What is a Master Of Business Administration?
A Master of Business Administration (MBA) is a professional degree that sharpens students’ business skills through graduate-level study in management, finance, marketing, strategy, accounting, operations, economics, and other topics.
🤔 Understanding MBAs
A typical full-time Master of Business Administration (MBA) program takes two years to complete, and the total tuition of top programs can surpass $140,000 in the US, as of 2019. Although expensive, an MBA is sometimes required for high-level corporate positions and can help graduates stand out to employers. During the degree program, students take courses on a broad range of subjects to develop their business acumen. They are generally able to tailor the curriculum to their interests. The average annual compensation for MBA graduates their first year out of school was $102,495 in 2018. While an MBA doesn’t guarantee a high salary, the skills learned and network gained can help graduates achieve lofty business goals, such as obtaining C-suite employment or starting a company.
Harvard Business School is one of the most famous elite business schools in the US. As of the 2019–2020 school year, the tuition of its full-time, two-year degree MBA program was $73,440 per year. During the first year, students follow a set curriculum, which includes courses in finance, economics, leadership, marketing, strategy, and management. In the second year, students pick courses based on their individual interests from a selection of electives – These courses include e-commerce, negotiation, game theory, launching technology ventures, and business analytics. Famous graduates of Harvard’s MBA program include Michael Bloomberg, Sheryl Sandberg, George W. Bush, Mitt Romney, and Jamie Dimon.
An MBA is like a key…
For some students, the graduate degree will open doors and help them progress in their careers – But it’s not a magic key that unlocks a guaranteed high-paying role or executive-level position. Graduating from a top-ranked business school often provides you a better chance at a lucrative or prestigious job, though it comes with a higher price tag. The annual tuition for an MBA at the Stanford Graduate School of Business – a perennially high-ranked program – is $73,062, but it’s $32,000 at the University of Louisville – a lower ranked program. If you’re considering enrolling in an MBA program, you’ll need to decide whether the knowledge you’ll gain and doors the degree will unlock are aligned to your career goals and worth the time and money investment.
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What is a Master of Business Administration?
A Master of Business Administration – aka MBA – is a graduate degree in business that can be completed part-time or full-time. It’s often referred to as a professional degree because it prepares a student to work in a certain profession – general business leadership roles, in this case. The curriculum is designed to prepare graduates to lead in any function across any industry. As such, classes in these programs are aimed at teaching general business, management, and leadership skills that can be applied broadly.
Part-time MBAs are divided into executive MBA programs – aka EMBAs – and regular part-time MBAs. EMBAs are typically designed for students in their mid-30s to early-40s who have many years of work experience under their belts and already hold leadership positions. Regular part-time MBA programs are geared toward younger students who are more junior in their careers, but are still working full or part-time. Most part-time MBA programs take two to three years to complete and, in some cases, the enrolled student’s employer will foot part of the bill. This is especially true when it comes to EMBA programs, which can sometimes be significantly pricier. The cost of tuition and fees for a part-time MBA at the New York University Leonard N. Stern School of Business is approximately $140,000, but it’s about $200,000 for an EMBA from the same school.
Full-time MBAs are usually tailored towards younger students in their mid- to late-20s who are able to take time off work to study full-time for a period of generally two years. Classes usually are in session for nine months out of year, and students often elect to pursue an internship or independent project during the summers off.
Full-time MBA programs tend to be more selective than part-time because business schools are usually ranked based on their full-time, not part-time programs. Several organizations rank MBA programs, but the rankings from US News and World Report are often the most cited. US News and World Report ranks full-time MBA programs on several metrics including peer assessments, recruiter assessments, admissions selectivity, and placement success. Theoretically, the higher a school is ranked, the higher the quality of its education. Consequently, employers tend to prefer students from more highly ranked schools.
Graduating from a full-time program at a top-rated school like Harvard Business School or the Wharton School of the University of Pennsylvania can give students a major boost both in earnings and employment opportunities at the beginning of their careers. In 2018, the average yearly compensation for graduates from the top 12 ranked business schools by US News and World Report was $166,999 – but the average for all MBA programs was $102,450.
What will I learn with an MBA?
During a Master of Business Administration (MBA) program, you’ll typically take foundational courses in accounting, business ethics, management, strategy, finance, business law, marketing, economics, and other topics to sharpen your business acumen. The specific courses you’ll take, however, will depend on the exact program you attend. All MBA programs are designed to prepare you for general business leadership positions.
If you attend the Wharton School of the University of Pennsylvania, for example, some core courses you are required to take include the following: Statistics: Regression Analysis for Managers, Managing the Emerging Enterprise, and Introduction to Corporate Finance.
Many schools, like the Kellogg School of Management at Northwestern University, allow students to specialize or major in specific subject areas, like finance or strategy, after completing the required core curriculum.
What requirements do you need to enter an MBA program?
The requirements for an MBA program vary by school. Most MBA programs require incoming students to have a bachelor’s degree, but a minority accept work experience in place of a formal undergraduate degree, such as the University of Chicago Booth School of Business.
Prospective students must also take either the GMAT or GRE and submit their score to schools. The GMAT – aka Graduate Management Admission Test – is a standardized test designed by a group of business schools to test whether students are ready for an MBA program. The test includes an analytical writing assessment and sections for quantitative, integrative, and verbal reasoning.
The Graduate Record Examination (GRE) is another standardized test, but it’s more similar to the SAT or ACT – standardized tests for college-bound high schoolers – than the GMAT. The GRE includes an analytical writing assessment as well as quantitative and verbal reasoning sections. Whereas the GMAT is specific to business school, the GRE is the most common exam required for other graduate schools, such as an MS (Master of Science) and MA (Master of Arts) programs.
In addition to standardized testing, most MBA programs prefer two to three years of work experience and a good undergraduate GPA. According to US News and World Report, the average undergraduate GPA for students entering the top 20 MBA programs in 2017 was 3.53.
Extracurricular activities, like volunteerism or a demonstrated interest in specific hobbies, can also help bolster your application. Some MBA programs will mandate one or more essays and an interview as part of the admissions process. Most also require letters of recommendation from either current or former work supervisors or professors.
How much does an MBA cost?
By the end of a full-time degree program, you can expect to have spent $140,000 or more in tuition alone if you attended a top-rated program in the US. This cost may be slightly less if you complete your studies at a lesser-known or less well-ranked school. For example, the annual cost of tuition at the Wharton School of the University of Pennsylvania (a top-rated school) is $81,378, but it’s $32,000 at the University of Louisville (a lower-ranked school).
Executive MBAs typically cost significantly more, with some top schools like Wharton, Columbia Business School, and the Kellogg School of Management at Northwestern University charging over $200,000 for the degree. However, employers often pay for a portion of the tuition for an EMBA, or even the whole thing, if you continue working there and it helps boost their image. Having employees who graduated from top programs looks good for companies and may help generate business or credibility.
But don’t expect expenses to end at tuition costs — There are also books, personal expenses, and room and board costs for full-time students. At Wharton, the cost of tuition and fees is $81,378 per year, but the estimated yearly cost including these additional expenses comes to $114,896.
What does a person with an MBA do?
An MBA generally prepares graduates for leadership positions in roles including finance, operations, management, consulting, marketing, and organizational behavior.
According to US News and World Report, five of the most popular jobs for MBA graduates are:
- Product manager: Multiple businesses, including tech and consumer packaged goods companies, enlist product managers to help coordinate work from multiple departments within a company to ensure that new products and features are completed on time and within budget.
- Management consultant: Businesses often hire management consultants to provide strategic advice on how to achieve their goals, such as growth targets, and implement new processes. Management consultants sometimes work as freelancers if they have prior experience or have full-time positions at large consulting firms like McKinsey & Company and the Boston Consulting Group (BCG).
- Medical and health services manager: Hospitals and other medical facilities employ medical and health services managers to run the operational and financial side of their organizations. This is a growing sector, and some MBA programs offer a specialization track for healthcare.
- Financial manager: Financial managers like financial analysts, directors of finance, and chief financial officers (CFO) run and analyze financial models and devise ways to turn their findings into actionable strategies ultimately designed to boost profitability. They often spend their time looking over ledgers (i.e. master records of all financial transactions for a company) and balance sheets (i.e. financial statements made by a company).
- Brand marketing manager: Marketing managers analyze marketing efforts (e.g., advertising campaigns) and find ways to communicate the value proposition of their company, product, or service to their target audience better.
Of course, MBA graduates aren’t limited to these roles. Many go on to become chief executive officers (CEO), chief operating officers (COO), or company founders. Some also work at hedge funds. They may even teach or enter politics. An MBA is a career’s launching pad, not its final destination.
How much does an MBA increase your salary?
There’s no guarantee that an MBA will increase your salary or income at all. If it does increase your salary, the amount it increases by will depend on several factors including the industry you enter, the job you hold in that industry, the school you attended, the type of MBA program you completed, your work and education history, and other personal factors.
That said, a survey of 7,000 business school alumni conducted by the Wall Street Journal and Times Higher Education found that graduates’ salaries typically increased by 50-118%, depending on their industry and field of work. Government workers experienced the smallest increase and healthcare professionals saw the largest jump.
Data from US News and World Report indicates that the starting salary for an MBA graduate is highly dependent on the sector they enter. Graduates who enter consulting, for example, are paid $130,600 per year on average, while graduates entering the nonprofit sector earn just over $57,500 per year on average.
Should I get an MBA? Is it worth it in 2020?
Is an MBA worth it? Well, it depends. Whether you should get an MBA is a personal decision that should be based on your career goals and financial situation. If you plan to pursue a career in business, management, finance, or marketing, an MBA can be an invaluable asset for your career growth and is often required for management and leadership positions, especially at major corporations.
However, it’s an expensive investment and, if you’re unsure which direction you want to head down in your career path, it may be best to hold off until you have more clarity.
Similarly, you’ll also need to evaluate the post-graduate outlook for the specific schools you’re considering. Not all MBA programs are created equal, and an MBA from a top school is typically worth a lot more than a part-time online MBA from a school that isn’t well known.
To better evaluate the employment prospects for graduates from the school you’re interested in, it’s always a good idea to speak with alumni and school representatives. That way, you’ll get a better feel for how you’ll likely fare once you hit the job market.
Finally and, perhaps most importantly, you’ll need to decide how much the subject matter interests you. If you’re passionate about leadership and management in business, an MBA can help you sharpen your skills and learn more about a subject you love.
As the famous blues guitarist B.B. King once said, “The beautiful thing about learning is no one can take it away from you.” Whether you plan to climb the corporate ladder, open your own business, or study just for the fun of it, education will always hold its value if what you learn is meaningful and important to you.
So, is an MBA worth it? There’s no clear answer, and you’ll need to do some soul searching to make that decision for yourself.
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