Surviving (and Thriving!) in a Globalizing World

Globalization

In 1990, only 1/3rd of S&P 500 Revenues

Came from OUTSIDE the U.S.

Today

It’s HALF

by 2025, over 2/3rd Of Revenue

will be INTERNATIONAL

Are YOU

ready?

Is YOUR

organization?

Phase 1

Raw materials from abroad

Phase 2

Manufacturing Inputs from

Abroad

Phase 3

Innovation and R&D from Abroad

Phase 4

Sales Generated from Abroad

1970s 1980s 1990s 2000s and Beyond

Developed Countries’ Economic Dependency on the Rest of the World

Think these trends don’t affect you?

Think again.

Fact:

American companies increasingly look to foreign talent pools to gain competitive advantage in a globalizing world.

There is a Business-driven Shift in Recruiters’ Focus on Languages:

As fortunes are increasingly tied to global sales…

Foreign Sales’ Growing Weight Sales Abroad per $1 of Domestic Sales, S&P 500 Companies

$0.64$0.75

$0.87

$1.06

$1.31

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Globalizations’ Impact on Profitability % of Executives Expecting Positive Impact, 2010

Increasingly Global Markets for Labor and Talent

Shift of Economic Activity Between and Within Regions

Growth of Consumers in Emerging Economies 64%

51%

50%

…American companies naturally emphasize multilingualism in their recruiting efforts.

U.S. Recruiters’ Hiring Preferences Q2 2010

33%

50%

Will be hiring bilinguals Will prefer a bilingual over a non-bilingual, all else equal

Coupled with a Widening Skills Gap:

While American children face diminishing and limited access to foreign languages at school…

U.S. Public Schools with Foreign Language Programs 1997 vs. 2008

24%

75%

15%

58%

Elementary Schools Middle Schools

1997 2008

Languages Most Frequently Offered at U.S. Secondary Schools 2008

93%

46%

14% 13% 4% 4% 3% 0.6% 0.3%

Spa

nis

h

Fren

ch

Ger

ma

n Latin

Chi

nes

e

Italia

n

Japa

nese

Ara

bic

Rus

sia

n

A “dead” language is offered more often than

languages spoken in markets that are major U.S. trading partners.

…their European counterparts graduate from school speaking at least one foreign language.

Language Learning Among Upper Secondary European Students EU Average, 2007

2+ Languages

60%

1 Language

33%

No languages

6%

Forces Increased Talent from Abroad:

Recognizing the wide gaps in language proficiency between American workers and their foreign counterparts…

Proficiency in Foreign Languages Beyond Beginner Level % of Active Language Learners, 2007

23%

33% 33% 40% 42%

54%

45% 47%

57%

vs. vs.

...many companies look to poach talent from abroad…

Growth in Number of Foreign Workers H1B Visa Petitions by Top 1000 Employers of Foreign Workers

99,426

143,769

2005 2008

3-Year CAGR = 13%

4

14

2000 2010

….even at the CEO level.

Foreign-born CEOs Fortune 100 Companies, 2000 vs. 2010

Fact:

Fulfilling multicultural and multilingual business needs exclusively through hiring foreign-born talent is not sustainable.

The Lure of Fast-growth Developing Countries:

The staggering pace of business activity in parts of the developing world…

Real GDP Growth USA vs.BRIC Countries, 2000 through 2009

1.88%

3.31%

5.30%

7.01%

9.91%

USA Brazil Russia India China

vs.

Change in M&A Activity Q1 2010 over Q1 2009

USA -11%

Europe -3%

Asia-Pacific (incl. Japan)

79%

Asia-Pacific (excl. Japan)

126%

…coupled with the arbitraging effect of lower cost of living in these countries…

The Illusory Wage Gap Average Salary for 5-9 Years of Experience, 2010 Duty

…presents lucrative opportunities for professional development and career advancement.

Returnees’ Careers on Steroids % of Returnees Holding Senior Management Jobs, 2008 Data

Reverse Brain Drain Further Exacerbates the challenge:

The promise of a brighter future abroad...

Positive Outlook on Future Economy % of Immigrants Studying in the U.S.,2008 Data

…and governments’ efforts to lure talent back home...

Concerted Global Recruitment Efforts Case in Point: China

 Special chapter on Human Resource Development in 5-year Plan  “One Thousand Talents Scheme” to recruit global academic and managerial talent.

 $150,000 one-time subsidy for high-potential employees moving to work in China.  Special service to help foreign professionals handle immigration paperwork and get settled.

...are starting to crowd American recruiters out of the labor market for international, high-potential talent.

MBAs Taking Jobs in Asia % of Graduates from Top 10 U.S. Business Schools

Serious Competition from Foreign Recruiters Case in Point: Samsung in 2009

 50 non-Korean MBAs from top 10 U.S. business schools signed for Samsung’s Global Strategy Group (100% year-over-year increase).

 16 graduates hired from Kellogg alone – more than the combined number of graduates hired by U.S. giants Proctor & Gamble and General Mills.  Jobs offer early opportunity to advise top Samsung executives on internal consulting projects.

Cumbersome and Uncertain Processes add to the Challenge:

Current U.S. Immigration quotas that accommodate only a portion of yearly work authorization cases…

Supply-Demand Imbalances 2008 Work Authorization Applications Situation

163,000 H1-B applicants

BUT

85,000 Annual cap on new H1-B visas

1 Day Available visas ran

out on the day after the

application process started.

+ Random Lottery Lucky applicants

selected through a random computer

lottery.

78,000 Foreign-born, highly skilled workers that

could not be hired by American companies due to lack of available visas.

Fact: American companies seek to develop linguistic awareness amongst their employees through offering language training support.

Multilingualism is now a Critical Component of Employees’ Skill Set:

Companies increasingly consider foreign language proficiency a critical part of their employees’ skill set…

Importance of Speaking a Foreign Language 2009 Data

…and many have already started offering subsidized or free training opportunities to their personnel.

Provision of Language Training 2009 Data

Look into the Near Future:

Companies that consider foreign language proficiency important but do not currently offer language training often compensate for the skills gap by hiring already multilingual staff…

Top 3 Reasons for Not Offering Language Training Support 2009 Data

36%

…however, as they face increasing difficulties recruiting international talent, language training increases.

Anticipated Near-term Changes in Corporate Language Training % of Companies Expecting Increases, 2009 Data

Fact: Innovative technology can be leveraged to deliver effective, scalable language training across an organization.

A platform approach that is engaging, effective, and easy-to-implement is the answer:

Technology-based platforms offer scale...

Foundational Language Learning Platform

REACH

Foundational Learning

Operational Proficiency

Expert Fluency

Linguist

...measurability, and value.

Foundational Language Learning Platform

REACH

Foundational Learning

Operational Proficiency

Expert Fluency

Linguist

INVESTMENT

•  The ideal platform offers: –  Language breadth –  Management platform/

LMS integration –  Scalability/accessibility –  Motivation and learner

engagement –  Effectiveness

Rosetta Stone Enterprise TOTALe™ a Robust E3 Language-Learning Platform:

The Ideal Platform Delivers the Right Content in the Right Way…

  No translation   Adaptive RecallTM

  Adjusts to user needs   Audio CompanionTM

  Response to user action   Speech, text, click   Models correct way   Real-time applicable

  Patterned input   Helps discover meaning   Thought and play   Keeps users motivated

  Proprietary technology   Emphasizes interaction   Helps develops skills   Builds confidence

  Most natural method   Simulated dialogues   Native-speaking coaches   Connect with other users

Intelligent Sequencing

Actionable Feedback

Natural Discovery Speech Activation Native Socialization

Rosetta Stone Enterprise TOTALe

RosettaCOURSE™

RosettaSTUDIO™

RosettaWORLD™

Fact: Rosetta Stone delivers award-winning enterprise language-learning platforms that develop the language advantage for thousands of organizations all over the world.

Recognized Effectiveness:

Outstanding Reviews, Trade Recognitions, and Academic Validation…

Outstanding Reviews

“Gold standard.” “Next best thing to living in a country.”

“A thousand times more engaging than audio tapes.”

“Unrivaled.”

Trade Recognitions

Academic Validation

Independent 2009 study:

95% confidence that average user will meet requirements of full semester in college after 55 hours of using Rosetta Stone.

Embraced by Organizations Worldwide: