Understanding Risk

When a global financial advisory services firm in Chester County, Pa., looked to expand into Latin America, a team of five students in Lehigh’s Integrated Business and Engineering (IBE) program set out to help the company identify where to go, what to offer and how to do it.

The team considered Brazil, Argentina, Panama and Mexico as potential entry points for Chatham Financial, which is based in Kennett Square, Pennsylvania. In the end, it recommended that Chatham Financial focus its efforts on Colombia, where the economy had been showing signs of renewed growth and where the company already had established contacts.

“It’s an easier-to-penetrate market,” team member Josh Azarchi ’16 told students, staff and faculty as well as a committee that was reviewing the team’s analyses. “It’s growing very quickly, and it’s still in its infancy stages. So it’s easier to get in on the ground floor. There are future prospects for growth, and there are a lot of external and internal supports and investment in infrastructure.”

The team’s hour-long presentation, held in a seminar room in the College of Business and Economics in December, capped a two-semester, six-credit course that allowed the team to assess the feasibility of Chatham Financial’s proposed expansion into Latin America.

Team members Azarchi, Brandon Barton ’16, Trevor Edwards ’16, Michael Holdorf ’16 and Sean Tamlyn ’16 said afterwards that they had been eager to tackle the project, given that they had the potential to have an impact on an established, international company like Chatham Financial, not a start-up.

“It was probably the biggest challenge too,” said Tamlyn, referring to the other IBE projects presented to students.

Offered jointly by the P.C. Rossin College of Engineering and Applied Science and the College of Business and Economics, the IBE program integrates courses in business and engineering with courses in mathematics, science, English, humanities and foreign languages. In the capstone design course, student teams work with faculty mentors on the feasibility of product concepts.

At the start of the January 2015 capstone course, Chatham Financial had been among the companies that had pitched assignments to students. Founded in 1991, the company specializes in the debt and derivatives markets. According to its website, its solutions serve the investment and risk management needs of clients across a spectrum of industries and markets. Currently, the firm has offices in the United States, Europe, Asia and Australia.

In their presentation, the students said they determined that Bogotá and its surrounding region would present the best opportunity for Chatham Financial’s expansion into Colombia, given that the country’s capital city is densely populated and the heart of its business community.

Next the students sought to advise the company on which services to initially offer and which clients to pursue, based on prevailing market needs, projected revenue modeling and the potential cost to the company to provide those services.

Students evaluated the country’s financial institutions, corporate and industrial sectors and its infrastructure. They analyzed energy trends, noting the falling price of crude oil, and telecom trends, noting the projected growth of the country’s population in the next five years and mobile phone usage. They identified potential clients and took note of the company’s likely business competitors. They considered obstacles, such as the fact that most of the company’s employees are English-speakers, not Spanish-speakers. They developed a market strategy for building a client list.

“So, what have we learned?” said Holdorf. “We believe that Chatham [principals] should attack the financial institution sector first, and by doing that, they can start to grow their reputation and establish their connections and then use those connections and their established reputation to attack the corporate sector. We believe that’s the smartest plan of attack for entering Colombia.”

And, the students said, if potential clients demonstrate a need for Chatham Financial to have a physical office in Colombia, and if the company believes it can grow its client list faster if it does have one, it makes sense to establish an office there right away.

Following the presentation, the team was questioned by a panel of students in Lehigh’s technical entrepreneurship program who offered another perspective on the analyses. The question-and-answer segment helps IBE teams hone their critical thinking, presentation and communication skills.