What is an MBA?
The Master of Business Administration degree, commonly known as an MBA, is an advanced qualification in the study of business and management. The degree combines theory and practical application with real-world experience to prepare graduates for management positions in a broad range of fields. MBA degree programs are offered at most major universities and colleges in the United States.
Within the US higher education system, the MBA can be viewed as the graduate-level extension of the Bachelor of Business Administration or Bachelor of Science in Business Administration. These popular undergraduate degrees equip students with foundational knowledge and skills needed for occupational roles in public, private, and non-profit enterprises.
However, MBA holders and candidates come from nearly every academic background. According to 2016 data from U.S. News & World Report[U1] , 60% of the students in 131 ranked full-time MBA programs, 301 part-time MBA programs, and 23 executive MBA programs studied undergraduate majors in fields other than business and commerce. The same data revealed that 89.6% of candidates entering full-time MBA programs already had some work experience, with the average being 4.3 years. A real diversity of academic interests and ages is represented among MBA students.
The history of the MBA in the US goes back to the early 20th century and what historians refer to as the Second Industrial Revolution. Companies were growing and looking for scientific approaches to management. The Wharton Business School at the University of Pennsylvania was established in 1881, but no opportunities for graduate-level study were available until 1900, when Dartmouth College established the Tuck School of Business, where a Master of Science in Commerce degree was offered. In 1908, the Harvard Graduate School of Business Administration inaugurated the country’s first MBA program with 15 faculty members and 80 students. Now, the MBA is one of the most sought-after degrees in higher education.
MBA Programs: Preparation and Requirements
Earning an undergraduate degree in business administration would be the standard preparation for entering an MBA program. However, a background in business-related skills, some work experience, and the interest and passion required to motivate hard work on a rigorous course of study are qualifications enough for success in most MBA programs. From a practical skills perspective, knowledge areas critical to success in an MBA program include math/statistics, accounting, economics and finance, and data analysis. Strengths in critical thinking, communication, leadership, and problem-solving are very helpful as well.
Requirement: Test Scores
A good score on the Graduate Management Admission Test (GMAT ) is a prerequisite for MBA study at a majority of US universities and business schools, and score reports are part of the application package. It is advisable for prospective students to research admissions requirements at their top program choices and gather data on average GMAT scores achieved by admitted students. A respectable target score should be at least 20 points above the average for a given program. In 2017, average GMAT scores for enrolees at the top 50 US business schools ranged from a low of 608 at the University of Pittsburgh’s Joseph M. Katz Graduate School of Business to a high of 737 at the Stanford Graduate School of Business.
MBA hopefuls can access a wealth of resources to support independent GMAT study, or join one of many available study/tutoring programs. Undergraduate students who may be interested in getting an MBA later on should take the GMAT or GRE (Graduate Record Examination) early. Statistics indicate that current students perform better on these tests than people who have been away from school and in the workforce for several years. For admission purposes, scores earned on these exams are valid for five years.
An alternative strategy would be to target programs that do not require the submission of such entrance exam scores. And some B-schools may be willing to waive testing requirements for applicants who can show impressive work experience and career progression or a strong undergraduate GPA.
A typical MBA program will include core requirements in accounting, business law, finance, and marketing. Management training with coverage of topics such as business strategy, leadership, organizational behaviour, and planning are additional important aspects of a complete MBA curriculum.
There is a trend toward designing MBA programs around specialities or concentrations[U6] . Students can choose a degree program focused on information technology, international business, entrepreneurship, health care, sustainability, or one of many other industries and fields. Such specialization will be reflected in program curricula and other requirements. In an increasingly competitive job market, strategic choice of concentration is a very important consideration for anyone thinking about pursuing an MBA.
It generally takes about 2 years to complete a full-time MBA program, but some schools offer accelerated tracks that make it possible to finish in as little as 21 months. MBA programs tend to differ from other graduate-level business programs in their course and credit requirements. Full-time MBA students usually take three courses (9 credits) per semester with the objective of completing around 36 credits for graduation. Since most full-time programs run on a two-semester academic year basis, students can complete their degree after two full years of study.
The two-semester framework means that part-time MBA students will generally need three years to completion. There are exceptions to this rule, with some programs adopting a trimester format for part-time candidates. This basically entails adding an extra semester of study to each academic year. Caveats include higher yearly tuition costs, intensive courses with little break time between, and potentially overwhelming workloads, especially for working students. Still, some students may find this time-saving option attractive.
Newly admitted applicants who need remedial work before being accepted to full candidacy can expect to invest more time in their program. If prerequisite undergraduate work in accounting, economics, finance, and management has not been completed, students should plan on adding as much as one full semester to their planned coursework schedule. Requirements may vary, with anywhere from 3 to 9 credits of prerequisite work needed at most schools before promotion to degree candidacy and the beginning of MBA degree coursework.
The time requirement for completing an MBA is not particularly onerous in comparison to degrees of similar rigor and value. It is common for programs in counselling, law, medicine, nursing and other professional fields to require 3 to 5 years to completion whether studying full-time or part-time. For doctoral programs, results from the PhD Completion Project[U7] indicate an average completion time of approximately 10 years as opposed to the common perception of 7 years as a standard. Seen in this light, an MBA degree can produce a good ROI for a relatively light time investment.
Studying for the MBA
Graduate-level study in any field presents a significant challenge to most people, and MBA programs are similar to law schools in their reputation for rigor, high workloads, and packed schedules. Every student’s circumstances and experience will vary. However, it is fair to say that individuals returning to the classroom after years on the job then attempting to balance MBA study with work and the demands of family life will have the steepest road ahead of them.
Despite the difficulty, research from the Master’s Completion Project[U8] revealed an 86% completion rate for MBA students, considerably higher than the 66% average for students in other STEM master’s programs. Successful attainment of the MBA calls for maturity, diligence, and a serious commitment of time and effort. For those returning to school from work, simply adapting to academia may present some bracing challenges. Every student will have a unique personal experience when studying for the MBA, but here are a few universal matters that every MBA candidate will need to attend to:
Earning an MBA almost always ends up costing more than predicted. Beyond the basic costs of school, unexpected opportunities and expenses arise to strain the budget. Study abroad programs, field experiences and internships, competitions and conferences all offer great learning value, but they demand additional expenditure. Financial management skills are as critical to attending business school as they are to running a real-life business.
It is important to draw on prior experience in both study and work contexts to aid reflection on your learning style and typical reaction to high workloads and stress. Build an understanding of the ways you learn best and honestly evaluate your behavior under stress. This will lay groundwork for the development of effective tactics and learning tools for addressing the challenges associated with earning an MBA.
Mastering Time Management
This is an essential skill that can turn the seemingly impossible into the difficult but doable. Remember that life beyond the classroom will still be moving along at its usual frantic pace after your MBA program begins. Class time, study and homework time, projects, team work obligations and more will present a significant additional load. The trick of balancing everything and completing all tasks while maintaining high-performance levels is a skill and discipline that must be mastered.
Preparing for School
Getting in good academic shape is a necessity, especially for candidates who have been out of school for some time. Most MBA programs offer advice on preparation, and many require students to complete online preparatory work or a boot camp-type program before course work begins. Brushing up on math/statistics, accounting, economics, and other core business topics is an endeavour that should be taken seriously.
Keeping Up with the News
Developing an awareness of current world events and a grasp of what is happening in the realms of economics, finance, business, and industry will familiarize you with the terminology of the field and impart knowledge that will be useful throughout your MBA studies. Classroom discussions, case studies, and projects are just a few examples of work that will call for drawing on such background knowledge. Following the Wall Street Journal and other sources of business information is a sound strategy.
The Future of the MBA
While the MBA degree is still immensely popular, a three-decade long rush of applicants to US business schools seems to be subsiding in recent years. The Graduate Management Admission Council, a global nonprofit association of 223 leading business graduate schools that owns and administers the GMAT exam, conducted a 2018 survey[U9] that documented a 7% drop in applications to US MBA programs in 2017. This was the fourth consecutive year of a gradual decline that has affected more than 70% of US business schools.
As is true in so many other enterprises and industries in the 21st century, the future of the MBA seems to be a place where innovation and transformation mark the boundary between winners and losers. “Schools that haven’t added concentrations, gone online or offered more flexible pathways to a degree are the ones struggling,” notes Dr. Nancy Albers, Dean of the College of Business, Education and Human Development at Louisiana State University.
Deeper levels of specialization along with greater agility in responding to the requirements of the job market are emerging as markers of sustainable MBA programs. The needs of modern students are also driving change in graduate-level business education. The proliferation of online MBA programs, especially in high-demand specialties like data analytics, cyber security, data science, and supply-chain management is one indicator of the transformation taking place.
The future of the US MBA is being shaped by practical responses to factors like the student debt crisis, the weakening of the job market for graduate degree holders and college graduates in general, and a more careful focus by education consumers on ROI when making the decision to attend graduate school. This view is backed up by experts like Anthony P. Carnevale, Director of Georgetown University’s Center on Education and the Workforce. Carnevale notes that “The popularity of master’s degrees will increasingly depend on if the return on investment for students makes sense.”
Is an MBA Worth It?
It is a fact that the MBA tends to be perceived as a “commercial” degree. Most candidates unabashedly view the degree as a route to better employment prospects and higher earnings. However, like all other education opportunities, the value of graduate-level business study should be considered from a holistic standpoint. The prospect of earning more money is not the only factor that gives the pursuit of an MBA meaning. Study for the degree offers the potential for significant reward in terms of personal growth, expanded skill sets, and the acquisition of useful experience.
The relationships candidates forge with classmates and faculty members are another important benefit of graduate study. According to Nirav Mehta, Associate Director for MBA admissions at the University of Southern California’s Marshall School of Business, “The MBA degree’s real value comes from membership in a lifelong learning community and access to the alumni network.” The connections developed during study in an MBA program can prove invaluable to future career development efforts.
Show Me the Money
The foregoing does not imply that professionals with the MBA do not earn good salaries. Starting salaries and bonuses vary widely depending on the prestige of the business school attended, but on the whole they compare quite favorably to compensation levels associated with other professional degrees. Data gathered by U.S. News & World Report for their 2019 Best Business Schools[U10] rankings reveal that graduates of top-10 ranked schools were rewarded with an average compensation of $161,566 per year. Students who attended lower-ranked schools received salary and bonus packages averaging $58,390. (Note that in-state annual tuition at the 15 top-ranked schools runs from $50,000 to over $70,000.) The importance of sector and specialty are also highlighted by the U.S. News data. Entering the consulting sector yields an average salary of over $130,000 per year. Graduates who go to work at non-profits earn just above $81,000.
Although the MBA degree is not necessarily an engraved invitation to the executive suite and the ranks of the highly-compensated, it is a prestigious credential. MBA study confers priceless networking, entrepreneurial, and leadership skills on those who see it through. The degree opens up a multitude of career opportunities and is a common feature of Fortune 500 executive resumes. For those interested in or developing a career in business, earning an MBA can be very beneficial at any career stage, and is an endeavour that deserves careful consideration.