Content provided by Paul Vaaler of the Carlson School

G’day from Down Under! This week, I am writing from Melbourne, Australia. I am giving a couple of talks at Melbourne-based Monash University: Monash is massive: 48,000 undergrads; 21,000 grad students; multiple campuses located around Melbourne; one of the Big Eight Australian Research Council universities. I’ll be talking to faculty and grad students in the School of Social Sciences, which includes Business and Economics but also other social sciences like Sociology and Geography. And I have to tell you that it is beautiful here. November in Melbourne is like May in Minneapolis: warm (but not hot) sunny days and cool nights without mosquitoes (but with eucalyptus trees). It’s great to be visiting here.

It’s also interesting from a Minnesota business perspective. I’m staying in an eastern suburb of Melbourne called Glen Waverly, which is home to the Australia subsidiary headquarters of 3M ( and General Mills ( Melbourne has historically been the economic center of the country. The largest domestic manufacturers and banks are here, so it’s not surprising that many Minnesota multinationals would locate here as well.

Those companies have seen substantial growth and profitability in recent years, but the last few months have seen a slow-down in growth, that’s attributable in part to national politics and in part to international politics. Let’s start with the international politics. President Trump’s decision to pull-out from the Trans-Pacific Partnership was a blow to the exporting plans of many domestic Australian firms that might otherwise have had freer market access to the US and the other TPP signatories like Japan and South Korea. The domestic politics have to do with the tenuous position of the current national government in Canberra. Australia has a parliamentary system and the majority in parliament is a coalition of Liberal Party and National Party (from Queensland) members. But the majority is a majority of only one, so there is no room for ambitious pro-growth policies (e.g., tax-cutting). There are a few by-elections coming up in December. If the Liberal-Nats lose just a couple, then it’s the end of the current government. Business and finance don’t like uncertainty and markets here are showing it:

Meanwhile back in Minnesota and the US, November is seeing some big corporate moves with big reactions. Locally on Tuesday, we found out that Roark Capital made an offer of more than $150 per share, or more than $2.3 billion, a source familiar with the matter told US financial media. This sent BUFFALO WILD WINGS (BWW) shares skyrocketing as much as 27 percent Tuesday: Roark specializes in owning fast-food businesses like Hardees and Jimmy Johns. If Roark pays $2.3 billion it would cash out the current hedge-fund and activist investor, Marcato Capital, for about the same value that it bought into BWW earlier in 2017. Marcato sought a change in strategy at BWW, ultimately winning a proxy fight to get that change last June. Since that win, shares have drifted down. So Marcato doesn’t really “win” anything if this acquisition goes through. For BWW, it almost certainly means cuts in headquarters staff.

Nationally, I think the big story is General Electric. New CEO John Flannery unveiled a plan to turn around the manufacturing and financial conglomerate. And Wall Street analysts criticized it as too little too late to turn around ailing key businesses like lighting: The stock has tumbled 20% this year when stocks generally have increased more than 20%. Flannery may not be responsible for the slow growth and administrative bloat at GE, but he is responsible for sending a strong message to analysts that he’ll turn those trends around. So far the Street thinks Flannery is offering only half measures. And the Street can be brutal with half measures. Look for announcement of big headcount reductions at GE in January.

Next week, I’ll be back in Minneapolis for another edition of Business by Carlson. Since it will be the Wednesday before Thanksgiving, we’ll be giving out awards for the biggest business blunders of 2017. Yes, Dave and I will be co-hosting the Third Annual Golden Business Turkey Awards. And there are more than enough blundering businesses –gobblers galore– to make this year extremely competitive. The awards committee is heading down to the Carlson School basement kitchen to start their final deliberations. And snack on some Carlson School basement kitchen chimichangas. Good luck committee members. See you next week to learn who they picked as this year’s Golden Business Turkey winner.


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