STRATEGIC INVESTOR RELATIONS AND PUBLIC DISCLOSURE Addressing the Shareholders’ Crisis of Confidence through Strategic Com...
Intro: CNI <ul><li>20 years old </li></ul><ul><li>Core Business: MLM </li></ul><ul><li>Others: Contract Manufacturing, F&B...
Contents <ul><li>IR and its problems </li></ul><ul><li>Importance of IR to Value Creation </li></ul><ul><li>Corporate Repu...
IR and its problems Overview of Corporate Communications and Investor Relations problems www.myCNI.com.my www.OOBEY.com
Value destruction in 48 hours… <ul><li>13 th  April 2009 </li></ul><ul><li>Two Domino’s employees </li></ul><ul><li>YouTub...
How to please Investors (the Dilbert version) © 1998 United Feature Syndicate, Inc.
How to please Investors (the Dilbert version) <ul><li>Buy back shares </li></ul><ul><li>Announce massive cutbacks </li></u...
Why is UMW favored by Analysts? <ul><li>high  dividend  yield,  </li></ul><ul><li>low  price  earnings multiple,  </li></u...
Importance of Investor Relations Why focus on Investor Relations in the first place? www.myCNI.com.my www.OOBEY.com
Is Investor Relations important? <ul><li>Funds  </li></ul><ul><li>Brand </li></ul><ul><li>Intelligence </li></ul><ul><li>C...
IR’s Key Roles <ul><li>Funds   </li></ul><ul><li>Brand </li></ul><ul><li>Intelligence </li></ul><ul><li>Customer-sharehold...
IR’s Key Roles <ul><li>Funds  </li></ul><ul><li>Brand </li></ul><ul><li>Intelligence </li></ul><ul><li>Customer-shareholde...
Funds: Types of Investors (1/2) <ul><li>Institutional </li></ul>Fund Managers Corporations Sovereign Funds VCs NGOs Non-Pr...
Funds: Types of Investors (2/2) <ul><li>Retail </li></ul>Investor-Shareholders Employee-Shareholders Management-Shareholde...
Why do they Invest? <ul><li>Return/Profit </li></ul><ul><li>Risk Management/ Hedging </li></ul><ul><li>Tax-benefits </li><...
Funds: What do Investors look for? www.myCNI.com.my www.OOBEY.com   Market Value 0 10 <ul><li>M&A </li></ul><ul><li>P/E </...
Funds: Business Model USP Market  Discipline Profit Model <ul><li>Google </li></ul><ul><li>Tata Nano </li></ul>www.myCNI.c...
Business Model: USP <ul><li>Unique Selling Proposition (USP) </li></ul><ul><li>= </li></ul><ul><li>Targeted Customer </li>...
Business Model: Profit Model www.myCNI.com.my www.OOBEY.com   Income Cost Margin Cash  Flow Assets
Business Model: Profit Model <ul><li>Gillette shaver </li></ul><ul><li>Amazon, Facebook </li></ul><ul><li>Tata Nano </li><...
Funds: Business Model <ul><li>&quot;Exactly what I need&quot; </li></ul><ul><li>Customized products </li></ul><ul><li>Pers...
Funds: Business Model: Market Disciplines Operational Excellence (low cost producer) Ref:  The Discipline of Market Leader...
Funds: Business Model: Market Disciplines Operational Excellence (low cost producer) Ref:  The Discipline of Market Leader...
Funds: Business Model: Market Disciplines Operational Excellence (low cost producer) Ref:  The Discipline of Market Leader...
<ul><li>Product Leadership </li></ul><ul><li>New, state of the art products or services </li></ul><ul><li>Risk takers </li...
The McPlaybook* <ul><li>Make it easy to eat </li></ul><ul><li>50% drive-thru </li></ul><ul><li>Meals held in one hand </li...
Funds: Business Model Operational Excellence (low cost producer) Ref:  The Discipline of Market Leaders , Michael Treacy &...
Funds: Business Model Operational Excellence (low cost producer) Ref:  The Discipline of Market Leaders , Michael Treacy &...
Funds: Business Model: Business Model USP Market  Discipline Profit Model www.myCNI.com.my www.OOBEY.com
Business Situation vs. Focus Upturn Flat Downturn Fight Complacency Sharpen Edge Keep Momentum Conquer ‘ Change’ mgmt Redu...
Side Notes on Cost Reduction Strategy <ul><li>Cost Reduction </li></ul>5% - 30% 30% - 80% Business Model <ul><li>USP </li>...
Business Situation vs. Sales Upturn Flat Downturn Fight Complacency Sharpen Edge Keep Momentum Conquer ‘ Change’ mgmt Redu...
Business Situations vs. Focus Upturn Flat Downturn Fight Complacency Sharpen Edge Keep Momentum Conquer ‘ Change’ mgmt Red...
Branding Positioning Execution Communication www.myCNI.com.my www.OOBEY.com   Investor Relation’s role
How do Investors get their ‘INFO’? (1/2) Institutional Gov./Politics Customers Suppliers Economics AGM Market Research Int...
How do Investors get their ‘INFO’? (1/2) Institutional Gov./Politics Customers Suppliers Economics AGM Market Research Int...
How do Investors get their ‘INFO’? (2/2) Retail Gov./ Politics Customers Public Events Economics AGM Ads Internet* Annual ...
How do Investors get their ‘INFO’? (2/2) Retail Gov./ Politics Customers Public Events Economics AGM Ads Internet Annual R...
How  not  to talk to Retail Investors <ul><li>“ The holder [of a CAB certificate] may continue to serve regularly any poin...
How  not  to talk to Retail Investors <ul><li>“It has been determined not to be in the public interest that United Airline...
What topics interest Investors? www.myCNI.com.my www.OOBEY.com   Acquisition  target Layoffs Cost Cutting New  Mgmt Treatm...
What topics interest Investors? www.myCNI.com.my www.OOBEY.com   Acquisition  target Layoffs Cost Cutting New  Mgmt Treatm...
What Events impact Investors? www.myCNI.com.my www.OOBEY.com   Politics Financial  Announcements Shareholding changes Stru...
What Events impact Investors? www.myCNI.com.my www.OOBEY.com   Politics Financial  Announcements Shareholding changes Stru...
Importance: Intelligence <ul><li>Two types: </li></ul>www.myCNI.com.my www.OOBEY.com   I.R. Investors CRM Intelligence Dea...
Investor Intelligence: What? <ul><li>Examples… </li></ul><ul><li>Record feedback and questions </li></ul><ul><li>Competito...
Investor Intelligence: Why? <ul><li>Broad view of market </li></ul><ul><li>Less optimistic/review own assumptions </li></u...
Investor Intelligence: Why? Revenue Growth Base Retention Share Gain Positioning Adjacent Market New Business Operational ...
Dangers of Intelligence… <ul><li>Also known as ‘Beware of Benchmarking’: </li></ul><ul><li>Big vs. Small company </li></ul...
IR and Customer-Shareholders <ul><li>Retail </li></ul>Investor-Shareholders Employee-Shareholders Management-Shareholders ...
Is Investor Relations important? <ul><li>Funds  </li></ul><ul><li>Brand </li></ul><ul><li>Intelligence </li></ul><ul><li>C...
Corporate Reputation Good News, Bad News. Who cares? www.myCNI.com.my www.OOBEY.com
Challenges of Public and Investor Relations <ul><li>Stake- vs. Share-holder* </li></ul><ul><li>Public Opinions </li></ul><...
IR problems <ul><li>“ Good news for stockholders can be bad news for other stakeholders.”  </li></ul><ul><li>Gregory Mille...
Audiences – Good News? Bad News? <ul><li>money saved by tough bargaining with a union  </li></ul><ul><li>announcing a divi...
News vs. Controllability Can Control Cannot Control Internal Attribution External Attribution www.myCNI.com.my www.OOBEY.c...
Good News vs. Controllability Can Control Cannot Control Internal Attribution External Attribution  www.myCNI.com.my www....
Good News vs. Controllability Can Control Cannot Control Internal Attribution External Attribution www.myCNI.com.my www.OO...
Bad News vs. Controllability Can Control Cannot Control Internal Attribution External Attribution  www.myCNI.com.my www.O...
Bad News vs. Controllability Can Control Cannot Control Internal Attribution External Attribution www.myCNI.com.my www.OOB...
The 6 Sins of Greenwashing <ul><li>Sin of the Hidden Trade-Off </li></ul><ul><li>Sin of No Proof </li></ul><ul><li>Sin of ...
Summary www.myCNI.com.my www.OOBEY.com
Summary <ul><li>IR and it’s problems </li></ul><ul><li>Importance of IR to Value Creation </li></ul><ul><li>Corporate Repu...
Post-Downturn Possibilities vs. Investor Choices Deflation Inflation Stagflation www.myCNI.com.my www.OOBEY.com   Business...
Investor and Analyst Picks <ul><li>Low-cost solutions for small businesses </li></ul><ul><li>Healthcare (especially Vaccin...
10 Questions for CFOs – post recovery <ul><li>Recovery shape? </li></ul><ul><li>Restructured enough? </li></ul><ul><li>Sup...
<ul><li>“… in the past 18 months, we have heard that profit is more important than revenue, quality is more important that...
Don’t forget… <ul><li>“ The business of business is Business, not Investor Relations”  </li></ul>www.myCNI.com.my www.OOBE...
Thank You.  soft copy of slides:   http://totallyunrelatedrandomanddebatable.blogspot.com/
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Strategic Investor Relations and Public Disclosure

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LexisNexis Capital Raising for Corporations Conference
August 2009

Establishing Sustainable Growth through Successful Funding Strategies and Addressing the Shareholders’ Crisis of Confidence through Strategic Communications
• Assess the importance of communications for
Investor Relations and Public Disclosures
• Differentiating communication initiatives in maximizing their value
• Defining the communications, investor
relations, and statements and why they play
an integral role in a corporations financial
activity
• What is the information that companies are
required to make public?
• Frequency of disclosure and maintaining
confi dentiality

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  • On the most basic level, pleasing Institutional Investors is not difficult – stick to basics.
  • **Note: Refer to “The Edge” analysis and report on UMW This is what we mean as FUNDAMENTALS – basics of what excites Investors.
  • These are all different parties that IR has direct influence on in relation to Corporate Branding. These parties are either our Branding targets or has influence on our branding targets
  • *Distributor-Shareholders and Distributor-Entrepreneurs are unique to CNI and the MLM industry
  • Example of Risk Management/Hedging – Abu Dhabi Fund, Temasek Example of Exclusive Rights and R&amp;D Portfolio – Microsoft buying stake into Facebook (widgets, web 2.0, internet Ads, SaaS, Cloud Computing), Microsoft also will sell Internet ads for Facebook, combined fight to Google, exchange for the opportunity to broker ad placements to non-English language versions that are anticipated to be introduced in the coming months, Microsoft the exclusive provider of standard banner advertising on Facebook using Microsoft’s digital advertising solutions and the Microsoft® adCenter platform.
  • Example: Google USP – Search, Free! Profit Model – Ad revenue MKt Discipline – Operational Excellence Example: Air Asia USP – Budget Profit Model – Lowest Cost, Maximum Seats Mkt Discipline – Operational Excellence
  • How does the Customer define “Great Experience”? - It depends on their own perceptions. Problem is…this differs depending on the Customer! If you are very good in something that the Customer does not value, it will not improve the Experience.
  • To Excel – Must be a Leader in ONE of the disciplines but the other two must be at least at industry standard
  • OPTION 1
  • Exercise: Customer Analysis and Market Discipline Determining your Market Discipline
  • Refer to Handout 1: Value Disciplines
  • Example of successful customer loyalty strategy focusing on Operational Excellence and Product Leadership while maintaining market standard on Customer Service without indulging in it
  • To Excel – Must be a Leader in ONE of the disciplines but the other two must be at least at industry standard
  • *Rising importance of Top Management Bloggers, Google Alerts, Youtube, and RSS Investors also listen to Bloggers; all with differing opinions; some cannot be trusted
  • Red Circle: Areas where INTERNAL has influence over how it will turn out, be perceived, or communicated
  • ‘ Customers’ include checking out the Check-out Lines! *Rising importance of Top Management Bloggers, Google Alerts, Youtube, and RSS Investors also listen to Bloggers; all with differing opinions; some cannot be trusted
  • Red Circle: Areas where INTERNAL has influence over how it will turn out, be perceived, or communicated
  • This is an example of ‘formal’ language used by the CAB for its own reasons. Nobody could really understand what it means… and these were abolished by Alfred Kahn when he took over the CAB. Is this very different from our current communications to ‘Retail’ investors? Do you really want to confuse them?
  • Another example taken from the CAB experience. Which do you think is more suitable for Retail investors? Time to train your Corporate Comm people?
  • *Topics other than the usual Financial announcements i.e. dividend, share buybacks, restructuring, investments, divestments, HR
  • Red Circle: Areas where INTERNAL has influence over how it will turn out, be perceived, or communicated
  • *Financial Announcements i.e. dividend, share buybacks, restructuring, investments, divestments, HR
  • Red Circle: Areas where INTERNAL has influence over how it will turn out, be perceived, or communicated
  • pointing out the money saved by tough bargaining with a union could cause a real problem with employees. Announcing a dividend may lead to anger from employees who think it should have been a bonus or from environmentalists who think it should have gone into environmentally friendly upgrades. CNI e.g. Setting up Diversified business = Good News? Bad News? High Dividend Payout = Good News? Bad News?
  • The term came into use around 1990, [3] most notably as the title of an article in the 1991 March / April issue of Mother Jones magazine. The term is generally used when significantly more money or time has been spent advertising being green (that is, operating with consideration for the environment ), rather than spending resources on environmentally sound practices. This is often portrayed by changing the name or label of a product, to give the feeling of nature, for example putting an image of a forest on a bottle of harmful chemicals. Environmentalists often use greenwashing to describe the actions of energy companies, which are traditionally the largest polluters. [4] In December 2007 , environmental marketing company TerraChoice gained national press coverage for releasing a study called &amp;quot;The Six Sins of Greenwashing,&amp;quot; which found that 99% of 1,018 common consumer products randomly surveyed for the study were guilty of greenwashing. Sin of the Hidden Trade-Off: e.g. “Energy-efficient” electronics that contain hazardous materials. 998 products and 57% of all environmental claims committed this Sin. Sin of No Proof: e.g. Shampoos claiming to be “certified organic,” but with no verifiable certification. 454 products and 26% of environmental claims committed this Sin. Sin of Vagueness: e.g. Products claiming to be 100% natural when many naturally-occurring substances are hazardous, like arsenic and formaldehyde (see appeal to nature). Seen in 196 products or 11% of environmental claims. Sin of Irrelevance: e.g. Products claiming to be CFC-free, even though CFCs were banned 20 years ago. This Sin was seen in 78 products and 4% of environmental claims. Sin of Fibbing: e.g. Products falsely claiming to be certified by an internationally recognized environmental standard like EcoLogo, Energy Star or Green Seal. Found in 10 products or less than 1% of environmental claims. Sin of Lesser of Two Evils: e.g. Organic cigarettes or “environmentally friendly” pesticides, This occurred in 17 products or 1% of environmental claims.
  • Strategic Investor Relations and Public Disclosure

    1. 1. STRATEGIC INVESTOR RELATIONS AND PUBLIC DISCLOSURE Addressing the Shareholders’ Crisis of Confidence through Strategic Communications Case Study, Concepts, and Debatable Ideas Kenny Ong CNI Holdings Berhad www.myCNI.com.my www.OOBEY.com
    2. 2. Intro: CNI <ul><li>20 years old </li></ul><ul><li>Core Business: MLM </li></ul><ul><li>Others: Contract Manufacturing, F&B Retail, Export/Trading, eCommerce, Shared Services </li></ul><ul><li>Malaysia, Singapore, Brunei, Indonesia, India, China, Hong Kong, Philippines, Italy, Taiwan, Oman, United States, Vietnam </li></ul><ul><li>Staff force: ± 500 </li></ul><ul><li>Distributors: 200,000 </li></ul><ul><li>Products: Consumer Goods and Services </li></ul>www.myCNI.com.my www.OOBEY.com
    3. 3. Contents <ul><li>IR and its problems </li></ul><ul><li>Importance of IR to Value Creation </li></ul><ul><li>Corporate Reputation </li></ul>www.myCNI.com.my www.OOBEY.com
    4. 4. IR and its problems Overview of Corporate Communications and Investor Relations problems www.myCNI.com.my www.OOBEY.com
    5. 5. Value destruction in 48 hours… <ul><li>13 th April 2009 </li></ul><ul><li>Two Domino’s employees </li></ul><ul><li>YouTube </li></ul><ul><li>Apology from Domino’s after 48 hours </li></ul><ul><li>1 million hits </li></ul><ul><li>Twitter: questions on silence </li></ul><ul><li>LinkedIn: suggestions by users in forum </li></ul>BusinessWeek, May 4, 2009 www.myCNI.com.my www.OOBEY.com
    6. 6. How to please Investors (the Dilbert version) © 1998 United Feature Syndicate, Inc.
    7. 7. How to please Investors (the Dilbert version) <ul><li>Buy back shares </li></ul><ul><li>Announce massive cutbacks </li></ul><ul><li>Spin off New Divisions </li></ul>Ironically and Unfortunately, the above prescription is true in real life… www.myCNI.com.my www.OOBEY.com
    8. 8. Why is UMW favored by Analysts? <ul><li>high dividend yield, </li></ul><ul><li>low price earnings multiple, </li></ul><ul><li>buoyant growth outlook; </li></ul>
    9. 9. Importance of Investor Relations Why focus on Investor Relations in the first place? www.myCNI.com.my www.OOBEY.com
    10. 10. Is Investor Relations important? <ul><li>Funds </li></ul><ul><li>Brand </li></ul><ul><li>Intelligence </li></ul><ul><li>Customer-shareholders </li></ul>www.myCNI.com.my www.OOBEY.com
    11. 11. IR’s Key Roles <ul><li>Funds </li></ul><ul><li>Brand </li></ul><ul><li>Intelligence </li></ul><ul><li>Customer-shareholders </li></ul>Communication to bring in the Funds www.myCNI.com.my www.OOBEY.com
    12. 12. IR’s Key Roles <ul><li>Funds </li></ul><ul><li>Brand </li></ul><ul><li>Intelligence </li></ul><ul><li>Customer-shareholders </li></ul>Communication to bring in the Sales www.myCNI.com.my www.OOBEY.com
    13. 13. Funds: Types of Investors (1/2) <ul><li>Institutional </li></ul>Fund Managers Corporations Sovereign Funds VCs NGOs Non-Profit Org Financial (Loans) JV Partners M&A Social VCs Holding Co. HQ (MNC) Gov. VCs Supply Chain Gov. Partnership PFI Competitors Franchisees www.myCNI.com.my www.OOBEY.com
    14. 14. Funds: Types of Investors (2/2) <ul><li>Retail </li></ul>Investor-Shareholders Employee-Shareholders Management-Shareholders Customer-Shareholders Distributor-Shareholders* Distributor-Entrepreneurs* www.myCNI.com.my www.OOBEY.com
    15. 15. Why do they Invest? <ul><li>Return/Profit </li></ul><ul><li>Risk Management/ Hedging </li></ul><ul><li>Tax-benefits </li></ul><ul><li>CSR/Image </li></ul><ul><li>Diversify revenue </li></ul><ul><li>Counter-cyclical balance </li></ul><ul><li>Support ‘Mission’ </li></ul><ul><li>Exclusive rights </li></ul><ul><li>Contractual obligation </li></ul><ul><li>National Agenda </li></ul><ul><li>Control Supply Chain </li></ul><ul><li>R&D portfolio </li></ul><ul><li>Control Management </li></ul><ul><li>Alternative Cash Flow </li></ul><ul><li>M&A </li></ul>www.myCNI.com.my www.OOBEY.com
    16. 16. Funds: What do Investors look for? www.myCNI.com.my www.OOBEY.com Market Value 0 10 <ul><li>M&A </li></ul><ul><li>P/E </li></ul><ul><li>Investor </li></ul><ul><li>Etc. </li></ul>Strategic Control 0 10 <ul><li>I.P. </li></ul><ul><li>Monopoly </li></ul><ul><li>Gov-linked </li></ul>Business Model 0 10 <ul><li>USP </li></ul><ul><li>Profit Mod. </li></ul><ul><li>Mkt Disc. </li></ul><ul><li>Growth </li></ul>
    17. 17. Funds: Business Model USP Market Discipline Profit Model <ul><li>Google </li></ul><ul><li>Tata Nano </li></ul>www.myCNI.com.my www.OOBEY.com
    18. 18. Business Model: USP <ul><li>Unique Selling Proposition (USP) </li></ul><ul><li>= </li></ul><ul><li>Targeted Customer </li></ul><ul><li>= </li></ul><ul><li>Core Buying Purpose/ Customer Value Proposition/ Job To Be Done (JBTD) </li></ul>www.myCNI.com.my www.OOBEY.com
    19. 19. Business Model: Profit Model www.myCNI.com.my www.OOBEY.com Income Cost Margin Cash Flow Assets
    20. 20. Business Model: Profit Model <ul><li>Gillette shaver </li></ul><ul><li>Amazon, Facebook </li></ul><ul><li>Tata Nano </li></ul><ul><li>Newspapers, DVD </li></ul><ul><li>Google </li></ul>www.myCNI.com.my www.OOBEY.com
    21. 21. Funds: Business Model <ul><li>&quot;Exactly what I need&quot; </li></ul><ul><li>Customized products </li></ul><ul><li>Personalized communications </li></ul><ul><li>&quot;They're very responsive&quot; </li></ul><ul><li>Preferential service and flexibility </li></ul><ul><li>Recommends what I need </li></ul><ul><li>&quot;I'm very loyal to them&quot; </li></ul><ul><li>Helps us to be a success </li></ul>&quot;They are the most innovative&quot; &quot;Constantly renewing and creative&quot; &quot;Always on the leading edge&quot; &quot;A great deal!&quot; Excellent/attractive price Minimal acquisition cost and hassle Lowest overall cost of ownership &quot;A no-hassles firm&quot; Convenience and speed Reliable product and service Product Leadership Operational Excellence Customer Intimacy www.myCNI.com.my www.OOBEY.com <ul><li>Air Asia </li></ul>
    22. 22. Funds: Business Model: Market Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution) www.myCNI.com.my www.OOBEY.com
    23. 23. Funds: Business Model: Market Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution)
    24. 24. Funds: Business Model: Market Disciplines Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution)
    25. 25. <ul><li>Product Leadership </li></ul><ul><li>New, state of the art products or services </li></ul><ul><li>Risk takers </li></ul><ul><li>Meet volatile customer needs </li></ul><ul><li>Fast concept-to- counter </li></ul><ul><li>Never satisfied - obsolete own and competitors' products </li></ul><ul><li>Learning organization </li></ul>Funds: Business Model: Disciplines, Priorities, and KPIs <ul><li>Operational Excellence </li></ul><ul><li>Competitive price </li></ul><ul><li>Error free, reliable </li></ul><ul><li>Fast (on demand) </li></ul><ul><li>Simple </li></ul><ul><li>Responsive </li></ul><ul><li>Consistent information for all </li></ul><ul><li>Transactional </li></ul><ul><li>'Once and Done' </li></ul><ul><li>Customer Intimacy </li></ul><ul><li>Management by Fact </li></ul><ul><li>Easy to do business with </li></ul><ul><li>Have it your way (customization) </li></ul><ul><li>Market segments of one </li></ul><ul><li>Proactive, flexible </li></ul><ul><li>Relationship and consultative selling </li></ul><ul><li>Cross selling </li></ul>www.myCNI.com.my www.OOBEY.com
    26. 26. The McPlaybook* <ul><li>Make it easy to eat </li></ul><ul><li>50% drive-thru </li></ul><ul><li>Meals held in one hand </li></ul><ul><li>Make it easy to prepare </li></ul><ul><li>High Turnover </li></ul><ul><li>Tasks simple to learn & repeat </li></ul><ul><li>Make it quick </li></ul><ul><li>“ Fast Food” </li></ul><ul><li>Tests new products for Cooking Times </li></ul><ul><li>Make what customers want </li></ul><ul><li>Prowls market for new products </li></ul><ul><li>Monitored field tests </li></ul>*Adapted from: Businessweek , Februrary 5 th 2007 www.myCNI.com.my www.OOBEY.com
    27. 27. Funds: Business Model Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution)
    28. 28. Funds: Business Model Operational Excellence (low cost producer) Ref: The Discipline of Market Leaders , Michael Treacy & Fred Wiersema; 1995 Product Leadership (best product) Customer Intimacy (best total solution) HP well-balanced portfolio, mass customization Acer super lean cost structure, aggressive pricing Apple powerful products, premium pricing, limited range Still Doing well in 2009
    29. 29. Funds: Business Model: Business Model USP Market Discipline Profit Model www.myCNI.com.my www.OOBEY.com
    30. 30. Business Situation vs. Focus Upturn Flat Downturn Fight Complacency Sharpen Edge Keep Momentum Conquer ‘ Change’ mgmt Reduce Fat Continuity Everyone Happy Innovation Acquire Profits Build momentum Sales Cash Flow Talent Mgmt Innovation/R&D Early wins Slow Down HR Costs Top Talent focus Sales, Sales, Sales Increase attrition www.myCNI.com.my www.OOBEY.com
    31. 31. Side Notes on Cost Reduction Strategy <ul><li>Cost Reduction </li></ul>5% - 30% 30% - 80% Business Model <ul><li>USP </li></ul><ul><li>Profit Model </li></ul><ul><li>Market Discipline </li></ul>Operational <ul><li>Finance and HR </li></ul><ul><li>Supply Chain </li></ul><ul><li>R&D </li></ul><ul><li>Sales & Marketing </li></ul>
    32. 32. Business Situation vs. Sales Upturn Flat Downturn Fight Complacency Sharpen Edge Keep Momentum Conquer ‘ Change’ mgmt Reduce Fat Continuity Everyone Happy Innovation Acquire Profits Build momentum Sales Cash Flow Talent Mgmt Innovation/R&D Early wins Slow Down HR Costs Top Talent focus Sales, Sales, Sales Increase attrition www.myCNI.com.my www.OOBEY.com <ul><li>Optimize customers’ current assets </li></ul><ul><li>Offset customers’ costs </li></ul><ul><li>Focus market share </li></ul><ul><li>CEO and Sr. Mgmt in the field </li></ul><ul><li>Sell up the buyer chain </li></ul><ul><li>Motivate troops </li></ul><ul><li>Add extra services </li></ul><ul><li>Control troop emotions </li></ul><ul><li>Specialized vs. general teams, i.e. sell support services, sell equipment, existing customers etc. (e.g. Xerox) </li></ul>
    33. 33. Business Situations vs. Focus Upturn Flat Downturn Fight Complacency Sharpen Edge Keep Momentum Conquer ‘ Change’ mgmt Reduce Fat Continuity Everyone Happy Innovation Acquire Profits Build momentum Sales Cash Flow Talent Mgmt Stack R&D Early wins Slow Down HR Costs Top Talent focus Stack Sales Increase attrition Many times, you need a different CEO/Leader/Management Team for each business situation www.myCNI.com.my www.OOBEY.com
    34. 34. Branding Positioning Execution Communication www.myCNI.com.my www.OOBEY.com Investor Relation’s role
    35. 35. How do Investors get their ‘INFO’? (1/2) Institutional Gov./Politics Customers Suppliers Economics AGM Market Research Internet* Annual Report Media Analysts Fund Managers Due Diligence NGOs Newsletter Spokespersons www.myCNI.com.my www.OOBEY.com
    36. 36. How do Investors get their ‘INFO’? (1/2) Institutional Gov./Politics Customers Suppliers Economics AGM Market Research Internet Annual Report Media Analysts Fund Managers Due Diligence NGOs Newsletter Spokespersons www.myCNI.com.my www.OOBEY.com
    37. 37. How do Investors get their ‘INFO’? (2/2) Retail Gov./ Politics Customers Public Events Economics AGM Ads Internet* Annual Report Media Analysts Fund Managers Relatives Friends Pasar Malam Employees Employee Bloggers Mgmt Actions Newsletter www.myCNI.com.my www.OOBEY.com
    38. 38. How do Investors get their ‘INFO’? (2/2) Retail Gov./ Politics Customers Public Events Economics AGM Ads Internet Annual Report Media Analysts Fund Managers Relatives Friends Pasar Malam Employees Employee Bloggers Mgmt Actions Newsletter www.myCNI.com.my www.OOBEY.com
    39. 39. How not to talk to Retail Investors <ul><li>“ The holder [of a CAB certificate] may continue to serve regularly any point named herein through the airport last regularly used by the holder to serve such point prior to the effective date of the certificate. Upon compliance with such procedures relating thereto as may be prescribed by the Board, the holder may, in addition to the services hereinabove expressly prescribed, regularly serve a point named herein through any airport convenient thereto.” </li></ul>Civil Aeronautics Board, 1977 www.myCNI.com.my www.OOBEY.com
    40. 40. How not to talk to Retail Investors <ul><li>“It has been determined not to be in the public interest that United Airlines continue to provide air transportation services between San Diego and San Antonio” </li></ul>“ I forbid United Airlines to fly between San Diego and San Antonio” www.myCNI.com.my www.OOBEY.com
    41. 41. What topics interest Investors? www.myCNI.com.my www.OOBEY.com Acquisition target Layoffs Cost Cutting New Mgmt Treatment of Profits Consistency Ecology Economics Politics Strategy Alignment CSR- related Crisis Topics?
    42. 42. What topics interest Investors? www.myCNI.com.my www.OOBEY.com Acquisition target Layoffs Cost Cutting New Mgmt Treatment of Profits Consistency Ecology Economics Politics Strategy Alignment CSR- related Crisis Topics?
    43. 43. What Events impact Investors? www.myCNI.com.my www.OOBEY.com Politics Financial Announcements Shareholding changes Structure Accidents Economic Crisis Competitor Moves M&A New Plans Share- drop Events?
    44. 44. What Events impact Investors? www.myCNI.com.my www.OOBEY.com Politics Financial Announcements Shareholding changes Structure Accidents Economic Crisis Competitor Moves M&A New Plans Share- drop Events?
    45. 45. Importance: Intelligence <ul><li>Two types: </li></ul>www.myCNI.com.my www.OOBEY.com I.R. Investors CRM Intelligence Deal with… I.R. Management Investor Intelligence Deal with…
    46. 46. Investor Intelligence: What? <ul><li>Examples… </li></ul><ul><li>Record feedback and questions </li></ul><ul><li>Competitors’ IR communications </li></ul><ul><li>Top 10 Analysts’ views on Company </li></ul><ul><li>Top 10 Analysts’ views on Industry </li></ul>www.myCNI.com.my www.OOBEY.com Attachment 1 -How Sony Can Keep the Momentum
    47. 47. Investor Intelligence: Why? <ul><li>Broad view of market </li></ul><ul><li>Less optimistic/review own assumptions </li></ul><ul><li>Upgrade IR function to be strategic </li></ul><ul><li>Feed Management discussions </li></ul><ul><li>Better and more relevant IR communications </li></ul><ul><li>Support (buy-in) </li></ul>www.myCNI.com.my www.OOBEY.com
    48. 48. Investor Intelligence: Why? Revenue Growth Base Retention Share Gain Positioning Adjacent Market New Business Operational Excellence Product Leadership Customer Intimacy Competencies Information Systems Motivation, empowerment, alignment Financial Learning & Growth Internal Process Customers Investment Strategy Productivity Market Value www.myCNI.com.my www.OOBEY.com
    49. 49. Dangers of Intelligence… <ul><li>Also known as ‘Beware of Benchmarking’: </li></ul><ul><li>Big vs. Small company </li></ul><ul><li>Selective success stories </li></ul><ul><li>Correlation vs. Causal </li></ul><ul><li>Survey problems </li></ul><ul><li>Actionable vs. For-fun </li></ul>www.myCNI.com.my www.OOBEY.com
    50. 50. IR and Customer-Shareholders <ul><li>Retail </li></ul>Investor-Shareholders Employee-Shareholders Management-Shareholders Customer-Shareholders Distributor-Shareholders Distributor-Entrepreneurs www.myCNI.com.my www.OOBEY.com Affect Sales
    51. 51. Is Investor Relations important? <ul><li>Funds </li></ul><ul><li>Brand </li></ul><ul><li>Intelligence </li></ul><ul><li>Customer-shareholders </li></ul>www.myCNI.com.my www.OOBEY.com
    52. 52. Corporate Reputation Good News, Bad News. Who cares? www.myCNI.com.my www.OOBEY.com
    53. 53. Challenges of Public and Investor Relations <ul><li>Stake- vs. Share-holder* </li></ul><ul><li>Public Opinions </li></ul><ul><li>Indirect Stakeholders – NGOs, Community Activists, Online Networks </li></ul><ul><li>Increasing focus on ecological, social, ethical issues </li></ul><ul><li>Diverged expectations for same issue </li></ul><ul><li>Web 2.0 </li></ul><ul><li>What to do with Excessive Cash? </li></ul><ul><li>Superficial changes vs. Fundamental Changes </li></ul><ul><li>Investors depend on ‘hearsay’ vs. ‘facts’ </li></ul><ul><li>Share Price ≠ Market </li></ul><ul><li>R&D/M.S./HR vs. Investor Expectations </li></ul><ul><li>Opposing ‘Expert’ views </li></ul><ul><li>Operational Risk -> Reputational Risks </li></ul>www.myCNI.com.my www.OOBEY.com
    54. 54. IR problems <ul><li>“ Good news for stockholders can be bad news for other stakeholders.” </li></ul><ul><li>Gregory Miller, Assoc. Prof., Harvard Business School. </li></ul>www.myCNI.com.my www.OOBEY.com
    55. 55. Audiences – Good News? Bad News? <ul><li>money saved by tough bargaining with a union </li></ul><ul><li>announcing a dividend: to employees </li></ul><ul><li>announcing a dividend: to environmentalists </li></ul><ul><li>setting up Diversified business </li></ul>Refer Attachment 2 - Building Trust with One Group Can Destroy Trust with Another www.myCNI.com.my www.OOBEY.com
    56. 56. News vs. Controllability Can Control Cannot Control Internal Attribution External Attribution www.myCNI.com.my www.OOBEY.com Born Stupid Didn’t study hard enough Lousy Teachers Sudden high extreme marking stds E.g. Failed SPM
    57. 57. Good News vs. Controllability Can Control Cannot Control Internal Attribution External Attribution  www.myCNI.com.my www.OOBEY.com ?  
    58. 58. Good News vs. Controllability Can Control Cannot Control Internal Attribution External Attribution www.myCNI.com.my www.OOBEY.com ?   Foreign investor Segment growth R&D breakthrough
    59. 59. Bad News vs. Controllability Can Control Cannot Control Internal Attribution External Attribution  www.myCNI.com.my www.OOBEY.com   
    60. 60. Bad News vs. Controllability Can Control Cannot Control Internal Attribution External Attribution www.myCNI.com.my www.OOBEY.com   Oil spill Product recall Marketing strategy Bad debts (NPL) Pandemic Economy crisis
    61. 61. The 6 Sins of Greenwashing <ul><li>Sin of the Hidden Trade-Off </li></ul><ul><li>Sin of No Proof </li></ul><ul><li>Sin of Vagueness </li></ul><ul><li>Sin of Irrelevance </li></ul><ul><li>Sin of Fibbing </li></ul><ul><li>Sin of Lesser of Two Evils </li></ul>Study by: TerraChoice, December 2007 www.myCNI.com.my www.OOBEY.com
    62. 62. Summary www.myCNI.com.my www.OOBEY.com
    63. 63. Summary <ul><li>IR and it’s problems </li></ul><ul><li>Importance of IR to Value Creation </li></ul><ul><li>Corporate Reputation </li></ul>www.myCNI.com.my www.OOBEY.com
    64. 64. Post-Downturn Possibilities vs. Investor Choices Deflation Inflation Stagflation www.myCNI.com.my www.OOBEY.com Businessweek, 22 nd June 2009, “Pick Your Poison” Source Indicator Investment <ul><li>Combination of slow growth and surging inflation </li></ul><ul><li>Huge amount of money being pumped </li></ul><ul><li>Strong supply of goods and weak demand </li></ul><ul><li>Conservative </li></ul><ul><li>High-quality growth </li></ul><ul><li>Pegged to inflation </li></ul><ul><li>Commodities, utilities, specialty materials </li></ul><ul><li>Short-term </li></ul><ul><li>Technology </li></ul><ul><li>Misery Index, = Unemployment + Inflation Rates </li></ul><ul><li>CPI </li></ul><ul><li>Commodity prices </li></ul><ul><li>Government debt as a % of GDP </li></ul><ul><li>CPI </li></ul><ul><li>Real estate values </li></ul><ul><li>Savings rate </li></ul>
    65. 65. Investor and Analyst Picks <ul><li>Low-cost solutions for small businesses </li></ul><ul><li>Healthcare (especially Vaccines) </li></ul><ul><li>Solutions that increase Customer Loyalty </li></ul><ul><li>Government Stimulus-linked </li></ul><ul><li>Green tech </li></ul><ul><li>Large fixed headcount </li></ul><ul><li>Commodities </li></ul><ul><li>Confused Business Models </li></ul><ul><li>High Leverage </li></ul>www.myCNI.com.my www.OOBEY.com
    66. 66. 10 Questions for CFOs – post recovery <ul><li>Recovery shape? </li></ul><ul><li>Restructured enough? </li></ul><ul><li>Supply Chain flexible? </li></ul><ul><li>Acquisition targets? </li></ul><ul><li>Restart alliances? </li></ul><ul><li>Divest underperforming businesses? </li></ul><ul><li>Financial resources for upturn? </li></ul><ul><li>Buying talent, marketing, R&D? </li></ul><ul><li>New risks? </li></ul><ul><li>How to sell recovery plan to investors? </li></ul>McKinsey & Company, May 2009, “What’s Next - 10 Questions for CFOs”
    67. 67. <ul><li>“… in the past 18 months, we have heard that profit is more important than revenue, quality is more important that profit, people are more important than profit, customers are more important than our people, big customers are more important than small customers, and that growth is the key to our success. No wonder our performance is inconsistent&quot; </li></ul>CEO, Anonymous www.myCNI.com.my www.OOBEY.com
    68. 68. Don’t forget… <ul><li>“ The business of business is Business, not Investor Relations” </li></ul>www.myCNI.com.my www.OOBEY.com
    69. 69. Thank You. soft copy of slides: http://totallyunrelatedrandomanddebatable.blogspot.com/
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