Globalisation and technological developments are changing the business of business schools and presenting new opportunities to innovate, says Kai Peters.
A plethora of challenges are impacting globally on the management education market, including the continuing evolution of online possibilities, the emergence of new providers, the role of for-profits, changes to public funding, a turbulent economy and cost pressures in the competitive environment.
Business school leaders are being forced to reflect on the long-term sustainability of their current business models and focus on refreshing future models. Some of the strategic options that are emerging include part-time and online education, altering the teaching/research focus, and developing the type and portfolio of services.
Throughout Europe a range of business models already exist, largely because of a rich diversity of economic and educational cultures. However, economic uncertainty is testing almost all business school models as is evident through a range of mergers, of sales of schools to private equity providers and the disappearance in a variety of schools of what was once considered core– the MBA.
Even when it is well established, executive education is even more unpredictable. Revenues can alter significantly within a matter of months when the economy lurches. Unicon, a consortium of schools involved in executive education, reported that on average, revenues generated by executive education shrank by 30% in 2009 compared to 2008. Revenues are only returning now to pre-recession levels.
Questions around the sustainability of current business school business models are already being raised, in particular the viability of research intensive institutions, faculty costs and teaching loads, and the need to either raise tuition fees or increase scale by filling classes with larger numbers of students (EFMD Global Focus, Vol 5, 02, 2011).
However, business school deans can diversify and embrace innovation within their own businesses through collaborations with organisations with complementary approaches to achieve a more sustainable business model in changing times.
Across the business school landscape, for-profits are either establishing themselves as alternative providers or are forming alliances with existing business schools. The levels of marketing spend by for-profits are eye-watering compared to traditional providers. It is not uncommon to hear of marketing budgets that are one-third of turnover, call centres employing hundreds of people and networks that involve up to a thousand agents.
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