MBA Task Force Presentation to Fuqua Managers

8/12/2019 MBA Task Force Presentation to Fuqua Managers

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Challenges and Opportunities of a

Changing MBA Market

Based on the report by Bob Garda, Melanie Kahn, Kevin McCarl

May 2, 2005

Managers at Fuqua Retreat – August 9, 2005

http://www.fuqua.duke.edu/



MBA Task Force 2005 2

Fuqua daytime applications have also fallen off…

…Volume appears to be driven by GDP and mean salary

trends at the top 22 business schools…

Fuqua Applications - Model Versus Actual

3,557

2,190 2,149

1,500

2,000

2,500

3,000

3,500

4,000

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Year

A p p l i c a t i o

n s

Actual

Forecast

(1990-

2004)





After a run-up in applications to Fuqua in the 1990s,

applications from all regions have fallen sharply…

Application TrendsFuqua Applicants by Region of Origin

902 828 7921,003

784 825

192210

195

157

116 116

300210 235

199

126 99

12192 102

106

86 92

1,8361,842

2,064 1,730

1,2741,016

1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005

Year

A p p l i c a t i o n s

US

ROW

Latin

America

Europe

Asia

Source: Fuqua Admissions Data

3,351

2,386

3,195

3,388

3,182

2,148





Trends in MBA Applications

Top 22 Programs

16.6 16.9 16.2 17.2 16.9 16.8 17.3 17.3

57.259.063.8

82.6 80.2 79.7 93.8

65.0

0.0%

5.3%6.7% 6.5% 9.0%

7.0%

2.5%

7.4%

-

20.0

40.0

60.0

80.0

100.0

120.0

1990 1992 1994 1996 1998 2000 2002 2004

Year

A p p l i c a t i o n s ( 0 0 0 ' s )

-14%

-10%

-6%

-2%

2%

6%

10%

U S D $ ( T r i l l i o

n s )

FT Enrollment FT Apps GDP Growth Source: BusinessWeek Rankings

Applications fall from new height after 2002 Top 22






Worldwide GMATs have fallen off, suggesting declining

interest in business school…

Source: GMAC Profile of GMAT Candidates 1998-99 to 2003-04

GMATs taken by academic year

US v non-US citizens

98.9 101 106.9124.4 119.2 113.7 112.2

69.2 74.987.7

108.9102

88.3 86.5

0

50

100

150

200

250

1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05

projected

G M

A T s ( i n 0 0 0 s )

non-US

US

168.1 175.8

194.6

233.3221.2

202.0

…Vocal critics Pfeffer, Mintzberg, Tyson & Andrews, and Bennis &O’Toole have written articles highly critical of the MBA…

198.7

• “No one should be allowed out of a conventional MBA program without having a skull and crossbones stamped firmly

on his or her forehead, over the words „Warning: NOT prepared to manage!‟” – Mintzberg

• Business schools “stand accused of being too market driven, pandering to the ratings, failing to ask important

questions, and…losing claims of professionalization as they "dumb down" the content of courses, inflate grades to

keep students happy, and pursue curricular fads.” – Pfeffer

• “By allowing the scientific-research model to drive out all others, busienss schools are institutionaliing their own

irrelevance.” – Bennis/O‟Toole





From Forbes, September 5, 2005

• For the 90 full-time programs that completed a survey,only 3 saw an increase in applications last year (HEC,University of Alabama, and the University ofConnecticut) and there was an average decline of 33%between 2002 and last year.

• Schools like Tuck, Kellogg, and Harvard saw better than30% drops in applications.

• Last year, 42% of applicants were accepted across theschools in the survey.

• Top schools like Harvard are trying different strategies toincrease applications. Harvard this year accepted 20undergrads straight from school compared to 5 theprevious year.



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Student Source for US MBA Programs

22.2 23.6 26.4 33.0

71.3 73.578.6

91.0

7.012.1

20.0

9.2

11.3

16.2

16.2

5.3

9.0

9.0

6.7

-

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

180.0

1 9 9 4 E S T

1 9 9 6

1 9 9 8

2 0 0 0

2 0 0 1

2 0 0 2

2 0 0 3

2 0 0 4

2 0 0 5

2 0 0 6

2 0 0 7

2 0 0 8

2 0 0 9

2 0 1 0 E S T

Year

D e g r e e s ( 0 0 0 s

)

Int'l PT

Int'l FT

ForProfit

Domestic PT

Domestic FT

Source: US News Rankings, AACSB, GMAC data, Estimated

108

142

131

169

Given recent trends, the US MBA market will probably grow slowly…

…International student growth will probably be hit hardest…

Underlying reasons for slowgrowth in domestic market

• Slowing economic growth

• Falling MBA salaries

• Poor image of US business

• For-Profit siphoning off part-time students due to costand convenience

• Negative articles by Pfeffer,Mintzberg, and Tyson

• Price & ROI

Underlying reasons for nointernational growth

• Growth in number of top-flight international schools

• Popularity of 15-18 monthprograms

• Price versus int‟l MBA

• Tighter US work visarestrictions

• Stringent entry restrictions

• Heavy marketing by English

speaking internationalschoolsKey assumptions: Domestic student growth at GDP or 3% per yearInternational student growth at zero




School

US Rank

2006

US Rank

2001

Enroll

2006

Accept

2006

Enroll

2001

Accept

2001 Enroll Accept

Carnegie Mellon 17 19 194 28% 219 31% -11% 3%

Indiana 27 20 225 33% 281 35% -20% 2%

Yale 15 16 234 26% 216 24% 8% -2%

Emory 18 21 177 37% 179 35% -1% -2%

Harvard 1 1 893 14% 887 12% 1% -2%

Stanford 2 1 377 10% 366 7% 3% -3%

Columbia 9 6 598 15% 628 11% -5% -4%

Haas 6 10 248 17% 245 12% 1% -5%Stern 13 14 378 22% 418 17% -10% -5%

Sloan 4 4 393 21% 357 15% 10% -6%

Kellogg 4 5 527 22% 599 16% -12% -6%

Wharton 2 3 820 22% 773 13% 6% -9%

UCLA 11 11 328 25% 329 14% 0% -11%

Chicago 8 6 544 29% 504 18% 8% -11%

USC 26 22 269 37% 286 24% -6% -13%

Tuck 6 11 252 27% 189 13% 33% -14%

Michigan 10 9 439 36% 431 20% 2% -16%Cornell 15 15 272 36% 297 19% -8% -17%

Darden 14 11 315 38% 242 19% 30% -19%

Kenan-Flagler 21 18 271 47% 261 27% 4% -20%

Texas 18 16 353 43% 371 22% -5% -21%

Fuqua 11 8 403 38% 332 15% 22% -23%

Mean 387 28% 382 19% 2% -9%

Fuqua has seen the largest drop in student selectivity…

…Since enrollment has remained relatively constant, the

drop in acceptance rate is largely due to the fall-off in

applications…

Source: US News Rankings – please note US News rankings year leads publication by one year (i.e. 2006 rankings were published in April of 2005).Class enrollment estimate comes from dividing total student body size by 2.




Fuqua has also seen a significant decrease in

yield…

School

BW Rank

2004

BW Rank

2000 BW Rank Apps 2004

Accept

2004 Yield 2004 Apps 2000

Accept

2000 Yield 2000 Apps Accept Yield

Michigan 6 6 - 2,068 35% 61% 3,923 21% 53% -47% 14% 8%

Tuck 10 16 6 1,695 25% 59% 2,849 14% 52% -41% 11% 7%

Harvard 5 3 (2) 7,139 13% 87% 8,124 13% 82% -12% 0% 5%

Columbia 8 7 (1) 4,871 15% 71% 5,637 12% 69% -14% 3% 2%

Chicago 2 10 8 3,492 23% 60% 3,271 25% 59% 7% -2% 1%

Stern 13 13 - 3,403 22% 48% 3,910 22% 50% -13% 0% -2%

UCLA 14 12 (2) 2,941 25% 45% 4,564 15% 48% -36% 10% -3%

USC 27 24 (3) 1,693 36% 44% 2,485 27% 47% -32% 9% -3%Indiana 18 20 2 1,221 33% 48% 1,818 32% 51% -33% 1% -3%

Stanford 4 11 7 4,697 10% 78% 5,431 8% 82% -14% 2% -4%

Kellogg 1 2 1 4,299 23% 57% 5,802 18% 61% -26% 5% -4%

Wharton 3 1 (2) 5,622 16% 68% 7,428 14% 73% -24% 2% -5%

Cornell 7 8 1 1,826 36% 47% 2,305 25% 52% -21% 11% -5%

Kenan-Flagler 16 15 (1) 1,500 47% 40% 2,601 22% 46% -42% 25% -6%

Emory 20 28 8 1,083 37% 39% 1,144 34% 45% -5% 3% -6%

Yale 22 19 (3) 1,998 25% 42% 2,446 17% 48% -18% 8% -6%

Sloan 9 4 (5) 2,728 20% 66% 2,859 17% 73% -5% 3% -7%

Fuqua 11 5 (6) 2,389 37% 45% 3,439 19% 54% -31% 18% -9%

Haas 17 18 1 2,858 17% 47% 3,109 14% 56% -8% 3% -9%

Darden 12 9 (3) 2,110 38% 39% 2,510 19% 52% -16% 19% -13%

Carnegie Mellon 15 14 (1) 1,194 28% 45% 1,265 31% 61% -6% -3% -16%

Texas 19 17 (2) 1,647 43% 45% 2,753 25% 61% -40% 18% -16%

Mean 2,840 27% 54% 3,622 20% 58% -22% 7% -4%

Source: Business Week Rankings – the most recent yield data available comes from BusinessWeek‟s 2004 rankings.




Summary of Market Situation

• After a run-up in applications to Fuqua in the

1990s, applications from all regions have fallensharply through 2005.

• Worldwide GMATs have dropped, signaling adeclining interest in the MBA.

• Given recent trends, the US MBA market shouldexhibit slow growth

– International student growth will probably behit hardest, largely due to many overseas

schools considered to be on par with those inthe US.

– The one exception in the near term may beincreased applications from Asia.




It may no longer be enough to be very good.

Fuqua may need to be (and be seen as)better than our competitors.




School

US Rank

2006

US Rank

2003 US Rank

Peer

Rank

Recruit

Rank

Accept

Rank

GMAT

Rank

GPA

Rank

Salary

Rank

Employment

Rank

Employment

+3 Rank

Model

Rank

Haas 6 10 4 (1) 1 - 4 3 3 15 18 7

UCLA 11 15 4 2 - (1) 3 (1) 7 7 3 2

Emory 18 22 4 (1) 1 4 4 11 - 2 (10) 1

Tuck 6 9 3 - (1) (1) 2 2 - (2) 10 1

Harvard 1 2 1 1 - - (1) 1 1 7 (6) 1

Wharton 2 3 1 1 - (1) 2 1 - 7 1 -

Kellogg 4 5 1 (2) 3 1 (3) 1 6 7 10 2

Cornell 15 16 1 - 4 1 - (4) (3) (3) (5) -

Carnegie Mellon 17 18 1 - 1 7 6 5 (1) (8) 8 3

Sloan 4 4 - (2) - 4 (8) (3) (1) 12 8 (1)

Michigan 10 10 - 1 - (2) 1 (1) (3) 6 4 2

Stern 13 13 - 2 (3) 6 2 2 5 9 6 1

Texas 18 18 - (1) 1 - (5) - (3) (7) 4 -

Stanford 2 1 (1) - - - (1) (2) (1) (9) 1 (1)

Columbia 9 8 (1) (1) (2) - (1) 2 (2) (2) (2) (2)

Chicago 8 6 (2) - - 6 (6) 9 1 (3) (5) 2

Yale 15 13 (2) - 4 3 1 (1) (2) (13) (19) (6)

Darden 14 10 (4) - 3 (11) (3) (7) (1) (17) (14) (4) Kenan-Flagler 21 17 (4) 2 (4) (7) (4) (2) (1) 7 7 (1)

Fuqua 11 6 (5) (1) (2) (7) 4 - (6) (8) (3) (6)

USC 26 20 (6) 3 (4) 3 2 2 - (3) (18) (1)

Indiana 27 21 (6) (1) (2) 2 (1) (3) 1 (4) - -

Weight 25% 15% 1% 16% 8% 14% 7% 14%

In US News , Fuqua dropped from #5 to #11 over a 3-year

period due to its precipitous drop in relative salary and

employment after graduation statistics…

Source: US News Rankings – please note US News rankings year leads publication by one year (i.e. 2006 rankings were published in April of 2005)





School

BW Rank

2004

BW Rank

2000 BW Rank

Corprate

Rank

Graduate

Rank

Intellectual

Rank

Cumulative

ScoreChicago 2 10 8 3 19 (7) 9.2

Emory 20 28 8 7 6 13 7.2

Stanford 4 11 7 5 14 - 8.6

Tuck 10 16 6 6 6 5 5.9

Indiana 18 20 2 2 2 (7) 1.1

Kellogg 1 2 1 (1) (1) (5) (1.4)

Cornell 7 8 1 2 - (1) 0.8

Haas 17 18 1 3 1 15 3.3

Michigan 6 6 - 2 (4) (3) (1.2) Stern 13 13 - 1 2 (2) 1.2

Columbia 8 7 (1) (1) 2 2 0.7

Carnegie Mellon 15 14 (1) (1) (6) 11 (2.1)

Kenan-Flagler 16 15 (1) (1) (6) 13 (1.9)

Wharton 3 1 (2) (4) - 2 (1.6)

Harvard 5 3 (2) 1 (7) 6 (2.1)

UCLA 14 12 (2) (8) (4) 9 (4.5)

Texas 19 17 (2) (5) (1) (6) (3.3)

Darden 12 9 (3) (4) (5) (18) (5.9) Yale 22 19 (3) (5) 1 (12) (3.0)

USC 27 24 (3) (4) (4) (1) (3.7)

Sloan 9 4 (5) (7) 3 - (1.8)

Fuqua 11 5 (6) (4) (2) (9) (3.6)

Weight 45% 45% 10%

From 2000 to 2004, Fuqua lost ground in the BusinessWeek

rankings due to poor corporate, graduate, and peer rankings…

Source: BusinessWeek Rankings – weightings are 45% on corporate, 45% on graduate, 10% on intellectual capital





An analysis of BusinessWeek rankings in 2004 indicates

Fuqua has many strengths from which to build…

Category BW Ranking –

Top 30

Recent Initiatives

Student quality (i.e. GMAT) 2

Responsiveness of faculty & administration 7

Intellectual capital 10* Dean‟s push for publications

Facilities - New buildings

Faculty numbers - Almost 100 faculty

…But needs to shore up perceived weaknesses… Teaching quality (core) 28 Teaching changes in core

Value of investment 22

Career management center 21-24 CMC management changes

Network and connections 24 New alumni director

International business 23

Selectivity 18

Teaching quality (electives) 15 Teaching changes

Ethics 14

Yield 14 PhD CRM project

* #1 in 2000 BW rankings, highlighted rows are included in the graduate survey





With employment figures and corporate scores figuring so

strongly into rankings, the CMC today appears to be pushing

Fuqua in the right direction…

# Companies Recruiting at Fuqua

91 9474 82 81 90

117

70

42 33 3850

0

30

60

90

120

150

180

210

1999-00 2000-01 2001-02 2002-03 2003-04 2004-05

Source: Fuqua CMC

1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05

Total companies with any on-campus recruiting activity* 161 208 164 116 115 119 140

New since previous year - 117 70 42 33 38 50

Returning since previous year - 91 94 74 82 81 90

Lost since previous year - 69 114 90 34 34 29

Note: *Companies performed at least one recruiting activity on campus (SIP, FY interviews, SY interviews)

New

208

164

116 115 119

140

Returning

Perennial Recruiters

…Recruiters’ interest in Fuqua is on the rebound since the

early 2000s recession lows…





Initiatives to Consider – 1 (as proposed by Garda

et al.)

• Boost marketing effort across all Fuqua programs to

increase pool of qualified applicants and to improve yield• Create an alliance of top business schools to promote

the value of the MBA degree

• Focus on the growth sector of the MBA market: EMBA

• Develop sector-specific curriculum to address popularstudent interests, as Fuqua has done with HSM and asother peer schools have done to varying degrees

• Develop joint programs with top international schools asother top US schools have already done with top-tier

international schools• Launch an accelerated 15-18 month MBA program as

many international schools and some top US schoolshave done




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Initiatives to Consider – 2 (as proposed by Garda

et al.)

• Raise the academic bar for students andrecognize individual achievement

• Improve placement

• Enhance integration of international students• Improve faculty research productivity

• Use the BOV more effectively


MBA Task Force Presentation to Fuqua Managers

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