MBA Industry and Porter’s Five Forces
MBA Industry: The MBA school industry includes universities and colleges that offer academic courses and grant graduate degrees. The general requirement for admission is a bachelor’s degree and GMAT® scores. Some schools and programs also require prior employment experience. Instruction is typically provided on physical campuses, although online education and other unconventional approaches are gaining popularity. For purposes of this paper, for-profit institutions or community colleges are not included in the industry definition. The major forces that affect MBA market are: competition between public and private business schools, buyers of business education including both students and employers, faculty as the key suppliers to the industry, and substitutes in the forms of alternative means of delivering graduate business education. Porter suggests that evaluation of these forces will provide insights into the prospects for long-range profitability1. Competition: The MBA market in the United States is an unregulated industry that allows schools to develop their own distinctive styles and personalities, and to define their own missions5. B-Schools consider it their mission to educate and research, but face intense pressure of managing faculty issues, finding new funding sources and distinguishing themselves from competitors9, highlighting the most prominent areas within this category: cost, revenues, and reputation. Reputation is differentiated by rankings and accreditations, specializations and regional focus and flexibility10. Rankings drive how students, faculty, and employers perceive the MBA program. In turn, how students, faculty, and employers perceive the MBA program drives rankings, resulting in developing a brand name for universities, leading schools to expend vast resources in pursuit of being highly ranked or even ranked at all8. The significant costs associated with business education have left room for...
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