The Aftershocks of the Financial Crisis Have Made B-schools Change Course
At the beginning of the financial crisis in 2008, universities offering high-quality MBA degrees saw the crash as a blessing in disguise and a time for business-makers to take a break and go back to school. However, with the registered drop in full-time MBA applications in the past few years, B-schools have to rethink their strategy and come up with a plan B.
Online and one-year MBAs
The full-time MBA is still popular in countries with growing economies such as India and China where there is demand for young business professionals (last year applications surged at four out of every five programmes in Asia). However, the popularity is beginning to wane in Europe and North America where the market is tight and job possibilities are more limited.
GMAC numbers for 2012 do not give a very pretty picture for the full-time MBA. For a fourth year in a row the number of applications for the two-year format is declining. The median number of applications worldwide fell 22% in 2012 for the two-year degrees, after a nearly 10% decline last year. B-schools are battling the unfavourable trends by offering a variety of MBA formats.
Part-time, online and executive MBA programmes reported gains globally, benefiting from workers who want to earn advanced degrees without leaving their jobs. In 2011, for example, the University of North Carolina’s Kenan-Flagler Business School launched MBA@NUC, the first full-scale online MBA programme offered by a top B-school. It provides the same content as the traditional programme but is considerably less expensive and allows students to budget their own time. All concerns that the project may fail since it might not be able to replicate the face-to-face, back-and-forth communication in the classroom, have proved to be groundless. The inaugural class for MBA@NUC was 19 students but the number of new admissions since then has jumped to 75. Other universities have quickly followed the example such as Bentley University which successfully launched a one-year programme in 2012 for young leaders. The fast-track, one-year MBA has also proved to be a success. Accelerated MBA programmes which take between 10 and 15 months to complete have been on offer for decades. They are the norm in Europe which explains why this year’s first-ever Wall Street rank-list of the best universities with accelerated MBAs was topped primari ly by European Bschools, However, American universities are picking up fast. Kellogg School of Management and Babson College's F.W are now in 3rd place and other US universities are also offering high-quality one-year MBA degrees – Cornell, the University of Florida, Hult.
The one-year MBA degree is especially popular with students with more work experience and who are reluctant to take two-years away from the job. The programme is time-efficient, core requirements are often reduced and courses can be customised through electives and concentrations. Although Europe leads the “race” in providing accelerated MBA education, US universities also have their own assets. Partway through the one-year programmes, some accelerated MBA students at Kellogg and Cornell, for example, start taking classes with two-year MBA students, offering an influx of new study partners and work experiences to incorporate in their personal networks. US schools also tend to have more women—35% vs. 23%.
American schools also tend to excel in softer skills, such as teamwork, relationship-building and managing across functions. According to alumni, Kellogg outperformed all other schools in negotiation training, for example. (The one European school that stood out in this area was IMD which focuses heavily on leadership training.) So, if you decide on a year of professional business schooling, you have plenty to choose from and you are no longer geographically-bound.
The spread of specialised Master’s programmes
A relatively recent novelty for business universities is the spread of specialised programmes such as, for example, in management, finance, international relations, IT, marketing and communications.
Although they are not attractive to students with extensive work experience who want the broad general management coverage which an MBA offers they are a good option for those who are at the start of their careers. Moreover, there’s no lack of interest: for the newly launched Master of Finance programme. The University of Texas’s McCombs School of Business received 222 applications for 30 places. At Sloan student enrollment in the finance Master has doubled to 120 this year to accommodate student demand.
The top European business schools also offer a variety of specialised Master’s programmes which allow students to gain the necessary expertise in the industry of their choice. IE, for example, has modules in digital marketing, tourism management and sports management among other things and offers separate masters in management and finance. However, the real sel l ing-point of the specialised master’s programmes is the success graduates experience on the job front. The Massachusetts Institute of Technology’s Sloan School of Management, for example, launched a finance degree in 2008 and all of their graduate students have managed to land a job, says the director of Sloan’ s Laboratory for Financial Engineering, Andrew Lo.
So, what’s the balance sheet?
It is true that business schools are encountering difficulties – especially in Europe and North America where the full-time MBA is becoming less popular. However, they have managed to read just themselves by offering a variety of MBA formats and specialised masters for those wishing to grow in a particular industry without compromising the quality of education or diminishing their admissions tandards. Thus you will still need a brilliant academic record and an outstanding resume to get in.