Need an answer to this question.

Well an MBA is a Masters in Business Administration so I don't see why one wouldn't be able to get a Phd afterwards...

EssaySnark says, the master's degree awarded by universities in different countries vary widely in terms of requirements and difficulty. We're assuming you're asking about what the American bschools generally offer.

For many (non-MBA) Master's programs in the US, a dissertation is required, and this is not the case with the MBA, so that's the main difference.

The other is that the MBA is usually geared towards practical, pragmatic education, with hands-on training that prepares the student to immediately move into a new career, or a more specialized area of their existing career. In that sense it can be seen as a professional program. The core curriculum in just about any MBA program will include accounting, finance, microeconomics, macroeconomics, statistics, and a leadership function, then you get to take electives, and some schools have majors/concentrations. But it's broad-based and hands-on. By contrast, other Master's programs at a business school are much more academic and research-focused, and narrow. They could still prepare the student for business, just in a much narrower speciality, and usually there's papers involved. And of course there's totally other tracks, e.g., an MFA in writing.

EssaySnark believes that not all PhD programs require a Master's first, though yes, it is a common pre-req. And yes, an MBA generally would be accepted for PhD programs where that's the case. Every school (and every program) has different requirements. There are no "rules" here. Not like going for a Master's, where a Bachelor's is almost always required (we know of one school in Europe where it's not).

So, probably you and your friend are both right! EssaySnark loves it when that happens.