Why Finance Is a Useful Term in MBA Programs?
Finances is a broad term encompassing a number of financial subjects that deal with the economic development, creation, management, and distribution of funds. Finance has been called the “elephant in the room” because of its powerful influence over all aspects of business, including banking, economics, and investment. For example, decisions relating to investment, savings, lending, and spending are intimately linked with finance decisions. Financial markets are complex, largely because of the interdependence and subtle influences of various fields, including accounting, economics, business, banking, and government.
Businesses rely heavily on finance to finance growth and buy new products and services, and to finance their acquisitions and repositions. Large corporations seek financing from banks and other financial lenders in order to buy new equipment or services, to expand their operations, and to increase their market share. In recent years, the global credit crunch, a sharp slowdown in commercial and residential construction, soaring oil and gas prices, and increasing unemployment and inflation have resulted in a severe deterioration of the world economy. Home-based businesses are suffering the most because they have relied on business finance companies to fund their start-ups and expansions, purchase key resources, and grow and develop their businesses.
Business finance includes a wide range of activities. The most basic is the generation of cash flows by obtaining credit, which may be in the form of loans from banks, credit cards, private investors, or the proceeds of sales. The purpose of financing is to generate short-term cash to conduct operations. Business owners use short-term funding for working capital, expansion, and liquidating excess assets. The balance between short-term debt and long-term assets determines the company’s ability to meet its financial obligations.
Behavioral finance refers to the analysis of human behavior and the decisions it makes. Much of this comes down to the ability to understand customer preferences and tastes. Companies use behavioral analysis to predict customer needs and desires and then tailor their products, advertising, and marketing strategies to serve these customers. Companies that specialize in financial services help to provide accurate and timely information to customers in order to help them make buying and investing decisions. In fact, some experts argue that behavioural finance trumps economics as the science of choice.
Finance is part of economics, but it differs primarily in the degree of specialization and focus. Economics is the study of how people and institutions choose to make buying and investing decisions. Business finance includes aspects of corporate finance such as investment and borrowing, business valuations, managing venture funds, corporate finance, mergers and acquisitions, and financial engineering. These are just some of the finance examples used in MBA programs.
In order to obtain your current job, you will need to complete a finance assignment. The scope and style of your finance assignment are determined by the type of finance position you are seeking, but many students are required to complete a general overview of the market, a case study of one company in particular, or a short overview of financial activities undertaken by a business. Some students are also asked to conduct an in-depth study of one individual aspect of corporate finance. Regardless of the type of finance assignment you are given, the end result will allow you to demonstrate the skills required for a management or executive position in finance. It should also open up several job opportunities because it provides an excellent overview of what is going on in the world of finance.