Arbitrage opportunities across borders

Most of the readers who may have read my previous blog entries will know that I recently moved from the UK to the US in order to pursue full-time MBA at the Kellogg School of Management. Today, I want to write about the arbitrage opportunities between the UK and US, based on my experience as a consumer in both markets. I want to highlight my recent experiences in the US, and some interesting questions it raises about market efficiency, specifically relating to pricing and product design.

When I arrived in the US, my immediate realization, like most people, was that overall product prices were much lower that they were in the UK. In addition, in most places, the comparable portion sizes (both packaged and consumables) were much larger than those in the UK. I continued to observe these differences across product categories for the first few weeks while I settled in, as I shopped for furniture, food, groceries, and entertainment.  

And at one point I stopped to investigate a specific category. Let’s take a rug selling in the Ikea store in a Chicago suburb. At the largest Ikea store in North America, It was selling for USD 19.99. The same rug in Ikea UK sells for GBP 19.99. At the current exchange rate of 1 GBP=1.6 USD, there is a 60% pricing difference – i.e., the rug in the US costs 60% lesser than an equivalent one in the UK. Given that this Ikea rug is manufactured in Sweden (part of the European Union), I also checked that the customs and excise rate on importation of this product category into the UK is zero. Such pricing differences exist across most product categories.

So what might explain these pricing differences between the two markets? Is Ikea discounting its products in the US in order to match the price expectations of this market, or instead is it charging a premium in the UK because of the higher average price of all products in that market? Even if we consider that the cost of manufacturing the product is the same, the overheads such as transportation, labor, and retail costs simply could not account for the 60% pricing difference. So, I dug in a bit deeper and looked to historical pricing trends in the UK in the hope of finding an explanation for this phenomenon.

I think I may have found an answer. Many decades ago, during the Wars, the UK government promoted the concept of “Be British, Buy British”. The idea was that the citizens of the nation should be manufacturing and purchasing local products, albeit at a premium, in order to show their patriotic support and fund the wars that the UK was engaged in. During that time, the average price of most goods in the UK shot up. By the time the wars ended, and the UK market opened up, the consumers were accustomed to higher prices, and all new entrants tended to operate at higher than average pricing. Similarly, the cost of resources and wage levels also tended to move in tandem along with the product prices. This, in my view, made the UK an “expensive” country.  And this may explain the pricing differences across borders.

What I’ve also noticed during the first few weeks is the higher quality of product packaging for foods and groceries in the US compared to the British counterparts. Some of the product packaging, for example re-sealable frozen vegetables packages, is very simple but useful. Not one brand selling frozen vegetables in the UK offers re-sealable packaging. And I’ve noticed such packaging and convenience differences across many product categories.

This brings me to the title of this blog – arbitrage opportunities across borders. I was not implying the standard currency and trade arbitrage, but rather differences and opportunities across consumer product categories. Implementing improved product packaging, or the ability to access products that are considerably cheaper are arbitrage opportunities that could drive revenue for existing brands in the UK, or open up new markets.

My take is that this could be a lucrative business opportunity i.e., to investigate such differences across global markets (not just US and UK) and create niche businesses that allow local producers to gain access to such international practices and innovation.

Readers should feel free to contribute and add some of the observations that you may have made during your global travels…  

Business School: My journey to a business school (Part 3 of 3)

Admissions Status: Kellogg (accepted & attending), Michigan Ross (accepted). Duke Fuqua (accepted with scholarship), Wharton (wait-listed), Harvard (Ding), MIT (Ding), Darden (Ding)

Introduction and structure of the Post
I have divided my post into three parts. Part 1 was published last month and covered two topics: school selection and GMAT. Part 1 also provided some information on my profile as an MBA candidate.
Part 2 was also published last month and covered four topics: school visits, recommendations, essays and applications submission.
This (final) part covers three topics: Interviews, decisions, and preparing for school. I hope that readers preparing for B-school admissions find this helpful.

You can also read about my time at Kellogg by following updates on my personal blog.

I've structured the post as follows:
Part 1 - The decision to apply and the approach to school selection. Why MBA?
Part 1 - GMAT
Part 2 - School visits
Part 2 - Essays, including networking and reviewers
Part 2 - Recommendations
Part 2 - Applications submission
Part 3 - Interviews
Part 3 - Decisions
Part 3 - Preparing for School, including networking

Interviews
Time: August-October 2010.

Two of the schools I applied to offered an open interview process. Both Kellogg and Duke allow candidates to schedule and attend an interview even before the application is submitted. This is an optional process. In any case, if you do not interview during the open process, you may still be invited for an interview if you’re shortlisted. All admitted candidates have to interview. In my case, the open interview process for Kellogg and Duke meant that I had fewer interviews to worry about at a later stage in Round 1.

The open interview process is a great opportunity to demonstrate your strengths as a candidate, especially if your profile does not come across as stellar straight away. In my case, I was up against the fact that I had completed my post-graduation in business studies, and that my years of work experience put me in the wrong side of the class age-range. However, I was aware that if I had a chance to get in front of the interviewer, I could share my motivation for pursuing the course as well as share my thoughts on the value that I could add to the class.

My interview preparation involved brainstorming to ensure that I had content for key interview topics – strengths, areas of development, why B-school, examples of leadership, team work, failure etc. I also undertook in-depth research for each school in order to form an informed view on the activities and clubs I wanted to be a part of. I also ensured that I had a good understanding of the school culture so that I could highlight the relevant areas of my experience that aligned with the culture.

A few days prior to the interview, I condensed this content into bullets onto an A4 sheet so that I could review the cues and ensure that I picked the right stories and examples. This worked well for me. However, a word of caution: you will certainly be asked questions that you may not have thought of or prepared for. Hopefully, if you’ve prepared well enough, you would have developed the right technique to be able to think on your feet and answer the question in a structured fashion.

My general tips on interviews are as follows:
- If you have the opportunity to attend open interviews, please do so. Not only will it help you to make a stronger case for your admission, it will also alleviate some scheduling pressure, especially if you’re applying to multiple schools in the same round.
- Remember to do in-depth research about the school and the activities that you can be a part of. The interviewer may test your genuine interest in the school by checking what contribution you can make as a student.
- Prepare three or four good questions to ask the interviewer. Also, please make sure you don’t ask for information that is readily available on the school website!
- Remember to thank you interviewer for his or her time. If the interviewer exchanges a business card with you, use the email address to thank them. Also, don’t expect a response! In many case, interviewers are advised not to respond. But that should not stop you from thanking them for their time and your opportunity to interview.

Some relevant resources:
http://www.clearadmit.com/wiki/index.php?title=Main_Page
http://www.beatthegmat.com/mba/category/interview
School websites


Decisions
Time: December 2010 – February 2011.

I was in a fortunate position to receive multiple admission offers. The final decision, though, was quite a straightforward one. The main reason was that right at the start of the process, I had drawn up an objective list of schools, and Kellogg was my top choice. The key reason was that it was the only 1 year course I was applying to, and the school had the strongest curriculum focus in the areas of my interest (social enterprise, public policy and consulting). So, rather than spend time on how I made the decision, I think it makes sense to talk about the process involved in offers of admission.

Depending on which schools you’ve applied to, the decisions start to be released around Christmas. By the second week of December, a number of schools begin to roll-out admission notifications, and there tends to be a raft of decisions by Christmas. Around Christmas, there is a frustrating and anxious hiatus, and the process re-starts around the second week of January. Of course, I’m referring to Round 1.

Most schools will offer you the admission and then expect you to provide the deposit by early March, for you to be able to secure your place. Therefore, in real terms, you have between two and three months to make up your mind. These timescales are much shorter if you’ve been offered a place as part of the early-admissions process which is an option in a number of schools (for example, Duke).

The best way to use the time between offer and deposit payment is to attend the new student events offered by some schools. If you are particularly split between two schools, then the best way to decide is to attend these events and get to know the school from close quarters. Not only will you be able to see the school in action, you’ll also meet some of your potential classmates.

Personally, my view is that you should not spend too much time in making a decision. You should have done your research at the start of the process, added to that during the admissions and interview process, and really should have a pretty well-informed view of which school you should attend. Once you’ve got the decision out of the way, and you’ve informed the other schools that you appreciate their offer but you’ve decided to attend another school, you should get cracking on preparing to attend the school. The more time you have for that, the more value you can get out of your time at school.

My general tips on decisions are as follows:
- If you have received multiple offers, then you should make a decision as soon as possible in order to give yourself more time to prepare for the school.
- Use the admission events for admitted students to experience the school from close quarters. This will also allow you to see the city and assess housing options and cost of living – factors that you may decide to integrate into your decision process.
- If you’re unable to decide between two schools, be open and seek advice from experienced people – alumni, admission counselors, or people from the industry you’re targeting to move to after school.

Some relevant resources:
School websites

Preparing for school
Time: February 2011 – May 2011.

Once I’d made my decision to attend Kellogg, I got down to re-connecting with the students and alumni I’d met during the application process. The questions and information I was seeking at this stage was very different – my focus was on understanding about living in Evanston (Chicago-suburb where Northwestern University is located), understanding what I should be doing to prepare myself for school in order to get the most out of the experience, and figuring out details about the industry I was looking to join after school. I also decided to attend the student event on campus, even though I’d already decided to join Kellogg.

Some of you may be aware that the 1-year program at Kellogg begins in the summer (June). This additional term is used to complete the mandatory first-year curriculum. Therefore, between attending the “Day at Kellogg” event in February and starting school, there was a lot that needed to be done in 14 weeks. I used the DAK event to finalize housing and find a pre-school place for my son. At this point, I also had a fair idea of the costs involved which enabled me to complete my financial planning. I also used the event to connect with many current and incoming students, with whom I remained in contact since.

For international students, the visa process takes up a lot of time between decision and attending school. Therefore, it’s important to take that into account as you plan your holidays and travel during this time.  

I’ll be posting more details on my preparation for school on my personal blog.

Business School: My journey to a business school (Part 2 of 3)

Admissions Status: Kellogg (accepted & attending), Michigan Ross (accepted). Duke Fuqua (accepted with scholarship), Wharton (wait-listed), Harvard (Ding), MIT (Ding), Darden (Ding)

Introduction and structure of the Post
I divided my post into three parts. Part 1 was published last week and covered two topics: school selection and GMAT. Part 1 also provided some information on my profile as an MBA candidate.
That post is available here (see my earlier post).
This part covers four topics: school visits, recommendations, essays and applications submission.
I hope that readers preparing for B-school admissions find this helpful.

I've structured the post as follows:
Part 1 - The decision to apply and the approach to school selection. Why MBA?
Part 1 - GMAT
Part 2 - School visits
Part 2 - Essays, including networking and reviewers
Part 2 - Recommendations
Part 2 - Applications submission
Part 3 - Interviews
Part 3 - Decisions
Part 3 - Preparing for School, including networking

School visits
Time: August 2010.

Once I'd finalized my list of schools to apply to, I decided to schedule school visits. This is not necessarily something that many international students do. I had put some budget aside for this specific purpose. My thinking was fairly simple and the case for visits was a straightforward one: I wanted to approach the admissions process with a lot of focus - to be certain that I was making the right decision, and also to not leave any stones unturned. I had estimated that a 10-day tour to visit 5-6 schools would set me back by no more than 1/15th of the tuition fee for the actual program. So, in the medium-term, it was certainly an investment worth making.

I planned a 10-day trip to visit 6 schools. The visits were characterized by thousands of air-miles, lot of research before every visit, and a number of business cards exchanged with students and faculty. I used the visits to witness and feel the culture of each school first-hand. I talked to students and faculty, especially those involved in areas of study which I was keen to pursue. It was my opportunity to see the infrastructure first hand, spend some time reading in the library and see the club notice boards. That was my way to begin imagining myself as a student in that institution - a feeling that ultimately would serve as a great motivation during the tedious and unforgiving process of writing essays. Also, I imagined, and in hindsight, correctly so, that the visits would help me to re-order my school preferences that, so far, had been based only on secondary research.

Ultimately, the visits helped me cement the decision to apply and do an MBA.In the process, I also met new people, and stayed in touch with them through the course of admissions and thereafter - as a rich and useful resource. Above all, the visits left me with some great (and honest!) anecdotes to add to my essays.

My general tips on school visits are as follows:
- If you have the time and money to visit the schools, I recommend it highly. (Of course, subject to travel permission/ visas etc)
- Do your research about the school before-hand. Read the school guides (available for free and can also be purchased from various websites). Review the school websites thoroughly so that you don't end up asking questions or seeking information which is readily available. You want to try and maximize the value of your interactions, and demonstrate depth, so that the visit serves a useful purpose.
- Plan your visits. Contact your networks. Use the student ambassador links on school websites to contact the students and faculty beforehand in order to schedule your meetings. If you want to do 5-6 schools in 10-days, you are really talking of no more than a day or day-and a-half per school, after accounting for travel. Hence, you want to make the most of the 12-16 hours you have on-campus.
- At the end of every visit, remember to invest some time and make school visit de-brief notes, especially when everything is still fresh in your mind. I found these notes really helpful during the essays brainstorming stage (more on that in the following section).
- Ultimately, just remember that you're about to make a $250,000 purchase - most likely to be more than what most of us invested or will invest in our first mortgage. The visit is your chance to find out about the product you're putting your money on. You should take it seriously and ask insightful questions.
- Stay in touch. And even when you return home, don't forget to show courtesy by thanking those individuals who invested their time to talk to you and show you around during your visit.

Some relevant resources:
http://www.veritasprep.com/business-school-annual-reports/
http://www.clearadmit.com/sg.html
http://www.mbamission.com/guides.php
http://www.beatthegmat.com/research-mba-programs-f43.html
School websites


Essays, including networking and reviewers
Time: From August 2010 to October 2010

By the second week of August, I had visited 6 of the 7 schools to which I was applying. I had lots of notes from each visit, and I had an updated preference order for the schools. At the end of July and early August, I had reviewed the essay questions for each school for the 2011 admissions. I also reviewed notes and materials available on a number of MBA admissions websites and blogs, to form an all-round understanding of the questions and key pointers related to each.

Looking back, I had a three-stage approach to this part of the applications process. Firstly, I created a calendar of deadlines for the schools that I was targeting, and allocated timescales for completing the draft and final essay for each school. Secondly, I ensured that the process started with an overall brainstorming at the start, and then a school-specific brainstorming before preparing essays for each school. Thirdly, I ensured that I had current students, alumni or friends (preferably from each school) lined up to review my essay drafts and provide critical feedback.

As I was targeting 6 schools in Round 1 (that later became 7!), my calendar ensured that i was focussed on hitting the timescales and not building early slack at the cost of schools that were scheduled for later.

The initial brainstorming involved a lot of reflection and dumping all my past achievements, education history and key milestones on paper. I forced myself to think through why, in the past, I made the decisions that I had, and how my journey since high-school had taken shape. I also thought about my plans for the future, both in the immediate future and in the medium term. As a more experienced candidate, I had to make sure that I could demonstrate a clear career objective, a concrete plan right after business school, and a fairly well thought-out medium term plan.Once I had all that data on a few A1 sheets, I categorized those in various buckets such as leadership, team-work, initiative, risk, family/ personal etc. Of course, many points cut across multiple buckets. The idea was to ensure that I had relevant labels attached to almost everything that was on the A1 sheets. This approach was influenced by a success story interview I saw on beatthegmat website. Please follow this link if you're interested:
http://www.beatthegmat.com/mba/2010/03/23/how-samir-got-into-mit-sloan-part-1-exit-interview
http://www.beatthegmat.com/mba/2010/03/31/how-samir-got-into-mit-sloan-part-2-exit-interview 

Thereafter, for every school, I undertook another brainstorming session which involved focussing on the specific essay questions. The purpose was to create an outline structure for my responses to essays. Again, I drew heavily from the brainstorming from the initial stage, and added more detail to specific stories in order to ensure that I responded effectively to the essay questions.

Subsequently, I started work on writing the first drafts and stringing together the whole thing. I also drew from my notes during the visit in order to substantiate my reason for interest in that school, and demonstrate knowledge about the school.

The network I built during the visits was also helpful when I needed to clarify something relating to a school, or required some additional information which I may have required for my essays.

In order to summarize, my tips on essay-writing are as follows:

- It may sound cliched, and you may have read this in many places, be yourself. I cannot begin to stress how crucial this is. Essays are a means to presenting yourself through written word. Ultimately you have to do the same during the interview. So there is really no where to hide.
- If you be honest and be yourself right from the start, it will also help the admission team figure out whether or not you are the right cultural fit for the school. And this is critical - if you end up getting admitted to a place that you do not fit into culturally, you'll have a miserable 1 or 2 years! In my case, for instance, I think that the type of person I am is absolutely aligned with the culture of the three schools that have offered me a place. That's no coincidence!
- Focus on your positives and achievements. Don't underestimate your experiences. Remember, you bring something valuable to the table - in some cases, that may be exactly what a school is looking for, while in others it may not. The idea is to play the odds honestly and hope that it clicks.
- Revise your essays many times over. I re-visited the final drafts I'd prepared for schools after many weeks, and was able to have a very different view. The time lag allowed me to make amendments that I had not even thought of earlier.
- Finally, don't let the process bog you down. It is likely to happen. But you need to keep reminding yourself of the objective. I found it useful to access MBA forums and discussion threads to read about success stories and read how I was not alone, and that thousands of other people like me were also preparing for the admissions.

Some relevant resources:
http://www.mbamission.com/blog/2010/06/11/columbia-university-columbia-business-school-essay-analysis-2010-2011/
http://www.beatthegmat.com/mba/business-school-essays-series
http://www.clearadmit.com/wiki/index.php?title=Main_Page
Book: Your MBA Game Plan: Proven Strategies for Getting into the Top Business Schools [Paperback] By Omari Bouknight
School websites


Recommendations
Time: From August 2010 to October 2010

You should keep in mind that until your recommenders submit their recommendations online, your applications are not considered as completed. Recommendations, and the timing of it, is probably the only part of the process that is not under your direct control. You simply have influence over it. And therefore, it's important not to underestimate the importance of starting early, getting it done, and ensuring that it does not end up holding up your online application.

Most importantly, just as you wouldn't rush your essays at the cost of quality, you should not rush your recommendations at the cost of content and quality. Many admission and school websites state clearly that recommendations are the only third-party component of your application which the school relies on as a valuable support to your application. Recommendations should turn out to be a tremendous endorsement of your strengths and skills, and together with your essays, provide a 360 degree view of you as an applicant.

I discussed my approach with my recommenders very early-on in the process. Due to the high number of schools I was planning to apply to in the first round, I selected more than 2 recommenders in order to spread the work-load and be able to have some flexibility depending on the application. I selected people who knew me and my work very well in a professional capacity. I met with them early-on and had an open discussion about my plans, motivation and objectives for applying to B-schools. I took them through my approach to essays, and the key areas that I was looking to highlight for each school. I also took them through the calendar of submissions and agreed some tentative timescales. There was no point hiding from the reality that I was applying to the schools and there was every chance that I may not make it and carry on in my current job. Equally, the fact was that I was looking to invest in myself and take a medium to long-term view of my career in pursuing this opportunity. And if, after all this, you find that the recommenders are not committed or do not appear convinced, then I suggest that you should consider getting someone else on-board!

My tips on the recommendations stage are as follows:
- Have a clear view, per school, of what you plan to include in your essays, and the gaps and endorsement that you want your recommenders to plug and provide, respectively. During my discussions with the recommenders, my aim was to ensure that there were minimal overlaps between the two recommendations for every school.
- You should remember to thank your recommenders. After the submission and depending on cultural nuances, take them out for a drink/ coffee/ meal or hand them a voucher or a bottle of wine. But do it. I may have had to go to Round 2, and hence knock on their doors again. Trust me, after a heartfelt thank you note at the end of Round 1, it would have been much easier to arrive at their door-step once again.

Some relevant resources:
http://www.clearadmit.com/ss_reco.html
http://www.mbamission.com/blog/2009/08/27/mba-news-recommendations-for-recommendations/
http://www.beatthegmat.com/mba/2011/01/12/how-to-solicit-strong-recommendations
Book: Your MBA Game Plan: Proven Strategies for Getting into the Top Business Schools [Paperback] By Omari Bouknight
School websites

Applications submission
Time: From October 2010 to November 2010

The only reason I've added this as a separate section in my de-brief is because I think this is an underestimated part of the process. Many candidates take a first look at the online application a few days or a night before the submission deadline. However, I feel that it is always useful to take an early look at the application and gather the required data before hand.

I was surprised when I saw that a lot of information was requested relating to my background and work history. Luckily, I had enough time to gather all the required information, and did not have to update my application in a rush.

Also, there are warnings on most school websites that their admission servers may have issues or slow down in the few days prior to the application deadline. It goes without saying that you should avoid leaving it all to the last minute. My recommendation is that you should start your application and complete most of it much in advance, and save the file on the server (which is something that all school applications allow you to do). By doing so, you leave yourself relatively little to do closer to the deadline (for example, simply uploading your essays and then submitting your application).

PART 3 (covering interviews, decisions, and preparing for school including networking) to be published soon... 

Business School: My journey to a business school (Part 1 of 3)

Admissions Status: Kellogg (admitted & accepted), Michigan Ross (admitted). Duke Fuqua (admitted with scholarship), Wharton (wait-listed), Harvard (Ding), MIT (Ding), Darden (Ding)

Introduction and structure of the Post

I have been meaning to write this post for a long time. Ever since I completed the Business School admissions process, I wanted to capture and publish my thoughts so that others could benefit from it, in the same way that i benefited from hundreds of stories and blogs I followed during admissions. At the outset, it is important to say that although I am the author of this blog, the admissions process was a joint effort with my wife and 4 year old son. Without their support, I wouldn't have made it to any School.

Readers may want to know my credentials for writing this, and why they should find my story meaningful and relevant. Well, (and now sounds the bugle!), I applied to 7 leading (read: top 12) business schools in the US. I interviewed with 4. Finally I was offered a place by 3 programs, and wait-listed by 4th. The admissions offer included my top-choice program. For one of the programs, I was offered a substantial tuition scholarship. My GMAT score was 720. (And the bugle sounds again, because the next part is even better). This has to be put into context of my background - at the time of applications, I was 31 years old at the time of applications. I already have a Post graduate in Management, from one of the leading business schools in India (more on, "so why did I do this" later in this post), and was on a fairly successful run in my job, in terms of growth and responsibility. Most of you who're knowledgeable about the Business schools admissions process would recognize that my profile put me pretty much in the "outliers" category with majority of the top schools. 

This post has been structured into key elements that are involved in the admissions process. I have also time-stamped each stage to make it more relevant. Depending on where you are in the process, you may find it relevant to read specific sections or the entire post. Throughout the post, I've referenced various information sources that I found helpful. To summarize, I've structured the post as follows:

Part 1 - The decision to apply and the approach to school selection. Why MBA?

Part 1 - GMAT

Part 2 - School visits

Part 2 - Essays, including networking and reviewers

Part 2 - Recommendations

Part 2 - Application submission

Part 3 - Interviews

Part 3 - Decisions

Part 3 - Preparing for School, including networking

The decision to apply and the approach. Why MBA?

Time: Around January 2010.

Given my background, as mentioned earlier, I had to be sure where an MBA would fit in my career. My decision to pursue a full time MBA was based on the fact that after spending just over 3 years in the consulting industry, working with public sector, I had found a path in which I gained a high level of personal satisfaction. I enjoyed the job, and was making a substantial positive difference to clients' organizations. At the same time, I also realized that in order to set myself up for the future, I needed to gain a deeper insight into specific areas of consulting, strategy, and public sector. At the same time, through constant 360 feedback with peers, seniors and clients as well as through self-reflection, I identified some areas of personal growth, and felt that i needed time, and a safe environment, to develop. I also wanted the MBA to be an immersive experience, hence I ruled out part-time programs. 

Once I'd decided that this was an appropriate path to pursue (subsequent to the financial calculations!), I did extensive research to create an initial shortlist of schools, as well as get a sense of typical candidate and recruitment profiles at each school. I assessed the top schools mainly on the following decision criteria:

- strength in subject areas of my interest, average age of the class and distribution, average GMAT scores and distribution, average number of years of work experience and distribution, industry and educational background of students, recruitment statistics, length and cost of the program, industry reputation, school brand and strength of the alumni network. I also assessed the admissions criteria, as some of the schools do not admit candidates with previous post-graduate level education in management. Once I'd drawn up my initial list of 8-10 schools, and I knew enough about the admissions process, I contacted an admissions consultant for a free profile evaluation. I was so far removed from the business school admissions process, and did not have access to any close friend or family from the schools I was targeting, that I needed to speak with someone, at a professional level, to discuss my profile, plan and whether or not I was mad to be considering this at all. My key take-aways from that conversation with Clear Admit were that I had a good shot at the schools, given my multi-industry and multi-country experience, my school target-list needed to be redefined, and that I had to achieve a 700+ in GMAT to give myself a fighting chance (Also, i was told that even with a GMAT of 650+, I had a decent chance, but if that were the case I would be up against it from the word go). 

Some relevant resources:

www.clearadmit.com

http://www.businessweek.com/bschools/rankings/

http://www.economist.com/whichmba

http://www.beatthegmat.com/research-mba-programs-f43.html

www.mba.com

School websites

GMAT

Time: From February 2010 to June 2010

By February 2010, I had decided to jump into the admissions process. After my conversation with Clear Admit, i had also decided to focus 100% on the GMAT component of the process. I had two reasons for doing so: one, I wanted to use the GMAT as a test of my ability to get back into some form of education 8 years after completing my post-graduation, and secondly, to use the GMAT score I achieve as a "go no-go" decision for the rest of the admissions process. For some strange reason, and maybe incorrectly, I had convinced myself that if I did not get a 700+ score, I would end up pursuing the process unsuccessfully, and the opportunity cost of doing so would be substantial - in terms of time and money. All this while, I had a full-time consulting job. I'd started working (and leading) a new client account and was going through a phase of work that required 70+ hours of work every week. I knew that the entire admissions process would place a huge demand on my time from February 2010 through to the end of the year (if I was lucky to make it in Round 1) or through to March 2011 (if I went through to Round 2).

So, I started preparing for GMAT through self-study. In my case, that was a decision that cost me 4 weeks in the process, which I had to make up later during the essays stage. I used the standard material: Official OG guides, Quant and Verbal OG guides, Kaplan foundation guides. When I started my preparation, I scored 580 in my benchmark test (one of the two official mock-tests). I knew that i had a long way to go and that it was going to be a rough ride! After spending 4-5 weeks on brushing up my basics, and attempting most of the OG guide, I took some mock tests. My score had now inched up to 620. I researched blogs to understand how I could improve my score and the study-approach I should adopt. I spent another 2 weeks focussing on specific topics that I perceived as my weakness. I took the mock-tests again and scored 640-650. At that time I realized that this was going nowhere and that I needed to reflect and decide the best approach to adopt. When I started out my prep, I had April as the month targeted to take the actual test. I was now in a situation where I had to reevaluate and move that to May-June. My aim was that I'll attempt the GMAT once and try to get the target score so that I could focus on the next stage of the process. Hence, I was willing to push out the date of the test, and focus on preparing well for the first attempt.

During early March, I attended a free GMAT Quant workshop in London hosted by Manhattan GMAT. I found it very useful. Mainly because it put me in contact with scores of other working men and women looking to do the same thing that I was (prepare for GMAT). The teaching methods were focussed on tried and tested techniques to prepare for GMAT. I made a decision to enroll for their 8 week course - this included a 3-hour class-based session once a week (after work) and a well structured program to cover off all topics included in GMAT. Most importantly, the enrollment came with access to online MGMAT tests and MGMAT guides - certainly the most helpful GMAT material I had access to.

So, during March, April and 2-weeks in May, I was working full-steam on my GMAT prep. I was really focussed. I completed all my homework on time, spent the weekends and any spare time to review the OG guides and MGMAT materials, and prepared for the classes. I knew that within 4-weeks of completing the class-based course, I needed to give the test in order to stick to my plan - and therefore, I had no time to slack.  By the time I finished the MGMAT sessions, I felt really comfortable with the fundamental concepts. I must have taken around 5-6 mock tests in the 4 weeks following the last class, leading up to the tests - both the MGMAT and GMAC tests. I always scored in the range of 650-660 during the first few tests (within 1 week of the last class) and then in the range of 680-740 during the last 2 weeks... 

And 4-weeks after the course finished, in June, I appeared for the test and scored a 710 (92nd percentile) and the break-up was Q-48 (83 percentile), V-39 (87 percentile). 

As an aside, I took the test for the second time in September, when I felt that I was making progress on my essays well ahead of the schedule. I always felt that I could do much better, especially in the Verbal section. In my second attempt, I scored a 720 (my Verbal score was 45, and Quant score was 44). With this attempt, I felt that I had achieved my potential in the Verbal section but unfortunately, I was unable to maintain my Quant performance, hence the marginal improvement in overall score. I decided to give the test the second time because I wanted to be sure that I had another shot at increasing my score. Just before my second attempt, I was consistently scoring in the 740-770 range in the mock-tests. In hindsight, I think it was a relatively poor use of my time. On the flip side, it reassured me that 710 was not a fluke. I prepared for 2-3 weeks before the second attempt, concentrating mainly on the Verbal section, and did well on the test. 

In terms of my take on the preparation for GMAT, I have summarized it below:

- set yourself a final target score, so that you keep your eye on the goal and so that it motivates you 

- take the diagnostic test at the start so that you know the size of the mountain you have to climb

- there is no substitute for the hours and effort you need to put in. Do not underestimate that

- the test itself relies on candidates to be switched-on all the time. In the main, the test is not about difficult and complex problems, but about tricky problems. Once you get familiar with the tricks, there is a repeating pattern to it. Attending the MGMAT classes helped me figure out that pattern (which I could not do on my own through self-study).

- In my view (and based on my research) schools do not frown upon multiple attempts (3 or under). So don't be under too much pressure during the first or second attempt so much so that it negatively affects your performance

- read blogs and stories of other candidates who've done well on the tests, and those who have improved their scores dramatically. These stories provide clues to areas that you can focus on, as well as serve as motivation

Some relevant resources:

www.manhattangmat.com

www.beatthegmat.com

www.gmatclub.com

www.mba.com

PART 2 (covering school visits, essays, recommendations and application submissions) to be published soon...

Book Review: States of Transition (Tackling Government's Toughest Policy and Management Challenges) by William D. Eggers and Robert N. Campbell III

In my endeavor to learn more about the US economy and government, I found this book on Amazon. I first read about the book on the website of Deloitte consulting - this book has been written and published by senior members of the Deloitte public-services research division in the US. Although the book is slightly dated, i.e. 2006 edition, I found that in some ways it was quite relevant because as I read about the data projections made in the book, I also followed current news stories about the US public services that demonstrated to me that the data projections made in the book were quite accurate.  

What the book has attempted to do, and quite successfully, is outline some of the key challenges facing the United States - ranging from the changing demographics, to the state of schools and education, the health care issues, infrastructure and disaster recovery. The book then outlines, in a typical consulting way, the key issues that need to be resolved in each of these areas and the manner in which we should be looking at and addressing these issues before everything gets out of hand. The book is intended to be a guide for State Governors, who occupy the role with a responsibility to plan and take action on these issues. The most fascinating aspect of the book is that it was written, in 2006, when federal government and most State governments were not facing a deficit crisis; the authors however, do mention that if these issues are not tackled, the deficits will grow to an unmanageable levels. When you look at the country today, 5 years hence, it's clearly visible that the States that acted to address issues in all the areas listed earlier, are the ones not facing a deep deficit crisis, while the States that didn't, are really up against it (although, at this point it's safe to say that most States are in some shape or form, up against it!).

So how come the US public services finances have become such an issue? I've been keen to figure out how the country got to this place. Some of the figures and projections outlined in the book help explain that. Here are the key ones:

Demographics: Age group 30-50 is considered to be the most economically productive group. This group invariable provides the lion's share of tax revenues. In the US, this group has been, and is expected to continue shrinking. In the year 2000, about 1/8th of the US population (13%) was 65+. By 2030 that group is expected to grow to 1/5th (20%). Essentially, what is happening is that the two largest groups of population, the children and old, that cost more in terms of taxation and services are growing, but the population that provides the most in tax revenue is shrinking. This shift in demographics is evidenced by the recent news stories of how the 'baby boomers' will begin to retire in the next few years, putting further pressure on the federal and state budgets.

Entitlement spending: We hear a lot about this in the news. This is by far the largest expenditure item in State budgets. Until 2005, most States spent the most on education and schools, followed by health (Medicaid - the state-run public health insurance program for low income individuals and families). However, since 2006, most State budgets started to see a shift - the spending on medicaid began to nudge school and education spend to second place in most State budgets. What this means is that medicaid is now the biggest line item in most State budgets. And the average annual growth rate in spend for medicaid is over 5% in most States. That's a staggering fact for two reasons - one, it shows that the health spending is spiraling out of control and the population demanding that care is only projected to increase in size; two, this spend is taking away from the resources that are available to deploy and invest in children's education, which could turn out to be disastrous in the medium to long term. In addition to medicaid spending, most pensions are underfunded and are currently unsustainable.

Policies and legacy: The third key reason for the current state is the fact that most of the laws and rules were designed and agreed for an era that has long gone. And an attempt to change the laws to reflect the reality of the present time is a nightmare. This is greatly evidenced by the recent strikes by the public service officers in Wisconsin. The authors outline that "some of the legacy problems are systemic, reflecting the failure to update industrial age processes and business models. Others are structural - rooted in statutes and state constitutions from a bygone era".

So where do we go from here? My take is as follows...

Most of us are aware of the issues that got us to this place. Few are aware of the trends and trajectories that we're on - in terms of spend, demographics, global trends etc. And for me, the latter is the scary part. If the nation does not fix these issues and stop the bleeding now, it could reach fairly disastrous proportions, requiring radical changes. Some argue that we're already at that stage. I differ, because I think the fundamentals driving the US economy and public services are strong, the values are intact, the intentions are good. What's required is a drive to act, and do so together. So, here's my view (a very very simplistic outline for a fairly complex issue - but I'm limited by the space on this page and the desire to not lose the reader's interest when faced with pages and pages of text on their computer screen!)

In my mind, I class the required action in three categories:

- The big picture and policy discussion: This is about the leading government figures and policy-makers getting together to outline what the business model for the nation as a whole should be in the coming years and decades. It is about building a blueprint, agreeing a 5-year, 10-year and 15-year outline of how the US wants to operate both domestically and globally. It is about really defining the role of the government in the future. And from this, should emerge the policy constraints and the changes required in this area. From this should also emerge the actionable strategies and plans that will help align the direction of the country with the blueprint. Fundamental issues such as tax levels for the wealthy, business taxation, immigration laws etc should be addressed at this level.

- The focus on customer: Very often, the discussion around change stays within the government buildings and town-halls. Ultimately, all changes impact the customers - the residents and citizens. It's important, particularly for State governments, as they tend to be closer to the last-mile delivery of services, to take into account what the customers expect. From my experience of working with Public services in the UK, I can safely state that whenever public services are re-designed based on customer expectations, the satisfaction levels increase, while the delivery costs decrease. Why is that? Well, for one, most public services continue to operate the way they've operated for decades - without any consideration for the changing customer profiles, requirements and available technology. The moment the services are re-aligned to current customer requirements, a lot of the service delivery processes are recognized as redundant, the platform for service delivery changes to a low-cost technology platform and the overall costs decline. 

The other important benefit of focusing on the customers is that the services tend to stay relevant. When you have a system whereby you listen to the customer requirements, your business has built-in processes to hear and interpret customer needs, it makes it easier to stay relevant. Which means, that a number of shifts in demographics etc don't come as a shock to the public services demanding radical changes all at once, but rather allow the services to adapt at a manageable pace.  

- Implementing new business models: Public service organizations should reconsider the way the services are delivered. This not only relates to embracing technology (online services etc) but also the fundamental business models. Exploring public-private partnerships, social enterprise, private sector delivery, innovative service use charging mechanisms etc are all ways in which the delivery of services can be improved without impacting the budgets negatively. 

To conclude, I want to leave you with a quote mentioned in the book. Albert Einstein, the greatest experimenter of all times, was fond of saying "Out of difficulty, find opportunity". We live in exciting times. We have a great opportunity. 

Book review: The Great Short - by Michael Lewis

The great Short - by Michael Lewis

I bought this book from a book store at Heathrow airport sometime around August 2010 mainly because I needed to buy another book to avail a promotional offer of buy 2 and get a third at half price. I had already selected the two books that I was really keen to get my hands on, and started to browse the collection for the third one. And it's then that I came across this book. I’d read the reviews for “Poker’s Liar” – another of Michael’s best sellers and read some great comments for this book as well. And since I was intrigued by the financial crises, asking not just the obvious question of how it happened, but also how come no one saw it coming; and how did we dig ourselves so deep that the only way to be safe was to dig deeper, rather than dig ourselves out!  And I finally managed to get around to reading this book last month.

This is a really great book – mainly due to three reasons:

The author handles a fairly complicated and vast subject of financial crises in a simple and coherent way that makes the storyline easy to follow.
The author does not assume that the readers have great knowledge about financial products. He takes the time to explain what these different products mean.
Finally, it is not a book just about the facts related to what was going on in the market at the time but the author takes the liberty to explain the linkages, and adds his commentary to outline the implications of various actions.

My take on the book is similar to something the author mentions briefly towards the end of the book (but I assure you that I had formed my view way before I reached the final pages!). In my mind, I draw parallels between the financial industry and gambling industry (albeit in a regulated environment) – with two exceptions. The first exception is that the gambling industry is based on regulation that is governed primarily by the industry players. Take two examples: in the event that there is a trend of large bets placed on a given outcome, the industry regulator raises alarms – which means that either the betting for that outcome is suspended or/ and there is an investigation to assure that the outcome is not rigged. Secondly, the industry is based on transparency – you can clearly see the odds and returns offered by each player (and these don’t tend to vary too much) mainly because the it’s the same industry that is answerable and has to pay for all outcomes – i.e. it takes the winnings, as well as pays out – and therefore, has to balance the books.

Why do I think financial trading is like gambling? In some aspects – Options, future obligations to buy or sell, Bonds etc, are all a bet on a specific future outcome (value of the underlying instrument in this case). And the investors are playing the odds. In many cases, that may pay off, while in others it may not. So when I read the book, the question I wanted to answer was where did it all go wrong? Why did the financial industry lose it and ended up in a huge disaster, affecting the global economy so severely? And here’s my take:

The first problem was the lack of transparency. The inability of rating agencies and most in the business to understand the products that they were trading in, and the inability to accurately assess the risks related to these products (a fundamental basis of financial trading) clearly evidenced the lack of transparency and understanding.
The second issue was the lack of accountability – the bets were made by the industry, but the industry for some strange reasons was not responsible for both ends of the trade – it involved the insurance industry (AIG), it included the investment banks, private investors, money managers, and ultimately common man (thanks, ultimately, to the government intervention). And hence, it is because of this that the people who were on either side of the bets that the subprime market would collapse, remarkably ended up with money and rich – how is that possible? Because the third element – the public – got involved and ended up paying for both the bets! As an aside, it is in the news recently that AIG and other insurers are looking to sue the financial firms for not disclosing the risks associated with these financial products when these were traded.
And the third issue was that the regulation wasn't coherent – the market and its impact stretched across the globe – across multiple industries and players including consumers, while the regulation was based on a smaller and restricted level – never able to gain an overarching view that was required. The interconnectedness of the market and the trades was far removed from the mirror image that you’d expect the regulators of such a market to have.

So, where does that leave us now? We’ve had the crash and as a result millions have lost their homes and jobs. However,the finance industry has rebounded to its performance levels that are similar to those prior to the crash. And there is a small matter of billions of debt that the government is straddled with. Based on my understanding of the crisis, I reckon we need to find solution to the following issues:

Firstly, we need to fix the rating industry. Many claim that the genesis of the problem was that the rating agencies did not attribute the correct ratings to financial instruments that were being traded (CDO’s and Synthetic CDO’s) because they could not assess their risk or value. And hence, the investment banks led them to rate the instruments triple A when in reality these were made up of mortgages that would have certainly attracted triple B rating. I still haven’t come to understand on what logic can you consider something as rated triple A when you know that it’s made up of mortgages that individually would be triple B or B? The questions that we should be looking to answer is that if the rating agencies are unable to assess risks on complicated products designed by the bright investment bankers, then should these instruments be permitted to be traded at all? And why don't we come up with a team made up of the nrightest representatives from different agencies involved in the trade - so that the "buy" and "sell" side have a 360 degree view and a responsibility to determine the ratings?

 

Secondly, we should be looking to review the regulatory structure that blankets the industry, and align in a way that it closely reflects the interconnectness of the financial trading across world markets. I think, the EU regulatory structure, proposed by leaders such as Gordon Brown, is a great start. It needs to be joined up further across continents.

 

That's my take on this book.