The uncertain economic climate and the increasing emphasis on the use of advanced technology have led to a rapidly changing global business environment, putting unprecedented pressure on managers to make strategic decisions that will increase their companies' competitiveness in the marketplace in the most effective manner.
Sustainability and value creation should be at the heart of every corporate strategy during these difficult times, says Vidhan Goyal, professor, department of finance, School of Business and Management, the Hong Kong University of Science & Technology (HKUST).
"Operational decisions and financial management go hand in hand in today's business environment," Professor Goyal points out.
It is therefore crucial for general managers to develop an understanding of the way strategic decisions and operations impact on companies' financial performance and, ultimately, on creating firm value, which determines long-term business viability.
In a move to help executives get to grip with the significance of a financial decision, the HKUST's School of Business and Management offers a two-day strategic financial management programme, with an aim to provide managers with a comprehensive understanding of valuation and the value creation process. The programme focuses on the strategies that company decision-makers can employ to create value for their investors.
"Students also learn to evaluate the financial implications of their decisions, including the impact on company cash flow," Professor Goyal adds.
Now running for the third year, the programme also caters to the professional needs of general managers and executives hailing from a non-financial background. The programme material extends beyond spreadsheets and accounting to provide a broader perspective on finance.
"In essence, we teach students to look at key financial numbers, understand what these numbers mean and how their decisions can increase the overall value of the company," says Professor Goyal.
In addition to learning how to drive company value through corporate restructuring, mergers and acquisitions and capital budgeting, students also gain insights into how to change a company's mix of assets, either by selling some off or by diversifying.
Towards the conclusion of the programme, students will be able to look at the impact of their day-to-day decisions on overall company value in a different light. "Once their decisions are guided by the objective of value creation, they will start making decisions differently," he says.
The programme is not simply knowledge-based, but also "transformational and interactive", Professor Goyal stresses.
It makes use of recent case studies to provide a fundamental framework and the theoretical knowledge to teach students to evaluate companies' financial health and investment projects, and to help them to develop alternative ways to allocate resources, says Professor Goyal. This makes the process relevant to industries across the board.
He remarks that the concepts and tools discussed not only apply to the current financial environment, but to all economic conditions.
"It is now the ideal time to prepare managers for corporate repositioning as the economy recovers," Professor Goyal points out. "The skills that we develop with this programme are crucial for the survival and growth of companies across all sectors."
Company managers benefit greatly from the programme, he emphasises. "Our programme is practical in the sense that managers can take the knowledge they learn and immediately apply it to their daily business operations. It tends to change the way they look at different business issues and makes it easier for them to communicate effectively with the finance people in their companies."
Students participating in the programme over the past two years have hailed from a wide range of industries and varied company backgrounds — from small family-run businesses to medium-sized companies and large conglomerates.
The diverse student profile has always provided ample opportunity for peer discussions and ideas exchange, Professor Goyal concludes.