Pull! Push!
Monday, July 7, 2008
Competition in the distribution sector of Barbados: Good, bad or both?
DISCLAIMER: Insert usual IANA-type (I Am Not A...) disclaimers here as I'm in a rush (going to see Hancock tonight) and I want to post this before I forget.

By distribution sector of Barbados, I mean the companies that import the foodstuffs, groceries, etcetera, that we see on the shelves of our major supermarkets as well as the smaller shops.

In some(?) cases, these distribution companies also own and operate the supermarkets (an example of vertical integration at work here, folks).

After watching a bit of the budget this eve, it seems to me that The Government, as a result of the high cost of living, appears to be receptive and open to the idea of allowing foreign competitors to setup shop in Barbados. In addition, ownership of these outfits is to be kept independent from local entities in an attempt to, perhaps, avoid collusion/cartels(?). The aim here is that by allowing foreign entities into the market, competition will ensue and therefore drive down prices, thereby giving Barbadian consumers a 'break' or an 'ease.'

Now I'm a consumer, and I'm all for a 'break' and an 'ease.' No harm at all, none whatsoever. Or is there? This measure, I think, could very well be a double-edged sword, one that must be wielded carefully (or how about: there are two sides to every coin, or two sides to every issue, or the lesser of two evils? LOL).

Very quickly (as I'm running late for the show at the drive-in):

The Good:

Foodstuffs et al should be available (in theory), at competitive prices and in a wider variety, to the average Barbadian consumer. I for one am always happy to pay less. After all, I'm a Barbadian, we like that sort of stuff, but not at the expense of quality ofcourse. ;-)

The Bad:

Existing distribution & supermarket entities now faced with stiff competition from overseas competitors (who enjoy economies of scale), may be forced to compete on price in one way by reducing their costs.

Labour is a cost. Local companies may be forced to lay-off, or reduce staff levels (i.e., Barbadian employees) in order to reduce their costs, which in turn will (hopefully) allow them to offer competitive pricing in line with the overseas players. Alternatives to lay-offs may involve: reducing their profit margins or finding ways to increase the efficiency of their businesses so as to drive down costs.

Another negative aspect of foreign entrants is that if these foreign entities are a hit with the Barbadian public, and they start to make a profit for their overseas owners, where do you think these profits are going ? I'm no expert, but I guess that our Government will probably see a 'little something' in the form of taxes, duties, etcetera, but I think that the bulk of it will be heading overseas, to a parent company somewhere.

I'm sure that there are plenty of arguements and counter-arguements to what I've said, but this is simply a little food (pardon the pun) for thought. Remember, what do I know? IANA... ;-)

In conclusion, if I may offer one slight, insignificant, tiny, suggestion from little ol' me: If you're going to allow these foreign firms to setup shop in Bim, make sure that the majority of all staff hired (even the Management team), are Barbadians.

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In other news...
"Mswati was crowned king a mere six days after his 18th birthday, and the country has been a train wreck ever since. An estimated 26 percent of Swazis between ages 15 and 49 are HIV positive, one of the highest rates in the world. Mswati’s brilliant solution: a sex ban. In 2001, he instated the uncwasho rite, which put a five-year ban on sex for females under 18. The move proved unpopular, especially after Mswati—who at last count had 13 wives and at least 23 children—married a 17-year-old. The ban was lifted a year early."

The World's 10 Youngest Leaders (Foreign Policy)

"You know I care deeply about the people of Zimbabwe," Bush said. "I'm extremely disappointed in the elections, which I labeled a sham election."

Bush focuses on Zimbabwe 'punishment' (CNN.com)

"Everything made in America — from goods to entire companies — is near dirt cheap to many foreigners. Meanwhile, American consumers, both those who travel and those who stay at home, are seeing big price increases in energy, food and imported goods. The dollar has lost roughly a quarter of its purchasing power against the currencies of major U.S. trading partners from its peak in 2002."

The buck doesn't stop here; it just keeps falling (Yahoo! News)

"Whether it is an unexpected food crisis or a devastating hurricane, the world’s weakest states are the most exposed when crisis strikes. In the fourth annual Failed States Index, FOREIGN POLICY and The Fund for Peace rank the countries where state collapse may be just one disaster away."

The Failed States Index 2008 (Foreign Policy)

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Monday, June 30, 2008
Article: 'How tiny Jamaica develops so many champion sprinters'
A snippet from the article...

"By US standards, the training facilities are second class. Jamaica's top sprinters cram into UTECH's tiny gym to pump rusty weights, and they often practice on the school's basic grass track.

"We have to be creative, because we don't have the resources," says Davis, explaining that the lanes of the track are marked with diesel and burned because the school can't afford the machine that lays down chalk lines every week or so. "We had a choice: complain about the resources and do nothing or work with what we have.""


Source:

How tiny Jamaica develops so many champion sprinters (csmonitor.com)

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Monday, June 2, 2008
Article: 'Will Soaring Transport Costs Reverse Globalization?'
A snippet from the article...

"Globalization is reversible. Higher energy prices are impacting transport costs at an unprecedented rate. So much so, that the cost of moving goods, not the cost of tariffs, is the largest barrier to global trade today. In fact, in tariff-equivalent terms, the explosion in global transport costs has effectively offset all the trade liberalization efforts of the last three decades. Not only does this suggest a major slowdown in the growth of world trade, but also a fundamental realignment in trade patterns."

Sources:

Will Soaring Transport Costs Reverse Globalization? (CIBC World Markets)

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Sunday, June 1, 2008
Article: 'The Coming Energy Wars'
Snippets from the article...

""Indeed, there's concern that as higher oil prices force many Asian economies to reduce or even cut their generous fuel subsidies, growth will slow sharply, and there could be social unrest as the world's poorest become more desperate. The political ramifications of this (which already include moves away from free trade), combined with the ever-rising costs of doing business as usual, could force a retrenchment from globalization. "It's a harbinger of the reversal of globalization," says Jeff Rubin, chief economist for CIBC World Markets. "At $200 a barrel, you'll see transport costs rise so much that they will effectively reverse the trade liberalization of the last 30 years." He predicts that world trade will realign itself regionally, so that while Japan may continue to ship in goods from China, the United States will increasingly import from Latin America. "If you look at the period from 1973 to 1979 [when oil spiked] you'll find the same thing happened," he notes. "The share of imports to the U.S. from Latin America and the Caribbean rose by 6 percentage points. That was all about freight costs.""

"This spring, America hit a historic point. With average gas prices per gallon edging toward $4, America's notoriously profligate ways started to change fast. Americans are driving less, using mass transit more, buying fewer gas guzzlers, indeed shopping less wantonly in general, and lowering their previously unshakable confidence as consumers. Suddenly, Americans are acting differently; if not exactly like Swedes, then not quite like themselves, either. It's a shift that could change the world.

And there are more changes to come. So far the price shock has triggered the most obvious consumer shifts in the United States. Europeans, already greener, are also are buffered by a stronger currency, and Asians are protected from the spiking price of oil by subsidies that control the impact on gas prices at the pump. But if oil prices continue to rise, and the subsidy dam breaks, as seems likely, the energy revolution now transforming America will spread. "We sailed through $80 a barrel," notes energy authority Daniel Yergin, author of "The Prize: The Epic Quest for Oil, Money and Power" and chairman of Cambridge Energy Research Associates. "But that doesn't mean we'll sail through $200 a barrel. That sort of price would have enormous global consequences.""


Sources:

The Coming Energy Wars (Newsweek.com)

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Name: Amit Uttamchandani
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