Simplified business in e-Markets

The common adage in investing boils down to maximizing returns at the shortest possible time. Here, the terms "returns" and "time" are relative, depending on pre-defined objectives tied to the concept of risks and rewards. Yet, so-called "noises" within the investing terrain are best winnowed out when dissemination of accurate information becomes accessible. Free-flowing exchanges such as stock markets are among key examples, especially since these make available an identified number of shares that can be purchased and/or sold at prices which buyers and sellers could agree on. When the concept of "valuation" sets in, however, "cheapness" is best verified when benchmarked with certain guidelines. Some fund managers refer to historical price trends, others base their decisions on targeted entry and exit range.

Intelligent investing through adequate research-related features, allow investors to sift through comparative industry data, specifically those that are more appropriate within selected markets. If you’re buying into listed infrastructure/construction firms, for example, most take time sifting through the size and quality of an enterprise’s order book, and the pace at which receivables are collected. For those linked within financial services, the common utilized approach is to browse through price-to-book value parameters when mergers and acquisitions set in, among others. Property stocks are commonly appraised relative to their discount vis-à-vis computed net asset values (or market value of properties net of acquisition costs), while cash flows that can be derived from identified ore reserves are highlighted when buying into commodity and/or exploration/mineral-based firms. While numerous parameters can be outlined to expound this point, free-flowing markets thrive on simplified procedures since a common denominator is used for equity participation.

In advanced markets, regulators progressed providing a venue where "futures contracts" can be traded electronically. Rather than buying items on the spot, investors are accorded options to purchase or sell securities set to be delivered within an identified timeframe (e.g., a September order can be traded for delivery/settlement in October). Fund managers who believe prices would rise as the fourth quarter spending season approaches may be inclined to buy now, while others tilt in favor of macro-related variables (e.g., deceleration in perceived geopolitical risks in the Middle East) that may inhibit prospective capital gains. Either way, these may, at one time, skew for a buyer-or seller-driven market, with the end objective of obtaining a win-win approach to the requirement being sought.

In procurement, models vary depending on an enterprise’s industry affiliation, while others rely on their accustomed business practices. Challenges exist in defining "quality," as it varies based on a buying company’s use for a certain item and associated parameters such as payment terms, operations’ sensitivity relative to items being procured, and interrelated operation dependency, among others. Surprisingly, several leaders have taken a pro-active step in transforming business operations to become highly efficient, by upholding key directions in simplifying procedures that would help raise the bar in terms of surpassing bottomline targets.

With technology fast reshaping the business terrain, greater value-adds are achieved when clerical procedures are minimized or even outsourced. E-Marketplaces have contributed to this call, enabling purchasers to do critical tasks that set the tone for accurate forecasting to help minimize risks, and prepare for necessary contingencies as growing competition takes place within the business environment. Within SourcePilipinas, parameters exist that ensure supplier-participants are adequately informed on item specifications and remove possible "biases" that might get in the way within the awarding route. Similarly, suppliers benefit as the selling process is shortened online, reinforcing inventory planning procedures. Financial planners benefit as comparative analysts are better formulated to account for price differentials within various timeframes tied to the negotiation process, enabling them to assess conditions as to when prospective re-negotiations could take place.

Whether one intends to venture into having its exclusive e-Marketplace (especially those that have programmed budgets) or feels the importance of participating in one (for those which may not necessarily have the budget), information flow is fortified when joining these exchanges. Several companies have taken on this simplistic approach – and have reaped good results.

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Grace Crisostomo-Cerdenia is the general manager of SourcePilipinas.com and COO of 2TradeAsia. For comments or queries, e-mail her at [email protected].