Quarterly Profit | Volume 3, Issue 2

QUART E R LY P R O F I T

DECEMBER 2015

VOLUME 3, ISSUE 2

CONTENTS 2 6 9 11 13

15 19 21 23 25 31 39 41

LETTER FROM THE EDITOR

WHAT’S MINE IS YOURS: THE SHARING ECONOMY TGIF: CASUAL FRIDAYS UPDATE YOUR BOOKSHELF MCMASTER ENTREPRENEURSHIP SPOLIGHT: WeBeam Alumni Interview:

KRISHNA NADELLA THE DEVALUATION OF THE YUAN: TWO MOTIVES WHAT’S UP WITH WHATSAPP? RURAL NUB HOW TO EXCEL IN YOUR EXAMS RANKING THE MBA RANKINGS FAIL SUPRESSING SCHADENFREUDE

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Quarterly Profit Dec 2015 | Volume 3, Issue 2 EDITOR IN CHIEF Imran Dhalla MANAGING EDITORS Julia Dinh Andrew Kwast CREATIVE DIRECTOR Danielle Fraser DESIGNERS Florence Pau Alison Lin Jordan Flick Haley Pelton Anduena Sertolli WRITERS Marryiam Khan Sehrish Khan Kelvin Pau Taylor Browne Krish Puri Tara Khudairi Bukhtar Khan Malikah Ebrahim Nicholas McFarlane MARKETING DIRECTOR Ryan McNeely DIRECTOR OF OPERATIONS Courtney Smith VP CREATIVE Cory Bryck

Contact us at: magazine@degrootecommerce.ca Visit us online: http://issuu.com/quarterlyprofit DISCLAIMER // All photos or logos used without sourcing are used in compliance with the Fair Use Law - for not-for-profit educational purposes. In no way do we assume ownership or affiliation with any images seen.

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Letter from the Editor Wow! I can’t believe we’re already through our first semester! First of all, I’d like to take this opportunity to thank all our readers at DeGroote and beyond. The response to our summer issue and October issue was truly exceptional. Just two days into the launch, I received a message from our Head of Design telling me we’ve hit over 160% more reads than our previous issue, and words cannot describe how grateful we are for the support we have received from DeGroote.

The team has been working round the clock, between classes and midterms to generate content we at DeGroote can truly be proud of, and I have to say that I couldn’t be more proud of the work my team has done this past year.

The premise of our second issue and goal is to keep growing.

That has been the goal since day one! One of the beliefs I have always pushed my team to strive for success and never give up.

We are bound to face obstacles and encounter many setbacks, but it’s how you get over those setbacks is what describes you and the future you will hold. That’s what the Quarterly Profit has been striving since day one and from what I said in the previous issue, by the end of the year, I hope to show you what I see in the Quarterly Profit and why it’s so special to me.

In this issue you will see a range of different topics, we decided not to limit this issue to a specific theme, hoping it would give the writers and readers a variety of different topics to explore throughout the magazine. From Alumni contributions to a reflective piece about suppressing schadenfreude (I didn’t even know what that was, or how it could play such a massive role in a student’s life!). We the team hope you enjoy this issue, and with finals looming around a corner, this might be the perfect option for your study breaks!

Imran Dhalla, Editor in Chief

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A Global Economic Rev

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What's Mine is Yours: The Rise of the Sharing Economy

Written by: Julia Dinh, Managing Editor

So, what is this “sharing economy”, you ask? Well, it turns out that you’ve been living in harmony with it all along - the likes of Airbnb and Uber have seamlessly entered into our everyday vocabulary, and we ought to wonder how they came to be and why they are getting so popular.

What’s the big deal?

The sharing economy (also referred to as the rental or peer economy,) is part of a larger concept called collaborative consumerism. Network technologies have opened doors in connecting people easier, faster and cheaper than ever before. Along with this comes new ways to enter markets and shifts in consumer values and lifestyles. Ordinary people can now assume the roles that were traditionally played by large businesses, like retailers, taxi companies and hotel chains.

The sharing economy is an opportunity for start-ups to gain some ground, and enable the realization of benefits for both sides of the story: the rentee earns income and makes use of resources they already own but are not fully using, while the renter saves money through a less expensive and more convenient alternative to what is offered by centralized businesses the basic supply, demand and utility concepts that we learn in economics.

And so, businesses of this nature have begun to sprout everywhere.

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How does it work?

The sharing economy signifies a change in how we look at business, how it is conducted, how we interact as consumers and technology has played a big role, being the backbone of up-and-coming businesses and creating communities to support it. Let’s look at some examples:

An online marketplace for people to list, find and rent vacation lodging. Users register with Verified ID to create online profiles and communicate over its messaging system. Hosts can set their own pricing, advertise and determine who can reserve their property. Detailed profiles, reviews, and recommendations help users to assess credibility.

Offers a mobile app for people (“riders”) to connect with local independent drivers partnered with Uber and arrange travel to a desired destination. Riders can check the estimated fare, route, and info about the driver (e.g. name, photo, vehicle) and pay for the ride through the app. Uber also reviews drivers’ vehicle records during their time with Uber.

A community of renters and private car owners who rent out their cars online. Car owners can set their prices, which the company takes 25% of the earnings. Cars are covered by the company’s insurance policy and 24/7 roadside assistance.

Created by a Toronto developer, its mobile app connects drivers with local property owners who have available parking spaces. Drivers can search, book and pay for space through the app. Parking rates can be set by owners, but capped at $2 per hour. App developers earn 30% of each transaction, a portion of which is contributed to charity.

Many of these concepts sound odd at first - staying at a stranger’s house, or borrowing a stranger’s car - but it’s fascinating to see how a simple idea could transform into a game-changing business model, and even more so how commonplace it has become. Companies using this new model are essentially the “middlemen”, providing a basis for how these transactions take place between people and establishing a common ground through online communities so that these people are less of “strangers.”

However, emerging from a new type of business, these start-ups still face some opposition. Uber, for example, has been challenged by governments and taxi 7 | Quarterly Profit | December 2015

companies around the world, citing the use of unlicensed drivers as unsafe and illegal. Another aspect is that start-ups and individuals involved in these businesses skirt around conventional regulations or associated costs to operate, as personal property is used for commercial purposes. These businesses don’t own the cars or apartments that are rented out, and the individuals offering the services are freelancers rather than employees. This allows them to charge lower prices, having a seemingly unfair advantage over traditional businesses.

“It represents the shift from material consumption to experience consumption.”

Why can’t we get enough of it?

With its rising popularity, it’s no doubt that companies in this new economic marketplace are thriving.

Airbnb has more than a million listings in 190 countries and is valued at over $20 billion; Uber operates in hundreds of cities in 67 countries and is valued at a staggering $50 billion. Though, before the success, these companies were about more than making money; they were aiming to simply connect people and build communities. These are views that we naturally share and buy into as part of today’s culture, fueled through social media and mass communication, which have been integrated into many aspects of our lifestyle.

The sharing economy was created by Millennials, and the main participants are none other than fellow Millennials - the tech-savvy, well-connected multi-taskers who are reshaping the marketplace. Consumer values have changed from ownership to access as millennials face student debt and a shaky job market.

By renting assets shortterm when one needs them instead of owning them, a considerable amount of money can be saved.

Likewise, renting out underused assets allows owners to earn another source of income. There is a social aspect as well, where one can meet new people through interactions within these new communities.

Quite simply, there’s also just something enjoyable about straying off the beaten path and breaking out of routine by finding bargains through a more collaborative process instead of through “mainstream” businesses.

What does the future hold?

As this new business model takes off, it will continue to shape the way consumers spend and how businesses operate, whether by creating a conducive environment for start-ups or by providing a wake-up call for traditional businesses in understanding today’s consumers and ever-changing marketplace.

It provides a new, albeit secondary, source of income, and fulfills the needs of consumers looking for more affordable and lowcommitment, accessible services offered by everyday people. It represents the shift from material consumption to experience consumption.

Time will tell if the sharing economy is another current consumer fad, or if it is here to stay. But for now, we can refer to the adage that we learned since kindergarten sharing is caring.

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TGIF

#CasualFridayOOTD

Written by Malikah Ebrahim

Friday: the most coveted day of the week. The saviour to all things work and school. The light at the end of the tunnel. There is no difference if your plans include a great dinner out or eating a box of pizza while binge watching your favourite show on Netflix. There is no discrimination. Because, low and behold, Friday is here.

With all of the great wonders Fridays bring, there’s still one thing we are all not quite sure about. What does one wear on Casual Fridays?

How casual does one dress? Should I just

wear my normal attire, so I still look super professional?

Well, there are a lot of basics to cover before we start picking out some outfits. It’s important to remember that although your clothing can be more casual than the rest of the week, ‘professionalism’ and ‘casual’ are not mutually exclusive. There is still a standard of dressing to uphold, but the articles of clothing themselves do not need to be corporate level.Here are some tips to your Casual Friday dressing so you’re still as fresh as your suit and tie!

DARKEN IT UP When opting for denim, choose a darker wash jean. Dark wash jeans have a more sophisticated look than lighter washes, and hence, you can still be comfortable yet classy. Just be weary of too many rips or distressing. Darker denim or even black jeans work well with almost everything, making choosing the rest of your outfit pretty simple and effortless.

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ADD IT ALL When in doubt, add a blazer or sweater on top! They’ll instantly make your outfit look more professional, even if you’re wearing your favourite denim on the bottom. Also, they make Fall dressing even easier, because you may not even have to wear a jacket on top! You could even be wearing a polo and jeans, but adding a sweater on top will seal the deal.

BUMP UP THE CONTRAST Adding colour is an easy and great way to liven up a Casual Friday look. Wearing a forest green blazer over dark wash jeans, white shirt tucked in, and brown shoes/belt is a stellar outfit. I can imagine it already! Tailor your colour palette to the season at hand; so don’t shy away from the gorgeous Fall mustards, burgundies, dark greens, and purples!

ONE STEP AT A TIME One small step for man, one giant leap for your outfit.

Shoes can transform your look - taking it to a new level of style. Keep it classy with an animal print pointed flat, or a sleek loafer. Adding colour through your shoes is a great idea as well, just make sure that you are not too informal.

And, I think I can say that we’re all here for the belt-shoe combination.

MIX AND MATCH

PUT A RING ON IT Casual Fridays are a great opportunity to play around with some funky and cool accessories. Wearing pretty necklaces or scarves can add a totally different look to your outfit. Accessories are a great way to add depth and dimension to a look. Even if you’re just wearing a gray sweater and jeans, adding a cute hat or some jewelry will change the whole look. And don’t forget to make sure your watch game is on point.

You could always pair a nice cardigan over your dress pants and call it a day. It’s the best of both worlds - casual and formal altogether. It’s one of the easiest combinations if you’re short on time and effort.

At the end of the day, remember to have fun with your outfit! Keep in mind that the weekend has not started just yet, but it’s coming soon! Hope you all have a great Casual Friday, always. And I hope your #CasualFridayOOTDs are always on point.

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T

U

his text is one of the best ways to kick off the school year. It’s right up there with Meatless Wings Night at TwelvEighty and the Free Samples Sidewalk Sale. It is especially relevant for senior year female students. Let’s just start off by acknowledging that the pressure to graduate and find a job in today’s shaky job market is no joke. It’s the only thing I have in common with everyone in my program. With all good intentions, I do believe that we could all use an extra dose of Lean In to get us through the end of the day.

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PGRADE YOUR B KSHELF Written by: Marryiam Khan

In her glorious workplace manifesto for Millennials, Sheryl Sandberg breaks it down for us in digestible tidbits and personal anecdotes. For those of you wondering, Sheryl is the current Chief Operating Officer of Facebook. Her book is heavily inspired by her experiences in the male-dominated Silicon Valley.

However, the echoes of the book circle all around the world. This book has inspired Lean In circles in places as upcoming as India and Singapore, and as cliché as Harvard Business School.

L

Title | Lean In For Graduates Author | Sheryl Sandberg Price (Hardcover) | $23.16 CDN

We have been conditioned for way too long to believe that success depends on our hard work and perseverance. The truth is, there are still policies that exist in workplaces that are both sexist and detrimental to women seeking executive positions. For example, maternity leave is discussed in depth.

Sandberg explores this double-edged sword by pointing to how it can act both as a relief and a crutch.

While the book does not fall under the genre of self-help, I found that the book did wonders for my anxietyridden brain. I was forced to ask

myself some hard questions and reflect on my future goals.

Sheryl Sandberg convinces women to keep an objective and clear view of their goals and avoid certain career traps. There is a special section on how men can encourage and help their women through a beautiful and underutilized tool called compromise.

Lean In contains grim themes about the corporate world that are in your best interest to not ignore. Well, what can I say? The truth hurts.

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YOUR PERSONAL ASSISTANT AT NETWORKING EVENTS

An easy way to talk to other students and experts in real time, without having to connect on regular social media channels or give away your contact information. It is the modern IRC (instant realtime chatroom) for students.

RESOURCES AVAILABLE Ask Me Anything

• Our team is bringing industry professionals into the community • You use this channel to connect with speakers and learn through chat

Careers

• You use this channel to browse opportunities in the area

Events

• Our team posts networking events from the GTA area • You browse this channel to see events

News

• Our team posts news events from DeGroote, the DCS, and other relevant sources to the community 13 | Quarterly Profit | December 2015

Live Clubs

• Clubs have their own channels to post content and network in, for example: #livedaa for the Degroote Accounting Association

Recruiters

• Our team schedules recruiters during certain time periods throughout the month to do AMAs and video chats with students • This provides huge value to students by giving them direct access to talk with recruiters and learn about the companies

Video-Chats

• Our team is organizing dates when industry professionals can be live and available for video-chats (for up to 8 people)

WHO IS #BEAMHAMILTON FOR? Anyone in DeGroote looking for a richer experience: #Club Leaders #Students #Alumni

#Professionals #Recruiters #Professors

E N O N I ALL R O F E C R RESOU E T O O R DEG The WeBeam App is like your personal assistant when you attend events. The app groups people based on their profession and shows you people with similar interests.

The WeBeam App allows the most effortless way to exchange contact info: using your phone’s bluetooth capabilities. Why search or type a name to your phone when you can just Beam.

LEARN HOW TO SIGN UP AND GET INVOLVED BY SEARCHING #BEAMHAMILTON WELCOME ON YOUTUBE 14 | Quarterly Profit | December 2015

Krishna C. Nadella Founder of STATE OF MIND

QP: After living in New York and now returning to McMaster, how do the two environments differ?

Both professionally and emotionally?

Michael Lee Chin, and Tim Horton to help with our brand image.

We have to ask ourselves are we at the elite level? Are certain things getting us at that level specifically at DeGroote? Are KN: There are more high-end we happy being behind other professional jobs coming from schools and does it matter what [Hamilton], especially with other people think or not? regards to funding. As a result, and McMaster there will be better recruitment Hamilton and growth to follow. All these specifically have goals and things about McMaster matter, strategies and are working we have Michael G. DeGroote, everyday to implement and 15 | Quarterly Profit | December 2015

achieve what they have set out to do. I can tell you that McMaster is bringing in people who are important, both in academics as well as in other fields. For example, Glen Grunwald, McMaster’s new athletic director of McMaster and former New York Knicks/ Toronto Raptors GM, has been an incredible asset to the school. This is a similar effect as a sports team would have had in Hamilton, and look at what that has that done for cities

This weekend we had the pleasure of welcoming Krishna C. Nadella back to his Alma Mater here at McMaster University.

We were incredibly fortunate to hear his insights into his university experience, what it is like to be a young professional in today’s’ workforce, and the challenges the millennial generation face today.

His anecdotes about growing up in an immigrant household in Hamilton, Ontario, and his education both at McMaster and Penn State made it clear that he was a man with a purpose. As he spoke candidly of his experiences in grad school, professional career at CitiGroup, Bloomberg LP, and his personal entrepreneurial endeavor, STATE OF MIND, the essence of his unwavering work ethic, and the importance of finding one’s self-identity was captured.

While listening to him speak, two things, in particular, stood out to me: his willingness to better himself, as well his desire to leave a lasting impact on his community and those who surround him.

such as Edmonton, Calgary, and Toronto. We need to plan McMaster with Hamilton and the golden horseshoe while building synergy between the environments.

Nadella’s passion project, STATE OF MIND (SOM), raises awareness about the problems that young people face, particularly those in post-secondary education. He broaches his target audience via a web series, where he invites prominent guest such as John A. Bryne, Glen Grunwald, and other professionals to discuss their respective fields and how they can help the youth. The goal of STATE OF MIND is to keep the dialogue going outside the classroom and talk about topics that are affecting students not only today but in the future.

What makes this project unique is that it gives him an opportunity to connect with universities all over North America, facilitating connections between professors, students, and staff all with the emphasis on working towards improving the lives of millennial students.

Written by: Bukhtar Khan and Krish Puri

decision was very risk averse, seeing as medicine is one of the most fiscally rewarding careers - this is why so many people strive to become doctors and why it’s such a competitive field.

The “immigrant mentality” QP: Tell us about your says yes, this is a great career, undergraduate experience. but do people who explore that How did it affect your career path truly love it? Is personality and who you are? that individual truly living out their dream? That ties into KN: I studied life science in my STATE OF MIND. We want to four years as an undergraduate convince people that they can at McMaster. Looking back, the do whatever they want and be

successful at it, so long as you have the right attitude and work ethic.

Putting a round peg into a square hole is the worst thing a parent could do for career choices.

And that’s why it so tough, because, as a parent, you have to let your kids fail. Immigrant parents are always there, every step of the way. In some cases, they are present too often that they do not allow that student to live and grow on their own.

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In university, I wish I took more risks during my undergrad that allowed me to grow as a person. During my time spent in Hamilton at McMaster, I wasn’t able to take risks the same way I was able to at Penn State.

Being on my own at Penn State, away from my family, is where I started finding myself and when my vision started to become clearer. That being said, I’m still trying to improve myself every day, and striving toward that vision.

QP: How do you manage the pressure on top of getting and staying involved?

KN:

In my 4th year at McMaster, I was applying to med and business school, working in a lab and running a Sports Management Company, all as a biochemistry major.

What I’ve come to realize is that getting the first 80% of a task accomplished is easy but your true passion and drive is marked by your willingness do the remaining 20%, and doing it to the best of your ability.

You can either chase the 20% or choose certain things to go that do not matter as much. It matters to the person who is receiving it – don’t worry about being Picassos, but color me in.

University throws a million different things at you. While not everything you see or do will be essential to you career, or life after school, it’s important to learn how to deal with and balance all these things at once. Failure is an experience.

Mediocrity is an experience.

These experiences are part of life. You need to learn how to make these decisions and manage whatever it is that’s on your plate at the moment.

The gravity of these decisions starts getting bigger and bigger.

Do you decide to work in San Francisco or New York – the sooner you get that in your DNA, the sooner you can move forward with it.

Being perfect, being well rounded in student activities – if you are chasing the approval of someone else – don’t do it.

Regardless how long you take

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to get there, and you want to do it, that means that you are comfortable.

I try to take a similar approach to SOM – it is a passion project for the reasons that it aligns with my core values.

QP: What was your career trajectory like following your MBA?

KN: In my 20s I was able to

get in the capital markets and started establishing a brand and self-image on Wall Street, I went out a few times a week and always could afford to have a nice dinner. I had much more time in this period of my life, and I was able to build myself here.

In my 30s, I got thinking about not leaving an impact on the world. This topic is very mecentric; how can I help others?

I got married, and my place in the world changed. That could have been for two reasons – I was able to realize I need to help others because they helped

“We want to convince people that they can do whatever they want and be successful at it, so long as you have the right attitude and work ethic.”

me OR having an ego (lasting impact). They are two ends of the spectrum, and they both work for people. For myself, I had an appreciation for all of the individuals who got me to where I am today, and I will always be grateful for that. That being said, I also believe that I carry a healthy ego and would like to have a lasting impact on the millennial through STATE OF MIND. QP: Tell us, at what point in your career did you decide to start STATE OF MIND?

KN: SOM was an idea that

stirred in my head for almost ten years. Higher education is not much different than corporations in general. President = Deans, stock certificate = degree. The value of your degree or stock goes up and down depending on the overall image of the school or company. For example, take the Jerry Sandusky scandal.

Following those events, Penn State had a certain image. There was a lot of money on the line, Penn State was in the middle of

a capital campaign of 2.2 billion and that is what killed a lot of funding. We make education so BUSINESS-minded, and we can’t just do that. This is where STATE OF MIND was formed.

QP: What challenges did you face in 4th year and what steps did you overcome? How do you use those experiences to overcome what you do today?

We have to keep talking and keep the debate and dialogue going: and I believe that millennial care about these issues. And if we get you that information to you in different forms you will be able to be intelligent and make informed decisions.

with a healthy frustration. Could I be a good husband? Yes. Am I the bad father? No. But there are things we can work on, and this may be what frustrates us.

There are goals in place, but you are constantly pushing and pushing and making other people buy in as well. I have a young family, with a baby and another one on the way. Both my wife and I are working parents – but you want it all. This is how I prioritize – I know that something has to give. You learn how to make choices on what is more important, but you have to make the decisions yourself.

You are always balancing many things. Everything gets bigger, professionally and personally – I would love to tell you the answer, but I don’t have the answer. You have to be aware of the problems.

QP: How do you brand yourself and why is it important?

KN:

Loving what you do is happiness but doing what you love to do is freedom. I love what I do at Bloomberg, for my family and career in management and building a brand for myself in the capital markets business. This is not “Krishna’s State of mind“ but more of Mike Bloomberg. I can spend the rest of life working with SOM but at Bloomberg, I would be told to quit after a certain time.

KN: You want to flock to people

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The Devaluation of the Yuan: Two Motives When you think war, you think of conflict, strategy and politics. “Currency Wars”, although absent of any physical intermingling, encapsulates many of these same ideas. The goal is clear: devalue your currency so that your country has an ex-ports pricing advantage over competitors. However, every other country in response will devalue their currency to stay competitive.

Hence, a vicious circle of devaluation occurs. We typically do not see this during times of economic prosperity. If everyone is well off, there is no incentive to risk a race to the bottom. Presently, however, the second largest economy in the world isn’t doing so hot. China’s exports have tumbled 8.3% in July, and the country’s 10% projected growth rate seems to be slipping.

So what Does China Do? On August 11th, China devalued the renminbi, or Chinese yuan, by 1.9% versus the dollar, and the following day, on August 12th, devalued it by an

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additional 1.6%. For those not familiar with the different exchange-rate regimes, this may be confusing. Countries with a floating exchange rate­—such as Canada, the US, and most open market economies—typically do not meddle directly with the value of their currency.

Instead, they allow the value of their currency to fluctuate in response to the supply and demand in the foreign-exchange market.

China, however, enforces a fixed rate currency model that allows for market intervention. When China feels their economy is sluggish and needs a

boost, they may devalue their currency to enhance exports. Although this is an easy conclusion to come to, pundits are skeptical as to whether this is the real reason behind the central bank’s devaluation of the Yuan. There is a second, arguably more legiti-mate, motive for the devaluation.

Reserve Currency Status

China has been upfront about their pursuit of a reserve-currency status for the yuan for some time now. This would explain the steady devaluation of the yuan and the movement towards a more marketoriented economy. However, the International Monetary Fund (IMF) has yet to deem the yuan suitable.

The IMF has the ultimate say as to what currencies are included in the reserve basket. A key guideline is that the exchange rate must be “freely floating”, that is to say, absolved of any direct influence; this has not been the case for China.

Adhering to a fixed currency model, China’s central bank sets a midpoint, or “central parity”, and maintains it within a 2% band above or below that value. Although the yuan would regularly lean towards the weaker end of the 2% band, the central bank would simply nudge the value back up to its midpoint.

Recently, however, China has been loosening its grip on its currency. On August 11th, the central bank declared that the midpoint set each day would simply be the previous day’s closing value. The result was the observed 3.7% corrective plunge of the yuan’s value. Although this devaluation does not imme-diately qualify the yuan as a reserve currency, many regard it as a step in the right direction. It is unrealistic to expect the central bank to switch the

yuan from a fixed exchange rate to a floating exchange rate overnight, and so we can only expect a slow and steady shift towards a more market-based currency.

As logical as this justification sounds, some are still skeptical of China’s intentions. The new exchange-rate policy is at best regarded as a “managed float”, meaning there still exists occasional fixing of the currency. Furthermore, China has experimented with interest rate cuts and fiscal policy change in the This devaluation may seem like another attempt at stimulating their slowing economy, potentially at the cost of provoking a currency war. past without much avail.

So far we have examined two sides of the story. Either China is directly intervening to fight a currency war or they are merely attempting

to liberalize the yuan and enter the reserve basket.

Which is it? Although a currency war is a compelling story, the scale of which the yuan has been weakened belies such a motive. In comparison to last year, the yuan has remained 10% stronger against the currencies of China’s trading partners. A much larger depreciation of the yuan would be needed to incite a noticeable growth in exports.

Therefore, it seems most likely that China’s devaluation of the yuan and loos-ening of policy is motivated by the desire to achieve reserve currency status. Later this year the IMF will decide whether or not these efforts were in vain. Mean-while, we should expect China to be less restrictive with the yuan and potentially devalue further against the US dollar.

Written by Taylor Browne 20 | Quarterly Profit | December 2015

What’s up with

Whatsapp?

Written by Vincent G. Dong, CPA, CA vdong@vincentdong.com This article is the first of many focused at integrating the teachings of the terrific professors at DeGroote with real-world business issues from a graduate of the school.

The more knowledgeable a DeGroote grad is, the more the valuable the grad is to a future employer!

I sourced much of the information below from a multitude of online sources. I am offering my perspective on this purchase not from the public markets, but from the eyes of an esteemed DeGroote student.

So, who isn’t on WhatsApp today? WhatsApp — the instant messaging app that Facebook acquired for $19 billion last year – hit 900 million monthly active users (MAU) in September 2015. (As a comparison, WeChat in China is now at 600 MAU’s).

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In addition to that, FB messenger has 700 MAU’s.

With WhatsApp and FB messenger combined MAU’s, that makes them the top global mobile messenger app. Wow, what a spectacular amount of money! I am willing to bet Maple Leaf tickets that quite a few DeGroote students are some of these users.

The app costs less than a third of a cent a day AFTER the first year of being free.

What kind of company can stay in business that charges virtually nothing for its service offering? What kind of business model is this? What is a DeGroote student to learn about this $19 billion purchase

by FB? WhatsApp earned $15 million in 2014 and lost $232 million. In fact, it’s never made a profit.

I wonder what would have happened if FB had not

come along and purchased the company. What do all of you think?

Both WhatsApp CEO Jan Koum and Facebook CEO Mark Zuckerberg, who are long-time friends, agreed that it is not about monetizing this purchase. This is evidenced by the fact that there are no ads on the app. Is this not refreshing? Their goal is to make WhatsApp the top international messaging app first, box out their competitors, and then earn money once it’s established that they are the dominant player. What thoughts do you all have regarding their future revenue opportunities? I have some thoughts and time will tell on this long game that Koum and Zuckerberg are playing.

This story has so many business issues to it, that they are worth mentioning with some comments:

One

This app values your privacy. This is quite refreshing when most apps want to know what you’re going to have for dinner this evening.

Two

A terrific feature is that of group messaging.

Our family is on it with one child in Brussels.

I am grateful to a company for the first time in my life that directly saves me money!

Three

Another feature it has is free voice calling.

I wonder what will become of the global telecommunications industry.

Four

When the purchase was accounted for by FB, $15 billion of the $19 billion was posted to Goodwill. Can you imagine being the accounting firm for FB and asking them if there has been any impairment in the value of this asset?

Five

Humanism. This somewhat aligns with point #1 above. Co-founders Brian Acton and Jan Koum wanted a company to improve the lives of humans and attempt to make a small difference in the world. Imagine a company not just interested in draining your debit card, but one that made your lives better in a small way AND saved you money. Imagine working for this very company!

Six

Koum has also joined the Board of Directors of FB. There are only eight directors of this multi-billion dollar company. Zuckerberg and Koum wish to make the world more open and connected, and it appears that Zuckerberg sees Koum as the future, especially as WhatsApp has been growing more quickly than FB. What is the future now? 1 or 2 years? It certainly doesn’t seem to be five years anymore.

Seven

The global instant messaging market also includes Kakao Talk (Korea), WeChat (China), Line (Japan) and Viber (Israel), and many of those competitors to WhatsApp include games in their suite of service offerings.

With so many users, will WhatsApp just offer bames to monetize their app or something way beyond what most people are thinking? There has to be a recovery of the $19 billion investment or else Zuckerberg could look not so successful to the public.

Eight

With FB now at a $300 billion market capitalization, imagine a $1 trillion market cap in the not too distant future. Afterall, they have the greatest MAU’s today. Their only competition would be BerkshireHathaway, Google, Exxon Mobil, Microsoft and Apple. Maybe, Zuckerberg’s end game is to be the biggest company in the world.

Maybe. What are your thoughts?

Nine

If you wanted to work for WhatsApp, what unique skills do you think you’d require to be hired at this new-world order organization?

Would those skills be relevant today or are there skill requirements that haven’t even come up yet, and would it be your goal to prognosticate what they may be?

Ten

Imagine having class discussions with group chats on WhatsApp. What would all of you do with the time savings? Invent the next big app?

I welcome your thoughts on what may be the world’s biggest company from a market capitalization standpoint in your lifetime. When FB came out, there were the naysayers. When FB bought WhatsApp, people took notice.

22 | Quarterly Profit | December 2015

Rural Nub

A story by Nabodit Mainali Written by Kelvin Pau

F

IVE YEARS AGO, I immigrated to Canada from Nepal, crossing international boundaries to travel from one beautiful country to the next. I decided to settle in metropolitan Toronto before moving one and a half hours southwest to Hamilton for university. I was enrolled in the DeGroote School of Business as an undergraduate Commerce student. Currently, I am in my third year pursuing a specialization in accounting, with the hopes of obtaining a CPA designation.

As a keen observer and broad thinker, I noticed that my homeland was in need of substantial development in many key areas, such as literacy (the total adult literacy rate is a paltry 57.4%, according to the most recent statistics from UNICEF) and education. I noted in an interview conducted by my friend, Kelvin Pau, that “in some villages, people do not send their children to school due to the financial burden imposed on their families.

Also, the schools are often far away and would require

risking one’s life at the expense of obtaining a quality education.” The devastating Nepalese earthquake that happened in April further impaired this situation.

In light of the events that happened in April, and to alleviate the 57.4 % adult literacy rate, I started a not-for-profit organization called Rural Nub.

Based on the meaning mentioned above behind the name, I described the purpose as “A platform for educationdeprived students to get the requisite education “...the idea behind this initiative they need. To support was to give these children a new this mission, my team start and an even brighter future.” will provide them with physical school supplies When asked about the and moral support for meaning behind the name, “A whichever career paths they nub is a term used to describe may choose later in their lives. the start of something. With This in turn will provide them the hardest hit areas being with an opportunity to be rural and underdeveloped the future leaders this society neighbourhoods, the idea needs, and not revert to the behind this initiative was to mistakes that their previous give these children a new generations had no choice but start and an even brighter to endure.” future.”

As with any organization, a mission statement and accompanying strategies needed to be thought out.

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In late August, Rural Nub held its first event in Nepal, giving out school supplies to 38 students from two schools.

The packages included

“...to create a realistic and sustainable solution for the underprivileged” everything from pens, pencils, and erasers to notebooks and colouring pencils.

Among the 38 recipients were children whose parents had passed away or had parents whose homes were located far from educational facilities. The team gave a short presentation on the importance of getting a good education and why it is imperative that people stay in school. Afterwards, students received their individual care packages, each of which cost about $8 CAD. Speaking of this price, “Due to the exchange rate between Canada and Nepal, as well as a weak economy, it was possible to cater to a large group of people.” Relating this back to the student population at McMaster University, I proposed that if each student donated a minimum of $10, it would be

a meaningful contribution to a long-term solution for an underdeveloped city.

As recently as Thursday, November 5th 2015, I participated with my partner on DeGroote’s Den (based on the show “Dragon’s Den”) and pitched the Rural Nub event idea to a panel of four judges (“Dragons”). We won $800 and we intend to add the proceeds to the cumulative donations collected from DeGroote students, to provide school supplies to more underprivileged children in Nepal.

Currently, we have a team of four students whose roles within Rural Nub range from Chief Development Officer to VP Marketing, and we hope to attract future applicants and continue to build our organization.

Rural Nub is looking to

expand its team and bring in enthusiastic candidates who are passionate about tackling real-world situations “In the future, the club’s growth will be predicated on having donations for children.” while working with likeminded individuals to create a realistic and sustainable solution for the underprivileged. In the future, the club’s growth will be predicated on having donations for children to cover the entirety of his or her school expenses, an initiative that I believe will slowly propel Nepal to the upper echelons of international education parameters for many generations to come.

24 | Quarterly Profit | December 2015

HOW Excel in Your Exams TO Written by | Tara Khudairi

T

hey’re fast approaching: those highly weighted end-of-year assessments that prove that you kind of knew what was going on all semester and totally weren’t scrolling through Instagram during class as your prof’s voice droned on in the background. That is, if you even went to class at all (Although I know we’re all dedicated students who read the slides before lecture).

Ideally, if you are the kind of student that kept up with all their readings, did the homework and assignments yourself, and attended lecture and tutorials, exam season is probably a smooth walk in the park for you. However, this article is more geared towards people closer to the other side of the spectrum – procrastinators, it’s your turn to sit front row.

Find your “zone”.

First and foremost, find your zone. Find the place where you are most efficient and like to study, and whether it is with people or alone, with a murmur of soft conversations or absolute silence, at a library or on your kitchen table.

Read the exam outline and make a to-do list for every course.

Next, go on Avenue and find the breakdown of your exam (what chapters it consists of – what you need to know, essentially). Make a to-do list of all the things you have to do for each course in order to be prepared for the exam.

Write it in pen on paper so that you can feel that much more accomplished every time you scratch a bullet point off your to-do list.

25 | Quarterly Profit | December 2015

Hard work and reward.

We physically can only stay focused for so long. For every 50 minutes of doing work, take a 10-minute break to relax your brain. Watch a funny YouTube video, half an episode of Friends, chat with a friend, scroll through Twitter, or walk over to a vending machine/your fridge to grab a drink or snack.

Be antisocial [in media, that is].

Here comes your biggest threat: the distraction of social media in this day and age. How routine is it to log onto Facebook when your mind shifts away from your studies onto the next social event? To scroll through Instagram while your phone lies on your open textbook? There is a free ‘Self-Control’ app that doesn’t allow you to access the social media applications of your choice for a time chosen by you, even if you restart your computer. If you are unable to download this app for any reason, just give a friend your phone until you finish the chapter you need to finish, and reward yourself with the phone later on (see #3).

Sleep!

“Sleep is for the weak” should not be your motto this exam season. Even if you’re a night studier like me, adjust that to work to your advantage (stay up late and sleep in, since we have no classes during exams). Just make sure to get at least a solid 7-8 hours. But most importantly – keep it consistent. Try to keep a consistent bedtime/wake-time – your body will adjust and learn to function properly on the amount of sleep you choose to get.

Be optimistic.

Negative energy attracts negative marks. Believe in yourself, your abilities and your hard work, and you’ll perform to the best of your abilities. If you followed these steps and studied smart, then it’s time to beat exam season DeGroote.

26 | Quarterly Profit | December 2015

Global Economic Review Written by: Andrew Kwast, Managing Editor

Overview of the Global Economy According to the International Monetary Fund (IMF), declining commodity prices, depreciation in currencies, and increasing financial market volatility is hurting the global economic outlook.

Lower oil prices have helped ease the burden on monetary policy for oil importers. However, emerging market economies are exporting other commodities at low prices, resulting in depreciating currencies against the U.S. dollar, euro, and yen. In general, the economic recovery in advanced economies has been improving at an increasing rate, while emerging market and

developing economies are expected to grow at weak or negative rates.

Notably, low commodity prices and volatile political conditions are severely affecting economic growth in South America, Africa, and the Middle East. The IMF estimates that low commodity prices will subtract approximately 1% each year from the average rate of economic growth over the next three years.

Canada The S&P TSX Composite index is down 3.63% month-over-month, due mostly to falling oil prices.

Although oil prices climbed in early October, they have steadily dropped a total of 13.2% since then, due to reports that U.S. crude oil stockpiles have been increasing. The oversupply of oil worldwide continues to weigh on crude prices, while the Organization of the Petroleum Exporting Countries (OPEC) seems determined to maintain its high current output. According to the IMF, Canada’s GDP growth in 2014 was 2.4% and is projected to be 1% in 2015 and 1.7% in 2016. Lower capital expenditures were also an important factor in Canada’s declining oil sector early in 2015.

Technically, Canada has been in a recession, with two consecutive quarters of contraction. Monetary easing from the Bank of Canada, decreasing the lending rate twice by 0.25% each time to 0.5%, has been working to counteract the effects of low oil prices. Furthermore, the new majority government in Ottawa has promised fiscal spending, primarily in infrastructure, to revitalize the economy.

Moreover, business investment has slowly been increasing in non-energy exports. The Organisation for Economic Co-operation and Development (OECD) expects the Canadian economy to improve so that inflation will be above the central bank’s target midpoint of 2% before 2017.

28 | Quarterly Profit | December 2015

USA The S&P 500 index is up 2.88% month-over-month.

The U.S. economy is showing steady growth and bullish signs recently, similar to other developed economies not heavily dependent on oil exports.

The Bureau of Labor Statistics reported that nonfarm payrolls grew to 271,000 in October (far above the 2015 average of 230,000) and the unemployment rate fell to 5%, the lowest unemployment rate since April 2008. Although exports have slowed on a stronger U.S. dollar, investments in manufacturing capital is up over 60% year-over-year improving the capacity and efficiency in the manufacturing sector. Similarly, growth in private research and development investments are currently at around 8%, its highest growth since the 2008 recession. Also, cheaper fuel is boosting the American economy, with air travel increasing to the highest it has been in five years. According to the IMF, U.S. GDP growth in 2014 was 2.4% and is projected to be 2.6% in 2015 and 2.8% in 2016. Lower oil prices, improved financial position, increasing private investment, and an improving housing market are expected to offset any export challenges from a stronger U.S. dollar.

29 | Quarterly Profit | December 2015

Europe The DAX, CAC 40, and FTSE 100 index is up 0.59%, up 0.63%, and down 1.16% respectively month-over-month. As a major oil exporter, Norway is struggling to deal with low oil prices with the IMF expecting the Norwegian economy to grow by 0.9%.

Meanwhile, Sweden and the UK are growing at a pace similar to the U.S., with investment and consumption on the rise. Economic recovery in the Eurozone is improving due to lower oil prices, monetary easing, and the euro depreciation, but lingering economic difficulties within the European Union have held back growth in most European economies. Developed European economies are exhibiting low but stable growth, with some depression

East Asia

in growth attributed to noneuro currency appreciation.

Russia faces one of its most severe recessions in decades from low oil prices, the plummeting ruble, and sanctions over its involvement in Ukraine. Economic growth in Eastern Europe is stable, and has benefitted from low oil prices, but is also negatively impacted by the contraction in Russia. Greece still faces uncertainty as to its future, as the debt crisis continues to unfold. Furthermore, the full effects of the European migrant crisis is yet to be seen.

The Nikkei 225 and Hang Seng index is up 6.79% and down 0.71% respectively month-over-month. The Chinese stock market crashed on June 12, 2015, as inflated stock prices exceeded the expected rate of growth in the Chinese economy. Over three weeks, the Shanghai stock exchange dropped by about 30%.

The Chinese government acted to stem the tide of selling by banning stockholders with at least 5% ownership positions from selling and used money from the central bank to buy stocks while lowering interest rates. The implication being that the Chinese government may have been fueling the stock market bubble to prevent the bubble from popping.

Investors are beginning to realize that the Chinese economy will not be growing as quickly as it had been in the past. The Chinese slowdown will only continue, as the IMF expects the decline in growth to be 0.6% in 2015 and 0.5% in 2016 to 6.3%. Japanese growth is expected to be positive this year at 0.6%, a substantial improvement from the -0.1% in 2014.

The Bank of Japan’s additional quantitative and qualitative easing, based on Abenomics, as well as lower oil prices, have encouraged Japan’s economy into positive growth. Economic growth is expected to be stable elsewhere in Asia, although volatility in the Chinese economy and slow growth in the Japanese economy may dampen forecasts.

30 | Quarterly Profit | December 2015

STATE OF MIND:

RANKING THE MBA RANKINGS

9 | Quarterly Profit | December 2015

An interview with: John A. Byrne Conducted and written by: Krishna Nadella | State of Mind, Host

Pursuing an MBA can be a very stressful process. From studying, preparing and eventually taking the GMAT to starting, completing and submitting multiple school applications, it can become very overwhelming trying to differentiate and identify which schools one has a legitimate chance to get into. Thankfully, for many years, if not decades, college rankings have helped serve as a guide in providing this much needed clarity. To date, Bloomberg BusinessWeek, The Financial Times, U.S.

News & World Report, Forbes, and The Economist all provide their own rankings based on their own unique approach.

With so many rankings available for a prospective applicant to choose from, it begs the question, “Who’s ranking the rankings?” The answer to that question is John A. Byrne, Chairman and CEO of C-Change Media Inc., a digital media company that owns and moderates the collegiate website Poets & Quants (www.poetsandquants.com).

Previously, he was the editorin-chief of Businessweek. com and executive editor of Businessweek where he worked for the better part of two decades, launching the magazine’s ground-breaking rankings of business schools. He is one of, if not the most, knowledgeable individuals when it comes to differentiating between MBA rankings. The following are his perspectives on MBA Rankings and his analysis of the five major publications.

32 | Quarterly Profit | December 2015

Q: If I could take John Byrne back

to his 20s, what qualitative and quantitative data would you look at knowing the knowledge that you know now?

J: Superior Teaching When taking into consideration the opportunity cost and actual tuition, you will be spending about a quarter million dollars towards an MBA. As such, you want the best teachers teaching you when that much of a monetary investment is on the line. You will spend more money on your MBA than on any other purchase (even more than an undergraduate degree) except maybe a house.

An excellent service on PoetsandQuants. com provides which programs have the best teachers through student evaluations over the course of the respective school’s history.

This allows applicants the ability to make a informed decision on which school to pursue.

Small and Intimate

MBA programs are an excellent place where people get to know each other. Schools with strong alumni networks develop incredible 33 | Quarterly Profit | December 2015

loyalty which speaks to the value of how much you will learn from each other. John notes, the most important and “most dirty little secret” occurs among your classmates who you learn the most from and not your teachers. With the large diversification of individuals from different educational and career backgrounds it is invaluable to have a small class size that allows you to grow these relationships. This enhances your professional network as the possibilities are endless to learn from your peers

Brand Matters

This is directly related to the school’s ranking. There is no truth in any one ranking, however, consensus generally gives you a head start on the truth, which leads to the public’s perception of an MBA program.

A lot of judgement in your resume goes into where you attained your MBA (the good and the bad). Brand is distinguished through each discipline (where you want to work, what skills you want to develop, etc.) – so choose schools that best suit where you will acquire the most amount of knowledge. For example, for finance students, make sure to look at the depth of each school since they will all have a “finance” course.

“Unfortunately, if you are an Admissions Director for a school that is competing in these rankings, you will be more likely to only accept individuals with high GMATs/GPAs.”

Q: Can you speak on “context”, specifically on the historical presence of the US News’ ranking – especially as it came out a year after Businessweek’s?

J: If not for the US News rankings, we would not have all of the data over the last several decades that is comparable across all schools. US News imposes a rule that as a school you have to always report the most important and basic information such as, the number of applications received, the number of people admitted, the number of people enrolled, the average GMAT score, the average bonus, etc. This is an incredible amount of data that people can use to make an educated decision. The formation of the US News ranking was incredible for the industry.

However, there are flaws in the rankings – such as the heavy emphasis on high GMAT scores when looking at prospective applicants.

Individuals who are in the 500s could make better business people than those who have scores of 700 or above. The reports do not look at a candidate holistically – what they bring to the table and what they might become.

Many intangible aspects are taken out of the equation but are incredibly important because the can show who you are as a person, and who you will become. Unfortunately, if you are an Admissions Director for a school that is competing in these rankings, you will be more likely to only accept individuals with high GMATs/GPAs. This prevents some great people from getting into great school since schools do not want to drop their rankings through lower GMAT scores or GPAs.

Q: It sounds like US News holds a tremendous amount of sway with graduate MBA programs, is that a conflict of interest?

J: I love it as it creates a marketplace where information is available to everyone and it is transparent. If the information was not available, you would not be informed enough to make a decision.

34 | Quarterly Profit | December 2015

U.S. News & World Report “Like all rankings of business schools, the U.S. News list often engenders much controversy and debate. Detractors particularly take aim at the magazine’s survey of deans whose opinions, critics say, merely reflect the previous year’s ranking. Observers also criticize the ranking because small changes in some of the metrics can have an outsized impact on an MBA program’s status.

But the U.S. News list is among the most influential and most followed of the five prominent rankings. The magazine only ranks U.S.-based schools, unlike Bloomberg Businessweek, The Financial Times, or The Economist, which publish global rankings, either combined or separate.

U.S. News’ methodology takes into account a wealth of proprietary and school-supplied data to crank out its annual ranking of the best business schools. The magazine does its survey of B-school deans and MBA directors (25% of the score). This year, U.S. News said about 40% of those surveyed responded, but it did not reveal how many deans were surveyed or how many replied. It also does its survey of corporate recruiters (accounting for 15% of the overall ranking). The magazine did not disclose its response rate for the recruiter survey. Last year 18% of those surveyed responded. U.S. News said it averaged the recruiter scores over the past three years for this ranking.

Other metrics included in the ranking are starting salaries and bonuses (14%), employment rates at and three months after graduation (7% to 14%, respectively), student GMATs and GREs scores (about 16%), undergrad GPAs (about 8%), and the percentage of applicants who are accepted to a school (a little over 1%). This is the third year U.S. News included GRE scores in its ranking methodology.

35 | Quarterly Profit | December 2015

This year U.S. News assigned numerical ranks to 100 schools, ending the list with a halfdozen schools all tied for 95th place.”

Forbes “Forbes routinely publishes three separate rankings every two years: One for twoyear U.S. programs, another for two-year international programs and a final one for one-year international programs which tend to be more popular outside the U.S. Oneyear programs hold an obvious advantage when it comes to crunching ROI because students only lose one year of pay to get the degree and only have to pay one year’s worth of tuition. For the non-U.S. schools, Forbes convert the gains reported by students in their local currency and then uses an average exchange rate over the past five years to report the totals in U.S. dollars.

Unlike other MBA lists that often use a wide variety of metrics to rank schools, the Forbes methodology produces a ‘Show-MeThe-Money’ ranking based solely on return on investment. The magazine gathers all its rankings data from alumni, comparing graduates’ earnings in their first five years after graduation to their opportunity costs, including two years of lost income, tuition, and fees, to calculate a five-year MBA gain.

Forbes said it had a 24% response rate on its surveys to 17,400 alumni at 95 schools.

Schools with response rates under 15% were excluded from the rankings as were schools where alumni reported a negative ROI after five years. The magazine adjusts the median five-year gains for cost-of-living expenses and discounts tuition to account for students who pay in-state rates and for scholarships and non-repayable financial aid. Bottom line: If the graduates reporting the numbers are telling the truth, this is a fairly good set of data to judge the worth of an MBA degree.”

“The bigger problem with Businessweek‘s recruiter survey is that many of the respondents are alumni of the schools they are rating.”

Bloomberg BusinessWeek “The 2015 Bloomberg Businessweek ranking features a new methodology that diminishes the influence of the magazine’s long-standing surveys to the latest graduating class and adds the viewpoints of alumni from three separate classes: 2007, 2008, and 2009. Businessweek also added two key components of U.S. News’ ranking: starting salary and employment, though it used year-old data for this portion of the survey. In common with last year’s ranking, this list also excludes any measurement of the intellectual capital of a school’s faculty. All told.

However, Businessweek says that it gathered data from more than 13,150 current students, 18,540 alumni, and 1,460 recruiters across 177 B-school programs. “The result is our deepest and broadest set of data ever,” according to the publication.

Changes in methodology, of course, also result in vast swings in rankings that have nothing to do with the quality of an MBA program’s experience. Among the Top 25 schools, no school has the same rank it did last year on Businessweek‘s list. Six of the Top 25 schools had either double-digit increases or declines.

Somewhat more valuable, perhaps, is the magazine’s survey of alumni, which now accounts for 30% of the weight. To its credit, Businessweek based its alumni results on three different factors: the median increase in compensation, the satisfaction alums expressed with their current job paths, and finally 16

questions about their overall MBA experience.

Adding the compensation data in the mix helped to offset the inevitable cheerleading that would go on in such a survey.

Critics, however, will have a field day with other parts of the survey. Businessweek‘s poll of employers, which accounts for the most weight in the methodology at 35%. It shows that the employers willing to pay the highest starting salaries to MBAs are graduating from schools that rank 14th and 21st.

The bigger problem with Businessweek‘s recruiter survey is that many of the respondents are alumni of the schools they are rating. In MBA recruiting, it is typical for a company to send back graduates to their alma maters to interview candidates. Obviously, alumni would be biased for their schools.

The magazine acknowledges this problem by noting that alumni tend to rate their schools “significantly more favorably than non-alumni.”

Nonetheless, Businessweek continues to survey everyone who recruits at its target schools as opposed to the top officials at companies who are in charge of overall MBA recruiting.”

During my interview with John, he lightheartedly joked about how the Businessweek survey was better when he first released it because, at that time, he was the founder of the industry. His survey results were unbiased because the individuals completing the surveys had no idea that they were for rankings. Biases may arise when people know what surveys are for, whether purposefully or not.

36 | Quarterly Profit | December 2015

“The Financial Times ranking is arguably the most consulted global list of full-time MBA programs...”

The Financial Times “The single biggest factor in the Financial Times’ ranking is compensation, with 40% of the newspaper’s methodology based on adjusted salaries three years after graduation and average salary increases from pre-MBA levels. Look at the overall rankings and you’ll find that schools making big progress have alumni reporting higher salaries to the FT. The FT has done its shrewd readers a favor by publishing such folly. The newspaper is capturing self-reported salary figures, without initial signing bonuses, guaranteed year-end compensation, stock grants and stock options, performance bonuses, and other valuable perks received by MBAs, particularly those from the better U.S. schools. The impact then of this “weighted salary” calculation is to disadvantage significantly those elite U.S. schools in a ranking.

37 | Quarterly Profit | December 2015

The Financial Times ranking is arguably the most consulted global list of full-time MBA programs, largely because U.S. News does not rank schools outside the U.S. and Bloomberg Businessweek separates U.S. and non-U.S. schools in different rankings. But there are significant flaws in the methodology the FT uses to rank programs, including the use of far too many metrics–20 in all–that include measures that have nothing to do with the quality of a school’s MBA offering. It’s also widely acknowledged to favor non-U.S. business schools.”

The Economist “The often quirky results of this ranking–like all rankings–are fundamentally due to its methodology. In many ways, The Economist ranking is similar to The Financial Times. For one, it’s global in scope and weighs several factors that tend to favor non-U.S. schools.

It examines many criteria—21 different metrics in all, from the diversity of the oncampus recruiters to the range of overseas exchange programs. Compensation and career placement are heavily weighted, including starting salaries, pre-MBA versus postMBA pay increases, and the percentage of graduates who land jobs through the career management center. Pay and placement account for 45% of the methodology.

The one big difference with The Financial Times is its rather significant reliance on student satisfaction, gathered by an annual survey of current MBA students and recent alumni. They’re asked to rate the quality of the faculty, the career services staff, the school’s curriculum and culture, the facilities, the alumni network, and their classmates. The methodology takes into account new career opportunities (35%); personal development/ educational experience (35%); increasing salary (20%), and the potential to network (10%). The figures are a mixture of hard data and the subjective marks given by the school’s students who are surveyed by the magazine.

Measuring MBA programs on those dimensions should insure that Harvard,

Stanford, Wharton and London Business School do well. Surprisingly, year after year they tend to lag in The Economist ranking.

In fact, Harvard, Stanford, and Wharton have never topped this ranking even though it has been published for 14 years. There are many explanations for this, including the likelihood that students and alumni who complete The Economist‘s survey are cheerleading for their schools, the sample size of the surveys, and the fact that some schools have dropped out, refusing to participate in the ranking because they believe it lacks credibility.

When posed the question of an ideal ranking system, John said it would be a clean and simple system that people could pick apart based on three inputs (GMAT, GPA, Acceptance Rates) and three outputs (Average Starting Salary & Bonus, % of Job Offers at Graduation and % of Jo Offers 3 Months after Graduation). The rankings would be conducted globally, and the underlying index numbers would be available.

At the end of the day, love them or hate them, MBA rankings are here to stay, and the key is to get the most out of them. The responsibility ultimately lies with the person using them to do their due diligence and decide what school is right for their needs.

Like any decision made in life, know the facts and move forward with eyes open. Caveat emptor - let the buyer beware!

38 | Quarterly Profit | December 2015

FAIL Ever tried avoiding failure?

How’d that turn out for you?

I’m guessing not so good.

The fact is, at some point or another you will encounter failure. It could be personal, academic or professional; there’s no way you can avoid it! After months on hiatus, a little despair and a lot of reflecting on my life, I realized something that I felt it would be crucial to share with all of you.

Failure is the secret and probably the most important catalyst to success!

You might be asking yourself, “Really?! What a load of nonsense!” Nobody loves to fail, but often those who do come back and win.

Frustrated? Annoyed? Well you shouldn’t be, because it’s the truth.

Earlier in life, failure was often viewed as a taboo and something to avoid at all cost.

Growing up, I

recall comments like “If you fail, you’ll be left behind”, “You better be studying, or you’ll fail!” and my personal favorite, “If you fail, everybody will think you’re an idiot!”

“Society has led us to believe that failure will result in your extinction from society...”

Written by: Imran Dhalla idea of embracing failure and essentially failing at everything we do in life.

Rather, I am suggesting we change our view of what failure is, viewing it as an essential part of learning, which ultimately leads to success. I believe that failure has a direct link to success.

It’s a common perception amongst us all that success is an upward trajectory with nothing but sunshine and daisies, warm breezes and smooth sailing. I’m sorry to burst your bubble, but it’s not. Success is often a messy road, filled with tests, unexpected results, unwanted decisions, compromises, unexplainable fear, nausea and occasionally a lot of crying as you venture on a journey towards unchartered waters.

We’ve all heard these phrases at some point in life, be it at home, school or even the workplace. Society has led us to believe that failure will result in your extinction from society, and that if we fail, we will amount to absolutely nothing at all. It’s a scary thought to know that our society continues to kill off creativity, hope, and curiosity, while rewarding people for conforming to “WHAT REALLY SEPARATES the status quo, obeying orders and coloring inside THE WINNERS, THE PEOPLE the lines.

WHO REALLY WANT TO Let’s get something completely clear here, I am not advocating the

SUCCEED IN LIFE, IS THEIR ABILITY TO ALTER THEIR VIEW OF FAILURE.”

“We need to change our definition of failture and see it as a vital step towards our inevitable success.”

The fact is, successful people fail way much more than we do. Don’t believe me? Well, here’s the proof: After being cut from his high school basketball team, Michael Jordan went home, locked himself up in his room and cried.

“You don’t fail when you fall down; you fail when you stop picking yourself back up” Albert Einstein wasn’t able to speak until he was four years old. His teachers believed he wouldn’t amount to anything.

Walt Disney was fired from his job at a newspaper for lack of imagination, and having no original ideas.

Steve Jobs found himself crushed and devastated after being fired from the company he started.

Before J.K. Rowling published

the series of novels, she was nearly penniless, severely depressed, divorced, and trying to raise a child on her own while attending school and writing a novel.

And of course one of my favorites, Thomas Edison a man who I would consider a specialist at failure. It is stated that Mr. Edison failed 10,000 times before he successfully created the world’s most reliable light bulb. He later said “I haven’t failed. I’ve just found 10,000 ways that won’t work.” It’s the tenacity and “never say die” attitude, along with his ability to take an unorthodox view on failure that ultimately led to his success.

You don’t fail when you fall down; you fail when you stop picking yourself back

up. The secret is to keep trying, whether you’re an artist, a musician, an athlete, a friend, unemployed or just somebody who is hungry for an opportunity to shine.

In the end, it’s up to us, as individuals, to shape our future. Letting failure best you will only feed the status quo. Although it is easier said than done, we need to change our definition of failure and see it as a vital step towards our inevitable success. At the end of the day, nobody remembers your failures, so go out there, face your fears, and eliminate the hundreds, no...thousands, no...millions of ways that won’t work and always remember to enjoy this bumpy ride we call life!

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Suppressing Scha.den.freude: T WRITTEN BY NICHOLAS MCFARLANE

“You have the opportunity to control your happiness. Make it contingent upon your actions, not those of others.”

Imagine your dream office. How big is it?

Hardwood or marble flooring? Is the furniture leather? Maybe you want a panoramic view. For Harvey Specter fans, perhaps a collection of signed Michael Jordan memorabilia suits your fancy.

Now, imagine the person in this office. Welldressed, probably custom suit. A person with suave quips. The boss’s favorite. Proud owner of a luxury vacation home and exotic boat with a three car garage to boot.

Now what if I told you this person was less educated and experienced than you. How would you feel? Jealousy, anger, inadequacy or a lack of confidence may be common symptoms. All of a sudden, you imagine that panoramic view is the Alps and your co-worker falling 10,000 feet below.

From the German words, ‘schaden’ and ‘freude’, damage and joy. It means to take spiteful and malicious delight in the misfortune of others. In September 2013, Stanford professor, Susan Fiske captured schadenfreude on a brain scan after extensive testing. When

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you witness the plight of others, a chemical is released in the dorsal striatum of the brain that causes a sensation of pleasure. Fiske’s experiment included measuring the electrical activity of cheek muscles and associated neural responses. Princeton researchers determined that people smile more when adversity strikes those most envied.

Psycho-diagnostic tools capture schadenfreude too. For example, the Rorschach. Originally used to diagnose schizophrenia in 1918, the Rorschach test is now used to identify personality profiles. Formerly known as the inkblot test, it consists of 10 cards containing pictures of inkblots that have been folded over on themselves to create a mirror image. You are asked to look at these images and explain what you see. This test is projective in nature because of the ambiguity of the images. Through interpretation, you project a meaning to these visuals. In practical application, this assessment demonstrates how you would apply meaning in the real world.

The Struggle of Corporate Envy Look at this image. What do you see?

The red object in the middle could be many things.

Is it two hearts joined, perhaps a symbol of love?

Maybe even fighting over love. A more gruesome thought: is it blood ejecting from their bodies?

Some may say it is a butterfly.

And how about the black object between the two figures. Are they playing a game of ‘tug-of-war’?

Maybe it is something they are sharing.

This particular image is designed to elicit human emotion towards social interaction. Your interpretation of this image may reveal your predisposition in social settings. Mike Drayton, Psychology Professor at the London School of Economics, says those who see a conflict in this image are more prone to jealousy and associated behaviors. These findings hold significance for interpersonal relationships of all ages and are particularly consequential for students if mismanaged and transferred over to the workplace.

In fact, a study conducted by the University of Haifa in Israel found evidence of schadenfreude displayed in children as early as the age of 2.

‘This study strengthened the perception that

schadenfreude is an evolutionary mechanism that develops within us as we cope with situations of inequality’ says Professor Simone Shamay-Tsoory, the head of the study.

The worst part- you do not grow out of it. Adults compete for jobs, positions in society and even in sports. When others are rewarded with promotion, victory or money for the same efforts as ourselves, we still fall back on old behavior. An adult selfwounded pride manifests itself into a resentful feeling of self-righteousness. Schadenfreude is a natural emotion, but it poses the threat of unhealthy competition in the workplace. So how do you suppress it?

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FIRST, IDENTIFY WHERE YOUR SCHADENFREUDE COMES FROM. Resentment and relief. These are the two most common triggers of schadenfreude, according to Professor Richard Smith, Psychology Professor at the University of Kentucky. Smith conducted a study where two groups of students watched a video about two med school applicants. One

“Knowing why you feel the way you feel allows you to identify triggers and instances where schadenfreude could be intensified.�

applicant had a BMW and a girlfriend and was a straight A student with little effort.

The other applicant came from a poor family, had no girlfriend and worked hard to become a B student. After the video, it is revealed neither candidate got into medical school. No surprise, all students in the study reported a pleasure stimulus from the failure of the first applicant and remorse for the second applicant. Now imagine you are one of the students. Why would you feel joy in the misfortune of the first applicant?

It is normal to feel this way, but does that mean everyone feels that way for the same reason? Of course not. Maybe you resent them for having a desirable lifestyle, or you

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are simply relieved it was not you who got rejected. It could be that you have a personal grudge against them. Knowing why you feel the way you feel allows you to identify triggers and instances where schadenfreude could be intensified.

STRIVE FOR LONG-TERM HAPPINESS Heavy emphasis on long-term. Why? Happiness from the failures of others is unsustainable. You cannot consistently count on the downfall of others to experience pleasure. If that is a primary source of joy in your life, you will likely be unhappy most of the time. As awful as this sounds, this is not a bad situation to be in. You have the opportunity to control your happiness. Make it contingent upon your actions, not those of others. Perhaps smiling is a good start.

The act of smiling releases serotonin, which is a neurotransmitter from the brain and a natural mood-lifter commonly found in antidepressants.

SO THE NEXT TIME YOU WALK

BY YOUR DREAM OFFICE, SMILE, MAYBE ONE DAY IT WILL BE YOURS.

Have an idea for a startup?

Perfect. Now let’s turn it into a business.

The McMaster Entrepreneurship Association

Presents: Annual Entrepreneurship Bootcamp Coming January 2016 Sign up opens Monday, December 7th, 2015

McMaster Entrepreneurship Association macentrepreneurship.com