Knowledge Centre:
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:

ACCC says companies are responsible for dodgy testimonials posted on their social media pagesND


James Thomson, Smart Company, 11 February 2011

ACCC chair Graeme Samuel says companies will be held responsible if they do not delete or respond to false, misleading and deceptive testimonials on Facebook or Twitter. The comments follow the Federal Court’s decision to fine an allergy products company and its director $7500 for allowing false and misleading testimonials to be published on its commercial Facebook and Twitter pages. Philip Argy, a lawyer who specialises in technology matters, says that companies must carefully moderate official, corporate Facebook pages. He gives the example of a knife company, which receives a post on its Facebook page from a customer claiming the company’s knives can cut through steel. ‘If it’s false and you do not delete it or respond, then you have adopted publication of that post and you are liable for it’. For more information, see www.smartcompany.com.au

Companies law set to mandate 2 per cent CSR spendND


The Times of India, 10 February 2011

The Ministry of Company Affairs in India is set to announce a new Companies Bill that requires companies meeting certain financial thresholds to allocate 2 per cent of their net profit for the preceding three years on CSR. While this bill marks an important change in company law, it has been criticised in that as of yet it has not clarified exactly what constitutes CSR spending. Additionally, the government has decided against policing this spending, instead allowing companies to self-regulate and relying on stakeholders to hold companies accountable. This proposed CSR spending would be in addition to the CSR spending already imposed on companies in the mining and coal sector. For more information see www.timesofindia.indiatimes.com

How to succeed with today’s empowered customersND


Martin Zwilling, Forbes, 10 February 2011

Today’s customers are armed with three lethal weapons — instant access to information about every potential purchase, immense choice, and realtime comparison of competitive prices. They don’t care about customer loyalty, and all that matters is that companies deliver what matters most to them, when it matters most. While this is viewed by customers as a blessing, this buyer empowerment is seen my many businesses as a curse. However, empowered customers have to be met by empowered employees, using the same Internet technologies to keep up. Because it’s a wide-open market, the latest technology often comes to consumers first. The old-style, top-down, ‘push’ marketing isn’t working anymore. Companies need to understand and capitalise on the decisive moments of empowered customers. For more information see blogs.forbes.com

National survey of volunteering issues 2010ND


Volunteering Australia, February 2011

A survey of volunteers, volunteer-involving organisations and companies was conducted by Volunteer Australia in 2010, with one of the issues explored being corporate/employee volunteering. The majority of not-for-profit organisations interviewed had not been involved in corporate/employee volunteering programs, however, among those that were involved, half found that the programs were valuable to their organisation. Of companies interviewed, 36 per cent had fully implemented volunteering programs, with the main aim of these programs being to allow employees to contribute to the community. Means of improving the efficacy of corporate/ employee volunteering include increasing the number of days that employees volunteer for and introducing paid time. For more information see www.volunteeringaustralia.org

Facebook moves closer to China advertisers with Hong Kong officeND


Mark Lee and Tim Culpan, Bloomberg Businessweek, 9 February 2011

Facebook is set to open an office in Hong Kong, with Chinese companies potentially to begin advertising on Facebook despite the fact that the site is blocked in China. At the end of 2010, China had approximately 457 million Internet users, and authors have suggested that there is potential for Facebook to gain access to Chinese Internet users by investing in Chinese Internet companies, as foreign Internet companies rarely experience success in China. Currently, Indonesia is Facebook’s largest market outside of the US in terms of users, however Facebook is also increasing its presence in emerging markets such as Brazil, India and Russia. For more information see www.businessweek.com

India arrests first executive in graft scandalND


James Fontanella-Khan, Financial Times, 9 February 2011

In 2009, the Central Bureau of Investigation in India launched an investigation into allegations of government officials being bribed by companies in order to secure mobile licenses at undervalued results. The investigation has yielded its first arrest. In recent months India has witnessed a series of high-profile corruption investigations that have damaged both the government and the economy’s reputation. Consequently, also in the last few months, the Indian stock market has plunged nearly 14 per cent, and there has been a significant withdrawal of foreign funds. These developments pose a significant challenge for the country’s future economic growth. For more information see www.ft.com

The year of the metal rabbit: China’s high-speed rail networkND


David C. Michael, Bloomberg Businessweek, 9 February 2011

China is set to unveil its plans to create a bullet-train network, linking high-speed trains around the country. Despite the speed at which the network was built and concerns that the ticket price will be expensive for the average Chinese traveller, it is predicted that the network will fuel major economic benefits for the country. Firstly, the network is bound to boost productivity, by allowing workers to travel greater distances in shorter periods of time. Additionally, the new transport network will create new markets by making consumers easier to reach, as well as allowing manufacturing bases to expand more inland. The rapid pace of infrastructure development in China poses a challenge for multinationals, which must take care to seize the opportunities posed by such developments. For more information see www.businessweek.com

A growing thirst for water managementND


Sarah Murray, Financial Times, 7 February 2011

There is a significant lack of education options for executives looking to apply water conservation techniques in a business context. Although business schools attempt to keep up with trends in the corporate sector, they are lagging behind in this respect, with major corporations such as Coca-Cola and General Electric investing strongly in water conservation. While there are some water management classes that students can take within different courses, in terms of MBA programmes, many schools are still to incorporate water management classes. There are considerable business and economic advantages to be had from understanding water management; hence business schools should develop their capabilities in this sector so as to meet the growing demand. For more information see www.ft.com

Have you tested your strategy lately?ND


Chris Bradley, Martin Hirt and Sven Smit, McKinsley Quarterly, January 2011

Executives are often concerned with searching for new and innovative strategies, however it is perhaps more valuable to rediscover the basic principles that make for good strategy and to consider whether your strategy accords with these principles. A 10-step test is proposed for executives to assess the strength of their strategy. The test is quite detailed and comprehensive, however this detail is useful in helping executives to pinpoint areas of their strategy that need development. The test considers different aspects of strategy, including how it interacts with the market, whether it produces advantage, whether it deals with uncertainty and whether the strategy has been formalised in an action plan. For more information see www.mckinsleyquarterly.com

Embedding innovation in leadershipND


Vijay Govindarajan and Susan Peters, Bloomberg Businessweek, 1 February 2011

Leaders are currently exploring innovative ways to aid their recovery and begin the new year, however difficulties arise in transforming innovative ideas into practice. There are several lessons for companies to follow in this respect. Firstly, organisations looking to embed innovative practices need to ensure that they have consensus among their team members and that they have the full support and commitment of the organisations’ leadership. In implementing ideas, organisations should design a workable framework and terminology that can be used to create consistency throughout the organisation. Implementation of innovative strategies requires extensive follow-up processes, and best practice examples should be shared across the organisation. For more information see www.businessweek.com

Managing government relations for the futureND


Mckinsey Quarterly, February 2011

Survey results from January 2011 showed that governments and regulators were second to customers in their ability to affect companies’ economic value and 61 per cent of respondents expected government involvement in their industry within 3 to 5 years. Results echo 2010 in terms of the most actively engaged regions; China, India and Latin America. Not surprisingly, those who were actively engaged were more successful at influencing government policies. Practices include aligning external affairs agenda with overall company strategy, making trade-offs across external issues and co-ordinating external affairs activities across the company. For more information see www.mckinseyquarterly.com

Recovering from information overloadND


Derek Dean and Caroline Webb, McKinsley Quarterly, January 2011

While the development of information technologies has had significant benefits for organisations, there are also drawbacks, namely the fact that we are experiencing an information overload. This overload makes it extremely difficult for people to focus their attention, which is particularly an issue for senior executives who have to juggle a variety of expectations as well as receive information from a vast number of sources. There are three ways of addressing the information overload. Firstly, executives need to move away from multitasking, recognising that it hampers productivity and creativity. Secondly, executives need to exercise greater self-discipline, prioritising the more pressing tasks, setting time limits, and filtering the information they receive. Thirdly, executives need to take care to set a strong example for their organisation, establishing healthy time and attention management norms. For more information see www.mckinseyquarterly.com

Risk management in the era of unpredictabilityND


Leon Gettler, The Sydney Morning Herald, 1 February 2011

We are seeing more and bigger catastrophes created by increasing urbanisation, climate change and globalisation. The conventional risk-management approach lists possible events and determines the probability of their occurring based on experience. It does not factor in the impact of the growing number of unlikely but potentially devastating events. The floods that ravaged Queensland and Victoria are a warning for businesses to overhaul their risk-management strategies. Clearly, these sorts of events are impossible to predict. So, how should organisations respond? It is a subject that should be reviewed by boards regularly. Companies should have scenario-mapping teams that report to the board and work with suppliers and customers to identify potential threats. Twenty-first century risk management is about systems and relationships that create an organisation agile enough to respond when disaster strikes. For more information see www.smh.com.au

World Bank’s IFC lends $300 m for green energyND


Viraj Desai, The Times of India, 18 January 2011

The International Finance Corporation, a branch of the World Bank, has pledged $300 m to India to support the development of renewable energy projects. A quarter of the money has been allocated to solar energy projects, while the rest will go to wind and biomass projects. The funding provided to India is part of the $1 billion that international lenders plan to spend on renewable energy projects by 2013. While India is doing well in terms of developing solar energy projects, it needs to expand its renewable energy ventures and can learn from China’s example. For more information see www.timesofindia.indiatimes.com

Top social media campaigns and what you can learn from themND


Patrick Stafford, Smart Company, 13 January 2011

Social media is becoming increasingly important to business, with many companies allocating part of their budget to this area. Companies need however to be aware of their purpose in using social media, and need to ensure that they listen to and engage with their customers through social media. A notable social media campaigns for Westfield ran a Facebook campaign encouraging followers to download an application that changed their Facebook status to a ‘Westfield’ slogan, thereby getting its name across the social networking site in a matter of days. Companies need however to be aware of using social media sites, as there are many ways in which they can commit ‘blunders’. For more information see www.smartcompany.com.au

China to attract overseas talent to aid economic restructuringND


Xinhua, China Daily, 12 January 2011

China will attract overseas experts in equipment manufacturing and emerging industries this year to help its economic restructuring process. The country would also recruit overseas talent who could help in the technological upgrading of enterprises, the development of modern service industries, the research and development of core technologies and energy saving and emission reduction sectors, according to officials attending a national conference on the introduction of overseas expertise. China introduced a more open policy last June to attract top-notch foreign talent under the National Medium and Long-term Talent Development Plan (2010-2020). According to the plan, the government would work out favourable policies in terms of taxation, insurance, housing, children and spousal settlements, career development and research projects. It would also introduce awards for high-caliber foreign professionals willing to work in China. For more information see www.chinadaily.com.cn

Conflict zone pressure rises on companiesND


Hugh Williamson, Financial Times, 12 January 2011

Transnational corporations are likely to come under increased pressure to tighten operating standards in developing countries and conflict zones, with the United Nations to vote on a framework of tougher standards in June. Corporations are being encouraged in particular to improve their risk assessments and grievance mechanisms, and to integrate such standards into every aspect of their business operations rather than simply limiting them to CSR activities. Although business compliance with the proposed United Nations framework will be voluntary, companies will be facing pressure from the public, Western governments and human rights groups. For more information see www.ft.com

Following the big guns on social mediaND


Valerie Khoo, The Age, 12 January 2011

With many businesses paying greater attention to using social media to engage with customers, computer giant Dell has launched its own dedicated 'Social Media Listening Command Centre' in order to track, monitor and respond to consumer conversation on applications including Twitter and Facebook. Since July 2010, Dell has trained 5000 staff in various aspects of social media. Digital business strategist Kate Carruthers says that smaller businesses are often better placed to harness social media than larger organisations – ‘Social media also levels the playing field for smaller businesses, enabling them to compete more equally with larger ones’. Many small businesses use social media as a one-way broadcast when the medium is designed to start a ‘conversation’ with customers. In other words, if a company uses social media, it actually needs to engage with customers. For more information, see www.theage.com.au

Vietnamese leaders deliver mixed messagesND


Ben Bland, Financial Times, 12 January 2011

Vietnam’s ruling Communist part opened an eight-day national congress in Hanoi to discuss the country’s economy. The outgoing party chief identified an under-developed education system, weak infrastructure, corruption and government waste as key challenges that need to be overcome. The country’s sovereign debt was downgraded by the three main credit agencies last year, which cited concerns about inefficient state bank lending and a lack of transparency. Despite the problems associated with the strong government influence on the economy, key documents prepared for the congress emphasised that the state would retain its ‘leading role’. For more information see www.ft.com

Corporate China's succession strugglesND


Liu Shengjun, Harvard Business Review, 11 January 2011

Many successful Chinese companies are entering a transition phase in which their founder-CEOs are reaching retirement. The success of these companies depends on how effectively these incumbents manage this leadership transition. Succession plans are particularly difficult to implement in China. First, interpersonal trust is low in the country unless people are related by blood. Second, Many founder-CEOs expect to continue to play a part in their organisations long after they step down. Third, most Chinese companies don’t have transparent structures or effective corporate governance systems. Some argue that China should cultivate professional managers to take over enterprises in place of incapable or unwilling successors. For more information see www.blogs.hbr.org

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