Is the MBA Still Hot?

Candidates’ Interests: 2012 vs. 2013

September 9th, 2014

The MBA is a degree that has undergone various transformations. Over the years, B-schools have introduced different formats to match the interests and availability of prospective students, and the constantly adapt their programmes’ content to market trends. All these modifications are aimed at keeping the degree up-to-date with the contemporary business world. Candidate interest statistics are the criteria which show us whether the MBA is still hot.

A Graduate Management Application Council (GMAC) survey indicates that, in 2013, the interest of candidates for full-time programmes rose for a second consecutive year, after the 2011 dip. The United States led the way with 52% of two-year and 55% of one-year fulltime MBA programmes receiving more applications than in the previous year. The Asia-Pacific region fared fairly well, although the statistics were not as good as in 2012.

The situation in Europe was different – the number of MBA candidates decreased due to an unstable economy, despite heading towards the road to recovery. 2013 was a good year for the business schools. Worldwide, half of the two-year full-time programmes saw a rise in their application volumes. And for the one-year full-time MBAs it was almost the same - 49% of programmes reported more candidates and 4% were steady. In the USA 56% of two-year fulltime programmes received more applications from abroad. This, most probably, signals that the American economy was perceived by prospective students as more attractive than the European situation. It is, however, not unlikely that in 2014 Europe will rebound, so we should not be too hasty to automatically project this trend into the future.

The American highway going up

The American economy is indeed improving for the time being. In 2013, the GDP rose by 1.9% and, in the last quarter of the year, it was 3.2%. Additionally, according to a Gallup poll, the Economic Confidence Index for the USA in 2013 was -16, up five points from 2012, and the Job Creation Index was +20, up two points. The average daily self-reported spending reached 88 USD which is 16 USD more than it was in 2012. Despite still being in the negative territory, the American Economic Confidence Index last year was the highest since Gallup started measuring it in 2008. Simultaneously with the rise of foreign applicants, however, 59% of MBA programmes across the Atlantic also faced a decline in domestic candidates. Only 38% of the programmes received more applications from Americans. And, since US business schools generally accept fewer international candidates than their European counterparts, they were affected by this tendency. Nevertheless, American schools did score numbers to be proud of – 61% of US programmes reported increased volume from for eign applicants. One-year full-time MBA programmes also experienced a rise in interest - 55% of them received more applications in 2013. It was the same situation in 2012, with 54% receiving more applications.

Fluctuating Asian style

For many years, the Asian market has secured the biggest boom for the MBA industry. Last year, however, was certainly a different one, as the economy slowed. In 2012, 79% of two year fulltime MBA programmes in the Asia-Pacific region had more applicants. In 2013, just 46% had an increase in volume. The main reason for this is the weaker interest from domestic candidates that represent three quarters of all applicants. At the same time, 53% of full-time one-year MBAs had a smaller applicant pool – down from 77% in 2012. Not surprisingly, this comes concurrently with a slowdown in the growth of the economies in the region. But Asia is still very far from being frozen. In China, 75% of two-year MBA students seeking employment received a job offer prior to graduation. In India, 67% of full-time one-year MBA students and 70% of full-time two-year MBA students had an offer. In comparison, 55 % of students in European schools received an offer while still studying.

European worries

There’s no doubt that the European economy looked gloomy in 2013, and that the MBA was hit hard, as candidates also evaluate their long-term employment perspectives when applying. Only 38% of full-time one-year MBA programmes in Europe have increased their application volume. A pretty similar result to 2012, when 37% experienced more interest. European programmes rely heavily on foreign candidates and 54% of programmes reported decreasing volumes from abroad, with just 31% reporting an increase. An area where Europe really sets itself apart is the part-time MBA. 61% of parttime programmes in Europe witnessed increased or stable application volumes, as opposed to just 42% in the United States.

 

In reality, if you are an expatriate in Europe, the chances of finding a job are greater than if you were in the United States, according to GMAC. The majority of foreigners in MBA programmes in the EU - 56% - had a job offer before graduation. For the USA, that number is 42% and in Latin America – 32%. Meanwhile, the most successful method (61%) for finding a job in Europe is through a placement or a work project. This is the same in the USA (76%) and China (58%) whereas in Latin America the leading method (64%) is through a network of friends and family.

The technology sector is the pioneer (32%) when it comes to hiring graduates who need a visa or work permit. Globally, 55% of companies would employ business alumni who require a visa or work permit. One quarter (24%) plan to hire, and one third (31%) were willing to hire, but did not have specific plans for 2013. More Asia-Pacific and European employers than American ones planned to attract MBA talents with a need for a visa or a work permit.

Professional MBAs

The interest in the so-called professional MBA programmes – part-time MBA, executive MBA, online MBA, etc. – waned in 2013. These disciplines are designed for people who, while studying, also continue to work. Many candidates cannot rely on the financial support of their employers, as was the case in previous years. According to the Executive MBA Council, only one in four (24%) EMBA students receive a full sponsorship today, down from one in three (33%) in 2008.

 

When it comes to candidates’ interest in the programmes, the full-time two-year MBA programmes received a median of 4.1 applications for each available place and the full-time one-year MBA programmes a median of 2.7 applications. On average, professional MBA degrees received just over 1 application per place. It would not be uncommon for schools to try to channel especially the more experienced MBA candidates to their EMBA courses. Between 64% and 75% of applicants for professional degrees were accepted.

Even though not all the statistics on the popularity of professional MBAs during the previous year are positive, quite a few top B-Schools still report positive numbers in different categories. For instance, the most recently published applicants- to-places ratio of the EMBA programme at ESADE Business School is 3:1. Additionally, the current class of the IESE Global Executive MBA, a traditionally selective programme that seeks highlycalibrated participants,  has 60 students. Despite the fact that levels of interest in professional MBA programmes fluctuate, EMBA and part-time MBA students are reporting numbers that hint at a bright future for the popularity of the programmes. According to Business Wire, the salary and bonus packages of recent EMBA graduates who participated in the Executive MBA Council 2013 Student Exit Benchmarking Survey increased by 14% from programme start to programme end. The average salary and bonus package at programme start for students in the 2013 survey was 140,310 USD. By the end of the programme, the average salary and bonus package rose to 159,963 USD.

The reality is that statistics abound – there are various sources that base their reports on administering surveys with hundreds of business schools over dozens of categories. Some of the data look more positive than other aspects and it is true that recent years have seen fluctuating numbers of MBA applicants as a whole.



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