Program Wrap-Up

The last week has been very hectic. We had our paper and presentation due yesterday, but most of us had traveled during the weekend so it put some pressure on us to work through the assignment. We also had our lectures of course, to include doing business in Central Eastern Europe (CEE) countries, corporate social responsibility (CSR), and finance as well. The lectures about doing business in the CEE region were interesting largely due to our professor. Her nationality is Slovak, but in her lifetime she has lived in three ‘states’ due to the changing landscape of Europe. Further, she had experienced a Socialist governing for the majority of her life and had both positive and negative things to say about the experience. She did allude to the fact that Obama was giving us a “small taste of Socialism” and implied that we were headed in that direction. None of us have ever had a professor mix political views with lecture, so it was interesting to watch her take on our politics and economy versus her own. She finished by saying “good luck in all you do, be successful, make a lot of money, and then bring some of that money to Slovakia for business.” The CSR lecture was very similar to that of lectures found in the United States. We had two guest speakers for the day that worked for a non-profit research firm. We worked a short case that day in which we had two hours to come up with a CSR initiative for a firm, to include research, feasibility, justification, and then presentation to the class. My group chose to build affordable housing for residents of Allendale, SC, where nearly 40% of the population is below the poverty line. Finally, our finance professor spoke primarily about the differences between investing in the United States and investing in Europe. The bottom line is Americans enjoy risk more than Germans, who require insurance on virtually any investment they make. Our professor may have been the exception, as he stated “no risk, no fun.” We did get into a discussion about what exactly went wrong during the financial discussion, and it was interesting to hear the variety of opinions from people in the summer program as well as the professor himself.

We completed our papers and presentations yesterday. The papers were to be 8-10 pages single space and the presentations were required to be 20 minutes in length. There were five groups, and each had to choose a premium consumer good to introduce in the European Union. The goods selected were Whole Foods, Kindle, Victoria’s Secret, Leapfrog, and Crest White Strips. The presentations were very diverse in nature, as each product appealed to a different customer base in different countries, and also required very different manufacturing and distribution networks. My group presented the idea of the Kindle, the electronic reading device provided by Amazon and saw our major challenge being that it was currently incompatible with European wireless providers. Overall, everyone’s presentation was thorough and with sound justification.

Today we are taking our final exam, followed shortly thereafter by a wine-tasting of Rhein region wines and dinner. This program has been an enjoyable learning experience attributable to the diverse students participating as well as the selection of topics and professors.

Weekend Recap

Last Friday we were dismissed earlier than usual and after a brief group meeting several of us decided to take a train to Koln (Cologne). It is only an hour and a half from Koblenz and has a large, historical church. One of the undergraduates that attends WHU is from Koln and mentioned the church in passing, telling us we would see it as we came out of the train station. That was quite possibly the understatement of the year. The church was MASSIVE and absolutely gorgeous. The architecture was so detailed it was astounding. There were gargoyles, arches, and even pipe organs suspended from the ceiling. My group enjoyed a recommended restaurant, at which point we ran into a stag party. The bachelor was dressed in lederhosen and a pointy hat! We also found an amazing ice cream parlor with a picture menu we couldn’t refuse. I should mention here that most ice cream parlors are Italian, and the ice cream and gelato are virtually free of additives, making the ice cream notably more delicious. We caught a train back and were home by 11:30 in the evening. The next day we spent the afternoon shopping Koblenz, which is actually quite the fashionable city, before catching our boat tour of the Rhein. The boat tour was a 12-hour round trip journey south on the Rhein that passed several castles along the way, some dating back to the 12th century or even earlier. We stopped in a small town named Bacharach and attended a May Fest. The Rhein region is known for its wine production, so we were able to sample some local wine from the many vineyards located along the Rhein. Even though it was a 12-hour round trip, the time seemed to pass much more quickly.

Other groups from the program went to Berlin, Hamburg, Heidelberg, Amsterdam, and Brussels. The students who went to Amsterdam and Brussels both came back with rave reviews about their destinations. The Amsterdam group said the city was gorgeous, just like a smaller Venice and the Brussels group said the waffles were amazing.

Fiege

No class lecture today, but we did leave at 7:30 to head to Worms for a company visit with Fiege. The company is the second largest distribution and logistics company in Europe, and is still family owned and operated over 130 years after it’s founding. They also serve international markets, although not the United States. While they do have strategic partnerships with specific firms, they keep most operations in house. Fiege specializes in contract logistics, which means that rather than just providing transportation for clients, they also offer value-added services such as assembly of products and ironing of clothing. The company works in industries ranging from industrial equipment to fast moving consumer goods to medical supplies, and has been the recipient of numerous awards for its services. In fact, during our company visit the marketing team had to leave for Berlin for an awards ceremony in which it was one of seven remaining contending companies out of an initial 1500 for marketing campaign of the year. It is also the only company in Europe that has two distribution buildings in the same city. One is general, and one is exclusively for Bosch and was built as a partnership with a 15 year contract of guaranteed business with Fiege. The general distribution center is an enormous building and houses approximately two million Euro worth of goods at any given time. The Bosch specific, or dedicated, building is even larger, is two stories, and is mostly automated. Additionally, it handles approximately 275 billion Euro of inventory annually. The entire complex is operated in a flexible manner because goods have seasonal spikes. Because of the large fixed costs, labor is adjusted every 18 hours depending on shifts in seasonal demand for varying goods. Further, employees are paid a salary with bonuses based on performance by team (e.g. assembly, picking, packing) and work 42 hour weeks, which is highly unusual in Germany. No employees are members of unions; they willingly work the required hours because of their loyalty to the company. The final room we toured was in the Bosch dedicated building, and was the most impressive. It was a sorting room 40 meters high with six aisles and shelves that reached from floor to ceiling. Automated forklifts, also 40 meters tall, were stationed in each aisle on a slender metal track and worked efficiently to deliver ordered products while storing excess inventory. They were completely electric and amazingly gentle with the products. Any time a lift got a command, and it could handle more than one in order without having to reset, it would click on and cruise down its track, sorting and tracking palletized inventory. Watching the operation live was an experience. Touring the complex while employees whizzed past on forklifts and automated belts sorted boxes both in receiving and delivery allowed us to appreciate the complex system required to be the second largest logistics company in Europe.

European Central Bank

Today we went to Frankfurt to visit the heavily-secured European Central Bank (ECB) and attend discussions regarding the founding and history of the bank, performance of the Euro Zone, and unique participation among member and non-member countries. We also attended two lectures discussing monetary and fiscal policy within Europe, the challenges therein, and what the future holds. Our visit today was the capstone to yesterday's lecture which introduced the significance of the Euro and the challenges one monetary system presents. During our in-class lecture we discussed mostly the history and challenges overcome, but also worked as teams to debate the varying challenges different types of companies would face in a Single European Market (SEM). For example, how would an EU intermediate supplier respond versus a non-EU supplier versus an American supplier? What unique challenges would they face? Would their strategy completely change? Would there be benefits? We also discussed how the Central and Eastern European Countries (CEEC) have fared in growth versus the EU-15, and debated how long it would take these countries to catch up to the EU-15. There were several unique perspectives and justifications, ranging from mapping convergence points to arguing the CEEC would have to experience entrance of highly-skilled jobs in finance and IT to ever gain ground. The difficulty in answering the question of how long it would take for the CEEC to catch up to the EU-15 was amplified by the fact that the two groups had internal consistent growth that resulted in virtually parallel lines. The visit to the bank further solidified the challenges individual countries within the EU face to remain within the guidelines and standards of membership.

Welcoming Day

We just finished our welcome dinner in the 'Vaulted Cellar' which is, appropriately, a vaulted cellar that is over 800 years old and has been transformed into a dining hall. The food was not the expected schnitzel, bratwurst, and beer but rather female turkey, couscous, and a rice vegetable mix. Most people are adjusting to the fact that almost everything is carbonated, from water to apple juice to grape juice. You actually have to specify that you don't want carbonation, or 'gas.' Surprisingly, a lot of the American students speak German, with varying degrees of proficiency. Also, several of them have visited or lived in Europe. There are students from Arizona State, Texas A&M, University of Florida, NYU, University of Michigan, Washington University in St. Louis, Southern Methodist University, University of Southern California, Lancaster University, Indiana University, and myself from American University. This brings us to a grand total of 23 students staying in two separate locations, one directly next to WHU and one across a bridge on a long, narrow island. I'm staying in the latter and have to say the room is much bigger than expected. I have my own room and bathroom with a large desk and two separate closets.

We received a welcome introduction from one of our professors, Professor Michael Frenkel, who spoke to us about the German culture and the diversity of each region. He also provided insight about living in Germany and how NOT to be a completely obvious tourist. For example, tax and service are already included in restaurant bills, and therefore a tip above an additional 5% is a dead giveaway. He also said that the rumors about beer, bratwurst, and lederhosen weren't as pronounced as they may seem, but that there is truth behind every rumor or stereotype. Apparently the region in which Koblenz is located is not the correct region for lederhosen, but that Bavaria does still have individuals that wear them.

Finally, we have a LARGE binder with our required readings, additional readings, and assignments. We also have study hall every day, which is good considering we have a group project and final exam each worth 45% of our final grade. Participation is the remaining 10%. The groups are predetermined and mix up the schools as best as possible, and the project includes an 8-10 page submitted proposal and a 20 minute presentation. The background of the assignment is that we are a Strategic Task Force at an American company that produces and distributes high end consumer goods. The challenge is exploring opportunities to expand business in the 27 EU countries in order to improve growth performance by establishing a European branch.

Tomorrow we start at 9 in the morning and work through until 5, at which point we will start our guided tour and ending with a pub crawl.