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Module 2

Financial Management (3 credits)

Taught by Frans de Roon

Finance is about how corporations, investors, and households use their funds, the investment decision and, conversely, how they finance, or fund, their investments, the financing decision. These two financial decisions will be the central themes of this course.

The Investment decision or Capital Budgeting is about whether investing funds today is worthwhile given the cash flows that we will obtain from that investment in the future. Examples are i) investing in a stock today, where the expected payoffs or cash flows are the dividends that we will receive from the stock, ii) investing in a marketing campaign in order to increase your company's cash flows via increased sales, iii) investing in college education in order to increase your future salary, etc. In order to make the investment decision, we need a good understanding of i) Cash Flows, ii) the Discounted Cash Flow framework, and iii) the Discount Rate or Cost-of-Capital.

The Financing decision is about how to finance an investment. Once we have decided to invest in building a new plant, invest in a marketing campaign, buy another company, or start a college education, we need to determine how to fund the investment. The basic choice a firm (or household) has to finance its investments is to use either i) equity (or savings) or ii) debt. We therefore need a good understanding of the different financing choices and how this affects the value of the firm. Indeed, throughout the course, valuation will be a key issue.

Finally, both in Investment decisions and in Financing decisions, there are often option characteristics – i.e., the investment or financing structure may be adjusted over time depending on market conditions. Therefore the course also plans to give an introduction into Option Analysis, and how this affects Investment and Financing decisions.

Managing During Transition & Uncertainty (2 credits)

Taught by ISM faculty & Aldas Kriauciunas

Lithuania was first mentioned by name in historical archives in 1009 A.D., but people have lived in this area by the Baltic Sea for thousands of years. Through the centuries, the country grew and in the early 1400s Lithuania was the largest country in Europe, stretching from the Baltic Sea in the north to the Black Sea in the south. But the country's location in the geographic center of Europe also made it the cross-roads for armies from Russia, Poland, Prussia, Germany, France and other countries. And so, during the 19th century, Lithuania disappeared from the face of the map as an independent country.

Its fortunes improved when it reestablished independence on February 16, 1918 and held that status until 1940. Unfortunately, the country was annexed by the Soviet Union in 1940 and was only able to once again reestablish independence on March 11, 1990. It was the first of the Soviet Republics to take this bold move and started a trend that ended with the collapse of the Soviet Union in August 1991. Since then, the country has embarked on a road embracing democratic principles and free-market systems. It is a member of the European Union, uses the euro, and is also a member of NATO. While Lithuania is similar to other Central European countries given its experience as a transition economy, Lithuania's unique location and history makes it a bridge in multiple ways: a geographic bridge, an economic bridge, a cultural bridge, and a management bridge.

This background sets the foundation for this course. The course is not just about Lithuania, but rather, uses Lithuania as a context for understanding a broader set of challenges and successes. As such, the course focuses on the following objectives:

  1. Considering the challenges of running a business in a country that has experienced four economic crises in 25 years – what has allowed managers and their employees to withstand so many crises at such depths rarely seen in developed economies;
  2. Understanding the management of a multi-lingual work force that has employees from different economic systems;
  3. How to implement modern management systems in a country that is still constrained by a different system – in this case, the former soviet system;
  4. How do managers cope with the uncertainty where each election brings in a new set of governing parties and related changes.

Students will need to consider transition and uncertainty at both an external level and personal level.

Mergers & Acquisitions (Functional Elective) (2 credits)

Taught by Jeffrey Reuer

In this course, we will focus on the key aspects of M&A deal-making and implementation, and we will adopt an integrative approach that emphasizes strategic management issues in corporate development. Acquisitions are one of the key instruments of corporate strategy.  These investment vehicles hold out great promise for firms to obtain economies of scope, cross-selling advantages, and other benefits such as corporate renewal and innovation. They also present executives with important risks and challenges, as witnessed by many studies placing failure rates as high as one-half to two-thirds of deals.

Operations & Supply Chain Management (3 credits)

Taught by Roberto Cigolini

Operations and supply chain management (OM&SCM) is a key element in the improvement in productivity in business around the world. Establishing a competitive advantage through OM&SCM requires an understanding of how the operations and SCs functions contribute to productivity growth. However, the intent of this course is to do more than just show what companies are doing to create a competitive advantage in the marketplace, by conveying a set of skills and tools that you can actually apply. Hot topics in business today relate to OM&SCM sustainability, lean SCs, SC risk and resilience, SC finance aligning SC and New Product Development processes and improving global SC planning. These topics are studied in the course with up-to-date, high-level managerial material to clarify the “big picture” of what these topics are and why they are so important to business today.

Success in OM&SCM requires a data-driven view of a firm’s business. Every part of the course has analytical content that ties decisions to relevant data. Mathematical models are used to structure the data for making decisions. Given the facts that are supported by data, success in OM&SCM requires using a strategy that is consistent with the operations-related priorities of a firm. Different approaches can often be used, and usually trade-offs related to cost-and-flexibility-related criteria exist. Strategies are implemented through processes that define exactly how things are done. Processes are executed over and over again as the firm conducts business, so they must be designed to operate efficiently to minimize cost while meeting quality-related standards.

Great managers are analytical in their approach to decision making, understand and select the appropriate strategy, and then execute the strategy through great processes. The reality of global customers, global suppliers, and global SCs has made the global firm recognize the importance of being both lean and green to ensure competitiveness. Success for companies today requires successfully managing the entire supply flow, from the sources of the firm, through the value-added process of the firm, and on to the customers of the firm.

Please note course offerings and faculty are subject to change.