The business of MBAs

by 01 May 2007

With stagnant or declining enrolments, universities are trying to rework their MBA programs to attract students, while keeping up with the demands of business. Teresa Russell explores recent trends and finds out how to get the best bang for your MBA buck

The winds of change are blowing through the MBA marketplace. There has been a recent proliferation of specialised versions of the MBA. You can now get an MBA with specialisation in just about anything, including human resource management, environmental sustainability, project management, ethics, health management, corporate governance, insurance, law, international business…the list goes on and on.

Differentiating MBA offerings

Chris Nailer, coordinator of the MBA program at ANU’s school of management, marketing and international business says that hiring organisations prefer degrees that offer a more clearly identified specialisation. “Employers are looking for specialisation and the ability to leap across disciplines. Generalists are needed less and less,” Nailer says.

Sam Wells, MBA director at the Adelaide Graduate School of Business says that specialisation will increase. “Globally, the MBA has tended to become more commoditised in the last decade. In response, we are re-emphasising the features that differentiate our program. For example, we give students flexibility in their choice of subject and specialisation and we also emphasise learning embedded in the workplace, rather than quarantined in the classroom,” says Wells.

John Toohey, head of RMITUniversity’s Graduate School of Business is overseeing a different type of differentiation that he believes is the way of the future. In February this year, GSB’s fully online executive MBA program was launched through Open Universities Australia. It has 103 online students and about the same amount enrolled in its on-campus course.

Online MBAs

Toohey says RMIT manages online students as a class and cap numbers at 29. Students get a CD ROM study guide with 12 weeks of work for each of the 12 courses (subjects) and are expected to spend at least 3 hours per week online. “The first course can be done as an intensive residential and the final one, Implementing Strategy, is a compulsory residential. Our first intake has gone really well,” says Toohey.

Open UniversitiesAustralia is a not-for-profit consortium of seven universities – Curtin, Griffith, Macquarie, Monash, RMIT, Swinburne and the Universityof South Australia. RMIT is the first of this consortium to offer an MBA online, but according to Cratis Hippocrates, Open UniversitiesAustralia’s general manager, the demand is high and other universities are likely to follow suit.

“We are very different because our whole offering is online. The students will get a degree and testamur from RMIT, with no reference to the mode of delivery,” says Hippocrates. Open UniversitiesAustralia’s online undergraduate degrees used to cost less than on-campus degrees, but as services have expanded, prices have risen. The online EMBA through Open UniversitiesAustraliacosts the same as RMIT’s on-campus program.

In the last three years, Open UniversitiesAustraliahas tripled its revenue and more than doubled its student numbers. In late March, Hippocrates attended a Business and Higher Education roundtable meeting entitled “The Business Graduate of Tomorrow” which was co-hosted by the Australian Business Deans Council. Everyone there agreed that the delivery mode would be the next change they will have to face, as time-poor students demand at least a blended learning opportunity. “It’s the first time I’ve taken 40 business cards to a gathering like that and come home with none,” declares Hippocrates.

How much is an MBA worth?

The Good Universities Guide (www.ratings.thegoodguides.com.au) ranks universities across many criteria, including the change in salary after completing an MBA. An MBA is a significant investment in time and money, so it is reasonable for students and their employers to expect major benefit in return. Quantifying that benefit is not easy.

ANU’s Nailer says that because the sticker price of MBA programs is now very significant, people are forced to undergo this study earlier in their careers than previously. “If people approach it as a learning and skilling exercise, there is huge value to be gained. If they approach it to quadruple their income and see it as a ticket to fame and fortune, they will be disappointed,” he says.

“The value we look for is in the professional growth of our students. They should develop a sophistication of understanding and an expansion of their thinking. The way to get the most out of an MBA is not to do just enough to get through, but to open yourself to new thinking and to explore new ideas,” says Wells.

Toohey says that the value add depends on the nature of the MBA program. “People may learn a lot but get no business education. Successful students are the ones that come out of a program as different people. They can get great things out of people using consultation and good communication, rather than arrogance and aggression,” he says.

Toohey also cautions about relying on indicators such as salary increases when assessing MBA program. “Some good programs don’t score well on that indicator, because their students are already well paid and older at the start, so the increase is only small,” he says.

The future

The Australian market is currently crowded with MBA programs and providers. There are over 40 universities offering over 80 different MBA programs. Although a rationalisation of providers has been expected for more than a decade, it is yet to eventuate. Instead, universities have courted the higher fee paying international students.

The future of the degree to some extent relies on the effectiveness of current graduates. “There will definitely be more differentiation in a market that is commoditised. Part of the differentiation will be to re-engage with the workplace – to develop graduates who are effective at work, rather than just in the classroom,” says Wells.

Nailer sees a proliferation of specialised versions of the MBA. He believes that a strong emphasis on experiential learning will create graduates with a better understanding of both themselves and the business world.

Toohey believes that some Australian business schools will form alliances and market themselves internationally, where growth in student numbers is assured. The final word must come from Hippocrates at Open UniversitiesAustralia. Without doubt, online delivery will feature in at least some parts of many MBAs in the near future.

“We target time poor working adults from their mid-20s to mid-50s. We believe that the fulltime MBA market in Australia will be saturated for this kind of offer by 2010 – at around 140,000 units pa,” he says. (Open Universities Australia is currently providing 80,000 units per annum).

“In the future, I believe students will do their core subjects at a few different universities and decide, after they have tried a few, which one they want to complete their degree with. This will give time-poor students the ultimate flexibility in their study,” says Hippocrates, who also believes that international competition for the online MBAs is likely.

In 2006, Open UniversitiesAustralia established a pilot program in Indiafor some of its undergraduate courses. “The international market will be a big attraction once routes are firmly embedded,” he predicts.

The business, the business school and the student

“I first met Chris Nailer at a venture capital evening that we both attended as observers,” recalls Peter Norton-Baker, owner of Water Plus, a Canberra based manufacturer of an under-sink filtered, boiling and chilled drinking water appliance.

Nailer coordinates the MBA program at ANU’s school of management, marketing and international business. Norton-Baker subsequently applied to the uni in the hopes that some of Nailer’s MBA students would assist in researching his potential Asian market for their major Internationalisation assignment.

Michael Tempany was one of five students who formed a team to complete the assessment of the market potential, competitors, potential distributors and everything else that needed to be considered. They focussed their attention on Singapore for the purposes of the assignment.

The students and Norton-Baker met on about four occasions over a 6-month period, the first time as a fact-finding discussion and the other times were to seek clarification or report on the group’s progress.

The students produced a 40,000-word report for Water Plus. “I just lived and breathed that business for the duration of the course,” says Tempany, who took on a full-time study load while holding down a full-time job in the final year. “I loved learning about every aspect of Water Plus’ business – from the way the industry works here, to who the players are in the Singaporemarket. It felt great to be able to help a real company [internationalise their product],” says Tempany.

“I received a professionally prepared report that was well structured and offered far greater detail than our business could have achieved with our limited resources,” says Norton-Baker, who used the plan as part of his overall strategy. “It was just another piece in the jigsaw.”

As often happens in the world of business, luck played a part in Water Plus’ entry into the Singaporemarket. The Australian Embassy in Singapore specified a Water Plus unit in its recent fit-out, so Norton-Baker took a unit there and installed it personally. He appointed a distributor there that was one of the sub-contractors on the embassy refurbishment, after comparing them to those suggested in the students’ report.

“If you are lucky enough to have students willing to research your product and market for you – take advantage of it,” counsels Norton Baker. “The students are often able to gain insights that the company cannot.”

When to take the plunge?

People undertake an MBA for a myriad of reasons. Some do it after only a few years in the workforce, while others do it with 20 years work experience under their belts. Which is best?

Cathy Teager, business operations manager with Health Connect SA (a commonwealth funded program to put all health records online) began studying towards her MBA degree at ANU’s school of management, marketing and international business in her early 40s. She has no undergraduate degree.

“I wanted to make sure that my work practices were contemporary, as they were different to those of my peers at Diabetes Australia. I wanted to run my team my way,”says Teager of her motivation to embark on an MBA. Teager was the national manager of the National Diabetes Service Scheme, a program that provides products to diabetics throughout the country.

Michael Tempany has an undergraduate commerce degree from the University of Melbourne and was working for the Federal Government in Canberra while doing his MBA at ANU. “After a few years of working on policy matters, I wanted to get hands on business experience, working as a consultant. I saw the MBA as the best way to achieve that goal,” he says.

Both Teager and Tempany chose ANU primarily because of its location, then secondarily because of its reputation. “I knew I wanted to do interactive class work,” says Teager who felt any distance or online learning option would not suit her.

Both received financial support from their employers to study, but neither student had personal situations you could call “ideal.”Teager’s husband was overseas for the duration of her study. She sole-parented a 12 and 16 year old during that time. (She graduated from ANU with a Masters in Management, as she moved to Adelaide mid-way through her MBA). “There were times when we all had assignments due in the same week – and just one computer at home to work on.” Tempany worked full time and studied full time for the last year of his degree. His first child was 6 months old when he finished.

Tempany says that although there was huge pressure on him (and his family) because of the combination of work and study, he looked at the situation as a challenge and feels proud of his achievements. His MBA has already paid dividends, with a move into a large consultancy firm coming not long after graduation.

“Make sure that you do your MBA at a time that is right for you. I chose to do it early in my career and it has already opened doors for me at a relatively young age. In 15 years time, when management theory has changed again, I may regret studying so early, but not now,” says Tempany.

“It is important to choose courses that reflect your real study aims, not just because they fit into a timetable. I use the project management course content every day. I am a better leader because I have a greater understanding of my own strengths and weaknesses,” says Teager.

Things to consider when choosing an MBA program

• Understand what you want to get out of doing an MBA first

• Choose a mode of study that will suit you (and your family) best

• Consider the need for flexibility in attendance – some schools deliver the same

classes in different states and countries at the same time.

• Be able to afford the fees

• Decide on the length of the program – 12 or 16 subjects

• Be able to meet the weekly time commitment

• Choose course content that you need/want

• Specialise, if desired

• Research faculty qualifications and experience

• Ask for employer support (both time and money)

• Consult widely with past graduates

• Know the reputation of the business school