Business Up Front - June 2006

Business Up Front

Economic Freedom throughout the World

The world is economically freer today, according to the 12th annual "Index of Economic Freedom," published by The Wall Street Journal and The Heritage Foundation.

Of the 157 countries graded in the 2006 index, 99 improved their overall scores, compared to 51 whose scores worsened and five that remained unchanged. Twenty are classified as "free," 52 as "mostly free," 73 as "mostly unfree" and 12 as "repressed." Countries with "mostly unfree" or "repressed" economies earn 70 percent less than countries with "mostly free" economies. "Free" economies enjoy a per-capita income more than twice what "mostly free" economies earn.

Countries receive a rating of one to five (one being the best) on 10 measures of economic freedom: trade policy, fiscal burden of government, government intervention in the economy, monetary policy, capital flows and foreign investments, banking and finance, wages and prices, property rights, regulation and informal (or black) market activities. The ratings are then averaged to produce the overall index score.

Hong Kong and Singapore finished first and second in the rankings for the 12th straight year. The U.S. ranked among the 10 freest economies for the first 10 editions of the "Index." After slipping to 12th place last year, it regained a top-10 ranking by cutting government spending as a percentage of GDP and lowering tariff rates (weighted average). The U.S. is tied for ninth place worldwide with Australia and New Zealand.

360 Degrees of Financial Literacy

The American Institution of Certified Public Accountants has set up a new financial literacy education Web site, 360financialliteracy.org, as a national effort of the accounting profession to improve the personal financial understanding of Americans. It provides a comprehensive approach to financial education and decisions, focusing on the information people need at different stages of their life, from childhood to retirement.

The "Financial Guidebook" offers general information on managing personal finances and budgeting resources in areas such as: owning a business, education savings and financial aid planning, home ownership financing, estate planning, life insurance, government benefits, investment planning, legal protection planning, retirement planning and tax planning.

The Web site also offers financial advice for women, as they control both individual and family spending, run the majority of small businesses in the country and an increasing number of corporations, select their own investments and need solid information about personal and business finance. The site offers tips from building a career and planning for the future, to running both a household and a business.

Are You Prepared for a Pandemic Flu Outbreak?

The Las Vegas Chamber of Commerce and the Southern Nevada Health District recently urged local businesses to prepare for a pandemic flu outbreak, which would mostly likely create high absenteeism, supply shortages and possible disruptions to infrastructure, transportation and communications systems. An outbreak would also disrupt the local economy due to changes in tourism and consumer spending habits. Estimates are that 20 percent of working adults would become ill and could be absent for at least two to four weeks. As many as 40 percent of the workforce may be absent at any one time, due to their own illness, caring for a sick family member, or out of fear of infection. A pandemic could cost the economy $70 billion to $160 billion in lost productivity and direct medical expenses. The chamber has created an online planning resource center to help businesses prepare their operations for potential disruptions. The resource center includes the chamber’s "Open for Business" booklet and The Pandemic Flu Planning Toolkit. All materials are free and available to any business at www.lvchamber.com/open. In Northern Nevada, the Washoe County District Health Department recently held a seminar entitled "Local Pandemic Influenza Planning: What Community Leaders Need to Know." Presenters included experts who discussed planning for pandemic influenza in general and addressed issues specific to avian influenza (bird flu) in particular.

The Great Vacation Excuse

Are you facing another long hot summer of slogging away at your desk? Unfortunately, you just can’t swing a vacation this year – or can you? "Actually, you probably can," said Tripp Friedler, author of Free Gulliver: Six Swift Lessons in Life Planning. Financial planner Friedler says "I can't afford it" and "I’m too busy to take time off" are excuses we use to cover other, deeper issues without realizing we’re doing it. Here are a few reasons you might be writing off your summer vacation, along with Friedler’s thoughts on what’s really going on:   Actually, you probably can. You would just rather spend money on a big house or an expensive car or monthly shopping sprees. "When you really think about it, you may well decide you can live with a more modest home or car to free up money for extras like nice vacations," says Friedler. You believe they can’t survive without you at work. No one is so important that a company will go out of business if he or she takes two weeks off. If you believe yours will, you might have a few ego issues you need to explore, Friedler says. Secretly, you’re more comfortable at the office than hanging out with your family. This one is tough to admit, but many hard-driving executives don’t enjoy being around their family for long stretches of time. This is especially true if their spouse handles 95 percent of the day-to-day childcare.

"I’m not here to judge anyone; I just want you to be aware of the real reasons you’re avoiding vacations," says Friedler. "Once you’ve ferreted out your excuse, decide where you really want to go on vacation, set a goal, and start making some changes. Most people need a sense of balance, and working non-stop without a break isn’t the answer."

Pointing the Finger at Wendy’s

Researchers from the University of Nevada, Las Vegas and the University of California, Irvine recently studied the public relations response of the Wendy’s fast food chain following 2005 news reports of a Nevada woman’s claim that she had found a human finger in her chili. The publicity led to a sharp drop in sales for Wendy’s, even after the event was revealed as a hoax. Wendy’s response to win back customers was to offer a weekend of free Frosty shakes as a show of good will and commitment, but the UNLV survey showed this probably wasn’t the best approach.

The UNLV research team tried two different print advertisements on a test group of 100 students who had heard about the Wendy’s finger incident. One group was shown an ad offering a free Frosty, and the other saw an ad depicting a young child happily eating Wendy’s burgers and fries. The ad referencing happy childhood memories led to more favorable brand attitudes and made it more likely the subjects would revisit Wendy’s. "We found that trying to appeal to customers rationally through offering a free promotion is not as effective as trying to appeal to them on an emotional level," said Michael LaTour, a professor at the College of Business.

Ten "Grand" Keys to Success

The CEO of the MGM Grand, Gamal Aziz, named 2005 Nevada Hotelier of the Year by the Nevada Hotel and Lodging Association, shares the following leadership philosophies:

Always benchmark those above you, not equal to or below you. That will ensure you’re always raising your game and staying a step ahead of the competition.

Quality, quality, quality. Don’t bring a product to market unless it is best in class. Don’t skimp on quality of products and never skimp on quality of talent to operate it and bring it to life.

Don’t be in a hurry to fill open positions. Wait to find the best, most qualified person in the field, then do everything to hire them. Be creative with your payroll numbers if you have to. Sacrifice somewhere else to get the best talent possible.

Travel. Explore. Constantly expand your perspective. You can’t innovate if your focus is limited to what’s around you. The world has much to teach.

Get out of your comfort zone. If you’re not uncomfortable doing your job, then you’re not challenging yourself enough. Stretch. Take risks. Challenge yourself every day. Learn from your mistakes.

Don’t go back to the same well twice. You can’t expect different results from the same people, products and approaches. Do your research, bring in new talent from outside industries. Put leaders together from different fields and see what they can create together.

Own your own restaurants, nightclubs, room products, and services. No one will look after them and care about them quite like you will. Owning your own ensures your success.

Promise people opportunities and rewards for excelling, and then give those to them when they deliver.

Celebrate your successes, but quickly. Begin every day forgetting the success you had the day before. If you don’t, you’ll lose sight of the competition and miss an opportunity to innovate and stay ahead of your competitors.

Be passionate about everything you do, especially about your people. Listen to them. Understand what motivates them.