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  • Class comments: Deeper understanding, more submerged in culture, more detached from “real world” means you are more “into” the place, and less connected to previous biases

part 9: Global entrepreneurship class   part 9: Global entrepreneurship class Presentation Transcript

  • Developing Global Mindset for Entrepreneurs
  • Class #9 Saturday June 5th , 2010
  • Professor of international finance and global entrepreneurship with Forum-Nexus Study Abroad. Guest lecturer with the IQS Business School of the Ramon Llull University in Barcelona, and the Catholic University of Milan. Previously, Brian taught finance, economics and global trade courses at Thunderbird’s Global MBA program in Miami, and worked as a research analyst at the Columbia University Business School in New York City. briandbutler@gmail.com A global citizen, Brian was born in Canada, raised in LinkedIn/briandbutler Switzerland (where he attended international British school), educated through university in the U.S., started his career with a Japanese company, moved to New York to work as an Skype: briandbutler analyst, married a Brazilian, and has traveled extensively in Latin America, Asia, Europe and North America. Brian currently lives in Recife, Brazil where he is teaching classes on “Global Entrepreneurship” at the university FBV.
  •  4 more classes Attendance +  Today Homework = 25% of your grade!!  June 12th  June 19th –Exam 30% of your grade!!  One week later – team project due  June 26th - 25% of your grade!!
  • 1. Careers + international experience 2. International IQ
  •  Social networks  Collaboration  (micro) global entrepreneurs  Clusters (?)  International IQ – Brazil – risks / opportunities
  •  Homework / assignments:  I f you missed any homework… you may still submit them!  How? Review slides from previous lectures. Look for homework assignments. If you didn’t do any… DO THEM NOW!!!!  Group Project  Get together and start working today!  Don’t wait till the last second!!
  • CS VP
  • CH CR
  • R$ KR KA
  • KP C$
  •  In your own words, tell me 5 reasons that international experience is important for your career.  (“international experience” could be = travel, or internships, or study abroad, etc)  Class discuss...
  •  New Business Ideas:  “When traveling around the world we see different things, business, ideas that may be transferable business ideas and this could be the beginning of a small business or a huge empire.” ▪ Roberta  Spotting business opportunities  “You can identify opportunities all around the world, or thing that you’ve seen in one place that would work in another.” ▪ Luiza
  •  #2: “What is the trend? “  Requires: Awareness of global trends, global business models  #3: “What is great locally or abroad?”  Requires: International IQ + global awareness
  •  Building your network  “Get to know more people, especially in different places of the world. Increasing your friend network.  “It’s very important to maintain contact, because in the future this person can either be you business partner, work for you, or call you to work for him, introduce you to other people….
  •  Nothing is more important for an international profession than their network.  Most international opportunities arise because of you word-of-mouth exposure into the international market.
  •  “Connect-the-dots between different markets and various boundaries.”  Arthur
  • Career, Travel + International
  • “I met a lot of people in Europe. I even encountered myself.” – James Baldwin, American novelist, writer, playwright, poet, essayist and civil rights activist
  • “The world is a book, and those who do not travel read only a page.” – Saint Augustine
  • “Don’t tell me how educated you are, tell me how much you have traveled.” – Mohammed
  • Skills enhanced by global travel
  •  Travel will make you more capable, mature and able to look after yourself.  “It was only after hopping on flights across the globe and hunting around for hotels on my own that I stopped calling my Dad at the first sign of trouble. I started to solve my problems myself. Novel!"  - 5 (Less Obvious) Reasons Why Travel is Good for You | Travel Blog - Tripbase
  •  exposing yourself to an international lifestyle.  learn to be curious about international places, people, cultures, businesses, events, politics, etc..  Increase your international IQ every day!
  •  Greater perspective on how others live,  leading to humility, generosity... traits which are attractive to potential employers  Teamwork –  as you travel the world, you learn to work with others  Decision making –  traveling solo in different parts of the world, you learn how to make decisions quickly in unfamiliar circumstances
  •  Initiative –  the act of going out to see the world on your own is taking initiative, and as you travel you will find that daily acts of initiative will build your skills in this area  Communication -  what better way to develop your communication skills than to travel the world and encounter cultures of people who speak other languages, and have different communication styles?  Money management, budgeting, planning –  going off to travel the world will improve your financial skills as you learn to live within your budget, plan for future travels, negotiate hotels, trans, air flights and more
  •  Negotiation skills –  traveling the world on a budget will force you to become a great negotiator. These skills of negotiation will definitely benefit your career after the trip is done.  Adaptability –  While traveling you will need to learn to be flexible and accept changes quickly, which are important skills to develop to an ever innovating world  Interpersonal skills –  solo travel is lonely if you don't quickly develop a knack for interacting with people from different cultures. Traveling is one of the best means to developing interpersonal skills
  •  Cross cultural leadership –  as you travel the world, your skills in cross cultural communication and leadership will be tested to the max. What you learn in daily life traveling is beyond what you could learn in MBA school classrooms or in cross cultural training seminars.  Self reliance, independence, confidence, responsibility  are all skills you will develop while traveling  Language skills –  as you learn phrases for surviving daily life in other countries, you will develop a talent for how to learn languages, and how to communicate non-verbally with people from other cultures.
  • Career benefits
  • Personal  Understand international news (not just hear it)  Expand your world view  Create global awareness  Develop international outlook, and global mindset.  Develop a greater appreciation of other cultures and of different economic and political environments Professional  Enhance your resume  Break out of your academic routine  Build your network of friends from around the world  Develop leadership skills
  •  “The salary of an executive who will live abroad (which varies according to location and the company he works for) increases, on average, about 20%. “  Extra $$$$
  •  "A professional with international experience it is easier to develop corporate culture and motivate people, since he is usually very motivated,“  Marcos Ramos, newly named president of Alcoa Europe.
  •  “Young people now need to shift the so- called global mindset, a skill set that consists mainly of understanding, communicating up and manage people of different origins. It is a decisive experience in deciding to hire a person."  Marcos Ramos, newly named president of Alcoa Europe.
  •  "Half of our partners and more than 20 percent of our associates have worked outside their home region. Each year, more than 200 consultants take short- or long-term transfers. And last year, 42 percent of non- partners relocated on an engagement loan. They’re rewarded with experiences that enrich their career."  - Live and work around the world | Global | Travel | McKinsey Careers
  •  "In the past, it was the experience that left a professional ready to go abroad. Now the logic is the opposite…he needs to go overseas to get ready.“  Prof. Brooks, a professor of the Graduate School of Advertising and Marketing (ESPM, Sao Paulo Brazil)
  • Skills enhanced by global travel
  •  More than eight years of adulthood administrator Sao Paulo Rodrigo Aires were spent abroad.  At 24, he moved to Mexico.  Then lived in Puerto Rico and Spain.  He now lives in Hong Kong.  With 17 countries in the curriculum and only 32 years old, Aires represents a generation that goes around the five continents with the same ease of one who takes a taxi.  These are called global executives, professionals with the potential to assume leadership positions are invited to spend periods in other countries, periods that can last from few months to several years.
  •  economic and geographical knowledge,  cross-cultural communication skills,  analytical skills,  flexibility,  an understanding of and familiarity with local customs,  an ability to adapt to new circumstances,  language skills
  •  Who thinks international experience (travel, study abroad, etc) is beneficial to:  1. Vision  2. Passion  3. Purpose  4. Adaptability  5. Leadership Skills  6. Networking Savvy  7. Determination  8. Positive attitude
  •  "Darwinian war for talent" is now so keen that the gap year - once a straightforward mark of distinction - now has to be absolutely extraordinary to single a graduate out.  Straightforward canoeing up the Amazon is no longer enough. The graduate has to have paddled backwards. http://news.bbc.co.uk/2/hi/uk_news/magazine /3530906.stm
  •  See my blog posting on how to include study abroad experience on your resume here: http://forumnexus.wordpress.com/2009/10/2 9/resume-cv-building-with-study-abroad/
  •  Question: Some ideas…. 1. International business  If you already have invested 2. Import / export, in your International IQ…. 3. Global Entrepreneur And if you int’l IQ is already 4. Diplomat HIGH… then what career 5. Int’l Journalist / reporter options might you consider? 6. Work at United Nations as Politician / Mediator  What careers might be open 7. International Lawyer to you (that might not be 8. Political activist open to others)? 9. Teacher (history, geography, etc) 10. Economist 11. What else??
  •  Some interesting 1. Strategy consultant career options you /management consultant MIGHT NOT have - Examples: McKinsey, considered…. Bain, Boston Consulting Group, etc 2. Global Macro trader: Hedge funds, Ex: Jim Rogers (see below)
  •  Consultants sell knowledge, and the skill and expertise of their employees.  Basically, consultants are hired by a company, government, or a nonprofit…to:  help assess its problems,  plan its future,  or improve operation efficiency and profits. see more: from Vault. com
  •  unique career that offers the chance to work within many industries and companies,  Work directly with CEOs,  and travel throughout the country and the world. see more: from Vault. com
  •  More about investors + the benefits of global travel will be discussed below (see section on “3 steps” + how to benefit from increased international IQ by investing. see more: http://globotrends.pbworks.com/global-macro-hedge-funds
  • How to
  • 1. Increase “Potential” Int’l IQ 2. Increase “Actual” Int’l IQ 3. Benefit from your increased International IQ
  • 1. Increase “Potential” Int’l IQ  Much like “potential GDP” in economics which sets the constraints for how much the economy can grow  Can be increased with: Travel, Study abroad*, Volunteer abroad, Work abroad, Language lessons, more… 2. Increase “Actual” Int’l IQ  Much like “actual GDP” of an economy which may be below (with room for growth), at equilibrium, or above the potential GDP (causing meltdown)  Can be increased by: Reading Economist magazine weekly, watch BBC, international news, etc… *(could increase BOTH potential & actual IQ @ same time)
  •  Travel  Long-term travel: Open your mind, learn about politics, geography, history, culture, “what’s going on?”, etc…  Work Abroad  Study abroad (increases BOTH potential & actual IQ)  Get a masters from another country  Short term – get a certificate  Volunteer abroad  Peace corps, etc
  •  Benefits of LONG-TERM (around the world) travel: Defined as 3 months or more  Why do around-the-world extended travel? Rather than short trips (many). What are the advantages of doing one LARGE round the world travel instead of many short 1 week travels?  Class discuss…
  •  Short-term travel is likely short-distance travel.  Because the world is so BIG, that short-term travelers will likely never travel to Thailand, Laos, Malaysia, Indonesia, etc. (unless they are from that part of the world!)  So, when news from the other side of the globe hits, she will have no travel-reference to relate the news back to her personal experiences.
  •  Without the experience of traveling across, you miss the context of place:  Short term travelers, if they do happen to travel long-distances, likely only see a pin-point on a map, and you lack the context of moving from one place to another across the map  In my experience: driving across the border from Malaysia to Thailand, or Laos to Thailand was more educational than … the tourists that just flew into Phuket and went directly back to England (and lacked the transition / context of the changing landscape, people, religion, etc)
  •  Increased potential… means that when you DO come across international news… it will make more sense to you  Previously having traveled somewhere…Makes it easier to understand (later) when you read news about that place  For example…
  •  How close (geographically, culturally, economically) are Phuket + Bangkok  If you had traveled there, you would know…  This is about your POTENTIAL
  • About 900 km- “are you talking of a hire car and driving yourselves, if so you would be mad, roads are crowded and traffic is hectic. The best thing is to fly from Bangkok to Phuket, there are all sorts of cheap fares, and you would get there alive.” Trip Advisor
  • 2. Increase “Actual” Int’l IQ  Much like “actual GDP” of an economy which may be below (with room for growth), at equilibrium, or above the potential GDP (causing meltdown)  Can be increased by: Reading Economist magazine weekly, watch BBC, international news, etc…
  • After Traveling (or Studying Abroad, Working Abroad, etc)… to increase your Potential… The next step is to increase your ACTUAL international IQ…. How? For this you need to read, read, read…
  • Note: it takes about 5 hours to read it per week. Invest 1 hour per weekday to raise your “ACTUAL” international IQ up to your “potential”
  • Free monthly AUDIOCAST…
  • 3. Invest to - Benefit from increased International IQ
  • 3. Invest to - Benefit from increased International IQ  Invest in career advancement  Invest in new job  Take advantage of opportunity as entrepreneur  Trend (get ahead of it), Transferrable idea (from abroad)  See import / export opportunity  Invest in stock market, commodities, currency, countries (or bet against them)… the so called “global macro” strategy of investing… as outlined below…
  •  Rogers co-founded the Quantum Fund. During the following 10 years the portfolio gained 4200% while the S&P advanced about 47%.[5] It was one of the first truly international funds.  Co-founded with George Soros  In 1992, the lead fund, Soros's Quantum Fund became famous for "breaking" the Bank of England, forcing it to devalue the pound. Soros had bet his entire fund in a short sale on the prediction that the British currency would drop in value (it did), a coup that netted him a profit of $1 billion.
  •  Between January 1, 1999 and January 5, 2002, Rogers did another Guinness World Record journey through 116 countries, covering 245,000 kilometers with his wife, Paige Parker, in a custom-made Mercedes. The trip began in Iceland, which was about to celebrate the 1000th anniversary of Leif Eriksson's first trip to America. On January 5, 2002, they were back in New York City and their home on Riverside Drive. His route around the world can be viewed on his website, jimrogers.com. He wrote Adventure Capitalist following this around-the-world adventure. It is currently his best selling book.
  •  He is quoted as saying: "If you were smart in 1807 you moved to London, if you were smart in 1907 you moved to New York City, and if you are smart in 2007 you move to Asia."
  •  From 1990 to 1992, he traveled through China again, as well as around the world, on motorcycle, over 100,000 miles (160,000 km) across six continents, which was picked up in the Guinness Book of World Records. He tells of his adventures and worldwide investments in Investment Biker.
  • 1. Travel to - Increase “Potential” Int’l IQ 2. Read to - Increase “Actual” Int’l IQ 3. Invest* to - Benefit from increased International IQ *take benefits of your hard work: Invest in career advancement, Invest in new job, Take advantage of opportunity as entrepreneur - Trend (get ahead of it), Transferrable idea (from abroad), See import / export opportunity, Invest in stock market, commodities, currency, countries (or bet against them)… the so called “global macro” strategy of investing… as outlined above…
  • A look at China- USA
  • China and America, joined by trade & finance
  •  We have previously covered Europe + the situation in Greece (and Portugal, Italy, Spain, etc)  This class: we will briefly discuss another global relationship you need to be aware of: that of the USA-and China.  Why?  To conduct global business, you need to be aware of key important developments, and the potential for changes.  Next class: we will discuss how this all impacts Brazil + Brazilian business people
  •  We did NOT cover all of the following slides.  Class discussion was just a summary of the issue, and an introduction. All slides are included here just for your reference….
  • 1. “Chimerca” introduced - with statistics and observations 2. About china – 1.3 billion people: 300mm upper middle class / 900mm lower class 3. Controls – migration controls, no slums – fears of removing controls, currency controls, money flow controls, savings options limited, one child policy, retirement
  • 4. Threats to china- $2trillion in foreign reserves, with about $1 trillion loaned to the US government at very low interest rates. What happens if US dollar depreciates? Is it in China’s interest to appreciate currency? NO!!... Would lose value of investment! 5. History: 1997 Asian Crisis is key: afterwards, had fear of accepting foreign capital. Desire to keep exchange rate low for exports 6. Result is that since 2000; massive flows of money from world’s Poor to rich countries.
  • 7. Not just china: Dollar bloc of countries targeting US dollar, but Brazil is outside 8. From USA perspective: needs cheap financing; demographics, 2 wars, health care, etc 9. Flood of Cheap credit – one Cause of credit crisis – “USA hung self, noose supplied by China” 10. Future: underling “Imbalances” unchanged – but will fixed / flexible change again? How?
  •  Key points from class discussion:  that the US-China relationship is important.  only since 1997 has the situation been that money flowed en-masse from poor countries to rich ones (often called “global imbalances”)  A “dollar bloc” of countries exists, and Brazil is not one of them  Massive quantity of cheap credit flowing from poor countries to the US is likely not sustainable nor desirable (in the long term)  What will happen when it ends?  We already have seen the “credit crisis” (2007-now) as likely partially caused by this flood of cheap credit
  •  The following are select slides from my lecture  Recommended further reading:  Martin Wolf, “Fixing Global finance”  Niall Ferguson, “A financial history of the world: the ascent of money”
  •  China  USA  1.3 billion people  0.3 billion people  Approx 9,6o0,000 km2  Approx 9,6o0,000 km2 Observation: China has about 4 times as many people, in a country about the same size as the USA, but with almost all of those people in ½ of the country (East)
  •  China  Of the 1.3 billion people…  approximately 300 million are middle to upper class… approximately the same population as the USA, or more people than the entire population of Brazil  it is VERY NICE: In cities like Shanghai, or Beijing, the quality of life is VERY HIGH! http://en.wikipedia.org/wiki/List_of_countries_and_outlying_territories_by_total_area
  •  He is quoted as saying: "If you were smart in 1807 you moved to London, if you were smart in 1907 you moved to New York City, and if you are smart in 2007 you move to Asia."
  •  China’s main concern:  Feeding 1.3 billion people  What would you do if you had 1.3 billion mouths to feed?  Sustainable development and…  Controls…
  •  One Child policy makes sense if you consider the object – slow down population growth  But troubling is the demographic trend of too many men “IN CHINA they are called “bare branches”: young  Issues: lack of options men without wives or offspring, frustrated, rootless, drifting, disruptive. And there are a hell of a lot of for retirement them. Five years ago the Chinese Academy of Social Sciences in Beijing calculated that one Chinese man planning / old age care in six was unlikely to find a female partner. That’s about 111 million unattached males. In other words, there are twice as many bare branches in China as there are people in the whole of Britain. http://www.timesonline.co.uk/multimedia/archive/00065/TIM041FshrhD22_65733a.gif
  •  Controls on the movement of people from the interior to the cities has its positive impact: no slums around the mega cities (as we have in Brazil, India, Mexico, etc). In China, these “favelas” do not exist
  •  But, the fear is: if the controls were to be removed…  With 300 million in upper/ middle class and 900 million in lower class…  The cities might get crowded FAST as people from the interior might move in mass to the cities looking for work (as happened here in Brazil, Mexico, India, etc)
  •  Other controls:  Capital controls – money in / money out of the country is controlled (according to Mundell Trilemma, this control is necessary to maintain the other control:  Currency control – appreciation / depreciation is targeted to the US dollar
  •  China's economy now is closely intertwined with the U.S.  The U.S.-China economic relationship has become arguably the world's most important.
  •  An important trading bloc with  about 1/10th worlds land surface  1/4th worlds population  1/3rd worlds economic output  more than 1/2 of worlds economic growth over past 8-10 years  The US accounts for 1/5th of all Chinese exports (their biggest trading partner) Niall Ferguson, “A financial history of the world: the ascent of money”
  •  Chinese savers, American borrowers / spenders  The Chinese model  relies on funneling savings into limited options at low rates.  Personal savings channels for retirement and health care are limited.  Companies pay little dividends.  The result is a large savings rate.
  •  Chinese savers, American borrowers / spenders  The USA model (opposite)  consumers spend rather than save (at least up until the crisis of 2007-).  In 2007, the US needed to borrow $800 billion, more than $4 billion every working day (mostly borrowed from foreigners).  According to Martin Wolf, the US became the "superpower of global borrowing".  China became the banker to the US, creating a perverse world in which money flowed from the world's poor to the rich (the Average US earned $34k per year, while the average Chinese earned just $2k per year).
  •  …Mostly from Asia, mostly after SE Asian Crisis of ‘97-98
  • In America savings fell from around 10% of disposable income in the 1970s to 1% after 2005."...
  •  Leads to a housing bubble, which bursts in 2007
  •  China's exports: goods exports went from $250 billion in 2000 to $1430 billion in 2008
  • http://en.wikipedia.org/wiki/File:USimportsgs1960-2004.gif
  • SOURCE: U.S. Census Bureau, Foreign Trade Division, http://www.census.gov/foreign-trade/balance/c5700.html
  • https://www.cia.gov/library/publications/the-world-factbook/rankorder/2188rank.html
  •  By March 2007: ▪Both Taiwan & South Korea held more reserves than the entire Eurozone!  When? Almost all between 2000-2007 Martin Wolf book, “Fixing Global Finance”
  • See the inverse relationship? -Current account balances -Reserve accumulation
  •  Perhaps China manipulates its currency, but so too do Singapore, Argentina, Saudi Arabia and any nation that either pegs its currency, maintains a tight trading band or oversees a “managed float” system. Even Hong Kong, routinely ranked as the world’s freest economy by the Heritage Foundation, manipulates its currency. It has to maintain its link to the U.S. dollar.
  • • “currencies either pegged to the dollar or more or less actively managed against it (a group that includes Japan)”  Oil Exporters  Bahrain  Oman  Qatar  Saudi Arabia  UAE (Dubai included)  China  Japan  Russia  Singapore  Taiwan  Malaysia  Hong Kong  Thailand  India  Others: Ecuador, Panama, more…. Used to be Argentina! Sources: figure 6.6 from Wolf “Fixing Global Finance” And, Economist.com, May 23 2009, “Monetary Union in theGulf”
  • Sorry 
  •  How does the China-America relationship outlined above effect Brazil?  Describe in 1 page or less