Digital Nerves

Take Risks to Export

New Energy Deals

E-Commerce and the Arts

Corrections or additions?

These articles by Melinda Sherwood and Teena Chandy were published in U.S. 1 Newspaper on June 16, 1999.

All rights reserved.

Selling Our Heritage

For all the differences that exist between Princeton

and Trenton, the two towns have this much in common: neither has a

well-defined plan for drawing tourists. This is a naive mistake, says

Peggy Wall, president and CEO of the Annapolis Conference and

Visitors Bureau. "If the tourist business is doing well, everyone’s

business is lifted," she says.

Heritage tourism, which draws in the babyboomer generation, is among

the most lucrative areas of tourism. "Babyboomers are the most-traveled

segment of the population," Wall says. "They’ve been traveling

all their lives. They want experience and education and they want

to be able to find it without working hard because they have little

time to do it in," she says.

"Heritage Tourism: There’s money in our history," will be

the topic at the Mercer County chamber on Thursday, June 17, at 11

a.m. at the Trenton Country Club. Wall will share her experience coordinating

a large-scale, successful effort between business and historical groups

to revitalize the Annapolis economy. Cost: $30. Call 609-393-4143.

Wall, a native of McKeesport, Pennsylvania, earned a BA in political

science from Catholic University and a master’s in urban and regional

planning from Cornell. Before moving to Annapolis, she created and

operated the Inn at Sunderland, a 10-room bed and breakfast in Vermont.

Since joining the Annapolis Visitors Bureau in 1993, she has expanded

the annual budget from $170,000 to $1 million.

Most of the new income came from increased hotel taxes, which Wall

says hotel owners all supported. "Hotels actually asked to have

the lodging tax increase on the premise that one half of the increase

would go to the bureau," she says. It was viewed as an investment

that was sure to pay off.

There are 7,500 hotel rooms in the Annapolis area. In Trenton there

are none. Wall works with a staff of eight and dedicates a large effort

to marketing and destination sales. Trenton has a two-person staff

and a brochure.

Princeton has no organization dedicated solely to coordinating tourism.

Ramar Inc., a private event and party planning firm at 179 Nassau

Street, is the acting Princeton Visitors Bureau. It mainly siphons

calls to the Princeton Chamber, which distributes brochures.

"My understanding is that there are resources and history there

and nobody is working together and identifying themes," Wall says.

The absence of a hotel in Trenton is an anathema to her. "I was

very surprised to hear that there was no hotel," she says. "The

greatest single addition to the economic impact is to make a person’s

stay longer. You’ve invested in someone to get them there one day,

and it costs less to keep them there on the second day."

Local businesses need to team up with historical and cultural organizations,

says Wall. For businesses who want to get off to a start, she suggests

the following:

Be neighborly. Find out what’s going on in the community,

says Wall, and form partnerships. When you’re ready, take it one step

further: coordinate strategic hours of opening and closing and set

pre-paid prices — anything to make it easier for the tourist.

Use the storefront. Wall suggests advertising area events

on the storefront as well.

Think regionally. Work with the existing visitor bureau

to spread the word about your business — both in print and on

the web.

The idea is to bring people to you, Wall says. "Heritage

tourists think: `I don’t have to work to go to Mercer County because

Mercer County wants me to come. They’ve made my decision for me.’"

Whether you believe Mercer County has something to offer tourists

is hardly the point. As Wall puts it: "Palm Springs markets the

desert so I guess anything can be sold."

Melinda Sherwood

Top Of Page
Digital Nerves

You won’t find it in a hotel room drawer, but "Business

@ The Speed of Thought" (Warner Books, 1999), the best-selling

book by Bill Gates, is rapidly becoming the bible of business.

Gates himself has already become a sort of Information Age prophet,

whose vision of business in the 21st century is affecting CEOs, entrepreneurs,

and consultants like Henry Lubas, director of Amper Consulting.

"I say it’s a bible only because everyone thinks Gates is the

definitive authority on technology," he says. "He’s proposing

uses of technology that are right on."

Lubas will discuss some of those concepts in "Implementing a Digital

Nervous System" on Thursday, June 24, at 8:30 a.m. at Pine Manor

in Edison. The sermon is free. Call Amper Consulting at 732-287-7849.

Lubas received a BS in accounting/computer science at Boston College

in 1981 before joining Arthur Young (of Ernst & Young) as one of the

first computer auditors. He is a CPA and received an MBA from New

York University in 1991. Before joining Amper — a division of

Amper, Politziner & Mattia — he worked for Pfizer.

The crucial relationship between business and technology was obvious

to Lubas early on. "The biggest reason I went into computers was

because I was interested in using technology as a competitive weapon.

It was something I heard about in 1984: using technology in innovative

ways to give companies true competitive advantage," he says.

Only in the past few years, Lubas says, have conditions been ripe

for a full-blown technological revolution. "A lot of companies

are striving to use technology but the problem is that historically

it’s been too expensive to deliver," he says. "Now it’s cheaper.

Software applications are more powerful and are cost effective. Even

small businesses can use it to garner competitive advantages. Gates’

book highlights a lot of the opportunities out there."

As Gates writes: "In many companies the middle managers can be

overwhelmed by day-to-day problems and not have information they need

to fix them. They may have reams of data in front of them — literally

reams of paper reports — that are difficult to analyze or correlate

with data in other reports. A sign of a good digital nervous system

is that you have middle managers empowered by the flow of specific,

actionable information. They should be seeing their sales numbers,

expense breakdowns, vendor and contractor costs, and the status of

major projects online, in a form that invites analysis as well as

coordination with other people."

If you want fulfill the Gatesian vision, Lubas suggests doing the

following:

Figure out where you want to go. This includes very specific

goals and a complete inventory of your company’s strengths and weaknesses.

Don’t invest in underpowered technology. A company should

first determine whether its problem pertains to software issues, infrastructure

or hardware needs. "We’ll get into a company that says `I need

accounting software,’ and we’re hesitant to do that until we get into

a real sense of where the company is headed," Lubas says.

Involve people in the process. "The worst thing you

can do is make decisions without consulting the people whose lives

you’re affecting," Lubas says. "You want people to buy into

the concept, or a lot of times you end up with failed projects."

The earlier you get people involved in the transition to digital,

the better off you are, he says.

In fact, involving employees is crucial. After all, the Information

Age is essentially about converting human intelligence to artificial

intelligence. "The concept of Business @ The Speed of Thought

is to use technology that will replace what was usually done by human

thought," says Lubas.

This may have "worker displacement" written all over it, but

Lubas assures us that there will be plenty of room for everyone in

the 21st century economy. People who were previously involved in processing

transactions, he says, will now become "value-added" members

of the organization. "Instead of circling invoices that need to

be shipped out, now you have tools at your disposal to spot trends

and analyze," he says. "Businesses need to adapt new technology

and individuals need to adapt."

— Melinda Sherwood

Top Of Page
Take Risks to Export

The global business environment has never been better,

says Beverly Pegnato of Pegnato International. "Trade agreements

like the NAFTA (North American Free Trade Agreement) and the WTO (World

Trade Organization) have brought down a lot of trade barriers, and

trade blocks like the European Union have made it easier for companies

to make an entry into foreign markets."

Foreign companies are not ignoring America either, says Pegnato. "This

is a great place, a huge market, and their entry has increased the

competition within America. If you’re not part of the global village,

you won’t survive." Many start-up American companies even find

it more profitable to enter European markets first, says Pegnato.

"It really depends on your product. Right from the initial stages

you should spend some time and energy exploring the possibilities

of doing business outside the country." Pegnato will conduct the

workshop, "Are You Competing or Just Participating in Exports,"

on Tuesday, June 22, at 10 a.m. at the Business Owners Institute in

Bridgewater. The workshop is free. Call 908-526-1500.

Pegnato majored in accounting at Rutgers University, Class of 1977,

and has been managing international business and finance for more

than two decades both in the U.S. and abroad. Five years ago in Nutley

she founded her consulting company to help businesses develop export

strategies.

The United States government and foreign governments offer many incentives

for foreign trade that companies do not take advantage of, says Pegnato.

"The tax incentives for export businesses sponsored by the Department

of Commerce put into law in 1984 helps small businesses make more

money by paying fewer taxes." Foreign governments encourage investors

with incentives like the value added tax, which help you recover a

percentage — from 8 percent to 25 percent — of the money you

invest, says Pegnato. "For example if you go to Germany to do

a trade show and spend $100,000, you can recover about $15,000, which

is a significant amount of money."

At the workshop Pegnato will focus on market opportunities; financial

issues, such as pricing, foreign exchange, and tax-related issues;

and regulatory issues, including customs, local laws, and labor issues.

"Each of these issues are interdependent and each of them would

impact each other," says Pegnato. "You have to do the research

to find out if your widget has a market in that country, you have

to make a price for it so you can make a profit, and then you have

to deal with the regulatory issues to get your widget in there."

Approaches differ. A low-risk method would be to go through an export

management company or an export trading company, but this method has

low rewards, says Pegnato. "You don’t encounter the foreign buyer

or market directly, which reduces risk, but your lack of market intelligence

and market knowledge also precludes you from expanding and exploring

the full potential of that market."

On the other hand, says Pegnato, "you have multinational companies

that do their purchasing in one country, manufacturing in another,

warehousing in yet another country, and selling into a totally different

country. It is a complex business arrangement fraught with high risks,

but the rewards can be very high."

Pegnato will also cover foreign exchange issues. "You can lose

out on a good market opportunity by not being foreign exchange smart,"

says Pegnato. American companies may have to deal with currencies

other than the dollar to gain entry into new markets. "There are

ways you can capitalize on issues related to foreign exchange. When

you are dealing with a foreign buyer you have to understand what side

of the table the risk is on and develop strategies to manage the risk

better."

Doing business in Europe became much easier after the formation of

the European Union, says Pegnato. "Before the EU you had to deal

with each and every country’s rules. Now if you have entered one country,

you have entered every country." There are differences in each

country, she adds, "but there has been a real push to harmonize,

normalize, and simplify rules and regulations. The Euro will allow

countries to function in one currency, and things you had to do 10

times, you will only have to do once."

Pegnato encourages businesses to consider expanding internationally.

"But plan, plan, plan before you do. Do as much research before

you invest, or you might find yourself in a deep dark hole." People

who have experience in exporting can be wonderful resources, says

Pegnato. "There is a wealth of information here in the U.S., both

from governmental and non-governmental sources."

Do not underestimate your foreign counterparts, and do not ignore

the cultural impact, cautions Pegnato. "Just because they don’t

speak English does not mean they do not have the ability to do business.

Culture cannot be easily analyzed or categorized, it is far more pervasive

and underlined and affects everything from the way you do business

to the relationships that you form."

Culture is embedded in laws and mores, and it forms part of the fabric

of a country’s legal system, says Pegnato. "For example, biotechnology

products have a tough time making an entry in Europe. A lot of Europe

has banned genetically engineered agricultural products because it

is contrary to their historical view of life."

Most American businesses seek out foreign distributors, and 70 to

80 percent of all initial relationships fail for cultural reasons,

says Pegnato. She cites the example of an American company that terminated

a longstanding relationship with a Japanese distributor and had to

face the consequences. The distributor took his case to the courts,

the finance ministry intervened, and the company could not export

any of its products to Japan until the problem was resolved.

"The American company thought they could change a long-standing

relationship just like that," says Pegnato. "You can do that

to a guy in Pennsylvania but it might not work in another country.

Americans are used to changing people or changing banks when they

feel like it but it is different in other countries," she says.

"You’re in it to do business, not to have legal problems, and

financial issues. You will run the risk of putting yourself out of

business if you do. If you are going to Japan to be a rabble rouser

that is different, but otherwise that is not your goal."

Be aware, and consider the culture of the country and translate that

into your business dealings with them, says Pegnato. "The American

perspective does not prevail all over the world. Think of that as

your premise and you will do well."

— Teena Chandy

Top Of Page
New Energy Deals

Starting August 1, says Frederick F. Butler, businesses

can get energized in new ways. "There lots of ways to do new and

exciting things and save money on energy bills." Butler, a Democrat,

is the just-appointed commissioner of the Board of Public Utilities,

and he will speak to the Middlesex Chamber on Friday, June 18, at

8 a.m. at the DeVry Institute on Route 1 North.

In a panel entitled "Energy Deregulation: what will it mean for

you and your business," Butler will be joined by John S. Wisniewski,

an assemblyman from the 19th district, and John R. Murray, associate

director of facilities operations for Bristol-Myers Squibb. Murray

is also the energy council chairman of the New Jersey Business and

Industry Association. For $15 reservations, call 732-821-1700.

The New Jersey Builders Association will hear another take on energy

deregulation, this one from GPU Energy, on Thursday, June 17, at 7:30

p.m. at the Eatontown Sheraton. Frank Migneco, supervisor of

residential programs, will give a morning-long presentation on energy,

Y2k compliance, and new service issues. For the invited builder members,

the breakfast is free. Call Sharon Fullagar at 973-455-8389.

Only good things will happen with deregulation, says Butler: "Mandated

rate reductions will kick in on Saturday, August 1, exactly."

In Public Service Electric & Gas territory, all customers will get

a 5 percent reduction at 12:01 a.m. that day. Starting next year,

the first part of the gross receipts and franchise tax kicks in, and

that will add another 5 percent tax reduction. By year three of this

four-year transition period, the total rate reduction on public service

will go from 5 percent to 13.6 percent and then to 18.6 percent.

Everybody wants to compare energy changes to the telephone deregulation,

but that equates apples to oranges, insists Butler: "We are not

going to make the same mistakes again. It will be much more controlled."

No slamming. For instance, energy clients will not need

to worry about arbitrary changing of a customer’s service without

permission. Slamming was and is a very big problem for telephone companies,

but the board is taking preemptive steps against it. "They would

be fined $10,000 per day, per slam," says Butler.

No operating without a license. Unlike telephone companies,

utility companies cannot operate without a state license. If they

misbehave, says Butler, "we can pull the license."

Less complicated bills. Energy bills will be easy, compared

to telephone bills, says Butler.

If your favorite charity has been tapping PSE&G largesse, don’t

worry that the pipeline will dry up, says Butler. The utility may

need to tighten its belt, "but it won’t come out of the charity

work. That is as much public relations for them as it is charity.

And a new societal benefits charge will be in the law."

The good news for the energy companies is that they will be able to

sell energy in the rest of New Jersey and will be allowed to offer

other competitive services, such as appliance repair contracts.

The bad news for the small contractor is that the energy firms are

now allowed to offer appliance repair contracts. "That is driving

some of the small contractors bananas, but hopefully the consumer

is better off," says Butler.

The good news for business clients is that they will be able to shop

for the energy. "They can purchase the kilowatt hours from whoever

can give the better price," says Butler, "or they can pay

more to get green energy. If enough people switch to green energy

we will all benefit. More windmills will go up. If a coal plant in

Pennsylvania sees its revenues down because people are using green

energy, maybe they will take one of their coal plants out of service."

A native of Linden, where his father was a purchasing agent and his

mother a legal secretary, Butler studied at Villanova, Class of 1968,

and has a master’s degree in international studies from Johns Hopkins.

He taught in the Washington, D.C., public schools, pursued PhD studies

in political science at Rutgers, directed capital budgeting for the

state treasury department, and taught at Rutgers’ Eagleton Institute.

Along the way he has sung bass for Princeton Pro Musica, held elective

office in Dunellen and Plainsboro, and he is now vice chairman of

the Plainsboro planning board.

After 17 years on the staff of the New Jersey General Assembly Democratic

office, most recently as executive director, Butler announced his

resignation. Almost immediately, Governor Whitman put his name up

for the board job; he was nominated in February and sworn in on March.

"As a commissioner I am one of three decision makers, and it is

little less hectic," says Butler. "In the legislature we covered

A to Z, agriculture through zoos. I was staff. Now I have

staff."

Top Of Page
E-Commerce and the Arts

Students seeking a masters degree in Business Administration

at the Rutgers Graduate School of Management have two new options

— E-commerce and Arts Management. "Electronic commerce is

a rapidly expanding field," says Howard Tuckman, dean. "Tomorrow’s

managers need to understand the technology of E-commerce, its potential

impact on the way business activities are managed, and apply traditional

management disciplines to it."

The new concentration in E-commerce requires course work in Internet

technology, and electronic commerce and marketing. A new course will

be offered next fall in the development of a virtual business.

"As the New Jersey Performing Arts Center broadens its own program,

the demand for well-trained arts managers has grown," says Pat

Kettenring, director of the school’s Business and the Arts Program.

"There simply aren’t enough qualified graduates to meet that demand."

The 12-credit concentration, the first of its kind in the state, is

for persons interested in a management career in the non-for-profit

sector of the performing and fine arts.

Other existing MBA concentrations include computers and information

systems, entrepreneurial management, finance, human resources management,

international business, marketing, professional accounting, and strategic

management. Call the Department of Management at 973-353-5656.

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