MBS, Ltd. (Ukraine)
Zhukovskogo 22
Odessa, Ukraine 65026
Tel: +380 48 796-5208

MBS Blog

The Day to Day of Trade and Business

Posts Tagged ‘Moscow Times’

NO politics please, however…………

Wednesday, December 3rd, 2008

The unwritten rule regarding the blog here at MBS, Ltd., was that we would focus on macro & micro economic and business issues ONLY. We would not stray into the murky and dangerous waters of politics.

Having stated such, we decided to dive into the political pool (or cesspool?) with this entry. The motivation for this diversion is the topicality and relationship of the subject matter to BUSINESS in emerging markets like Eastern Europe, Russia, Georgia and Ukraine. The subject is NATO.

Nick Witney’s article in the Moscow Times (www.moscowtimes.ru) captures, dissects and congeals the truth like few others have recently.  The fact is, NATO in its current form is an obsolete, expensive and largely political club, where military and security matters are of primary importance mainly to its newest members and aspirants.

The subject of NATO is a divisive issue here in Ukraine, as well as further east.  The inclusion or exclusion of Ukraine and Georgia into the current NATO organization, will affect the economic direction of these nations.

Some argue very coherently, that a byproduct of NATO inclusion is the acceleration of political-or what we could call “philosophic integration” between new members and “the West,” as well as increased trade. The hope among the practitioners of “realpolitik” in the West, is that an expanded NATO will act as a check on Russian, as well as Asian influence and ambitions in Europe.

The main problem with this thesis is that it ignores the weakness of NATO and the shifting alliances that have resulted.

The Death of NATO

02 December 2008

By Nick Witney

NATO, whose foreign ministers will meet Tuesday and Wednesday, is dying. Death, of course, comes to all living things. And, as NATO approaches its 60th birthday next spring, there seems no immediate urgency about writing its obituary; 60-year-olds may reasonably look forward to another decade — perhaps two or even three — of active and productive life. But perhaps it is now time for some discrete reflection on the fact that “the old man” will not always be with us.

Human institutions, like human beings, can collapse with surprising speed once they have outlived their usefulness. The dramatic dissolution of the Soviet Union stands as a reminder of what can happen to organizations when doubts take hold as to whether they still serve any real interests other than those of their own apparatchiks — and how suddenly such doubts can grow when they attempt to convert themselves into something they are not. 

NATO has, of course, shown remarkable tenacity. It should have disappeared when the Soviet Union collapsed and the Warsaw Pact evaporated because its job was done. But then came the Balkan crises of the 1990s, culminating in the realization that only U.S. military power could put a stop to Serbian President Slobodan Milosevic’s ethnic cleansing of Kosovo. And then came the terrorist attacks of Sept. 11, 2001, and this kept NATO in business, spreading its activities to Afghanistan. 

But NATO’s repeated demonstrations of resilience should not blind us to the fact that it no longer provides a healthy basis for the transatlantic security relationship. As long as NATO’s raison d’etre was to keep the Russians out and the United States in, NATO’s internal dynamic of U.S. leadership and European obeisance was both inevitable and appropriate. 

This unbalanced relationship still has advantages for both parties. Americans may find their European allies less pliable than before, but they can at least count on the absence of any serious alternatives for what NATO should become or what it should do. Europeans can continue to avoid responsibility for their own security and to invoke the catechism of “NATO — the cornerstone of our security” as a substitute for serious strategic thought. 

But each now resents the behavior of the other. Americans find their patience tried by Europeans who are free with their advice and criticism, yet reluctant to shoulder risks. Moreover, the United States learned from the Kosovo experience of “war by committee” to distrust NATO as a place to run operations, and now Afghanistan highlights the organization’s limitations as a mechanism for generating force contributions. 

As for Europeans, they are unhappy about pressure to participate in a U.S.-led “global war on terror” that they regard as dangerous and misconceived. They are also averse to policies seemingly designed to antagonize their more difficult neighbors like Russia and the Islamic world. 

So what is to be done? None of the ideas for another dose of NATO rejuvenation looks like the answer. All the talk of an improved NATO-European Union partnership is mainly wasted breath. “Intensified strategic dialogue in Brussels,” in practice, boils down to the chilling specter of interminable joint committee meetings at which one nation’s ambassador to NATO explains his government’s position to a compatriot diplomat who is accredited to the EU and vice-versa. 

The problem is not institutional relationships between the two organizations — except in the important but narrow case of Turkey and Cyprus, which remain bent on pursuing their bilateral feud without regard to the real risks to the personnel of their allies and partners deployed in Afghanistan and Kosovo. The real problem is relations between the United States and European countries, 21 of which belong to both organizations. 

Nor does the answer lie in developing an EU “caucus” within NATO. The 1990s concept of a “European Defense Identity” within NATO proved to be unviable. Since then, expansion of the alliance and proliferation of NATO “partners” has made the idea of a special collective role for EU members all the more improbable. A double layer of decision-making would only cause an already ponderous organization to seize up. 

There is nothing more dramatic to be done than to focus on upgrading the EU-U.S. strategic dialogue. The annual summits need to be made more substantial, and their focus needs to shift from transatlantic, bilateral issues to aligning EU and U.S. global policies and actions. President-elect Barack Obama should keep an eye on the calendar of the European Council, which brings the EU presidents and prime ministers together four times a year, and solicit an occasional invitation. The U.S. mission to the EU should be scaled up, and the EU representation in Washington needs to become a proper embassy. The more seriously the Americans show that they are willing to take the EU collectively, the more seriously the Europeans will take themselves. 

Winston Churchill once remarked that you could always count on the Americans to do the right thing — after having tried all the alternatives. In the same way, the Europeans will eventually find themselves having to speak with one voice and act as one body in the wider world, if only because a globalized world will not allow them the luxury of doing anything else. As Charles de Gaulle forecasted: “It is not any European statesman who will unite Europe. Europe will be united by the Chinese.” Only collectively can Europeans be effective contributors to global security or achieve a robust transatlantic security partnership. 

As NATO enters its twilight years, the United States should encourage the EU to grow into its global responsibilities. Despite all their differences and mutual dissatisfactions, Europe and the United States know that their relationship is as close to being best friends as they are likely to see for the foreseeable future. 

Nick Witney, former chief executive of the European Defense Agency, is a senior policy fellow with the European Council on Foreign Relations. © Project Syndicate

 

 

 

Anton Olff

Technorati Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Recessionary Marketing

Tuesday, November 25th, 2008

As I wrote on 24 November 2008, the recession in emerging markets provides opportunities for companies to promote, establish, re-establish, and capture market share. The key is looking beyond the short term-which is painful for almost everyone at this moment- and focus on the long haul.

John Rose writes today in “The Moscow Times:” The looming crisis in Russia will cause many marketers to re-evaluate budgets, strategies and relationships. Although there may be many challenges ahead for companies as they face the prospect of slower growth and pressure on margins, there is a silver lining in that black cloud. During the last financial crisis in Russia, a decade ago, some companies took advantage of falling media costs and slow-to-react competition to capture market share and set the stage for strong future earnings.

There are three main opportunities for marketing during a recession.

Opportunity No. 1: Customers generally re-evaluate their brand loyalties during a recession. It is no longer business as usual. Many people will be looking for greater value as their buying power weakens. A recession breaks down barriers that make consumers otherwise resistant to new brand messages. This creates an opportunity for brands that have otherwise been unable to capture significant market share in a crowded category or one dominated by a larger competitor. If you are the No. 2, 3 or 4 brand in your market category and you have a good story to tell, this could be your best opportunity in years to relate your story and receive a positive reception. Reacting to the last financial crisis, Mobile TeleSystems continued advertising, while its competitor Beeline retreated. As a result, MTS substantially raised its subscriber base and overtook, Beeline, to become the top Russian mobile service provider. And MTS still retains the No. 1 spot today, despite Beeline’s ubiquitous advertising campaign.

 
 

Opportunity No. 2: Many companies will take a wait-and-see attitude during a recession. They will freeze or cut marketing budgets until they have a clearer picture of what lies ahead. This will have the effect of reducing media costs. The smart companies will become more aggressive while their competitors have their heads in the sand, and they can get more for their marketing expenditures. Now is the time to be creative and grab some attention for your company and brand. Establish yourself as a leader by staying visible through the media, promotion and public relations. Show the world you have a resilient brand and a plan for a sustainable future. Experience shows that market share gained during a recession will return dividends when the economy rebounds. Wimm-Bill-Dann continued to promote and expand aggressively during the last crisis, filling a vacuum left by international competitors, who were still licking their wounds. Today, they are the leading Russian producer of dairy and beverage products. Saint Springs is another example of a company that continued to expand its marketing programs while the market was still contracting. After becoming the leader in the bottled water segment, it was acquired by Nestle Waters in 2002.

Opportunity No. 3: Customers expect a deal during a recession. People know companies are under pressure and will expect them to react to the recession with superior products, special offers and better service to win their business or get them to buy. You don’t want to disappoint them. But unless you run a volume business where you plan to always be the price leader, you shouldn’t feel obliged to lower your prices to win business during a recession. Sure, discounts will move inventory today, but it may come at a high cost in the future through the loss of brand value. The key is to give your customers more rather than charge them less. Value is most important, not price. Expand product features, extend warranties, provide special financing terms and offer enticing rewards for becoming loyal to your superior brand. Electronics retailer M-Video owes much of its success to creative promotions it began during the last crisis to lure customers and build loyalty, which is a practice they continue to this day. Currently, together with Sony Ericsson, they are giving away a card that provides free cinema tickets for one year when you buy select mobile phones. Their customers will be escaping the Russian recession to Hollywood — at least in their imaginations — and will no doubt reward the company with loyalty and future purchases.

It’s easier, of course, to follow the market and do what the other guys are doing during a crisis — that is, very little. But with a better understanding of the short window of opportunity brought on by a crisis — plus a little chutzpah — your company could use this recession to build a stronger brand and a more profitable business in the near future, when Russia bounces back.

Anton Olff


Technorati Tags: , , , , , , ,