Exactly one week from today I will be home in the great USA! While I am so happy that I had this experience, and have loved my time in the beautiful UK, I am very excited to go home. It's funny how patriotic and homesick a little distance can make you...
If you read this blog ever, thanks for your support, it's been a fun project and I hope Duke continues it next year.
If you need any crumpets or etc. please place your orders this week - the plane leaves Sunday morning!
Ciao.
-Kate.
Monday, 9 March 2009
Thursday, 5 March 2009
Fascinating Factoids - Spain and Germany
Did you know...
After the fall of Franco in the 70s, Spain became a manufacturing powerhouse. Attracted by relatively cheaper labor on the continent, European manufacturers set up shop in droves and the economy grew at a healthy and promising clip... right up until 1989.
Date ring a bell? It's the year the Berlin wall fell and the soviet blocks opened up. Because of their proximity to their Western European neighbors and their decentralized form of communist rule, Eastern European countries had factories and managers galore waiting eagerly for foreign direct investment that would allow them to leap into the EU as fast as possible. No sooner did the doors open, but companies bailed on Spain for the greener/cheaper pastures of the Eastern European states and the Spanish economy was in shambles.
From that shock, the Spanish economy reformed itself from a production and manufacturing-based one to one that is known the world over for fancy banks, investments, and services. (Heard of a little guy called Santander?) How did they do it, and how did that happen? Apparently no one really knows yet and it's a topic of "hot" study...
Did you know:
In Germany after the war, the political economy was designed under the premise that German firms were considered part of society and are treated as a communal good in a way - the goal of the firm in Germany is NOT to serve the shareholders, it is to provide jobs for Germans, grow the German economy, and be a citizen of the country and an entity for the people. German shareholding is done by few large shareholders who are long-term minded and German capital markets are largely served by banks with exclusive relationships with firm customers who offer patient and long-term capital, removing firm's needs to seek quick gains or returns.
Workers sit on the boards of firms and are entered into a social contract with the firm called co-destiny. Employees in Germany really don't switch jobs, almost from the time they exit school, and firms pay for extensive training for skilled workers so that the contract is complete. Benefits, well-being, employment, all these things are the role of the firm. Wages are set at a central level by the industrial representatives, which shores up the no-poaching or job hopping climate that allows firms to invest in their employees.
It all sounds nice... until German firms start expanding overseas to escape the confines of the law because now they have US and other foreign PE and hedge fund investors putting unfamiliar pressures on them to restructure or grow.
It's also interesting to view the effect this system has on innovation. MBA studies would tell you that without the easy hire/fire laws, liberal capital markets that include venture capital money, and institutions like bankruptcy laws, you simply won't get highly innovative companies springing up in Germany. And, this is somewhat true... but you do get a lot of innovation, it's just of another kind.
Since R&D is an Asset in German accounting, not an expense as it is at home, companies invest a TON in internal R&D. Innovation within the firm comes from the employees themselves who have a direct incentive and obligation to see their company survive and grow. In fact, some of the largest IT companies in the world are German, think SAP for instance, which is a highly technical business but is built on relationship-driven sales and long-term partnerships with customers. The German model allows this to work.
Germany also focuses on niche, highly technical manufacturing - not commodity work which it simply couldn't compete on given the high costs of labor. So, it goes for sweet spot high price, high expense, niche markets and does very well. Scarily well for a bunch of socialists. Why this is a bad word in the US lexicon, I'll never understand because Germans are capitalists - very good and successful capitalists, they just practice a very different kind of capitalism from the US-Anglo version.
The point is though, it's their way and it works for them because they went all the way. The second they try to implement liberal market stuff, the system starts to weaken. You have to be either liberal market, or socialized market, you can't be in between or it doesn't work because the institutions can't be streamlined - well, so say the experts at LSE. And I'm inclined to agree.
After the fall of Franco in the 70s, Spain became a manufacturing powerhouse. Attracted by relatively cheaper labor on the continent, European manufacturers set up shop in droves and the economy grew at a healthy and promising clip... right up until 1989.
Date ring a bell? It's the year the Berlin wall fell and the soviet blocks opened up. Because of their proximity to their Western European neighbors and their decentralized form of communist rule, Eastern European countries had factories and managers galore waiting eagerly for foreign direct investment that would allow them to leap into the EU as fast as possible. No sooner did the doors open, but companies bailed on Spain for the greener/cheaper pastures of the Eastern European states and the Spanish economy was in shambles.
From that shock, the Spanish economy reformed itself from a production and manufacturing-based one to one that is known the world over for fancy banks, investments, and services. (Heard of a little guy called Santander?) How did they do it, and how did that happen? Apparently no one really knows yet and it's a topic of "hot" study...
Did you know:
In Germany after the war, the political economy was designed under the premise that German firms were considered part of society and are treated as a communal good in a way - the goal of the firm in Germany is NOT to serve the shareholders, it is to provide jobs for Germans, grow the German economy, and be a citizen of the country and an entity for the people. German shareholding is done by few large shareholders who are long-term minded and German capital markets are largely served by banks with exclusive relationships with firm customers who offer patient and long-term capital, removing firm's needs to seek quick gains or returns.
Workers sit on the boards of firms and are entered into a social contract with the firm called co-destiny. Employees in Germany really don't switch jobs, almost from the time they exit school, and firms pay for extensive training for skilled workers so that the contract is complete. Benefits, well-being, employment, all these things are the role of the firm. Wages are set at a central level by the industrial representatives, which shores up the no-poaching or job hopping climate that allows firms to invest in their employees.
It all sounds nice... until German firms start expanding overseas to escape the confines of the law because now they have US and other foreign PE and hedge fund investors putting unfamiliar pressures on them to restructure or grow.
It's also interesting to view the effect this system has on innovation. MBA studies would tell you that without the easy hire/fire laws, liberal capital markets that include venture capital money, and institutions like bankruptcy laws, you simply won't get highly innovative companies springing up in Germany. And, this is somewhat true... but you do get a lot of innovation, it's just of another kind.
Since R&D is an Asset in German accounting, not an expense as it is at home, companies invest a TON in internal R&D. Innovation within the firm comes from the employees themselves who have a direct incentive and obligation to see their company survive and grow. In fact, some of the largest IT companies in the world are German, think SAP for instance, which is a highly technical business but is built on relationship-driven sales and long-term partnerships with customers. The German model allows this to work.
Germany also focuses on niche, highly technical manufacturing - not commodity work which it simply couldn't compete on given the high costs of labor. So, it goes for sweet spot high price, high expense, niche markets and does very well. Scarily well for a bunch of socialists. Why this is a bad word in the US lexicon, I'll never understand because Germans are capitalists - very good and successful capitalists, they just practice a very different kind of capitalism from the US-Anglo version.
The point is though, it's their way and it works for them because they went all the way. The second they try to implement liberal market stuff, the system starts to weaken. You have to be either liberal market, or socialized market, you can't be in between or it doesn't work because the institutions can't be streamlined - well, so say the experts at LSE. And I'm inclined to agree.
Jobs, Layoffs and German Co-Destiny
For me, occupying thoughts in London on most days are "do I want to try the mature cheddar and pickles sandwich today?" or, "does this espresso come with the 10 pence student discount?" But I have been being a good little European student and have been reading the FT and the Economist diligently (esp. since my fellow students are young and pompous and I refuse to be showed up on current events.) As a result, I'm definitely paying attention to a few things that I find very interesting, and here is this week's installment of the news from Europe:
Germany last week announced that it would be subsidizing the wages of people in hurt industries directly so as to help their employers and thus the populace retain jobs. Some economists might say that this makes no sense, but perhaps it makes some (beyond the obvious political benefits) – this keeps people employed and not laid off by struggling employers, and keeps them off the dole. Furthermore, it does something for confidence and panic in the country which has to have positive effects and of course a working person is a healthier person than a despondent laid off one (and studies have proven this).
France announced that they would be doing the exact same thing.
Renault/Nissan which is a Japanese company that ate a French one and has a French CEO – was able to lay off workers in the UK last week (from the most productive car factory in Europe), but was unable to do so in France – France provided $ to keep them on, and has lay-off laws to protect workers. The CEO was quoted as saying, "It's just really hard to fire people in France." A fact that has stifled growth of manufacturing and innovative industries in the country for some time and has led to the stereotypes of unproductive French who unfortunately become the brunt of so many jokes the world over.
The UK is not considering paying car manufacturers to keep workers. Instead they are offering loans and aid to “green” industries as part of their bailout.
Critics say that laying off highly skilled workers (construction, auto etc.) and then rehiring them and re-training them all in a few years when the economy picks back up, makes no sense. If highly skilled workers know how to do things that are good and healthy for the UK's local industries, why should they be re-trained for something else, or worse yet incentivised to leave the UK to seek jobs overseas?
It's an interesting question from a political/economic lens of what's best for a country in the long-run beyond the knee-jerk reaction of "must save jobs! panic now!" In the US, my opinion is however, that our car companies and industrials are not all suitable to weather the storm and do need to be let go and that is the exercise foremost - what industries do we keep and why, and then how best do we preserve them through this downturn. God, I'm so glad I'm not a politician...
Germany last week announced that it would be subsidizing the wages of people in hurt industries directly so as to help their employers and thus the populace retain jobs. Some economists might say that this makes no sense, but perhaps it makes some (beyond the obvious political benefits) – this keeps people employed and not laid off by struggling employers, and keeps them off the dole. Furthermore, it does something for confidence and panic in the country which has to have positive effects and of course a working person is a healthier person than a despondent laid off one (and studies have proven this).
France announced that they would be doing the exact same thing.
Renault/Nissan which is a Japanese company that ate a French one and has a French CEO – was able to lay off workers in the UK last week (from the most productive car factory in Europe), but was unable to do so in France – France provided $ to keep them on, and has lay-off laws to protect workers. The CEO was quoted as saying, "It's just really hard to fire people in France." A fact that has stifled growth of manufacturing and innovative industries in the country for some time and has led to the stereotypes of unproductive French who unfortunately become the brunt of so many jokes the world over.
The UK is not considering paying car manufacturers to keep workers. Instead they are offering loans and aid to “green” industries as part of their bailout.
Critics say that laying off highly skilled workers (construction, auto etc.) and then rehiring them and re-training them all in a few years when the economy picks back up, makes no sense. If highly skilled workers know how to do things that are good and healthy for the UK's local industries, why should they be re-trained for something else, or worse yet incentivised to leave the UK to seek jobs overseas?
It's an interesting question from a political/economic lens of what's best for a country in the long-run beyond the knee-jerk reaction of "must save jobs! panic now!" In the US, my opinion is however, that our car companies and industrials are not all suitable to weather the storm and do need to be let go and that is the exercise foremost - what industries do we keep and why, and then how best do we preserve them through this downturn. God, I'm so glad I'm not a politician...
Tuesday, 3 March 2009
How Fancy Duke Is
Somewhat related to my abroad experience is Duke's new Global MBA strategic initiative which will create campuses in countries all over the world enabling students to physically study in those locations. Sounds so cool and while too late for me, will hopefully one day make some rising star MBAs very happy. Check out our fancy new commercial:
http://www.fuqua.duke.edu/wakeup/?utm_campaign=WakeUp_Brand_Worldwide_022309&utm_medium=email&utm_source=mba2&utm_content=dean
http://www.fuqua.duke.edu/wakeup/?utm_campaign=WakeUp_Brand_Worldwide_022309&utm_medium=email&utm_source=mba2&utm_content=dean
Tuesday, 24 February 2009
Reflections on the LSE Abroad Experience
Everyone's at Fuquavisoin... I'm in the library...Yeah, poor me! For the first time all semester I figured out where they keep the books. Still, it's sad to know that I'm missing all the usual fun back at school, and I'm very excited to be going home soon. For those interested or considering going abroad to LSE, here are some reflections (perhaps a grumpier rendition given the library situation).
I never went abroad in college, and this was a mistake. Since b-school is college part II, I wanted to go abroad if I could. I chose London because it's a great city where I had a lot of fond memories of times with my family, and because I love the funny accents. I also chose London because of the London School of Economics - one of the finest institutions of economics and finance in the world, and easily the best school for this stuff in the UK if not all of Europe. It was a good decision, and I'm happy I did this and got it out of my system. Amazing opportunity.
There were just two problems with this perfect opportunity - 1. London in Winter BITES. 2. LSE is NOT a business school and actually has been kind of a let-down. London in winter would have been worth it if LSE had been great, but it wasn't, so when the sun doesn't shine, it really ticks me off. Better use of money is just backpacking around Europe in the summer like normal people. This is because LSE is very much (and I'm sorry to the Crimson friends out there) like Harvard undergrad - some kids are great, sure, but the majority are really kind of weird and horribly pompous and self-conscious... come on admit it, Justin, it's so true.
Undergrads all over are annoying to me because I'm an old grump, but at LSE, that's all they've got. The majority of the master's students are straight from undergrad, and are indistinguishable. You see the difference everywhere in the immaturity of the class discussions and the self-absorbed day to day they live - no one smiles back, no one holds the elevator or doors, and there's a girl in one of my classes with black nail polish, ripped jeans, dyed hair and so much eye makeup there are days I wonder if she's punching herself. Contrast this with London Business School - same city, same stuff, but adults. You walk in and it feels like a b-school in how people are dressed, the conversations they're having, and the way they treat each other. Not quite Fuqua, but at least I got a smile and an invitation to free beer night from someone I stopped for directions.
Suppose you can get past the annoyance of being surrounded by arrogant young'in. Then you have to get used to the coursework which is also, just like undergrad. If you were an econ or poli sci major with a hankering to taste what PhD life would be like, then this is the program for you. Academic lectures, zero interaction, zero real-life case work, zero real life applicability (unless you're going to work as a functionary analyst for some ministry in Germany or something) and tons of literature to read. And by literature, I mean academic studies in books you've never heard of on topics like, "The Varieties of Capitalism approach applied to the French economy post-German reunification." Poke my eyes out with a crumpet.
It's all very interesting, but I came here to understand Europe better - the culture, the business world, what people my age were thinking in this global recession, etc. And, I haven't gotten it at LSE. What I have learned has mostly been done through reading the FT and the Economist and paying attention to the news in a different lens, which I could have done at home. I did pick up a thing or two from classes, but it's a stretch, honestly. My biggest regret is that the students here have not been interested in making friends and the environment is not really conducive to it. My European friends are actually other students from US schools also studying in London, which is cool, but I was hoping for more.
Here are the lessons learned:
Duke rules. Classes at Fuqua are excellent, even when they suck, they are better than what they've got at the London Business School, the London School of Economics, and even at Hong Kong University of Science and Technology - this is my random sampling and makes me an expert. Fuqua's facilities, culture, students and student life are also incredible, and don't you forget it. So keep in mind that when you go abroad, all that goes away.
Got the travel bug? Great. But keep in mind, after a month, one does tire of throwing money around, and traveling is really better on vacation, in the warm sun, with friends and a drink in a coconut.
Need a break from Fuqua? Best reason to go abroad. It clears your head, helps you remember what you're all about and gives you time to reflect and think again. Plus, it makes you miss Duke like hell and remember all the reasons you love it, and how absolutely 100% correct you were to do your MBA there. Perspective - that's what international living is all about.
Fuqua needs a relationship with LBS as well as LSE. Of the many US students I've met at both schools, the LBS kids are proportionately happier with their classes in at least they can take comparable courses to what they wanted at home, and their environment is truly a business school one. Plus, the school has weekly beer night, and everyone is over the age of 22 - makes a big difference. While LSE may be a fancier name, and may claim to have superior coursework, it's just not what someone in an MBA program cares about. Even the finance classes are off in the sense that derivatives and valuation are taught not in the expectation that one will USE the methods, but that one will STUDY and evaluate the methods. It makes no sense because the kids at LSE want to be analysts and traders too... it's just their way. To remedy this, the Exchange office at Fuqua has agreed to step it up on the LBS front and I'm going to help as best I can while I'm here. Check out the sign we made at the LBS Exchange Recruiting Fair last week in the photo! We were next to the Wharton table where a couple of tools in suits were talking big about how excellent they were... we decided to bring out the big blue guns.
US Business School is different from anything else. The American brand of the MBA really is one of a kind, and I've come to the conclusion that international rankings are complete crap. The truth of it is, smart people are everywhere and they succeed no matter where they go. If schools abroad want to claim they have a hand in this for their graduates then wonderful, but there is absolutely no way that any of the schools abroad ranked higher than US top 10 schools on the international rankings can compare in the US MBA experience. We just do it better - I'm not a relativist on this.
GO DUKE!
Wednesday, 18 February 2009
Why I Love My iPhone
In comparison to the LSE students, I am an historical, political and economical moron. My fabulous pre-med undergraduate education was severely lacking in the modern european ANYTHING, and these LSE kids are killing me. Here's a sample of today's seminar: "Well, prior to the 70s, England was really a Keynesian model of an economy...", "Bretton Woods simply changed everything in Germany in the post-war period..." Ahhh??!!!
If it weren't for the google box on my iPhone I would really have to hide under the desk.
And, the wisecracks keep a-coming...
Professor: "When the Japanese entered the US luxury automobile market with Lexus and Infinity etc., Mercedez and BMW saw their market shares halve."
German kid: "It's because the Americans can't tell the difference (with disdain)."
Laughter ensues. Professor looks at me (why am I the only American in this class??)
Kate: "Oh, I can tell the difference... between a lot of things, (wry smile and a sinister wink)." I think he's scared of me now.
*** Midnight now in the UK, but stay tuned for tomorrow's post on my visit to Fuqua London's "campus", meeting the Duke London Alumni Society, and things I learned about jobs and job losses Europe.
If it weren't for the google box on my iPhone I would really have to hide under the desk.
And, the wisecracks keep a-coming...
Professor: "When the Japanese entered the US luxury automobile market with Lexus and Infinity etc., Mercedez and BMW saw their market shares halve."
German kid: "It's because the Americans can't tell the difference (with disdain)."
Laughter ensues. Professor looks at me (why am I the only American in this class??)
Kate: "Oh, I can tell the difference... between a lot of things, (wry smile and a sinister wink)." I think he's scared of me now.
*** Midnight now in the UK, but stay tuned for tomorrow's post on my visit to Fuqua London's "campus", meeting the Duke London Alumni Society, and things I learned about jobs and job losses Europe.
Saturday, 14 February 2009
Post-Dragon Bliss
Sooo... anyone catch the answer to the riddle in last week's Economist? China's economic slow down is actually due mostly to its over-reliance on exports and its immature domestic market for its own goods as opposed to a huge blow from the West's financial crisis. Liquidity in China means something very different from what it does in the Anglo world in the sense that banks in China are state-owned and controlled to the point that all non-private firms have direct lines to loans on almost fluid "terms" and access to cash is not a matter of banking finances as much as it is a matter of Party connections and policy flavor of the day. Considering our stimulus is being funded in large part from cash drawn from Chinese banks, cash is not their problem any way.
But enough about what I learned in HKUST's "Doing Business in China" class last week, and on to more important topics:
Hong Kong's crumpet... is AWESOME. If you happen to be in Hong Kong, and find a "bakery" you'll notice that what they serve is definitely baked and wheat-derived. However, the goods will be markedly different from what you'd expect. Half the goods will be filled with meat (usually sweet) and a significant portion with red bean paste. This is all very tasty, but could hardly be a crumpet. What I decided was a crumpet was a confection called "coconut and pineapple bun" which is basically a bavarian cream donut from Dunkin but maybe a third the price. And oh baby is it good.
Now to try to connect this to my blog. The British "handed" over what is today greater Hong Kong in 1997 after the previously-agreed upon deadline to hand the New Territories towns to the PRC seemed like as good a time as any for Thatcher to just give it all back. Hong Kong was granted Special area status by the PRC and was allowed to maintain its existing democratic government and laws for 50 years by the PRC. According to a local friend, the PRC stays very removed, but does approve the mayor and presumably a few other higher officials that the populous votes in to office - what "approves" means is unclear to me. Signs of British colonization are everywhere in the double-decker buses, wrong side driving, bi-lingual signs and tan expats. Hong Kongers dress and look as trendy Westerners in any major city do, and any international food, good or service can be procured in HK. The most striking wonders are the natural beauty of HK which is really tropical, lush volcanic rolling hills dropping into the ocean, and the underground metro system which is incredible.
As for HKUST - the dorms suck, but that school looks like something out of a Malibu dream, and the classes were really great - so thanks to Duke, Joe, Air France, my Visa card, and HKUST for making it all happen.
But enough about what I learned in HKUST's "Doing Business in China" class last week, and on to more important topics:
Hong Kong's crumpet... is AWESOME. If you happen to be in Hong Kong, and find a "bakery" you'll notice that what they serve is definitely baked and wheat-derived. However, the goods will be markedly different from what you'd expect. Half the goods will be filled with meat (usually sweet) and a significant portion with red bean paste. This is all very tasty, but could hardly be a crumpet. What I decided was a crumpet was a confection called "coconut and pineapple bun" which is basically a bavarian cream donut from Dunkin but maybe a third the price. And oh baby is it good.
Now to try to connect this to my blog. The British "handed" over what is today greater Hong Kong in 1997 after the previously-agreed upon deadline to hand the New Territories towns to the PRC seemed like as good a time as any for Thatcher to just give it all back. Hong Kong was granted Special area status by the PRC and was allowed to maintain its existing democratic government and laws for 50 years by the PRC. According to a local friend, the PRC stays very removed, but does approve the mayor and presumably a few other higher officials that the populous votes in to office - what "approves" means is unclear to me. Signs of British colonization are everywhere in the double-decker buses, wrong side driving, bi-lingual signs and tan expats. Hong Kongers dress and look as trendy Westerners in any major city do, and any international food, good or service can be procured in HK. The most striking wonders are the natural beauty of HK which is really tropical, lush volcanic rolling hills dropping into the ocean, and the underground metro system which is incredible.
As for HKUST - the dorms suck, but that school looks like something out of a Malibu dream, and the classes were really great - so thanks to Duke, Joe, Air France, my Visa card, and HKUST for making it all happen.
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