Professional experiences

The “Professional experiences” category contains posts about the professional experience of contributors (apprenticeship, internship, consulting mission, first job, etc.).

My experience as a student assistant at KMD

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My experience as a student assistant at KMD

Magnus NIELSEN

In this article, Magnus NIELSEN (ESSEC Business School, European Management Track, 2023-2024) shares his professional experience as a student assistant at KMD. A company located in Denmark, mainly focusing on software solutions for the public sector in Denmark.

About the company

KMD A/S, is a Danish IT company, within development and delivery of software and service solutions tailored for municipalities, government entities, and businesses in Denmark, alongside selected segments in Scandinavia. The company, with branches in all major cities in Denmark, operates as a subsidiary of the NEC Corporation (Japanese multinational corporation). The KMD group works primarily in Denmark, but has recently expanded to Norway, Sweden, Finland, and Poland, boasting an annual turnover of approximately DKK 4.8 billion and a workforce exceeding 3,000 employees.

A significant player in the Danish IT landscape, KMD traces its roots back to 1972 when it was established as “Kommunedata” (translated to; “municipality data”), a merger of all Danish municipal IT centers. Until March 2009, the company was owned by Kommune Holding A/S, giving it close relations to the government. After 2009 it was privatized in a large selloff by the municipalities.

KMD’s systems play a crucial role in administering various Danish income transfers, including welfare, child benefits, maternity benefits, unemployment benefits, disability pensions, and old-age pensions. With a clientele exceeding 1,500 from both the public and private sectors, KMD serves around 800 Danish and international companies. Main competition comes from NNIT, Netcompany, TDC Group and SimCorp. Representing the forefront of the Danish IT industry.

In the evolution of its ownership structure, KMD transitioned from municipal ownership to becoming part of “EQT Partners and Arbejdsmarkedets Tillægspension” (a special pension fund system in Denmark) in 2009. Subsequently, in 2012, EQT Partners sold its stake to the private equity firm Advent International. Notably, KMD expanded its portfolio in 2015 through the acquisition of Banqsoft, a Nordic software company specializing in financial services.

The year 2019 marked a significant milestone for KMD as Japanese company NEC acquired the company for 8 billion DKK, solidifying KMD’s position in the ever-evolving landscape of IT solutions.

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

My internship and the department

Being a part of KMD in the role of a student employee within the Finance department is an enriching and dynamic experience. The company’s role in developing and managing over 400 IT systems that support the welfare of Denmark adds a sense of purpose to the work environment.

The focus of my position is primarily on maintaining and enhancing financial reporting for the business. The responsibilities extend to supporting the monthly closing process in collaboration with experienced controllers. This hands-on experience allows for a deep dive into the intricacies of financial operations, providing valuable insights into the core of KMD’s activities.

The role involves working with a substantial amount of data, requiring proficiency in tools such as Excel, PowerPoint, SAP, and Power BI. This emphasis on data analysis and modeling adds a layer of complexity to the tasks, making it an intellectually experience.

The position was for 15-hour per workweek which is normal in Denmark to do besides studies. Instead of internships, students often work in between 15-25 hours a week whil also keeping track of their academic

My missions

Strengthening Financial Reporting: Playing a key role in maintaining and enhancing financial reporting for the business.

Monthly Closing Support: Collaborating with senior controllers to facilitate the monthly closing process, involving the analysis of statistics from the previous month. This includes identifying areas where company performance may have fallen short and investigating the underlying reasons. Additionally, overseeing the tracking of consultants’ work hours and assessing their productivity.

Data Analysis and Modeling: Participating in data-related tasks, encompassing analysis and model development. Leveraging tools such as Excel, PowerPoint, SAP, and Power BI for efficient data management. SAP serves as the primary system for obtaining accountable data, subsequently analyzed using Excel and Power BI.

Required skills and knowledge

My position in KMD’s Finance department demanded a blend of both soft and hard skills essential for the dynamic responsibilities associated with financial reporting and analysis. On the soft skills front, effective communication was paramount, as conveying complex financial insights to diverse stakeholders required clarity and precision. Including the elaboration and communication of complex financials to non-financial employees.

Additionally, a high degree of analytical thinking was indispensable for interpreting data and contributing meaningfully to the monthly closing process. Being detail-oriented was crucial, ensuring accuracy in financial reporting and tracking of consultants’ work hours.

On the hard skills side, proficiency in tools like Excel, PowerPoint, SAP, and Power BI was fundamental. The ability to navigate and extract actionable insights from SAP, the primary system for accountable data, was essential for comprehensive financial analysis. Moreover, a solid foundation in data analysis and modeling techniques facilitated the creation of meaningful reports that contributed to the strategic decision-making processes within the department. The use of PivotTables thus exemplifies how technical skills, in this case, mastery of Excel functionalities, played a crucial role in the success of tasks within the dynamic environment of financial analysis at KMD.

What I learned

Financial Analysis and Communication

  • Analyzed corporate information and financial statements
  • Prepared pitch-books and presentations for effective communication with stakeholders
  • Utilized evidence-based conclusions and strategic thinking to propose innovative initiatives aligned with industry innovations and key success factors
  • Enhanced collaboration skills through engaging with diverse stakeholders.

Global Industry Understanding

  • Understanding value creation within the IT industry, drawing parallels with academic studies in competitor theory
  • Explored potential channels for international expansion, broadening perspectives on global finance dynamics
  • Applied financial modeling and analysis skills in a real-world context.

Financial concepts related my internship

DuPont Analysis

A powerful and simple financial tool, holds particular relevance in the financial reporting function at KMD. Rooted in financial ratio analysis, DuPont Analysis breaks down Return on Equity (ROE) into three key components, providing an understanding of the drivers behind financial performance.

The theoretical foundation of DuPont Analysis lies in the decomposition of ROE using the formula:

Return on Equity (ROE)

Net Profit Margin (NPM): The first component assesses profitability, reflecting the proportion of each revenue dollar that translates into net income. The formula for Net Profit Margin is:

Net Profit Margin (NPM)

Asset Turnover (ATO): The second component, Asset Turnover, evaluates the efficiency of asset utilization in generating sales. The formula is:

Asset Turnover (ATO)

Equity Multiplier (EM): The third component, Equity Multiplier, gauges the financial leverage used to magnify returns. It is calculated as the ratio of total assets to shareholders’ equity:

Equity Multiplier (EM)

By breaking down ROE into these components, DuPont Analysis enables a more structured assessment of financial performance. The application of DuPont Analysis enhances the finance department’s ability to interpret and communicate the multifaceted nature of financial performance within the context of KMD’s operations. Likewise, it provided an opportunity to pinpoint areas where improvement actions could be initiated.

Real options valuation

The application of real options valuation (ROV) methods in the context of KMD’s IT projects involves adapting and selecting appropriate models to capture the dynamic and uncertain nature of these projects. Considering that KMD’s projects may span various stages and encounter multiple uncertainties, the valuation method addresses American-styled exercises and incorporate flexibility throughout the project lifecycle.

When large uncertainties surround costs and revenues of a complex IT project, where development costs already is initiated before the actual contract is won, the traditional Black-Scholes approach can be used to estimate the value. When multiple uncertainties exist Monte Carlo simulation can also be a way to estimate the value of a project.

One must understand the concepts of IT projects, as these are put out to tender. And development cost almost always arise before the company even know if they have won the tender offer. Thus, there is a chance that the option will never get exercised, and the value is lost.
In the context of an IT project, the real option is often more analogous to a call option than a put option.

Call Option Characteristics:

A call option provides the holder with the right, but not the obligation, to buy an asset at a predetermined price (strike price) within a specified period (expiration date).

Similarly, in an IT project, the company holds the real option to proceed with the project but is not obligated to do so. The company has the flexibility to exercise the option if the conditions (such as winning a tender) are favorable.

With a call option, the holder’s downside is limited to the premium paid for the option.
In the case of an IT project, the development costs incurred before knowing the tender outcome represent a limited downside. If the tender is not won, the company may choose not to exercise the option, limiting the financial exposure.

This is a simple case. And the real option of KMD’s IT projects are often much more complex.

Monte Carlo simulation can be a powerful tool instead of the Black and Scholes formula.

In the context of an IT project’s real options valuation, Monte Carlo simulation involves modeling the project’s uncertainties using stochastic variables and running numerous simulations to estimate the project’s value. Here’s how it can be applied:

1. Identify Stochastic Variables

  • Project Success Probability: The likelihood of winning the tender or securing the project
  • Development cost: The cost associated with developing the IT project
  • Exogenous factors: External factors impacting the project, such as changes in technology, regulatory environment, or market demand.

2. Define Probability Distributions

Assign probability distributions to the identified stochastic variables. For example:

  • Probability of success: Following a beta distribution representing high degree of uncertainty/
  • Cost of development: Triangular distribution based on optimistic, most likely, and pessimistic estimates
  • Market conditions: Following a gaussian distribution

Denote that one can assign any distribution to the stochastic variables, depending on what is assumed to fit best.

3. Run the Monte Carlo Simulation

Generate random values for the stochastic variables based on their probability distributions. For each set of randomly generated values, calculate the project’s Net Present Value (NPV) or other relevant financial metrics. Repeat the process for thousands of iterations to create a distribution of possible outcomes.

Finally one may analyze the result, and present the obtained results for a managing director, who will take the final decision together with the executives. Depending on NPV of the project and the degree of uncertainty, the executives may agree to bid for the tender offer, or not to engage.

Why should I be interested in this post?

For an ESSEC student aspiring to build a career in finance, this post offers an opportunity to explore the intersection of finance and information technology. The practical application of financial concepts, such as DuPont Analysis and Real Options Valuation, within the IT industry at KMD provides a valuable insight in the daily life of a Danish software firm.

The position requires a holistic understanding of financial operations within the company. Working with technologies like SAP and Power BI enhances your skill set, making you more versatile and competitive, particularly in a digitalized financial landscape.

The exposure to real-world scenarios involving strategic decision-making under uncertainty, as emphasized by Real Options Valuation, equips you with a strategic mindset—vital in finance roles where decision-making is critical.

Understanding the inner workings of a major IT company operating in Denmark and other Nordic countries, like KMD, provides insights into the challenges and opportunities in the competitive IT market. If you ever aspire to work in Denmark, this post offers international experience, giving you a taste of the Danish business environment and company culture.

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▶ Snehasish CHINARA My Experience as an External Junior Consultant with Eurogroup Consulting

▶ Nithisha CHALLA My experience as a Risk Advisory Analyst in Deloitte

Options

▶ All posts about Options

▶ Akshit GUPTA Options

▶ Jayati WALIA Black-Scholes-Merton option pricing model

▶ Jayati WALIA Monte Carlo simulation method

Useful resources

About KMD

Goran Avlijaš (2019) Examining the Value of Monte Carlo Simulation for Project Time Management Management Journal of Sustainable Business and Management Solutions in Emerging Economies

Black F. and M. Scholes (1973) The Pricing of Options and Corporate Liabilities The Journal of Political Economy, 81(3) : 637-654.

About the author

The article was written in December 2023 by Magnus NIELSEN (ESSEC Business School, European Management Track, 2023-2024).

My experience as Actuarial Apprentice at La Mutuelle Générale

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My experience as Actuarial Apprentice at La Mutuelle Générale

Shengyu ZHENG

In this article, Shengyu ZHENG (ESSEC Business School, Grande Ecole Program – Master in Management, 2020-2024) shares his professional experience as Actuarial Apprentice at La Mutuelle Générale .

About the company

La Mutuelle Générale is a major French mutual insurance company that has established itself as a trusted provider of health and social protection solutions. With a history dating back to its foundation in 1945 as the mutual health insurance provider for La Poste et France Télécom, La Mutuelle Générale has grown to become a key player in the mutual health insurance sector in France.

Unlike private insurance companies, mutual insurance companies are based on the concept of solidarity and not for lucrative purposes. As a mutual insurance company, La Mutuelle Générale has no shareholders but only member clients who also contribute to the decision making of the company.

Specializing in health insurance and complementary health coverage, La Mutuelle Générale offers a comprehensive range of insurance products and services designed to meet the diverse needs of both individual and collective clients. On top of the coverage offered by the French social security system, la Mutuelle Générale’s health insurance offerings encompass a wide array of guarantees, including medication reimbursement, hospitalization coverage, dental care, optical care, and so forth. The company strives to provide flexible and tailored solutions to suit the specific requirements of the member clients.

The core business of the mutual insurance company is composed of health insurance and social protection (short-term incapacity, long-term invalidity, dependency and death). For the purpose of providing a more comprehensive healthcare service, in 2020, the company launched its Flex service platform, which enables partner companies to access services such as home care or personal assistance.

Overall, La Mutuelle Générale stands as a reliable and reputable insurance company, driven by the mission to provide quality healthcare coverage and social protection to individuals and businesses across France. They combine their extensive expertise, expansive coverage, and a dedicated workforce to promote well-being, financial security in face of healthcare needs, and peace of mind for their members.

Logo of La Mutuelle Générale
Logo of La Mutuelle Générale
Source: website of La Mutuelle Générale

My position

Since September 2022, I have been engaged in a one-year apprenticeship contract for the position of Actuarial Analyst in the Technical Department that englobes all the actuarial missions. Specifically, I was in the team of Studies and Products Collective Health Insurance and Social Protection. This team takes charge of the actuarial studies of social protections and collective health insurance contracts.

My missions

Within the team, I had the chance to assist my colleagues to conduct actuarial studies in various subjects:

Monitor the profitability and risk of different insurance portfolios

We continually evaluate the financial performance and risk exposure associated with individual and group Health Insurance and Life Insurance policies. We assess factors such as claims experience, investment returns, and expenses to gauge the profitability and financial health of the portfolios. By closely monitoring these aspects, the management can make informed decisions to ensure the sustainability and growth of the company.

Calculate and provide rates for group Health Insurance and Life Insurance products

We are responsible for developing the pricing structure and tools for group Health Insurance and Life Insurance products. According to the size of the clients, we deploy different pricing strategies.

We model factors such as the demographics and health profiles of the insured individuals, expected claims frequency and severity, and desired profit margins. Through mathematical models and statistical analysis, we determine appropriate premia for corresponding products.

Here I introduce brief the key idea of insurance pricing. The mechanism of insurance is that the insured person pays for a premium beforehand to get guarantee against a certain risk for a period in the future. Insurance works on the basis of mutualisation, explained by the Law of Large Numbers. For example, for automobile insurance against the risk of theft. The risk does not befall everyone (the probability of occurrence is relatively low). Whereas, when it happens, the owner has to endure a loss amount that is relatively high and it is in this case that insurance companies accompany the car owner to cover part or all of the loss if the owner is insured.

Let’s denote Xi as the loss amount for insured person i (Xi equals 0 if the risk does not take place). If an insurance company has n insured persons, and we assume all Xi are independent and identically distributed. According to the Law of Large Numbers, we have:

1/n ∑ ni =1 Xi → 𝔼[ Xi]

If n is large enough, the total claim amount will converge to 𝔼[ X1]. Therefore, if every insured person pays individually a premium of 𝔼[ X1], the insurance company as a whole would be able to pay off all the possible claims.

Ensure the implementation of the underwriting policy:

The Underwriting Department relies on a tool to assess and price group insurance contracts. Actuaries play a crucial role in guaranteeing the consistency and accuracy of the pricing scales used within this tool. We review and validate the formulas and algorithms used to calculate premia, to make sure that they are aligned with the company’s underwriting guidelines and principles and with our calculations.

We work closely with the underwriting team to enforce the company’s underwriting policy. This involves establishing guidelines and criteria for accepting or rejecting insurance applications, determining coverage limits, and setting appropriate pricing. We provide insights and recommendations based on their analyses to ensure the underwriting policy is effectively implemented, balancing risk management and business objectives.

Conduct studies related to the current political and economic conditions

Given the dynamic nature of the insurance sector, we conduct studies to assess the impact of external factors, such as economic conditions, on insurance products. For example, we analyze the effects of the 100% Santé reform on insurance premia and claim payouts. We also conduct theoretical research of the impact of the 2023 retirement reform on our social protection portfolio.

By understanding these impacts, actuaries can adapt pricing strategies, adjust risk models, and make informed decisions to address emerging challenges and provide appropriate coverage to policyholders in conformity with the framework of regulations.

Required skills and knowledge

First and foremost, the position pivoted on actuarial studies requires solid understanding of actuarial and insurance concepts and theories. For example, it is indispensable to understand the contractual aspects of insurance policies, pricing theories and accounting rules of insurance products. Actuary is a profession that requires high-level specified expertise, and the title of Actuary is recognized by actuarial associations in respective countries after passing the credentialing process.

Besides, statistical and information techniques are highly needed. The professions of Actuary could be in a way considered as a combination of Statistician, Informatician and Marketer. Making use of statistical and information techniques, actuaries delve deep into data to uncover useful information that would aid the pricing of insurance policies and the decision-making process.

Last but not least, since the insurance sector is highly regulated and insurance offerings are mostly homogeneous, a solid and comprehensive knowledge of the local regulatory environment and business landscape is a must to make sure efficient development and management of the product portfolio. In my case, a thorough understanding of the French social security system and product specificities is crucial.

What I have learned

This apprenticeship experience takes place in parallel with my double curriculum in Actuarial Science at Institut de Statistique de Sorbonne Université (ISUP). I had the opportunities to apply the theoretical aspects in actual projects and work on various subjects with the guidance of experienced professionals. I had the chance to deepen my understanding in insurance pricing, health insurance & social protection and risk management for insurers.

Financial concepts related my internship

Insurance pricing

Health insurance pricing involves the application of theoretical concepts and statistical analysis to assess risk, project future claims, and determine suitable premiums. Insurers utilize statistical models to evaluate factors such as age, gender, pre-existing conditions, and healthcare utilization patterns to estimate the likelihood and cost of potential claims. By considering risk pooling, loss ratios, and health economic studies, insurers strive to set premiums that balance financial sustainability while providing adequate coverage to policyholders. Regulatory guidelines and statistical modeling further contribute to the development of pricing strategies in health insurance.

Solvency II

Solvency II is a regulatory framework for insurance companies in the European Union (EU) that aims to ensure financial stability and solvency. It establishes risk-based capital requirements, governance standards, and disclosure obligations for insurers. Under Solvency II, insurers are required to assess and manage their risks, maintain sufficient capital to withstand potential losses, and regularly report their financial and risk positions to regulatory authorities. The framework promotes a comprehensive approach to risk management, aligning capital requirements with the underlying risks of insurance activities and enhancing transparency and accountability in the insurance sector.

Related posts on the SimTrade blog

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   ▶ Nithisha CHALLA My experience as a Risk Advisory Analyst in Deloitte

Useful resources

La Mutuelle Générale

Institut des Actuaires

Pricing Insurance #1: Pure Premium Method

About the author

The article was written in October 2023 by Shengyu ZHENG (ESSEC Business School, Grande Ecole Program – Master in Management, 2020-2024).

My Experience as an External Junior Consultant with Eurogroup Consulting

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My Experience as an External Junior Consultant with Eurogroup Consulting

Snehasish CHINARA

In this article, Snehasish CHINARA (ESSEC Business School, Grande Ecole Program – Master in Management, 2022-2024) shares his experience as an External Junior Consultant with Eurogroup Consulting, which is a consulting company specialized in organization and operations (supply chain).

About Eurogroup Consulting

Eurogroup Consulting, founded in 1982, is a French consulting firm with a European approach to management, strategy and organization. With a focus on freedom to take risks, requirements of the clients and the projects, and solidarity to the success of their entrepreneurial partners, Eurogroup consulting has been able to expand its network to 16 countries and clientele to all sectors of activity. They have grown significantly in the areas of banking and finance, business, insurance and welfare, logistics and transportation, retail, energy and the environment, and public sector, including healthcare. Today, Eurogroup Consulting stands out as a highly reputable and able partner for companies seeking all-encompassing solutions and knowledgeable advisory in the areas of Digital, Operational Excellence, and Transitions.

Eurogroup Consulting Logo
Eurogroup Consulting Logo
Source: Eurogroup Consulting.

Junior Consultant Experience

As a part of my Master in Management program at ESSEC Business School, I and a few other students a ESSEC (my team) collaborated as an External Junior Consultant with Eurogroup Consulting for a consulting project in the aviation sector based in Singapore. With my team, I closely worked with the managing partner of Eurogroup Consulting in Singapore to offer strategic recommendations to one of the firm’s clients in the aviation sector dealing with logistics (for the maintenance, repair and overhaul (MRO) of airplanes). Our focus was on addressing the real-world challenges faced by the aviation industry in the post-Covid era in the Asia-Pacific region.

My project with Eurogroup Consulting dealt with logistics and supply chain within the aviation sector. Efficient logistics and supply chain management are vital for businesses to remain competitive in today’s globalized marketplace as they ensure the efficient flow of goods, services and information from the point of origin to the point of consumption.

Our focus was on Contract Logistics in the aviation sector, which is a type of third-party logistics (3PL) service where a company delegates certain aspects of its supply chain operations to a specialized provider. This provider, known as the contract logistics provider, oversees a portion or all the company’s supply chain, which includes transportation, distribution, and related activities, as per the contractual agreement. The primary objective of contract logistics is to enhance the efficiency of the customer’s supply chain, reduce expenses, and optimize overall performance. By leveraging expertise, resources, and technology, contract logistics providers enable clients to concentrate on core business activities while entrusting the management of their logistics operations to the specialized service. Contract logistics providers provide services such as warehouse management, inventory management, order fulfillment, distribution and transportation management. In the aviation sector, contract logistics play an important role in offering services like space part logistics. Airlines face challenges with “Inoperable parts” (INOPs), which necessitate costly replacements or risk grounding the aircraft indefinitely. Major companies provide essential services to address this spare parts availability issue, such as Order Tracking & Tracing, spare parts storage management, advanced stock organization, and repair logistics management.

My missions

The objective my project was to achieve the following:

  • Identify the post-Covid supply chain strategies of major multinational corporations (MNCs) in the aviation sector, including the evolution of their supply chain footprints and their expectations from contract logistics providers (an intermediary between the different manufacturers and an airline company).
  • Evaluate the current positioning and services offered by prominent contract logistics providers and anticipate how their positioning and offerings might evolve in the future.
  • Recommend new potential offerings and analyze their suitability and key factors for success.

Required skills and knowledge

As a part of a cross-functional team of ESSEC students to achieve the shared project objectives through efficient cooperation, and decision-making, I gained an understanding of the aerospace Third Party Logistic (3PL) and Maintenance, Repair and Overhaul (MRO) industry in the Asia-Pacific region as we conducted comprehensive market research. We gathered and analysed large sets of data related to the aviation contract-logistics market, customers, competitors, and industry trends to identify growth opportunities. Following the analysis, we had weekly meetings with the managing partner of Eurogroup consulting, a professor-mentor of the team at ESSEC and the client to discuss our approach to the problem statement, challenges faced by the team to gather access to information, since aviation industry is well-known for its confidentiality norms, and the assessments produced after detailed analysis of the data. Attending the weekly team-mentor meetings was vital to our learning, providing us with first-hand exposure to the real-life operations within a consulting firm. In these meeting we decided upon the objective targets for the coming weeks and how to address the challenges faced this week.

As a junior consultant, I engaged with subject matter experts in the region in order to gain a holistic understanding of the impact of Covid-19 on the aviation contract-logistics industry. I conducted detailed financial statement analysis to understand how the larger players and competition were leveraging their cash flows, and debt to counter the crisis caused on the industry by the pandemic. In order to measure the risk of the competitors of the client, we conducted a fundamental calculation of Altman’s Z-Score and developed a credit rating model based on key financial indicators, both quantitative and qualitative, in Excel. This allowed us to scrutinize the key players in the current market and identify competitors to be focused on. Based on our discussions with experts, and analysis conducted, we identified the gap in the service offerings which allowed us to provide strategic recommendations for the client company. This 3-month long learning-by-doing experience gave me immense exposure to the operations of a consulting firm and the way they respect the needs of the stakeholders of the project.

What I learned

Key Learning Outcomes of this project :

  • To utilise evidence-based conclusions and strategic thinking to propose new strategic initiatives that aligned with industry innovations and key success factors.
  • To analyse corporate information and financial statements, preparing pitch-books and presentations while collaborating with stakeholders.
  • To define the value chain of aviation contract-logistics industry in Asia-Pacific region and observe potential channels to expand.
  • To develop custom credit rating tool based on key performance indicators.

Concepts related my internship

Third-Party Logistics in Aviation Sector

Third-Party Logistics (3PL) is a crucial aspect of Logistics and Supply Chain Management, that has transformed how businesses handle the transportation and storage of products and services. Through strategic outsourcing, companies delegate specific logistics tasks to external service providers, known as 3PL providers. These service providers streamline supply chain processes, resulting in increased efficiency, cost reduction, and improved overall performance. Within the aviation sector, 3PL is crucial for aiding airlines, aircraft manufacturers, and associated enterprises with intricate global logistics. Due to the complexity and time-sensitivity of aviation operations, 3PL providers offer customized solutions to address the unique demands and challenges of the industry. 3PL companies in the aviation industry offer a range of essential services to streamline operations. These include arranging the transportation of aviation-related cargo and goods, managing efficient warehousing and inventory systems for quick access to items, handling customs clearance for international shipments, ensuring prompt last-mile delivery to designated destinations, managing the distribution of critical spare parts for airlines’ maintenance facilities worldwide, and facilitating smooth transportation of large components and sub-assemblies for aircraft manufacturers. These services contribute significantly to the industry’s efficiency and help reduce aircraft downtime, making them indispensable partners for aviation businesses.

Aviation 3PL Services:

  • Freight Transportation: 3PL companies arrange timely transport of aviation cargo to airports, maintenance facilities, and aircraft assembly lines.
  • Efficient Warehousing: These providers manage aviation-related inventory in well-organized warehouses, reducing lead times.
  • Customs Compliance: 3PLs handle international shipments’ customs documentation, ensuring smooth clearance.
  • Last-Mile Delivery: They ensure prompt delivery of aviation components to their destinations.
  • Spare Parts Distribution: Airlines rely on 3PLs for critical spare parts distribution, minimizing aircraft downtime.
  • Aircraft Manufacturing Support: Specialized 3PLs facilitate smooth production by transporting large components for aircraft manufacturers.

Aviation companies benefit from the expertise of 3PL providers in handling complex logistics. Outsourcing these services saves on capital investments and allows them greater flexibility in scaling services based on demand. 3PL providers’ extensive network aids in smoother international operations for the customers.

Credit risk

The evaluation of credit risk holds significant importance in financial risk management, especially concerning lending and investment activities. It pertains to the potential financial loss that a lender or investor might encounter in the event of non-payment or failure of a borrower or counterparty to fulfil their financial commitments. Credit risk occurs when people, companies, or governmental entities take loans or offer credit with the possibility that they might be unable to repay the borrowed amount according to the agreed terms.

Several key concepts allow us to gauge the risk involved with an investment and make better decisions. The Probability of Default (PD) is a measure that evaluates the probability of a borrower being unable to fulfil their contractual obligations and defaulting. Although defaulting doesn’t always result in immediate losses, it can raise the risk of bankruptcy and eventual losses. PD is expressed as a percentage, with higher percentages indicating a higher risk of default. Loss Given Default (LGD) is a commonly used expression to describe the ‘loss severity’ of an investment. It calculates the proportion of an exposure (such as a bond or loan equivalent) that is expected to remain unrecovered if a default occurs. It is a percentage of the outstanding debt or investment that is not recoverable after a default occurs.

Credit agencies are responsible for assigning credit ratings to both corporations and governments based on their ability to fulfil financial obligations. These credit ratings serve as indicators for lenders regarding the entity’s capacity to repay loans. Each credit agency employs slightly varied approaches in determining credit ratings. On the other hand, credit scores pertain to individuals and reflect their creditworthiness, considering their credit history and financial conduct. Credit risk models play a vital role in the financial industry as they employ mathematical techniques to foresee the probability of default, evaluate potential losses, and handle credit risk. These sophisticated tools aid both financial institutions and investors in making well-informed choices concerning lending and investment matters. As the global economy continues to evolve, understanding and managing credit risk will remain paramount for safeguarding financial stability and ensuring sustainable growth in lending and investment sectors. By employing comprehensive credit risk analysis, stakeholders can navigate potential challenges, capitalize on opportunities, and foster a resilient financial landscape for the future.

The evaluation of credit risk had a vital role in the extensive market research conducted for the top players in the aviation contract logistics segment. Although credit risk analysis mainly concentrates on appraising the creditworthiness of potential collaborators or customers, it offered valuable insights that prove beneficial for competitive intelligence and market research objectives. Conducting credit risk analysis on companies within the industry allowed for the identification of major players and their market position. Assessing financial stability, including liquidity, profitability, and debt levels, helped evaluate potential investment opportunities and market disruptions. Additionally, studying competitors’ credit risk provided insights into their market share, customer base, and potential risks of default or bankruptcy. Understanding their financial strength aided in formulating effective strategies for competitive positioning in the aviation contract logistics niche.

Corporate Risk Management

In order to mitigate various types of financial risks, such as credit risk, market risk, liquidity risk, and operational risk, investors and management can use risk analysis to identify, measure, and mitigate these risks effectively. Instabilities and losses in financial markets generally caused by fluctuations in stock prices, currencies, interest rates and more lead to rise in financial risks. Market risk reflects the fluctuations of interest rates, currencies, and prices of raw materials. Probability of failing to pay creditors such as banks or lenders leads to credit risk. Liquidity risk is the inability of a company to meet its short-term financial obligations (to pay the salaries of its employees, to settle the invoices to its suppliers, to pay back the capital and interests to the bank, to pay the taxes to the State, etc.) and is generally signs of cashflow inefficiencies. Flawed policies, processes, events or systems disrupt business operations and are known to cause operational risks. Financial risks are measured by calculating specific ratios that indicate the overall health of a company, which are then compared against the industry benchmark.

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?

Working closely with subject matter experts and engaging in financial statement analysis to assess the impact of Covid-19 on the various industries equipped us with valuable skills and knowledge in financial analysis and risk assessment. Additionally, learning to calculate Altman’s Z-Score and developing a credit score model allowed us to evaluate the financial health of companies, a crucial skill in the finance industry. The exposure to strategic decision-making, data analysis, and client interactions during this consulting project helped me develop problem-solving capabilities and communication skills, which are highly sought-after attributes in the finance job market. Overall, this hands-on experience provided me with practical experience for finance roles, especially in consulting firms.

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   ▶ Jayati WALIA Value at Risk

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   ▶ Nithisha CHALLA My experience as a Risk Advisory Analyst in Deloitte

Useful resources

Eurogroup Consulting

Financial Risk – Allianz Trade

Financial Risk – Deloitte

About the author

The article was written in August 2023 by Snehasish CHINARA (ESSEC Business School, Grande Ecole Program – Master in Management, 2022-2024).

My experience as a trading floor intern at CIC Market Solutions

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My experience as a trading floor intern at CIC Market Solutions

Tanguy TONEL

In this article, Tanguy TONEL (ESSEC Business School, Global BBA, 2019-2023) shares his professional experience as an intern at the Bordeaux trading floor of CIC.

About CIC Market Solutions

Logo of the CIC Market Solutions.
Logo of CIC Market Solutions
Source: CIC Market Solutions

My internship

I joined the trading floor of CIC Sud-Ouest (the South-West branch of CIC) which is divided in two desks (FICC – Fixed Income, Currencies and Commodities, and asset management) to provide personalized advice to local corporate clients for their investments and risk management. There, I assisted sales and asset managers in their daily duties.

My missions

As an intern, my tasks were very diverse as I have been assisting both FICC and asset management desks. In a day, I would operate the trades reconciliation, monitor the limit orders execution for the sales traders, research and analyze data for the asset managers in preparation of client meetings and do reporting to track the performance of investments. Finally, I helped with management control and middle office tasks such as new clients’ registration.

Required skills and knowledge

While some technical skills such as Excel/VBA are welcomed, the most important skill to have is curiosity. Indeed, as financial markets are constantly evolving it is important to look for anything that can help explain any change, whether in the products’ performances, in the regulatory environment or in clients’ demand to react proactively.

What I learned

During the internship, I learned about the financial solutions provided by a trading floor. On the FICC desk, I was exposed to derivatives and other complex products. On the asset management desk, I discovered the world of EMTNs (Euro Medium Term Notes) which are structured products.

Overall, the internship allowed me to get a broader understanding of the financial markets as I could see the impacts of the markets and the broader economy on clients’ needs, and the impact of client’s needs on the type of products offered by the bank.

Financial concepts related my internship

EMTNs

Euro Medium Term Notes (EMTNs) are a type of debt security that is issued by large corporations, financial institutions, and sovereign governments to raise funds for financing purposes (so the bank can loan money). EMTNs are similar to traditional bonds in that they pay a fixed or floating rate of interest and have a maturity date. One of the key advantages of EMTNs is their flexibility. They can indeed be tailored to meet the specific needs of investors. In practice, the structurers can work on guaranteeing the capital, on the yield… They usually obey rules (such as “The EMTN pays 7% per year for 3 years, then the spread between a rate and another. When the EMTN has paid 22% or at the end of the seventh year, the product ends, and the investor gets his or her capital back.”).

Derivatives

Financial derivatives are financial instruments used to manage risk. They derive their value from an underlying asset or group of assets. Derivatives can be sold for a wide range of assets such as interest rates, currencies and commodities, which are traded by the FICC desk.

There are several types of financial derivatives. The best-known include futures contracts, options contracts, swaps, and forwards.

  • Futures contracts are agreements to buy or sell an asset at a predetermined price and date in the future.
  • Options contracts give the holder the right, but not the obligation, to buy or sell an asset at a predetermined price and date in the future.
  • Swaps are agreements to exchange cash flows based on different financial instruments, such as interest rates or currencies.
  • Forwards are similar to futures contracts, but they are customized agreements between two parties rather than standardized contracts traded on an exchange.

Structured products

Structured products are financial instruments that are created by combining multiple financial assets, such as stocks, bonds, and derivatives, into a single investment product. These products are designed to meet specific investment objectives, such as providing income, capital protection, or exposure to a particular market or asset class.

Structured products are typically created by financial institutions, such as banks or investment firms, and are sold to investors. They can be customized to meet the specific needs of individual investors and can be structured to provide a range of risk and return profiles.

Some common types of structured products include:

  • Principal-protected notes: These products provide investors with a guaranteed return of their initial investment, while also offering exposure to the performance of an underlying asset or index.
  • Autocallable notes: These products provide investors with a fixed income stream, while also offering the potential for higher returns if an underlying asset or index meets certain performance criteria.
  • Reverse convertibles: These products provide investors with a fixed income stream, while also exposing them to the risk of a decline in the value of an underlying asset or index.

Why should I be interested in this post?

The trading floor is the link between the financial markets and the rest of the business world. Understanding the products offered allows one to get a better grasp on both sides of the economy.

Related posts on the SimTrade blog

   ▶ All posts about Professional experiences

   ▶ Colombe BOITEUX Métiers de la finance : sales

   ▶ Alexandre VERLET Understanding financial derivatives: options

   ▶ Alexandre VERLET Understanding financial derivatives: futures

   ▶ Alexandre VERLET Understanding financial derivatives: swaps

   ▶ Alexandre VERLET Understanding financial derivatives: forwards

   ▶ Akshit GUPTA Equity structured products

   ▶ Shengyu ZHENG Reverse Convertibles

Useful resources

Academic resources

Hull J.C. (2021) Options, Futures, and Other Derivatives Pearson, 11th Edition.

Business resources

CIC Market Solutions

About the author

The article was written in June 2023 by Tanguy TONEL (ESSEC Business School, Global BBA, 2019-2023).

My experience as an Investment Specialist at Amundi Asset Management

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My experience as an Investment Specialist at Amundi Asset Management

Tanguy TONEL

In this article, Tanguy TONEL (ESSEC Business School, Global BBA, 2019-2023) shares his professional experience as an investment specialist in the ETF, Smart Beta & Indexing division of Amundi Asset Management.

About Amundi Asset Management

Amundi Asset Management is a leading global asset manager with over €1.7 trillion in assets under management as of December 31, 2022. The company was founded in 2010 as a joint venture between Crédit Agricole and Société Générale and has since grown to become one of the largest asset managers in Europe.

Amundi offers a wide range of investment solutions across all major asset classes, including equities, fixed income, multi-asset, and alternative investments. The company serves a diverse client base, including institutional investors, corporations, and individual investors.

Logo of Amundi.
Logo of Amundi
Source: Amundi

My internship

I joined the Investment Specialist team of the ETF, Smart Beta & Indexing division which works as a facilitator for the asset management and the sales teams. The team answers clients on the most technical questions and their due diligence inquiries, applies to calls for tenders, monitors the market and does the reporting of the funds.

My missions

During my internship, I shadowed the team, helping them on a broad variety of their tasks.
Among those, I worked on the reporting of the funds, researching data to answer clients’ questions and on drafting sales offers for calls for bids. Additionally, I documented the tools used by the team in their daily activity which allowed me to get involved in nearly all the team’s duties.

Required skills and knowledge

While some technical skills such as Excel/VBA are welcomed, the most important skill to have is curiosity. Indeed, as financial markets are constantly evolving it is important to look for anything that can help explain any change, whether in fund performance, in the regulatory environment or in clients’ demand to react proactively. The ability to adapt is crucial, tools change.

What I learned

During the internship, I have been able to learn a lot about passive management. Indeed, the funds offered by Amundi are very diverse and allowed me to discover the concept of Smart Beta, how indices are built and replicated by asset managers, how ESG rules are incorporated into funds…

Financial concepts related my internship

Passive asset management

Passive asset management is an investment strategy that seeks to replicate the performance of a market index or benchmark. It involves investing in a diversified portfolio of securities that closely mirrors the composition of a particular index.

Usually replicated by index funds or ETFs, the indices follow different kind of rules in their composition while the asset managers work to replicate them without getting involved in the composition.

Physical and Synthetic ETFs

There are two main ways that an ETF can replicate an index: physically and synthetically.

A physically replicated ETF holds all or a representative sample of the securities in the index it tracks. For example, if an ETF tracks the S&P 500 index, it will hold all 500 stocks in the index or a representative sample of those stocks. The ETF’s performance would then closely track the performance of the index.

A synthetically replicated ETF, on the other hand, does not hold the underlying securities in the index. Instead, it uses derivatives, such as swaps, to replicate the index performance. The ETF enters into an agreement with a counterparty, such as a bank, to receive the returns of the index in exchange for paying the counterparty a fee. The counterparty holds the underlying securities and takes on the risk of holding them.

Physical replication tends to be more straightforward and transparent, as investors can see exactly what securities the ETF holds. However, it can also be more expensive, as the ETF incurs costs associated with buying and selling the underlying securities.

Synthetic replication can be cheaper, as the ETF does not need to buy and sell the underlying securities. However, it also introduces counterparty risk, as the ETF is reliant on the counterparty to fulfill its obligations. Additionally, synthetic ETFs may be less transparent, as investors may not know exactly what securities the counterparty is holding.

Smart Beta

Smart Beta is a strategy used in asset management that seeks to outperform traditional market-cap weighted indices by selecting stocks based on factors other than their market capitalization. These factors can include value, momentum, quality, and low volatility, among others.

Using Smart Beta, investors will seek to lower the variance of their portfolio, reducing risk or try to improve returns.

Indeed, one of the flaws of passive funds such as ETFs is that by following the indices, they might bear unrewarded risk or miss rewarded risk. This is due to the fact that for market-cap weighted funds, when a company’s market cap rises as a share of the index, it will also rise as a share of the fund, even if it yields less returns to the holder than another stock.

This has lately been seen with tech companies that grew exponentially as money flowed into those funds.

Why should I be interested in this post?

As passive management is taking a larger share of the asset management industry, understanding this growing trend can provide a valuable edge whether to work inside it or deal with it. Nonetheless, the concepts detailed in this article can also be useful for personal finance decisions.

Related posts on the SimTrade blog

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   ▶ Youssef LOURAOUI ETFs in a changing asset management industry

   ▶ Youssef LOURAOUI Smart Beta industry main actors

   ▶ Jayati WALIA My experience as a credit analyst at Amundi Asset Management

   ▶ Youssef LOURAOUI Passive Investing

   ▶ Youssef LOURAOUI Active Investing

Useful resources

Amundi ETF, Gestion indicielle et Smart Beta

Amundi ETF

About the author

The article was written in June 2023 by Tanguy TONEL (ESSEC Business School, Global BBA, 2019-2023).

My experience as an EMEA Regional Treasurer intern at Sanofi

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My experience as an EMEA Regional Treasurer intern

Isaac ALLIALI

In this article, Isaac ALLIALI (ESSEC Business School, Bachelor in Business Administration (BBA), 2019-2023) shares his professional experience an EMEA Regional Treasurer intern at Sanofi.

Sanofi

During my internship at Sanofi, a leading global pharmaceutical company headquartered in Paris, I had the privilege of working in the Treasury Department. Sanofi is renowned for its extensive research, development, manufacturing, and marketing of pharmaceutical products across various therapeutic areas. With a steadfast commitment to improving global health, Sanofi’s portfolio includes treatments for diabetes, cardiovascular diseases, vaccines, and rare diseases. As a key player in the pharmaceutical industry, Sanofi holds a significant share of the prescription market.

Logo of Sanofi.
Logo of
Source: the company.

Financial accounts

Income statement of Sanofi.
Logo of
Source: the company.

Strategy

Strategy of Sanofi.
Logo of
Source: the company.

My internship

As a Europe Middle East and Africa (EMEA) Regional Treasurer intern at Sanofi, my internship involved two main aspects. Firstly, I was responsible for reporting on the performance of the company’s subsidiaries on a monthly basis, focusing on key financial metrics such as Days Sales Outstanding (DSO), Days Payable Outstanding (DPO), Days Inventory Outstanding (DIO), and cash flows. This required analyzing financial data, preparing comprehensive reports, and providing insights into the subsidiaries’ financial health. I developed a deep understanding of financial ratios and gained proficiency in financial analysis and reporting.

Additionally, on a day-to-day basis, I played a vital role in implementing alternative banking channels to ensure the sustainability of cash receipts from high-risk countries. This involved close collaboration with banks and local teams to establish robust procedures and systems. To ensure accurate cash receipts matching with product sales, I diligently contacted banks and the local teams on a daily basis. This rigorous process involved verifying and validating each transaction, ensuring the precise quantity of products sold aligned with the corresponding justifying claims. By maintaining meticulous attention to detail, I ensured that every transaction was accurately registered and properly accounted for.

This aspect of my internship demanded strong communication skills, attention to detail, and the ability to manage complex transactions efficiently. It provided firsthand exposure to the challenges and intricacies of international banking operations, risk management, and compliance in high-risk countries.

During my internship as an EMEA Regional Treasurer at Sanofi, I had the additional responsibility of consolidating the representative offices’ register, which included all the bank accounts and power of attorneys (legal documents allowing appointed employees to make decisions on behalf of Sanofi).

This task required me to meticulously reconcile and align the information from various regions before the audit control. To ensure accuracy and completeness, I actively communicated with every regional treasurer, collaborating closely to verify the documentation and address any discrepancies. This process of effective communication and coordination with the regional treasurers was crucial in achieving a thorough and successful consolidation. By ensuring that everything was in order, I contributed to the smooth audit control process and maintained the integrity of the company’s financial records.

My missions

My internship involved two main aspects. Firstly, I was responsible for reporting on the performance of the company’s subsidiaries on a monthly basis, focusing on key financial metrics such as Days Sales Outstanding (DSO), Days Payable Outstanding (DPO), Days Inventory Outstanding (DIO), and cash flows. This required analyzing financial data, preparing comprehensive reports, and providing insights into the subsidiaries’ financial health. I developed a deep understanding of financial ratios and gained proficiency in financial analysis and reporting.

Additionally, on a day-to-day basis, I played a vital role in implementing alternative banking channels to ensure the sustainability of cash receipts from high-risk countries. This involved close collaboration with banks and local teams to establish robust procedures and systems. To ensure accurate cash receipts matching with product sales, I diligently contacted banks and the local teams on a daily basis. This rigorous process involved verifying and validating each transaction, ensuring the precise quantity of products sold aligned with the corresponding justifying claims. By maintaining meticulous attention to detail, I ensured that every transaction was accurately registered and properly accounted for.

This aspect of my internship demanded strong communication skills, attention to detail, and the ability to manage complex transactions efficiently. It provided firsthand exposure to the challenges and intricacies of international banking operations, risk management, and compliance in high-risk countries.

During my internship,I had the additional responsibility of consolidating the representative offices’ register, which included all the bank accounts and power of attorneys (legal documents allowing appointed employees to make decisions on behalf of Sanofi).

This task required me to meticulously reconcile and align the information from various regions before the audit control. To ensure accuracy and completeness, I actively communicated with every regional treasurer, collaborating closely to verify the documentation and address any discrepancies. This process of effective communication and coordination with the regional treasurers was crucial in achieving a thorough and successful consolidation. By ensuring that everything was in order, I contributed to the smooth audit control process and maintained the integrity of the company’s financial records.

Required skills and knowledge

The EMEA Regional Treasurer role at Sanofi requires a combination of knowledge and skills. Here are key areas of expertise and proficiencies relevant to the position:

Financial Analysis: A strong foundation in financial analysis is essential for evaluating subsidiary performance, assessing financial health, and providing meaningful insights. Proficiency in financial ratios, financial modeling, and data analysis enables you to make informed decisions and recommendations.

Treasury Operations: Familiarity with treasury operations, including cash flow management, liquidity management, risk management, and financial reporting, is crucial. Understanding financial instruments, banking relationships, and compliance procedures ensures effective treasury operations and supports decision-making.

Communication and Collaboration: Effective communication skills are vital to engage and collaborate with internal stakeholders, such as regional financial management and local teams. Clear and concise communication fosters productive relationships and ensures the smooth execution of financial processes.

Attention to Detail and Compliance: Meticulous attention to detail is necessary when reporting on subsidiary performances and implementing alternative banking channels. Compliance with internal control procedures, risk mitigation protocols, and financial regulations ensures accuracy, transparency, and integrity in financial operations.

Analytical Thinking: Strong analytical skills are critical for analyzing financial data, identifying trends, and making data-driven decisions. The ability to evaluate risks, identify opportunities, and propose solutions contributes to effective financial management.

Adaptability and Problem-Solving: The dynamic nature of the role requires adaptability, as well as the ability to think critically and solve problems in a fast-paced environment. Resilience, flexibility, and a proactive approach enable you to navigate challenges and drive continuous improvement.

Financial concepts related my internship

Days Sales Outstanding (DSO)

DSO is a financial metric that measures the average number of days it takes for a company to collect payment after a sale is made. Monitoring DSO is crucial for assessing a company’s liquidity position and efficiency in collecting accounts receivable. During my internship, I actively analyzed and reported on DSO, gaining a practical understanding of its significance in cash flow management.

Days Payable Outstanding (DPO)

DPO is a financial metric that measures the average number of days it takes for a company to pay its suppliers after receiving an invoice. Managing DPO effectively is essential for optimizing working capital and maintaining strong supplier relationships. In my reporting responsibilities, I monitored and analyzed DPO, contributing to a comprehensive assessment of the company’s financial performance.

Cash Receipts and Compliance

Ensuring the accurate and timely recording of cash receipts is vital for financial integrity. Implementing alternative banking channels and verifying transactions from high-risk countries required a keen eye for detail and compliance with internal control procedures. This experience emphasized the importance of maintaining rigorous standards to mitigate risk and ensure accurate financial reporting.

Why should I be interested in this post?

The role of EMEA Regional Treasurer at Sanofi offers a compelling opportunity for individuals interested in finance, treasury operations, or the pharmaceutical industry. Here are a few reasons why you should be interested in this post:

Industry Leadership: Sanofi is a global leader in the pharmaceutical industry, renowned for its innovative research and development. Joining the Treasury Department of such a prominent company provides exposure to the complexities of finance within a multinational pharmaceutical corporation, offering a unique and valuable experience.

Financial Responsibility: As an EMEA Regional Treasurer, you would have a significant role in managing the financial assets of Sanofi across the EMEA region. This level of responsibility allows you to make strategic financial decisions, analyze financial performance, and contribute to the company’s financial health.

International Exposure: Working within the EMEA region exposes you to diverse markets, cultures, and business practices. It presents an opportunity to develop a global mindset, adaptability, and cross-cultural communication skills, which are increasingly valuable in today’s interconnected business world.

Learning Opportunities: The Treasury Department at Sanofi offers a dynamic and challenging environment where you can continually enhance your financial knowledge and skills. You will gain exposure to various aspects of treasury operations, financial risk management, liquidity management, and financial reporting.

Impactful Contributions: By actively participating in the implementation of alternative banking channels, you will contribute to ensuring the sustainability of cash receipts from high-risk countries. This responsibility allows you to make a tangible impact on the company’s financial operations and play a vital role in managing financial risks.

Useful resources

Sanofi

Careers at Sanofi

About the author

The article was written in June 2023 by Isaac ALLIALI (ESSEC Business School, Bachelor in Business Administration (BBA), 2019-2023).

My professional experience as B2B Project assistant manager at Dance

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My professional experience as B2B Project assistant manager at Dance

Theo SCHWERTLE

In this article, Theo SCHWERTLE (Maastricht University, School of Business and Economics, Bachelor in International Business, 2023) shares his experience as a B2B Project assistant manager at Dance which is a start-up in urban mobility.

About the company

Dance is a progressive company that is reshaping urban mobility by providing an electric mobility subscription service. The company offers members the freedom to explore their city with an electric bike or moped, with maintenance and repairs included in the membership. Founded by the creators of SoundCloud and Jimdo, Dance is currently operating in Berlin, Hamburg, Munich, Vienna, and Paris, with a focus on making urban commuting more connected, convenient, and environmentally friendly.

Logo of the company.
Logo of Dance
Source: Dance.

My internship

As part of the Dance for Business department, I was privileged to contribute to various crucial aspects of the business, including the development and standardization of Business-to-Business (B2B) playbooks for client outreach, engagement, and account management. I also had the opportunity to manage the company pipeline using our Customer Relationship Management (CRM) tool, conduct competitive market research, and collaborate with cross-functional teams to execute lead generation strategies and client retention initiatives.

My missions

My mission at Dance was multifaceted, encompassing both client relationship management and sales strategy. I was responsible for creating and developing B2B pitch decks, preparing and supporting pitch meetings with new clients, and building long-term relationships with our clients to provide the best service possible. Serve as the first point of contact for all B2B clients, but also to find new strategies to acquire more customers. Furthermore, we were making Partnership deals with other service providers to spread the word about the mobility solution that Dance offers.

Required skills and knowledge

This role required strong interpersonal skills for building and maintaining client relationships, as well as proficiency in using CRM tools to manage the company pipeline. It also called for a solid understanding of sales strategies and market research methodologies. Since we were only a small team, communication and constant prioritization of tasks was paramount. Interpersonal skills have strongly increased during that time since I was constantly pitching to the management of firms like AboutYou or Inditex while also taking care of our current clients.

What I learned

Project Management: In preparing B2B pitch decks and supporting pitch meetings, you would have honed your project management and organization skills.

Communication: Being the first point of contact for all B2B clients and building long-term relationships with them would have strengthened your communication and interpersonal skills.

Strategic Thinking: Conducting competitive market research and collaborating on lead generation strategies likely helped develop your strategic thinking and market analysis abilities.

Problem Solving: Proposing solutions in line with business objectives and incorporating new initiatives shows your problem-solving capabilities.

Financial concepts related my internship

Customer Acquisition Cost (CAC)

Customer Acquisition Cost (CAC) refers to the total expenses a company incurs to convince a potential customer to purchase its product or service. It includes costs related to marketing and sales efforts and is a key metric for determining the return on investment for acquisition strategies.

Contribution Margin

Contribution Margin is a financial metric that calculates the profitability for individual items sold by a company. It is determined by subtracting the variable costs (costs that change with the amount of goods or services produced) associated with a product from the revenue generated by that product.

Customer Lifetime Value

Customer Lifetime Value (LTV) is a projection of the total net profit a company expects to earn from a customer throughout the business relationship. It takes into account the revenue a customer would generate, the costs of acquiring and serving the customer, and the duration of the relationship with the customer.

Why should I be interested in this post?

If you’re looking to gain insights into the world of business operations or contemplating a career in a similar industry, this post should be of high interest to you. The financial concepts discussed here form the backbone of many successful businesses. Understanding these concepts can help you view business operations from a new perspective, providing you with a solid base for making informed decisions.

Furthermore, sharing my experience at Dance provides an insider’s perspective into how the start-up operates and how different roles contribute to its success.

My experience at Dance was nothing short of enriching. With the right blend of motivation, attention to detail, and focus on business objectives, I was able to contribute effectively to the company’s success. I hope my insights will inspire and guide those looking to embark on a similar professional journey.

Related posts on the SimTrade blog

   ▶ All posts about Professional experiences

   ▶ Jayna MELWANI My professional experience as a Global Development and Learning Intern at Danone

Useful resources

Dance

About the author

The article was written in May 2023 by Theo SCHWERTLE (Maastricht University, School of Business and Economics, Bachelor in International Business, 2018-2023).

My experience as City Manager at HungryPanda

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My experience as City Manager at HungryPanda

Mirabelle DING

In this article, Mirabelle DING (Telfer School of Management, Bachelor in Finance, 2015-2019) shares her professional experience as City Manager at HungryPanda Tech.

About the company

HungryPanda Tech is a global platform focused on overseas Asian community, covering food delivery, online grocery, retail, and lifestyle services. Founded in 2017 in Nottingham, the United Kingdom (UK), HungryPanda has expanded its operations to more than 80 cities in 10 countries, with 3.5 million registered users and over 60,000 merchant partners.

Logo of HungryPanda.
Logo of HungryPanda
Source: HungryPanda.

The operation team is typically composed of three segments: business development, marketing, and delivery operations. The business development team manages accounts for our existing merchant partnerships and reaches out to new business opportunities. The marketing team is responsible for the promotion of the platform and customer acquisition, as well as negotiating sponsorship with local events. The delivery team ensures the efficiency of the delivery dispatch, quality of service, and recruitment of new carriers. The city manager oversees the workflow and coordinates the three departments to ensure seamless teamwork and achievement of the company’s goal.

My job

I worked as City Manager at HungryPanda for the Toronto Area, which is equivalent to Business Manager.

My missions

As City Manager at HungryPanda, my primary mission was to expand market share and enhance profitability.

Asian food delivery is a niche but competitive market in Toronto. To reinforce the competitive advantage of the company, my team and I had to regularly conduct market research, including industry trends, consumer behaviour analysis, and competitor analysis, to develop strategies and stay on top of the game. For example, we initiated a virtual kitchen program with selective partner merchants, where we researched and identified marketable dishes that were popular in areas with a similar demographic as our customer base. We collaborated with the merchants to design the menu and build exclusive virtual brands that were innovative and appealing to the consumers, which helped the merchants boost their revenue while mitigating the risk of modification on their original menus.

Another important duty of the city manager is to analyze the operational and financial data. The financial analysis includes breaking down the contribution margin of each of our merchant partners and evaluating the return on investment (ROI) of each project and market campaign, which is crucial in understanding our financial performance. The operational data analysis, on the other hand, entails app traffic flow, conversion rate, customer retention rate, redemption rate of discount coupons, etc., which facilitates identifying areas of improvement and optimizing the allocation of online resources. For example, if we launch a promotional discount on selective merchants alongside in-app advertising and text message marketing, analyzing the contribution margin and the customer retention rate of each merchant can help us determine the merchants that will continue to generate growth even after the discount period ends. This approach allowed us to maximize the return on our budget spending and ensure efficient utilization of marketing resources.

Knowledge and skills

During my time at HungryPanda, I have come to recognize several important skills that are essential for business operations:

  • Effective communication and coordination among different departments
  • Financial analysis and forecasting to support sustainable growth
  • Strategic planning to identify opportunities and challenges
  • Adaptability to react and adjust strategies in a dynamic business environment

Financial concepts related my job

I describe below the following financial concepts related my job: contribution margin, Gross merchandise volume, and the lifetime value (LTV) to customer acquisition cost (CAC) ratio.

Contribution margin

The contribution margin is calculated by sales revenue less the variable costs, and it represents the available revenue to cover the fixed costs (rent, salaries, market spending, etc.). I used contribution margin analysis to identify the profitability of each project and market campaign, and thereby determined which project or market campaign to continue and to invest in.

Gross merchandise volume

Gross merchandise volume (GMV) is the total money value of transactions on the platform. We used GMV as a key performance indicator to assess the scale and growth of our business and to track the overall performance of our long-term operational strategies.

LTV to CAC ratio

The lifetime value (LTV) to customer acquisition cost (CAC) ratio is the expected revenue from new customers relative to the cost of acquiring them. To encourage potential customers to try out the products and services offered on our platform, we frequently launched campaigns targeted at new registers, including offline promotional giveaways, new user discounts, referral rewards, etc. It is essential to analyze the customer acquisition cost and Lifetime value to evaluate the effectiveness and sustainability of each acquisition channel.

Why should I be interested in this post?

The experience at HungryPanda has instilled in me the importance of financial analysis and forecasting in making informed decisions for business operations. I hope this post shares some perspectives on how the application of financial concepts is used in driving business growth and improving profitability.

Related posts on the SimTrade blog

   ▶ All posts about Professional experiences

Useful resources

HungryPanda

About the author

The article was written in May 2023 by Mirabelle DING (Telfer School of Management, Bachelor in Finance, 2015-2019).
 

My professional experience as an Assistant to the CFO at Association Science Ouverte

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My professional experience as an Assistant to the CFO at Association Science Ouverte

Matisse FOY

In this article, Matisse FOY (ESSEC Business School, Bachelor in Business Administration (BBA), 2019-2023) shares his professional experience as an Assistant to the CFO at Association Science Ouverte.

About the structure

The missions of the Science Ouverte Association are “to open young people to science and science to young people, to fight against a feeling of powerlessness and confinement often too present”. It aims to create a visible and effective structure in Seine-Saint-Denis, capable of arousing scientific vocations and helping young people who are committed to this path.

It offers various activities, especially to high school students: tutoring, science and technology courses, various workshops on 3D graphics, programming, etc.

Logo of Science Ouverte Association
Logo of Association Science Ouverte
Source: Association Science Ouverte

I was a part of the Finance Department, a critical unit within the organization that was responsible for managing the association’s financial resources. As a district association, our department was made of only two people: the CFO and me.

The Finance Department oversees a wide range of functions, including budgeting, accounting, and financial reporting. It also plays a strategic role in decision-making processes by providing financial analysis to guide the association’s decisions.

Furthermore, the Department works with external stakeholders, such as auditors, as well as private and public funders.

My internship

My missions

Throughout my internship, I was tasked with various missions to operate and enhance the accounting and financial tools of the Association. Those missions had both short-term, operational objectives, and long-term objectives. Here is what they mainly consisted in:

  • Preparation of files for the audit of the accounts
  • Improving timesheet maintenance (e.g., adding indicators and summary tables for them to be as ergonomic and easy to use as possible)
  • Verification and updating of financial statements, individual funds and association budgets.

Required skills and knowledge

To work in a corporate finance position and be efficient at your job, you will need to acquire many skills:

  • Knowledge of financial concepts: During my internship, I was accompanied by the CFO in my learning of specific financial notions related to an association. My previous knowledge of finance and accounting helped understand and assimilate those notions faster.
  • Basic knowledge of a spreadsheet like Excel: In most structures, Excel will play a key role in your everyday job. Don’t forget to learn basic Excel skills and shortcuts to save time and make your tasks easier.
  • An understanding of the organization’s industry: Each structure has its financial specificities in terms of business model, objectives and regulatory environment. Learning about them as soon as possible will help shape your decision to be most effective.

What I learned

This experience brought me key valuable lessons about professional environment and work ethic. Here are three of them:

  • Attention to details: my time in the Finance department taught me how every piece of documentation, and every penny is important. The margin for error is low, and it allowed me to become meticulous is my work.
  • Effective communication: clear, concise, and timely communication was vital when communicating with my colleagues and superior to accomplished task I was assigned to. When confronted with a new problem, I did not hesitate to contact relevant persons if I couldn’t find the solution myself.
  • Proactivity: I tried to show initiative, anticipate needs, and propose solutions to existing problems that weren’t directly asked by my manager. This helps to create a positive impression and demonstrate your commitment.

Financial concepts related my internship

Financial forecasting

Financial forecasting refers to the process of estimating the future financial performance of an organization. These forecasts played a crucial role in strategic planning, helping the organization know what they could be able to invest in or not in the months and years to come.

Budgeting

Budgeting allows to estimate revenues and expenditures over a future period. During my internship, I saw how a well-structured budget serves as a roadmap, guiding the association’s financial decisions, and keeping the organization on track financially.

Financial Reporting

Financial reporting involves the process of producing statements that disclose an organization’s financial status to funders and the government. As part of my role, I helped in the preparation of the 2021 and had to work on financial reports. These reports were critical in understanding the financial health of the association, making informed decisions, and ensuring regulatory compliance.

Why should I be interested in this post?

An experience in the financial department of an association helps apply your theoretical knowledge about finance while taking a step back about its role: concretize the most impactful project by allocating resources, reporting, and optimizing them, to get the most of every euro you inject in the structure’s activities.

As I was working next to the association’s activity rooms, it was really gratifying to see that my work has a concrete influence on the young people the association is helping.

Related posts on the SimTrade blog

   ▶ All posts about Professional experiences

   ▶ Alexandre VERLET Classic brain teasers from real-life interviews

   ▶ Martin VAN DER BORGHT My experience as an intern in the Corporate Finance department at Maison Chanel

Useful resources

Association Science Ouverte

About the author

The article was written in May 2023 by Matisse FOY (ESSEC Business School, Bachelor in Business Administration (BBA), 2019-2023).

 

My professional experience as a Strategy and Innovation Consultant at Planet Impact Advisory

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My professional experience as a Strategy and Innovation Consultant at Planet Impact Advisory

Matisse FOY

In this article, Matisse FOY (ESSEC Business School, Bachelor in Business Administration (BBA), 2019-2023) shares his professional experience as a Strategy and Innovation Consultant at the firm Planet Impact Advisory.

About the company

Planet Impact Advisory is a consulting firm located in Paris and providing strategy consulting services for corporates and venture funds.

The firm uses methodologies mixing strategy consulting, design thinking, and a strong entrepreneurial approach to solve challenges and build impactful projects.

Its missions range from accompanying a mid-size company in the establishment of an investment strategy in the health sector, to the construction of a European program and two innovative platforms to solve the talent crunch in the health sector.

Logo of Planet Impact.
Logo of Planet Impact
Source: Planet Impact.

My internship experience

My missions

My assignments within the firm were extremely diverse. I was assigned in the mobility, human resources (HR) and even healthcare sectors. These missions mainly consisted in:

  • Sourcing, production of one-pagers, presentation, and matchmaking with startups for a Swiss-German CVC (Corporate Venture Capital Fund)
  • Construction of the strategic documentation and support for a fundraising for a startup in the HR Tech / Future of Work.
  • Conceptualization and competitive analysis of two innovative platforms for an organization in the health sector
  • Participation in the construction of a database of 2,500 startups in the mobility sector.

Required skills and knowledge

Many soft skills are required to perform in the consulting world:

  • Strong analytical skills: much the work involves interpreting complex data through dense literature and translating it into actionable strategies.
  • Communication: whether when facing your superiors or clients, you need to be able to communicate idea in a concise and effective way.
  • Business fundamentals: you don’t need to be an expert with 10 years of experience in each and every business sector you will be working in, but you should at least know about the core aspects of marketing, finance, and project management.

What I learned

This experience brought me key valuable lessons about professional environment and work ethic. Here are three of them:

  • Be honest about what you can do and not to do in a timely manner. Being a people pleaser is not a good thing if you get buried under the workload that you will have accepted.
  • Learn to accept criticisms: there is always room for improvement, especially when starting an experience: don’t take criticism from your superiors personally, and show that you apply it.
  • Keep an eye for the details: the work you’re sending to the clients must be of excellent quality. One of the witnesses of this quality is the documentation that will be sent to them: check and double-check your work to avoid grammar or spelling errors.

Financial concepts related my internship

Return on Investment (ROI)

The ROI helps determine the profitability of an investment or compare the efficiency of different investments by measuring the gain or loss made on an investment relative to the amount of money invested. In consulting, you need to help clients make informed decisions about where they should be investing their money to get the most out of it.

Financial leverage

Financial leverage refers to the borrowed money used to finance the purchase of assets. In consulting, understanding a client’s industry and risk aversion with regards to how much financial leverage it is willing to take is crucial before taking any financial decision.

Profit margin

Profit margin is a profitability ratio calculated as net income divided by revenue, or net profits by sales. It measures how much percentage of sales a company keeps in earnings. Using profit margin analysis helps understand a company’s pricing strategy and cost structure, providing insights into the company’s operational efficiency.

Why should I be interested in this post?

Sometimes, thinking narrowly about your dream career can cut you off from excellent professional opportunities.

During my search for an internship, I was primarily interested in finance, but my position at the firm was not exclusively dedicated to this area. However, this opportunity broadened my horizons and allowed me to approach financial topics in a different context than finance-oriented position. This experience was thus unique compared to most people who wish to pursue a career in finance.

So, the next time you are looking for a professional experience, don’t hesitate to think broader about what you want to learn.

Related posts on the SimTrade blog

   ▶ All posts about Professional experiences

   ▶ Alexandre VERLET Classic brain teasers from real-life interviews

   ▶ Anant JAIN My Internship Experience at Deloitte

Useful resources

Planet Impact

About the author

The article was written in May 2023 by Matisse FOY (ESSEC Business School, Bachelor in Business Administration (BBA), 2019-2023).
 

My experiences as Fixed Income portfolio manager then Asset Liability Manager at Banque de France

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My experiences as Fixed Income portfolio manager then Asset Liability Manager at Banque de France

William ARRATA

In this article, William ARRATA (Lecturer in advanced portfolio management at ESSEC Business School Master in Finance and Master in Management since 2014) shares his professional experience as Fixed Income Portfolio Manager then Asset Liability Manager at Banque de France.

About the company

Founded in 1800 by Napoléon Bonaparte, Banque de France began as a private institution for managing state debts and issuing notes. The first Basic Statutes of the Bank were established in 1808, where the Bank’s notes in French Franc became legal tender. In 1936 the Bank was nationalized. In 1993, a reform granted the Bank independence, in order to ensure price stability, regardless of domestic politics. This reform cleared the path for the European monetary union. In 1998, the Bank became a founding member of the European System of Central Banks which groups together the European Central Bank and the National Central Banks of all countries that have adopted the Euro. On 1st January 1999, France adopted the euro. Nowadays Banque de France’s three main missions, as defined by its statuses, are to drive the French monetary strategy, ensure financial stability and provide services to households, small and medium businesses and the French state. In particular, it manages the accounts and the facilitation of payments for the Treasury and some public companies. The Bank is a sui generis public entity governed by the French Monetary and Financial Code. The conditions whereby it conducts its missions on national territory are set out in its Public Service Contract. François Villeroy de Galhau has served as Governor of the Banque de France since 1 November 2015.

Logo of Banque de France.
Logo of Banque de France
Source: the company.

Since 2019, I work as Asset Liability Manager at the Financial Directorate of the General Secretariat of Banque de France, having previously worked from 2013 to 2019 as Fixed Income portfolio manager in the Markets Directorate of the Directorate General Financial Stability and Operations.

The Markets Directorate of Banque de France encompasses the management of foreign exchange reserves and gold, foreign exchange operations, and the provision of investment services to foreign central banks and international organizations. The Directorate is fully integrated from front office to back office and custody. It is split into five divisions and totals 120 persons, based in Paris, Poitiers, New York and Singapore.

The Financial Directorate of Banque de France encompasses the accounting of Eurosystem monetary policy operations as well as BdF’s investment operations, the costing and budgeting of expenses, management control, Asset Liability Management modeling of the Balance sheet, as well as the investment and management of BdF’s Capital and pension funds, on which the Socially Responsible Investment strategy of BdF is also enforced. It is split into five divisions and totals around 100 persons.

My jobs

From 2013 to 2019, I was Fixed Income Portfolio Manager in the Reserves Management Division of the Markets Directorate, in charge of managing foreign exchange reserves. In essence, the job consists of managing a fixed income portfolio, with the objective of consistently outperforming its benchmark through time.

Since 2019, I am an Asset Liability Manager (modeling mainly) in the Financial Management Division of the Financial Directorate. It consists of balance sheet modeling and projection through time. It is a quantitative position, which requires knowledge in stochastic calculus and programming languages. In addition, it is also a special job in the sense that the central bank balance sheet is unique in its kind such that asset and liability management (ALM) modeling at the central bank also requires understanding monetary policy operations.

My missions

My position as a Fixed Income portfolio manager in the Reserves Management Division of the Markets Directorate started in 2013. Foreign exchange reserves are held in various currencies, and each currency is actively managed against a benchmark into a specific portfolio, which is daily marked-to-market. I have been responsible for the management of one of those portfolios for 6 years. As for all portfolios, it is invested in money market instruments (reverse repos, repos, deposits, fully hedged swaps, STIR futures) on the one hand, and bonds from different types of issuers on the other hand. It also makes use of derivatives such as bond futures, rates futures, and Interest Rate Swaps. Each portfolio is managed in reference to a benchmark, around which risk limits are defined. Those risk limits give leeway to the portfolio manager to do tactical asset allocation, in order to “beat” the benchmark. Tactical allocation can take many forms.

First, the portfolio manager (p.m.) has the possibility do “time the market”, which is named after “duration position” in the Fixed-Income universe. This translates into an increase or a decrease of the differential duration (duration in excess of the benchmark) of his portfolio. A duration position is implemented when expectations from the p.m. on the interest rate path differ from what is priced in the forward curve (i.e. the p.m. expects indeed rates to “reprice” in the future according to his expectations, e.g., to move up or down). To benefit from this expected variation, the p.m. adjusts the differential duration of his portfolio. For instance, he increases the differential duration if he expects rates to go down. Such positions can also be combined. Combining a long duration position with a short duration position on two different segments of the yield curve can be a relevant investment strategy when the p.m. expects the yield curve to steepen or to flatten. This creates a spread position, referred to as “butterfly position”.

Market timing bets can be set using different techniques. This can stem from a regular central bank watching, which allows to understand the central bank “reaction function“ and to take positions in advance of other market participants. It can also be done using quantitative tools such as rates models.

The benchmark can also be beaten using security selection. This consists in substituting a bond whose price is seen as deviating from its fair value with another bond. The p.m. sells the “richer” bond and buys the “cheaper” bond. Such a strategy should not embed a duration mismatch with the benchmark, i.e., the duration of the bond sold (the bond in the benchmark) should equal the one of the bond bought. For instance, the p.m. can choose to sell a bond whose yield is deemed below its estimated fair yield (whose price is too high) and buy a bond whose yield is deemed either fairly priced or above its estimated fair yield, with identical durations for the two bonds. There are many ways to estimate bonds’ fair yield. One can employ a model such as the Nelson Siegel Svensson (NSS) model. This model proposes a parametric form for the zero coupon rate curve of a given issuer. Observed market yields can then be compared to theoretical yields, to identify “cheap” and “rich” bonds.

Such tactical positions can be held over varying horizons, usually not more than 6 months.

The p.m. can also implement some “arbitrage” strategies, for instance on the repo market, by lending “special” securities against least expensive (“General Collateral”) security (see infra). When the risk framework allows it, he can manage the short-term portion of his portfolio by taking advantage of the basis between money market rates between his currency and another currency (“cross currency basis”), when the interest rate parity is not enforced. He can then build a “synthetic” money market position made out in his portfolio’s currency, by using a FX derivative and a foreign currency money market instrument, to benefit from the higher rate of return provided by the synthetic money market rate versus the “natural” one. At last, he can also substitute the purchase of a bond on a given segment by investing in a risk-free instrument and a future on that bond, to take advantage of a deviation in the “cash and carry relationship” (see infra).

My second experience started in 2019 at the Financial Directorate, as an Asset Liability manager in charge of modeling the balance sheet of Banque de France and proposing strategies for the investment portfolios of Banque de France.
The job starts with the modeling of the different assets and liabilities of a central bank balance sheet. The central bank balance sheet is unique and requires an understanding of the dynamics of monetary policy operations, but also on the drivers of banknotes issuances, target 2 positions, accounts of non-banking clients, etc… In an unconventional monetary policy environment such as the one experienced by the Euro System since 2014, the dynamics of the balance sheet have somewhat become more complex. What is crucial in this step is to provide with a joint modeling of all elements concerned as they interact with each other in specific ways.

Another important task lies on the projection of economic and financial market through time. It relies on modeling over a long-term horizon (usually a 10-year horizon) the evolution of the financial and economic variables to which the central bank is exposed. This requires the usage of stochastic calculus and programming skills, as projections models are implemented with programming languages such as R, Python or Matlab. For instance, one can take advantage of the existence of listed options on assets such as Euribor futures, French sovereign bonds futures, fed funds futures or US Treasuries futures. By making some assumptions about the price process of those assets, it is possible to retrieve their implied distributions at given horizons (so called “risk neutral densities”). Those distributions can then be used to build a large number of scenarios (say 1000) which are applied to the modeled balance sheet, to propose a distribution of future revenues through time.

The fact that the BdF belongs to the Euro System also requires understanding the rules for sharing the monetary revenues of the 20 national central banks of the Euro System. Analytical balance sheets have to be modeled, to compute monetary revenues for each national central bank.

At last, this ALM exercise can also serve as the basis for devising optimal investment strategies for investment portfolios of Banque de France non-monetary balance sheet.

Required skills and knowledge

A fixed income portfolio manager should be skilled in money markets, fixed income securities and derivatives, portfolio management (in particular tactical allocation and performance attribution tools) and fully understand the impact of macroeconomics and monetary policy on rates markets.

An Asset Liability Manager should be skilled in fixed income securities, financial accounting, probabilities and statistics, stochastic calculus, rates models and option pricing, programming languages such as R, Python or Matlab, and monetary policy when it comes to modeling the balance sheet of a central bank.

An Asset Liability Management position in an ideal position after a Fixed Income portfolio management position. Having explored the many facets of Fixed Income and monetary policy are indeed very helpful to start an Asset Liability Management position. It is very satisfactory to develop analytical skills on the aggregate balance sheet after having worked on a specific portfolio.

What I learned

I learned a lot in all the fields I mentioned, but in particular about some topics that are not extensively covered in masters in finance’s curricula, such as money markets and monetary policy. I learned a lot about unconventional monetary policy, as it has been enriched from the recent experiences of the Fed, the ECB or the BoE, which we not in textbooks when I graduated 15 years ago. At last, as time went by I gained capacities in programming languages (especially related to quantitative finance), which is a prerequisite for ALM modeling, and a “nice to have” for fixed income portfolio management.

Financial concepts related my internship

I develop below three financial concepts related to my activities: implied repo and basis, par-par asset swap and specialness on the repo market.

Implied repo and basis

The implied repo rate is the rate of return earned by a market participant who sells a bond future contract and buys the Cheapest to Deliver (CtD) bond in the basket of bonds available for delivery at contract maturity. The implied repo rate should be compared to the effective repo rate of the CtD, and the difference between the two is referred to as the “net basis”. An arbitrage profit can be captured by combining a position on the bond future, the CtD and a reverse repo, depending on the sign of the net basis.

Par-par asset swap

It is a position that consists in purchasing a bond and entering into an interest rate swap such that the combined position is a floating rate bond valued at par. Forcing the value of the bundled position to equal par implicitly requires the fixed rate of the swap to equal the bond’s coupon rate, and as a result, the swap’s initial value will differ from zero. As the obtained synthetic floating rate bond is trading at par, its discount rate is a par rate. As such, it is not distorted anymore by the discrepancy between the bond coupon rate and its current market yield (which is at the origin of the discount/premium). Thus it is a pure measure of the ytm of the issuer on the considered maturity.

Specialness on the repo market

A reverse repurchase agreements (“reverse repo”) is a transaction whereby cash is lent on the market against collateral, usually a bond, to mitigate counterparty default risk. Such an operation falls into the many possible money market instruments available to p.m. to earn a return on the short-term portion of their portfolios.

Conversely, a repo transaction implies lending a bond against cash. The counterparty of a repo trader is a reverse repo trader.

When a reverse repo trade is initiated to lend cash, the cash lender will require from his counterparty that the collateral posted fills some characteristics (for instance, Investment Grade sovereign bonds with a residual maturity below 10 years), but he will not require a particular bond. The collateral posted by his counterparty is referred to as “General Collateral” (GC). This is why the rate of return earned on the trade is named after the GC repo rate.

But in some instances, some bonds in the market are particularly looked after (for instance, newly issued bonds in the days surrounding their auction, or the Cheapest-to-Deliver Bond of a future contract). They are usually in high demand when they have been sold short by market makers or primary dealers, and they must borrowed to be delivered to the bond buyers in due time. As those bonds have to be delivered, they cannot be substituted by another bond as would be the case for GC collateral (the repo transaction is said to be “security driven”). Thus the demand from short sellers on those bonds is inelastic to price, and they will be inclined to pay a lower rate than the GC rate to borrow them on the repo market, as they are at risk of failing to deliver otherwise. Such bonds are referred to as “special” (spec) collateral in the repo market, as opposed to the GC.

The rate on special collateral is lower than on the GC, which means that the cash leg will receive a lower remuneration when the borrowed bond is spec. Thus looking for a special bond entails a cost for the borrower. Specialness on a bond is often measured by computing the spread between the GC repo rate and the special repo rate on that bond.

Related posts on the SimTrade blog

   ▶ All posts about Professional experiences

   ▶ Youssef LOURAOUI Yield curve calibration

   ▶ Youssef LOURAOUI Fixed Income arbitrage

   ▶ Youssef LOURAOUI Portfolio Management at the Central Bank of Morocco

Useful resources

Banque de France

About the author

The article was written in May 2023 by William ARRATA (Lecturer in Advanced Portfolio Management at ESSEC Business School’s MiF and MiM and Asset Liability Manager at Banque de France).

My professional experience as a Global Development and Learning Intern at Danone

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My professional experience as a Global Development and Learning Intern at Danone

Jayna MELWANI

In this article, Jayna MELWANI (ESSEC Business School, Global BBA, 2019-2023) shares her professional experience as a Global Development and Learning Intern at Danone, the world’s leading food company.

About Danone

Danone is a multinational food and beverage corporation that is headquartered in Paris, France. The company produces a wide range of dairy products, water and plant-based food and beverages. Some of the most popular brands owned by Danone include Activia, Evian, Actimel and Danette.

Danone operates in over 120 countries and has more than 100,000 employees worldwide. The company’s mission is to provide health-focused food and beverage products that contribute to the well-being of individuals and the environment.

In addition to its commercial activities, Danone is also committed to promoting sustainable practices and social responsibility. The company has made significant investments in sustainability initiatives such as reducing greenhouse gas emissions, improving water usage efficiency and investing in regenerative agriculture.

Danone is a leading food and beverage company with a strong commitment to health and sustainability. Its portfolio of popular brands and global reach make it a major player in the industry.

Logo of Danone.
Logo of Danone
Source: the company.

The Global Learning Team at Danone

I was part of the Global Learning team at Danone in its headquarters in Paris. It is a team of approximately 15 people who are responsible for launching and maximizing the global learning agenda for the various functions such as Sales & Marketing, Research & Innovation, IT & Data, etc. I was in charge of supporting the global learning agenda for General Secretary, IT & Data and Sustainability.

The global learning and development team at Danone is responsible for creating and implementing programs to support the professional development of employees throughout the company. The team’s mission is to provide employees with the knowledge and skills they need to excel in their roles, grow within the organization and contribute to the company’s overall success.

Some of the key responsibilities of the learning and development team at Danone include:

  • Developing training programs: The team designs training programs that are tailored to the specific needs of different departments and job functions. They can be on-the-job training, e-learning modules, and workshops. For example, I worked closely with the General Secretary team to develop Compliance e-learning modules to be done by all employees worldwide.
  • Managing learning technologies: The team is responsible for managing the learning management system (LMS) used by the company. This includes maintaining the system, monitoring its effectiveness and ensuring that employees have access to the resources they need.

My Experience at Danone

During my internship at Danone, my missions were to support the global learning agenda for the following functions: IT & Data, and General Secretary & Sustainability. My main responsibilities were supporting the implementation of the learning portfolio, liaising with local learning teams to ensure the proper local deployment of the learning activities, measuring and reporting worldwide completion, managing suppliers, and contracts with external learning providers.

It was a 6-month internship that went by very quickly. My day-to-day responsibilities were mainly dealing with the LMS and building reports and dashboards for stakeholders. Though, I was also leading a number of global projects at the same time. One notable project I led was the Compliance campaign. Danone trains its employees worldwide every year on compliance as part of its compliance obligations with external auditors. I led the communications, reporting and stakeholder engagement for this project.

I was also responsible for negotiating deals with external learning providers for upcoming projects. Because of this, I was able to negotiate prices, measuring costs and opportunity costs of learning initiatives.

What I learned during my internship

The main things I learned during my internship at Danone are:

  • I learned how to create powerful AI dashboards to analyze raw reporting data and quickly turn them into insightful analysis.
  • I gained many soft skills such as stakeholder management, interpersonal communication, and negotiation skills.
  • I discovered my passion for health and sustainability and my love for the food and beverage industry.
  • I learned about HR digitalization through innovative technology such as digital onboarding and people analytics.

Financial concepts related my internship

Return on investment (ROI)

ROI is a financial metric that measures the profitability of an investment. In the context of my internship, ROI was used to evaluate the effectiveness of training programs and other development initiatives.

Opportunity Cost

Opportunity cost is the cost of forgoing one option in favor of another. In the context of my internship, the learning team must consider the opportunity cost of investing in employee development vs other potential investments.

Cost-benefit analysis

Cost-benefit analysis is a financial tool that compares the costs and benefits of different options. In the context of learning and development, the learning team can use cost-benefit analysis to evaluate the potential return on investment of different training and development programs. By comparing the costs, the team can make informed decisions about which initiatives to prioritize.

Related posts on the SimTrade blog

   ▶ All posts about Professional experiences

   ▶ Alexandre VERLET Classic brain teasers from real-life interviews

Useful resources

Danone

About the author

The article was written in April 2023 by Jayna MELWANI (ESSEC Business School, Global BBA, 2019-2023).

My internship experience as a junior consultant at ZEBOX

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My internship experience junior consultant at ZEBOX

Pranay KUMAR

In this article, Pranay KUMAR (ESSEC Business School, Master in Strategy & Management of International Business (SMIB), 2022-2023) shares his professional experience as junior consultant at ZEBOX.

About the company

ZEBOX is an innovation and start-up accelerator program launched by CMA CGM, one of the world’s leading shipping and logistics companies. ZEBOX’s mission is to support start-ups and entrepreneurs in developing new technologies and business models to improve the global supply chain.

Logo of ZEBOX.
Logo of ZEBOX
Source: the company.

As a department of CMA CGM, ZEBOX has access to vast resources and expertise in the shipping and logistics industry, which allows it to provide valuable guidance and support to start-ups in this sector. The program has a global reach and is headquartered in Marseille, France.

My internship

During my internship at ZEBOX, I worked a Junior Consultant

My missions

As a Junior Consultant at ZEBOX, my primary mission was to analyze economic and demographic data from over 10 Asia-Pacific countries to guide ZEBOX’s market expansion efforts. Specifically, I was tasked with developing a comprehensive 3-year plan for ZEBOX’s expansion in the APAC region, covering strategic planning, go-to-market approaches, and market positioning using tools such as Porter’s five forces.

Required skills and knowledge

To succeed in my internship, I needed to have a strong understanding of economics, finance, and strategic management. Additionally, I needed to have excellent analytical and communication skills, as I was responsible for gathering and analyzing data on market trends, the competitive landscape, and consumer behavior in various countries, and presenting my findings and recommendations to both the ZEBOX team and the ESSEC SMIB professor.

What I learned

During my time at ZEBOX, I learned a great deal about how to conduct market research and analysis, as well as how to develop a comprehensive strategic plan. I also gained a deeper understanding of the shipping and logistics industry and the challenges faced by start-ups looking to innovate within this sector. Finally, I developed valuable skills in project management, data analysis, and communication that will serve me well in my future career.

Financial concepts related my internship

Market Research and Analysis

Understanding market trends, competitive landscape, and consumer behavior is essential to making informed business decisions. This involves conducting thorough research, gathering relevant data, and analyzing it to gain insights into the market.

Strategic planning

A comprehensive strategic plan is critical to achieving long-term success and achieving organizational goals.

Porter’s Five Forces

This model helps analyze the competitive forces within an industry and determine the attractiveness of entering a new market.

Why should I be interested in this post?

ESSEC students interested in finding a job in finance may find this post useful as it highlights the importance of having a strong foundation in both hard and soft skills. It also demonstrates the practical application of financial concepts such as market research and analysis, strategic planning, and Porter’s five forces in a real-world business context.

Related posts on the SimTrade blog

   ▶ All posts about Professional experiences

   ▶ Federico DE ROSSI My Internship Experience at AlixPartners in London

Useful resources

Here are some useful resources related to my professional experience:

ZEBOX website: This website provides information about the accelerator program and its activities.

CMA CGM website: This website provides information about the shipping and logistics company that launched ZEBOX.

About the author

The article was written in April 2023 by Pranay KUMAR (ESSEC Business School, Master in Strategy & Management of International Business (SMIB), 2022-2023).

My Internship Experience at Kearney

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My Internship Experience at Kearney

Jianen HUANG

In this article, Jianen HUANG (ESSEC Business School, Master in Strategy & Management of International Business (SMIB), 2021-2023) shares his professional experience as a consulting intern at Kearney.

Kearney

Kearney is a global management consulting firm that specializes in helping clients achieve their strategic goals and solve complex business challenges. With over 95 years of experience, Kearney has built a reputation for delivering innovative solutions that drive lasting results. The firm operates in over 40 countries, serving clients in a range of industries, including consumer goods, healthcare, retail, technology, and transportation. Kearney’s team of experienced consultants bring deep industry knowledge, analytical rigor, and a collaborative approach to every engagement, working closely with clients to understand their unique needs and deliver tailored solutions. With a focus on delivering measurable impact and driving growth, Kearney has earned a trusted reputation as a strategic partner for businesses around the world.

Logo of the Kearney.
Logo of Kearney
Source: Kearney.

My internship

I worked as a part-time assistant and supported the Kearney consulting team based in Shanghai. During the six months internship, I worked on two main projects with clients from two different industries.

The Hainan Free Trade Port is a new special economic zone in China, established in 2020, with a focus on developing a globally competitive, free trade port, and a hub for international trade and investment. The Hainan Free Trade Port aims to promote trade liberalization and facilitation, open up the Chinese economy to international investors, and attract foreign investment. The Chinese government has announced a series of policies and measures to support the development of the Hainan Free Trade Port, including tax incentives, streamlined customs procedures, and relaxed visa policies, making it an attractive destination for international businesses looking to expand in the Asia-Pacific region. With this context, the first client is a state-owned company that was planning to enter the duty-free market. And we have been asked to plan the exhibition and the future expansion.

Quality management is important for businesses to ensure that their products or services consistently meet or exceed customer expectations. By implementing a quality management system, businesses can improve their processes, reduce waste, and increase efficiency, ultimately leading to higher customer satisfaction and increased profitability. Quality management involves establishing processes and procedures to ensure that products or services meet specific standards and requirements, reducing the likelihood of defects or errors that could negatively impact customer satisfaction. By focusing on quality management, businesses can also reduce costs by eliminating waste and inefficiencies in their processes, while building trust and a positive reputation for quality and reliability with their customers. The second project is related to a Chinese intelligence manufacturing player. With the trend of digitalization, the client is now planning to digitalize their quality management system, which includes the digitalization of all stages of the production process. Kearney’s team had been asked to build a QMS for the client and help them enhance their quality control ability.

Financial concepts related my internship

Cost-Benefit Analysis

Cost-benefit analysis is often used in consulting projects to make sound suggestions and convince management. Cost-benefit analysis is a way to evaluate the potential cost and benefit of a potential project. The process involves identifying and quantifying all relevant costs and benefits associated with the project, calculating the net present value of those costs and benefits, and comparing them to determine whether the project is financially viable.

The cost-benefit analysis process includes:

  • Identify the project scope: during this stage, the consultants need to not only determine the topic of the analysis, but also identify key stakeholders, key resources, and technics.
  • Determine the cost: the cost of a project can include direct and indirect costs, opportunity costs, and potential risks.
  • Determine the benefit: a project can bring revenue from the sales, intangible benefits, or advantages we can potentially gain.
  • Calculate the result

DCF

The discounted cash flow method (DCF) is an important financial valuation method that is often used in consulting jobs, and it is one of the most commonly used cost-benefit analysis. It is used to estimate the intrinsic value of an investment based on its series of cash flows. It involves projecting future cash flows, determining the appropriate discount rate, and calculating the net present value (NPV) of those cash flows.

The mathematical formula for the NPV:

NPV formula

CFt = cash flows of each period (from t=0 to t=T)
T = terminal date and number of periods
r = discount rate or interest rate required of the investment (it is the rate of return that the investors expect on their investment).

In a classical project, the initial cash flow, CF0, is usually negative since it is usually the initial investment of the project. The following cash flows, CFt for t=1 to t=T, are usually the profit that generates by the project for each period. The NPV can be rewritten as

NPV formula

In the end, we are comparing the NPV with the initial target we set to evaluate whether we should launch this project. On the other hand, in the case that we have enough resources, we can consider launching all the projects that have NPV greater than 0.

In the consulting project, the consultants usually have been asked to evaluate the value and to show a figure of the benefit of the project in order to convince the management.

Customer Due Diligence (CDD)

In consulting, CDD, or Customer Due Diligence, is a critical component of advisory services provided to clients in industries such as finance, banking, and insurance. Consultants use CDD to assess the risks associated with clients’ customers and to ensure regulatory compliance. CDD helps consultants identify potential financial crimes such as money laundering, terrorist financing, or other fraudulent activities that could pose a risk to their clients. By conducting thorough and systematic customer due diligence, consultants can help their clients mitigate risk, comply with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations, and make informed business decisions. CDD is an essential tool for consultants providing advisory services to clients in highly regulated industries, helping them to build trust, maintain compliance, and protect their reputation.

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Useful resources

Kearney

About the author

The article was written in April 2023 by Jianen HUANG (ESSEC Business School, Master in Strategy & Management of International Business (SMIB), 2021-2023).

Insuring Success in France: My Journey with InsurdHR

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Insuring Success in France: My Journey with InsurdHR

Lokendra RATHORE

In this article, Lokendra RATHORE (ESSEC Business School, Master in Strategy & Management of International Business (SMIB), 2022-2023) shares his working experience at InsurdHR.

InsurdHR – Company Overview

InsurdHR is a Singapore-based insurance broker platform providing Software as a Service (SaaS) that offers insurance solutions to startups and Small and Medium Enterprises (SMEs). The company is looking to expand its offerings to the French market to help its clients access insurance services more easily.

Logo of InsurdHR
Logo of InsurdHR
Source: InsurdHR.

My internship

I had the opportunity to work with InsurdHR which had partnered with SemioConsult (a privately owned consulting firm) for this expansion mission. As a student at ESSEC Business School on the Cergy campus (France), this project provided me with the unique opportunity to apply my academic knowledge to a real-world problem (market entry).

As a Strategy Consultant, I was responsible for conducting market research and analysis to help InsurdHR enter the French insurance brokerage market. During my time at InsurdHR, I had the opportunity to work on a number of exciting projects that allowed me to further develop my skills and knowledge.

My missions

One of my main missions was to conduct market research with due diligence for competitive analysis, market sizing, risk assessment, and identification of key partners. I used various sources, including Statista, Marketline, and Factiva, to gather data and insights on the French insurance market. Through my research, I was able to gain a comprehensive understanding of the industry and the key players within it.

Another key aspect of my internship was the analysis of other several survey reports on customer attitudes towards insurance in France. This allowed me to effectively segment, target, and position InsurdHR’s offering in the market. My findings helped the company to develop a more targeted and effective marketing strategy, which ultimately will lead to increased customer acquisition.

Working closely with the CEO of InsurdHR, I also had the opportunity to devise a preliminary market penetration strategy for the soft launch of the company’s services in France. This involved creating a roadmap for customer acquisition, with the goal of reaching the target population in the French market. Through this project, I was able to apply my knowledge of market research and analysis to develop a practical and effective strategy for the company.

Throughout my internship, I had the opportunity to work with a variety of people from different backgrounds and gain exposure to the fast-paced and dynamic world of insurance as a service. I learned how to conduct market research, analyze data, and collaborate effectively with others to achieve common goals.

Overall, my internship experience at InsurdHR was a truly rewarding and educational experience. I am grateful for the opportunities I had to learn and grow, and I am confident that the skills and knowledge I gained will be valuable to me in my future endeavors.

The skills required for this internship included strong research and analysis skills, effective communication and collaboration, and an understanding of the French insurance industry. Through this internship, I gained hands-on experience in these areas and was able to make a meaningful contribution to InsurdHR’s expansion efforts in France.

Key Concepts that I learned

I present below a few concepts related to my work: market sizing, risk assessment, and customer acquisition.

Market Sizing

Market Sizing is about determining the size of the target market which is an important first step in creating a successful business strategy. This involves analyzing data on market trends and customer behavior to determine the potential size of the market and the company’s ability to capture a portion of it.

Risk Assessment

In the insurance industry, risk assessment is a critical component of determining the cost and feasibility of offering a new product or service. This involves evaluating the potential risks and uncertainties associated with the market and making informed decisions based on this information.

Customer Acquisition

Customer acquisition is the process of acquiring new customers and converting them into paying customers. This involves developing and executing a strategy to reach, attract, and engage potential customers, as well as measuring the effectiveness of the acquisition efforts over time.

Why should I be interested in this post?

If you are interested in gaining insights into the practical application of academic knowledge in real-world business scenarios, particularly in the insurance industry, this post is definitely worth reading. The author shares his firsthand experience of working as a strategy consultant with InsurdHR, a company that was expanding into the French insurance brokerage market. The post covers various aspects of the author’s internship, including conducting market research, competitive analysis, risk assessment, and customer acquisition strategies.

Additionally, the author provides valuable insights into key concepts such as market sizing, risk assessment, and customer acquisition, which are relevant not only to the insurance industry but to any business looking to enter a new market or expand their customer base. Overall, this post is informative and provides a practical perspective on applying academic knowledge to real-world business problems.

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Useful resources

InsurdHR

SemioConsult

About the author

The article was written in April 2023 by Lokendra RATHORE (ESSEC Business School, Master in Strategy & Management of International Business (SMIB), 2022-2023).

My internship experience as a marketing intern at Amazon

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My internship experience as a marketing intern at Amazon

Fatimata KANE

In this article, Fatimata KANE (ESSEC Business School, Master in Strategy & Management of International Business, 2022-2023) shares her professional experience as a marketing intern at Amazon.

About the company

Amazon is a multinational technology company that was founded in 1994 by Jeff Bezos. Originally started as an online bookstore, the company has since expanded to become the world’s largest online retailer, selling a vast array of products and services across various categories, including electronics, fashion, home goods, groceries, and digital content.

Logo of Amazon.
Logo of Amazon
Source: the company.

In addition to its e-commerce platform, Amazon has also expanded into other areas such as cloud computing (Amazon Web Services), digital streaming (Amazon Prime Video), smart home devices (Amazon Echo), and artificial intelligence (Amazon Alexa). The company is headquartered in Seattle, Washington, and operates in over 200 countries worldwide.

Amazon is known for its customer-centric approach and has a reputation for offering fast and convenient delivery options, competitive pricing, and a wide selection of products. The company’s mission statement is to “be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online.”

Amazon France

Amazon France is the French subsidiary of Amazon, which is the world’s largest online retailer. The company’s French website, Amazon.fr, was launched in 2000 and offers customers in France a wide selection of products across various categories, including electronics, books, fashion, home goods, and more.

As of 2021, Amazon France has over 22,000 employees and operates several distribution centers and warehouses throughout the country to ensure fast and reliable delivery to customers. The company also offers various delivery options, including same-day delivery and Amazon Prime, which provides free shipping and access to additional services such as streaming video and music.

I worked as a General Marketing Specialist Intern at Amazon France, in the retail business unit.

My internship

As a general marketing specialist intern at Amazon.fr, my role was to support the retail team in executing various marketing campaigns and initiatives to drive traffic, sales, and customer engagement on the website.

My missions

For example, I could assist in creating and publishing content on Amazon.fr’s social media accounts to promote products and engage with customers. This could include writing copy, designing graphics, and scheduling posts. I also created email campaigns to promote new products, sales, and other marketing initiatives. This could involve designing email templates, writing copy, and analyzing performance metrics.

I could also assist in managing Amazon.fr’s search engine marketing (SEM) campaigns to increase visibility and drive traffic to the website. This could involve keyword research, ad copy creation, and performance monitoring. Besides marketing content creation, I also oversaw auditing the marketing performances, and designed marketing plans for brands.

Required skills and knowledge

Working in this role required creativity, eagerness to learn, good communication skills, and high prioritization capacity.

What I learned

My internship experience with Amazon provided me with exceptional learning opportunities.

First, Amazon has a strong customer-centric approach, and this is reflected in all aspects of its marketing strategy. As an intern, I learned the importance of understanding customer needs and preferences and creating marketing campaigns that resonate with them.

Moreover, Amazon relies heavily on data analysis to inform its marketing decisions, and I had the opportunity to work with various analytics tools to measure the performance of marketing campaigns. This helped me develop a better understanding of the importance of data-driven decision-making.

Furthermore, in a large organization like Amazon, collaboration is essential. As an intern, I had the opportunity to work with different teams and departments to execute marketing campaigns. This taught me the importance of effective communication and teamwork.

Plus, Digital marketing is constantly evolving, and Amazon is at the forefront of innovation in the industry. As an intern, I had access to various training resources and had the opportunity to attend industry events and webinars to stay up-to-date with the latest trends and best practices.

Lastly, Amazon has a reputation for providing a seamless customer experience, and this requires a high level of attention to detail in all aspects of marketing. I thus learned the importance of quality assurance and attention to detail in all aspects of marketing campaigns, from copywriting to design.

Overall, my experience as a general marketing specialist intern at Amazon.fr was invaluable in helping me develop a better understanding of digital marketing and how it can be used to drive business growth and customer satisfaction.

Financial concepts related my internship

Although not focused on finance, my internship in marketing still allowed me to be in touch with several financial concepts such as:

Return on Investment (ROI)

As a marketing intern, I learned the importance of measuring the ROI of marketing campaigns. This involves calculating the revenue generated by a campaign compared to the cost of the campaign. This concept is related to financial analysis, where businesses must analyze the return on investment for any project or initiative.

Cost of Goods Sold (COGS)

COGS is a financial concept that represents the direct costs associated with producing and selling a product or service. As an intern, I learned how Amazon calculates the COGS for each product and how this impacts pricing and profitability.

Gross Margin

Gross margin is a financial concept that represents the difference between revenue and COGS. As an intern, I learned how Amazon manages its gross margin by optimizing pricing strategies, managing inventory levels, and reducing costs.

Why should I be interested in this post?

I greatly appreciated my experience at Amazon and would recommend the company to any curious and eager-to-learn individual who is interested in marketing and retail.

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Useful resources

Amazon France

About the author

The article was written in April 2023 by Fatimata KANE (ESSEC Business School, Master in Strategy & Management of International Business, 2022-2023).

My experience as a PwC Associate Auditor in the Digital Data Hub

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

Federico MARTINETTO

In this article, Federico MARTINETTO (ESSEC Business School, Exchange Global BBA, 2021) shares his professional experience as a PwC Associate Auditor in the Digital Data Hub.

About the company

PwC is a global professional services firm providing audit, tax, consulting, and advisory services to clients in various industries. With a network of over 284,000 employees in more than 157 countries, PwC serves multinational corporations, public sector entities, and emerging businesses. The company is committed to innovation, diversity, inclusion, and corporate social responsibility.

Logo of PwC.
Logo of PwC
Source: the company.

In the department I work for, we provide comprehensive audit and assurance transformation services to give real value for our clients. We offer three types of services: Risk Assurance, Capital Markets & Accounting Advisory Services, and Financial Statement Audit (EN).

Risk Assurance

The uncertainties facing companies today vary between known risks, emerging risks and potentially global risk scenarios. Risk Assurance services improve the “resilience” of your business by helping management make informed decisions.

Capital Markets & Accounting Advisory Services

Thanks to our expertise, we will assist you in dealing with the regulatory aspects related to operations of access to the capital and debt markets (from going public to being public)as well as financial reporting issues considering their potential impacts on financial communications with stakeholders, including through the use of advanced digital solutions.

Financial Statement Audit (EN)

A financial statement audit is the examination of an entity’s financial statements and accompanying disclosures by an independent auditor. The result of this examination is a report by the auditor, attesting to the fairness of presentation of the financial statements and related disclosures. The auditor’s report must accompany the financial statements when they are issued to the intended recipients.

My job

I support the audit teams in the development and implementation of digital audit tools leveraging advanced data analytics and automation solutions.

My missions

I work with state-of-the-art technologies to provide high-quality audits, gaining in-depth expertise on technology and data through a structured training program. I can get in touch and interact with domestic and international customers.

Required skills and knowledge

I am within a team that relies on flexibility and agility to solve important problems for our customers. You need excellent writing and speaking skills in English.

What I learned

I am developing a deep understanding of the role that digital plays in the new form of audit process.

Financial concepts related my job

During my job the following concepts were useful: digital transactional platform, digital financial inclusion, and retail agents.

Digital transactional platform

A digital transactional platform enables a customer to use a device to make or receive payments and transfers and to store value electronically with a bank or nonbank permitted to store electronic value.

Digital financial inclusion

“Digital financial inclusion” can be defined broadly as digital access to and use of formal financial services by excluded and underserved populations. Such services should be suited to customers’ needs, and delivered responsibly, at a cost both affordable to customers and sustainable for providers.

Retail agents

Retail agents armed with a digital device connected to communications infrastructure to transmit and receive transaction details enable customers to convert cash into electronically stored value and to transform stored value back into cash. Depending on applicable regulation and the arrangement with the principal financial institution, agents may also perform other functions.

Why should I be interested in this post?

You should be interested in this post, if you have always wanted to see for yourself what it means to work for a big 4. If you have always dreamed of making a difference, helping companies to design their future. The analysis of data and their transformation into essential information fascinates you. Technology and all the most innovative tools are a puzzle to solve. You like to play with passion and without limits. You stand out for empathy, proactivity, and versatility.

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Useful resources

PwC

PwC Careers with PwC

About the author

The article was written in April 2023 by Federico MARTINETTO (ESSEC Business School, Exchange Global BBA, 2021).

My experience as a leisure tourism management assistant in the French Tourism Development Agency

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My experience as a leisure tourism management assistant in the French Tourism Development Agency

William LONGIN

In this article, William LONGIN (EDHEC Business School, Global BBA, 2020-2024) shares his experience as a leisure tourism management assistant at Atout France USA, which is the French Tourism Development Agency in the United States of America.

Atout France

Atout France is the official French National Tourism Development Agency. It is a government agency responsible for promoting France as a tourism destination to visitors and tourism professionals (tour operators and travel agents) from around the world.

Logo of the Atout France.
Logo of Atout France
Source: Atout France.

Atout France was created in 2009 through the merger of three existing organizations that focused on tourism promotion: Maison de la France, ODIT France, and France Tourism Development Agency. The name Atout France comes from “Atout” meaning asset and “France” the nation that it services. The agency’s main mission is to develop and implement strategies for promoting France as a tourism destination by working with French companies and tourism professionals from around the world. We will explore the strategies used by Atout France in more depth in this article.

Atout France objectives are set by the French government and reflect the needs of French businesses in the tourism sector. To attain the objectives set by the government, Atout France organizes and attends multiple business-to-business (B2B) events to create visibility and encourages French networking. Another key objective set by the French government is promoting the new offers for sustainable tourism called eco-tourism, still overlooked by many international travelers. For example, Atout France in the United States launched an e-learning platform covering eco-tourism in France.

I interned in the branch of Atout France located in New York, as a “leisure tourism manager assistant”. As a foreign worker in the United States, I was granted a diplomatic A2 Visa for my internship. Kind of cool! My experience in New York was really valuable in addition to the experience I had in the company as I was able to make many friends and discover the city through a new lens (a worker and not a tourist). Indeed New York is home to many international institutions such as the United Nations, many consulates, and schools such as New York University (NYU) and Columbia University. New York, also called the Melting Pot, has a developed French community and culture particularly in the areas of art, cuisine, and fashion. The numerous French restaurant venues in the city allows Atout France to showcase French cuisine when organizing events. We could almost call French restaurants the culinary consulates of France in New York!

My personal experience at Atout France

My experience at Atout France USA was very valuable as I learned about company culture, the tourism industry and about the various software used by the company.

My experience of the company culture and workplace at Atout France USA is very positive. As an intern I have been well received and helped in the beginning of my internship. However, I realized very early on that in order to be useful it was important to be proactive. I cannot emphasize enough on the word ‘proactive’ because it is central to understanding how to be a useful coworker in the trade and events department of the company. I learned that it is important to ask questions about tasks, especially that you could be unfamiliar with as an intern. For example, when building the slide show for an internal proposition I made, I went in a freestyle but learned afterwards that there was a corporate template that was essential to respect in order to keep things more organized.

The tourism industry was a completely new industry for me as I have never interned or leaned towards a career in this sector before. What attracted me the most for this internship was to learn more about the industry, have the opportunity to work in New York and serve the nation of France. Throughout my internship I learned about jobs and vocabulary that I was unfamiliar with before such as what travel writers do, what is MICE (which is an acronym for business tourism), or what is eco-tourism. My time in the industry allowed me also to learn about the importance of networking events for professionals and their ways of communicating. Overall, my experience at Atout France encouraged me to learn more about the different forms of tourism and how professionals operate.

The large number of valuable contacts (from the United States and from France) that Atout France possesses is a key asset that adds value for the local and French companies interested in developing businesses. In order to organize its contacts, Atout France uses a Customer Relation Management tool (CRM) called HubSpot. HubSpot is a cloud-based software platform that provides marketing, sales, and customer service tools for businesses. In the case of Atout France, the main purpose is to store data about its contacts. Data about area, domain of expertise and level of engagement with the company are useful for selectively picking the most adequate contacts when organizing events. For example, amongst the tour operator companies of the network, only a segment of them is already selling French packaged trips. This segment of tour operators is interesting for French companies because they already have an interest in the country and are more likely to create more deals or tailor new offers. Throughout my internship I was taught to get accustomed with the use of the software for searching information, creating spreadsheets for business analytics and creating invite lists for events.

Core missions and duties

Event planning

Part of my responsibilities as an intern at Atout France USA were to contribute to organizing events by finding venues, inviting business representatives and communicating with our clients to best build the event according to their needs. Atout France USA organizes events for its local partners and French institutions to increase their visibility on the American market and meet travel professionals that could be interested in doing business with them. Generally, the size of events ranges from dinners with 10 guests to larger events going over 100 guests. As an intern it was my duty to look for appropriate venues matching the style, theme, and logistical capability of the venue according to the needs of the client.

Market research

As part of my duties as an intern I was asked to perform market research for various missions notably to contribute to the updating of the market presentation of the United States created and regularly updated by Atout France. Atout France puts an emphasis on design and credibility of sources when gathering data. Performing such research is very enriching as it allows you to have a better understanding of the industry and analyze the industry better.

Must do tasks – Mindset

When preparing an event, there were many manual tasks that needed to be done. For example, it was imperative to set up the event space with a well-thought decor, and other necessary equipment. When preparing for the event it also involved managing vendors by making sure they delivered food, beverages, audio-visual equipment, or other services. During events interns were often asked to handle registration and troubleshooting during the event by handling any issues that arise, such as technical difficulties or unexpected changes to the schedule.

Required skills and knowledge

To perform well as an intern at Atout France in New York, there are several prerequisites that you should consider such as strong communication skills. Interns are asked to communicate with different stakeholders, including industry professionals, tourists, and colleagues. Therefore, having the ability to clearly communicate and proactively ask questions is a must. Knowledge of the French language is an excellent plus for talking to partners. It can ease communication and make it easier for both French and American partners. Familiarity with the events and tourism industry is largely valued by Atout France as it is a good indicator for adaptability. Atout France has a dynamic workplace, and as an intern, you may have to manage multiple tasks simultaneously so having good time management and a sense of organization can come in very handy.

Learned skills and knowledge

During my internship I have improved and worked on my hard skills and soft skills. Hard skills such as my knowledge of the industry, learned how to use HubSpot, perform market research in the tourism industry. Soft skills such as flexibility during events, bilingual communication and team empathy skills.

Key concepts

Cultural awareness

Cultural awareness is the ability to recognize and appreciate different cultures, values, and beliefs. It involves understanding and respecting differences between cultures and being able to navigate and communicate effectively with people from different backgrounds. Cultural awareness also involves recognizing one’s own biases and assumptions and being open to learning from and about different cultures. Cultural awareness involves developing attitudes of respect, openness, and curiosity toward other cultures, which can help to build stronger relationships and promote mutual understanding. When performing missions it is important to take into account the image that Americans have of France.

Customer Relationship Management (CRM)

Customer Relationship Management (CRM) tool is a tool that organizations use to manage and analyze their interactions with customers and improve customer relationships. CRM involves collecting and analyzing customer data from various sources, including sales, marketing, and customer service, to gain insights into customer behavior, preferences, and needs. The CRM was a very useful tool for analyzing email opening rates, network contracting and marketing data.

Ecotourism

Ecotourism is a type of tourism that focuses on responsible travel to natural areas that conserve the environment and improve the welfare of local communities. Ecotourism examples are visiting and experiencing natural areas, such as national parks, wildlife reserves, and cultural sites, while minimizing the negative impact on the environment and supporting local communities. Ecotourism is also characterized by responsible travel practices, such as reducing waste, etc.

Ecotourism is of growing interest to France in its pioneering mission of the eco touristic industry and carbon neutral objectives for 2030. At the same time ecotourism can provide economic benefits to the local community by promoting conservation efforts by providing financial incentives for protecting natural resources and wildlife.

MICE

MICE is an acronym that stands for Meetings, Incentives, Conferences, and Exhibitions. It refers to a type of tourism that involves the organization and hosting of business events, such as conferences, seminars, trade shows, exhibitions, and meetings. MICE tourism is a growing industry that often involves large groups of people traveling to a specific destination for a specific purpose, such as attending a conference or meeting.

MICE tourism is of interest to Atout France as it provides significant economic benefits such as revenue for French hotels, restaurants, transportation providers, and other businesses.

Travel Agent VS Tour Operator

A travel agent is an intermediary that personally helps clients plan and book their travel arrangements. On the other hand, a tour operator specializes in organizing and selling complete travel packages, which may include transportation, accommodations, meals, and activities. Both professions are both of interest to Atout France as a majority of Americans use their services to plan their travel to Europe.

B2B and B2C

B2B and B2C are abbreviations for “Business to Business” and “Business to Consumer” respectively. Indeed, different companies rely on different business models. Relations and commerce with different customers change the way companies do business. At Atout France, the company’s services are for companies, so it operates on a B2B model when organizing events. However, Atout France also interacts with the public through marketing campaigns. Whether that interaction is a B2C is arguable because the “product” sold by Atout France is the whole nation of France and the operation is made in the nation’s interest rather than in the businesses’ interest as the income gained from such an operation is not directly earned from the consumer.

Why should you be interested in this post?

My article about my experience as an intern for Atout France in New York should be of great interest to people who are interested in the travel and tourism industry, as well as those who are considering pursuing an internship or career in this field. The article provides valuable insights into what it’s like to work for a destination marketing organization and gives a behind-the-scenes look at the operations of Atout France in New York. Readers can learn about the different departments and functions within a tourism development agency, as well as the challenges and opportunities that come with working in this field. Readers can also learn about the vocabulary, skills and qualities that are important to excel in this industry.

Word of conclusion

In conclusion, my experience as an intern at Atout France in New York was an incredibly valuable opportunity for me. I had the chance to work with a talented and dedicated team, passionate about promoting France as a premier travel destination.

During my internship, I gained valuable insights into the operations of the government in the tourism area abroad and learned about the different strategies and tactics used to promote tourism. I had the chance to work on a variety of projects, from developing marketing materials to conducting research and analysis on industry trends.
Throughout my internship, I was impressed by the level of professionalism and expertise demonstrated by the Atout France team. I also had the chance to network with industry professionals and attend industry events, which provided me with valuable connections and insights into the travel industry.

Overall, my internship at Atout France in New York was an incredible learning experience and a valuable steppingstone in my career. It has provided me with a strong foundation in destination marketing and tourism. I would highly recommend an internship with Atout France to anyone who is passionate about travel and tourism and looking to gain valuable insights and experiences in this industry.

Related posts on the SimTrade blog

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Useful resources

Atout France Organization website

Atout France USA LinkedIn group

HubSpot Firm website

About the author

Article written in March 2023 by William LONGIN (EDHEC Business School, Global BBA, 2020-2024).

My Internship Experience at AlixPartners in London

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My Internship Experience at AlixPartners in London

Federico De ROSSI

In this article, Federico De Rossi (ESSEC Business School, Master in Strategy and Management of International Business, 2020-2023) shares his professional experience as Business Analyst Intern at AlixPartners.

About the company

AlixPartners is a global consulting firm that offers companies facing complex challenges strategic, operational, and financial advice. They collaborate with companies in a variety of industries, including automotive, consumer goods, healthcare, retail, and technology. The company was founded in 1981 in Detroit, Michigan, and has since expanded to become a global firm with offices in more than 25 countries.

Logo of the AlixPartner.
Logo of AlixPartner
Source: AlixPartner.

My internship

During my internship at AlixPartners, I worked as a Business Analyst Intern.

My missions

My role was twofolded: on one side I was involved in providing support to consultants all over the globe on various projects and different industries. On the other side, I also worked hand to hand with the firm’s managing director to spot business development opportunities by, for instance, analysing four of the biggest private equity firms in the world and their portfolio companies.

Finally, I was responsible for conducting research and analysis to support project work, preparing presentations and reports for clients, and attending team meetings.

Required skills and knowledge

As an Intern in a global consulting firm, I already had to master some skills that would have been necessary for a successful completion of the internship itself. Obviously, learning agility and curiosity are given qualities that candidates are asked to have: without them, working 10+ hours a day would not be sustainable and would not make the job interesting. On top of those, problem-solving and communication skills are the bread and butter of the industry. Finally, for what concerned hard skills, a good knowledge of the Microsoft Office suite was fundamental.

What I learned

My internship at AlixPartners provided me with a valuable learning experience. It helped me develop a range of skills, including problem-solving, analytical, and communication skills. I also learned the importance of teamwork, collaboration, and time management.

One of the key things that I learned during my internship was the importance of developing a deep understanding of the client’s business. This involved analyzing the client’s financial statements, conducting market research, and understanding their competitive landscape. This understanding helped consulting firms develop customized solutions that are tailored to the client’s specific needs.

Another valuable lesson that I learned was the importance of effective communication. As consultants, we had to present our findings and recommendations to clients in a clear and concise manner. This involved preparing presentations and reports that were easy to understand and conveyed the key messages effectively.

Finally, working in such a high paced environment, with long hours and very demanding challenges, I definitely learnt how to better manage my time and conciliate my personl life with my professional one.

Financial concepts related my internship

When it comes to financial concepts related to the industry, I haven’t been exposed to much if not for when I had to analyze private equity firms such as KKR, Bain Capital, EQT, and others. It was the first time I was working on PEs and the topic revealed itself to be extremely enjoyable. It’s quite interesting to see the deep connection between private equity and consulting.

Why should I be interested in this post?

Overall, my internship at AlixPartners was a fantastic learning opportunity that enabled me to develop a variety of skills that will be useful in my future career. I would strongly recommend AlixPartners to anyone interested in a career in consulting.

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Useful resources

AlixPartner

About the author

The article was written in March 2022 by Federico De Rossi (ESSEC Business School, Master in Strategy and Management of International Business, 2020-2023).

My experience as an intern in the Corporate Finance department at Maison Chanel

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My experience as an intern in the Corporate Finance department at Maison Chanel

Martin VAN DER BORGHT

In this article, Martin VAN DER BORGHT (ESSEC Business School, Master in Finance, 2022-2024) shares his professional experience as a Corporate Finance intern at Maison Chanel.

About the company

Chanel is a French company producing haute couture, as well as ready-to-wear, accessories, perfumes, and various luxury products. It originates from the fashion house created by Coco Chanel in 1910 but is the result of the takeover of Chanel by the company Les Parfums Chanel in 1954.

Chanel logo.
Channel logo
Source: Chanel.

In February 2021, the company opened a new building called le19M.This building was designed to bring together 11 Maisons d’art, the Maison ERES and a multidisciplinary gallery, la Galerie du 19M, under one same roof. Six hundred artisans and experts are gathered in a building offering working conditions favorable to the wellbeing of everyone and to the development of new perspectives at the service of the biggest names in fashion and luxury.

My internship

From September 2021 to February 2022, I was an intern in the Corporate Finance and Internal Control department at Maison Chanel, Paris, France. As part of Manufactures de Mode, subsidiary of Chanel, which aims to serve as support for all the Maisons d’art and Manufactures de Modes, located in le19M building, my internship was articulated around three main missions.

My missions

My first mission was to develop and implement an internal control process worldwide in every entity belonging to the fashion division of Chanel. The idea behind this was to make a single process that could be used in every entity, whatever its size, so all of them have the same, improving the efficiency during internal and external audits.

During the six months of my internship, we focus our development on a particular aspect of internal control that is called “segregation of duties” or SoD. The segregation of duties is the assignment of various steps in a process to different people. The intent behind doing so is to eliminate instances in which someone could engage in theft or other fraudulent activities by having an excessive amount of control over a process. In essence, the physical custody of an asset, the record keeping for it, and the authorization to acquire or dispose of the asset should be split among different people. We developed multiple procedures and matrix to allow the company to check whether their actual processes were at risk or not, with different level of risks, and adjustments proper to each entity.

My second mission was to value each company to test them for goodwill impairment in Chanel SAS consolidation. We use a discounted cash flow (DCF) model to value every company and based on the value determined, we tested the goodwill. Goodwill impairment is an earnings charge that companies record on their income statements after they identify that there is persuasive evidence that the asset associated with the goodwill can no longer demonstrate financial results that were expected from it at the time of its purchase.

Let me take an example. Imagine company X acquire company Y for $100,000 while company Y was valued at $60,000 in fair value. In this situation, the goodwill is $40,000 (=100,000 – 60,000). Now let’s say we are a year later, and the fair value of company Y is calculated as $45,000 while its recoverable amount is $80,000. The carrying amount of the asset and the goodwill (85,000) is now higher than the recoverable amount of the asset (80,000), and this is misleading, so we have to impair the goodwill by $5,000 (85,000 – 80,000) to account for this decrease in value. As the company was acquired at a price higher than the fair value, it is the goodwill that will be impaired of such a loss.

My last mission was a day-to-day exercise by which I had to assist and support each entity in its duties towards Chanel SAS. It could have been everything related to finance or accounting (reporting, valuation, integration post-acquisition, etc.), and sometimes not even related to finance but to the development of these companies (IT, audits, etc.). This last mission allowed me to travel and visit multiple Maisons d’art and Manufactures de modes to help prepared internal and external audits.

Required skills and knowledge

The main requirements for this internship were to be at ease with accounting and financial principle (reporting, consolidation, fiscal integration, valuation, etc.) to be able to communicate with a multitude of employees by writing and talking, and to be perfectly fluent in English as entities are located everywhere.

What I learned

This internship was a great opportunity to learn because it required a complete skillset of knowledge to be able to work at the same time on internal control aspects, financial aspects, accounting aspects, and globally audit aspects. It gave me the possibility to meet a huge number of people, all interesting and knowledgeable, to travel, to learn more about the fashion luxury industry at every stage of the creation process, and to discover how it is to work in a large company operating on a worldwide scale.

Three concepts I applied during my journey

Discounted cash flow (DCF)

Discounted cash flow (DCF) analysis is a valuation method used to estimate the value of an asset or business. It does this by discounting all future cash flows associated with the asset or business back to the present time, so that they have a consistent value in today’s terms. DCF analysis is one of the most commonly used methods for valuing a business and its assets, as it takes into account both current and expected future earnings potential.

The purpose of using DCF analysis is to determine an accurate value for an asset or company in order to make informed decisions about investing in it. The method takes into account all expected future cash flows from operating activities such as sales, expenses, taxes and dividends paid out over time when calculating its intrinsic worth. This allows investors to accurately evaluate how much they should pay for an investment today compared to what it could be worth in the future due to appreciation or other factors that may affect its price at any given moment over time.

The process involves estimating free cash flow (FCF), which includes net income plus non-cash items like depreciation and amortization minus capital expenditures required for day-to-day operations, then discounting this figure back at a rate determined by market conditions such as risk level and interest rates available on similar investments. The resulting number provides investors with both a present value (PV) which reflects what would be earned from holding onto their money without risking any capital gains tax if held long enough; as well as terminal value (TV) which considers what kind of return can be expected after taking into account growth rates for remaining years left on investments being considered.

Since DCF only takes into consideration anticipated figures based off research conducted prior through financial data points, there are certain limitations associated with using this type of calculation when trying to determine fair market values since unexpected events can occur during timespan between now until end date calculated period ends causing prices either rise above estimated figures proposed earlier before end date was reached thus creating higher returns than originally forecasted initially before actual event took place; at same opposite can occur where unforeseen economic downturns could lower prices below predicted projections resulting lower returns than assumed initially prior situation happening firstly. Therefore, while estimates provided via discounted cash flow are helpful tools towards making more informed decisions when considering buying/selling specific assets/companies, ultimately investor should also conduct additional due diligence beyond just relying solely upon these calculations alone before making final decision whether proceed further move ahead not regarding particular opportunities being evaluated currently.

Goodwill impairment is an analysis used to determine the current market value of a company’s intangible assets. It is usually performed when a company has acquired another company or has merged with another entity but can also be done in other situations such as when the fair value of the reporting unit decreases significantly due to market conditions or internal factors. The purpose of goodwill impairment analysis is to ensure that a company’s financial statements accurately reflect its financial position by recognizing any potential losses in intangible asset values associated with poor performance.

When conducting goodwill impairment analysis, companies must first calculate their total identifiable assets and liabilities at fair value less costs associated with disposal (FVLCD). This includes both tangible and intangible assets like trademarks, patents, and customer relationships. Next, they must subtract FVLCD from the acquisition price of the target entity to calculate goodwill. Goodwill represents any excess amount paid for an acquiree above its fair market value which cannot be attributed directly to specific tangible or intangible assets on its balance sheet. If this calculated goodwill amount is greater than zero, then it needs to be tested for potential impairment losses over time.
The most common method used for testing goodwill impairments involves comparing the implied fair value of each reporting unit’s net identifiable asset base (including both tangible and intangible components) against its carrying amount on the balance sheet at that moment in time. Companies may use either a discounted cash flow model or their own proprietary valuation techniques as part of this comparison process which should consider future expected cash flow streams from operations within each reporting unit affected by acquisitions prior years among other inputs including industry trends and macroeconomic factors etcetera where applicable. If there is evidence that suggests that either one would result in lower overall returns than originally anticipated, then it could indicate an impaired asset situation requiring additional accounting adjustments.

Goodwill

In summary, goodwill impairment analysis plays an important role in ensuring accurate accounting practices are followed by companies so that their financial statements accurately reflect current values rather than simply relying on historic acquisition prices which may not necessarily represent present day realities. By taking all relevant information into consideration during these tests, businesses can identify potential issues early on and make necessary changes accordingly without having too much negative impact downstream operations going forward.

Segregation of duties (SoD)

Segregation of duties (SoD) is an important part of any company’s internal control system. It involves the separation and assignment of different tasks to different people within a business, in order to reduce the risk that one person has too much power over critical functions. This segregation helps to ensure accuracy, integrity, and security in all areas.

Segregation of duties can be broken down into two main components: functional segregation and administrative segregation. Functional segregation involves assigning specific responsibilities or tasks to individuals with expertise or knowledge in that area while administrative segregation focuses on preventing an individual from having too much authority over a process or task by dividing those responsibilities among multiple people.

The purpose behind segregating duties is to limit potential risks associated with fraud, errors due to lack of proper supervision, mismanagement, waste, and misuse of resources as well as other potential criminal activities that could lead to loss for the business. Segregation also ensures accountability for everyone’s actions by making sure no single employee has access or control over more than one critical function at any given time: thereby reducing opportunities for mismanagement and manipulation without proper oversight from management personnel. Additionally, it allows businesses better manage their internal processes by providing checks-and-balances between departments; thus, promoting better coordination between them which can be beneficial when dealing with complex procedures such as budgeting cycles or payroll processing, etc.

In conclusion, segregating duties helps businesses reduce risks related not only fraud but also mismanagement, waste, misuse & other criminal activities which may lead businesses losses & create transparency & accountability within departments so they are able coordinate properly & execute operations efficiently. It is therefore an essential component business should consider implementing into their internal controls systems if they wish to ensure their financial stability long run.

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Useful resources

Maison Chanel

le19m

About the author

The article was written in January 2023 by Martin VAN DER BORGHT (ESSEC Business School, Master in Finance, 2022-2024).