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A Case Study of Nigeria LNG Ltd – migration from Market Research to Competitor Intelligence

AN EVALUATION OF THE EFFECTVINENESS     OF COMPETITOR INTELLIGENCE (CI) AS A MANAGEMENT TOOL   A Case Study of Nigeria LNG Ltd – migration from Market Research  to Competitor Intelligence      Dissertation Proposal     Introduction:   Unless in a monopolistic environment, every organisation offering a product or services is somewhat threatened by another organisation offering the same or substitute product or service. Every business will have to deal with customers, suppliers, employees and other stakeholders, some of which are loyal to their brand and some do not hold any alliance but rely on availability, quality and/or price differentiation. Pleasing and maintaining customers and increasing their base generally heralds good returns for investment. Struggle for survival or competitive advantage in any business means the business ensuring that its competitor(s) does not take from them part or all of their customers, suppliers, employees and/or other stakeholders.   The objective of every business is to grow, make money and succeed (positive Return on Investment). Essentially, there is a struggle for survival and the fittest will normally survive while the weaker ones will decline and eventually die. The struggle is to gain same resource and territory thus one needs to understand his opponent (as in war): a)      How he thinks b)      What his strengths are c)      What his weaknesses are d)     Where he can be attacked e)      Where the risk of attack is too great For effective action you also need to know the above facts about yourself and weigh the result against the result of the analysis done on your competitor to see how you can excel. The competitor will have some trade secrets which will differentiate it and lead to profit or loss, expansion or bankruptcy. Identifying these secrets and using them for your advantage can be rewarding. “By knowing our competitors we may be able to predict their next moves, exploit their weaknesses and undermined their strengths” ( (1995-1999). This is with the aim to maintaining competitive edge over them. Frederick the Great said, “It is pardonable to be defeated, but never to be surprised”. The aim is for the winner not to have an easy win but succeed only after a tough and long drawn battle The modern age of digital electronics made it possible for business and corporate organizations to keep up with the demands of their industries. At present, most business organizations are equipped with the latest information technology (IT) systems that enable them to function fully and effectively. IT has given everyone an opportunity. It has provided every person with the ability to communicate and perform tasks which were impossible to do before the arrival of the 21st century. As such, modern information technology has been considered the result of a crucial connection between digital and communication technologies. It has been declared as the fundamental core of an information system, which involves various interactions between data, the users, software, hardware, business corporations and their environment.   Information has always been a critical factor to the success of a business. For this reason, every company in this age must realize the importance of information technology. Not only does it play a role, but it must somehow, blend with the corporation’s business strategies and techniques. To fully understand the concept of information technology, one must examine its interaction with the world and all its factors around it such as economic, political and social issues. Unless IT professionals or the corporate organisation as a whole are aware of this fact, they are most likely to remain as mere pawns to those who are. Likewise, in the corporate world today, business firms who encounter many setbacks with regards to their IT projects are a result of their failure to understand all the factors that are involved in information systems.   In this case, aside from information technology infrastructures along with privacy, security issues and the ethics and moral obligations of industrial espionage that beset the international business environment, understanding of the strategic plans and objectives of corporations will contribute to the full comprehension of evolving means to doing business at present. Hence, this research activity is geared towards the investigation of the case of Nigeria Liquefied Natural Gas Limited (NLNG Ltd) proposed migration from Market research to business intelligence with special emphasis to  competitor intelligence (CI) as part of its management tool. Evaluation of the effectiveness of competitor intelligence as a management tool will be highlighted by utilizing the implementation and application used by Shell .      WHAT IS COMPETITIVE INTELLIGENCE (CI)?   This has various names with near-similar meanings but its application and scope are usually defined by the specific organization employing it. Quite often its name defines its scopes in the company-wise application.  The common names include – Intelligence, Business Intelligence, Research and Development, Marketing Analysis, Marketing Monitoring etcetera. Competitor Intelligence (CI) is the critical driver that will help the organization gather information that will be used to take actions, which would put the company ahead of its competitors ((2001). CI helps managers have a much more complete understanding as to how intelligence information can have a bottom line impact on any organization. The main aim of CI is to create competitive advantage.   Intelligence sometimes involves bribery, espionage, and illicit acquisition of information, legitimate information gathering, analysis, and the presentation of intelligence information (2002). In today’s world the above definition must be filtered as every definition of CI must have an ethical guard around it and this means the removal of the bribery, deception and assuage of other unacceptable means for information gathering. “CI is the identification of strategically important corporate intelligence (knowledge) needs and the process of resolving those needs through ethical information-gathering, analysis, and the presentation, of such analysis to clients (internal or external)” – ( 2002) Generally, for synergy of purpose, the responsibility of the intelligence manager is expanded to include counter-espionage activities and thus create a balance.   Who is a competitor in Business?   Business competitors are: v  Other organizations offering the same product or services v  Other organization offering similar/substitute products or services v  Organizations that could offer the same or similar products or services in the future v  Organizations that could remove the need for our  product and replace with one of theirs   JUSTIFICATION FOR CASE STUDY - LNG TRADING   Before commencing to outline the Aims and Objectives of this Dissertation, I will highlight the peculiarity of LNG trading. <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Liquefied Natural Gas (LNG) is methane, liquefied for ease of transportation from producers to end user (usually used by electrical or energy company)  </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> LNG projects are capital intensive projects and earlier approach was for each project (plant) to be tied to another project (end-user) and thus   competition was non existent</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> LNG is transported by pipelines (distances below 1500miles) and by specialised ships for further customers</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Deliveries by ships were either by Cost, Insurance and Freight (CIF) contracts where the terminal or plant owners owned the vessels and delivers cargo at the Buyer’s terminal and Free On Board (FOB) contract where the Buyer takes delivery at the sellers facility thus the buyer is responsible for shipping to his terminals</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Few shipyards are able to build LNG ships because of its highly specialised nature and one needs to know or have an idea of the order list and know when to place orders for competitive pricing.</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> LNG contracts are normally between 20 to 25 yrs agreement but short-term and even voyage by voyage contract are on the increase this days</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> LNG ships were built and owned by project owners but now it is opening like any other shipping activity with ship owners building on speculative orders. </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> With speculative building of LNG Vessels, there are now LNG vessels available for short/Long term charter</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> LNG naturally boils off at about 0.24% per day hence the nearer the delivery point the less cargo lost to boil off</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Customers pay for received quantities only (as in the popularised pay-as-you-go contracts.</li> </ul> ·         There were very few Buyers and Sellers in global market but in recent times with the declaration of LNG as the safest, most environment friendly energy and the pressure for no-flaring of gas from oil-fields, there are now more projects springing up.             AIM OF THE DISSERTATION   The main focus of this dissertation is on competition intelligence with special emphasis on its application in the Energy (Gas) sector. This process which was never popular in this sector has now become necessary and is now fully incorporated in strategic planning due to the need for dynamism in the business environment to help create and maintain competitive advantage. Competitor Intelligence forms an input in Strategic Business Planning. The main question here is how to implement CI process in LNG business.   The dissertation will highlight the advantages of the application of competitive intelligence in the Energy (Gas) sector as a necessity for maintaining competitive advantage. It is well known that Strategic Business Process is incomplete and inconclusive without input from Competitor Intelligence. The degree of relevance of CI is increasing and it now forms a separate section in any business. Little wonder a lot of companies are now specializing in offering this service at a premium.   The dissertation aim to portray on CI as a management tool and will analyze the available techniques.       OBJECTIVES OF THE PROJECT / DELIVERABLES   In order to meet the expected outcomes of this research proposal, the researcher is duty-bound to attain the following aims and objectives of this particular research study:   1.      To ascertain the advantages and disadvantages of utilizing competitive intelligence in the business sector.   2.       To determine the reasons why NLNG Ltd management decided to undertake strategic change migrating from business intelligence to competitive intelligence.   3.      To discuss the processes utilized in realizing the goals of competitive intelligence in the context of any company.   4.      To evaluate the implications of the perceptions, attitudes and behaviors of the members of NLNG Ltd management and staff involve in delivering the goals of competitive intelligence.   5.      To analyze the implications of the practicing competitive intelligence in the industry where NLNG Ltd belongs to. .         Research Methodology   The research approach should be decided by the nature of the topic (Creswell, 2003). As this research is “An evaluation of the effectiveness     of Competitor Intelligence (CI) as a management tool” which has links with Business Intelligence, a topic that has extensively been researched by many scholars. I will thus try to verify already developed academic concepts and not develop a new theory.    The methodology provides information on the description of the methods and procedures that were conceptualized and constructed in order to obtain the needed data and information that will be most useful to the study. Details on how the accumulated data will be analyzed and interpreted as well as how the conclusion will be drawn is discussed in full extent in this section.  This provides justification of the means in which the study will be accomplished and at the same time helps in giving purpose and strength to the validity and reliability of the collected information that makes this particular research practice truthful and analytic. Specifically, this research methodology will cover the following discussions: the research design, the methods used in accomplishing the study, the sampling technique utilized, the statistical treatment used, the validity and reliability of the collected data, and the logical and systematic data presentation and analysis.   Research design   This study will operate under the quantitative paradigm wherein the survey method will be utilized in order to elicit the relevant information needed to complete research ( 1992). Besides, quantitative research plainly and distinctively specifies both the independent and the dependent variables under investigation (2002). It also follows resolutely the original set of research goals, arriving at more objective conclusions, determining the issues of causality and eliminates or minimises subjectivity of judgment (1996). The research variables will be primarily analyzed in order to provide description on the factors that concerns the topic of the study. The variables of the study imply quantitative research wherein the data, situations, or other facts collected will be explained or correlated with other data.  Basically, this research will base its findings through quantitative research methods because this permits a flexible and iterative approach. Through this method, qualitative elements that do not have standard measures such as behaviour, attitudes, opinions, and beliefs are analyzed. As such, the information that the informants of the study will share to the researcher will be accordingly examined, analyzed and interpreted to answer the research questions presented.  Research design   The survey method will be implemented in three successive data collection procedures. These will include the pretest of the questionnaire, the actual survey, and the back-checking after the analysis of the data. The pretest of the survey will be necessary in order to identify possible shortcomings of the instrument that may hinder the efficient collection of valid and reliable data. On the other hand, the back-checking that will be implemented will provide assurance that the results of the analysis are consistent with that of the available information and facts in the field. The researcher will gather secondary data and collate published studies from different local and foreign universities and articles from social science journals. This research project will be accomplished by conducting a questionnaire survey using a sample of at least 30 respondents in which inferential statistics will be used in organizing and summarizing the findings of the study. Descriptive statistics will be used to provide and present the background of the industry in a logical manner. The data collection instrument will be a structured questionnaire that will be based on Likert scale. A Likert Scale is a rating scale that requires the subject to indicate his or her degree of agreement or disagreement with a statement. By rating scale we mean the scales that are usually used to measure attitudes towards an object, the degree to which an object contains a particular attribute, (Like or dislike), toward some attribute, or the importance attached to an attribute ( 1991).   The equivalent weights for the answers will be: Range                          Interpretation                         4.50 – 5.00                              Strongly Agree 3.50 – 4.00                              Agree 2.50 – 3.49                              Uncertain 1.50 – 2.49                              Disagree            0.00 – 1.49                              Strongly Disagree   Moreover, the use of survey is efficient since copies of the questionnaire could reach a considerable number of respondents through efficient personal distribution. It will serve as an effective and efficient research tool to elicit and exhaust the information that the respondents perceive regarding the topic of the research project at hand. The questions included in the questionnaire are composed mostly of close-ended queries for easy manipulation of the data during analysis and interpretation. The respondents were asked to fill out the self-administered questionnaires until such time that the researcher was able to complete the number of samples for the study. The researcher will tally, score and tabulate all the responses in the provided questionnaires for the subsequent presentation, analysis and interpretation of the data that were accumulated.   Sampling technique. The use of stratified random sampling technique was grounded on the need to ensure the representativeness of the respondents in the survey method. This particular sampling technique ensures the validity and reliability of the data based on the number or quantity of the respondents who filled out the survey questionnaires. Stratified random sampling technique operates by classifying the target population into group classifications as set by the researcher. The samples are chosen through several selection procedures that usually take several stages depending on the complexity of the characteristics of the possible respondents and the interest of the researcher ( 2001). Since there is a possibility that several of the accomplished questionnaires will not pass the standards of validity set by the researcher, 5 other individuals who have the same characteristics as that of the defined target samples of the study will also asked to accomplish the questionnaire as reserved samples. Such incidents include half-finished survey form, inconsistent answers, untruthful information and forms of the respondent who did not answer the questionnaire seriously. Upon the completion of the required number of respondents for the survey method, the valid questionnaires will still be included in the presentation and analysis of the findings and results of the study.   Basically, (1973), initiated that it is advisable to use the Slovin’s formula in choosing sample sizes. Thus, the sample size of the population in this paper was determined by Slovin’s formula. The formula of Slovin is given as follows: Where:             n = a sample size         N= population size e= desired margin of error (percent allowance for non-precision                         because of the use of the sample instead of the population).    Data presentation and analysis: Generally, responses to a questionnaire are objectified and standardised and these make tabulation easy. But more importantly, the respondents’ replies are of their own free will because there is no interviewer to influence them. This is one way to avoid biases, particularly the interviewers’ bias. The answers of the respondents will be first encoded and subsequent tests will be applied to produce quantitative and descriptive data used to complete the research project. Frequency values and percentages of the answers of the respondents compose some of the findings and results of the study. Percentage – to determine the magnitude of the responses to the questionnaire                  n       % = -------- x 100   ;           n – number of responses                  N                            N – total number of respondents             The statistical analysis will be conducted using Microsoft Excel where the quantitative data are tabulated, graphed and evaluated. The relationships of the variables will be then analyzed and collated with other findings of the study. The extent and magnitude of the relationship between variables will be presented for the systematic analysis of the collected information. The researcher will use graph and charts for data presentation. Tables, on the other hand, are the summary numbers and figures indicated in rows and columns normally used to present quantitative data and results of the statistical tests. Tables will facilitate the systematic presentation of all the collected data and information from the survey method. Each table will be provided with proper title, number, caption, text and explanation that will comprise most of the results and findings section of the research study.    Validity and reliability of data. Ensuring the validity of the accumulated data is considered to be the most crucial stage of the research endeavor. Since a methodology is always employed in the service of a research question, validation of the inferences made on the basis of data from one analytic approach demands the use of multiple sources of information through validation study built into the design ( 1998;  2002; 2001).  The triangulation research strategy in which the use of multiple sources to enhance the rigor of the research ( 2002) helps in the in-depth case analysis of the paper.  (1995) stated that the protocols that are used to ensure accuracy and alternative explanations are called triangulation. The need for triangulation arises from the ethical need to confirm the validity of the processes. In case studies, this could be done by using multiple sources of data ( 1984).   The data and information gathered in using the secondary data analysis will be used to support and rebut the claims of the study wherein critical examination and analysis of the findings were compared and contrasted with each other.   The secondary data were critically analyzed based on the credibility of the authors, the methods used and the sampling procedures made in order to accomplish the said previous research studies. Secondary data analysis is composed of the reviews of references and sources in this study to either support or rebut the claims and findings of this particular research endeavor. This enables the researcher to compare and contrast the results that were accumulated by other researchers who investigated the same topic of research. These include published and available unpublished research studies, case studies, journal articles, and books that have concerned on the investigation and analysis of different concepts, variables and factors that relate to the principal idea of the study’s investigation.  Secondary data is data that already exists and there is a variety of sources available to the researcher (2003). In order to meet the research objectives, the researcher will make a thorough review of literature on the subjects of Business Intelligence, competitor’s Intelligence and competitor’s analysis. The researcher has presently identified a preliminary reading lists (in GSM  and   Westminster Libraries)    both in hard and electronic copies. Further reading list will be identified in the course of the research as researcher have identified several professional journals on management, marketing and Competitor’s Intelligence. Research on the followings, will therefore be made: v  Competitor analysis  - using Petroleum economist, Datamonitor, Euromonitor and the internet to identify existing LNG companies and proposed / new entrants v  Usage of public available information / data from governments sources, journals and energy forecasters v  Collating and analysising information on EU Third party access right.     Literature Review   A number of articles, academic papers, journals and other relevant references have provided and researches on the concept of information management. The continuous advancement in technology gave way to inquisitive inquiries on the logic that governs information management, its importance and its drawbacks. It has been studied in the perspective of different disciplines such as social, political, legal management, communication, science, and business courses. Information management has been a familiar concept since then. (1998) discussed the importance of good information management in the ever-increasing demands of the global business industries which are common nowadays. He emphasized the relevance of the search for global efficiency, local responsiveness, transfer learning and external alliances through proper information management in a particular business organization. Information management (IM) is the administration of data with regards to its uses and transmission as well as the application of theories and techniques of information science to be able to create, modify, or improve information handling systems within a particular business organization (slim.emporia.edu). It is the function of managing the organization’s information resources which includes the creating, capturing, registering, classifying, indexing, storing, retrieving and disposing of records and developing strategies to manage records. It also includes the acquisition, control and disposal of library and other information products, items kept for reference purposes, and the provision of services to internal and external customers, based on information resources. Data administration, archival records and the handling of Freedom of Information (FOI) requests are also classified under this category (metadata.curtin.edu.au).   IM describes the measures required for the effective collection, storage, access, use and disposal of information to support agency business processes. The core of these measures is the management of the definition, ownership, sensitivity, quality and accessibility of information. These measures are addressed at appropriate stages in the strategic planning lifecycle and applied at appropriate stages in the operational lifecycle of the information itself (). It is the provision of relevant information to the right person at the right time in a usable form to facilitate situational understanding and decision-making. It uses procedures and information systems to collect, process, store, display, and disseminate information (atiam.train.army.mil). Information management is the handling of knowledge acquired by one or many disparate sources in a way that optimizes access by all who have a share in that knowledge or a right to that knowledge ().   According to  (2002) the private sector intelligence and security is necessary in order for companies to profit for the interest of the owners, shareholders, and mangers. The marketplace intelligence or the competitive intelligence is the most significant area of the private investigation sector that focuses on the knowledge management and information utilization for the benefit of the business organization. The market intelligence has been popular due to the drive of the Society for Competitive Intelligence Professionals (SCIP) to encourage the members of the private industry to make use of intelligence in undertaking their business processes. In this regard, competitive intelligence will contribute to the business decision-making of the stakeholders of the company through access to important information outside the organization.   However, the collection-analysis process of the concept of competitive intelligence is most critical when it comes to the strategic planning of the company particularly those that operate in the international market. The media as well as the academic sector have not been very adept to such subject as evident in the limited literature tackling the issues and implications of practicing competitive intelligence by the business sector. But undeniably a very busy network of professionals is involved in the business of political risk analysis who provide information and recommendations to prospective investors that are interested in starting up businesses overseas. Most of the professionals in this career are concerned to in the social, political, and economic information of developing countries along with other business environment or setting where business deals present dangers to the entirety of the organization ( 2002).  According to (2001) the current business environment demands the need for newer business systems in the form of business intelligence systems (BISs) in order for business organizations to grow. Business intelligence systems require vision, money, and patience for their development as well as implementation. Business intelligence focus on full understanding of knowledge and information derived from data through effective way of access and synthesis processes using data mining tools. These tools allow organizations to sift through fundamental information for business intelligence use particularly those that provide data about customers, supplier, internal transactions, and other aspects of the business transactions. Data warehouse applications such as catalog, index, and cross-referencing systems are used for the convenient archiving, retrieval and use of collected information. In this regard, basic business data are needed to be transformed into “actionable business intelligence in order to assist decision-makers of the company on what to do.   Among the information systems that are directly related to business intelligence include (1) knowledge management systems, (2) on-line analytical processing systems, (3) decision-support systems, and (4) executive information systems. All these facilitate comparisons, analysis trends and business patterns, and current and historical information presentation to the decision-makers of a particular organization. Hence, theses systems help decision-makers to make informed decisions that will affect all aspects of the operations of the company by providing thorough information and understanding of its long-term goals and objectives (, 2001).  The business intelligence model (BIM) highlights the collection of business information from existing information systems in the operations, work management, procurement, inventory, customer satisfaction, and human resources of the business organization. More than establishing relationships between entities and assets of the company, BIM summarizes and aggregates incoming data for immediate processing to be provided in an accessible format along with numerous and multi-level critical reviews and analyses of the new data to provide in-depth understanding to the people who will use them in the company. The model combines multiple, predetermined data structures and metadata in relational database in which the standardized data warehouse model combines entities, attributes, relationships, and business rules in order to give enterprises ready access to assets, facts, dimensions, events, real time information, and organizational hierarchies necessary to facilitate timely business decisions (l). Among the characteristics of BIM include (1) standards-based architecture and design, (2) facility to store and manage static data, (3) facility to store and manage dynamic (real-time) data, (4) ability to integrate data from multiple sources, (5) summarizes data for decision support and analysis, (6) aggregates data for multi-dimensional and cross discipline analysis, (7) provides data suitable for analysis over extended periods of time, (8) oriented by business area, function or subject, (9) provides integrated information from across the entire organization, and (10) provides cleansed, reliable data for other business areas such as ‘data marts’ or DSS   Figure 2. The Business Intelligence Model Today most companies find that it impossible to create any kind of sustainable competitive advantage based on product alone. It is common knowledge that every one of the successful companies sought and found a precise understanding of how it could create a customer-centered competitive advantage. Business firms invest on researches that will define their target customer groups that they believed they could serve best. Every business person is determined to know what kind of work they would and would not do for their customers and, in turn, they carefully learn how to fulfill the needs of each kind of customer in their target markets.  (1996) emphasized the idea to take advantage of the competitive situation not just by being better in how that product gets sold, serviced, and marketed at the customer interface. It requires that companies create breakthroughs in how they interact with customers, and design a way of interacting that makes an indelible impression on customers, one that so utterly distinguishes them from others that it becomes a brand in itself (4).   Understanding the dynamics of the competitors in the industry helps assess the potential opportunities of every business venture by differentiating the similar products or services offered by the company against other business organizations. As such, it is necessary to realistically assess potential levels of profitability, opportunity and risk based on five key factors within an industry so as to determine the long-term profitability of a market or market segment (1998). According to  (1987) competitive intelligence (CI) is the process by which organizations gather actionable information about competitors and the competitive environment and, ideally, apply it to their decision-making and planning processes in order to improve their performance. CI links signals, events, perceptions, and data that appears unrelated into sensible patterns and trends concerning the business environment to which an organization's decision-makers act upon. Moreover, public sources are normally used to find and develop information on competition, competitors, and the market environment ( 1987). With regards to ethics CI is legal ( 2003).   Porter’s Five Forces Model highlights the interplay between the suppliers, buyers, new entrants, substitutes, and industry competitors in order for a business entity to gain competitive advantage. When it comes to suppliers, an organization that offers products as well as services also depends on suppliers that deliver the company’s raw materials. This condition leads to the buyer-supplier relationships within different industries. Such relationship is directly influence by the changes in the supply and demand variables based on the existing needs of the consumer population. The influence of the supplier is defined by its ability to dictate price and influence availability of materials and their ability to (a) increase prices without suffering from a decrease in volume, (b) reduce the quantity supplied, (c) organize in a formal or informal manner, (d) compete in an environment with relatively few substitutes, (e) provide a product/material that is a critical part of the end product or service, (f) impose switching costs on their customers when they depart, and (g) integrate downstream by purchasing or controlling the distribution channels (1989).   The power of buyers describes the impact customers have on an industry. When buyer power is strong, the relationship to the producing industry becomes closer to market conditions wherein the buyer has the most influence in determining the price. As such the bargaining power of buyers increases when they have the ability to (a) make agreements with other companies providing similar products and services, (b) purchase a product that represents a significant fraction of the expenses incurred by the company, (c) purchase of a product that is undifferentiated, (d) incur low changes in costs when they change vendors, (e) be price sensitive by bearing in mind the options available, and (f) integration to purchase the goods of the suppliers (1989).   Meanwhile, the possibility of new companies entering the industry influences the pace of the competition. Thus, the key is to evaluate the methods of entry and exit for a new player to the industry. Although any company should be able to enter and exit the sector, each industry presents different levels of difficulty influenced by economics. These unique characteristics of the each industry are referred to as barriers to entry which may come from different aspects of the business ranging from supplies to technology. They seek to reduce the rate of entry of new entrants which leads to maintenance of a level of profits for the existing players ( 1989).    “Substitute products” as those that are available in other industries that meet an identical or similar need for the end user. As more substitutes become available and affordable, the demand becomes more elastic since customers have more alternatives. The treat of substitutes often impacts price-based competition since substitute products may limit the ability of firms within an industry to raise prices and improve margins. Other concerns in assessing the threat of substitutes include the presence of new technologies that can contribute to competition though more diverse and economical substitute products and services. A segment is unattractive when there are actual or potential substitutes for a product (1989).   Lastly, firms strive to secure a competitive advantage over their rivals. The intensity of rivalry varies within each industry and these differences can be important in the development of strategy. Industries that are “concentrated,” versus “fragmented,” often display the highest level of rivalry. In pursuing an advantage over its rivals, a firm can choose from several competitive moves: (a) changing prices, (b) improving product differentiation, (c) creatively using channels of distribution, and (d) exploiting relationships with suppliers (1989).     EXPECTED RESULT   The result of this dissertation from the result of the surveys and interviews and the response base of the companies contacted will be used to determine the present extent of CI use in LNG business [NLNG being case study] and the importance/benefits this process has in strategic management.     Plan of Work (Project Schedule)   A data or information analysis plan was prepared to organize the information collected orderly so as to make the presentation of the results more comprehensive as well as to make sure that research objectives are achieved and the research questions were answered. In summary, the researcher will undergo four major phases to complete the study: Phase 1: Problem Identification for Research. This involves reviewing existing theory, research, and practices from professional literature. This process helped integrate theoretical perspectives and empirical findings with the own understanding of the problem, and discern the aspect of the problem the researcher want to research and learn more about. Phase 2: Administration of the Instrument. After reviewing literature, the researcher will formulate questions for the survey and makes a set of guide questionnaires for the interview. These are then presented to the adviser for validation purposes. After this the researcher initiated a process of building collaborations with the respondents who participated in the study.   Phase 3: Data Collection and Analysis. In the third phase, the researcher will collect and analyse data for the purposes of identifying critical contextual variables specific to their setting. These data will enable the achievement of a specific understanding of the problem. Phase 4: Data Synthesis and Generation of Recommendations. The researcher will synthesize the findings from the previous phases and relevant previous research to modify existing hypotheses and account for different factors that will transpire during the analysis, as well as generate recommendations based on new understandings. During this phase, practice-based recommendations for action will be generated.     Project schedule   The schedule of activities that the researcher will need to undertake in order to complete this particular research endeavor is illustrated in the Gantt chart below:     Resources required   1.      The Internet    2.      College library and other libraries’ catalogues 3.      Various  magazines both physical and on-line as well   4.      Books & magazines   5.      I have due to this dissertation signed up to full membership of relevant societies and thus now have subscription to relevant magazines. The associations with paid subscription have given me access to a lot of databases a.       Society Of Competitive Intelligence (SCIP) b.      Mckinsey Quarterly c.       Leader2leader d.      Harvard Business Review   6.      By building up contact lists in different categories it will be possible to have access to people involved in various aspects of CI work (e.g. CI People, CI Consultants, Academics, ...). The necessary contacts can be found on the Internet, e.g. through membership directories or the speaker database of SCIP and other CI related organisation.

A Case Study of Nigeria LNG Ltd – migration from Market Research to Competitor Intelligence

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Thesis Hypothesis on Institutional Barriers to Small Scale Business Development

Institutional barriers to small scale business development Institutional barriers for small businesses must be examined in an individual, country specific context.   Studies have been conducted on several developing nations on barriers to the development of small businesses.  There are several characteristics that are common among the different nations which prompt the barriers on business development.  In Brazil, for instance, some of the barriers for operations and growth of companies include taxation and regulations followed by government policy instability and uncertainty (Campos, Nauro F.  and Iootty, Mariana.  Institutional barriers to firm entry and exit: Case-study evidence from the Bartliain textiles and electronics industries.  21 August, 2007.  https://docs.google.com/viewer?url=http%3A%2F%2Fmulyagusdin.terapad.com%2Fresources%2F67269%2Fassets%2Fdocuments%2F101-Econ.Dev.%2520Readings%2F4_Institutions%2520and%2520entry%2520-%2520%2520exit%2520in%2520Brazil.pdf, retrieved 25 April, 2011.)”  “In Tanzania, a mismatch is observed between economic policy reforms and restructuring of the institutional framework (Institutional Barriers to Small-Scale Business Development: A Need for Flexibility in Tanzanian Tax and Regulatory Systems.    http://www.deepdyve.com/lp/sage/institutional-barriers-to-small-scale-business-development-a-need-for-dsrAMafxd9?autoClickRent=true, accessed 25 April, 2011.)”  “Most developing countries can be characterized as ‘neo-patrimonial’ in the sense that much authority is highly personalized rather than rule-based and bureaucratic.  This is extremely tricky for businesses because the presumed need for a fairly competitive and open ‘playing field’ field for business might conflict with the more personalized state-business relations that are found more often in a patrimonial state.  (Hare, Paul G.  Business Development in Four Developing Countries:  Institutional Barriers and Supports.  September 2006.  https://docs.google.com/viewer?url=http%3A%2F%2Fwww.sml.hw.ac.uk%2Fecopgh%2FIPPG-DSA%2520Conf%2CNov2006.pdf, accessed 25 April, 2011. 5)” The three hypotheses which point to the aspects of the development process which are oftentimes neglected or under-estimated, and which is also why policy advice is often too similar between countries and the reason behind why it often fails include the following: ·         “The costs and complexity of doing business are often very high and discourages potential beneficial economic activity.  Institutional arrangement which result in high costs are damaging to economic performance.  Their diligence depends on the political-economic structures which are very slow to change. ·         The lack of modern institutions to manage risk results in firms that remain too small and habitually informal, farms which are over-diversified and technically inefficient. The result is low incomes and low rates of income growth. ·         Whether privatization proves to be beneficial for the economy or not depends on post-privatization ownership structures and on the quality of the regulatory and competitive environment in which the privatized firms find themselves in. (Hare, Paul G.  Business Development in Four Developing Countries:  Institutional Barriers and Supports.  September 2006.  https://docs.google.com/viewer?url=http%3A%2F%2Fwww.sml.hw.ac.uk%2Fecopgh%2FIPPG-DSA%2520Conf%2CNov2006.pdf, accessed 25 April, 2011. 5)” In Mali, Compagnie Malienne pour le Developpement des Fibres Textiles (CMDT) works with many small farms concerned with cotton growing.  Office du Niger (ODN) deals with farms that grow rice on irrigated land.  “These are key economic activities in Mali and based on the studies of CMDT and ODN, Mali is comprised of ‘farms within firms’.  (Hare, Paul G.  Business Development in Four Developing Countries:  Institutional Barriers and Supports.  September 2006.  https://docs.google.com/viewer?url=http%3A%2F%2Fwww.sml.hw.ac.uk%2Fecopgh%2FIPPG-DSA%2520Conf%2CNov2006.pdf, accessed 25 April, 2011. 7)” CMDT has a vertically integrated research-production-marketing structure which is considered a success.  The usage of local extension agents to promote technology diffusion and the spread of best practice as well as the use of pricing schedules that rewarded farmers for sorting their cotton by quality is what contributes to this accomplishment.  However the future of CMDT is a very politically sensitive issue as there are complaints that CMDT surpluses have not been useful to develop the infrastructure in the cotton-growing areas. ODN initially worked in the same way as CMDT however over time the practice has changed.  “They no longer maintain a vertically integrated monopoly in its operations, ODN maintains and develops the irrigation system and supplies water to farmers, but the latter no longer has to sell their rice to ODN for threshing, husking and marketing.  (Hare, Paul G.  Business Development in Four Developing Countries:  Institutional Barriers and Supports.  September 2006.  https://docs.google.com/viewer?url=http%3A%2F%2Fwww.sml.hw.ac.uk%2Fecopgh%2FIPPG-DSA%2520Conf%2CNov2006.pdf, accessed 25 April, 2011. 7)” Other problems have risen as well including needing to diversify crops because the production of rice is insufficient to meet the needs of the farming families.  Also, property rights to the land are not clear with ODN’s disinclination to cede individual farmers full rights.  Leasing land to foreign companies was not successful.  “ODN is considered to be highly corrupt. (Hare, Paul G.  Business Development in Four Developing Countries:  Institutional Barriers and Supports.  September 2006.  https://docs.google.com/viewer?url=http%3A%2F%2Fwww.sml.hw.ac.uk%2Fecopgh%2FIPPG-DSA%2520Conf%2CNov2006.pdf, accessed 25 April, 2011. 8)” In Tanzania, in comparison to its neighboring East African countries (Kenya, Uganda and Sub-Saharan Africa average), companies are of the opinion that access to electricity, tax administration, business licensing and permits, and corruption are big constraints on their operations and growth.  “Business licensing and permits were viewed as severe constraint by firms in Tanzania (27.4%), relative to firms in Kenya (15.2%), Uganda (10.1%) and the SSA average (13.7%).  This finding is in line with Tanzania’s poor regulatory quality which shows that specific institutions which matter most for companies in their investment activities are particularly weak.  (Hare, Paul G.  Business Development in Four Developing Countries:  Institutional Barriers and Supports.  September 2006.  https://docs.google.com/viewer?url=http%3A%2F%2Fwww.sml.hw.ac.uk%2Fecopgh%2FIPPG-DSA%2520Conf%2CNov2006.pdf, accessed 25 April, 2011. 8)”

Thesis Hypothesis on Institutional Barriers to Small Scale Business Development

Institutional barriers to small scale business development Institutional barriers for small businesses must be examined in an individu...

STOCK MARKET AND STOCK PRICES: UNDER THE LENS OF EFFICIENT MARKET HYPOTHESIS

STOCK MARKET AND STOCK PRICES: UNDER THE LENS OF EFFICIENT MARKET HYPOTHESIS   Introduction             The invisible hand in economics implies that isolated benefits existing in the economy will not be apparent and will continue to be believed normal events.  This is because all economic actors are doing the same thing, which is, outwitting one another to get an upper hand with economic gains and benefits.  In specific areas such as stock markets, the invisible hand is redefined by efficient market hypothesis.  The mechanism is the same with reference to stock price indifference and absence of isolated case of attractive investment.  However, the historical stock market bubbles/ crashes as well as corporate scandals show that the hypothesis is merely a theory and has its limits.    EMH and its Major Forms Efficient market hypothesis or EMH is an investment theory that posits the zero possibility of outperforming the stock market by using fundamental (e.g. corporate date, economic factors) and technical (e.g. trending) analysis in investment appraisals ().  Due to this, EMH assumes that share prices are determined in the market through all possible and existing information.  There is no room for investors even an expert to achieve gains through available information.  EMH incorporates them to the current share price.  For example, there are no undervalued or overvalued stocks which can attract speculation for potential gain.  As a result, there is no other way to outperform the market rather than to invest and purchase for riskier stocks.  Although highly theoretical and controversial, EMH was evident during 1987 stock market crash and some corporate scandals.      There are three forms of EMH; namely, weak, semi-strong and strong forms (Investopedia).  The first form states that technical analysis can be utilized to outperform the market because the current stock price reflects all past prices that it had during trading.  Alternatively, fundamental analysis can be used to measure if the stock is undervalued or overvalued.  The second assumes is in conjunction to the initial definition of EMH but gains can be held when investors will be able to use unpublished information about the stocks.  Therefore, only public information (i.e. published) are integrated to current stock price.  The third agrees with the complete definition of EMH that includes in the current stock price both the public and private (i.e. through insiders) information.  With this, even when investors will consider a huge amount of research to achieve price gains, this form retires the outcome.   EMH Failure and Capital Market Research              The historic Great Depression and Enron collapse are two cases in two different times that proved that EMH failure will not be discovered and addressed until adverse effects to stakeholders are at peak.  This calls for a pro-active approach in conducting capital market research in which the endeavor should be infused even if obvious effects are yet to emerge.  The more stringent policies may defer and discourage Enron-like firms temporarily but pro-activity to determine the culprit (client alone) or culprits (client plus auditor) is conceded to have its strategic merits for capital suppliers.  Every potential and existing shareholders and creditors are now bound to get all the help they need from financial advisors, government and peers to secure their funds to entities that have at least a sprinkle of EMH or some degree of the weak-form.  Otherwise, their investment can be easily diluted by the market and/ or the entity without even imploring some contingent measures.  In simple terms, they will lose the battle without pulling out their swords and shields.               Being in chorus to the behavior of a certain financial market proved to be beneficial and less complicated for shareholders.  The case of Great Depression and Enron is not an everyday case while the general pulse of market participants is oftentimes correct and profitable.  However, there are several factors to consider when shareholders will completely give their trust and relate investment options to the capital markets.  For example, the efficiency of stock exchanges in which corporate shares is traded out of their traditional operations.  In economics, the role of the stock market is merely to provide a venue in which demanders and suppliers of capital can meet (1965).  Today, this venue becomes complicated due to brokers and traders, regulation from the government and involvement of foreign firms and investors as well as complexity and uncertainty of the environment.                For example, the London Stock Exchange had abolished Big Bang scheme that led to de-motivated independent brokers and conversely allowing entities to have their own dealers (1999).  In effect, the exchange can fail to limit the marketing campaigns private brokers can use to attract investors.  As Enron primarily utilized the lack of corporate disclosure and insider trading to obtain its objective, this situation can mimic the manipulative feature by misleading promises and bias advises.  In addition, the abolishment can hinder broker efforts (both private and independent) to seek markets diligently due to their “focused” clients that can ultimately limit the flow of capital in the economy.  Limiting the access to capital and interested borrower stimulates as well aggravates the inclination of firms to implement actions that continuously mitigate the functions and invisible hand of EMH.  Another Enron or perhaps Great Depression can follow in the coming years.    Asymmetrical Information              According to Investopedia, asymmetrical information is a condition when one party in a transaction has a more substantial and relevant information than the other party.  In this case, it is likely that the former party will have higher bargaining power throughout the transaction until the latter discovers the error or default in the agreement.  When applied in the corporate setting, the theory of the separation of ownership and management can illustrate this case.  The theory states that investors have an indirect access to inside information with regards to the real corporate value compared to directly managing executives (2002).  As observed, investors can be applied with management tactics to raise self-vested interests of executives.  Traditionally, the latter opt to sell and issue shares when the firm is overvalued as well as the investors are unaware of such condition.  However, this dogma had long been discovered by the market.  as such, investors repel this executive behavior by revaluing their shares causing a negative market reaction.  In the end, the management could not maximize the traditional tactic due to unfolded information of its significance to investors.                 The supposedly first stage of the collapse of Enron was derived from Skilling drastic imposition of rigid and hostile retention scheme (Thomas 2002).  This is a condition of moral hazard (1999).  Before Skilling took the post of Division Manager, former employees have symmetric information with the firm regarding their worth.  However, when Skilling tackled human resource issues, he tried to abort loyal but change-averse staffs with master-level and doctorate degree holders without full disclosure of the plan so that former staffs have adjusted their work ethics accordingly.  In a different case, the unethical accounting practice of Fastow and his collusion with Andersen auditors is an information asymmetry under signaling (2002; 1999).  The victims are the shareholders unknowingly handed by non-transparent corporate and financial reports.  Fastow and Andersen signaled to each other about the hidden action which transformed shareholders as one having asymmetric data from the start of the contract.               Information asymmetry to employees was regarded as the first dark stages of Enron collapse because staff resistance to change is one of the top causes of failure of major corporate changes (2002).  Skilling, who had substantial experience as financial advisor, undermined human resources when it insisted to be hostile on them.  Without loyal employees, quality management is adversely affected because highly-qualified but new employees are neither capable nor motivated in conforming to the new methods under Skilling culture. This scenario may have been integrative-planned by  to limit the size of familiar employees to minimize their unethical exposure.  At this point, Enron was not looking strategically rather financially.  The incomplete information staffs would have been received (like the transition to highly-qualified and scholarly recruits) sparkled the negative atmosphere throughout the organization.  It ultimately impeded cultural cohesion and deepened the opportunity of higher executives to execute their self-vested practices.               On the other hand, information asymmetry to investors as well as rating agencies led to unguided substantial investments.  This formed the foundation for the fame and fortune of Enron to emerge.  Although signaling is primarily evident to investors that purchase stocks or those who increase their holdings under Andersen regime, moral hazard can be more appropriately tagged to initial investors of the company way back in 1980s.  The loophole of this practice by colluding parties, however, is that the huge amount of stakes that used to support the firm’s operations, stock attractiveness and continuity of the unethical practices made them very crucial to the existence of Enron.  As a result, when the scandal cropped up in the offing of the new millennium, the firm had faced not a gradual demise rather instant shutdown.    Option Grants Under opportunistic perspective, the economic incentives of Enron can vary depending if they opt to engage in fraud or take risks with regards issuing options.  The perspective is an accounting policy used by an organization that is based on manager’s incentives to increase their wealth; however, this will be shouldered by other parties within and beyond the organization (1997).  When they employ fraud, they can manipulate accounting methods providing a tampered profits and performance ratios.  According to the survey of  (1997), most managers are remunerated from the profits or ROA of their respective firms.  In effect, executives will not only impress employees to undergo option grants but as well impress the investors to provide higher incentives believing that the firm is doing well.    Further,  (1987) showed that restrictive covenants formed by corporate debts are surmountable by fraud to improve accounting numbers.  The process will begin after executives have manipulated financial ratios permissible to the constraints of creditors.  In effect, the firm can enjoy strategic actions it cannot implore when the manipulation did not take place.  In return, the firm can implement strategies that will ultimately lead to profitability and growth in either prospective or actual sense.  When this information is delivered to employees, they will think that stock options are attractive investments.  They will purchase stocks unknowing that they are merely funding the efforts of executives to conceal mismanagement or possible bankruptcy.  As a result, executives are rewarded two-fold.  They can manage the firm with the support of creditors and implementing strategies with employees in full support due to the stock options the latter is currently holding.  The cover-up ultimately leads effective fraud on the part of executive whose incentives goes beyond remuneration rather long-term employment, promotion and fame within the industry.                        In a similar case, political groups can impede strategic actions of the firm if it reports high earnings or disclose issues pertaining to adverse external effects of their operations (1997).  The government may impose tax sanctions or legal remedies on tax evasion while environmental groups can boycott its products when informed about negative externalities (like oil spills).  These situations have their adverse impacts in both short-term and long-term existence of the company.  In effect, fraud to accounting methods can result to lack of disclosure and computational manipulation to arrive at a standard level of accounting reports.  This is why the study of  (1996) found that firms with environmental disclosures still used them for corporate image building.  As a result, similar to the benefits of corporate ability to bypass creditor restrictions, the firm can induce its strong business outlook to employees deepening the need of the later to resort to option grants.  Executives can distort the likelihood of disruptions from external actors from a major mental lapse in decision-making through designing accounting methods that can hinder such mistake.                  On the other hand, under efficiency perspective, the efficiency of the contracting parties or transactions at hand is pursued to end at a minimum agency cost.   According to  (1999) accounting alternatives are adopted by executives because it reflects the underlying and true performance of corporate assets ().  This makes fraud selection for executives ineffective, if not, legally impaired.  In this case, risk taking is the more strategic choice for executives to maximize their incentives.  For example, there are different methods to compute for depreciation or amortization.  When this will be related to stock options, executives have minimal control over the options due to the absence of fraud.  In effect, it is left to accept the repercussions of the market.  Although this is ambiguous making a less enthusiastic employee to involve their investment in options, this can be an effective mechanism keep employees and executives “unattached” to corporate performance.                Due to this, executives will not be pressured to take unethical accounting practices.  One incentive of this is that employees may see the worth of their executives that can induce corporate cohesion.  By doing so, executives can freely implement their strategies and run the organization more smoothly.  Through this, they can reap the benefits of fraud tactics through similar economic benefits plus the recognition they can derive from complimenting and idolizing employees.  They can extend affect their investment decision in the long-run which inevitably acquire employee’s trust.  By this time, executives can opt to apply fraudulent actions as they wish.  Another incentive is that accounting best practice can be awarded to the company by external actors as well as investors. In effect, executives can go away from unethical practices and manipulation that can minimize the costs of hiring additional skilled accountants and the cost of “greasing” to auditors, politicians and other colluding parties.    Conclusion             The stock markets of today are likely positioned in the middle of reality and theory, that is, under semi-strong EMH.  It allows gains for the issuers and investors alike to make investing exciting and thrilling that is compatible to the appetite of rich businessman and influential people.  The discussion shows that EMH failure is necessary to give way for all the stock market actors to reap specific gains and achieve their personal/ corporate interests.  However, the drawback is that inefficiency in macroeconomic sense is detrimental for the people in the lower bracket of earnings-capacity (i.e. those in poverty or even the working class).  They are completely unable to participate in the stock market, minimal access to assess companies based on credible/ accurate financial statements and controlled by their employers.  As a result, this serve as a policy issue for authorities that requires review and appreciation of EMH and the appropriate EMH form to use in different economic conditions.

STOCK MARKET AND STOCK PRICES: UNDER THE LENS OF EFFICIENT MARKET HYPOTHESIS

STOCK MARKET AND STOCK PRICES: UNDER THE LENS OF EFFICIENT MARKET HYPOTHESIS Introduction The invisible hand in ec...