Online MBA Programs Could Put Some Business Schools Out of Business

Online MBA programs diverting students away from part-time programs
Online MBA programs diverting students away from part-time programs

Dean of the University of California at Berkeley’s Haas School of Business is predicting a less than certain future for business school programs in America:

“Half of the business schools in this country could be out of business in 10 years—or five,” said Richard Lyons.

Lyons explained that it’s the trend for top-tier MBA programs towards offering their valuable degrees online which is sending shivers up the spines of lower-ranked business school officials. This phenomenon puts a crack in the industry’s current business model, since for the majority of business schools’ part-time students and those seeking executive MBAs supply the schools with critical revenue. More and more these programs, which are directed towards working professionals, are competing with online alternative programs offered by the more elite schools in the business MBA program environment. And these two choices are serving the same population of students.

It’s the lower-ranked schools that are most vulnerable to these changes. When the big names in MBA programs such as Harvard and Wharton begin to offer their degrees online, which is indeed beginning to happen, they draw students away from the lesser-known part-time programs which are closer to home. But the part-time programs are a great source of income for business schools, since most students pay full, or almost full, tuition. Part-time programs have traditionally been able to assure a steady flow of income for their schools.

Right now there are not that many top-tier schools that offer their MBA programs online, but many other schools have. But the snobs are showing signs of warming to the idea as the stigma caused by the down market MBA programs that do offer online programs continues to fade. It should not be long before the biggest names in MBA programs, such as Wharton, Stanford, and perhaps even Harvard, offer a part-time MBA program online to anyone who qualifies, no matter where they happen to live and work.

If an executive based far from a top-tier school can choose between a local part-time MBA programs at a less elite school versus a part-time program at a top-ranked school online it seems the choice will often be to opt for the online program.

James Cannon

About James Cannon

James Cannon is an experienced hedge fund analyst. He has served on the advisory boards for various different Fortune 500 companies as well as serving as an adjunct professor of finance. James Cannon has written for a variety of Financial Magazines both on and off line. Contact James at james[at]businessdistrict.com