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Business Review Week 5|122


A Word From the President Hey again, Welcome back to what promises to be another busy and fruitful semester.

4. On the Agenda 5. Excellence in the Faculty 6. Internship Reviews 8. BUPPP - Everything You Need

Don’t be fooled by the Bond middle semester. Although student intake is comparatively lower than usual and the University may seem quieter, it may just actually prove to be the most important semester for a business student.

10. The Rundown on Business

Further, with the introduction of compulsory SAM semester 122 will promise to enhance you student experience as a Bond Business student. With more available events catering to your academic interests, social cravings and career prospects, the BSA are continuing to work hard to provide you what we initially promised – A well reputed and valued Business degree.

to Know Clubs

14. Palaver 16. GMC Update 18. Why There is Not Much to

Like About Facebook and its IPO

19. The Euromess - So What Happens Next?

That being said let me give you a spiel on your future career post graduation: Internship and graduate applications come and go faster than you may expect. For those aspiring to become leading bankers, accountants and more, it is important that you showcase your Bondy Business degree. So, don’t forget to pop onto to firm websites, visit career placement staff within the Faculty, and utilise BSA resources to get a head start.

To keep up to date with all Business Faculty and BSA initiatives, I encourage you to check out the newly launched BSA website: The BSA website is your insight into career information updates, competitions and more. Finally, on that note, this may seem crazy, but we’re your BSA, so feel free to contact us maybe. Best regards, Nitesh.

21. The Reckoning of 38 Studios Editor’s Note

Firstly I’d like to thank all those who have sent me material for this trimester’s first edition of the BBR. Without you the publication would not be possible. This edition is again geared toward helping you with career and work-experience ambitions. Amy Ezzy has again contributed a great article on Bond’s new BUPPP initiative, which is already proving an innovative way of improving the graduate attributes of participating students. We also have two advisory articles about working internships and how to get the most out of them. A well deserved congratulations is also due to the Bond team who won the Australian national finals of the Global Management Competition and received the opportunity to represent Australia in Ukraine in April. Towards the back are three interesting commentaries relating to current international business events. I sincerely

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hope you take something useful away from this edition. As always, I encourage you to contact me at benjamin.scarrabelotti@ if you have any questions relating to the BBR. Whether it be that you wish to submit content for the next edition or to take issue with something that bothers you, I’d like to hear from you. Until the next edition, all the best in the coming weeks, with some luck the cooler weather will prompt higher study stats. Regards, Ben Scarrabelotti.



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Academic Affairs

On the Agenda There was steady progress on a number of academic issues in the business school in the later half of last semester and that progress is continuing into this semester. As well as pursuing new initiatives we have sought to consolidate already established programs, with the hope that they will provide long-term benefits to all business students at Bond. So without further adue here is your update on ‘academic affairs’ within the business school.

Class Representative System Since the official class representative policy and guidelines were passed by the faculty during 2011, it has been both the desire of staff and the BSA to increase the legitimacy of the role both within the student population and amongst academics at the university. The role of the class representative is an important one: your class rep is you first point of contact for issues you may have with your subject, whether it is concerned with content of the course or the way it is being taught. The best way to ensure the ongoing success of the system is to take it seriously. If you are a class representative make a proactive effort to solicit feedback from your class. If you’re not the class rep and you have an issue make sure you convey it. As a student you have real potential to affect change within the university, but the first step is making sure you are voice is heard.

Tutor Database Once again the BSA tutor database is open for nominations. If you are interested in having you details listed on our database be sure to contact the BSA by the end of week 6. Alternatively, if you require the assistance of a studenttutor then make sure to take advantage of the database. It can currently be found on the BSA page of the Bond Student Portal, on the BSA Bondsync page under ‘Files’ and on our website at If you don’t have a computer handy the business faculty reception desk also keeps a hard copy on hand available for consultation.

Undergraduate Commerce Honours Program The proposal for an undergraduate honours program for the commerce degree was given to the Business Faculty’s Teaching and Learning Committee. After over a year of preparation and research it was encouraging to

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see the final proposal met with a positive reception by the faculty. The next step is for the idea to be tabled at a faculty executive level, which will occur in the coming week. Make sure to keep your eye on your emails for an update of the proposal’s progression during this semester. If you want more information regarding the proposal or just want to know more about what an honours program is and why this process was launched, feel free to contact the BSA at or drop by the BSA office in the business faculty on level 3.

Lecture Streaming The BSA is embarking on a new academic initiative this semester: to lobby the business faculty to introduce lecture streaming for subjects in the business school that can reasonably accommodate the technology. In the coming weeks look for more information to come from your BSA regarding the solicitation of business student’s feedback and recommendations regarding lecture streaming. The overall objective of the BSA is to launch a pilot lecture-streaming program in 2013. Until next time, all the best with your studies. Fergus Kinnaird Academic Affairs Director – Bond University Business Students’ Association

Academic Affairs

Excellence in the Faculty

Bond University prides itself on its sense of belonging and community. The small and friendly environment is often the lynchpin of Bond University’s renowned and unique educational experience. Within such a community, three bodies coherently work together. It is quite simple: the students learn from the teachers, and the teachers are glued together and managed by the hardworking administrative staff. Excellence in Administration 122 Awarded to Kelly Kohler Mrs. Kelly Kohler, staff member of the Business Faculty’s Marketing Department, has strived and worked tirelessly to ensure that we as Bondies are recognised as Australia’s leading students. Some of Mrs. Kohler’s initiatives include the creation of Bond University Business paraphernalia, the management of online promotion and organising key events such as O-week, Open day and Award Nights. In order to recognise Mrs. Kohler’s committed involvement within the Business Faculty the BSA, on behalf of the greater student voice, recently awarded Mrs. Kohler the BSA Award for Administrative Excellence. Although, a truly deserved recognition, Business students can be confident that Mrs. Kohler will continue to strive in order to ensure our University continues to be one of Australia’s leading educational institutions. Thank you Mrs. Kohler.

Excellence in teaching 122 Awarded to Robert Wrathall This trimester the BSA’s Excellence in Teaching award was granted to Robert Wrathall. Teaching in the area of economics and statistics, Robert is committed to his creating a thriving learning environment for his students. He is able to clearly break down difficult concepts into easily understandable ideas. Robert is always ready to provide assistance to his students outside of the classroom. He makes his classes enjoyable and easy to look forward to going to. On behalf of Business students we would like to thank you for your hard work and commitment.

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Academic Affairs

Internship Reviews Investment Banking - Yes?

Being an analyst at an investment bank is a strange place. It’s like a Whole New World. Except Aladdin is wearing a Hugo Boss suit, his magic carpet is an Audi, Jasmine is some babe he picked up at a club and he’s just pulled 100 hours this week sitting in front of a spreadsheet, hating every second of it.

friend of mine works in M&A at bulge bracket bank. In his first week on the job, he worked 112 hours. That’s 16 hours a day, every single day of the week. Your life kind of sucks when you work till 3am on Sunday night, and have to get up again in 4 hours to be back at your desk that Monday morning. Expect to be perpetually tired. Also, good luck trying to maintain a relationship, with anyone.

2. The Holidays


Wait, what holidays? In your first year, you’re expected not to take any annual leave.

1. The Money

3. Absolute Silliness

The salaries of investment bankers border on the ridiculous. Hugo Boss and Armani suits are standard. Expect to go to the most expensive clubs and drink Verve straight from the bottle. Depending on whether the economy is raining gold or shitting bricks, a first year analyst can walk away with anywhere between $100k – $200k. And as my Director told me on my first day, “the money grows exponentially from there,” (he’s probably well into seven figures).

2. Absolute Silliness With all this money, comes, well… silliness. I’d like to tell you some stories, but probably shouldn’t.

3. Mad Skills After 3 years in M&A at an investment bank, I really doubt that there would be anyone else in the world that is better at modeling and finance than you. From day one you are given an absurd amount of responsibility. The guy sitting at the desk next to me would regularly receive phone calls from the CFO of an ASX200 company, asking him complex questions about the model he was building for their proposed takeover. And he hadn’t even started his 2nd year yet.

Yes, it’s good and bad. In the week leading up to Christmas, it was fairly quiet at the office. At 10pm on the Tuesday, one of the 3rd years stood up and said loudly, “Oi, !#$% this. We’re going out. Minimum $400 spend. Now.” So everyone closed their spreadsheets, took out their gold Amex, and went drinking at the most expensive club in the city till 4am. They then rocked up the next day to work, and opened up their spreadsheets again. After a few years of this, you’re body is hating on you. By age 25, you’ll look 40.

4. The Crackberry On your first day, you’re given a blackberry. From that moment on, you can’t escape. It’s like an iron umbilical cord. If that phone beeps, you check it. If its 10am on a Monday, you check it. If it’s 3am on a Saturday night on your holiday in the Bahamas, you check it. There’s no escaping.

THE CONCLUSION: Depends on whether you’re after obscene wealth, insane career opportunities, or just getting home in time for dinner every night. At the end of the day, it’s probably only 4 or 5 years of your life to give up before you’re living the dream.


Your call.

1. The Hours

By anonymous.

As an investment banker, expect to work absurd hours. Burning the midnight oil isn’t a one-off occurrence, it’s standard. While I was interning, I was grateful whenever I managed to leave the office before midnight. A good

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Academic Affairs

Internship Reviews For the Love of Tax?

Over the past two semester breaks, I have been fortunate enough to undertake vacation work at two of the Big Four accounting firms, Deloitte and PwC, in the wonderful world of corporate tax. They were pretty typical clerkships; three weeks in a service line, working alongside graduates and analysts on a range of challenging client work. While this was rewarding in itself, it wasn’t until my second clerkship that I realised their true value in experiencing corporate culture. Think of it this way: we’ve all had one of those groups for an assignment, or even one of those lecturers, that you just do not get along with. After twelve weeks you’re keen to see the end of them, and hopefully avoid them for the rest of your degree. Now imagine working with them, or under them, nine hours a day, five days a week, for the next three years. It’s a scary thought. This is where corporate culture comes into play. Each of the Big Four, and any other firm for that matter, has a distinctly different personality, and chances are they’re not all going to suit you. Each service line will also have a different culture, and different partners and managers. The only effective way to establish where you want to be is by trying them out. With that in mind, here are a few of my ‘tips’ for getting into, and the most out of, a clerkship:

1. Get in early and apply everywhere If you think you want to work in one of the Big Four, apply for them. If you’d prefer mid-tier, apply. If you’re not sure, apply for both. Try as many different firms as you can. Realistically this is where you will start your career, so it’s a good idea to know where you’re going.

to recent mergers. Also know about the firm. Research their culture and values. Know why you chose them above other employers.

3. Talk to everyone With enough training nearly anyone can fill out a tax return, or write a memo. A firm will expect more from you. Accounting firms are transitioning themselves to Professional Service firms for a reason, and if you want to be a part of them, you need to be personable. Introducing yourself to your colleagues and grabbing a coffee will always be more valuable than getting your work in early.

By Kim Brown.

2. Know what you’re talking about Firms are after graduates who are passionate, or at least interested in the service line and firm they’re applying for. So, whatever line you’re applying for, know about current issues. This could range from changes in tax rates

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Academic Affairs Introducing BUPPP - The Bond University Practice Program The Career Development Centre is proud to introduce the Bond University Professional Practice Program (BUPPP)! BUPPP was originally developed to meet the changes to the Fair Work Act, which prevented students undertaking unpaid work experience unless it formed part of a subject. From there, it developed into a program that provides students the opportunity to gain formal recognition for additional activities they undertake during their time at Bond, whilst also developing and identifying employability skills. The program provides a learning framework around employability experiences to enhance graduate outcomes. BUPPP is a no fee, no credit, no exam, subject that is self-managed and spans the duration of a student’s degree. BUPPP provides you the tools, resources and support to not only gain recognition for those additional activities you are involved in, but also the confidence to recognise and sell those employability skills developed to potential employers.

How does it work? Once enrolled in BUPPP you are required to complete a pre-experience evaluation form which you upload with a career plan. Completing a career plan will ensure you are aware of what you need to do to achieve your career goals and ambitions! We recognise that priorities and interests change, for that reason, you will review and update your career plan as you complete each module. Our Employment Service Specialists are here to help and you will be offered the opportunity to meet with them throughout the program to ensure you are on track! BUPPP is divided into 13 modules and enables you to review and reflect on a range of activities. These may include, but are not limited to, work experience, involvement in student associations and even attendance at careers workshops! Simply choose your module/s, complete the required activity and assigned portfolio task and receive allocated points! Once you have completed 20 BUPPP points, the modules completed will be included on your Australian Higher Education Graduate Statement (AHEG). This statement provides formal recognition that you can provide to employers highlighting your activities and achievement above and beyond your studies. On completion of BUPPP, you will complete a post-experience evaluation form and a final career plan. This will require you to reflect and identify the employability skills that you have developed as part of BUPPP and ensure you have a career plan that will enable you to reach your career goals.

How to get involved: Step 1: Talk to your academic advisor, they can enrol you into the subject

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Step 2: You will receive a welcome email from the CDC. This will include step by step instructions on the program and FAQ’s. If you wish to make an appointment with the CDC to discuss your participation, email your availability and we will book you into the next available appointment. Step 3: Log onto iLearn and The Bond Professional Practice Program is found under ‘My Communities’. Step 4: Go to ‘Getting Started’, complete an evaluation form and create an initial career plan.

Step 5: Read the course outline and identify the activities you have done or would like to do. Step 6: Complete the modules learning activities and upload the portfolio pieces that are relevant. Step 7: Book an appointment with the CDC team to discuss your next steps!

Frequently Asked Questions: How do I enrol?

Your academic advisor can enrol you into BUPPP via Student One, you cannot self-enrol via e-student. It is a no fee, no credit point subject that has been designed to provide recognition for the other activities you do as part of your Bond student experience.

I have already completed a number of activities; can these be transferred into BUPP?

Yes, if you have already undertaken activities they can be transferred as eligible activities for BUPPP, they need to have been undertaken during your period of enrolment, things you have undertaken prior to commencing your degree cannot be approved. To transfer these to BUPPP, all you need to do is complete the relevant learning activities and upload the portfolio pieces into ilearn.

I have a very heavy workload, what is the time commitment to undertake BUPP?

BUPPP has been designed to focus on the activities you are undertaking rather than the portfolio pieces, so the time required to complete the average module may take you 1 - 2 hours depending on the type of piece you decide to complete, the key element is for you to reflect on what you learned during the experience, to link this to your academic learning and be able to communicate this to a potential employer. You can use these pieces as evidence during the interview process.

Will BUPPP appear on my academic transcript?

BUPPP will only appear on the internal academic transcript, it

Academic Affairs will not appear on your final transcript as it is a no fee, no credit point subject. If you complete the threshold of 20 points, it will appear as a comment on your AHEGS in addition to the modules that you have completed.

What is the AHEGS?

The AHEGS is a new document brought in by the Federal Government to internationalise the Australian Education System. It stands for Australian Higher Education Graduation Statement and provides information on the Australian Education System, Bond University, the degree/s you have undertaken and other activities that you have completed that add to your employability. You will receive this at Graduation along with your Testamur and Academic Transcript.

Who manages BUPPP?

BUPPP is a very non-traditional subject; there are no credit points or fees, lectures, tutorials or assessments. It has been developed by the Career Development Centre and will be run by our team of Employment Services Specialists. We will be coordinating your appointments with the team to discuss your progress; we will review your portfolio pieces and help you plan the next stages. BUPPP is a program designed to recognise all that you do that adds value to the Bond student experience, the broader community and to also support your graduate outcomes. The CDC manages the iLearn site.

Are there limited spaces in BUPPP?

No, all enrolments will be accepted, however if you want to

book an appointment with our team, there may be a delay of a day or two during peak periods for our team.

I am already enrolled in 4 subjects, will this impact my enrolment, do I need to swap BUPPP for one of them?

BUPPP has no impact on your existing academic enrolment, it is designed as a subject that can run parallel to your study plan as it is a non-traditional subject. You are not required to attend classes, tutorials or submit assessments and receive grades for it. The focus of the subject is to provide you with recognition for the range of activities you undertake in addition to your degree, these are highly valuable to potential employers and we want you to make the most of them. The time commitment is minimal with the focus on the activities you are undertaking; to complete the portfolio piece for most modules will take no more than 1-2 hours.

How do I receive the points towards BUPPP?

The CDC will monitor your progress in BUPPP, we are notified when you upload a portfolio piece, we then review it and provide you with feedback either via email or in a consult (depending on what you prefer) and then allocate the points. If you complete the activities and upload the portfolio piece you will receive the points, there is no grading system as we want the focus to be on the activity you undertake and the reflection you complete in regards to this.

If I only complete 1 module will it appear on my AHEGA or will I receive a certificate of completion?

No, the minimum threshold for any BUPPP completed modules to appear on your AHEGS is 20 points, you are welcome to complete less than this. The CDC however will not provide any recognition of completion for these either via the AHEGS or certificates for individual modules. We encourage you to undertake a range of activities and complete the 20 points, not only will this then appear on your AHEGS it will increase your competitiveness and employability for graduate employment.

I was told I need to be enrolled in BUPPP to undertake an internship/work experience placement organised by my Faculty?

To be eligible for the Bond University Insurance Policy, you will need to be enrolled in BUPPP; this protects both you and the employer from any potential issues. The placement will need to be related to your degree/study area.

Want more information?

Want more information?The CDC hosts a BUPPP open day every Friday from 10.00am – 4.00pm. If you have any questions or would like to run through the program, drop in and see us. Of course, if that doesn’t suit we can arrange a one on one appointment at a time that does. The Career Development Centre is located on Level 1, Building 9 (next to Varsity Printing). By Amy Ezzy.

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Clubs Bond is practically plagued with clubs, societies and associations all with unique agendas and lead by students who are driven to effect growth and progress. With so many clubs in operation it can be difficult to keep track of their individual identities and functions. The following are short synopses on a number of clubs that fall under the Business banner. If you would like to enquire further or are interested in becoming involved, feel free to contact their committees.


Bond Investment Group is one of Australia’s pre-eminent student finance societies. Formed under the Bond University Business Students’ Association in early 2008, the Group has since evolved into a fully independent, student-run organisation that aims to improve the graduate outcomes of Commerce students at Bond University. We aim to improve the knowledge base of students interested in the fields of finance, economics and business with respect to career opportunities and extra-curricular knowledge. By connecting students with leading figures and firms in the fields of finance, economics and business, the Group aims to facilitate the transfer of knowledge from these bodies to students. In turn, this will improve the graduate outcomes of our constituents.

What We’ve Done BIG’s first bout of success was when the committee secured Sir Richard Branson to come and speak to over 400 Bond University students, academics, alumni and local community members on his experiences in business and vision for the future. Much like Sir Richard did when he landed his helicopter on Bond’s iconic Ornamental Lawns, BIG made a large impression that day. Since then the Group has added a number of new initiatives to its roster. The Beginners Series and Seminar Series, which have since evolved into the BIG Edge Series, became staple events for Commerce students at Bond.

The inaugural Titans of Industry Forum was held in 2009, and featured corporate leaders such as Mr David Gonski AC (Chairman of ASX Ltd, Investec Back (Australia) Ltd and Coca-Cola Amatil Ltd) and Mrs Sue Morphet (CEO of Pacific Brands Ltd). Since then, the Forum has played host to other prominent business and regulatory figures, including Mr Graeme Samuels (former Chairman of the ACCC), Mr Trevor Rowe (Executive Chairman of Rothschild Australia), and Mr David Crawford (Chairman of Lend Lease). 2010 and 2011 have seen the introduction of a whole host of new initiatives, including swathes of new competitions. However, we refuse to stop there; so long as our members continue to think BIG, we will continue to create new initiatives to help challenge their perceptions, broaden their horizons, and to think big. Awards: t t t t t

Best Cultural Club – Semester 2, 2011 Best Cultural Club – Semester 1, 2011 Best Small Event (Titans of Industry Evening) – Semester 1, 2011 Best Event (Titans of Industry Forum) – Semester 3, 2009 Best Event (Sir Richard Branson Seminar) – Semester 2 2008

What’s Coming up Coming up later this semester, the Bond Investment Group is running the BIG Mentoring Program that is geared towards preparing students for interviews (both for internships and graduate positions). This program will commence in Week 8 and will run through to Week 10. In Week 4 of next semester, BIG is running its signature event, the Titans of Industry Forum. We encourage all business students to regularly check our facebook page to learn more details about each of the exciting events that we are running this semester and next.

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Clubs For More Information Contact:, See:


Students in Free Enterprise (SIFE) is a global network of students, with like-minded ideas and innovations that run projects for the aim of benefitting the lives of others within the immediate and wider community. Bond SIFE believes that in order to be successful in whatever business venture, project or innovative initiatives, that we are able to make a difference not only as a group but as individuals as well, through empowering growth and fostering success. Currently, the Bond SIFE Team is comprised of motivated individuals with a view of helping people achieve greatness through the power of positive business. Bond SIFE is diverse and dynamic group of individuals who work towards implementing innovative projects within the community. This will empower growth today, for a better tomorrow.

What We’ve Done Since it’s establishment, Bond SIFE has created a number of different projects that have now become self-sustainable. However, over the past 12 months, Bond SIFE has been focused on 4 innovative projects that have been successfully implemented around the local Gold Coast Region, Interstate as well as Internationally. These 2011/2012 projects: Tap Collective, Indigenous Express, Learn to LEAD and Money Matters, encompass a range of social, business and educational entrepreneurial concepts, whilst empowering the individuals and the community who participate in the programs.

What’s Coming Up

In July 2012 these four projects will be presented at the National Conference in front of 32 other SIFE Universities and a panel of 50 Judges, who are representatives of a number of giant corporations within Australia and Worldwide. The winner of the National Conference will

win the title of National Champions and will go on to the International Conference to represent Australia. After the National Conference, Bond SIFE have planned a number of new projects to be implemented Internationally, move the current projects to become self-sustainable.

For More Information Contact:

HOTEL & TOURISM STUDENT ASSOCIATION (HTSA) Who We Are The Hotel Tourism Student Association is the representative body for students enrolled in the hotel and tourism school. The HTSA endeavours to ensure that all students acquire the confidence and knowledge necessary to succeed in their chosen vocation and that they enjoy their time at Bond.

What We’ve Done The HTSA has developed close ties with a significant number of leaders in the hotel and tourism industry, and this has resulted in tangible outcomes for students both during and after their studies. It is the HTSA’s role to provide students with: t networking events where students can meet with industry professionals; t industry-related work opportunities; and t the development of a strong alumni community.

What’s Coming Up Currently the HTSA is planning its annual event, to be held on June 30 at the 5-star Sea Temple resort in Surf-

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Clubs ers Paradise. This event will allow students to meet and network with each other, and will provide a platform for building a strong alumnus.

hosting the Hon. Senator Ian Macdonald, the Shadow Parliamentary Secretary for the Defence Forces and Defence Support and Northern and Remote Australia at Bond, as well as the Australian Young Liberal Federal Convention, and in 2012, we have so far held jointly with BUPALS and Bond Politik, a political mixer, as well as a debate between various state candidates for the recent state election. The guests included the newly appointed Minister for Science, IT and the Arts, the Hon. Ros Bates MP.

What’s coming up

For more information Contact:

BOND YOUNG NATIONAL LIBERAL PARTY (BYNLP) Who we are The Bond Young LNP is the university representative group affiliated with Young Liberal National Movement of Queensland and is part of the Australian Liberal Students Federation. We are made up of committed, like-minded individuals dedicated to understanding and changing our political landscape and ensuring our voices are heard.

What we’ve done The Bond Young LNP is enthusiastic about developing and debating policy, supporting local, state and federal election campaigns, and building the next generation of leaders. We are a vehicle for Generation Y to engage in public debate, get exciting guest speakers, contribute to discussion forums and to influence the future of Queensland and Australia. In 2011, Bond has had the pleasure of

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This semester, the Bond Young LNP hopes to hold several policy debates on such topics as a Flat Tax, Plain Packaging of tobacco and law and order. In addition to this, we hope to host two events with the Faculty Student Associations, which will allow students to meet with political leaders and understand the environment in which they will operate within once they graduate and important changes that will occur in Queensland in the next 5-10 years. This includes the Hon. Jarod Bleijie MP, Attorney General of Queensland and Minister of Justice, The Hon. Jan Stuckey MP, Minister for Small Business, Tourism, Major Events and the Commonwealth Games and Cr. Tom Tate, Mayor of the Gold Coast. Under the leadership of the current Executive, the Bond Young LNP would like to host events with the other relevant FSAs including inviting the IT Minister, Education Minister and various other politicians to discuss pressing issues with the students of Bond University. We believe in the individual, his enterprises, freedom and responsibilities, and our club and the events we host will seek to develop these ideas for the benefit of all the students.

For more information Contact:

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Photos attributed to Shaun Rotman and Mitchell Willocks

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Competitions Global Management Competition Bond Competes in Ukraine

Team Testimonials

The Global Management Challenge (GMC) is completed after the International Finals in Kiev in April.

“The 2011 Global Management Challenge (GMC) had given me an extremely unique experience. The core of this competition gave me a rich understanding of the interrelatedness and the importance of company management.

On the 17 March, Bond University hosted the Australian National Finals where 2 teams from Bond and 2 teams from Monash competed head to head for the chance to go to Kiev, Ukraine for the International Finals. The National Finals involved the teams to make all 5 decisions, usually carried over a period of 5 weeks, in a single day. From the start of the day the Bond teams showed a distinct lead from the Monash teams. At the end of the day Bond 3 had won the Australian National Finals by a nail-biting margin of $0.02. The winning team consisted of Alexander Robertson, Casey Schneeberger, Breanna Lee, Connie Xu and Paul Kelly and they went on to represent Australia at the International Finals in Kiev, Ukraine in April. A total of 25 teams competed in the International Final and the competition was fierce. The countries were divided into 4 pools where 1st and 2nd in each pool were to progress into the Final Round. The Bond team representing Australia did not progress however, being in a pool with strong teams from the USA, Greece, Mexico and Macao. A congratulations is in order to the team for making it all the way to the International Finals. Keep an eye out for the 2012 edition of the Global Management Challenge starting in September.

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I have found that the competitiveness of this challenge is what has made it even more realistic. With us knowing that our competitors’ decisions can impact our performance, it was essential for our team to design and implement innovative strategies to outperform our rivals. The experience of participating in the 2011 International Finals held in Kiev has not only given me the chance to learn techniques to improve our strategy, but its has also given me such a precious opportunity to meet many wonderful teams from around the world, as well as the masterminds of the GMC. This competition has been very enjoyable and I am looking forward in taking part again.� - Connie Xu.

Competitions “This year I was fortunate enough to compete in the 2011 Global Management Challenge located in Kiev, Ukraine. I was very excited upon hearing this news as I have never had the chance to travel overseas. Also the prospect of going to Ukraine was very interesting as I had never thought about visiting this part of Europe before. The first day of the challenge, there was an opening ceremony that allowed us to get to meet all the other competitors as well as those involved in organising and creating the GMC. Everyone was friendly and was interested in getting to know me. The competition then started on day two, this is where I was able to see how cultures from all over the world worked as teams. Unfortunately we did not make the second day of the finals and were able to go sight-seeing. That night there was a Gala dinner event that had some of Ukraine’s best talent on display contributing to an amazing evening. There was great local food, nice wine and fantastic company. Overall, my experience with the Global Management Challenge has been the highlight of my university degree. I would recommend it to all those considering it as I will continue to compete to qualify for the international finals.� - Alex Robertson.

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Commentary Why There is Not Much to Like About Facebook and its IPO The IPO of this decade – or so it was hyped – has come and gone, and much like everything with great expectations, it disappointed. Except for Facebook, who got exactly what they wanted – a bucketload of cash and Zuckerberg firmly in control. A retrospective look at the IPO reveals a mess that was mishandled by nearly everyone involved, from the lead underwriter Morgan Stanley to key executives at Facebook and even the NASDAQ exchange itself. Personally, I expected the bankers behind the deal to price Facebook at the perfect sweet spot, resulting in a 10-15% ‘pop’. As The Epicurean Dealmaker notes, investment banks straddle the buyside and sellside and have a multitude of conflicting interests. This ‘pop’ that I’m talking about keeps an investment bank’s buyside clients happy, as they register nice gains on the opening day, and keeps the client being taken public happy, as they have achieved value-for-money. Instead, Facebook’s opening share price barely held on the opening day (closing at $38 – its IPO price), and only because heavy buying by the underwriters supported it (see below). Why did this happen? Well, at the last minute Facebook revised down its revenue and earnings estimates, leaving its future prospects a lot less attractive. Only the investment banks were given this guidance, who in turn only passed it onto their institutional clients (i.e. the smart money). These guys, being the smart money, obviously thought Facebook was worth a lot less than $38 with these future prospects. So they sold. The Morgan Stanley tech bankers – headed by Michael Grimes

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– either did a terrible job of sounding out investor demand for Facebook shares at which price, or did a poor job of managing Facebook itself on the deal. It should, rightly, be judged on its success to price Facebook shares just a little bit below what the market is willing to pay. Given that Facebook is, at the time of writing, now trading at US$ 28.19, they failed pretty damn miserably in that regard. Further, they’ve done a very effective job in destroying the trust of everyday investors by not passing on the earnings guidance to their broader customers. Mark Zuckerberg himself deserves a fair share of the blame for this botched IPO. Him turning up to meetings with shareholders slouched and in a hoodie does not instil a great deal of confidence and respect from outside investors. Further, the dualclass shareholdings, which underperform regular structures, means he doesn’t really have to answer to anyone. By all reports his CFO, David Ebersman, was too hands on in the IPO process. By and large, it’s the job of the investment banks to manage it. Evidently by focusing too much on the IPO and not enough on Facebook, he wasn’t aware of their declining revenues until it was far too late. Regardless of whether Facebook sinks to $50bn in market value or skyrockets past $100bn, it is still a product integral to the lives of many. You can Like Facebook, but you don’t Like its shares.

By Liam Auer.

Commentary The Euromess - So What Happens Next? The word on everyone’s lips now is ‘Grexit’ – that is, a Greek exit from the Eurozone. The Euro-mess, which has stretched over for a couple of years now, is about to shift gears into dangerous new territory unless policymakers act soon and decisively. However, Greece isn’t the major problem – rather, it’s what is currently happening to Spain, and then what could potentially happen to Italy once the focus shifts to them.

Austerity Has Failed The response of French and German policymakers up until now has been to double-down on the policy of ‘austerity’. Austerity is cutting spending and raising taxes in an effort to improve a country’s budget position. The problem here is that cutting government spending at a time when the private sector is in depression – see Spain’s nearly 20% unemployment and nearly 50% youth unemployment – is a recipe for disaster. See, most people look at the Debt/GDP ratio when evaluating a country’s debt position. Cutting government spending in these circumstances lowers the long-run potential of the economy and reduces a government’s tax take, in turn reducing their ability to service their debt load. Even worse, the denominator of this ratio – GDP – decreases as well in a recession, further exacerbating the figure. In essence, it leads to a budgetary death spiral, where this negative feedback loop of budget cuts ends up worsening a country’s budgetary position. Peripheral economies are subject to ‘bank runs’ This is what Spain is facing now. Their budget position isn’t fantastic, but their unemployment is truly horrific. What’s more, Spanish banks (which include the giant Santander and who has operations right around the world – counterparty risk a la Lehman Brothers, anyone?) are now being subject to an oldfashioned bank run. I recently came across this startling chart, which shows that deposits are fleeing from Spanish banks and are then being deposited with banks in more resilient economies, such as Germany. As you can see above, bank runs are when customers withdraw their deposits from a bank en masse. Given the nature of the business of banking – it is basically built around the premise that its customers do not do this so it can borrow ‘short’ and lend ‘long’ – this can leave a bank insolvent and unable to return deposits to its customers. People lose money and then confidence in the system, sparking runs against other banks. Businesses and individuals are starved of credit, plunging the country into a recession. The traditional response would be for the Spanish government to recapitalise its banks, much like the US government did in 2008. This would, however, bankrupt the Spanish government given its current fiscal state.

A Fork in The Road European policymakers have essentially reached a fork in the road – if Spain goes, the Eurozone goes. They must choose the right policy mix to keep the Euro together, or see the currency – and likely any future of a political – union fragment. The current course of austerity is clearly not working, as many economists (including Nobel laureate Paul Krugman) predicted. So in order to avoid another global downturn (as Europe roughly accounts for a quarter of the world’s economic activity and has deep trade ties with the US and China), European leaders need to act boldly and decisively.

Four Easy Steps to Solve Your Euromess

European policymakers need to take a four-pronged approach to the crisis, and soon: 1. 2. 3. 4.

The introduction of Eurobonds A higher inflation target (4-5%) for the European Central Bank ECB steps in as the lender of last resort for systematically important financial institutions Eurozone-wide deposit insurance for all European banks

The introduction of Eurobonds – bonds issued by national governments, but guaranteed by the collective Eurozone – would ease market fears over the ability of peripheral countries such

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Commentary as Portugal, Ireland, Spain and Italy to meet their obligations. This would also remove the cloud over European banks, many of which hold government debt that is rapidly falling in value. These would have to come attached with budget rules to limit the danger of moral hazard and allow weaker governments to spend profligately – once the Euro-mess has passed. A higher inflation target for the Eurozone would allow the peripheral countries to restore their competitiveness. As this chart (courtesy of Krugman) shows, relative price levels rose much faster in the peripheral economies compared to ‘core’ economies such as Germany. This has left them uncompetitive. There are two ways to solve this: internal devaluation or through inflation. A higher inflation target will slowly erode away Germany’s competitiveness and allow the peripheries to regain some of theirs. The only alternative to this is for countries such as Spain, Italy et al to suffer through years of ‘internal devaluation’, or brutal deflation and high unemployment. This seems to be a fairly unrealistic solution, given that wages have the quality of ‘downward nominal rigidity’ (that is, people are resistant to wage cuts and they happen very slowly, if at all). So, a higher inflation target would achieve this without quite as much pain. The ECB needs to also step up to the plate and fulfil a key function of a central bank: to act as a ‘lender of last resort’ during financial panics. Walter Bagehot, the editor of The Economist during the 19th century whose treatise Lombard Street forms much the basis for modern central banking, imparted a key rule: lend freely to ordinarily solvent institutions, but at a penalty rate. As you can see below, this is what the Fed did during the 2008 crisis for critical institutions such as Morgan Stanley, which stemmed much of the financial bleeding. It is also what the ECB should do now. Acting as a backstop to major Euro-

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pean banks will calm market jitters. Finally, Eurozone authorities should introduce deposit insurance for European banks. Deposit insurance is when the government agrees to cover deposits held at failed financial institutions – Australia temporarily introduced a form of this during the GFC and the US has had it since the 1930s. It would stop bank runs and restore stability and confidence in the financial system. All in all, these are not radical policy prescriptions. They are either tried-and-tested, or follow insights from previous financial panics and Keynesian economic doctrine. My recommendation – keep an eye on whether European authorities move towards these policy prescriptions. If not, then it’s time to panic.

By Liam Auer.


The Reckoning of 38 Studios The United States video game industry has been left shaken after financially embattled developer 38 Studios declared bankruptcy on June 7. The studio experienced a very public downfall over the past month with Rhode Island government officials and studio executives working around the clock in a desperate attempt to keep the company solvent. Now, the state of Rhode Island’s one million taxpayers are left to repay up to $112.5 million of the loan that the bankrupt developer secured back in 2010. The studio had been working on its own massively multiplayer online roleplaying game, Project Copernicus. Analysts were critical of the investment since its inception, questioning the chance of success in a heavily occupied MMORPG market. Now their fears outlaid two years have become a reality and developers, publishers, and government officials are facing the long-term repercussions of this disaster. Former Major League Baseball player Curt Shilling founded 38 Studios in 2006 with the long-term goal of releasing a MMORPG – codenamed Project Copernicus - that would go toe-to-toe with Blizzard heavyweight, World of Warcraft. In 2009, they acquired developer Big Huge Games from California-based video game publisher THQ as part of a move to acquire their propriety game engine and assets, which will be integrated in the development of 38’s Copernicus IP. Big Huge Games would thus begin transforming their current game under development into what is now known as Kingdoms of Amalur: Reckoning, released in February to widespread critical praise. The company moved from Maynard, Massachusetts to Providence, Rhode Island in 2010 as part of a funding partnership with the State of Rhode Island. The partnership helped 38 Studios secure funds to the sum of $75 million in taxpayer-backed bonds. In exchange, the company was to create 450 new jobs within the area.

lion. If these figures were to be an industry standard, 38 Studios would have been out of funds well before completion. Even more perplexing were the consequences of failing to perform. If, by the end of 2012, 38 Studios did not reach their employment quota, they would be penalised $7,500 per year for each of the 450 jobs that they did not create. This meant that it was in fact cheaper to not hire the full quota of employees than hire and have to pay wages, insurance, and other entitlements. They also put their IP up as collateral against the company, which had not yet been publicly showcased. 38 studios was an unproven developer, and they were being handed $75 million dollars to make a game that would be entering into the riskiest genre of the video game industry. The first sign of the incoming storm arrived when 38 Studios failed to make a $1.125 million loan repayment on May 1, effectively defaulting on their loan. Once these details became public, Rhode Island officials held an emergency meeting with 38 Studios on May 16 to determine the company’s solvency and develop a plan to mitigate any potential damage that it would eventually cause. The officials were caught off-guard when Shilling abruptly asked for more money. Not knowing what to do, the officials were frozen in indecision. No vote was cast as to what should be done so the question of where this $1.125 mil-

The deal spurred considerable controversy. The requirements of 38 Studios were enormous. A video game development company with 450 full-time employees was a massive undertaking and few companies have such large development teams, let alone a company that has not even released a title. Also, $75 million may be considered more than sufficient for a regular video game, but MMORPG development requires costs upwards of $100 million BioWare’s MMORPG Star Wars: The Old Republic is purported to have minimum development cost of $200 mil-

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Commentary lion was to come from, was still hanging precariously over everyone’s heads. A day later, a cheque for the required sum was hand-delivered to the Rhode Island Economic Development Corporation. The cheque bounced. Eventually, enough funds were procured to clear the cheque at the expense of that week’s payroll. To make matters worse, it was discovered that employees had not been paid since May 1 and their healthcare was going to end at midnight on May 24. Come May 24, the entire 379 staff members of both 38 Studios and Big Huge Games received this internal memo: “The Company is experiencing an economic downturn. To avoid further losses and the possibility of retrenchment, the Company has decided that a companywide lay off is absolutely necessary. These layoffs are non-voluntary and non-disciplinary. This is your official notice of lay off, effective today, Thursday, May 24th, 2012.” Everyone was laid off. Some were hit with more bad news when it was discovered that their houses the company was supposed to sell on their behalf as part of the company relocation in 2010 had not been sold and were now stuck with a second mortgage. It was all but certain at this point that the $50 million that 38 Studios received so far in funding was going to be irrecoverable. The government was unwilling to provide any additional financial support and interest from private investors had dried up. Rhode Island was set to acquire the Amalur IP and any other games they might have had in development at the time, the collateral used to secure the funds in the first place.

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Industry Analysts valued the IP at approximately $20 million. However, with a now-displaced team, a decline in interest for MMORPGs in the west and the poor performance of major franchise, subscription-based MMOs such as Star Wars: The Old Republic and DC: Universe Online, few parties would be willing to pony up large sums of cash for the rights to Amalur and its attached technology. Even the moderate success of Big Huge Games’ debut title Kingdoms of Amalur: Reckoning could not offset any of the incoming damage. The game sold 1.2 million units in its first 90 days of sales. For a new IP, this is considered to be a success within the industry. Unfortunately for the companies involved, Rhode Island Governor Lincoln Chafee claimed that it needed to sell over 3 million copies just to break even. “The game failed” – Lincoln Chafee to press conference attendees. On the morning of June 7, 38 Studios declared Chapter 7 bankruptcy, leading to an investigation by the attorney general’s office, the US Attorney’s office and the FBI into how the company handled its finances. Discussions with potential investors and buyers for 38 Studios’ assets began immediately and continuing as this article is being written. Reports from the Rhode Island EDC say that figures discussed are in the tens of millions. Time will tell however, and the state cannot expect a great return on the assets sold. In 2009, Midway Games Inc. filed for bankruptcy and Warner Bros. swept up most of the company’s assets, including the Mortal Kombat IP, for the modest sum of $33 million. Rhode Island officials will have to fight tooth and nail for every cent. It is too early to tell what the exact repercussions for the wider video game development community are, but it is certain that the bitter taste of the 38 Studios collapse will linger for a long time to come, especially since both par-


ties feel like they have been wronged by each other. 38 Studios accused the Rhode Island Government of turning their back on them in a time of need and sabotaging talks with investors by continually speaking with pessimism and a lack of confidence. Rhode Island Governor Lincoln Chafee responded by reiterating that his obligation was to the State and would not misrepresent the direness of the situation. Current developers and publishers working to garner tax incentives and breaks from states will be met with the same statements citing concerns that what happened in Rhode Island could very well happen again. While the industry is expected to see revenue of $68.4 billion in 2012, the specifics of the development process are not common knowledge. It is possible that many officials will be too scared of public backlash if they were to apply any similar schemes in their own state. Unfortunately, politicians may not recognise the difference between the well-established, coordinated companies and studios like 38. As the State of Rhode Island is left to pick up the tab, 397 ex-employees are looking for new jobs, two government officials have resigned, and one man leaves behind a shattered dream. Within the hard drives of Big Huge Games

lies pre-production data on Reckoning 2, waiting to be bought in the eventual fire sale for a negligible sum. The video game community has been incredibly supportive of those laid off in this tumultuous affair. A Google Docs folder has been created with companies that are currently hiring, sharing it over twitter with the hash tag #38jobs. Neighbouring developers have picked up numerous displaced workers. Epic Games announced that they were creating a new studio in Baltimore, Maryland, made up of members of Big Huge Games. The suffering and fallout is nowhere near being over, but hopefully more instances like Epic’s generosity will help those affected get back on their feet as soon as possible. Sometimes big, huge problems need epic solutions. By Jonothan Dodd.

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Bond Business Review, Week 5, 122  

See this trimester's first edition of the BBR for an update on the Business Faculty's recent events and activities.

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