1. 1 Macroeconomic Correlates of Organizational Growth Rupert Rhodd, PhD William Lawrence, DBA

2. Outline of Presentation 1.Introduction 2.Economic Growth 3.Organizational Growth 4.A Look at the Data a.Macroeconomic Variables b.Implications from Correlation Analysis 5.Where do we go from Here? 2

3. A Crucial Question 3 Do certain macroeconomic variables promote or impede organizational growth in Jamaica?

4. Real GDP Growth 4

5. 5 JAMAICA GDP BY SECTOR 19762011 Agriculture, Forestry, Fishery7.9% 5.8% Mining and Quarrying8.7% 1.9% Manufacturing and Processing17.5%8.1% Electricity and Water1.2%3.5% Construction and Installation7.1%7.8% Distributive (Wholesale and Retailing)15.7%18.9% Hotels and Restaurants 6.1% Transport, Storage, and Communication7.0%11.8% Financing and Insurance services4.4%11.7% Real Estate and Business services8.9%10.1% Government services14.9%12.3% Other services6.5%7.2% Household and Private/Non-Profit Institutions1.9% Less imputed charges1.7%5.2% Total Contribution100%

6. Average Inflation rate 6

7. Exchange Rate Variable 7

8. Interest Rates: 6 Month T-Bills & Lending Rate 8

9. 9  Main Market:  Firms listed= 84  Firms reporting losses= 49  Firms recovered= 25  Corporate growth strategies:  Product diversification= 47  Mergers/Acquisitions= 23  International Expansion= 12  Vertical Integration= 8 JAMAICA STOCK EXCHANGE (1969-2011)

10. Case Studies Scotia Group (BNS) Desnoes & Geddes (DG) Gleaner (GLNR) Year started188919181834 Majority OwnersCanadaUnited KingdomJamaica Business areaFinancial servicesBeveragesMass media Growth StrategyDiversificationExport expansionM & A 10

11. Company Growth Orientation DOMESTICINTERNATIONAL ORGANIC BNS DG GLNR DG GLNR INORGANIC BNS DG GLNR 11

12. CHANGING BUSINESS PORTFOLIOS 12  1985 o BNS – banking o DG – brewed products, soft drinks, wines, spirits, printing o GLNR – newspapers, forms, books  1990 o BNS – banking o DG – brewed products, soft drinks, wines, spirits, printing, exporters of agri products o GLNR – newspapers, forms, books, Gleaner UK  1995 o BNS – banking, building society o DG – brewed products, soft drinks, wines, spirits, printing, exporters of agri products o GLNR - newspapers, forms, books, Gleaner UK, Gleaner N.A.  2000 o BNS - banking, building society, insurance o DG – brewed products o GLNR - newspapers, forms, books, Gleaner UK, Gleaner N.A.  2005 o BNS - banking, building society, insurance o DG – brewed products, Mktg UK o GLNR - newspapers, books, radio, Gleaner UK, Gleaner N.A.  2010 o BNS - banking, building society, insurance, wealth o DG – brewed products, Mktg UK o GLNR - newspapers, radio, Gleaner UK, Gleaner N.A.

13. Company Revenue Growth 13

14. Company Return on Equity 14

15. Descriptive Statistics VariableMeanStd. Dev.SkewnessKurtosis BNS Rev Growth0.050.180.581.43 DG Rev Growth0.010.151.294.00 GLNR Rev Growth0.000.12-1.505.17 BNS ROE30.1112.760.580.19 DG ROE15.3213.391.111.55 GLNR ROE9.209.49-1.212.13 Interest rate17.379.631.502.77 Exchange rate30.6729.20.60-0.98 15 N = 37 (Data from PIOJ and Company Annual Reports)

16. Interest Rates and Exchange Rate as Correlates of Real Growth of Firm Revenues BNSDGGLNR Real Interest Rate.229-.067.115 LT Lending.198-.152.105 Risk Premium.163.181-.169 Exchange Rate-.240-.350* -.375* Real Exchange Rate-.094-.243-.144 * p <.05, ** p <.01 N = 37, Spearman two tailed tests Revenue Growth Adjusted for inflation

17. BNSDGGLNR Real Interest Rate.467**-.028.420** LT Lending.838**.028.674** Risk Premium.199-.264-.087 Exchange Rate.243.643*.472** Real Exchange Rate-.150-.158.381* Return On Equity (ROE) Interest Rates and Exchange Rate as Correlates of Return on Equity (ROE) * p <.05, ** p <.01 N = 37, Spearman two tailed tests

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