Welcome, Spain, to the Euro

IE Focus | By Gayle Allard, Professor at IE Business School

After just 8 years of circulation the Euro has the dark side that Spain didn’t want to see when it took over from the weakened peseta. What we need now is real improvement in levels of competitiveness.We thought we knew what the Euro was about when we launched it in 2002. We started to spend those new coins and notes with an almost patriotic meaning for pro-Europeans. We went through the “rounding-up” stage, but anyway we were enthusiastic about the new currency and what it meant for Spain and Europe.

And the initial years of the euro brought the benefits we anticipated. Interest rates fell to the lowest ever levels. Trade increased, foreign investment reached new highs and Spain went through a golden era of growth and rapid increases in income. We should almost be forgiven for thinking that belonging to the Euro held only advantages. But we were wrong.

From the beginning, the euro was not ´pretty´ notes, but rather the final abandonment of two fundamental tools that had helped the member states balance out their economies: interest rates and exchange rates.

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Madrid signs collaboration with IE

The mayor of Madrid, Ruiz-Gallardon, signs a collaboration with IE Business School which addresses four key areas: entrepreneurship, economy, innovation and worldwide promotion. IE Business School is to produce management education tools based on the public administration model of the city of Madrid, including keys to the social and economic transformation achieved by the city in…

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IE Brown Executive MBA – getting into details!

The IE Brown Executive MBA breakes with the traditional Executive MBA model purely focussed on management. Starting in March 2011, this program integrates leading management thinking with wider perspectives from the humanities, social sciences, engineering, and life sciences. Follow this video in which Angus Kingon from Brown and David Bach from IE provide insights into the…

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Can Nokia compete with the iPad?

IE Focus | By Ricardo Perez, Professor at IE Business School

Nokia is still a leader in terms of sales, but the crown of innovation has now passed to Apple. In order to get it back, Nokia needs to reinvent itself as a mobile services company that offers multiple benefits to its partners. At the last world mobiles congress in Barcelona, Nokia and Intel revealed their plans for the joint development of software for all kinds of devices to compete with Apple and Google. Nokia takes another step forward in its strategy of creating a technological platform that returns it to a position that will enable it to take the initiative in the most interesting market at the present time, i.e. smart phones like the iPhone, and in new markets, such as the one created recently by the iPad. Don´t worry, I won’t go on about the iPad; what I want to speak about is Nokia and its position in today´s market. It is a story of what can happen to a leading company if it comes up with the wrong definition of the business game it is playing. The loss of leadership this causes has happened to others: it has happened to Sony with its music players and its video consoles over the last two years. Nokia had worked hard to create the different technological platforms it believed would enable it to win in the mobile market. Symbian, its key product, has also seen defeat. Allow me to explain.

Nokia established the rules for the top-of-the-range telephone market before iPhone. It created an alliance to produce the base software (operating system) with which telephones worked (Symbian, theoretically neutral and owned by many companies on the market). It also made sure that what users saw on the telephone when they used the menus (user interface) was the development and property of each of Symbian´s partners, which meant it could not enter the market as a competitor. The rules were clear and benefited Nokia in a market that competed in terms of the electronics and “additional utilities” of the telephone (best camera, GPS, etc.).

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Marketing and social networks

IE Focus | By David Gracia, Professor at IE Business School

The social networking phenomenon is unstoppable, but there is still no business model capable of successfully exploiting the services these companies provide.Social networks are attracting more and more consumers´ attention. As a result, they are becoming an unbeatable opportunity for advertisers to showcase their products and services to potential consumers. However, advertisers´ and users´ interests are not always the same and social networks need to find a balance so that they can attract new users and, at the same time, capitalize on their services in an Internet culture ruled by freebies. It is a three-edged challenge: advertisers, users and the social networks themselves.

Social networks are a particularly attractive platform for advertisers. Facebook, which has just completed its sixth year, was visited by 460 million people in February, 13.3 million of them from Spain (according to figures released by Nielsen). If Facebook were a country, it would have the third-highest national population on the planet, with more than 400 million inhabitants.

The comparison between Google and Facebook is particularly interesting. On the one hand, the percentage of Internet users that use the search engine in Spain is 91%, whereas only 53% use the social network. On the other, the key factor lies in the time spent by users on the site: whereas with Google people enter, search and leave, whereas Facebook users are getting more and more involved in a growing number of activities. On average, users spend 1.45 hours a month on Google, which is very little in comparison with the 6.5 hours they spend on Facebook.

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A … botnet?

IE Focus | By Enrique Dans, Professor at IE Business School 

You may not know this, but your computer could have a secret life of its own. It may form part of a network that takes advantage of chinks in your computer’s security system to commit fraud. Such a network is called a botnet.The news of the recent arrest of three Spanish citizens responsible for the “Butterfly Network”, described as one of the largest botnets in the world, was received with great interest by Spain’s technology sector. But exactly what is a botnet and what is it used for? What is a zombie computer? What are we talking about?

A botnet, or “robot network”, is a group of computers which, after being infected by a specific person or group, remain under his or its control and can be used for fraudulent purposes. The owners of the computers are usually unaware of the infection and do not know that their machine is being used, together with many more, for some type of generally criminal purpose. The person who manages to control a botnet has many options on the table: collecting sensitive user data, launching distributed denial-of-service attacks and even ordering the computers to click on websites with advertising contracted by a third party. The possibilities are manifold: the botmaster has an army of computers ready to execute a certain command at his/her will, with the profit resulting from any fraudulent behaviour being very difficult to identify as a result of the distribution.

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Out of sync at 40

IE Focus | By Celia de Anca, Director Centre of Global Diversity Management at IE

The midlife crisis affects both men and women, but while men tend to seek an emotional answer, women often need a more rational approach. It would be to business corporations’ advantage to provide women with just that.According to Jewish mysticism, a man can only start his learning of the cabbala after his 40th birthday, when life starts to fall apart and needs to be rebuilt, not so much from the outside, but rather from within, from a connection with his true nature. In our more prosaic civilisation, we speak of the midlife crisis, which, as Tony Judt pointed out not long ago, is that crucial moment when many men either get a new wife or buy a motorbike. 

A woman could not study the cabbala so there was apparently no reason for speaking about when her life starts to fall apart in mystic terms, and women have not traditionally changed their husband for one who was 20 years younger when reaching the age of 40. Her crisis, at least in our society, used to be the empty nest syndrome, which left a woman waiting to refill it with grandchildren.
Our society has changed, even if the midlife crisis is still with us. A woman no longer cries when her chicks fly the nest. Indeed, many of them are happy to see them go and become hungry for a professional career with some kind of meaning. A male friend once told me that after 20 years in the same profession, the time had come to change his life. At the same time, his wife, after 5 years at home looking after the children, had reached a point where she really needed to go back to work. Hence pure logic led them to change their roles, whereby he stayed at home for a few years enjoying his time with his children, who were still small, while she went back to work to enjoy the pleasures (yes, there are some) of a full professional life.

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Alternative Financing

IE Focus | By Ignacio de la Torre, Academic Director of Master in Finance, Master in Advanced Finance

The credit crunch could go on for years. That’s why alternative funding is on the rise, and it looks like it is here to stay.In 2009 more European companies financed their businesses using bonds rather than banks. This has never happened before, so what’s going on? The current situation means that banks are having to clean up their balance sheets, build up equity and write off toxic assets, which makes it difficult for them to offer companies competitive interest rates. Plus, Basel III will penalize bank loans to companies, which further exacerbates the current liquidity crunch. This scenario has forced companies to do their homework and to seek alternative sources of funding for expansion.

What is alternative financing? It’s the kind that does not depend on the banks. Traditionally, risk capital has played a major role in financing companies undergoing growth. It is normally broken down into two types: venture capital, which finances startups (often technology-related businesses) and private equity, which is generally used by more mature companies with a lower growth rate and a higher debt volume.

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