Monday, June 29, 2009

ISB Vs US Business Schools

In the last few weeks I have talked to more than 200+ GMAT takers at various coaching centers in Mumbai, Chennai and Hyderabad. One of the question that consistently popped in most of my discussions was why would someone choose a 1 Year program at ISB as compared to a 2 Year program in US or in Europe?

Pretty genuine question particularly if you consider our obsession with higher education in US and Europe. However if you look at the question more objectively and plug in data to answer (This is really what an MBA teaches you J) the same, it becomes obvious that most people should definitely go for ISB’s one year program. Here is an explanation:


When a candidate is shortlisting the schools to apply to what he is really doing is shopping for MBA program. And as with any rationale consumer what he should essentially look at are the dimensions of the cost that he is incurring and the dimension of value that he is extracting – and then possibly pick up one with the maximum consumer surplus (value – cost incurred).



If that was the case most applicants would pick schools in the second quadrant in the picture above (Low Cost and High Value) to get maximum consumer surplus. Now let us go to a finer level and see what really constitutes Cost and Value.

For most of the people I had a discussion the cost of an MBA program is the Application Fee. That really is not a fact – If you think about it for people who are attending an MBA at ISB and other US Business schools are also keeping themselves away from work during the prime of their career. Hence the cost is not only on the fee but also the opportunity cost of staying away from work.


Cost = Program Fee + Living Expenses + Opportunity Cost


Though cost was straightforward Value is a more complex dimension as the value that one derives from an MBA program would vary from individual to an individual depending on what one is expecting the program. However some of the representative components of value could be quality of learning, quality of network, career prospects etc etc. The weight of each of these components and the components themselves could vary from individual to individual – However it would not be unfair to say that MBA rankings published by some of the recognized authorities (The Financial Times, The US News etc) are a good abstraction of the value extracted.
Now that we have understood the two dimensions in details – lets go back and look at whether 1 Yr program at ISB makes sense over a 2 Yr program in US and Europe.
On the cost front –

  • The program Fee at ISB is around USD 40,000 almost half as compared to schools in US and Europe
  • With the 1 Yr program you save a precious year of your peak work life and hence opportunity cost wise ISB’s 1 Yr program is more economical

On the value front, ISB has been consistently ranked among the top business schools of the world. According to the latest Financial Times Ranking, ISB ranks 15th globally – this definitely speaks a lot of the value that students get from the school.


In conclusion if we go back to the picture above ISB clearly falls in the second quadrant – the most attractive for applicants. More and more people are subscribing to this view as represented by some of these cases http://in.news.yahoo.com/32/20090330/1053/tnl-it-s-harvard-v-hyderabad-now.html

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