The University of Rochester’s Simon Graduate School of Business yesterday (Aug. 23) jumped into the quickly growing one-year MBA market. The new 12-month program, which plans to enroll its first class in June of 2013, is being marketed to seasoned professionals.
In an interview with Poets&Quants, Simon Dean Mark Zupan says the school decided to go with a one-year offering due to industry trends favoring shorter MBA programs as well as an attempt to tap into an unmet market need. The U.S. market for MBAs has been through four years of declines in MBA applications, says Zupan. “The numbers for last year aren’t yet reported, but I predict there will be a 10% to 15% decline in two-year programs nationally,” he says. “The dominant reason is the downturn and how hard it has hit the financial sector. You talk to alums on Wall Street these days and they seem grateful to have a job. But the growth in one-year programs was 12% just last year.”
A TWO-YEAR MBA NOW COSTS THE EQUIVALENT OF FIVE LEXUS’
“The other industry trend driving this is partly competition from Europe and Asia where a lot of the programs are one-year. A student’s opportunity cost in time, we think, is the biggest driver. When you buy a full-time MBA, you are essentially buying five Lexuses. And opportunity costs represent three Lexuses of the total. It’s a huge professional investment that still has a positive return-on-investment even through the downturn. But it’s not for the feint of heart.”
Simon is the latest prominent business school to get into the one-year market. Currently, there are only three business schools in the Top 20 and just eight in the Top 50 in the U.S. that offer one-year MBA programs. Poets&Quants ranks the Simon School’s full-time MBA the 39th best in the U.S.
The Simon offering comes after the school studied the competition and the latest market trends. “Through benchmarking peer schools, the chief drawback of these one-year programs is placement rates,” explains Zupan. “They tend to be lower than two-year programs because you don’t have the internship experience. Our hypothesis is that these programs still disproportionately target career switchers without work experience,” he adds. “That’s the case at Cornell. The other options like Notre Dame or Kellogg tend to draw a disproportionate number of business undergrads so you cut the length of the program in the core courses to get people to the electives more rapidly. They attract people with some business training, but they may not be attracting career switchers.”
SIMON’S ONE-YEAR MBA WILL BE AIMED AT ‘CAREER BUILDERS’
In contrast, Simon plans to position its one-year MBA somewhat differently. “Our play is to try to find career builders who have four to five years of experience,” says Zupan. “It’s for people who are in finance and want to stay in finance or who are in marketing and want to stay in marketing. If you want to switch careers, we’ll steer you to the two-year MBA program.”
Zupan said the one-year MBA will include Simon’s rigorous schedule of nine core courses (same as its flagship two-year MBA program) as well as five electives (just four fewer than two-year MBAs get) from an array of specialized courses. “About 60% of our flagship MBA program folks get at least two majors,” he says. “The likelihood you will get two majors in this program is virtually null.” The one-year MBA will feature two unique courses: a workshop, which pairs students with a faculty member to solve an unstructured managerial situation, and a business project in which students to apply what they’ve learned to a business challenge.
Simon will price the one-year program at “roughly 82% of our normal two-year MBA tuition. That is how many fewer credits there are,” explains Zupan. Simon’s tuition and fees for its two-year MBA program currently run $52,928 per year.
Simon’s full-time MBAs in its Class of 2013 reported average GMAT scores of 675 and average undergraduate grade point average of 3.46, with 5.3 average years of work experience. Zupan said he would expect the average GMAT for the one-year program to be slightly lower largely because older candidates tend to score lower on standardized tests.
The program will span one summer followed by the usual academic year term. Enrollment for the first class will begin in June 2013, pending New York State Education Department approval.
The school also announced two new specialized master’s programs so that it now offers a dozen different specialized graduate programs in business. The new programs are a Master of Science in Business Administration with a concentration in business analytics and a Master of Science in Business Administration with a concentration in pricing.