An illustration by Nick Lowndes depicting elite institutions
© Nick Lowndes

The half-page newspaper article is brief but to the point: the doctor in the New York clinic is accused of amending insurance claims to give women access to fertility treatment if they cannot afford to pay for it. Twenty women who benefited from the scheme are sitting in court with their children in support of the doctor. Should he be jailed for fraud?

It is a case that MBA students at IMD business school in Switzerland have fought over in the classroom, with one group prosecuting the doctor, another defending him and a third group passing judgment, says Ralf Boscheck, MBA programme director.

“There is a difference between how we respond intuitively and how we rationalise it,” he says. “The idea is not to teach people ethics, but to get them to recognise their own moral compass.”

Such personal development initiatives are just one of the innovations being implemented in top full-time MBA degrees, as participants demand that schools move away from the traditional siloed classroom approaches. Big data analysis, new business models, soft skills and entrepreneurship are edging out the traditional courses in accounting, marketing and supply chain management.

The top few business schools go from strength to strength — Stanford Graduate School of Business in California, for example, admits just 6.5 per cent of applicants. “Students say that if they can get into a top school they will go. If not, they won’t,” says Garth Saloner, dean of Stanford. “If you want people to come for two years, give up a salary for two years and pay high fees, you really have to provide a transformational experience.”

For many institutions outside the top cadre of around 20 schools, it is survival, rather than the nuances of the curriculum, that occupies minds.

This year several second-tier schools in the US have closed their full-time MBA programmes — Thunderbird School of Global Management, Wake Forest University and Virginia Tech’s Pamplin School of Business are just three. Others seem set to follow.

“The segment of the market that is healthy is quite small,” says Alison Davis-Blake, dean of Michigan Ross business school. Many schools have been subsidising their full-time MBA programmes for years, she says, but now many have programmes that are so small they have crossed the line of academic as well as economic viability.

© Nick Lowndes

Second-tier schools are moving to different part-time formats for their MBAs, and to launching specialised masters degrees and masters in management programmes. “The question no one really knows the answer to is: will these cannibalise the MBA?” asks Prof Davis-Blake. “We haven’t been in the business long enough at scale [in the US] to know.”

Increasingly the competition for US business schools is global, believes Prof Davis-Blake. “If China continues to come up the curve and India becomes like China, we would be at a fundamental tipping point,” she predicts.

Long-promised changes in legislation, which might be implemented in the Indian market in 2015, may confuse as much as clarify. The traditional pre-experience PGP (postgraduate programme) taught by the prestigious Indian Institutes of Management could be renamed as an MBA.

Inside India this will have little effect, says Ajit Rangnekar, dean of the Indian School of Business in Hyderabad. “Within the country nobody cares. All people care about is what institution you went to. The only people affected would be those who leave the country.”

What is unlikely to change, he says, will be legislation to acknowledge the one-year MBA, such as that taught at ISB. The school enrols nearly 800 students a year on its accelerated degree.

Though widely recognised as the degree of choice in most of Europe, the one-year MBA faces problems in countries such as Australia, where overseas graduates of shorter courses cannot apply for postgraduate work visas.

Nevertheless, the one-year format is widely accepted in the market, says Laura Bell, associate dean of academic programmes at Melbourne Business School in Australia. “The concept of a year out — maternity leave or a year travelling — is something that is understood.”

At Insead, which teaches the highest-ranked one-year MBA programme in the world, recruiters increasingly are giving it their seal of approval. In the past six months 30 additional recruiters have visited one of Insead’s three campuses, according to Urs Peyer, dean of degree programmes. While the campuses in France and Singapore have remained strong, the big surprise has been the interest in Abu Dhabi, with 10 per cent of MBA graduates now starting their first job in the region.

“It’s just amazing how the perceptions have changed,” says Prof Peyer. “Everyone wants to go [to Abu Dhabi] now.” He cites the one module on the full-time MBA that was recently taught in Abu Dhabi and that catered for 45 participants: 175 students applied for it.

Different types of jobs are on offer following the recession, says Stanford’s Prof Saloner. “There hasn’t been much change in where [students] come from, but there have been changes in where they go.” Private equity, venture capital and hedge funds have replaced investment banking, and there has been a surge in graduates going into technology start-ups and new ventures. In India, about 100 of ISB’s 2015 graduates will go into technology start-ups, for example.

So, is the long-term security of the MBA assured? All the great problems in the world relating to global poverty and healthcare, for example, need great leadership and management, says Prof Saloner. “I don’t think the MBA is going away.”


Poll: funding formulas

A woman takes a deposit box out of a compartment in the safe room of an Austrian bank in Vienna April 10, 2013
Raiding the account: students covered about 35 per cent of the cost of their degrees with savings © Reuters

More than three-quarters of MBA alumni who responded to an FT poll funded their degree in part or fully from savings, writes Wai Kwen Chan.

Of some 1,860 respondents who completed their MBA in 2011, 78 per cent said they had used their savings to cover some or all of the total cost. On average, personal savings accounted for 35 per cent of that total.

With tuition fees often running into five or six figures in US dollars, many graduates resorted to multiple sources of funding. A bank loan was the second most common form of financing, used by about 46 per cent of respondents and making up 27 per cent of their total costs on average.

Slightly fewer graduates (42 per cent) used scholarships, accounting for an average of 14 per cent of costs, while 33 per cent of alumni used money from friends and family, making up about 15 per cent of their total. Other financial support, from sources such as employers, partners and alumni bonds, made up the remainder.

But there is some help available, as more than half of the respondents turned to their business school for advice and support with financial difficulties. Nearly 70 per cent of this group reported that their school had been helpful. Some graduates, however, felt under pressure because of the burden of their debts, with one respondent reporting that his loan’s interest rate was twice that of a mortgage.

Another graduate argued that there was a need for a school-run financing scheme with more competitive rates and flexible payment options.

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