SEBA PRESENTATION Radisson Hotel South

January 21, 2010

NAIT

9 Academic Schools

85,000 Full and Part-Time Students

Delivers Training and Education in 23 Countries

Certificates, Diplomas, Applied Degrees and Degrees

Has identified Applied Research as a Strategic Focus

Is The Largest Apprenticeship Trainer in Canada

JR Shaw School of Business

Serving Albertans for more than 40 years

Average more than 2,000 students per year

Diplomas, Applied Degrees and Baccalaureate Degrees

Has had 2 Research Chairs endowed by JR Shaw

Faculty facilitate the delivery of CBUs MBA

One of the largest business schools in Western Canada

Baccalaureate Degrees

FUS established to manage all degrees at NAIT

BBA and BTECH-Technology Management

New Health Informatics Degree CAQC approved

BTECH Construction Management being reviewed

BBA has received CASB, CMA and CGA approval

On-line, evening, week-end [24-7] delivery modes

New focus on credential enhancement for working learners

The Business Faculty

More than 110 full-time teaching faculty

Approximately 20 are pursuing or hold PhDs

36 hold professional designations CA, CGA, CMA, CFP

90% are pursuing or hold a minimum of a Masters degree

Average 12 and 13 years of industry and PS experience

A reputation for quality teaching for more than 4 decades

Purpose

To try to put the events of 2009 in context

To identify how businesses are affected by these events

To inform you about what NAIT is doing to help

To answer any questions you may have

Global Uncertainty Prevails

Economically and financially, we are in unchartered waters

Regulatory failure and excessive risk taking has led to a banking meltdown that triggered a global financial crisis.

Significant regulatory restructuring is required

Massive fraud has resulted in shareholder losses that total in the billions which may have negative long-term effects

and implications for investor confidence and markets

BRIC countries are positioned to rival US economically and can be expected will leverage their improved economic

positions for further gain in 2010 and beyond

Jack WelshWorld Business Forum, NYC, September 24, 2008

I believe that we are in for a hell of a timea deep downturn. The first quarter of next year will be brutal

We will be slow to get out of it, de-leveraging is huge. Got to get our balance sheets back; to free up markets

For all of you here running a company, you have to take action, dont ponder. Get ready for real tough times.

Get your cost structure in place. Be sure you are not over-leveraged. Take care of your best people

Michael PorterWorld Business Forum, NYC, September 24, 2008

Refocus on economic fundamentals. Stay focused on the strategy. Dont over react to distressed conditions

Make sure you are cutting costs and restructuring towards a strategy, rather than cutting across the board

Take advantage of opportunity. When the market is down, get into a fundamentally good (better) position

Seize opportunities for restructuring and dont be afraid to make discontinuous moves if they become available

US-Canadian Situation

Our economy is highly dependent on the US economy. US Federal debt obligations in 2009 are 74.6-trillion (est.)

Job loss is 323,000 from 2008 high. Unemployment: 8-9%. Rising unemployment will increase defaults on existing

credits which may trigger a second round of credit tightening a clear threat to recovery

Recovery has been aided by low interest rates which will rise as last years crash in energy/metals prices wears off - which could trigger inflation and unwind stimulus

Protectionist trade actions are gaining momentum and currency risk could damage exports and recovery

CFA Forecast DinnerShaw Conference Centre, January 20, 2010

Stefane MarionChief Economist & Strategist, National Bank Financial

Gary Smith, PhD, CFAChief Economist, Alberta Investment Mgt. Corp (AIMCo)

Gary Chapman, MBA, CFAManaging Director, Guardian Capital LP

2010 Financial Forecast

No consensus, de/inflationary camps, crisis of confidence

Weak US appetite for borrowing/lending, de-leveraging

Cautious, conservative, crisis of confidence, hopeful?

Improvement is expected but ragged and inconsistent

Overall, 5% TSX, S&P; CADUSD; Oil USD $75-92;

30 Yr. Bonds 5%; Gold USD $800-1,320

2009 in Retrospect

Financial fallout continues bankruptcies reach new high

Retrenching in Afghanistan US commits 30K more troops

Iran and Iraqs fraudulent election results and protests

Divisive US debate on healthcare reform. Is it affordable?

H1N1 pandemic global vaccine supply distributed

G20 replaces G8 as main global economic forum

PSE Global Trends

Demand for global business education is rapidly increasing

Transformation continues to be driven by globalization, technology, demographics and social imperatives

Privatization, marketization, QA and internationalization

Doctoral faculty shortages are a reality

Intense competition for students and funding continues

Financial stewardship is becoming an issue

A New Experience?

Our expansion was larger so the downturn is larger than anything that we have experienced before

Consumption excesses in the West became production excesses world-wide so the contraction is global

Since the growth cycle was so long (16 years) this is the first downturn for many businesses and policy-makers

Our economy is beginning to recover. But, will it last?

Some views from JRSSBs Finance Caucus . . .

Mustaq Ahmad, PhD

Biography

Education: Economics (Illinois)Position: InstructorIndustry Exp: 2 yearsTeaching Exp: 24 yearsExpertise: Economics

Curriculum DesignProf. ConsultingPublications AuthorApplied Research

Anna Beukes, PhD*

Biography

Education: Economics (S.A.)Psychology (S.A.) *ABD (Finance)

Position: InstructorIndustry Exp: 12 yearsTeaching Exp: 15 yearsExpertise: Investment Banking

Financial AnalystProf. ConsultingApplied ResearchPublications Author

Ivan Ourdev, PhD

Biography

Education: Com Physics (Alberta)Position: InstructorIndustry Exp: 13 yearsTeaching Exp: 4 yearsExpertise: International Business

CommercializationApplied ResearchFinancial ServicesProf. ConsultingPublications Author

Richard Ford, PhD

Biography

Education: Business (Cranfield)Position: InstructorIndustry Exp: 20 yearsTeaching Exp: 10 yearsExpertise: Supply Chain Mgt.

Operations/LogisticsBest PracticesProf. ConsultingApplied ResearchPublications Author

Andy Igonor, PhD

Biography

Education: Business (Bristol)Industry Certification

Position: Associate ChairIndustry Exp: 12 yearsTeaching Exp: 10 yearsExpertise: Information Tech

Info/Bus SystemsProf. ConsultingApplied ResearchPublications AuthorCurriculum Design

Doug Short, MBA

Biography

Education: Business (Alberta)Position: Chair, FinanceIndustry Exp: 16 yearsTeaching Exp: 27 yearsExpertise: Textbook Author

Curriculum DesignFinancial ServicesProf. ConsultingApplied ResearchCase Studies

National Expectations

The recovery will be more gradual/onerous than expected

Regulatory reform is required to stabilize markets

True recovery wont happen until private demand resumes

G20 policy, US debt, increased protectionism are factors

Rising unemployment and inflation could slow recovery

Economy, climate change, nuclear diplomacy are priorities

Is Alberta Better-Off?

Credit is slowly coming back into the banking system

Cautious businesses are increasing their equity positions

Oil prices and Sands spending is expected to be up in 2010

Construction costs are down fueling increased building

Gas royalties have declined triggering government cuts

Climate change regulation/requirements is still unknown

Recovery in Alberta is expected to arrive in late 2010

What It Means for Business

We are recovering but there are more bumps ahead

Take the time to prepare for set-backs and opportunities

Carefully assess your business risks and vulnerabilities

Identify and prioritize short-term readiness initiatives

Broaden focus, prepare for multiple scenarios

Globally, keep your eyes on China

Why Watch China?

They have less debt/financial obligations than the US

Demographics/cost structure are more favorable than US

Consumer goods trade generates a huge surplus

Quality of life, education and training are improving

Developing technology around old-economy manufacturing

Economic and Financial firepower is substantial

Can be expected to push position

Some Key Questions

Are the right people in the right roles?

Have the key risks facing your business been identified?

Is decision-making being responsive to market changes?

Are resources being allocated to support key value drivers?

Have costs, customers and suppliers been prioritized?

Are stakeholders informed and involved?

Assessing Business Risk

BUSINESS MODEL

Key People, Products, Services, Channels

Information I-Technology Equipment

STRATEGIC COMPETITIVE ADVANTAGE

Customer Value Proposition, Profit/Loss

BrandPartnerships Alliances Stakeholders

EVALUATION

LEVERAGE

REQUIREMENTS

KEY PROCESSES

Short-term Readiness

Increase efficiency, manage cash flow (Cash is King)

Cut nice-to-haves, reduce debt and other liabilities

Be credit conscious; aggressively manage working capital

Focus equally on customer and key employee retention

Improve customer services/incentives; enhance marketing

Leverage proven products/services; delay LT investments

Consider Multiple Scenarios

Several scenarios should be considered

Conventional business models may no longer be viable

Management teams should be assessing options

Implementation plans should be developed

Ensure all stakeholders are involved

Ensure an effective communication strategy is in place

Action Summary

Make adjustments and/or cuts for new realities

Continue to invest in core strengths and key resources

Communicate, Communicate, Communicate

Offer employees incentives and customers new solutions

Maintain pricing and focus on capital (and how its used)

Evaluate efficiencies related to out-sourcing/off-shoring

Upgrade your personnel and consider acquisitions

Contributing to Our Community

Through JRSSBs Community Connections initiative, faculty are able to provide Edmonton-based businesses with a strategic business risk assessment (as above)

All assessments are coordinated through my office

If you are interested in taking advantage of this business risk assessment opportunity, call 780-491-3008

Thank you!

Slide 1NAITJR Shaw School of BusinessBaccalaureate DegreesThe Business FacultyPurposeGlobal Uncertainty PrevailsJack Welsh World Business Forum, NYC, September 24, 2008 Michael Porter World Business Forum, NYC, September 24, 2008 US-Canadian SituationCFA Forecast Dinner Shaw Conference Centre, January 20, 20102010 Financial ForecastSlide 132009 in RetrospectPSE Global TrendsA New Experience?Mustaq Ahmad, PhDAnna Beukes, PhD* Ivan Ourdev, PhDRichard Ford, PhDAndy Igonor, PhDDoug Short, MBANational ExpectationsIs Alberta Better-Off?What It Means for BusinessWhy Watch China?Some Key QuestionsAssessing Business RiskShort-term ReadinessConsider Multiple ScenariosAction SummaryContributing to Our Community