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The What, Why and How of Business Forecasting

 

By John Alexander Adam

The use of business forecasting models is now regarded as a basic necessity in business management and planning. Setting up the plan for the months and years ahead always involves prediction of trends in demand based on factors such as seasonality, competition and wider economic factors. Management use these forecasts, which are essentially informed guesses, in their budget planning and things like HR strategy, capital investment and marketing spend are all shaped based on business forecasting.

There are two main categories of business forecasting methodology. Judgement forecasting, most commonly termed ‘qualitative forecasting’, is based on human judgement while ‘quantitative forecasting’ is data driven. Both have their common applications, strengths and weaknesses.

Qualitative ‘Judgement’ Forecasting

Qualitative Forecasting is essentially based upon ‘informed consensus’, either that of consumers themselves and harvested via market research, or ‘experts’. Qualitative business forecasting is most commonly used for shorter term decision making and in situations where there the scope of the forecast is more limited. It is generally accepted that its reliance on opinion over data means that judgement forecasting is not a reliable over the longer term.

Qualitative forecasting is generally most relied upon when calculating likely demand before a product or service is launched. Market research and focus groups are examples of qualitative ‘judgement’ forecasting based on a consensus of consumer opinion. The compilation of the opinion of a cross-section of relevant experts is referred to as the ‘Delphi’ method of qualitative business forecasting.

Quantitative Forecasting

Quantitative business forecasting methodology is founded on the principle that human opinion is both fickle and unreliable, at least over the longer term and when the scope of the forecast is not very limited. There are three main methodologies that quantitative forecasting relies upon:

  • The Indicator Approach

This approach looks at the various ‘indicators’ or influences that can impact upon demand. It isolates particularly important indicators which cause changes in demand even when all other influences retain their status quo. The influences are termed ‘lead indicators’ and tend to be big macro-economic factors such as unemployment rates and GDP, though different kinds of products and services will use different lead indicators depending upon their historical influence on demand. Historical data will show how changes to these indicators impact demand and will base sales forecasting on forecasted fluctuations in these lead indicators. The indicator approach will almost certainly not be used in isolation for business forecasting and is usually combined with the other main quantitative methodologies.

  • The Econometric Approach

Econometric methodology is essentially a more complex version of the indicator approach and incorporates all of the indicators that are considered to have been shown to impact upon demand. This methodology uses complex statistical models to forecast not only how changes to different indicators in isolation are likely to impact demand but how they work together. Indicator 1 may be shown to have historically impacted demand for a company’s category of product by x percent when it has changed by y percent. The same might be said of indicator 2. However, when indicators 1 and 2 have changed by these same percentages together, the impact on demand may have been different. Add in another several indicators and the model becomes a sophisticated algorithm based on frequency, probability and statistical inference involving large groupings of statistical data interacting with each other to produce different forecasted outcomes.

  • The Time Series Approach

The Time Series Methodology is more of an ‘editor’ to the other methodologies covered than an independent methodology in its own right. It takes the historical data used in the other methodologies and attaches greater weighting to more current data and can discount older data or less influential data as ‘outliers’ than can corrupt the forecast.

If you would like to improve your understanding of business and finance, why not take a qualification such as the CFA® Program. Morgan International offers a number of different professional finance, investment and accounting qualification programs at locations across the Middle East.

 

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Why Consultants Love Data Driven Recruiting

By Lyndsey Mclaughlin

The recruitment process can reveal an abundance of information, which can be key for making recruiters more effective. The analysis of this data can help to make the recruitment process more effective and this is known as data driven recruiting. Data driven recruiting is becoming more common, although it is still not being used as widely as it could be. The purpose of data driven recruiting is to use data to identify important information and trends, which can make the process more successful. There are many reasons why data driven recruiting can be an essential tool for the recruitment process.

Improve Candidate Engagement

Without using data driven recruiting, recruiters often don’t have a clear understanding of where candidates are in the process. This often leads them to advertise roles which could easily be filled by those who are already on the books. Data driven recruiting can give recruiters a better understanding of the candidate pipeline, therefore improving candidate engagement and reducing costs.

Identify Social Media Trends

A substantial amount of time is spent sourcing candidates for roles and quite often, these may be ineffective without recruiters realizing. Unless recruiters physically spend time working out where candidates are coming from, which is not realistic, they have no idea of which social media platforms are most effective. Data driven recruiting can help recruiters to identify social media trends and gain an understanding of which methods are most effective. This can improve the overall recruitment process.

Increase Knowledge

In addition to enrolling in essential programs such as the SHRM-CP or SHRM-SCP certification programs for developing HR skills and knowledge, data driven recruiting can vastly increase the knowledge of consultants. Without using data, consultants are generally just going on observations or gut instincts, rather than being able to identify successes and trends. This increase in knowledge can substantially benefits consultants in their roles.

Potential Issues

Data driven recruiting can also help to identify any potential issues in the process, which may be affecting performance. For example, recruiters may not be making use of suitable inactive candidates from their database to fill live roles and this could be causing inefficiencies, without the recruiters realizing it. Data driven recruiting can help to support this.

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Native Advertising Explained

By Luci M Iley

What is Native Advertising?

Native advertising is paid marketing content which is often described as being ‘disguised’ into the hosting platform – this can be used in both online and offline media, including magazines, websites, blogs and social media. This content is usually read or viewed in the same way as the medium it is disguised in and is often distinguished only by a small label reading ‘sponsored content’ or similar.

Where Can Native Advertising Be Seen?

In magazines, native advertisements are often in the form of visually appealing articles or content, designed to promote a specific product or brand, but appearing at first glance, to be no different to the publication’s existing content and written media.

Online, native marketing appears in the form of sponsored articles, video content or images, produced in line with the publisher’s branding and regular content, but with a strong message of promotion or a call to action included.

What is Good About Native Advertising?

Native advertisements are often read as if they were a part of their host’s content. Regular readers and viewers will have a personal connection to the content creator and will associate those positive feelings with the message being delivered through the advertisement, leading to a higher chance of conversion and sales as a result.

In the Middle East, native advertising techniques are still relatively new, giving them a higher chance of impacting upon viewers as they discover sponsored content and a new way to digest marketing messages without having their content disrupted.

What is Bad About Native Advertising?

The camouflaged message may not be strong enough to motivate the consumer to take action; by disguising the message as regular content, readers and viewers may treat it as such by consuming the message and simply moving onto the next piece of content, rather than learning more about the brand or engaging with the business.

How can I Learn More About Native Advertising?

Consider pursuing a short diploma in digital marketing, covering online advertising techniques, strategies and tools.

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Why Organizations Need CMAs

 

By Rebecca Langdon

We all know that the days of organizations surviving based on tactical decision making is over. Strategic decision making must be core within an organization if it is to prosper in today’s tumultuous and rapidly changing environment. The days of keeping some functions in the rhetorical basement are over. Teams such as marketing, accounting, HR, and operations, are now seen as having essential seats at the table when an organisation is strategizing. I believe that management accountants, particularly CMAs, are being seen increasingly as a key contributor to strategic decisions.

Why?

  1. The numbers don’t lie

I say this with some jest, as of course there are instances where numbers can be misleading. However the feasibility of all strategies is dependent on the cost model, i.e. what is it going to cost to implement, and what will the return be in the short, medium, and long term. A management accountant has the requisite skills to profile the costs associated with a strategy.

  1. Performance management

A key part of the CMA syllabus is performance management. This covers performance evaluation, variance analysis, and use of key performance indicators and balanced scorecards. CMA’s are trained to produce budgets and then measure deviations from those budgets. To ensure monetary control of strategies, budgeting and forecasting is of fundamental importance.

  1. Decision making

Another element of the CMA syllabus is decision analysis. This teaches the budding accountants to use financial data to perform analysis for the decision making process. This includes a number of tools and techniques which all contribute to strategic decisions, such as cost volume profit analysis, marginal analysis, make vs buy decisions, and pricing methodologies.

  1. Financing decisions

Many new strategies will require financing. This may be from internal funds, or perhaps a new funding round, or maybe a bank loan. There will be a piece of analysis that needs to be undertaken to ascertain which type of finance best suits the particular strategy. CMAs are trained to undertake this analysis, underpinned by the key concept of risk and return. They also have an operational understanding of short and long term financial management, in addition of the pros and cons of major financial instruments.

Summary

Above are just 4 of the reasons why qualified Management Accountants are so fundamental to the strategic decision making process within an organisation. There are of course many more. It is positive to see that there has been a seismic shift in the last decade in terms of how accountants are viewed and if you are interested in undertaking the CMA qualification, have a read through our website.

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The 3 Reasons Your Dreams are Unachievable

By Luci Iley

Everyone has a dream – it could be a career aim, perfect house or even a complete relocation. They are the ultimate thing we aim for, our reason for working hard and something to give us hope during the harder times.

When it comes to career goals and the dream job, many people spend their whole professional lives working toward the ideal. But there are a few things that5 can hold us back – without us even realising it.

Fear

Whether it’s the unknown, failure or feeling unfulfilled, fear is the biggest factor holding you back from achieving your dreams. It is perfectly natural to be scared of the unknown – not knowing what happens if you don’t succeed right away, how you will cope financially, emotionally and professionally. All of these factors may place a burden on your mental health, personal relationships and even your physical wellbeing.

The important thing to remember is that, whilst failure, obstacles and pitfalls are genuine concerns – you really will never know if you don’t try. There’s no harm in setting up safety nets to fall back on, but if you never take the first step, you have zero chance of success.

Waiting for the ‘Right Moment’

The elusive ‘right moment’ haunts most people, whether it’s waiting until our children are old enough, or looking for a more spiritual sign from the universe, there is an overwhelming number of people with the ‘ideal’ moment in mind. This is the time when they will start working toward their dreams, the stars will align and everything will work out perfectly.

One problem - it doesn’t exist. The ‘right moment’ is a procrastination method, linking back to our first point -fear. Waiting for the ideal time is our mind’s way of trying to protect us from potential failure – the truth is, once that moment comes, another moment will conveniently pop up – and progress is never made.

Not having Enough Time

Most people’s dreams will take time and effort to achieve, they are big goals which cannot be achieved overnight. The issue with this is that once you factor in your job, personal care, relationships, family time and hobbies, there just doesn’t seem to be enough hours in the day to get started on that big dream you have.

Again, this is procrastination. When we decide that something is important, we make time – no, it’s not always easy and it may start as a very small amount of time each week – but the first step to success is actually beginning.

Settling

Making big changes is scary, we’ve covered that. But, convincing yourself that your current circumstances are the only ones you will ever experience is simply dangerous. Getting stuck in a rut is the worst way to live life and giving yourself a boost to progress and achieve something more is vital for a fulfilling life.

 

No matter what the reason for thinking that you can’t, we’re here to show you that you can. With courses in a range of professions, the first step towards achieving your dream is here.

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What Does the Future Hold for Procurement?

 

By Rebecca Langdon

According to the highly publicised study by Osborne and Frey; The future of employment: How susceptible are jobs to computerization – out of 702 jobs most likely to be automated, purchasing was 111th. In recent years the procurement function has received renewed attention as the likes of Amazon have demonstrated the importance of the supply chain to organisational success. It is always interesting to consider disruptive forces which alter the shape of the profession. You will not be surprised to know that our top 3 are all technology based!

  • Artificial intelligence

When people talk about artificial intelligence, it often goes hand in hand with robotic imagery. However what we are really talking about is incredibly powerful computers which have the capability to ‘learn’. This is typically paired with ‘big data’, which has the capability to handle repetitive tasks quickly and without the need for human intervention. A potential target within the procurement space would be tasks in the accounts payable and accounts receivable space. For example the matching of invoices, and pushing through workflows.

  • The internet of things

The internet of things is already disrupting procurement. Digitized stock means that suppliers are able to monitor the levels of throughput. There is a positive side to this as let’s say for example you are the procurement manager of a retailer and you always want the shelves to be stocked at 80-100%. If the supplier has access to the stock levels you can set up an agreement for them to deliver without you having to be involved in tactical ordering.

  • Driverless logistics

I am sure you have read a lot about driverless cars, and they are set to become a frequently seen reality imminently. It will transform supply chains as drivers will no longer be required, and in the long term as the roads are full of driverless cars, it is set to reduce traffic on the roads. In fact, Dubai based port operator, DP World, is already using remote controlled quay cranes, security drones, and driverless trucks at its Jebel Ali terminal.

 In Summary

We should not fear change, and in fact technology is set to make procurement careers all the more exciting, by allowing humans to focus on the more strategic work and generate organisational value. It will be the more qualified candidates who are more resistant to technology making their jobs redundant. Therefore if you are in the profession, and you are not yet accredited, perhaps you should consider the CSCP.

 

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Be Inspired with the Top Project Management Trends for 2017

 

By Lyndsey Mclaughlin

Good project management is key within any business, as it ultimately determines whether projects will be delivered on time, stay within budget and reach a successful conclusion. When a project fails to deliver, it can be costly for a business. It can cost the business money and there is also the risk of losing out on key clients. Whether you are a project manager by title or you manage your own projects, it is important to keep up with project management trends, if you want to be as effective as possible. These are some of the project management trends for 2017.

Staff Investment

Great staff are your most important asset when it comes to project management and investing in staff is one of the trends for 2017. Without the right resources, it is unlikely that projects will perform as highly as they could, so investing in staff is worthwhile for the overall success of a project. Project managers should invest as much as possible on good, quality staff, who will exceed the expectations of their role.

Certification

There is a growing trend for project managers to become certified, as there is evidence to support the link between this and the performance of projects. It is thought that around 80% of projects which perform well, have a certified project manager leading the way. A PMP certification program can equip PM’s with the right knowledge and skills to ensure high performance with the project.

Project Management Software

In 2017, we will see an increase in the use of project management software to support projects. It is thought that project management software can help improve the success of projects and can help ensure high performance. The right software can help project managers to make the best use out of their resources and to create essential milestones to keep the project on track. Companies who invest in project management software in 2017, are likely to enjoy better results than those who fail to make this outlay.

 

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Pass Your Level I CFA® Exam With Confidence

 

By Morgan International Staff Writers

Nobody ever sets out to fail their certification exams, but the inevitable reality is that some do. It’s only once the results are out that the soul-searching begins to pinpoint what exactly went wrong.

Another possible cause could be questions left unanswered because you were not familiar with the subject matter. The deeper issue here, though, would be your approach to revision before the exams and possible lack of question practice. In other words: poor preparation. Generally there are three main areas where students should direct their searching. Top of that list could be that not all the questions were answered, based on lack of sufficient time. If only the examiners had given you half an hour or an hour more, you might say, then you would have been able to answer them all. What this really points to, though, is a weakness in your time management and exam technique.

Perhaps you felt that you answered all questions correctly and came away feeling you passed, only later to find out you didn’t. Here, the issue is most likely a failure to address the specific requirements of each question in a succinct and clear manner. Again, preparation is the key word.

With a view to specifically help students overcome all of these issues, Morgan International developed a set of study tools prepared by subject matter experts designed to give students the most thorough preparation, all with the goal of passing. For the Chartered Financial Analyst (CFA) exam, Morgan's tools and resources gives you a combination of practice questions, mock exams and case study questions. Remember, these have been written by subject matter experts and therefore prime you in the best way possible.

With this valuable information to hand, your preparation should be honed to perfection and you should be well on your way to sitting your exam with confidence you did everything you could to pass.

Pass your Level I CFA® exam with confidence! Click here to view Morgan’s full range of CFA® Program packages.

 

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The Growing Industry of HR: Is it the Place to be?

 

By Lyndsey Mclaughlin

HR has changed significantly over the years and as there are so many different roles available within HR; it is becoming an increasingly popular career choice. The umbrella of HR describes recruiters, business partners, administrators, advisors and it is a growing industry. As it is essential for every organisation to have HR representation, no matter how small it may be, it is an industry which is always likely to be needed. If you are unsure of where to go in your career, there are many reasons why HR is one to consider.

Opportunities

HR covers such as wide spectrum of roles that it can offer a lot more opportunities than other industries. Within HR, you can choose the talent management and recruitment side of the function, or advising staff on employee relations. There is also a lot of administration associated with HR and a growing need for HR business partners. You will always find a wealth of opportunities if you choose to work in this side of the business.

Variation

The main function of HR is to deal with people and this means there is never a dull moment if you decide to pursue a career in this area. HR is far from boring; there is a lot of variation and most HR staff would agree that no two days are the same. If you are looking for a career which will have a lot of variation, HR is definitely one to consider.

Rewarding

HR can be a highly rewarding career. Whether you are responsible for bringing new talent into the business and supporting growth or improving employee relations, HR is a field where you can really feel like you have made a difference.

Competitive Salary

HR is in such high demand these days that you can expect to be rewarded well with a competitive salary and benefits. Even if you start at the bottom of the ladder in HR, you can quite quickly move into other roles and increase your earning potential in the process.

If you are considering a career in HR, it is essential that your skills and knowledge are up-to-date. HR can be notoriously difficult to get into, but once you get your foot in the door, it can become highly rewarding. It is worthwhile considering investing in a SHRM certification, which will provide you with a deeper understanding of HR related topics, such as policies, recruitment and talent management.

 

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Influencer Marketing in the Middle East

 

 

By John Alexander Adam

 

Blogging is a passion: as bloggers, we want to share our thoughts, feelings, insights and knowledge with the world. Whether a blog is purely a hobby or has a commercial element, in the majority of cases the blogger wants to reach out, connect with and influence as wide an audience as possible. In the modern era the top bloggers have huge influence and following and this is particularly true in the Middle East.

Influential bloggers from the Middle East are in the enviable position that their followers are more active and engaged than those from almost anywhere else in the world. This is probably due, at least in part, to the fact that as a traditional, conservative society, the independent voice of bloggers, imbued with their own personality, is particularly valued as juxtaposed to mainstream media.

That engagement is a dream for marketers trying to connect with a Middle East audience and it should come as no surprise that brands are particularly keen to be associated with influential bloggers from the region. So, as a marketer in the Middle East, how can you best leverage the unique opportunities that influencer marketing presents in the region?

 

Think Indie Movie, not Blockbuster

The first step is to grasp the nature of influencer marketing and how it differs from more traditional channels. The Middle East as a region has a tendency towards the big budget and the extravagant and that culture is often reflected in the character of marketing campaigns targeting the region. Influencer marketing goes against that grain and marketers must first get their heads around that if they are to be able to properly exploit the strategy.

Social media influencers are generally successful not because of the slickness of their production but their raw, stripped-back entertainment value. The most successful may start to add some slickness and production to their video clips and other forms of content but there is only so much ‘production’ that can go into a 15-second Instagram video. Their followers like and relate to them for what they see as their personality and how that comes through in the content they create. Trying to change that would almost certainly have a negative impact. It is up to the marketers to find creative, unobtrusive ways to inject brands into influencers’ content if they want to connect with their audiences.

Sarah Barry, general manager at advertising agency Momentum, has discussed how many brands and marketers take the wrong approach when it comes to working with influencers.

“Most brands just want to be seen with the influencers and not make any real effort to connect with their audience. A simple cameo of your brand in an influencer video does not mean their fans will like you too. A real collaboration with the influencer is needed to build real relationships, and there are so many ways to do that.”

Effective influencer marketing is all about co-creation of content that is true to the influencer’s own style and not putting the influencer into a traditional marketing campaign.

 

Invest in Influencers

While it is a growing market, the number of genuinely good influencers producing quality content is still limited and this is particularly true in the Middle East. Every influencer is also not suitable for every brand, further reducing the suitable options for marketers engaging in influencer marketing. As such, it makes sense for brands to invest in and nurture suitable influencers as a longer term strategy.

Khaled Akbik, director of social media at OMD UAE confirms this, saying “engaging with influencers should be part of a long-term strategy to build an ongoing working relationship with them and move them from simply being influencers into being actual brand ambassadors.” 

“This may require the brand to empower them with tools that help them get the job done (i.e. cameras, vehicles, gear, studios, etc). Yes, this means it will be costly, but remember that these ambassadors are producing quality content that is loved and trusted by hundreds of thousands, if not, millions of people. Don’t think of it as a cost coming out of your media budgets only, rather from both your media and content budgets. When you combine the two and perform a cost benefit analysis over a long term, you’ll find that it’s well worth the cost.”

Used correctly, influencers can be just as effective, if not more so, than mainstream media celebrities when it comes to brands connecting to particular audiences. Their followers feel more personally connected to influencers. Compared to the cost of marketing that features top celebrities, investing in good influencers long term will actually be far more cost effective.

 

Managing Influencers without Compromising their Appeal

One phrase which sums up the challenge of influencer marketing perfectly is “to the marketer, the brand is the hero, but to the audience, the influencer is.” One of the major challenges in influencer marketing is to ensure that the content produced is not compromised. The appeal of the influencer is in their perceived personality and their followers buying into its authenticity. Marketers have to learn to find the sweet spot between the two when it comes to influencer marketing.

Influencer marketing is still very much a new, developing marketing channel and everyone in the industry is still learning. We have only touched on some of the key considerations marketers must bear in mind. However, the points outlined here are certainly key to a successful approach.

If you want to take your marketing skills to the next level, Morgan International offers a number of different digital marketing diplomas at locations across the Middle East.