Fewer taking tests, but glory days may be ahead

PUBLISHED : Saturday, 13 August, 2005, 12:00am
UPDATED : Saturday, 13 August, 2005, 12:00am

GMAT numbers are down in North America and Japan, still going strong in Asia

ARE MBA DEGREES past their sell-by date? That is the impression you get if you look at the number of people taking the Graduate Management Admission Test (GMAT) in the United States, Canada and Japan.

Designed to assess skills related to postgraduate studies in business and management, the GMAT is required by most business schools for admission to MBA and other graduate programmes.

According to the Graduate Management Admission Council (GMAC), the number of people taking GMAT in the US in the first five months of this year dropped from 58,517 to 58,037, or down 0.85 per cent, compared with the same period last year.

Overall, test takers outside the United States rose by 3.75 per cent in the same period. Exceptions included Canada and Japan, which also had declines. To put these figures in context, 71,589 took the test in the US in the same period of 2002, compared with 109,475 worldwide.

According to GMAC's website, gmac.com, 'Testing volume rose sharply during May in India, Greece, Korea and Taiwan, all of which recorded double-digit percentage gains in the number of GMAT exams administered within their borders during May 2005 compared with figures for May 2004.'

Demand for MBAs is especially strong in the emerging economies of Asia, and insiders expect it to get stronger in future.

'One of the interesting things [I have found] as I travel around is that the MBA has been peaking in North America,' said Michael Goldberg, chief academic officer at Singapore-based Universitas 21 Global, which offers online MBAs.

'But in Asia it seems to be just taking off. We do a lot of work in China and India, and there seems to be an insatiable demand there. It also seems that in both these big markets there is a shortage of high-quality MBA programmes.'

According to Professor Goldberg, the Indian Institutes of Management have had 200,000 applicants take exams for 1,000 places.

'Demand is huge,' he said. 'And it is continuing to grow, but there is a huge shortage of supply. India and China have hundreds of thousands of potential students.'

Sachin Tipnis received his MBA from the University of Hong Kong (HKU) last year. On graduation, the Indian national was hired by the Faculty of Business and Economics to handle global marketing for the programme.

The main impetus for young Indians to pursue an MBA, he said, was to get out of the country.

'Despite the economic growth, the standard of living in India remains poor and that's what accounts for the brain drain,' he said. 'So an MBA has become a tool to get out.'

Steven DeKrey, associate dean and director of MBA and EMBA programmes at the School of Business and Management at the Hong Kong University of Science and Technology, said that people in China did not so much regard an MBA as a passport overseas but more as a qualification that could give them access to a career in the mainland with a multinational company.

'With that goes higher pay and better career prospects,' Professor DeKrey said.

With massive populations, China and India are examples of emerging economies with different strengths.

'India has been very successful on the technical side,' Professor Goldberg said.

'They've done wonders in IT, both hardware and software, but they're short on managers.'

China, meanwhile, has turned into the world's factory.

'It has this massive manufacturing base, but a shortage of really well educated people,' he said.

'Both countries need people who know business and they need people with managerial skills.'

When it comes to MBAs, Hong Kong may have more in common with its counterparts in North America and Japan than its neighbours to the north and west.

Chris Chan, associate professor of MBA programmes and director of the Faculty of Business and Economics at HKU, estimated that the market for MBAs in Hong Kong had been shrinking by about 20 per cent per year for the past three years.

'We know that trying to fight for a greater market share in a shrinking market would be death for us,' Professor Chan said. 'We are therefore strengthening our requirements to attract better students.'

Kathleen Slaughter, executive director and associate dean of the Richard Ivey School of Business/Asia, said MBA students from the US and Canada were being replaced by students from China and 'lesser developed countries'.

Interest in the school's Executive MBA (EMBA), which was launched in Hong Kong several years ago, remains strong, and there is increasing interest from students in the mainland.

'Ivey's focus is on Southeast Asia,' Professor Slaughter said. 'We continue to focus our energies on attracting executives from China to work with the large international student base of EMBA students in Hong Kong.'

Allan Au Kai-ming, an associate professor at the School of Business and Administration at the Open University of Hong Kong, has a different explanation. He said that with new programme offerings - such as masters' degrees in corporate governance and HR management - many executives here were opting for specialised training rather than the training in general management that an MBA provided.

John Fernandes, president and chief executive of AACSB International, believes that the MBA - even in the US - is far from dead.

'The glory days of the MBA are still ahead, and the facts support my belief,' he wrote in eNEWSLINE, the body's online monthly newsletter. 'Just in the USA, there are nearly half a million MBA students, and that number should reach 1 million by 2012. While the number of full-time MBA applications and GMAT takers has dipped, I argue that these occurrences are blips in a cycle and not a trend.'