EMTM’s Global Immersion Trips Offer Actionable Insights on World Economy

May, 2004 — Since Daniel Stern’s first trip to China in 2002 as a participant in EMTM’s first Global Immersion Trip, he has returned 10 times to pursue new and growing business opportunities.

Expanding his cultural horizons has paid off. “Our business growth has resulted from those trips to China, and that’s in a market that has been relatively flat,” says Stern (EMTM ’05), president of Everite, a privately-held Philadelphia-based prime contractor for the military and a manufacturer of machine tools and control systems. “Our growth challenge has become to contain our expansion at a healthy pace.”

That first trip to China brought to life the lessons – for instance in global supply chain management – that Stern had learned in EMTM classes and projects. “As president of a small manufacturer, it’s very effective for me to attend EMTM to get fresh ideas and update my business skills. Going to China gave me the confidence to say ‘the opportunities are limitless.’”

Global Immersion Trips are an optional, valuable component of the University of Pennsylvania’s EMTM program that began in May 2002 with the initial trip to China, continuing in 2003 with a trip to Germany, and returning again in 2004 to China. Participating students obtain pragmatic, cutting-edge insights – broadening their perspective on the global economy, helping them identify and pursue new business opportunities, and enhancing their cross-cultural communication skills.

Outsourcing of labor and manufacturing was a focus for all three trips, says Jeffrey Cantor (EMTM ’05), a key planner of the student-organized trips. Though the implications of globalization are far-reaching, rapidly-evolving and subject to debate, Cantor says, seeing these trends first-hand illustrates that “this is the reality of the world, and shows how I can best operate in it.”

For Niranjan Kumar (EMTM ’04), a senior scientist with Aventis-Pasteur, learning about the theory of supply chain management and then seeing this in action was a “fantastic” opportunity. “Most global pharmaceuticals are looking strategically at China to establish R&D facilities,” says Kumar. He was particularly impressed with the fact that Hewlett-Packard’s printers are assembled in outsourcing outlets in Shanghai that are Six Sigma certified.

Seminars by professors at Hong Kong University of Science and Technology (HKUST) during the 2002 and 2004 trips provided insights on the impact in China of the trend toward global integration of suppliers, manufacturers and distribution. On both trips, EMTM students visited with top executives at one of the world’s largest and most automated air freight terminals and at a container shipping terminal operator at the Hong Kong Seaport, one of the world’s busiest ports.

Gun-Sam Kim (EMTM ’05), research and development project manager for Hewlett-Packard Company, valued the opportunity to see what his firm’s marketing looks like in Asia. He also appreciated the chance to meet with senior management at an HP manufacturing facility and at similarly technology-intensive businesses in Shanghai including: an IBM software globalization design center; a Roche Pharmaceuticals manufacturing facility; Flextronics, a contract manufacturer for the electronics industry; and two divisions of Siemens that manufacture medical devices and wireless phones.

Prior to their departure to China, EMTM students attended cultural sensitivity and Chinese language training workshops conducted by international graduate students attending the University of Pennsylvania’s Lauder Institute. Students also learned to work with the private and government-sponsored firms in China that help U.S. firms initiate and form business relationships there.

That broader perspective on global business trends is an invaluable extension of EMTM’s emphasis on actionable technology management training.

For Stern, of Everite, the business-altering epiphany obtained from his 2002 trip was that: “We prosper by maximizing the value chain. A company must compete in areas it can be most competitive.” After his return, he shifted labor-intensive manufacturing processes to China, and refocused his growing U.S. workforce on value-added finishing operations where the firm can achieve better quality control and superior productivity through technology and automation.

Another analytic tool learned through EMTM, real options analysis (a method for estimating the value of strategic investments that factors in volatility and uncertainty) helped Stern determine that the value chain analysis for China is likely to shift dramatically when the Chinese currency is revalued. When this happens, Chinese firms will more easily afford investments in high tech equipment. With this in mind, Stern leveraged relationships with Chinese manufacturers of a particular medical device to become the de facto supplier of that product in the U.S. He anticipates that “once the currency status changes, we’ll make the necessary multi-million dollar investment to manufacture it here. If the real options approach hadn’t been used,” he adds, “the value of the opportunity would have been understated.”

Stern, who recently hired a project manager who is fluent in Cantonese, Mandarin, Japanese and English to manage Everite’s more than 20 different business partnerships overseas, adds, “Globalization offers limitless opportunities if you just look at them the right way and only compete in the areas in which you can be most competitive.”