Published in June 2007

Breaking Old Habits
By David McNutt

A lighter look at business and the economy.

    Many people I work with know that I have issues with many terms or phrases that people use in normal business conversation. It bothers me to hear perfectly smart business- people start a sentence with “at the end of the day,” or “think outside the box” or the tremendously overused favorite, “going forward.” These overused word clumps are the spoken equivalent of fingernails across a blackboard, the result of poor speech habits; just as poor as, like, saying, like, the word “like” in between, like, every other, like, word.
    There are, of course, many other phrases that are overused in business, as well. One that I’m becoming particularly tired of hearing is “global economy.” That phrase is a marriage between a geographical adjective and a financial noun in an attempt to broaden the scope and raise the level of importance of the noun. But, really, the phrase is internally redundant, carrying the same redundancy as phrases such as “universal truth” or “absolute finality.” The term simply should be “the economy”; we don’t have to identify it as “global,” because it already is.
    “Global” was added by some yahoo because he observed that the people of the world thought of themselves as smaller, unconnected groups, and never spent much time thinking or caring about other different groups until the other groups began selling products to, or wanting the resources from, their group. This commerce between peoples had very early beginnings, but took on energy in the 1800s when, according to economic historians, the progressive substitution of minerals for plants, as the world’s source of energy and raw materials, transformed the dynamics of early capitalism [no, I’m not providing a footnote].
    Suddenly, we had vast new sources of energy and raw materials, freeing the economy from the local resource constraints of the old, agri-based economy. Cheaper, more abundant energy; dramatic reductions in the costs of transportation; and an increasingly wider volume and range of goods now could enter long-distance and international trade channels. These developments created the basis for an international division of labor that today is clear: The huge economy connects us all. It is, by definition, “global.”
    For most of us, detailed economic events are way down our list of discussion topics over coffee. But many details can affect our businesses, now and over time.
    Take, for example, the direction trend of a simple exchange rate. For importers or distributors buying products in a currency outside the country, a change in the exchange rate can affect overall prices and margins. If margins are squeezed too tightly, it pushes prices up. If prices rise too much, buyers may substitute products and sales will fall. Case in point: The exchange rate between the US dollar and the British pound, although it has fluctuated, is the weakest today that it has been in 26 years. Over a three-year period, it dropped 22% and has stayed there for almost two years. Our dollar is worth around 50 cents in England.
    In the UK, this rapid Sterling depreciation boosted cost-price margins for manufacturers while dramatically reducing margins for importers in the US. A study performed by the Federal Reserve showed that, during a similar depreciation, prices remained relatively the same in the UK, while rising prices characterized the US for British goods. Same economy, two local areas, tightly connected.
    Many professional audio manufacturers are located in the US and Britain, as well as other parts of the EU. These companies manage currency fluctuations in different ways. Some operate currency-trading hedge funds in an attempt to offset losses in one currency by trading in another currency. Other companies simply report the losses or gains from these market changes on their financial statements, win or lose.
    Either way, the long-term effect between the pound, the dollar and the Euro can produce inflationary effects in our local sector of the globe. Seeing these long-term scenarios may help an integrator plan his own buying and pricing, knowing that pressures on manufacturer and distributor margins ultimately will reach the integration community.
    Well, I began this piece with my aggravation with poor speech habits among perfectly bright businesspeople and got sidetracked. Yes, good habits in business speech are important. However, it is also important to understand how our economy connects us all because, at the end of the day, we all are part of the global economy. Going forward, we must work together to help raise the standard of living of people everywhere. So, let’s drop the “global” identifier and try to think outside the box.



A member of Sound & Communications’ Technical Council, David McNutt has 35 years of experience, covering live sound engineering, marketing for well-known manufacturers, audio system design and consultation, and fixed installation contracting. McNutt holds a Masters in Telecommunications and an MBA in Marketing and Strategy. He can be reached at dmcnutt@testa.com.

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