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In 2005, 80 percent of the 129 business schools sampled by the Graduate Management Admission Council reported a drop in full-time applications -- the third consecutive year that most schools reported a downturn.
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updated 1/13/2006 1:03:32 PM ET 2006-01-13T18:03:32

For MBA programs, competition is no longer just an academic concept.

Buffeted by a decline in the number of students seeking the credential, business schools have been revamping their offerings, particularly by offering students more specialized knowledge. Schools also have stepped up or tweaked their marketing campaigns to differentiate themselves from competitors.

In 2005, 80 percent of the 129 business schools sampled by the Graduate Management Admission Council reported a drop in full-time applications -- the third consecutive year that most schools reported a downturn. The same trend has been true for part-time applications -- the decline started a year earlier, but it has also been less severe, with about half of the programs reporting a drop in 2005.

Bentley College, for example, has seen a 40 percent decrease in applications for its full-time program over the past five years. Boston University, though rebounding, received 916 applications in the past academic year, 9 percent fewer than in 2002-03. Even Harvard Business School has seen a 26 percent decline in applications over the last five years. And MIT's Sloan School of Management, which saw a temporary spike of applications during the dot-com bust, received 12 percent fewer applications for fall 2005 than it did for fall 2001.

School officials have several explanations for the trend, including a soft job market that makes working professionals less willing to take a hiatus for an MBA; companies being increasingly unwilling to help pay employees' tuition; and new, post-9/11 restrictions on student visas that have made it harder to recruit international students. Compounding the situation, new schools have entered the marketplace, including the for-profit University of Phoenix, meaning the pie is being sliced thinner.

Although the intensifying competition is leading schools to more forcefully distinguish themselves from one another in their educational offerings, placement rates and flexibility, one topic they tend to gloss over is tuition, which ranges from the mid-$20,000s at Bentley and Suffolk University to the low $30,000s at BU and Babson College for one year of a two-year full-time program.

But there is no clear pattern to the impact on Boston-area programs. Babson has taken a hit on part-time applications, while full-time applications remain stable, said Jon Kerbs, the marketing director for the MBA program and its acting director of admissions. At Bentley, on the other hand, applications to its part-time program have remained steady, while full-time applications are down.

"As the economy comes back, hopefully things will turn around," said Kate Klepper, Northeastern University's director of graduate business programs. "But are people looking for the same thing they were looking for before? Can we continue to offer the exact same thing as we have in the past and expect different results? Frankly, I don't think we can."

Northeastern, for example, has decided to spend more time giving students a "managerial skill set" -- such as giving effective presentations, or getting and giving feedback -- through stand-alone courses and existing courses on other subjects. The program, set to launch next fall, will be promoted with Northeastern's three career tracks -- finance, marketing and supply chain management -- that Klepper touts as the school's "core competencies."

"It is that combination that we think is going to be very distinctive in our offering, and set us apart in the marketplace," Klepper said.

Other schools are also looking to bolster traditional MBA offerings with more specific expertise. This fall, Bentley launched a program that combines an MBA and a Master's of Science degree in either information technology or human factors in information design.

"We feel that that is a very powerful combination, because businesses want people who understand the business practicality of these products and services," said Margi Olson, dean of Bentley's graduate school.

Bentley also has eased up on the number of required courses students must take, giving them more opportunities to take electives, Olson said.

Boston University took a similar tack two years ago, increasing the number of electives students could take from seven to 10. And four years ago, the school created its own joint MBA/MS in information systems.

Although Associate Dean John Chalykoff said those changes weren't a response to declining applications, he believes promotion of them has allowed the school to reverse a precipitous 30 percent drop in applications in 2003-04. Applications shot up 30 percent last year, and so far this year are on track to increase again by more than 100 percent. The joint program accounts for about half of the school's MBA students.

"Technology has become central to everything we do in business," he said. "So the plain vanilla MBA, that's going to be at a disadvantage in the future."

Babson, in contrast to other schools, has stuck by its entrepreneurial-focused curriculum. Although that specialty might have lost some cachet in the aftermath of the dot-com bust, school officials are betting that entrepreneurial skills will again be sought by corporate recruiters -- and thus, by students.

"We have kind of stuck to our knitting," said Kerbs, the school's MBA marketing director. "We've seen, over the last several years, both large and small companies realize that the cost-cutting days are over. It's time to grow businesses."

Babson has focused on promoting its accelerated part-time track, which includes several online courses that can be "attended" whenever the student has time. The school hopes to double the number of students in that 5-year-old program by next fall to 100.

"It was our view that this really is the strategic response that we thought was right for the marketplace, at the right time," Kerbs said.

© 2007 Boston Business Journal

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