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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IE Multimedia: innovation and interactivity

In recent years there has been a marked increase in the use of multimedia materials in the educational sector. IE Business School foresaw this trend when it created its e-learning unit back in 2001 for the explicit purpose of the production of multimedia materials. The resulting games simulators, interactive graphs and tutorials serve to support…

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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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