Top 5 companies in the technology sector

December 13, 2024 by Nithisha CHALLA

Top 5 companies in the technology sector

In this article, Nithisha CHALLA (ESSEC Business School, Grande Ecole Program – Master in Management (MiM), 2021-2024) delves into the top five companies in the technology sector by market capitalization and provides information into their origins, latest announcements, and notable developments to provide financial professionals and students with actionable insights.

Introduction

The top tech firms are not only industry innovators but also major drivers of global financial markets. Their influence extends from stock market trends to shaping global investment strategies. Their products and services help other companies to improve their productivity. These companies, Apple, Nvidia, Microsoft, Amazon, and Alphabet, dominate global market capitalizations through their relentless focus on advanced technologies like artificial intelligence (AI), cloud computing, and digital services. We examine below the top five tech firms by market capitalization, delving deeper into their financial performance, innovation strategies, and implications for finance professionals.

The picture below shows the world’s 50 valuable companies by market capitalization (Companies Market Cap, August 2024). We can observe that the top 5 companies are related to the technology industry.

World’s top 50 valuable companies by market capitalization

Source: Companies Market Cap.

The market capitalization, commonly called a “market cap”, is the total market value of a publicly traded company’s outstanding shares and is widely used to measure how much a company is worth. In most cases, it can be easily calculated by multiplying the share price with the amount of outstanding shares.

Apple

Apple Inc was founded in 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne in Cupertino, California. Known for its consumer electronics like the iPhone, Mac, and Apple Watch, Apple also thrives in services such as the App Store and Apple Music, contributing to over 20% of its revenue. Apple consistently generates substantial revenue from its ecosystem of devices and services. In fiscal 2024, its services division alone brought in over $70 billion, reflecting a 25.17% change in the market capitalization growth from the previous year.

Logo of Apple Inc.

Source: the company.

As of December 2024 Apple has a market cap of $3.748 Trillion USD. This makes Apple the world’s most valuable company by market cap according to “companies market cap” company data.

The picture below shows the market capitalization history of Apple from 1996 to 2024.

Market cap history of Apple from 1996 to 2024

Source: Companies Market Cap.

The picture below shows the stock price history of Apple from 1980 to 2024.

Stock price history of Apple from 1980 to 2024

Source: Companies Market Cap.

The company’s stock remains a popular choice for institutional investors due to its consistent performance and market leadership. Apple has steadily increased its dividend and share buybacks, returning over $100 billion to shareholders annually in recent years. Despite declining iPhone sales, Apple’s diversification into wearables and services helped sustain strong financials. It also topped the list of the world’s most valuable global brands in 2023 with a brand value of $880 billion (Business 2 community, 2024).

Initially focused on personal computers, Apple has evolved into a consumer electronics powerhouse. In recent years, its technological innovations, including the Vision Pro mixed-reality headset announced in 2023, underscore its push into augmented and virtual reality spaces. Its expansion into India has been a game-changer, with manufacturing operations set to reduce costs and increase market penetration in one of the fastest-growing smartphone markets.

Nvidia

Founded in 1993, Nvidia Corporation is a leader in Graphics Processing Unit (GPU) development, powering the AI revolution. Its AI hardware is critical for training large language models (LLMs), cementing its role in both consumer gaming and enterprise-level AI solutions. In fiscal 2024, its services division alone brought in over $1.8 trillion, reflecting a 178.92% change in the market capitalization growth from the previous year.

Logo of Nvidia

Source: the company.

As of December 2024, Nvidia has a market cap of $3.411 Trillion USD. This makes Nvidia the world’s 2nd most valuable company by market cap according to “companies market cap” company data. The market capitalization, commonly called market cap, is the total market value of a publicly traded company’s outstanding shares and is widely used to measure how much a company is worth.

The picture below shows the market capitalization history of Nvidia from 1999 to 2024.

Market cap history of Nvidia from 1999 to 2024

Source: Companies Market Cap.

The picture below shows the Stock price history of Nvidia from 1999 to 2024.

Stock price history of Nvidia from 1999 to 2024

Source: Companies Market Cap.

Nvidia dominates the GPU market, controlling over 85% of the discrete GPU space globally. It boasts a gross margin of approximately 65%, one of the highest in the semiconductor industry. According to the Business 2 community, Nvidia’s revenue surged, particularly in its data center segment, which accounted for $15 billion in 2023. Its AI chipsets have become a cornerstone for AI development across industries, leading to increased investor confidence.

Nvidia is integral to AI, as its GPUs are critical for training large language models (LLMs) and generative AI tools. This has led to surging demand for its A100 and H100 chips. Nvidia announced collaborations with Tesla and other automakers for AI-driven autonomous driving technologies.

The company continues to expand its AI reach through strategic investments in startups and partnerships with cloud providers like Amazon Web Services (AWS). Its Omniverse platform is being adopted for digital twins, a technology with applications in industrial design and smart cities.

Microsoft

Established in 1975 by Bill Gates and Paul Allen, Microsoft Corporation has been at the forefront of software development. Its strategic investment in OpenAI and integration of generative AI into its Office suite and Azure cloud services have significantly bolstered its growth. Investors and students can learn from Microsoft’s ability to adapt its business model over decades, sustaining growth in both legacy and emerging markets. In fiscal 2024, its services division alone brought in over $70 billion, reflecting a 19.59% change in the market capitalization growth from the previous year.

Logo of Microsoft Corporation

Source: the company.

As of December 2024 Microsoft has a market cap of $3.342 Trillion USD. This makes Microsoft the world’s 3rd most valuable company by market cap according to “companies market cap” company data. The market capitalization, commonly called market cap, is the total market value of a publicly traded company’s outstanding shares and is widely used to measure how much a company is worth.

The picture below shows the market capitalization history of Microsoft from 1996 to 2024.

Market cap history of Microsoft from 1996 to 2024

Source: Companies Market Cap.

The picture below shows the stock price history of Microsoft from 1986 to 2024.

Stock price history of Microsoft from 1986 to 2024

Source: Companies Market Cap.

Microsoft has surpassed a $3 trillion market cap for the first time in January 2024. It has made a significant investment in quantum computing with the development of its Azure Quantum platform.

Microsoft’s Copilot AI has been integrated across its Office Suite, including Word, Excel, and PowerPoint, revolutionizing productivity software. Recent news in June 2024 states that it has strengthened its partnership with OpenAI to bring advanced AI tools to Azure, making enterprise AI more accessible globally.

Amazon

Amazon Inc, founded in 1994 by Jeff Bezos, revolutionized e-commerce before expanding into cloud computing and entertainment. Amazon Web Services (AWS) remains a dominant player in the cloud sector, while its AI capabilities support logistics, retail, and media content. In fiscal 2024, its services division alone brought in over $85 billion, reflecting a 54.2% change in the market capitalization growth from the previous year.

Logo of Amazon

Source: the company.

As of December 2024 Amazon has a market cap of $2.421 Trillion USD. This makes Amazon the world’s 4th most valuable company by market cap according to “companies market cap” company data.

The picture below shows the market capitalization history of Amazon from 1997 to 2024.

Market cap history of Amazon from 1997 to 2024

Source: Companies Market Cap.

The picture below shows the Stock price history of Amazon from 1997 to 2024.

Stock price history of Amazon from 1997 to 2024

Source: Companies Market Cap.

Amazon’s Bedrock AI service has enabled enterprises to deploy customized AI models, further enhancing its AWS offerings. According to CRN, AWS held a 31% market share in the third quarter of 2024 and generated $27.5 billion in total sales during this period.

And according to CRN, Microsoft’s Intelligent Cloud business generated $24.1 billion in sales during the third quarter of 2024, up 20 percent year over year. It has also ramped up investments in drone technology, with Prime Air expanding to multiple cities for rapid deliveries. Its expansion into healthcare, with telemedicine services and pharmacy offerings, demonstrates diversification into high-growth industries.

Amazon’s continued investment in AI, including generative AI tools for its AWS customers, has strengthened its competitive edge in cloud services. Its e-commerce business has also seen growth, particularly in emerging markets contributing significantly, with innovations in logistics and Prime memberships driving customer retention.

Alphabet (Google)

Alphabet was founded in 1998 as Google by Larry Page and Sergey Brin in Menlo Park, California (later restructured as Alphabet Inc. in 2015). Google’s dominance in search and online advertising is complemented by its ventures in AI, particularly through its DeepMind subsidiary. It leverages its dominance in digital advertising while investing heavily in AI, autonomous driving (Waymo), and cloud services. Some of the companies under Alphabet are Calico, GV, Capital G, Verily, Waymo, X and Google Fiber. In fiscal 2024, its services division alone brought in over $65 billion, reflecting a 36.57% change in the market capitalization growth from the previous year.

Logo of Alphabet

Source: the company.

As of December 2024 Alphabet (Google) has a market cap of $2.399 Trillion USD. This makes Alphabet (Google) the world’s 5th most valuable company by market cap according to “companies market cap” company data.

The picture below shows the market capitalization history of Alphabet from 2014 to 2024.

Market cap history of Alphabet from 2014 to 2024

Source: Companies Market Cap.

The picture below shows the stock price history of Alphabet from 2004 to 2024.

Stock price history of Alphabet from 2004 to 2024

Source: Companies Market Cap.

Nearly eight years into their journey as an AI-first company, Alphabet launched Gemini AI, a generative AI model to compete with OpenAI’s GPT, integrated into Google Workspace and search functions. Alphabet’s significant developments in Waymo, an autonomous vehicle subsidiary has an expansion of robotaxi services in major U.S. cities.

Recently Alphabet announced an ambitious plan to power all operations with 100% renewable energy by 2030. Its advertising revenues saw a resurgence in 2024 after a decline due to privacy changes in prior years.

Conclusion

The dominance of the top five technology firms Apple, Microsoft, Nvidia, Amazon, and Alphabet, is a testament to their ability to innovate, adapt, and lead in a rapidly evolving market landscape. Their influence extends beyond their respective industries, shaping global economic trends, investment strategies, and technological advancements. Their products and services help other companies to improve their productivity. Their market cap rankings serve as a barometer for the health of the tech sector and the global economy, making them essential for any professional seeking to navigate today’s financial landscape effectively.

Why should I be interested in this post?

For finance professionals, the performance and strategic moves of these tech giants offer valuable lessons in market resilience, innovation-driven growth, and capital allocation. Understanding the trajectories and current strategies of these firms helps in identifying investment opportunities and evaluating risks in the tech sector.

Useful resources

Companies market cap Largest tech companies by market cap

Invest News Network(INN) Technology Stocks: 10 Biggest Companies in 2024

Business 2 Community Top 10 Tech Companies in the World by Market Capitalization in 2024

Computer Reseller News (CRN) Cloud Market Share For $84B Q3 2024: AWS, Microsoft, Google Cloud Lead

Visual Capitalist Ranked: The 50 Most Valuable Companies in the World in 2024

About the author

The article was written in December 2024 by Nithisha CHALLA (ESSEC Business School, Grande Ecole Program – Master in Management (MiM), 2021-2024).

My Apprenticeship Experience as Customer Finance & Credit Risk Analyst at Airbus

December 11, 2024 by Snehasish CHINARA

In this article, Snehasish CHINARA (ESSEC Business School, Grande Ecole Program – Master in Management, 2022-2025) shares his experience as Customer Finance Analyst at Airbus, which is a leader in the commercial aviation industry as an original equipement manufacturer (OEM).

About Airbus SAS

Airbus SAS, founded in 1970, is a leading European multinational aerospace corporation with a global presence. Specializing in the design, manufacturing, and delivery of aerospace products, services, and solutions, Airbus has established itself as a cornerstone of innovation and excellence in the aviation industry.

From commercial aircraft to defence and space systems, Airbus covers a wide array of sectors, each driven by cutting-edge technology and a commitment to sustainability. Their iconic product line, including the A320 and A350 families, represents the forefront of efficiency, safety, and performance in aviation.

Beyond manufacturing, Airbus is also deeply engaged in digital transformation, pushing boundaries with initiatives in autonomous flying, AI-driven processes, and greener aviation solutions. As an industry leader, Airbus is committed to decarbonizing the aerospace industry, having set ambitious goals to reduce its environmental footprint through innovations such as sustainable aviation fuels and hydrogen-powered aircraft.

With a global workforce of over 130,000 employees and operations in more than 170 locations worldwide, Airbus continues to be at the heart of the aerospace revolution, shaping the future of flight.

Logo of Airbus.

Source: the company.

My Experience as a Customer Finance & Credit Risk Analyst at Airbus

During my time as a Customer Finance & Credit Risk Analyst at Airbus, which was part of my Master in Management degree at ESSEC Business School, I had the opportunity to play a pivotal role in leading financial analyses and supporting high-stakes deal campaigns in the aviation sector. This experience was instrumental in sharpening my analytical and credit risk assessment capabilities, as I worked on transactions exceeding €200M, where each decision carried significant financial implications.

In this role, I focused on developing advanced financial models and internal customer credit rating models, applying methodologies from major credit rating agencies like Moody’s, S&P, and Fitch. These models, built using tools such as Excel, R, and Python, allowed my team to improve the accuracy of risk predictions for over 200 global client companies (mostly airline companies) air. By conducting industry-wide credit risk analyses, I ensured that each deal was supported by a thorough understanding of financial and credit health, helping Airbus mitigate risks and seize opportunities in a highly competitive market.

A key highlight of my work involved analysing the impact of M&A and restructuring activities within the aviation industry. This hands-on experience further honed my ability to deliver comprehensive financial forecasts and credit risk analyses.

One of the most rewarding aspects of my role was the opportunity to present these financial insights directly to senior executives. Communicating complex financial data effectively is crucial when high-value transactions are involved, and this responsibility significantly enhanced my presentation and communication skills. My experience in presenting to top executives helped me not only translate data into actionable strategies but also contributed to the decision-making process at the highest level.

Overall, my role as a Customer Finance & Credit Risk Analyst at Airbus was a formative experience that deepened my expertise in financial modelling, credit risk analysis, and strategic financial communication. It was an invaluable opportunity to contribute to significant aviation industry deals and refine my skills in evaluating financial performance and credit health at a global scale.

My missions

The objective my project was to achieve the following:

Led the migration of Airbus’ internal credit rating model from a manual Excel-based system to an automated and scalable R-based system, improving data processing accuracy and decision-making.

Educated internal teams on industry-specific financial metrics and KPIs to help them understand the financial health of Airbus’ customers.

Conducted comprehensive financial health analyses and credit rating evaluations for over 200 global companies, using tools such as Excel, R, and Python.

Supported marketing and sales campaigns by providing financial insights, risk evaluations, and industry trends to improve Airbus’ position in the aviation sector.

Required Skills and Knowledge

As a Customer Finance & Credit Risk Analyst at Airbus, several key skills and knowledge areas were essential to fulfilling my responsibilities effectively:

Financial Analysis and Modelling: Proficiency in developing financial models and credit rating models was crucial. These models helped me assess the financial health of clients and predict risks. Additionally, I frequently used tools like Excel, R, and Python to develop robust financial models that supported decision-making processes.

Credit Risk Assessment: Applying methodologies from Moody’s, S&P, and Fitch allowed me to conduct comprehensive credit risk assessments. Understanding credit rating criteria and financial ratios helped me evaluate over 200 global companies in the aviation sector, ensuring accurate risk predictions.

Industry Knowledge: Understanding the aerospace industry inside and out was essential. I became familiar with the dynamics between OEMs, lessors, airlines, and financial institutions. This helped me make better-informed decisions when assessing the creditworthiness of our clients and providing insights that contributed to Airbus’ overall financial strategies.

Data Analysis and Reporting: I worked with large datasets to analyse financial performance and assess risk factors. Creating financial reports, dashboards, and presentations helped me convey complex data in a way that was clear and actionable, especially when presenting to senior executives.

Automation and Process Improvement: One of my major projects involved transitioning our internal credit rating system from Excel to a more efficient R-based platform. This required me to develop a scalable solution that not only improved accuracy but also streamlined the data processing workflow, making everything faster and more reliable.

Collaboration and Stakeholder Management: Working closely with various teams within Airbus and external partners taught me the importance of effective communication and teamwork. Presenting my financial insights to senior executives also sharpened my ability to convey complex information in a clear, understandable way, ensuring everyone was aligned with our financial strategies.

This diverse set of skills allowed me to support high-value transactions, improve credit risk assessment processes, and contribute to strategic initiatives at Airbus.

What I learned

Key Learning Outcomes of this project :

Applying Financial Models to Real-World Scenarios: I gained hands-on experience using advanced financial models such as DCF, LBO, and credit rating models. This helped me make informed, evidence-based conclusions to assess credit risk and guide strategic decision-making.

Enhanced Risk Assessment Skills: I learned how to apply credit rating methodologies from major agencies like Moody’s, S&P, and Fitch. This allowed me to develop a deeper understanding of risk factors affecting both the aviation sector and individual companies, enhancing my ability to forecast risks with greater accuracy.

Collaboration and Stakeholder Engagement: Collaborating with cross-functional teams within Airbus, I developed strong communication skills, particularly in presenting complex financial insights to senior executives and aligning my work with broader corporate objectives.

Data-Driven Decision Making: I honed my ability to analyse large datasets, extract meaningful financial insights, and turn them into actionable recommendations. This process strengthened my strategic thinking and ability to contribute to critical business decisions.

Process Automation and Efficiency Improvement: Leading the automation of the internal credit rating system taught me how to streamline workflows and improve efficiency, significantly reducing the time spent on manual processes while enhancing data accuracy.

Concepts related my Apprenticeship

I explain below three business concepts related my apprenticeship: value chain, credit risk analysis, and financial ratios.

Value Chain

The commercial aviation sector comprises multiple interconnected players, each contributing to different stages of the value chain. The value chain begins with aircraft Original Equipment Manufacturers (OEMs) like Airbus and Boeing, which design and manufacture aircraft. These OEMs negotiate deal terms with airlines and lessors for the sale or lease of aircraft. The deals can range from firm orders, where aircraft are purchased outright, to leasing agreements, where airlines lease aircraft for operational flexibility.

In this value chain, airlines are the primary end users, operating the aircraft to transport passengers (commercial airplane) and freight (cargo airplane). Lessors act as intermediaries, purchasing aircraft from OEMs and leasing them to airlines, offering flexibility in fleet management. Additionally, Maintenance, Repair, and Overhaul (MRO) providers play a critical role in ensuring the safety and performance of aircraft throughout their lifecycle. Financial institutions and credit rating agencies are also integral players, assessing the creditworthiness of the companies involved and financing large-scale aircraft transactions.

The deal-signing process with OEMs often involves complex negotiations on pricing, delivery schedules, and terms of financing. Types of deals include sale agreements, wet or dry leases, and purchase options. The financial arrangements and credit risk evaluations play a pivotal role in securing these deals, ensuring that all parties can fulfil their obligations over the aircraft’s operational life.

Credit Risk Analysis

Credit risk analysis is the process of evaluating the likelihood that a borrower or counterparty will default on their financial obligations. In the context of my work at Airbus, credit risk analysis was crucial for understanding the financial health of customers—whether they were airlines, lessors, or MRO service providers. By analysing financial statements, liquidity ratios, and external market factors, we could gauge the risk of default and the overall creditworthiness of these companies.

Credit ratings, provided by the three major credit rating agencies—Moody’s, S&P, and Fitch, are a standardized way to assess a company’s financial health and default risk. These agencies evaluate the financial statements of companies, industry trends, and macroeconomic conditions to assign ratings that range from AAA (lowest risk) to D (in default). Credit ratings are essential for investors and lenders in determining the risk profile of potential investments and for companies like Airbus when structuring deals.

Airbus, like many large corporations, uses internal customer credit rating models alongside external credit ratings to gain deeper insights into the financial stability of its clients. These models allow Airbus to account for industry-specific factors and customer performance metrics that external agencies might overlook. Internal models are particularly valuable in predicting potential risks and making informed decisions about financing, delivery schedules, and long-term contracts, ensuring that Airbus minimizes exposure to credit risk.

Financial Ratios

Financial ratios (key performance indicators (KPIs) for the financial health of a firm) are vital in assessing the financial health of companies in the aviation sector. During my time at Airbus, I focused on analysing these KPIs to evaluate the financial stability and creditworthiness of our customers:

Liquidity Ratios: Indicators like the current ratio and quick ratio show a company’s ability to meet its short-term obligations. A higher ratio suggests stronger liquidity and a lower risk of financial distress.

Debt-to-Equity Ratio: This KPI measures the proportion of debt financing relative to equity. A lower debt-to-equity ratio typically indicates a more financially stable company, with less risk of default in turbulent market conditions.

Profitability Margins: Metrics like net profit margin and EBITDA margin give insights into how efficiently a company is operating. Higher profitability suggests a company can generate sufficient revenue to cover its expenses, even in challenging times.

Gearing Ratio: A company’s gearing ratio measures its financial leverage and how reliant it is on debt to finance its operations. A higher gearing ratio may indicate increased financial risk.

Altman Z-Score: This is a composite score used to predict bankruptcy risk, combining profitability, leverage, liquidity, solvency, and activity ratios. It’s particularly useful for assessing companies under financial stress, a key concern in the aviation sector post-COVID-19.

Cash Flow from Operations: A company’s ability to generate consistent cash flow from its core operations is a strong indicator of financial health. In the aviation sector, where cash flow can be cyclical, maintaining positive cash flow is critical for long-term sustainability.

The following table provides some of the important financial ratios used to estimate the risk of a company. High financial risk is implied by high or low measure according to the ratio.

Table 1. Financial ratios

Financial ratios

Source: The author.

Ratios are most useful when compared between companies in similar sectors and over time. Multiple measurements may be necessary for each given firm to fully comprehend the financial risk.

Why Should I Be Interested in This Post?

If you are passionate about the aviation sector, finance, and risk management, this role as a Customer Finance & Credit Risk Analyst at Airbus offers an exceptional opportunity to develop a deep understanding of the global aviation market while working on high-impact financial transactions. You’ll be at the forefront of evaluating the creditworthiness of major airlines, lessors, and other key players in the industry, gaining valuable insights into how financial health and risk factors influence large-scale deals.

This position also allows you to hone your skills in advanced financial modeling, risk assessment, and credit rating, using real-world data to drive decision-making on transactions worth millions of euros. The chance to work closely with cross-functional teams, present findings to senior executives, and contribute directly to Airbus’ business strategy ensures that you will grow both technically and professionally.

Additionally, the aviation industry is dynamic, with constant innovations in technology, sustainability initiatives, and global market trends. By working in this role, you’ll be part of a sector that plays a pivotal role in global transportation and trade, offering immense potential for career growth and advancement.

Useful resources

Airbus

Allianz Trade Financial Risk

Deloitte Financial Risk

About the author

The article was written in October 2024 by Snehasish CHINARA (ESSEC Business School, Grande Ecole Program – Master in Management, 2022-2025).

CRSP

December 9, 2024 by Nithisha CHALLA

CRSP

In this article, Nithisha CHALLA (ESSEC Business School, Grande Ecole Program – Master in Management (MiM), 2021-2024) examines the history, features, applications, and relevance of CRSP, with a special focus on why it matters to finance professionals and students.

Introduction

CRSP (Center for Research in Security Prices) is a leading financial database renowned for its comprehensive collection of security price data, returns, and market indexes. It is a trusted resource for academics, researchers, and professionals who rely on historical datasets for empirical research and strategic decision-making. With a focus on U.S. markets, CRSP has set the gold standard for securities data, supporting countless studies in finance and economics.

Mastering CRSP not only deepens a student’s understanding of financial markets but also signals to potential employers a commitment to analytical rigor and excellence in finance—a key advantage in a competitive job market.

The History of CRSP

Established in 1960 at the University of Chicago, CRSP was founded to provide accurate and comprehensive data on U.S. stock markets for academic research. Its first dataset covered securities listed on the New York Stock Exchange (NYSE), laying the foundation for rigorous empirical research in finance. Over time, CRSP expanded to include data from other exchanges, such as the American Stock Exchange (AMEX) and NASDAQ, creating an unparalleled repository of historical market information.

Logo of CRSP

Source: the company.

CRSP’s pioneering methodologies in data collection and standardization have significantly contributed to advancements in financial theory and practice. Its datasets have been integral to groundbreaking studies, including those that led to Nobel Prizes in Economics like Eugene Fama.

Key Features

Certain key features of CRSP make it very useful as a database such as its Comprehensive Market Data, High-Quality Data, Unique Identifiers, Event Studies and Analytics, and Customizable Datasets.

As an example, the picture below presents the CRSP website Interface.

CRSP website Interface
CRSP Interface
Source: the company.

Comprehensive Market Data

In the domain of finance, where historical accuracy and data consistency are critical, the Center for Research in Security Prices (CRSP) database has established itself as an invaluable resource. Maintained by the University of Chicago Booth School of Business, CRSP provides high-quality financial and market data, widely recognized for its rigor and reliability.

CRSP provides historical data on stock prices, returns, and dividends dating back to 1926. It includes data on U.S. equity, fixed-income securities, mutual funds, and market indexes.

High-Quality Data

Known for its accuracy and reliability, CRSP meticulously cleans and standardizes data for research-grade quality.

Unique Identifiers

Employs permanent and unique identifiers for securities, ensuring seamless tracking across corporate events such as mergers or name changes.</p

Event Studies and Analytics

CRSP supports event-based analyses, including stock splits, delistings, and corporate actions. It enables users to study the impact of specific events on stock performance.

Customizable Datasets

CRSP allows users to tailor data queries based on timeframes, security types, or specific indices.

Applications in Finance and Business

There are several applications of CRSP in finance and business such as Market Benchmarks, Strategic Planning, academic research, and Corporate Finance.

Academic Research: CRSP is the backbone of empirical finance, aiding studies on asset pricing, portfolio theory, and market efficiency.
Investment Strategies: Asset managers and analysts use CRSP data to backtest trading strategies, analyze market trends, and optimize portfolios.
Market Benchmarks: CRSP provides widely used benchmarks like the CRSP Indexes, which are integral to understanding market dynamics.
Corporate Finance: Researchers and professionals leverage CRSP for analyses on mergers, acquisitions, and the impact of financial policies.

Advantages and Limitations of CRSP

Though there are multiple advantages of using this database there are also certain limitations that we have to consider:

Advantages of CRSP

Historical Depth: CRSP’s long-term datasets enable robust time-series analyses and longitudinal studies.
Reliability: Trusted by academics and practitioners for its meticulous approach to data accuracy.
Comprehensive Coverage: Includes data on a broad range of financial instruments and corporate actions.

Challenges and Limitations

Cost: Access to CRSP is subscription-based and can be expensive for individual users or smaller institutions.
U.S.-Centric Focus: While exhaustive for U.S. markets, it offers limited data on international securities.
Technical Complexity: Requires expertise to navigate and analyze its extensive datasets effectively.

Why CRSP Matters in 2024

In 2024, as financial markets grow increasingly complex, CRSP’s role as a reliable data source is more critical than ever. The database supports cutting-edge research on topics such as algorithmic trading, behavioral finance, and the impact of ESG factors on market performance. With its legacy of contributing to financial innovation, CRSP remains a vital resource for understanding and navigating modern markets.

Conclusion

CRSP stands as a testament to the power of high-quality data in shaping financial research and practice. Its depth, precision, and historical scope make it indispensable for academics, researchers, and industry professionals. As markets evolve, CRSP continues to provide the tools and insights needed to analyze trends, test hypotheses, and drive informed decisions.

Why should I be interested in this post?

For finance students, CRSP is more than a database—it’s an educational gateway to understanding market behavior, testing financial theories, and developing data-driven insights. Familiarity with CRSP equips students with the skills to conduct empirical research and enhances their readiness for roles in asset management, investment banking, and academia.

Useful resources

CRSP CRSP research data products

CRSP GCRSP US Stock Databases

Wikipedia Center for Research in Security Prices

About the author

The article was written in December 2024 by Nithisha CHALLA (ESSEC Business School, Grande Ecole Program – Master in Management (MiM), 2021-2024).

Compustat

December 9, 2024December 9, 2024 by Nithisha CHALLA

Compustat

In this article, Nithisha CHALLA (ESSEC Business School, Grande Ecole Program – Master in Management (MiM), 2021-2024) delves into Compustat, its origins and history, features, applications, and its critical role in shaping modern finance.

Introduction

In an era where data drives decision-making, having access to reliable and standardized financial information is essential for academics, analysts, and professionals in finance. Compustat is a comprehensive database that offers detailed financial and economic data on publicly traded companies across the globe. Renowned for its standardized and comparable datasets, it is extensively used for financial modeling, investment research, and academic studies. It is especially valued in environments where precision, consistency, and historical depth of data are paramount.

Investing time in learning how to navigate and apply insights from Compustat is not merely an academic exercise; it’s a practical step toward becoming a data-savvy finance professional ready to tackle real-world challenges.

The History of Compustat

Compustat traces its origins to the 1960s when Standard & Poor’s developed it as a digital repository for corporate financial data. Initially focused on U.S. companies, the database expanded its scope to include international firms, establishing itself as a global standard for financial information. Over decades, Compustat evolved with technological advancements, incorporating tools for analytics and data visualization, thus maintaining its relevance in an increasingly complex financial landscape.

The acquisition of Compustat by S&P Global(Standard and Poor) further solidified its position, ensuring integration with other S&P products like Capital IQ, enhancing both usability and depth.

Key Features

Certain key features of Compustat make it very useful as a database such as its extensive financial data, global reach, standardized metrics, customizable data access, and integration capabilities

As an example, the picture below presents the screenshot of the Compustat website.

Compustat website Interface

Source: the company.

Extensive Financial Data

Compustat, a product of S&P Global, is a robust database that provides financial, economic, and market data, making it a cornerstone for those engaged in quantitative research and corporate analysis. Compustat covers thousands of companies’ income, balance sheets, and cash flow statements. It includes detailed information on assets, liabilities, revenues, expenses, and equity.

Global Reach

Compustat provides data on companies from North America, Europe, Asia-Pacific, and emerging markets. It also features coverage of both active and inactive companies for historical analysis.

Standardized Metrics

Compustat ensures consistency and comparability across industries and geographies. It adheres to accounting standards, enabling uniform analysis.</p

Customizable Data Access

Allows users to tailor datasets according to specific time frames, industries, or financial metrics.

Integration Capabilities

Compustat is compatible with statistical software like R, Python, and MATLAB for advanced analytics. It can be integrated with S&P Global’s broader suite of tools, enhancing data utility.

Applications in Finance and Business

There are several applications of Compustat in finance and business such as equity research and valuation, credit analysis, academic research, corporate strategy, and benchmarking

Equity Research and Valuation: Investment professionals use Compustat to build financial models, perform company valuations, and assess market performance.
Credit Analysis: Lenders and credit analysts utilize Compustat’s data to evaluate borrowers’ financial health and creditworthiness.
Academic Research: Scholars rely on Compustat for empirical studies on market behavior, corporate performance, and economic trends.
Corporate Strategy and Benchmarking: Businesses use the database for competitive analysis and to benchmark their performance against peers.

Advantages and Limitations of Compustat

Though there are multiple advantages of using this database there are also certain limitations that we have to consider:

Advantages of Compustat

Depth of Data: Historical records spanning decades provide valuable insights for longitudinal studies.
Reliability: Maintained by S&P Global, Compustat is a trusted source of financial information.
Customization: The ability to filter and extract tailored datasets enhances its utility across various applications.

Challenges and Limitations

Cost: The subscription fee is substantial, which may limit access for small organizations or individual users.
Complexity: Navigating the platform and interpreting data may require specialized training.
Limited Non-Financial Metrics: Focuses primarily on financial data, with less emphasis on qualitative aspects like ESG (Environmental, Social, Governance) metrics.

Why Compustat Matters in 2024

In the rapidly evolving financial landscape of 2024, Compustat remains a vital resource. With the growing complexity of global markets, the need for standardized and reliable data has never been greater. As businesses increasingly adopt AI-driven analytics, Compustat’s clean, structured datasets are a foundation for machine learning models and predictive analytics. Furthermore, its historical archives enable researchers to analyze economic trends and market cycles with unparalleled depth.

Conclusion

Compustat stands as a benchmark in financial databases. Its extensive features, historical depth, and global reach make it indispensable for professionals and academics. Compustat empowers users to make informed decisions in a data-driven economy by bridging the gap between raw data and actionable insights.

Why should I be interested in this post?

For finance students, understanding and utilizing Compustat can be a game-changer. Mastery of this database enhances research capabilities and provides a competitive edge in the job market. Familiarity with Compustat signals to employers a proficiency in handling large-scale financial data and performing advanced analytics skills highly sought after in finance, investment banking, and consulting.

Useful resources

S&P Global Compustat Financials

Fidelity Investments Introduction to Standard & Poor’s Compustat

European University Institute (EUI) Compustat – Standard and Poor’s

Wikipedia Compustat

About the author

The article was written in December 2024 by Nithisha CHALLA (ESSEC Business School, Grande Ecole Program – Master in Management (MiM), 2021-2024).

Statista

December 9, 2024December 9, 2024 by Nithisha CHALLA

Statista

In this article, Nithisha CHALLA (ESSEC Business School, Grande Ecole Program – Master in Management (MiM), 2021-2024) explores Statista, its origin, features, applications, and its value as a go-to resource for data and insights.

Introduction

Statista is a leading provider of market and consumer data, presenting information in an intuitive, visually appealing format. Known for its user-friendly interface and comprehensive coverage, Statista aggregates data from over 22,500 trusted sources, making it a one-stop shop for global statistics, market trends, and industry reports.

Moreover, familiarity with Statista demonstrates to employers a capacity for leveraging data to inform decisions—a skill highly sought after in finance, consulting, and analytics roles. By mastering Statista, students not only enhance their academic experience but also gain a competitive edge in their professional journey.

The History of Statista

Founded in 2007 in Hamburg, Germany, Statista was created to simplify access to data and transform complex information into actionable insights. The platform initially focused on German-speaking markets but quickly expanded to serve a global audience. Over the years, Statista has grown into one of the largest statistics portals worldwide, providing data in fields ranging from technology and finance to healthcare and consumer behavior.

Logo of Statista

Source: the company.

Statista’s innovative approach to presenting data visually has set it apart. By combining academic rigor with business-friendly accessibility, the platform has become indispensable for decision-makers across industries.

Key Features

Certain key features of Statista make it very useful as a database such as its Extensive Data Coverage, Interactive Visualizations, Comprehensive Reports, Global Consumer Survey, and Ease of Access

As an example, the picture below presents the Statista website Interface.

Statista website interface

Source: the company.

Extensive Financial Data

Statista, a renowned online statistics and market research platform offers a treasure trove of data for professionals, researchers, and students alike. Statista offers over 1.5 million statistics across 170 industries and 150+ countries. It includes data on demographics, consumer behavior, market trends, and economic indicators.

Interactive Visualizations

Statista provides charts, infographics, and dashboards to make data interpretation easier. Its users can customize visualizations to suit their needs.

Comprehensive Reports

In Statista, industry reports, market forecasts, and trend analyses are available. There are also special reports that focus on emerging topics like digitalization, sustainability, and AI.

Global Consumer Survey

Statista has a unique feature that offers insights into consumer attitudes and preferences across regions and industries.

Ease of Accessibility to data

Statista supports export in multiple formats, including PDF, Excel, and PowerPoint, for seamless integration into presentations and reports. And it features a powerful search engine and intuitive navigation tools.

Applications in Finance and Business

There are several applications of Statista in finance and business such as Market Research, Strategic Planning, academic research, and Public Policy, and Advocacy

As an example, the picture below presents the news about the monthly variation of the harmonized consumer price index (HICP) in France from January 2021 to April 2024.

Statista news on harmonized consumer price index(HICP)
Statista Interface
Source: the company.

Market Research: Businesses use Statista to understand market dynamics, consumer preferences, and industry trends.
Strategic Planning: Statista’s insights help organizations make informed decisions about investments, product launches, and expansions.
Academic Research: Students and researchers rely on Statista for data-driven studies in fields like economics, business, and social sciences.
Public Policy and Advocacy: Policymakers use Statista to analyze economic indicators and societal trends, aiding in policy formulation and advocacy efforts.

Advantages and Limitations of Statista

Though there are multiple advantages of using this database there are also certain limitations that we have to consider:

Advantages of Statista

Broad Scope: Covers a wide range of topics, industries, and geographies.
User-Friendly: Simplifies complex data with visual tools and intuitive navigation.
Trusted Sources: Aggregates data from reputable organizations, ensuring reliability.

Challenges and Limitations

Subscription Costs: Comprehensive access requires a paid subscription, which might be prohibitive for some users.
Limited Raw Data: Focuses more on aggregated and processed data rather than raw datasets.
Depth vs. Breadth: While broad, some topics may lack the depth found in specialized databases.

Why Statista Matters in 2024

In 2024, as data becomes the backbone of strategic decision-making, Statista’s role is more vital than ever. Its ability to present real-time insights and long-term trends in a visually engaging manner caters to the increasing demand for actionable intelligence. With industries navigating challenges like digital transformation and global economic shifts, Statista serves as a reliable ally in staying informed and competitive.

Conclusion

Statista has revolutionized how data is accessed and utilized. Its blend of breadth, reliability, and user-friendly design makes it a versatile tool for anyone needing data-driven insights. Whether you’re exploring new markets, conducting academic research, or shaping public policy, Statista equips you with the knowledge needed to succeed in a complex world.

Why should I be interested in this post?

For finance students, Statista offers a wealth of resources to support academic projects, case studies, and career preparation. The platform provides access to financial metrics, market trends, and consumer insights that are invaluable for coursework and internships.

Useful resources

Statista Empowering people with data

Statista Global stories vividly visualized

Wikipedia Statista

European University Institute (EUI) Statista

About the author

The article was written in December 2024 by Nithisha CHALLA (ESSEC Business School, Grande Ecole Program – Master in Management (MiM), 2021-2024).

Trump Trade

December 7, 2024 by Marine SELLI

Trump Trade

In this article, Marine SELLI (ESSEC Business School, Global Bachelor in Business Administration (GBBA), 2020-2024) examines the phenomenon of “Trump Trades” and their enduring impact on financial markets.

What Is the Trump Trade?

Have you ever wondered how politics shapes financial markets?

The “Trump Trade” highlights this intersection as it captures how market movements are influenced by the policies of Donald Trump. This phenomenon was first observed after his surprise 2016 election victory, and then resurfaced in 2024 with Trump’s re-election.

The Trump Trade is the financial strategies and market movements based on expectations of Trump’s economic policies enactments. It is about how markets understand and view them. Investors react to these policies such as anticipated tax cuts, deregulation, trade measures, and infrastructure projects which leads to significant market shifts.

In 2016 when Trump’s election came out of the blue and the market rallied, all major U.S. indices, including the S&P 500, Dow Jones Industrial Average and Russell 2000, hit record highs. Then, fast forward to 2024 and the story repeated itself. In the month of the election, November 2024, the Dow Jones shot to an all-time high of 44,910.65 and the S&P 500 broke 6,000 points for the first time.

In this phenomenon, it is observed how investor behavior follows the perception of Trump’s policy as pro-business.

What is it about Trump’s presidency that drives these significant market reactions?

Trump has a real estate magnate background therefore he positions himself as a supporter of loose monetary policy: as a developer, he used to rely mainly on cheap credit to finance his projects, benefit from asset appreciation and leverage investments.

His economic philosophy was shaped by his background and that is still reflected in his policies and statements. If implemented, Trump’s policies would prioritize growth, borrowing, and investment, the core of the Trump Trade phenomenon. In fact, Trump’s policies are largely articulated in terms of tax cuts, deregulation, tariffs and infrastructure spending, which are for investors, opportunities of growth.

Two Elections: 2016 vs. 2024

When comparing the Trump Trade in 2016 and 2024. What remained the same and what changed? Trump’s surprise win in 2016 sent shockwaves through the financial world. He was able to get investors to change their portfolios based on his policies. Small cap stocks led the way, outperforming large caps by nearly 8 percent, as they are more reliant on domestic growth, and equity markets surged. The yield on the 10-year Treasury also shot up by almost 100 basis points. It was a steepening yield curve, reflecting optimism over growth but concern about higher borrowing costs and inflation.

Trump’s reelection by 2024 was less surprising, but markets still reacted heavily. Shortly after his victory, the Dow Jones climbed 200 points and small cap stocks again outperformed as investors favored companies less exposed to global trade risks. Additionally, the bond market behaved in line with 2016 trends by long term yields rising faster than short term yields, a sign of inflation expectations.

Financial Market Movements during Trump Re-election

Source: Bloomberg, Les Echos

Trump viewed as an inflationist?

Why do markets think Trump equals inflation? The answer to his policies and economic philosophy. Of course, Trump’s way of doing fiscal expansion through unfunded tax cuts and big spending naturally triggers inflation expectations. Higher disposable income from lower taxes creates demand and raises prices. At the same time, businesses that import goods are burdened by higher costs, which are often passed on to consumers due to protectionist measures that Trump wants to accentuate.

These dynamics are reflected in bond markets. Inflation eats away at the purchasing power of fixed payments, so investors require higher yields on long term bonds. The dynamic steepens the yield curve, whereby long-term rates rise faster than short term rates. In 2016 and then again in 2024, this pattern characterized the Trump Trade and proved that markets still see Trump as an inflationist.

In addition, as I mentioned earlier, Trump’s economic strategy is influenced by his background in real estate. He has always been someone that has leveraged debt to grow and has always pushed for lower interest rates and expansive fiscal policies.

The Forces Driving the Trump Trade

Trump’s policies and economic agenda have included his tax reforms. The 2017 Tax Cuts and Jobs Act cut the corporate tax rate from 35% down to 21%, which had a massive impact on corporate earnings and stock valuations. The same optimism is building in technology and consumer sectors that would be the biggest beneficiaries of these measures for 2024, when there is a possibility of further tax incentives.

Another key driver is deregulation, as during Trump’s first term rollbacks on things like environmental protections, financial regulations and healthcare compliance lowered costs for businesses and raised profitability in sectors like energy and banking. While these expectations have reappeared yet again in 2024, the increased focus on ESG investing has made things more difficult, with some investors eschewing industries deemed environmentally unfriendly.

Furthermore, a boost to infrastructure spending also fuels optimism, as Trump’s pledge of massive energy infrastructure investments such as in energy pipelines for example, has raised market hopes for the industrial sectors. In the weeks following Trump’s 2016 victory, the energy sector outperformed the broader market by over 10%, and similar gains were seen in 2024 as infrastructure-related stocks went up on hopes of renewed public investment.

In conclusion, the Trump Trade exemplifies how market perceptions, often driven by political rhetoric rather than enacted policies, can shape financial dynamics. While Trump’s agenda captures market optimism, much of it may rest on speculative assumptions and short-term gains, masking the underlying risks and long-term challenges. The sustainability of this optimism is contingent on consistent execution, realistic fiscal discipline, and the ability to address structural issues beyond mere rhetoric. Without these, the Trump Trade could unravel as a fleeting market illusion.

Why should I be interested in this post?

Understanding the Trump Trade demonstrates how political decisions, and macroeconomic policies can move financial markets. The analysis links the theoretical principles you study such as market behavior, and corporate strategy to their real-world application. The Trump Trade is a practical example of how politics, economics, and finance play off each other, no matter whether your aspiration is to work in investment banking, asset management, or corporate strategy. It goes beyond academic learning as a basis to think critically about future political and economic shifts that might influence global markets.

Useful resources

JPMorgan Private Bank Is the Trump Trade a Good Deal?

Goldman Sachs on Trump’s Economic Policies

LSE Economic Impacts of the Trump Tariff Proposals on Europe

Financial Times Trump’s Tariff Policies Analysis

Financial Times Market Reactions to Trump’s Economic Decisions

Financial Times Global Trade in the Trump Era

Deutsche Bank Flow: Trump Trade – Back to the Future

Synapses (YouTube channel) Business Insights

About the author

The article was written in December 2024 by Marine SELLI (ESSEC Business School, Global Bachelor in Business Administration (GBBA), 2020-2024).

Political Risk: An Example in France in 2024

December 7, 2024 by Marine SELLI

Political Risk: An Example in France in 2024

In this article, Marine SELLI (ESSEC Business School, Global Bachelor in Business Administration (GBBA), 2020-2024) explores the intricate relationship between political instability and financial markets, focusing on France’s landscape in 2024.

The context

Financial market stability is critically dependent on political risk, which determines how investors behave, borrowing costs and how strong a nation’s currency is. Consequently, market fears of political instability under Michel Barnier’s government have been heightened in France. Indeed, the instability has manifested itself in rising bond spreads, pressure on the euro and rising costs of debt issuance. Therefore, France’s financial landscape is being impacted by political uncertainty.

Spread Since the Dissolution of the National Assembly.
Spread Between French and German Bonds
Source: Bloomberg, Les Echos

The Cost of French Debt Rises

One of the most widely followed indicators of France’s economic health is its government bonds (obligations assimilables du Trésor or OATs): the yield reflects market confidence in France’s creditworthiness and economic conditions, with rising yields often signaling increased risk perceived by investors. Additionally, the spread between OAT yields and German Bunds serves as a benchmark for comparing investor sentiment toward France versus Europe’s strongest economy. In the past few months, the French bond market has spiked to political uncertainty. As a result, the spread between French and German 10-year bond (which represents a key risk gauge) spiked to 89 basis points in late November 2024. It is the highest since eurozone crisis days in 2012, and up from the 55 basis points in May 2024 before parliamentary dissolution.

Spread Between French and Greek Bonds.

Source: Bloomberg, Les Echos.

The spread reflects the additional yield investors demand to hold French debt over German bonds, which are the eurozone’s safest. Therefore, it represents a quantifiable expression of the risk that markets see associated with France’s political and fiscal situation. This comes as France’s 10-year bond yield has risen sharply from 2.9% at the start of 2024 to 3.2% in November 2024. However, German yields have remained steady at 2.1%, reflecting a difference in confidence among investors in the two economies.

Therefore, the implications for France’s borrowing costs are profound. In 2025, the government will issue €300 billion in bonds, a record amount, as debt refinancing needs and budgetary deficits are pushing up borrowing. A 30 basis point rise in yields could add £900m a year to the interest bill, further stretching a budget that is already under severe strain. Hence, the urgent need to restore market confidence is underlined by the cumulative cost of higher borrowing rates.

The Cost of French Debt Rises

France’s political challenges have also put pressure on the euro, often considered a barometer of European unity. The euro is currently trading at $1.05 and risks further depreciation to parity with the US dollar if the Barnier government collapses. Historically, currency markets have been sensitive to French political developments, and we can point to recent examples.

For instance, speculation of a severe euro devaluation swirled around a ‘Frexit’ in 2017 after fears of such an outcome during the presidential campaign of Marine Le Pen. Analysts had forecast up to 5% fall in the euro, but Emmanuel Macron’s eventual victory eased those fears, pushing the euro 10% higher in four months. However, in 2024, the situation is less clear. The euro’s path remains fragile as investor sentiment is weighed down by political uncertainty and fiscal deficits near 6% of GDP. Further decline would aggravate inflationary pressures by increasing the cost of imports, especially energy, and would provide only modest export benefits in a weak global economy.

Meanwhile, the widening of the French-German spread in recent weeks has been a clear signal that skepticism about France’s political and fiscal outlook has been growing.

France, a semi core of the eurozone, now has borrowing costs approaching those of southern European countries such as Spain and Portugal, which have been viewed as riskier. For example, Spanish 10-year bond yields have fallen below those of France due to the improved fiscal discipline in and economic performance by Spain. In the meantime, France’s credit default swaps are trading at 0.4%, implying a default probability of 2.6%. This is still below Greece’s 5%, but it reflects a loss of confidence in French fiscal management.

Additionally, liquidity concerns are also at play. France’s ability to get enough private investors to put money into its debt is becoming more reliant on these private investors as the European Central Bank reduces its purchases of bonds. The shift in market dynamics only underscores the need for political stability.

France Fiscal Outlook

France’s fiscal outlook is a daunting challenge for financial markets. This comes as the government embarks on its record €300 billion debt issuance program for 2025, at a time when interest costs are rising and the budget remains in deficit. As a result, the sheer volume of outstanding debt, coupled with higher yields, will push debt servicing expenses to €55 billion in 2025, from €50 billion in 2024.

Moreover, France’s debt-to-GDP ratio is already 111% in 2024, one of the highest in the eurozone. That ratio has been a source of concern about the sustainability of France’s fiscal policies, given that it comes amid a slow economic growth. That’s why analysts warn that without meaningful reforms to deal with structural deficits, the debt trajectory could become unsustainable, which will then trigger further downgrades from credit rating agencies and higher borrowing costs.

Outstanding French Debt Overview.

Source: Agence du Trésor.

In conclusion, France is at a crossroads, and its financial markets are reflecting deep seated worries about political instability and fiscal sustainability. Widening bond spreads, growing debt servicing costs and pressure on the euro underscore the need for action. Furthermore, this case serves as a textbook example of how political risk can deeply impact financial markets. The interplay between France’s domestic political turmoil, bond spreads, currency volatility, and investor sentiment demonstrates how closely markets monitor political developments.

Why should I be interested in this post?

This post provides an analysis of how political risk impacts financial markets, focusing on the French bond market, currency fluctuations, and fiscal sustainability. It gives you an outlook on the real-world consequences of political instability, offering a detailed understanding of how investor sentiment shifts in response to political uncertainties.

Useful resources

European Central Bank (ECB)

Agence France Trésor (AFT)

Bloomberg

Les Echos (Financial Market Section)

Standard & Poor’s (S&P) Global Ratings

About the author

The article was written in December 2024 by Marine SELLI (ESSEC Business School, Global Bachelor in Business Administration (GBBA), 2020-2024).

My Internship Experience at Safety Carb

December 7, 2024 by Marine SELLI

My Internship Experience at Safety Carb

In this article, Marine SELLI (ESSEC Business School, Global Bachelor in Business Administration (GBBA), 2020-2024) shares her professional experience as a Strategic Financial Planner at Safety Carb Additifs.

About the company

My father founded Safety Carb Additifs as an entrepreneurial venture in 2015 to produce French industrial additives. It is a company focused on environmentally friendly additives while reducing their negative ecological impact. Over the years, Safety Carb has developed itself and reaffirmed its positioning earning eco-certifications that also allow its customers to benefit from eco-primes.

Logo of the company.
Logo of Safety Carb
Source: Safety Carb.

My internship

Joining Safety Carb Additifs as a Strategic Financial Planner gave me the opportunity to contribute to an entrepreneurial venture which is a stimulating and ever evolving environment. My role encompassed many day-to-day recurring tasks such as inventory management, issuing invoices, it was mainly centered around developing a comprehensive business plan, which served as a foundation for the company’s strategic initiatives and future growth. Yet being in a small corporate setting, in rare moments I also had to bring support in other areas such as operational tasks.

In the end, this internship allowed me to delve into the company’s financial operations and understand the unique challenges faced by entrepreneurial ventures.

My missions

One of the main parts of my internship was the creation of a detailed business plan with the CFO ( Chief Financial Officer ). I had to do in-depth market research of this process in which I had to assess growth opportunities and identify the company’s competitive advantage. We looked to determine the possible market expansions and the need to incorporate the sustainability metrics into the plan. Safety Carb emphasized the use of its eco-friendly products to break new market segments in this business plan.

It also featured financial projections of the company’s growth potential and indicated the company’s ability to achieve profitability while conforming to his sustainability objectives, and used scenarios useful for external financing like investors.

I was also responsible for helping to synthesize accounting data and to create tools to monitor inventory so that the company’s operations could be kept efficiently and on track with its financial achievement.

Required skills and knowledge

Reflecting on it, my internship at Safety Carb Additifs required a combination of technical and analytical skills. Developing the business plan required me to acquire a comprehensive understanding of financial modeling and market analysis. Moreover, I needed a strategic mindset to balance the company’s entrepreneurial objectives with its operational constraints. For instance, while drafting the Business Plan, I had to consider the company’s limited financial and human resources, ensuring that proposed initiatives were feasible within budget and staffing constraints. Additionally, the production capacity of the company’s facilities imposed limits on how quickly new projects or expansions could be implemented.

What I learned

This experience enhanced my understanding of how financing can support entrepreneurial ventures and fast-track its success. I also learned to develop business plan creation skills, from market analysis to financial projections, and gained an overview into how sustainability can drive growth in competitive industries in today’s environment. On a more personal note, working closely within an entrepreneurial team also gave me a deeper appreciation for the challenges and opportunities that come with running a family business.

Financial concepts related my internship

Business Plan Development

One of the key financial concepts I applied during my internship was business plan creation. This involved integrating various components into a cohesive Excel that reflected the company’s strategic direction.

Cost-Benefit Analysis

I also relied on cost-benefit analysis to evaluate the potential return on investment for market expansion initiatives and the need for a validation of other eco-certifications. By assessing the trade-offs between costs and expected benefits, I was able to provide actionable recommendations backed-up by several hypotheses.

Cash Flow Management

Cash flow management was another important concept. For any entrepreneurial venture, it’s necessary to understand how to project and monitor cash flows and ensure that the company’s operations were financially sustainable.

Why should I be interested in this post?

If you’re interested in an entrepreneurial venture, finance and sustainability, I think this post provides a great ground to demonstrate how finance can serve as a catalyst for both business growth and positive environmental impact.

Useful resources

Safety Carb

About the author

The article was written in December 2024 by Marine SELLI (ESSEC Business School, Global Bachelor in Business Administration (GBBA), 2020-2024).

My Internship Experience as a Brand Strategy Assistant at Accor

December 7, 2024 by Marine SELLI

My Internship Experience as a Brand Strategy Assistant at Accor

In this article, Marine SELLI (ESSEC Business School, Global Bachelor in Business Administration (GBBA), 2020-2024) shares her professional experience as a Brand Strategy Assistant at Accor, focusing on brand strategic analysis for a global portfolio of midscale brands.

About Accor

As a global hospitality industry leader, Accor has over 5,300 hotels throughout 110 countries. Accor has a wide variety of brands from luxury to economy, catering to different segments of customers – leisure travelers to business professionals. The company is known for its focus on innovation and sustainability and is always looking for ways to maintain a competitive advantage in a changing market. Today, the focus is on “augmented hospitality”. The brand strategy team in Accor’s global operations is responsible for creating and executing actions to promote value, brand equity, market presence and operational efficiency. In close partnership with regional relays and individual hotels, the team is able to adapt strategies in order to work with the specific dynamics of each market. Accor recently has been in the process of a strategic transformation, moving away from being a hotel owner and towards franchising and contracted management. Accor increases operational flexibility and minimizes financial risk by selling its brand name rather than owning the hotels directly and brand strategy is a key element of its global success. This strategy allows the company to concentrate on specific and focused competencies such as brand management, customer experience, but also innovation while transferring the financial and operational responsibilities of property ownership to third parties. By adopting a franchising and contracted management model, Accor also mitigates the risks associated with real estate ownership such as market fluctuations, high CAPEX ( capital expenditures ), and asset depreciation. This asset-light approach also provides greater agility, as it enables Accor to expand more rapidly and adapt to changing market conditions.

Logo of Accor.

Source: Accor.

As of December 5, 2024, Accor’s stock price has reached €46.08, reflecting a 45% year-to-date growth from its 52-week low of €32.47 on August 5th. This significant recovery underlines the investor’s confidence in the company’s strategic shift towards this asset-light model and its operational resilience. Moreover, Accor’s reentry into the CAC40 in March 2024 highlighted its resurgence as a key player in the French economy. The stock is now showing strong momentum, peaking at a 52-week high of €46.12, with daily trading volumes of 492,713 and a market capitalization of €11.23 billion.

Accor’s Historical Stock Data.

Source: Euronext.

My internship

During six months, I worked as a Brand Strategy Assistant for Accor, supporting global initiatives for three brands: Belonging to Mercure, Grand Mercure and Handwritten Collection. In my role, I had to simultaneously apply analytical know-how and communication skills to ensure strategic priorities were consistent across regions and individual properties. Because of my position, I was able to interact with a diverse range of stakeholders, including hotel managers responsible for implementing strategies on-site, regional leaders overseeing multiple properties, and corporate executives shaping the brand’s strategic vision. My role was to identify and help to develop the most impacting actions to drive results at the hotel level, and communicate these to the regional teams and the hotel managers.

My missions

When I was interning, a large part of what I did was take I did was take comprehensive data sets detailing every hotel Accor owns, including each property’s specific features and performance metrics such as occupancy rates, average daily rates (ADR), revenue per available room (RevPAR), and marketing campaign performance. Then I would synthesize it into a clear, actionable report. To accomplish that, I had to create Powerpoints that would portray brand strategies and performance insights to the regional teams and hotels all around the world as well as to the stakeholders at all levels with key performance metrics being highlighted. A second important part of my work was determining the ROI of different actions.This was computed by analyzing the incremental revenue generated from specific initiatives relative to their associated costs, such as marketing spend, operational investments, or promotional discounts. Through an analysis of global hotel-level data, I was able to identify which initiatives were having the greatest impact and provide recommendations on how to best utilize resources for maximum impact.

Required skills and knowledge

In this role I needed high-level synthesis skills to make sense of large amounts of data and report into documents. There was a need for proficiency in Excel to curate the data, and PowerPoint to convey effectively the information. I also needed analytical skills as I worked with financial metrics such as ROI and KPIs to analyze the success of initiatives. In addition, the role required deep collaboration and strong communication skills. I regularly engaged with a wide range of stakeholders, including regional teams, hotels, and agencies. I also developed expertise in working across different markets, understanding their unique characteristics, and aligning recommendations with each region’s specific goals and challenges.

What I learned

I learned a lot through my internship about how global strategies are applied to the local market in a fast developing and competitive industry. I acquired advanced skills in data analysis and synthesis and learned how to communicate complex information clearly to diverse audiences. In addition, I learned about the process of using financial metrics like ROI and KPIs to evaluate and prioritize strategic actions. On top of that, I believe this experience helped me develop my ability to think critically about how brand strategies can drive tangible results across different markets.

Finally, managing a hotel portfolio of this size (+1000 hotels) and complexity highlighted the difficulty of ensuring that every hotel aligns with Accor’s vision and delivers on its brand promises even though it is now its main business model. I had gained firsthand experience in learning how to navigate this challenge, contributing to initiatives designed to reinforce operational implementation and efficiency which is a key driver in hospitality business.

Financial concepts related my internship

I explain below three financial concepts related to your internship: Return on Investment (ROI), Key Performance Indicators ( KPIs) and Budget Management

Return on Investment (ROI)

ROI was one of the key financial concepts I applied. I analyzed the ROI of many different initiatives to identify which action led to the highest ROI and so resources were directed towards actions which led to the best results for driving hotel performance.

Key Performance Indicators (KPIs)

Another concept was KPIs. The hotel industry has its own specific metrics such as occupancy rates, average daily rate, and revenue per available room. These are essential for evaluating the success of each project and determining where improvements could be made.

Budget Management

Finally, my manager and I worked extensively on both budget management and budget allocation, which were critical aspects of my role. For budget allocation, we collaborated to distribute a strict and defined budget across different brands and within various global initiatives, such as brand campaigns, regional activations, and strategic projects aimed at strengthening Accor’s global market presence. I contributed by carefully evaluating the expected ROI of each initiative, analyzing key performance metrics like brand visibility, customer engagement, and revenue contributions. Together, we ensured that resources were allocated strategically to maximize the impact on a global scale. In terms of budget management, we worked closely to monitor spending across these global initiatives, ensuring compliance with the allocated budget. I actively tracked expenditures, flagged any deviations, and supported the development of adjustments to keep financial goals on track.

Why should I be interested in this post?

If you’re interested in exploring a mix of finance, strategy and marketing within a global organization, my experience at Accor demonstrates how financial metrics are used to drive impactful decisions in several business’ segments. It also highlights the importance of ensuring that global strategies translate into local success, offering valuable insights for those aspiring to work in corporate strategy, hospitality, or brand management.

Useful resources

Accor

About the author

The article was written in December 2024 by Marine SELLI (ESSEC Business School, (ESSEC Business School, Global Bachelor in Business Administration (GBBA), 2020-2024).

Factiva

December 9, 2024December 6, 2024 by Nithisha CHALLA

Factiva

In this article, Nithisha CHALLA (ESSEC Business School, Grande Ecole Program – Master in Management (MiM), 2021-2024) delves into the essentials of Factiva, its features, and its applications, showcasing why it remains indispensable for professionals and academics alike working in business and finance.

Introduction

In the fast-paced world of business and finance, access to accurate, reliable, and up-to-date information is paramount. Factiva, a subscription-based database owned by Dow Jones & Company, is a cornerstone for researchers, financial analysts, and business professionals seeking high-quality data for decision-making.

The History of Factiva

Factiva was launched in 1999 as a joint venture between Dow Jones & Company and Reuters, two industry titans in financial news and information services. The aim was to create a unified platform catering to the growing need for consolidated global news and business data access. By integrating Dow Jones’s deep archives and Reuters’ real-time data capabilities, Factiva emerged as a pioneering solution for professionals in any sector, especially finance.

Logo of Factiva.

Source: the company.

Factiva is a premier business intelligence platform offering access to a vast array of global content, including news, company information, market data, and industry insights. It integrates thousands of sources from over 200 countries in more than 30 languages. These sources include major newspapers, trade journals, industry publications, and multimedia content.

In 2006, Dow Jones acquired full ownership of Factiva, streamlining its integration with other Dow Jones products, including The Wall Street Journal. Over the years, Factiva has evolved into a sophisticated tool incorporating artificial intelligence (AI) and machine learning for advanced data analytics, thus staying ahead in a competitive information services market.

Key Features

Certain key features of Factiva make it very useful as a database such as its Extensive Content Coverage, Search and Filter Options, Data Analytics and Visualization, Company Profiles, and Industry Reports.

As an example, the picture below presents the news about Apple in the Factiva Interface.

Factiva Interface

Source: the company.

Extensive Content Coverage

Factiva includes over 33,000 sources, such as The Wall Street Journal, The Financial Times, The New York Times, and Reuters. It features specialized publications in sectors like energy, healthcare, and technology. Archival content dates back decades, enabling trend analysis and historical research.

Search and Filter Options

Advanced search tools allow users to refine searches using keywords, topics, dates, or specific publications. Filters can narrow results by geography, industry, or company size.

Real-Time News

Factiva provides real-time updates on financial markets, economic changes, and global events. Alerts and notifications keep users informed of developments affecting their areas of interest.

Data Analytics and Visualization

Users can extract, analyze, and visualize data to identify patterns and insights. Tools include charts, graphs, and export options for seamless integration with other software.

Company Profiles and Industry Reports

Comprehensive profiles offer financials, competitors, and SWOT (Strengths Weakness Opportunity and Threats) analyses for thousands of companies. Industry reports provide market trends, regulatory updates, and forecasts.

Applications in Finance and Business

There are several applications of Factiva in finance and business such as Investment Research, Risk Management, Academic Research, and Public Relations and Marketing.

Investment Research: Financial analysts rely on Factiva for market trends, earnings reports, and competitor analysis to guide investment decisions.
Risk Management: Businesses use Factiva to monitor geopolitical events, economic risks, and compliance-related developments.
Academic Research: Factiva’s extensive archives are invaluable for finance students and researchers studying historical market behavior or conducting case studies.
Public Relations and Marketing: PR professionals use Factiva to monitor media coverage, track competitors, and evaluate public sentiment.

Advantages and Limitations of Factiva

Though there are multiple advantages of using this database there are also certain limitations which we have to consider.

Advantages of Factiva

Global Reach: Access to international publications ensures a well-rounded perspective.
Customizable Dashboards: Users can tailor the interface to prioritize relevant content.
Reliable Sources: Factiva aggregates data from reputable and verified sources.
Ease of Integration: APIs (Application Programming Interface) allow integration with other platforms for streamlined workflows.

Challenges and Limitations

Cost: Factiva’s subscription model can be expensive for individuals or small businesses. The pricing is on the request basis of the data.
Complexity: The platform’s depth may require training for optimal use.
Access Restrictions: Some content may have geographical or licensing restrictions.

Why Factiva Matters in 2024

With the explosion of information and the increasing risk of misinformation, Factiva’s role as a curated, reliable database is more critical than ever. Its ability to distill vast quantities of data into actionable insights makes it a vital tool for navigating the complexities of modern business and finance. Moreover, the integration of advanced technologies such as AI in Factiva enhances predictive analytics, enabling users to anticipate market movements and mitigate risks proactively.

Conclusion

Factiva exemplifies the power of information in driving informed decision-making. Its rich history, innovative features, and significant economic implications underscore its enduring relevance in a data-driven economy. Whether you’re a student aiming to excel in finance or a professional seeking a competitive edge, Factiva equips you with the tools to succeed in a knowledge-driven world.

Why should I be interested in this post?

By embracing Factiva, users, and students mainly gain not just data but the clarity and confidence to act on it effectively, ensuring better outcomes for businesses, academia, and industries at large.

Useful resources

Dow Jones Factiva – Global News Monitoring, Business Intelligence Platform

Dow Jones What is Factiva?

European University Institute (EUI) Factiva news and company database

Wikipedia Factiva

About the author

The article was written in December 2024 by Nithisha CHALLA (ESSEC Business School, Grande Ecole Program – Master in Management (MiM), 2021-2024).

November 2024: Top Posts of the SimTrade Blog about Professional Experiences

December 4, 2024 by Prof. François LONGIN

November 2024: Top Posts of the SimTrade Blog about Professional Experiences

I have selected very interesting posts about a very interesting topic: professional experiences from alumni of the SimTrade course.

Most Read Posts

Please find below the most read posts from the SimTrade blog.

▶ Medine ACAR Mon expérience professionnelle en tant que contrôleuse de gestion chez Carfuel

▶ Matthieu MENAGER My professional experience as a credit analyst at Targobank

▶ Praduman AGRAWAL My Professional Experience as a Quantitative Analyst Intern at Findoc Financial Services

▶ Jayna MELWANI My Professional Experience as a Quantitative Analyst Intern at Findoc Financial Services

▶ Federico MARTINETTO My professional experience as a PwC Associate Auditor in the Digital Data Hub

SimTrade choice

Have a look on the post below!

▶ Mickael RUFFIN My Internship Experience as a Structured Finance Analyst at Société Générale

Treasury Bonds: The Backbone of U.S. Government Financing

December 3, 2024December 3, 2024 by Camille KELLER

Treasury Bonds: The Backbone of U.S. Government Financing

In this article, Camille KELLER (ESSEC Business School, Bachelor in Business Administration (BBA), 2020-2024) explains the purpose, significance, and global role of U.S. Treasury bonds.

Introduction

Treasury bonds (T-bonds) are long-term debt securities issued by the U.S. Department of the Treasury, fundamental to funding government operations and shaping economic policies. Backed by the “full faith and credit” of the U.S. government, they are regarded globally as benchmarks of stability and reliability.

These bonds play a dual role: domestically, they underpin the financial system and provide risk-free investment options, while globally, they influence capital flows and pricing in international markets. With their long maturities and predictable returns (if hold until maturity), Treasury bonds are a secure haven for investors in times of uncertainty.

This article explores the structure of Treasury bonds, their critical role in monetary policy, and their global significance in maintaining financial stability.

What Are Treasury Bonds and How Do They Work?

Treasury bonds are issued by the U.S. government to finance national projects and repay debt. They have maturities of 10 to 30 years and offer fixed semiannual interest payments, returning the principal amount at maturity.

Figure 1 below gives the evolution of the interest rate of Treasury bonds (30 years of maturity) over the period March 1977 – December 2024 (data from Federal Reserve Bank of St. Louis). You can download the Excel file for the historical data used to build the figure.

Figure 1. Evolution of the US Treasury bonds interest rate.

Source: Federal Reserve Bank of St. Louis.

These bonds are sold through public auctions, where competitive bidders specify desired yields, and non-competitive bidders accept the auction’s determined rate. This transparent process ensures fair pricing and liquidity, making T-bonds accessible to a wide range of investors.

Treasury bonds are considered among the safest investments globally, given the U.S. government’s ability to generate revenue through taxation and currency issuance. This security makes them a key component of institutional portfolios, particularly for pension funds and central banks looking for low-risk, reliable returns.

In financial markets, T-bonds serve as a benchmark for long-term interest rates. Their yields influence borrowing costs for mortgages, corporate bonds, and loans, directly affecting economic activity. During financial uncertainty, their reputation as safe-haven assets attracts significant demand, reaffirming their stability and importance in global markets.

The Role of Treasury Bonds in Monetary Policy

Treasury bonds are integral to U.S. monetary policy, serving as tools for the Federal Reserve to manage money supply and interest rates. Through open market operations, the Federal Reserve buys or sells Treasury bonds to inject or withdraw liquidity from the financial system. These actions influence borrowing costs and economic activity.

When the Federal Reserve purchases T-bonds, it lowers interest rates, encouraging borrowing and investment. Conversely, selling bonds tightens liquidity and increases rates, curbing inflation and slowing economic growth.

T-bonds are also key indicators of inflation expectations. Fixed coupon payments lose value in inflationary periods, prompting investors to demand higher yields as compensation. Their role as a measure of market sentiment makes them critical in assessing economic conditions.

The yield curve—a graph of yields on Treasury securities of varying maturities—offers further insight. An inverted yield curve, where short-term yields exceed long-term yields, is often a precursor to economic recessions, signaling investor concerns about future growth.

Through these mechanisms, Treasury bonds enable the Federal Reserve to balance economic growth, inflation, and employment, making them indispensable to monetary policy.

Treasury Bonds as a Global Benchmark

Treasury bonds extend their influence far beyond U.S. borders, forming the bedrock of the global financial system. Their stability, liquidity, and dollar-denominated nature make them indispensable to central banks, institutional investors, and sovereign wealth funds worldwide.

Central banks, particularly those in countries like China and Japan, hold large reserves of T-bonds to stabilize exchange rates, manage currency reserves, and hedge against market volatility. Their status as a low-risk investment ensures enduring demand, reinforcing the U.S. dollar’s dominance in global finance.

T-bonds also serve as a benchmark for pricing other financial instruments. Their yields represent the risk-free rate used in valuation models for equities, corporate bonds, and derivatives, shaping investment decisions across markets.

In times of crisis, Treasury bonds attract capital as investors seek security, lowering yields and providing stability to global markets. However, this reliance also introduces vulnerabilities; events like U.S. debt ceiling debates or credit rating downgrades can disrupt global confidence in Treasury securities.

Despite these challenges, the unwavering demand for Treasury bonds highlights their critical role in ensuring liquidity and stability in the international financial system.

Why Should I Be Interested in This Post?

This post is a valuable resource for students and professionals interested in understanding the mechanics of Treasury bonds and their broader implications. It highlights the intersection of government finance, monetary policy, and global markets, offering insights into how these instruments shape economies worldwide.

Useful Resources

U.S. Department of the Treasury

Federal Reserve Economic Data (FRED)

Federal Reserve

About the Author

The article was written in December 2024 by Camille KELLER (ESSEC Business School, Bachelor in Business Administration (BBA), 2020-2024).

OAT: France’s Answer to Sovereign Bonds

December 3, 2024December 3, 2024 by Camille KELLER

OAT: France’s Answer to Sovereign Bonds

In this article, Camille KELLER (ESSEC Business School, Bachelor in Business Administration (BBA), 2020-2024) explains the role, structure, and significance of French government bonds known as Obligations Assimilables du Trésor (OATs).

Introduction

Obligations Assimilables du Trésor (OATs) are the backbone of France’s government debt strategy, providing a reliable means to finance public expenditures. These long-term debt securities are issued by the French Treasury and are central to the stability of France’s financial system.

OATs not only ensure the funding of state operations but also serve as a benchmark for the European financial markets. Their appeal lies in their fixed and predictable returns (if hold until maturity), making them a popular choice for institutional investors seeking stability in a historically low-risk asset.

This article dives into the structure and purpose of OATs, their relevance in monetary policy, and their role in the broader European and global financial system.

What Are OATs and How Do They Work?

OATs are long-term debt securities issued by the French Treasury to meet the government’s borrowing needs. The maturities of OATs ranges from 2 to 50 years. Investors receive fixed annual interest payments and the principal amount at maturity.

Figure 1 below gives the evolution of the OAT interest rate (10 year of maturity) over the period January 1986 – December 2024 (date from investing / Banque de France). You can download the Excel file for the historical data used to build the figure.

Evolution of the OAT interest rate.

Source: investing / Banque de France.

OATs are issued through public auctions managed by Agence France Trésor (AFT), the French government agency responsible for debt issuance and management. These auctions allow competitive and non-competitive bidding, ensuring a transparent and efficient process.

The reliability of OATs is grounded in the French government’s creditworthiness, supported by a robust and diversified economy. This low-risk profile attracts a wide range of investors, including pension funds, insurance companies, and foreign governments, making OATs a staple of institutional portfolios.

In financial markets, OATs play a vital role as benchmarks for euro-denominated securities. They influence pricing for corporate bonds, mortgages, and other fixed-income instruments within the Eurozone. Their stability and liquidity make them a key asset class in European financial systems.

The Role of OATs in Monetary Policy

OATs are an integral part of monetary policy in the Eurozone, serving as tools for the European Central Bank (ECB) and other institutions to influence financial conditions. As sovereign bonds, they are used in the ECB’s open market operations, including quantitative easing programs aimed at stabilizing the economy.

Through these programs, the ECB purchases OATs and other Eurozone bonds to inject liquidity into the financial system. This lowers interest rates, supports borrowing, and stimulates economic growth during periods of economic stagnation or crisis.

The yield on OATs is also a key indicator of France’s economic health and investor sentiment. Rising yields suggest increased borrowing costs for the government and heightened risk perceptions, while lower yields signal strong investor confidence and stability.

Additionally, OATs contribute to the overall functioning of the Eurozone’s financial architecture by providing a risk-free benchmark for pricing other securities. Their role in monetary policy extends beyond France, influencing financial markets across the European Union.

OATs as a Global Benchmark

OATs hold significance beyond France, serving as a critical component of global financial systems. Their euro-denominated nature positions them as an attractive option for central banks and institutional investors seeking diversification in foreign reserves.

Global investors often compare OATs with other sovereign bonds, such as U.S. Treasury bonds and German Bunds, to evaluate risk and return profiles. This competition reinforces OATs’ status as a key player in international capital markets.

In times of financial uncertainty, OATs provide a safe haven for investors looking to preserve capital. Their high liquidity and the French government’s strong credit ratings ensure consistent demand, particularly during economic turbulence.

However, OATs’ global importance also comes with challenges. Economic or political instability in France can impact investor confidence, affecting the broader European financial system. Despite these risks, their resilience and reliability continue to cement their role in global markets.

Why Should I Be Interested in This Post?

This post is a valuable resource for students and professionals interested in understanding OATs as a key financial instrument. It highlights their significance in government financing, monetary policy, and global markets, making them essential knowledge for those exploring careers in finance or economics.

Useful Resources

Agence France Trésor (AFT)

European Central Bank

Organisation for Economic Co-operation and Development (OECD)

About the Author

The article was written in December 2024 by Camille KELLER (ESSEC Business School, Bachelor in Business Administration (BBA), 2020-2024).

Bridging Technology and Finance: Insights from a Marketing Internship in Public Bidding

December 1, 2024December 1, 2024 by Ziqing QIN

Bridging Technology and Finance: Insights from a Marketing Internship in Public Bidding

In this article, Ziqing QIN (ESSEC Business School, Bachelor of Business Administration (BBA), 2022-2026) shares her professional experience at VideoPower Technology as a Marketing Intern in public bidding.

About the company

VideoPower Technology Co., Ltd., founded in 2012 and headquartered in Beijing, China, is a leading provider of technological solutions for government procurement and public bidding. The company’s innovative tools and platforms enable government agencies to procure goods and services transparently and efficiently while empowering businesses to compete fairly in the marketplace.

VideoPower specializes in advanced analytics, compliance management, and bidding process automation. For example, its flagship platform “BidMaster” has been used in over 300 government projects, helping businesses win contracts totaling more than 50 million RMB. One notable success story involved assisting a logistics company in securing a provincial transportation contract worth 10 million RMB by optimizing their bidding strategy using BidMaster’s analytics.

I worked in the Marketing and Business Development team, which was pivotal in identifying market opportunities and crafting strategies to position the company as an industry leader. During my internship, I contributed to the development of campaigns targeting public procurement opportunities and collaborated with Finance and Operations to prepare competitive bids. A key achievement was securing a regional government IT infrastructure project valued at 3 million RMB, a testament to the team’s strategic alignment and execution capabilities.

Logo of VideoPower Technology.

Source: the company.

My internship

As a marketing intern at VideoPower Technology Co., Ltd., I had the opportunity to work directly on public bidding projects that shaped my understanding of the procurement process. One of the most impactful experiences was contributing to a successful bid for a regional government’s information technology (IT) infrastructure project valued at 3 million RMB. This hands-on involvement taught me how to collaborate with multiple departments, such as finance and operations, to ensure that our proposals were both competitive and aligned with strategic objectives.

My missions

Throughout my internship, I was responsible for a variety of key tasks that directly supported the company’s bidding efforts:

Performed in-depth market research on over 50 government procurement projects, identifying opportunities in sectors such as IT and construction.
Played a pivotal role in crafting proposals, including a winning bid for an 8 million RMB service contract that secured a 5-year partnership with a municipal government.
Evaluated competitors’ pricing and strategies, which led to a reduction in bid preparation time and increased success rates.
Worked closely with cross-functional teams to ensure compliance with government regulations, achieving a 95% approval rate for submitted proposals.

Required skills and knowledge

My role required both technical and interpersonal skills. I leveraged analytical tools such as Excel to create detailed cost models, ensuring proposals were competitive and profitable. Proficiency in project management software, such as Trello and Microsoft Project, allowed me to prioritize tasks and meet tight deadlines. Soft skills, including communication and teamwork, were vital for presenting market insights to senior management and fostering collaboration with other departments. Additionally, my understanding of government procurement regulations enabled me to identify compliance risks and avoid potential setbacks.

What I learned

This internship was a crash course in the complexities of public procurement and how to navigate them effectively. By working on large-scale projects, I gained a solid understanding of cost analysis, competitive pricing, and risk mitigation. For example, I analyzed historical bid data to anticipate competitor pricing, which directly influenced our proposal strategies. I also learned how to balance profitability with client requirements, an essential skill for roles in finance and consulting. Beyond the technical aspects, this experience deepened my appreciation for cross-departmental collaboration and the importance of clear communication in achieving shared goals.

Financial concepts related to my internship

During my internship, I applied several financial concepts that were essential to the bidding process. These included cost estimation and budgeting, pricing strategies, and risk assessment.

Cost Estimation and Budgeting

Cost estimation and budgeting were fundamental aspects of my role. I learned how to break down project costs into direct and indirect categories, ensuring that every expense was accounted for. By accurately estimating costs, the company could prepare bids that were both competitive and realistic. This process involved analyzing historical data, consulting with project teams, and forecasting potential risks that might impact the budget.

Pricing Strategies

Developing effective pricing strategies was crucial to winning bids while maintaining profitability. I analyzed competitors’ pricing models and market trends to determine optimal pricing for our proposals. This involved striking a balance between offering an attractive price to government clients and ensuring that the company’s financial goals were met. By leveraging market intelligence, I contributed to crafting proposals that highlighted the company’s value proposition.

Risk Assessment

Risk assessment played a significant role in preparing bids. I worked on identifying potential risks, such as fluctuating material costs, project delays, and regulatory challenges, and developed strategies to mitigate these risks. By addressing these uncertainties in advance, the company was able to submit bids with confidence, minimizing the likelihood of unforeseen challenges during project execution.

Why should I be interested in this post?

This post highlights how an internship in public bidding applies essential financial concepts like cost estimation, pricing strategies, and risk assessment. These skills are highly relevant for ESSEC students pursuing careers in finance, consulting, or corporate strategy.

It also shows how practical experiences complement academic learning, preparing students for roles in investment banking, business development, and beyond.

Useful resources

Below are some valuable resources related to public procurement, market analysis, and project management that were relevant to my internship experience:

Government Procurement Platforms

PLACE – Plateforme des Achats de l’État: The official French government procurement platform, providing information on public tenders and bidding processes.

Market Analysis Tools

Statista: A leading platform for market statistics and industry insights.

Google Tag Manager: A free tool for managing and analyzing website tags, helpful for digital marketing analysis.

Business and Investment Resources

Business France: A national agency that supports the international development of French businesses and promotes investments in France.

Project Management Tools

Microsoft Project: A comprehensive tool for planning, executing, and tracking projects.

Trello: A flexible project management tool that helps organize tasks using a Kanban board approach.

About the author

The article was written in December 2024 by Ziqing QIN (ESSEC Business School, Bachelor of Business Administration (BBA), 2022-2026).

My Apprenticeship Experience at Gan Assurances

December 4, 2024November 28, 2024 by Camille KELLER

My Apprenticeship Experience at Gan Assurances

In this article, Camille KELLER (ESSEC Business School, Bachelor in Business Administration (BBA), 2020-2024) shares her two-year experience as a Digital Strategy Officer at Gan Assurances, a subsidiary of Groupama, in the Marketing and Communication department.

About Gan Assurances

Gan Assurances, a subsidiary of the Groupama group, is a major player in the French insurance market. Specializing in comprehensive coverage for individuals and businesses, the company offers a wide range of insurance solutions, including property, health, and life insurance. Gan Assurances prides itself on a customer-centric approach and a robust network of general agents spread across the country.

Logo of the company.
Logo of Gan_Assurances
Source: the company.

The Marketing and Communication department plays a pivotal role in enhancing the visibility of Gan Assurances through innovative campaigns and strategic digital initiatives. The team focuses on optimizing customer engagement, driving brand awareness, and supporting agents with tools and strategies tailored to their communication needs.

My Apprenticeship

From 2022 to 2024, I completed a two-year apprenticeship as a Digital Strategy Officer at Gan Assurances. I worked in the Marketing and Communication department, where I contributed to digital communication strategies and optimized the company’s online presence. My role involved a combination of strategic analysis and hands-on creative work, enhancing the effectiveness of digital campaigns.

My Missions

During my apprenticeship, I was responsible for analyzing and interpreting key performance indicators (KPIs) to evaluate the effectiveness of digital communication campaigns. Based on the results, I adjusted strategies to optimize engagement and return on investment (ROI).

In addition, I managed the editorial calendar and created engaging content for platforms like LinkedIn and Facebook. This required combining creativity with strategic messaging to align with the brand’s goals.

Another major aspect of my role was mentoring eight cohorts of general agents, equipping them with best practices in digital communication. This involved conducting training sessions and providing them with the tools needed to amplify their online presence effectively.

Lastly, I developed data-driven communication strategies, using performance insights to recommend digital investment channels and enhance campaign effectiveness.

Required Skills and Knowledge

To succeed in this role, I needed strong analytical and creative skills. My ability to interpret performance data was crucial for adjusting campaign strategies in real time. I also needed proficiency in digital marketing tools and content creation software, such as Canva and Adobe, to design engaging visuals. Strong communication skills were vital for mentoring agents and creating compelling content. Additionally, a solid understanding of social media platforms and their algorithms helped me tailor content to the target audience.

What I Learned

This apprenticeship greatly expanded my skill set. I gained a deep understanding of digital communication strategies, from content creation to performance analysis. The experience enhanced my ability to interpret data and adjust strategies to optimize campaign performance. I also honed my leadership and mentoring skills by guiding agents through best practices in digital communication. One of the most valuable lessons was learning how to balance creative content with data-driven decisions to achieve optimal engagement and brand visibility.

Financial Concepts Related to My Apprenticeship

Return on Investment (ROI)

One of the essential financial concepts in my role was Return on Investment or ROI. By analyzing the ROI of digital communication campaigns, I assessed their profitability and efficiency. This involved calculating the ratio of the campaign’s net profit to its cost, allowing us to prioritize strategies that delivered the highest value for the budget spent. Understanding ROI helped guide decisions on where to allocate resources to maximize impact.

Budget Allocation

Managing the budget for digital investments required a strong grasp of allocation principles. I worked on distributing funds across different channels and campaigns to achieve optimal reach and engagement. This required balancing costs with expected outcomes, ensuring every euro spent contributed to measurable results. Monitoring these allocations also enabled the team to make data-driven adjustments during campaigns to improve performance.

Key Performance Indicators (KPIs)

Tracking and interpreting KPIs was central to my work. Metrics such as click-through rates, engagement rates, and conversion rates provided insights into campaign success. For instance, I used KPIs to identify underperforming areas and adjusted strategies accordingly. These metrics served as a financial health check for campaigns, ensuring that resources were spent effectively and objectives were met.

Why Should You Be Interested in This Post?

This post is a valuable read for students interested in combining creative and analytical skills within the marketing and communication fields. It demonstrates how financial principles such as ROI, budget allocation, and KPIs are integral to optimizing marketing strategies. This experience can inspire ESSEC students to explore roles where strategy meets creativity, providing real-world business impact.

Useful resources

Gan

About the Author

The article was written in November 2024 by Camille KELLER (ESSEC Business School, Bachelor in Business Administration (BBA), 2020-2024).

The Premium on coins like Elizabeth II

December 4, 2024November 26, 2024 by Nithisha CHALLA

The Premium on coins like Elizabeth II

In this article, Nithisha CHALLA (ESSEC Business School, Grande Ecole Program – Master in Management (MiM), 2021-2024) analyzes the economic factors explaining the premium on the collectible coins like the Elizabeth II coins.

Introduction

The financial world has long recognized the significance of precious metals, particularly gold, as a reliable store of value. However, beyond the traditional investment vehicles such as bullion bars and coins, there exists a subcategory of numismatic items—collectible coins—whose premiums can exceed the value of the metal content itself. Coins like the Elizabeth II coin series represent a growing segment of this market. While these coins are often minted with a fixed gold or silver content, their value can significantly outpace the value of the metal they contain. The difference between the face value or gold value of an Elizabeth II coin and its market value is commonly referred to as the premium. This difference represents a premium that can explained by several factors.

Elizabeth II bullion
Elizabeth2 bullion
Source: Hatton Garden Metals

Computation of the premium

As an example, let us consider a 2022 Queen Elizabeth II Gold Sovereign coin. The gold content for this coin is 7.32 grams (0.2354 troy ounces of gold). In the beginning of 2024, the spot price of gold is $2,000 per troy ounce (or approximately £1,580 per troy ounce). The gold value (or intrinsic value) of this coin is equal to $470 (=0.2354×2,000) or approximately £372. The market value (including the premium) is $600 (or approximately £475). The premium, defined as the difference between the market value and the gold value, is then equal to $130 (=$600−$470) or approximately £103.

The Investment Potential of Numismatic Coins

Numismatic coins, such as those featuring Queen Elizabeth II, have long captured the attention of collectors and investors alike. Beyond their historical and cultural significance, these coins hold substantial financial value, often trading at a premium above their intrinsic metal content. Factors such as rarity, condition, historical context, and market demand significantly determine their market price and explain the premium. In this article, we delve into the economic factors of coins premium, focusing on the Elizabeth II series, their appeal, and their role as an alternative investment vehicle.

Understanding the Premium: What Sets These Coins Apart?

A premium refers to the additional cost above the intrinsic value of a coin’s metal content. For example, if a gold coin contains one ounce of gold, its inherent value will be based on the current market price of gold. However, a coin like the Elizabeth II Gold Coin could carry a premium because of its collectibility, historical significance, rarity, and demand among collectors. This premium is influenced by several factors: mintage numbers and rarity, condition and grading, and demand and market Trends.

Mintage Numbers and Rarity

The mintage number of a coin significantly influences its rarity, and by extension, its premium. Coins with limited mintage, such as special editions or proof versions of the Elizabeth II coin, typically see higher premiums due to their scarcity. For instance, a limited-edition Elizabeth II coin series celebrating the Queen’s milestone events (e.g., her Diamond Jubilee) would likely command a higher price compared to regular-issue coins.

Condition and Grading

Coins are often graded for their condition, which impacts their value. Coins in pristine condition (often graded as MS70 or PF70, which indicates perfect condition) carry a higher premium. This is especially true for coins preserved in perfect, uncirculated condition, making them rare in the market.

Demand and Market Trends

The demand for collectible coins is often driven by trends in the collector community. When a coin series, like the Elizabeth II series, becomes popular among investors and collectors, its premium increases as more people compete for a limited supply. Economic factors, including inflation, interest rates, and even geopolitical events, can also spur increased interest in collectible coins as alternative investments.

Notable Elizabeth II Coins

I give below a list of notable Elizabeth II coins:

1953 Coronation Crown: Issued to commemorate Queen Elizabeth II’s coronation, this coin is a prime example of how historical events can add numismatic value. While its melt value is minimal, its collectible value often exceeds 10 times its base worth.
2002 Golden Jubilee Coins: Struck in limited numbers, these coins saw a steep rise in market value due to their rarity and the significance of the Golden Jubilee celebration.
2022 Memorial Coins: Following Queen Elizabeth II’s passing, the Royal Mint issued special memorial coins, which have become highly sought after. Early buyers have seen considerable price appreciation, driven by emotional and historical factors.

Elizabeth II coin for the 1953 Coronation Crown
Elizabeth II for the 1953 Coronation Crown
Source: The Royal Mint

Elizabeth II coin for the 2002 Golden Jubilee
Elizabeth II for the 2002 Golden Jubilee
Source: The Royal Mint

Elizabeth II coin for the 2022 Memorial
Elizabeth II for the for the 2022 Memorial
Source: The Royal Mint

The Financial Benefits of Investing in Premium Coins

Diversification of Investment Portfolio

In the world of investing, diversification is often touted as one of the key strategies for managing risk. Coins like the Elizabeth II series offer a unique opportunity for diversification. While traditional assets such as stocks, bonds, and real estate are subject to market fluctuations, gold, and silver coins tend to be less volatile and are often viewed as a hedge against inflation or economic uncertainty (see Erb and Harvey (2013, 2024) for a discussion).

Additionally, premium coins are not just an investment in the precious metals market; they also offer exposure to the world of collectibles, which can experience appreciation independent of broader financial markets. Investors looking to diversify into non-correlated assets may find that numismatic coins, like those in the Elizabeth II series, provide an attractive avenue for diversifying their portfolios.

Appreciation Potential

One of the primary financial attractions of premium coins is their potential for appreciation over time. The value of a collectible coin is driven by both the fluctuating value of the precious metal it contains (gold, silver, etc.) and the coin’s numismatic value. As demand for specific coins rises, their premiums can increase exponentially.

For example, a gold Elizabeth II coin bought at a premium in the 1990s could be worth several times its original purchase price today, due to both the rising price of gold and the increasing demand for coins tied to the late Queen’s reign. Investors in these coins have seen capital appreciation not only from the metal price but also from the unique value placed on these coins by collectors.

Figure 1 below gives the evolution of the gold price over the period January 1971-September 2024.

Figure 1. Evolution of the Gold price
Gold price chart January 1971-September 2020
Source: Wikipedia

Tax Benefits and Legacy Planning

In some jurisdictions, numismatic coins, such as the Elizabeth II gold coins, are subject to favorable tax treatment. Depending on the country, these coins may be exempt from certain sales taxes or capital gains taxes, further enhancing their attractiveness as an investment. The tax advantages, when combined with their appreciation potential, make them an appealing choice for long-term investors seeking wealth preservation.

Additionally, premium coins are often used in legacy planning due to their tangible value, portability, and emotional appeal. Families pass down coin collections across generations, ensuring that the wealth embedded in these coins remains intact and grows over time.

Risks and Considerations for Investors

While coins like those featuring Elizabeth II can be lucrative investments, they are not without risks:

Market Volatility: The numismatic market can be unpredictable, with premiums fluctuating based on collector sentiment and economic conditions.
Liquidity Challenges: Selling collectible coins at premium prices requires access to the right buyer market, which may not always be readily available.
Authentication and Grading Costs: Ensuring the authenticity and proper grading of a coin often incurs additional costs, which should be factored into investment decisions.

Finally why Coins Featuring Elizabeth II Remain an Attractive Investment?

Coins bearing Queen Elizabeth II’s effigy offer a blend of historical appeal, tangible value, and investment potential. The enduring legacy of her reign adds a unique emotional and cultural dimension that elevates their demand. From a financial perspective, these coins offer diversification benefits, a hedge against inflation, and the potential for significant capital appreciation.

Conclusion

Investing in premium coins such as those featuring Elizabeth II requires a balance of sentiment and financial analysis. While their cultural and historical value is undeniable, their economic worth hinges on factors like rarity, condition, and market trends. For investors, these coins are more than just collectibles; they represent a fusion of history and finance, offering opportunities for both preservation of wealth and long-term growth.

Why should I be interested in this post?

As financial markets become more volatile and inflationary pressures rise, the appeal of premium coins as an alternative investment will likely continue to grow. These coins not only provide an investment in precious metals but also represent a tangible, legacy-building asset that can be passed down through generations. For students seeking to understand and diversify their portfolios, learning about the premium on collectible coins presents an intriguing opportunity with considerable upside potential.

Useful resources

Academic research

Erb, C.B., and C.R. Harvey (2013) The Golden Dilemma. Financial Analysts Journal 69 (4): 10–42.

Erb, C.B., and C.R. Harvey (2024) Is there still a Golden Dilemma. Working paper.

Business

US gold bureau The History and Evolution of Queen Elizabeth II on Coins

Change Checker The History of Queen Elizabeth II Coins

The Royal Mint Museum Her Late Majesty Queen Elizabeth II on coins

Physical Gold Gold Coin Premiums Explained

Treasure Coast Bullion Group Gold and Silver Premiums: What You Need to Know

American Bullion What Does MS70 Mean, and Why Is It Important?

Other

Wikipedia Gold

Wikipedia Two pound coin

Rare Coins Vault Top 10 Most Valuable Elizabeth II Coins! | Rare Coins Worth Millions (YouTube video)

About the author

The article was written in November 2024 by Nithisha CHALLA (ESSEC Business School, Grande Ecole Program – Master in Management (MiM), 2021-2024).

Risk Management in the Real-Time Arena

December 4, 2024November 20, 2024 by Vardaan CHAWLA

Risk Management in the Real-Time Arena

In this article, Vardaan CHAWLA (ESSEC Business School, Master in Strategy and Management of International Business (SMIB), 2020-2023) shares a case study on Risk Management in the Real-Time Arena: Navigating the Financial Rapids.

As an individual investor venturing into the dynamic world of financial markets, it’s crucial to understand and implement effective risk management strategies. The following article, explores the key principles and techniques to safeguard your investments and navigate the potential risks.

Financial markets are very dynamic, interesting, and filled with opportunities and risks. Learning to manage risks in the always-changing world of financial markets is crucial. In the following article I discuss the effective methods to manage, navigate, and avoid risk while dealing in financial markets to help you make informed decisions and safeguard your money.

Understanding Your Risk Tolerance

The first principle of effective risk management is self-awareness. Before diving into financial markets one must assess one’s own risk tolerance meaning the amount of losses you are able to manage comfortably.

Ask yourself critical questions:

How much capital can I realistically afford to lose?
How would a significant loss impact my financial well-being?
Am I prone to emotional decision-making during market fluctuations?

After answering these questions you can start making your trading and risk management strategies and techniques. A very aggressive investor will be open to taking a high amount of risk with more potential results while a conservative investor will be the opposite, low risk with less potential returns. One must invest based on their own loss tolerance.

Core Risk Management Strategies

Once you understand your risk tolerance, equip yourself with these key risk management strategies:

Position Sizing: This describes how much capital is devoted to a specific deal. Starting small is a vital notion, particularly for novices. A typical place to start is with 1% to 2% of your entire portfolio for each deal. With a diversified portfolio, you can progressively raise position size as your experience and risk tolerance permits.
Stop-Loss Orders: These are vital instruments for safeguarding your investment. To limit potential losses if the market swings against your position, a stop-loss order automatically sells an asset when the price hits a predefined level. It’s critical to create stop-loss levels that balance possible asset recovery with risk minimization.
Take Profit Orders: These orders work similarly to stop-loss orders in that they automatically lock in profits by selling an asset when the price hits a predefined level. This lessens the chance of losing gains if the market turns south. To safeguard your earnings and resist the need to cling to a winning position for too long, use take-profit orders wisely.
Diversification: Avoid putting all of your money in one place. Distribute your investments throughout several industries, sectors, and asset classes. This lessens the effect that a fall in one asset will have on the value of your entire portfolio. Diversification makes your portfolio more stable and less vulnerable to changes in the market.
Risk-Reward Ratio: This measure contrasts the possible gain with the possible loss on a certain transaction. Seek for transactions where the possible profit margin outweighs the potential loss margin. A better risk profile is indicated by a greater ratio. Prior to making a trade, evaluating the risk-reward ratio will help you make well-informed judgments regarding potential gain vs downside.

Figure 1. Take profit and stop loss example of Apple stock as on 15th august 2024.
Logo of Talent Carriage
Source: computation by the author.

Advanced Risk Management Techniques

As you gain experience, consider incorporating these advanced techniques:

Hedging: This is the process of offsetting possible losses in your underlying holdings by employing derivative instruments, such as option contracts. Before putting hedging methods into practice, careful thought and comprehension are necessary because they can be complicated.
Volatility Targeting: This strategy modifies the overall risk exposure of your portfolio in response to fluctuations in the market. You may lower the sizes of your positions or devote more capital to less volatile assets during times of high volatility. On the other hand, you may decide to take on larger positions or invest in riskier assets during times of low volatility.

Disciplined Execution: The Key to Success

Risk management is not just about having the right tools; it’s about disciplined execution. Here are some essential practices to cultivate:

Trading Plan: One must work meticulously in developing a comprehensive trading plan that clearly defines your entry, exit, risk management strategies, and what you aim to achieve from trading and avoid emotional and impulsive decision-making.
Monitoring and Adjustment: You must also regularly monitor your portfolio and be updated on financial news in order to prepare for potential future losses or opportunities. To maximize your gains utilize Stop loss orders and take profit orders and adjust your trades and position as and when needed.
Emotional Control: When we receive surprise losses or surprise gains we are inclined to make emotional and impulsive decisions that can lead to further future losses. The trader must always make decisions with a calm composed mind to make sound decisions.

By adopting these risk management principles and maintaining disciplined execution, you can navigate the real-time financial markets with greater confidence and minimize the possibility of significant losses. Remember, risk management is an ongoing process that requires constant evaluation and adaptation.

Useful resources

Justin Kuepper (June 12, 2023) Risk Management Techniques for Active Traders

Amir Samimi & Alireza Bozorgian (September 2021) An Analysis of Risk Management in Financial Markets and Its Effects

About the author

The article was written in November 2024 by Vardaan CHAWLA (ESSEC Business School, Master in Strategy and Management of International Business (SMIB), 2020-2023).

My internship experience at Talent Carriage

December 4, 2024November 20, 2024 by Vardaan CHAWLA

My internship experience at Talent Carriage

In this article, Vardaan CHAWLA (ESSEC Business School, Master in Strategy and Management of International Business (SMIB), 2020-2023) shares his experience as a Business Development intern at Talent Carriage a human resource shared services startup in New Delhi, India.

About Talent Carriage

Talent Carriage is a New Delhi-based startup that brings innovation to Human Resources by specializing in Human Resource Shared Services (HRSS). It was launched with the vision of simplifying HR processes for small and medium organizations, they offer a unique solution for businesses seeking efficiency in their human resource process and cost reduction.

Logo of the company.
Logo of Talent Carriage
Source: the company.

What is shared services: Talent Carriage was established with a focus on the evolving needs of modern workforces and companies, Talent Carriage leads the shared services model for HR for medium and small-scale companies in India. This model centralizes all common HR tasks, such as administration, payroll, benefits, and recruitment processing, into a centralized unit. Centralization of all common tasks helps free the organization’s HR professionals and allows them to focus on more strategic and big-picture tasks like the growth and development of their employees.

Benefits for Businesses of All Sizes: Even though Talent Carriage’s services are well suited for organizations of all sizes their core offerings are inclined towards startups and growing businesses. They prioritize streamlining processes and the use of flexible technology which can help organizations reduce costs.

This shared services has three great benefits:

Increased Efficiency: In order to improve efficiency and eliminate redundancies for the client. Talent Carriage helps the client to centralize their HR processes like payroll and benefits. With such redundant work out of the way, the HR personnel have the time and capacity to lead strategic initiatives that help in the company’s success.
Standardization and Consistency: The shared services model also leads to consistent HR practices across an organization. Businesses with multiple locations and/or departments derive great benefits from HRSS.
Enhanced Employee Experience: The employees have a single point of contact for all their HR inquiries. This centralized approach leads to a smoother and more efficient experience.

Three-Step Engagement Model: Talent Carriage implements its HRSS solutions in an organized manner. Their three-phase approach of interaction includes:

Suggest: Consulting with the customer to ascertain their unique HR needs and objectives constitutes the first step. Then they analyse the organization’s current HR processes and recommend a suitable shared services model for them.
Implement: After a plan is finalized by both the client and talent carriage. It is Implemented and Talent Carriage trains staff on the new processes and help with a smooth transition.
Maintain: They also offer continuous support to the client organization. Talent carriage’s work goes far beyond initial implementation to ensure the success of their HRSS model within the organization. They also provide technical assistance and monitor for ongoing problems and optimization opportunities.

By leveraging Talent Carriage’s expertise in HRSS, businesses can achieve significant improvements in efficiency, cost-effectiveness, and employee experience.

My Internship at Talent Carriage

In the summer of 2023, I did my internship at Talent Carriage. There I had the opportunity to explore the exciting world of HRSS and business development (BD). Talent Carriage is a dynamic startup in New Delhi, India. It is the leader of how small and medium organizations manage their HR and I was excited to be a part of its journey. My Internship was in the Business Development and Sales department of the company where I had the opportunity to hone my skills in identifying new business opportunities and displaying the value proposition of Talent Carriage’s HRSS model to as many organizations in India as I could.

My Missions

As a BD intern, I was on the hunt for new markets and organizations to spread the word about talent carriage and the benefit of HRSS. My job was to conduct market research and competitive analysis which helped me build a 20% bigger database of potential client databse. In order to complete this process, I had to research market trends, pinpoint businesses in need of HR process optimization, and assess the competitive environment. Following this, I also carried out surveys to learn more about the HR requirements of various Indian companies. I was able to create buyer personas and comprehensive profiles of our prospective customers thanks to the survey. Together with the sales team, these personas assisted me in developing BD strategy and practical insights. In addition, we were able to customize our strategy for various clientele groups, which improved the focus and efficacy of our sales pitches.

Required Skills and Knowledge

In order to succeed in this challenging role. I needed several skills including Research and analytical abilities which were very important in understanding and analyzing market trends. After this, I also improved my communication skills in this role both written and verbal. While conducting surveys and sending cold emails and sales pitches I honed my skill of communication by effectively communicating the benefits of Talent Carriage’s service. Building rapport and effectively presenting our solutions were key aspects of the role, requiring strong interpersonal and presentation skills.

What I Learned

This amazing summer internship helped me learn and hone various skills and pushed me beyond my comfort Zone. To begin with I gained a deep understanding of HR and how transformative HR-shared services can be for all organisations. The fast-paced and challenging environment also helped me hone my research and analytical capabilities. The most important skill I learned was clear and concise communication. This skill was crucial to creating good sales pitches and cold emails. Identifying the needs of organizations and tailor-making a sales pitch and presenting it compellingly.

Financial concepts related to my internship

Customer Acquisition Cost (CAC)

I found that knowing CAC was essential to the Business Development position at Talent Carriage. The average cost of gaining a new client is referred to as CAC. For BD teams to evaluate the effectiveness of their sales activities, this statistic is crucial. Talent Carriage calculates the cost per lead generated and, eventually, the cost of obtaining a new client who signs up for their HRSS services by examining our research and outreach efforts. An effective sales approach is shown by a low CAC in comparison to the revenue a client generates. Our understanding of CAC, helped us adjust our outreach strategies to focus on the most economical market groups and improve the overall sales strategy.

Return on Investment (ROI)

While CAC focuses on the cost of acquiring a client, ROI analyzes the return on investment generated by a client. ROI would be determined by comparing the revenue from Talent Carriage’s HRSS services against the costs associated with acquiring and retaining those clients. We were able to evaluate the effectiveness of Talent Carriage’s business model and identify areas that required improvement thanks to our understanding of ROI. When sales presentations emphasize the financial benefits for potential customers and demonstrate the favorable return on investment (ROI) that the HRSS model produces for clients, they become more appealing.

What I learned during my internship

The three main things I learnt during my internship at Talent Carriage are as follows: I gained information about the structure and working environment at Talent Carriage. I learnt about digital transformation, particularly HRSS Proccess. I acquired an insight about the soft and hard skills required to work as an Business development Intern.

Useful resources

Talent Carriage

Bhavna Deuglo What is HRSS and How Can It Benefit Your Business?

About the author

The article was written in November 2024 by Vardaan CHAWLA (ESSEC Business School, Master in Strategy and Management of International Business (SMIB), 2020-2023).

The Gold Standard

December 4, 2024November 19, 2024 by Nithisha CHALLA

The Gold Standard

In this article, Nithisha CHALLA (ESSEC Business School, Grande Ecole Program – Master in Management (MiM), 2021-2024) explores the origins, implementation, and eventual decline of the gold standard, leading to the establishment of the Bretton Woods system, which redefined global financial stability in the post-World War II era.

Introduction

The concept of using gold as a basis for currency emerged in the early 19th century, aiming to provide a universally accepted standard of value for trade and to reduce inflation. Countries agreed that their paper currency could be exchanged for a fixed amount of gold, which limited the amount of money governments could issue, thus preventing inflation.

The United Kingdom was one of the earliest adopters, establishing the gold standard formally in 1821. The system allowed Britain to stabilize its currency and promote global trade, reinforcing its position as a leading global economic power. This model inspired other countries to adopt similar standards. By the late 19^th century, several countries, including the United States (1900), Germany (1873), and France (1873), adopted the gold standard. The U.S. had been on a de facto gold standard since 1879 and later officially adopted the gold standard in 1900 with the Gold Standard Act, and the practice became increasingly popular as global trade expanded.

The Gold Standard’s Role in Economic Stability

Some key features of the classical gold standard are exchange rates, price stability, and discipline in monetary policy.

Stabilizing Exchange Rates

One of the primary benefits of the gold standard was stable exchange rates, which encouraged international trade and investment. By fixing the value of their currencies to a certain amount of gold, countries reduced currency fluctuation, making trade more predictable.

Preventing Inflation

Price stability (low inflation) was demanded since governments could only print as much currency as their gold reserves permitted. The gold standard limited excessive money printing and helped prevent inflation.

International Trust and Trade

The gold standard fostered trust among trading nations because gold-backed currencies reduced the risk of devaluation. Trade partners knew they were dealing in stable, reliable currencies.

Countries that Opted Out of the Gold Standard

According to an article published by Cooper, R Dornbusch and Hall (1982), until the late 19^th century most countries were on a bimetallic standard, interspersed with occasional periods of inconvertible paper (as in the United States in the 1780s and the 1862-78 period, or Britain from 1797 to 1821). Some countries, such as China and Mexico, were only based on silver until the twentieth century. Holland and Belgium even switched from bimetallism to silver alone in 1850 on the grounds (following the California gold discoveries in 1848) that gold was too unstable to provide the basis for the currency. The United States adopted a de facto gold standard with the resumption of specie payment on the Civil War greenbacks in 1879 (some would say it was formal since the standard silver dollar was dropped from the coinage in the “crime of 1873”); it moved formally with the Gold Standard Act of 1900.

Though several countries opted for the classical gold standard, there were still many countries who chose to opt out because of economic challenges:

Economic Challenges and Opt-Outs: Some countries struggled to adopt the gold standard, especially those with weaker economies or limited gold reserves. For example, several Latin American countries and parts of Eastern Europe either delayed adopting the standard or abandoned it after a short period due to limited gold resources.
Flexibility vs. Stability Debate: Countries facing frequent economic crises found the gold standard too restrictive. By adhering to a strict gold-based system, governments had less flexibility to respond to economic downturns, which later became a crucial issue in the Great Depression.

The Great Depression and the Decline of the Gold Standard

During the Great Depression (1929–1939), many countries faced extreme economic challenges. The rigid nature of the gold standard prevented governments from increasing the money supply to stimulate growth, worsening the economic crisis.

In response, several major economies, including the United Kingdom (1931) and the United States (1933 under President Franklin D. Roosevelt), abandoned the gold standard to regain control over their monetary policies. This allowed them to inject liquidity into the economy, stimulating growth and reducing unemployment. The gold standard was briefly reinstated in a modified form, known as the “gold exchange standard,” but it was ultimately unsustainable in the post-Depression global economy.

Transition to the Bretton Woods System

After World War II, the world needed a new financial system to prevent the economic instability that had contributed to the Great Depression. The gold standard was no longer viable, but there was still a need for a stable international currency framework.

In 1944, delegates from 44 nations gathered in Bretton Woods, New Hampshire, to establish a new global monetary system. The Bretton Woods system introduced a modified form of the gold standard where the U.S. dollar became the central reserve currency, convertible to gold at a fixed rate of $35 per ounce.

Some key features of the Bretton Woods system were:

U.S. Dollar as the Global Reserve: Countries agreed to peg their currencies to the U.S. dollar, and in turn, the dollar was backed by gold. This established the U.S. as the central player in global finance.
International Monetary Fund (IMF) and World Bank: The Bretton Woods conference also established the IMF and the World Bank to oversee exchange rates, provide financial assistance, and promote economic development.

The figure below shows the dollar conversion price to gold bullion for the period 1914-2024.

Dollar conversion price to gold bullion for the period 1914-2024

Source: Wikipedia

By the 1960s, the U.S. began running significant trade deficits, and its gold reserves dwindled as foreign governments exchanged dollars for gold. The U.S. could no longer sustain the gold-dollar convertibility at the set rate of $35 per ounce. In 1971, President Richard Nixon announced the end of dollar convertibility to gold, effectively ending the Bretton Woods system. This decision led to a floating exchange rate system, where currencies were no longer tied to gold but fluctuated based on market forces.

Conclusion

The gold standard played a vital role in creating a stable economic environment and promoting international trade in the 19^th and early 20^th centuries. However, its rigidity limited countries’ ability to respond to economic crises, eventually leading to its abandonment during the Great Depression. The Bretton Woods system provided a middle ground, establishing a dollar-based standard that aimed to maintain stability while allowing more flexibility. However, as global economies evolved, even this system proved unsustainable, paving the way for today’s floating exchange rate regime.

Why should I be interested in this post?

Gold has been a key financial asset for centuries, acting as a store of value, a hedge against inflation, and a safe-haven asset during economic crises. Understanding its investment options helps students grasp fundamental market dynamics and investor behavior, especially during periods of economic uncertainty.

Useful resources

Academic research

Cooper RN, R Dornbusch, RE Hall (1982) The Gold Standard: Historical Facts and Future Prospects, Brookings Papers on Economic Activity, 1982(1): 1-56.

Business

World gold council The Bretton Woods System

Federal Reserve History Creation of the Bretton Woods System

Other

Wikipedia Gold

Wikipedia The Gold standard

Wikipedia Bretton Woods system

About the author

The article was written in November 2024 by Nithisha CHALLA (ESSEC Business School, Grande Ecole Program – Master in Management (MiM), 2021-2024).

FortKnox: the US Gold Reserve

November 19, 2024 by Nithisha CHALLA

FortKnox: the US Gold Reserve

In this article, Nithisha CHALLA (ESSEC Business School, Grande Ecole Program – Master in Management (MiM), 2021-2024) explores the history of Fort Knox, its economic significance, the myths surrounding it, and its enduring importance.

Introduction

The origins of Fort Knox date back to the 1930s during the Great Depression, a period of severe economic downturn in the United States (U.S.). In 1936, the U.S. government constructed the facility in response to the need for a secure location to house the country’s growing gold reserves, which were essential to backing the dollar under the gold standard. The construction was overseen by the U.S. Treasury Department, and the fort was designed with cutting-edge security for its time, utilizing 16,000 cubic feet of granite, 750 tons of reinforced steel, and 4,200 cubic yards of concrete.

The figure below shows the Fort Knox facility in Kentucky.

Fort Knox
Gold reserve in the United States, Fort Knox
Source: US Funds

The legislative foundation of Fort Knox’s role in safeguarding America’s wealth comes from the Gold Reserve Act of 1934. This act established the control and management of the nation’s gold to stabilize the economy. The Treasury’s decision to centralize gold in Fort Knox allowed for more efficient management and bolstered public confidence in the nation’s monetary policy. The fort’s massive, highly fortified structure made it an impenetrable vault, setting a global standard for secure storage facilities.

The Role of Fort Knox in U.S. Financial History

During the era of the gold standard, Fort Knox was critical in maintaining economic stability, as the gold stored within it provided a foundation for the dollar. This system allowed the U.S. government to prevent inflation by limiting the amount of money in circulation to the amount of gold held in reserves, fostering economic stability. Fort Knox’s immense reserves helped ensure that the dollar was trusted globally, making it a linchpin in both national and international finance.

The gold standard era came to an end in 1971, under President Nixon, who made the historic decision to cease gold convertibility, effectively transitioning the U.S. to a fiat currency system. This policy shift changed Fort Knox’s role, as gold was no longer used to back currency. Nonetheless, Fort Knox’s gold holdings continued to serve as a reserve asset, a sign of wealth and security, giving the government a financial safeguard in times of economic uncertainty.

According to 2021 statistics by US funds, the top 10 central banks with the largest gold reserves have remained mostly unchanged for the last few years. The United States holds the number one spot with over 8,000 tonnes of gold in its vaults – nearly as much as the next three countries combined – and accounting for 79% of total reserves.

The below figure shows the Top 10 countries with the highest gold reserves (US$ Million) in the second quarter of 2024.

Top 10 countries with highest gold reserves

Source: Central Banks, Federal Reserve Bank of St. Louis, International Monetary Fund, World Bank, World Gold Council

Security Measures and Infrastructure

Military Presence and Physical Security: Fort Knox is protected by the U.S. Army, with soldiers and highly trained security personnel safeguarding the facility. There are intense security measures, including 24/7 surveillance, motion detectors, alarms, and physical barriers.
Advanced Technologies: Though specific details are classified, Fort Knox is believed to have some of the most advanced technology for security, possibly including biometric access controls, reinforced gates, and even underground passages. Its security has inspired legends and pop culture references (such as the James Bond film “Goldfinger”), adding to its mystique.
Limited Access: Only a few individuals have ever entered the main vault. In 1974, several members of Congress and journalists were invited to see the vaults and confirm the gold, which was an unusual event to dispel rumors about the gold’s existence.

The Contents of Fort Knox

Gold Reserves: Currently in 2024, Fort Knox holds the highest gold reserves at approximately 8,133.46 tonnes, which make up about 72.4 percent of the US total reserves. At today’s gold prices, this would be worth hundreds of billions of dollars.
Other Assets: While gold is the primary asset stored, the vault has also been used to store other valuable items in times of crisis, such as the U.S. Constitution, Declaration of Independence, and other historical documents during World War II for safekeeping.
Gold’s Role as a Reserve Asset: Even though the U.S. operates on a fiat currency system, the gold at Fort Knox acts as a safeguard, providing the country with a tangible asset that could be utilized or sold in extreme economic crises.

Economic and Financial Relevance Today

Despite the shift to a fiat currency system, Fort Knox’s gold reserves continue to provide financial security. Gold remains an important asset because it is believed to offer a hedge against inflation as gold’s value tends to increase during inflationary periods as it preserves purchasing power (see Erb and Harvey (2013 and 2024) for a discussion). Even in a modern economic context, where paper currency is not directly backed by gold, large gold reserves contribute to economic credibility on the global stage.

Gold’s role as a stable asset makes it valuable in times of economic volatility. During financial crises or market downturns, governments and investors alike often turn to gold as a safeguard. For the U.S., Fort Knox remains a testament to financial prudence and a guarantee of economic resilience.

Conclusion

In conclusion, Fort Knox stands as a symbol of American financial strength, security, and heritage. Though its role has evolved over the years, it continues to be a key reserve asset, both financially and symbolically. The facility’s rich history, robust security, and enduring legacy contribute to its iconic status as one of the most secure locations on earth. As an economic and cultural symbol, Fort Knox reflects the resilience and security of the U.S. economy, holding a significant place in both national and global finance.

Why should I be interested in this post?

Useful resources

Academic research

Erb, C.B., and C.R. Harvey (2013) The Golden Dilemma. Financial Analysts Journal 69 (4): 10–42.

Erb, C.B., and C.R. Harvey (2024) Is there still a Golden Dilemma. Working paper.

Data

World Gold Council Gold Reserves by Country

US Funds Top 10 Countries with Largest Gold Reserves

Other

Wikipedia Gold

WikipediaFortknox

About the author

The article was written in November 2024 by Nithisha CHALLA (ESSEC Business School, Grande Ecole Program – Master in Management (MiM), 2021-2024).

Top 5 companies in the technology sector

Introduction

Apple

Nvidia

Microsoft

Amazon

Alphabet (Google)

Conclusion

Why should I be interested in this post?

Related posts on the SimTrade blog

Useful resources

About the author

About Airbus SAS

My Experience as a Customer Finance & Credit Risk Analyst at Airbus

My missions

Required Skills and Knowledge

What I learned

Concepts related my Apprenticeship

Value Chain

Credit Risk Analysis

Financial Ratios

Why Should I Be Interested in This Post?

Related posts on the SimTrade blog

Professional experiences

Risk

Useful resources

About the author

CRSP

Introduction

The History of CRSP

Key Features

Comprehensive Market Data

High-Quality Data

Unique Identifiers

Event Studies and Analytics

Customizable Datasets

Applications in Finance and Business

Advantages and Limitations of CRSP

Advantages of CRSP

Challenges and Limitations

Why CRSP Matters in 2024

Conclusion

Why should I be interested in this post?

Related posts on the SimTrade blog

Useful resources

About the author

Compustat

Introduction

The History of Compustat

Key Features

Extensive Financial Data

Global Reach

Standardized Metrics

Customizable Data Access

Integration Capabilities

Applications in Finance and Business

Advantages and Limitations of Compustat

Advantages of Compustat

Challenges and Limitations

Why Compustat Matters in 2024

Conclusion

Why should I be interested in this post?

Related posts on the SimTrade blog

Useful resources

About the author

Statista

Introduction

The History of Statista

Key Features

Extensive Financial Data

Interactive Visualizations

Comprehensive Reports

Global Consumer Survey

Ease of Accessibility to data

Applications in Finance and Business

Advantages and Limitations of Statista

Advantages of Statista

Challenges and Limitations

Why Statista Matters in 2024

Conclusion