A new credit monitoring framework for agents' networks

The purpose of this work is to develop a practicable approach for Telecom firms to manage the credit risk exposition to their commercial agents’ network. Particularly it will try to approach the problem of credit concession to clients’ from a corporation perspective and explore the particular scenario of agents that are part of the commercial chain of the corporation and therefore are not end-users. The agents’ network that served as a model for the presented study is composed by companies that, at the same time, are both clients and suppliers of the Telecommunication Company. In that sense the credit exposition analysis must took into consideration all financial fluxes, both inbound and outbound. The current strain on the Financial Sector in Portugal, and other peripheral European economies, combined with the high leverage situation of most companies, generates an environment prone to credit default risk. Due to these circumstances managing credit risk exposure is becoming increasingly a critical function for every company Financial Department. The approach designed in the current study combined two traditional risk monitoring tools: credit risk scoring and credit limitation policies. The objective was to design a new credit monitoring framework that is more flexible, uses both external and internal relationship history to assess risk and takes into consideration commercial objectives inside the agents’ network. Although not explored at length, the blueprint of a Credit Governance model was created for implementing the new credit monitoring framework inside the telecom firm. The Telecom Company that served as a model for the present work decided to implement the new Credit Monitoring framework after this was presented to its Executive Commission.

Portuguese footwear

This case study deals with the reasons why the Portuguese Footwear Cluster evolved from a small industry focused on the Portuguese internal market into a high-tech industry capable of designing and producing some of the best and most expensive shoes in the world. It went from using the low labor costs of an under-developed economy to produce long series of shoes for pre-designated brands in Northern Europe to having the ability to produce some of the highest quality shoes in the world, in small orders, designed and delivered in record timing, while offering a service of excellence. In 1960, when Portugal became a founding member of EFTA, the footwear industry in Portugal was globally irrelevant, producing low quality shoes directed to the puny internal market and its African colonies. The new free trade zone with economies much more developed that itself, led to the transfer of the labor-intensive, low skilled manufacture from the UK and Scandinavian countries to Portugal. Mostly through joint ventures, the industry was able to mechanize itself so it could produce shoes in long series at low prices. It grew based on that model up until the 1990s, when the emergence of the Asian countries meant either a different strategy or extinction. Taking advantage of a clarified leadership of its trade association, it used the European funds made available to it during the 1990s, to modernize its factory floors, so it could become more nimble and flexible, expand its design capabilities and dramatically change its image abroad. The role of the trade association, APICCAPS, was instrumental throughout the process going well beyond what came to be expected of trade associations. It used its privileged position to provide understanding regarding the current situation and competitive landscape, alerting for changes ahead and at the same time providing a strategic vision on how to deal with the challenges. Moreover, it helped companies get the resources they needed by creating a research center in collaboration with a University, by creating a process that allowed companies to learn from each other via the show casing of projects sponsored by the association or by helping industrials traveling to locations where new customers could be found. The case study provides insight on how the trade association leadership, which has no formal authority over its members, was able to guide and motivate an industry through a consistent positive approach. That approach focused on the solutions, on the opportunities and on the success stories of companies in the cluster rather than on what was wrong or needed to be addressed. Based on this case, one could use the leadership role of the trade association to discuss and change leaders’ roles and styles in other sectors or even companies.