Manajemen | Fakultas Ekonomi Universitas Maritim Raja Ali Haji joeb.81.6.345-348
Journal of Education for Business
ISSN: 0883-2323 (Print) 1940-3356 (Online) Journal homepage: http://www.tandfonline.com/loi/vjeb20
Book Reviews
James L. Morrison
To cite this article: James L. Morrison (2006) Book Reviews, Journal of Education for Business,
81:6, 345-348, DOI: 10.3200/JOEB.81.6.345-348
To link to this article: http://dx.doi.org/10.3200/JOEB.81.6.345-348
Published online: 07 Aug 2010.
Submit your article to this journal
Article views: 10
View related articles
Full Terms & Conditions of access and use can be found at
http://www.tandfonline.com/action/journalInformation?journalCode=vjeb20
Download by: [Universitas Maritim Raja Ali Haji]
Date: 12 January 2016, At: 22:18
BOOK REVIEWS
Downloaded by [Universitas Maritim Raja Ali Haji] at 22:18 12 January 2016
McIntyre, John R., and Alon, Ilan (Eds.)
Business and Management Education
in Transitioning and Developing
Countries
Armonk, NY: M.E. Sharpe Publishers,
2005, 435 pp.
ISBN: 0-7656-1505-3. Paperback,
$35.95
This text, edited by John McIntyre and
Ilan Alon, reflects the experience of
over 40 contributors with expertise in
business and management education.
The emphasis is on change and how
graduates of business education programs can expand their influence in the
workplace as new global markets continue to emerge. In this regard, the primary purpose of the book (what some
could consider a handbook) is to prepare a cadre of innovative change agents
who may be better prepared to handle
the trials and tribulations of the change
process for guiding developing countries into the mainstream of globalization. The specific content for the text is
derived from scholarly exchange at a
research conference held at the Georgia
Institute of Technology in November
2003. The result is a comprehensive
review of management training issues
and business education models recently
being adopted by developing and transitioning countries.
The editors of this volume present a
collection of viewpoints from a pool of
talented professionals who make a variety of suggestions for updating educational institutions specifically situated in
emerging countries. The end goal is to
better enable faculty to address gaps in
the current product distribution systems
in emerging countries, such as India,
China, Nepal, and Russia. The text is
divided into six parts, reflecting transitioning economies in six regions of the
world. The initial segment includes five
chapters focusing upon emerging coun-
tries situated within the Indian subcontinent. After describing the status of business education programs and the challenges currently being faced by faculty
in India, the readings focus on accountability, affordability, and accessibility
issues that affect other countries in the
same region. The regulatory challenges
currently in existence are also analyzed
in great detail. Of particular note is a discussion of India’s priorities to the training of huge numbers of engineers to
launch a continual stream of innovative
products and services. The effective use
of technology to assist a new breed of
entrepreneurs is a major part of an innovative educational strategy proposed. At
the conclusion to this part, the book
turns our attention to the smaller country
of Nepal, an emerging country with lesser notoriety, but strategically situated
between China and India. The discussion here is how such a small country
has revised its management education in
direct response to the needs of its local
economy.
Part II of the readings advances the
study of current training programs in
post-Communist Europe, including references to Albania, Bosnia, Hungary,
Poland, and Russia. Of note here is the
attention paid to the privatization of key
industries and its impact upon preparing
individuals to fulfill new roles in organizations that are currently being restructured. In this regard, special interest is
given to Russia and its current emphasis
on revising business education and management training to graduate workers
possessing skills similar to those currently emphasized in the American business education programs. Areas that are
currently being benchmarked with
American programs are analytical skills,
oral and written communication, computer skills, decision making, and problem solving. Noted here is how students
in Russia differ from their faculty in
their perceptions as to the quality of their
learning experiences as they go about
developing their managerial talent.
In Part III of the text, the reader’s
attention is directed to the transitioning
of economies in Europe and Central
Asia. An interesting example illustrated
is that of the Lviv Institute of Management in Ukraine, whereby educational
strategies typical of Western-style business schools have been adopted in its
entrepreneurial-training
program.
Specifically, the highly interactive U.S.
model of business education has served
as a guide for enhancing the management training capability of institutions
in emerging countries that are now free
to reinvent themselves because governmental interference has been significantly reduced.
Another institution of interest is the
Vilnius University in Lithuania, which
has a master of international business
program that prepares students to enter
into a globalizing local economy. It also
symbolizes the movement from training
institutions offering a narrow technical
strategy to that of a more general and
liberal arts orientation. Concluding this
segment is an emphasis on reforming
the accounting and financial reporting
systems, especially of countries in Eastern Europe. Within the context of
Bosnia and Herzegovina, there is an
intriguing discussion of matching existing professors to the new certification
model now being formulated to ensure
the quality of accounting program graduates. The primary issue addressed is
how faculty in these transitioning countries will be able to mobilize their limited resources (i.e., land, labor, and capital) to generate and sustain needed
business education reforms for launching new global initiatives.
Part IV concentrates on developing
countries in Latin America where the
interdependency of countries is an
July/August 2006
345
Downloaded by [Universitas Maritim Raja Ali Haji] at 22:18 12 January 2016
issue. The self-interest here is on the
need to establish a global mindset
among faculty for reinventing existing
business education programs that reflect
an expanded global reality. Using
Argentina as an example, the need for
change agents to reshape organizations
so they become incubators for new
products and services is explored. New
ventures generated by business education graduates are expected to play a
critical role in the emergence of firms of
superior quality that are on the cutting
edge of technology. The editors cite
Chile as another example of how emerging countries have moved from centralized economies to a free-market system,
enabling citizens to compete more
freely and openly.
Parts V and VI target the continents
of Africa and Asia. Of particular interest
is the radical transformation, both politically and economically, of countries in
Africa, as internal and external pressures mount to reform existing
economies. In addition, China is alluded
to as another example of a country with
similar pressures to reform its universities. The strategy discussed is the acceleration of the process to accumulate scientific knowledge and technology to
better enable graduates to go about
adapting current resources for entering
into an era of what the contributors refer
to as knowledge work. Because there is
a burgeoning demand for business education in China, there is a renewed interest in reconfiguring training programs
in Chinese universities from the traditional emphasis of engineering (and
other sciences) to entrepreneurial building or business. China is a remarkable
example of the seriousness behind the
current movement among emerging
countries to become major players in
the global economy. In this regard, the
readings focus on the factors of selfesteem of students; the degree of control
by institutions on personal decision
making; and underlying cultural
assumptions, values, and beliefs.
In summary, the text is about choice
and how business education faculty are
facing unique training challenges to
bring their countries into a globalizing
marketplace with an aggressiveness that
may startle the reader. The contributors
propose a variety of innovative respons346
Journal of Education for Business
es to the changing training needs of
workers situated in different regions of
the globe. The message is clear that
institutions offering business and management education are being heavily
relied upon to demonstrate the leadership necessary to mobilize future generations of workers into new employment
models that inspire change.
The strength of the text is the numerous examples used to reference proposed models for transitioning from
business education reflecting a country’s traditional norms to new dynamic
training models. The idiosyncrasies
peculiar to work cultures around the
world are described in terms of exploring the complexity of the issues surrounding such transition. The contributors do an excellent job of illustrating
how countries are attempting to diversify their markets in an attempt to reap
rewards from the new opportunities
emerging every day.
A primary weakness of the text is
some confusion in the differentiation of
leadership training and management
education. While there is some attention
given to the topic, the inference appears
to be that leadership and management
education are relatively the same. The
confusion may be the result of what is
being currently debated among business
and other faculty in American colleges
and universities. In this text, there
appears to be a blurring between the
disciplines of leadership and management. However, rather than implying
that leaders and managers have very
similar training needs, a more differentiated but complementary strategy may
be in order. In other words, how are
countries preparing future generation of
workers with the leadership skills of
developing a vision, inspiring others to
act, and making decisions that set a
country in the right direction?
The assumption I had when reading
the text is that the current leadership in
emerging countries is generally on the
right path and that the purpose of management education is to prepare those
workers to carry out existing plans.
However, it would have been helpful if
the contributors analyzed the complementary effects of both leadership education and management education within a new context. In other words, it takes
leadership to set a country in the right
direction to promote economic development, but effective management is also
required to plan, organize, and act on
those tasks required to sustain a direction of change; the initiation of change
and sustaining such a movement likely
require two separate but complementary
strategies.
However, the contributors to the text
provide an intriguing perspective of the
opportunities and challenges facing business education programs around the
world as faculty attempt to meet the
needs of both political and economic
environments. The contributors do complement one another by giving a variety
of examples to document their perspectives. The focus on what are referred to as
emerging markets makes this text somewhat different from others previously
appearing in the literature. With the intent
to redefine business and management
education within the context of emerging
countries, the contributors do lay the
groundwork for the premise that business
education has a vital stake in the success
or failure of these emerging countries.
This book can generate lively discussions
among students either at the undergraduate or the graduate level of education. It is
certainly a text that should be part of a
faculty’s personal library and also be
readily available to students who have an
interest in understanding the dynamics of
emerging markets.
Berman, Karen, and Knight, Joe (with
Case, John).
Financial Intelligence: A Manager’s
Guide to Knowing What the Numbers
Really Mean.
Cambridge, MA: Harvard Business
School Press, 2006, 255 pp.
ISBN 1-59139-764-2. Paperback,
$24.95
Financial Intelligence: A Manager’s
Guide to Knowing What the Numbers
Really Mean focuses on what every
employee would like to know about the
company in which he or she works. Is
the company in which I work solvent?
Does the company have sufficient funds
on hand to pay its bills? Is the company
headed in the right direction? The
premise of the text is that when employees have a thorough understanding of an
Downloaded by [Universitas Maritim Raja Ali Haji] at 22:18 12 January 2016
employer’s financial situation, they will
be in a better position to make appropriate decisions that result in greater efficiencies and enhanced profits.
The intriguing strategy on which the
text is based is that numbers reported in
traditional financial statements, such as
the balance sheet and income statement,
may be misleading to the financially
uninformed. In this regard, the typical
non-financial manager has very limited
knowledge on which to make reasonable judgments on how to put such
numbers into proper context. Therefore,
this book is an attempt to bring home
the financial reality of a company in
easy-to-understand terms that avoid the
jargon typically found in such publications. Berman and Knight have coauthored a unique but simple strategy,
which suggests that there is a correlation between having financially intelligent employees and enhanced worker
productivity.
The book could also easily fill a void
that may be evident in a considerable
number of business programs in our
postsecondary educational institutions.
In addition to assisting managers in
updating their financial knowledge, it
enables business faculty to provide a service to a student population that is not
majoring in a business concentration. In
this regard, the text may serve a broader
spectrum of individuals by assisting
those undergraduates in the liberal arts
and the sciences who also will likely
find employment in the private sector.
Becoming better informed as to the
financial side of business will help not
only typical employees as they go about
attempting to understand the significance of their roles in that organization
but also the future workers graduating
from colleges and universities. Moreover, by having a strong financial literacy awareness program in a company,
workers will feel more involved and
committed. Employees will better
understand of what they are a part, what
the organization is trying to achieve, and
how they can affect the results. Therefore, the authors argue that employee
morale should improve as trust between
leaders and followers solidifies.
The book is full of surprises, especially in the manner in which accounting
concepts are presented to and analyzed
for the reader. For example, the authors
begin by portraying accounting as an
“art,” in that the rules followed and
assumptions made frequently vary
depending on the intent and experience
of the developer of such financial statements. Therefore, employees who understand the assumptions upon which numbers are based are in a better position to
make appropriate decisions as to the
financial conditions of the companies in
which they work. As a result of comprehending the tools and strategies presented, the reader learns how to determine
the true meaning of numbers by being
capable of asking the right questions of
those who create income statements, balance sheets, and cash flow declarations.
Correspondingly, this capability puts
employees in a better position to be more
confident in using the financial information available to link their own personal
performance to the needs of the company
in which they work.
The text is divided into eight parts that
are sequentially linked in terms of building on concepts learned early in the
process. At the end of each part is a toolbox, which consists of having the reader
apply financial tools that will enable him
or her to better interpret financial reporting back at work. Therefore, the authors
attempt to integrate a sense of reality by
offering suggestions for getting through
the jargon generally associated with
those numbers being reported. The use
of these toolboxes symbolizes the
authors’ intent, which is to build the
reader’s confidence in analyzing any
company’s financial foundation.
Part I introduces the reader to the concept of distrust. The authors focus on the
importance of being sensitive to the
assumptions, estimates, and biases related to the numbers reported on the balance sheet, income, and cash flow statements. The key here is to know how to
make an accurate judgment as to when
revenue is recorded and when it is not.
Topics presented in this regard include
interpreting accruals, allocations, and
depreciation; separating hard data from
assumptions and estimates; calculating
and deciphering financial ratios; and differentiating between cash and profit.
Part II focuses particularly on examining the income statement, with the
authors guiding the reader to analyze
what exactly is considered profit, how it
is determined, and how it relates to cash
flow. Berman and Knight present what
they refer to as the matching principle
for illustrating why it is important to
match each category of sales with its
associated costs. Another engaging concept introduced is the principle of estimates, which means that numbers on
the income statement generally reflect
estimates and assumptions. The reader
is constantly reminded throughout the
text that financial accounting is an art
and that individuals must be extremely
cautious in accepting at face value numbers that are reported.
For example, the concept of earnings
per share is introduced, which is the net
profit divided by the number of shares
outstanding. However, for the reader to
understand this concept, the authors
make certain that the reader learns about
the importance of recognizing earned
income, how it is determined, and how
it relates to the reporting of sales. The
term profit is then examined in terms of
gross profit, operating profit, and net
profit. Again, the reader’s attention is
brought back to the significant role
played by the employee for boosting
profits by controlling costs of production and operating expenses as well as
the enhancement of noncash expenses
(such as depreciation).
Part III presents a straightforward
discussion of the balance sheet. The
focus here is on the topic of equity, or
the company’s book value (assets minus
liabilities). The authors direct an intensive portion of the reader’s attention to
differentiating between the types of
assets owned by a company—from
inventory to goodwill, tangibles to
intangibles, and accruals to prepaid
assets. An interesting aspect of the discussion here is how the income statement affects the balance sheet. Again, to
bring the discussion to the level of the
average employee, the authors explore
the topic of how an employee is generally classified in a company. Is it significant whether a company treats their
employees as a cost, an expense, or an
investment? In this regard, an issue the
authors address is why employees do
not show up on the balance sheet as a
separate item. The authors explain that,
in addition to the fact that companies do
July/August 2006
347
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not own employees, there is basically no
way to determine the value of the
knowledge possessed by each employee. Therefore, the balance sheet is an
inappropriate place to document the
value an employee has on the financial
worth of a company.
The authors use Part IV as a reality
check, with a discussion of the importance of a company’s ability to generate
cash consistently from month to month.
The reader’s attention turns to the topic
of why cash flow is a key measure of
business performance. An interesting
comparison is made here in terms of
interpreting the balance sheet and
income statements of a company.
Berman and Knight point out that cash
flow is reality, whereas the numbers
appearing on the balance sheet and
income statement may reflect an
accountant’s biases that are the result of
personal assumptions and estimates.
More important, the intent is to explain
why cash on hand matters to the average
employee. The authors go on to explain
that the amount of cash on hand determines where a business is headed, what
the priorities are, and if a company is
investing in its future. If there is sufficient cash on hand, then employees
know they can focus on conducting
business (i.e., reducing costs or generating sales) rather than being distracted by
performing tasks to generate cash to pay
immediate bills.
Part V of the text is about power; that
is, the power of ratios. Here, the reader
is again cautioned that numbers shown
on financial statements can be deceitful.
However, if a manager can relate numbers to one another, some sense can be
made of them. For example, comparing
ratios of one business with averages in
the industry can reveal much about a
company’s financial condition. Specific
examples of ratios discussed are returns
on assets, equity, and investment; debt
to equity ratio; current ratio; and collection’s efficiency ratio. The book provides a number of illustrations to
remind the reader that employees at all
levels of management can affect each of
these ratios.
348
Journal of Education for Business
Part VI turns the reader’s attention to
the financial concept of return on investment. The discussion of the time value
of money (differentiating between future
value and present value) is typically a
difficult concept to explain. However,
the authors do a particularly good job of
illustrating its importance in figuring out
how a company determines whether an
investment in the purchasing of new
equipment or expanding an existing
facility is worth it. For employees to
understand how to determine the benefits behind a new investment in terms of
their role places them in a position to
accept the vision of company leaders.
Part VII places the worker in the center of the economic picture of a company. The authors explain how the typical
employee may impact on the success or
failure of a company’s strategic plan.
The concept of working capital is interpreted in terms of how the typical
employee impacts the expectations of
both generating and managing cash. In
other words, how to convert the cost of
raw materials into cash (from sales)
quickly is the essence of efficiency. The
rate of the turnover of inventory can
mean the difference between a profit
and a deficit. Therefore, honing in on
concepts related to cash conversion by
exploring strategies that are readily
available for the employee to adapt
again brings the context of the book into
everyday reality.
The conclusion, Part VIII, contains a
proposal for a systematic plan on the
part of any organization to educate
employees about the financial aspects of
operating a business. The authors propose a three-prong strategy for implementing a financial literacy training
program. The first prong is the initiating
of a series of short training sessions on
a regular basis, perhaps once a month.
At these meetings, the employees will
become aware as to what numbers they
should be watching (e.g., sales, shipments, hours billed). The second prong
is the instituting of weekly training sessions (called numbers meetings) to help
employees to keep up-to-date with the
fast-changing pace of business. The
third prong is the introduction of reinforcement scoreboards that illustrate
visually how the accounting numbers
being reported match up to company
predictions. In other words, by having
the numbers posted on bulletin boards,
it will be difficult for employees to forget or ignore important information that
they may use during their own decisionmaking processes.
This book is about passion and the
power of knowledge. The purpose is to
produce more passionate employees who
perceive themselves as possessing a
power to make a difference in a company’s operation. The book can also be useful for undergraduates in colleges and
universities who would like to learn more
about how they, upon graduating, will fit
into the needs of a business. The text may
also be useful for a series of continuing
education seminars or in-service training
workshops that attract those presently
employed who are seeking to better
understand their roles at work.
In summary, the authors argue
throughout the text that knowing the
reasons behind why your work (and
what you do) is important to a company
and how it can have a significant effect
on worker productivity. By becoming
financially literate, employees can
answer the following questions: (a)
Where do I put my energy? (b) What
priorities should I set? and (c) What
kind of work plan should I implement to
have impact? In this regard, business
faculty have a very important role to
play in assisting not only managers in
the field but also undergraduates other
than majors of business to have a better
understanding as to how they can add
value to the company with which they
are or will be employed. Anything to
advance an understanding of the freeenterprise system is in the best interest
of business faculty, and this text can
play a role in this endeavor.
James L. Morrison,
University of Delaware
Newark, DE
Copyright © 2006 Heldref Publications
ISSN: 0883-2323 (Print) 1940-3356 (Online) Journal homepage: http://www.tandfonline.com/loi/vjeb20
Book Reviews
James L. Morrison
To cite this article: James L. Morrison (2006) Book Reviews, Journal of Education for Business,
81:6, 345-348, DOI: 10.3200/JOEB.81.6.345-348
To link to this article: http://dx.doi.org/10.3200/JOEB.81.6.345-348
Published online: 07 Aug 2010.
Submit your article to this journal
Article views: 10
View related articles
Full Terms & Conditions of access and use can be found at
http://www.tandfonline.com/action/journalInformation?journalCode=vjeb20
Download by: [Universitas Maritim Raja Ali Haji]
Date: 12 January 2016, At: 22:18
BOOK REVIEWS
Downloaded by [Universitas Maritim Raja Ali Haji] at 22:18 12 January 2016
McIntyre, John R., and Alon, Ilan (Eds.)
Business and Management Education
in Transitioning and Developing
Countries
Armonk, NY: M.E. Sharpe Publishers,
2005, 435 pp.
ISBN: 0-7656-1505-3. Paperback,
$35.95
This text, edited by John McIntyre and
Ilan Alon, reflects the experience of
over 40 contributors with expertise in
business and management education.
The emphasis is on change and how
graduates of business education programs can expand their influence in the
workplace as new global markets continue to emerge. In this regard, the primary purpose of the book (what some
could consider a handbook) is to prepare a cadre of innovative change agents
who may be better prepared to handle
the trials and tribulations of the change
process for guiding developing countries into the mainstream of globalization. The specific content for the text is
derived from scholarly exchange at a
research conference held at the Georgia
Institute of Technology in November
2003. The result is a comprehensive
review of management training issues
and business education models recently
being adopted by developing and transitioning countries.
The editors of this volume present a
collection of viewpoints from a pool of
talented professionals who make a variety of suggestions for updating educational institutions specifically situated in
emerging countries. The end goal is to
better enable faculty to address gaps in
the current product distribution systems
in emerging countries, such as India,
China, Nepal, and Russia. The text is
divided into six parts, reflecting transitioning economies in six regions of the
world. The initial segment includes five
chapters focusing upon emerging coun-
tries situated within the Indian subcontinent. After describing the status of business education programs and the challenges currently being faced by faculty
in India, the readings focus on accountability, affordability, and accessibility
issues that affect other countries in the
same region. The regulatory challenges
currently in existence are also analyzed
in great detail. Of particular note is a discussion of India’s priorities to the training of huge numbers of engineers to
launch a continual stream of innovative
products and services. The effective use
of technology to assist a new breed of
entrepreneurs is a major part of an innovative educational strategy proposed. At
the conclusion to this part, the book
turns our attention to the smaller country
of Nepal, an emerging country with lesser notoriety, but strategically situated
between China and India. The discussion here is how such a small country
has revised its management education in
direct response to the needs of its local
economy.
Part II of the readings advances the
study of current training programs in
post-Communist Europe, including references to Albania, Bosnia, Hungary,
Poland, and Russia. Of note here is the
attention paid to the privatization of key
industries and its impact upon preparing
individuals to fulfill new roles in organizations that are currently being restructured. In this regard, special interest is
given to Russia and its current emphasis
on revising business education and management training to graduate workers
possessing skills similar to those currently emphasized in the American business education programs. Areas that are
currently being benchmarked with
American programs are analytical skills,
oral and written communication, computer skills, decision making, and problem solving. Noted here is how students
in Russia differ from their faculty in
their perceptions as to the quality of their
learning experiences as they go about
developing their managerial talent.
In Part III of the text, the reader’s
attention is directed to the transitioning
of economies in Europe and Central
Asia. An interesting example illustrated
is that of the Lviv Institute of Management in Ukraine, whereby educational
strategies typical of Western-style business schools have been adopted in its
entrepreneurial-training
program.
Specifically, the highly interactive U.S.
model of business education has served
as a guide for enhancing the management training capability of institutions
in emerging countries that are now free
to reinvent themselves because governmental interference has been significantly reduced.
Another institution of interest is the
Vilnius University in Lithuania, which
has a master of international business
program that prepares students to enter
into a globalizing local economy. It also
symbolizes the movement from training
institutions offering a narrow technical
strategy to that of a more general and
liberal arts orientation. Concluding this
segment is an emphasis on reforming
the accounting and financial reporting
systems, especially of countries in Eastern Europe. Within the context of
Bosnia and Herzegovina, there is an
intriguing discussion of matching existing professors to the new certification
model now being formulated to ensure
the quality of accounting program graduates. The primary issue addressed is
how faculty in these transitioning countries will be able to mobilize their limited resources (i.e., land, labor, and capital) to generate and sustain needed
business education reforms for launching new global initiatives.
Part IV concentrates on developing
countries in Latin America where the
interdependency of countries is an
July/August 2006
345
Downloaded by [Universitas Maritim Raja Ali Haji] at 22:18 12 January 2016
issue. The self-interest here is on the
need to establish a global mindset
among faculty for reinventing existing
business education programs that reflect
an expanded global reality. Using
Argentina as an example, the need for
change agents to reshape organizations
so they become incubators for new
products and services is explored. New
ventures generated by business education graduates are expected to play a
critical role in the emergence of firms of
superior quality that are on the cutting
edge of technology. The editors cite
Chile as another example of how emerging countries have moved from centralized economies to a free-market system,
enabling citizens to compete more
freely and openly.
Parts V and VI target the continents
of Africa and Asia. Of particular interest
is the radical transformation, both politically and economically, of countries in
Africa, as internal and external pressures mount to reform existing
economies. In addition, China is alluded
to as another example of a country with
similar pressures to reform its universities. The strategy discussed is the acceleration of the process to accumulate scientific knowledge and technology to
better enable graduates to go about
adapting current resources for entering
into an era of what the contributors refer
to as knowledge work. Because there is
a burgeoning demand for business education in China, there is a renewed interest in reconfiguring training programs
in Chinese universities from the traditional emphasis of engineering (and
other sciences) to entrepreneurial building or business. China is a remarkable
example of the seriousness behind the
current movement among emerging
countries to become major players in
the global economy. In this regard, the
readings focus on the factors of selfesteem of students; the degree of control
by institutions on personal decision
making; and underlying cultural
assumptions, values, and beliefs.
In summary, the text is about choice
and how business education faculty are
facing unique training challenges to
bring their countries into a globalizing
marketplace with an aggressiveness that
may startle the reader. The contributors
propose a variety of innovative respons346
Journal of Education for Business
es to the changing training needs of
workers situated in different regions of
the globe. The message is clear that
institutions offering business and management education are being heavily
relied upon to demonstrate the leadership necessary to mobilize future generations of workers into new employment
models that inspire change.
The strength of the text is the numerous examples used to reference proposed models for transitioning from
business education reflecting a country’s traditional norms to new dynamic
training models. The idiosyncrasies
peculiar to work cultures around the
world are described in terms of exploring the complexity of the issues surrounding such transition. The contributors do an excellent job of illustrating
how countries are attempting to diversify their markets in an attempt to reap
rewards from the new opportunities
emerging every day.
A primary weakness of the text is
some confusion in the differentiation of
leadership training and management
education. While there is some attention
given to the topic, the inference appears
to be that leadership and management
education are relatively the same. The
confusion may be the result of what is
being currently debated among business
and other faculty in American colleges
and universities. In this text, there
appears to be a blurring between the
disciplines of leadership and management. However, rather than implying
that leaders and managers have very
similar training needs, a more differentiated but complementary strategy may
be in order. In other words, how are
countries preparing future generation of
workers with the leadership skills of
developing a vision, inspiring others to
act, and making decisions that set a
country in the right direction?
The assumption I had when reading
the text is that the current leadership in
emerging countries is generally on the
right path and that the purpose of management education is to prepare those
workers to carry out existing plans.
However, it would have been helpful if
the contributors analyzed the complementary effects of both leadership education and management education within a new context. In other words, it takes
leadership to set a country in the right
direction to promote economic development, but effective management is also
required to plan, organize, and act on
those tasks required to sustain a direction of change; the initiation of change
and sustaining such a movement likely
require two separate but complementary
strategies.
However, the contributors to the text
provide an intriguing perspective of the
opportunities and challenges facing business education programs around the
world as faculty attempt to meet the
needs of both political and economic
environments. The contributors do complement one another by giving a variety
of examples to document their perspectives. The focus on what are referred to as
emerging markets makes this text somewhat different from others previously
appearing in the literature. With the intent
to redefine business and management
education within the context of emerging
countries, the contributors do lay the
groundwork for the premise that business
education has a vital stake in the success
or failure of these emerging countries.
This book can generate lively discussions
among students either at the undergraduate or the graduate level of education. It is
certainly a text that should be part of a
faculty’s personal library and also be
readily available to students who have an
interest in understanding the dynamics of
emerging markets.
Berman, Karen, and Knight, Joe (with
Case, John).
Financial Intelligence: A Manager’s
Guide to Knowing What the Numbers
Really Mean.
Cambridge, MA: Harvard Business
School Press, 2006, 255 pp.
ISBN 1-59139-764-2. Paperback,
$24.95
Financial Intelligence: A Manager’s
Guide to Knowing What the Numbers
Really Mean focuses on what every
employee would like to know about the
company in which he or she works. Is
the company in which I work solvent?
Does the company have sufficient funds
on hand to pay its bills? Is the company
headed in the right direction? The
premise of the text is that when employees have a thorough understanding of an
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employer’s financial situation, they will
be in a better position to make appropriate decisions that result in greater efficiencies and enhanced profits.
The intriguing strategy on which the
text is based is that numbers reported in
traditional financial statements, such as
the balance sheet and income statement,
may be misleading to the financially
uninformed. In this regard, the typical
non-financial manager has very limited
knowledge on which to make reasonable judgments on how to put such
numbers into proper context. Therefore,
this book is an attempt to bring home
the financial reality of a company in
easy-to-understand terms that avoid the
jargon typically found in such publications. Berman and Knight have coauthored a unique but simple strategy,
which suggests that there is a correlation between having financially intelligent employees and enhanced worker
productivity.
The book could also easily fill a void
that may be evident in a considerable
number of business programs in our
postsecondary educational institutions.
In addition to assisting managers in
updating their financial knowledge, it
enables business faculty to provide a service to a student population that is not
majoring in a business concentration. In
this regard, the text may serve a broader
spectrum of individuals by assisting
those undergraduates in the liberal arts
and the sciences who also will likely
find employment in the private sector.
Becoming better informed as to the
financial side of business will help not
only typical employees as they go about
attempting to understand the significance of their roles in that organization
but also the future workers graduating
from colleges and universities. Moreover, by having a strong financial literacy awareness program in a company,
workers will feel more involved and
committed. Employees will better
understand of what they are a part, what
the organization is trying to achieve, and
how they can affect the results. Therefore, the authors argue that employee
morale should improve as trust between
leaders and followers solidifies.
The book is full of surprises, especially in the manner in which accounting
concepts are presented to and analyzed
for the reader. For example, the authors
begin by portraying accounting as an
“art,” in that the rules followed and
assumptions made frequently vary
depending on the intent and experience
of the developer of such financial statements. Therefore, employees who understand the assumptions upon which numbers are based are in a better position to
make appropriate decisions as to the
financial conditions of the companies in
which they work. As a result of comprehending the tools and strategies presented, the reader learns how to determine
the true meaning of numbers by being
capable of asking the right questions of
those who create income statements, balance sheets, and cash flow declarations.
Correspondingly, this capability puts
employees in a better position to be more
confident in using the financial information available to link their own personal
performance to the needs of the company
in which they work.
The text is divided into eight parts that
are sequentially linked in terms of building on concepts learned early in the
process. At the end of each part is a toolbox, which consists of having the reader
apply financial tools that will enable him
or her to better interpret financial reporting back at work. Therefore, the authors
attempt to integrate a sense of reality by
offering suggestions for getting through
the jargon generally associated with
those numbers being reported. The use
of these toolboxes symbolizes the
authors’ intent, which is to build the
reader’s confidence in analyzing any
company’s financial foundation.
Part I introduces the reader to the concept of distrust. The authors focus on the
importance of being sensitive to the
assumptions, estimates, and biases related to the numbers reported on the balance sheet, income, and cash flow statements. The key here is to know how to
make an accurate judgment as to when
revenue is recorded and when it is not.
Topics presented in this regard include
interpreting accruals, allocations, and
depreciation; separating hard data from
assumptions and estimates; calculating
and deciphering financial ratios; and differentiating between cash and profit.
Part II focuses particularly on examining the income statement, with the
authors guiding the reader to analyze
what exactly is considered profit, how it
is determined, and how it relates to cash
flow. Berman and Knight present what
they refer to as the matching principle
for illustrating why it is important to
match each category of sales with its
associated costs. Another engaging concept introduced is the principle of estimates, which means that numbers on
the income statement generally reflect
estimates and assumptions. The reader
is constantly reminded throughout the
text that financial accounting is an art
and that individuals must be extremely
cautious in accepting at face value numbers that are reported.
For example, the concept of earnings
per share is introduced, which is the net
profit divided by the number of shares
outstanding. However, for the reader to
understand this concept, the authors
make certain that the reader learns about
the importance of recognizing earned
income, how it is determined, and how
it relates to the reporting of sales. The
term profit is then examined in terms of
gross profit, operating profit, and net
profit. Again, the reader’s attention is
brought back to the significant role
played by the employee for boosting
profits by controlling costs of production and operating expenses as well as
the enhancement of noncash expenses
(such as depreciation).
Part III presents a straightforward
discussion of the balance sheet. The
focus here is on the topic of equity, or
the company’s book value (assets minus
liabilities). The authors direct an intensive portion of the reader’s attention to
differentiating between the types of
assets owned by a company—from
inventory to goodwill, tangibles to
intangibles, and accruals to prepaid
assets. An interesting aspect of the discussion here is how the income statement affects the balance sheet. Again, to
bring the discussion to the level of the
average employee, the authors explore
the topic of how an employee is generally classified in a company. Is it significant whether a company treats their
employees as a cost, an expense, or an
investment? In this regard, an issue the
authors address is why employees do
not show up on the balance sheet as a
separate item. The authors explain that,
in addition to the fact that companies do
July/August 2006
347
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not own employees, there is basically no
way to determine the value of the
knowledge possessed by each employee. Therefore, the balance sheet is an
inappropriate place to document the
value an employee has on the financial
worth of a company.
The authors use Part IV as a reality
check, with a discussion of the importance of a company’s ability to generate
cash consistently from month to month.
The reader’s attention turns to the topic
of why cash flow is a key measure of
business performance. An interesting
comparison is made here in terms of
interpreting the balance sheet and
income statements of a company.
Berman and Knight point out that cash
flow is reality, whereas the numbers
appearing on the balance sheet and
income statement may reflect an
accountant’s biases that are the result of
personal assumptions and estimates.
More important, the intent is to explain
why cash on hand matters to the average
employee. The authors go on to explain
that the amount of cash on hand determines where a business is headed, what
the priorities are, and if a company is
investing in its future. If there is sufficient cash on hand, then employees
know they can focus on conducting
business (i.e., reducing costs or generating sales) rather than being distracted by
performing tasks to generate cash to pay
immediate bills.
Part V of the text is about power; that
is, the power of ratios. Here, the reader
is again cautioned that numbers shown
on financial statements can be deceitful.
However, if a manager can relate numbers to one another, some sense can be
made of them. For example, comparing
ratios of one business with averages in
the industry can reveal much about a
company’s financial condition. Specific
examples of ratios discussed are returns
on assets, equity, and investment; debt
to equity ratio; current ratio; and collection’s efficiency ratio. The book provides a number of illustrations to
remind the reader that employees at all
levels of management can affect each of
these ratios.
348
Journal of Education for Business
Part VI turns the reader’s attention to
the financial concept of return on investment. The discussion of the time value
of money (differentiating between future
value and present value) is typically a
difficult concept to explain. However,
the authors do a particularly good job of
illustrating its importance in figuring out
how a company determines whether an
investment in the purchasing of new
equipment or expanding an existing
facility is worth it. For employees to
understand how to determine the benefits behind a new investment in terms of
their role places them in a position to
accept the vision of company leaders.
Part VII places the worker in the center of the economic picture of a company. The authors explain how the typical
employee may impact on the success or
failure of a company’s strategic plan.
The concept of working capital is interpreted in terms of how the typical
employee impacts the expectations of
both generating and managing cash. In
other words, how to convert the cost of
raw materials into cash (from sales)
quickly is the essence of efficiency. The
rate of the turnover of inventory can
mean the difference between a profit
and a deficit. Therefore, honing in on
concepts related to cash conversion by
exploring strategies that are readily
available for the employee to adapt
again brings the context of the book into
everyday reality.
The conclusion, Part VIII, contains a
proposal for a systematic plan on the
part of any organization to educate
employees about the financial aspects of
operating a business. The authors propose a three-prong strategy for implementing a financial literacy training
program. The first prong is the initiating
of a series of short training sessions on
a regular basis, perhaps once a month.
At these meetings, the employees will
become aware as to what numbers they
should be watching (e.g., sales, shipments, hours billed). The second prong
is the instituting of weekly training sessions (called numbers meetings) to help
employees to keep up-to-date with the
fast-changing pace of business. The
third prong is the introduction of reinforcement scoreboards that illustrate
visually how the accounting numbers
being reported match up to company
predictions. In other words, by having
the numbers posted on bulletin boards,
it will be difficult for employees to forget or ignore important information that
they may use during their own decisionmaking processes.
This book is about passion and the
power of knowledge. The purpose is to
produce more passionate employees who
perceive themselves as possessing a
power to make a difference in a company’s operation. The book can also be useful for undergraduates in colleges and
universities who would like to learn more
about how they, upon graduating, will fit
into the needs of a business. The text may
also be useful for a series of continuing
education seminars or in-service training
workshops that attract those presently
employed who are seeking to better
understand their roles at work.
In summary, the authors argue
throughout the text that knowing the
reasons behind why your work (and
what you do) is important to a company
and how it can have a significant effect
on worker productivity. By becoming
financially literate, employees can
answer the following questions: (a)
Where do I put my energy? (b) What
priorities should I set? and (c) What
kind of work plan should I implement to
have impact? In this regard, business
faculty have a very important role to
play in assisting not only managers in
the field but also undergraduates other
than majors of business to have a better
understanding as to how they can add
value to the company with which they
are or will be employed. Anything to
advance an understanding of the freeenterprise system is in the best interest
of business faculty, and this text can
play a role in this endeavor.
James L. Morrison,
University of Delaware
Newark, DE
Copyright © 2006 Heldref Publications