Business education has gone from boom to gloom recently, with reports from the US suggesting a fall in enrolments at some top ranking schools of between 20 and 35 per cent.
In Australia the picture is even more bleak, thanks to a unique combination of local factors, including drought, the soaring dollar and what some see as an underlying crisis of confidence in Australian education, both within the country and overseas.
“Business education in Australia is in deep shit,” says Michael McGuirk, management education consultant, who claims that a widespread change of culture is required before a recovery can occur.
Problems first became apparent with the crisis at IDP Education Australia, the body charged with recruiting overseas students to study in Australia. More than 150,000 foreign students are enrolled at Australian universities, many of them at business schools, injecting some A$2.1bn (£870m) in fees.
But when enrolments stalled last year, IDP was forced to shut seven offices around the world and retrench 60 staff.
“We went through some painful changes,” says Anthony Pollock, the new chief executive officer. “A cash shortfall late last year [of A$3.6m] meant we had to approach the universities and get them to pledge A$7m, mostly in two-year interest-free loans.” IDP needed the money in order to keep trading, since as an independent company owned by Australia’s 38 universities it does not receive government funding.
A large part of the problem seems to be the cost of studying in Australia, which, according to IDP research, has more than doubled since 2001. The overall cost of studying in Australia is heavy, now second only to the UK, thanks to a triple whammy of higher living costs – a one-in-100-year drought has pushed up food prices – an average annual rise in tuition fees of 12 per cent and a strengthening local dollar, which has eroded Australia’s price competitiveness in the region. Enrolments from regional markets, such as Singapore, subsequently dipped as much as 13 per cent.
Business schools have been hit hard. At the elite Melbourne Business School, foreign enrolments for the full-time MBA are down 20 per cent, with local enrolments down 40 per cent. Although However, MBS claims this has been balanced out by an increase in part-time MBAs.
And Things are not due to improve any time soon, according to John Seybolt, MBS dean and director, who blames a trend towards “very viable one-year alternatives” in Europe and the US to the MBA, as a contributing factor to the decline in full-time numbers. MBS, for example, runs a 16-month full-time MBA and a three-year part-time option.
Paradoxically, Australia’s strong economy is part of the problem. “Not only is there the dollar, which is getting up toward US80 cents, but we also have record low unemployment at the moment,” says Tyrone Carlin, director of academic programmes at Sydney’s Macquarie Graduate School of Management.
“This has resulted in a skills shortage in Australia, particularly in accounting and law, the areas that form the main MBA target market. These people are thinking: ‘People think: ‘Well, I’ve already got more work than I can do, with good pay, so why do an MBA?’ ”
MGSM has seen a 20 per cent drop in enrolments, from 1,400 full- and part-time MBA students in 2002, to about 1,100 in 2005.
“Another factor has been the increased competition from business schools in Asia, from the likes of the Singapore Management University, Insead at its Singapore campus, the Chinese University of Hong Kong and the China Europe International Business School,” says Prof Carlin. “This has had an impact here because Asia has traditionally been a big feeder market for Australian business schools.”
At the top ranking Australian Graduate School of Management, there are also signs of trouble. “We’ve been just as challenged as the other schools,” admits Sharyn Roberts, AGSM’sdirector of award programmes at AGSM.
(In an internal memo leaked to the press in December last year, the dean of AGSM, Rob McLean, complained of poor planning and marketing when it became apparent that enrolments for 2005’s full-time MBA were down by one-third.) Ms Roberts is maintaining a brave face, claiming that “overall, across all our courses, enrolments are more or less on a par with figures from recent years”, and that there is no need for panic.
But some think the problems go deeper. “There’s a steadily declining confidence here in local enrolments,” says consultant Michael McGuirk. A leading Australian broadsheet recently ran an article entitled: “MBAs Fail to Dazzle Bosses – if you believe getting that MBA will land you a better job, you might have to think again.” The article cited a study by an international group called Executive Connection that found that only 5 per cent of Australian bosses placed any value on an MBA when recruiting; 54 per cent said that candidates with an MBA did not stand out from the pack.
Overseas, too, Australia’s reputation has been hurt by repeated corruption scandals and allegations of poor standards.
“In south-east Asia, our [Australia’s] brand is being seriously eroded,” says Mr McGuirk. “People over there are now asking themselves, why would I go to study in Australia, especially now that it’s becoming more expensive? What’s on offer for the extra dollars?”
Mr McGuirk believes: “We have to retain the brand name or it will undermine the whole system.”
IDP’s Anthony Pollock agrees, but says it is also a matter of marketing. “Our pitch has always been focused on quality, coupled with competitive pricing. Now,” he concedes, “the future is totally tied up with the quality message.”
SO WHY STUDY FOR AN MBA IN AUSTRALIA?
■ Well known, accredited programmes from respected, top-ranking institutions
■ Variety of full-time programme lengths – 12-month, 16-month and two-year courses
■ Internationally and culturally diverse cohorts
■ Easy access to Asia and the Pacific Rim
■ Close proximity to Asia allowing schools to respond swiftly to developments
■ MBA programmes and courses that have been tailored to a deeper understanding of the region
■ Despite recent currency fluctuations programmes offer value for money
■ High standard of living
■ Pleasant climate, beautiful surroundings and a relaxed beach culture