The MBA is no longer the only option for ambitious people to advance their careers. Is it still the best?

For decades, the MBA has been the qualification of choice for business people with ambition. Now its top spot is being challenged. Specialist Masters degrees in subjects such as finance, marketing and international business are fast becoming popular alternatives for those wanting more focus and career flexibility – not to mention lower fees.

Jeanette Purcell, the chief executive of the Association of MBAs, says the growth in these Masters degrees has been striking, and predicts that it is likely to continue as business education becomes more globalised. "We don't see it as competition for the MBA," she says. "We see it as a positive development because all these programmes are valuable for a certain type of student in a certain context."

This autumn, Cambridge University's Judge Business School will launch a new Master of Finance degree, for people with at least two years experience in finance and banking, while ESCP-EAP European School of Management will launch a specialised Masters in Finance in its London campus, for students who already hold an MA or MSc or who have an undergraduate degree and three years' relevant work experience.

At the same time, Cass Business School is launching a flexible, part-time MSc in finance and investments, aimed at business executives who have around 18 months of work experience and want more in-depth knowledge of finance. Grenoble Graduate School of Business has started an MSc in marketing in London, alongside its existing MSc in Finance.

Traditionally MBAs have been available only for those with several years work experience, and offer a general and practically-based business education, while Masters courses are more specialised and theoretical, and students can embark on them as soon as they finish their first degree.

But these distinctions are beginning to break down. Harvard is one of a handful of US institutions which now offer MBAs for graduates fresh out of college. Masters courses are also attracting people with extensive business experience. To reflect this, AMBA recently changed the name of its pre-experience Masters in management accreditation to Masters in business management.

The fact that it is possible to study for Masters degrees with relatively little business experience is still one reason for their growing popularity. Students recognise that to sell themselves to the best employers, an undergraduate degree alone is no longer enough. The trend has been accelerated by the Bologna process, which aims to bring European higher education systems into line by 2010, and makes Masters qualifications more important.

David Ruiz, the director of studies at the London campus of ESCP-EAP, says: "Major discussions are going on in the business schools in Europe. Some universities are rethinking the positioning of the MBA and some of the corporates are thinking, 'Should we recruit people with Masters or with Bachelors?'"

Another consideration is the growing complexity of the business world, and the demand for greater specialisation. Mark Shackleton, the professor of finance at Lancaster University Management School, says both Lancaster's MSc in finance and its Masters in accounting and finance have noticeably taken off over the past five years because of the increasing importance of finance globally for all corporations.

"A lot of people on a career track inside a company need financial expertise to flourish," he says. "Or they realise that there are interesting opportunities in finance and they want to change career."

But the biggest reason for choosing a Masters over an MBA, appropriately for business-savvy students, is money. The basic cost of an MBA is £18,500 for an overseas student at Nottingham Business School, compared with around £12,000 for a Masters. Lancaster charges £17,500 for an MBA, compared with £14,000 for an MSc in finance.

There are plenty of reasons why MBAs are more expensive: they are usually aimed at those advanced enough in their careers to afford high fees; they are more about practice than imparting knowledge, so involve more faculty time; they traditionally lead to significantly increased salaries for graduates; and they attract scholarships.

Yet the calculation can be a fine one, especially when the highest cost for most full-time MBA students is the salary they forfeit, which is why more and more are choosing to study part-time. This is usually less of a consideration for Masters students, who tend to be younger and less established in their careers.

Key to the calculation, whether students are studying for an MBA or Masters, is still the reputation of the institution. Individual circumstances will determine whether it is better to take a business qualification directly after leaving university, or to work or travel first.

Scott Goddard, the associate director of Nottingham University Business School, says a further increase in the number of people taking business Masters programmes is inevitable, although for future career and salary prospects an MBA from a good institution remains hard to beat – if you can afford it.

'My degree is an investment that lives on'

Aishah Ahmad, 31, already had an MBA from her native Nigeria, and a career in banking, when she enrolled on a Cranfield School of Management MSc in finance and management.

"I was in a more general management role and wanted to specialise in finance," Aishah says. She completed her degree in September. Now her ambition is to secure a job in investment banking, private equity or hedge funds, and she is considering a number of options.

At £17,000 in fees, plus at least another £15,000 in living expenses, the MSc was not cheap but she describes it as "an investment that lives on". Not only is she confident of securing a good job quickly, but she has also made contacts, had exposure to different businesses and learned techniques she will be able to draw on in future.

As for MSc versus MBA, she feels she got more value from the MSc, but that was partly to do with timing. When she did her MBA she had only two years of experience. By the MSc, she knew exactly where she wanted her career to go."