part 9: Global entrepreneurship class

1. Developing Global Mindset for Entrepreneurs

2. Class #9
Saturday June 5th , 2010

3. Professor of international finance and global
entrepreneurship with Forum-Nexus Study Abroad. Guest
lecturer with the IQS Business School of the Ramon Llull
University in Barcelona, and the Catholic University of Milan.
Previously, Brian taught finance, economics and global trade
courses at Thunderbird’s Global MBA program in Miami, and
worked as a research analyst at the Columbia University
Business School in New York City.
briandbutler@gmail.com
A global citizen, Brian was born in Canada, raised in
LinkedIn/briandbutler Switzerland (where he attended international British school),
educated through university in the U.S., started his career
with a Japanese company, moved to New York to work as an
Skype: briandbutler
analyst, married a Brazilian, and has traveled extensively in
Latin America, Asia, Europe and North America. Brian
currently lives in Recife, Brazil where he is teaching classes
on “Global Entrepreneurship” at the university FBV.

5.  4 more classes
Attendance +
 Today Homework = 25% of
your grade!!
 June 12th
 June 19th –Exam 30% of your grade!!
 One week later – team project due
 June 26th - 25% of your grade!!

6. 1. Careers + international experience
2. International IQ

7.  Social networks
 Collaboration
 (micro) global entrepreneurs
 Clusters (?)
 International IQ – Brazil – risks / opportunities

8.  Homework / assignments:
 I f you missed any homework… you may still
submit them!
 How? Review slides from previous lectures. Look
for homework assignments. If you didn’t do any…
DO THEM NOW!!!!
 Group Project
 Get together and start working today!
 Don’t wait till the last second!!

10. CS VP

11. CH CR

12. R$ KR KA

13. KP C$

38.  In your own words, tell me 5 reasons that
international experience is important for
your career.
 (“international experience” could be = travel, or
internships, or study abroad, etc)
 Class discuss...

39.  New Business Ideas:
 “When traveling around the world we see different
things, business, ideas that may be transferable
business ideas and this could be the beginning of a
small business or a huge empire.”
▪ Roberta
 Spotting business opportunities
 “You can identify opportunities all around the world,
or thing that you’ve seen in one place that would work
in another.”
▪ Luiza

40.  #2: “What is the trend? “
 Requires: Awareness of global trends, global
business models
 #3: “What is great locally or abroad?”
 Requires: International IQ + global awareness

41.  Building your network
 “Get to know more people, especially in different
places of the world. Increasing your friend
network.
 “It’s very important to maintain contact, because
in the future this person can either be you
business partner, work for you, or call you to work
for him, introduce you to other people….

42.  Nothing is more important for an international
profession than their network.
 Most international opportunities arise because of
you word-of-mouth exposure into the
international market.

43.  “Connect-the-dots between different
markets and various boundaries.”
 Arthur

44. Career, Travel + International

45. “I met a lot of people in Europe. I even
encountered myself.”
– James Baldwin, American novelist, writer,
playwright, poet, essayist and civil rights activist

46. “The world is a book, and those who do not
travel read only a page.”
– Saint Augustine

47. “Don’t tell me how educated you are, tell me
how much you have traveled.”
– Mohammed

48. Skills enhanced by global
travel

49.  Travel will make you more capable, mature
and able to look after yourself.
 “It was only after hopping on flights across the
globe and hunting around for hotels on my own
that I stopped calling my Dad at the first sign of
trouble. I started to solve my problems myself.
Novel!"
 - 5 (Less Obvious) Reasons Why Travel is Good for
You | Travel Blog - Tripbase

50.  exposing yourself to an international lifestyle.
 learn to be curious about international
places, people, cultures, businesses, events,
politics, etc..
 Increase your international IQ every day!

53.  Greater perspective on how others live,
 leading to humility, generosity... traits which are
attractive to potential employers
 Teamwork –
 as you travel the world, you learn to work with
others
 Decision making –
 traveling solo in different parts of the world, you
learn how to make decisions quickly in unfamiliar
circumstances

54.  Initiative –
 the act of going out to see the world on your own is taking
initiative, and as you travel you will find that daily acts of
initiative will build your skills in this area
 Communication -
 what better way to develop your communication skills
than to travel the world and encounter cultures of people
who speak other languages, and have different
communication styles?
 Money management, budgeting, planning –
 going off to travel the world will improve your financial
skills as you learn to live within your budget, plan for
future travels, negotiate hotels, trans, air flights and more

55.  Negotiation skills –
 traveling the world on a budget will force you to become a
great negotiator. These skills of negotiation will definitely
benefit your career after the trip is done.
 Adaptability –
 While traveling you will need to learn to be flexible and
accept changes quickly, which are important skills to
develop to an ever innovating world
 Interpersonal skills –
 solo travel is lonely if you don't quickly develop a knack for
interacting with people from different cultures. Traveling
is one of the best means to developing interpersonal skills

56.  Cross cultural leadership –
 as you travel the world, your skills in cross cultural
communication and leadership will be tested to the max. What
you learn in daily life traveling is beyond what you could learn in
MBA school classrooms or in cross cultural training seminars.
 Self reliance, independence, confidence, responsibility
 are all skills you will develop while traveling
 Language skills –
 as you learn phrases for surviving daily life in other countries,
you will develop a talent for how to learn languages, and how to
communicate non-verbally with people from other cultures.

57. Career benefits

58. Personal
 Understand international news (not just hear it)
 Expand your world view
 Create global awareness
 Develop international outlook, and global mindset.
 Develop a greater appreciation of other cultures and of
different economic and political environments
Professional
 Enhance your resume
 Break out of your academic routine
 Build your network of friends from around the world
 Develop leadership skills

59.  “The salary of an executive who will live
abroad (which varies according to location and the
company he works for) increases, on average,
about 20%. “
 Extra $$$$

61.  "A professional with international experience
it is easier to develop corporate culture and
motivate people, since he is usually very
motivated,“
 Marcos Ramos, newly named president of Alcoa
Europe.

62.  “Young people now need to shift the so-
called global mindset, a skill set that consists
mainly of understanding, communicating up
and manage people of different origins. It is
a decisive experience in deciding to hire a
person."
 Marcos Ramos, newly named president of Alcoa
Europe.

63.  "Half of our partners and more than 20
percent of our associates have worked
outside their home region. Each year, more
than 200 consultants take short- or long-term
transfers. And last year, 42 percent of non-
partners relocated on an engagement loan.
They’re rewarded with experiences that
enrich their career."
 - Live and work around the world | Global | Travel |
McKinsey Careers

64.  "In the past, it was the experience that left a
professional ready to go abroad. Now the
logic is the opposite…he needs to go
overseas to get ready.“
 Prof. Brooks, a professor of the Graduate School
of Advertising and Marketing (ESPM, Sao Paulo
Brazil)

65. Skills enhanced by global
travel

66.  More than eight years of adulthood administrator Sao Paulo
Rodrigo Aires were spent abroad.
 At 24, he moved to Mexico.
 Then lived in Puerto Rico and Spain.
 He now lives in Hong Kong.
 With 17 countries in the curriculum and only 32 years old,
Aires represents a generation that goes around the five
continents with the same ease of one who takes a taxi.
 These are called global executives, professionals with the
potential to assume leadership positions are invited to spend
periods in other countries, periods that can last from few
months to several years.

67.  economic and geographical knowledge,
 cross-cultural communication skills,
 analytical skills,
 flexibility,
 an understanding of and familiarity with local
customs,
 an ability to adapt to new circumstances,
 language skills

68.  Who thinks international experience (travel,
study abroad, etc) is beneficial to:
 1. Vision
 2. Passion
 3. Purpose
 4. Adaptability
 5. Leadership Skills
 6. Networking Savvy
 7. Determination
 8. Positive attitude

70.  "Darwinian war for talent" is now so keen that
the gap year - once a straightforward mark of
distinction - now has to be absolutely
extraordinary to single a graduate out.
 Straightforward canoeing up the Amazon is
no longer enough. The graduate has to have
paddled backwards.
http://news.bbc.co.uk/2/hi/uk_news/magazine
/3530906.stm

71.  See my blog posting on how to include study
abroad experience on your resume here:
http://forumnexus.wordpress.com/2009/10/2
9/resume-cv-building-with-study-abroad/

72.  Question: Some ideas….
1. International business
 If you already have invested 2. Import / export,
in your International IQ…. 3. Global Entrepreneur
And if you int’l IQ is already 4. Diplomat
HIGH… then what career 5. Int’l Journalist / reporter
options might you consider? 6. Work at United Nations
as Politician / Mediator
 What careers might be open 7. International Lawyer
to you (that might not be 8. Political activist
open to others)? 9. Teacher (history,
geography, etc)
10. Economist
11. What else??

73.  Some interesting 1. Strategy consultant
career options you /management consultant
MIGHT NOT have - Examples: McKinsey,
considered…. Bain, Boston Consulting
Group, etc
2. Global Macro trader:
Hedge funds, Ex: Jim
Rogers (see below)

74.  Consultants sell knowledge, and the skill and
expertise of their employees.
 Basically, consultants are hired by a company,
government, or a nonprofit…to:
 help assess its problems,
 plan its future,
 or improve operation efficiency and profits.
see more: from Vault. com

76.  unique career that offers the chance to work
within many industries and companies,
 Work directly with CEOs,
 and travel throughout the country and the
world.
see more: from Vault. com

78.  More about investors + the benefits of
global travel will be discussed below (see
section on “3 steps” + how to benefit from
increased international IQ by investing.
see more: http://globotrends.pbworks.com/global-macro-hedge-funds

79. How to

80. 1. Increase “Potential” Int’l IQ
2. Increase “Actual” Int’l IQ
3. Benefit from your increased International IQ

81. 1. Increase “Potential” Int’l IQ
 Much like “potential GDP” in economics which sets the
constraints for how much the economy can grow
 Can be increased with: Travel, Study abroad*, Volunteer
abroad, Work abroad, Language lessons, more…
2. Increase “Actual” Int’l IQ
 Much like “actual GDP” of an economy which may be
below (with room for growth), at equilibrium, or above
the potential GDP (causing meltdown)
 Can be increased by: Reading Economist magazine
weekly, watch BBC, international news, etc…
*(could increase BOTH potential & actual IQ @ same time)

82.  Travel
 Long-term travel: Open your mind, learn about politics,
geography, history, culture, “what’s going on?”, etc…
 Work Abroad
 Study abroad (increases BOTH potential & actual IQ)
 Get a masters from another country
 Short term – get a certificate
 Volunteer abroad
 Peace corps, etc

83.  Benefits of LONG-TERM (around the world)
travel: Defined as 3 months or more
 Why do around-the-world extended travel?
Rather than short trips (many). What are the
advantages of doing one LARGE round the
world travel instead of many short 1 week
travels?
 Class discuss…

84.  Short-term travel is likely short-distance travel.
 Because the world is so BIG, that short-term
travelers will likely never travel to Thailand,
Laos, Malaysia, Indonesia, etc. (unless they are
from that part of the world!)
 So, when news from the other side of the globe
hits, she will have no travel-reference to relate
the news back to her personal experiences.

85.  Without the experience of traveling across, you
miss the context of place:
 Short term travelers, if they do happen to travel
long-distances, likely only see a pin-point on a map,
and you lack the context of moving from one place to
another across the map
 In my experience: driving across the border from
Malaysia to Thailand, or Laos to Thailand was more
educational than … the tourists that just flew into
Phuket and went directly back to England (and lacked
the transition / context of the changing landscape,
people, religion, etc)

86.  Increased potential… means that when you DO
come across international news… it will make
more sense to you
 Previously having traveled somewhere…Makes
it easier to understand (later) when you read
news about that place
 For example…

88.  How close (geographically, culturally,
economically) are Phuket + Bangkok
 If you had traveled there, you would know…
 This is about your POTENTIAL

89. About 900 km- “are you
talking of a hire car and
driving yourselves, if so
you would be mad, roads
are crowded and traffic is
hectic. The best thing is to
fly from Bangkok to
Phuket, there are all sorts
of cheap fares, and you
would get there alive.”
Trip Advisor

90. 2. Increase “Actual” Int’l IQ
 Much like “actual GDP” of an economy which
may be below (with room for growth), at
equilibrium, or above the potential GDP (causing
meltdown)
 Can be increased by: Reading Economist
magazine weekly, watch BBC, international
news, etc…

91. After Traveling (or Studying Abroad, Working
Abroad, etc)… to increase your Potential…
The next step is to increase your ACTUAL
international IQ…. How?
For this you need to read, read, read…

92. Note: it takes about 5 hours to read it per week.
Invest 1 hour per weekday to raise your “ACTUAL”
international IQ up to your “potential”

93. Free monthly AUDIOCAST…

94. 3. Invest to - Benefit from increased
International IQ

95. 3. Invest to - Benefit from increased
International IQ
 Invest in career advancement
 Invest in new job
 Take advantage of opportunity as entrepreneur
 Trend (get ahead of it), Transferrable idea (from abroad)
 See import / export opportunity
 Invest in stock market, commodities, currency, countries
(or bet against them)… the so called “global macro”
strategy of investing… as outlined below…

97.  Rogers co-founded the Quantum Fund. During
the following 10 years the portfolio gained
4200% while the S&P advanced about 47%.[5] It
was one of the first truly international funds.
 Co-founded with George Soros
 In 1992, the lead fund, Soros's Quantum Fund
became famous for "breaking" the Bank of
England, forcing it to devalue the pound. Soros
had bet his entire fund in a short sale on the
prediction that the British currency would drop
in value (it did), a coup that netted him a profit
of $1 billion.

98.  Between January 1, 1999 and January 5, 2002,
Rogers did another Guinness World Record
journey through 116 countries, covering
245,000 kilometers with his wife, Paige
Parker, in a custom-made Mercedes. The trip
began in Iceland, which was about to
celebrate the 1000th anniversary of Leif
Eriksson's first trip to America. On January 5,
2002, they were back in New York City and
their home on Riverside Drive. His route
around the world can be viewed on his
website, jimrogers.com. He wrote Adventure
Capitalist following this around-the-world
adventure. It is currently his best selling book.

99.  He is quoted as saying: "If you
were smart in 1807 you moved
to London, if you were smart in
1907 you moved to New York
City, and if you are smart in
2007 you move to Asia."

100.  From 1990 to 1992, he traveled
through China again, as well as
around the world, on motorcycle,
over 100,000 miles (160,000 km)
across six continents, which was
picked up in the Guinness Book of
World Records. He tells of his
adventures and worldwide
investments in Investment Biker.

102. 1. Travel to - Increase “Potential” Int’l IQ
2. Read to - Increase “Actual” Int’l IQ
3. Invest* to - Benefit from increased
International IQ
*take benefits of your hard work: Invest in career
advancement, Invest in new job, Take advantage of
opportunity as entrepreneur - Trend (get ahead of it),
Transferrable idea (from abroad), See import / export
opportunity, Invest in stock market, commodities,
currency, countries (or bet against them)… the so called
“global macro” strategy of investing… as outlined
above…

103. A look at China- USA

104. China and America, joined by trade & finance

105.  We have previously covered Europe + the
situation in Greece (and Portugal, Italy, Spain,
etc)
 This class: we will briefly discuss another global
relationship you need to be aware of: that of the
USA-and China.
 Why?
 To conduct global business, you need to be
aware of key important developments, and the
potential for changes.
 Next class: we will discuss how this all impacts
Brazil + Brazilian business people

106.  We did NOT cover all of the following slides.
 Class discussion was just a summary of the
issue, and an introduction. All slides are
included here just for your reference….

107. 1. “Chimerca” introduced - with statistics and
observations
2. About china – 1.3 billion people: 300mm
upper middle class / 900mm lower class
3. Controls – migration controls, no slums –
fears of removing controls, currency
controls, money flow controls, savings
options limited, one child policy, retirement

108. 4. Threats to china- $2trillion in foreign reserves,
with about $1 trillion loaned to the US
government at very low interest rates. What
happens if US dollar depreciates? Is it in
China’s interest to appreciate currency? NO!!...
Would lose value of investment!
5. History: 1997 Asian Crisis is key: afterwards,
had fear of accepting foreign capital. Desire to
keep exchange rate low for exports
6. Result is that since 2000; massive flows of
money from world’s Poor to rich countries.

109. 7. Not just china: Dollar bloc of countries
targeting US dollar, but Brazil is outside
8. From USA perspective: needs cheap
financing; demographics, 2 wars, health
care, etc
9. Flood of Cheap credit – one Cause of credit
crisis – “USA hung self, noose supplied by
China”
10. Future: underling “Imbalances” unchanged
– but will fixed / flexible change again? How?

110.  Key points from class discussion:
 that the US-China relationship is important.
 only since 1997 has the situation been that money
flowed en-masse from poor countries to rich ones
(often called “global imbalances”)
 A “dollar bloc” of countries exists, and Brazil is not
one of them
 Massive quantity of cheap credit flowing from poor
countries to the US is likely not sustainable nor
desirable (in the long term)
 What will happen when it ends?
 We already have seen the “credit crisis” (2007-now) as
likely partially caused by this flood of cheap credit

111.  The following are select slides from my
lecture
 Recommended further reading:
 Martin Wolf, “Fixing Global finance”
 Niall Ferguson, “A financial history of the world:
the ascent of money”

112.  China  USA
 1.3 billion people  0.3 billion people
 Approx 9,6o0,000 km2  Approx 9,6o0,000 km2
Observation: China has
about 4 times as many
people, in a country
about the same size as
the USA, but with almost
all of those people in ½
of the country (East)

113.  China
 Of the 1.3 billion people…
 approximately 300 million
are middle to upper class…
approximately the same
population as the USA, or
more people than the entire
population of Brazil
 it is VERY NICE: In cities like
Shanghai, or Beijing, the
quality of life is VERY HIGH!
http://en.wikipedia.org/wiki/List_of_countries_and_outlying_territories_by_total_area

114.  He is quoted as saying: "If you
were smart in 1807 you moved
to London, if you were smart in
1907 you moved to New York
City, and if you are smart in
2007 you move to Asia."

115.  China’s main concern:
 Feeding 1.3 billion
people
 What would you do if
you had 1.3 billion
mouths to feed?
 Sustainable
development and…
 Controls…

116.  One Child policy makes
sense if you consider
the object – slow down
population growth
 But troubling is the
demographic trend of
too many men
“IN CHINA they are called “bare branches”: young
 Issues: lack of options men without wives or offspring, frustrated, rootless,
drifting, disruptive. And there are a hell of a lot of
for retirement them. Five years ago the Chinese Academy of Social
Sciences in Beijing calculated that one Chinese man
planning / old age care in six was unlikely to find a female partner. That’s
about 111 million unattached males. In other words,
there are twice as many bare branches in China as
there are people in the whole of Britain.
http://www.timesonline.co.uk/multimedia/archive/00065/TIM041FshrhD22_65733a.gif

117.  Controls on the
movement of people
from the interior to the
cities has its positive
impact: no slums
around the mega cities
(as we have in Brazil,
India, Mexico, etc). In
China, these “favelas”
do not exist

118.  But, the fear is: if the
controls were to be
removed…
 With 300 million in upper/
middle class and 900
million in lower class…
 The cities might get
crowded FAST as people
from the interior might
move in mass to the cities
looking for work (as
happened here in Brazil,
Mexico, India, etc)

119.  Other controls:
 Capital controls – money in /
money out of the country is
controlled (according to
Mundell Trilemma, this
control is necessary to
maintain the other control:
 Currency control –
appreciation / depreciation
is targeted to the US dollar

120.  China's economy now is closely intertwined
with the U.S.
 The U.S.-China economic relationship has
become arguably the world's most
important.

121.  An important trading bloc with
 about 1/10th worlds land surface
 1/4th worlds population
 1/3rd worlds economic output
 more than 1/2 of worlds economic growth over
past 8-10 years
 The US accounts for 1/5th of all Chinese exports
(their biggest trading partner)
Niall Ferguson, “A financial history of the world: the ascent of money”

122.  Chinese savers, American borrowers /
spenders
 The Chinese model
 relies on funneling savings into limited options at low
rates.
 Personal savings channels for retirement and health
care are limited.
 Companies pay little dividends.
 The result is a large savings rate.

123.  Chinese savers, American borrowers / spenders
 The USA model (opposite)
 consumers spend rather than save (at least up until the crisis of
2007-).
 In 2007, the US needed to borrow $800 billion, more than $4
billion every working day (mostly borrowed from foreigners).
 According to Martin Wolf, the US became the "superpower of
global borrowing".
 China became the banker to the US, creating a perverse world
in which money flowed from the world's poor to the rich (the
Average US earned $34k per year, while the average Chinese
earned just $2k per year).

124.  …Mostly from Asia, mostly
after SE Asian Crisis of ‘97-98

125. In America savings fell from around
10% of disposable income in the
1970s to 1% after 2005."...

126.  Leads to a housing bubble, which bursts in
2007

127.  China's exports: goods exports went from
$250 billion in 2000 to $1430 billion in 2008

128. http://en.wikipedia.org/wiki/File:USimportsgs1960-2004.gif

129. SOURCE: U.S. Census Bureau, Foreign Trade Division,
http://www.census.gov/foreign-trade/balance/c5700.html

130. https://www.cia.gov/library/publications/the-world-factbook/rankorder/2188rank.html

132.  By March 2007:
▪Both Taiwan & South Korea held more
reserves than the entire Eurozone!
 When? Almost all between 2000-2007
Martin Wolf book, “Fixing Global Finance”

133. See the inverse
relationship?
-Current account balances
-Reserve accumulation

134.  Perhaps China manipulates its currency, but
so too do Singapore, Argentina, Saudi Arabia
and any nation that either pegs its currency,
maintains a tight trading band or oversees a
“managed float” system. Even Hong Kong,
routinely ranked as the world’s freest
economy by the Heritage Foundation,
manipulates its currency. It has to maintain
its link to the U.S. dollar.

135. • “currencies either pegged to the dollar or more or less actively
managed against it (a group that includes Japan)”
 Oil Exporters
 Bahrain
 Oman
 Qatar
 Saudi Arabia
 UAE (Dubai included)
 China
 Japan
 Russia
 Singapore
 Taiwan
 Malaysia
 Hong Kong
 Thailand
 India
 Others: Ecuador, Panama, more…. Used to be Argentina!
Sources: figure 6.6 from Wolf “Fixing Global Finance”
And, Economist.com, May 23 2009, “Monetary Union in theGulf”

137. Sorry 

138.  How does the China-America relationship
outlined above effect Brazil?
 Describe in 1 page or less