Adonis Diaries

Posts Tagged ‘balance sheets

MBA mania: Introspection

After the latest financial crash, MBA graduates are having hard time finding jobs:  Banks, financial institutions, and financial consulting firms have realized that they need graduates in fields that produce added values.

Wall Street has put to pasture over 250,000 MBA employees since 2007.  The US business schools used to graduate over 150,000 MBA degree holders per year before the crash, and the trend is reversing.  More than half these graduates were foreigners who invested over $80,000 (of family wealth).

For example, India is spending over $4 billions a year for Indian students going after graduate studies in the USA and England universities.  Renowned MBA schools are re-structuring their programs and hiring new teams to re-thinking what is needed for the market.  Re-thinking MBA programs was long due; it is better late than never.

I was once, long time ago, enrolled in a PhD program in Industrial engineering.   There were not enough graduate Human Factors courses in the PhD program: the human factors field was not well developed as the other industrial engineering specialties, and the university lacked enough qualified professors in that field.

I was lucky to complement my course requirements in many other departments that offered me new perspectives and approaches to the human element in all these artificial man-made systems.

I enrolled in a couple of graduate courses in the Psychology department and I felt at home; my heart got set on the cognitive aspect of human capabilities and limitations (functions of the brain) instead of the physical aspects (known as Ergonomics and the modeling of the human body).  Thus, I ended up taking courses in various departments such as marketing, business, economics, education and others departments to fulfill the required number of graduate credit-hours.

I had taken many courses with various statistical modeling and software analysis programs frequently used in marketing, business, psychology and econometrics.

Once, I had audited and did all the homework and exams for the Pascal programming language course in the psychology department because I could not afford to pay tuition; professor Getty gave me credits the next semester when I paid for the course without having to attend it.  I was hooked to the cognitive field in Human Factors but my adviser would have none to do with cognition for my dissertation because he was not interested in such a field, and it was not in his line of business of forensic safety.

This post is meant to explaining a few of the graduate courses in business that I suppose are required for an MBA program.

The marketing course was basically a higher statistical course involving a dozen statistical models or experimental designs appropriate to marketing products and investigating customers preferences and the like targets.  It was so broad and so intense that I felt at a loss for the first two weeks.  I doubt that these kinds of courses are offered in most business school: I think Dr. Hughes was a perfectionist, wanted to cover everything under the sun in a single course, and she never tired of pressing us to work harder.

The graduate accounting course was a let down; I was crest fallen.  I expected that this is going to be an interesting introduction to the business field but I soon discovered that accounting is basically knowing the laws, rules, and regulations of how to understand and prepare accounting sheets.  The regulations were so unfair, illogical, and obtuse that it made me angry to satisfying them just to pass the course.

Accounting is a compromise field among the members of the accounting order and the multinational institutions in order to cover up unfair practices.  I learned to comprehend and interpret balance sheet and working fund and what companies are asked to publish for their shareholders and government requirements.

I learned that the most important parts in accounting information are the notes written in the tiniest characters accompanying the sheets, like the ones you find in legal contracts.  The notes tell the real story of the difficulties and problems of a company such as legal liabilities, court investigations, high short-term debts, court litigation with the high officials in the administration…

I had a graduate course in economics (not econometrics such as applied in operations research models)  The professor was an acclaimed consultant; which means companies extend grants for a project and then the university takes 50% for overhead (research facilities, electricity…).  The adviser appoint or hire a graduate student to do the project, then the advisor write up the project (or the graduate student) and the advisor gets all the honor and publications.

This professor told us many interesting anecdotes and encouraged us to compute three dozens of ratios (data extracted from balance sheets and working fund statesman) in order to interpret correctly the state of affairs of a business.

There were two major problems with these exercises:

First, it is assumed that companies publish correct and honest information (as if accounting is not fraught with rules made to fill huge loopholes) or if the government cared to investigate properly the millions of balance sheets.

Second, these exercises were not based on good comprehension of which ratios mattered or correlated. For example, if several ratios (variables) highly correlated (positively or negatively) then, we better select one or two of these ratios as representatives of a trend to be included in a model.

Fact is, most of variables do not correlate (you cannot give a rational code name) and they are the most important to investigate because they are the catalysts or hidden forces in any trend (which is not done).

I have been told that in serious MBA programs students are handed lists of at least six books to be read per week and then to be summarized.

I wonder if “fast reading” is one of the criteria to be admitted in such programs.  I think skimming a book gives the illusion of understanding:  reflecting, analyzing, and interpreting require slow and focused reading that is time consuming.




May 2023

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