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Coronavirus Pandemic Accelerates Shift in MBA Market
Coronavirus Pandemic Accelerates Shift in MBA Market
Coronavirus Pandemic Accelerates Shift in MBA Market
market
Publication info: Financial Times ; London (UK) [London (UK)]. 18 May 2020: 16.
FULL TEXT
D uring his 22 years at the University of North Carolina's Kenan-Flagler Business School, Doug Shackelford has
helped its MBA programme adapt to a number of serious economic shocks. Following the turmoil after the dotcom
bubble burst and the 9/11 terrorist attacks, he helped lead the school as head of academic affairs. Then in the
recession that followed the financial crisis, Kenan-Flagler set up an online version of the programme —MBA@UNC.
Mr Shackelford, who has been the school's dean for the past six years, says the coronavirus pandemic is by far the
biggest challenge to the MBA.
"I would be shocked if there is any school that can take the hit that has occurred to our sector and make money,"
he says. "We were going to run another big surplus this year but now we are trying to minimise the deficit."
The Covid-19 outbreak has shaken the higher education sector worldwide by forcing them to spend heavily on
online teaching systems while future revenue streams from new students become less certain.
But the travel restrictions and social distancing rules enforced to stop the spread of the virus have hit business
schools harder than their parent institutions because they are more reliant than other academic disciplines on
overseas students and graduate degree course fees.
The MBA market was troubled before the pandemic struck. Demand for the full-time two-year degree in the core US
market has fallen every year for the past five years. Competition has increased with alternative training providers
such as Hyper Island and Jolt offering MBA modules via short courses taught at city centre venues.
The recent forced campus closures and mass digitisation of MBA course teaching has heightened the sense of
crisis. Hundreds of existing students have signed petitions demanding tuition fee refunds from Wharton, Insead,
Stanford and other leading schools. This pressure on schools could lead to the most profound shift in the sector
since the first MBA was introduced in 1908 by Harvard Graduate School of Business Administration —as Harvard
Business School was known then.
Business model revamp Deans have long been aware of the problems of the MBA business model but believed
they had plenty of time to adapt, according to Cynthia Vitters, managing director of Deloitte's government and
public services practice, which helps business schools and other academic institutions develop enterprise risk
management programmes.
"The situation has now changed," she says. "If the quality of the course teaching is not up to snuff, there is
definitely a risk that schools will lose people who applied this year."
The cost of the MBA is a key issue, according to Ms Vitters, but a difficult one to resolve. "Clearly in education the
way things have been delivered will have to change, but I don't think there is anything schools can do to make
tuition [fees] go down because of the high cost of staff," she says. "They will have to work on giving greater value
to students for the same price."
Agility and flexibility is likely to be key for survival in the MBA market, even among those with the financial reserves
in terms of alumni donations and endowments to get through the current crisis.
Barcelona's Esade business school is among those resisting refunds. Instead it is offering its intakes additional
careers support services and free access to its suite of executive education programmes once they have
graduated.
DETAILS
Business indexing term: Subject: Business schools Business models Recessions; Industry: 61141 : Business
and Secretarial Schools
First page: 16
Section: News
ISSN: 03071766