Inquiry » Article

Is an MBA Bubble Popping?

“Is an MBA Bubble Popping?” is the title of an article published in the American magazine “The Atlantic” (http://www.theatlantic.com/business/archive/2013/12/is-an-mba-bubble-popping/282541/) . In the text the author Jordan Weissmann claims that “surveys show declining pay and shrinking job opportunities for business grads, even as the rest of the job market keeps healing”.

Image

Picture: Rike / pixelio.de

Weissmann further writes that “it's undeniable that salaries for new MBAs have decreased since the recession, which suggests the market is glutted with business-school grads”. 

There has been a stern response already by MBA expert John A. Byrne who titled his article “Is An MBA Bubble Popping? Seriously?”  saying that “it’s become common sport to bash the world’s most successful educational degree in the past half century”. In his opinion Weissmann simply only delivered an opinion piece that “couldn’t be further from the truth”.

MBA Channel wanted to get the opinion from MBA experts and deans from different corners of the earth to see if they can find any truth in Weissmann’s words and if there is indeed an MBA bubble brewing somewhere. These are their answers:

Robert F. Bruner USA: Robert F. Bruner, Dean Darden School of Business, University of Virginia

“For the past few years, demand for Darden’s graduates has been very strong. We have placed well over 90 per cent of recent graduating classes. New recruiters are engaging with us. And we have experienced sizable increases in applications for the past few years. 

At the same time, the volume of people in the U.S. taking the GMAT, the standardized test for entry into graduate management programmes, has been declining slowly for over a decade. I have reason to believe that this is true for other developed economies as well. But this is more than offset by eager interest from applicants in the emerging economies. 

In contrast to Darden, it could be that applications and recruiting volume at some other schools are declining.  But it is hard to assert that this constitutes the “MBA bubble popping” as opposed to dynamic competitive changes that occur in every industry. I have studied financial bubbles and can say that it is very difficult to identify a bubble until after the fact.

Given the global economic recovery – and particularly the higher rates of growth in the emerging economies – it seems safe to say that the need and demand for management education is practically beyond measure. How schools propose to fill that demand is the real wildcard in management education.”

Hellmut  Schütte China: Hellmut Schütte, Dean CEIBS

“Despite all the talk about globalisation, the market for MBAs has mainly remained a local one. The demand for MBAs in the US and in Europe has matured. Whether it has peaked is not obvious. We may just see the negative tail of a short-term cycle, but not a trend.

Asia is different, and China even more so. China has only a quarter of the number of business schools than the US. And it has a population that is four times as big. It continues to grow and as such needs more and better managers.

The Chinese market is undersupplied and will remain so for a long while, even if we add those MBAs who got their degrees from abroad and search for employment in the country. Demand for qualified managers is high and will remain so as China upgrades its economy and increasingly integrates it into the world. No signs of maturity are in sight.”

Professor Zeger Degraeve Australia : Professor Zeger Degraeve, Dean Melbourne Business School

"While it is clear that there is an oversupply of MBA programmes - best estimates are that there are currently more than 10,000 programmes worldwide - it is also clear that there is a delineation between quality programmes and the rest. A well-regarded MBA degree still has value - in teaching managers how to think laterally from multiple perspectives, solve complex problems and approach business with a global mindset. As businesses become more complex, one of the few areas in which organisations can have a competitive advantage is through their talent, through their people.

What makes a good MBA programme? Without doubt, the quality of the teaching and the cohort. Academics who are known thought leaders and consult to business and are able to bring a corporate lens into the classroom; students from across the world who bring a global perspective and add to the classroom experience through syndicate assignments. That's why we will not use online teaching as the primary tool. Technology is important but it can't be the main mode of delivery. All our students and alumni nominate that face-to-face interaction with faculty, the informal networking and friendships as one of the main benefits of doing our MBA - a network that is deep and formed for life.

So yes, the bubble will pop for those programmes that were created to take advantage of the MBA name and to generate quick revenue. But employers will still continue to recruit from quality MBA schools because they have seen first-hand how recruitment of the right person will help deliver growth to their organisation. That's why we place 90 per cent of our graduates within 3 months of graduation. A good school will continue to be able to do this.

In terms of Australia, this will be the Asian century and MBS is well-placed to take advantage of this. Our programme is delivered in the world's most liveable city and is a gateway to Asia. One of our core courses is Doing Business in Asia in which students are taken to China to do a consulting project. We also attract a large number of students from North American schools who come here to study Doing Business in Australia. It's very much a melting pot of ideas and opportunities for our international students. We have been active in Asia for many years and this foundation building is now starting to pay dividends with collaborations with Asian universities, research partners and corporate clients in executive education. But again, this has taken many years and anyone thinking that it can be duplicated overnight is going to come in for a shock!”

Armando Dal Colletto South America/Brazil: Armando Dal Colletto, Dean BSP - Business School São Paulo

The hiring of talents prepared for Management challenges is one of the resource needs at companies. It should not be compared in a simplistic manner with “bubble phenomena”, which are more appropriate for identifying a fad. Of course, as in everything, the law of supply and demand is still valid. In times of crisis, demand falls and the impact is felt several ways. When an automobile industry lays people off, we cannot conclude there is no more demand for workers in that industry. Suddenly, that same industry is hiring workers in another country.

The adaptation of organizations to their environment and, consequently, to the market of operation, has been the biggest challenge in recent years and it requires skills achieved through academic preparation and experience in the field. MBAs offered on a part-time basis or on weekends are more effective in this preparation, because they take advantage of the fact students continue working, exchanging everyday experiences with each other and with the teacher;

In order to affirm we are in a crisis, or coming out of one, or even whether the bubble has burst in the hiring of Talents with MBAs, we need to go beyond the projections of recruiters and also talk to economic analysts; The pronouncement by the United Nations' DESA for the 2014 economic scenario projects global improvements compared to 2013. World growth should reach 3 per cent in 2014 and 2015, compared to 2 per cent in 2013. The developed world will recover even more, beginning to compete for those resources directed to emerging countries. With the exception of China, which will grow 7.5 per cent and India and Africa, at about 5 per cent. The rest of the world will see modest growth between 2 and 3 per cent, which will include Brazil if it fights in time against its delays in infrastructure, fiscal legislation and low productivity in some sectors;

The Brazilian scenario includes local peculiarities, such as: The MBA is studied simultaneously with work and, therefore, it does not follow the same concept that dominates the North American MBA market: Finish the MBA and dispute a job opening! Recruiters give great consideration to the professional’s experience and achievements. Degrees help, but are not enough!

Iñiguez de Onzoño Europe/Spain: Santiago Iñiguez de Onzoño, Dean IE Business School

Is there an MBA bubble or is the MBA a mature programme? Frankly, I do not believe that MBA programmes are maturing, but that there are simply some mature business schools out there and that competition is increasing.

There are a number of reasons for supporting this view. Firstly, if we look at the broad family of MBA programmes, which includes Executive MBAs, MBAs specialized in sectors or particular disciplines (such as Finance or Marketing), with traditional or on-line formats, the fact is that the aggregated market has grown in the past decade and the prospects are positive.

Secondly, there is still ample room to grow in mature markets if schools aim at attracting more women to MBA programmes. This is still a pending subject in many MBA programmes, where the percentage of women is still under the average of other equally demanding degrees such as Law or Medicine.

Thirdly, there are still big opportunities to internationalize the student body at many business schools.

Fourthly, some of the statistics we are using may be misleading. Although GMAC reports discrete growths in the number of participants in the GMAT test in the past years, many schools are using alternative instruments to select applicants, including their own tests."

 

 

Print Page