Los Angeles is all about glitz and glamour.  Red carpets, celebrity appearances and after-parties in Hollywood dominate the entertainment industry.  Judging by Los Angeles Fashion Week events this past March, it seems that Los Angeles has “entertainment” engrained in almost every industry, including fashion. I had the opportunity to experience LAFW firsthand during spring break. Running around from event to event was extremely hectic but I enjoyed every minute of it.

Los Angeles Fashion Week (LAFW) officially took place March 16-March 25 at venues across Los Angeles – including, the California Market Center and Cooper Building in downtown LA, Fred Segal in Santa Monica, The Key Club on Sunset Blvd. among other various locations. I attended several fashion week events where I met and chatted with designers like Greg Alterman of Alternative Apparel, Richard Chai and Yotam Solomon, stylists, photographers and fashion PR giant Kelly Cutrone to learn more about their brand, creative inspiration, and business strategies. And this being Los Angeles, I spotted some of Hollywood’s young trendsetters and tastemakers such as Shenae Grimes, Olivia Munn, Monet Mazur, Peaches Geldof and Nikki Reed during the week.

In most other cities that host fashion shows, like New York City, Milan, Paris and London, designers have a runway show or presentation. A select few have after-parties to celebrate their season’s accomplishments and industry reviews. In Los Angeles, every runway and presentation was followed by a party. Yotam Solomon presented his Fall/Winter 2010 Collection at a Hollywood Hills private estate. Yotam frequently draws inspiration from his European and Middle Eastern roots and Southern California childhood and lifestyle. He makes use of geometry, architecture and cut-outs to form futuristic, avant-garde pieces, while using natural fabrics which compliment the silhouettes of the clothing. The models wore Solomon’s creations on a red carpet with the Hollywood Hills and greater Los Angeles as the backdrop where guests and photographers were mesmerized. Afterwards, guests went indoors for an intimate gathering to celebrate the new collection.

Alternative Apparel showcased its new collection at its downtown Los Angeles studio.  The venue was transformed into a carnival-esque space, all produced by fashion production and PR powerhouse, People’s Revolution. Greg Alterman, designer for Alternative Apparel, focused on knits, layering, floral tights, overalls, long johns, waffle

thermals and even some tulle. The cuts and silhouettes were up-to-date but the overall feeling was a western nostalgia. The brand is known for its extremely comfortable and casual pieces, but this seasons show showed great promise for more styles. Kelly Cutrone and Brent Bolthouse DJ-ed the event until The Walkmen hit the stage during the after-party.

Another characteristic inherent to Los Angeles Fashion Week was that not all presentations were for highlighting individual designers. A few brands and showrooms, like What Goes Around Comes Around (WGACA), showcased their Fall/ Winter 2010 Collections as well. WGACA is a brand famous for carrying vintage goods at its unique boutique Soho and Hollywood stores. You can find one-of-a-kind clothing and jewelry at WGACA as well as pieces from the WGACA label. Seth Weisser (co-founder and President) and Gerard Maione (co-founder and Creative Director) celebrated the one year anniversary of the Hollywood boutique with a model installation and celebration party.

ConceptLA and BOXeight both held exceptional three-day exhibitions. ConceptLA had runway presentations by Chelsea Rebelle, B Scott, Fremont, Jen Awad, martinMARTIN and The Battalion. Mike Vensel shot photographs of models in his clothing upstairs while Farm Tactics created an organic shelter to showcase its pieces. The space represented what their brand is all about.

BOXeight Studios was a photography and creative haven during LAFW. Skin Graft, Gold Spun, Funktional, Kanvis, Future Heretics, Postage and a slew of other brands and designers shot their lookbook campaigns on-location. Designers and fashion brands create lookbooks, which are compilations of photographs of models in their clothing line. Lookbooks are typically compiled every season and sent to buyers, fans and potential investors to showcase their wares. Guests had the opportunity to observe the entire styling, shooting, editing and processing development. The three day event gave admirers the opportunity to witness what goes on behind-the-scenes. It was a unique approach and a creative alternative to a typical runway show.

The Green Initiative and Hope in the City were two great events with even greater causes.  The Green Initiative Humanitarian Fashion Show was sponsored by The Green Youth Movement (GYM). The show highlighted the very real issue of sustainability in fashion and showcased the work of designers who utilize eco-textiles, organic bamboos and fabrics, and environmentally-friendly dyes in their design processes. The Emily Factor show was fun and flirty while the Lizzie Parker pieces were uber-casual. Puridee presented simple dresses and gowns, which incorporated bridal elements. Hope in the City hosted their 3rd annual fashion show event that featured “a gallery of over 25 local and professional artists and a runway show of 22 established and up-and-coming designers.  Each creation is centered on the theme “Wear Your Story.” All ticket proceeds went to Beyond US projects and serveLA.

Gen Art, BOXeight, FGI-LA, ConceptLA, Directives West, California Market Center, California Apparel News, Los Angeles Times IMAGE, LA Confidential Magazine, l.a. models, SMASHBOX and countless partners, sponsors and hosts made Los Angeles Fashion Week possible. The visions of these innovators created a truly unique experience.  LAFW made me realize that Los Angeles has a unique personality, as does Los Angeles Fashion Week. LAFW is event-driven, but who says that’s a bad thing? Los Angeles knows how to have a good time, especially with fashion!

Danny Chung is a senior at UCLA and blogs, as the modman at themodman.net/www.modmen.wordpress. com/ and as the LA General Fashion Examiner at examiner.com, runway trends, fashion news, styling tips and event reviews. He has interned at entertainment and fashion public relations companies in NY and LA during his summers and has been to numerous New York and Los Angeles Fashion Week shows and events. Be sure to check out his blog and examiner page and follow his tweets at mm_modman!

The road to a career in fashion is fierce and competitive but well worth the effort.  UCLA students are well positioned for immersion, as Los Angeles is one of the world’s fashion capitals joining cities such as Paris, New York, Hong Kong, and Milan.

The processes for obtaining internships and entry- level positions are similar in many ways to applying for a job in other industries. Companies will request a resume and cover letter, and most likely additionally require a list of references, a writing sample or portfolio.  Preliminary goals for finding an internship or job in the fashion industry are to research and to find out what exactly inspires you about the industry. A motivated individual must research local and top global companies, such as Condé Nast and TimeWarner, Inc. for competence and possible openings. For example, a Promotion Copywriter position currently posted on Condé Nast requests applicants have excellent writing, editing and proofreading skills, and ability to think creatively under tight deadlines. A position for Promotion Coordinator at Condé Nast requires applicants to possess excellent verbal and written communication skills, proficiency in Microsoft Excel, Word and PowerPoint, professional phone skills, attention to detail and ability to function in a fast-paced environment.

Fashion industry careers are extensive, such as fashion designer, photographer, model, editor, or marketer.  The job of a fashion designer varies between designing clothing labels to supervising a design team at a company. The future fashion designer has knack for drawing or sketching, which is essential in order to create a marketable portfolio. Similarly, becoming a fashion photographer requires a portfolio demonstrating photography skills and experience. For candidates aspiring to be fashion models, an agent is an invaluable and necessary resource. Los Angeles has many agencies searching for talent, such as Elite, Wilhelmina and L.A Models.

The fashion editor career has two different paths – in-house fashion editor or market editor. An in-house editor is the creator of the themes featured through fashion editorials, while the market editor is an expert of the magazine, traveling to different cities and establishing relationships with designers and showrooms. Both positions require candidates to work their way up from an assistant, possibly even beginning at a non-fashion magazine. Yet another career path in the fashion industry is that of fashion marketer, which involves elements of sales, advertising, design, and business administration.  Marketers are responsible for determining which products are most likely to be successful by analyzing pop culture as well as predicting future trends. They analyze the best ways to reach potential consumers. These five possibilities are only a few of many possible careers within the fashion industry; one can also become a personal stylist, graphic designer, public relations specialist, product manager, or show-room manager among others.

Due to fashion’s competitive nature, positions require diverse and unique qualities from applicants.  Many of the job postings look for candidates that are organized, energetic, fast learners, detail-oriented, skilled in Photoshop and above all have an interest in fashion. Each position and each company will have different standards for the new hires, which is why it is very important to research the companies beforehand.

The most direct way to get hired at a fashion company is contacting human resources or responding to an online job posting. For example, if you want to work for a fashion magazine, contact a company such as Condé Nast Publications or Time Warner, Inc. Condé Nast owns Vogue, Lucky, Allure, Glamour, Vanity Fair, Modern Bride and more, while Time Inc. owns Essence and InStyle. You can find their contact information and job postings on their websites.  Both companies have special internship programs that recruit starting around February through their websites, while full time recruiting happens more heavily. There are postings now on BruinView and the company websites for full time positions.  Search through the company websites about deadlines and due dates if there aren’t current listings now for the type of position you want. Also, don’t be afraid to email the human resources department with your credentials and the types of position you are seeking so that they can contact you when a position becomes available. When contacting the human resources department, include any material that may be applicable to the position being sought. Lastly, there are third party websites dedicated to careers in fashion, such as StyleCareers, so be sure to scan these for opportunities as well.

The road to becoming a top fashion editor in a magazine such as Vogue, might require one to start as an assistant performing simple administrative tasks.  When starting out and even at senior levels, gaining experience and networking are essential to advancing within the industry. Highly successful individuals in fashion combine creativity and vision to drive companies forward.

Tired of waiting for the most recent fashion styles to appear at your local retail stores?  Fast fashion has been the latest trend among retailers and consumers.  The term “fast fashion” describes the newest collection of clothing based on the styles introduced every year during Fashion Week in the spring and fall.  Fast fashion is the collection of clothing derived from ideas and elements of high-end designers that is rapidly manufactured and available to the mass market.  While quickly producing replicas of designer clothing in a cost-efficient manner, fast fashion caters to mainstream consumers who want to follow current celebrity-inspired looks at a low, affordable price.

Fast fashion companies combine quick response (QR) production and enhanced product design capabilities to maximize profits while fulfilling customer needs. QR methods aim not only to create and introduce new products in a short span of time, but also to find effective approaches to draw consumers back for more. Enhanced product design methods, on the other hand, focus on ways to offer products that customers value more now, making them less willing to wait for a clearance sale later.

Along with their main collections every spring and fall, fast fashion companies also provide customers with smaller lines to keep up with the changes in trends throughout the year. With the latest styles rapidly changing, consumers want to maintain their images without having to spend a lot. These smaller product lines allow customers on a tight budget to update their wardrobes and copy the styles of those strutting down the catwalk. With the high demand for affordable and fashionable clothes, fast fashion companies sell their products at relatively lower prices than do other retailers. These companies are able to sell their products at low prices by taking advantage of the lower labor costs in developing nations, significantly cutting manufacturing costs.

Currently operating in 37 countries and employing 76,000 workers, Hennes & Mauritz (H&M) is one of the largest retailers in fast fashion. Established in 1947 by Erling Persson, H&M opened its first store in Sweden. While it has most of its major markets in Europe, H&M is also available in the Middle East, Asia, and North America. In addition to expanding geographically, H&M has also broadened its range of products. Offering a varied selection of clothing, it has recently launched new lines in cosmetics, accessories, and footwear. H&M also offers online shopping for its customers located in major market locations, including Germany, the Netherlands, and Sweden.

H&M caters to women, men, teenagers, and children, and provides them with new fashion items every day in each of 2,000 retail locations. According to the company’s 2008 full-year report, H&M’s revenue rose by 73 percent over a five-year period.  Moreover, since 2008, H&M’s success in fast fashion has contributed to its goal of increasing sales and the number of retail stores by 10 to 15 percent every year.  To meet this goal, H&M has effectively utilized online marketing tools, such as Facebook and Twitter, for closer communication with its customers. H&M uses these online marketing tools to attract and acquire new customers as well as to drive its fans to visit the H&M Web site, where they can view the latest styles and purchase items online, thus increasing sales. The fast fashion giant also has its own YouTube.com page with Fashion TV and other related fashion clips. H&M uses mainly its Web site to promote upcoming events and introduce viewers to the latest collection.

The latest women’s collection, the ecofriendly line, emphasizes floral designs, soft cottons, khakis, and ocean blues. The Green Garden line encourages fashionistas to create wardrobes that blend nature prints and colors with homemade pieces. Inspired by famous designers like Stella McCartney, Dolce & Gabbana, and Rochas, the Green Garden line promotes mixing and matching earthy colors with feminine floral ruffles. Released in March, the Green Garden collection

While fashion has existed in all countries, it is widely believed to have originated in Western Europe during the 12th century.  The fashion norm during the 12th century included long tunics for men and elegant clothing such as gowns for women.  In the 17th and 18th centuries, men wore long sleeve clothing such as coats, waistcoats, and breeches. Women of this period wore clothing that emphasized their curves by wearing corsets underneath their dresses and gowns. While fashion began in Europe, it grew and spread to other continents such as North America and Asia through increased trade and ease of transportation. Fashion has changed immensely from the past and continues to change as many of today’s western fashions put more emphasis on comfort unlike many styles of the past. It plays an important role in the aspects of people across different cultures and has done so for thousands of years. Fashion today is represented in a multitude of ways in society encompassing both the corporate and casual worlds.

The Business of Fashion

Nike, one of the industry leaders in athletic wear brought an estimated $19.2 billion of revenue during its 2009 fiscal year. Gucci, one of the world’s leaders in high end and luxury fashion reported an estimated $1.3 billion in revenue for 2009. Bloomingdales, a clothing department store chain that carries numerous different clothing labels, reported a revenue sum of $26.3 billion in 2009. While it is difficult to tabulate accurate revenue numbers for the fashion industry, the revenue streams of these and other companies show the high consumer demand for fashion.

Tokyo, London, New York, Milan, and Paris are widely regarded as some of the largest and most prestigious fashion hubs in the world. These cities are home to many famous fashion brands such as Louis Vuitton, Christian Dior, Giorgio Armani, and Calvin

Klein. These cities also possess shopping districts that create significant amounts of economic impact due to high volume of tourists and revenue they generate. Luxottica, the world’s most successful eyewear company is based in Milan, Italy. In 2008, Luxottica reported revenues of $7.02 billion.

One fashion destination close to the UCLA campus is the L.A. Fashion District located in downtown L.A. The L.A. Fashion District does not carry brand name clothing brands but sells independent brands’ apparel and accessories for both wholesale and retail customers. These independent retail shops carry clothing for all demographic groups of shoppers.  Even though the L.A. fashion district does not carry large retail brands, according to an economic study from 2006 published on its website, the Los Angeles

Fashion District was responsible for generating $5.76 billion in business volume that supported over 66,000 jobs in 2006 and the revenue figure is expected to reach $6.7 billion by 2011. This center that supports small and independent fashion brands is able to create significant economic impact for its merchants and the city of Los Angeles.

Careers In Fashion

Fashion designers are responsible for creating new patterns and styles for clothing and accessories designed for the consumer market. They usually work in a specialized market such as men or women’s wear. Designers are responsible for overseeing and creating clothing that consumers are able to find in stores. While many people think of designers as the main career in fashion, there are many other careers in and interrelated in fashion.  Aspiring designers should aim to hone their knowledge on different textiles, fabrics, fashion trends as well as working to improve and hone their design creativity.

Fashion Merchandising is a field in where professionals work closely to research trends in their markets to report back to the manufacturing and design departments of their firms. Professionals in this field also create marketing campaigns for advertising in television, Internet, and billboards.  Cosmopolitan, Instyle, and Elle are three of the most notable fashion magazines. Magazines are just one form of Fashion Media. This field employs creative individuals with strengths in writing such as writers and editors as well as those with visual strengths such as photography, and illustrating. Fashion Media is responsible for keeping its readers and audience informed about news, trends, and other information in the fashion industry.

Since fashion and physical appearance plays a role in everyone’s lives, there are careers dedicated to this field as well. Many famous celebrities and athletes hire personal stylists to oversee appearance and also shop and maintain their personal wardrobes and fashion. Personal stylists not only work with individuals but also with department stores and clothing brands to coordinate outfits for models in runway shows. To become a celebrity stylist, individuals should intern for positions related to the fashion industry while also working to build their own fashion portfolios and industry relationships.

For those interested in a more traditional business position, the fashion industry also offers many positions in its corporate operations including corporate finance, human relations, and various types of management. Major clothing companies such as Banana Republic offer specialized business oriented internships and full time positions in fields such as Merchandise Planning. Merchandise Planning Analysts review and analyze sales performances of stores and products to create projections for store sales as well as supply of future products. Clothing companies offer business related positions and for both undergraduate and graduate students. Individuals interested more in the business aspects of fashion can search for positions under the careers sections of fashion company websites.

Schools In Fashion

For individuals interested in entering the fashion industry, there are many schools across the U.S. and international institutions that have programs dedicated to fashion and design. Notable schools in these fields include the Fashion Institute of Design and Merchandising located in Los Angeles, Parsons School for Design in New York, and Instituto Marangoni located in Milan, Paris, and London. These schools offer a variety of certifications and degrees in areas such as interior design, merchandise marketing, as well as business management. Individuals who have passion for the Fashion industry and desire to pursue a career in this field should contemplate fashion school. The fashion-based coursework offered at these schools such, as jewelry design and apparel manufacturing management are usually not available to students at traditional four-year universities. Many of the instructors at these schools have had experienced working in different industries such as manufacturing, retail management, and entertainment. Fashion schools such as the

Fashion Institute of Design and Merchandising have career centers and networking events designed to put their students on the fast track to a career in fashion. Those individuals who have a strong passion to enter the fashion industry should look at the exclusive benefits and career training offered by these schools.

Conclusion

Fashion will continue to play a big role in the daily lives of individuals and in the business world. There are schools dedicated to the craft and different aspects of fashion as this industry grows and becomes more popular. The fashion industry provides careers for a variety of individuals including those with skills in design, marketing, writing, and finance.

Although careers in fashion are typically associated solely with clothing design, there is a large business component to fashion as well.  Possessing the business acumen needed to identify fashion trends, understand costs, and, more importantly, developing a network are crucial to succeeding in this industry.  Consequently, more and more of today’s students are looking to obtain an MBA from a fashion business school.

Founded in 1939 and originally known as the Laboratory Institute of Merchandising (LIM), LIM College is the only college in the United States to offer an academic curriculum focused on the business of fashion. LIM College is conveniently located in New York City (midtown Manhattan), one of the premier fashion capitals of the world. Because of its location, LIM College students have a wide range of internship and career opportunities available to them. The college partners with many well-known fashion companies such as Avon, Calvin Klein, and Gucci looking to hire LIM College students and graduates. In addition, LIM College offers both part-time and full-time MBA programs that prepare students for a career in the fashion industry. The Princeton Review recently listed LIM College as one of the “Best Northeastern Colleges.”

MBA

LIM College’s MBA program is designed to prepare candidates for a career in the fashion business. Like most other MBA programs, LIM College requires students to take general business courses in addition to fashion-specific courses. Business courses offered include topics such as supply chain management, financial management, business law, and fashion merchandising.

The MBA degree requires the student to complete 51 credits spread over the course of four 12-week terms and one 11-week term. Roughly half of those credits will be obtained through fashion-specific courses, while the other half will consist of a general business curriculum seen at most MBA programs around the nation. The program also offers students the option of adding two specializations: Fashion Management and Fashion Entrepreneurship. The Fashion Management specialization is suitable for those wanting to work at a large fashion company such as Kenneth Cole, while the latter prepares students to launch their own fashion venture.

For the first two terms, students take courses in business administration covering a range of standard business topics such as management theory and strategy, business law, finance, and marketing.  During the third and fourth terms, students switch gears and focus their studies on either the fashion management or entrepreneurship concentrations and take a variety of elective classes focused primarily on fashion:

• Fashion merchandising

• Retail management

• Project management in fashion

• Luxury marketing

The fifth and final term (11 weeks) concludes with an internship or exchange requirement, allowing students to apply their book knowledge to the outside world. Students are typically placed well, often interning in brand-name companies such as Liz Claiborne and Tommy Hilfiger.

In addition to the above, students are also required to attend several pre-MBA seminars before the start of the MBA program. These seminars cover a wide range of basic business courses, such as mathematics, economics, and accounting, which are designed to prepare the MBA candidate for the program. These courses are graded on a pass/fail basis and can be taken online.

Overall, LIM College would be a strong fit for an individual set on a career in the fashion industry.  The MBA curriculum is a solid combination of business principles and fashion-specific courses that should prepare the student well for this industry.  With small classes and experienced faculty, students will be able to develop meaningful contacts.  Finally, the location is a strong factor to consider, as it is certainly suitable for obtaining internships and networking.

Application Requirements

A completed Graduate Program Application, including two letters of recommendation, essays, and a non-refundable application fee of $50

• Proof of an earned bachelor’s degree (120 credits)

• GMAT or GRE test results. Please use code ZXH-QV to direct your GMAT scores to LIM and DI Code 2380 to direct your GRE scores.

• Applicants whose native language is not English need to submit proof of English proficiency in the form of TOEFL or IELTS test results. These results should not be more than five years old.

• A resume demonstrating appropriate work experience

• An interview with the Admissions Committee LIM College has a rolling admissions policy and has two application filing dates in March and September.  To download the MBA application form, go to http://www.limcollege.edu/LIM_MBA_App10_09.pdf

More questions? Contact them at http://www.limcollege.edu/academics/3120.aspx

Phone

(212) 752-1530

Mailing Address

12 East 53rd Street

New York, NY 10022

As the consulting field has become increasingly popular among undergraduate business students, many students commonly ask themselves two important questions: how can I differentiate myself and how do I break into the consulting industry?  Are you among the many who are interested in landing that consulting job with prestigious firms such as Bain and Company, ZS Associates, Mercer, and Deloitte?  If so, the best way to get your feet wet and get one step closer to that full-time offer is to participate in a case competition.  A case competition is a competition in which contestants choose teams of three to five persons to tackle a business problem by a hosting firm.  This spring’s Strategy and Operations Case Competition was held on Saturday, April 17, and was hosted by Bruin Consulting, who gathered contestants from CAST Management Consulting, Inc.; Bain and Company; L.E.K. Consulting; Monitor; Mercer, and ZS Associates.

The competition consisted of groups of three to five members who had a 36-hour window to prepare for the competition.  Participants came up with creative solutions to present to a panel of prestigious consulting firms.  More importantly, participants had the opportunity to not only make a great impression on recruiters but also to network with the firms after the event.

Interview with Elaina (Contestant)

BBR: I understand this is your first time doing a case competition.  What motivated you to participate?

Elaina: I started to have a spark of interest in consulting after talking to alumni in the field and decided to go on a mission to find out as much as about consulting as possible.  As a Communications major, I really had no background in business problems and wanted to get a feel of what to expect.

BBR: What do you feel were the main challenges and what did you learn from the entire process?

Elaina: Because this was my first time doing this and given my major, I went into this really not knowing what to expect.  When we were given the actual case of trying to figure out why many underprivileged people do not use banks, I felt the task at hand was extremely daunting because of my lack of knowledge in consulting, let along banking issues.  Even though it was a bit difficult to learn about banking issues in a 36-hour time window, I felt undertaking this case competition forced me to learn more about the banking issues that I would ever learn on my own.  Because of the time pressure and the fact that I had to really know my subject to be able to present to a panel of judges, I felt that it was a great learning experience that had a lot of value.

So, you talked about how you formed your team, read your case, and formulated some solutions.  What was the actual presentation day like and how was it set up?

Elaina: As I said before, I was pretty nervous about presenting to a panel of judges.  The competition was run by CAST Management Consultants and they created a first and final round of presentations.  Initially, we would sign up for a time slot to present and then have to wait a little bit for the previous team to finish.  They would then have each team present in separate rooms.  The first round had three judges each from different consulting firms who really focused on asking us where we got our numbers from and why we came to the conclusions we came to.  The first round was generally a bit more relaxing and less pressure, given the judges had to judge 12 groups.  In the end, only three groups moved onto the final round where they faced a panel of all the consultants from each company.  While each round was characterized by a 14-minute presentation followed by a 10-minute Q & A, I felt the final round was much more intense, as all of the consultants were free to mump in at any time to grill the teams.  Unfortunately, we didn’t move onto the final rounds, but I felt the entire experience as a whole was a great learning experience and a great opportunity to network with firms after, even if you did not place.

BBR: Did the judges talk about how your team could have improved and what do you think the teams that won did right?

Elaina: The judges told use that they could tell we were a bit nervous and that with more practice and confidence we would do better next time.  I think the teams that were successful went in there with a rip-through-it mentality that really impressed the judges.  It’s one thing to stress and over-prepare in the preparation part of the competition, but I think once you get to the actual presentation, you have to take a step back and tell yourself to relax and not stress the moment.  A lot of people were saying how hard it is to prepare yourself for a consulting case competition given how broad the topic is they gave us, but I saw that the teams that came up with very specific answers and were able to defend their answers even when they were grilled did the best.  

Lastly, being confident, flexible, and quick on your feet during the presentation is necessary because judges may sometimes ask you a question that you may have never thought of.  For example, the judges asked us have you consulted any other companies with this sort of business problem, and if so, who?  Of course, we had never consulted anyone, after all, we are undergraduates.  However, just adapting to the situation and telling them that we did consult other companies established credibility for ourselves and was actually what they were looking for.  I’m not saying you have to lie to win a case competition, I’m just saying you have to be confident enough to think quickly on your feet.

Overview of Consulting

Let’s face it, running a business is a messy ordeal in which a myriad of details can hamper productivity and expose businesses to excessive risk. The job of the consultant is to be an expert in a specific field to help organizations improve their performance, primarily through the analysis of existing business problems.  Moreover, consultants offer skills in assessing and solving business problems, and they are hired by companies who need consultants’ expertise, fresh outside perspective, and/or extra sets of hands. For example, a manufacturing company may go to Deloitte with their dilemma: the company has maintained its revenue but profits have been falling, what should they do?  Since there is so much information and various processes within one business, it is extremely difficult for a company to keep track of what they are doing right and what they are doing wrong. In this situation, Deloitte would send a team of three to five consultants to work with the client to analyze the client’s data and understand why their profits are falling. After careful analysis, the consultant may find some inefficiency in the storage of unsold products and that many of the products are being broken during storage, which is increasing their costs. This is an operations example where a consultant would analyze the problem and subsequently create and implement a solution for the client.

While this case competition focuses specifically on strategy and operations, there are also a number of other branches of consulting that include technology, sales and marketing, economic, litigation, and human capital.

The strategy part of management consulting deals primarily with solving business problems that are external to the business. Some common business problems that often arise in cases include helping a company increase revenues and decrease costs, navigate mergers and acquisitions, how to introduce a new product, and evaluate the market to determine whether to enter into it. Conversely, operations management deals with the internal processes of a company. Thus, a consultant working on an operations case will primarily be trying to improve the client’s organization, process, and productivity.

How to Best Prepare

Just like any other industry, putting time into due diligence and research for every company is essential to be prepared for the behavioral interview. In addition to the behavioral interview, most consulting companies, with the exception of Accenture and Triage, will have a case interview. The best way to prepare for the case interview is to participate in case competitions such as a BC Case Competition, and read through Vault Guides and books such as Case in Point. Furthermore, by practicing with your peers who are also looking to go into consulting, you will not only know what to expect but will also have the confidence to tackle any curve ball case interviewers may throw. In addition, you want to fill your résumé with experiences that relate in some aspect to consulting. Essentially, any type of internship that is project oriented and involves improving internal processes are all great experiences to have. Lastly, joining list-servs such as UBS, Bruin

Consulting, and ACT will allow you to search for every opportunity to gain relevant consulting experience.

Ernst & Young along with Lehman Brothers Holdings Inc. Chief Executive Officer Richard Fuld, and other top executives of the Lehman firm were sued on April 9^th by the Retirement Housing Foundation for an accounting gimmick known as the Repo 105 which allows companies to classify borrowing activities as revenue.

Ernst & Young, one of the top accounting firms in the world was the auditing firm for Lehman Brothers during the last quarter of 2007 and throughout 2008, until Lehman Brothers Petitioned for bankruptcy. The Retirement Housing Foundation in its complaint filed to the clerk of the Los Angeles Superior court claims that it lost more than a $1,000,000 invested in Lehman bonds due to the “misleading” accounting of the Ernst & Young firm. It intends to hold Ernst and Young professionally negligent for failing to spot and point out accounting procedures that were being used to prop up Lehman’s financial statements without having any true economical or business substance.

At the very least it intends to establish a breach of the fiduciary duties of Richard Fuld and other top executives of the bankrupt firms, for allowing the filing of financial statements there were misleading and did not reflect the true economic substance of the company.  A fiduciary would include top officers and executives of a company that have a duty of approaching business decisions with care. They are allowed to be sued directly if this duty is breached. This is the first of many more lawsuits expected to be filed against Ernst & Young and the top corporate officers of the Lehman Firm for its use of Repo 105 transactions.

This lawsuit is based on a 2200 page report, written by Mr. Valukas, a court appointed examiner.  The report deals with details of the fallout of Lehman Brothers and their financial activity preceding their petition for bankruptcy. In this report, Mr. Valukus spends over 200 pages describing the Repo 105 transactions and how they were used to manipulate Lehman Brother’s financial numbers. A standard procedure for companies who are trying to increase their cash holdings for a short amount of time is to borrow money from companies that have big cash reserves. In order for the creditor companies to be confident that their money will be paid back, they obtain some kind of collateral from the borrowing company, so that if the borrowing company defaults on their repayment, the creditor company can keep the collateral and sell it off to retain its money back.  These are called repurchasing agreements.

Normally repurchasing agreements are treated as financing activities on a balance sheet. Borrowing a large amount of cash always entails a risk of default and investors need to be vigilant. This is in accordance with standard accounting procedures. However, under certain instances, companies are allowed to classify repurchasing agreements as a sale and not a loan. This is allowed if the collateral that the borrowing company gives to the creditor company is more than 105% of the value of the loan. If the repurchasing agreement is classified as a sale, than it is no longer a financing activity and serves to increase the net revenue of the company. Since this type of repurchasing agreement is no longer classified as a financing activity, investors are not aware that the borrowing company has obligations that it must pay back to its creditors. These kind of repurchasing agreements are called repo 105 transactions and can be very misleading because they classify a loan as a sale on the balance sheet.

These were the steps taken with the Repo 105 by the Lehman Brothers

1. Undertake Repo 105 transactions

2. Use cash from the Repo 105 to pay off Liabilities and reduce leverage

3. After the reporting period, borrow cash to repurchase back its collateral. Did not report obligation in financial statements.

The volume of these Repo 105 transactions right before reporting periods was enormous. In the 4^th quarter of 2007, these Repo 105 transactions reduced Lehman Brothers balance sheet by $38.6 billion. In the 1st quarter of 2008 they reduced its balance sheet by $49.1 billion, and in the 2nd quarter of 2008 a staggering $50.38 billion was shaved off the balance sheet due to these Repo 105 transactions. As described before, Lehman Brothers would use the cash from these transactions to pay of its liabilities, thereby reducing its net leverage ratio. This had a substantial effect on their net leverage Ratio, which is a ratio that compares how much money a company receives from borrowing versus people investing in it. In the second quarter of 2008, Lehman Brothers net leverage ratio without the $50.38 billion of Repo transactions would have been 13.9. With those transactions it turned out to be 12.1.  That is a difference of 1.8, which in accounting terms is huge. A difference of .1 is often considered to be material, but here the net leverage ratio jumped by over a point due to these Repo 105 transactions. These procedures made perfect sense to the executives of Lehman brothers because the Repo 105 transactions allowed them to hit their target numbers for their net leverage ratio.

What makes this illegal and highly unethical is that Lehman did not disclose in its footnotes that it had an obligation to repurchase the collateral that it had originally sold to obtain cash. Thus the net leverage ratio as reported in the financially statement was intentionally misleading to the public. Additionally, Lehman had engaged in Repo 105 transactions for purely accounting purposes, without any business or economic substance. On top of that it was losing millions of dollars on such Repo 105 transactions because they had to pay interest on the repurchases. Ernst & and Young, was the auditor of Lehman Brothers during the quarters it was ramping up its Repo 105 transactions right before reporting periods.  They should have noticed irregularities and informed the audit committee. So far Ernst & Young claims that it stands by its audit of Lehman in 2007 in accordance with GAAP, a set of accounting guidelines.  When asked about the Repo 105 transactions, Ernst & Young says that it knew about those in theory, but not the exact specifics. The facts of the case however do not support that conclusion. Matthew Lee, a former Lehman Brothers employee had suspicions about the fraudulent handling of the Repo 105 transactions. He contacted two Ernst & Young officials and set up a meeting with them. On June 12, 2008 two Ernst & Young officials met with Matthew Lee. In this meeting, Lee described to the accountants how his firm was moving about 50 billion dollars off its balance sheet to pay off it liabilities.  He also described that they would reassume those assets after the reporting period was over. The next day, Ernst and Young spoke to Lehman’s audit committee, but did not disclose Lee’s information.

Given the seriousness of the allegations, the multitudes of investors who lost money due to the collapse of Lehman and facts of the case, Ernst & Young looks as if it will face a rough road ahead, filled with lawyers and legal liabilities. Ernst & Young could now face lawsuits from an array of parties. Private entities, such as companies and investors are likely to keep suing Ernst &Young. It might also face lawsuits from the securities exchange commission, or even criminal lawsuits from the justice department.

The legal fallout from the Lehman Brothers collapse could drag on for many years to come.

A New York Times article released April 14 sparked huge controversy in the banking world when it accused Lehman brothers of using the firm Hudson Castle to convert its volatile assets into safer looking securities. Numerous transactions indicate that Lehman was selling its dangerous assets, such as the Mortgage backed securities that led to the financial meltdown, to Hudson or one of its vehicles and then buying debt securities back from the same companies.

Wall Street insiders admit that many banks use third party companies like Hudson Castle to unload risky investments and quickly turn them into cash. This process has the double benefit of making the bank’s finances seem more stable and if the investment goes south, the bank avoids taking the blame because the poisoned assets are no longer in their possession. While addressing this issue across the banking industry should be a concern of banking regulation reform; the relationship between Lehman Brothers and Hudson Castle deserves special scrutiny for two reasons: evidence indicates that Lehman Brothers might have secretly been running the small financial firm for its own ends and Lehman’s transactions with Hudson during the summer of 2008 allowed the bank to hide its financial problems up until the crash.

The New York Times article claims that Lehman brothers, “exerted an unusual level of control over the firm.” In 2001 Kyle Miller a Lehman employee, endorsed

Lehman’s acquisition of IBEX Capital Markets, which would later become Hudson Castle. Miller described the future relationship between the two companies in which Lehman would act as a “gatekeeper” for Hudson’s operations. Miller sited the benefits listed above in his argument and Lehman made the decision to purchase a major share of the company. The company then took on the new name, Hudson Castle, and an agreement with Lehman not to do business with its competitors. Adding to the evidence of Lehman’s influence, the same Kyle Miller that argued for the plan became president of Hudson Castle and still runs the company to this day. Miller refused to take calls from the press.

This purported control that Lehman Brothers had over Hudson Castle is compounded by the firm’s involvement in Lehman’s last minute cover-up of its rapidly declining condition. During its final months in 2008, Lehman Brothers was attempting to stay afloat by depending on loans from the Federal government and major banks, spearheaded by JPMorgan. It offered JPMorgan “commercial paper,” or short term investments high in liquidity, as collateral for its loans. This commercial paper was actually almost completely financed by Lehman through a complex financial process. The commercial paper was from a Special Purpose Vehicle called Fenway, which was owned by Hudson Castle. Lehman Brothers had sold its securities to Fenway, these securities were packaged with the mortgage-backed securities that were high-risk rapidly losing value at the time. Fenway then sold Lehman 3 billion dollars worth of commercial paper, which was almost their entire stock of the securities. The value of the commercial paper was tied to Fenway’s assets, which because of the earlier sale consisted mainly of Lehman’s toxic securities. This is a simplified version of the process, but the intentions are clear: Lehman was trying to secure a loan using its own already worthless assets. As soon as they realized that the collateral Lehman was offering was partially financed by Lehman, “JPMorgan concluded that Fenway was worth practically nothing,” according to a court examiner.

However convincingly fishy the situation may seem, some arguments have been brought up in favor of the normalcy of the Lehman-Hudson relationship.

A Lehman spokesman stated that official Lehman control over Hudson ended in 2004 and, “all funding decisions at Hudson Castle were solely made by the management team and neither the board of directors nor Lehman Brothers participated in or influenced those decisions in any way.” Lehman brothers also reduced its number of seats on Hudson’s board to one after the contract expired. At the time of the controversial exchange, Lehman was still the largest shareholder of Hudson, but only accounted for 10% of the company’s revenue.

If the editors at the times are to be believed, then Lehman deliberately made such deceitful transactions with Hudson Castle’s knowledge and consent.

However other commentators have considered the possibility that Hudson had no inkling of Lehman’s fraudulent intentions. Either way, the legality of Lehman’s last minute transactions will be an important topic of debate.

Finding the Culprits: Federal Investigation Reveals More Information on the Causes of the Crisis

Since the beginning of the economic crisis, America has been looking for someone to blame. Alan Greenspan and the Fed, the Bush administration, and the bankers of Wall Street have all been popular targets. However, government investigators are not interested in finding individuals to blame but in understanding the poisonous practices of these entities that led to the financial meltdown in the first place. Despite the difficulty and complexity of their work, investigators have turned up a number of decisions made by bankers that should have Americans shaking their heads thinking, “how did they ever imagine this was a good idea?”

Citigroup’s “Liquidity Puts” Make Promises They Cannot Keep

Citigroup is under attack not for conspiracy accusations but for incompetence.  Traders working for the company hoped to increase the sale of securities by adding “liquidity puts” to the deal. A liquidity put means the bank who issued the security promises to buy it back for the price of the sale if the market freezes, which means there are no more buyers. While the idea of millions of investors demanding their money back at a time when no one wants anything to do with the company sounds like one of those “avoid at all costs” situations, the Citigroup traders were operating under the assumption that such a market freeze would never happen. Of course in 2008 that is exactly what happened and Citigroup was forced to pay $25 billion back to investors, forcing a taxpayer bailout of the company.

Citigroup had received multiple warnings that the large amount of “liquidity puts” were a potentially disastrous problem. A 2003 annual report stated a risk of “contingent liquidity facilities” being sold with certain securities, which basically means there was a risk the bank would have to pay a huge amount of investors at once. Another warning came through a memo in 2006 stating that the liquidity puts represented a “severe concentration risk.” This means that a downturn in the banking industry will have a huge impact. But the rapid growth in the sale of mortgage-backed securities prompted Citigroup to continue using liquidity puts to increase demand for their securities. Compounding this problem is the fact that Citigroup also tied liquidity puts to debt securities they sold in order to finance the purchase of more mortgage-backed securities.

The reason why liquidity puts never appeared on balance records and why Citigroup never held any capital to cover possible costs is the same reason why they were so attractive to securities traders. They required a very unlikely circumstance to gain any relevance, a complete freeze on the market. But when the housing bubble crashed in 2008 and mortgage-backed securities became worthless, that unlikely circumstance became a reality. The Federal Crisis Inquiry Commission hearing emphasized that banks need to be aware of the promises they are making investors.  Chairman Phil Angelides remarked, “If you’re having to offer buyers a put back to you, that should be a big red flag.”

At the 2010 Nuclear Security Summit, which took place on April 13 and 14 in Washington, D.C, President Obama participated in discussions geared toward passing reform limiting nuclear stockpiling around the world.  China, Russia, and the United States reached a breakthrough agreement to impose tougher sanctions against Iran and its nuclear objectives.  The aim of the agreement is to ensure terrorists cannot obtain nuclear devices of any kind as they would likely use them.  The United States updated its agreement with Russia made in 2000, which is intended to remove nuclear weapons from both countries’ military programs.  Other countries such as Mexico, Ukraine, and Egypt are also contributing to the task of reducing nuclear dependence through initiatives geared at eliminating highly enriched uranium.  Nuclear reactors used to generate power will be converted to use low-enriched uranium, which is more stable and not effective for producing nuclear weapons.

The Internet in Your Hands… Wait, Doesn’t My Phone Already Have That?

On April 3, 2010 Apple Inc. released its newest gadget, which is sure to make any Apple fan drool.  The long awaited iPad is supposed to revolutionize the way that people browse the Internet, by allowing users to virtually hold entire Web pages in their hands.  Apple Inc. has already sold over 900,000 devices, and most stores are still struggling to keep them in stock to satisfy high demand.  Starting at $499 for the 16GB model and ranging up to $829 for the 64GB model, which includes 3G wireless support, the iPad features Wi-Fi, 10 hours of battery life, and a 9.7-inch screen with multi-touch support.  It can also ready eBooks purchased from the iTunes store, and view two pages at once, where the Kindle limits users to a single page at a time.  The vivid display is also perfect for watching movies on the go.  However, the iPad’s steep price tag will most likely deter casual users from purchasing this device, which has the same essential functionality as an iTouch, lacking flash, multitasking, and the ability to make calls.

Earthquakes Continue

Following the devastating 7.0-magnitude Haiti earthquake, the world has been shaken by several more large earthquakes.  None of them, however, has resulted in the damage or death toll of 230,000 associated with the Haiti earthquake.  Chili was rocked by a magnitude 8.8 tremor that trumped Haiti’s 7.0 rating. However, the fact that the source of the quake, or epicenter, was located deep beneath the earth’s surface meant that the real force that people experienced from the quake felt much smaller.  Moreover, Chili’s buildings are much sturdier than Haiti’s buildings, leaving Chili with only minor structural damages.  All of Southern California was shaken up over the Easter weekend, when a magnitude 7.2 earthquake occurred in Mexicali, Mexico, slightly east of San Diego.  Mexicali suffered minor damages overall, such as cracked roadways and the collapse of a few poorly built houses.  Southern California was largely unharmed.  China was also hit by a magnitude 6.9 earthquake, but no damages were reported.

Staff Writer

China’s stock market is now the second largest in the world behind only the United States.  Measured by market capitalization some of the largest banks and insurance companies in the world are Chinese institutions.  Around 80% of assets in the Chinese banking system are controlled by the largest seventeen companies.  The Industrial and Commercial Bank of China (ICBC) is the largest bank in the world by market capitalization and is ranked 92 of Fortune’s Global 500 in 2009.  ICBC is one of the “Big Four” commercial banks in China along with the Bank of China, and China Construction Bank.

Despite the growing economic crisis, China’s economy has continued to grow robustly.  On February 12 the Chinese Central Bank increased the share of bank deposits that must be held as reserves for the second time this year.  The reserve requirement ratio is the minimum percentage of reserves that banks must hold to total deposits.  Such ratio is not often used as a monetary policy tool by Western central banks, but the People’s Bank of China has recently used increases in the reserve ratio requirements to help combat inflation.

Increasing the reserve requirement ratio can lower inflation because a higher ratio requires banks to keep more money in reserve and consequently have less money to lend.  Central Banks can also increase lending by lowering the reserve requirements for banks.  China’s central bank announced that it will raise the reserve requirement by 0.5% bringing the ratio to 16.5% of deposits to be held as reserves.  By comparison the United States has recently maintained a reserve requirement of 10% and relied on other monetary policy tools such as open market policies.  Open market policies refer to the Central Bank buying and selling previously issued government securities.  Buying government securities creates downward pressure on interest rates while selling government securities creates upward pressure on interest rates.  This ratio increase came sooner than many economists were predicting.  Many other central banks including the U.S. Federal Reserve have begun talking about tightening the money supply but have not yet taken such actions.

Recently China has sought to tighten bank lending standards and to increase their capital ratios as a buffer against potentially bad loans.

Banks tighten lending standards by making loan criteria such as income and outstanding debt more restrictive.  The effect of tightening bank lending standards is that credit becomes more costly and more difficult to obtain.  China’s real estate has garnered attention recently as a potential bubble ready to “pop.”  While real estate prices have been inflating rapidly, many economists think the bubble risk in China is small compared to repercussions experienced in the West.

Some analysts worry that Chinese Banks are in worse financial shape than they appear because the lenders use off balance sheet transactions to make new loans.  In response to this potential problem China has quietly banned certain transactions that allow banks to loan transactions off of their balance sheets.  To increase banking transparency banks are no longer allowed to remove loans from their books by temporarily selling them to lightly regulated trusts.  When loans were sold to trust companies they were repackaged into financial instruments and the banks promised to repurchase the loans any time from one month to several years in the future.  China’s currency, the yuan, has recently come under scrutiny by some of the U.S. officials.  Many economists believe that the yuan is undervalued relative to other currencies.  A country with an undervalued currency has exports that are cheaper to buy for other countries.  This has created trading tensions as cheap imports compete directly with domestic production.  Zhu Min, the deputy governor of the People’s Bank of China, has defended the value of the yuan against pressures from the U.S.  Zhu Min has maintained that the bank will not be making any changes in its currency policy and that a stable yuan is part of China’s stimulus package.  In an interview with Bloomberg News Obama said that the U.S. would pursue “some very serious negotiations” with China about its currency.  A spokeswoman for China’s Ministry of Foreign Affairs on February 4 said that China’s currency was not overvalued and that accusations and pressure from the U.S. will not help solve the issue.

Chinese banks have grown tremendously in the last ten years and are now large and powerful institutions.  As the soon to be largest economy in the world, China has a huge impact on the global economy.  Tensions over China’s currency policies show the wide reaching effects of their decisions.  Robust growth and stable banking policies have created a powerful financial system that has performed impressively resisting the market downturn.