What is an MBA?
MBA stands for Master of Business Administration and it is therefore a master’s degree.
MBAs generally take a fairly scientific approach and cover various areas of business such as accounting, finance, marketing, human resources, and operations in a manner most relevant to management analysis and strategy. They are, in short, courses designed for people looking to be heads and managers of businesses.
Though they are technically master’s degrees, MBAs are often considered separate from them. Here are some key differences:
- Length: MBA courses can last for a variety of time, but the standard course is generally two years, compared to the standard one year for a master’s.
- Intention: MBAs are specifically designed to aid the student’s employability and success in the workplace, whereas most Master’s degrees build upon the academic background of a student.
- Teaching Style: Master’s degrees typically rely on the more traditional style of university teaching: seminars and lectures, with lots of personal study time. MBA students tend to work in small groups and work on ‘case studies’; real-world examples of business problems that students are expected to explore, discuss and reflect on.
- Specificity: MBAs are quite broad in their assessment of topics, covering a great deal of potential problems and situations. Compare that to a Master’s, in which the contents of the course are incredibly specific in their scope, educating students on a very particular part of life.
- Expense: While both require an extensive outlay, MBAs can get very expensive indeed. The general accepted cost for a top MBA is anywhere between $100,000 and $200,000 (USD). The lack of income you miss out on by not working during this time is also a factor.
Why are MBAs so Expensive?
Return on investment (ROI) is one of the primary considerations for those looking to complete an MBA. In a recent survey of students considering taking an MBA, the number one reason for doing so was to improve earning potential, followed by increased employability and then a desire to work abroad.
Yet they also offer a phenomenal return for their cost. After completion of the MBA, salary gains in the first year can often be as high as 100% of the initial fees. After three years, salaries can get to be 200-300% of those fees. If you can afford an MBA then, they are incredibly valuable for career progression.
But spending so much will always carry some element of risk. So what are you paying for?
In top programmes, the professors of the courses are of extremely high quality. These men and women will likely be consistently tempted to move from academics into the world of business, so their salaries have to be similar to those at the very top of successful companies. Unfortunately, that cost is partly passed on to you.
MBA programmes give their teachers and students ample resources to pursue their research. Most universities also supply support staff to help.
The top degrees are usually held in the top universities, with the top facilities, requiring top investment.
Those with strong MBAs often go into some of the highest paying jobs in the world, seeing great success, owing a great deal of that to their new business degree. There is, therefore, a lot willing to pay a great deal for an MBA. Supply and demand.
The safer the risk is in terms of payment, the more expensive an MBA is going to be. And since MBAs can cost hundreds of thousands of dollars, the safe ones are very safe indeed. An MBA from a university like those following are as close to guaranteed as you can get for a successful future career.
Most Recognised, Valuable MBAs in the World
Please note that all $ references are to USD.
Northwestern University – Kellogg School of Management
Average starting salary: $121,500
Average GMAT score: 724
Northwestern’s business school was established early in 1908, but it wasn’t until 1979 that it took the Kellogg name following a $10 million donation from the heirs of the family that started the famous cereal company.
The school values and emphasizes international experience. As part of the course, students are paired with those at ESADE in Barcelona and the Hong Kong University of Science and Technology to develop strategies for solving an international business’ real-world problems.
Harvard University - Harvard Business School
Average starting salary: $131,600
Average GMAT score: 725
The world’s first MBA programme, Harvard Business School is also often considered the best, but its heavy cost ($141,900) and good but not excellent job placement figure of 91% (three months after graduation) do reduce the sheen of Harvard somewhat.
Yet there are also lots to love. The high average starting salary its graduates command, the school’s reputation with employers and the impressive alumni network of more than 44,000 still make it one of the most coveted business schools for students. HBS’s huge body of successful alumni is second to none, littered as it is with politicians, CEOs and billionaires. They include: former US President George W. Bush, JPMorgan Chase CEO Jamie Dimon, former Massachusetts Governor Mitt Romney, Facebook COO Sheryl Sandberg and HP Chairman Meg Whitman.
Stanford University – Graduate School of Business
Average starting salary: $133,400
Average GMAT score: 733
Typically ranked in the top two business schools (competing with Harvard), Stanford unfortunately has recently lacked in the its job placement percentage. Still a respectable 86%, it is a cut below many other top schools and 6 percentage points below its figure last year. Stanford attributed the drop to students becoming “more selective”.
But graduates that found a job commanded a hefty starting salary covering the entire $132,150 price tag for the two-year degree. Top employers include Facebook, Yahoo, Yelp and a number of other Silicon Valley based tech companies.
University of Pennsylvania – The Wharton School
Average starting salary: $127,300
Average GMAT score: 732
Wharton was established in 1881 by a donation from industrial tycoon Joseph Wharton, making it the first business school founded in the US. The institution has grown and developed ever since and graduates include notable figures like John Sculley of Pepsi and Apple, LinkedIn CEO Jeff Weiner and billionaire investor Ronald Perelman.
Though no other American school topped its tuition cost of $144,340, Wharton’s excellent reputation, high average starting salary and 95% job placement within the first three months of graduation make it a very worthwhile investment. Only Stanford’s students scored higher on the GMAT.
University of Chicago – Booth School of Business
Average starting salary: $125,000
Average GMAT score: 726
98% of students from the 2015 class secured employment within three months of graduation (the highest percentage of any school) and the top-five employers were McKinsey & Co., Boston Consulting Group, Bain & Co., Amazon and Bank of America- each a titan in their field.
Booth’s MBA focuses on training students for real world business scenarios via observation and experience wherein students work with real start-ups. The school also brings in guest lecturers from private-equity and venture-capital companies and some students intern with them and help evaluate new market and business opportunities.
To Consider When Choosing an MBA
Since MBAs were invented in the USA, it is perhaps no surprise that the ‘best’ are held there (they did get a head start after all). Though that is not to say that the US is your only option- there are excellent options across the globe: the UK, France and China just to name a few.
It is also worth noting that while there is some correlation with best university lists (Harvard and Stanford often score highly on these lists for example), they are not completely equitable and choosing your best MBA requires personal research.
There is one final point to make. There are lots of MBA rankings lists: The Economist, Forbes, the Financial Times, Business Insider, Bloomberg, CNN and more. Each use slightly different methods of reaching their conclusions and each have their own slight biases. American rankings favour American institutions, for example. Read widely and deeply when considering your MBA. They are a huge expense but are incredibly valuable. They therefore deserve your full care and attention.