Why are oil prices damaging the stock market?

The topic of oil prices continue to make daily headlines, but are leaving consumers with some basic questions unanswered. Stocks are having a poor start to the year, in fact the worst in recorded history. And this could be partly due to the plunge in oil prices.

Already we have experienced a 28% reduction in crude oil prices, pulling the overall index down by 9%. These low oil prices and fuel prices have been warmly welcomed by many consumers and businesses. However, they have also been faced with criticism, with experts concerned about the low prices. If we look back to 2007-08, ironically these experts were concerned about the prices being too high.

What is the reasoning for the low prices?The answer is simple, because we are extracting so much of it.  The previous long-running high prices enabled drillers to develop and test new techniques and search for new locations, in which they succeeded. These improved oil drilling techniques increased the amount of oil available on the global market due to a higher amount of extraction.  US production remains at a steady level, despite the low prices and lifting of international sanctions. Therefore, the US stockpiles have hit their highest levels in almost 80 years. Following this, experts have predicted that global oil supply could outstrip demand by 1.5m barrels a day.

How do low prices affect the stock market?These low prices has meant that oil companies profits are rapidly plummeting, along with their shares and therefore dragging the whole market down. Large investors are also selling off shares of companies that may be affiliated with the oil industry, like certain well-known banks. Financial experts are also worried that global economic growth will be much weaker than expected as a result of the oil prices.

Are lowers prices good for the economy?Lower oil prices aren’t always a good thing, it depends on the reason why they have been lowered. If it is because new supplies have been found, then this can have a positive effect on the wider economy. The best case scenario for the economy would be for oil prices to stay positive through transferring income from the oil producer to the oil consumers. However the latest reduction in oil prices shows that global growth is slowing down as businesses and consumers in many developing countries make cutbacks on spending.  Consumers are becoming more cautious about how they are spending their money and concentrating on saving more.

What would be the ideal situation?

Experts suggest that the best price would be one that is high enough for the producers to remain in business whilst still low enough to provide real benefits to the incomes of consumers. It has also been anticipated that the oil prices will level out by the end of next year as oil companies cut back on exploration and excessive production.

Why is 'big data' a big deal?

It is common knowledge that the world has become more digitally complex over the recent years. The advanced nature of digitalisation has increased interconnectivity between people and businesses alike. Defined networks now make up the infrastructure of our technical, social and working environments. As technology grows more and more powerful, its partnership with mathematics has opened the door for ‘big data’.

Big data has been defined as “extremely large data sets that may be analysed computationally to reveal patterns, trends, and associations, especially relating to human behaviour and interactions.” Big data can become a popular and seductive concept for procurement leaders, providing them with beneficial analysis and the answers to many burning questions. Queries around to how to reduce costs, increase competitiveness and heighten profits can all be answered with the help of big data. However, leaders are still apprehensive that a computer can present such answers to crucial decisions. Therefore, in order to get the most out of big data, the users need to be educated and confident about how complex and accurate this data can be.

The ability to apply tailored tools and options allows us to create a much more complex purchasing environment and therefore aiding better outcomes. The collaboration with globalisation and technology also provides businesses with information on specialists markets and cultural differences, aiding supply chain relations. This complex marketplace analysis does not only outline purchasing behaviours but also anticipates the future strategic challenges and potential new opportunities.

In order to successfully evaluate business scenarios, it is recommended that you should focus on planning on how to execute your new procurement strategy. Having the ability to effectively comprehend and focus on complexity has provided procurement with the opportunity to enable cost-effective growth for many businesses. This successful understanding has had outstanding results for many procurement departments, making them able to quickly move into expanding markets, reduce cultural barriers and allowing for a greater overall competitive advantage.

Gaining data surrounding global market intelligence also allows leaders to identify potential procurement hot-spots and enables better decision-making to be carried out. This in-depth thinking can dramatically affect procurement, putting it at the top of its game. The results should show a positive and genuine ROI. In contemporary procurement departments, having the ability to read and analyse these complex data sets is a highly sort after skill. Partner this with the ability to visualise and outline the road ahead will be the biggest advantage for successful future procurement.

Top 5 biggest threats to the world right now

Everyday we are faced with headlines containing the word ‘threat’ or ‘crisis’, but what actually are the biggest threats that today’s world is facing?  

Prior to the World Economic Forum next week, results have been released following a review of the biggest issues that could affect the world over the next 10 years. The same analysis from last year’s survey listed state conflict and water security high up the list of global issues. However this year’s report, carried out by over 750 experts, identified all the significant environmental, geographical, political and economic threats that may worsen in the next decade.

Here is a list of the greatest risks found following the World Economic Forums research: 

1. Unemployment

Although economic issues feature far less prominently, unemployment still remains an important issue. A slow but steady economic growth reduces the likelihood of another financial crisis happening any time soon, but the likelihood of unemployment still remains high.  Consistent joblessness keeps inequality within society and causes a lot of social tension.  Yet again, the opportunity for global prosperity remains out of reach. Vast technological advancements and a slow economic growth also mean that unemployment is set to be a long term issue.

2. Migration

Headlines of the large scale migration crisis reach us on a daily basis, but this issue will expand further over the next 18 months. This involuntary but necessary mass movement of people in the past year is set to continue, overtaking other potential global risks. Records show that over 60 million refugees fled from their homes in the previous 12 months. The government and policy makers have to prioritise this crisis and support those in need.

3. Climate change

Even though migration has the greatest likelihood of persisting, climate change looks to have the greatest overall impact on the world.  The inability to confront the issue of the temperature rising means that climate change has now been classified as a Global Risk. This was outlined before the 2015 Climate Change conference in Paris. However, dealing with the effects of climate change can prove a much more complex task when compared to other issues,

4. State Conflict

The results from the survey also revealed that one of the biggest threats to affect the world in the next 10 years will be from political tensions. Such crises including that in Ukraine, Middle-East, Russia, China are all suffering from strained relations and strategic power struggles. Although these struggles are not directly violence related, these issues can cause global instability in both the present and the future.

5. Oil Prices

Oil prices have dropped to the lowest prices since 2004. This reduction in price has come as a positive shock for the global economy and has helped from consumer spending. The recent results shown that petrol may even become cheaper than bottled water in the UK. However, experts say that the quicker the price reduces the faster it will rebound. These potential higher prices could squeeze consumers and increase global inflation.

The Hidden Law That Could Be Undermining Your Business

Do you walk the walk, or talk the talk? You can’t do both, so which is the most effective for your business?

An interesting perspective from 'Yes, Minister' helps us to open our eyes to a hidden corporate culture. In the initial chapter, we are introduced to the Open Government white paper. This document provides proof that they intend to help the minister implement his stated policy goals. However, as times goes on it is revealed that this document is actually a prime example of the Law of Inverse Relevance.

"The less you intend to do about something,

the more you have to keep talking about it."

Understanding the Law of Inverse Relevance, might seem far away from what you considered the business environment to be like. However, once you surpass the confusion, it all become clears.

For example, you are scouring through a global conglomerates website and come across their well scripted mission statement.  In relation to the Law of Inverse Relevance, this statement is merely a piece of text that they want people to believe that represents their company and what they do. However this representation isn't what they’re actually doing.  Simply writing a good quality mission statement isn't enough - don’t just talk the talk.

This law provides explanation of why you are more likely to get ripped off at “Honest Harry's Hardware Store” than a basic hardware shop. Another good example is an MD stating that his workforce is “one big happy family” when the reality is it is a group of dissatisfied, unhappy workers. The Law of Inverse Relevance also explain why companies employ Ethics Officers, Diversity Policies, CSR and Environmental Standards departments. It is a purely for perception.

But don’t panic, all this talk is actually saving you money! Because it's keeping you from getting things done.

This law has brought to light some interesting revelations, including:

• Some of the most successful businesses don't have mission statements, because they know what they are aiming for.
• The top innovative businesses rely on their customers to decide whether their new products are good.
• Socially responsible businesses act responsibly from personal interest rather than for a good perceived reputation.
• The best leaders portray great leadership rather than spending time and effort claiming to be excellent leaders.

The principle is simple you either "talk the talk" or you "walk the walk."