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Degrees of concern - Reports of the MBA s demise are exaggerated

2017-10-31 10:23:33

A part of the American market may be in decline, but globally the qualification

continues to thrive

THE MBA is both revered and reviled. To boosters it has advanced the science of

management and helped firms, and countries, to grow. Detractors say it offers

little of practical value and instils in students a sense of infallibility that

can sink companies, and knock economies sideways. The critics are currently the

louder of the two, claiming that particularly the full-time, campus-based MBAs

have reached saturation point, with too many mediocre courses chasing too few

candidates. The Financial Times recently likened them to the Grand Tour of

business education in an age of Airbnb .

There is a widespread feeling that full-time MBAs are on their last legs,

concedes Sangeet Chowfla, the president of the Graduate Management Admission

Council (GMAC), a business-school association. Decline is allegedly hastened by

competing qualifications, such as the Masters in Management. MiMs have much the

same syllabus as MBAs, but unlike them, take students without management

experience straight from undergraduate degrees. They often cost half as much

and do not make participants interrupt their careers to study. Such degrees

have long been popular at European business schools. Now Americans are

following suit.

Non-MBAs now attract 35% of people who sit the GMAT, the de facto

business-school entrance exam, up from 30% five years ago. MBAs share has

dipped proportionately. When King s College London launches a business school

in November, it will offer specialised Masters courses but no MBAs. Stephen

Bach, its dean, says that employers like to recruit younger students because

they are more flexible and culturally attuned .

But look across the world and MBA programmes are thriving. The popular myth

of their demise is just that, says Mr Chowfla. Rapid growth in the overall

business-education market has offset MBAs declining share. Global applications

to MBA programmes in the 2016/17 academic year grew by 6%, according to GMAC.

In Asia, they rose by 13%; 132,000 students now apply to Asian schools, nearly

as many as to American ones. Applications in Europe increased by 3%. American

courses that enroll more than 200 MBA students which dominate The Economist s

ranking of MBA programmes (see article) report a 4% rise.

Demand has, it is true, fallen at smaller American schools. Those with fewer

than 200 students saw applications drop by 6% this year. These schools enroll

around half of all students in America. But they face distinct pressures. One

is Donald Trump. In a survey by Carrington Crisp, a consultancy, around 40% of

potential applicants said that the new president had discouraged them from

studying in the country (just 3% said he made them more likely to study there).

His anti-immigrant administration s plans to tighten the rules for graduate

work visas may have something to do with this. International students are

feeling left behind, explains one who opted to study in France over America.

Dislike of Trumpism will not deter applicants from the finest American

establishments. Few institutions anywhere can match the cachet of Harvard,

Wharton or Kellogg, which charge a premium as a result. Second-tier American

programmes are nearly as expensive, but nothing like as prestigious. Foreign

students may opt for cheaper courses in countries with brighter job prospects.

That bodes well for non-American MBAs.

One partial exception is Britain. British schools lure students from the

European Union, in part because they enjoy an automatic right to work at London

s big banks and professional-services firms. Brexit would change that. But

British courses are at least getting cheaper for non-Brits. The collapse in the

pound since the Brexit vote in June 2016 has cut the cost to Europeans of

attending London Business School by 14,000 ($16,000), for instance. That may

help explain why three in four British schools report a rise in applications

this year, according to GMAC. If Britain crashes out of the EU the pound could

weaken again, making courses look cheaper still. By then, however, the discount

may not be sufficient to attract anyone.

This article appeared in the Business section of the print edition under the

headline "Degrees of concern"