MBA@UNC Global Immersion in Istanbul: Day One
One of the unique features of the MBA@UNC program is the Global Immersions. Held in cities around the world, these three-day weekend immersions are high-impact experiences that provide MBA@UNC students with the opportunity to meet, learn and collaborate with classmates, faculty and global business leaders. On Thursday evening, 84 students arrived in Turkey to participate in the Istanbul Global Immersion. Titled “East Meets West,” together they will explore Turkey’s unique role as a growing economy that sits on the physical and cultural divide between Europe and the Middle East. We will be blogging this event live to give you a glimpse into the MBA@UNC immersion experience.
Session One: “History of Turkey’s Economic Development”
Ambassador Cem Duna
About our speaker: Mr. Cem Duna is presently the Chairman of AB Consultancy and Investment Services, a company specializing in EU affairs, foreign direct investments into Turkey and Turkish investments abroad. Duna joined the Ministry of Foreign Affairs in 1969 and has served at various diplomatic posts in capitals like Copenhagen, Den Haag, Jedda and London. Duna served as the Foreign Affairs Advisor to President Turgut Özal from 1985–1988. He was appointed as the Director General of the Turkish Radio and Television from 1988–1989 and was Ambassador and Permanent Delegate of Turkey to the United Nations Offices in Geneva, where he was also the Chief Negotiator in the GATT Uruguay Round multilateral trade negotiations between 1989 and 1991. Duna was appointed as Ambassador and Permanent Delegate to the European Union in 1991 and served until 1995, during which time negotiations for the formation of the Customs Union were conducted under his guidance.
Session Two: “Emerging Market Finance”
Christian Lundblad, UNC-Chapel Hill
About our speaker: Christian Lundblad is the Edward M. O’Herron Distinguished Scholar and Professor of Finance at the University of North Carolina’s Kenan-Flagler Business School. His research spans asset pricing and international finance, with a specialization in emerging market development.
Professor Lundblad spoke to our group about trends in emerging markets and understanding the risk associated with foreign investment. We know that an increasing share of foreign direct investment is exposed to political and economic risk. Professor Lundblad explains that determining answers for the following questions are key to understanding risk management:
- Quality: Are we taking the right kinds of risk?
- Quantity: Are we taking the proper amount of risk to meet our objectives?
- Resources: Are we allocating resources efficiently to manage risks?
- Advantage: Do we have a competitive advantage in a particular type of risk?
He asked our group to catalogue the relevant risk factors for a global investment in an emerging market setting and evaluate these risks by impact and probability of occurrence. Our list included:
- Foreign transaction exchange
- Talent acquisition and retainment, labor laws and demographics
- Size of skilled labor pool
- Supply-chain management and its effect on operations
- Institutional/political environment
- Probability of war and terrorism
- Consumer behavior and appreciation for cross-cultural differences
- Exchange rate volatility
- Likelihood of natural disaster
But how should companies make decisions given these intrinsic challenges? Amongst others, Professor Lundblad suggests to make long-run & on-going risk scenario analysis part of risk management at the highest organizational level. Consider political risk insurance. Engage local resources, both for labor and financing. Align with the interests of the host country and investors across all economic scenarios. Spread your commitments over time.
Kenan-Flagler professor Christian Lundblad led a really interesting discussion about analyzing and mitigating risk in emerging markets as well as the ability of investment in and out-flows to influence reforms in those markets. He presented two great frameworks for multinationals to use when identifying, classifying and working to mitigate risks. We discussed preventable, strategic and unavoidable risks as well as market, credit and operational risks. Christian also proposed some key questions to help us think about the program of strategic, emerging investments our companies might make and to make sure that all this discussion of risk analysis didn’t result in investment paralysis, he left us with some words of wisdom from JFK: “There are risks and costs to any program of action. But they are far less than the long-range risks and costs of comfortable inaction”. -Lindsay Konte, MBA@UNC Class of 2015
Session Three: “Financial Markets: Practitioner Perspective”
Murat Gülkan, Ünlü & Co.
About our speaker: Murat Gülkan is the Managing Director at Ünlü Portfolio Management. Previously, he worked as the Managing Partner and Strategist at Arma Capital. Before returning to Turkey in 2007 to take up his post at Deutsche Securities Istanbul, he had been working for Deutsche Bank London as the Co-Head of European Emerging Markets Sales. Murat Gülkan was working for Bender Securities as a Managing Partner when the firm was wholly acquired by Deutsche Bank in June 2005. At Bender Securities, he established the Research Department and headed the research effort until June 2004. Murat Gülkan holds an Industrial Engineering degree from Middle East Technical University (METU) and also holds an MBA degree from Tulane University (1992).
Murat Gülkan’s practitioner perspective of Turkey’s financial markets both balanced Ambassador Duna’s discussion and related Professor Lundblad’s emerging market discussion to our host country. Turkey is a great example of a country that has worked hard to create a stable investing climate for foreign investors, with reasonably low uncertainty, high transparency, and well-regulated banks, yet their economy swiftly and intensely feels the effects of even the smallest changes in U.S. fiscal policy.
The first day of the immersion was a great introduction to Turkey’s history, accomplishments, challenges, and opportunities. Not only is this my first visit to Turkey, but it’s also my first real exposure to the country, its culture, and its economy. Today was a great beginning to what I expect will be a fun and enlightening immersion! -Amie Bonner, MBA@UNC Class of 2014
Mr. Gülkan’s discussion, in particular, helped alleviate some of my skepticism around Turkey’s future. Mr. Gulkan immediately confronted an issue in all of our minds while explaining the past and present state of Turkey. “Geography matters.” With Iran, Iraq, and Syria positioned to the southeast and the largely developed countries of the European Union to the west, Turkey is an intriguing emerging market. A free market economy with large net imports, Turkey faces a huge current asset deficit. Similar to the United States, Turkey is highly dependent on other countries for those investments. In fact, as an emerging market, Turkey is highly susceptible to sudden shifts in foreign exchange as evident by the ebb and flow of the Lira. What I ultimately discovered was that Turkey faces the same issues we do as Americans; high employment rates, a strong push for higher education, and new focuses on urbanization in large cities.
So in a trek 5,000 miles across the world and unsure of what I might encounter, Turkey is surprisingly and pleasantly similar. This weekend is shaping up to be a huge success! -Adam Brunson, MBA Class of 2014