Prof Dr. P. Jenster Jun-15 Market Situation, Trends and Strategic Issues for Business Schools The “Business” of Management Education: An Analysis of the

04/18/23 Prof Dr. P. Jenster

Market Situation, Trends and Strategic Issues for

Business Schools

The “Business” of Management Education:

An Analysis of the Industry

Prof. Dr. Per V. Jenster

CEIBS


Provide a review of the current situation of the market,

Identify the trends witnessed by the industry and

Discuss certain strategic directions pursued by educational institutions in their efforts to stay competitive competitive.

The purpose of this presentation is to …

Acknowledgements & Disclaimer

The information contained herein has been obtained from sources believed to be reliable. I would particularly acknowledge research assistance from A.Khanna, S. Chander and P. Manchor


General Overview1

Industry Dynamics2

Strategic Options3

Management Education Industry

The outline of the presentation is divided into three sections


General Overview1

Industry Dynamics2

Strategic Options3


Presentation Plan


The global management education market stood at USD 22 billion in 2003 and is expected to grow at a CAGR of 10-12 percent …

Source: Friga, Bettis and Sullivan 2003 The management education market includes:

Undergraduate, graduate and PhD courses in the field of management

All program variations, including full-time, part-time, distance-learning (including e-learning), executive and specialized programs

22.00

24.42

27.11

30.01

33.39

10.00

15.00

20.00

25.00

30.00

35.00

2003 2004E 2005E 2006E 2007E

Mar

ket S

ize

(In

US

$ bi

llion

)

Management Education Market


The growing demand for management education has led to a massive increase in colleges providing management programs...

Source: Global Guide to Management Education (2005-06)

The following table provides the indicative list of business schools that provide management education in 40 countries:

There are more than 7,666 business schools providing management education in 40 countries.

The list is not comprehensive as there are several countries not included in the analysis.

While there are no clear statistics on the total number of business schools worldwide, the number is huge.

Minimum Estimated Number of Business Schools by Country

Country No. Country No. Country No. Country No.

Argentina 69 Germany 59 Lithuania 36 South Africa 15

Australia 39 Ghana 10 Mexico 1,000 Sweden 29

Austria 26 Greece 41 Morocco 17 Switzerland 15

Canada 60 Hong Kong 44 Netherlands 36 Thailand 95

China 1,396 Hungary 35 New Zealand 25 Turkey 77

Chile 60 Iceland 4 Pakistan 87 UK 102

Cypress 10 India 1,100 Philippines 1,127 US 1,500

Estonia 5 Ireland 27 Portugal 50 Venezuela 17

Finland 12 Italy 68 Singapore 6 South Africa 15

France 100 Korea 218 Slovenia 5 Sweden 29


Source: Global Guide to Management Education, 2005-06

40

60

80

100

120

2000 2005 2010 2015 2020 2025Pop

ulat

ion

in A

ge G

roup

25-

29 (

In m

illio

n)

Latin America and Carribean Africa

260

280

300

320

340

360

2000 2005 2010 2015 2020 2025

Pop

ulat

ion

in A

ge G

roup

25-

29 (

In m

illio

n)

Asia

20

22

24

26

28

30

2000 2005 2010 2015 2020 2025

Po

pu

latio

n in

Ag

e G

rou

p 2

5-2

9 (

In m

illio

n)

North America Western Europe

0

2

4

6

8

10

12

14

2000 2005 2010 2015 2020 2025Po

pu

latio

n in

Ag

e G

rou

p 2

5-2

9 (

In m

illio

n)

Oceania Eastern Europe

Global demographic trends are also providing an impetus to the management education industry…

Source: Global Guide to Management Education, 2005-06


US continues to be the largest management education market…

US has around 1,500 business schools providing undergraduate and graduate management programs.

There is declining trend observed in the total number of undergraduate enrollments for management degrees. The number of bachelor degrees awarded declined from 250,237 in 1992 to 230,425 in 1999; however, purely based on demographics (available on previous slide), the trend in undergraduate enrollment is expected to reverse in the near term.

The graduate management degree continues to demonstrate significant growth evident from the number of enrollments (104,618 in 1999 vs. 82,364 in 1992).

CurrentMarket

Structure

The following three types of players are providing management education in the US

University-based business schools (includes AACSB affiliated schools)

For-profit institutions

Others including executive development centers, consulting firms, independent consultants, and company-based training centers and corporate universities

American Assembly of Collegiate Schools of Business Standards for Business Accreditation (AACSB) affiliated schools control the largest share of both the undergraduate and graduate management education market. However, the share has declined from 79 percent in 1992 to 72 percent in 1999 for the bachelor’s degree and from 90 percent in 1992 to 82 percent in 1999 for the master’s degree.

SupplyCharacteristics

Source: Management at Risk, AACSB International


Distribution of MBA Enrollment (2001-2003)

Sources: The Global MBA Marketing Network

US is the market leader in graduate management education with 80 percent of the global market ...

Source: B-School by the Number, AACSB International

Program Type 2001 2003

Full-Time 23.5% 24.6%

Part-Time 52.3% 50.5%

Executive 5.7% 7.4%

Specialized Masters 18.5% 17.5%

MBA Market Share by Type of Institution (2003)

US has 850+ business schools (2003) offering MBA to 120,000+ graduates every year.

US business schools accounted for about 80 percent of the world MBA market in 2003.

Changes in consumer demands have led to the proliferation of part-time and distance-learning MBA programs, as students try to balance their career objectives with attaining financial stability.

The percentage share of foreign students in MBA programs has registered a decline. Full-time MBA students in the US on temporary visas decreased from 32 percent in 2002-03 to 28 percent in 2003-04.

US business schools have pro-actively started funding institution expenses through public endowment or private gifts and contracts. According to AACSB, around 13.7 percent of annual operating funds of US business schools came from private donations in 2002-03.

MBA MarketDynamics


US business school lost 0.43% of the US market. UK, Spain and France gained 0.18%, 0.08% and 0.07%,

respectively.

US business school lost 13.26% of the Western European Market. Greece,

France, UK and Spain gained 3.19%, 1.77%, 1.57% and 1.2%, respectively.

US and Spain business schools lost 0.79% and 0.97%, respectively, of the

eastern European market. Canada, Germany, and the UK gained

1.17%,0.93% and 0.5%, respectively. US business school lost 7.23% of the Asian market. UK, Canada, China and France gained 2.19%, 1.99%, 1.44% and 1.02%, respectively.

US business schools lost 14.88% of the Central Asian market. India, UK,

Canada and Singapore gained 4.54%, 3.05%, 2.92% and 1.23%,

respectively.

However, the US is gradually losing its dominance in the global MBA market


Europe is gaining a stronger foothold in the worldwide MBA market due to increased mobility towards its shores

Europe has 200+ business schools offering MBA, 20,000+ MBAs graduating every year, 22 European Business Schools in FT rankings.

Study formats are becoming increasingly flexible with 40 percent of the MBA programs either part-time or distance learning.

European colleges are trying to gain a global focus through the curriculum, faculty or type of courses offered.

To satisfy the growing market demand, institutions have increased their emphasis on leadership and interpersonal skills.

Europe’sBuoyantMarket

-40000

-30000

-20000

-10000

0

10000

20000

Eu

rop

e

Asi

a

Mid

dle

Ea

st a

nd

Afr

ica

N A

me

rica

S A

me

rica

Oce

an

ia

Oth

ers

From To

2000

-30000

-20000

-10000

0

10000

20000

Eu

rop

e

Asi

a

Mid

dle

Ea

st a

nd

Afr

ica

N A

me

rica

S A

me

rica

Oce

an

ia

Oth

ers

From To

2004

Source: Graduate Management Admission Council How to Read the Charts – The ‘From’ bars show the number and geography of students enrolling in European MBA programs. On the other hand, ‘To’ bars show the number of European students moving towards international B-Schools.

Evidence of Growing Demand of MBA in Europe and Increased Mobility


Key Trends in the European Management Education Market

Europe has adopted the ‘Bologna Accord’ to introduce structural changes in higher education in Europe. The key highlights include:

It has been voluntarily signed by 40 countries.

It has harmonized higher education around a common model – 3 cycles and 2 formats

Its implementation will be completed by 2010.

The main drivers for the adoption of the accord include:

Its compatibility with other higher education systems.

It is comparable within Europe and with other international educational institutes.

It helps reduce the cost associated with education.

Structural Change in

ManagementEducation

Increased autonomy and increased accountability has facilitated European colleges to achieve greater focus on market orientation. This is evident from:

Growth in non-state providers of education

Regional decentralization and/or devolution from the central government

Institutional autonomy or devolution of authority to the institutions

Education becoming

marketoriented

Source: The Future of Graduate Management Education in the Context of Bologna Accord


Australia’s mature management education market is facing strong competition locally as well as from international players..

Australia had around 46 business schools offering 77 MBA programs each year. Latest estimates indicate the market to be worth US$150 million in 2003.

The market offers 41 standard MBA degrees, 27 specialized and 9 Executive MBA degree programs. Out of 46, 24 schools offer a standard MBA only, and 5 offer only a specialized MBA, the remaining 17 schools provide multiple MBA products to the market.

Australian graduate education market is presently witnessing saturation, as several key factors are negatively influencing the industry dynamics:

Overabundance of business schools and products servicing a limited market

Decrease in government funding

The cost of studying in Australia has doubled since 2001, leading to a decline is foreign application. Australia has a negative application trend.

Double degrees are growing in popularity at both UG and PG levels.

AustraliaMarket

Structure

Source: Australian Business Education Study, Higher Education Review, Various Journals

Decrease in government funding is expected to put additional pressure on the competitiveness of the Australian management education market

Lack of funding support has led to colleges reducing scholarships/increasing fee for management programs, thereby making the market less attractive

The lack of funds is also putting additional pressure on knowledge creation including doctoral education and research

FundingIssues


The dominance of mature markets is steadily decreasing as Asia starts to play a critical role…

There has been a massive increase in the number of management schools in Asia:

China has more than 80 accredited courses. In 2001, more applications for MBA were received in China than any other post-graduate course.

In Japan, 17 new MBA courses were recently launched as a response to gradual removal of life-long employment and seniority-based salary structure in Japanese enterprises.

India has around 1,340 business schools.

Russian Association of Business Schools has more than 50 business school members.

With the growing number of management programs and lack of identity and differentiation, many colleges are finding it difficult to survive.

In addition, the competition is fierce as ranking plays the most important role in student’s decision-making.

Crowded LocalManagement

Education Market

Asia is facing the same funding challenges as the rest of the world. The Asian management education industry is witnessing decline in public funding.

Hong-Kong has already started cutting government funding to management institutes.

Singapore government intends to shift the financial burden of tertiary education to private sector and tuition fee.

The financial problems are getting escalated due to lack of non-religious philanthropy.

Business schools are finding it difficult to attract enough private funds to sustain themselves.

Funding Problems

The economic boom in Asia has led to a derived demand for management education

Source: Asian Management Education: Some 21st century Issues, David B. Montgomery


Some other significant trends in Asia…

Asia is also facing shortage of professionally-qualified faculty.

In order to tackle the situation, leading schools have started recruiting from foundation courses including psychology, sociology, statistics and economics, which has its own drawback:

Teaching business classroom is in general more difficult than foundation classes.

However, Asia is yet to make any structural changes to the research and doctoral education.

Asian executives have preference for Asian degrees with highly-reputed international partners:

Tsinghua University in China has partnership with both Harvard and Sloan.

University of Science and Technology in Hong Kong has partnership with NorthWestern.

Asian management education market is also witnessing growing trend of regional partnerships, ranging from joint-degree programs to colloborative research centers:

Shortage of Faculty Supply

Developing Partnerships

Source: Asian Management Education: Some 21st century Issues, David B. Montgomery


India is a major player in the Asian Management Education Market and is the second largest MBA provider in the world after US …

India had about 1,340 business schools including 1,120 institutions recognized by All India Council of Technical Education (AICTE) in 2004.

More than 150,000 applicants compete for admission to prestigious business schools every year.

The average tuition fee for Indian business schools is around US$4,000 for a 2 year MBA program.

India is one of the largest student sending country of origin in the US. Indian students in US increased by 22.3 percent from 2001 to 2004.

IndiaMarket

Structure

Significant demand for managers in private, public and non-governmental organizations is providing impetus to the sector.

Lack of experienced faculty and massive increase in number of business schools has led to significant increase in faculty salaries and relaxed hiring criteria for faculties.

Research is significantly lacking in Indian Management Education. Very few business schools focus on research.

Placement is substituting academic excellence as the most important selection criterion for all concerned parties including recruiters, applicants and the media.

Lack of a power with the governing body (AICTE) is putting additional pressure on the quality of management education in India.

Current Trends

Source: Management Education in India – Its Evolution and some Contemporary Issues, All India Management Association


China is expected to start playing an important role as its Management Education Market goes through some pivotal changes …

2348

68868461

1082212146

13274

17128

0

4000

8000

12000

16000

20000

1997 1998 1999 2000 2001 2002 2003

MBA Admission in China

MBA Admissions in China (1997-2003)

MBA Admissions in China (1997-2003)

EMBA Admissions in China (2003)

EMBA Admissions in China (2003)

Present Scenario

MBA education in China began in 1991. Nearly 86 students graduated from the business school in the first batch*.

In 2002, a number of pilot EMBA programs were introduced, together with other management training programs.

The market has witnessed exponential growth since then. The number of MBA admissions have increased at a CAGR of 55.5 percent, while the number of MBA programs have increased at a CAGR of 21.1 percent.

There are 1,396 universities offering management programs, out of which, 491 conduct bachelor programs with a management major.

Background

2700

3000

2000

2500

3000

3500

2002 2003

EMBA Admission in China

9

26

5664

89

0

20

40

60

80

100

1991 1994 1997 2000 2003

MBA Admission in China

MBA Programs in China (1991-2003)

MBA Programs in China (1991-2003)

Sources: Tsinghua Universtity, China Department of Commerce

* Earlier attempts from 1984 not included.


There exists a four-tier structure in the Chinese Management Education market…

EMBA

Transplant

Foreign-Partnered

EMBA

Foreign-Partnered

Joint MBA

Domestic MBA

Higher Tuition FeesAdmission Standards

Foreign Faculty

Larger Student Enrollment and Number

of programs

Domestic MBADomestic MBA Foreign-Partnered MBAForeign-Partnered MBA Foreign-Partnered EMBAForeign-Partnered EMBA Transplant EMBATransplant EMBA

• Most common MBA program serving maximum number of students

• Rely on Local Faculty

• Lowest Tuition Fees (<US$5,000)

• Student body composed of local company and government employees

• Selective admission criteria

• English proficiency often a requirement

• A blend of foreign and local faculty

• Tuition Fees ranging between US$8,000-18,000

• Requires around three years of work experience

• Similar to Foreign-Partnered MBA

• Cater to mid-senior level working professionals

• A blend of foreign and local faculty

• Tuition Fees ranging between US$20,000-47,000

• Requires around three years of work experience

• A sub-segment of foreign partnered EMBA

• Majority of the courses are taught by foreign faculty

• Foreign-partner plays a dominant role in administration. Requires five to eight years of experience

• Extremely selective admission criteria. Prefers TOEFL and GMAT scores

• Tuition fee is more than US$35,000



Demand Gap: Although more than 10,000 students graduate from MBA programs annually, official estimates indicate that China will require 37,500 qualified MBA professionals each year by 2006.

Geographical Expansion: While there exists tough competition between different management education provider in the municipalities, there is an opportunity for management training projects in remote regions.

Distance Training: More and more management education providers have started utilizing or plan to utilize online distance learning to provide management courses. This is expected to further expand the market.

Industry-specific Management Training Project: Industry-specific MBA programs began to be introduced in China in 2002. The trend is expected to satisfy a growing percentage of the present demand-supply gap in the future.

Opportunities

Irrespective of the significant growth, there exists a huge opportunity for management education in China …

Shanghai is the management education hub of China with nine universities providing MBA programs.

Most universities offer domestic and foreign-partnered degree/non-degree programs.

Most foreign-partnered programs compete on reputation, tuition fee, the ability to target niche areas and international faculty. There is an intense competition between foreign-partnered programs in China.

Domestic management programs fail to compete with foreign-partnered programs due to the lack of maturity and faculty experience.

Competitive Landscape



Increasing interest in providing Executive MBA programs has led to several launches in the last five years

These programs are perceived to be highly profitable, which is driving more and more colleges to form international alliances with international MBA programs from the US, UK, Australia etc.

All top-tier courses are provided with the help of international partnerships. However, the extent of partnership decides the pricing of the program.

Supply-sideTrends

Executive MBA is gaining traction in China …

Demand for Executive MBA in China is very strong and EMBA programs are highly researched by prospective clients

Market-Segmentation for the China market: MNC Senior Managers/Executives Independent and Highly Motivated Individual (includes overseas Chinese who come to region

for work, spouses of expats and well-to-do Chinese looking for prestige) Next-generation entrepreneurs who have successful family business Senior Managers/Executives employed in national corporations

Demand-sideTrends

Sources: William Reinfeld

Business Models Used by Foreign Institutions in Providing EMBA Examples

Provide material and training of teachers, local university degree (Loose/Formal arrangement) MIT and Fudan

Provide name, content, and degree, pick up teachers or use partner's teachers Webster and SUFE

Provide certificate locally, and then offer courses leading to degree elsewhere, if desired Thunderbird

Alliances with local universities, divide courses, offer joint degrees Tulane

JV with local university, offer variety of programs, seminars, degrees, etc, jointly delivered Northwestern and UST in Hong-Kong

JV with local university, offer degree only, deliver primarily by foreign university, draw on local university for support

Washington University and Fudan


General Overview1

Industry Dynamics2

Strategic Options3


Presentation Plan


Are management institutes teaching the right thing to the right people or are these trends pointing towards a paradigm shift…

Changing Approach to

Faculty Recruitment

Developing Role of Technology

Changing Customer

Demographics

Increasing International

Focus

Move Away from Government

Funding

Proliferation of Specialized

Courses

Trends in

Management

Education


Changing Customer Demographics

Changes in

Student Demographic

Globali

zatio

n lea

ding

to

trans

natio

nal in

take

Growing

tend

ency

to

self-

selec

t

Increasing

sophistication in

selecting program

Long decision phase

but short application

phase


Offers better quality education than what is available in their own country

Offers better career opportunities

Provides a unique cultural experience and an international exposure

International recognition and reputation of school in foreign country

Value proposition of the college

A growing number of students are evaluating programs in foreign countries and Europe is perfectly positioned…

Future GrowthOf

Potential Market

Selected World

Regions

% Change from 2005 to 2010


Europe -1.0% -1.0%

Asia +2.6% +9.1%

Latin America and the Caribbean

+7.3% +4.5%

United States +5.5% +7.6%

Selected World

Regions



Europe -8.7% -13.1%

Asia +3.6% -2.1%

Latin America and the Caribbean

+1.8% +1.0%

United States +5.4% +0.1%

Future Potential Graduate Management Market

Demographic Trend – 25-34 years olds

Future Potential Graduate Management Market


Future Potential Under-Graduate Management Market


Future Potential Under-Graduate Management Market


As more and more students evaluate foreign programs, Europe is positioned to gain the most. Europe’s internal pipeline is slow and therefore, there is a growing opportunity for Europe to attract students from the US, Asia and Latin America.

Source: Graduate Management Admission Council, 2005

Reason for Movement


Students are becoming increasingly sophisticated in theirdecision-making…

To develop management knowledge and technical skills To improve long-term income and financial stability To generate professional credentials required for advancement To stay competitive/marketable To gain a sense of personal satisfaction and achievement To pursue something exciting and challenging

Reason toPursue Management

Courses

Extremely Important Europe US

Program should be accredited 45% 56%

Prestige and global recognition of the college or university 34% 31%

Location of the college or university 32% 45%

Quality/reputation of the faculty 31% 28%

Diverse background and experience of students and faculty 27% 18%

Published ranking of the management program 26% 26%

Source: Graduate Management Admission Council, 2005; Reasons to Pursue Management Courses is based on a survey conducted by mba.com in Europe

Student’s Criteria for School Selection is based on Global MBA Graduate Survey 2004

Student’s CriteriaFor SchoolSelection

Percentage of Sample that Agreed with the Selection Criterion


Initial decision phase long, but shorter period to apply..

To

Enroll

Decision to Apply

Decision to Pursue Degree

De

cis

ion

Tim

e

3 months on an average

What can I commit to?

10 months on an average

What schools, attributes are important for me?

2 years or more

Is the degree right for me?

Survey – When did you first consider attending Graduate Business School ?

Europe US

Percentage of survey respondents, who had already applied or were planning to apply

84% 86%

Less than one year ago 31% 25%

More than one but less than two years 30% 31%

Two years or longer 39% 44%

Source: Graduate Management Admission Council, 2005

Based on a survey conducted by mba.com in Europe

Time Spent in the Management Education Decision-Making Pipeline


Increasing International Focus – Effect of globalization on each activity of the business education value chain (1/2)

Curriculum The curriculum is being revised to include essential analytical skills to prepare students for

global strategies and business functions. Business schools have developed ‘International’ core courses in order to integrate global

themes into the curriculum.

Programs Management institutes have started offering ‘study-abroad’ programs. The success of such

programs is evident from the growth in the number of international business programs in the US from 200 in 1990 to 400 in 2000 (100 percent growth).

Management institutes use one of the following approaches to build international presence:• Build their own facility in the foreign location• Develop partnership with foreign university to act as a local host • Engage in global joint venture to either deliver their own degrees to foreign students or

award joint degrees with local partners

Curriculum and Programs

Management Education, especially degree-based education has started to shift from the US to other parts of the world.

In 2004, US Management institutes lost 0.43 percent of its own MBA market, 13.26 percent of the European market and 7.23 percent of the Asia market to other players in the education market, including the UK, France and Italy.

The concentration of the European, Asian and Australian institutes is also increasing in the annual ranking of top-100 business institutes.

Growth of non-US education

providers


Students are increasingly considering a range of global options for their business education. It is evident from the student inflows and outflows for top business education markets. Some of

the following numbers substantiate this point:• In 2000-01, foreign students constituted 19 percent of all students at the US MBA

institutions.• In the same year, 29 percent of the full-time under-graduate management students and 13

percent of full-time non-doctoral postgraduate management students in the UK were foreigners.

• In Canada, the number of foreign students in management masters program increased by 26 percent between 1991 and 1997.

• Among the top-50 schools of 2001, about 44 percent of the enrolled students were categorized as ‘International’.

Student Recruitment

Accreditation and ranking has shifted the focus of many management institutes towards a well qualified ( preferably doctoral) business faculty.

Due to the existing gap in supply and demand, many institutes have started hiring international faculty, as there is a lack of qualified faculty pool in the local economy.

This trend is particularly true in non-US economies and less prominent in the US. The average non-US faculty at AACSB member schools was less than 3 percent.

Among the top-50 schools of 2001, about 31percent of the faculty were categorized as ‘International’. In terms of US and non-US schools, 25 percent and 42 percent of their respective faculty were international.

Faculty Recruitment

Increasing International Focus – Effect of globalization on each activity of the business education value chain (2/2)


Decrease in per capita government funding has led institutionsto explore new avenues…

European Union Case Study is used to demonstrate the impact of the trend on management education

-30

-25

-20

-15

-10

-5

0

5

10

15

20

-40 -30 -20 -10 0 10 20 30 40

Hungary Sweden

Austria

UK

Finland

Norway

Czech Republic

France

The Netherlands

Ireland

Italy

Belgium

Spain

Portugal

Switzerland

Germany

Denmark

% Change in Spending Per Student

Ch

an

ge

in %

of

GD

P F

or

Ed

uca

tion

Source: The Future of Graduate Management Education

The Size of the Bubble represents the percentage of funds from private sources

In Europe, there has been a gradual shift in management education funding from public to private. The continuing change has brought autonomy for public institutions which is evident from:

• Growth in education delivered by non-state providers• Decentralization of institutions and autonomy to manage operations• Autonomy to generate revenue through tuition fee, consulting fee, sale of research and provision of Executive MBA

Changes Between 1995 and 2000 in State Spending per Student Relative to Changes in % of GDP Invested in Education


Funding of management education and the current trends…

Major Trends in Management Education FundingTo provide greater autonomy to institutes, governments have started offering block grants for teaching, instead of providing

an itemized budget. More and more countries are moving towards grants against pre-agreed performance and/or service levels.

Grants for research are coming in the form of entitlements, instead of block allocations for general research.Many governments have allowed tuition fees and accepting funds from private sources, which is increasingly leveraged by

several institutions.

SOURCE

OF

FUNDING

SOURCE

OF

FUNDING

PUBLICPUBLIC

PRIVATE PRIVATE

For

Teaching

For

Teaching

For

Research

For

Research

For

Teaching

For

Teaching

OtherOther

• Contract-based for specific programs• Contract-based for specific programs

• Grants for specific research (contract based)• Grants for specific research (contract based)

For Capital ExpenditureFor Capital Expenditure

• Contract-based

• Executive education program and tuition fee

• Contract-based

• Executive education program and tuition fee

• Contribution

•Donations

• Contribution

•Donations

For Research, on a contract basisFor Research, on a contract basis


Information Technology is dramatically changing the way institutes impart management education…

Management Institutes are increasingly re-examining their business programs and are building technology-mediated learning (TML) strategies to build new competitive advantage. Many colleges have been successful in technology implementation, as the implementations was based on an overall TML objective.

University Type Objective of TML Initiative Scope of TML Initiative

Duke University – Fuqua Business School

Non-profit, Private

• Expand Student Base• Enhance Brand Image• Improve learning and Teaching• Improve Competitive Positioning

Executive and Day MBA programs, non-degree executive programs

Ohio University –

MBA Without Boundaries

Non-profit,

Public

• Expand Student Base• Enhance Brand Image• Enhance Student Retention• Improve Revenue• Increase Learning

MBA Without Boundaries executive program

UCLA – Andersen Graduate School of Management

Non-profit,

Public

• Enhance Brand Image• Enhance Student Satisfaction• Improve Competitive Positioning• Improve Services

Executive and Day MBA programs

University of Phoenix - University of Phoenix Online Campus

For-profit, publicly traded

company

• Expand Student Base• Enhance Brand Image• Improve Revenue and Reduce Costs• Improve Competitive Positioning• Develop New Products/Services

Undergraduate, Graduate and Certificate programs

Examples of Successful TML Strategies based on overall technology objectives


Implementation of TML in management institutes…

TIME

SAME DIFFERENT

P

L

A

C

E

SAMEWired Lecture Room

Multi-Media cases

Computer Lab

Multi-Media cases

Simulations

DIFFERENTVideo Conferencing

Simulations

Web-based Delivery

Simulations

Most management institutes combine synchronous and asynchronous elements of TML for teaching and this mixed-modality approach is expected to continue.

32%

27%

24%

22%

21%

0% 10% 20% 30% 40% 50%

Online LibraryDatabases

Email

Listserv/BulletinBoard/Electronic

Discussion

Web-basedDiscussion Groups

ClassroomComputer

Projection System

Percentage of Courses Employing the Technology

A recent survey conducted in the US demonstrates the top five TML tools used in management education.

Results also point that while the institutes used the same technology, they did not use a specific single hardware or software.

Source: Best Practices in technology-Mediated Learning in American Business Schools, Gretchen Gemeinhardt, Texas Woman’s University


Researchers Vs Teachers – Which is the right way to go?

Global growth in MBA programs Demand for qualified faculty by schools to achieve

global recognition through accreditation Increase in undergraduate enrollment

Demand Drivers

The production of doctoral faculty is decreasing worldwide

Enrollments for the doctorate program are declining Employment outside academe is increasing Increasing number of faculty members are reaching

retirement age

Supply Constraints

There is an ever-increasing gap between the demand and supply of professionally-qualified business faculty. For instance, the gap for business doctorates in the US is expected to double between 2007 and 2012.

25000

26000

27000

28000

29000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Num

ber

of F

ull-t

ime

Doc

tora

l Fac

ulty

(U

S)

Faculty Supply Faculty Demand

As is evident from the chart, the demand will continue to outstrip faculty supply. Institutions have, therefore, shifted their focus to:

Hiring researchers to act as facultiesHiring non-business PhDs to business

research and training

However, this approach has its own limitations. This is demonstrated by a US Case Study provided on the next slide.

Source: Can American Business Schools Survive?. Jarold L. Zimmerman, University of Rochester


Faculty Recruitment – US Illustration

Until 2003, the AACSB required at least 75 percent of the student credit hours to be taught by full-time faculty, with most expected to possess a terminal degree, either a Ph.D. or D.B.A.

Background

In 2003, AACSB relaxed the accreditation standard. The new standard changed the emphasis from “doctorally qualified” faculty to “participating” faculty. Participation is defined not in terms of degree held, but by the active involvement in teaching and non-teaching activities. Thus, an instructor with a masters degree, who holds office hours, advises students, and serves on committees within the business school could be considered a participating faculty.

Initiative

The relaxation is driven by the current shortage of new doctorates in business.Argument

AACSB standards 2003 will allow schools to maintain AACSB accreditation, while filling the faculty with lower cost instructors that would not have been considered qualified under the old standards.Result

Reduction in doctorally qualified faculty

Why

Pressure to allow higher-proportion of low cost non-doctorally qualified faculty

to teach in business schools

AACSB relaxes the required proportion of doctorally qualified faculty

Diminished academic standard, ability to teach graduate programs, lower

standing in the University community and weaker B-School leaders

Lower Salary for B-School Faculty and administrators


Faculty Recruitment – So what is the right strategy?

Effect of AACSB’s Relaxation

Quantity

The chart shows that at the current wages, the quantity demanded exceeds the quantity supplied, resulting in a shortage of professors.

• In an open market, this should lead to higher salaries, thereby finding a new equilibrium.

However, the relaxed standards shifts the supply curve to the right, leading to a reduction in faculty shortage and the equilibrium wage rate.A B

Wage

Rate

W

W’

S

S’

D

WithoutAACSB’s

Intervention

In case the free market forces were left alone, this shortage would have driven the salaries upward for new hires.

A higher wage would have led to new entrants on the supply side, reducing the shortage.

Higher academic salaries might have induced some MBA students to pursue a business doctorate instead of opting for attractive positions in the industry.

It might have led to several current students in non-business fields to shift their degree programs into closely-related business fields.

Do not compromise on the quality standard and the open market economy will find its new equilibrium


There is an increasing focus among colleges to build specialized programs to differentiate their course offerings..

Decline in business school applications in certain parts of the world has resulted in mid-tier business schools trying to carve out niches to stay competitive. The section introduces some of the attempts in the recent past in the US

University Program Details Additional Information

Boston University –

School of Management

Introduced a combined MS in Information Technology with MBA program

50 percent of the incoming class are enrolling in this program, which requires 20 more credits than normal MBA

Carnegie Mellon –

Tepper School of Management

One of its MBA program has a special focus on product development and provides students with understanding of how to develop and launch products

Tepper has eight other specialized MBA with different focus areas

Iowa State University –

College of Business

The college has partnered with the ISU Graduate Program in Sustainable Agriculture to offer minor in sustainable agriculture

This is the only graduate-level program of its kind in the US

Rutgers –

Business School in Newark

Rutgers launched pharmaceutical management MBA in 2000

The school partnered with seven local pharmaceutical companies to launch the MBA

UC Davis –

Graduate School of Management

Offers a program leading to a Wine MBA awarded by the Bordeaux Business School in France

UC Davis is one of the four universities offering the same program in the US

University of Minnesota –

Carlson School of Management

The school has four executive programs in the field of fund management, consulting, venture capital and brand management

Around 80 percent of the student participate in one of these four programs. The students spend 20 hours a week for 3 semester

University of Wisconsin – Madison

School of Business

The school dropped its general management MBA in favour of 13 specialized programs

Some of the programs include real-estate, applied corporate finance and arts admiration

Source: Business Week Online


Why are specialized programs gaining momentum?

Demand Side Trends

Industry: Most industries are increasingly looking for managers who already have the specialized skill set required in a specific industry.

Students: Growing number of students are interested in getting a tailor made MBA programs to distinguish themselves. Candidates also want to acquire specialized skills or industry specific knowledge.

Supply Side Trends

Universities can establish a strong reputation separate from other general MBA providers.

Tends to generate higher revenue and profitability for management institutes.

Occasionally, the expertise gained through such courses also helps institutes in generating indirect revenues through consulting.

Drivers

The demand for specialized courses is relatively limited when compared with general MBAs.

Specialized courses lacks the immunity to economic fluctuations within a sector.

Lack of course material also acts as a significant hindrance. Institutes offering such programs are required to invest heavily in developing basic teaching resources.

Specialized courses require regional resources. For instance, starting a wine MBA in Japan will not meet the desired results.

They also require industry support. For instance, efforts to launch same wine MBA in Bordeaux, France without the support on local chamber of commerce would be futile.

Challenges

Source: The Made-to-Order MBA, BizEd


General Overview1

Industry Dynamics2

Strategic Options3


Presentation Plan


MEDIA RANKING

• Too many resources focused towards media ranking management

• Less focus on research• Ranking is a function of location, wealth

of school, brand, quality of students and faculty

INCREASING WEALTH OF SCHOOLS

• Large endowments for top private schools– Harvard > US$1.5 billion (est.)– Kellogg, Wharton > US$400 million (est.)

Implications• Intense competition for top faculty, students and executives

COMPETITION

• More than 7,666 MBA colleges• Increasing number of distance program• Numerous partnership between schools

and companies• Growing role of e-learning, evident from

the number of enrollment at Phoenix

RESOURCES

• Continuous decrease in public funding

• Endowments are increasing but do not cover all expenses

Implications• Colleges are trying to develop new

streams of revenue to cover costs

FACULTY SHORTAGES

• Demand at the highest level since 1980s• Supply is falling

Implications• Salaries are rising• More efficient delivery of the curriculum

– Basic courses available Online– Non-productive research faculty

time re-allocated

Influencers in business schools’ strategy decision

All business schools are continuously managing several internal and external pressures…

Source: The Perilous Future of Business Schools, Andrew j. Policiano, University of California


These external and internal pressure have led to structural changes in the way management education is imparted… (1/2)

Classic Model of Business Education Emergent Model of Business Education

Characteristics of the Market

Markets Served Mainly Local; A few national players;

Partnership unusual

Local/National/Global/Sector or Industry-based – including on-line and corporate customer

Spatial Organization Campus-based Campus-based, company-based or dispersed on-line community partnership

Basis of Reputation Selectivity, research standing of staff, alumni employability

Selectivity, research standing of staff, alumni employability, industry specialization, responsiveness to corporate requirement, ‘added value’ of courses for careers

Learning and Teaching

Primary Medium Books, Periodicals and Journals for learning Varied, but e-intensive (Multimedia CD ROMs, web etc.)

Experimental Elements Limited experience external to the courses, barring occasional use of simulations, activities and projects

Participant’s prior and current experience integral, plus substantial use made of wide range of experimental tools

Scope for Learner Dialogue Tutorial/Seminars; otherwise informal Tutorial; Seminars; Group activities and on-line forums; also informal

Assessment Based primarily on individual course works and exams

Also, group projects, individual project exhibits, placement report and portfolio building

Source: Reproduction from ‘Changing Business Education, Learning and Teaching Support Network’


These external and internal pressure have led to structural changes in the way management education is imparted… (2/2)

Classic Model of Business Education Emergent Model of Business Education

Business Teachers

Characteristics of Role and Skill Set

High autonomy; low on education teaching know how; subject expertise critical

Reduced autonomy; often team based; high on education teaching know how; subject expertise critical

Professional Development Informal and voluntary; occasional staff development courses

Training grades and formal development programs widespread

Role of Other Staff Limited; Second class contributors Widespread; Important for a balanced team

Learner Support and Customer Care

Learner Role and Characteristic

Students/ largely homogenous within particular programs

Customer of educational services/ often very variable by age, gender, educational, employment and cultural background

Approach to Quality Issues Understood largely in terms of academic standards and limiting drop-outs; student feedback informal

Quality negotiated in terms of academic, learner, employer and sponsor; Formal QA processes in operations

Student Workload Basic guidelines, but left to individual staff and not seen as an important issue

Clear policies and metrics, with monitoring and links to other issues like learning outcome and study skill development

Support Services Basic counseling and careers advice; ad-hoc remedial and re-sit support, rudimentary back-office systems; technology infrastructure variable

Explicit policies and systems for leaner support, retention, diversity etc; Customer focused administration and appropriate technology infrastructure

Source: Reproduction from ‘Changing Business Education, Learning and Teaching Support Network’


In such difficult times, all management institutes are trying to outplay each other by using a combination of strategies..

The following three identified strategies have been extensively used by institutes to differentiate from traditional management colleges

E-Learning ExecutiveEducation Research


The role of technology in imparting management education hasincreased significantly

Limitation in Campus Facility Expansion - Universities and colleges are finding it difficult to continue expanding the number of on-campus students.

Temporal (time) and Geographic constraint - The constraint acts as the biggest obstacle in the expansion of institutes.

Technological Development – A reduction in technology cost in addition to bandwidth increase has improved the possibility of leveraging technology in management education.

Sources: Leipzig Graduate School of Management

In the context of management education, e-learning can be defined as:

“The interactive delivery and exchange of rich academic content in an organized fashion to non-residential learners .”

Several management institutes are pursuing e-learning strategy as it solves certain key constraints towards expansion

Drivers behinde-learning

growth

TEMPORAL DIMENSION

SYNCHRONOUS ASYNCHRONOUS

One-way • Live Video Lecture

• Real Audio/Video• Drawing/White Boards• Hypertext

Bi-multi/way

• Live-Video Discussion• Internet Relay Chat• Application Sharing

Software• Shared Whiteboards

• Electronic Bulletin Boards

• E-mail• Mailing Lists

e-learning can be realized through various tools, which vary along two dimensions:

Type of Communication – One-way or bi-directional

Temporal Dimension – Same or different time period


Penn StateDrexel TechnoSyracuse iMBAIMD

The level of integration of e-learning in US business schools (1/2)

Source: AACSB International

WhartonKelloggCase Western

Cardean/EllisCapellaU PhoenixDrexel OnlineCU Denver OnlineKelley/Indiana

Used as support between frequent

classroom meetings

“Blended” modular programs: Infrequent, condensed classroom meetings with longer periods of

rich e-learning content in between

Substantial use of e-learning with minimal number of

classroom meetings

Entirely non-residential

DukeMichiganPurdue


MBA program Features MBA program Features

Colorado State University

Videotapes of classes sent each week.

Threaded discussions and chats

Ohio University Nine major learning projectsThree 1-week residenciesIntranet real-time meetingsElectronic tutorial

Drexel University No foundation courses Three-on campus weekend

residencies Executive mentors, enterprise

resource planning as a unifying theme

Suffolk University EMBA Slide shows, video clips,

threaded discussions, and chat rooms

Duke University Global executive MBA Five residencies required on five

continents

University of Missouri at St. Louis

Meet 1 weekend per month on campus

23 months of 12-week classes. Learning teams

Indiana Wesleyan One course delivered on each of 3-day on-site sessions. Live chats

University of Phoenix Classes offered one at a time 5 to 6 week classes.

Computer conferencing. Business plan project

National University of San Diego

Courses each last 2 months CD-Rom, Internet, and Intranet

University of Wisconsin-Whitewater

Learning Space software. CD-ROM presentations. Threaded discussion.

Source: ED Magazine and ED Journal September, 2001

The level of integration of e-learning in US business schools (2/2)


So, why hasn’t e-learning replaced the traditional form of teaching?

Sources: Leipzig Graduate School of Management

Pros:Higher degree of spatial and temporal flexibilityEasy to integrate different information and communication

tools PowerPoint containing video and texts Provides the possibility to create more engaging learning

communities can review lecture materials at one’s own pace

An effective way to face globalization

Cons:Less social interaction acts as the biggest deterrent in

following e-learning strategy. Most traditional colleges would not like to compromise on social interaction

Teaching quality is affected by the IT infrastructure Bandwidth scarcity affects the communication channel between a sender and receiver

e-learning is not a substitute to classroom teaching; however, it can complement old-fashioned teaching.

Residential formats and Traditional Distance Learning formats are two extreme cases; e-learning modules can balance drawbacks of the two.

However, 100 percent e-learning leads to little customization and a clear lack of interaction. Therefore, integrating e-learning format into both residential format and traditional distance learning can create a ‘win-win’ situation for both students and management institutes .

Richness

Reach

Residential

Format Internet-based

Format

Traditional Distance

Study Format`


Institutes need a comprehensive review of intellectual property policies on the WebShould have royalty agreements or licenses for all materials used from the Web

Colleges should implement plans to substitute paper-based textbooks with e-booksUse MS-Office instead of pen and paper

Materials

Assist professors in acquiring information technology skillsHelp professors in adopting new teaching methods and reduce their reliance on

individualistic teaching stylesPromote the idea of professors spending more time on written communication with students

instead of verbal communication

What differentiates a good e-learning strategy?

Professor

Institutes should focus on technology implementations that replace physical location with e-mail, bulletin boards, chat rooms and so on. Classroom

Unlike recruitment for traditional MBAs, colleges should admit students who are: Self-motivated Self-disciplined Well Organized

Student

Intellectual Property

Source: Online Business Education: Issues and Challenges, Education at a Distance

Institutes planning to provide e-learning courses need to align various functions, processes and infrastructure in line with the strategy.


The flip side of e-learning: Without a comprehensive plan, many colleges have failed to leverage technology as a competitive advantage

VentureInvestment

CapitalStudents and

Dates Outcome and

DateAdditional Information

NYUOnline US$ 21.5 million 166 (In 2000) Closed 2001 Its operations were partly folded into the School of Continuing and Professional Education

To attract corporate clients, NYUOnline dropped semester length subjects in favor of 8–12 hour self-paced modules.

Temple University NA NA Closed 2001 (Distance Education arm)

NA

UK e-university (UKeU) £62 million 900 (2001-04) Closed 2004 The university enrolled 900 students in four years against a target of 5600 in a single year

Cardean University US$100 million 1000+ (2002) Moribund The university faced accreditation issues in the US.

The agreement with Thomson Learning was in jeopardy when the university was unable to meet the enrollment targets

Universitas21 Global US$25 million 300-400 (2004) Struggling The program started in 2003 instead of 2001.

The original business plan estimated a total of 27,000 students by 2005


Worldwide, the USD 1 billion executive education market is luring more and more colleges to enter the arena…

The US$1 billion pie is shared between Executive MBA, customized non-degree management programs and in-company programs. While, business schools were traditionally playing in the EMBA space, the horizon in the recent past has expanded beyond EMBA and now includes non-degree (open enrollment and customized curriculum) and in-company programs as well. Increased focus on executive education has translated into significant revenues for several colleges

2004

Rank

Provider 2003

Rank

2004-05

Revenue (million)

Open Programs

Five –Year Revenue

Change (%)

1 Harvard 1 76 66 NA

2 INSEAD 5 85.1 136 104.6

3 IMD 8 62 137 28.3

4 Stanford 6 21.2 40 43.2

5London Business School 10 43.9 27 55.1

6 Michigan 3 17.2 77 -35.1

7 Columbia 7 16 62 4.6

8 Wharton 2 NA 53 NA

9 Kellogg 9 NA 83 NA

10Queen’s University NR NA 11 34

2004

Rank

Provider 2003

Rank

% Revenue

from Custom

Revenue 2004-05 (million)

No. of Clients served

1Duke Corporate Education 1 100 42 54

2 IMD 3 51 31.8 82

3 INSEAD 5 52 44.1 90

4 Virginia 6 57 11.4 28

5 Michigan 9 28 4.8 14

6London Business School 14 52 22.9 52

7 Harvard 2 NA NA 20

8 Penn State (Smeal) NR 70 3 19

9 Stanford 13 NA NA 10

10 Kellogg 8 41 NA 24

Open Programs Custom Programs

2004 Ranking of Institutes Providing Executive Education

Source: Business Week; Structuring for Scale, Duke Corporate Education


The largest force that is driving change in EMBA program is the lack of corporate funding for its target segment, due to both financial constraints on companies and significant after-market for employees outside the company.

EMBA programs are, therefore, relaxing their admission criteria, as corporate funding is hard to get for executives and many possible target segments including doctors and entrepreneurs were missed by sticking to this approach.

It is evident from the fact that the number of students fully funded by corporate in the US decreased from 44 percent in 2001 to 38 percent in 2003, while the percentage of student paying their own increased from 19 percent to 24 percent.

Another significant trend witnessed by the EMBA industry is the reduction in the duration of the EMBA course.

According to EMBA Council statistics, the number of courses with more than 20 months duration decreased from 51 percent in 2001 to 37 percent in 2003

The trend has been due to increased demand for EMBA program from people who have more work to do but less time to do it

Some of the critics find the trend worrisome due to lack of time for academic rigor. While, others find this trend a direct response to market forces

EMBA – The most mature market within executive education for management institutesWorldwide, Executive MBA is the most visible and profitable program offered by business institutes. However, there is no lack of criticism for EMBA as many critics call the program a ‘not-so-worthy’ offshoot of MBA, while some compare the course with non-degree executive programs

EMBA programs, amidst the criticism, are continuously adjusting to satisfy the customers whose core demographic characteristic is ‘always on the move’ by satisfying his growing needs. Key trends in the EMBA market include:

Reduction inCorporate

Sponsorships

ShorterEMBA programs


EMBA programs globally are trying to differentiate by using a combination of strategies:

Distinction from executive non-degree programs: EMBA programs consistently have high admission standards as compared to open-policy of several other executive programs and provide grades, which is not the case with non-degree programs.

Distinction from other management programs: Most EMBA programs add an international element to the MBA, by partnering with institutions in different countries.

EMBA institutes are increasingly providing flexibility and reduced campus time. EMBA programs are getting built around multi-disciplinary modules.

The strategy facilitates reduction in time spent on campus, as students come together for extended period only a few times in a year and keeping in touch electronically rest of the time

Asynchronous e-learning acts as the biggest asset for EMBA program that formulate their programs based on this approach

Future of EMBA…

DifferentiatingEMBA

Relaxation In Course Timing

At an industry level, EMBA program is changing based on the requirements of its target segment. However, experts believe that the demand of EMBA in mature management education market will decline as more and more students will get their MBAs when they are young.

At the same time, there is no significant trend pointing towards the decline in the overall market. The market is expected to continue growing at a moderate pace in saturated markets including the US and at a significant pace in growth and developing economies


On the other hand, custom and in-company programs are the most dynamic industry segments for management institutes

The line between the focus areas of management institutes and consulting is increasingly blurring. This is particularly true in case of in-company programs, where management institutes and consulting are competing for the same pie

OpportunitySpace

Management Consultancies

• Proposition: Migrating to capture educational projects

• Target: Executive and senior Management

Management Consultancies

• Proposition: MBA and associated product extension

• Target: Executive and senior Management

Professional and IT Services

• Proposition: Migrating to capture educational/ communication projects emerging from core capability in IT or finance training

• Target: Junior and Middle Management

HR Consultancies

• Proposition: Managing HR know-how and IP into training and development

• Target: HR Interface, Management Development

Source: Structuring for Scale, Duke Corporate Education


To avoid detachment of faculty from real business scenarios. It ensures that current developments find their way quickly into curricula

The consulting services act a clear source for business school funding

Also provides on-going challenge to faculty and alternate source of income

Further increase the interaction between industry and business school, as research/consulting acts as a direct link to the business world. The intensification of networking also translates to indirect benefits: More Interaction with business world Better branding/positioning of the college better recruitment better student and faculty

Most successful business schools with consulting operations have positioned themselves at mid-price point with clear focus on Synergy Consulting

Synergy Consulting capitalizes on the already existing know-how developed for another purpose.

The advantage of this approach is that a large amount of expert staff can be kept at disposal, ready to be used in a suitable consulting assignment, without any stand-by cost.

Business schools are most appropriately positioned in the segment, as they have the advantage of using the unutilized time on teaching unlike consulting firm

Business schools should try to position themselves in the mid-price segment, as low-price consulting leads to ‘lack-of-quality’ image.

Business schools can add a competitive advantage by pricing themselves at the mid-price point, as they do not have to spend significant amount on sales effort

There is a growing trend of business schools providing consultingservices to enterprises

Drivers

Most EfficientMarket Positioning

Source: Structuring for Scale, Duke Corporate Education; The Myth of Standardized MBA, BizEd


Any institute focusing on providing custom executive education should focus on the following:

Develop scale of operations, through:• acquiring global clients and leverage global understanding• building respected faculty network• building staging capability independent of home campus• manage client relationship and quality

Increase awareness of education as a strategic tool – This should be done by engaging executives in their own language

However, grabbing the whole share of the executive education market for management schools will be difficult

There is a growing awareness of education as a strategic tool

Therefore, consulting firms are entering management institutes’ core business area, which is evident from:

• Mercer acquiring Nadler, CDR and several other coaching and boutique firms• IBM deal with boutique firms and marketing internal management development approach

There is a premium available for customized and integrated solutions in the marketplace

Customer intimacy is becoming increasingly critical in the market

The trends clearly highlight the risk associated with regional, single price point, off-the-shelf, faculty-centric, classroom-based models

Key elements of the consulting strategy and challenges in competing with consulting firms..

Strategies forProviding Executive

Education

A Few PointsTo

Remember

Source: Structuring for Scale, Duke Corporate Education; The Myth of Standardized MBA, BizEd


The focus on research began when the Ford Foundation started to develop five business schools as Centre of Excellence (Carnegie, Chicago, Columbia, Harvard, and Stanford)

Carnegie Tech was the pioneer in research, as the funding from the Ford Foundation was used to sponsor research and doctoral education

Staffed with economist, Carnegie started producing good quality-research and PhDs.

The success led to the adoption of research as a key goal for management education

Business schools presently strive to manage two goals: knowledge exploration through research and knowledge exploitation through teaching

Business schools investing in research attracted the brightest doctoral talent from the whole world

This trend led to differentiation between colleges that excelled due to the strength of their research and the status achieved as a result

Investment in research also led to an overall development of management education, as faculty started using their knowledge to develop interesting curricula.

Basic analytical problem solving and organizational skills replaced vocational-style courses

Applied research based on theoretical concepts led to a fundamental change in business education, as colleges started teaching students ‘how to think’, instead of teaching them ‘collection of facts’.

These changes also led to impressive development of management education from 3,200 applicants in 1956 to 102,000 in 2001

Role of Research: The business school’s foundation

History

Pay-offs

Source: Can American Business Schools Survive?, Jerold L. Zimmermann, University of Rochester


In 1986, Business Week came out with the first business school ranking followed by Forbes, US News, Wall Street Journal and others.

In order to maintain/improve the school ranking, deans and boards started re-allocating their resources towards factors that influence rankings and away from research and doctoral education.

In addition, faculty started spending more time on teaching and less time on research. Proliferation of executive education courses has led to additional pressure on faculty time dedicated for research.

Downfall of research and its few saviors..

Present Scenario

While most business schools started shifting their focus from research to teaching, some colleges continued investing in business research, as a source of competitive advantage. Pennsylvania, Michigan, Harvard, Stanford and Chicago are some of the colleges that have been able to sustain their advantage with sustained investment in research.

Rank

1997-2001

Rank

1986-1998

Percentage of Pages University Rank

1997-2001

Rank

1986-1998

Percentage of Pages University

1 1 3.96% Pennsylvania 8 10 2.32% North Western

2 2 2.58% Michigan 9 6 2.17% Columbia

3 9 2.56% Harvard 10 21 1.92% Indiana

4 3 2.51% Stanford 11 4 1.86% New York University

5 5 2.49% Chicago 12 13 1.77% MIT

6 23 2.41% UNC – Chapel Hill 13 7 1.75% Minnesota

7 8 2.32% Texas - Austin 14 20 1.71% Wisconsin-Madison

Business Schools Research Ranking (Top 14)

Source: Business School Research Performance, Kelley School of Business


The road to sustainability does not stop there, as colleges are trying to find non-traditional ways to generate revenues..

Revenue Initiative Some Examples

Business Partnership• Franchise• Merger• Joint-Program

• Kellogg and Hong Kong UST• ESC-EAP and IMD• University of Mannheim and Warwick Business School

Business Incubators Haas School of Business; F.W Olin School of Business; Madison’s School of Business and others

Fee-based Information System Kansas Business School; Centre for International Business Education and Research at Michigan State University etc.

Internal Cross-subsidization between courses University of Wisconsin; commonly used method of revenue generation

Logo-bearing merchandise licensing London Business School; Manchester; Harvard, Durham Business School; Michigan etc.

On-campus debit cards Harvard, Purdue; commonly used method

Alumni Services Harvard, Manchester

Non-traditionalRevenue

Generation

Cost Initiative Some Examples

Use part-time teachers and PhD students for teaching and research

Cambridge*

Increase the class-size to reduce fixed cost/student

Harvard

Non-traditional Cost Cutting

Measure

Source: various Journals, Internet Search

*Please note: There is no substantial evidence directly pointing towards the use of PhD students by Cambridge. The information comes from blog site: http://www.urielw.com/cambridge/18.htm


RecognitionFor Teaching

Recog

nit

ion

Of

Researc

h

Positioning Bus. Schools generally takes place along two dimensions: Recognition of Research and Teaching

Carnegie-Mellon, Univ of Chicago

LSE Harvard, Wharton,

Stanford

Univ. of Virginia,IMD, Babson

Michigan, Duke,London Business School

INSEAD

Where isCEIBS, and Where

Should we be?


January 6, 2006

Thank You


Documents

Prof Dr. P. Jenster Jun-15 Market Situation, Trends and Strategic Issues for Business Schools The “Business” of Management Education: An Analysis of the