Analysis: G20 has to show FX pact packs meaning

We discussed this in class last week and will continue our discussion on the Currency Wars in class tomorrow night.  Here's what Reuters is reporting.  What does the press in your home country report?

By Alan Wheatley, Global Economics Correspondent

GYEONGJU, South Korea | Sun Oct 24, 2010 8:07am EDT

GYEONGJU, South Korea (Reuters) - Excited talk of currency wars has given way to an uneasy truce, but what has so far been a phony war could yet break out into outright hostilities.

The statement thrashed out among finance ministers of the Group of 20 leading economies in South Korea at the weekend did no more than paper over the radically different views of the two main belligerents -- the United States and China.

Sometimes international meetings sow the seeds of understandings that, over time, bear policy fruit. But most times what you see is what you get.

And what world markets saw in Gyeongju was two countries poles apart on who is responsible for global imbalances that are generating currency volatility and threaten to spill over into 1930s-style protectionism -- at a time when the world economic recovery, in the words of the G20, is "fragile and uneven."

"On the currencies, I would have liked to have seen more substantive progress there," said Canadian Finance Minister Jim Flaherty.

"We did make directional progress," he said, but added: "There was a lot of push back from China and some of the other countries as well. I think there's nervousness about the fragility of the economic recovery."

Washington pressed its case that countries with big external surpluses, primarily China, need to let their currencies rise.

The result? A call in the communique for more market-determined exchange rate systems, the avoidance of competitive devaluations and the pursuit of a full suite of policies to reduce current account imbalances.

Developing economies countered with criticism of rich countries for cranking up their money-printing presses and, in the process, sending a flood of money into their markets that is inflating asset bubbles and forcing up their exchange rates to the detriment of export industries on which they rely for growth.

The result? A promise in the closing statement that countries that issue reserve currencies -- code principally for the United States -- would be vigilant against excessive volatility and disorderly movements in exchange rates.

"The outcome of the G20 meeting clearly shows progress in the global rebalancing policy debate," said Thomas Stolper, chief currency strategist at Goldman Sachs in London.

"At the same time, this is not a Plaza-style statement that signals a broad agreement on the role currencies have to play in the global rebalancing," he added, referring to the 1985 Plaza Accord by five leading nations to drive down the dollar.

REPRESENTATION AND RESPONSIBILITY

Chris Turner, head of FX strategy at ING Commercial Banking in London, argued that the G20 surpassed market expectations by delivering a comprehensive set of reforms: Washington had pledged not to devalue the dollar in return for an agreement by emerging market (EM) economies to let their currencies appreciate.

Seen through this prism, a surprise agreement to transfer six percent of voting power at the International Monetary Fund to developing countries is part of a grand bargain.read more from Reuters here

Mexico's Grupo W Will Enter U.S. Hispanic Market

By Laurel Wentz
Published: October 14, 2010

NEW YORK (AdAge.com) -- Mexico's Grupo W, a leading international digital agency, is planning to enter the U.S. Hispanic market, working both with ad agencies on digital projects and directly with marketers.

GrupoW uses its promotional Digital Invaders website to create a talent pool by training young people in digital skills. 

 

Grupo W is initially opening a representative office in Miami, headed by Lynn Ponder, who will be in charge of developing new business in the U.S. Grupo W founders Miguel Calderon and Ulises Valencia will spend a couple weeks in the U.S. in November in an informal road show with Ms. Ponder to introduce the agency. 

The two men started Grupo W in 1999 in their home town Saltillo, a desert city of about 700,000 people located near Mexico's business capital Monterrey. They only opened an office in Mexico City two years ago, when they began working directly with more marketers. 

Read More Here

Weak economy has nations waging currency wars

Martin Crutsinger and Greg Keller, Associated Press, Washington | Fri, 10/08/2010 12:27 PM | Business 

 

Fears of a full-blown currency war flared as the dollar fell to an eight-month low against the euro and the U.S. stepped up pressure on China to let its currency rise.

The escalating tension threatened to dominate a three-day conference of the International Monetary Fund and the World Bank. Leaders from both groups warned Thursday that a currency war could destabilize global financial markets at a fragile moment.

The flare-up comes as investors are anticipating the U.S. Federal Reserve will pump billions more dollars into the U.S. economy. That is weakening the value of the dollar against the euro, which has been surging.

A falling dollar can affect U.S. consumers, investors and businesses in various ways. Travel to Europe becomes more expensive for Americans. Exports from U.S. businesses become more affordable for European buyers. U.S. Treasurys become less attractive to investors.

A different scenario has been playing out with China. An undervalued Chinese yuan has weakened U.S. exports while making Chinese goods attractive to U.S. consumers. The imbalance has weakened U.S. economic growth. And it threatens U.S. manufacturing jobs at a time when the American economy is struggling with 9.6 percent unemployment.

At the same time, China's economy is soaring.

World Bank President Robert Zoellick said Thursday that the tensions over currencies could undermine investor confidence at a time when the world needs the private sector to bolster growth.

"If ever there were a time that we should not turn our backs on international cooperation, it is now," Zoellick said at a news conference ahead of three days of high-level talks on global finance in Washington. 

Read more here

Virgin Atlantic Debuts First-Ever Global TV

 We'll discuss this tonight in class - Why is Virgin going global in it's marketing now? 

 
 
 From Mediapost:


Virgin Atlantic Airways is debuting its first-ever global TV spot, which is part of a $25 million global ad campaign.

The campaign first launched in May with the introduction of the U.S. print ads and online advertising. This is the first time in 10 years that Virgin has run a TV spot in the U.S., said Chris Rossi, senior VP of North America at London-based Virgin Atlantic.

"The launch of this global marketing campaign and TV ad is a crucial step in shaping and advancing the brand in this new economic landscape," Rossi tells Marketing Daily. "In addition, this spot will remind our fan base why they continue to choose Virgin Atlantic and showcase our unique offerings to a new audience. Returning to TV will allow us to visually showcase the brand's innovation and creativity while bringing to life our signature products and memorable services to passengers."

The spot captures the spirit of the brand by showing off unique services and products, from complimentary ice cream to individual upper-class suites, Rossi adds.

The TV spot, which will air in both 30-second and 60-second versions, was created by RKCR/Y&R and debuts the week of Oct. 11 in New York, Los Angeles, Washington D.C., San Francisco and Boston during the MLB playoff series. The spot will air over 50 times until the conclusion of the MLB World Series the week of Nov. 1. The media spend on TV alone is $9 million, according to the 

airline.

Featuring the tagline "Your airline's either got it or it hasn't," the spot takes the viewer on a metaphorical flight with Virgin Atlantic, guiding them through a surreal and glamorous world of the airline's iconography and dramatizing how it feels to fly with Virgin Atlantic to London.

The campaign is accompanied by the song "Feeling Good" from the band Muse. This is one of the rare times that Muse, an English alternative rock band, has licensed a soundtrack for use in advertising, according to the airline.

Global forces: An introduction

Excellent article from McKinsey & Co for all students to read.  We'll discuss in next week's class:

Five crucibles of change will restructure the world economy for the foreseeable future. Companies that understand them will stand the best chance of shaping it.

JUNE 2010 • Peter Bisson, Elizabeth Stephenson, and S. Patrick Viguerie

In This Article

“I never think of the future,” Albert Einstein once observed. “It comes soon enough.” Most business managers, confronted with the global forces shaping the business landscape, also assume that their ability to sculpt the future is minimal. They are right that they can do little to change a demographic trend or a widespread shift in consumer consciousness. But they can react to such forces or, even better, anticipate them to their own advantage. Above all, they ignore these forces at their peril.

Business history is littered with examples of companies that missed important trends; think digitization and the music industry. Yet this history also shines with examples of companies that spied the forces changing the global business scene and used them to protect or contribute to the bottom line. Companies ranging from insurers to energy producers did precisely that in embracing the growing social concern about climate change. So did Wal-Mart Stores in applying technology to automate inventory management and reduce costs dramatically for the company and its suppliers.

The fact is, trends matter. Systematically spotting and acting on emerging ones helps companies to capture market opportunities, test risks, and spur innovation. Today, when the biggest business challenge is responding to a world in which the frame and basis of competition are always changing, any effort to set corporate strategy must consider more than traditional performance measures, such as a company’s core capabilities and the structure of the industry in which it competes. Managers must also gain an understanding of deep external forces and the narrower trends they can unleash. In our experience, if senior executives wait for the full impact of global forces to manifest themselves at an industry and company level, they will have waited too long.

Video: Why trends matter

McKinsey director Peter Bisson explains the value of tracking global forces and how to build them into corporate strategy.

Download a PDF of the transcript.

For much of the past year, a team at McKinsey has revisited and retested our assumptions about the key global trends that will define the coming era. We have identified five forces, or crucibles, where the stresses and tensions will be greatest and thus offer the richest opportunities for companies to innovate and change:

• The great rebalancing. The coming decade will be the first in 200 years when emerging-market countries contribute more growth than the developed ones. This growth will not only create a wave of new middle-class consumers but also drive profound innovations in product design, market infrastructure, and value chains.
• The productivity imperative. Developed-world economies will need to generate pronounced gains in productivity to power continued economic growth. The most dramatic innovations in the Western world are likely to be those that accelerate economic productivity.
• The global grid. The global economy is growing ever more connected. Complex flows of capital, goods, information, and people are creating an interlinked network that spans geographies, social groups, and economies in ways that permit large-scale interactions at any moment. This expanding grid is seeding new business models and accelerating the pace of innovation. It also makes destabilizing cycles of volatility more likely.
• Pricing the planet. A collision is shaping up among the rising demand for resources, constrained supplies, and changing social attitudes toward environmental protection. The next decade will see an increased focus on resource productivity, the emergence of substantial clean-tech industries, and regulatory initiatives.
• The market state. The often contradictory demands of driving economic growth and providing the necessary safety nets to maintain social stability have put governments under extraordinary pressure. Globalization applies additional heat: how will distinctly national entities govern in an increasingly globalized world?

Our thinking is exploratory rather than definitive. Precisely how these forces will unfold—and, as important, how they interact—is very much a work in progress. Still, our research, extensive one-on-one contacts, and broader survey data give us confidence that these topics should be framing every organization’s strategic conversations about how best to chart its future course. Over the coming year, McKinsey will dive deeper into each of these five areas to draw out the business implications and inform the strategic debate. We can be certain that this new era will not evolve smoothly. Future economic crises—quite likely, major ones—are inevitable. And management theory for the 21st century, the first with truly global enterprises, is being invented in real time, as thousands upon thousands of companies make it up as they go.

What we do know is that the forces driving the emergence of this new world are too powerful to be denied and that running a 21st-century company is exponentially more complex than running a 20th-century one, of any size. Companies must pay attention to more stakeholders, more regulations, and more risks—and watch to see what their customers are tweeting about them. That complexity is greater, but so, we believe, is the opportunity.

Even the most talented strategists will have, at best, incomplete knowledge of what comes next. But from our experience, we know that an understanding of the forces defining the future will also provide the best chance for seizing it.

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'Jersey Shore' transforms regional style into global marketing boon

We'll discuss this in next class on Monday night.

By Soraya Roberts
DAILY NEWS STAFF WRITER

Thursday, July 29th 2010, 4:00 AM

ING;Getty

'Jersey Shore' stars Mike 'The Situation' Sorrentino and Jenni 'JWoww' Farley are both hawking their own clothing lines.

YouTube

'Jersey Shore' star Nicole 'Snooki' Polizzi is the face of Sunlove spray tan lotion.

Miami is only the beginning.

After starting out a year ago in a small beach house in New Jersey, the self-professed "guidos" of "Jersey Shore" have made their way as far south as Florida and are poised to inspire spray tans, blowouts and ab-tastic bodies beyond the U.S.

"What was a very local regional style up until this show -- coming out of Brooklyn initially and then migrating to the larger metropolitan area, Staten Island and Jersey -- this show has allowed it to go global," Joe Sciorra, associate director at CUNY's  John D. Calandra Italian American Institute, told the Daily News.

Taking advantage of their massive exposure -- "Jersey Shore's" season one finale drew 4.8 million viewers, according to Reuters -- members of the cast have reportedly penned book deals, filmed workout videos, inspired iPhone apps and are commanding upwards of $25,000 for personal appearances, the Daily Beast reports.

Not since "Hannah Montana" has a TV show been marketed so insatiably. But it's one thing to sell Miley Cyrus' bubble-gum pop to tweens, it's another thing to try and shove this GTL-loving band of hedonists down the throat of the general population.

Yet a Facebook fan page devoted to Snooki's poof has more than 7,000 followers while Pauly D's barber, who has been cutting his hair for 10 years, told the AP he has been booking appointments from as far away as Massachusetts.

Sciorra suggests that this can be taken at face value -- literally.  ‘You can't get away from the fact that this is a white culture, so there's a whole community that can identify with it in ways that they literally see themselves in the projected images of "Jersey Shore," ' he explains.

The "Jersey Shore" products available to fans literalize this identification process. For example, an iPod Touch app called "Jersefy" employs 50 options that allow you to computer generate bronzer, blowouts, poofs etc. while fans can rub shoulders with Snooki via  iTunes' "Spread Snooki" iPhone photo application.

"Jersey Shore" lovers can also go to the source -- the cast itself.

To get a spray tan like Snooki's, they can purchase a tanning lotion called Sunlove, for which Snooki is a spokesperson. Meanwhile, JWoww's Filthy Couture clothing line expands upon the infamous yellow top she wore in season one that was cut down to her navel.

For the guys, Mike "The Situation" Sorrentino's clothing line for Dilligaf by Bohica Bill includes shirts, sweatshirts and accessories. The most entrepreneurial member of the cast, The Situation reportedly also has a self-help guidebook for "guidos" in the works, not to mention a workout DVD.

Both MTV and the "Jersey Shore" cast appear to have gotten hip to the divisive nature of "guido"  -  a term that has been criticized as stereotyping young Italian Americans - since season one and have softened their edge. While Snooki has lost her poof, and JWoww  has renounced her ratty blond extensions, MTV has launched a "Jersey Shore" game in which 'there is no mention of the terms "guido" or "guidette,"' according to Reuters.

Sciorra says that this is the only way for the network and its stars to keep cashing in.

"If you can only sell to Italians from Jersey, you're not going to make a profit," he says. "It has to be marketable to people beyond that group."  He says that these markets don't exist solely in the U.S. "There are communities like this all over the world," Sciorra tells the News, "where men and women are into club culture and personal adornment is important for self presentation."

Read more: http://www.nydailynews.com/money/2010/07/29/2010-07-29_jersey_shore_transforms_regional_style_into_global_marketing_boon.html#ixzz10YuhOfb9

The Top 11 Global Brands 2010: Interbrand

Consumer behavior is more difficult to predict than ever, says Interbrand, a leading brand consultancy firm that just released its annual ranking of the "Best Global Brands."

The current economic climate is "a risky landscape for today's brands," Interbrand writes, "one that is fraught with contradictions and vocal customers scrutinizing your ever move...The same customer might opt to buy an iPad instead of a laptop, purchase private label toothpaste, and then match a Zara skirt with Christian Louboutin shoes."

Despite today's "schizophrenic consumers," some brands managed to rise to the top of Interbrand's widely-viewed list by engendering loyalty and trust from the world's buyers.

Based on what Interbrand believes are the three key aspects that contribute to a brand's value -- "the financial performance of the branded products or services, the role of brand in the purchase decision process and the strength of the brand to continue to secure earnings for the company" -- below are the top 11 brands in the world, according to Interbrand.

Which one is most deserving of the the top spot? Check them out and vote below: 

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