The 30 Day MBA (2 page)

LIST OF TABLES

Introduction

• The real value of an MBA
  
• What an MBA knows
  
• Why YOU need that knowledge too
  
• Where to get MBA knowledge – from the best schools (not just from one)
  
• How to use this book
  

T
he value of MBA knowledge has been put to the test in the years following the world credit crunch. When Lehman Brothers, a bank that had survived the great depression of 1929, collapsed, the queues of their employees exiting their offices worldwide clutching cardboard boxes of their personal effects included the alumni of almost every top business school. The 2012 edition of MBA Application Trends, produced by the Graduate Management Admissions Council (GMAC), the leading source of research and information about quality graduate management education, reveals a reassuring confidence in the value of the MBA. The 13th since GMAC introduced the annual survey in 2000, it included more participants than ever before: a record-breaking 744 programmes were represented in the survey from 359 business schools. Two-thirds (66 per cent) of participating schools were located in the United States; however, a record percentage of programmes (34 per cent) from elsewhere in the world are represented in their findings.

The percentage of MBA programmes that experienced increased application volume in 2012 ranges from 41 per cent to 66 per cent, with two year full-time programmes represented by the lower figure and online/distance learning MBAs the higher. This growth in demand looks set to continue; based on applications for 2012–13 some 51 per cent of business schools noted increased application volumes.

There is also clear evidence that the market respects the knowledge gained on MBA programmes and is prepared to pay accordingly. Sue
Kline, Acting Director of Career Development at MIT Sloan School of Management, in their 2011/12 MBA Employment Report showed demand for MBAs was high from every sector of the economy. High-tech firms such as Apple, Amazon, Groupon, Google, Microsoft and TripAdvisor vied with banks – Bank of America Merrill Lynch, Bank of Tokyo-Mitsubishi UFJ and Barclays Capital – and the kings of consulting AT Kearney, Boston Consulting Group and Bain & Company to hire from MIT. More conventional firms such as BP, Cisco, Union Pacific Railroad Company and public and quasi-public sector bodies – United States Department of Energy and the National Basketball Association – all took on MBA graduates last year. Salaries were respectable too, with mean base salaries at around US $120,000 (€92,300/£80,400) a year, with those going into venture capital or hedge funds clocking a mouth-watering US $215,000 (€165,500/£144,000).

Business Schools have been assimilating the lessons from the credit crunch and built that knowledge into their teaching programmes. Columbia Business School in New York, recognizing that the dynamics of business post-credit crunch required a greater degree of interdisciplinary cooperation, offered their faculty the chance to earn an extra US $30,000–US $40,000 (€21,600–€28,900: £19,000–£25,400) a year. To get this bonus they had to instigate research with professors from other departments within the school. Glen Hubbard, the school's Dean, claims one of the things that quickly became apparent in the financial crisis was ‘how business people failed to connect the dots'. The shifting balance of economic power from West to East has led business schools to forge partnerships with schools on other continents, and to review their teaching strategies. Wharton, for example, unveiled a new MBA curriculum, the result of a year's worth of study and work by the faculty implemented in the Class of 2013.

This new edition will keep you up to speed with the very latest thinking and teaching from the world's top business schools. The learning material, research and teaching resources contained here have been drawn from a score of the world's very best business schools. By reading this book you will be mirroring the fastest growing trend in MBA teaching – distance learning. You will also be gaining an insight into the programmes of more than 20 top business schools (see
Table 0.1
), rather than just the one that regular MBA students attend.

TABLE 0.1
  
Top Ranked World Ranked Business Schools (FT Global MBA Rankings)
2012
: teaching, research and learning resources drawn on for this edition

What is MBA knowledge?

Business schools have tended to complicate and intellectualize the subject of business but it basically boils down to a dozen disciplinary areas, each with a number of components. The disciplines contain the tools with which you can analyse a business situation effectively, drawing on both internal information relevant to the business and external information on its markets, competitors and general business environment as a prelude to deciding what to do.

The emphasis here in the contents of this book is on the terms ‘concepts' and ‘tools'. The business world is full of conflicting theories and ideas on how organizations could or should work, or how they could be made to work better. They come in and out of fashion, get embellished or replaced over time. Even concepts that appear to be new are often little more than old ideas revisited. Quantitative Easing (QE), for example, a term that took the economics world by storm in 2010, was in fact first coined in September 1995 by the economist Dr Richard Werner, Professor of International Banking at the School of Management, University of Southampton (UK). The idea of QE is itself over 200 years old having first been used in 1797 by the government of a British Prime Minister, William Pitt the younger, in response to a request by two Bank of England directors.

In business, for example, there is no such thing as a universal optimal capital structure, or the right number of new products to bring to market, or whether or not going for an acquisition is a winning strategy. What's best in terms of, say, a debt to equity ratio varies with the type of organization and the prevailing conditions in the money market. That ratio will be different for the same organization at different times and when it is pursuing different strategies. Layering an inherently risky marketing strategy, say diversifying, with a risky financing strategy, using borrowed rather than shareholders' money, creates a potentially more risky situation than any one of those actions in isolation. But whichever choices a business makes, the tools used to assess financial and marketing strengths and weaknesses are much the same. It is the concepts and tools to be used in those disciplines that this book explains, and it shows you how to use both of these individually and to assess a business situation comprehensively.

The MBA disciplines

These are a dozen or so core disciplines that comprise the subject matter of an MBA programme. Many business schools eschew some vital elements within these disciplines as they are considered either too practical, unsexy from a research/career prospective or more skill or art oriented than academic. A prime example is the field of selling, which fits naturally into the marketing domain but, much to the surprise of MBA students, often fails to appear on the syllabus. There are thousands of professors of marketing, distribution and logistics, market research, advertising, industrial marketing, strategic communications and every subsection of marketing, but there are no professors of selling. Yet most employers, and students for that matter, feel that their MBA's value would be enhanced by a sound grounding in selling and sales management.

Some business schools miss out personal development, social responsibility and ethics, entrepreneurship, business planning or even quantitative methods.
Almost all of them miss out business history – a core subject at Harvard – and business law – essential at all top schools. You will find all of these disciplinary areas covered in this book.

Accounting

This covers the basic assembly and interpretation of raw financial data, from double-entry bookkeeping through to the construction of the key accounting reports – income statement/profit and loss, cash flow and balance sheet. It con-tinues through to the accounting concepts and ground rules and the auditing process and the tools required to access a business's financial health and performance.

Business history

This is a brief review of the processes that led to the creation of the types of business enterprise we have today, showing how they came about, their significance and development. The main area covered is the development of modern industry from 1800, but the trading laws and business structures created in Babylon and the activities of mediaeval merchants are also relevant to an understanding of the pedigree of today's business environment. The watchword here is: ‘Those who cannot remember the past are condemned to repeat it.'

Business law

From intellectual property, employment and legal structures, through to the laws governing contracts and corporate governance, organizations are constrained in their actions by local and international laws.

Economics

In the 1990s there was a prevailing view that globalization and technology would check inflation and keep prices so low that consumers would keep consuming. The death of the economic cycle was announced alongside the birth of the ‘long boom'. Today, those same forces are credited with creating a more volatile world with more violent economic swings. For the manager, a grasp of elements of macro and microeconomics is essential to making sense of the business environment.

Entrepreneurship

Until the late 1980s entrepreneurship was a paragraph or two in an economics textbook. The discovery by David Birch, a researcher in the United
States, that small and new businesses accounted for over 80 per cent of new jobs propelled entrepreneurship from a footnote to a core discipline important equally to potential participants and government policy makers.

Research into entrepreneurship published in 2010 has brought a biological dimension into play. Research at Case Western Reserve University in Ohio and NUS (National University of Singapore) Business School shows how genes interact with different types of environment to create conditions either more or less favourable to producing entrepreneurs and leaders.

Ethics and social responsibility

One of the primary goals of business is to make the world a better place. Until recently this was something that business moguls did after a lifetime of being responsible for oil spills, deforestation and generally polluting the planet. Sure, Exxon can't solve the world's energy problems and Wal-Mart and Nike can't solve the poverty experienced by the 250 million child workers and their families. But increasingly businesses are being required to work within accepted guidelines and to take part in the debate about morals and responsibilities. Monsanto alone can't decide whether genetically modified crops are safe or desirable and stem cells and cloning are not subjects where it can be left to industry alone to set boundaries. But those working in an industry have a wider constituency than their shareholders and their own careers.

Finance

Finance covers the vital areas of where a business gets its money from and the risks and responsibilities associated with each of those sources. Debt, equity, bonds, debentures, IPOs, private equity and business angels are part of this area's vocabulary, as is appraising capital investment decisions.

Marketing

The outward face of a business is addressed to its customers and its success or failure is the measure of how well it performs in the marketplace. Markets have to be identified, product attributes accessed, competitors understood and advertising messages developed to reach chosen markets. Marketing is perhaps the discipline with the largest number of misunderstood and misapplied business tools of all.