European MBA vs. American MBA

Make the most out of this helpful article which looks at the choice many MBA applicants are faced with – European MBA vs. American MBA.

European MBA vs. American MBA

49 years is the length of time separating the first American MBA programme from the first one in European. The Graduate School of Business Administration at Harvard University started its Master of Business Administration degree in 1908 and not until 1957 did INSEAD in France follow suit. Have the Europeans and Americans now reached the same level?

The choice of an American or European MBA depends on many factors which have little or sometimes nothing to do with geography.Amongst the most important differences between the programmes on either side of  the Atlantic is the price of the degree, its duration and the level of internationalisation of the school. When comparing options it is a good strategy for candidates first to make an analysis of themselves and their career goals. The correct approach would be to pick schools which match the individual profile is . The starting point is to knowing the sphere of specialisation an applicant wants to follow: – Marketing, Commerce, Project management, Accountancy or another.

After deciding on the field(s), the prospective student should also try to determine which place is more suited to his lifestyle. Here the dilemma touches on the question of culture and surroundings:  that of Europe or America. Cultures are not homogenic and it would be too simplistic to make generalizations,. Thus it is best to gather personal impressions. Most schools have open door days and candidates should visit them whenever possible. It is also useful to talk to students in the programme you want to apply for.  Employment prospects post-graduation are another factor to be kept in mind, if candidates intend to relocate. Both America and Europe have legal restrictions such as work permits, visas, etc. that could potentially make more difficult career plans.

USA – the motherland of MBA

The two-year programme is still considered to be the American standard for the full-time MBA. In Europe this duration of the course is one year or eighteen months. However, since the two-year course is more expensive and has a related high opportunity cost, more prestigious American schools have started to offer shorter MBA programmes. In the beginning of February 2012, Northwestern's Kellogg School of Management announced its plans to increase the size of its one-year programme and reduce the intake for its two-year classes. Sally Blount, the dean of Kellogg, explained the move in an interview with PoetsandQuants.com: "It's very clear that growth in demand for the two-year MBA is going to be slowing and that growth for one-year programmes will be growing. We have to be realistic about the market in which we find ourselves."

The latest GMAC survey shows that MBA graduates remain highly paid in the American job market.  Graduates of US business schools from the class of 2011 earned an average salary of US$ 81,000, which is with roughly 3000 less than their European colleagues. Pay is important, of course but what is more important is the satisfaction with what you do. Despite the small difference in favour of Europe, more US alumni (84 %) said that their salary met or exceeded their expectations.

In the USA the employment rate of graduates from class of 2011 was 89%, higher than in Europe. A good education usually increases job opportunities but in times of crisis people are less picky. 66% of both Americans and Europeans said that their first job after graduation was in the industry they chose.

At the end of 2011, 74% of companies reported that they were planning to hire MBA graduates in 2012, an increase of 58%  from  the previous year. 65% of them also said they would keep the pay levels of alumni from 2011 and 32 %  said they planned to raise it. This study is more representative for the USA, as almost three-thirds of the 216  companies polled were American, and only 10 % European.

 It is generallyaccepted that the MBA costs more in America than in Europe. This is important, of course as not everyone can find the funds required to study in a top school, especially if they have to be repaid after graduation. What is more important, however, is to build a fuller picture of the expenses needed for the period of study, the overall opportunity cost, and the salary earned after graduation. If we take the top five European and American schools in the Financial Times rankings and put them in their value for money order, the results show that European schools are preferable. The ranking order is the following: IMD, INSEAD, IE business school, London Business school, IESE, and then are Columbia, Stanford, Harvard, Wharton, and Kellogg. However, such calculations do not take everything into account and, just like rankings, are not entirely representative. 

Europe – room for development

Although the US and Europe are the two main business and trade centres in the world, the 49 "missing years" for European schools have given rise to some very distinct differences. It took time for the degreeto be recognised and gain popularity in Europe, even in some of the developed countries. As Jens Wüstemann, president of the Mannheim Business School commented for the Financial Times: "Fifteen years ago, the MBA was unknown in Germany. We are trying to educate the market." The available data also confirms business education is much more widespread in America. During 2011 testing year 116, 546 people have taken the GMAT test in the USA as opposed to only 24, 298 in Europe.

Europeans from the class of 2011 earned the highest starting salaries worldwide with an average of US$84,267. 79 % of raduates in Europe said that their pay met or exceeded their expectations and 81% of European business graduates found employment after graduating.  . 

Another difference is the extent to which the schools are  internationalised.  Europse is the leader here: 83 % of the applicants for the European one-year full-time MBA programmes were overseas students. GMAC reports this figure to be 38% in the US. Although America has strong traditions in accepting immigration, the exposure to cross-cultural influences is greater in EU schools, where the movement of students between different countries is stimulated by different European and national programmes.

In choosing between schools in Europe and the US the main thing to bear n mind is that the choice is very personal. Take a good look at the available options and do not let yourself be influenced by rankings. If your background fits in better with a school, which may be a little outside the top 10, 20 or 30, don't let that worry you.  There are excellent MBA programs in both America and Europe, whose graduates are sought by global business. Meanwhile, higher education in Asia fast on the increase...

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