to carryout proper DSM evaluation, a detailed “bottom-up” economic and financial analysis must be undertaken to establish definitive “Purchasing Power” of wholesale and retail customers and consumers and their “Capacity-Ability-Willingness-To Pay”.

It should be noted that any DSM assessment is also subject to; Market Segmentation; Demographics; Monetary Policy (Inflation / Deflation / Currency Value); Fiscal / Financial / Regulatory Policy; Macroeconomics, Structured Project Finance and; Microeconomics.

Tuesday, May 24, 2016

Overcoming Challenges of 3D’s vs. 3I’s

The global economy is undergoing major dynamic transformation. Depending on various insights, opinions and viewpoints between fundamental(s) versus technical(s), the key drivers continue to inherently be dependent upon the “3D’s vs. 3I’s” (Deflation-Demand-Debt vs. Inflation-Income Tax-Interest Rates).

Regardless of public sector versus private sector or; developed versus emerging economies or; brick & mortar versus digital or; otherwise, the fundamentals of the global commercial market scenario continues to prevail over central planning. This includes, but not limited to; supply-demand; unmet demand gap; elasticity of income levels and commodity prices; purchasing power of wholesale / retail customers; regulatory policy & framework; infrastructure; competition; alternative supply chain sources and; influencing factors (politics, bureaucracy, legislative etc.).

The “3D’s vs. 3I’s” as well as the supporting elements, as shown in adjacent figure, are essential in maintaining sustainable, stable, and sound economic health. This in turns directly affects wealth and various associated asset classes. Various stakeholders impacted, based on market segmentation and demographics, include Government, Corporate, Academia, Non-Profits, and Individuals.

Whether global currencies either cooperate and/or compete in various trade and policy scenarios in order to gain increased global market share, it is important for all of the various stakeholders to clearly understand and appreciate the critical underlying factors which influence “3D’s vs. 3I’s”. In addition, it is paramount to ascertain the various associated risks, viable mitigation strategies and plans as well as ensuring downside risk is well understood and most certainly taken into account.

On the positive side, there is a plausible and viable methodology and approach for addressing potential challenges and resulting adverse impact of “3D’s vs. 3I’s”. As shown in adjacent figure, subject to collective and inclusive emphasis of various stakeholders, unleashing the dynamic potential power of “STEAMIE” can critically unlock the vast amount of human capital and retransform the macroeconomic and microeconomic landscape. If done effectively, various positive benefits can be definitively achieved in terms of holistic solutions, social responsibility, sustainability and preserving society-at-large. In addition, “STEAMIE” can help in rebuilding individual wealth across various socioeconomic demographics including, but not limited to, lower income groups, middle class, and mass affluent market segments. This will help in a big way in restoring purchasing power (disposable income levels) of both wholesale and retail consumers.