The MBA is both revered and reviled. To boosters it has advanced the science of management and helped companies, and countries, to grow. Detractors say that it offers little of practical value and instills 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 MBA has 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, conceded Sangeet Chowfla, the president of the Graduate Management Admission Council, a business-school association. Decline allegedly is hastened by competing qualifications, such as the Masters in Management. “MiMs” have much the same syllabus as MBAs, but 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 long have been popular at European business schools, and now Americans are following suit.
Non-MBAs now attract 35 percent of people who sit for the GMAT, the de-facto business-school entrance exam, up from 30 percent five years ago. MBAs’ share has dipped proportionately. When King’s College London launches a business school in November, it will offer specialized masters courses, but no MBAs. Stephen Bach, the school’s dean, said that employers like to recruit younger students because they are more flexible and “culturally attuned.”
Look across the world, though, and MBA programs are thriving. The “popular myth” of their demise is exactly that, Chowfla said. Rapid growth in the overall business-education market has offset MBAs’ declining share. Global applications to MBA programs in the 2016/2017 academic year grew by 6 percent, according to GMAC. In Asia they rose by 13 percent: 132,000 students now apply to Asian schools, nearly as many as to American ones. Applications in Europe increased by 3 percent. American courses that enroll more than 200 MBA students, which dominate The Economist’s ranking of MBA programs, report a 4-percent rise.
Demand has, it is true, fallen at smaller American schools. Those with fewer than 200 students saw applications drop by 6 percent 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 percent of potential applicants said that the new president had discouraged them from studying in the country, with only 3 percent saying that 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,” explained one, who had opted to study in France instead of 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 programs are nearly as expensive, but nowhere near as prestigious. Foreign students may opt for cheaper courses in countries with brighter job prospects. That bodes well for non-American MBA programs.
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 will change that. However, British programs 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 $16,000, for instance. That may help explain why three in every four British schools report a rise in applications this year, according to GMAC.
© 2017 Economist Newspaper Ltd., London (October 28). All rights reserved. Reprinted with permission.
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