Your business is radically changing: In 1990, only one-third of S&P 500 revenue came from outside the United States; today it is half. By 2025, more than two-thirds of revenue will be international. During the past 40 years, developed countries’ economic dependencies on the rest of the world have shifted to sales and consumption. Ninety-five percent of the world’s consumers live outside the U.S., causing businesses to place a premium on globally savvy employees. While globalization yields significant challenges, it also offers potential for incredible reward. Leaders must position their organizations to leverage these opportunities. Expecting to hire foreign-born talent is unrealistic, especially in light of the current reverse brain drain. Are you ready? Pete Rumpel, Vice President, Institutional Markets, Rosetta Stone Ltd.

1. Surviving (and Thriving!) in a Globalizing World

2. Globalization

3. In 1990, only 1/3rd
of S&P 500 Revenues
Came from OUTSIDE the U.S.

4. Today
It’s HALF

5. by 2025, over 2/3rd
Of Revenue
will be INTERNATIONAL

6. Are
YOU
ready?

7. Is
YOUR
organization?

8. 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

9. Think these
trends don’t
affect you?

10. Think again.

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

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

13. 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

14. 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%

15. …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

16. Coupled with a Widening Skills Gap:

17. 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

18. Languages Most Frequently Offered at U.S. Secondary Schools
2008
93%
46%
14% 13%
4% 4% 3% 0.6% 0.3%
Spanis
h
French
Germa
n
Latin
Chines
e
Italian
Japane
se
Arabic
Russia
n
A “dead” language is
offered more often than
languages spoken in
markets that are major
U.S. trading partners.

19. …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%

20. Forces Increased Talent from Abroad:

21. 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.

22. ...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%

23. 4
14
2000 2010
….even at the CEO level.
Foreign-born CEOs
Fortune 100 Companies, 2000 vs. 2010

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

25. The Lure of Fast-growth Developing Countries:

26. 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.

27. Change in M&A Activity
Q1 2010 over Q1 2009
USA
-11%
Europe
-3%
Asia-Pacific
(incl. Japan)
79%
Asia-Pacific
(excl. Japan)
126%

28. …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

29. …presents lucrative opportunities for professional
development and career advancement.
Returnees’ Careers on Steroids
% of Returnees Holding Senior Management Jobs, 2008 Data

30. Reverse Brain Drain Further Exacerbates the challenge:

31. The promise of a brighter future abroad...
Positive Outlook on Future Economy
% of Immigrants Studying in the U.S.,2008 Data

32. …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.

33. ...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

34. 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.

35. Cumbersome and Uncertain Processes add to the
Challenge:

36. 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.

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

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

39. Companies increasingly consider foreign language
proficiency a critical part of their employees’ skill set…
Importance of Speaking a Foreign Language
2009 Data

40. …and many have already started offering subsidized or free
training opportunities to their personnel.
Provision of Language Training
2009 Data

41. Look into the Near Future:

42. 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%

43. …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

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

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

46. Technology-based platforms offer scale...
Foundational Language Learning Platform
REACH
Foundational
Learning
Operational
Proficiency
Expert
Fluency
Linguist

47. ...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

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

49. 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

50. Rosetta Stone Enterprise TOTALe

51. RosettaCOURSE™

52. RosettaSTUDIO™

53. RosettaWORLD™

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

55. Recognized Effectiveness:

56. 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.

57. Embraced by Organizations Worldwide: