Hello ladies!

Yes, this is a special post, not a “girls only” but almost there. I wanted to share with you a very nice initiative we had from the Women in Business Club in April: a round table with Julia Balandina. Julia is very famous in impact investing in Switzerland and teaches an elective in our MBA. We had the chance to chat with Julia about all that one could be interested about. On the day of the event I had a huge headache, considered not joining the event, but for some reason I decided to stay and have a look. Well, I couldn’t leave at all and didn’t even remember I had any headache!!! Our 2.5 hour chat went by so fast, that if it were to us, the lunch with Julia would go until dinner! Although it was a Women in Business event, it was the first time we had some boys asking if they could attend it as well. A bit shy, they stayed close to the door at the beginning, but were soon interacting, asking questions and enjoying as much as they could!
I must say this was one of the most special events I went to. No need for fanciness, only a nice, open and honest conversation with an impressive person. Julia shared with us her entire career path, her thoughts about impact investing and, of course, how she dealt with being a mother, wife and successful professional in Switzerland. Her insights were simply amazing, it was priceless to listen to her tips on how women can deal with men-dominated boards, for example.
It was an afternoon filled by impacting messages. I am sure that all of us who were there will keep it for our lives. And yes, life can change, go a way we never thought about and still lead to happiness and success.

Julia, thank you very much for sharing so much with us.
Girls, let’s keep it up!

Xoxo
Paula Landmann

1. It helps (but is not absolutely necessary) to have a strategy in advance. Where do you plan to go after?

2. If you go into an MBA without a concrete career plan, which is fine, you should figure out what you want by halfway through the programme…or be a genius (a genius in the normal sense of the word as well as a genius at selling yourself and your resume).

3. It is difficult to change everything in your career at once (changing the industry, level of seniority and location is next to impossible, so don’t set goals that cannot be achieved).

*That being said, the Career Service team was really good, really cared and helped me in many ways!

4. Have an idea of how expensive it will be and make a financial plan. You begin your first lesson in International Finance by financing your degree in St.Gallen. Pay attention to the risks and benefits of leverage!

You can find out about my own experience during my time at the St.Gallen MBA by clicking here.

In 2008, the State government decided to create a new story for Rio de Janeiro, resolving to free the city from crime and corruption arising from drug lords running the favelas. The operation to pacify the favelas was as dangerous as a real war, involving thousands of people, but the government was determined to free its citizens from the iron clasps of drug lords and to provide its residents with peace and improved living conditions.

Taking a cable car to the UPP Station at the top of the Complexes of Alemao and Panha and seeing the sheer size of the community, makes you realize the complexity and danger of launching the pacifying operation. But simply imagining that for years people were subjected to the whims and commands of drug lords makes you understand the need for such a complex military operation.

There is so much pride in the eyes of UPP officers who were involved in the pacification, but there is also sadness due to many losses incurred during and before the operation. However, despite the difficulties faced by the criminal resistance, the military and the UPP were able to succeed and the months of fighting were replaced by peace and stability presently ruling the communities.

Visiting a new business owner of a small shop demonstrates the true victory of the pacification efforts. An initial loan of R$ 300 has given him the capital to start his own business, without the previous control and payoffs to the drug lord. Having a dream of being a business owner and expanding the business is not only a realistic reality but also one shared by many in the multiple pacified communities of Rio.

It was inspirational to visit the community and humbling to see the amount of hope, determination and hard work that so many people we spoke with share. Before we visited the community, we were told that we should refer to Panha as a “community” and not as a “favela”.  Of course this sounds nicer, but I didn’t really understand a true difference between the two. However, during our visit, it became clear that it’s not only the word “community” but actually it represents how everyone who lives there interacts. Panha is truly a community in the fullest sense. It seems as though the citizens who live their not only know and respect each other, but also support each other and share a common goal – not to “improve” only their own quality of life, but to provide the best future for all those that live in the community with them. The bond, compassion and caring nature that we felt when talking to the entrepreneurs about their visions was something I had not expected and also a feeling that I will always remember from our visit.

Of course with all change comes uncertainty and there is never change where 100% of the people are satisfied. After visiting the community of Panha and speaking with the UPP and various community members throughout our stay in Rio de Janeiro, I am fully confident that in the long-term the pacification and the UPP presence will provide an immeasurable benefit. The right intentions are there, a well thought out approach is being taken and most importantly, the UPP is filled with passionate people that truly believe in what they are doing and the long-term benefit for the community. Experiencing this passion makes me confident that the citizens of the community will adjust and appreciate the way of life without the bandit and drug lord control.

Authors:
Svetlana Shifrina, New York USA
Darcy Heigert, Ohio USA

An opportunity for us to build upon our working relationships in a more informal environment, it was the perfect chance to get to know exactly what makes the HSG alumni tick. Participants of this get-together ranged from the previous year’s full time MBA class to current part-time students. We hope that the turnout continues to rise as we host more events.

The next HSG-MBA Suisse Roman Alumni get-together is scheduled for early June somewhere in central Geneva. To become involved in the HSG-MBA Suisse Romand Alumni group, please get in touch.

1) Why did you sign up for the study mission?
I decided to participate in the study mission, because it was a great opportunity to get key insights into Brazil. St.Gallen has partnered with one of the most reputable universities in Brazil, organised respected guest speakers and lined up numerous insightful company visits, all of which made the study mission very attractive. Specifically I wanted to understand how Brazil had developed from an agricultural hinterland to become the world’s fifth largest economy. I realised that better insights into the cultural, political and economic landscape of this country will be vital as the BRIC nations becoming increasingly important in our world. In addition I was hoping to identify possible investment and expansion possibilities and build networks which might be useful, depending on my job after the MBA.

2) What is your first impression of Rio?
The city is much larger than expected. The latest oil & gas discoveries have added new dynamics to the economy and in combination with the upcoming Olympics and World Cup contribute to the already buzzing city. Apart from the economic side, the city offers amazing beaches and night-life but also plenty of cultural and social challenges. Together this makes the city a vibrant and exciting place.

3) What was the perspective given by the Police Pacification Unit on their role in their Favelas?
There has been much discussion about the way the policy reclaimed Rio’s favelas from drug lords and gangs. The Police Pacification Unit is now tasked to bring back normal life to the favelas, guarantee safety and encourage entrepreneurship. It seems like government has taken many measures to improve the lives of people living here. It is no wonder that Brazil has been one of the few countries able lower its GINI coefficient, as income levels for the poor have grown at China-like levels.

4) What’s next?
Next week we will be in Sao Paulo – the largest city in the southern hemisphere with an economy larger than that of Argentina. Here the economic power of Brazil is concentrated and I am curious to see how it differs to Rio de Janeiro.

The two local experts we’ve heard from so far didn’t sugarcoat doing business in Brazil. One professor took the geography-is-destiny view and reckons that Brazil continues its imperialist (his term) expansion to the Pacific, which will eventually cut off days to export Brazilian raw materials to the Western seaboard of the United States and to Asia. Today we heard about the way Brazilians conduct business, contrasting them with practices we’re used to back home. The discussion on how meetings “work” here was very revelaing. Interestingly, the Khanna and Palepu insight about emerging markets (which I’ve discussed in the Business Environment and in Competing in Emerging Markets classes), namely, that the hurdles to doing business in emerging markets can be substantial business opportunities if you can stop looking for, and expecting, perfection—was made here. For all Brazil’s faults, we learned that plenty of money will be made here in the decades to come, even if the road will be rocky from time to time.

Yesterday we had a fascinating visit to BG, a British oil and gas company that has a 25 percent stake in four fields here, located approximately 300km off the coast of Rio. For a company with a market cap of 60 billion UK pounds, we heard from the No2 of BG Brasil that they intend on investing $20-30 billion developing these fields in colloboration with Petrobas, the local state-owned energy giant. If the technological challenges of digging 7000 metres into the ground (in water that itself is 2000 metres deep) weren’t enough, the potential political risks to BG from a change of heart in Brasilia was one topic we explored on this company visit. (For the record, we were told that Brasilia has been very good at honouring its agreements in the energy sector with foreign firms.) It all begged the question what BG is bringing to the joint venture and how it can protect its interests over time. Interestingly, shale gas wasn’t seen as a big threat.

Study Mission company visit to BG Group (oil & gas)

While I’m chained to the desk in my hotel room this afternoon, the MBAs are off to another company visit followed by a trip up the towering Sugarloaf Mountain, to see the spectacular views of Rio. After that we’re off to a churrascuria, for our second helping of Brazilian meat. There’s only one vegetarian on this year’s Study Mission and she’s coping pretty well (the fish and salads at these restaurants are typically excellent too.) Overall, then, a great start with plenty more to come.

The thought of it is a wee bit creepy for most of the students, considering that each student has to ‘stand his ground’ for 70-90 minutes in front of an extremely challenging panel that is made up of our Academic director, one professor and one or two business executives. The first part of the assessment constitutes a presentation of a Financial Times case by the student, followed by a Q&A session on the case. This Q&A session leads onto the second part which tests the student on the core MBA subject knowledge, business implication analysis and some of the current global business events and happenings.

The on-going week is the week designated for the assessment for our batch. Some students have already completed their assessment on the first two days. All of them have come out on top with some rave feedback from the panel, but at the same time face-to-face with some of the areas that they still need to work upon during the rest of the MBA.

This assessment is certainly poised to be a tremendous exposure for me and my classmates because the real attributes of an individual come to the fore only in a trying situation. The corporate touch to the assessment makes the whole setup even more significant. Apart from the knowledge gained during the MBA and its application, this assessment is an ideal way to test an individual’s decision- making prowess, stress- handling ability and most definitely presentation skills too.

Hopefully, our batch would set a relatively high benchmark in the assessment, an example for the future St. Gallen MBAs.

It is worth remembering that the 1930s competitive currency devaluations had other adverse knock-on effects. Compelling analysis has shown that in the 1930s, those countries that did not follow others in devaluing their currencies — or followed later —tended to resort more aggressively to tariff hikes and other forms of protectionism. So currency devaluations not only begot copycat behaviour, but also other forms of beggar-thy-neighbour behaviour, both of which have the effect of fragmenting global markets and setting back the cause of free trade. Plenty, then, is at stake.

This time around, matters might be different for two reasons. The first is that spread of international supply chains means that countries which import lots of parts of components — like Japan — find that many of their exporters’ cost competitiveness worsens as their currency devalues. In the past, when far fewer parts and raw materials were imported, the presumption was that currency devaluations improved national export performance and put imported final goods under pressure. Nowadays, the impact of currency changes on a country’s trade balance is less clear-cut, as simulations have shown. Policymakers in Tokyo should not expect that yen depreciation would have the same impact on net exports as it might have had in the past.

Incidentally, the above argument cuts both ways: exporters in countries that are experiencing currency appreciations will face lower costs for their imported parts and components, offsetting the pressure to raise prices in foreign markets. In effect, such exporters are hedged — at least partially, and sometimes fully — against currency changes. Recent research has shown the impact that such natural hedging has cushioned the impact on exports of nations facing sharp currency appreciations.

The political significance of natural hedging — that arises from the spread of international supply chains — is that exporters aren’t harmed as much by foreign currency devaluations as before and so are less likely to encourage their governments to retaliate. Japanese yen devaluation, then, poses less of a threat to the recovery of its trading partners than in the past, contrary to this week’s assertions by president Hollande in the European parliament.

Another overlooked factor that differentiates now from the 1930s is that governments today are less likely to resort to the more blatant forms of protectionism. For sure, there have been some tariff hikes and plenty of “unfair” trade suits, but few governments have raised tariffs across the board in recent years — despite in many cases having plenty of leeway to do so under their WTO obligations. Instead governments — in rich countries and the large emerging markets — have eased the financial pressures of their firms through bailouts and other cash infusions. While most of the headline-grabbing bailouts are in the financial sector, a large amount of additional financial support given to manufacturers, farmers and non-service sector firms has gone largely unnoticed. Even when governments have been cutting their own budgets — so limiting direct payments from public coffers — financial support has been extended to firms through pliable national banking systems. The indirect and non-transparent nature of bank-driven financial support is another feature that appeals to politicians who don’t want to be seen to be abandoning the “level playing field.”

The upshot is that this time around, governments need not respond to foreign currency manipulation by copycat behaviour or by erecting trade barriers. Instead, any pleas for support for domestic firms can be pretty effectively hidden through financial infusions of one type of the other. Like tariffs, bailouts distort market forces, but in different ways. If Ja­pan’s currency devaluation doesn’t trigger a currency war or protectionism, then that doesn’t mean that other governments have eschewed beggar-thy-nei­gh­bour policies — pressures for state action is likely to manifest itself in other forms of more murkier intervention. Politically this is very convenient for Japan’s trading partners as they can condemn Ja­pan for its naked currency appreciation while responding in far less transparent, but still beggar-thy-neighbour manner. Such is the nature of 21st century foreign economic policymaking.

While these considerations tend to downplay the likelihood that any devaluation of the Japanese yen is likely to trigger overt retaliation, it has to be admitted that competitive devaluations touch upon raw nerves and the risk that a war of words degenerates into something worse, cannot be ruled out entirely. Still, there are good reasons to believe that a re-run of the 1930s is not on the cards.

Also published in the Financial Chronicle, February 10, 2013.

The proceedings started with the Head of Business Development and Corporate Communication- Mr. Res Schneider- introducing us to the company’s business operations and the various challenges that he faces in the telecom industry. It was a revealing insight into the world of telecom production and the products of the company spanning across radio frequency, low frequency and fibre optics.

Further Mr. Damian Looser, Senior Application Engineer, narrated some impressive stories about his field experiences in Brazil and Mexico. He touched upon important market considerations and characteristics for data centres and the distribution of the company’s global business of Data centres.

Subsequently, the highlight of the day awaited us.  Two employees of Huber+Suhner escorted us on a production floor visit and the assembly area. It was fascinating to see the high degree of automation and the precision of various machines, no surprise considering the enormous labour cost in Switzerland. It was a relief to see some employees though.

The final presentation by the Fibre optics product management team displayed the focus on innovation and the positive outlook of the company. The company is amongst the forerunners in technology innovations and developments and sees huge opportunities in Fibre to the home business. In fact, the company has recently developed a new connector, which doubles the density of fibres per rack resulting in improvement of handling, reduction of costs and amount of space and eventually improvement of efficiency.

The time had flown past and the visit ended with a sumptuous lunch in the production plant, where the students had discussions with the company management and recruiters.