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    The StratEDgy blog is intended to be a thoughtful hub for discussion about strategy and competition in higher education.

Musings on the MBA Market
February 8, 2012 - 9:52pm

Hats off to Kellogg! It’s rare to see a market leader remaking its up-to-this-point-wildly-successful business model, but this is exactly what the new Dean, Sally Blount, is doing

So what exactly are the folks at Kellogg doing? For starters, they’re shrinking the class size of their traditional 2-year MBA program by ~20% and revamping their research program and curriculum to be less discipline-based and more focused around the areas they believe most important. These areas are markets, customers, and growth; architectures of collaboration (organizations, people and interconnectedness); private enterprise/public policy interface; and innovation and entrepreneurship. 

These two are huge steps for a school to make. Add to this that Kellogg will be introducing new one-year master’s degrees as alternatives to the traditional MBA, and launching short, non-degree certificate programs with partner schools in Brazil and China. 

In one fell swoop, Kellogg is addressing several of the issues facing U.S. MBA programs:

  1. The U.S. is losing its dominance in the MBA market. While the U.S. may still be the top destination for MBA studies, this lead is narrowing.  Take, for example, GMAT score-sending patterns. In GMAT test year 2006, U.S. schools received 83% of all GMAT scores sent.  In 2010, this number was 78%
     
  2. Demand for the traditional 2-year MBA is decreasing.  Again, some GMAC data: in 2011, two out of three GMAT-using schools worldwide reported application declines for their 2-year MBA programs. This follows drops in the previous two years – in 2010, 49% of two-year MBA programs worldwide noted application volume declines and in 2009, 32% reported declines. 
     
  3. Demand for shorter, and more specialized, programs is taking up some of the slack.  According to similar GMAC figures, in 2011, 51%, 69% and 83% of GMAT-using schools reported increases in applications for (typically one-year) Master’s of Accounting, Master’s in Management, and Master’s in Finance programs. 
     
  4. Demand for non-degree programs will also rise.  As people work later in life and now expect to have multiple careers over their lifetime and as education is delivered in a more modular fashion and in shorter bursts, the demand for non-degree certificates and professional development programs will also increase.  Business schools have traditionally served the higher end of this market, and are well positioned to continue this trend, particularly if they “go to the customer,“ as many of them have increasingly been doing.

Although much of the data is for GMAT schools, and a large number of U.S. and non-US schools do not require the GMAT, this looks like a shift. 

As another data point, consider what prospective graduate management education students are saying about the programs they would consider (see chart below) – 46% are considering the full-time 2-year MBA, while 42% are considering a full-time 1-year MBA, 33% a part-time MBA, and 24% a Master’s in Management. 

Source: mba.com Prospect Students Survey (2011)

What do you see in the future for the 2-year MBA and the schools offering them?

 

 

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