Getting Ready to Survive B-School
CONCEPTS TO REMEMBER FROM YOUR GMAT PREPARATION
As you shift your focus from preparing for the GMAT to preparing your applications, you may start to wonder whether all that test preparation will have any residual utility. It will, in at least two areas:
$ Analytical writing.While your score on this section isn’t the most important part of your admissions package, your ability to write analytically and quickly is critical to your success as an MBA. Sure, you may graduate without it, but the electronic messages, memoranda, and briefing slides that will probably constitute a significant chunk of your productive output as an MBA (that’s a thought, isn’t it?) will show a lack of preparation.
$ Algebra. It really all gets back to algebra. You can probably forget all the geometry you relearned for the GMAT, since it has almost no connection to what you will do in grad- uate school. On the other hand, you will need every bit of the algebra you’ve reviewed in this book, and a good bit more. If your algebra is not good, get yourself a book with which to review it, or consider math camp.
MATH CAMP
“Math camp” is the affectionate MBA term for the mathematics review course that many schools offer in July or August for students who, well, haven’t really thought about algebra, statistics, or calculus since high school. It’s a relatively embarrassment-free reintroduction to all of the math that you once knew, then forgot, but really need to know again, fast. Expect to cover everything in Chapters 3 and 4 of this book in less than a day. At that point, you’ll probably move on to more sophisticated algebra, and cover a considerable amount of probability and statistics as well.
Math camp may go further than that. In Chapters 3 and 4, we stressed the importance of algebra. That’s not quite all the mathematics you’ll need for an MBA program, as you’ll need to understand statistics very well before you finish. Depending on where you go to school, you may need to brush up on your calculus as well.
If you’re not concentrating in finance, then there aren’t that many situations in which you will need to use or understand more than basic calculus. The only one that is certain to arise is the monopoly-pricing problem in microeconomics. That is the question of what price
205▲ d
an unregulated monopolist should charge to maximize his profit. While you are certain to have that problem, you may not need a rigorous understanding of calculus.
What do we mean? Calculus is essential to solving the problem in the general form, but only algebra is required once you have that formula. So, if you attend the University of Chicago or the Sloan School at MIT, you’ll see the calculus in class. If you attend case study programs at the University of Virginia’s Darden School or the Harvard Business School, you almost certainly won’t. You’ll be handed the formula after a review of the calculus, and you’ll just memorize it, use it once or twice, and then look it up if you ever need it again.
That all changes if you want to study finance or business economics in any depth. By your third semester of microeconomics, calculus and differential equations are part and parcel of your work.
Options pricing just can’t be done without them. (Apparently, before Black and Scholes devised their famous formula—derived through the solution of a differential equation resembling that used in heat transfer calculations—options pricing was largely a matter of, “Hey, I saw that new Chevy on the drive in. It’s sporty. Let’s buy some GM options.”) So, if you think that you want to study higher finance or economics, and you have never taken calculus, you’re seriously out of luck until you correct that problem.
Note that many schools also offer a camp for the accounting-challenged. Double-entry account- ing is hardly an intuitive concept, but the adage that “accounting is the language of business” is almost as true as it is old and shopworn. That means that you really can’t have a meaningful discussion with your classmates if your head tilts over uncontrollably to the left when you hear terms like “ee-bit-dah.”
(EBITDA is Earnings Before Interest, Taxes, Depreciation, and Amortization, and it’s a useful measure of the cash-generating potential of a business.) Why that’s important you’ll pick up in financial accounting, financial statement analysis, and corporate finance—but you really should consider a gentle introduction if you’ve never had accounting before.
ESSENTIAL TOOLS FOR THE MBA STUDENT
So suppose you’ve posted an excellent score on the GMAT, you’ve written some fabulous essays (that are even mostly true), you’ve been accepted to an outstanding MBA program, you’ve mailed in your deposit, you’ve secured some gigantic student loans, and you’ve loaded up the truck to move to Philadelphia, Chicago, Palo Alto, or elsewhere. Wait—that cramped student apartment that you’ve secured for two years won’t hold half your stuff, so you sold most of it on eBay. Given the impending impoverishment of your lifestyle, are there any things that you can’t do without? Absolutely. Every MBA student needs, at a minimum, the same four essential pieces of gear:
1. The laptop computer. Don’t even think about a desktop; the lack of portability will hugely cramp your mobility when working in groups. Furthermore, pay no attention to what the kid at Circuit City tells you are the performance differences between the two types of machine at the same price point. A three-year-old laptop has more than enough processing power and memory for what you will need to do. The only thing driving improvements in the personal computers marketed to individuals these days is the need to see greater resolution in the blood pools in Quake III. That’s a fine way to make a living in software (we suppose), but there’s no
seconds per day is not worth tying your work to your desk. That cramped student apartment is really going to irritate you after a few weeks. Your student loans are paying for the “free” wireless that the school just installed, so you might as well take advantage.
The question of whether you should get a Macintosh or Windows machine is almost immaterial, unless you like contracting computer viruses. (OK, one of us has a bias against Windows machines.) It’s the same Microsoft Office, which is (of course) the most popular office software suite. Macs run Excel, which is the only vital piece of software that almost everyone needs. Minitab and SPSS run on both as well, and you’ll need one of those (or something similar) if you’re at a school that takes statistics seriously. Now that new Macs are Intel-based, they can run Windows and all Windows-based software, as well. That said, you will find that Windows machines are the most popular version in busi- ness schools, in part because they are the most popular machines in business. Our advice: consider where you will be working after school. If you prefer a start-up or a creative environment that allows you to choose your machine, pick what you like. If, however, you know that your employer of choice is running on a few thousand Dell laptops, then consider that fact. Many schools are bundling laptops as part of the tuition these days, so before you go and drop a few grand, see what each program offers.
2. The financial calculator. Yes, you have that laptop computer. Yes, it has Microsoft Excel, which is by default a really big calculator. You still need a calculator, because it’s annoying to have to pull out that laptop every time you need to multiply a string of numbers. That said, there are a number of routes.
You probably don’t need a graphing calculator (though do check with the school to confirm this).
That’s not to say that you won’t be graphing; au contraire, you’ll be graphing a great deal. It’s just that you’ll probably want to print or project those graphs onto something a bit larger than a calculator screen. However, if you have a graphing calculator that you like, and it has the financial functions you need, then it should be more than adequate.
You could purchase a Hewlett-Packard, Texas Instruments, Casio, or other financial calculator.
They all pretty much have the same net present value functions, and that’s the main thing for which you’ll need the calculator. The HP 12C was once the favorite of financial analysts, but TI and others have great (and less expensive) machines these days as well.
Another excellent route is to just procure a software-based financial calculator for your handheld computer. Landware’s FinCalc for the Palm OS is an excellent option. Put that on a Treo, and suddenly your phone can calculate the yield on a 10-year T-bill. That’s slick.
3. The mobile phone. If you don’t have one yet (we can’t really imagine that, but we wanted to cover the bases just in case), get one with good coverage both on campus and in any city in which you plan to spend significant time job-hunting. As we note in Chapter 15, check your messages every day, and don’t go to sleep until you’ve responded to every one of them (well, every one that’s important). If you can go the route of the Treo or the Blackberry, that’s all the better—you won’t need to carry an organizer, a telephone, and a calculator in your backpack, and you won’t need to fumble with all three in order to do business. For that matter, the elec- tronic mail functionality will mean that you needn’t bring your laptop everywhere you travel, which can be a great relief.
4. The Wall Street Journal subscription. This is absolutely indispensable if you are headed to a career in investment banking, but it’s almost as important for everyone else. Our sniffy European friends tell us that The Financial Times(the “pink pages,” because of the salmon color of the paper) is a most acceptable substitute. Whatever. Reading The Wall Street Journal every day gives you a ground-level reminder about the way things really function, and a daily short course in the lexicon of commerce. One of the worst interviewing experiences one of us had (as an interviewer) involved an MBA student who kept referring to the European Union’s currency as the “Eurodollar.” (For reference, Eurodollars are not units of currency; they are bonds issued in Europe but denominated in U.S. dollars. They’re not as popular as they once were, and the EU’s currency is the euro.) He probably wouldn’t have made such a career- limiting move if he had read the Journaldaily.