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News Digests

Stay abreast of what’s happening internationally with developments in corporate public affairs. Here is news that you may find useful and interesting:

Samsung halts production of Note 7 phone ND


Al Jazeera, 11 October 2016

Samsung Electronics has provisionally halted production of its Galaxy Note 7 smartphone after reports of fires in replacement devices. The announcement saw Samsung's share price dive by 4 percent. "If the Note 7 is allowed to continue it could lead to the single greatest act of brand self-destruction in the history of modern technology," Eric Schiffer, brand strategy expert and chairman of Reputation Management Consultants, told Reuters news agency. "Samsung should arrest the sale of Note 7's and protect the safety of their clients before profits and ultimately as a by-product protect Samsung. Samsung needs to take a giant write-down and cast the Note 7 to the engineering hall of shame next to the Ford Pinto." Telstra has stated that Samsung had paused supply of new Note 7s to the company. "Analysts are saying the recall could cost between $2bn and $5bn, and that was before this latest development," said Al Jazeera's Harry Fawcett, adding that some 2.5 million phones worldwide would need to be replaced. Singapore Airlines said on Monday that charging of phone is prohibited on all its flights. For more information see: www.aljazeera.com

The Forecasting Sweet Spot Between Micro and MacroND


Eddie Yoon, Jeremy Bartlow and Tim Joyce. Harvard Business Review 26 August 2016

Forecasting plays a major role in all modern business strategy, yet statistically businesses are fairly poor at it. In a survey with 500 senior executives, 1 per cent of their companies hit there 3 year financial forecast, only 5 were with 5 per cent of the original goal. The average rate of over/underestimating results was 13 per cent off, causing the fluctuation of share prices by an average 6 per cent. This occurs as the focus of forecasting is almost always on macro data such as GDP and fails to incorporate trends or the fluidity of consumption habits. When forecasting the HBR argues expanding the focus to ‘middle data’ such as wine consumption to determine disposable income, development, and the potential for higher demand, will create a more holistic and reliable forecast. For more information see: www.hbr.org

How big data will revolutionize the global food chainND


Clarisse Magnin, McKinsey and Company August 2016

Making the worlds food supply more efficient and reactive to demands is a key goal for a sustainable future. Currently 60% of the cost of goods sold are the raw materials with manufacturing and packaging representing the majority of the additional 40%, to minimise waste in both areas big data can analyse supply and demand. Demanding efficiency from the food production sector is essential when globally 795 million people go hungry and a third of food produced for human consumption is ‘lost or wasted’. Utilising big data through technologies like precision agriculture, which provides real time analysis of crops to allow farmers to adapt and apply ‘tailored care’ to maximise output or automated systems which increase delivery reliability and eliminates human error. Agricultural robotics appears to be a major growth industry with growth from $1 billion in 2014 to $14-18 billion by 2020. Utilising big data will ultimately make the production of food more productive with a greater potential for both higher yields and profits, a necessity in a world with a consistently expanding population. For more information see: www.mckinsey.com

When Corporate Philanthropy Makes the Recipient Look BadND


Yuliya Shymko & Thomas Roulet Harvard Business Review 24 August 2016

Gifts from the private sector to cultural non-governmental organisations (NGOs) have previously been seen almost ubiquitously as a positive thing. Corporate gifts offer opportunities to, expand, give greater job security, improve operations and undertake larger projects. Essentially accepting gifts from the private sector allowed NGOs to ‘amplify the positive impact of their activities upon society’. This often does not translate. The Academy of Management conducted a study to determine the correlation between corporate donations and the likelihood of being nominated for a prestigious theatre award in Russia between 2004 and 2011. They found (assuming equality of production) that for every corporate donors support the potential recipient is 10% less likely to be nominated for an award. The acceptance of corporate financing appears to undercut the artistic merit of the NGO, which the Royal Opera (UK) discovered when they accepted sponsoring from BP and had ’75 top classical musicians’ boycott or cut ties with the Royal Opera. For More Information see: www.hbr.org

Normalising NarcissismND


The Economist, 20 August 2016

The American Psychiatric Association has routinely requested that its members refrain from psych-analysing any of the major candidates in the run up to the election. Psychoanalysis of a subject you have never met obviously possess ethical issues, but the profile of ‘narcissistic personality disorder’ and its symptoms of ‘abnormal attention-seeking, self-centredness, a sense of entitlement, exaggerated self-appraisal (i.e., fibbing about achievements) and warped relations with others’ appears to fit. The economist examines the Republican Party’s three key totems: Gods, guns and grit and how the party base of rugged individualism has been disrupted and re-routed towards narcissism. The claims of Ben Carson that god was telling him to run, Marco Rubio claiming that the gun he bought for Christmas was the ‘last line of defence’ against the Islamic State of Iraq, from his Florida home and Mitt Romney’s 2012 campaign claiming that small business owners had built the country with grit. The intentional inflation of both ego and individualism is firstly unnecessary, and secondly attacks interdependence which is a foundation of any democracy or civil society. For more information see: www.theeconomist.com

Why few records will be broken in RioND


The Economist 13 August 2016

The Rio Olympics, described by the Vice-President of the IOC as ‘the most difficult ever’ (perhaps overlooking Munich ’76) and perhaps the most underwhelming. While 17 swimming records were broken in Beijing 2008, just four have been broken in Rio. Mark Denny of Stanford University statistically determined the human speed limits for running events, with the quickest possible 100 metres time being 9.48, 0.11 seconds faster than Usain Bolt's record. The 100 metres is hampered by Rio, which is located at sea level and as such has ‘denser air’. Combined with the crack down on doping before the Olympics, ways in which to gain a competitive advantage on both current and historical competition is becoming far more challenging. Perhaps, Rio has shown that athletic aerobic and anaerobic sports are not going to be future crowd drawers, but rather skill-based disciplines such as gymnastics hold exciting record breaking potential. For more information see: www.theeconomist.com

What Could China’s ‘Social Credit System’ Mean for its CitizensND


Foreign Policy. Roger Creemers, Peter Mattis, Samantha Hoffman, Pamela Kyle Crossley. 15 August 2016

Using big data the Chinese government is intending to create a ‘social credit system’ to give a credit rating for individual civilians based upon civil obedience. The scheme is designed to use online and offline data to create a numerical score. The Shanghai municipal government released a list of 1,200 questions which would develop the score, 1,000 for companies and 200 for individuals. The feasibility of such a scheme is unlikely, due to the technological limitations and ultimately the impossible task of turning loyalty into a quantifiable score. It is unlikely that such a system could be installed nationally, the likelihood is that the system will be used to score individuals with influential occupations, such as doctors and teachers. While in the USA utilising similar data is used to create a FICO score, a scheme of this size and scope has never been attempted. Disgraced former security chief Zhou Yongkang argued pursuing this technology offers the government the ability to install a culture of self-censorship and civil obedience. This technology is ultimately designed to shape people's behaviour to become predictable to authorities. For more information see: www.foreignpolicy.com

Thailand Votes for a new constitutionND


The Economist, 8 August 2016

With a turnout of 55 per cent the Thai Army have passed a charter which introduces new electoral rules resulting in the weakening of any potential coalition government. Sixty five per cent of the vote endorsed the introduction of ‘independent’ commissions who will monitor politician’s policies and ‘moral conduct’. The Junta backed reform opposed by the US, UN and EU maintains the Thai system of stability from the military, legitimacy from the monarchy and bureaucracy from politicians. This reform comes during the IMFs prediction that Thailand’s growth has slowed from 5 percent in the mid-2000s to around 3 per cent, juxtaposing its immediate neighbours. The reform may offer stability to Thailand with the army now in firm control of the tumultuous election cycle, or the opposite with support for former Prime Minister Thaksin (2001-06) who was outed in a military coup remaining strong. For more information see: www.economist.com

IMF's own watchdog criticises its handling of eurozone crisisND


Larry Elliot, The Guardian, 29 July 2016

The International Monetary Fund’s handling of the Eurozone crisis has been failed by its own watchdog which found that it, failed to determine the scale of the problem, failed to create realistic forecasts and gave the impression Europe was gaining preferential treatment. The Independent Evaluation Office found that the IMF failed to appreciate the requirements of accountability and transparency within the banking system. Christine Lagarde, the managing director, argued the IMFs handling of the crisis, particularly in Greece, prevented the ‘contagious’ crisis spreading throughout Europe. The 2010 bailout was heavily politicised the Independent Evaluation Office found, a point Lagarde denies. For more information see: www.theguardian.com

Three-piece dream suit, Abenomics.ND


The Economist, 30 July 2016

Since 2012 Shinzo Abe has promoted three economic policies to create an ‘exoskeleton’ or a ‘three-piece dream suit’. This suit consists of monetary easing, fiscal pragmatism and structural reform. This plan to boost Japans GDP through stronger growth and higher prices has ultimately failed. The potential failure of Abenomics has been connected to the prioritisation of Mr Abe to gain domestic popularity to allow for the pursuit of nationalist aims, particularly to the pacifist constitution. The short term future of Abenomics appears to be fiscal stimulus generated through consumption taxes with employment rising with individuals working in more part time and casual roles. The ageing population places a major hurdle for Japan with the skilled foreign workers being a unpopular solution due to the populations underlying xenophobia. The re-flation of Japan under Abe may allow for the pursuit of further structural reform with the next three years being crucial to Japans macro-economic future. For more information see: www.economist.com

Disasters linked to climate can increase risk of armed conflictND


Damian Carrington, The Guardian, 26 July 2016

Research has found that 23 per cent of violent clashes in ethnically divided places have connections to climate disasters. Climate change is closely associated with armed conflicts, with the effects such as heatwaves, storms and floods acting as a ‘threat multiplier’ for conflict. Nine per cent of armed conflicts were associated with climate disaster, while areas with previously existing ethnic division spiked the statistic to 23 per cent. The research conducted by the Potsdam Institute for Climate Impact Research shows the requirement for further research into disaster distribution and modelling. Carrington concludes on the fact that Syria and California are currently experiencing the biggest droughts on record, yet the lack of ethnic tension and division within California allows for the retention of peace. For more information see: www.theguardian.com

Why Industrial Strategy is back ND


The Economist, 24 July 2016

The promotion of industrial strategy in the UK has previously been seen as a left wing ambition and not a Conservative pursuit. Since Margaret Thatcher dismantled UK industry and ‘smashed the unions’ during the 1980s to develop a service based economy removing the previously Keynesian system of policymaking, industry has not been a major focus. After the Brexit, a devalued currency has left the UK in a position to become a significant global exporter with a highly educated workforce and good infrastructure yet very little to no manufacturing. Theresa May aims to boost productivity, invest in major infrastructure projects (as done by Roosevelt with the Works Progress Administration (1935-43), notably creating Hoover Dam and LaGuardia Airport) and address the current housing shortage. For more information see: www.economist.com

Splendour in the Grass a 'missed opportunity' for drug testing, advocates say.ND


Lexi Metherell. ABC News, 23 July 2016

The first festival of the season went ahead in Byron Bay without significant any issues, yet the debate around ‘Pill testing’ still rages on. Drug policy in New South Wales is a complex mix of harm reduction and clear moral obligation to actively police drug use. After a series of deaths at the start of 2016 due to lethal ecstasy, there has been renewed pressure on the NSW government to allow for pill testing schemes, as utilised in most Western European nations. Metherell argues the ‘Nancy Reagen-esque’ approach increases both the risk of harm and amount of money dealers are make due to the illicit drugs value being partially dependent on the risk dealers must take. For more information see: www.abc.net.au

The greyhound ban and the working man: what exactly does 'working class culture' mean?ND


Jeff Sparrow, The Guardian, 21 July 2016

As a policy maker Mike Baird has been quick to implement potentially unpopular policies, from his support of the Sydney lockout laws, the new anti-protest laws and finally the state-wide ban of grey hound racing, he has remained unrepentant. Whilst the greyhound industry undoubtedly has poor practices, as with any form of racing, Mike Baird risks a legacy of ‘class based moralism’ writes Jeff Sparrow. Banning the ‘assumed mythical aspect of an ever-disappearing old Australian way of life’ in such a fashion, rather than attempting reforms in the industry highlights potentially lacking attempts at stakeholder engagement. The news that Barton Deakin, traditionally Liberal Party aligned, will be representing the greyhound industry suggests that the dog may still have its last bite. For more information see: www.theguardian.com

Losing our AAA credit rating is not a harbinger of doom. It could be a blessing in disguise.ND


John Quiggin, The Guardian, 12 July 2016

John Quiggin argues that in today’s debt heavy society the retaining of triple-A status is simply unnecessary. To retain a AAA credit rating any risk around investments must be avoided, usually at the cost of socially beneficial investment. With falling interest rates (currently at 2% for government bonds) there is little benefit in the government not following the heavily indebted Australian public and use debt as a financial management tool on a larger scale. The pursuit of austerity and retention of triple A status in Germany at the potential cost of the European Union dispels the myth of credit rating equating to financial or social security. For more information see: www.theguardian.com

Three amigos and two spectresND


The Economist, 25 June 2016

The North American Free Trade Agreement (NAFTA), enacted by George H.W. Bush in 1992 allows for free trade between the United States, Canada and Mexico. The free trade zone has boosted trade since its signing, yet growing protectionism and the rise of Donald Trump has placed the agreement at odds with a public voting for isolation. However, as the U.S.A aims to distance itself from the agreement Canadian Prime Minister Justin Trudeau has placed enormous effort into improving Canadian-Mexican relationships. This has taken the form of visa free travel into Canada. Whilst NAFTA maybe a small agreement when compared to the planned Trans-Pacific Partnership (TPP) consisting of 12 Asian and Latin signatories in addition to Canada and Mexico. NAFTA provides a platform for dialogue within North America, along with geopolitical and economic security threatened by the rise in protectionism and isolationism within the U.S.A. For more information see: www.economist.com

Tony Blair unrepentant as Chilcot gives crushing Iraq war verdictND


Luke Harding, The Guardian, 7 July 2016

The report of the Chilcot enquiry into the 2003 Iraq war has been published. The report, announced in June 2009, was designed to create a clear narrative of the motivating forces which led to British involvement in the Iraq war in order to determine both the legitimacy and legality of the invasion. The findings of the report found, ‘military action was not a last resort’, there was no imminent threat from Saddam Hussein, there was an unjustifiable over-estimation of the threat of WMD and ultimately the invasion had failed to achieve its objectives. The 2.6 million word, 12 volume report concluded that Tony Blair overestimated his control of the US led direction of the war and the preparedness of the British armed forces. For more information see www.theguardian.com

Olympics ease a blackout, and brands flood the fieldND


Zach Schonbrun, The New York Times, 3 July 2016

In the build up to the Rio Olympics the International Olympic Committee has revised Rule 40 of the Olympic charter. The rule dictates a blackout of non-sanctioned advertising during the Olympic Games and the run up. The revision allows sponsors to run Olympic based adverts, just before the Olympics, as long as they don’t explicitly link the product to the Olympics. This revision has the potential to devalue exceptionally expensive, sanctioned, adverts taken out by companies like Citigroup and Adidas. The loosening of rule 40 also brings in the issue of social media marketing which has become a key source of revenue for athletes and sponsors. A source that is far harder to police. Whilst, it has yet to be seen if more adverts and therefor attention to the Olympics will facilitate higher demand for products or over saturation will devalue expensive adverts. For more information see: www.nytimes.com

Uber rival gains ground in South East AsiaND


Newley Purnell, The Wall Street Journal, 4 July 2016

With Uber currently focused upon expansion within India and China funded by the recent $3.5 billion USD investment from Saudi Arabia’s Public Investment fund, it has growing competition within South East Asia. Ride-sharing application based companies have become the latest billion dollar industry, created by easy access to GPS enabled smartphones and the constant desire for ease of use. Whilst the marketplace for transport based services is large, accessing it has proved challenging with largescale public protest occurring from London to Sao Paolo usually combined with litigation. Market presence has proved important with the threat of ride-sharing services being banned or illegal (as in France) eliminating a customer base. Whilst the currently small Uber competitor ‘Grab’ operated out of Singapore has focused its expansion in the highly populous and less regulated South East Asian marketplace. Due to this Grabs current value of $1.6 billion USD is forecast to reach $13.1 billion by 2025. For more information see: www.wsj.com

The former attorney general has said a second EU referendum would be legalND


Jon Stone, The Independent, 5 July 2016

The dust over the Brexit may be settling with the British economy gradually stabilising. The divisiveness of a vote split 52 per cent leave to 48 per cent stay is evident with renewed calls for a further independence referendum in Scotland, and even the satirical request for London to join the EU. With Dominic Grieve (the former conservative chief legal advisor until 2014) stating it is “possible that it will become apparent with the passage of time that public opinion has shifted on the matter. [And] If so a second referendum may be justified” and a study completed by Opinium indicating around 7 per cent of voters regretted casting their exit vote, whilst 3 per cent regretted voting remain, further complicating the situation. Negotiations surrounding issues such as the single market have been set back by the Conservative party still seeking a ‘captain’ to ‘steady the ship’ whilst the Labour opposition suffers a crises of both leadership and identity. Until the formal declaration of Article 50 (stating the UK will leave the EU) the divided-United Kingdom remains an unstable political and economic marketplace for both individuals and investors. For more information see: www.independent.co.uk

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