Things Are Bleak Now, but It's at Times Like These That
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‘‘ The plain fact is you can’t have capitalism without capital. The current lack of liquidity is a serious challenge for CFOs as they strive to protect their businesses. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to We are in a period of asset provide accurate and timely information, there can be no guarantee that such deflation. The recovery will begin information is accurate as of the date it is received or that it will continue to be accurate in when asset values stabilize and the future. No one should act on such information without appropriate professional advice banks and investors move back into the market after a thorough examination of the particular situation.The views and opinions expressed in a serious way. Banks may never, as we debate herein are those of the authors and interviewees and do not necessarily represent the on page 18, lend as readily as they did in 2005-7, views and opinions of KPMG’ s network of firms. © 2009 KPMG International. KPMG but they need to lend money to make money International is a Swiss cooperative. Member firms of the KPMG network of and businesses need to borrow it. independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG Until life returns to normal, companies International or any other member firm vis- -à vis third parties, nor does KPMG must survive the turmoil and make strategies International have any such authority to obligate or bind any member firm. All rights for the future. This means getting back to the reserved. Printed in the United Kingdom. KPMG and the KPMG ‘‘ logo are registered trademarks old-fashioned virtues of clear direction, financial of KPMG International, a Swiss cooperative. discipline, transparency and building the Publication name: Agenda: insights into growth, performance confidence of potential investors and lenders. and governance Publication no But critically, they should also be looking for 903007 Publication date 23 March 2009 the opportunities that eventually emerge. Printed in the UK by MPG impressions. Environmental Management System ALAN BUCKLE ISO 14001 accredited and Forest Stewardship Global Head of Advisory Council (FSC) chain of custody certified Printed on Think White, manufactured from 100% Elemental Chlorine Free (ECF) pulp, of which 50% is recycled post- consumer fibre and is sourced from well -managed forests independently certified according to the rules of the FSC. 02 Agendamagazine © 2009 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated. coo ntents Strategic intelligence Revolutionary regulation; Islamic finance; the bright(ish) future of private equity 04 Ones to watch They’re aiming for growth in 2009 – how will these execs buck the trend? 06 Keys to success Kiran Mazumdar-Shaw, India’s ‘biotech queen’, on successful management 08 Competitive edge There’s more to Finland than Moomins: why Finns are hotting up in 2009 11 Cost optimization Why cutting 10% off everyone’s budget is wrong – and how to get it right 12 Acumen Which unexpected sector is exciting Istithmar, the Dubai SWF? 16 Great debate Where will the capital come from? Three experts chase the money 18 10 issues on your agenda Factors for your consideration, from corporate ethics to the changing role of CFOs 22 The big issue Why it’s time to get IT out of the basement and into the boardroom 26 Learning curve Investing in a downturn? You wouldn’t be the first… 29 Left field What science fiction tells us about financial modeling 30 Any other business Monitise Group’s Tom Spurgeon on the couch; exec blogs and Tweets 31 08 8 22 30 30 26 Agenda: Insights into growth, performance and governance is published by Haymarket Network, Teddington Studios, Broom Road, Teddington, Middlesex TW11 9BE, UK on behalf of KPMG International. Editor Paul Simpson Managing Editor Robert Jeffery Art Editors Stephen Hopkins, Jo Jennings, Sarah Power Production Editor Vanessa Longworth Staff writer Laura Bridgestock Sub editor Ian Cranna Designer Paul Frost Group Production Manager Jane Grist Senior Production Controller Hannah Pettifor Board Account Director Kate Law Senior Account Manager Caroline Watson Group Art Director Martin Tullett Editorial Director Simon Kanter Acting Managing Director, Haymarket Network Andrew Taplin Reproduction by Colour Systems, London, UK. Cover photography by Juidin Bernarrd/Khaleej Times. No part of this publication may be copied or reproduced without the prior permission of KPMG International and the publisher. Every care has been taken in the preparation of this magazine but Haymarket Network cannot be held responsible for the accuracy of the information herein or any consequence arising from it. Views expressed by contributors may not reflect the views of Haymarket Network or KPMG International or KPMG member firms. Agendamagazine 03 © 2009 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated. sintterlligaencte egic Revolutionizing regulation G20 targets tax havens, hedge funds and risk taking “Business should expect Hashagen says this “Regulation and a revolution in regulation over revolution aims to avoid oversight are the next two years.” That is another financial meltdown, likely to be more the stark message from Jorg bring hedge funds and private closely aligned Hashagen, KPMG’s Global equity into the regulatory fold, with the risk Head of Financial Risk ensure taxpayers get value for profile,” he says, Management, who says the public money being invested “and be more alert push for clear, consistent and through bailouts – and seeks to upcoming stronger regulation is being to ensure that tax havens like systemic risk. Banks driven not by traditional Andorra, the Bahamas and will have to supply Switzerland are not used to a much more detailed evade taxes or launder money. picture of their liquidity G20 working groups are position and regulators will now exploring three key be quicker to react if they G20 leaders talked tough on tax havens, and they’re issues: sound, transparent see something they do not set to back it up with 15 regulation; global cooperation approve of.” appropriate measures percent of the world’s to protect financial markets; Hashagen says the G20 countries are described by and reform of the IMF, World countries are backing the OECD as tax havens Bank and other multilateral previous rhetoric with development banks. investment in technology bodies such as the Basel Hashagen says that the and personnel to ensure Committee but by the leaders financial sector should be regulators are better suited of the world’s 20 largest under no illusions about the to fulfil their new, more economies (G20). new regulatory environment. ambitious, global mission. Going for growth Not every country is counting the days until 2009 ends: for some, the year could see genuine growth, as the map below shows. True, India microtrend and China’s respective 5% and 6% rises in GDP are disappointing after prolonged double-digit growth, but Qatar – which already has Emerging MNCs the highest GDP in the world – is predicted to lead the pack again with 11.6% growth. The Qatari government’s policy of investing up to They don’t like to shout about it, but multinational 3% of its GDP on R&D is seen as a key reason for its success. companies (MNCs) from emerging economies are gradually making their presence felt. China’s Haier has quietly become the fourth largest white goods manufacturer on the planet, while China Mobile is the leading mobile carrier 4.4% and Gazprom has sidled its way into the list of the world’s 6% biggest companies. Last year the combined revenues of 3.8% 4.2% the top 10 emerging MNCs were just shy of US$1 trillion 11.6% 6% 4.9% (€800bn). Within 10 years, they’re likely to represent a third 5% of companies in the Fortune 500, up from 4% 10 years ago. 3.9% Latin American MNCs are growing too, including Boeing’s 3.1% Brazilian rival Embraer and Mexican food giant Bimbo. Source: Economist Intelligence Unit Kumm/epa/corbis. Shutterstock Wolfgang Projected GDP growth, 2009 2009 growth, GDP Projected 04 Agendamagazine © 2009 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated. KEYS TO SUCCESS leadingg edgge Corporate animals Which creatures should execs ape? Want to get ahead in business? Rent Watership Down, says Stephen J. Spear, author of Chasing The Rabbit. “High-velocity rabbit organizations” are apparently the future. It’s not the The good news first time business gurus have looked to the animal kingdom: Fleas Crabs for private equity Big businesses are “If you want Vittorio De Pedys, affiliate professor of business finance elephants, says to build a new at ESCP- EAP European School of Management, says it’ s organizational culture, do not not all doom and gloom for the troubled sector expert Charles attack the old Handy – but they one. It simply need a “team of fleas” invites a battle. Instead, act Leverage is out of fashion – especially in private equity (nimble, lean sub-contractors) like a crab; tackle the culture At this year’ s SuperReturn annual conference in Berlin, where to survive, and must learn sideways on,” says author Jo the world’ s private equity investors met, the delegates were from their diminutive friends if Owen. While she doesn’t say in reflective mood. They may have realized relying on cheap they want to flourish.