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Journey to my MBA

Thursday, October 20, 2005

Application Volume Trends Still Send Mixed Signals

Below are the results of the most recent Application trends for B-School. So why is this important? It's important for several reasons. Remember... prospective MBA students... it's not about the numbers, but it's about what the numbers are telling you about the bigger picture that's key.

Here's my take away points.

1) The number of schools reporting increased in volume of applications is up by 1% out of 129 schools. Well, this doesn't tell you much other than 1-2 schools over last year are seeing growing numbers of applicants. What about the other schools? Lower numbers? What's going on? There is only one conclusion that I'll safely say about this..... applications volume isn't that much better than last year. And last years application numbers were fearfully low. Take notice of several changes that many schools made as a result. a) Many schools moved their application deadlines up by 1-3 weeks compared to last year. (Trying to snag quality students from the pool so that other school don't get them is all this says) b) EMBA programs are starting to get some big spotlight to draw in money for the schools c) the number of schools attending large conferences like the MBA Tour has grown drastically. ( I don't have the numbers, but it was clearly more than 30% over last year. )

2) Part-time programs are seeing drastic application increases ever since the 2002 peak where B-schools across the board saw application numbers break all kinds of records. (by the way, you ought to tip your hat to anyone who graduated from a top 10 B-School in 2004 because that would mean that they were chosen from the highest pool of applications in the schools history. The drastic increase in part-time programs tells me a couple of things (This is just based on my humble opinion and from the numbers of e-mails, comments, prospective students I talk to at info-sessions).... 1) People are scared that the economy is going to fall apart again so they don't want to lose their job and/or 2) people have lived with such crappy jobs since the tech bubble burst and are starting to look into how to break out of their current job. 3) MBA = Money, money, money. 4) Wanting to get ahead because they feel that what they currently do doesn't match what they think they should be doing. I'm sure there are as many reasons as there are stars in the sky as to as to why the part-time numbers increased so much... but the four reasons I've listed reign supreme in my opinion.

3) Executive MBA's are growing year after year. The writing is on the walls for many schools on this issue as to how things are changing. For example, Wharton West which is the EMBA branch in San Francisco that started a couple of years ago is a case in point of a trend in schools that target middle level managers and higher. The demand is there, but it's also tremendously lucrative for schools. Why? EMBA tuition is much higher than the full-time tuition. Carnegie Melon-Tepper now has a West coast EMBA branch that I just heard about. Chicago and Kellogg have branched out as well. I feel for the poor professors that fly back and forth for the students. This must cause a strain on the availability of staff for the main campus and the full-time/part-time students. I dislike that aspect a lot.

Heck.. guess what the number one money maker for a business school is? Yup, EMBA programs by a HUGE margin. So is it any surprise to hear that a school like Darden that waved the "we only do full-time.. so we focus on our students" flag for so long now has an EMBA program that started this year? Is this bad? Well it depends on who's perspective your a looking at and how you measure it. (by the way, Tuck must have all kinds of pressure to consider an EMBA. I'm thinking that it's not a matter of "if", but "when" for them) The B-school bubble burst of 2003 and onwards damaged all kinds of things for schools and not just application numbers. Job placement numbers went to the tank for graduates, Average salary for graduates went drastically down as well. That meant.. private giving was hurt. (Yeah, I know starting salaries and job placement has improved quite a bit since then.... but they're still below the numbers that they were in 2002. Although... I consider what happened during that time to be a fantasy that should not be repeated again. Nor do I anticipate it to happen again anytime soon)

So the EMBA infuses money into the school that benefits everyone, but hurts the ability of a school to focus on their full-time students in so many ways. Prof hours are reduced, career placement centers become spread thin and now you have an active campus in the evenings that changes the dynamic of a school. Full-time students no longer get the run of the school because the room availability is drastically reduced. I guess the answer to how EMBA program impact a Business School is all based on your level of involvement in the school or your comfort level with the kind of attention you receive to get the most out of the experience and from what the school has to offer.

So here's the article from GMAC:

September-October 2005

Are you looking for an indication of which way the MBA application tide is going? After all, applicants are the lifeblood of our industry, and the more quality people who want in, the better.

That said, we may not be at high tide, but application levels at all types of MBA programs are holding steady or showing signs of improvement, according to the latest GMAC® survey of application trends.

The percentage of full-time MBA programs reporting a year-over-year increase in application volume increased slightly, from 19% in 2004 to 20% in 2005. Meanwhile, the percentage of part-time programs with increased application volume surged from 27% in 2004 to 46% this year. And executive programs continue to report relatively stable year-over-year increases.
Full-time programs have particularly benefited from international applications, which appear to have stabilized after across-the-board declines. Also, female applicant volume appears to be on the rise across the industry, with continued small increases for executive and part-time programs and fewer reported declines for full-time programs.

The positive trend for part-time MBA programs represents the first such increase since 2002, when interest in business school set all-time records.

Application volume to all programs continues to be influenced by a number of factors, including how long prospective students take to decide to pursue an MBA; the number of schools the typical applicant applies to; the market dynamics such as school location and where applicants live; and general demographic trends among 25–34 year olds, who represent the target age group. Increasingly, it appears that prospective students are focusing on programs where they believe they have a competitive edge.

The Application Trends Survey results include responses from 210 MBA programs from 129 schools; 20% of the responding programs are non-U.S. programs and 80% are U.S. programs. Keep in mind that the survey measures the percentage of programs reporting increases or decreases in application volume. The survey does not collect data about the number of applications b-schools receive.


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