Why the world is queueing up to sit the MBA

The worse the economy gets, the more popular business degrees become. By Richard Northedge

More people than ever want to study for an MBA, the course first offered by Harvard more than a 100 years ago. The London Business School has had 3,500 applications for this month’s 400 places. Demand for business courses in the UK is up by 8 per cent.

Jane Delbene, the director of marketing at the Graduate Management Admissions Council, which sets the entry tests used by many business schools, says: “There’s an inverse relationship to the economy. When the economy’s down, people decide they want to go to business school.”

But, after the financial crash of 2008, business schools are improving their teaching of ethics. Diane Morgan, the associate dean of the London Business School (LBS), says: “We went through an MBA programme review – which we do every five years – and we’ve just moved our ethics course from the first half of the first term, and we’ve enhanced it to be a business, society and government course in the third term.”

The change has been influenced by business failures dating back to the Exxon Valdez disaster in 1989 – the responsibility of Enron, run by Jeff Skilling a former Harvard graduate now jailed for fraud – to the financial collapse of 2008. Ethics has been on the LBS curriculum since the school opened in Regent’s Park in the 1970s, when students were largely British with a common style of doing business. Now the school tries never to have two people of the same nationality in each study group of six or seven students, and it accepts that diversity has revealed differences in acceptable business behaviour.

“Now we look at ethics from a micro level – what it means to you – and at the macro level of what it means to the greater economy,” says Morgan. “The big debate is how we talk about bribery.

“We were seeing that, with such diverse classes, that there are different perspectives. We could not look at ethics as a stand-alone but in terms of government and the world the students will encounter.”

Students spend a term learning about finance, another on managing themselves then, after an internship, a whole term on how to engage with the world ethically. “That’s brand new from this month,” says Morgan.

There have never been so many people wanting to become MBAs (masters of business administration), the title Harvard coined originally

and which is now used internationally. Of the 59 students who enrolled for the course at Cambridge, Massachusetts in 1908, only a quarter returned for the second year, but today the qualification is eagerly sought by a generation who know that an MBA will get them a job and better pay.

The Association of Business Schools has about 120 full members in Britain, and figures to be published soon will show an 8 per cent increase in students in the past year; the rise for 2009-10 was over 6 per cent. The country is covered, from Exeter to Edinburgh and Lancaster to London.

There are now 269,000 people studying business and administration in the UK plus 32,000 more reading economics. That 8 per cent increase outstrips the 5 per cent rise in the numbers in higher education generally and means that one student in every seven is on a business course. The increase in post-graduate business courses is 12 per cent.

But many places are being taken by overseas students impressed by British teaching. Morgan says: “When LBS started, we were mostly British, mostly men. Now about 90 per cent come from overseas.”

And although analysis of last month’s school exams will show girls taking commercial subjects are significantly outnumbered by boys, the split is even for all business degrees; on MBA courses, women fill 29 per cent of the places. Morgan hopes to raise that to 30 per cent for this month’s LBS intake to match the target for women in boardrooms set in February by Lord Davies’s committee inquiring into gender equality at the top of business.

Anna Abramovich, daughter of the Russian oligarch who owns Chelsea football club, is reported to be taking a business course in London, starting in September. And although she may not worry about the cost, the fees are not small.

They will be £53,900 this year at LBS, which tops one respected league table of UK schools (see box) – ahead, internationally, of US institutions such as Wharton, Harvard and Stanford. However, other British top-10s include schools at Ashridge, in Hertfordshire, and Bradford.

While not all fees are that high, Joe Clark, the head of policy at the Association of Business Schools, admits: “The top-level MBAs are eye-wateringly expensive.” A small number of people are sponsored by companies or foreign governments, but Mr Clark says: “The majority of them are paying themselves.” And people taking a postgraduate MBA have often had to give up a well-paid job to attend the course. LBS takes only people who have at least 10 years’ in work for its executive MBA, for instance.

When you consider that a three-year first degree at a large number of universities costs £27,000 in tuition fees alone, the cost of an MBA starts to look less expensive. On the other hand, managers who are still paying

off their original undergraduate student loans may be reluctant to take on a further education cost, especially if their own children are approaching university age.

“I can see both possibilities,” says Ms Morgan. “We’re interested to see what impact it will have. It could change the mindset of how people view paid education.”

Mr Clark is also interested in how the Government’s policy on student fees will affect courses. “There’s a question in future of whether students will be prepared to pay to take on a postgraduate course when the are still in debt and repaying their first course.

“There seems to be growth in part-time study, and distance-learning is being offered more. It’s an easier way to fit it round earning, and the costs are lower.”

But people contemplating a business course ought to be capable of doing the sums. A survey of business schools found that 19 of the top 20 graduates claimed to have more than doubled their salaries after leaving – and the increase was 86 per cent even at the bottom end. LBS graduates claimed an average 124 per cent jump to the equivalent of $142,000 (£87,000) a year; the Stanford increase was 110 per cent to $165,000.

“You do your first degree in something you like, but you do your postgraduate in something to make money,” says Mr Clark, but he points out that different people gain different benefits. “People who go to Harvard are well driven anyway. The higher pay may well not come from

anything they were taught; it may be from who they meet there.”

Most business schools squeeze the teaching into one year, although Manchester takes 18 months, LBS’s courses last 15 to 21 months and Edinburgh’s two years is more akin to the American model. Mr Clark suggests higher fees may make applicants seek better value, but there is no shortage of people wanting to attend business schools.

“It’s a pretty high selection test,” says Ms Morgan. “They have to do a GMAT (graduate management admissions test) to see how well they’ll do and write five essays on why they want to come to business school and what they will contribute.

“They need very strong references, and everyone that makes it through the first test is then interviewed and has to do an on-the-spot presentation on a topic they’re given during the interview. It’s a very extensive and rigorous process, and it’s very competitive throughout.”

The suspicion is that, with so many courses on offer from so many institutions, standards of entry and graduation are falling and that a qualification that was once rare is now common, diluting the value of an MBA.

Ms Delbene, who sets the entry tests, says: “Where once the MBA was wholly American, now more schools around the world are offering it so a lot more students are staying in Europe to attend graduate schools.”

She denies the entry test has become easier, but admits it has changed. The maximum score is 800 marks: a few business schools demand 700-plus; most of the top schools take people with scores above 600, but others are prepared to accept lower scores. However, she points out: “It’s only one element of the process.”

Ms Morgan admits: “We have quality indicators that we think are important to students coming in – maturity, a number of years of being in business, and being at the point where you’re starting to lead people.

“The proliferation is creating a bigger gap between the schools at the top and the others. I wouldn’t be so bold as to say they don’t have value but we have an ambitious vision, and I’m not sure if every other school does.”

It shows, she says, how graduates identify themselves. “Alumni will often identify themselves by their school rather than their degree,” she claims. “At other schools, they say they’ve got an MBA.”

Britain’s best schools for a business masters:

1 London Business School

2 Said Business School, Oxford

3 Cambridge Judge Business School

4 Lancaster University Management School

5 Cranfield School of Management

6 Imperial College Business School

7 Manchester Business School

8 Cass Business School, London

9 Warwick Business School

10 Strathclyde Business School

Source: FT analysis

Following in famous footsteps: Who went where?

LBS: Sir John Egan, chief executive, Jaguar, chairman of Severn Trent; Dame Mary Marsh, chief executive, NSPCC; Sir Richard Greenbury, chief executive, Marks & Spencer; Sir John Sunderland, chairman, Cadbury

Lancaster: Antony Burgmans, chairman Unilever; Richard Allinson, Radio 2 presenter; Rob Holden, chief executive, Crossrail; Richard Cousins, chief executive, Compass Group

Cranfield: Andy Bond, chief executive, Asda; Elena Ambrosiadou, chief executive, Ikos Partners; Ted Tuppen, chief executive, Enterprise Inns; Charlie Mayfield, chairman, John Lewis

Manchester: David Varney, chairman HM Revenue & Customs; Andy Duncan, chief executive, Channel 4; Sir Terry Leahy, chief executive, Tesco; Paul Skinner, chairman, Rio Tinto

Cass: Sir Stelios Haji-Ioannou, founder of easyJet; Muhtar Kent, chief |executive, Coca-Cola; Lin Mingkang, deputy governor, People’s Bank of China; William Castell, chairman |Wellcome Trust

Harvard Business School: Chase Carey, chief operating officer, News Corporation; Michael Bloomberg, media magnate; Vittorio Colao, chief executive, Vodafone; Jeffrey Skilling, chief executive, Enro

Lucerne’s Hotel Château Gütsch, one of the lots in our Homeless Veterans appeal charity auction
charity appeal
Arts and Entertainment
Tony Hughes (James Nesbitt) after his son Olly disappeared on a family holiday in France

Jo from Northern Ireland was less than impressed by Russell Brand's attempt to stage a publicity stunt

Nabil Bentaleb (centre) celebrates putting Tottenham ahead
footballTottenham 4 Newcastle 0: Spurs fans dreaming of Wembley final after dominant win
Arts and Entertainment
The Apprentice candidates Roisin Hogan, Solomon Akhtar, Mark Wright, Bianca Miller, Daniel Lassman
tvReview: But which contestants got the boot?
Life and Style
A woman walks by a pandal art installation entitled 'Mars Mission' with the figure of an astronaut during the Durga Puja festival in Calcutta, India
techHow we’ll investigate the existence of, and maybe move in with, our alien neighbours
Arts and Entertainment
Jim Carrey and Jeff Daniels ride again in Dumb and Dumber To
filmReview: Dumb And Dumber To was a really stupid idea
Arts and Entertainment
Sir Ian McKellen tempts the Cookie Monster
tvSir Ian McKellen joins the Cookie Monster for a lesson on temptation
Tourists bask in the sun beneath the skyscrapers of Dubai
travelBritish embassy uses social media campaign to issue travel advice for festive holiday-makers in UAE
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs Student

Recruitment Genius: Graduate Software Developer

£25000 - £40000 per annum: Recruitment Genius: Join a fast growing software co...

Guru Careers: Graduate Account Executive / Digital Account Executive

£20k + Benefits: Guru Careers: We are seeking a Graduate / Digital Account Exe...

Guru Careers: Junior Designer / Design Graduate

£18k: Guru Careers: We are seeking a Junior Designer / Design Graduate to join...

Recruitment Genius: Key Sales Account Manager / Graduate Trainee

Negotiable: Recruitment Genius: A Key Sales Account Manager/Graduate Trainee i...

Day In a Page

Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas
La Famille Bélier is being touted as this year's Amelie - so why are many in the deaf community outraged by it?

Deaf community outraged by La Famille Bélier

The new film tells the story of a deaf-mute farming family and is being touted as this year's Amelie
10 best high-end laptops

10 best high-end laptops

From lightweight and zippy devices to gaming beasts, we test the latest in top-spec portable computers
Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

The batsman has grown disillusioned after England’s Ashes debacle and allegations linking him to the Pietersen affair
Susie Wolff: A driving force in battle for equality behind the wheel

Susie Wolff: A driving force in battle for equality behind the wheel

The Williams driver has had plenty of doubters, but hopes she will be judged by her ability in the cockpit
Calls for a military mental health 'quality mark'

Homeless Veterans campaign

Expert calls for military mental health 'quality mark'
Racton Man: Analysis shows famous skeleton was a 6ft Bronze Age superman

Meet Racton Man

Analysis shows famous skeleton was a 6ft Bronze Age superman
Garden Bridge: St Paul’s adds to £175m project’s troubled waters

Garden Bridge

St Paul’s adds to £175m project’s troubled waters
Stuff your own Christmas mouse ornament: An evening class in taxidermy with a festive feel

Stuff your own Christmas mouse ornament

An evening class in taxidermy with a festive feel
Joint Enterprise: The legal doctrine which critics say has caused hundreds of miscarriages of justice

Joint Enterprise

The legal doctrine which critics say has caused hundreds of miscarriages of justice
Freud and Eros: Love, Lust and Longing at the Freud Museum: Objects of Desire

Freud and Eros

Love, Lust and Longing at the Freud Museum
France's Front National and the fear of a ‘gay lobby’ around Marine Le Pen

Front National fear of ‘gay lobby’

Marine Le Pen appoints Sébastien Chenu as cultural adviser