Sovereign Wealth Funds (SWF): Heroes or Villains?

1554.jpgJuly 2008 | By Juan Pedro Gomez, Professor at IE Business School

They are about liquidity and a desire to invest millions in leading international banks in order to leverage the subprime crisis. They are sovereign wealth funds, the new focus of debate in the western world.

In February, the Qatary Investment Authority (QIA), the Qatar governmentâ??s investment fund, purchased between 1 and 2% of the Swiss bank Credit Suisse. More recently, rumours of investments by the same fund in the Royal Bank of Scotland increased the British bank´s share price by 5% on the London Stock Exchange on 25 February.

In January this year, Merrill Lynch and Citigroup received a total of $21 thousand million from sovereign wealth funds (SWF) from the Middle East and Asia. Overall, according to Morgan Stanley, since the liquidity crisis began in August last year, more than $69 thousand million have been invested by SWF in financial groups in developed countries. There is not the slightest doubt that the money has been welcome, not only by the banks (who continue to lower the market value of mortgage portfolios and their derivatives), but also by the market as a whole, anxious for liquidity and stability. So far, SWFs are heroes.
At the same time, leaders such as Nicolas Sarkozy and Angela Merkel have promised to protect their investors and managers from the “aggressive practices” of these funds.

The president of the European Commission, Durao Barroso, commented that “we cannot allow non-European funds to be used to carry out geopolitical strategies”. The European Commission has recently approved a proposal for the SWF to voluntarily subscribe to corporate government and transparency policies that are common in Western economies. And now, it would seem that for political managers and legislators they are villains.

Who is behind these funds? Are they a recent phenomenon? Should we be concerned about their movements? Are they heroes or villains?

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What drives enterprise: talent or motivation?

1551.jpgJuly 2008 | By Javier Roza, Professor at IE Business School

The alignment of markets and companies is an inevitable result of globalization, but a highly motivated team can gain competitive advantages by breaking the mould.

Let us accept for a moment that multinational business sets the latest trends in management. In this type of environment, country managers do not normally generate product innovation or communication on an individual basis; they are usually not even responsible for production, and in some cases they do not produce their own organisational design. In this situation, local responsibility consists of implementing the strategies developed centrally.

Let us also accept that countries in the same geopolitical environment have a similar level of development and that the consumer pattern is one of convergence. Enterprises also converge in terms of the brands and products they market. Systems and processes are also global. Even the type and quality of employees are becoming more and more consistent owing to the similarity of recruitment and promotion processes. And to cap it all, competitors are the same in each country, complete with globalised strategies.

Furthermore, technical capacities are increasingly reaching the same level. It is becoming more and more difficult to gain a sustainable competitive advantage through technology. When a new product triumphs, competitors rapidly appear with similar products and more competitive offers.

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Why are online MBAs not cheaper than traditional ones?

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imagen1.jpgIE Business School is set to invest around â?¬14 million in the former convent of Santa Cruz la Real in Segovia to convert the building and the adjoining land into an international business university equipped with state-of-the-art technology. The project aims to make IE University a European benchmark for quality.

 

The venue chosen for IEâ??s university project is the former convent of Santa Cruz la Real, a building which was declared a national monument in 1931 and is one of the architectural gems of the city of Segovia. The restoration project for the building, which is located by the city wall and is very close to the aqueduct, was presented at a press conference in July by Miguel Sagüés, IE Universityâ??s managing director, and the architects Fernando Serrano-Suñer and Ismael Rodriguez.

 

The whole restoration project involves five phases which will take in the buildingâ??s 18,000 m² surface area, in addition to a plot of land covering 30,000 m² adjacent to the former convent. Restoration work began a year ago on the communal areas of the ground floor such as the cloister, the chapterhouse, the refectory hall and the dormitories. This summer, work will focus on the universityâ??s lecture halls and include fitting automated lighting and sound systems in order to save energy while respecting the structure of the building. According to the architect, Fernando Serrano-Suñer, work on each of these two phases will cover a surface area of around 4,000 m².

 

After these first two stages, a third phase of restoration work will begin in 2009 and include a complete renovation project which will be presented to the Segovia City Council and the Heritage Commission during the next few days so that they can assess its feasibility. This phase will include work on the interior design and furnishings and will supplement the work carried out during the first two phases. It will also involve work on the outside of the building and the facades and a glass roof for the complexâ??s two characteristic courtyards. During the press conference, Fernando Serrano-Suñer insisted that the restoration work would â??respect the buildingâ??s heritageâ? at all times and stressed that in the case of the facades, which are at present in a very poor state of repair, the aim was to â??restore them to their former splendourâ?.

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Executive Management Program on Latin America for Singaporean companies

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Madrid, financial centre?

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July 2008 | By Ignacio de la Torre, Academic Director of Master in Finance, IE Business School

Over the last few years, Madrid has managed to climb a few positions to become a more important international centre of finance, but in order to consolidate itself in a top position it needs to carry out a series of improvements.

At the beginning of the 13th century, the all-powerful England of King John (the baddie in the Robin Hood films) was defeated by an extremely modest France, which at the time comprised only Paris and the surrounding area. What was the secret behind the French success? London was an important political centre with a financial power that was on the decline, whereas Paris was a political centre of little significance with a financial power that was just beginning.

This mediaeval anecdote should help us reflect on our capital city´s role as an international financial centre. Paradoxically, in a context of political decentralisation in which Madrid has seen how its political power has been considerably reduced, the city has developed huge economic power in terms of GDP and GDP per inhabitant. The next challenge is to take advantage of this economic importance, “capitalising” on Madridâ??s position as a top-tier financial centre. A few weeks ago, Deloitte published a report that classified Madrid as the fourth-ranking international financial centre (behind New York, London and Paris). However, a report commissioned by the city of London on the basis of 7,193 surveys (many of them biased towards Anglo-Saxon markets) position Madrid in 42nd place in terms of international financial importance. In recent years, Madrid has enjoyed an economic and financial environment that has allowed it to climb many positions as a financial capital, higher than number 42 without a doubt. Nevertheless, the black clouds that hang over our economy, the deficit of the Spanish current account, the difficulties affecting the securities markets and the low-level volume of corporate transactions will force us to increase efforts if we want Madrid to effectively be among the top five financial capitals.

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IE empowering African women through entrepreneurship

In conjunction with the FAS (Femmes Africa Solidarite) and the Spanish Government, the Center for Global Diversity in Management and the Department of Entrepreneurial Management at IE Business School has accepted twenty-two women from Liberia, South Africa, DRC, Mozambique, Senegal and Rwanda into the recently launched advanced training and mentoring program for women-lead businesses in…

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A dialogue between deans of top business schools in Shanghai

在6月初上海举行的全球商学院院长圆桌会议之前,IE商学院院长Santiago Iniguez和Tuck商学院院长Paul Danos在上海浦东君悦大酒店接受了新浪财经频道采访,以下为全部视频和谈话文字内容。 Prior to the Dean’s Roundtable in Shanghai this June, Dean Santiago Iñiguez and Dean Paul Danos from Tuck School of Business had a joint discussion at Sina, the leading Chinese portal, about how overseas business schools are developing synergies with their Chinese counterparts in the fields of research, programs, and teaching/learning processes,…

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21 Century Business Herald’s report about IE’s entrepreneurial education practice

下文是《21世纪经济报道》对院长Santiago Iniguez关于IE兼并西班牙当地某知名大学,并要在此模式上将IE打造成一个包括了Executive Educaiton, different postgraduate programs such as MBA, general management programs, Masters in Management, 以及undergraduate programs的一个“full education service provider”的专访“马德里:一个商学院的教育与实践 (Madrid: one business school’s education practice)“。(Interview by leading Chinese business newspaper 21st Century Business Herald with Dean Santiago Iniguez. The resulting upbeat article includes comments about how IE has extended its business school model to…

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The web, friction, your business and you

1528.jpgJune 2008 | By Enrique Dans, Professor at IE Business School

The web is now 15 years old, and, just like any adolescent, it has revolutionized the previous generation. Business organizations need to find new approaches to keep growing in lockstep with the continuous changes the web brings.

The web celebrates its 15th birthday. Fifteen years have passed since Tim Berners-Lee and Robert Cailliau decided, at the CERN, to change the world by making their operating source codes freely available everyone, unleashing one of the most important technological diffusion processes of our time and giving rise to one of the development platforms with the greatest potential in the history of technology. Now, after 15 years of using the web, of seeing it grow and reach adolescence, it is a good moment to consider the future: that of the web, our future and that of our business.

If anything is patently obvious, it is that after 15 years of existence the web has become one of the greatest friction-reducers ever made available to humankind. Entering a search engine such as Google, keying in anything and pressing a button produces a page of results in a fraction of a second, when, before the advent of the web, it would have taken us hours, almost certainly after a number of trips and much detailed documentation and summarizing. And, as classic economics says, friction is a very important part of business.

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