What is Corporate Finance?

To answer this question, we must know the core of  firm, the purpose, before. What is the purpose of firm?  It is to create value for shareholders (owners). So, the shareholder's value is important for all part of the firm. That value is reflected in financial activities which the division or department that oversees the financial activities do. That is the meaning of the corporate finance.

The Balance Sheet Model

All financial activities that we discuss before are recorded in the balance sheet of company.To get deeper understanding about corporate finance, let's look at the figure below, we can see and understand the concept of the balance sheet model that will describe all financial activities that company do.

Based on the figure, we can see assets of the firm are on the left side of balance sheet. And also we can see that there are two types of assets, which are:

1.     Fixed assets 

All assets that will last a long time. Some fixed assets are tangible, such as machinery and equipment. Other fixed assets are intangible, such as patents and trademarks.

2.     Current assets

All assets that have short lives, such as inventory.

On the other side of balance sheet, right side, we can see the form of company financing. Why the company need financing? Because company needs money for investing to assets. There are two kinds of financing that company can obtain, which are:

1.     Debt (loan agreements)

Debt like asset which classified as:

a.    current liability

All short term debt that must be repaid within one year

b.    long term debt

All debt that mustn't be repaid within one year 

2.     Equity shares (stock certificates)

Equity shares is difference between the value of the assets and the debt of the firm

Based on the balance sheet model concept, we can conclude that there are three questions will solved by Finance, which are:

1.     In what long-lived assets should the firm invest? 

The answer of this question will involve the capital budgeting that describes the process of making and managing expenditures on long-lived assets.

2.     How can the firm raise cash for required capital expenditures? 

This question will be discussed in the firm’s capital structure, which represents the proportions of the firm’s financing from current and long-term debt and equity.

3.     How should short-term operating cash flows be managed?

This question concern with a firm’s net working capital defined as current assets minus current liabilities that must be managed by finance manager.

By : Dera Hafiyyan as Finance Lover

Intriguing Marketing Cases or Are They ????

Dealing with marketing cases intrigues MBA students in regular basis. Having too many information to compartmentalize while demanding the right creative solution from the students speak the nature of marketing cases. Creative students find it hard to keep on track with the information overload and analytical students have difficulties in creating the on point approaches to the problem. So, what is the solution of this problem? Looking at the students’ behavior when facing marketing cases, it can be seen that most students are trapped in the problem analysis at the end of the cases. If you are one of them then now is the time to change. Problems at the end of the cases are not what you should pay attention to. It is helpful in some way but not the main purpose of the cases. Detecting the real purposes of the cases will lead the students to the right solution on track. Now the question is how to detect the main purpose with this many information. The answer of this question lays in how the students read the cases.

Many MBA students read marketing cases like reading novels, straight from the first page until the end or read the problem then find the answers like doing exams. However, it is not the right approach for marketing cases. The cases are not mathematical problems when the answers are clear and not also IELTS or TOEFL reading passages that have the answers written accordingly. In marketing cases, students should be able to find hidden meaning behind lines. For example, expanding decision might relate to change in customer preference or failed innovation because of the middle man (you will be surprise to know the power of plumbers in real estate market).  For that reason, MBA students should treat marketing cases differently from their reading tendency. The first step to do that is by acting as the person in charge in the cases not as a student.

Acting as the person in charge lead students to think and act realistically. In addition, knowing the roles and position of the lead actor will help students to eliminate unimportant information. The next thing MBA students should do is skimming the cases. It might be a surprise because skimming is not even a decent reading activity. However, skimming is one of the best techniques to deal with marketing cases. Skimming by reading the first and the last page of the cases will help students in understanding the case as a whole and finding the right information. The first page mostly explains the nature of the cases. It briefly explains the company, the industry and the market. Subsequently, the last page is a pointer to find out what kind of information the students should have.  After reading these two pages, students should gather all the information needed based on the pointers in the last page, read all the pages meticulously to find the right information. To sum up, skimming to gather the right information and understand the nature of the case is very important to keep students on track. Now, we are moving to the third step, finding the right problem.

It is stated earlier that the questions in the last page are not the real problems. The real problems hide inside the cases. Hindering students to find the real problems is what the writer supposed to do. So, how to detect the real problem? The problem will be transparent if students recognize the real vision of the company. No, it is not the written vision but it is the company long-term objective. To put it simple, it is what the company wants to accomplish in the future, what they want to gain or what kind of attention they want to pursue. Consequently, the problems are issues that thwart the company to achieve its goal. This step is relatively easy if the students already think like leading role in the cases, and understand the nature of the company and industry. By doing that, they will be able to portray the real vision of the company based on their role and find the problem based on their understanding of the industry. This third step help student to create the creative but straightforward solution for the cases.

In a whole, doing these three steps, acting as the leading role, skimming to gather the right information and understand the nature of the company, and finding the right problems, are what MBA students need to do to conquer the marketing cases.

Written by ClaudyaLita an SBM-ITB MBA student

THE SPIRIT OF ENTREPRENEURSHIP

This session explains about what we can do in a very first step creating your business. Able to create and run your business means you have the spirit of entrepreneurship. In simple way to elaborate, entrepreneurship is your effort to answer the consumer needs by adding value in your innovations and becomes profit. :)

As we can see in this picture, you, as the entrepreneur have the capability to find out what consumer needs and in the end they are satisfied with your solution. Next thing is, in this situation you need to collect some datas so after that you can come up with ideas. Try to make some distinct idea that others never created. After you get your brilliant idea pour it out into your concepts. I believe the more you have in concepts, the better you can take the best one. Explore your concept and make a lot of options.

After you struggling with concept you finally decided the best concept and try to put it into your product/ services. Remember, like as mentioned before, put the value you want to share. As long as you can answer the consumers’ needs, put the value and they are satisfied, it will be a BOMB solution and you will get profit! Doing business you need to manage and develop so you can be more successful.

By : Bonnie Ariel Sharon

Gallery of Us

During Microsoft Workshop

MBA league with Dr.Mikko Laukkanen 

MBA league writers

From SBM to all entrepreneurs out there