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									The “Business” of Management Education:
                        An Analysis of the Industry
                       Market Situation, Trends and
                       Strategic Issues for Business
                                             Schools


                              Prof. Dr. Per V. Jenster
                                       CEIBS




 Sep-10

 Prof Dr. P. Jenster
The purpose of this presentation is to …



             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.




                Acknowledgements & Disclaimer
Sep-10              The information contained herein has been obtained from sources believed to be reliable. I would
Prof Dr. P. Jenster
                       particularly acknowledge research assistance from A.Khanna, S. Chander and P. Manchor
The outline of the presentation is divided into
three sections



                          Management Education Industry


      1               General Overview

      2               Industry Dynamics

         3            Strategic Options



Sep-10

Prof Dr. P. Jenster
Presentation Plan


                          Management Education Industry


      1               General Overview

      2               Industry Dynamics

         3            Strategic Options



Sep-10

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

                                35.00                                                                                             33.39
 Market Size (In US$ billion)




                                                                                                        30.01
                                30.00
                                                                                     27.11
                                                                  24.42
                                25.00
                                               22.00

                                20.00


                                15.00


                                10.00
                                               2003               2004E              2005E              2006E                     2007E
                                                                    Management Education Market
                                                                                                                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

Sep-10

Prof Dr. P. Jenster
The growing demand for management education has led to a massive
increase in colleges providing management programs...
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)

Sep-10

Prof Dr. P. Jenster
Global demographic trends are also providing an impetus to the
management education industry…
                                                             120                                                                                                                     360
   Population in Age Group 25-29 (In million)




                                                                                                                                        Population in Age Group 25-29 (In million)
                                                                                                                                                                                     340
                                                             100

                                                                                                                                                                                     320
                                                              80
                                                                                                                                                                                     300

                                                              60
                                                                                                                                                                                     280


                                                              40                                                                                                                     260
                                                                   2000       2005      2010      2015       2020      2025                                                                2000   2005      2010        2015      2020       2025
                                                                          Latin America and Carribean               Africa                                                                                       Asia
                Population in Age Group 25-29 (In million)




                                                             30                                                                                                                       14




                                                                                                                                    Population in Age Group 25-29 (In million)
                                                                                                                                                                                      12
                                                             28
                                                                                                                                                                                      10

                                                             26                                                                                                                        8


                                                             24                                                                                                                        6

                                                                                                                                                                                       4
                                                             22
                                                                                                                                                                                       2

                                                             20                                                                                                                        0
                                                                   2000       2005     2010       2015      2020       2025                                                                2000   2005     2010    2015       2020            2025
                                                                            North America        Western Europe                                                                                      Oceania    Eastern Europe
                                                                                                                                                                                                   Source: Global Guide to Management Education, 2005-06
Sep-10

Prof Dr. P. Jenster
                                                                            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
   Current
                            management degrees. The number of bachelor degrees awarded declined from 250,237 in 1992 to
   Market
                            230,425 in 1999; however, purely based on demographics (available on previous slide), the trend in
  Structure
                            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).



                           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,
   Supply
                                  and company-based training centers and corporate universities
Characteristics
                           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.

                                                                                                Source: Management at Risk, AACSB International
    Sep-10

    Prof Dr. P. Jenster
 US is the market leader in graduate management education with 80 percent
 of the global market ...
                         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.
MBA Market               The percentage share of foreign students in MBA programs has registered a decline. Full-time
 Dynamics                 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 Market Share by Type of Institution (2003)                                        Distribution of MBA Enrollment (2001-2003)

                                                                                      Program Type                    2001                   2003
                                                                   Public, 37.6%
                                                                                      Full-Time                      23.5%                  24.6%

Private, Not-                                                                         Part-Time                      52.3%                  50.5%
 for-Profit,
   54.9%                                                                              Executive                        5.7%                  7.4%

                                                           Private, For-              Specialized Masters            18.5%                  17.5%
                                                           Profit, 7.5%
                                Source: B-School by the Number, AACSB International                          Sources: The Global MBA Marketing Network
  Sep-10

  Prof Dr. P. Jenster
However, the US is gradually losing its dominance in the global MBA
market

                                                US business school lost 13.26% of the
                                                 Western European Market. Greece,
                                                France, UK and Spain gained 3.19%, and Spain business schools lost
                                                                                US
                                                1.77%, 1.57% and 1.2%, respectively. and 0.97%, respectively, of the
                                                                               0.79%
                                                                                 eastern European market. Canada,
                                                                                     business andUS lost gained of
                                                                                                   the UK 14.88%
                                                                                 USGermany, schools business school lost 7.23% of the
                                                                                1.17%,0.93% and 0.5%, respectively.
                                                                                 the Central Asian market.market. UK, Canada, China
                                                                                                    Asian India, UK,
                                                                                    Canada and Singapore gained
                                                                                                    and France gained 2.19%, 1.99%,
         US business school lost 0.43% of the                                                         1.44% 1.23%,
                                                                                  4.54%, 3.05%, 2.92% andand 1.02%, respectively.
          US market. UK, Spain and France                                                    respectively.
          gained 0.18%, 0.08% and 0.07%,
                    respectively.




Sep-10

Prof Dr. P. Jenster
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.

Europe’s                         Study formats are becoming increasingly flexible with 40 percent of the MBA programs either
Buoyant                           part-time or distance learning.
 Market                          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.

                                              Evidence of Growing Demand of MBA in Europe and Increased Mobility
   20000                                                                                                20000
                                                                                        2000                                                                                2004
   10000
                                                                                                        10000

           0
                                          Middle East and




                                                                                     Oceania




                                                                                                            0
                                                            N America
                       Europe


                                   Asia




                                                                         S America




                                                                                               Others




                                                                                                                                 Middle East and




                                                                                                                                                                              Oceania
                                                                                                                                                   N America
                                                                                                                          Asia
                                                                                                                 Europe




                                                                                                                                                                S America




                                                                                                                                                                                        Others
  -10000
                                              Africa




                                                                                                        -10000




                                                                                                                                     Africa
  -20000

                                                                                                        -20000
  -30000

  -40000                                                                                                -30000
                                                  From              To                                                                   From              To

 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.
                                                                                                                                  Source: Graduate Management Admission Council
 Sep-10

 Prof Dr. P. Jenster
  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.

 Structural                    It has harmonized higher education around a common model – 3 cycles and 2 formats
 Change in                     Its implementation will be completed by 2010.
Management
 Education               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.


                         Increased autonomy and increased accountability has facilitated European colleges to achieve
 Education                greater focus on market orientation. This is evident from:
 becoming                      Growth in non-state providers of education
   market
  oriented                     Regional decentralization and/or devolution from the central government
                               Institutional autonomy or devolution of authority to the institutions




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

  Sep-10

  Prof Dr. P. Jenster
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.

Australia               Australian graduate education market is presently witnessing saturation, as several key factors are
 Market                  negatively influencing the industry dynamics:
Structure                     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.


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

Funding                 Lack of funding support has led to colleges reducing scholarships/increasing fee for management
 Issues                  programs, thereby making the market less attractive
                        The lack of funds is also putting additional pressure on knowledge creation including doctoral
                         education and research


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

 Sep-10

 Prof Dr. P. Jenster
   The dominance of mature markets is steadily decreasing as Asia starts to
   play a critical role…
                                  The economic boom in Asia has led to a derived demand for management education
                          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
 Crowded Local                   life-long employment and seniority-based salary structure in Japanese enterprises.
  Management
                                India has around 1,340 business schools.
Education Market
                                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.

                          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.
   Funding                      Singapore government intends to shift the financial burden of tertiary education to private
   Problems                      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.
   Sep-10
                                                             Source: Asian Management Education: Some 21st century Issues, David B. Montgomery
   Prof Dr. P. Jenster
   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
 Shortage of                including psychology, sociology, statistics and economics, which has its own drawback:
Faculty Supply                   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.
Developing
                                 University of Science and Technology in Hong Kong has partnership with NorthWestern.
Partnerships
                           Asian management education market is also witnessing growing trend of regional partnerships,
                            ranging from joint-degree programs to colloborative research centers:




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


    Sep-10

    Prof Dr. P. Jenster
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.
  India
 Market                 The average tuition fee for Indian business schools is around US$4,000 for a 2 year MBA program.
Structure
                        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.




                        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.

Current                 Research is significantly lacking in Indian Management Education. Very few business schools
Trends                   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.


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

 Sep-10

 Prof Dr. P. Jenster
 China is expected to start playing an important role as its Management
 Education Market goes through some pivotal changes …
                          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.
Background                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.

                              MBA Admissions in China                                        EMBA Admissions in                       MBA Programs in China
                                    (1997-2003)                                                 China (2003)                               (1991-2003)
                                                                                      3500                                     100
                         20000
                                                                                                                                                                            89
                                                                              17128
                         16000                                                                                                  80
                                                                      13274                                       3000                                             64
                                                              12146                   3000
                         12000                        10822                                                                     60                        56
 Present                                                                                         2700
                                               8461
 Scenario                 8000          6886                                                                                    40
                                                                                      2500                                                       26

                          4000   2348                                                                                           20
                                                                                                                                        9

                             0                                                                                                   0
                                                                                      2000
                                 1997 1998 1999 2000 2001 2002 2003                              2002             2003
                                                                                                                                       1991     1994     1997     2000     2003
                                         MBA Admission in China                                EMBA Admission in China                        MBA Admission in China
                                                                                                                         Sources: Tsinghua Universtity, China Department of Commerce
  Sep-10

  Prof Dr. P. Jenster   * Earlier attempts from 1984 not included.
There exists a four-tier structure in the Chinese Management Education
market…
                                                                     EMBA
                                                                  Transplant
                        Higher Tuition Fees                                                                  Larger Student
                                                             Foreign-Partnered
                       Admission Standards                                                               Enrollment and Number
                                                                   EMBA
                          Foreign Faculty                                                                      of programs

                                                             Foreign-Partnered
                                                                Joint MBA




                                                                Domestic MBA



          Domestic MBA                        Foreign-Partnered MBA            Foreign-Partnered EMBA                          Transplant EMBA

• Most common MBA program               • Selective admission criteria    • Similar to Foreign-Partnered            • A sub-segment of foreign
  serving maximum number of                                                 MBA                                       partnered EMBA
                                        • English proficiency often a
  students                                requirement                     • Cater to mid-senior level               • Majority of the courses are taught
• Rely on Local Faculty                                                     working professionals                     by foreign faculty
                                        • A blend of foreign and local
• Lowest Tuition Fees                     faculty                         • A blend of foreign and local            • Foreign-partner plays a dominant
  (<US$5,000)                                                               faculty                                   role in administration. Requires
                                        • Tuition Fees ranging between                                                five to eight years of experience
• Student body composed of                US$8,000-18,000                 • Tuition Fees ranging between
  local company and                                                         US$20,000-47,000                        • Extremely selective admission
                                        • Requires around three years                                                 criteria. Prefers TOEFL and
  government employees                    of work experience              • Requires around three years
                                                                                                                      GMAT scores
                                                                            of work experience
                                                                                                                    • Tuition fee is more than
 Sep-10
                                                                                                                      US$35,000
 Prof Dr. P. Jenster
                                                                                    Sources: Tsinghua Universtity, China Department of Commerce
  Irrespective of the significant growth, there exists a huge opportunity for
  management education in China …
                          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.
Opportunities             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.

                          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.
Competitive
                          Most foreign-partnered programs compete on reputation, tuition fee, the ability to target niche
 Landscape
                           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.

                                                                                       Sources: Tsinghua Universtity, China Department of Commerce
   Sep-10

   Prof Dr. P. Jenster
 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:
Demand-side                 MNC Senior Managers/Executives
  Trends                    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

                         Increasing interest in providing Executive MBA programs has led to several launches in the last
                          five years
Supply-side              These programs are perceived to be highly profitable, which is driving more and more colleges to
  Trends                  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.

  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   Washington University and Fudan
  university
  Sep-10    for support
  Prof Dr. P. Jenster
                                                                                                           Sources: William Reinfeld
Presentation Plan


                          Management Education Industry


      1               General Overview

      2               Industry Dynamics

         3            Strategic Options



Sep-10

Prof Dr. P. Jenster
Are management institutes teaching the right thing to the right people or are
these trends pointing towards a paradigm shift…


                                          Increasing
                                         International
                                            Focus

                        Changing                         Move Away from
                        Customer                          Government
                      Demographics                          Funding
                                          Trends in
                                         Management
                                          Education
                      Proliferation of
                                                         Developing Role
                       Specialized
                                                          of Technology
                         Courses
                                          Changing
                                         Approach to
                                           Faculty
                                         Recruitment



Sep-10

Prof Dr. P. Jenster
Changing Customer Demographics




                            Changes in
                       Student Demographic




Sep-10

Prof Dr. P. Jenster
  A growing number of students are evaluating programs in foreign
  countries and Europe is perfectly positioned…
                          Offers better quality education than what is available in their own country
                          Offers better career opportunities
  Reason for
                          Provides a unique cultural experience and an international exposure
  Movement
                          International recognition and reputation of school in foreign country
                          Value proposition of the college

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.

                              Future Potential Graduate Management                       Future Potential Under-Graduate
                                              Market                                           Management Market
                               Demographic Trend – 25-34 years olds                     Demographic Trend – 15-24 years olds

                           Selected World          % Change       % Change       Selected World            % Change            % Change
                           Regions                 from 2005 to   from 2010 to   Regions                   from 2005 to        from 2010 to
 Future Growth                                     2010           2015                                     2010                2015
       Of                  Europe                  -1.0%          -1.0%          Europe                    -8.7%               -13.1%
Potential Market
                           Asia                    +2.6%          +9.1%          Asia                      +3.6%               -2.1%
                           Latin America and the   +7.3%          +4.5%          Latin America and         +1.8%               +1.0%
                           Caribbean                                             the Caribbean
                           United States           +5.5%          +7.6%          United States             +5.4%               +0.1%



                                                                                             Source: Graduate Management Admission Council, 2005
   Sep-10

   Prof Dr. P. Jenster
   Students are becoming increasingly sophisticated in their
   decision-making…


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




                               Extremely Important                                                                                  Europe                           US
                               Program should be accredited                                                                              45%                       56%
                               Prestige and global recognition of the college or university                                              34%                       31%
 Student’s Criteria
    For School                 Location of the college or university                                                                     32%                       45%
     Selection                 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%
                                                                                                             Percentage of Sample that Agreed with the Selection Criterion
                          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

    Sep-10

    Prof Dr. P. Jenster
Initial decision phase long, but shorter period to apply..

                                                                      3 months on an average




                           Decision Time
                                                           To         What can I commit to?
                                                          Enroll
                                                                               10 months on an average
                                                     Decision to Apply         What schools, attributes are important for me?


                                                                                           2 years or more
                                              Decision to Pursue Degree                    Is the degree right for me?




                      Time Spent in the Management Education Decision-Making Pipeline

                       Survey – When did you first consider attending Graduate Business School ?
                                                                                 Europe                 US
             Percentage of survey respondents, who had already applied or        84%                    86%
             were planning to apply
             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
Sep-10

Prof Dr. P. Jenster
 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
Curriculum and
                          Management institutes have started offering „study-abroad‟ programs. The success of such
  Programs
                           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


                          Management Education, especially degree-based education has started to shift from the US to
                           other parts of the world.
   Growth of              In 2004, US Management institutes lost 0.43 percent of its own MBA market, 13.26 percent of
non-US education           the European market and 7.23 percent of the Asia market to other players in the education
    providers              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.
   Sep-10

   Prof Dr. P. Jenster
Increasing International Focus – Effect of globalization on each
activity of the business education value chain (2/2)
                        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.
 Student                     • In the same year, 29 percent of the full-time under-graduate management students and 13
Recruitment                    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‟.

                        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                faculty, as there is a lack of qualified faculty pool in the local economy.
Recruitment             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.



 Sep-10

 Prof Dr. P. Jenster
 Decrease in per capita government funding has led institutions
 to explore new avenues…
  Changes Between 1995 and 2000 in State Spending per Student Relative to Changes in % of GDP Invested in Education

                                                                                                               20                  Spain               Italy                   The Size of the Bubble
                                                                                                Switzerland                                                                    represents the percentage of
                                                                                                               15
                        Change in % of GDP For Education


                                                                                                                                                                               funds from private sources
                                                                                                               10                                                Ireland
                                                                   Hungary                      Sweden
                                                                                                                          Portugal
                                                                                                                5
                                                                                                                                               Belgium
                                                                                                                0
                                                            -40         -30            -20          -10              0Germany 10           20             30           40
                                                                                                                -5
                                                                                                    Denmark                           France
                                                                                                              -10
                                                                                         Finland
                                                              Czech                                                                  The Netherlands
                                                             Republic                                         -15
                                                                                                              Austria

                                                                                               UK             -20

                                                                                                              -25

                                                                              Norway                          -30

                                                                                             % Change in Spending Per Student
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
                                                           European Union Case Study is used to demonstrate the impact of the trend on management education
                                                                                                                                                           Source: The Future of Graduate Management Education
  Sep-10

  Prof Dr. P. Jenster
Funding of management education and the current trends…

                                                         For             • Contract-based for specific programs

                                                        Teach
                                                         ing
                                                         For             • Grants for specific research (contract based)
                              PUBLIC
                                                        Rese
                                                        arch Capital Expenditure
                                                           For
       SOURCE
             OF
       FUNDING
                                                       For Research, on a contract basis



                                                         For             • Contract-based
                             PRIVATE
                                                                         • Executive education program and tuition fee
                                                        Teach
                                                         ing
                                                        Other            • Contribution
                                                                         •Donations


Major Trends in Management Education Funding
To 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.
 Sep-10

 Prof Dr. P. Jenster
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.

                       Examples of Successful TML Strategies based on overall technology objectives
 University                   Type              Objective of TML Initiative             Scope of TML Initiative
 Duke University –            Non-profit,       • Expand Student Base                   Executive and Day MBA
 Fuqua Business School        Private           • Enhance Brand Image                   programs, non-degree executive
                                                • Improve learning and Teaching         programs
                                                • Improve Competitive Positioning
 Ohio University –            Non-profit,       • Expand Student Base                   MBA Without Boundaries
 MBA Without                  Public            • Enhance Brand Image                   executive program
 Boundaries                                     • Enhance Student Retention
                                                • Improve Revenue
                                                • Increase Learning
 UCLA – Andersen              Non-profit,       • Enhance Brand Image                   Executive and Day MBA
 Graduate School of           Public            • Enhance Student Satisfaction          programs
 Management                                     • Improve Competitive Positioning
                                                • Improve Services
 University of Phoenix -      For-profit,       • Expand Student Base                   Undergraduate, Graduate and
 University of Phoenix        publicly traded   • Enhance Brand Image                   Certificate programs
 Online Campus                company           • Improve Revenue and Reduce Costs
                                                • Improve Competitive Positioning
 Sep-10                                         • Develop New Products/Services
 Prof Dr. P. Jenster
 Implementation of TML in management institutes…

                                                                                                                                      TIME

                                                                                                                   SAME                          DIFFERENT
 Most management institutes combine                                               P                                                           Computer Lab
 synchronous and asynchronous                                                                            Wired Lecture Room
                                                                                  L      SAME                                                Multi-Media cases
 elements of TML for teaching and this                                                                    Multi-Media cases
                                                                                  A                                                            Simulations
 mixed-modality approach is expected
                                                                                  C
 to continue.                                                                                            Video Conferencing                 Web-based Delivery
                                                                                  E   DIFFERENT
                                                                                                             Simulations                       Simulations

    Classroom
     Computer                                  21%
 Projection System


    Web-based
Discussion Groups
                                                 22%                                  A recent survey conducted in the US demonstrates the
                                                                                      top five TML tools used in management education.
  Listserv/Bulletin
  Board/Electronic                                 24%
    Discussion                                                                        Results also point that while the institutes used the
                                                                                      same technology, they did not use a specific single
             Email                                     27%                            hardware or software.


    Online Library
                                                             32%
     Databases


                      0%         10%       20%         30%         40%      50%          Source: Best Practices in technology-Mediated Learning in American Business Schools,
                                                                                                                             Gretchen Gemeinhardt, Texas Woman‟s University
                           Percentage of Courses Employing the Technology
  Sep-10

  Prof Dr. P. Jenster
Researchers Vs Teachers – Which is the right way to go?

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.


                                             Demand Drivers                                                                                                   Supply Constraints
                    Global growth in MBA programs                                                              The production of doctoral faculty is decreasing
                    Demand for qualified faculty by schools to achieve                                          worldwide
                     global recognition through accreditation                                                   Enrollments for the doctorate program are declining
                    Increase in undergraduate enrollment                                                       Employment outside academe is increasing
                                                                                                                Increasing number of faculty members are reaching
                                                                                                                 retirement age
 Number of Full-time Doctoral Faculty (US)




                                              29000                                                                              As is evident from the chart, the
                                                                                                                                 demand will continue to outstrip
                                                                                                                                 faculty supply. Institutions have,
                                              28000                                                                              therefore, shifted their focus to:

                                              27000                                                                           Hiring researchers to act as faculties
                                                                                                                              Hiring non-business PhDs to business
                                              26000                                                                            research and training
                                                                                                                               However, this approach has its own
                                                                                                                               limitations. This is demonstrated by a
                                              25000
                                                                                                                               US Case Study provided on the next
                                                      2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
                                                                                                                               slide.
                                                                   Faculty Supply   Faculty Demand
                                                                                                                         Source: Can American Business Schools Survive?. Jarold L. Zimmerman,
      Sep-10                                                                                                             University of Rochester
      Prof Dr. P. Jenster
 Faculty Recruitment – US Illustration

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

                        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,
 Initiative             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.

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


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


                                                                Reduction in doctorally qualified faculty


                        Lower Salary for B-School Faculty and
                                                                                                                   Pressure to allow higher-proportion of
                                   administrators
                                                                                                                  low cost non-doctorally qualified faculty
   Why                                                                                                                 to teach in business schools




                                 Diminished academic standard, ability
                                   to teach graduate programs, lower                          AACSB relaxes the required proportion
                                 standing in the University community                             of doctorally qualified faculty
  Sep-10                              and weaker B-School leaders

  Prof Dr. P. Jenster
Faculty Recruitment – So what is the right strategy?

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

                         Wage                                                       The chart shows that at the current
                                                              S                     wages, the quantity demanded
                          Rate
                                                                                    exceeds the quantity supplied, resulting
                                                                    S‟              in a shortage of professors.
  Effect of
                             W                                                          • In an open market, this should
 AACSB’s                                                                                   lead to higher salaries, thereby
                             W‟                                                            finding a new equilibrium.
 Relaxation

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


                         In case the free market forces were left alone, this shortage would have driven the salaries
                          upward for new hires.
  Without                A higher wage would have led to new entrants on the supply side, reducing the shortage.
 AACSB’s
                         Higher academic salaries might have induced some MBA students to pursue a business
Intervention
                          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.
  Sep-10

  Prof Dr. P. Jenster
  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 –            Introduced a combined MS in Information          50 percent of the incoming class are enrolling
 School of Management           Technology with MBA program                      in this program, which requires 20 more
                                                                                 credits than normal MBA
 Carnegie Mellon –              One of its MBA program has a special focus on    Tepper has eight other specialized MBA with
 Tepper School of               product development and provides students        different focus areas
 Management                     with understanding of how to develop and
                                launch products
 Iowa State University –        The college has partnered with the ISU           This is the only graduate-level program of its
 College of Business            Graduate Program in Sustainable Agriculture to   kind in the US
                                offer minor in sustainable agriculture
 Rutgers –                      Rutgers launched pharmaceutical management       The school partnered with seven local
 Business School in Newark      MBA in 2000                                      pharmaceutical companies to launch the MBA

 UC Davis –                     Offers a program leading to a Wine MBA           UC Davis is one of the four universities
 Graduate School of             awarded by the Bordeaux Business School in       offering the same program in the US
 Management                     France

 University of Minnesota –      The school has four executive programs in the    Around 80 percent of the student participate
 Carlson School of              field of fund management, consulting, venture    in one of these four programs. The students
 Management                     capital and brand management                     spend 20 hours a week for 3 semester

 University of Wisconsin –      The school dropped its general management        Some of the programs include real-estate,
 Madison                        MBA in favour of 13 specialized programs         applied corporate finance and arts admiration
 School of Business
   Sep-10
                                                                                           Source: Business Week Online
   Prof Dr. P. Jenster
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
 Drivers                 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.

                        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.
Challenges
                        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.
                                                                                                   Source: The Made-to-Order MBA, BizEd
 Sep-10

 Prof Dr. P. Jenster
Presentation Plan


                          Management Education Industry


      1               General Overview

      2               Industry Dynamics

         3            Strategic Options



Sep-10

Prof Dr. P. Jenster
 All business schools are continuously managing several internal and
 external pressures…
                                                   INCREASING WEALTH OF SCHOOLS
                                              • Large endowments for top private schools
                                                     – Harvard > US$1.5 billion (est.)
                                                     – Kellogg, Wharton > US$400 million (est.)
                 MEDIA RANKING                Implications
• Too many resources focused towards          • Intense competition for top faculty, students and
  media ranking management                    executives
• Less focus on research
• Ranking is a function of location, wealth                                                                               RESOURCES
  of school, brand, quality of students and        Influencers in                                       • Continuous decrease in public
  faculty                                                                                                 funding
                                                      business                                          • Endowments are increasing but do
                                                  schools‟ strategy                                       not cover all expenses

              FACULTY SHORTAGES
                                                      decision                                          Implications
                                                                                                        • Colleges are trying to develop new
• Demand at the highest level since 1980s                                                                 streams of revenue to cover costs
• Supply is falling
Implications                                                               COMPETITION
• Salaries are rising                                  • More than 7,666 MBA colleges
• More efficient delivery of the curriculum            • Increasing number of distance program
       – Basic courses available Online                • Numerous partnership between schools
       – Non-productive research faculty                 and companies
         time re-allocated                             • Growing role of e-learning, evident from
                                                         the number of enrollment at Phoenix
  Sep-10

  Prof Dr. P. Jenster
                                                     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;                    Local/National/Global/Sector or Industry-
                                Partnership unusual                                      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          Selectivity, research standing of staff, alumni
                                employability                                            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,       Participant‟s prior and current experience
                                barring occasional use of simulations, activities integral, plus substantial use made of wide
                                and projects                                      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 Also, group projects, individual project exhibits,
                                exams                                          placement report and portfolio building


                                                               Source: Reproduction from „Changing Business Education, Learning and Teaching Support Network‟
 Sep-10

 Prof Dr. P. Jenster
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 High autonomy; low on education teaching                        Reduced autonomy; often team based; high on
Skill Set                   know how; subject expertise critical                            education teaching know how; subject
                                                                                            expertise critical
Professional Development     Informal and voluntary; occasional staff                       Training grades and formal development
                             development courses                                            programs widespread

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

Learner Support and Customer Care
Learner Role and             Students/ largely homogenous within particular                 Customer of educational services/ often very
Characteristic               programs                                                       variable by age, gender, educational,
                                                                                            employment and cultural background
Approach to Quality Issues Understood largely in terms of academic                          Quality negotiated in terms of academic,
                           standards and limiting drop-outs; student                        learner, employer and sponsor; Formal QA
                           feedback informal                                                processes in operations
Student Workload             Basic guidelines, but left to individual staff and             Clear policies and metrics, with monitoring and
                             not seen as an important issue                                 links to other issues like learning outcome and
                                                                                            study skill development
Support Services             Basic counseling and careers advice; ad-hoc                    Explicit policies and systems for leaner support,
                             remedial and re-sit support, rudimentary back-                 retention, diversity etc; Customer focused
                             office systems; technology infrastructure                      administration and appropriate technology
                             variable                                                       infrastructure
 Sep-10                                     Source: Reproduction from „Changing Business Education, Learning and Teaching Support Network‟

 Prof Dr. P. Jenster
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




                                   Executive
               E-Learning                                      Research
                                   Education




Sep-10

Prof Dr. P. Jenster
The role of technology in imparting management education has
increased significantly
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


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


Drivers behind
                        Temporal (time) and Geographic constraint - The constraint acts as the biggest obstacle in
  e-learning
                         the expansion of institutes.
    growth


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

                                                                                            TEMPORAL DIMENSION
e-learning can be realized through                                              SYNCHRONOUS                        ASYNCHRONOUS
   various tools, which vary along                                                                             • Real Audio/Video
   two dimensions:                                           One-way       • Live Video Lecture                • Drawing/White Boards
                                                                                                               • Hypertext
 Type of Communication – One-                                            • Live-Video Discussion              • Electronic Bulletin
  way or bi-directional                                                                                          Boards
                                                                          • Internet Relay Chat
 Temporal Dimension – Same or                               Bi-multi/way • Application Sharing                • E-mail
  different time period                                                     Software                           • Mailing Lists
 Sep-10
                                                                          • Shared Whiteboards
 Prof Dr. P. Jenster                                                        Sources: Leipzig Graduate School of Management
The level of integration of e-learning in US business schools (1/2)




              Entirely non-
               residential


                              Substantial use of e-learning
                                with minimal number of
                                 classroom meetings

                                                                “Blended” modular programs:
                                                              Infrequent, condensed classroom
                                                                meetings with longer periods of
     Cardean/Ellis                                            rich e-learning content in between
     Capella
     U Phoenix
     Drexel Online                                                                                   Used as support
     CU Denver                  Penn State                                                          between frequent
     Online                     Drexel Techno                                                      classroom meetings
     Kelley/Indiana             Syracuse iMBA          Duke
                                IMD                    Michigan
                                                       Purdue           Wharton
                                                                        Kellogg
                                                                        Case Western


                                                                                                         Source: AACSB International
Sep-10

Prof Dr. P. Jenster
The level of integration of e-learning in US business schools (2/2)


 MBA program           Features                               MBA program                 Features
 Colorado State         Videotapes of classes sent each      Ohio University             Nine major learning projects
 University              week.                                                            Three 1-week residencies
                        Threaded discussions and chats                                   Intranet real-time meetings
                                                                                          Electronic tutorial

 Drexel University      No foundation courses                Suffolk University           EMBA
                        Three-on campus weekend                                           Slide shows, video clips,
                         residencies                                                        threaded discussions, and
                        Executive mentors, enterprise                                      chat rooms
                         resource planning as a unifying
                         theme
 Duke University        Global executive MBA                 University of Missouri       Meet 1 weekend per month on
                        Five residencies required on five    at St. Louis                  campus
                         continents                                                        23 months of 12-week classes.
                                                                                            Learning teams
 Indiana Wesleyan       One course delivered on each of 3-   University of Phoenix        Classes offered one at a time
                         day on-site sessions. Live chats                                  5 to 6 week classes.
                                                                                            Computer conferencing.
                                                                                            Business plan project
 National University    Courses each last 2 months           University of                Learning Space software. CD-
 of San Diego           CD-Rom, Internet, and Intranet       Wisconsin-Whitewater          ROM presentations. Threaded
                                                                                            discussion.
                                                                                       Source: ED Magazine and ED Journal September, 2001
Sep-10

Prof Dr. P. Jenster
So, why hasn‟t e-learning replaced the traditional form of teaching?

  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 .

Pros:
 Higher degree of spatial and temporal flexibility
 Easy to integrate different information and communication
  tools PowerPoint containing video and texts                       Richness
 Provides the possibility to create more engaging learning                           Residential
  communities can review lecture materials at one‟s own                               Format            Internet-based
  pace                                                                                                       Format

 An effective way to face globalization
Cons:
 Less social interaction acts as the biggest deterrent in
  following e-learning strategy. Most traditional colleges would                                            Traditional Distance
  not like to compromise on social interaction                                                                 Study Format`

 Teaching quality is affected by the IT infrastructure 
  Bandwidth scarcity affects the communication channel                                                                  Reach
  between a sender and receiver
                                                                                       Sources: Leipzig Graduate School of Management
 Sep-10

 Prof Dr. P. Jenster
   What differentiates a good e-learning strategy?

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

                           Assist professors in acquiring information technology skills
                           Help professors in adopting new teaching methods and reduce their reliance on
      Professor             individualistic teaching styles
                           Promote the idea of professors spending more time on written communication with students
                            instead of verbal communication

                           Colleges should implement plans to substitute paper-based textbooks with e-books
      Materials
                           Use MS-Office instead of pen and paper

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

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

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


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

    Sep-10

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

                              Investment      Students and     Outcome and
           Venture                                                                          Additional Information
                                Capital          Dates             Date
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           NA
                                                             (Distance Education
                                                             arm)



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
  Sep-10

  Prof Dr. P. Jenster
    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 Ranking of Institutes Providing Executive Education

                             Open Programs                                                            Custom Programs
2004       Provider           2003 2004-05       Open    Five –Year    2004      Provider                   2003       %             Revenue          No. of
Rank                          Rank Revenue   Programs      Revenue     Rank                                 Rank Revenue              2004-05        Clients
                                   (million)            Change (%)                                                  from             (million)       served
                                                                                                                  Custom
1          Harvard               1        76      66            NA               Duke Corporate
                                                                       1         Education                       1         100                 42        54
2          INSEAD                5       85.1     136        104.6
                                                                       2         IMD                             3           51            31.8          82
3          IMD                   8        62      137          28.3
                                                                       3         INSEAD                          5           52            44.1          90
4          Stanford              6       21.2     40           43.2
                                                                       4         Virginia                        6           57            11.4          28
           London Business
5          School               10       43.9     27           55.1    5         Michigan                        9           28                4.8       14
6          Michigan              3       17.2     77          -35.1              London Business
                                                                       6         School                         14           52            22.9          52
7          Columbia              7        16      62            4.6
                                                                       7         Harvard                         2          NA                 NA        20
8          Wharton               2        NA      53            NA
                                                                       8         Penn State (Smeal)            NR            70                 3        19
9          Kellogg               9        NA      83            NA
                                                                       9         Stanford                       13          NA                 NA        10
           Queen‟s
10         University           NR        NA      11            34     10        Kellogg                         8           41                NA        24
     Sep-10
                                                                      Source: Business Week; Structuring for Scale, Duke Corporate Education
     Prof Dr. P. Jenster
 EMBA – The most mature market within executive education for
 management institutes
 Worldwide, 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:

                         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.
Reduction in             EMBA programs are, therefore, relaxing their admission criteria, as corporate funding is hard
 Corporate                to get for executives and many possible target segments including doctors and entrepreneurs
Sponsorships              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
   Shorter
EMBA programs            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
  Sep-10

  Prof Dr. P. Jenster
  Future of EMBA…

                          EMBA programs globally are trying to differentiate by using a combination of strategies:
                          Distinction from executive non-degree programs: EMBA programs consistently have high
 Differentiating           admission standards as compared to open-policy of several other executive programs and
     EMBA                  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.
   Relaxation             The strategy facilitates reduction in time spent on campus, as students come together for
In Course Timing           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


 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


   Sep-10

   Prof Dr. P. Jenster
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

                                                   Management Consultancies

                                           • Proposition: Migrating to capture
                                             educational projects
                                           • Target: Executive and senior Management




                  HR Consultancies                                                            Management Consultancies

• Proposition: Managing HR know-how and
  IP into training and development                      Opportunity                • Proposition: MBA and associated product
                                                          Space                      extension
• Target: HR Interface, Management
  Development                                                                      • 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
 Sep-10

 Prof Dr. P. Jenster                                                         Source: Structuring for Scale, Duke Corporate Education
   There is a growing trend of business schools providing consulting
   services to enterprises
                           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
      Drivers
                           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,
  Most Efficient            ready to be used in a suitable consulting assignment, without any stand-by cost.
Market Positioning         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
    Sep-10

    Prof Dr. P. Jenster                            Source: Structuring for Scale, Duke Corporate Education; The Myth of Standardized MBA, BizEd
   Key elements of the consulting strategy and challenges in competing
   with consulting firms..
                          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
   Strategies for             • building respected faculty network
Providing Executive
     Education                • 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:
   A Few Points
       To                     • Mercer acquiring Nadler, CDR and several other coaching and boutique firms
    Remember                  • 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
    Sep-10                                          Source: Structuring for Scale, Duke Corporate Education; The Myth of Standardized MBA, BizEd

    Prof Dr. P. Jenster
Role of Research: The business school‟s foundation

                       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
  History              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.
 Pay-offs              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

Sep-10                                       Source: Can American Business Schools Survive?, Jerold L. Zimmermann, University of Rochester

Prof Dr. P. Jenster
  Downfall of research and its few saviors..

                          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
Present Scenario
                           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.

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.

                                        Business Schools Research Ranking (Top 14)

  Rank      Rank         Percentage of Pages   University          Rank           Rank            Percentage of Pages          University
  1997-2001 1986-1998                                              1997-2001      1986-1998
  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

   Sep-10                                                          Source: Business School Research Performance, Kelley School of Business
   Prof Dr. P. Jenster
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                                                     • Kellogg and Hong Kong UST
                       • Merger                                                        • ESC-EAP and IMD
                       • Joint-Program                                                 • 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
Non-traditional                                                                        others
  Revenue
 Generation            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

                                         Cost Initiative                                                        Some Examples
Non-traditional        Use part-time teachers and PhD students for                     Cambridge*
 Cost Cutting          teaching and research
   Measure             Increase the class-size to reduce fixed                         Harvard
                       cost/student
 Sep-10
                                                                                                     Source: various Journals, Internet Search
 Prof Dr. P. Jenster
                                                *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
Positioning Bus. Schools generally takes place along two dimensions:
Recognition of Research and Teaching




                                                                                              Where is
                                                                                          CEIBS, and Where
                      Of Research
                      Recognition




                                    Carnegie-Mellon,                                        Should we be?
                                     Univ of Chicago       Harvard, Wharton,
                                          LSE                  Stanford
                                                            Michigan, Duke,
                                                         London Business School
                                                                INSEAD




                                                                     Univ. of Virginia,
                                                                      IMD, Babson



                                                       Recognition
Sep-10
                                                       For Teaching
Prof Dr. P. Jenster
                      Thank You




Sep-10

Prof Dr. P. Jenster
                         January 6, 2006
Sep-10

Prof Dr. P. Jenster

								
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