Smith Students Visit Australia for Winter Study Trip

Professor Mark Wellman writes about the January 2011 winter study trip to Australia.

Americans frequently assume that doing business in Australia is no different from doing business in the US. However, as we have learned on our trip, as well as our visit to the Australian embassy, the two cultures contrast greatly, despite a shared language. Even some common and business terminologies have very different meanings.

Our group of forty-six visited Australia to gain an appreciation for the political and economic history as well as the culture and business practices of the region. An important outcome was to develop an understanding for the opportunities and challenges faced by global business professionals managing and operating business enterprises in a global environment. The global immersion experience included: 1) preparatory activities that covered cultural, economic, and political issues in the region; 2) a fourteen-day trip to the region; and 3) assessing the impact of the experience by requiring students to submit a journal reflecting on the course events.

The experience began with pre-trip activities, including a trip the Australian Embassy in Washington, D.C. Through classroom lectures and speaker at the embassy, students became familiar with the Australian news issues and concerns, challenges and opportunities of doing business in Australia, and its business environment. Students met with educational managers Sarah Wolf, of the embassy, and Jen Nielsen, of the Australia Trade Commission. They also interacted with Paul Adler, a Smith MBA Alumni and business development manager at the Australia Trade Commission, who shared his experiences regarding the Australian business culture.

The in-country component of the course included organizational visits to the Reserve Bank of Australia, Qantas Airlines, Google Australia, the Australian Parliament, the Australian Football League, Foster’s, and Bundaberg Rum Distillery. Our cultural visits included Canberra Glassworks, the National Museum of Australia, the Australian Institute of Sport, the Sydney Opera House, the Blue Mountains, the Sydney Harbour Bridge Climb, attending a cricket match, as well as the Great Barrier Reef.

Despite that Australia is the same size as the continental United States, their population is only about twenty million people, roughly half of that of the US. Most Australians live along the coastline, particularly in Eastern Australia. We were able to visit three of the largest cities in the country: Brisbane, Melbourne, and Sydney.

Our first company visit was to Foster’s Group Ltd. We met with Ian Johnston, the current CEO. Previously, Mr. Johnston has been the Managing Director of Foster’s Australia Limited. Foster’s Group specializes in beer, wine, and spirits. Their brands include beers such as Carlton, Carlsberg, Victoria Bitter, Kronenbourg 1664, wines such as Penfolds, Lindemans, Beringer, and Chateau St. Jean, and various spirits, ciders, and non-alcoholic drinks. Throughout Foster’s history (formerly Carlton & United Breweries), they have expanded their offerings by buying companies all over the world, such as vineyards in Napa Valley. Although their Australia group focuses only on several of the beers and wine selections, the company as a whole caters to varying markets across the world, in the US, New Zealand, Asia, and Europe.

Mr. Johnston discussed possible expansion into India despite its tendency for low market consumption – his reasoning being the thirty individual markets within India. Foster’s is proud to be the only wine brand in the top 100 supermarket sales and interestingly enough started out selling beer alone. Realizing that most of the big companies around the world produce liquor, Foster’s realized that liquor production has a quick turnaround time compared to wine, which could take as long as twenty years for a vine to

produce drinkable wine. Following market trends such as the increasing appreciation for wine, especially with women and younger generations, Foster’s has adapted to the consumption of alcohol around the world. One of the most important lessons that Mr. Johnston left us with was to continue to move forward by delivering on promises, acting with energy and urgency, and positively embracing change. He heavily focused on human relations and the importance of people development and rewarded successes.

Like Foster’s, the Bundaberg Rum Distillery is owned by Diageo, which owns over 150 international brands including Smirnoff and Guinness. However, Bundaberg focuses on the Australian continent, keeping 96% of its rum on the country of Australia, exporting 3% to New Zealand, and only 1% to the rest of the world. Based in the town of Bundaberg, the company also brews ginger beer, a popular beverage in Australia. They own twelve 22,000-liter vats filled with aging rum. Of their more popular rums, they produce 350 vats, which total $5.5 billion in rum annually.

On our visit to the Australian Football League (AFL), we met Ian Anderson, the CFO of the organization. Australian football, or “footy,” as Australians call it, is similar to rugby, and is the most popular spectator sport during the winter months – cricket being the most popular during the summer months. The AFL pours AUD$3.4 billion annually into the Australian economy – its inexpensive ticket prices ($20 for an adult ticket) and loyal spectators being the main reasons. Sponsors make profits as well, by earning 15% profit on sales of jerseys, or “jumpers,” on which their logo appears. AFL has enjoyed 8% revenue increases in the past ten years.

The Australian Institute of Sport (AIS) in Canberra was created to train Olympic medalists. Guided by a former Olympic swimmer, the group toured the facilities, which houses most of the Olympic training facilities of Australia as well as a multi-use arena that is used for eight sports as well as public performances. Subsidized by the government, the AIS was created when Australia did not win any gold medals at the Olympic Games.

In order to become more familiar with the Australian economy, we visited the Reserve Bank of Australia (RBA), where Richard Finlay, a senior economist shared his knowledge on monetary policies and the economic outlook for the Australian Federal Reserve. Some of the RBA’s responsibilities include monetary policy, the stability and efficiency of the payments system and the financial system, issuing Australia’s currency, acting as a banker to the government, and managing foreign exchange.

Whereas the US Federal Reserve implements monetary policy by adjusting rates, Australia performs interbank transactions through RBA accounts, which actually changes the amount of money in the system to set the interest rate. Thus, there is no need for adjustments. This works because of the small market size in Australia compared to that of the US.

Concerning inflation, the RBA Board sets the policy interest rate, or the “cash rate,” and such changes affect private consumption and investment. Because Australia uses a floating exchange rate, their cash rate did not drop as much as others’ did during recession. However, because of the rampant flooding in Queensland, they face the possibility of large customers such as China looking elsewhere for natural resources such as coal. Nevertheless, Australia faces a net debt of only 5% GDP due to a stabilizing interest rate.

On our company visit to Qantas Airlines, we split into three smaller groups, with each group focused on a different aspect of Qantas’ functions. The three areas were a tour of the jet base, hangar, and aircraft with Alan Milne; a tour of Check-in, Qantas Club, Baggage Operations, and New Technology; and an introduction to the Integrated Operations Centre (IOC) with Damien Wallace.

Students on the airport tour were introduced to Qantas’ innovations such as RFID luggage tags, which store a customer’s personal account information that allows them to bypass baggage claim. They also learned that Qantas stands for Queensland and Northern Territory Air Services. In addition, following with their ideal of efficiency, Qantas has recently developed self-service kiosks and baggage-weighing and baggage claim services.

Students on the engineering tour witnessed the airplane repair crew station and learned about their safety precautions that prevented worse problems when one of the Rolls Royce engines recently failed. They also toured the Airbus A380, one of the largest planes in the world.

The students on the IOC tour learned about all the behind-the-scenes functions that help with booking, redirecting and rescheduling flights and services in event of delays or cancellations, and even Qantas’ contracts with the government’s Weather Bureau to help predict and change flight schedules based on weather patterns.

Seeing Qantas’ inside operations was intriguing and informative, as the experience applied to everyone as an airline passenger. Students also learned about Qantas’ mission of customer service – offering many amenities to its customers, many of which are not available on international flights with US carriers.

The visit to the Australian Parliament allowed students to see the political sphere of Australia. The tour guide explained the various functions of the government, many of which are similar to those in both the US as well as the United Kingdom. For instance, their House of Representatives and Senate systems function similarly to those in the US.

Our final company visit involved a trip to Google Australia, in Sydney, where students interacted with Stephanie Borgman, Smith alumni who works in the Human Resources Department as well as with Claire Hatton, the head of Travel Search. Both speakers shared their experiences as well as advice for students in their future careers. Afterwards, the students were led on a tour of the facilities, which embodied the mission of Google, “to organize the world’s information and make it universally accessible and useful.” The facilities featured unique décor in manner of the Australian culture and personality, and offered a cafeteria with a wide range of selections, cafes throughout the offices, a game room, and nap room, and many uniquely themed conference rooms. Despite that Googlers share an open office environment, volume is not usually a concern because most communication is performed via the Web.

Some of our more leisurely activities included cultural visits to learn the heritage of Australians at the National Museum of Australia and a guided tour of the Sydney Opera House. One of the most recognizable buildings in the world, it was a miraculous feat the helped energize the economy during the Great Depression. The work instilled hope the heart of Australians and was a creative and mathematical genius. In order to get the world involved in its creation, the design of the building was a competition, in which Danish Architect Jorn Utzon dazzled the world. By taking parts from a single sphere, he discovered how to engineer the majestic arches.

Likewise, the Sydney Harbour Bridge gave hope to millions of Australians during the Great Depression. Held together by five million rivets, the bridge took over fifteen million men to build over the course of a decade. Students participated in the bridge climb, which involved extensive safety training. From the top, they were able to see a 360-degree panorama view of the city and beyond, even reaching the Blue Mountains.

At the Canberra Glassworks, students learned about the art of glass blowing as well as a glass-artist’s role and career. In an effort to learn the practices of Australians, the group attended a cricket match between Australia and England. The students enjoyed learning a new sport, and seeing the action live. As Maryland students are generally loyal sports fans, it was a great experience to see how Australians cheer for their home teams.

On a tour of a few Hunter Valley vineyards, students received a lesson on wine tasting, and one of the favorite activities on the trip involved snorkeling and scuba diving on the Great Barrier Reef. Despite the changes to the schedule due to immense Queensland flooding, we were able to continue with the planned schedule, and students were rewarded with an unforgettable cultural experience.