Dr. S. Pratap Reddy
Founder Chairman

Dhruva College of Management

Hyderabad, India

Web site: http://www.dhruvacollege.net/

Email:

Ph: (Res) 2761 3197, 2761 3666

Ph: (Mob) 9949499669


GLORY ?

· The first graduate school of business in the United States was the Tuck School of Business at Dartmouth College, founded in 1900.

· The Harvard Graduate School of Business Administration established the first MBA program in 1908, with curriculum based on Frederick Winslow Taylor's scientific management.

· Massachusetts Institute of Technology, the Sloan Fellows Program was established in 1930.

· In 1957, INSEAD became the first European business school to offer an MBA program.

· The MBA degree has been adopted by universities worldwide in both developed and developing countries.

IISWBM was the first institute to introduce a management education programme in India. Hence, when IISWBM celebrated its Golden Jubilee on April 25, 2003, it also underscored ‘50 years of management education’ in India. The institute was created through a resolution adopted by the Syndicate of the University of Calcutta on April 25, 1953.

The global economic crisis has intensified the pressure to change, even as the resulting shortage of resources has made change more difficult. Despite these difficulties- or perhaps, more accurately, because of them-we believe that top tier B-Schools have already begun to reassert their relevance. The demand for graduate management seems strikingly lucrative. Applications and enrollments continue to rise, tuition fee continues steady march upward, and the number of programs continues to grow exponentially.

B-School Bubble

Schumpeter in his recent article in The Economist, entitled “The latest bubble?” argues that American higher education is in a bubble which is already beginning to burst. Specifically, for business schools he concludes “Middle-ranking schools are seeing a significant drop in demand, which they have masked by taking weaker candidates, but which will eventually force them to start cutting back.” He also cites Peter Thiel, co-founder of PayPal, who “believes that higher education fills all the criteria for a bubble: tuition costs are too high, debt loads are too onerous, and there is mounting evidence that the rewards are over-rated.”

With more than 5,000 B-schools, India has three-times the number of B-schools as compared to the US, though the size of the Indian economy is only one-tenth of the US economy. The end result is poor quality of education, oversupply of MBA graduates, under-employability of MBA graduates, resulting in increase in unemployment and reduction in campus placements. A recent article by Vinay Umarji in Business Standard notes that according to All India Council for Technical Education (AICTE), last year nearly 60,000, or 30% of the approved 200,000 management seats, remained vacant. Also, the number of applications for the Common Admission Test (CAT) for MBA entrance declined from 260,000 to 200,000 in the last three years. Similarly, while on an average, the MBA tuition fees have gone up, the average salary offered to MBAs has gone down. This has created a wide mismatch as could be seen from the table below:

Course MBA

Percentage Employable 10% to12%

Duration of the course (Year) 2 years

Amount spent on the course 3 Lakhs to 5 Lakhs Current Monthly salary 10,000 to 15,000

This clearly indicates that Indian B-schools are in a bubble waiting to explode anytime. Probably except top-100 institutions, most will suffer from bursting of this bubble which is characterized by irrational exuberance, oversupply and poor quality. Many private B-schools are just a business model by some management gurus to earn some money out of investment. Some are extremely media savvy. They take page after page ad space in leading news paper to declare their often questionable achievements.

Bubbles have a long history of existence around the world and they inevitably bust with severe damage to individuals, society and economy (remember dot-com bubble? housing bubble?). It’s time we collectively make our best effort to reduce the damage from the Indian B-schools bubble burst. Institutions have to start questioning if they are contributing to expanding the B-school bubble or containing it? It is advisable that students should not take MBA as mandatory prestige tag for sure success in industry but should do it only after evaluating their current position, their long term goals, and, may be, their finances.

“The MBA Bubble” asserts that an educational bubble has been built up around the MBA degree to convince people that it is a necessity. While MBA tuition has increased more than 60% since 2005, the added value of these programs is almost nonexistent”.

Mariana Zanetti “The MBA Bubble: Why Getting an MBA Degree Is a Bad Idea”…Nov 1st, 2010.

CRITIQUE

To understand the challenges facing graduate business education, one must first understand the underlying forces of supply and demand. The MBA degree may be a highly distinctive product, but it is not immune to the forces of the market place. At the same time, however, there are a number of disturbing signs suggesting that the MBA degree-especially in its traditional full time two year format and tier II and III B Schools-is at cross roads.

A curriculum is no more than an assemblage of classes and materials that collectively constitute an educational program. The most basic decisions involve which disciplines and subject areas to cover, which courses are required, and which concepts, theories techniques and modes of thinking to feature. An associated set of decisions concerns pedagogy, which teaching approaches to favour when conveying material or developing skills and what methods to use for evaluating students’ mastery and academic understanding. Next level is to decide up required and elective proportions of the curriculum, how to structure and sequence classes, what type of concentrations and specializations to allow.Finally at the highest level come decisions about purpose: what broad goals and educational ends the curriculum is expected to serve

Critics view MBA training as having limited value in preparing students for their careers. Most courses emphasize analytical frameworks and quantitative techniques, not softer, hard-to-measure organizational skills. Students learn analytics, but not action. They develop skill in attacking problems, but learn little about implementing solutions. They become knowledgeable about business, but remain untutored in the art and craft of management.MBA Education, its argued, “is creating technocrats, people with a great toolbox who are not able to accomplish the things that organizations need them to accomplish”. Today we get much less cutting edge knowledge from MBAs.

WAY FORWARD

Two decades of economic liberalisation have shown that the dismantling the 'license-quota-permit raj' and infusing healthy competition into the Indian industry has been good for the health of the economy. Despite upheavals in the global economy and, particularly, the worldwide recession of 2007-09, the Indian economy has continued to grow at a high rate without any major turbulence. Sadly, against the backdrop of such profound changes in the Indian economy and industry, our social sector, which includes education and health, has been left behind and has not undergone any major transformation.

On social indicators, India has consistently lagged behind the developed and other developing economies of the World and has mostly been ranked on par with poorer Asian and African countries. Though higher education in India has expanded rapidly during the last few decades, the Gross Enrolment Ratio has remained way below the global average. India boasts of having the second largest youth population in the world, second only to China, between the age group of 18 years and 24 years that attends college -- 14.6 million in absolute terms. Despite this, it is ironical that India fares rather unsatisfactorily in the ranking of the world's best Universities and Colleges.

Higher education in India is regulated by 13 regulatory bodies which includes the University Grants Commission (UGC) and the All India Council for Technical Education (AICTE). UGC came into existence in 1956 and AICTE in 1987 via their respective acts of Parliament. AICTE alone regulates more than 11,000 technical institutions in the disciplines of engineering, management, pharmacy, architecture, hotel and catering management, applied arts, town planning, computer applications, etc.

Undoubtedly, AICTE regulations are very comprehensive but they have failed to be in-sync with changing times. Most norms and standards prescribed by AICTE are static, input-oriented and relate mostly to physical facilities, faculty, etc. The norms for approval of new institutions and programmes by AICTE were framed in the 1990s when there were very few technical institutions, and most of them were located in southern India and Maharashtra. Needless to say that we have come a long way since 1990s, however, AICTE has not changed these norms and guidelines to incorporate the opportunities and challenges provided by the changing times.

The problem is aptly summarized by BIMTECH Noida Director, Dr Harivansh Chaturvedi, when he says that “Instead of stifling B-Schools with autocratic punitive powers, an AICTE-like regulator should instead be aiding them with faculty development, upgradation and internationalization”.

PARADIGM SHIFT-need of the hour

"Be not afraid of greatness: Some are born great, some achieve greatness, and some have greatness thrust upon them."- William Shakespeare

The time has come to embrace new beginnings and take on a new journey. B-Schools, instead of reveling on past glory take a shift by embracing business war stories (filled with innovative best practices) on a path to Greatness. Let the MBA graduate to go out to figure it out what is best fit for global corporate. They shall be trained to imbibe innovative consciousness. Innovation is a necessary means to an end. The end is growth, sustainability and profit. They must embrace the challenges and the opportunity waiting outside.

Adapted from Larry DeBrock-Dean of the College of Business' convocation address

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