Red Zebra Business Centre -Management Memos
December, 2008. Making Measurably More For Your Business Since 1985!


Money, Money, Money. It's a Rich Man's World. Not!

Max Williams, Principal Consultant

When the Congress of the United States decided to let the investment bank Lehman Brothers fail last September, it was the final admission, if any were needed, that some serious fundamentals of the theories of money and commerce had been comprehensively ignored.

Two months ago, former Australian Prime Minister Paul Keating proudly claimed in a radio interview that his government, and by implication he personally, had enabled "the banks to create money".  It is a sorry day when a former Prime Minister and Treasurer fails such a test of the theory of money.

Banks create money - that is what they do!  Have always done!

Of course, the key element in any theory of money is the underlying demand for confidence. Even with cash itself.  A $50 bill is only worth $50 because we each believe that we can exchange it for $50 worth of goods - any time we choose.  Take away that confidence, and it becomes a valueless piece of plastic.

In the case of cash, that confidence is backed by the Government's pledge to honour the note issued in its name.  Money takes many forms, and much of it is in what's called 'commercial paper' - backed, not by governments, but by various institutions. Generally these institutions are solid enough to back their paper.  In the last year or so, though, this has been questionable.

Even when the institution was not strong enough, most people had depended on the Government to back the institution, and guarantee the commercial paper being used as money.  When the US let Lehamann Brothers collapse, that confidence was immediately shown to be completely misplaced.

Confidence collapsed, and with it the backing of hundreds of trillions of dollars of commercial paper being used as money. No backing - no value. Hundreds of trillions of dollars were just gone.

It is simply fatuous to imagine that such huge sums of value can be taken from the world economy without widespread consequences.  It is just as fatuous to imagine that those consequences will not affect Australia and New Zealand.  Fortunately, the Australian Government is applying a wide range of monetary and fiscal stimuli, and in New Zealand the new government is shaping up the same way.  This will provide some relief when it is most needed.

Yet despite this attempt at insulating us from these tough times, the recent moves in Australia by GE Money and GMAC show just how globalized companies will bring the staff lay-offs to our shores. Their actions seriously impacted the entire Australian auto industry - importers as well as manufacturers.

Can anyone imagine that US federal support for the American auto industry will not mean heavy lay-offs? Can anyone imagine that a heavy hand will not be applied to both General Motors-Holden and Ford Motor Company of Australia to repatriate funds as quickly as they possibly can? That means local cut backs, pure and simple. Add in some local moves (for instance ANZ Bank and significant mining job cuts in Queensland), and the outlook seems blindingly obvious.

So we can argue about the depth and the timing of a recession in Australia and New Zealand, and whether it is technically a 'recession' (New Zealand is said to be in a technical recession already).  What is clear is that business life is all set up to get tougher.

Elsewhere in this edition we refer to the 'Battle Plan for the Recession', so the weapons to beat this unwelcome recession are already here. Meanwhile, just for a few weeks, let's enjoy the summer break.  Let's spend it with friends and loved ones.  Next year we will bounce back, revitalized. Then we will have our own revenge on the 'Wallies of Wall Street' when we do succeed, and when we get stronger, in the worst recession for a good long time!

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Christmas Reflection 08

After a year like 2008, we all deserve a break! And we all need one too! So, here at The Red Zebra, we thought we'd devote this edition of Management Memos to something a little less serious than the challenges of the last few months. Over the next few months, we have the weapons of war we need - and so we'll deal with that when war comes.

This is what happens when things get lost and they turn up in the most unexpected places

Here is the Ultimate Earth Mover!

Picture 1
'Click the Pic' for a full size image

Take a look at the specifications .....

  • The mover stands 311 feet tall
  • Is 705 feet long
  • Weighs over 45,500 tons
  • Cost $100 million to build 
  • Took 5 years to design and manufacture
  • Took 5 years to assemble
  • Requires 5 people to operate it
  • The Bucket Wheel is over 70 feet in diameter with 20 buckets
  • Each bucket can hold over 530 cubic feet of material
  • A 6-foot man can stand up inside one of the buckets
  • It moves on 12 crawlers (each is 12 feet wide, 8' high and 46 feet long)
  • There are 8 crawlers at the front and 4 at the back
  • It has a maximum speed of 1 mile in 3 hours (1/3 mile/hour)
  • It can remove over 76,455 cubic meters each day - the equivalent of 100,000 large dump trucks

This is the largest earth mover in the world.....  built by the German company, Krupp, and seen here crossing a federal highway in Germany en route to its destination (an open-pit coal mine).  It is cheaper to move the thing like this, than to construct or reassemble onsite.

It begins work.

Picture 2
'Click the Pic' for a full size image

Now - Where is my bulldozer?

Picture 5
'Click the Pic' for a full size image

I think I've found it!

Picture 4
'Click the Pic' to find the bulldozer!

A Good Tip is Always a Nice Surprise!

100 Ideas

This light weight and inexpensive ($19.95) management book was reviewed for the July edition. It's been such a busy year that the review has been 'on hold' since then. Christmas seems like a good time to slow the frenetic pace, so let's catch up on this review.

Management books seem to fall into three categories - leaving aside the academic texts.

Some are inspiring stories of successful business ventures which show how extraordinary insights and a modicum of good luck have turned out so well for one entrepreneur. Others are 'how to' manuals - often helpful but sometimes hard to tailor to your own operation.

"100 Great Business Ideas" is in the third category - a smorgasbord of stories and anecdotes with things you can pick up and easily weave into your own situation.

This little bundle of 'Good Ideas' was put together by Jeremy Kourdi. Jeremy is a successful writer and business advisor, who has worked with the Economist Group, HSBC, London Business School, IMD, and the Chartered Management Institute.  Written in a stimulating and flexible way, the book contains ideas with proven power and potency that actually work! The ideas are varied, interesting,and thought provoking. Some are simple, while others are based on a careful analysis of detailed research results.

Don't settle down to a 'good read' with this one, though. It is definitely a 'lunch break' companion. Each idea is described and discussed on just two or three pages.

Many of the ideas simply won't appeal to you at first. It is amazing though, that since all of the ideas have brought about a successful change for someone, you can keep going back and seeing something helpful in almost all of the ideas.

Ultimately, you will find something of value in each point made in the book. Even if you do have to swallow your embarrassment at how simple some of the most successful ideas are!

At this price, we'd recommend picking it up when next you're browsing a book shop.

Christmas Tree

So, for now, Have a Happy Christmas, and together we'll make it a Very Prosperous New Year!

If you'd like to find out more about developing your 'Battle Plan for the Recession', talk to us, or ask us a question here! Remember, there's no charge or obligation.

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