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Schools Struggle to Sell MBA Programs ; Revamp Degrees to Reverse Declines in Enrollment

Posted on: Saturday, 11 February 2006, 15:00 CST

By BRIAN KLADKO, SPECIAL TO THE RECORD

It's a common drama in American business these days: A product loses cachet, its glut of producers chases a dwindling customer base, and in the resulting fierce competition, players desperately try to distinguish themselves from the pack.

Airlines? The wireless telephone business? Good guesses, but this time, the descriptions apply to MBA programs.

Graduate schools of business have found themselves scrambling to maintain their enrollments, thanks to declining numbers of students pursuing master's degrees in business administration. And the schools have responded in a typically business-like way by trying to differentiate their programs and touting their flexibility and convenience.

The decline in the MBA's popularity has been unmistakable.

In 2005, drops in applications were reported by 80 percent of the 129 business schools sampled by the Graduate Management Admission Council, which produces the GMAT, the admission test used by MBA programs. At Rutgers Business School, the number of applicants for full-time slots has fallen 43 percent since 2000. At Seton Hall University's Stillman School of Business, Dean Karen Boroff estimated that enrollment is 25 percent lower than it was a decade ago.

"We are seeing an uptick now with this particular cohort, but it's nowhere near what it was 10 years ago," she said.

Several factors help explain the fading fortunes of the MBA degree. Some of it is simple demographics: There has been a decline in the number of people in their 30s, the ones most likely to pursue the degree full time.

Some of it is simple economics: The cachet initially associated with the MBA credential persuaded many schools to add MBA programs, which means that today, with the pie sliced ever thinner, there are fewer students per school.

Fifteen years ago, Boroff said, Rutgers and Seton Hall had the only accredited programs in the state; now Fairleigh Dickinson, William Paterson, Montclair State, Monmouth, Rowan and Rider universities have entered the field.

Boroff also suggested that the shifting corporate landscape including mergers and downsizings has made companies less eager to subsidize business school tuition for their employees.

And the degree's status may be on the decline.

"The MBA is regarded more or less as a generalist degree, and there is an increasing interest in more specialized programs," said Rob Greenfield, a professor at FDU's Silberman College of Business, who served as interim dean last fall. He said the business school's biggest growth has been in its more focused master's programs in accounting and taxation.

Rutgers officials, aware of students' hunger for more specific knowledge, offer several majors within the MBA degree. They are most proud of a five-year-old pharmaceutical program, which was designed with the help of New Jersey drug companies and often relies on them to offer real-world insights about such topics as clinical trials and direct-to-consumer marketing.

More than a quarter of the business school's full-time MBA students are pursuing that major.

Rutgers offers a similar concentration in supply chain management the science of getting a product to a customer in the most efficient way possible. As pedestrian as the subject sounds, the success of such companies as Dell Computer has made it an increasingly popular subject for other business schools, too.

"I would estimate that there are hundreds of schools right now that have started to focus on supply chains," said Howard Tuchman, dean of Rutgers' business school.

"The market starts to shake out and the schools that have a genuine expertise survive, and those that have come lately pretty much don't get the market."

Seton Hall's attempt at real-world education includes "The Trading Room," a classroom that simulates a high-pressured New York brokerage house, complete with clustered desks, a stock ticker and specialized terminals that relay business news.

But Seton Hall, which has a high proportion of part-time students, puts even more emphasis on efforts to smooth the path to an MBA. I

ts 60-credit program has been shaved down to 42 credits, thanks in part to the merging of introductory courses: marketing and management, finance and economics, management information systems and operations research.

"We can make sure we are not repeating ourselves, and students are not wasting time and tuition dollars by taking two discrete, three-credit courses, instead of just taking one four-credit course, which saves them both time and money," Boroff said.

Seton Hall has also extended beyond its South Orange campus, using teleconferencing to teach students at a Brooklyn yeshiva, offering satellite classes at Hackensack University Medical Center to people who work or live nearby, and conducting some courses online.

The school also gives professionals a chance to opt out of the GMAT by discussing their experience and expertise before a faculty panel.

"Flexibility is just real important in terms of what we can provide very, very busy young professionals," Boroff said.

Fairleigh Dickinson offers what its former interim dean called "standard fare" concentrations in finance, marketing, management and human resources. But when the school revamped its curriculum a few years ago, it emphasized team projects, recognizing that companies are putting increasing value on collaboration, and required that all students take a course in "executive communication and leadership."

"There is a need these days to encourage people to improve their writing and speaking skills," Greenfield said.

Montclair State's School of Business has largely weathered the national decline of interest in the MBA degree, said Assistant Dean Karen Dennis.

For seven or eight years, the number of applications has been steadily climbing.

Dennis credits more aggressive marketing, an expansion of the faculty and the addition of two dozen new courses over the past three years, including "Emerging Information Technologies" and "Product Planning and New Product Development."

It also helps, she said, that Montclair State, as a public school, has cheaper tuition than private schools like Fairleigh Dickinson and Seton Hall an important factor for students who have to pursue degrees on their own dime.

"There is always going to be healthy demand," she said, "especially for people who are looking to change careers or who are seeking advancement once they are a couple of rungs up the ladder."

* *

Exec file

Name: Tim Rothwell

Position: CEO

Company: Sanofi-Aventis U.S., Bridgewater

What is your outlook for the economy in general in 2006?

I'm not the first to notice or even be surprised by the resilience of the U.S. economy. In 2005, we saw much higher energy prices, hurricanes and other natural disasters in addition to an ongoing war on terror. Yet economic expansion remained amazingly solid. Indicators such as consumption, retail sales and the GDP growth rate continued to rise.

Obviously, no economy is endlessly resilient. But all in all, I'm an optimist. Barring an unexpected crisis, I think the economic outlook for 2006 is very positive.

How about your industry and your company?

The pharmaceutical industry has entered a new phase, the most salient characteristic of which is declining consumer trust. For a number of reasons some of our own making there is a growing misperception of our industry as part of the health-care problem, rather than as a major contributor to its solution.

We know, for example, that pharmaceutical products reduce overall health-care costs by eliminating the need for more expensive hospitalization and surgery. If that is not widely understood, however, we are losing the battle ironically on what should be one of our biggest strengths: The fact is that our medications prevent many millions of people from ever setting foot in a hospital.

Aside from the issue of trust, the industry overall also faces decreased market growth, increased patent challenges, competition from generics and calls for price and usage controls. Even these macroeconomic trends, however, have to be addressed in terms of value creation. Those companies who best demonstrate and deliver new and innovative forms of value will be the ones leading the industry charge on these fronts.

Sanofi-Aventis will be at the forefront of that charge. In January 2005, our company began the extremely complex process of integrating two large companies and creating a new corporate culture, while still maintaining some form of "business as usual." I think we did far better than business as usual.

D espite our complex integration process, we outperformed the market throughout the year, with the second-highest growth rate among the top 10 U.S. pharmaceutical companies.

What is your biggest concern going forward?

Further threats to pharmaceutical innovation. These can come in the form of price control policies, litigation or unfair challenges to intellectual property. Our industry has brought about a revolution in health care in this country, but it is a revolution that is far from complete. I don't want to see it halted in its tracks.

What was your first job?

I was a patent trainee while attending Seton Hall Law School at night.

What did you learn from it?

It taught me structure, written communications, attention to detail, patience and discipline.

Currently reading:

"The Da Vinci Code," by Dan Brown.

Favorite vacation spot:

It's a tossup between Hawaii and Aruba they're both outstanding.

Source: Record, The; Bergen County, N.J.

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