Competitive horizon
Growth in the Russian economy could slow significantly during the next few years without an increase in productivity and investment, according to a report published by Dawn (www.dawn.com). Following 6.4 percent growth in 2005, the country’s Economy Ministry had predicted GDP of 6 percent for 2006. However, economic slowdown at the beginning of the year has raised doubts about this level being achieved and prompted the Ministry to speculate that GDP may slow to under 5.0 percent between 2007 and 2009. The strength of the ruble is believed to be damaging the economy, as is growing export demands and capacity constraints. The Ministry has also said that the country could no longer rely on energy to drive its economy because a downturn in gas and oil has left growth in these industries down to less than 2.0 percent. The report claims that the medium term should see growth remaining around this level. As things stand, the Ministry expects labor productivity to provide the best source of future expansion.
US organizations set to increase IT spending
An annual study carried out by Accenture has suggested that many US organizations plan to spend more on IT during the next three years. Out of the 300 business managers and IT executives questioned in the survey, 60 percent expected their company to increase spending on IT while only 13 percent felt that investment levels would fall. The average spending increase was predicted to be around 5.5 percent. Sixty nine percent of respondents reported that IT spending had increased in the last three years, but almost a third felt the level of expenditure was insufficient. The report, as published by Domain B (www.domain-b.com), also suggested that growth initiatives were driving IT spending increases more than maintenance activities. Over a fifth of those who anticipated IT spending increases cited new business initiatives as a significant factor, slightly ahead of adopting new technologies and updating legacy systems. Integration resulting from merger or acquisition, and security and compliance requirements were other reasons cited.
Exports to drive growth in Ugandan economy
A review carried out by the International Monetary Fund (IMF) concludes that Uganda’s export sector will continue to drive economic growth in the country. According to a report published by All Africa (www.allafrica.com), Uganda’s predominantly agricultural-based exports remain largely unaffected by ongoing power shortages and are set to earn the country around $1.4 billion during the financial year 2006/07. The IMF also expects the boom in construction and communication to drive the economy and estimates that GDP will expand to $9.9 billion by this time. Manufacturing has been affected by the power crisis but economists expect this to have minimum impact on growth because the sector accounts for less than a quarter of the country’s economy. On the contrary,it is anticipated that growth will strengthen in the export sector that includes coffee, tea, beef, hides and skins, and flowers. However, a robust export sector would not lessen the impact on the economy should countries like the UK,Germany, Ireland and Norway carried out threats to withhold promised financial support if political reforms are not implemented.
Do what you do best
A report published by the Online Business Advisor (www.onlinebusadv.com)claims that many companies mistakenly believe that diversification offers the best way forward. Paradoxically, this belief can occur during good times or bad. Success can breed overconfidence, while the struggling organization can believe that diversifying into a different area offers the best chance of turning things around. The report claims that diversification is frequently simply ego-driven and warns that changing the focus means committing the cardinal sin of neglecting the core business, a decision that can backfire spectacularly. Instead of courting trouble, companies should instead identify what they do well and then strive to perform even better in these areas. According to the report,improving areas that include such as customer service, marketing and operations can increase loyalty and add significant value to the organization.
