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STRATEGIES • ENTREPRENEURS IN OTI'tER LANDS • HOME TO IRAN THUNDERB I RD Maga z in e WWW.THUNDERBIRD .EDU 55 / 1 / 2002 THUNDERBIRD Page 2 How Multinationals Sustain Competitive Advantage Rapid globalization means more entrants into more markets. Getting or staying ahead takes work. Page 8 The HR Side of Competitive Advantage People are fast becoming precious assets. How do you attract, keep and move the very best? Page 10 The Secrets of Achieving Regional Business Success Understanding how culture, language, demographics and politics impact a region is half the battle. Page 16 Professional Consulting Thunderbird runs a "big league" consulting service that taps alumni and students for intelligence. Page 24 Home to Iran Samira Showghi '95 wasn't prepared for a journey back to her childhood and heritage. Page 28 Entrepreneurship in Foreign Lands T-birds tend to be highly entrepreneurial. So why not start that business abroad? T A BLE OF CO NTEN TS Ranked # 1 in international business by The Wall Street Journal and U. S. News & World Report Thunderbird is America's premier source of global management education with operations in the U.S., France, Russia, China, Japan, Mexico, Taiwan and Brazil. Page 1 THUND ERBIRD 'S COMPETITIVE POSITION Schools aren't immune from competition. Even Thunderbird has had to evolve. Page 19 M&AS FROM TEN PERSPECTIVES Success comes from analyzing mergers from all angles. A single course is team-taught by 10 experts. Page 20 AN AMERICAN IN CUBA Looking inside a ·restricted" land. Page 26 A EUROPEAN AT THUNDERBIRD An exchange student from ESSEC, a French "grande ecole, " calls T-bird a rich multicultural experience. Page 32 WINTER IM IN ASIA Students spent three weeks in Korea, China and Thailand learning the lay of each land. Page 34 SUSTA INING PERSONAL ADVANTAGE Executive Education that provides a needed edge. Page 36 STRATEG IC CA REER MANAGEMENT AT THUNDERBIRD That all-important staff/student partnership just got more intense. Page 38 T- BIRD NEWS Page 40 NETWORK NEWS Page 44 UPDATES ABOUT OUR COVER Costa Rica-based Hector GOTOsabel '87, vice president, North Latin America Division, The Coca-Cola Company. called innovative marketing, an outstanding distribution system and the Coca-Cola brand itself some of his company's best sources of advantage. ~~------------ 55/1/2002 P AGE ONE For the past two years the Thunderbird community has been engaged in an active and vigorous discussion about the future of the School, its academic programs and the marketing face we use to describe our programs. That discussion came into focus with the spring meeting of the School's Board of Trustees. Over the course of that month, faculty and staff, alumni, current students, our Trustees and members of the Thunderbird Global Council met. The resulting debate was often passionate, which diploma. Those graduating from the four-semester program will also have a non-English language proficiency listed and the opportunity to earn a regional focus designation as well. While the conversation about the name of the degree has been a major focus for us for the last few months, it has hardly been the only focus. We have also focused extensively on the progress being made on the expansion of Thunderbird Europe in Archamps, France. The new facility is being built in partonly speaks to how deeply so many of us care about this institution and its legacy. It was also a very helpful process in leading the Board to a condusion. THUNDERBIRD'S COMPETITIVE POSITION nership with the HauteSavoie District government and should be fully operational by the fall trimester. Formal dedication ceremonies are scheduled for October 3 during our fall Board meetings. Fundamentally, the Board made three key decisions. • The Trustees reaffirmed the School's commitment to its tradition: an international management education built on a tripartite base of business disciplines, language and communications and international coursework. The expansion of Thunderbird Europe marks a major strategic initiative for the School. In anticipation of the new faci lity, we have already begun offering students the opportunity to start their Thunderbird program in Archamps. In fact, almost one quarter of our Summer 2002 entering students chose that option. The new facility also positions Thunderbird to be • They charged the Thunderbird administration and faculty with ensuring that everything the school does is true to that vision of international management. • They approved the consolidation of Thunderbird's two full-time degree programs into one program with two tracks with the By DR. ROy A. HERBERGER, JR., PRESIDENT, THUNDERBIRD much more competitive in the European executive education market. allowing us to build significant and mutually productive rela-name of the degree awarded in both tracks being a Master of Business Administration in International Management. The program and character, the foundational philosophy of Thunderbird, was not changed. Going forward students at Thunderbird will be awarded the MBA in International Management. Students who come to us as part of a dual degree program with another institution, or who have already earned their MBA elsewhere, will continue to be awarded the Master of International Management (MIM). The MBA in International Management will be awarded to those enrolled in the School's traditional four-semester course of study (Track 1) as well as those choosing Thunderbird's one-year/three semester program (Track II) . Detailed descriptions of the content in both tracks can be found on our website (www.thunderbird.edu). Students in both tracks take the same courses and receive the same international management core central to a Thunderbird education. Students graduating from both programs will have their individual specialization noted on their tionships with more European corporations. Our strategy for several years has included diversifying the School both programmatically and geographically. Adding the one-year track to the full time program offerings, launching executive degree programs with partners in Brazil, Taiwan and Mexico and the expansion ofThunderbird Europe are all examples. We believe that to position Thunderbird as a truly global institution, both of these forms of diversification are critical to our long-term vitality. Taking this course has meant making some upfront investments in facilities and programs, but we are seeing the returns and are confident they will continue to increase. We do, however, dearly recognize that it will take focus and effort on our part to ensure our success. This is dearly not a case of "if you build it, they will come." The new Thunderbird Europe gives us a state-of-the-art management education facility; but what will attract students and corporations to us will be the quality of our content and instruction and our ability to showcase those capabilities effectively to the right audiences. That is a challenge, but one we eagerly embrace. • p.2 WWW.THUNDERBIRD.EDU 55/1/2002 55/1/2002 WWW.THUNDERBIRD . EDU p.3 HOW MULTINATIONALS SUSTAIN COMPETITIVE ADVANTAGE • Consumers drink my beverages at the rate of 12,600 units per second . • I sell those drinks in nearly every nation. • And even though at 116 I've been around awhile, I'm still a market leader. • Who am I? ong one of the world's most recognized companies and brands, CocaCola continues to prosper by innovating and adapting to the local needs of its customers and consumers throughout the world. Despite ferocious competition, significant currency devaluations in key markets and major acquisition- related write-downs, the company reported first quarter 2002 sales of US$4.08 billion and has predicted long term growth approaching six percent. What is Coca-Cola's formula for success? Is it simply a case of having the right product and brand? Or is it more than that? Just what does it take for a multinational like Coca-Cola to sustain its competitive advantage? "Our flagship Coca-Cola brand empowers us, without a doubt, with a tremendous competitive advantage and a solid foundation for success. But it is just one of many elements that enable Coca-Cola to create increasing levels of value in an ever changi~g market environment," said Hector GorosabeJ '87, vice president, North Latin America Division, The Coca-Cola Company. "I'd have to say that an innovative marketing approach and our unmatched distribution system are important as well, as is our focused, consistent approach to doing business. "Exactly what the brand means is a difficult question for Coca-Cola, since the brand has the unique ability to connect with people on a variety of emotional and functional levels. [ can tell you that we believe the brand stands for BY LINDSEY MICHAELS authenticity, for refreshment, and for enjoyment. But I can also tell you that people who drink Coca-Cola often do so because of the enduring, emotional and refreshing connection they have with the brand." Yet Coke is only one of the 230 brands CocaCola sells around the world. The company continues to leverage its competitive strengths as it selectively broadens its family of beverage brands to drive profitable growth. "We are committed to meeting the diverse preferences of consumers by offering branded beverage solutions in a variety of beverage categories and consumption occasions," said Gorosabel. Several examples of this diversified focus come in the form of the Minute Maid juice and Dasani water products. These two brands alone now yield a significant portion of the company's revenues. "Coke employs a Think local. Act local: market strategy founded on the principal that the company exists to benefit and refresh all those who are touched by its brands," said Gorosabel. Given that the product is so relationship based, the company tries to put locals in charge of operations whenever possible - believing they better understand local consumers, as well as their social, economic and political issues. "As for our distribution system, our objective is to ensure that ice cold Coca-Cola is always within an arm's reach of local consumers, whenever and wherever they need the physical or emotional refreshment of the unique CocaCola taste sensation." To deliver on that goal, Coca-Cola has constructed an unrivaled worldwide bottling net-work; consisting of a combination of privatelyowned, company-owned and jointly-owned bottling operations. More than two-thirds of Coca-Cola's unit sales take place outside of the U.S.; while threequarters of the company's operating income comes from overseas. "The key is creating a shared vision with our bottling partners; one based on respect and mutual success," said Gorosabel. "Although we have different goals and responsibilities within the value chain, we ultimately share the same goal: To creatively and consistently form meaningful relationships with consumers. Our continued success lies in our ability to grow system profitability and capability together with our bottling partners while consistently focusing on these relationships. " The company and its bottlers share a proprietary supply chain system that provides almost up-to-the-minute sales details. "We're so well connected that if you asked me how much of each product we sold today in some small 200- person Venezuelan town, I could probably tell you." That system allows everyone along the value chain to have a clear picture of exactly what's selling, how different promotions are affecting sales and where stock must be replenished. Which all makes customer relationship management much easier and more effective. "There's a tremendous amount of work done at the country, city and even neighborhood level that helps us understand what our consumers want and why they want it," explained Gorosabel. "We have a set of indicators that we follow on a daily basis, which include sales, p.4 revenues, product packages and channels. We also track things daily on an in-store basis using a variety of research methodologies." One such technique is old-fashioned observation. According to Gorosabel, his best market intelligence often comes from his store sales people. That's because they're in retail locations talking to management and customers almost every day. "While they're there, they check our point-of-purchase advertising, ensure that everything is dean and that the prices are marked dearly. But the most important thing they do is build valuable relationships," said Gorosabel. "These value based relationships make it harder for other companies to compete on price alone." All that primary and secondary data flows upward electronically through each region until it reaches the firm's Atlanta headquarters. Teams there analyze this information and begin to form - or act upon - new products and strategies. "A lot of our new product development takes place centrally in Atlanta," said Gorosabel. "But each region also has at least one major product development center and several minor ones. In my case, our primary innovation center is located in Rio de Janeiro." Coca-Cola's innovation centers can experiment with new products for local consumers, sharing their most promising new finds with their corporate headquarters. "Today's consumers are increasingly more sophisticated. They want more choices - and the opportunity to change from time to time. In Japan, for instance, where the market is extremely dynamic, we introduce more than 200 new products each year. That's one every day and a half or so. Other new product introductions, like Diet Coke with Lemon and VaniLla Coke, offer consumers exciting new twists on two of the world's most loved global brands." "When you get right down to it, products are the only things that make money for a company. Everything else is just a cost. So you have to have an effective global product development process and strategy," said Dr. Sundaresan Ram, an associate professor of marketing who teaches Thunderbird's Global Product Development and Management program. "With global companies, products aren't just in different stages of their life cydes. The same product is often in different stages in different countries simultaneously." According to Ram, successful global companies typically have cross functional/cross geographical "innovation teams." Those teams must anticipate market shifts, evaluate concepts from diverse perspectives, then shepherd products all the way through from design through WWW.THUNDERBIRD.EDU launch. They must also obtain country-specific insight and country-head buy-in early in the design process and then execute the rollout. "Coca-Cola and Gillette have their implementation process down to a fine art," said Ram. "Both have strong global distribution networks and a thorough understanding that shelf space is key in consumer marketing. Both also have strong brands - which they support heavily with advertising - so both can pretty much get whatever shelf space they want or need. "The real reason they get that shelf space though is because their products sell. That's the bottom line. And they sell because the people in those companies generally do their homework - and do it well." With some notable exceptions. "Everyone knows that New Coke was a disaster, a rare instance where someone's gut must have meant more than good research," said Ram. "But the New Coke product launch itself was phenomenal. All manufacturing, distribution and advertising systems worked extremely well." Ram called that repetition another competitive advantage. Having done multiple multi-site product launches for many years, the company now does them seamlessly. Ram termed the company's strong relationships and local knowledge two other advantages. "When I lived in India, for instance," Ram said. "I used to buy my razor blades one at a time at the little Mom & Pop store down our street. Then I went home, broke the blade in two and shared half with my brother. There was no such thing as multi-blade packs like those you find here in the States; if there had been, we couldn't have afforded them." In India, Mom & Pop stores are still the dominant retailers. Unfortunately, each store may only stock one of each item, investing no more than US$5 to US$25 in total inventory. So, finding a local distribution service that does quick restocks would give a company an edge. "While you need people with many skills on your innovation team, the most important skill may be dealing with diversity," said Ram. "You need people who are immersed in local cultures, people who can detect market shifts early on, people who realize that a product will have to be marketed entirely differently in each country - even if the customer profile itself is exactly the same in two countries. That means a very 55/1/2002 different mix of package look, size, language, point-of-purchase, advertising, distribution methods and strategy for everywhere you sell." It also means companies that want to get ahead - or stay ahead - of market shifts and competitors need numerous partners. Santiago Hinojosa '73, the Miami, Floridabased president and CEO of Latin America for Burson-Marsteller, is one such partner. His firm specializes in building corporate brand and reputation. "We work with the belief that reputation is ultimately based upon behavior, that reputation is vital to business success and that targeted and compelling communication plays a crucial role in influencing perception and reputation," Hinojosa said. "My job involves adding strategic senior level value way up the food chain." According to Hinojosa, Burson-Marsteller begins each strategy session by bringing together senior managers such as the CEO, COO, vice president of marketing and the communica-tions vice president. "Our methodology walks those dients through an industry or regional assessment, a competitor analysis and a key audience overview. By the end of the day, dients can usually articulate their goals and barriers." Hinojosa did admit that it was fairly common for senior managers from the same company to enter a session with completely different perceptions and goals. When that occurs, he uses his team's neutrality and third party analysis to challenge assumptions and look at things objectively. If dients still can't agree on goals and achieve executive buy-in, it's almost impos- SS / I / 2002 WWW.THUND ERBIRD . EDU p .S p .6 sible for Hinojosa and his team to construct an effective action plan. [f they can agree, Hinojosa's team goes right to work. "Let's look at Argentina," he said. "[ts currency is in such flux right now that some companies are pulling out. We recommend against that because Latin Americans tend to be very brand loyal. Once you lose them, it's very difficult and expensive to win them back." So assume you're a consumer products company with highly established brands. Argentina has long been a large and profitable market. Unfortunately, lost sales and write-downs may now force you to report quarterly earnings that are two cents below what analysts expect. "Well, we'd say, 'Don't leave the market:" Hinojosa said. "Then we'd help them adjust their costs so they could sell products at a price consumers could still afford. "Rather than dosing a plant, which would raise a whole new set of issues, we'd prefer to see the company lower costs by, say, switching from its Miami-based toothpaste cap supplier to one located in Argentina or Venezuela. Doing so would reduce both manufacturing and transportation costs," Hinojosa said. "We might also recommend reducing the product size from eight ounces to four to make it affordable. As for media, we'd cut it too. Probably use more pointof- purchase displays and trim television ads from 3D-seconds to lO-second 'billboard' shots - just to keep the brand out there. Then we'd look for ways to help the community." Such moves, he said, would help the company minimize its loss, while also protecting market share and bolstering the dient's brand image and corporate profile. Peter Chudy 'S7 provides competitive advantage opportunities of another kind. The Warsaw, Poland-based Chudy is director of consulting practices at Central European Trust (CET). Founded shortly after the Berlin Wall fell, CET specializes in helping companies enter central and eastern Europe. More than 25 percent of the world's Fortune 100 companies have hired CET. 'This was a depleted market in 1989. One with a hunger for all things western," Chudy said. With millions of new potential customers, crrs dients were anxious to get in, to find a good distributor and to start building market share. CET provided each an edge by introducing company officials to the right high-level business and government contacts, as well as by providing critical first-person business intelligence. 'Things began to change in 1992. That's when emerging countries began forcing foreign companies to invest in their countries, imposing import tariffs. Our job shifted more toward researching manufacturing facilities, labor laws, WWW.THUNDERBIRD . EDU wage issues and each region's microeconomic development programs." In some cases, Chudy's analysis showed that the company would benefit by purchasing a local plant. In others, his team determined that using a greenfield, or build-from-scratch approach, would be preferable. "Reducing production costs is something that will help any company sustain its advantage, so we're always planning ahead for major shifts. For instance, Poland is to Germany what Mexico is to the U.S. - a far cheaper labor pool just across the river." Labor costs in Poland are less than one-seventh of what they are in Germany, Chudy said. Therefore, it's cheaper to shift manufacturing or service centers there. But labor costs in the Ukraine are only about one-fourth of those in Poland, so should a company switch its manufacturing to there? Probably not if you factor in the political risks of Ukraine's instability, Chudy said. Chudy and his team routinely do that type of analysis and legwork for multinationals. They also advise dients when they should begin building educational programs and infrastructure in preparation for their next country move. According to Chudy, shoe manufacturing has already begun shifting out of Spain and Portugal, but with Poland already too expensive, producers are looking even further east. Auto assembly has shifted from Germany to Poland, The Czech Republic, and Hungary. Textile production has begun moving into Georgia and Kazakhstan. Then there's the European Union (EU) factor. "Poland, The Czech Republic, Hungary, Slovenia, Estonia and Latvia are all poised to enter the EU," he said. "Once they do, a huge amount of money will be transferred from Brussels to these countries and many of the tariffs protecting them will be removed. That's going to cause Europe to become even more competitive. " Who does Chudy see as the "dark horse" gems for multinationals? Croatia, because of its beautiful coasts and location. Bulgaria, which has excellent potential under its new government. And Russia, which, given its size and natural resources, could well "blossom" within 10 years. Bob Lees '77 is a true Asia-Pacific veteran. The former secretary general and president of the Pacific Basin Economic Council (PBEC), Lees was recently appointed executive advisor Asia Pacific at KPMG Consulting, [nc., which is one of the world's largest business and consulting technology integration firms. "[ began doing business in China over 20 years ago at a time when nearly all of Asia's 55 / 1/2002 domestic markets were relatively dosed," said Lees. "Things have changed dramatically since then. Asia is now a healthy market and a major base of operations for many of the ' world's multinational corporations." Lees, who headed the prestigious PBEC for 10 years, said that the region is bouncing back from its recent crisis and that multinationals must be players in Asia to remain competitive. "One third of the world's population lives in Asia, and although Japan's phenomenal growth ended in recession 11 years ago, the rest of Asia is growing and China's market has been like an SOD-pound gorilla on steroids." Lees cautioned that multinationals must adopt very different strategies in each country, rather than simply treating the region as a single market entity. Vietnam, for instance, is extremely young demographically, while Japan's population is much older. Commonalities, however, do exist across countries. The most notable are that: • The people have a strong work ethic, • They value education, • Personal savings rates are high, and • Good government contacts can be critical. "Multinationals going to China can actually have an advantage over local competitors in that China's consumers have traditionally been quite parochial in their buying habits. Its people have historically bought local products from local companies so it was difficult for many Chinese companies to expand nationally. Multinationals, however, can have a 'national brand' image, which makes it easier for them to gain acceptance across the nation. One of the biggest mistakes 'new-to-the-market' multinational firms make in Asia is assuming that their products have brand recognition like they do back in their home market. They don't. To be successful, multinationals must be in for the long haul, be good corporate citizens and invest much, much more in public relations and marketing than they generally plan to. "China's entrance into the World Trade Organization changes that large and growing market for the berter," Lees said. "In effect, China will be much more open to foreign products and Chinese companies will be seeking foreign partnerships and advanced technology to make them more competitive." While Lees' contacts and Asian expertise are somewhat proprietary, he did offer a few suggestions for multinationals to think about. China is quickly becoming one of the world's largest markets. Companies must be part of that market. But we should not forget Korea, Japan, Taiwan and Southeast Asia. Each offers huge potential to global corporations, not only for sales, but also for manufacturing and regional operations hubs. • 55 / 1 / 2002 WWW.THUND ERBIRD .E DU p.7 p.8 What makes two seemingly similar companies perform so differently? One outperforms the market. The other barely meets estimates. While each appears to have the same asset mix and market niche, one is dearly doing more. What's the source of that advantage? "Most companies can access the same financial, technological, and strategic capital. What they can't copy is organizational capability. That is, intellectual capital. the talent pool, and how those people work together," sajd Dr. Warren Wilhelm, a Harvard-educated expert in leadership development, human resource management and corporate change who teaches part-time at Thunderbird. "We're talking about a culture and the people who are steeped in it. Which is difficult to replicate." While most other assets can be acquired - quickly if need be - culture can only be built and changed slowly, according to Wilhelm. When people talk about business-related cultural issues, they tend to mean the regional. ethnic, and religious nuances Thunderbirds accommodate. Yet corporate cultures also indude an often-overlooked component ca1led "mindset," he said. "Mindset is more than culture. It is how people in each organization behave and think. How they view the company, its customers, each other." Wilhelm beJieves it's much more difficult to get people to work together and move forward when they don't share the same mindset. It's also much more costly in terms of lost productivity and having to allocate resources to "change" instead of "charge." Successful companies, Wilhelm said, begin by hiring the right people, people with the appropriate mindset. They then actively nurture, challenge and reward their people. 'The employee 'on-boarding' process is critical. New hires need to understand exactly what the company is, what it does, how it makes money, the impact of environmental change and competitors. You'd be surprised how many don't. Your people then need regular 'growth doses:" Through its 1998 study, "War For Talent," McKinsey & Company learned what motivated and helped retain top talent. Continuous growth, challenge, an ability to make a dear impact, respect, excitement, and a winning company were critical. Compensation wasn't. Wilhelm stressed that companies must actively track their best people from the day they join, providing continuous feedback and learning opportunities. He also said tlley should move people to new positions as soon as tlley've learned 80 percent of what they can learn in their current job - before they begin to feel stagnant and get bored. WWW.THUNDERBIRD .EDU 55/1/2002 Attracting and keeping the best and ~W6St BY UNOSEY MICHAElS "Retention and succession planning processes have to be driven by the CEO," Wilhelm said. "Someone who says, I'm serious about this. You'll be rewarded for grooming and sharing talent, punished for hoarding it. Someone who ensures that managers who share talent get back people who are as talented as those they give. ''There also has to be someone, or a team, at the corporate level who is forrna1ly in dlarge of such processes, because if left alone for even a month or two, programs like this will die." Wilhelm cited GE, Nestle, JP Morgan, Col- 55 / I / 2002 gate-Palmolive, and Unilever as companies he has personally worked with that handle such functions well. Johnson & Johnson (J&J) company is another multinational that works hard on people issues. Then chairman and CEO Ralph Larsen focused specifically on leadership, values, and hi ring the right people in his April 2002 address at Thunderbird. (Please see sidebar.) Michael Carey, vice president, Human Resources for J&J later discussed some of the human resources strategies and unique challenges his company faces. "Fi rst of all, we try to hire people who fit well with the Johnson & Johnson company culture, people who will live by the credo that drives everything we do," explained Carey. "We also tend to hire local managers because we believe they understand their countries, cultures, and competitive landscapes better than anyone else. They also tend to have strong local networks to draw upon." J&J typically hi res Thunderbirds into its 12-18 month International Development Program with the goal of returning them to their own countries within three years. During that time th ey, like other hires, are taught about J&J in classes conducted by senior managers - including the CEO. They also participate in the company's ongoing assessment and succession development process. "We have a formal Standards of Leadership process that tracks our people according to the five areas we most value. That model looks li ke a pinwheel, with our credo at the center and the other values radiating out from there." According to Carey, performances are tracked at the business unit, regional, and presidential level. And, how well each person "attracts, recru its and grows new talent" is a defi nite perfo rmance factor. Managers are expected to groom talent until each person has peaked within his or her business unit. Those managers must then be wi lling to give up those people to other units so that they and J&J can grow. Carey himself is a byproduct of J&J's succession planning process. He's worked in seven di fferent units during his 35 years with J&J. While J&J defi nitely tries to rotate people within the same region for as long as possible, Carey said the company does move people into its Intern ational Service Category for two reasons: when the company needs their expertise in a new market, and when they need a two- or th ree-year international ass ignment to enhance their growth. "We often use existing talent to seed a new organization," Carey said. "However we try to manage that process very closely since the average expatriate assignment can cost us $300,000 per year over and above that employee's salary." WWW.THUND ERBIRD. EDU JOHNSON & JOHNSON CEO SPEAKS AT THUNDERBIRD Ralph Larsen, chairman and CEO of Johnson & Johnson (J&J) came to Arizona in April solely to address Thunderbird. His topic: "Leadership in a ValuesBased Organization." A US$33 billion company with more than 100,000 employees that sells in 175 countries, J&J has long been a strong supporter of Thunderbird. The company has hired more than 100 Thunderbird students in recent years and has also used the School's Corporate Consulting arm to perform several indepth, country-specific projects. I&J is also a generous scholarship contributor. 'The most important reason I am here is because you are very, very important," said the affable Larsen. "As I already told one of your people, the single most serious shortage we have within Johnson & Johnson is leaders for the future." According to Larsen, J&J has been growing its top line business at an average annual rate of 10 percent to 12 percent for 100 years. Bottom line growth has averaged 12 percent to 15 percent. In fact, had you purchased $10,000 of J&J stock in 1989, when Larsen became CEO, that investment would have grown in value to $140,000 now. Although the company is still best known for its infant care and other consumer product lines, )&J's Codman unit is the world's largest manufacturer of science-based and neuro-surgical products. Its Ethicon division provides most of the world's surgical sutures, and its Ortho unit owns a significant share of the world's pharmaceutical market. Larsen quickly attributed the majority of J&Js success to its unshakable core values. "Johnson & Johnson is a company built around very strong values and a heritage that is expressed in our credo," Larsen said. "It's on the back of our annual report and it's a document that we take very seriously." That credo expresses the company's responsibility toward customers, employees, communities, and shareholders. And, according to Larsen, that credo is lived and breathed by employees throughout the world. "My job, for instance, is to run a good, decent, and ethical company as best we can in a complicated world ... to ensure that the types of things we see happening elsewhere - cutting corners, inflating numbers - doesn't happen here." Larsen said he focused the bulk of his efforts on people issues. He also said he and other senior managers personally discuss values and responsibility with new employees during their first year with )&1. A highly decentralized company that prefers to place nationals back in their home countries, J&J relies on its credo of shared values to foster a sense of common purpose and camaraderie. "We attract people to J&J who share the same values as us," he said. "You can't teach those values and you can't teach heart. The heart of our company is all about people who care deeply about companies and customers. "As you complete your graduate school program at Thunderbird, one of the finest graduate schools in the world, I hope you will choose companies and careers that are consistent with your core values." p.9 _p._J °-----------11 vIEWPOiNT 1t-----------55 - 1 -1'2 _0_02 THE SECRETS OF ACHIEVING REGIONAL BUSINESS SUCCESS A SWOT analysis t Thunderbird, students spend as much time studying the impact of culture, religion, family and language issues on each country's business practices as they do studying functional business skills themselves. They learn informally, from fellow students and professors who come from more than 60 nations, as well as from formal international studies courses. Here, professors who teach four of Thunderbird's Regional Business Environment courses graciously provide brief, competitive assessments of their regions. ASIA BY DRS. KlSHORE DASH AND M.AlmN SOURS Although events like the 1997 financial crisis, the collapse of the IT bubble and the September 11 terrorist attacks have put a brake on Asia's growth, the region is still an attractive investment destination. Despite economic difficulties, Japan's economy is still the second largest in the world. With a combined population of more than 2 billion, China and India are emerging as the fastest growing world economies and are leading the recovery race with seven percent and five percent annual growth respectively. Singapore, with its state-of-the-art ports and relative lack of corruption, continues to attract large sums of foreign direct investment. With Malaysia and South Korea on strong economic recovery tracks, investors' confidence is growing there. According to Mark Newman, vice president and CFO for GM Shanghai, "Eight countries will account for 60 percent of the automotive industry's growth over the next 10 years and four of those countries - China, India, Thailand and South Korea - are in Asia." Asia is a vast potential market, yet despite its apparent attractiveness, Asia's political, economic and cultural challenges make doing business there complex. For one thing, the rules and business practices in Asian countries are in constant flux. Those rules can change in the middle of a transaction, throwing an investment strategy into total disarray. Also, many Asian governments make last-minute pricing demands that can wreak havoc on strategies. Although changing, regulators and shareholders are often the same entity in Asia, making bureaucratic maze and frequent government intervention a fact of life. Therefore, investors must truly understand Asia's policy-making context, the important players and their roles in the policy-making process. Another critical issue that shapes Asia's business environment is cultural. The institutions of a nation (constitutions, laws, property rights, government) are all shaped by culture. These institutions help shape the nation's business culture by legitimizing certain behavioral patterns and then rewarding those who comply and punishing those who don't. Over time, of course, cultural values may be refined by economic development and exposure to other cultures. Many observers have spoken about the global (predominantly Western) culture of business and how it equally applies to Asia. While this is as erroneous as generalizing Asia as one culture, executives should remain sensitive to some common aspects of Asian business culture. Doing so will help them avoid many unpleasant experiences. Some Asian-wide business practices are a manifestation of the culture: government-business relationship, informal decision-making process, relationship-orientation, family-based business practices, time flexibility, opaque communication patterns, ambivalent communications as reflected in "YesNo" responses, lack of legal code and the prevalence of oral contract, tolerance for corruption and patent infringement. Most companies realize that to be a major global player, they need to participate in Asian markets. But given the political and cultural complexity of the Asian countries, what do they need to do? To start, companies must be sensitive to the following to succeed in Asia. First, day-trading dynamics will certainly not work. Companies need long-term investment strategies. Second, companies should be sensitive to the PRC (patient, relationship, cash) principle. Third, like any rational investment, investors must diversify. Putting all the eggs in one basket (one country) isn't a smart strategy. Thunderbird's Regional Business Environment - Asia (RBE: Asia) course, like other RBE courses, is designed to prepare students to navigate through the political. economic and cultural context of regional business activities. The course continues the tradition begun at the 1946 founding of the institution, when "Asian Survey" was one of the regional courses offered to students seeking tlle Bachelor or Master of Foreign Trade degree. Today RBE: Asia tightly focuses on the factual and conceptual elements needed for sophisticated analysis of the changing and evolving Asia-Pacific region. 55 / 1/ 2 0 02 Because of Asia's tremendous diversity and size, the course focuses on Northeast. East. Southeast and South Asia as regional subsets that are tied together using the concepts and institutions studied in Thunderbird's International Political Economy (lPE) course. Students must understand the basic elements of Eastern thought. religions and customs, and how they create tensions given the ongoing globalization process. Key national economies are discussed using case material, including China, Japan, South Korea, Taiwan, Singapore, Vi etnam, the Malay Southeast Asian world and India. Studies of important emerging business trends, such as software, telecom, and biotech developments, also give students a more detailed understanding of Asia's business opportunities and challenges. Students also prepare briefing papers that di scuss industries or companies in key countries. EUROPE DR. OLUFEMI BABARINDE The European business envi ronment has been undergoing acute eco nomic, political, social and legal changes. Paradoxically, both WWW.T HU ND ERB I RD .E D U centrifugal and centri petal fo rces are at work the re. On the one hand, there is evidence of a "Europeanization" process, manifested in interdependent national economies, coordinated na tional policies, and a pan-European business orientation. On the other hand, we also see evidence of virulent nationalism and separatism, including active separa ti st movements in Russia, Spain, and Yugoslavia. Similarly, ultranationalist radi cal right political parties have fared remarkably/ relati vely well in recent el ectio ns in Austri a, Belgium, Denmark, France, Italy, the Netherlands, and Romania. Other developments with fa r-reaching implications include the advent of the Euro in its phys ical fo rm and the graying of Europe. On January 1, 2002, th e European single currency, the Euro, became a physica l reali ty. On March 1, the Euro became the sale legal tender in 12 of the 15 member countries of the European Union (EU), collectively known as "Euroland" or the "Euro-zone." The inception of the Euro p . 1 1 was one of the most extraordinary, captivating. and far-reaching watersheds in the evolution of European integration in that it amounted to a substantial transfer of sovereign ty. The Euro is expected to strengthen European identi ty, bolster European solidari ty, and contribute to the tranquility that has existed in the EU since World War II. The European Central Bank, the European Commiss ion and others also believe that th e Euro will promote economic stability and prosperity, strengthen the Single European Market, and encourage investment in Euro land, the EU and beyo nd. Comprised of Austri a, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg. the Netherlands, Portugal and Spain, the Euro-zone already has a combined consumer population of over 300 million and an aggregate gross national product (GNP) of almost €6 trillion (US$6.5 trillion), representing 22 percent of world GNP. Euro land also accounts for about 18 percent of world trade. Compare that to the U.S., which has 280 million people and accounts for 30 percent of world GNP and 20 percent of world trade. Another phenomenon is the demographic p . 12 time bomb in Western Europe. In 2000, 16 percent of Western Europe's population was 65 years of age or older. That share could jump to 25 percent by 2030 and to 30 percent by 2050. Today, each elderly Western European is supported by more than four working age people. That ratio will be two-to-one by 2030 and less than two-to-one by 2050. Worse, the region's fertility rate is falling, including in Italy and Spain where birthrates are roughly 1.2 children per woman. Both trends will impact labor supply, social security systems, marketing strategies and immigration policies. Whereas the graying of Europeans might suggest a declining European market, it presents immense opportunities for the pharmaceutical, healthcare, insurance and equity product and tourism sectors. For example, despite resistance to private pension schemes in some EU countries, pension fund assets should grow by €3 billion between 2000 and 2010. The consumer products companies can focus less on baby formulas and more on nutritional supplements, less on diapers and more on Depends, while the tourism/hotel industry can cultivate the elderly, who have more free time and disposable income. Another business opportunity, especially in Germany, is the availability of small- and medium-sized manufacturing bus i- WWW.THUNDERBIRD .EDU nesses because the children of their retiring baby boomer owners are not interested in running the fam ily business; they prefer Information Technology and related jobs. One should also understand the rules of the game in the context of who and what counts in Europe before doing business there. The European Commission, the Council, the Court of Justice, and the Parliament are all important. For companies contemplating mergers and/or acquisitions, or those that may be investigated for running afoul of the EU's antitrust rules, the Directorate-General for Competition and the Court of First Instance, matter. The European Economic Area, which encompasses the EU and three of the four European Free Trade Association countries, basically sets the pace for business in Europe. Even and especially in Europe, companies must research and identify market segments carefully since significant variations exist among cultu res, languages, motivations, product preferences, economic sizes and per capita incomes. For example, Nordic and Alpine/Germanic Europeans are known for their low context communication style while Mediterranean Europe has a high context oral one. While the British tend to prefer well-rounded generalists who take initiative and responsibility for sen- 55 / 1 / 2002 ior management positions, the Germans prefer specialists who persuade others by the merits of their arguments, while the French emphasize intellectual cleverness/rigor and prefer strategic/conceptual thinkers. The evolving management style in Eastern Europe seems to suggest a preference for the Germanic and Nordic models. LATIN AMERICA DR. ROY N ELSON Despite some recent developments in Latin America, such as the severe financial crisis in Argentina and political instability in Venezuela, there are reasons to believe that long-term business prospects in the region are highly favorable. With some notable exceptions, such as Cuba and (now) Venezuela, the pursuit of marketoriented policies (reduction of tariff barriers, privatization of state-owned enterprises, elimination of subsidies) has become the new consensus among Latin American governments, and this trend seems likely to continue. On a regional level, the Free Trade Area of the Americas (FTAA) is well on the way to becoming a reality sometime in the near future, despite resistance among some countries which could postpone the planned start date of2005. 55/1/2002 Although this free trade zone will be phased in only gradually, it will encompass the entire western hemisphere and will therefore facilitate trade in the region dramatically. While the overall trends are favorable, it is useful to highlight some specific issues within individual countries in the region: Argentina. In the wake of riots in December 2001 that led to the resignation of the president and a number of interim presidents that fo llowed, social unrest and popular distaste for politicians and bankers continues. A major source of contention is the continuation of the corraJito policy. (This policy, designed to shore up the country's banking system, restricts withdrawals from people's bank accounts.) Nevertheless, current president Eduardo Duhalde, a member of the working-class oriented Peronist party and by nature a populist, seems to be one of the few politicians who has enough political cred ibility with those opposed to the austerity measures to enact the reforms the IMF is demanding. Almost certainly, however, Duhalde is bound to push through some populist measures that would be detrimental to multinational corporations, such as his recent proposal for new taxes of up to 20% on exports. Duhalde has stated that he will only serve as WWW.THUNDERBI RD . ED U president for one year; who will win, or even run, in the 2003 presidential elections has yet to be determined. But most large multinational companies currently in Argentina have a long-term perspective and plan to stay in for the long haul. A new agreement with the International Monetary Fund for financial assistance, which will indicate that the government has established a basis for macroeconomic reforms leading to eventual recovery, will help begin the process of restoring investor confidence. Venezuela. Since winning election to the presidency in 1998 on a platform of populist and nationalist rhetoric, Hugo Chavez has taken a number of actions that have been detrimental to the business environment of the country. Most sign ificantly, he managed to push through a new constitution that centralized power in the presidency and allowed him to run for re-election (he won election again in 2000 for a six-year term), something the previous constitution had not permitted. Chavez has also installed his political cronies in positions of influence in the government. He has done this in the military, to the consternation of key military officials. He also fired professional managers at Petr6leos de Venezuela S.A. (PDVSA), the state-owned oil company, and replaced them with his political allies. Even worse for Venezuela's economy, however, has been Chavez's expensive, badly managed social programs. These programs are popular and boost Chavez's political prospects, but have done nothing to solve the underlying economic problems of the 70 percent of the country's population living in poverty. Such actions, among others, were what led to the short-lived and ultimately unsuccessful "coup" in April 2002. The coup was overturned within 48 hours because of the tremendous p . 1 3 outpouring of support Chavez received from the masses of the people, who like his populist programs and admire what he has done to challenge the position of corrupt traditional politicians. However, it is unlikely that Chavez will be able to maintain this support for long. Additionally, the continuing exodus of educated middle class people to safer, more hospitable countries will only worsen the lo ngterm economic situation in the country. Despite the enormous potential of Venezuela, international managers might want to wait until there is a change in government before entering this market. NORTH AMERICA PROF. LINDA WITZEL So, you want to expand your business into North America. Or make an investment there. Great. Mexico's now under a president who wants to make his economy look like that of the U.S. (He used to work for Coca-Cola, after all). Canada already acts a lot like the U.S. - only it's even friendlier to foreigners And the U.S.? It's the biggest, richest, most risk-free market in the world. Right? Wrong. And, in some ways, right. North America beckons the international business manager like the fabled Promised Land. Milk and honey in abundance. But for a price. And only with careful planning. Canada and the U.S. are among the world's most successful economies. Passionately capitalist in spirit, the two political systems nonetheless provide insurance for "level playing fields" in their economies (anti-trust legislation) and in their societies (anti-discrimination regulations). Their markets are, in principle and generally in truth, open to all who have the ingenuity and energy to woo and win their affluent consumers. The North American Free Trade Agreement (NAFTA) has dismantled most of the trade firewalls between Canada and the U.S., adding to their allure. Mexico continues its painful trek away from its protectionist past, and the world has noticed. Most of the long-state-owned "commanding heights" of the Mexican economy are p. 1 4 increasingly up for grabs (the oil company), and President Fox is shrewdly marketing his country to the European Union and to South America, not only as an enormous potential source of skilled labor and consumption, but also as a gateway to NAFfA. But the Promised Land is not without its bogs and thickets. To foreign investors, the U.S. can be a chameleon. The U.S. government trumpets its free trade gospel, then it imposes tariffs on imported steel and subsidizes farmers. American culture celebrates success but the Justice Department prosecutes Microsoft - because it's "predatory," or too successful. A "nation of immigrants," the U.S. seems to tweak its immigration policies arbitrarily. And its Iiti- WWW.THUNDERBIRD.EDU giousness: for goodness sake, fast-food franchisee, don't sell that coffee hot! What does a foreign executive make of Canada? Since September 11, some of Canada's vaunted openness appears to have been sacrificed to U.S. security concerns. Fierce Canadian patriotism aside, just how independent of Washington is Ottawa? Besides, some say, Canada can't decide whether it's one country or three (Quebec, The Maverick West, the rest). And if NAFfA's so terrific, why can't Canadian lumber companies sell freely in the U.S.? While foreign investors cheer Mexico's reform-minded Fox, many are reserving judgment. Old corporatist habits die hard, and Fox has powerful opponents in the entrenched political and corporate elite. Mexico, too, 55/1/2002 chafes under NAFfA: Mexican truckers cannot yet travel beyond the U.S. border. Other risks abound in North America: • Risks to personal security that September 11 has exposed. It's unlikely that American society will soon resemble ever-vigilant [srael's, but the "age of innocence" is gone. • Post-Enron/Andersen risks to traditional business practices. Facing ever more intrusive scrutiny, companies must review their standard operating procedures and "behave." • Risks posed by the encroachment on nation-specific laws and regulations of global norms. Washington's refusal to join the International Criminal Court, for example, is probably only a modern-day Canute's resistance to a similarly unstoppable tide. For all the risks, North America presents seemingly unlimited business opportunities, among them: • A gamut of personal-security technologies, from the highest (airport security portal that obviates one's having to remove one's shoes) to the lowest (trained dogs that are proven to be nearly 100% successful in detecting plastic explosives and other threats - while also soothing nervous, pet-loving Americans). • More imaginative risk-management strategies. The New York Times reported that CSO (chief security officer) positions are proliferating. But are these CSOs employing the most advanced intelligence methodologies and practices? • Businesses targeting aging North Americans. Before September, many Boomers could be seduced by any product or service offering endless youth. Now, savvy businesses augment such offerings with those, SUd1 as early estateplanning software, which is more reflective of our ineluctable mortality. Opportunities and risks can be either real or imaginary. [n the "Regional Business Environment - North America" course, we deal with reality (to the extent we can know it), perception, and perception-as-reality. Operating or investing in North America is not. as they say, for the faint-hearted. But for those who accept North Americans' ethos of change, focus on the future, and questioning authority, milk and honey do await. _ Looking for Business Leaders with Global Experience? International Executive Search • • • • • • • www.oakbridge-global.com firstname.lastname@example.com U.S.A. Denver: 1.303.670.0788 JAPAN Tokyo: 81.3.5472.7079 Osaka: 81.6.6441.2581 EUROPE London: 44.20.7877.0428 p. I G WWW.THUNDERBIRD . EDU 55 / 1 / 2002 PROFESSIONAL CONSULTING Thunderbird offers "big league" consulting program. BY STEPHEN FRAIL '02 The trimester had ended, but work continued frantically in Thunderbird's World Business conference rooms. That's where consulting teams from the Thunderbird Corporate Consulting Program (TCCP) were preparing for client visits. • The two weeks after each trimester ends are always hectic for students, faculty and TCCP staff, as a trimester's worth of research and analysis gets distilled into targeted client presentations. For more than seven years, TCCP has quietly operated as a professional consulting firm under the direction of Dr. Mudhal KrishnaKumar, a professor of World Business, providing high quaJity services, and delivering 103 projects to clients while steadily growing in size and revenues. Specially chosen project teams, each with six to 10 Thunderbird students, officially called associates, serve as front-line consultants, conducting the research and preparing key deliverables. Each trimester, the TCCP, which has its own budget, accepts three to eight consulting cases from clients who pay just a fraction of the amount they would pay to competing consulting companies for those projects. Although the types of clients and consulting projects vary each trimester, TCCP has completed business development strategy, market entry strategy, product development, business process mapping, acquisition and joint venture valuations, and tactical plan analysis for Fortune 500 companies such as Citibank, IBM, johnson &. johnson, Bayer, AlG, General Motors, GE Capital, and EDS, as well as for smaller firms. It has also helped governments develop strategies to attract overseas investment. A year ago, TCCP consulted for the International Private Capital Task Force, advising the prime minister of Ukraine and developing a sensitivity model. TCCP has also recently consulted for the government of Poland, developing a benchmarking model of best practices on border management to prepare Poland for its European Union entrance. While clients can obtain much of what TCCP offers through traditional consulting firms, many ofTCCP's clients keep coming back because of the program's uniqueness. Most obviously, the price forTCCP's services is far below what is charged by competing consulting companies, and yet clients consistently rate the quality of the work quite high. Richard Puricelli, chairman of JAC Products, Inc., was so pleased with the results of his first project that he hired TCCP for a second one. "Dr. Kumar, his assistants, and students were outstanding," Puricelli said. "Results were very helpful for our company's extension into South America. Another project followed about two years later. This time our focus was in Asia and again we were very satisfied and pleased." Of the more than 80 companies served by TCCP over the past five years, more than a third have been repeat customers, while almost half of all projects have been for repeat clients. Another significant difference between TCCP and traditional consulting firms is that all TCCP projects must begin and end in four-month cycles coinciding with Thunderbird's trimester system. While this constraint limits TCCP's ability to take on longer or larger scope projects, Kumar insists it is also a selling factor. "Managers at client companies like the fact that they can have the answers to their most pressing business problems in just four months." Perhaps the most valuable characteristic ofTCCP, at least in the eyes of past and current clients, is the global network attached to the project. Having completed consulting projects in over 45 countries, TCCP boasts international experience few small consulting companies can match. Thunderbird's alumni network, over 33,000 strong and distributed globally, gives clients access to insight and key contacts that would take years to develop otherwise. Finally, associates are recruited from ThunderbiTd's diverse student body and specifically matched to projects for which they have relevant country, market and/or industry expertise. Luke Ford '96 (EMIM), director, Strategic Sales at EDS Corporation's Solutions Consulting, who has used TCCP's services several times said, "( have worked with the Thunderbird Corporate Consulting Program on previous occasions while with another technology company and now with EDS. The professional level of work and the analytical depth of decision and risk analysis is what made me recommend them to my company again. I was happy to see the students at my alma mater getting the opportunity to learn real-life corporate consulting as a part of their course work." Shawn McCarthy '99, a manager at PWC Consulting's Strategic Change Solutions in Moscow, who himself was a consulting program associate, summed up Thunderbird's competitive advantage in professional services: "Although other business schools might offer client consulting services, Thunderbird is able to consistently provide teams that can manage a vast array of issues arising in a vaTiety of industries on a global basis. To my knowledge, no other school is in a position to consistently field teams to meet the needs of global corporations. For these reasons, TCCP is unique and continues to differentiate Thunderbird from the ranks of other elite business schools." TCCP staff members bid each project, chart out the scope of work, 55/1/2002 WWW.THUNDERBIRD.EDU p. I 7 p. 1 8 WWW.THUNDERBIRD .E DU 55/1/2002 Where can you quickly learn everythlna you need to know about a country's culture, demographics. consumption patterns, potential competitors or partners, import/export laws and other data? 'The quickest. most c0mprehensive and least expensive option is probably thunderbird's Business Information Services (BIS) center. Thunderbird has quietly amassed one of the most compreheIlSive full-text global business databases In the world today. Available free to faculty and students, that Incredibly valuable resource can also be accessed by alllTV'll and the public for a small fee. Simply tell a BlS research expert what you need and sIhe can rapidly pull up all available data and send it to you via email or other mail Cost is just $75 per hour for al\.IMl and $85 per hour for non-alumnl. Recent projects have ranged from S300 for simple country, company or business research to up to $3,000 for the most complex and comprehensive intelligence. Recent projects have involved: • Business and competitive intelligence on companies and industries • Census and multi-level demographic data • Advertisina and marketing strategy research for product launches • DistrIbution chamel and c0nsumption pattern analysis "There is no 'typical' project,· said Patricia Watkins, BIS researcher who will design and conduct custom, Indepth searches for any client. "The BIS mission statement is 'If it's out there, we'll find itl'" Thunderbird's Business Information Services unit quickly provides comprehensive market and c0mpetitive data so companies can plan successful product launch, partnership and other strategies. Watkins brings nearly 20 years of primary market research to 1hunderbird. She can be reached by telephone at (602) 978-7236 or by email at watldaw;Att bird ecIu articulate principal deliverables to clients and develop the appropriate analytical model to be used with each project. That model maps and quantifies the project's principle drivers. TCCP also uses a sophisticated decision and risk analysis tool to run sensitivity analysis, create risk pro· files on potential strategies and examine the probability of enhancing or destroying shareholder value with each recommended strategy. Student associates do most of the heavy project work, spending long hours in Thunderbird's International Business Information Center (IBiC) performing secondary research on the library's many databases. Those associates later develop a primary research plan with the TCCP project managers, then fan out into the field to meet with clients, customers, competitors and employees. Students who participate in the consulting program as associates do so for a variety of reasons, but most are seeking practical consulting experience to help them break into the field once they graduate. The program is also a way for students to bring together and apply all the various skills they've learned at Thunderbird. Said McCarthy, "Though each project is unique, students are called on to leverage their collective global and academic experiences to analyze an issue and recommend a series of options designed to depict the effect of management decisions to be made in the near future." Marketing, benchmarking, competitive intelligence and analysis, finance, operations, supply chain management, acquisition strategies and valuation - all are required to deliver a comprehensive report that addresses the needs of each TCCP client. Many Thunderbird graduates have found that their participation in the consulting program has helped them later on in their careers. Mehmet Munzur '00, a former TCCP associate and now an associate with Dresdner Kleinwort Wasserstein, thinks his time in the program helped him land his job. "During my interviews, I received more questions about my experience with corporate consulting than about all of my other professional experiences. In addition to multiple job offers, my experience helped me develop a new and a better way of dealing with complex business problems," explained Munzur. McCarthy believes that what he learned in the program has made him a much more effective manager. 'The task we faced as part of the TCCP was so specific, so far outside my comfort zone, I wasn't quite sure where to start. TCCP helped structure an evaluation process to break down 'overwhelming' problems into manageable work streams possessing clearly defined mileposts. To this day, our project serves as a personal benchmark for what is possible and for what can be achieved." Kumar gives his student associates much of the credit for the success of the program. "Students who join the corporate consulting project can't be, and aren't, concerned with grades. They can't, and don't, settle for a B or a B+. Client satisfaction is everything." Because student associates move on after each trimester, brain drain is a fact of life for Kumar and his assistants. However, Kumar likes to think that when his students graduate, he isn't so much losing an associate as he is gaining another alumni champion for the consulting program. "We don't do much marketing," said Kumar. "We rely heavily on our alumni base, many of whom are in a position to influence senior management, to bring their consulting business to us." Kumar is continually working to grow the consulting program. He can be reached at (602) 978-7193 or at email@example.com. • p.19 WWW.T HUNDERBIRD .E DU 55/1/2002 M&AS FROM TEN PERSPECTIVES Unique Mergers & Acquisitions course examines M&As with 10 faculty experts You're with a German company whose expansion into Latin America necessitates finding a local partner with strong manufacturing and distribution ties. You locate a family- owned Chilean entity that seems to suit your needs. After your finance folks finish perusing its financial facts, they recommend initiating acquisition talks. But will this acquisition ultimately succeed or fail? That is, can you truly bring it to fruition and, if so, will it really help you achieve your financial goals and strategy? "Nearly 80 percent of all mergers fail to add shareholder value, oftentimes because the accounting and finance people leading them fail to recognize the complexity of integration issues," said Dr. Phil Drake, assistant professor of accounting at Thunderbird. "Our course teaches managers the strategic, integration, negotiation, financial, legal, tax and cultural skills they need to analyze then implement a deal successfully." Called Mergers & Acquisitions: A MultiDiscip linary Approach, Drake's unique three-week, fu ll-time program teaches managers how to analyze a potential merger or acquisition from ten critical angles. The course objective: Show students how to think about mergers & acquisitions and analysis completely, moving critical postmerger issues up front in the discussion process to ultimately ensure that millions of dollars and thousands of people's liveli hoods aren't needlessly threatened. To achieve that goal, Drake leveraged the unique integrated nature of Thunderbird - which combines global business, culture and language within each course - to assemble an all-star lineup of professors who each teach their subject of expertise. BY LINDSEY MICHAELS In Thunderbird's M&A course, student teams must ultimately assume the roles of real-life M&A participants, then attempt to negotiate the deal in character. They must also write up and defend their M&A positions before a faculty "Board" panel. • Dr. Kannan Ramaswamy: strategy • Dr. Caren Siehl: cross-cultural and merger integration issues • Dr. John O'Connell: risk management • Prof. Bob Tancer: statutory framework • Dr. Rich Ettenson: brand management • Dr. Dale Davidson: tax • Prof. Paul Kinsinger: business intelligence • Dr. Phil Drake: accounting • Dr. Mark Griffiths: corporate valuation • Dr. Karen Walch: negotiation. These topics are taught during the first two weeks through an integrated set of lectures, case studies and exercises. Geared to students of all specializations, Drake's program ends with students assuming the roles of those involved in the real GlaxoWellcome/ SmithKlein Beecham mega-merger. Students break into teams of four or five and spend a full and grueling week trying to negotiate the deal in character. Each team's "fi nal exam" involves defending its comprehensive written merger analysis, actions and strategy to a professor panel - which questions everything a company's Board of Directors would. "Our students admit to fee ling absolutely overwhelmed throughout this course," Drake said. "Besides the coursework, they have to learn everything they can about the pharmaceutical industry, then bring all the major elements of business together to form a comprehensive merger plan. We're talking about projected postmerger numbers, the structure of the new management team and Board, which brands and people to retain, where to locate plants and offices, how to integrate technologies and how to get people in both companies to get along." Mergers and acqu isitions have become an increasingly significant part of the global economy as companies have turned to them to address market entry and economyof- scale issues. I n fact, statistics show that M&A activity rose from US$250 billion in 1990 to US$3.5 trillion during 2000. As a result, many managers are now tasked with directing MMs. "The MM interim was one of the best academic experiences I had at Thunderbird," explained Christopher Thiele '02, who works for ING Americas. "The combination of multiple faculty teaching to their strength while blending their expertise with a group of highly motivated, insightful students resulted in the best that Thunderbird had to offer. Phil Drake did an exemplary job of not only providing a challenging environment but of also ensuring that we had all the possible support to push ourselves as far as we could go." • p. 2 0 WWW.THUNDERBIRD .E DU 55/1/2002 AN AMERICAN IN CUBA Looking inside a "restricted" land BY BRlTA MOELLER '02 The flight from Miami to Havana was short and from above Cuba appears green, lush and devoid of freeways, a land edged by white sand beaches. Exiting the airplane you felt the air, heavy with humidity, laced with diesel and a hint of tobacco. Visions of cigars and men dad in guayabera shirts came to mind. Then you real ized that you were surrounded by men wearing guayaberas, toting cigars and large suitcases, as well as by women pushing overstuffed duffel bags full of U.S. purchases. Toilet paper, bouquets of plastic flowers, and pink hair-curlers seemed their most popular items. We all waited together in the cigar-smoke haze to pass through immigration. I asked to get my passport stamped, as I was an American student on a "cultural visit" to a country the U.S. restricts visits to. Once in Cuba, I realized rather quickly that I was not an American, but someone from "the North," the United States. From an American perspective, there is a generation-long economic and political "embargo" between the U.S. and Cuba. Fidel Castro and the Cuban people term it a "blockade." We were fortunate to be in Cuba during the same time as former President Carter and his entourage and we planned to watch the week's events unfold with anticipation. No current or former U.S. president had visited Cuba since 1959 and so we wondered if the Carter/Castro meetings would influence policies in either direction, either tightening or loosening economic restrictions. With its colonial history as a crossroads for Spanish galleons and trade ships, it seemed strange to think that Cuba is today relatively isolated and growing more so as its major trading partners, the former Soviet Union and Eastern Bloc countries, address their own issues. Yet, I believe even a Cuba without Castro would seem wary of outside political influences due to its history of Spanish colonial domination, British takeovers and U.S. military interventions. Cuba and its people retain a proud and independent spirit. Leaving the airport, we passed through hordes of people waiting for returning family members; leaving the island is a definite "event." Walking into the airport's parking lot, full of 1950s cars, acted like a time machine, shooting me back to the pre-Castro era when the U.S. played an influential role in Cuba's economy and political development. 55/1/2002 WWW.THUNDERB1RD.EDU p.21 Today, Castro detests and claims to fight "U .S. cultural imperialism," therefore, Havana was visibly vacant of modem U.S. super brands, such as McDonalds and Hollywood movies. That gave me an eerie, yet somewhat pleasant feeling of stepping back in time. We passed many billboards on our way into Havana, mostly celebrating the Revolution and the accomplishments of Che Guevara and Fidel. Several depicted an "anti-imperialist" sentiment, such as the one reading "Yankee Imperialist Go Home." None of those billboards advertised specific products or brands. Along the streets we saw people of all ages standing in groups, either waiting for buses or friends. Others rode bicycles, which sometimes carried a whole family, rickshaws, or motorcycles with sidecars. Alternatively, lada taxis, which resemble little yellow bubbles, could take you to your hotel if you didn't have too much luggage. You could also tour the city in a romantic horse and buggy. Although Cuba was somewhat what I expected, it was also not what I expected. The 16th and 17th century colonial architecture of Havana was astonishing, pervasive, and every view offered an eyeful of visual stimuli. My most unexpected discovery in Havana was the sound, a constant hum of people speaking island Spanish mixed with the rattle of old car engines and a bit of "son" jazz from the comer cafe. Walking down the cobblestone streets, I felt like a bass note in a song from Buena Vista Social Club. We stayed at Hotel Telegrafico, a beautiful work of restoration situated on Central Park Square, next to the Capitolio Nacional, which is topped by a dome just like the U.S. Capitol building in Washing-ton, D.C. Much of Havana is dilapidated. However, there is an intense restoration effort that sped up once Havana was declared a protected World Heritage site. Today you find gorgeous restored colonial masterpieces next to decrepit, ramshackle structures housing multiple families. The dichotomy was so overwhelming it left me speechless for two days. By the third day my awe and fascination with Havana began to fade amid the sight of so much poverty and so few hygienic necessities, such as soap and toilet paper. The colonial mansions seemed like ghosts of past glory, their crumbling wrought-iron balconies a symbol of the failed ideology behind the former iron curtain. Get invited to a Cuban dinner party and you bring a bottle of cooking oil, for it is more valued than wine. By trip's end, my feelings had become more balanced and I could again see beauty in the surroundings and hear joy in the daily hum of Cuban life. The diversity of Cuba's population, the Afro-Cuban Santeria rituals, the music of son, the dance style of salsa, rumba, and mambo all run deeper in Cuban history than its current political leadership. Even though Cuba is an island with limited resources, certain types of food are plenti ful. For example, the government makes sure that everyone has enough ham, cheese, bread, coffee, red snapper and sugar. Staterun restaurants often included menus offering limited sandwich choices. Would you like ham and cheese, or cheese and ham? Pizza might be listed on the menu, but they happened to be "out of it that day." We found that the best places to eat are called "paladars," private restaurants run out of people's homes that not only offer more p. 2 2 WWW.THUNDERBJRD . EDU 55 / 1/2002 selection and better quality, but also a touch of elegance and flair. From appetizers and wine to desert and coffee, a full gourmet meal could cost US$2S. A bargain, unless you're a Cuban with an average monthly salary of US$lS. I found these paladars to be successful examples of free market dynamics operating in a controlled economy. When Castro was forced to make economically-related internal policy changes in 1994, he instituted the "spedal period," which allows certain businesses, such as paladars, to be "self sufficient" for a "limited time." Such businesses could not even exist in Cuba prior to seven years ago. Paladars send their staffs out to scour the city's markets for the freshest available ingredients each day, and then adjust their menus accordingly. We ate in several and they were all outstanding. While in the Old Quarter, quench your thirst with a mojito at the quaint bar on the roof of the Ambose Mundos, the hotel where Ernest Hemmingway stayed in the 1930s while writing "For Whom the Bell Tolls." Hemmingway later moved to a beautiful house, Finca la Vigia, in San Francisco de Paula, that is now the Hemmingway Museum. Some other important notes: With all due respect to American Express' "Don't leave home without" and Visa's "It's everywhere you want it to be" campaigns; you have to bring cold hard cash to Cuba. Credit cards from U.S. banks are simply not accepted, anywhere. The Hotel Nacional will change traveler's cheques for you, if needed. You must also bring soap, shampoo, and drugstore items. In talking with hotel staff, we learned that most Cuban people need vitamins and nutritional supplements, espedally for children, as well as overthe- counter painkillers such as Advil or Tylenol. They also need shoes and dothing. I'd suggest you plan on leaving what you don't use for the housekeepers. We had barely checked out of our rooms when two women from housekeeping descended upon them to gather up the precious items we had left for them. _ Organized by D,: Cannen Vega-Carney, who regularly takes Thunderbird students to Cuba for language and culture training, the weeklong program Moeller attended was the first in a series of short, in-country cultural programs Thunderbird is developing for alumni, students and others. 55 / 1 / 2002 WWW.THUNO ERBIRO .EOU Customers Inspect peppers and other produce from • vendor. (photo by Michael Norton) MUSEUMS NOT TO BE MISSED MUSEO DE LA REVOlUCt6N excellent MUSEO DE SAN SALVADOR DE LA PUNTA see Spanish ships and bullion MUSEO NAClONAL PALACIO DE BEl.1AS ARTES Cuba's fine art collection NIGHTCLUBS LA ZORRA Y EL CUERVO excellent Cuban Jazz dub Calle 23, between N and 0 vedado Tel: 662402 PLACES FOR DRINKS HOTEL AM80SE MUNDOS (where Hen1minpay stayed in the 19305) Obispo No. 153. at comer of Mefaderes Tel: 60-9529 LA BODEGUITA DEL MmlO (Hemminpay's favorite mojltos) La Habana Vleja EL fLORJDITA (Hemmlnpay's favorite daiquiris) Obispo No 557 at Ave Beligica LA CASA DE CAFE (nice place for coffee next to Hotel Santa Isabel) On East side of Plaza de Annas CULTURAL THINGS TO DO LAMAQUETA detailed model of Havana City La Hahana Viej. FlNCA LA VlGIA See Hemmlngway's residence & fishing boat San Francisco de Paula RESTAURANTS (PALADARS) LAGUARIDA (Where Fresa y Chocotate (Strawberries and CbocoIate) was filmed) Concordia 418, between Gervasio and Escobar Centro Habana Tel: (53 7) 62 .... 940 VISTAMAR (beautiful view. right on the ocean. excellent seafood) Avenida1~. between22anc124 No. 2206 - Miramar Tel: 23-8328 LE CHANSONNIER (French influenced) Calle J. No. 257. between 15 and Unea Veradado Tel: 12-1576 EL HURON AZUL (elegant dining. friendly waiters give you roses and cigars) Hwnboldt No 153. between Calle 0 and P Malecon Tel: 79-1691 LA ESPERANZA Calle 16.105 between 1 and 3 Miramar Tel: (53 7) 22 .... 361 LA COCINA DE UWAN Calle 48. 1311 between 13 and 15 Miramar Tel: 29-6514 p. 2 3 p. 2 4 WWW.TI-IUND ERBIRD . EDU 55 / 1 / 2002 ast Chrisunas Eve, I received a call from my friend Luby Ismail. an Egyptian-American, who asked if I would go with her to my homeland - a land I'd left in 1978 at the age of eight. A land I hadn't returned to since. For as long as I can remember, I was the last person on the planet who wanted to go back to Iran. I guess my problem was that Iran had been such a closed door for me for so long that I couldn't possibly consider the notion of unlocking it. For the past 25 years, I've found it difficult to declare my place of birth or answer the simple question, "Where are you from?" That's because I grew up in an America where Iran was the "evil enemy." We adapt to our environment for survival and so I came to subconsciously view myself as an offspring of that evil enemy. Eventually, I put my heritage behind me in order to move forward. Unfortunately, for me, the impact was one of negative prejudice against my own people, culture, and country. Of spending 25 years of growing up without looking back - then suddenly having the gateway to my past offered to me by someone outside my immediate family. March 22 was the longest night of my entire life. The flight from London to Tehran was five and a half hours, and without exaggeration, I wept uncontrollably for the duration of that flight. I really can't say it was anyone particular thought or emotion that brought on the tears. Something about flying through that mesmerizing starry night and having nature sounds gently making their way into my senses through the airline headphones made me feel truly at one with the universe. Profound thoughts of God's will and life's travels and the goodness of people swelled inside me. Thoughts of my childhood journey out of I ran mixed with the harsh reality that a revolution stole my childhood and the opportunity to grow up with my extended family and my people. At the same time I had an overwhelming feeling of gratitude toward my parents for sacrificing the world they had built for themselves in Iran to bring me to higher ground in America. I let all those feelings sweep me away, and for the first time in my life I allowed myself to grieve my loss of country, my self-denial of origin, and my C1uel bias against my own people. It was the most cleansing and peaceful state of mind, body and soul I have ever experienced. Arrival in Tehran was breathtakingly beautiful. By that time the tears had subsided, my head was rushing at the thought of being in the arms of my uncles, aunts and cousins. The Alborz Mountains were proudly guarding the city from one side and what seemed like an endless mass of buildings and freeway systems carpeted the other. Flying across the width of the metropolitan area reminded me of tlle flight pattern into Mexico City. Witl1 a 15 million daytime population and a nine million evening one, Tehran seemed more spread out than I remembered. I had really worried about how the Iranian passport control and customs officers would treat and react to me, but because I was returning after such a long absence, I feel they made a point of being nice. My family reunion at the airport was quite emotional. At the first sight of my uncle's face, I shed many, many more tears of joy. During those initial embraces with my cousins, aunts, and uncles, I forgot everything about my past and simply experienced a deep healing. People around our little group were even touched by our emotions. Apparently, outward display of emotions - hugging. kissing. smiling. dancing in public - is not within the conduct rules of the Islamic Republic of Iran. TOP ROW The writer's friend, Luby. finds Harry Potter books written in Farsi. Samira at an Internet cafe. Rows of global brands. Time alone with family. RIGHT The Zagros mountains south and west of Tehran. Iran. HOME A hesitant journey oao~~ 55/1/2002 WWW.THUNDERBIRD.EDU p. 2 5 ·0 IRAN Seeing me express myself openly, made the onlookers feel good that someone could express themselves in a way they only wished they could. Happily, that ability of self-expression was perhaps the single most visible point of distinction between me and the people I encountered throughout my trip. Although, in some ways, I looked like the conservative. Young women I saw had make-up on, had their hair showing from under their headdresses, wore bright-red nail polish and open-toed shoes and open necked shirts. Guys wore hair gel. Guys and gals wore tight-fitting clothes. There was even techno music blasting from a rollerblade rink in a city park. I kept thinking, "Hello, is this Jran?" Don't get me wrong. Life in Iran is definitely still under Islamic occupation. That was evident from the mosques that now line nearly every other street and ladies in their headdress or full "chador." But outside of those external symbols, there are five- and six-story indoor shopping malls with everything from Nike to Macy's to cheeseburgers to country fried chicken to Farsi-translated Harry Potter books to the latest Hollywood movies on DVD and Kellogg's Corn Flakes. All those things indicated that, to the general public, there was not a heck of a lot of anything pro-Islamic Republic and anti-American going on. In fact, 1 perceived the opposite. Just as in many other parts of the world, the largest segment of the consumer market in Iran is the youth and with 65 percent being 25 years and younger, anything hip-hop and American is definitely in. The only problem is the roughly 20 percent unemployment and the great disparity between highly inflated prices and people's relatively low income-earning potential. The gap between the upper and the lower class has widened with the flight of nearly the entire middle class. For us, going to Iran is a fantastic shopping opportunity with US$l roughly equal to 800 tomans. Unfortunately, the U.S. embargo on Iranian products means we can't bring back anything. But for the folks living there who earn on average $1l2-$150/month (90,000 - 120,000 tomans), a $10 DVD is a luxury item. Yet, almost every young boy wore Nikes, while young ladies wore Lee Jeans. Both genders seemed to have just about every European designer's accessory imaginable. When the day came for Luby and me to be taken to my childhood home in Amiraabad, I was both nervous and excited. Our house was still green on the outside, but the years had not been kind to it. I was disappointed to find it in that state, but also relieved that our building was still there, since because of renovation projects, many of the older buildings in that neighborhood had been demolished. We rang, and a woman - although initially quite hesitant - let me in to see the interior of her place and the backyard courtyard. Amazingly, I felt as if I had always been there, and although the furniture and interior features were foreign to me, the physical structure was definitely "home." Obviously, there are plenty of wonderful memories to share with you when we have the chance to speak. In the meantime, know that I found no evil in Iran, only family, a sense of healing, and the rediscovery of a heritage I'd denied myself for a quarter century. ~ This trip was the best thing I have ever done for myself. Taking that ~ leap into the unknown and facing my fears head-on was difficult, but it CII B was worth everything. I only wish each of you would take the opportu- .~.u. nity to go back to something or someplace in your past that you've shut UJ out of your life. You may find much peace and healing there. ~ Would I ever consider living in Iran again? Sorry. No. Home is right ~ here in the U.S. But you can bet your bottom dollar I'll be going back to ~ revisit my family and rediscover the rest of the beauty and riches of my ~ culture, people, and birth country. @) Anyone want to tag along? • p . 2 6 WWW.THUNDERBIRD .EDU 55 / 1 / 2002 55 / 1 / 2002 I finished my studies in France after my five-year degree in mechanical engineering and some good personal experiences in South America and in Switzerland with a strong desire to move my profes-sional life toward international business. For that, I needed a degree that would validate and support my choice. That is why I applied to a specialized masters degree program in strategy and international business at ESSEC Business School. Why did I choose this school? First because it is a highly rated "grande ecole" located in Cergy, France. Second, because its slogan, "acting first," fits me. But I also chose ESSEC because its program included an exchange program with the number one business school in international management: Thunderbird. That is how I and 18 other ESSEC students found ourselves last January in one of the more pleasant and warmest places a European can hope to spend the winter: Phoenix, Arizona, USA. While some schools have dual degree and other types of exchange agreements with Thunderbird, the ESSEC(fhunderbird program was developed around Thunderbird's Certificate of Advanced Studies in International Management program. It is a IS-credit program during which we took five specific courses: negotiation and communication in a multicultural world, international political economy, international finance and trad e, regional business environment: North America and global strategy. All brought the international side of economics, business and management to light in a way that only Thunderbird can do, taking classes beyond the theoretical: with 60 nationalities and a mix of more than 60 percent foreigners in every class. You may think you can have such multinational experiences everywhere, but then you start your negotiation workshop exercise with one Colombian, one Japanese, one American and one German. That's when you really start to understand what "international" means, and how this School can give you this intercultural awareness and compulsory skills you need to evolve into a real international manager. But this is only one side of the multicultural experience. I soon realized that you also learn a lot about a culture and its people by spending time with them around a couple of beers at the Thunderbird Pub. This is the first place you start to know people as "people." Thursday night at the pub; I think I made them all .... Looking back, it's where I learned the most about people from other countries and where all those strangers started to become my friends. Then comes the clubs, where you can practice in your favorite hobby with people from all over the world. I had the chance to participate in many clubs, such as volleyball, the choir and, of course, the club des Francophones (French club). Almost every nation- WWW.THUND ERBIRD .EDU ality has its own club and each prepares a special night where everyone is invited to share the food, the drink and the music of th eir culture. I had the chance to organize the French night with many of my fellow countrymen and French lovers: French food, French wine and music all night were the recipe. I remember also the Latin night, where students did special salsa dancing performances. There is also the Global Sounds concert, a multicultural concert where Thunderbird students perform vocal and instrumental music and/or dances from India, the United States, Russia, Czech Republic and many others for everybody. These are strong moments you do not forget. I also had the opportunity to travel within the U.S. while at Thunderbird; the Grand Canyon, Bryce Canyon, Joshua Tree National Park and other places are great natural monuments to visit. Las Vegas is also not that far, but this can be risky for your bank account .... Taking a nap at Coronado's beautiful beach in San Diego, riding a horse in Monument Valley, or renting a houseboat with other friends at Lake Powell are also unforgettable moments. But the most important thing I gained beside my studies at Thunderbird were the meetings I had, meetings with people from Argentina, Colombia, Germany, the U.S., Mexico, Costa Rica, the Czech Republic, Hong Kong, Taiwan or Japan. These are people I wHl not forget. These people and I all graduate and join a strong Thunderbird network of more than 33,000 alumni all over the world. The School's My Thunderbird information technology system is a strong tool that then helps all alumni keep in touch, from everywhere. These are just some of the reasons why Thunderbird is not a School like the others. My stay at Thunderbird also allowed me to meet representatives of international companies during the Internship Fair. This is actually how I found the paid internship I am currently on with Abbott Laboratories in Chicago. The companies that come to recruit at Thunderbird are looking for students with international backgrounds. They know they will find skilled people there, people who are aware of the international issues, people who can adapt to a global world more easily than students at other schools. So here I am. Working for an international pharmaceutical company, with people from India, Ireland, the Netherlands and Colombia, to organize Abbott's global logistic network. My goal is to stay in this kind of company, where I will still be able to enrich my cultural background and professional life, to adapt to different issues and to really feel like what Thunderbird taught me to be: a "citizen of the world." • p. 2 7 THUNDERBIRD MAINTAINS EXCHANGE AND/OR DUAL DEGREE PROGRAMS WITH THE FOLLOWING FOREIGN SCHOOLS • Australia: Bond University • Brazil: Coppead/ UFRJ. Rio de Janeiro • Brazil: Universidade de Sao Paulo • Chile: Adolfo Ibanez • Chile: Pontificia Universidad Cat61ica de Chile • Costa Rica: Instituto Centroamericano de Administraci6n de Empresas (INCAE) • Egypt: American University in Cairo • Finland: Helsinki School of Economics • France: Ecole Superieure des Sciences Economiques et Commerce (ESSEC) • France: HEC • France: Rouen Graduate School of Management (ESC) • Germany: European Business School (EBS) • Germany: The EuropaUniversitat Viadrina. Frankfurt an der Oder • Mexico: ITESM (Instituto Tecnol6gico y de Estudios Superiores de Monterrey) in Monterrey. or Mexico City • Norway: Norwegian School of Management • South Korea: Yonsei University • Spain: Escuela Superior de Administraci6n y Direcci6n de Empresas (ESADE) • Spain: Instituto Catolica de Administraci6n y Direcci6n de Empresas (ICADE) p. 2 8 WWW.THUNDERBIRD.EDU 55 / 1/2002 ENTREPREN EU RSH I P IN FOREIGN LANDS It seems clear that the terms "Thunderbird" and "entrepreneur" go together like the terms "foreign" and "travel," or "cross" and "cultural." The type of person tradi-tionally drawn to Thunderbird just seems entrepreneurial. In fact, there are so many T-birds entrepreneurs that we decided to focus on those who set up businesses in foreign lands. First, there was the problem of definitions. How do you define "foreign land?" What makes a country your "home" country as opposed to a "foreign" one? Being born there? Living there? Something else? Almost everyone has one place that feels like home; the difference is that for T-birds "that place" is often not the country where they were born. T-bird entrepreneurs from Wiesbaden to Singapore, Scottsdale to Sao Paulo, all share a common trait: no matter where they started life, they now have a thorough understanding of, or a love for, a country in which they now contribute to the economy as a business owner. For Charles LaFond '80, Vienna has always been "home." laFond first visited Austria as a high school junior; he knew he would be back. After Thunderbird LaFond went back to Vienna, married his Austrian girlfriend, and started working for Berlitz. Two years later, frustrated with Berlitz's lack of business English offerings, he quit and started his own company, the Business Language Center, teaching only business English to companies. For laFond, Austria has never really been a foreign country. Already well established in the local business landscape, laFond's biggest barriers had nothing to do with being an American in Austria, but with running the numbers. He said his accounting classes as Thunderbird "helped me survive" and added wryly, "The two most important things are: one, get a good tax advisor and two, get a good lawyer. It may cost you more in the short run, but it's worth it." Nor has France ever really been a foreign country to Tracy Harsvik '89, who grew up in Los Angeles. Harsvik had always wanted to live in Paris, and even went to Thunderbird with the intention of getting a job in France. But fate Why not go abroad? By BEATRICE BERNESCUT '90 intervened and it wasn't until 1998 that Tracy and her husband, Oystein Harsvik '89, finally moved to France. Once they did, Harsvik was perfectly at home in Paris and had no qualms about setting up her own business, Painted Art.com. Originally set up to sell art on the Internet, the bulk of Painted Art.com's business now involves taking visitors to explore the "hidden side" of Paris, meeting artists in their ateliers and selling art. For Alex de Faria e Castro '90, born and raised in Germany, it was Russia that beckoned. He said he feels as though he has a "Russian soul" and that it is this ability to understand the Russian mentality that enables him to do business there. Once he realized that the corporate life was not for him, he set up a business distributing food products in Russia (at one point importing 1,000 tons of chocolate a month). As for Scot von Bergen '74, it was experience rather than instinct. After graduation, von Bergen, who is from California, went to Brazil for the Barnes Group (a parts manufacturer). He then established Point Enterprises, selling and distributing agricultural chemicals and veterinary products throughout South America. Von Bergen said he wasn't nervous about starting a business in Latin America because he already had more than ten years' experience there, and because he spoke Spanish and Portuguese fluently and knew how to handle the different business cultures. As for those cultural barriers, most T-birds said they didn't really see any "cultural barriers." Different ways of doing business, yes. Subtleties about individual cultures, yes. But not barriers. The only "cultural barrier" T-birds consistently mentioned was leaping into the entrepreneurial culture. And what does that culture consist of? Webster's defines an entrepreneur as "one who organizes and assumes the risk of a business or enterprise." That in itself seems obvious, but what makes someone go and take on the risk of starting a business? What kind of personality is required? And are entrepreneurs born, or made? The answer to the last question, at least, appears to be "yes." Many T-birds always knew that they would one day work for themselves, while others seized an opportunity. For Merle Hinrichs '65, CEO of Global Sources, it was serendipity. "A set of circumstances provided an opportunity. Does anyone ever know if they're going to be an entrepreneur?" Global Sources started with one trade magazine, Asian Sources, which helped western companies source goods from Asian suppliers. Hinrichs' company is now an online community creating and facilitating global trade between buyers and suppliers. Its annual revenues exceed US$95.3 million. Sanjyot Dunung '87 also seized an opportunity. During the early nineties, Dunung realized that the world was changing and that people were enormously interested in Asia. Born in Bombay, and having traveled extensively throughout the whole region, Dunung dearly understood that part of the world. So she founded AcrossFrontiers. com, which provides cross-cultural training and services. Circumstances were also what spurred Evan Hassiotis '74. Originally from Greece, Hassiotis spent the first part of his career as an international banker then took a job with Booz Allen Hamilton in 1987. Transferred to Singapore, he disagreed with his employer's market strategy and so decided to set up his own Singapore- and Jakartabased consultancy. Chris Fussner '82, on the other hand, always knew he wanted to own his own company. "It was the only way to make real money," he said. Fussner started out in California. But "Do a lot oj and be realistic And to pursue he loved the Orient, and it wasn't long before his employer transferred him first to Korea, then to Singapore. Fussner eventually quit and set up his own business distributing electronic manufacturing equipment throughout Asia. Manfred Kohrs '80 was also determined to go out on his own. He spent a number of years working around the world for NCH before 55 / 1 / 2002 WWW.THUND ERB IR D .E DU p . 2 9 p. 3 0 returning home to South Africa in 1986. While he enjoyed the corporate life, he wanted to do something entrepreneurial. A reorganizing exercise persuaded Kohrs to start his own business selling and distributing synthetic leather products in Zimbabwe. Regardless of how people become entrepreneurs, they seem to share several personality traits, the most prominent of which is passion. Passion clearly was the spur for George Bradbury '99. Bradbury's career began in real estate development. At the same time, he combined his passion for horses (George breeds Friesians) with his misting business and developed a misting system that protected horses from the high heat and humidity of the Atlanta Olympic Games. Sherry Cameron '87 also talked about passion. Cameron moved to Singapore more than nine years ago to work with a telecom company. Soon, she and her business partner were offering relocation assistance to expats moving to Singapore. But while she enjoyed that business, she wanted to do something she was passionate about, so she started importing and exporting food products to Southeast Asia. That business continues to grow, and she is currently considering entering the Australian market. Another shared T-bird trait is creativity. One good idea seems to generate another, and Tbird entrepreneurs often seem to leap from one business into the next and the next. Bradbury went from real estate to horse breeding and is now exporting stone from China. De Faria e Castro diversified into commercial real estate development in Germany and in the u.S. Kohrs, along with his brother and sister-in-law, started a family business, the White Elephant Lodge game reserve, near Durban. Fussner, too, diversified. While vacationing in Switzerland one summer, he was approached by the owner of a prestigious vineyard about the possibility of wholesaling wines. He now imports Swiss and Italian wines into Singapore. Passion, creativity - and don't forget persistence, the willingness to learn from one's mistakes, flexibility, and adaptability. "Entrepreneurship is not about ego," said Bryan Abboud '95, a Nebraska native who established a software business for the gaming industry, Global Entertainment, Inc., in the Netherlands Antilles. Fussner added, "The key ingredients are motivation, fear, and just going out there." But success is not just about personality - education clearly plays a role. How does Thunderbird keep encouraging its entrepreneurs? Three years ago, Sam Garvin '88, a member of the school's Board of Trustees , established the Samuel L. Garvin Distinguished Professorship in Global Entrepreneurship to WWW.THUNDERBIRD .EDU 55 / 1 / 2002 55 / 1 / 2002 WWW.TH U NDERB I RD . EDU serve as a foundation for a Global Entrepreneurship Center at Thunderbird. Originally held by the high ly regarded Dr. Paul johnson, who just retired, that professorship was held last year by Dr. james Rothe, a visiting professor from the University of Colorado at Boulder. During his stay, Rothe carried out a comprehensive benchmarking study of other major entrepreneu rship programs in the U.S. and beyond. That study, combined with a stakeholder survey of studen ts, alumni, faculty, and staff, has helped the school defi ne the future direction of its entrepreneursh ip program: a program that wi ll include new courses, an entrepreneurship focus area, internship opportunities, and other partnership programs. Thunderbird is now seeki ng an expert who can accept th at professorship and guide its global entrepreneu rship program toward even greater prominence. In 2001. Thunderbi rd was also awarded a grant by the Kauffman Entrepreneurship Internsh ip Program. The Kauffman Center for Entrepreneurial Leadership at the Ewing Marina are part of process. " Kauffman Foundation provides grants that allow students to undertake paid internships in small start-up companies. Competition for such grants is intense and it speaks well of both the School and Dr. johnson that Thunderbird was selected for the program. So, how did their Thunderbird education help prior T-birds adlieve entrepreneuri al success? Cameron put it this way: "Thunderbird was my insp iration I I met people ea rly on who had started their own businesses. Seeing other people living their dreams convinced me that if they can do it, so can I, both on a personal and on a business leveL" In Abboud's case, it was the cultural tra ining he received at Thunderb ird th at helped him identify the Netherlands Anti ll es as a country that had the teclln ical infrastructure and legal system he was looking for. He also credits Thunderbird with providing the networking and negotiation skills that enabled him to surmount language and cultural barriers on the is land. Today, his company employs 40 people in Cura<;ao. Anja Foerster '97 was also very clear about how Thunderbird contributed to her success: "Thunderbird gave me self-co nfid ence. I learned to adapt fast to different situations and different cu ltures." Foerster was a manager for Accentu re until she tired of the travel and decided to estab lish a consu lting business, the Future Trend Institute, with her husband Peter Kreuz '97. For Adel Labib '83, Thunderbird's contributi on goes beyond mere business skills. Labib, p .3 1 who is Egyptian, started his own telecom company in Switzerland, Telesonique. As he put it, ''The Thunderbird menta li ty is that you can go anywhere and learn anything. Thunderbird gives you confidence. For most people, going international is taboo, but the Thunderbird education takes away your fear of different cultures. It doesn't tell you what to do; just gives you ski lls and an open mind." Finally, for those who dream of someday becoming an entrepreneur - whether in the country of their birth or any other - what advice would these entrepreneurs give7 "Make sure to be patient and do your homework. Make a plan and stick to it, " said Bret Baldwin '93. Baldwin, a Texas native, recently opened a co nsulting practice in Texas with a branch office in Singapore to assist companies that want to establish themselves in Asia. "Yes, there are differences in culture, differences in expecta tio ns, but they only serve to build up o ne's tolerance and your patience." Hin richs cautioned t1lat it's important to be ab le to actually run the business. "There are many excellent ideas out there, but that's a minor portion of the battle. You have to be able to execute, implement, and manage," he emphas ized. But over and over again, the one consistent piece of advice these T-birds gave was: Go for it! They said to be careful and to plan out your moves. To understand that everything possible wi ll go wrong and to plan for that. To not get reckless, but to definitely go for itl Labib said, "You can't be half-hearted. You must commil." De Faria e Castro added, "just take that first step - jump off the ledge. Once you've done that, you're 90 percent of the way there." Going out on your own is never easy, nor is it devoid of risk. So one wonders, when the dlallenges seem daunting. would these entrepreneu rs consider go ing back to work for someone else? Hass iotis did. After a few years in the Far East, he decided to return to his family's home base in Atlanta, so he sold the business and accepted the CEO ro le at a Greek multinational. But, he said, since he has invested some of his own money, it didn't really feel as though he was goi ng back to work for someone else. Most T-b irds, however responded wi th a variation on the theme of "never in a million years Foerster said she simply couldn't. "Being an entrepreneur changes your personali ty," she said. "Once you've been on your own, going back to a corporate environment is impossible," Kohrs added. Perhaps Cameron summed things up the best: "Whi le I work as many hours as a corporate type, at least I am in the driver's seal." • p. 3 2 55 / 1 / 2002 WINTERIM IN ASIA BY BENJAMIN CREERY '02 Twenty-five Thunderbird students learned how very much "culture does matter" by asking the tough questions of senior managers responsible for implementing their firms' business strategies in Asia. Our January 2002- Winterim course, "Big Emerging Markets of Asia: Korea, China and Thailand," and was led by Drs. Robert Moran and Kishore Dash. Moran, the internationally acclaimed author of "Cultural Differences Matter," and Dash, a specialist in Asian political economies, spent three weeks introducing students to Asian business leaders and practices. KO REA We arrived at our first destination - Seoul, South Korea - ready for adventure. And we got it. We were out visiting companies on our first day, eventually visiting Samsung, SK Chemical, the American Trade Representative from the U.S. Embassy, the dean of Korea's top business school and the ever-memorable Demilitarized Zone (DMZ) that borders North Korea. While at Samsung, SK Chemical and the university, students were able to ask Korean general managers and business school dean, Dr. Dong Sung Cho, questions regarding the political and economic issues Korea faces. Some questions focused on the recent Asian financial crisis and each company's ability to cope with the banking industry's need to write off large amounts of bad debt. Samsung believed that the write down wouldn't affect it much since the company did extensive international business in many currencies. Company representatives also talked about the impact of the gradual currency devaluation, political-stability, and the North Korean threat. Other questions focused on the social aspects of business and helping us understand the labor makeup in terms of gender roles, income distribution, quality of life, and entrepreneurial business opportunities. Students were also interested in how globalization was affecting Korean business structures, as well as in whether or not Chaebols (Korean conglomerates) would be able to survive in the face of increased competition from global firms. According to Samsung officials, Korea's low cost labor advantage was being challenged by Malaysia, Taiwan, and Indonesia. We noticed that many of the labor-intensive and intricate manufacturing jobs were given exclusively to women. Samsung managers said women had better dexterity and capability to deal with repetitive motion than men. Since much of Korea's economy depends on the skillful execution of such jobs, those managers believed women playa key role in Korea's economy. The criticism is that despite their prevalence in the work place, women are regarded as laborers. Few of us met any female managers in any of the Korean companies we visited. Later that week, we discussed the same issues - this time from an American perspective - at a conference hosted by John E. Peters, minister counselor for Commercial Affairs. There, the family relationship-nature of Korean business, new entrepreneurship opportunities, the rule of law, and the Korean people's work ethic were all major discussion points. Peters said there were several reasons why Korea rebounded more quickly from the current economic crisis than did other countries, namely: Korea's internationally recognized level of political stability, its people's incredible work ethic and strong sense of unity, and the country's willingness to adopt more efficient Chaebol practices, something that quickly reassured foreign investors. Despite our quest for business knowledge, the highlight in Seoul for many of us was our trip to the DMZ. While there, we were able to both see and experience one of the last frontiers of Communism and the Cold War. We encountered propaganda aimed at North Korea as well as South Korea and even descended 200 feet into a reported North Korean-dug invasion tunnel. That tunnel put us within feet of the actual border. It was a fabulous experience. The South Gate market and other destinations provided shopping and eating opportunities. Sitting on heated floors, we ate traditional kimchee and Korean barbeque after a hard afternoon of shopping and photography. We were fortunate that our hotel, the Hotel Seokyo, was extremely close to the subway, which was the quickest mode of travel. While some students wandered the back alley restaurants and markets, others jogged to the new World Cup Soccer Arena located just minutes from the hotel. Seoul was alive with feverish preparation, readying itself to receive the world as hosts of the World Cup. CHINA After Korea, we went to Shanghai, China - where many of our expectations were more than contradicted by what we saw and heard. Shanghai is, quite possibly, the most modem city in the world, with huge, newly constructed high-rise buildings as far as the eye can see. In addition to the wondrous architecture, the old British waterfront offered a peak into China's past. The people were warm and friendly nearly everywhere we went. We spent much of our time in China in the New Pudong Economic Development Zone where we visited Coca-Cola, Intel, and the auto supplier Teleflex, asking about their profitability, culture, and the unique challenges they faced manufacturing for both domestic and foreign markets. Coca-Cola, a joint venture, had seen the Shanghai market flatten as Pepsi pushed hard for market share. At Intel, Bill Abraham, general manager, Intel Technology China Ltd. gave us a tour of one of the company's flash memory plants. He explained that Intel needed the government's help to achieve its goals. At one point, Intel sent Chinese custom officers to a U.S. customs office to benchmark and bring back best practices. Since that trip, Intel's highly depreciable supplies often clear customs in a day or two, compared to the three weeks they used to take. Abraham termed working with the government and respecting China's judicial body a key success factor. Intel has expanded its plant three times in the past five years to meet growing worldwide demand. We also received a political/economics brief from the American Consulate General in 55 / 1 / 2002 Shanghai and two Chinese governmental agencies that help Chinese companies - and those interested in coming to China - meet existing and new World Trade Organization (WTO) standards. China appears committed to integrating into the world economic system and is actively training academics to specialize in WTO standards, so they can lead China's integration and governmental policy efforts. Those officials told us that China is moving in the WWW.THUND ERBIRD .EDU only way possible toward economic integration, that the political system doesn't need to change, and that changing to a democracy would not serve the interests of development. They see stability as the key to what they term "sustainable development." Sightseeing activities included nightly dinners overlooking the city, country tours around some of China's most beautiful cities, and visits to the famous black markets where pirated p. 3 3 DVD's, imitation Cucci, and other brands could be bought inexpensively. To our surprise, KFe, Pizza Hut, and McDonald's were always filled to capacity with young families eating American and Chinese-tailored American foods. China, and Shanghai in particular, appeared to be a place where entrepreneurship abounded and yielded tangible results. People seemed to believe that with governmental understanding, benchmarking, and cooperation, companies could find low cost labor and a semi-protected market to help ensure their profitability. THAILAND Although our course had originally been designed to visit India, the political events of last autumn forced us to make Thailand the last leg of our Asian tour. We wound up enjoying the country, visiting Toyota, Ford Motor Company, and the U.S. Embassy's Office of Political and Economic Development. Our meetings focused on the number of empty high-rise buildings left after the Asian financial crisis. We learned that the Japanese had invested aggressively in Thai real estate. When the crisis hit, many were forced to abandon building projects. This left a real estate glut, "For Lease" signs across many of Bangkok's high-rises, and at least 18 large, unfinished and abandoned apartment buildings that our group saw. Luckily though, the Thai economy has been growing over the past three years, albeit, at a slower than pre-crisis rate. At Ericsson and the American Chamber of Commerce, we learned more about the role government and the Thai monarchy played in telecom industry deregulation. Ericsson's Asian vice president said his company is meeting its Thai objectives and pushing forward toward 3C and digital wireless phones. Ponlatep Pantanakul, general manager, Toyota Samron Plant Bangkok, said Thailand's economic turn around has contributed to Toyota's success. According to Pantanakul, the Thai king's ownership interest, the company's early market entry, and its use of a tight and influential dealer network were what contributed to its market dominance. KEY TAKEAWAYS Where else can students like me meet influential business leaders located in the countries we're interested in working in, or really get to know the local cultures and languages, or ask questions of governmental leaders about controversial political topics? Only at Thunderbird! • Alumni and the public may take January Winterim courses on a space available basis. Please contact Thunderbird's James Scott '96 at (602) 978-7784 or at email@example.com p .34 WWW.TH UN DERB I RD . ED U Economic growth has slowed. Jobs are harder to come by. Yet, multinational challenges just seem to multiply. All while technology keeps changing. • So, how exactly can you sustain your own competitive advantage? More than 4,500 working executives will do so with training from Thunderbird this year. • Although it is well known for its fulltime degree programs, many alumni and other working executives don't yet realize how many types of executive programs Thunderbird offers. Those programs include everything from short functional, industry-, language-, or cultural-specific programs, to customized programs, to the School's top-of-the-Iine Thunderbird International Consortia programs. 55/1/2002 COMPA NY SPONSORED PROGRAMS Called TIC, consortia programs create a strategic learning partnership among senior managers of non-competing global companies. Those companies decide which topics to pursue during each two-week TIC session. Thunderbird then develops a targeted curriculum and facilitates benchmarking and best practices exchanges between participants. The School even helps TIC members conduct country specific research, recruiting natives from its full time student body to help. Similar to TIC programs, Thunderbird's custom programs are tailored to each client. Custom programs are developed to address specific needs. They can address one or several topics, be delivered at a client's site and are always tailored to each audience. PRO GR AMS FOR INDI VI DUA LS Do you need a quick business-specific language course? How about a short program that teaches the social and business norms of the country you're moving to? Or how about a negotiations course that covers the cultural nuances you'll need to bargain effectively? Thunderbird's Language and Culture Center can provide all three programs. Individual managers may also attend any of the short function- or industry-specific programs Thunderbird offers. Such courses include Global Finance for Non-Financial Managers, Global Brand Management, Mergers &1 Acquisitions, Managing Cross-Cultural Relationships, Oil and Gas Industry Issues and Global Telecommunications Management. Executives many also obtain a Thunderbird MBA part-time by taking classes at our Arizona, Brazil. Taiwan, or (soon) French-Geneva sites. Latin American executives can even enroll in the School's unique distance learning degree program, offered in partnership with ITESM. EXECUTIVES TAKE WEEK LON G LANGUAGE IM MERSI O N CO URSE Students in Thunderbird's executive masters degree program spent nearly a week speaking only their target language as part of a new three-credit "Intensive Second Language Immersion Experience." It was the first time a portion of their language study had been offered immersion-style. And, although everyone was noticeably exhausted afterwards, most said they want even more language and cultural immersion opportunities. "Thunderbird's program is great and I'm so glad I'm getting to take part in it," said Dr. Greg Mayer, executive medical director, Hospice of the Valley in Arizona. "The language week was very intense, with lots of work - presentations, dialogues, social setting activities - but it was 55 / 1 / 2002 very satisfy ing! We started on a Sunday and by Monday night I was laying awake in bed thi nking in Spanish. I was amazed at how much content and how many new verb tenses I had mastered by week's end." Thunderbird's EMIM 11 class began the 21- month degree program last August and has been studying language as part of its everyother- weekend curriculum fo rmat. However, th is weeklo ng language format was a fi rst for the Thunderbi rd executive degree program. "Our goal with this week was to boost the confidence level our students have in their abi lity to operate in a foreign language environment," said Barbara Carpenter, senior di rector of Thunderb ird 's Executive MBA in In ternational Management program. "With the help of Thunderbi rd's very creative and dedicated faculty and some native speakers who are students in our fu ll time program, we were able to create a language experience that was both fun and effective. " The immersion session foll owed an intensive first trimester dose of language and has been fo llowed by a combination of distance learning and in-class work. • ONLINE CERTIFICATE PROGRAMS BRANDING FOR GLOBAL SUCCESS Start Dates: Aug. 6, 2002; Nov. 5, 2002 The process of building. mai ntaining and extending a global brand is explored in this 6-week program through case studies of orga niza tions such as Volkswagon, Yahoo and Royal Dutch Shel l. US$ 2 ,49 9 NEGOTIATING TO WIN IN A MULTICULTURAL WORLD Start Dates: Sept. 3, 2002; Jan. 7, 2003 This 6-week program prepares managers and executives who need to develop solid skills for negotiating with people from diffe rent countries and across cultures. US$ 2 .499 THE EMERGING GLOBAL LEADER Start Date: Oct. I . 2002 This 6-week program provides a framework for leadership competencies and a cross-disciplinary approach to developing as a global leader in tomorrow's world. US $2 .49 9 CORPORATE INNOVATION IN GLOBAL ORGANIZATIONS Start Dates: Dec. 2, 2002; Feb. 4, 2003 This 3-week program provides a blueprint for the theory and practice of "intrapreneurship" through the study of successful global innovators and corporate cultures. US$ I , 2 50 To register or request an eThunderbird demo. visit http://www.thunderbird.edu/eThunderbird. For more information, call 1-800-457-6959 within the United States or 1-602-978-7864 in ternationally. or email at email@example.com. WWW.T HU ND ERBIRD .E DU BY SUSAN COFFROTH You're a middle manager in an international company and vour supervisor has iden
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