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Bhavik Trivedi’s job as director of MBA admissions consultancy Critical Square creates a delicate relationship with business schools.
“They know what we do, helping people find the best schools, but then insist on our clients signing things saying they have not had any outside help with their application,” he explains.
This year, however, the schools have been sending letters to Trivedi’s office, not to complain but to make sure that he is well informed about the attractions of their MBA programmes. “They want to make sure we are sending them the right kinds of candidate,” Trivedi says.
Competition is increasing in the MBA market. Attracting the best candidates is an issue even for the top business schools. Harvard Business School has a 10 per cent acceptance rate because it filters out so many applications, but still worries about finding the elusive group of top candidates, according to Trivedi.
Most MBA providers would dearly love to be in this position. The latest survey of business schools by the Graduate Management Admission Council, which oversees the GMAT application exam, found that for the first time since 2012 less than half of all institutions saw an increase in applications.
In the US, 53 per cent of schools running full-time two-year MBA courses reported a decline in application numbers in 2016, while 40 per cent had growth. The percentage of business schools worldwide reporting growth in applications fell for a third year running, from 61 per cent in 2014 to 57 per cent in 2015 to 43 per cent in 2016.
The figures hint at a flight to quality, where the highest ranked schools, which have built strong global brands, are seeing record numbers of applications. But even these schools are fighting for the best candidates because the top students are not always to be found in the traditional pipelines of management consultancies and investment banks.
The full-time MBA at Chicago’s Booth School of Business has been in the top 10 of the FT’s ranking for several years. Applications were up more than 20 per cent this year and the school also saw an increase in female candidates.
However, Douglas Skinner, Booth’s dean, acknowledges that even his school is caught in a battle for the best applicants. “Our answer to that is we need to keep developing new programming to keep students interested in being on campus and to increase the value for them,” he says.
A gift of $5m from an alumnus enabled the school to offer workshops for recent graduates interested in developing start-ups to address social problems. The school has also introduced additional practical courses aimed at students interested in entrepreneurship, including a class on how to find and acquire small businesses with the aim of growing them.
Highly ranked schools are showing signs of pulling further ahead of the pack, helped by increased applications and their appeal to desirable employers. This is leading to greater disparity of resources between the top institutions and those further down league tables. There is a place for some schools to compete on price, but this leaves a large number of middle-ranking schools stranded in between.
Location remains an important factor for applicants. Vlerick Business School in Belgium last year relocated its MBA programme from Leuven, a provincial capital, to its new campus 25km away in Brussels. A year later applications were up 25 per cent. Four-fifths of Vlerick’s MBA class was born outside Belgium.
“For these people studying in an international city is important,” says Yolanda Habets, head of Vlerick’s MBA programme. “For those looking beyond graduation, Brussels is able to provide connections both on a professional and government level.”
Rotterdam School of Management (RSM) has several factors in its favour. It is a highly ranked school, its full-time MBA takes only a year and the programme is taught in English. The school has marketed itself widely internationally and only 5 per cent of this year’s 98 successful applicants are Dutch. Despite all of this, applications for 2017 were down slightly.
Brandon Kirby, RSM’s head of MBA applications, attributes the fall to declining demand from Europe and the US. It would have been worse, he adds, had applications from Latin America and Asia not risen in the past year.
“Given all that is going on around the world, with Donald Trump’s election and Brexit, there are a lot of people waiting on the sidelines to see how things play out,” Kirby says.
Schools at the top of the table are highly selective, have invested significant resources into their image and have secured top-quality academic faculty teams to create the best research and teaching materials.
Prof Skinner at Chicago Booth defends the traditional campus-based two-year degree model against shorter or online courses, claiming that the face-to-face elements of learning are what Booth students value the most.
“Students love coming to class because they enjoy the interaction with each other and the facilities available,” Prof Skinner says. “I don’t see campus teaching going away.”
Only a handful of the top schools in the FT ranking also offer a well-respected online MBA.
Online course material is useful for teaching standardised elements of the MBA, such as the basic microeconomics course, Prof Skinner says. He dismisses online teaching using downloadable videos and other formats, known as massive open online courses, or Moocs, as a mere digitisation of textbooks.
“I probably worry less about the threat of those courses than [other schools do] because it is the top faculty like ours who are the people developing this content,” he says. “People come to us to meet the professor in person, who can then open up the subject in the classroom.”
One big change is MBA students’ destinations after graduation. The top employment route for Chicago Booth is management consultancy posts, but investment banking has been replaced as the number two choice by roles in technology businesses such as Amazon and Google. This creates a pressure to add new classes to the core MBA course, such as coding. However, Prof Skinner would rather make such subjects optional electives, noting that fashions change remarkably quickly.
“I remember circa 2000, when a lot of business schools were looking to hire [specialist] faculty and deliver case studies on dotcoms, but this proved very transitory,” he says. “You have to be cautious about how you change.”
While some US business schools are struggling, many of their European counterparts, which offer 12-month MBAs, are seeing more applicants. Imperial College Business School in London is among the schools enjoying an increase in applications this year, something Diane Morgan, Imperial’s associate dean of programmes, attributes to the school’s location and heritage. “It attracts students who want to be at the centre of finance, innovation and London’s arts and social scene,” she says
The advantage for European schools is that the market is less mature than the US, which means that people are still discovering the qualification, according to Morgan. “We find students who are looking for a one-year masters degree then find the MBA a better option,” she says.
The MBA market may be increasingly tough for many schools, but there are still opportunities for those institutions in the right place with the right brand.