Navtej Kohli Business Blog

Think about future and plan: Doing so helps prevent crises and awkward situations, and helps solve problems before they arise.

Make policies and regulations for your business before you start anything new.

Involve employees in decision making. This boosts their morale and increases their work productivity.

Communicate policies to everyone in your business.

Review the policies regularly as an when new processes are developed.

Asian commodity stocks rose after Japanese steelmakers agreed to a lower-than-estimated increase in iron-ore prices and crude oil held above $95 a barrel.Nippon Steel, Japan’s biggest steelmaker, climbed the most in three weeks after steelmakers agreed to a 65 percent increase in iron-ore prices, lower than some analysts estimated. Australia & New Zealand Banking Group Ltd. led a decline among banks after its chief executive said a “bloodbath” in debt markets will wipe out profit growth.

“Some had anticipated the price for iron ore would double,” said Mitsushige Akino, who oversees about $560 million in assets as chief investment officer at Ichiyoshi Investment Management Co. “Demand in emerging markets will likely help steelmakers increase sales and fend off the cost increase.”

The MSCI Asia Pacific Index was little changed at 144.69 as of 1:04 p.m. in Tokyo. Commodity and energy-related stocks were the two biggest percentage gainers among the gauge’s 10 industry groups.

The Nikkei 225 Stock Average added 0.3 percent to 13,665.52. Sony Corp. climbed after Kyodo news said rival Toshiba Corp. may exit high-definition DVD production. Tokyo Electron Ltd. led computer chip-related stocks higher after Credit Suisse Group raised its rating on the industry.

Nippon Steel gained 4.3 percent to 581 yen, set to close at its highest since Jan. 24. JFE Holdings Inc., Japan’s second- biggest steelmaker, added 6.5 percent to 4,420 yen. Posco, South Korea’s largest steelmaker, climbed 1 percent to 521,000 won.

Steelmakers

Steelmakers in Japan agreed to a 65 percent increase in the annual price of iron ore, the raw material used to make steel, a Japanese company official said. Prices may rise as much as 70 percent because of a global supply deficit, Credit Suisse said last month.

Woodside Petroleum gained 2.3 percent to A$51. Santos Ltd., Australia’s No. 3 oil and gas producer, advanced 4.3 percent to A$14.23. Cnooc Ltd., China’s largest offshore oil explorer, added 1.6 percent to HK$12.52.

Crude oil in New York rose as much as 1.3 percent to $96.67 on Feb. 15. Prices were recently at $95.60 a barrel.

Tokyo Electron, the world’s second-largest maker of chip- production equipment, gained 1.5 percent to 6,870 yen. Advantest Corp., the biggest maker of memory-chip testers, climbed 8.4 percent to 2,520 yen.

Credit Suisse raised its recommendation on Japan’s chip- equipment makers to “overweight” from “market weight” because it expects orders to pick up this year.

Sony, Toshiba

Sony, which helped develop the Blu-ray high-definition DVD standard, gained 2.1 percent to 4,950 yen. Toshiba is reviewing whether to completely end a rival HD DVD production standard, depending on factors such as demand from the U.S., Kyodo news reported on Feb. 16, citing unidentified industry officials.

Toshiba climbed 5.6 percent to 828 yen, the highest since Dec. 28 on speculation the company will abandon unprofitable business.

Australia & New Zealand Banking, Australia’s third-largest bank, dropped 5.7 percent to A$22.54, the lowest since Sept. 6, 2005. Chief Executive Officer Michael Smith said today the upheaval in global debt markets “is a financial services bloodbath” and that “credit costs are going up, well above underlying earnings growth.”

Commonwealth Bank of Australia, the country’s biggest mortgage lender, lost 4.4 percent to A$44.33, the biggest drag on the MSCI gauge. National Australia Bank Ltd., the nation’s largest by assets, lost 2.1 percent to A$30.

Small businesses are being sold more frequently than in the past. Statistically, on any given day, 1.7 Million small businesses are for sale in the United States. Yet, business brokers report that in many industries there are more buyers than sellers.

In the past, the vast majority of small business owners either started their companies or inherited them. The way in which small business ownership comes about is changing.

The trend of purchasing existing small businesses will be driven in part by older workers who have left corporate America (see the Graying of Small Business trend). Fortified by stock options, retirement buyouts, and severance packages, many will prefer to keep working as their own boss.

Impact:

A thriving market for the sale of small businesses will help grow their total number. There will always be those who start from scratch, just as there will always be businesses that make it into second- and third-generation hands.But a healthy market for the sale of small businesses will give owners additional exit-strategy options. Businesses that might have withered or have been absorbed by competitors will be sold to people who will bring new energy and in many instances new capital.Service providers who assist in putting together buyers and sellers, such as business brokers and M&A firms, will find good times ahead. More M&A activity will also mean more business for lawyers, bankers, consultants, and others who help make sales happen.For vendors, service providers, and market partners, businesses changing hands will mean a shifting landscape. A carefully constructed relationship has no guarantee of surviving when a new owner takes over. Relationships well become a constant concern that require more time and resources.

The high growing Indian IT sector, which has been reeling under pressure due to rupee appreciation, may again hit a roadblock if the government does not extend the Software Technology Parks of India (STPI) scheme beyond 2009. “About 1,500 small and mid-size firms would have to shut their shops if the government does not extend STPI scheme beyond 2009,” Electronics and Computer Software Export Promotion Council Executive Director D K Sareen told reporters.The industry is already battling with incremental rise in the value of rupee against dollar, which has impacted their bottomlines by up to 15 per cent, he said. Besides, there are fears of a recession in the world’s largest economy which could adversely impact the the industry in India.

ESC has about 5,000 IT and ITeS companies as its members. About 60 per cent of the total exports comes from just 100 firms. The STPI scheme, which provides tax holiday for export- oriented IT/ITeS firms, would expire by the end of 2008-09.Under the scheme, 100 per cent tax deduction on profits under Section 10(A) and Section 10(B) of the Income Tax Act is available only up to March 31, 2009. The companies will, thereafter, have to pay tax at an estimated rate of 33.99 per cent in the absence of these deductions.

About 84 per cent of the total exports comes from two markets — the US and the UK, Sareen said. The companies need to identify other markets such as Latin America, Africa and Asean countries, to reduce their dependence on the US market. Japan, which is the third largest IT & ITeS market in the world, only accounts for 4 per cent of the total exports from India. (PTI)