THE SOCIETY OF THE TWENTY-FIRST CENTURY (Re-posted)

Dr. John Psarouthakis, Executive Editor www.BusinessThinker.com;  Distinguished Visiting Fellow, Institute for Advanced Studies in the Humanities, University of Edinburgh, Scotland (2011-2013).
CV details: click on  http://bit.ly/2sXvygl

Unfortunately, we have entered a century in which many of the old cultures and societies that have been successful under the old technologies and cultural norms have fallen by the wayside.   We witness already  dramatic shifts in economic wealth, both within and across nation states.

There is still some debate about how the new changes in technology will affect some of the more prevalent twentieth century ideologies.   For example, will the new technologies and associated cultural changes support or retard the growth of the liberal democracies? Or, will the vision of George Orwell be realized, with a technology-induced return to a world-wide authoritarian state? Obviously, all the data are not in, and will not be in for another seventy-five years or so. The early returns, however, suggest that many of the new technologies seem to enforce democratic values and practices.   For example, one of the critical features of using information technologies and computerized systems is the rapid and transparent exchange of information across settings, cities, and nations.   This is highly compatible with democratic systems and values. However, we have also witnessed that China has been able to have an effective state control over these advanced technologies so that has been little if any democratization and is some cases it could be argued that we have seen a decrease in democratization! The Economist in a recent article has concluded that the democratization effects on China by technology could have been overestimated.

On the other hand, some of the new technologies will reinforce distinctions between individuals and classes of people, thus perhaps leading to a more hierarchical and elitist structure of society.   Moreover, the ability of the new technologies to successfully manage and facilitate diversity of tastes and markets, may lead to a fragmentation of societies such that it will be difficult to sustain larger goals and visions.   For example, it is unclear whether a television society can really sustain a long-term mission, or goal, or struggle.

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WARNING FROM AN ENTREPRENEUR OF THE YEAR


Dr. John Psarouthakis
, Executive editor www.BusinessThinker.com and entrepreneur of the year awardee.

You probably relish the challenge of seeing how far and how fast you can grow. Growth can be an exhilarating experience and public recognition of growth accomplishments abound. Most honor rolls of business, such as the Fortune 500 and Inc. 500 base selection on sales or sales growth.

But beware. So much hoopla accompanies rapid sales growth that the question of profitability may go unexamined until major problems set in. My experience confirms the critical point that growth alone does not guarantee profitability or long-term survival–and can actually spell disaster if improperly managed.

The case of an auto parts supplier entrepreneur highlights this point. At one point in his firm’s meteoric growth, he received many local, state, and national awards honoring his accomplishments, including Entrepreneur of the Year.

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VALUING AND PRICING THE COMPANY (Re-posted)

Dr. John Psarouthakis, Founder and former CEO, JPIndusries,Inc., a Fortune 500 industrial corporation. Publisher of www.BusinessThinker.com

Before you can begin final negotiations on price, you need to determine the value of the company. You can use several techniques to value a company.  We recommend the discounted cash flow value approach as the most accurate method although other approaches are useful in preliminary stages of your search to give you a sense of the range of the estimated price.

Timing and Scope of the Valuation Process

An initial calculation of valuation can be done on a fairly mechanical basis, based on information provided to you by the seller using established formulae and guidelines.  However, determining the accuracy of the financial data that the seller provides you is an on-going part of the evaluation process that should take place throughout preliminary and formal due diligence up to the closing.  Thus valuation takes place along with negotiations throughout the deal-making process.  One of the key objectives of due diligence is to surface any information that might affect the accurate valuation of the company. If your team does not have a financial auditor you should hire one to verify the accuracy of the historical data.

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