September 16

Chapter 4 focused on the first year of the MBA program, in this chapter the concentration areas, the essence of the second year, are presented and discussed, and the schools which offer the specific major, specialization, area of study, or concentration are listed. Exhibit 5.1 lists the concentration areas discussed here, and how many of the surveyed schools offer them.

Finance, Marketing, and Operations Management are, of course, the most popular areas, offered by the great majority of the schools. Accounting, Economics and the combination of General/Strategic Management and Entrepreneurship follow. Insurance and Risk Management, and System Dynamics are each offered by a single school.

The Accounting concentration is designed to provide students with an understanding of accounting information and with techniques for using this information in the process of decision making. The accounting courses are divided into two broad areas: financial and managerial accounting. The financial accounting courses target external users and the managerial accounting courses target internal users. Courses offered in financial accounting cover general accounting, financial statement analysis and taxation. In managerial accounting, emphasis is placed on cost accounting and activity-based costing. The accounting concentration is very often combined with the information systems concentration and sometimes it is divided into more specialized concentrations such as Corporate Accounting and Public Accounting.

"If accounting interests you, you'll learn how to use accounting information to make decisions and measure performance and incentives effectively. You'll also acquire the technical expertise necessary to prepare, analyze, and evaluate financial statements". (Cornell, p. 5)

The chief accountant of a very large corporation was observed standing next to a photocopy machine checking very carefully whether the balance sheet, after been photocopied, still balances.

These are the schools in which accounting is major/area of study/concentration: Berkeley, Carnegie Mellon, Chicago, Columbia (with Tax and Business Law), Cornell, Duke, Harvard (Control), Michigan, MIT, North Carolina, NYU (with Tax and Business Law), Northwestern (with Information Systems), Pittsburgh, Rochester, Stanford, Texas, UCLA, USC, Vanderbilt, Virginia, Washington U., Wharton.

The Decision or Management Science concentration is highly correlated with the operations research and statistics concentrations. The program is concerned with synthesizing the various factors of management planning, implementation and control into mathematical models that guide optimal decisions. Courses include Computer Simulation, Linear Programming, Probabilistic Models, Strategic Decision Making, etc.

Decision Science is offered as a major/area of study/concentration at Duke, Northwestern, and Wharton. Management Science is similarly offered at Chicago (with Information Systems), Columbia, Michigan (with Statistics), Pittsburgh (with Operations Management), Texas, UCLA.

The Economics concentration is designed to provide an understanding of the economic environment in which an organization operates, and an understanding of the limitations the economic environment places on the organization in the pursuit of its goals. The economics courses can be divided into two broad areas.

1. Microeconomics, which focuses on the theory and activities of individual consumers and business. It studies market structures, pricing policy, business strategies and optimal decision making by economic agents. Typical courses include Microeconomic Analysis, Pricing Strategies, Competitive Strategy and Models of Imperfect Competition.

2. Macroeconomics, which is concerned with aggregate economic activity and its determinants. It studies inflation, unemployment, output and how monetary and fiscal policy affect them. Typical courses include Macroeconomics, Economics of Regulation and Monetary Theory and Policy.

Although not always presented in the form of a concentration, economic theory provides the foundation for many disciplines in the B. schools.

"If you're interested in economic analysis within a corporate setting, you'll need to develop a basic foundation in microeconomics and macroeconomics and then choose an area of specialization". (Cornell, p. 6)

An engineer, a physicist, and an economics professor are the only survivors, drifting on a boat with nothing to eat but an unopened can of meat. The engineer tries, unsuccessfully, to free a nail from the boat and use it to open the can. The physicist takes off his glasses and tries, unsuccessfully, to focus the sun rays on the lead of the can. The economics professor is astonished: "I don't understand the problem, let's assume we have a can opener!".

Schools which offer Economics as a major/area of study/concentration are Berkeley, Carnegie Mellon, Chicago, Columbia (with Public Policy), Cornell, Duke, Harvard, Indiana (with Public Policy), Michigan (with Public Policy), MIT, Northwestern, NYU, Pittsburgh, Stanford (Economic Analysis and Policy and Political Economics), UCLA, Virginia, Washington U., and Yale.

The Finance concentration is designed to provide an understanding of the financial decision making process and to offer insight into how financial markets function. The courses are concerned with applying economic analysis, accounting and quantitative methods to financial problems relating to issues such as corporate finance, investments, financial markets and the international financial system. Typical courses include Investments, Theory of Finance, Banking, Options and Future Markets, Capital Markets, Portfolio Management and others.

"Finance is concerned with - value - how management's decisions affect the value of the firm to its shareholders and how capital markets direct funds to the most valuable use". (MIT, p. 24)

"There are several different educational routes to careers in finance, all built on a basic knowledge of managerial and capital-market finance theory. If you plan to work in the areas of portfolio management or investment banking...". (Cornell, p. 6)

A well-known finance professor was on a train travelling through the Mid-West. It was late and the train was delayed en route. A big farmer was sitting opposite him: "Why don't we play a game to pass the time," suggested the farmer. "I'll ask you a question; if you don't know the answer, you pay me a dollar. Then, you ask me a question; if I don't know the answer, I'll pay you a dollar".

"Well," said the professor, "it's only fair to warn you that I am a well-known finance professor, on my way back to Chicago after giving a guest lecture here at the university."

"In that case," said the farmer, "you pay me a dollar for not knowing an answer, and I'll pay you 60 cents!"

"OK," asked the farmer, "what has two legs going uphill and ten going downhill?"

After a few minutes of deep thought the professor gave up and offered the farmer his dollar.

"Just give me 40 cents," said the farmer. "I don't know the answer either." (Thanks, Avner Kalai).

The following schools offer Finance as a major/area of study/concentration: Berkeley, Carnegie Mellon, C, Columbia(also Money and Financial Markets), Cornell, Duke, Harvard, Indiana, Michigan, MIT, North Carolina, Northwestern, NYU, Pittsburgh, Rochester, Stanford, Texas, UCLA, USC (also Financial Services), Vanderbilt, Virginia, Washington U., Wharton, and Yale.

A concentration concerned with the application of economic tools and principles to the specific problem of healthcare. Courses generally cover Introduction to Health Services Systems, Healthcare Economics and Finance, Health Policy.

"The Program in Health Services Management (HSM) is designed to prepare students for top level management careers in health care and general business". (Northwestern, p. 8)

The three schools which offer Healthcare as a major/area of study/concentration are Northwestern, USC, and Wharton.

A concentration in Human Resource Management is sometimes combined with a one in Industrial Relations. The courses are concerned with understanding the operation of labor markets, people in organizations, leadership, motivation and power. The concentration looks at the competitive consequences of human resource policy decisions in the traditional human resource areas of planning, job analysis, recruiting and selection, training and development, reward structure and communication mechanisms.

The following schools include Human Resource Management as a major/area of study/concentration: Chicago (with Industrial Relations), Columbia, Cornell, Indiana, Michigan (with Organizational Behavior, Management, and Policy), MIT, Northwestern, Pittsburgh, UCLA, USC, Vanderbilt, Washington U., and Wharton.

The Industrial Relations concentration is concerned with the principles of labor economics and the influence of labor management relations on the overall profitability and cost-effectiveness of an organization. The concentration is highly correlated with the Human Resource management concentration and some of the courses overlap. Examples of courses are Human Resources Management, The Labor Market, Compensation and Labor Relations, and Public Policy.

It is first formal meeting between the CEO of a large textile mill, and the newly elected chair of the local labor union. "I am not acquainted with the rules," says the new chief. "Are you going to hire me as the VP Industrial Relations right now, in three years time, or after the first strike?"

Only a few schools offer Industrial Relations as a major/area of study/concentration: Berkeley, Chicago (with Human Resources), MIT, and Northwestern.

The Information Systems concentration is concerned with the computer-related problems of collecting, storing, analyzing and distributing information. The program focuses on the design and development of effective business processes that leverage information technology strengths. Areas of application include large transaction processing systems, end-user computing and office automation. Courses typically include Information Technologies, Systems Analysis and Design, Decision Support Systems, Database Management Systems, Financial Information Systems, etc.

Information Systems as a major/area of study/concentration is offered at the following schools: Berkeley, Carnegie Mellon, Chicago (with Management Science), Columbia (with Communications and Media), Cornell (with Operations Management), Indiana, Michigan, MIT, Northwestern (also with Accounting), NYU, Pittsburgh, Rochester, Stanford (with Operations and Technology), Texas, UCLA, USC, Vanderbilt, and Wharton.

The Insurance and Risk Management concentration includes courses that cover economic, legal, actuarial and managerial perspectives of insurance and risk. Courses include Actuarial Science and Insurance Problems, Reinsurance, Risk Management and General Insurance, Life Insurance and Social Insurance.

Three retired industrialists meet on a golf course in Miami Beach. "How come you retired so early?", they ask one another. "Well," answered the first one, "I had a large textile factory and last year it burned down. I was 63, so I picked up the insurance money and retired."

"I had a big printing facility," tells the second retiree. "One night it completely burned down. My son didn't want to continue the business, so I picked the insurance money and came here."

"I have a similar story," says the third one. "I had a small food processing firm. Last winter it was a total loss after a flood. I'll be 65 next summer, I took the insurance money and retired."

The other two look at him in astonishment: "How do you do a flood?" (Thanks, Yehuda Kahana).

An International Business concentration is offered at most business schools although very often it must be taken in conjunction with another concentration. The concentration in international business is designed to provide an understanding of the international environment for economic policy and business decision making: global issues, disciplines, competition etc.

The courses cover topics such as International trade and Finance, The Japanese Economy, International Finance, International Security Analysis, International Marketing and International Banking.

International Business is a major/area of study/concentration at the following schools: Carnegie Mellon, Chicago, Columbia, Cornell, Indiana, Michigan, MIT (with Strategic Management), Northwestern, NYU, Pittsburgh, Stanford, UCLA, USC, Virginia, Wharton, and Yale.

The legal context of business is not usually treated as a separate concentration. However, in some B. schools, attention is given to legal trends and concepts in courses that form part of other concentrations such as Accounting. Typically courses look at the law of contracts, agency sales, property, bankruptcy, the law of business organizations, commercial paper and insurance.

The young corporate lawyer bursts into his father's office in a great excitement: "Remember the long standing lawsuit of Tech Inc. against Innovation Inc.? I had them both meet today and settled it up!"

"What?!" - his father is exclaims. "How could you? Your grandfather assigned me to that case as a wedding present, and for the last thirty years it has been a major source of income for our firm."

Schools that have this major/area of study/concentration are: Carnegie Mellon, Chicago (Legal and Political Institutions), Michigan (with Law, Business History, and Communications), Northwestern (with Business Law), and Wharton.

The Marketing concentration aims to provide a general background in influencing market demand, allocating market resources and making strategic marketing decisions. The objectives may be summarized as understanding marketing variables and their relationship to decision making frameworks and processes, establishing market-oriented goals, defining marketing problems in different contexts, and specifying research and information.

Topics covered in the courses include establishing demand, adapting products to markets, selecting channels of distribution, pricing, advertising, sales management and so on.

"Marketing is an activity that permeates all levels of management. At a strategic level, marketing issues help managers determine an appropriate mission for a firm. Operationally, marketing helps the firm choose the best mix of products and services to offer and shows how to create and put into practice the most effective marketing strategy for the firm". (Cornell, p. 6-7)

This is the list of schools that offer a major/area of study/concentration in marketing: Berkeley, Carnegie Mellon, Chicago, Columbia, Cornell, Duke, Harvard, Indiana, Michigan, MIT, North Carolina, Northwest, NYU, Pittsburgh, Roches, Stanford, Texas, UCLA, USC, Vanderbilt, Virginia, Washington U., Wharton, and Yale.

Operations Management is concerned with the managerial decisions by which a firm allocates and utilizes its resources in order to produce goods or services. The concentration is aimed at understanding, planning and controlling many large processing systems that form the core technologies of manufacturing and service organizations. Topics covered are planning and control of product quality, process capacity planning, operation scheduling, location and distribution of facilities. Courses include Operations Management, Management of Processing Systems, Total Quality Management, Operations Scheduling, Inventory Management, Manufacturing Management, and Quality Management.

In a small number of business schools the Operations Management concentration includes a further concentration in Technology Management which is specifically concerned with investing in, acquiring and managing new technologies. It is usually not possible to take this concentration on its own.

"Operations management is one of the most mature and well-developed fields of management. Much of its methodology is based on analytical approaches to understanding the impact of technology and management processes". (MIT, p. 33)

"... you'll analyze the major economic problems of production and operations management in both the manufacturing and the service sector. You'll learn how to improve quality, response time, and productivity; manage production and distribution systems; and improve the return on production and inventory assets. The methods shown can be applied in many settings, including small manufacturing corporations, large multilocation production and distribution systems; and service organizations such as banks and hospitals." (Cornell, p. 7)

A well-known precision tools manufacturer, proud of his new modern plant, sent his competitor a 30 feet long, 1/32 inch thick, titanium thread. His competitor sent him back the titanium thread, with an end-to-end hole drilled through it. (Thanks! Yossi Hochberg).

The schools in which Operations Management is included in the list of majors/areas of study/concentrations are Berkeley, Carnegie Mellon, Chicago (also Quality Management), Columbia, Cornell (with Information Systems), Duke, Harvard, Indiana, Michigan, MIT, North Carolina, Northwestern, NYU, Pittsburgh (with Management Science), Rochester, Stanford (with Information Systems), UCLA, USC, Vanderbilt, Virginia, Washington U., Wharton, and Yale.

An Operations Research concentration is often combined with one in Statistics (for example, at NYU). Operations research is concerned with the theory and application of mathematical modeling techniques for analyzing and simulating business functions. Courses cover probability theory, stochastic processes, linear programming, networks and other statistical topics. Applications come from many functional areas such as economics, finance, operations management and marketing.

"Operations Research and statistics enhances our knowledge about the constraints with which we must live and improves our capacity to cope with them". (MIT, p. 36)

Operation Research is a major/area of study/concentration at Carnegie Mellon, MIT (with Statistics), and NYU (with Statistics). Statistics is offered at Carnegie Mellon, Chicago (also as Econometrics), Michigan (with Management Science), North Carolina (as Quantitative Methods), Vanderbilt, Virginia (as Quantitative Analysis), Wharton, and Yale (Data Analysis).

Organizational Behavior is concerned with the behavior of people and groups in organizations and how organizations interact with their environment. It deals with the human problems of management and organization. The concepts and methods of organizational behavior are drawn from the fields of sociology, psychology, anthropology and political science, and are applied to human problems in both public and private sectors.

The concentration is designed to provide a knowledge of how to motivate people, design organizations, improve problem solving and decision making capabilities and introduce and manage change processes. Topics covered include the individual and the organization, social processes in organizations, organizations in their environment, communication and power and politics in organizations.

"Human problems in organizations are pervasive and difficult to deal with, but must be understood because ultimately the process of management is the accomplishment of tasks with and through people". (MIT, p. 38)

"Corporations and other business firms are more than simply a collection of assets. Those that do well are often successful because of effective organization, which is, in turn, essential to good management. Students in organizational behavior study how to manage and organize effectively by first learning how individuals and organizations behave." (Cornell, p. 7)

Organizational Behavior is offered as a major/area of study/concentration at the following schools: Berkeley, Carnegie Mellon, Columbia, Cornell, Duke, Harvard, Michigan (with Human Resources), MIT, Northwestern, NYU, Rochester, Stanford, Vanderbilt, Virginia, Washington U., and Yale.

In the concentration in Public and Non-profit Management the curriculum is generally concerned with the formation of public policy and the critical functional and behavioral differences between market and budget-based institutions. Courses include Public and Non-profit Management, Non-profit Sector Financial Policy and Marketing in Non-profit Organizations.

The schools that offer Public and Non-profit Management major/area of study/concentration are Berkeley, Columbia, Northwestern, Pittsburgh, Rochester, and Stanford.

A small number of business schools offer a concentration in Public Policy, which must usually be taken in conjunction with another functional area. The public policy curriculum prepares managers to deal with the many and complex interactions among business, government and the changing social expectations and demands on business. Courses are offered on the social, political and legal aspects of business.

Public Policy is offered as a major/area of study/concentration in the following schools: Columbia (with Economics), Indiana (with Economics), Michigan (with Economics), Pittsburgh (Public Affairs and Social Policy), Stanford (Economic Analysis and Policy, Political Economics), UCLA, Vanderbilt (Management and Policy), and Wharton.

The Real Estate concentration provides students with conceptual methods for making rational business decisions in real estate investment, finance and management. Courses include Real Estate Finance and Investment, Legal Issues in Real Estate, Real Estate Development and Real Estate Economics.

"With urban renewal and housing needs high on the nation's agenda, the program combines business and urban planning courses to provide students two intensive tracks of study - one focused on private-sector real estate development and the other on public-private ventures - giving the students access to real estate development's most advanced techniques and tools." (Berkeley, p. 11)

The schools which offer Real Estate as a major/area of study/concentration are: Berkeley, Michigan U., Nothwestern, UCLA, USC, and Wharton.

Strategic Management is concerned with the overall general management of the firm. It is concerned with the determination of strategic direction for the firm, as well as the management of strategic processes within the firm. Most business schools offer courses related to this field, some offer strategic management as a concentration. In addition, some schools offer an Entrepreneurship concentration which is very similar to the Strategic Management concentration (Northwesteren and Carnegie Mellon offer both). Courses cover topics such as Small Business Management, Management of Organizations and Enterprise, Competitive Strategy, Strategic Pla, Strategic Management of Technology and so on. In somschools, the General Management area covers these topics.

"Strategy essentially deals with three issues: (1) how firms select the market, product, and geographic areas in which to compete, (2) the interaction between firms and their external environments, and (3) how firms adjust internally to changes in the marketplace or other elements of their external environments and what types of structures and processes they put in place to pursue their overall strategies". (MIT, p. 39)

The newly appointed CEO entered his luxurious office and found the previous CEO had left him three sealed letters. The first envelope read: "to be opened at the end of the first year". Impatiently, the new CEO tore open the envelope., The letter read: "Blame it on the previous management". The second one, to be opened after the second year, said: "You can still blame it on the previous management", and third one, to be opened after three years, read: "Prepare three letters".

"The Program [Entrepreneurship] concentrates on developing the analytical and conceptual skills needed to organize and manage new ventures and ventures within large corporations. The culmination of the learning experience is the development of a business plan for a new or growing business". (USC, p. 20)

"... students who wanted to do more than learn about entrepreneurs - they wanted to be part of the entrepreneurial process. .... students can become involved with the Licensing Office in three ways: working with the inventors of small-niche products, with an option to license the patent themselves upon graduation; working with inventors who already hold patents, doing market research and helping bring inventions to market; or working with the Licensing Office on major projects, interacting with inventors and venture capital firms to form companies and plan marketing".(MIT, p. 62)

Schools that offer Strategic Management and or Entrepreneurship as a major/area of study/concentration are: Carnegie Mellon, Chicago (Policy Studies), Michigan, MIT (with International), Northwestern, Pittsburgh, Stanford, Texas, UCLA, USC, and Wharton.

The Systems Dynamics concentration is designed to provide competence in the modeling and analysis of industrial and social systems. The courses develop basic modeling competence and provide exposure to corporate and economic problems. Courses include Principles of Dynamic Systems, Economic Dynamics and Systems Dynamics for Business Policy.

"System Dynamics provides a unique tool for understanding the behavior of industrial and social systems. A computer simulation model is constructed portraying the guiding policies of the system (a firm, an industry, or an economy). Feedback control concepts provide a framework for structuring the model." (MIT, p. 40)

A Transportation major is concerned with private industries such as airlines, railways, trucking, inland waterways, shipping etc, as well as public transport agencies. Courses include Transportation Policy, Financial Management in Transportation, and Economic Issues in Transportation.

Transportation is a major/area of study/concentration at Northwestern and Wharton.

The purpose of this second mapping is to capture and compare the structure of the second-year MBA programs in the 25 leading US schools. As you already know, the second-year courses are mainly electives - usually in an area of concentration (major). Thus, at base the structure of the second-year MBA program is composed of the concentration areas offered.

Exhibit 5.1 presents a matrix of all concentration areas, by school, in which "1" indicates that the school offers the specific concentration area, and "0" indicates that it does not. The Co-plot method was applied again. In Figures 5.1 and 5.2, the 25 universities are located in a two-dimensional "concentration area space". Remember that these maps are approximations only, not the "real" thing. Figure 5.1 includes all 21 concentrations (the general goodness of fit obtained by the coefficient of alienation is too high, ?=.22), and Figure 5.2 includes only the 13 that showed relatively high goodness of fit for the arrows and general goodness of fit, for the total map, ?= 0.16.

Concentration areas differentiate better than the core courses among schools, and the schools are more distributed on this space, which means, in terms of concentration areas, B. schools are different from each other. Unlike the core courses, concentration areas (the arrows) occupy less than half of the space (Decision Science, and Public and Non-profit Management in the middle), creating a general order among the schools. Starting from Dartmouth and Virginia, a school positioned further towards Northwestern usually has more concentration areas (Northwestern has them all, except for Legal Studies). Note how different Wharton and Northwestern are, both have been competing for the top position for the last few years. Here too, the five top-ranking schools are distributed across the generally ordered space. Ranking is thus not really explained by concentration areas (or a given combination of concentration areas).