New Boundaries.

I have reached a new boundary in my life. I have never been to so many culturally packed and awe-inspiring places in my entire life. Sensation last Saturday blew my mind. There were over 18,000 people raving all together from 8pm to 6am. I met so many random foreigners and beautiful women. These people were a different breed of human. After partying till six in the morning people went to the after party till 10 am. Everyone was dressed in white and raving to the beats of the five different dj's that played through out the night. The laser light show was amazing and the people danced like crazy. I was in the bottom pit most of the time while there were many people dancing above me in the stadium seating. I met the main mc for the concert and got to dance with some of the most gorgeous women I have ever seen in my entire life.

I am finally starting to feel the effects of sleep deprivation and I need to past out for about twelve hours tonight for sure to be in full form tomorrow as we go to our last cultural event to the communist museum and to our last company we need to visit. I have stretched my self to the limit and have tried to go all out as much as possible while here to get everything possible out of this trip from the culture, to the businesses we visit and to the fun night life. I have made wonderful friends here that I will share all my memories with for my first time in Europe. This whole trip is sadly finally winding down but I still have a lot planned ahead of me for this summer and I can not wait.

The Sunday after Sensation we went to the Prague castle, the old Cathedral and the Prague Museum. I am trying to post pictures of everything but the internet is incredibly slow here. The history is so vast and rich here it is hard to fathom. The royal family of Prague had original works of Beethoven and Mozart hand writing along with many famous pieces of art work on display in the museum to keep their rich heritage in tact. I snuck in a lot of pictures of this as well because we weren't supposed to take any.

Today we went to Krusovice and Skoda which are a beer company and car manufacturing company respectively. I took notes on them which I will post after this. We stopped for lunch in between these visits and I had beef Goulash with Dumplings which is their traditional meal here in Prague. After we got back from our visits a group of us went out to an asian restaurant and then came back to the hotel. Many people are going out tonight but I definitely need my rest tonight and need to prepare for the last day of our scheduled study abroad. I am deeply mournful that I can not live in the fantasy European fun world forever but I actually do miss Atlanta and Athens GA my two homes. Europe is great but there is nothing like home.

Fair well Krakow and hello Prague.

So the night after Auschwitz was pretty sobering and no one went out this night. I stayed in and got some extra sleep for the day ahead of me. We had our debrief session and last speaker on our last day and then had the rest of the day to our selves. On my last day I finished up some blogging and then went out through out the town. I went back to the south side of Krakow to the Jewish district to get one last view of the city and make sure I could ingrain memories in my mind about what we had been through. I tried some Gelato and then went to the main city square to have a slice of Polish Pizza which was fantastic. I ate my pizza out side in the main market where I could just observe the small city and see what people were up to. While I was out there. While I was sitting out side the pizza place there was a beautiful women by the name of Anna who sat right beside me and I asked her about some of the best clubs for the night life in Krakow. She told me Cien and Frantic were the best so I made sure that I would make my best effort to make it out to those places that night. I asked her if she was going to go to those clubs tonight but she said that she was going to visit her boy friend in Warsaw the next day so she wasn't going out. Dang it!

We had our final group dinner as a three course meal which consisted of green pea soup, salad, chicken in a special orange sauce, all with a house red wine. Believe it or not we had apple pie for dessert?? I don't know why we keep having apple pie. When we were heading back to the hotel we remembered that some of the locals were raving about honey wine so we made sure that we picked some up. It was definitely different but delicious none the less. When we went out we ended up going to Frantic after a long debate about where to go but I had a blast! Every woman in the club was either a 9 or a 10 and I made good friends with two Polish models whom I had the privilege to dance with! They had three different bars in the club and one large dance floor which I made sure to take full advantage of! We all partied and danced till the sun came up and passed out on the bus most of the whole next day while we had our nine hour bus trip to Prague. On the way to Prague we stopped at this lunch place where we ate beef covered in some sauce with a sponge bread that they described as dumplings. It was very tasty but many people were turned off to it because it looked like Nickelodean ooze sauce was poured all over the beef.

When we finally got to the Hotel in Prague last night after our long bus ride we went through the main market square and got some cash for the week. Their currency is called Coruna and the ratio to the dollar is 21 to 1 which works in favor for us because everything is so cheap here! We went to the largest Irish pub in the city of Prague and then many people went to the beer factory because they didn't want to go out but I decided to go to the Karlovy Lazne the largest club in all of central and eastern Europe. I went by my self because everyone was too tired to go out and I have wanted to go to this place for a long time. At first I was a little cautious about going by myself because I didn't know the city but I spoke with some natives and they assured me that I wouldn't have any trouble. When I finally got to the club I was amazed at the long line of people waiting to go in. The wait was about 15 minutes but they had to check everyone before walking in to make sure for security. As soon as I walked in music was blasting and lights were shinning everywhere. On every floor they had professional dancers in the main floor of the club and everyone of the five levels was a different theme. The levels were themed as follows: 1. Radio hits, 2, Oldies, 3. Dance music, 4, Black music, 5, Clill music. My two favorite floors were the techno dance music and the black music. I took many pictures of each floor so you should be sure to check them out. There were once again many beautiful women who I spoke with and danced with from all over the world. There were women from Holland, Sweeden, Canada, Poland, France and the Czech Republic that I met. This club was Frantic times ten. On the way back from the club I got a Kilbasa hot dog that are very popular in Prague and was extremely delicious. I made sure that I got to bed to prepare for our tour the next day.

During the tour we went all over the entire city of Prague and saw all the main historical sites. I was blown away by the architecture and the entire make up of the city. During WWII this city was fortunate enough not to have been bombed and the city was still intact from hundreds of years of work. Some of the sites that we saw were the old town square, Charles Bridge, the Astronomical clock, New town, the National museum, and a concert hall were Mozart had preformed in the past and where the movie Amadeus was filmed. This is by far the most beautiful city that I have seen in Europe thus far. Prague seems like the perfect mix between Krakow and Budapest in the way that it has the size of Budapest but the class of Krakow. For lunch I ate Venicine with forest fruits and potatoes and was taken to another place. The food here is so delicious that I feel like I am going to be spoiled by the time I come back home and return to American food. I picked up some white pants because tonight I am going to Sensation White which is one of the biggest touring Trance concerts in all of Europe and the world. The dress code is all white so I will be sure to have some super fly pictures for tonight for all to see! Tonight we are going to another nice three course group dinner right before my life becomes complete after going to one of the best concerts of my entire life. Life is so good right now and I am so blessed to have the opportunity to experience so much! I am just taking it all in right now.

Auschwitz

After our time with the entrepreneur yesterday we made our way over to Auschwitz. I have heard so much about Auschwitz and I've always believed that it has been something I needed to see so naturally I was very excited to go. We took a charter bus over and it took about an hour and a half to get there. We pulled into Auschwitz I where the main center of the concentration camp was first started amongst Auschwitz II Birkenau and Auschwitz III. Birkenau known as Auschwitz II was an extension of the first Auschwitz where most of the brutal acts were carried out. On Facebook I posted pictures of ruins in Auschwitz II where the main gas chambers were laid out. There were two main gas chambers that could hold 2,000 people each at a time. When the trian came through Auschwitz II people thought that they were being relocated outside of Europe aways from the Nazi regime not to be exterminated but to be kicked out. 75% of the people who were taken to the camp were exterminated immediately upon arrival. Most people did not resist going into the gas chambers because they thought they were going into showers to be cleaned up to live in their new destination. Once everyone was stripped naked and shoved into the chamber they were to Cyclon B and dead within 10-15 minutes. After death they would be cremated for 2-3 days out in the open fields that created a stench that could be smelled all through out Poland. About 1.5 million would murdered at Auschwitz mainly the Jews. Originally Auschwitz I was created to eradicate all of the Polish Political leaders at the time but Hilter liked the camp so much that they expanded it to Birkenau for the Jewish people. It was frightening to say the least that I was walking on grounds where all these terrible acts happened and walked through the areas where so much suffering had occurred. I took pictures from the entrance to the doors where the gas chambers used to be before the Nazis tried to destroy the evidence of the gas chambers before the soviets came in. This was evidence enough how shameful they knew theses acts to be after they had know they had lost the war. At one time the camp had 20,000 people enslaved to labor to work the infrastructure in the areas that Germany had wanted. In total only about 140 escaped the camp and these were mostly from people who were outside the camp working on infrastructure. People typically did not last more than six months working for these camps working 11 hours of day with poor nutrition and living standards. We walked to a wall by the main administration building where they had a shooting wall where they would originally line up and shoot the Polish people who were convicted of politically uprising against the Nazi regime. More than 2,000 people were lined up and shot to be made an example of for the workers in the camp. They had two layers of electrical fencing that were barb wired with a third twenty foot concrete wall that would be impossible to climb outside the fence. They had one remaining gas chamber that we went to and I took pictures of. We couldn't take any pictures of anything inside of the buildings but I managed to sneak some pictures in. They used the remaining hair from women that they killed and sold it off to make wool for neighboring countries. My heart goes out to all those who suffered and were lost. It is important to know this history because that history which is not know will surely be repeated again.

SABER Inc.

The man who came to speak on Saber Inc. was originally just in IT but has received his MBA and is now overseeing the work in Krakow Poland. He has worked 10 years in Krakow for Saber. Saber does the software for systems with airlines and hotel chains which helps brand their business as they work with big name companies. GDS (Global Distribution System) is used for cruise lines as well for information to online agencies such as travelocity and Expedia that customers can attain. SABER is mainly focused on the software which can be complicated at times but they have a highly trained and skilled work force to pull from. They don't have one specific niche product but one main specific resource which is their people. They are an extremely horizontally integrated company with the main focus on all the IT software designers working in teams to get their job done. When they select people from Engineering and Computer science workers they have a lot cheaper labor costs because of the 750 people that they need working in Krakow. The main difference in business in his experience between the U.S. and Poland is how in the U.S. we see business as everything half full and in Krakow they see a lot of business as half empty and are much more pessimistic about business. Probably because of the monumental changes that have happened in the past 20 years.

All of the corporate culture of SABER is important in the minds of the people in control so you can see senior executives very easily which shows how flat and horizontal this corporation really is. They do this to make sure that people are on the same goal with no teams purely related in Krakow. They have centers in Banglor, India, Buenos Aires and Dallas that are all working on the same project and global opportunites in a joined effort. They have joined the European Union and now have centers in Ireland, Italy, Greece that have joined the company. They don't have much movement or turnover from the Polish people either. With the new government and political situation in Krakow they had a new generation of the workforce creating the 9,000 employees of SABER today in 50 offices world wide.

The company started out in the early 60's when the C.E.O.s of American Airlines and IBM came together while flying on a plane discussing how airlines can work in the computer business. They eventually came together to work on this and were successful until SABER broke off in the early 90's. SABER stands for Semi-Automated Business Environment of Research. Competition is not as clear who they are working against as you think it would be because of all the different softwares and services they provide. One main competition though is for the talented workforce that they need to attain and maintain. Right now they are working on several products distributed in Germany for Hotels and Railways.

They don't have much turnover from their workforce because the people working for them are very satisfied to move from multiple technologies from Microsoft, SAN, Oracle and IBM with different systems. It is exciting and appealing to be able to change the areas that you work on 2 years at a time. With their flat organization their business performance is challenging but still doing well in these tough economic times. With the business that they were in they could see the recession before it even happened because they could slowly see people stop traveling and people cutting back on travel expenses with less booking.

They work with 250 travel agencies around the world today providing services to the home office through internal transfers of software to the company from Krakow to Dallas. They have to follow laws through the European Union though which can make this difficult at times. They make $3 billion annually world wide. Right now they are trying to introduce new ways for reservations and booking of flights because the shorter amount of time it takes for people to get a flight means the faster they see returns and get profit from commissions.

They were public until 2006 and then they were acquired by tow private equity funds. Their two biggest costs are people and maintaining their operating systems.

Wrap Up Session in Krakow.

Can Pack Inc.

They only had 60 people at the plant while making 3,000,000 cans per day at the one plant in Krakow which is pretty remarkable with only 14 in the factory. Products are a great indicator for where they company is going in terms of their aluminum, glass, and steel demands for their products. Out sourcing and transportation is a big part of their company as well. They want to see the flow of their production from begging to end. They have specific service specs that they need to keep track of with no damage to the cans, travel time and cost while delivering these cans. They have very high vertical integration with in the company with large and few customers which keeps advertising costs down real low. This makes not as much credit risk at all as well with big names such as Coke, Pepsi, Heineken. They have a ten hour lithograph process with 3% waste in the factory and almost 0% faulty products when they are shipped out which is extremely high quality. There costs seem a little high with 9 cents per can. It takes about $75 million to start a new plant. Out sourcing is about 5-7% of costs.

Inventory is only there 2 days after sale.
Accounts receivables are 30 days.

Interesting process to note that the financial sector uses.

Sales
-COGS
-SADA (Selling, Advertising, Distribution, Administrative costs)
= PBIT (Profit Before Tax)
-interest
=EBIT (Equity Before Tax)
-Tax
=NI

NI
+DEP
+/- Change in NWC
=Operating Cash Flow
+/- Investment

NWC (Net Working Capital) = INV + A/R - A/P

This Finance company is funded with corporate bonds and bank loans so they need the amount of money they need for leverage with the right interest rate.

They hedge for Aluminum prices for 2 years out.

Richard Lucas

Some interesting things to note were emotional v.s. intellectual I.Q.
Business is generic.
Good listening while managing.
P's of Product, People, Process and Profit.
C's of Customer, Competition, Cost and Capital.

The importance of highering and keeping good people that created value to the firm.
Hard to separate family and work as the C.E.O. so he rather be the consultant for 5 companies.

Richard Lucas Entrepreneur.

We had Richard Lucas come in and speak who is originally from the U.K. doing business in Poland for about 19 years. He is currently a consultant for five different companies that he has started such as Unicard, PMR corp., Argos corp., SKK and ISL. He described how in the U.K. typical jobs you think of when you want to be successful are a lawyer, accountant, doctor, or a consultant but typically not as much an entrepreneur. Some of the bigger names in Western Europe for companies people would like to work for are Proctor and Gamble, KPMG and McKenzie.

Some tid bits of information he gave us as advice that has helped him has been the JRL rule which was a rule from his father who is a professor at Oxford. He said a class has been highly successful if you can remember at least one thing from the class very well. Just to take away one thing because it is hard to remember anything form classes a few years out. He discussed the importance of utility and how free information is always better than paid when you get shared knowledge from people that you know. Some generic things that he cued us in on from TED were passion, work ethic, practice, focus, pushing yourself, serving, creating value, ideas, and persistence.

Typically we are focused on celebrating individual success but we should focus on the success as the company as a whole. He discussed about emotional I.Q. where we should be mindful not to be an emotional idiot in insecurity where it is the "I'll show them" mentality to do well in business to build up a weak ego. Daniel Goldman discussed a little bit about how I.Q. is not the main determinant for success but rather we should be aware of our social and emotional I.Q. in dealing with people and seeing things form others point of view. Listening and understanding people allows you to motivate people. You need to see things from others point of view while having the ability to control yourself. We should be mindful to post pone instant gratification for something better in the future. He described how by the age of 4 people are typically set in your ability to control themselves and your make up as a person.

During his 19 years in Poland and 32 years in business he has typically started businesses and had other people go and run them. He has had several failures costing him millions of zloty in the past but has always tried to learn form his mistakes to make them better. Now he has about 350 people in 5 businesses that he has started and now consults for. Confucious was big on " Do and understand" So making sure you learn from your mistakes and thinking about your objectives is important.

He had some interesting points to make about Some important things to note in the market economy.

4 C's: Capital, Customers, Costs, and Competition.
4 P's: Profit, Product, People, Process.
2 S's: Service and Strategy.

While reaching success he made a note to be careful about complacency and watch out for other market entry. Michael Doll Noted that 90% of success in business can be attributed to how well you execute. The three f's of who you raise money with as a common joke in the U.K. Friends, Family and Fools.

One overarching thing that he noted was how Business in Poland is not so different from around the world. The important things here are typically the important things everywhere in Business.

Can Pack Inc.

One of the companies that we visited was the famous canning company Can Pack. Many people don't know about this company of pay much attention to how all of their products are canned but this company does a lot of canning all through out the world. This company has many facilities all through out Europe but in this specific center that we were in cans 3,000,000 cans per day that is 1,800 cans per minute. When they get there aluminum from their supplier they hedge the cans and get a fixed 2 year rate which they price their aluminum off of. We got to see the manufacturing facility that they had and I left my camera in the car but hopefully I will be able to get pictures from some people and post them on facebook. We also got to see their testing facility where they measure the perfect size, height and can diameter. In 15 years only two people have been injured in the facility and they typically have been fingers that have been cut at the tips.

The Product Scope
Aluminum 2 piece beverage cans
Steel 3 piece food and general cans
Crown Caps for glass bottles
Glass Containers
Recycling Standards for the EU
Engineering, Spare Parts and Tools

They have over 9.5 billion production capacity per year in 8 plants.
They are the #4 producer of cans in Europe and #5 in the U.S.

They Produce 1.3 billion steel cans per year and 200 million steel containers per year.

They have over 29 billion capacity in 7 plants for bottle caps and they are the number one producer of bottle caps in the world! WOW.

They have 400 million glass container production capacity which they have newly expanded in Poland by acquiring an old and run down plant in Poland.

Geographical Information
They have their head quarters in Krakow.
17 plants in Europe.
4 plants in Asia.

All their products include beverage, food crown caps and glass containers.

The strength of the company includes how they have incorporated the newest and latest technology and they have expanded so fast after being only 18 years old. They are a newly and recently developed company because of the political and social framework of Eastern Europe that was Communist only twenty years earlier. Can Pack is a very lean and effective organization dedicated to management and company staff. They are one of the most efficient with some of the fastest market growth that has enabled them to gain much international experience. Currently they are netting about 1.25 billion dollars in revenue with 15% increases every year fairing very well in this struggling economy.

They have been concerned with consolidating in Polish Currency to the U.S. and have not broken into the U.S. quite yet because it is such a mature market for this industry. There are four main players for the bottling industry in the U.S. which Can Pack has not yet competed against at this time. They have branched off into North Africa, the Middle East, Asia and South Africa. Once again they hedge the price for the aluminum metal which makes up about 70% of their total revenue to fix the flexible metal prices. They have had trouble trying to break into the soviet and Ukraine market because business is difficult there. Each country is different while doing business there so you must always have a background of what is going on in the country through local lawyers and people.

They are not a publicly traded company and get most of their capital through local bank loans and corporate bonds. This business was started by a father and son back in 1991. They have a 5 year pay back period where in a mature market the pay back period is 9-10 years. In a less mature market like Africa the pay back period is 4 years.

It costs around 70-80 million dollars to create a new plants which apparently they have never failed in making a new venture in creating new plants around the world. Every year they take about 400 million dollars for reinvestment in new ventures which shows as a true testament to how aggressive they really are. They are highly efficient in the way that per all the capital equipment that they own compared to other companies they make about 50% more in cash flow. The Lithograph process of putting the brands on their cans only takes about 10 hours per shift because they are constantly changing from multiple producers. They stop the process and restart with high efficiency that most big name factory producers can not. Typically in the U.S. this process takes up to 7 days per print. Some of the big names that they are involved with are Kausberg, Heineken, Coca Cola, and Pepsi. 75% of their business is big global customers. Obviously the market is globalizing in the business world today.

They have a strong consolidating process internationally hiring trucks and delivering their product. They have an internet platform where distributing companies bid out one another for the business of Can Pack and they go as low as they can go because if they get the job they will have an incredible amount of business. They get about 150 trucks going in and out of their service center in Krakow per day. A lot of their equipment runs about 30 years and they have 3,500 employees world wide. This shows how they can expand so far internationally but still have so few employees being highly efficient. In Krakow they only have 16 people working on the floor at one time.

The philosophy of Can Pack is to treat their customers well and understand that they are a great asset just like all the equipment in the factory. They have trouble dealing with Western Europe because of the Unions in France, Spain and Germany. I asked about where they get their technology and they said that it is all out sourced. The biggest customer of Can Pack is Ball Co. from the U.S. where they try and have growth and reinvestment. In the U.S. the service sector is going up and the production sector is dwindling down.

Today in Krakow.

We had a speaker this morning who has been an entrepreneur in Poland for about 19 years and is originally from the U.K. He is recently running 5 different businesses that he has started as a consultant but not as the C.E.O. He said that he was the C.E.O. for a while but it wasn't his cup of tea. His presentation was very scatter brained and hard to follow and was probably my least favorite thus far. I took as many notes as I possibly could which I will blog about later but did not find it as one of the best business visits yet.

Right after this business visit I got lunch and toured the city a little bit with my laundry. We came upon this place that was a bar, a laundry mat, an art exhibit, a cafe and lounge. WOW. The lady running the place had awesome taste in music and it was no wonder because typically the places that I like to go always have great taste in music. She did all of my laundry for the price of $13 which was a steel in my opinion. We came back to the hotel and visited the Jewish District of Poland which now the country only makes up 5,000 Jews total. This location had the oldest temple in Poland where they actually managed to maintain the Jewish Cemetery because the assured the Germans who were superstitious that if they destroyed this holy part of town there would be a curse on their ancestors forever. There was also a Jewish Museum that we toured that had many dresses and set ups of the old homes that used to reside in the area before many of them were destroyed during WWII. WWII took a mighty toll on all of Europe destroy much of the past areas and history that we can not see today. The actually city of Krakow was unscathed because the Germans loved the city and thought it to be beautiful and wanted to take over the Wawel palace as their own once they took over all of Europe.

After touring all of the Jewish district and walking for countless hours we came back to the main market square and had an early dinner. I had a Kabob once again which I love but I am unfortunately getting tired of. For dessert I had this specialty Waffle dish that the Polish eat which was an enormous waffle covered in whipped cream and strawberry jam with powdered sugar. As my friend Kyle and I walked through the street of Poland in the main market square I had my face covered in this delicious dessert and was being made fun of by the locals because of the ridiculous mess that I was making. I didn't care because of how good it tasted. After I devoured this Picked up an awesome pair of white European sun glasses that I plan to wear out for our night at Sensation in Prague which is supposed to be one of the biggest techno party tours in all of Europe. I went back to the laundry mat and had a cup of coffee with the locals there while I marveled at the wonderful job that was done on my laundry. They thought I was from the U.K. and I just went with it. I have been telling people when we go out that I am from Germany and it works a lot better than telling them I am American. I just want to be able to be with them in a manner that makes it easiest for me to be friends knowing that they will have a grudge against me if I don't. I just want to be their friends but apparently there is a lot of bad sentiment between "uncultured" Americans and the Europeans.

Tonight I plan to go out and have more fun with the locals. God's speed.

Monday in Krakow.

On Monday we woke up really early and it was refreshing to be fully awake for once after not trying to go out and enjoy Eastern Europe at night. The Sunday night before I actually walked the city at night to take in the lights and walked through the park alone. The park is gorgeous and reminds me a lot of a smaller version of Central Park in New York. I just sat on a bench and took in the Krakow Summer night.

So the next morning we got up early and went deep through the country to go to Can Pack which is one of the biggest distributors of cans in all of Europe. We got to see the behind the scenes to how they make all types of cans from Beer/Soda cans to tuna cans with the top of the line machinery. I took a lot of notes on this company and will blog about it soon. We got to meet both CEOs of the Company and the Vice President who both toured and gave us a presentation. For lunch after the tour we went out to eat and I had Perogies for the first time! They were definitely delicious and worth having again.

After touring Can Pack we went to the famous Salt Mine in Poland where they actually have an underground church where John Paul II has actually performed mass and has been in existence since 1896. Poland has many large distributions of salt mines and this particular one went about 360 m deep under the earth. We walked down to the depths of the cave for 2 hours and only got to tour 1% of the cave. I took lots of pictures of the cave which I will post soon. We got back from the salt mines and went out to eat and regrouped before we went out for the night. We did have to keep in mind that it was a Monday night but that didn't keep us from going out and seeing new people. We went to an underground club in the basement like most clubs and I danced with many Polish women. I found one by the name of Casca whom I danced with for a solid 30 mins and we talked for longer than that. She unfortunately informed me that she had a boy friend and was not with him that night because he was working the next day. Regardless I enjoyed my time with her and took it for what it was. We would have never have found the club if it weren't for a man named Paul who led us there because he said it was the most happening place for the night. It was for sure a night with a lot of funny stories and experiences to say the least.

Sunday tour through Krakow.

On Sunday, which was the day of the Holy Ghost in the Catholic faith which is much of what the Polish are was a big holiday with many families roaming about the city of Krakow. We went to the main market square of Krakow where there were floods of shops and people all through out the main market square.This is known as the Wawel market square where St. Mary's Basilica is located at the center. Every hour a man from the top of the Basilica plays the trumpet on the hour and stops mid note of the song due to tradition. Centuries ago when the Swedes were invading a man was playing his trumpet on top of the tower and a warrior shot him with an arrow as they invaded. This basilica is impressive tall so that was a shot to end all arrow shots for sure. We walked through the main park where of course all the European lovers had to be making out in front of everyone in the scenic area right across the street from our hotel. We also got to see the Sukiennice clothe hall, Wawel Castle along with Wawel's Cathedral. We also got to see Jagillonian University which is one of the oldest schools in Poland where Copernicus actually studied. We toured the dorm of the former pope St. Paul II and got to see the tomb of the current fallen president and first lady of Poland who were placed in the Wawel Castle. We got to see so much in such a short amount of time that it is definitely hard to take everything in all at once. We went out to eat and had a traditional Polish Dinner in the middle of the market square in a loft with a window view to the outside. The dinner included Pea soup, a rare type of fish only found in Europe and another apple dessert. Later that night everyone was exhausted form the traveling and the night before and most retired at night.

Krakow on Saturday.

So when we got into Krakow Poland at the Monopol Hotel we all get up packed and settled in before we were set out to go venture through the city. The night we went out was the night of the Champions League Final so we thought it would be appropriate to go out and watch the "Super Bowl" of Europe with all the locals in a pub. On the way to the main city square we ran into a bunch of drunk locals being belligerent in the street doing obscene things that would surely get you arrested in the U.S. I have to admit I was a little sketched out because this was my first time ever in this city and I wasn't sure if this is how everyone acted or this was just an anomaly. While walking through the city scape I ran into a Kabob stop and had to try one. Apparently they have these in Athens and the U.S. but they were completely foreign to me. They are originally Middle Eastern but they are extremely popular in Poland and the rest of Europe. After sufficiently scarfing one of these down and trying some of their local ice cream we ventured into some of the bars where we could watch the football game. We finally found a pub and we had to walk down stairs into a basement to find it. Apparently most of their bars and pubs are all in the basement floors of the surrounding buildings to save space. It was an amazing little tavern packed with people all smoking and intently watch BEYERM v.s. INTERNATIONAL. Interesting enough all of the locals were going for the German team rather than the Italians. I think the Italians were the favorite but Poland has since gotten past their difference of the past with Germany. I ordered a Zywiec Beer which was fantastic and I believe a local Polish beer. After hanging out with the locals and chatting with them a bit the game finished with INTERNATIONAL winning the game. After we left this pub with found a hip hip hop bar to go to where I met many women of all ages 30-19 from all over Europe who loved to dance. I had a great time with Anna, Nina, Natalie, and Bianca. Those are the only names I could remember. The were from Germany, the U.K. and Poland. There were a few other girls that were fun to dance with but there names were so different that I couldn't remember. From there we went to two other really awesome clubs after wandering off with some U.K. people that we met. As the night progressed we went to a techno club and another hip hop club. It is funny that they have a lot of the same music if not all of the same hip hop music that we have and the locals try to sing along but many of them don't know the language. So in trying to sing they sound a lot like me by making up random words that they don't know the lyrics to or don't understand. Really awesome that I can have something in common with them and that we can share something so unique. After a late night I went to bed and got ready for our tour of the city of Poland on the Day of the Holy Ghost which is a Catholic Holiday very popular in Poland as the majority of the country is Catholic.It was a good Saturday and way to start my journey in this beautiful city.

The End of Budapest.

I haven't been doing a good job keeping up the blog but I will try to do much better. I am finally settling down a little bit now that I have a good feel for Europe and I am starting to get on a better Schedule so I don't die in the morning on our business visits and cultural visits.

After the great night of the great night at the Battle ship we had our last day in Budapest before we left. In the morning we had a debrief session where we discussed all about the different companies that we had been to and what we have learned which I blogged a little bit about earlier. For my last day in Hungary I made sure to go all out and have a blast. My room mate Charles and I just toured through Pest and saw some more of the sights. We pretty much toured through the city by getting lost like running into Heroes square and different attractions we have already been to. Earlier this coming wee I will be going to Auschwitz but while in Budapest we decided to go to the House of terror which was actually pretty terrifying. This was the house in one of the main districts of Budapest by the Octagon square where the Arrow Cross regime which were the Hungarian Nazis that occupied this house during WWII and the Soviet Regime stayed in this house after until 1990. This house symbolized the oppression of Fascism and Communism with in the area for over fifty years. This was a great opportunity to see this house because this was the main reason and source of why they have struggled so long to be a free capitalist country in the past twenty years. It explains a lot about why they are the way they are today. The house held the offices of both parties one after the other. At the basement of the house was the prison and torture chamber where they eradicated all of the past leaders of the Arrow Cross party in Hungary and eliminated all the people that they thought were suspects of rising against the soviet regime.

After going to the House of Terror we all went out to eat for our last day in Budapest at a great modern restaurant with a modern Hungarian meal. As our appetizer we had a bowl of cream and spinach soup, a main course of chicken wrapped in bacon with croissant rolls and apple strudel for dessert. Whoever arranged our desserts loves apple desserts I am pretty sure because every dessert that we have had has had apple in it.

After we had our final dinner everyone pregamed before and we went out to a sick Budapest club unlike anyone we've been to before. Michael Harris picked this club to go to and it was an awesome choice. Almost every girl there was a 10 while at the club and people were flooded out of the doors. This club was an out door club with the entire floor as a dance floor. They had three different bars set up in a triangle surrounding everyone. Something interesting to note was that we met a group of Neo Nazis screaming for white power and claiming that the Jews caused 9/11. I feel that the uneducated class is susceptible to brain washing but it is interesting to note that there are still small groups of Neo Nazis out there who are symbolic of the lasting effects of WWII. We have Jewish people on the trip so it is important to be mindful of what there heritage has been through especially as we head to Auschwitz in the coming days After having a blast at this club for a few hours David, Wilson and I went to Rio where they had they number one German Dj in the world playing with a similar crowd. By the time we got there it was about 2:30 am and the club was still going. The music was much better than the first and the girls were just as hot. We ended up making a lot of random friends from Germany, the U.K. and Hungary. We partied till 5:30 am and by that time the sun had already risen. We tried to make breakfast but passed out and got up to get on the Bus on our way to Poland. It was unfortunate not to eat but worth it for the awesome time that we had.

I was passed out for a lot of the time that we were on the bus in the country in Hungary but woke up just in time for us to just get into Slovakia. Slovakia had a gorgeous country side unlike any that I have ever seen. While half way through Slovakia we stopped in a town that had many shops and restaurants. Once again we had a three course meal that included a salad, Chicken with a special sauce and vegetables and once again an apple dessert. I really think I am going to ask the director of this trip about what's up with these apple desserts. Something interesting to note while we were there was an enormous black monument that was dedicated to Slovakia thanking the soviets for "freeing" them from the Nazi regime. The people in Eastern Europe actually thanked the soviets at the time for putting them under communism because of a desperate act for balance and order for something other than fascism. Anything seemed better at the time right after WWII and instead of marching straight to Russia as Winston Churchill wanted to stop not only the Fascists but Communists as well we left the situation as it was and Russia stepped right in and put an equally deadly force as a replacement that was not fixed till fifty years later. We toured Slovakia once again though the country side and finally got to Poland. Supposed Poland and Hungary are brother countries in the sense that they have fought and drank together for hundreds of years against the Austrians. When we went to the Chamber of Commerce the manager who gave the presentations told us that most the countries in Eastern and Central Europe have something against Hungary except Poland. At the same time Poland is also has the most political alliance to the U.S. than any other country in the CEE region which is nice since we are visiting here now. We got a small tour of Poland when we pulled in to see the Churches and the castle until we pulled up to our Hotel which is in the heart of the city.

I am about to go get some breakfast at the Monopol Hotel but I will continue blogging about Poland when I return from our adventure today!

A-38 Ukranian Warship AKA Dank Food and Technofest.

We took two different trams that took about 25-30 minutes to get to our destination of A-38 the reconstructed Ukrainian battle ship that was reconstructed and set on the south side of the Danube river. Here is a link if you want to see pictures of the A-38 and our meal.

http://www.a38.hu/?p=cikk&id=710

Basically we had five different wines most of which were white. The first meal was simply three small pieces of multigrain brad that had a cheese spread on top with a white wine. I believe it was Sauvignon Blanc. The next dish was our salad that had a raspberry vinaigrette dressing with strawberries and lamb meat. This was the only wine that we had that was a rose. The third dish had a full body white wine with sol fish, noodles, scallops and a white sauce. The forth dish was composed of Rabbit and some meat from a wild bird in Hungary compete with a house sauce and asparagus again with a full body white wine. Last but not least our fifth course was cheese cake that had mango, pears and pineapple on the side with a white dessert wine. So delicious.

The group was all hanging out side on the dock of the boat before we headed down stair to the basement of the boat where a huge rave was going on. We got free passes to the Rave from the owner Zultan who was probably one of the most sophisticated Hungarians that I have ever met. Once we all went down to the club we knew that we had arrived to something special. The DJ was a mix between pretty lights and tiesto with a sick bar and laser light show to match. There was a large group of people from Amsterdam there from students who were studying abroad as well. I meet a group of beautiful Brazilians who were there with a movie director working in Budapest at the time. I met some crazy raving local Hungarians that were making out on the stage while many other people were making out around the club. Free love is big in Europe. This was definitely the place to go for the night life in Budapest seeing that it was only a Thursday night and the club was packed. I didn't get home till 4 am and the party didn't stop till 5 am. It was a good night.

Budapest Debrief Session Day 5

This morning we had a debrief session in the Novotel Hotel Danube Room. We just recapped on some of the things that we have learned over the past few days in visiting the different business related activities. Here are some of the things that we went over.

Chamber of Commerce.

The chamber of commerce are mainly business advocates for companies within a city. The fight for the protection of businesses and want to promote businesses within the economy. They bring the standards of businesses up in the economy. 1/3 of the population of Hungary is in Budapest so their chamber of commerce has a significant influence over the entire nation. In trying to get business in Hungary they focus on the welfare of the work force, tax rates, labor laws and general advocation of businesses. They are a lobbying group. They want less restricitons and argue the business side to Parliament and politicians. They are concerned with how businesses operate in this country and why there should be FDI in Hungary. Entrepreneurship was an interesting topic that we went over because of the negative connotations that came with being an entrepreneur in avoiding taxes. The chamber of commerce has a lenient interpretation of the law. High interest rates are a problem with starting new businesses that are as high as 25%. Currency exchange is also an issue along with domestic borrowing. High interest rates means that their currency will depreciate in comparison to other nations. They have high interest rates because there is higher risk in investing in Hungary which means higher chance of default and higher payments. Banks are also ruthless in trying to prevent other banks from allowing small business from coming into the market by allowing lower interest rates by getting the government involved in claims of malbusiness practices. There is also no protection against someone taking your personal assets in the example of the single man enterprise. The single man enterprise is supposed to be like an LLC where you have limited liability but after they take the assets of the company they will go for the assets of the person head of the company in court even though you are supposed to be protected behind the Single man enterprise. For 50 years they had a period where making a profit was ot an incentive. If you had an efficient company along with innovations whatever money you made would be given to another company in your area. They are finally starting to learn about incentives 20 years later. Something to promote corporations is their low tax of 16% on corporations compared to the U.S. tax of 35%.

Stock Exchange.

Interesting things that we went over was the relationship between gross public debt and GDP. They had a decline in Government spending to GDP. Through the stock exchange they discontinued the exchange of capital. The stock exchange has been following EU relations. The people's assets were taken by the soviets but they have been compensated through compensation notes.

Shares outstanding X price per share = market capitalization.

24 billion Euros currently in market capitalization.

They have a share turnover rate of 120%. Risky to invest because oil and banks make up 63% of stocks volume. 75% of stock is foreign owned. If it is correlated it is not diversifying risk. A good hedge is not correlated. There are 15,000 domestic owners in their stock exchange.

IBM.

In Budapest they are a shared service center. Organize business across borders to open up exchange. Free flow of goods and capital. In an out exchange rates at a low cost. We went over the finance and accounting of IBM as they followed the Western European Scheme first. They were trying to make money in IGF with not much costs. It is more expensive to do business in Western Europe but it is because their costs are so high. They are working on getting their costs down. We also discussed finance and IT purchasing along with other activites IBM has used to centralize. The most extreme service center that we went over was the one with all the functions but it is important to know what is best for every service center. This would include low costs, better customer service and IBM trying to get a presence in Slovakia and India. The reason that IBM wants a credit corp is because this means that the customer is tied closer to IBM with all the functions necessary through IBM. The availability with products and financing make IBM a one stop shop. Leasing equipment is the norm due to technological obsolescence. There leasing is done through financing to get the residual value of dilapidated products. Today few people are purchasing IT because of the increasing rate of the improvement in products. They are now leasing. GE credit was the first to do this and they are the largest. The Credit corp can restructure loans in case of default. 9% of their profits in IBM were from financing while 63% of IBM is from the service sector which financing is part of.

IBM Finance.

On Day 4 05.20.10 Alan Knight who was the director of finance for IBM Global Financing presented the discussion on IBMs role as an option for financing in the global market place especially IBMs role as a service center in Hungary around the world. Before Alan went into financing he was an accountant for Price Waterhouse Coopers in the U.K. after graduating from Oxford. He left accounting in search for more engaging opportunites. In 1995 he joined IBM with the Global financing credit corp. He also got his start with IBM working with the IRS (International rely systems) for five years in Australia, Italy and Germany. He was a U.K. manager in accounting for IBM and then became an operations manager after two years.

The Agenda for the discussion that we had was to go over the culture, the Hungary service center, and IBM Global financing. IBM as a global company has its head quarters in Armonk, N.Y. where 60% of their revenue is generated outside of the U.S. serving 170 companies. In 1936 IBM was founded in Hungary as (Watson Electronic Tabulator LTD) through Thomas Watson. One of the biggest focuses of IBM is their on demand "peaks in usage" IBM today consists of 58% services with Global financing consisting of $95.8 billion of their revenue. He went on to discuss how IBM is a value company with a focus on dedication, innovation, trust and personal responsibility. The ISSC of Budapest is made up of sectors namely Human Resources Service, Accounts payable, Global Procurment, Strategic Sourcing, IBM Global Financing, and IBM EMEA Accounting. IBM Global financing is used as a common company support system along with HR, Business controls, Quality LIT and operations.

The benefits of financing are how you can have a complete multivendor solutions in one contract. In other words IBM can become a one stop shop. You can lease out IBMs products while obtaining the financing for this product through them as well. The Finance function of IBM also had a transition to an on demand environment. This eliminates the risk of technology obsolescence. They have created payment schedules to match cash flow, and then adjust capacity to match demand. This means that they can add or upgrade capacity to meet dynamic business needs. This makes assets disposal easy at the end of the lease. With every price that IBM puts out for financing risk is priced in. All of their financing has a variable cost that isn't a purchasing price but rather a financing price. They are big on relational financing to keep existing customers.

IGF (International Global Financing) is a supplement to the bigger operations of IBM. The contributions to IBM are detailed as follows.
IGF (2009)
3,400 Employees ( < 1% of total company)
30 billion USD in assets.
24.4 billion USD in debt.
2.6 billion USD in revenue.

The IGF of IBM operates in 51 countries with three lines of business which are Enduser financing, Commercial financing, and Global Asset recovery. IBM has 5 different service centers in five different countries. Budapest is the main service center for IBM IGF.

When looking for areas of service centers they look for areas with people who have multiple language skills, a population with university skills, low crime rates, an area with a central European Universtiy, an area with good infrastructure, and investment grants as an incentive. Some difficulites are the challanging labor laws such as no working on a public holiday which they have actually been fined for.

The flow of their business actions consists of sales, credit, pricing, contract transaction, business support centers, accounting and financial planning.

Skills that they look for in an IBMer are great intellectual capacity, team players, learning ability and desire, fluent in english and former work experience with companies like IBM.

Budapest Stock Exchange.

On Day 3 we went to see a presentation by Richard Vegh who is the director of the Budapest stock exchange. One of the main things that we discussed was how the exchange evolved as a young market economy and how the stock exchange is fairing today during the global financial crisis. For Hungary's GDP the two most important influences over their economy are there production in oil, gas, chemicals and pharmaceuticals. In 2008 their GDP was 155 billion in USD and in 2009 their GDP was 129 billion in USD which could have been worse but is not as bad as many other countries in CEE. Their gross public debt is at 81% which should be at 60% and unemployment is 10.5%. External trade is 5,900 billion in USD. The Hungarian central bank raised the base rate 300 basis points which set it to 5.25% to combat the financial crisis. The Hungarian market economy is newly developed in how they have just recently become a free market economy in 1990. The size of the private and public sector in 1990 was the state sector consisting of 85% control and the private sector conisisting of 15% control. In 2006 there was an oppositie shift of the state consisting of 20% and the private sector holding 80% of the control.

2005 was a big year for the stock exchange in Budapest when they had the merger of the Budapest stock exchange and the Budapest economy exchange making the gross net of the stock exchange that much bigger. The role of the stock exchange for businesses is raising captial for businesses, mobilizing savings for investment, facilitating company growth, balance risk and profit sharing, have corporate governance, creating investment opportunities for small investors and using the stock exchange as a barometer for the economy. Some other roles of the Budapest stock exchange are using it as a tool to know when and how to privatize the economy. Hungarian individuals were compensated for the soviet rule where their private assets were nationalized. They had the opportunity to buy their assets back from 60 years ago under the communist rule to move forward in privatization. Foreign Domestic Investment was crucial in this process in Hungary. This was not a smooth process but rather a peaceful transition. FDI was the biggest force in the transition.

The exchange rate in the economy is also another key factor to keep up with in terms of discussing the Budapest stock exchange. There is multiple exchanges in currency between multinational companies, large Hungarian companies, state owned companies, companies founded after the transformation from a public to private sector and finally between the newly developed banking system. They have a newly developed trading model consisting of a mutual trading fund with new competitors to their traditional exchanges. Some other topics we briefly discussed were the local market, the Central Eastern European stock exchange and the market capitalization of European exchanges.

In the product portfolio for the Budapest stock exchange biggest most important factor to consider is their equities exchange rate that trades 100 million euro per day with 46 different companies. Our speaker showed us bid and ask prices that were currently changing during the day and detailing how this is all electronic which is a big step for Hungary. Some of the topics we discussed in terms of the management of the finacial crisis were how there is a new tax law reduction of the borders of labor, 13 month compensation in the public sector and a pension hike that was canceled. Something extremely shocking is how 73.83% of their stock is owned by foreign investors. The increase of the number of securities was 22% from April 2008 to April 2009. Only 5.3% of households own stock. General ownership is remarkably less.

The past few days.

After we went to the Chamber of commerce we traveled over to the famous market in Budapest called the szentendre. They had many different shops such as cafes and clothing stores that were part of a tradition of the old market hundreds of years ago. When we drove back towards the market we passed an old Roman Colosseum that was still in tact from a couple thousands of years ago when the Romans ruled that part of the country.

Later in the day for dinner as an entire group we all went out to a modern Hungarian Restaurant in Pest that was excellent. A lot of the time when we are all ordering the food it is hard to figure out what you are realy ordering so it is always a surprise. Three different people ordered a 2.5 liter pillar of Dreher Beer that was probably three feet high. At the bottom it had a spicket where you could pour your beer into your mug and enjoy the tasty local beer brewed out of Budapest.

After we all went out to dinner we asked the waiter where a fun club was in the area but he said he wasn't much of a clubber. He was scared of clubs because he said there were too many different types of people. " Rockerman, Businessman, Partyman, Technoman. Too many types of people." We asked him to tell us where the club was anyway and he told us of an underwater club to go to only a few blocks down. Once we entered the club we knew we were at the right place. There were floods of different types of people from all over Europe there. I met women from Holland, Sweden, U.K., and of course Hungary. The band that was playing was like no band I have ever seen before and the European people had dance moves that words cannot describe. I made a mental note to add them to my arsenal of moves. I quickly learned that on a Tuesday night in the city they only have older women out on the prowl so I quickly changed my age from 23 to 25. The youngest women that I met was 26. The band had two violinist, a guitarist, a bassist, an organ pianist, drummer and a kick ass lead man. They were from France and they were dressed like mountain men. People were jamming to the music and dancing with there white people ways. After they stopped playing I was hanging out with some Hungarian women and invited my friends over to join. We left the bar with them and went to a few other places and got a taxi ride back to the hotel.

The next day on Wednesday we went to the Budapest Stock exchange which was in an extremely nice area of Budapest. They area reminded me of uptown New York with the different trees on the sidewalk and uptown shoppes. I have pictures that I posted if you want to check them out to see what I am talking about. I took a lot of notes on the stock exchange which I will blog about separately which I need to type out for my class to keep up our business journal. After the Budapest stock exchange we went to this famous building that used to be a casino then a toy shop and now a book store which is the equivalent to a Barnes an Noble that sells coffee and wine. They ceilings had lots of paintings reminiscent of the Renaissance and Gold trim all through out. It was a very class place to read a book, drink coffee and smoke a European cigarette. After we left this I was blown away to seen a McDonald and how they had a McRoyal with Cheese on the menu. Heck yeah. I know we are supposed to be experiencing different restaurants but I couldn't pass up an opportunity to try this out. Every since I saw this in Pulp Fiction I know I had to try it. It tasted the same as America but a little worse because I had to pay for my ketchup with my fries. Apparently ketchup hasn't caught on in Europe so it's extra to buy it. Coke tastes the same as well.

We went back to the hotel and I had to take a two hour nap because I still haven't adjusted to the time zone yet. I literally have to get as much sleep as I can in between our events as much as possible because we are always on the go. The next group cultural event that we went to was the famous Szechenyi Bath which is a spa for wellness. While we were here we went into many heated pools, whirl pools, ice baths, hot saunas, Eucalyptis saunas, tanning saunas, salt baths, massage baths, and they also had a carbon acid bath to exfoliate the skin. They had many guys in there one piece bathing suits and many gorgeous European women. I am pretty sure that I want to get a European girl friend one day when I travel through Europe again. They are very beautiful and exotic. When you see couples around Europe, especially in the different baths that we were in they make out in public and are always holding hands. They are really all about public displays of affection and showing off their loved one. Where every I go the people with their loved ones always look happier than the single people all alone. Europeans are very affectionate and emotional people who are proud to be in love as is evident where ever you go. You always see them laughing and kissing all the time. Crazy. Anyway after rejuvenating my body and getting accustomed to the European way of life for about three hours we went back to the hotel to take a shower and go out to eat. A group of us went on the train to go into pest and wander as we found a place to eat. We probably wandered for forty five minutes in the city lights until we found a fairly nice place to eat. Wine and beer are probably only two dollars each per serving which is really cheap for a restaurant. I had a traditional Hungarian meal that consited of potato noodles with a white sauce and bacon bits. Other people got variations of Salmon, steak and pork. After we drank some more and just relaxed at the restaurant we rushed to catch the train home which closed at 11:30pm. Once we got back to the hotel we hung out in the lobby for a while and then retired back to bed after having a long and exhausting day.

Today was also very exciting but more to come tonight. Every morning we have been eating the most delicious breakfasts that come with the stay at the hotel which are like an American breakfast with a Hungarian touch. We went to go visit the IBM service center in Budapest and got to learn about the financial side of the business. After we got back I had to pass out because for some reason I still haven't adjusted fully to the time zone. Our meeting with IBM was a 9 am which is 3 am our time. Maybe that has something to do with it. I will also write out a little bit about what we went over with IBM tomorrow after the festivities tonight. After IBM we went to the Labyrinth of the castle of Budapest which was pretty touristy to me. It was interesting to see the underground caves that they had but they artifacts they had in there were fake and they weren't even true representations of the real artifacts as the tour guide told me. The really artifacts are in France. I took lots of pictures if you want to check them out. After this we went into town and ate at the cities oldest bakery spanning from hundred of years before. This bakery was so good that during WWII when Budapest was bombed in the town all of the shops closed except this bakery which the people needed to keep open to have a little joy in their lives. This bakery definitely added joy to my life. I have the traditional chocolate cake that has been there staple item for over a hundred years. It was a delicious chocolate fudge cake with a cherry chocolate icing on the top. We took the tram back to the hotel and in about an hour we are going to an amazing dinner that my friend Kyle McDonald made reservations for. This restaurant that we are going to is elevated in the sky and has three different levels. The top level is the restaurant, the middle level is the bar and the bottom level is the club. Supposedly Germany's best DJ is playing there tonight so we are going to get out party on. They meal that we are having is five courses complete with a glass of wine for every course. I can't wait. I blog more about it tomorrow after we actually go through it tonight.

Hungarian Chamber of Commerce.

I am so busy all the time from one place to the next that it is hard to blog consistently at night but I will continue to do my best. I think I am finally over the jet lag it's just that the mornings have been a little rough seeing that when I wake up at 8:00am it is really 2:00 am for me.

Yesterday we went to the Hungarian chamber of commerce and had or presentation done by Andras Brio who is the area manager. This chamber of commerce has a history spanning over 150 years. When we went to the chamber of commerce we got to go to the sixth floor where the President's office was on the exec floor which is amazing that we got such incredible exposure to the heart of the facility. The main point of us being there was to get an overview of the economic characteristics and business environment of Hungary. The first part of his presentation went over the eastern and central European countries and how they are all related to each other geographically. The CEE (central and eastern Europe) consist of Albania, Bosnia and Herzegovina, Bolgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Macedonia, Poland, Romania, Slovakia, Slovenia, and Yugoslavia. The broad term is narrowed as the Balkan states or central Europe. Poland is the biggest country with 45-50 million people following Romania then Hungary with 10 million people.

The historical overview of Hungary starts with how the region became an organized entity since the time of the Romans in the Pannonia Province. This was the border line of Prussia/Germany, Mongol/Slavic and Byzantine/Ottoman Empires. In the XV century Sigmund unified a large entity from the seperate states in the German-Roman Empire. The Hapsburg monarchy and the European wars represented a blossoming of the regions. The breaking of the monarchy created a number of the independent states that we see today. He later when on to describe the post war era and the Cold-war era up until today.

In the recent history of Hungary in 1989 Hungary went away from communist rule and broke soviet ties which led to a quick and devastating drop in economic output. Hungary recovered with the European Union and an admissions treaty which allowed them to join NATO in the mid 90's. 5 of the 10 countries in the EU are from the CEE.

In the mid 1990's is when Hungary finally started to have economic and political harmonization and a new style of economic regulations. They had a continuous flow of EU support money where 60-70% of total trade is made with EU money. This led to the creation of the CEFTA, V4 and the Central European Initiative. All three of these organizations helped to create a free trade zone, encourage integration and help regional economic, scientific and cultural cooperation.

We finally started to see the countries coming together so they could have enough economic power as spain similar to the European countries coming together to form the Euro to have as much economic weight as the U.S. and Japan in 1999. There countries were working together in how the were taking advatage of their trade routes and centralized infrastructure with roads, bridges, ports and cities. One of the biggest effects was the melting pot effect where there were many nationalities that brought their craft and skills to the area and where many developments in Europe originated from this region.

Hungary had many strengths and weaknesses as an emerging free capital market economy. Some of their strengths included how they had faster growth than the EU as a whole, increasing consumption in many product categories and a relative advantage in the costs of living and company operations. Some of their weaknesses were that they had excessive capital costs, language barriers, and lower purchasing power. Many opportunites and threats also emerged. There opportunites that arose were how easy they could transfer products, qualified scientist for research and development and a qualified labor force in time for economic crisis. The threats that arouse were that they had continued economic problems that might cause mass bankruptcy, Asian competitors that might stunt growth, enviornmental deterioration, lack of global approach and a dependence of EU funding and exterior finance that consisted of 20% of their operations.

We later went on to discuss the business environment in the CEE mainly discussing the change of the economic system from communist to capitalist that had an increasing influence in their everyday economic operations. This led to state ownership decreasing from 90-100% down to 15-35% where there was no shortage or limitation on product accessibility. We later went on to discuss that an Entrepreneur in Hungary is different from businessman and still has negative connotations. An Entrepreneur in Hungarain terms is someone who tries to make lots of money and avoid taxes which would help the country to have more money to himself. This term does not seem to be negative at all to me but in Hungary they are characterized as being against nationalism in the sense that they don't want to pay taxes to help the country out.

We later went on to discuss the different business models of different enterprises their banking system, Infrastructure, Transportation, Contracting, manpower and administration. What I found most interesting was the difference between the Us and CEE. He went over how U.S. citizens are more entrepreneurial, tolerant and mobile. CEE citizens rely more on contacts with the government and maximize tax payments. U.S. companies have easier access to capital and are more willing to take risks. The CEE companies rely more on innovations and Unique services with a more pragmatic apprach to clients and market acquisition.

I am about to go to the famous Budapest water pools and spa but when I get back I will write out about my exciting journeys after the Chamber of commerce and describe about the Budapest stock exchange I went to this morning and my experience with the baths of heaven.

The Tour Today.

After we got the Novotel hotel and went out for lunch we went on our tour. We had a Hungarian tour guide to lead the way for us as we toured around the city on the tour bus. We did get to stop and walk around a lot of the sites but this was just meant to be a brief run through. The first stop that we went to was in Buda. Budapest is split into two divisions of Buda and Pest that are split by the Danube river. So while in Buda we stopped at the Fisherman's Basiton, the Buda Castle, the Castle Theatre, Matthias Church, Holy Trinity Square, and the Citadel. All of these places can be seen in the pictures that I posted on Facebook. The Fisherman's Bastion was the area where the fisherman of the town would protect the city walls to the main castle in Buda. Mattias Church and the Holy Trinity Square were right behind this guard where the main city square used to be in the middle ages. We did not get to go inside of Buda Castle but we got to see the outside where the royalty would stay all the way up until the mid 1800's. The Citadel is the point that is the highest in Buda where in WWII they would have artillery fire down at enemy forces coming to attack the town. This is also where I got the great pictures of all the city of Budapest from the high cliff. We also got to see the castle theatre where Beethoven actually preformed.

After we saw these sights We crossed over the Liberty Bridge to go to the town of Pest. Here we all saw Fashion Street which is similar to Parisian architecture and has actually been used in movies for scenes in Paris. Right down the street from this we went down Vaci Street which is one of the favorites of the tour guide as it is the center of all the shopping in Pest. We then saw the Mueseum of applied arts, Hero's square, the Museum of Fine Arts and Vajhunyad's castle. In driving through Pest we got to see where Franz List used to live in Pest as he was a native Hungarian.

After the tour we went to go eat at a great Hungarian restaurant where we ate a traditional Hungarian salad, Grey Cattle Goulash, and Apple Strudel while enjoying Red Cabernet Sauvignon. This would not be complete with out the Violinist and Pianist playing music for us over dinner. Delicious.

First Stop Budapest.

Just got into Budapest about eight hours ago and I am loving every second of being in Europe. Luckily our hotel has internet and my room mate has a power adapter for my computer. We are staying at the Novotel Hotel in the heart of the city and we just got back from our city tour. Tonight we are going out to eat at a traditional Hungarian restaurant. Earlier today during our free time we went to a local restaurant and I had Veal Goulash with a half liter of Dreher the traditional Hungarian beer that is actually brewed in Budapest. We are in an amazing location for the trip centered around three different banks, restaurants and bars. I got about 19,000 Florints which is a little less than $100 in cash to use while we go out to eat or travel through the city. I saw a sign that said 1,200 Florint foot long out side of a subway which is about equivalent to $6 foot long. I have taken a plethora of pictures that I will be posting on facebook so you can follow along while I blog about all the different places that I have been. My room mate left his camera charger so we will be sharing my 2.0 Gig camera for the trip.

I have been trying to fully immerse myself into the culture as much as possible while meeting people along the way. On the flight from Atlanta to New York I met a 56 year old man by the name of Chris who was Bulgarian as he told me all about his experience with the three different countries that I will be traveling to namely Hungary, Poland and the Czech Republic. I talked to him about Gypsies and pick pockets and he said that he is even weary of them in the cities of Budapest and Prague where they are the worst. I have been keeping my pass port and wallet in my front pocket to keep it a fair fight against the gypsies. Chris said that his family has lived in the U.S. for about ten years but he grew up in Bulgaria. He was on his way to New York from Atlanta to catch a flight to Bulgaria. Once we landed in New York we flew into the Kennedy airport and flew right outside of the city. We we there for about five hours before our next flight. While we were there I ate my last hamburger in America and watched the Celtics v.s. Magic game to try and keep up with the U.S. culture for one last time. Five guys was way better but at least it was an American Burger none the less. When I got on the next flight headed towards Budapest I knew I had a nine and a half hour flight ahead of me so I was hoping to sit to some one interesting. The man I sat down next to was Alex from the Ukraine. He was in his early thirties, divorced once and an industrial businessman. He was dressed very professional and he was a sharp man with really good wavy hair. Twice a year he flies all the way from the Ukraine to the U.S. to represent his company and try to start business ventures. He recent venture was in Savannah, Georgia. He described life in Eastern Europe from his perspective and he said not to worry about the different culture as it is really not at all that different. From his experience in both the U.S. and Europe it's basically just the same people in a different place. So far I have taken in this country and my experience seems to line up with his impression. These people aren't from mars but we are all the same universal people just with different cultures. At the same time the U.S. and Hungary are still part of Western Civilization so they aren't that drastic. Budapest is a very established culturally developed city as well so this isn't that much of a culture shock.

I am going to post another blog tonight about the tour I took and detail a little bit about what I have learned. At the restaurant we are going to that is covered by our fees paid for the study aborad entail a three course meal. We have an appetizer, main course and dessert which includes any two drink that we want such as Hungarian soft drinks, beer and wine. I slept as much as possible on the plane ride here but I know I am still due for some solid rest tonight. we'll see what the group wants to do but people were falling asleep on the tour today which I think is a sure sign that everyone is still jet lagged after our twelve hours worth of flying on top of setting our time six hours ahead. In Atlanta it is about 12:40 pm but here it is 6:40 pm. I can not stress enough how much I am thoroughly enjoying this experience and want to thank my parents once again for sending me away! I know they could probably use a good break from me as well. I have to wake up my room mate now so he can get ready for the dinner tonight which we are leaving for at seven. We were instructed to dress "smart casual" as our tour guide suggested which is simply another term for nice casual. She will be joining us as well.

Beyond Class.

Beyond the experience of the class room I have been hanging out with a lot of my new friends before we go off on the trip. The experience of Europe for the first time has a large part to do with the group of friends that I will be traveling with. We have all met each other previously during orientations but for the past two days in my free time I have gone out to lunch with everyone and plan to go out with them at nights after I finish my reading and do my work. All the people on the trip are all extremely unique and different which is perfect because we all blend together really well.

Everyone seems to be easy going and everyone is always up to do whatever everyone else wants to do. I'm sure that everyone understands that we are all trying to get know each other really well before we go out on this trip because we understand that we should know each other before we go into the unknown world of Europe to experience it together. It's not so much as important what we do here but as long as we're all doing something together.

Yesterday we went out to eat at Your Pie down town and then at night we all met up and went down town. Strangely enough the bars that are the most popular during the Summer are Generals and Sandbar. Today we all went out to eat at A-OK's down town to enjoy the most delicious club sandwich in Athens that we all ordered. Tonight my room mate, Charles Ratcliff has a really good friend that is turning twenty one tonight so the group and I will probably meet up with him later tonight down town. Today is the first day of Maymester in Athens and so there will probably be a lot of people out tonight compared to last night.

I promise my blog will get more interesting as I finally start to travel and get out of the states. Right now I am a sitting duck waiting to get on that plane headed for my first stop. Hungary.

My First Two Days of Class. 05.11.10

For the past two days we have just been having class and preparing for what is to come in Eastern Europe! We have had readings for the chapters and assigned hw after class. Here are a few notes I jotted down. This is not as exciting as actually traveling through Europe but this is giving us a Financial frame work to work off of before we go on to Europe.

In class we started to talk about what are the most important things we are interested in Finance. Some of the things that we mentioned were about raising capital, maxing out the stock price, capital budgeting for the cash flows for the year and discounting. When we are discounting in the long term it is hard to figure out the right NPV and IRR. Capital budgeting though has it’s main purpose and effect in raising the value of the stock. The structure of capital budgeting is set out with the CFO in charge of the Treasurer, General Controller and Financial Analyst.

The main concerns of the Treasurer are how to finance the company, raise capital and manage cash. We understand that cash is underperforming so international businesses have cash management systems to put their cash in their right currency in the right payments. Every day all of the access cash is put in the right currency and sent to the U.S. if we are working in the U.S. and investing in other areas such as Europe. You take this excess cash and you use it to pay off debt, buy capital equipment, put it towards accounts payable and accounts receivable.

The job of the general controller is to deal with accounting through the SEC, report results by country and then consolidate from different countries. When doing business in different countries you need to use their GAAP. The EU is not standardized. Supposed to have one stock market, one tax method, one accounting method. Dealing with international tax is also very difficult when you have to comply with the local tax laws, tax planning in ultimately trying to minimize the world tax.

What is special about International finance is that you have to deal with foreign exchange. In 1999 1 Euro was $1.18. At one point after the issuing of the Euro in 1999 the Euro fell to $0.80. Prices for a short period of time became less expensive. It is important to note that there are few companies that can’t be affected by exchange.

One thing that we have to take note of is the foreign exchange risk. There are three different risks that we have to account for such as the translation risk, transaction exposure, and economic exposure risk. The translation risk is where you have less earnings by translating money into a different currency. The transaction exposure risk is where you don’t know what the value of your money is going to be when you have to wait on credit terms. For example when you are conducting business in U.K. pounds and you have a 60 day credit terms. You sell a product as an account receivable for 100 pounds but you will not receive this for another 60 days due to the credit terms. The risk is that you do not know what the value is going to be in terms of your dollar amount in the future. The economic exposure risk becomes bigger in negative impact because you compete with companies in other currencies. This goes hand in hand with the political risk of companies changing the rules of the game in terms of how you condone business.

The Foreign exchange risk is basically determining the balance of having a great return on your investment but the currency you are doing business in could go bad or vice versa.

Market imperfection to be concerned about are where governments can stop the flow of money between business and close borders. One of the biggest mistakes that Americans do when doing business in other countries is to think like an American. The rest of the world does not condone business in the ways that we do.

An Example of an expanded opportunity set is where you could start your own business as an entrepreneur in a garage in California. You get and I.P.O. in the country in which you started but you are limited to only U.S. business so you start to conduct business in other countries for more opportunity. It is always best to learn how to effectively do business in your own country before doing business in another.

The Goal of International finance is to maximize the shareholder wealth over the long term.

The constituency for shareholders in a corporation in the U.S. main goal is to focus on the shareowner by raising the value of the stock. Americans are trying to maximize the value over the long term. In Europe though they have a different focus. In Germany they are more focused on the well being of their employees. They have work councils and can’t fire people. Acquisitions between companies are difficult because you have to pay a premium and make money by firing people. In order to do this you need to pre approve the acquisition. This is not a focus on the share owners but employment stability. You need to make money but the idea in Europe is not always share holder maximizing.

When doing international business you also need to have good relation with the suppliers. Japan has a Kerietsu where companies work together similar to a trust which is illegal here in the U.S. After WW2 Japan had nothing and companies were working together. This works but in the U.S. we say that there is a conflict of interest that needs to be dealt with. There are different business models all around the world. The U.S. is not the same as the world and as Americans we need to adopt the new business practices in order to do business in other countries.

All companies are integrated. There needs to be a privatization check where the republic wanted to privatize v.s. Western European countries moving in. Many countries are still dealing with moving from a communist mind set to a capitalist. People have never known profit. The companies were owned by the government. Not owned by the people. No share holders. Not a single person in the company was thinking about profit now has to condone business after being bought out by the west with a company profit motive in mind. Previously there were not any owners, earning statements or shareholders.

Currently in eastern Europe there has been lots of deregulation and technological financial innovations.

The Euro as a global currency: Europeans wanted a trading black that could compete with the U.S. and Japan. Europe was getting bigger. Greece could not originally be in on the Euro because their debt was to high. Now today they are needing massive bailouts from the countries in the Euro and European Union and Central bank because they are having trouble once again. There were very high standards for convergence criteria that needed to be accounted for. Such criteria was how much inflation that they had in the current year. Once again currently Greece is in trouble. The Euro is amazing because for many centuries there countries have fought each other. It is thought that if you have a financial exchange with each other you will less likely to fight each other. Right now the Euro is seeing its biggest crisis yet.

The U.K. opted out of the Euro along with Switzerland. The biggest thing that you give up with the Euro is your monetary policy. The U.S. has the fed. The Feds funds rate is almost zero. Interest rates are low today. Countries on the Euro are run by the European central bank. Greece on its own can not do any monetary policy because it does not own it. There is no central bank or monetary policy on its own. Countries still have their fiscal policy such as how they spend and tax. Greece needs to spend less and tax more. Greece originally spent a lot and did not tax enough which created ore debt. Today there are people in the European Union that have still not joined the Euro such as the countries I am going to visit such as Hungary, Czech Republic and Poland.

A big question that was answered to day is if the EU is going to save Greece. Germany was against bailing them out along with France because they have the biggest economy. Today German agreed to pay 188 billion dollars for the 950 billion dollar bail out that is going on for Greece. Spain, Portugal, and Italy have high unemployment. The question is who is next?

We discussed briefly about NAFTA and the relations between the U.S. Canada and Mexico.

The Privatization in the Czech Republic.

Multinational firms get raw materials and financial capital from other countries to produce goods with other countries labor. They do this by using capital equipment in a third country and sell in another.

Interesting fact is how Germany’s cost/worker is $35 while Mexico’s is $3/ worker.

The whole idea behind international business is that you go to another country because it poses opportunities that would be more successful than your own country.

Later in class we began to discuss the evolution of the international monetary system. A previous monetary system was bimetallism where there was o risk in exchange rates. This took out the risk of foreign exchange. This is all worked out through the Price Specie Mechanism to account for the change in domestic prices.

The ratio for the Dollar to the Euro started out as

1.50 Euro to 1 Dollar.

Now the ratio has changed as the Euro become more unstable with the down fall of Greece.

1.27 Euro to 1 Dollar.

This is obviously more attractive to the U.S.

The Brentton Woods system came about because of expanding economies shipping gold became too expensive. People did not give up fixed exchange rates that did not change. The goal was to attain exchange rate stability.

International monetary Fund put in 100 billion Euros in for Greece. They are trying to do this to give loans to struggling countries with low interest rates. The goal ws to keep currency within 1% to -1% to keep stable exchange rates.

Flexible exchange rates are external to iron out unwarranted volatilities. Free floating rates don’t interweave and the let the market decide. 48 countries do this. When the Fed is concerned about inflation they raise interest rates. China has a managed float where the try and keep their currency low to create more business from other countries in their own. The EU created the Euro for stable money.

Euro Convergence criteria included low inflation and low debt to GDP which Greece could not originally meet.

Currently in the EU are Hungary, Czech Republic and Poland who are trying to get into the Euro. When they do they will have to give up their monetary policy. Northern Europe such as Germany and France are ticked off at southern Europe because of their irresponsible spending and lack of economic stability. Europeans are starting to believe that Greece may have falsified their original information to get in on the Euro.

The second day of class we went over the Issue of currency. Today 1 Euro is worth $1.273 and continues to fall which is in favor of the dollar. The foreign market currency is composed of 3 trillion dollars exchanged a day. Two weeks ago 1 Euro was $1.40. Greece and the bail out is killing the Euro.

Spot rates: today’s currency rate.

Forward rates: future rate.

Currency rates are in the WSJ everyday.

The currencies = the spot rate + the interest rate.

We are concerned about either the dollar/ foreign currency or the foreign currency/dollar.

Here are the three exchange rates of the three countries that we are going to visit.

Hungary forint is .004551 in U.S. dollars

219.73 forint / U.S. dollar.

Poland Zloty is .3078 in U.S. dollars.

3.2489 Zloty / U.S. dollar.

Czech Republic Koruna is .04963 in U.S. Dollars

20.149 Koruna / U.S. dollar.

Venezuela fuerte dropped 100% to the dollar YTD.

The Americas and Asia Pacific currencies across the board are dominating the dollar while the dollar is dominating Europe in terms of currency exchange.

Problems with the U.S. were over speculation and borrowing in the U.S. with the bail out. U.S. will save California but will the European Central Bank save Greece? The answer seems to be yes as Germany has agreed to help with the bail out.

Spot rates and future rates are based on underlying theory.

The interest rate parity and the purchasing power parity. Future rates are an exact calculation. Spot rates are based on the underlying theory of the purchasing power parity.

The Future exchange rate for currencies are exact while the spot rate is not.

The interest rate parity needs the spot rate and interest rate in two different countries.

Everything around the world in currencies are calculated through the U.S. dollar. If you want a cross rate you get it by looking at it through the U.S. dollar. If you want a cross rate you get it by looking at it through the U.S. dollar.

There is no arbitrage condition. If IRP does not hold then an astute trader could make millions off of this. The Interest parity holds for the future.

Futures market has taken risk out.

Futures rate is given for a year out from the new rate.

If the future rate is different from the IRP then there is opportunity for Arbitrage.

If IRP fails then arbitrage.

Today on the market there is no arbitrage and no risk for the future values of currency. You can borrow in either currency and still have the same fixed rate.

Purchasing power is a theory explaining changes in spot rates. For example if inflation is higher in the U.S. then the U.K. pound depreciates.

We later went on to discuss transaction exposure. We worry about the dollar impact because of the exchange in currencies that amount to cash.

Today 1 U.K. pound is $1.48 today.

We later went on to discuss Forward Market hedges.

If you owe foreign currency then you buy the currency in a long position forward contract.

If you buy foreign currency then you sell the foreign currency in short position forward contracts.

We also discussed exposure netting, invoice currency and decision making on whether or not the firm should hedge.