Dr. S. Pratap Reddy
Founder Chairman
Dhruva College of Management
Hyderabad, India
Web site: http://www.dhruvacollege.net/
Email: drspratapreddy@yahoo.co.in
Ph: (Res) 2761 3197, 2761 3666
Ph: (Mob) 9949499669
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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, cofounder 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
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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
Percentage Employable
Duration of the course (Year)
Amount spent on the course
MBA
10% to12%
2 years
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 Schoolsis 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
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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 'licensequota-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 insync 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
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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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