Trans-national Voice Issue 1

Issue 1, Winter 2008

Trans-national Voice Student Journal IN THE ISSUE 6

In Focus: Launch of the Trans-national Leadership Series

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About... Assistant Dean of Academics Eva Porras

12 Think Business Become a Leader 16 Globalization: Discover the McDonald’s Empire

AND... 14 CEU Stories Exclusive interview 22 Expert Talk Yusaf Akbar on Emerging Markets

be the

change

Trans-national Voice

Trans-national Voice CEU Business School Student Journal

Trans-national Voice is the first student-run organization at the Central European University Business School. Transnational Voice is a publication devoted to presenting the most significant topics from the world of business and politics. The Journal is created for the benefit of the students, faculty, staff, and alumni of the CEU community. At Transnational Voice we provide you an informational platform for intellectual exchange in a global environment.

Editorial Contact Email: [email protected] Tel.: +36-70-254-3101

More information on CEU Business School

R. Servand

A. Kurmangazina

K. Rowland

Your Trans-national Voice team Founder and Editor-in-Chief: Rustam Jamilov (Azerbaijan) Assistant Editor: Rohan Servand (India) Correspondent: Katie Rowland (United Kingdom) Team Coordinator: Aigerim Kurmangazina (Kazakhstan) Writers: Ilya Baltinsky (Belarus), Givi Pantsulaia (Georgia)

CEU Business School Frankel Leo u. 31-34 Budapest, Hungary H-1023

Faculty Advisers: Yusaf Akbar (Professor of Management at CEU BS) Jay Fogelman (Program Director at CEU BS) Hogan Hayes (Professor of Communications at CEU BS)

Email: [email protected]

Special thanks to:

Tel.: +36-1-887-5014

R. Jamilov

Tony Kmetty, Ewout van der Schaft, Noemi Sidlo ,Eszter Zakarias, Katalin Gelencser, Dora Samak, and the Career Development Office

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Dean’s Column We are living in an era of rapid change, to which the business world tries to adapt. In most fields universities lead the way with innovation and new thinking. With business schools we struggle to keep up with the real world and often find ourselves debating issues and practices that have already become obsolete. Introducing socio-political elements into our programs is an opportunity to finally leap ahead of business rather than continuing to struggle just to catch up. In the area of socio-political expertise, businesses have been incredibly slow to grasp the impact social trends and public policy can have on their business. Political structures change, the society driver changes, the competition changes, the industries change. This is a very critical moment in time when business and public policy could benefit from some crosspollination. To cope with change our school aims at helping you to become the first breed of Trans-national Leaders who can move in and quickly adapt to a local market regardless of their country of origin. Leading the change however is also in your hands. In Europe, the expansion of decision-making and regulatory power of the EU is not just freeing up markets but also creating what Brussels perceives to be acceptable regulatory regimes across a continent of 350 million consumers. The newest phase in globalization (post-internet globalization) will focus on environmental technologies and their global diffusion. It will be required for managers to think within and across borders not just in terms of trade and investment but also to anticipate the in-country social and governmental impact of their strategies and tactics. Our goal is educating and empowering students to become future leaders of the rapidly changing, multi-cultural and trans-national environment. A good leader has a vision, sees the place to go and he/she also needs to get all the stakeholders, the employees, the community, politicians, and government regulators to believe in his vision. A good leader needs to have a broad view of society, and an extensive knowledge on different cultures is a must. We raise leaders, not just managers and we teach you skills that reach beyond the analytical methods of business. Because we are a part of the larger Central European University with a strong reputation in law, public policy and the humanities, we are able to draw upon the experts in these fields to ensure our graduates will appreciate the overlaps between business and society. Our socio-political courses are integrated with the core subjects in the curriculum such as marketing, finance and economics to help managers understand that they cannot make decisions on functional issues in isolation from the broader environment. You are the first breed of the future Trans-national Leaders, so it is up to you to make the change. I envision you, walking out of this school's door, to maintain your curiosity to be confident businessmen, with the appreciation for a deeper knowledge on the history and tradition of the different countries you will find yourselves in over your career, because these affect business and economy. Enjoy reading the first issue of the The Trans-national Voice! Sincerely,

Paul Garrison Dean and Managing Director Central European University Business School

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Trans-national Voice| Winter 2008

Trans-national Voice

Trans-national Voice

S t u dent Jour nal

Contents

Falling. Fallen. Hurt. by Rohan Servand

6 In Focus The launch of the Trans-national Leadership Series

8 About... Academic Dean Eva Porras

12 Think Business Become a leader today!

14 CEU Stories Interview with Dr. Paul Marer

16 Globalization Discover the McDonald’s empire

20 Career Quest The journey towards a better job

22 Expert Talk Dr. Akbar on emerging markets

The current fiscal year is etching itself into history for all the wrong reasons. As the populace of a rapidly changing world we stand at an economic crossroad, with the road we are journeying currently going downhill. Its ability to pick itself up relies heavily upon capital injection and lower interests rates for borrowers. It is also necessary that the injection made be systematic in nature. The United States Government recently passed a $700 billion bailout out plan after an unsuccessful first attempt. The objective of this plan is to buy out the troubled mortgages before reselling them to investors in the future. This in turn will allow banks to resume lending money, and in turn begin turning the wheels of the economy again. If this goes according to plan, it should essentially clear the nation of these large debts that financial firms are currently burdened under. The initiation of this problem leads back to real estate agents and lenders who showed a considerable amount of greed. They recognized an untapped market for sub-prime housing in the late 1990's. With attractive loan and interest figures, they lured in masses of people who could otherwise not meet the criteria for market interest rates. With predictions at the time showing a rise in property value and with favourable initial terms, that were adjustable further, many were enticed. But as property values began to regress in 2006, coupled with growing interest rates and higher adjustable rate mortgages, many individuals took to foreclosure. This essentially marked the beginning of the Global Financial Crisis that we are currently contained in. (Continued on p. 24 )

Point of view 10 Belarus: Land Between Powers (I. Baltinsky) 18 The Western “Support” to Georgia (G. Pantsulaia) 19 Guess Who? (Anonymous)

Quote of the Issue “A fly may sting a stately horse and make it wince, but one is but an insect and the other is a horse still”

(S. Johnson) No material appearing in this publication may be reproduced without written consent of the publisher. The opinions expressed in this journal are those of the contributors and are not necessarily shared by the CEU Business School.

Winter 2008| Trans-national Voice

Editor’s Voice Dear Readers, I am proud to present the Trans-national Voice – the first student-run organization at the CEU Business School. Business is more than just academics. No theory will prove to be useful without real-life experience. And there are few better ways to explore the world than through a student journal. Trans-national Voice is a unique project that will allow students, faculty, and alumn i of the CEU community to speak about most vital components that constitute the today's world – the global world. Trans-national Voice is a massive informational platform for students and experts from over 50 countries. The Voice symbolizes the multicultural environment of the CEU Business School as well as our unique competitive advantage – the global approach to learning. CEU Business School has developed an innovative model of education. Here we are taught to become trans-national leaders in a trans-national environment, to understand the economical, socio-cultural, and political complexities of other countries. No school in the world can match us with that. In the first Issue of the Trans-national Voice you, together with Rohan Servand, will discover the global empire of McDonald's Corporation. Exclusively for our first issue we conducted an interview with one of the School's founding fathers – Dr. Paul Marer. Ilya Baltinsky and Givi Pantsulaia talk about complex environments of their national states. In “Think Business” we present you a quick guide on how to boost leadership skills. In addition, Katie Rowland narrates about the launch of Trans-national Leadership Series and our first guest – Dr. Arpad von Lazar, Professor Emeritus of the Fletcher School of Law and Diplomacy.

I hope you will enjoy reading The Trans-national Voice!

Sincerely, Rustam Jamilov Founder and Editor-in-Chief The Trans-national Voice

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Trans-national Voice| Winter 2008

Trans-national Leadership Series “In Focus” is our regular section that provides a coverage of the most significant event in the school life of the pastt weeks . In this issue our correspondent talks about the visit of Dr. Arpad von Lazar, Professor Emeritus of Fletcher School of Law and Diplomacy.

IN FOC U S

By Katie Rowland

0800 hours… I joined roughly twenty of my peers for a discussion on 'Transnational

at the top of most of these fields.

But

when the school organized this discussion they

Leadership' with Dr. Arpad Von Lazar. The room

omitted to adhere to the first basic rule of

seemed a little sparse considering the status of

marketing: know your audience!

this speaker. I found it hard to comprehend that only twenty people wanted to hear this man

It wouldn't matter whether it was George Bush or

speak.

Vladimir Putin or even the Queen of England

After all, Mr. Lazar is a famous

international businessman.

A quick google

coming to speak. The fact would still remain that

search reveals that he has been involved in

at 8.00 a.m on a Tuesday morning, the average

international affairs, global finance, the oil

student desires only sleep, or coffee, or sleep +

market and higher education. Furthermore, he is

coffee.

20 people attended this unique event. Those who missed it must have certainly had a strong opportunity cost - comparable with and important enough to outweigh the wisdom and experience of a professor of Fletcher School of Diplomacy

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Luckily, the British Boarding school system taught me how to handle an early morning, so I was among a minority of people who were awake enough to hear the views of this distinguished man at such an early hour.

Mr Lazar spoke in an eloquent yet relaxed tone. It was soon apparent to all of us that the man speaking possessed a wealth of knowledge. He transitioned between the oil market, the current economic crisis, the Chinese economy, the US political structure and the modern education system seamlessly. And whilst effortlessly discussing the economic h istory of the world, Mr Lazar even found

Dr. Arpad von Lazar

the time to pass around the croissants.

Professor Emeritus, Fletcher School of Law and Diplomacy

“We are all too busy looking f or the big lesson. We tend to forget tha t under nea th ther e ar e millions of

Dr. von Lazar is currently Professor Emeritus of International Affairs at the Fletcher School of Law and Diplomacy. While at Fletcher he was a founding member of the academic programs on international development, international energy studies and the international environmental program. During his academic career Dr. von Lazar has worked as a senior advisor to major US and foreign oil companies, financial institutions, foundations, the US government and foreign governments. Dr. Arpad von Lazar holds a Ph.D. and an M.A. from the University of North Carolina, as well as a degree from the University of Vienna. He is also a recipient of numerous honorary awards and grants.

valuable e xperiences.”

Managing to tackle the issues of 'transnational leadership' in under an hour is a challenging feat for any speaker. Mr. Lazar knew this. Rather than trying and failing, Mr Lazar relaxed and simply 'chatted' about a few issues and some of the things that business life has taught him. He focused specifically on the idea that we should all be like 'Junkies', constantly searching for new things to try. He remarked: “We are all too busy looking for the big lesson. We tend to forget that underneath there are millions of valuable experiences. ”

Wise words from a wise man. Mr Lazar is certainly one of few inspirational figures in society. It was touching to hear him refer to CEU as his 'last love'. But the sixty minute chat left me wanting more. I believe that Mr Lazar could have spoken all day about almost anything. In such a short space of time and on such broad subjects he was only able to touch the surfaces. I hope that Mr Lazar will return to us (at a more sociable hour), because like a 'Junkie' I am craving my next fix.

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Trans-national Voice| Winter 2008

about... Associate Dean of Academics, Dr. Eva Porras “About...” is our new series of interviews with the School faculty members, staff, and alumni. In this issue we talk to Dr. Porras, our Professor of Finance and Associate Dean. By Rustam Jamilov What do you, as a specialist in finance, think the CEU Business School students should learn from the current financial crisis? What are the take-away points? Is there anything from what we are observing now that we must never repeat?

attention to the fact that the market is not the place to keep all those savings you need to maintain a certain life style, and much less if that

As a finance specialist I would remind everyone that the markets are mechanisms for exchanging certain assets. Price discovery is a result of this exchange and it is therefore independent of the fundamental value of the assets traded. That is, the price of a certain share at a specific moment will be determined by a number of variables including volume traded which is itself affected by the liquidity in the market and alternative uses for the money, the cash flows the given company is expected to generate in the future, and so on. Therefore, as conditions and expectations change, so do prices.

What qualities do you think a fresh graduate should have in order to become successful in business? And any specific qualities for finance sphere?

I believe we cannot prevent traders behaving in a speculative manner because investors saving and postponing consumption logically want the maximum return for that sacrifice. Other people have been accused of having had a major role in the crises such as those who assisted low income citizens obtain mortgages. Well, this requires another opportunity for discussion as simplification of the issues and tradeoffs does not help understand the situation. What we can do is remember that well developed markets, such as the NYSE in USA, have average annual standard deviations of approx 20% for the price of large company shares. This should help everyone infer how markets behave regularly and in extraordinary situations. This should also be a call of

life style is making ends meet.

I think “success” if understood in the business sense is a very relative term and partially the result of a number of factors, some of which the student cannot control. However, success in a larger sense- which is the one that should concern us - is to be in peace. In my experience, this means to do “your duty”. So whichever the definition of success, within those variables we can control, hard work accompanied by other qualities such as honesty, kindness and generosity are a good mix to start off. In the financial sphere, just as probably any other, it is fundamental to keep updated and to have a deep understanding of the issues. Could you recall an example from your past academic/work experience, when you had to overcome a challenging situation? What was the outcome?

Yes, I do remember many instances when I had to overcome a challenge. The interesting thing about this is not when you successfully resolve a situation because there exists such a clear solution you can reach without compromising.

Winter 2008 | Trans-national Voice

The truth is that life presents you with options in which there are no absolute “goods”, “truths” or “wins”, but tradeoffs among which we have to choose. Learning how to compromise, how to live with difficulties and with lack of optimal solutions is key in becoming an adult in the full extent of the word. Did you participate in any college or graduate-level extracurricular activities that you think have helped you become successful? No. I began working full time when I finished attending my first college by the time I was 19. Ever since then I worked full time while I moved on to studying a number of things which are not in my resume, such as photography, literature, etc. It was later, after I had already worked for CBS/FOX that I moved to the USA and began studying my BS in Business Administration, my masters, and my PhD, but I never stopped working. What I want to say is that, unfortunately, I had literally no time for college activities. Still, in college I managed to make the best friends I keep today, that I consider my success. However, I always wish I could have enjoyed a time during which I could solely focus on my studies and the wonderful community around them. Nevertheless, it was just not possible for me.

“A new vision is critical to identify, understand, and deal with in “non-standard” environments.” Is there any specific reason for joining the CEU Business School? Yes, I am personally committed to CEU's vision. It has been my life-long belief that progress can be advanced through knowledge and education and that research is critical in identifying and understanding problems. Nevertheless, it has also become obvious that these words have a different meaning in this time and age. A new visión is critical to identify, understand, and deal with situations in

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“non-standard” environments. It is CEU ´s mission to take on that challenge. In addition, once I had come to do my interviews, my wonderful colleagues and the beautiful city were two very strong additional motivators for wanting to join to CEU.

As far as we know, you are currently in a process of writing two books. Could you give us a brief insight on what their major focus will be? Was there any specific reason or interest for choosing the particular topics? For several years, the publishing house had been asking me to write something in the area of finance. There are several topics I enjoy and consider my area of expertise. One of them is the Cost of Capital, which is the title for the volume scheduled to come out first. The reason why this subject interests me is because even though this variable is the engine of the economy (obviously not alone) and even though capital is utilized by every business, in my experience

managers do not have a clear complete understanding of the subject. I thought that a comprehensive, easy to read, and detailed book targeting managers was needed. I also have talked about completing other books for the same publishing house such as one on Derivatives and another in Facility Management. Ìs there anything you would like to say or wish to our readers? Yes, I would like to recommend them to focus on today. First, because I believe it is an excellent practice to achieve some “mind and emotions” control. Second, because it is the only way to fully take pleasure in what life brings your way. So I would ask

them to work very hard and get out of the classes and experiences with the colleagues and professors as much as possible. I would also ask them to enjoy the opportunity of creating a small, wonderful, fun community around the school that they can take with themselves in their memory once they move on to other challenges. If they do today the best they can, then, they will also be ready to do their best in future new environments. Thank you for talking with us!

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Trans-national Voice | Winter 2008

Land Between Powers by Ilya Baltinsky Belarus? Yeah, I've heard a little about it… it's a part of

Ukrainian Slavs, came from the merge of Slavs and Balts,

Russia, isn't it? I've encountered such a question almost

a Scandinavian people. That certainly made the people

every time I was abroad making friends with people.

inhabiting my country somewhat different in terms of

People barely ever knew it was a single country; nor did

culture and values.

they know the country's location. In fact, Belarus is located in the geographical center of Europe and is greater in area than Austria, Netherlands, Belgium, and Switzerland put together. Home to Mark Chagall and

That couldn't but arouse people's interest in creating an independent state in the Belarusian land. Small principalities of Central and North-Western Belarus consolidated into the Grand Duchy of Lithuania (GDL),

Thaddeus Kosciusko, Belarus has always been at the crossroads of two worlds, European and Russian, which dramatically affected lives of all Belarusian generations.

“People in my country differ in terms of culture and values”

The story of international influence on my home country

which had by the middle of the sixteenth century grown

unfolds along with the development of the Belarusian

into one of the biggest states in Europe. As it covered the

state. Starting from the tenth century, the conquerors

area between the Baltic and the Black Sea, it drew all the

from the East furiously attacked the Principality of

wars in the region. But then again, Tsars in Moscow

Polatsk, the first known state to establish here.

continuously claimed the land belonged to Russia and by

Consequently, the Principality was subordinated to

all means, including wars and assimilation through

Kievan Rus, a stronghold of Moscow's future

religion, tried to seize the land. GDL, as a pro-Western

speculations that the peoples of Russia, Belarus and

catholic state, didn't accept the ideas implemented by

Ukraine descended from one nationality. However, most

orthodox Moscow and sought for closer cooperation

scientists agree that Belarusians, unlike Russian and

with Poland on the West.

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GDL and Poland eventually merged, creating an

after the USA. The commons, on the other hand,

even bigger country. Political center shifted from

preferred to stay calm and obedient as it came to

Lithuania (that was the name for Belarus at that

politics.

time) to the Polish side. Lithuanian unique culture started experiencing a decline as it was vigorously

The Belarusian society today in many ways

oppressed by Warsaw. Subsequently, Belarusian

resembles that of the end of the eighteenth century.

language was prohibited everywhere; instead,

Having come through the Russian Empire's

Polish was deemed the language for all. Moscow, in

intervention in the nineteenth century and then

turn, applied its politics of “religious intervention,”

through the hardships of the Soviet Union,

that is, convinced Belarusians to adopt Orthodoxy.

Belarusian folk failed to maintain control over their own authenticity. Use of Belarusian language was

Some were persuaded. Coming from a slightly

banned until the mid-1920s, the time when

different origin than that of Russians', those who

communist Moscow searched for support among

took up Orthodoxy still drew in a great deal of

periphery republics. However, Stalin repressions of

Russian culture in Belarus. However, there also

the 30s and the World War II, in which Belarus lost

remained Catholics – chiefly the rich, who lived up

every forth man, added up conservatism and

to the Polish way of life; in addition, the whole

reluctance to get involved into politics to the

population of Western Belarus professed

character of a common Belarusian.

Catholicism. All that, together with the originality brought about by those who still maintained the

Only after the USSR collapse in the 90s, Belarusian

culture of Eastern Slavs and Balts, archetypal for

identity started reviving. Events of the history left

Belarus, mixed together to create something new. It

their trace on what Belarus is now. Conservatives

was a society of tolerance and hospitality, bearing

are still awake; liberals now have their say. In shape

cultural particularities of all bordering countries.

of Belarusian original traditions, they represent

The wealthy had a rather progressive mind-set, and

confluence of two different world perceptions,

in 1791, together with the Polish, accepted the first

offspring of the ever-lasting struggle of the West and

Constitution in the continent, second in the world

East. This is Belarus, the Land between Powers.

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Trans-national Voice | Winter 2008

think business In Think Business we are providing you with insights on the most vital techniques necessary for becoming a successful businessman. Think Business will assist you in your life-long quest for personal, academic, and career development. Our series of informal articles and real-life stories will be beneficial for both students and professionals. By Rustam Jamilov Leadership has become a common buzz word in the world of business. It is a skill worth possessing by some means. It allows for one to break out of the ordinary and exercise their ideas via their leadership. More importantly it can take you places. Leadership is often linked with management. However, the two concepts differ in essence. Management is the process of managing people. Managers assign appropriate tasks to people they think can handle the problems. Leaders, on the other hand, share this unique emotional belongingness with the team to reach the common goal. Leaders attempt to supply others with the necessary skills with an emotional touch in order to succeed.

“Management is doing things right; leadership is doing the right thing”

Peter F. Drucker

Common Leadership Traits Most leaders, regardless of nationality, upbringing and mind set, share several common traits. These traits are called Leadership Traits. Generally, true leaders tend to be:

Intelligent – Continuously progress. Develop critical reasoning, and analytical skills.

Broad-minded – Diversity is an ally. Look for different angles on the same question.

Honest – They are sincere with their team members. Deception has not yet helped anybody.

Inspiring – Being confident in your actions.

Competent – Behave and

Constantly show your team that they know what they are doing. Don't dominate however; lead, not rule. Remember that no one can't do everything alone

reason in a mature way. Reasoning and moral values are always above unwise emotional desires.

Winter 2008| Trans-national Voice

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10 Steps to Become a Better Leader

Try it Now!

Plan thoroughly. Planning is 30% of success

The theoretical insight on leadership is very important. Although it takes time to develop these skills, there are numerous possible ways to make a good practical start. Here is our advice for you to become a better

Gather your team wisely

leader now: Ensure effective and comfortable communication

Build trust and confidence

Manage your time efficiently

Be responsible for your words and actions

Establish. A small-scale project. Invite your friends to volunteer at a local elderly house, or organize a trip to a local museum. Develop. Set the goal of your project. Inform others of your ideas. Build the timeline and plan your actions. Motivate. Pass your passion to your friends. Let them share your beliefs. Explain the importance of your initiative.

Serve as a role model

Integrate. Coordinate the work. Delegate tasks if necessary. Know when to take the mask off and laugh

Handle every unpredictable situation with confidence. Remember about social responsibility

Learn throughout your whole life. Remember the Socrates' “All I know is that I know nothing”

Editor’s Insight “Leaders are commonly defined as individuals with an extraordinarily developed ability to effectively inspire and lead people or organizations. Effective is perhaps the crucial word here, because many of us understand the importance of taking the leading role, representing a group, and directing towards the set goal. However, leaders are not just charismatic people full of motivational drive. Given the complexity of the world we are living in today, energy is not sufficient to effectiveness. And it is only effective leadership that brings result. When aiming to start your own business, organize an event or take any kind of initiative that implies leadership duties, the not-to-be-neglected aspect is the productive application of knowledge. For leaders are praised only when the right skills are employed on the right paths.”

Tolerate. Be flexible. Keep in mind the cultural differences. Accept opposing views. True leaders are lenient and ready for challenges.

Leadership Statistics 69% of business leaders say it's important to have a mentor.

75% of executives say good physical fitness is critical for career success at the executive level. 11% of surveyed CEOs either have or are considering establishing a charitable foundation or donor-advised fund. When dealing with suppliers, 86% of senior executives say a lack of ethical standards would be enough to not do business with a supplier

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Trans-national Voice| Winter 2008

CEU stories CEU Stories is our section on the facts and affairs of the lives of Central European University and the Business School. Here we will attempt to share some of the less known truths about our university. In this issue we present you an interview with Dr. Paul Marer, Professor Emeritus and one of our founders.

By Rustam Jamilov Dr. Marer, you are one of the founding fathers of the Central European University Business School. Could you tell us a few “insider” facts about the foundation of the School?

of what an effective business school is like, how it is managed, and what are some of the opportunities and pitfalls of setting up a business school in the communist world. It so happened that a member of the Business School faculty, Joseph Battat, had the

Students might be interested in knowing something

recent experience of having established the first

about the fascinating history of the CEU Business

Western-style business school in Shanghai, at the

School. As someone who was present at its “creation”,

request of the Chinese government, so he was able to

let me tell you a brief story about it.

share his experiences and make many practical suggestions.

Between 1975 and 2000, I was professor of international business at the Kelley School of Business of Indiana University, Bloomington, in the USA. My friend and colleague across campus, Hungarian-Chair Professor George Ranki, called one day in 1987: “I just learned that George Soros [one of the world's most

“My friend called me one da y: ‘George Soros and Sandor Demjan are thinking about establishing a school of management in Hungar y’”

successful, Hungarian-born U.S. investors, a prolific author of books, a major philanthropist], and a friend of his, Sandor Demjan [then the head of a large, stateowned bank in Hungary; today, Hungary's richest entrepreneur] are thinking about establishing a graduate school of management in Hungary, to train outstanding students for management roles in the then still Communist Central Europe. Soros asked if

In the evening of the first day we organized a banquet and asked Mr. Soros to speak. He sketched his dream about the first Western-style business school in Central Europe. He also spoke, humorously, about just the day before having lost $287 million dollars as the result of the dramatic decline of the stock market.

Indiana University could help. What can and should

The next day Soros and Demjan worked out the

we do?”

funding details of the new school, called the International Management Center (IMC), and asked

Ranki and I invited George Soros and Sandor Demjan

Prof. Battat and me to help with the task. We had

to spend two days in Bloomington in October 1987.

volunteered to work on this exciting project for eight months, whenever we could find the time. At the

The first day I arranged for them a program, with the

end of that period one of Mr. Soros' organizations

participation of dozens of business faculty and deans,

took over the planning details.

Winter 2008 | Trans-national Voice

Dr. Paul Marer Emeritus Professor, M.A., Ph.D., University of Pennsylvania (Wharton)

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The IMC was established in 1988 and the first group of 30 students was admitted in 1989. In 2001 the IMC became a part of Central European University, established by Mr. Soros in 1991, that is, several years after the IMC. Since then the School has grown in size and reach; for example, we now also have two undergraduate degree programs.

Professor of International Business, CEU Business School, Budapest; Academic Director (2000-2004); Professor and Associate Dean for Academics (August 2006August 2008). Appointed by President George Bush in 1990, reappointed by President Clinton in 1996 and by George W. Bush in 2001, to the Board of Trustees of the Hungarian-American Enterprise Fund. Twenty-five years at the Indiana University's Kelley School of Business (19752000), promoted to full professor of international business. Consulting experience with the IMF, the World Bank, the UN, the OECD, USAID, Eli Lilly, Cummins Engine Co and other firms. Wrote or edited 20 books and 150 articles and chapters, mainly on the changing political, economic and business situation in Hungary, the other countries of Central and Eastern Europe, Russia and China.

What was the reaction of Mr. Soros to the loss of $287 million in just few days? Last year, at an event involving the CEU Business School, where Messrs. Soros and Demjan were the featured speakers, Mr. Demjan recalled the Bloomington meetings in 1987: “On the second day, when George and I were discussing the details of setting up the IMC, I asked: 'George, how can you focus so sharply on the minute details of setting up a new school in Budapest when just yesterday you lost $287 million on the stock market?' George replied: 'There will be plenty of

opportunities to regain the money lost, so I am not worried. But the opportunity to establish a management school to serve (communist) Central and Eastern Europe may not ever again present itself, so I am making the most of the opportunity.'” What should the students learn from your narrative? What is the key conclusion? This story tells you a great deal about the man whose far-sightedness and generosity is responsible, more than anyone else, for you studying at this School today. I hope that you'll make the most of the opportunity, first and foremost for your own sake, but also as a good way to express your appreciation to the School's founders.

With so much experience to share with us, would you mind continuing this series of interviews in our future issues? Yes. In subsequent issues I'll tell you more about George Soros, who is not only the founder, benefactor, and Honorary Chancellor of CEU but is also one of the most

Honorary doctorate, Budapest University of Economic Sciences (1999).

influential thinkers and personalities of our time.

Thank you very much, Dr. Marer!

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T r a n s - n a t i o n a l V o i c e | Winter

2008

globalization In “Globalization” we discover the largest corporations on Earth that had the most influence on the business, political, and social aspects of our lives By Rohan Servand

business

political

society

E. Hobsbawm has labeled the period since 1991 onwards as the Globalization Epoch. Indeed, quite lately the world has experienced the fast ongoing process of globalization. This term has several definitions and explanations. However, for us, future businessmen, only one fact really matters - most of our business transactions and negotiations will include 2 foreign positions or more. Should that be political factors, cultural differences, or historically embedded ways of doing business, one thing remains crucial and that is preparedness to work in a global environment. In this issue we discover the McDonald’s Corporation and how its global expansion has affected people across the globe. Here we look at how McDonald’s manages to integrate its food strategy and think globally, while considering regional differences and act locally.

Winter 2 0 0 8 | T r a n s - n a t i o n a l V o i c e

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Food has proved itself to be one of the best agents of cultural migration. It is no longer impossible to find a foreign cuisine in most major cities across the globe. People are able to enjoy cuisines from countries they have only heard of, and in turn get a small taste of its culture. Foreign culture is often intriguing to the point that people temporarily lose their own traditions in order to get the best experience from another. Food has always had the ability to push some of its values on a host nation. The large, yellow, unconventional 'M' that symbolizes McDonalds is a powerful example of cultural invasion. With over 31,000 outlets across the globe, it is safe to say that

there is a little bit of America in each one of them. The food that it has to offer is just one medium of cultural transfer. The outlets are often designed to offer an American look or at least a look that is synonymous with the company. Its franchise base is amongst the strongest and best in the world. Regardless of where you are you can almost always get the same taste on products. I say almost always because McDonalds has often gone out of its way to alter products to get a better reception in certain locales. For example, in India where the majority of the country do not consume beef, McDonalds wiped all beef burgers off the menu and replaced them with chicken along with a twist of Indian flavour. However there are other tiny details that bring America to the world through McDonalds that often go unnoticed, especially in Europe. In many Arabic countries clothing is a modest affair for the majority of the country. However, even in such locales, where possible, McDonalds has imposed polo shirts and trousers for women and men alike. With bright colours they obviously stand out and in turn impose western dress culture on foreign soil. Even the toys that come along with every Happy Meal transfers a little bit of America to the world. They often depict fictional characters from animated movies that are being released or shown at the time. Through such marketing tools, companies like Walt Disney better their revenues in multiplex' outside the USA. If not toys that relate to characters, they instigate children outside the USA to follow the latest pastimes. For example in the early 1990's 'Pogs' became a sensation across North America. McDonald’s caught

onto this and began offering colourful 'Pogs' in Happy Meals across the Atlantic in Europe where the trend never actually managed to go into full throttle. However McDonalds does not go global solely through its venues and products. Sponsorship of colossal sporting events like the 2008 Olympics, and providing meals at the Athletic Village are other methods. Its appeal globally has even found itself a place in the British weekly, 'The Economist'. With the help of the Big Mac, the Economist compares Purchasing Power Parity across the globe. They chose a product that could be found in most markets, going to show the widespread presence of McDonalds and in turn American culture worldwide.

McDonald’s has entered so many markets by adapting to them. However while doing so, they never have forgotten to remind their customers and employees that they are an American brand. With the help of fast food they have been able to impose their culture in every corner. After all, food is an awesome a g e n t o f c u l t u ra l migration! Ron welcoming guests in Traditional Thai fashion

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Trans-national Voice | Winter 2008

Western “Support” to Georgia by Givi Pantsulaia More than two and a half months have passed since the the 5-day war between Georgia and Russia ended. Many questions arose about the preliminary actions that could be implemented for avoiding the military confrontation in the Samachablo region. (A historic name for the former Soviet “South Ossetian Autonomous District”, nowadays called “South Ossetia” by the local separatists, Russia and unfortunately by the International Community) Indeed, the West had more than enough power to generously contribute to maintaining peace in this breakaway region of Georgia, taking into account the fact that there were serious signs of a potential conflict that had been frozen for more than 15 years. Far more was expected than what was actually done. A month before the start of the clash between the Georgian military forces and the illegal separatist formations which were later joined by the Russian Army, the Russian Federation conducted military training “Caucasus 2008” close to its border with separatist region. Later on, just a few days before the opening fire, the de-facto government announced the evacuation of the local population. Six Georgian police officers were killed. These facts should have

been a serious signal for the International Community. However, there were no reactions. Finally, on August 6 the separatists did not let the Georgian members of the Control Commission on Conflict Resolution enter the region to attend the commission’s meeting. Negotiations broke down. Still no actual response from Georgia's “Supporters”. Certainly, the US and western-European states, alongside the UN, NATO and the EU showed their support for Georgia against Russia within this matter. However in the time of need there was no practical aid. Even when Russian troops came out of the conflict region of Samachablo and occupied the neighboring town of Gori which is under the jurisdiction of Georgia's central government, the official statement made by Nicolas Sarkozy on behalf of the EU “condemns the Russians' disproportionate reaction to Georgia's aggression to South Ossetia”. This made it clear how weak EU appeared to be in confronting Russia and pushing it for maintaining peace. Neither economic nor diplomatic sanctions were posed against Russian Federation. The UN, which stands on the basis of keeping global peace failed to carry out the mission it was built upon. Each and every victim state will always ask the International Community a question: what did they do in order to avoid the war and maintain the peace? Georgia is one of these victims asking this very question.

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What did THEY do to avoid war and maintain the peace?

Winter 2008| Trans-national Voice

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Guess Who? Anonymous

Based on my high-school experience

Class was full today, but still the sounds of shuffling papers and cross-talk could not drown out the loud bell at the beginning of class. Sitting next to me, one of the schools hockey players was sunken low in his seat, probably avoiding any unwanted attention he might draw. “How's it going man?” I asked softly, as class had slowly start to begin. “Fine. Just a little tired, that's all.” He replied. “Well, we have short classes today because of the assembly. Woohoo! How late were you up anyway?” I asked. He hesitated at first, but eventually said “Pretty late, I just flew back from the lower 48 last night with my Mom.” “Man, you gotta be tired” I said. “Yeah, and I almost died of boredom at all those conventions with Mr. John and others” He said. I laughed and said “I don't really follow all that stuff too much, to be honest.” It was a safe reply, fairly neutral I thought. The conversation came to an awkward halt and we both retreated to our notebooks. When class ended he hurried out, everyone else took their time. At my locker, I couldn't help but overhear him talking on his phone: “No, you really don't have to.” “What for?” “I'll just meet you somewhere else.” “Yeah, I made my bed this morning.” “Fine, bye.” I approached him, “Track, Is everything alright?” I asked. “I guess,” he said, with certain distress, “it's just that I'm a little

?

uneasy about all this attention.” I couldn't blame him. Track wasn't my close friend, however we did chat occasionally. I could see the emotional mix he was experience. All too soon the small town he grew up in was beginning to single him out because of his Mom. I patted his shoulder, and continued on to my next class. By lunch, rumors began to circulate. Apparently his mother was dropping by the school to speak at our assembly. Now I understood. That makes a lot of sense. The rest of the day was lost in a haze, as many of the kids anxiously awaited the coming assembly, each of them eager to see if the rumors were true. It was to be held in the schools gym, the only room large enough to house the school's still growing population. The room filled quickly, and I found my place amongst a few friends. Let the games begin. The lights dimmed a bit, provoking the rooms anticipation even more. Afterwards, the crowd slowly fell silent. A dark figure made its way to the center of the gym. It was our Principle. He took his time adjusting the microphone in hand, but soon his voice was resonating clearly throughout the gym. “I think most of you know what this assembly is about,” he said, “so I can skip the introduction.” The whole room went dead, frozen with expectations to finally hear Her speak in the school “Students, I give you the next class President.” he announced. Everyone gasped for air. What is this? Instantly the gym was filled with a tide of whispers. I sensed disappointment. “I wanna go home!” someone yelled in the distance. I agreed to that, this was a waste of our time. I turned to my friend, and with a sarcastic tone of voice he said, “Well, we sure expected someone else.” “Whom?” someone asked. “Track Palin’s mom, of course. Sarah Palin”

Trans-national Voice| Winter 2008

Career Quest In Career Quest the Trans-national Voice, in cooperation with the CEU Business School Career Development Office, provides the readers with various advice and tools for building a better career. Find out what events took place at CEU Business School in the past month and make sure you attend the upcoming fairs and showcases since they are bricks on your life-long career construction!

“Choose a job you love, and you will never have to work a day in your life”

(Confucius)

Expert Advisory

N e t w o r k i n g

Student Workshops

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landing a job

By Rustam Jamilov

No matter what degree one is pursuing, the ultimate goal for any student is to get a well-paid job in a good location with vast potential for growth. The problem is that everyone wants a wellpaid job in a good location and potential for growth. Moreover, the market requirements are growing more rigid every year. For instance, if 10 years ago a fluency in one foreign language was very much sufficient to landing a decent job, the situation is different today. Most successful graduates speak 3-5 languages, not mentioning the academic and extracurricular achievements shining out from their resumes . Therefore, it’s quite difficult given the modern flow of events to secure a job.

Winter 2008 | Trans-national Voice

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There is good news, however: CEU Business School is one of the unique institutions that highly stresses the importance of assisting students in making the right career choices. Only in recent weeks the members of the CEU community had a chance to attend corporate showcases of Credit Suisse, CEMI, and Egon Zehnder, as well as several undergraduate and graduate workshops. Overall, the career related events at CEU Business School constitute the very core of the “success cannonball”. As seen from the illustration on page X the four principal activities that will help a student land a job are: corporate showcases, advisory from experts, workshops, and networking. The latter one comes perhaps in consequence of the other 3. By attending various conferences and Credit Suisse Corporate Showcase. October 28, 2008 affairs participants not only increase their chances of getting a call from, say, Credit Suisse a few weeks after the showcase, but also to Past Events meet new people, exchange business cards, and contribute to the list of personal contacts. It’s crucial to remember that the freshmen and 15 October: Resumé Writing Workshop sophomores of today are future decision-makers in their home countries. Given the fact that 80% of the CEU Business School student 20 October: Global Management Challenge (GMC) body is international, and the country portfolio includes some 30 presentation nations, we are talking about a massive networking platform hiding 28 October: Corporate Showcase – Credit Suisse behind the three lettered “CEU”. It’s at the same time beneficial for the visiting companies as well to ask for an e-mail of our student: you never 4 November: Undergraduate Workshop, Resumé know who you will be doing business with in 5 years. and Cover letter writing

While the career events are the cannonball, the cannon itself is - the student. No matter what resources a school implements to see its graduates on the list of “The Best Companies to Work For”, the motivation and effort must come from the student only. For example,

one should take care of the grades before applying for jobs. Yes, one might argue that grades are not sufficient to higher incomes or faster promotions. And we in no way disagree. However, grades just... matter. Everything on the checklist matters: experience, grades, recommendation letters. Letting one of the factors down hits your chances of getting your dream position. And academic performance, we believe, although with some room for speculation, is the easiest basis for a company to make the final decision concerning a particular candidate. Seeing the numbers on the list is way less complicated than judging the listed internships, whether the description and difficulty would actually be similar in a different company and/or country. Hard facts are always more persuasive. So, landing a good job is never easy. However, results usually outweigh the costs. Construct your steel cannon in classes, and don’t disregard the career affairs. Those provide the necessary intellectual weapons to hit the bull’s eye of your life. Finally, it’s important to note that all our corporate showcases and student workshops would never take place without the diligent efforts of our Career Development Office staff. Every day those people are working really hard to make sure we receive the appropriate advice and training on all career-related topics. On behalf of the Transnational Voice team, I would like to express our sincere gratitude for everything they have done for us so far!

14 November: Egon Zehnder Corporate Showcase 20-21 November: Careers in Europe – job fair in Budapest 28 November: CEMI Corporate Showcase

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Trans-national Voice | Winter 2008

expert talk Can the BRIC Emerging Markets help the World through the Global Financial Crisis? by Dr. Yusaf Akbar ? Yusaf Akbar Received

his doctorate at the Sussex European Institute, University of Sussex, UK. ? Editor- in- Chief of the International Journal of Emerging Markets ? Main teaching interests are in International Business, Strategy, International Trade and Investment. ? Main research interests are in international trade and investment, EU integration and the politics of multinational enterprise strategy. ? He published two books in 2003, the first entitled EU Enlargenment and Central Europe: Regulatory Convergence and the Multinational Enterprise and another volume, Global Antitrust: Trade and Competition Linkages. ? Dr. Akbar has taught in many countries such as USA, Italy, UK, Bulgaria, Canada, etc.

So now we are at a moment of reckoning

debacle has pointed out on numerous

in the current phase of the global

occasions that speculative bubbles will

financial crisis that have frozen credit

occur and it is a matter of managing

markets and sent equity markets into a

them. We appear to have let this bubble

tailspin. The big issue we now face is

grow to fast and without adequate

whether or not the leading emerging

oversight.

markets of the world economy, notably the BRIC group (Brazil, Russia, India and

While the blame game will need to be

China), can save us from a global

played as we consider future regulatory

depression or whether they too are

strategies to harness the power of free

being dragged down in the after

markets without becoming wedded to

currents of the US, UK, Japanese and

libertarian ideology, we need to focus

West European slowdown.`

right now on how we can manage this slide and who will be the key players in

Comparisons been drawn between the

making this slide a gentle one.

current crisis and that of 1929 and 1908 - where financial markets collapsed

What is unique about Brazil, India and

after a speculative bubble burst. Indeed,

China (and to a make lesser degree

this comparison makes sense - and as

Russia) is that they have significant

George Soros - one of the few finance

domestic market potential.

gurus to have financially survived this

Winter 2008| Trans-national Voice

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With populations in India and China in excess of 1

face of the global turndown – we cannot afford a repeat

billion people in each country, if the floor on

of the post-1929 response. Fourth, developed country

developed country demand collapses, there's the

companies will also need to intensify their efforts to sell

possibility that insatiable growth in these countries

more in emerging markets.

will pick up some of the slack. Quite simply, we have

Given these four conditions, I am more confident about

no clear idea from economic history what a 1 billion-

India then China. China's growth has been predicated on

person consumer market behaves like. What we do

a weak RMB and cost-based competitive advantage of

know is that there are probably around 100 to 150

companies located there. By contrast, India's

million Chinese middle class consumers and a smaller

development, while having a significant export focus,

number in India who could continue to consume

has also been based on rapid growth in domestic

products while the developed countries are licking

demand in the major cities of the country. I am even less confident about Brazil and Russia. Just this week, President Lula da Silva in Brazil referred to the Wall Street meltdown as “Bush's problem”. News for President Lula: it's become everyone's problem! Russian prosperity is based on commodity price appreciation

their wounds from this collapse. We will expect this (notably oil and gas). With a relatively undiversified number of middle class consumers to grow in the BRIC economy and stagnant population growth, I'm not sure countries. that Russia can really help (unless Gazprom decides to cut gas prices this winter and beyond to help West What is key here are the following. First, export-led European economies – don't hold your breath). companies in the BRIC will need to re-orient their strategies towards their domestic market – a task As a final thought: the difference between Indians and easier said than done and one that will take some time. Chinese buying more of their own products and services But if they want to avoid a collapse in their sales, they'll to prop up the world economy and Asian and Middle need to do just that. Second, in the immediate term, Eastern investment funds buying developed country they'll have to cut prices to their export markets companies is obvious. The first implies breathing room because falling incomes in the developed countries for the Europeans and Americans while the latter implies will necessitate this. Third, developed countries must a wholesale shift in economic power and ownership resist the temptation towards protectionism in the from the North to the South.

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Trans-national Voice | Winter 2008

Continued from page 4 In recent months there have been rapid reactions from various nations in order to save their financial systems. Global negligence would inevitably lead to a global economic recession. With the United States in the thick of elections over the past months, countries have often had to take the first step forward to ensure that money is safe. Ireland and Greece recently guaranteed that all savings would be untouched. This angered their EU neighbours as their own citizens may look to transfer money to a place where their money is safe. As markets continue to plunge due to a widespread fear amongst investors of a global recession, governments battle hard to restore investor confidence by regulating economic policies and injecting large sums of money into the economy. In India the Reserve Bank of India has slashed Cash Reserve Ratios in order to release large sums of money into the economy and in turn improve liquidity. Japan on the other hand has been withholding large sums of cash in order to dilute losses that they fear have not been calculated yet post the collapse of Lehman Brothers. This in turn has regulated loans and hampered economic activity. In London the primary concern is the number of skilled

workers entering the labour market. Unemployment may hit all-time new lows in coming months as financial firms declare bankruptcy or are taken over by their more fortunate rivals. China is facing similar problems. Whilst the government cuts interest rates and the stamp price on share purchases post the Olympics, unemployment seems to be on the rise as infant competitors fail to receive orders from the West, where expenditure is declining. These are indications of the Chinese economy slowing down drastically. Russia on the other hand has faced few difficulties as very few Russians own shares. However the rapid changes in markets has led to the closing of markets for up to 48 hours at times in mid October. A pessimistic wave has engulfed investors across the globe in the light of what they fear may be a global recession. Banks are largely unable to provide loans in the West. As a result, governments have made it their top priority concern to bring these firms out of debt by purchasing their problems and reducing interest levels. This in turn will allow for more credit for borrowers. Credit was the ingredient of this downfall, and ironically it appears to be the sole cure; however at the price of innocent tax payers.