ESSCA

The screeching sound of rails echoed through my ears, as the overcrowded and stuffy metro train halted to a stop. The endless French murmurs, noticeable American tourists and elegantly attired business people surrounded me as I, sandwiched alongside Elliot, Matt, and Poom, was whacked constantly with the elbows of impatient commuters. Nevertheless, c’est la vie in the ultra chic and charming city of Paris. We are now exiting La Defense Grande Arche to the University Pole Leonard De Vinci.

Upon arrival, we are greeted by Mr. Albrecht Sonntag, professor of Int’l Business at ESSCA, who has graciously offered to discuss issues concerning the European Union. Daunting as the topic may seem, I prepared myself (diet coke in hand) to focus on the presentation in progress. Mr. Sonntag’s strong grasp of the subject, perfect English and excellent presentation skills kept us intrigued and alert.

We discussed topics such as the effects of cultural integration, the impact of the crisis, the future of the EU, the role of leadership, federalism, the Lisbon Treaty and shared sovereignty, to name a few. I was amazed to learn about how Europe’s history and collective desire to band together evolved to what we now know as the European Union. This unique structure and entity differs from any other type of governing body in the world and continues to change and progress. Professor Brunel’s passion and advocacy for the Commission sparked a lively debate regarding the validity of elected and appointed officials as well as the public’s role in shaping the union. We concluded that due to human nature, the public generally supports the “idea” of the EU, but not the actual “realization” of what full integration entails.

The million-dollar question of the day was “Is Europe in a crisis?” Contrary to what we all may have assumed, Mr. Sonntag responds with a resounding, “YES, Europe has been in a continuous and permanent crisis because they have come to no resolution as of this day. Europe’s direction demonstrates a strong step towards federalism, as proven by the euro, but also a strong opposition to coordination on fiscal and economic policy.” Although this hybrid entity has proven successful in the past, the impact of the economic crisis and any other future catastrophes leads us to question the EU’s future sustainability.

The future of the European Union is still unknown. Perhaps we will see increased control over the Euro budget, amplified pressure by nation states on tighter economic governance, or the withdrawal of certain nation states. We will have to wait and see...

On a side note: It is the 10th anniversary of the European Field Seminar and we should all congratulate Prof. Brunel for giving us this unique and exciting experience! Santé!!!

Peclers Paris..."fashioning the future"

On Tuesday, June 1, our group visited Peclers, a styling and trend agency specializing in textile, fashion, cosmetics, home decoration, consumer and retailing industries. Peclers offers products and services including: 1) trend books; 2) trend consulting and personalized trend analysis; 3) innovation consulting for trends, concepts, products and services; and 4) style consulting and design recommendations.

We met with Ms. Emma Fric, Global Development Director. Ms. Fric informed us that in the late 1960s, large-scale manufacturing of fashion and design products allowed for the replacement of haute-couture production methods and commenced the ready-to-wear industry. As a result of this emerging market, Dominique Peclers launched Peclers Paris as a consulting agency for the fashion industry, home and decoration retailers in 1970. By 1980, Peclers realized it had paved the way for trend publication based on its use of historical trends to decipher and anticipate future trend direction. A huge hurdle for Peclers is predicting consumer behavior, anticipating future attitudes and imagining future aesthetic preferences. Interestingly, Peclers employs no focus groups and instead relies upon research teams that recognize innovation and know emerging areas. These teams frequently travel to access and formulate new trends, as well as research and strategize the industries and clients they want to advise.

While some brands request exclusivity, other clients realize fashion trending is a global enterprise in which trends are not created in a vacuum. Fashion trends often encounter a 2-year-forecasting-to-market timeline, whereas architecture (10-year timeline) and cosmetics (5-10-year timeline) take longer to emerge in the marketplace. A recent trend is the myriad of interplaying contexts in nature due to the introduction of sustainability. Peclers is utilizing this trend in an effort to appeal to emotions and issues surrounding over-consumption.

Today, Peclers garners 55% of its revenue from consulting and 45% from trend and forecasting publications. Ms. Fric told us that some trends are cyclical and consumer thoughts tend to come back around to people and profiles in different global areas. Out of the 18 trend books produced by Peclers, "Futur(s)," utilizes global analysis to understand evolving values and future consumer behaviors. The 10^th, and most recent, edition of "Futur(s)" is printed in both French and English and retails for approximately 5,000€.

Although the global economy has affected sales of Peclers' trend books, we were told the fashion industry will not stand still. Trends will revamp and reintroduce themselves to the global market and consumer purchasing behavior, though different from before, will still require agencies like Peclers to aid brands in deciding what to produce for which markets.

Business Objects - Friday, May 28th

After finishing lunch outside on a beautiful Friday in Paris, we walked to Business Objects. We met with Michael Thompson and Timo Elliot to hear about business intelligence and the company's strategy. Business Objects strives for intuitive interfaces for client information through information management, enterprise performance management, business intelligence, and governance risk and compliance.

The company's success has been in creating interfaces that allow clients to manage data easily and create reporting with this data. Business Objects, Business Intelligence Explorer products allow companies to make informed decisions based on solid data and analysis. Current activity for the company has been around SAP Streamwork. The new product focuses on data (outside of the financials) needed for decision making. The software looks at "Collaborative Decision Making" to assist companies in managing the collaborative process in a team work setting. It creates a traceability on decision making in a team setting and increases buy-in for companies.

Both Michael and Timo also expressed the challenges that they have faced with the SAP and Business Objects merger over the last year. The process has been difficult on many fronts for both companies. This is something new for the employees of Business Objects that have had successful mergers in the past. One of the main issues has been the lack of "cross pollination" between the two companies. Both seem to be working along separate tracks instead of integrating together both in their process and location of employees. The difference in company culture for both has also been an issue.

The discussion then moved to the differences between US and European labor laws and the challenges of living/working abroad as an expatriate. The EU offers more job security with a longer benefit package for employees laid-off (ie. SAP had a 3 year pay package for employees laid-off). Although the EU requires a 4 month trial period for a new employee, it is much more difficult to fire that worker once employed compared to the US (ie. US - you are an employee at will). Employee privacy is an issue within the EU. For example the EU Worker Council ruled that information regarding an employee's title was indicative of their salary, so this became censored within companies. There is also a much lower turn-over rate for workers in Europe, but the promotion process in the EU is much slower compared to the US. In regards to living broad, both stressed the importance of integrating into the culture of where you are living to be a successful in a relocation abroad. One must also be aware that by working abroad you are "paying into the system" of the country you live in, making it more difficult to leave after many years. Your benefits become tied into the country.

Audi- on June 4, 2010

We arrived Audi around 12.30 after visiting Lear Corporation. The distance between Lear and Audi is not far at all, helping JIT to be more efficient and practical. The size of this factory is very large. If I'm not wrong, Audi is the second biggest company or the biggest engine plant in Hungary. We were presented by financial director whose dress was very cool and looked like a car racing guy, with red PUMA shoes =)

In this presentation, we learned about the history of Audi and obtained some key figures such as revenues, productions, staffs number in 2009 and 2008. Also, he presented us specifically the facts about the factory in Gyor. Audi Gyor produced engines and mainly 3 car models such as TT Coupe and TT Roaster with the daily capacity of 6,900 engines and 300 units respectively. However, net sales and investment in 2009 had decreased due to the economic crisis, therefore, they tried to increase efficiency through current employees. Their vision is to try to “Become quality/flexible/highly focus on being productive. Also, they apply lean operation as Toyota. Their strategy is to focus on four main areas: Profitability, Customer attraction/Customer Focus, Growth, and Most attractive employees.

After the presentation, we went to the factory’s dining hall and found out that Sodexo was the caterer of food for Audi- What a coincidence! I really loved the food here but sadly I forgot to take photos of this meal but I still remembered the taste of chicken pasta- so yummy . Then we went out for a walk to see the oldies sport car rally…All the cars were so cool!!, which I think they are hardly seen somewhere else. The mini BMW is so cute and funny, the owners were very friendly and welcomed us to take photos.

Lastly, the most exciting part of the day came- Assembly line tour!! but we were not allowed to take the pictures inside...I remembered I was very sleepy after a full meal but after walking and see the lines, especially for the car assembly, it’s very spectacular to see how each component were put together in both manually and robot in sequence. I’m also impressed with the facilities inside but most of the work here is done manually instead of robots due to cheaper labor costs, whereas, other factories focus more on robots. Finally, company visits of this trip ended here!!- It was the perfect end of the journey. I feel like I fall in love with Audi TT now and want to get one for myself but how many years do I have to work to get it then- hahaha 

Foreign Investments in Hungary - 2nd June

After a long last day in Paris, we arrived to our hotel in Budapest on Tuesday June 1st around 10:30 pm. The Budapest Marriot was probably the best hotel in our trip.

Our first stop in Budapest was the Hungarian Investment & Trade Development (ITD) agency. The ITD is a government body set-up to encourage foreign investment in Hungary.

Brief overview of Hungary: Hungary is a small country with a population of only 10 M people. The financial crisis had a strong impact on Hungarian economy resulting in a negative GDP growth in 2009. We were told that Hungary expects a positive 0.6% growth in 2010. Being in the eastern part of Europe, the average wages are much less than in those cities we visited before. Average wages here are about 700 Euros per month and unemployment is currently high at 10.5%. Lastly, Hungary is not in the Euro Zone and their currency is called the Florent (HUF). We all certainly had a tough time trying to figure out the value of goods in dollar terms. However, Hungary would like to enter the Euro Zone but does not meet the inflation criteria and the debt-to-GDP ratio.

New Government: Since we were visiting a government agency, we all felt a strong pro-Hungarian outlook during the entire presentation. It was a bit ironic when we visited ESSCA during our last meeting in Budapest where we were informed about the poor economic condition of Hungary. ITD has very high hopes of the new government and some of the goals of this government were to create new jobs, focus on SMEs, and attract investments in the financial services, R&D, and manufacturing industries.

Rationale for FDI: Some of the reasons highlighted in the presentation were:

• Higher Education – 90% of students speak English
• # of patents per capita is highest in the region
• Industrial parks encourage growth of foreign companies
• Low corporate tax rate
• High quality of life as compared to some developing Asian countries
• Strong presence of major US companies including GE, IBM, Morgan Stanley, CitiBank etc
• Investment schemes, EU-regulated cash subsidies, & tax allowances from ITD

ITD markets itself as a one-stop shop agency for FDI in Hungary. The main services of ITD are to:

1. Help foreign companies in the decision making process including finding locations, finding suppliers etc
2. Help during implementation of plan
3. Help in the operation phase of the company

The speaker also spoke about the strong automotive & the electronic sector and briefly touched upon the recent Daimler Mercedes investment in Hungary. So our first meeting in Budapest was a typical, very optimistic government agency trying to convince us of the benefits of FDI in Hungary. It was a good start for subsequent discussions in Budapest as we were better informed about the trends & rationale of FDI in Hungary.

We then did a small city tour before heading to our next meeting at EGIS PLC - a pharma company.

L'Oreal Paris

Sadly, our trip to Paris was almost over. But the day before we left, we spent Memorial Day meeting with Mr. Georges-Edouard Dias and Ms. Marelina Kakiris at L’Oreal Paris. After a long journey to the outskirts of Paris, we arrived at L’Oreal at 12:30, just in time for lunch! We were escorted into a huge and very posh dining room where we were served a three course lunch, topped off with as much wine as we could drink! The first course was a green salad served with smoked salmon, the second course was a delicious plate of pork covered with a creamy sauce, served with roasted mushrooms and some sort of side of potato. But, the best part of our lunch—and I think we can all agree—was the dessert. For dessert, we had a fruit tart covered with strawberry sauce and coupled coffee. During lunch, we had the rare opportunity to talk openly with Georges-Edouard and Marelina about L’Oreals’s global marketing strategy and the future of the company.

And now down to business. After lunch, we went upstairs to a conference room where Georges-Edouard gave us a wonderful, interactive presentation titled Rebooting Marketing—A Digital Transformation. In the presentation we learned that L’Oreal is the #1 Cosmetics group in the world with an unequalled brand portfolio, they had 17.5B in Euro sales last year, they have 61,000 employees world-wide, they spent 53.3M Euro in Research and Development last year, and they offer consumers 25 global brands. Georges-Edouard said that “digital is a powerful force for change” and predicted that there will be 2 Billion people online in 2013. This is a huge potential consumer base that L’Oreal is working to target! L’Oreal feels that they need to find a new and different way to advertise to their customers because traditional newspaper and magazine ads are being phased out while TV and Internet ads are becoming more popular.

Because of the increasing popularity of social media amongst young people, L’Oreal has started creating targeted messages in order to find a brand digital footprint. The goal of the brand digital footprint is to make the customer fall in love and stay in love with the brand. Ultimately, these targeted messages will be a conversation platform where the brand engages with the customer to create lifelong loyalty. Georges-Edouard also spoke about branded entertainment as a new form of advertising. An example of branded entertainment would be to strategically place L’Oreal brands in popular movies and TV shows such as Sex and the City where the target consumers will be sure to see the images. L’Oreal has already started doing this with Garnier, one of their brands. The style and design show Project Runway on Bravo features L’Oreal Paris makeup and Garnier hair products and stylists for the models before they walk the runway. It is interesting that because of different national regulations, this type of advertising is totally acceptable in the United States, but is not allowed in any EU country because of a law against placing products in TV and film.

Georges-Edouard also spoke about L’Oreal’s campaign to start targeting a new population of potential consumers in Africa. He said that since many people in Africa are not online, L’Oreal needed to create a new niche for their brands in Africa. So, their goal is to piggyback on the fact that most Africans either have their own cell phone or share one with a few people in their villages. Many Africans also do some of their necessity shopping on their phones since it is dangerous to carry cash with them on the streets. L’Oreal hopes to eventually “create an economy based on a payment system” that will allow “digital to be the enabler of development”. This fascinated me because I never thought about how different each and every country in the world really is. You can’t come up with one marketing/advertising campaign that can be applied successfully to every culture in the world. L’Oreal is using their creativity to bridge the gap between these different cultures which explains why they are the number one cosmetics company in the world.

The Last Day...

So this was our last day on our Seminar. Our speaker for the day spoke about the current state of the EU. How the EU has been affected. It was quite interesting to see his analysis of what led up to the situation in Greece, and how he sees that Hungary could well be the next one that has the same state. His point of views brought forth some thoughts that I would not have thought of.

After our speaker we broke for lunch, there was a market that as nearby they had many different types of food on the ground floor and then some interesting crafts on the second floor. The most interesting thing I saw was this puzzle jewelery box. After our lunch we came back and did a wrap up discussion and our views of Europe and the future of Europe. This discussion found that many of us had the same points come across, however there were some points that we each saw differently.

As this was the last day for some of us many of us went and explored the city a bit, and then we came back together to enjoy our last meal together. It was a fantastic meal at a Michelin Rated 1 Star restaurant. We continued to a Club and some of us returned to the hotel. As some were joined by loved ones in Budapest, others had to leave the next day. I'm sure though that all of us enjoyed our time on this seminar and learned many things.