New ideas in tough times

It’s been a funny old year for European business schools. When the Icelandic ash cloud descended across northern Europe in April, it only deepened a gloom that had already settled on the corporate education market. Revenues had been slashed by a quarter, and graduating MBA and masters in management students were struggling to find jobs.

But as the year progressed, business – and the skies – brightened as applications to degree programmes continued to rise. And although the fortunes of European business schools largely mirrored those of their US counterparts, some peculiarly European trends also manifested themselves.

While 2009 was the year of mergers and acquisitions, 2010 has been one of overseas expansion. Both Manchester Business School and France’s Skema Business School (established last year through the merger of Ceram and ESC Lille) have set up campuses in the US, while the University of Strathclyde has moved into India.

Michael Luger, dean at Manchester and himself an American, says there is a real demand in Miami for the school’s executive MBA course, and it easily filled the 30 places on its inaugural programme this summer. Part of the appeal, he says, is the school’s global perspective. “We’ve never had a problem getting a whole lot of US students coming over to the full-time programme.”

But the big challenges remain closer to home. Colin Mayer, dean of Saïd Business School at Oxford University, highlights the issues in getting European students to study at business schools.

“There is great merit in business schools being really international, but most of us would like to see a larger component of home-grown European students in the mix,” he says.

“There is only a small pool of European students applying to business school,” he adds, pointing to statistics from the Graduate Management Admission Council, which publishes the Graduate Management Admission Test. These show that of the 263,979 GMAT exams taken between July 1 2009 and June 30 2010, only 9 per cent were taken by European students, compared with 48 per cent by US students and 19 per cent by Asian students, even though there are only a handful of top-notch graduate business degrees in Asia.

The situation is likely to become most difficult in the UK, says Kai Peters, chief executive at Ashridge Business School, as the number of student (tier four) visas are limited. At present, he calculates, 91 per cent of students on full-time MBA programmes in the UK are from outside the country, and many of those would be denied visas in future.

Restrictions on job visas could deter non-European students from applying to European schools. “A lot of students come to European schools with a view to getting European jobs,” points out Prof Mayer.

For him, part of the reason for the low numbers of European management students has been the lengthy first degrees in continental Europe, often five years in length. The implementation of the Bologna Accord across Europe this year, which separates bachelor and masters degrees, will increase the number of European postgraduate students wanting to study management, he says.

At the moment, those students are looking at pre-experience masters degrees – masters in management. “The other response would be that students would come back for an MBA,” says Prof Mayer. “But whether that is going to emerge has yet to be seen.”

The past year has clearly been one of increased competition for European business schools, both from afar and at home. Dominique Turpin, president of IMD in Switzerland, believes much of the competition is coming from emerging markets, with an estimated 360 MBA degrees now offered in China, 350 in Russia and many more in India. “It seems to me that we have been forgetting the specific needs of emerging markets. This is where the competition is coming from.”

Back in Europe, however, it is one of Prof Turpin’s predecessors at IMD, Peter Lorange, who is heading a new type of competition – from the for-profit sector. A little more than a year since he bought GSBA in Zurich and renamed it the Lorange Institute of Business Zurich, he has received accreditation for his degrees by the Association of MBAs in London.

In the UK, BPP, the accounting and law business education provider acquired in 2009 by the US-based Apollo Group, has moved rapidly to set up a business school. Meanwhile, the Russian-financed London School of Business and Finance has made waves with the October launch of its “free” Facebook MBA.

Prof Peters at Ashridge says that although these programmes will attract a different group of students from those who traditionally enrol in expensive degree programmes, “a few will be the ones we want”. Also, students who cannot get UK study visas may turn to online programmes. In general, he says, universities are “in denial” about the gravity of the situation.

That said, many more traditional European business schools have demonstrated that they can launch innovative programmes to address business needs, from Rotterdam’s executive MBA in water management to Insead’s business and law degree, launched with the Sorbonne.

The two degrees illustrate two trends that Insead marketing professor Hubert Gatignon has identified in the European market this year.

First is the increased emphasis on environmental or societal issues. Warwick Business School, for example, has a global energy MBA and Exeter an MBA run in conjunction with the WWF, the conservation organisation.

Second, there will be more joint degrees with other disciplines, and between schools in different locations. Insead already has a joint programme with the Art Center College of Design, based in Pasadena, California, and will contribute to the LLM degree that the Sorbonne will launch in 2011 in Paris and Singapore.

HEC Paris has launched a joint masters in management degree with the Indian Institute of Management in Ahmedabad – the schools’ programmes are ranked third and eighth, respectively, by the Financial Times.

Prof Gatignon also believes there will be a growing demand for degree programmes, even at the corporate level. “I think more companies want degree programmes. The Asian market is very interested in formal degrees, such as specialised masters.”

At Ashridge, Prof Peters is unconvinced that any of this will stave off the pending storm. “We have to go back to being a professional school and not be rocket scientists … We have to make this work economically.”

What is the biggest challenge for European business schools over the next five years, and what is the biggest opportunity?

“The key challenge facing European business schools is to recruit enough European MBA students – enrolment from Europe is lower than from the other main regions. Attracting more European applicants is part of a process of forging closer links with European corporations and having a significant impact on their recruitment and future development.”

“The biggest opportunity for European business schools over the next five years is leading the change in management education to support developments towards a sustainable and value-orientated society. The biggest challenge is building an infrastructure that will foster thought-leadership of European business schools in the global arena.”

“Continuing to focus on existing networks is no longer a reasonable strategy to face and overcome the complex challenges of an increasingly global educational arena. However, European business schools can use past experience as leverage so long as the acquired co-operation competencies are transformed into an asset, helping them to establish global and profound strategic partnerships.”

“It’s the Icarus paradox. The biggest challenge facing business schools is also their biggest opportunity: the globalisation of education. That development will consist of an open academic job market, distance management and teaching, global governance, and sustainable business models as well as sustainable development.”