What is an MBA Degree? Definition and Explanation
An MBA, short for master of business administration, is a graduate degree that provides students with practical and theoretical training to aid them in better understanding general functions of business management (Investopedia). While some MBA programs accept students without professional experience, some MBA programs require that applicants have two to four years of work experience (BSchools.org calls these professional MBA programs), or even five or more (BSchools.org calls these executive MBA programs). Additionally, MBA students must always possess a bachelor’s degree, and some have a master’s degree in another discipline as well.
History of the MBA
An MBA is an internationally-recognized advanced business degree with a history dating to the nineteenth century. In 1881, Joseph Wharton established the Wharton School of Business at the University of Pennsylvania. As an industrialist and entrepreneur, Wharton envisioned a program that would produce graduates considered pillars of the state.
Prestige and Benefits of an MBA
The MBA degree can have considerable clout relative to other degrees. The initial appeal of an MBA is typically career advancement and higher salary prospects, which, according to research in Forbes Magazine, are to be expected. Ronald Yeaple conducted the first methodology for ranking business schools by the Return-on-Investment (ROI) of their MBA degrees in 1994 and again in 2014. He tracked the salaries of thousands of survey participants before and after they completed an MBA program. Unsurprisingly, respondents reported a 50 percent pay increase upon graduating. This methodology is now the basis for Forbes Magazine’s biennial ranking of business schools.
While this initial pay bump is exciting in its own right, MBA holders’ salaries often continue to increase for many years beyond. In his study, Yeaple found that the average MBA graduate earned 80 percent more after five years.
However, more money and a better job title are not the only benefits of an MBA. Walden University recently created a list of five non-monetary reasons for business professionals considering an MBA:
- New career paths: MBA programs force introspection that helps students determine what matters the most. Not only can they solve complex business issues, they might also decide to go in an entirely different direction than they originally planned.
- A shared passion for business: In some MBA programs, students remain with the same group of cohorts throughout the duration. By going through the same courses at the same time, students get to connect with people who share their interests. It is easy to do in non-cohort programs, as well, since everyone who meets online or in-person has the shared goal of learning as much as possible about business administration.
- Increased collaboration: A good MBA program simulates real-life business, regardless of its format (online, in-person or a combination of both), meaning that most projects are completed in teams. Students also learn how to build teams of their own, which is a definite asset in the diverse, worldwide business economy of today.
- A holistic business education: Even if students decide to pursue an MBA specialization, they benefit from the broad-based business administration courses that schools typically require as core components of a degree program.
- Improved communication skills: Students who push themselves to complete an MBA program can find many opportunities to develop the way they communicate with others. From sending emails to working with online groups to giving oral presentations, the program is uniquely designed so that every student will learn how to get their ideas across in a more concise manner.
Another thing to consider is that MBAs are in high demand with employers. The Graduate Management Admission Council (2017) reported that 86 percent of the employers it surveyed intended to hire an MBA program graduate in the next 12 months, and the projected median starting salary for recent MBA graduates was $110,000—up from $105,000 in 2016. As a basis of comparison, this is 83 percent more than recent bachelor’s (i.e., first degree) graduates in the U.S., who earned a median starting salary of $60,000.
Exploring the Different Types of MBAs and Specialty Concentrations
The University of North Alabama describes a traditional MBA as one that combines core curriculum with several electives to give students an opportunity to specialize and expand their business administration knowledge. An executive MBA, on the other hand, typically attracts experienced business professionals who want to develop their management and leadership skills even further. Schools usually want executive MBA students to have a minimum of five years of professional experience before applying. Another big difference is that an executive MBA program doesn’t offer specializations as a general program does.
While all colleges with MBA programs offer a general business focus, most allow students the option to specialize in a concentration. Specialization is usually a good idea for those who know the career path in which they are most interested, but in some cases, it might take a bit longer to complete the degree compared to students in the general track.
When MBA schools offer a specialization, students typically have just a handful of options from which to choose. However, dozens of specialty MBA concentrations exist. Here are just ten to consider:
- Accounting: Learn about applications, data, and procedures that enable professionals to analyze financial data appropriately.
- Business analytics: Explore artificial intelligence, data mining and acquisition, machine learning, and text mining in this specialization.
- Entrepreneurship: Create a business plan and learn the skills needed to succeed as a business owner or an entrepreneur in a corporate setting.
- Finance: Master theoretical and analytical skills needed to master both typical and complex financial situations.
- Global business management: Learn how to function in a global economy, including in the areas of accounting, finance, marketing, and public policy.
- Healthcare administration: Usually designed to teach those from a healthcare or practitioner background about management and leadership skills.
- Management: Learn to solve common leadership issues and study social science to understand best practices in employee motivation.
- Marketing: Study markets, competition, and product portfolios to learn how to gain a competitive edge.
- Operations management: Learn how to discover, develop, and test new methods and principles, with a strong tie to process management.
- Supply chain management: Explore the many elements of managing a successful product supply chain and consistently meeting customer expectations.
There is also the option of completing a joint or dual degree with an MBA. This typically involves completing coursework that goes toward a master’s degree in business education and a specialty area at the same time. The U.S. News and World Report indicates that popular dual degree MBA programs include masters degrees in education, public health, environmental studies, journalism, public policy and even doctorates in medicine. For these options, students should be prepared to spend one to three additional years in school.
Expected Duration and Coursework
MBA students have the option of completing the entire MBA degree program on campus, online, or a combination of the two, called a hybrid program, depending on the university. Many working professionals find the online or hybrid option most attractive because it allows the flexibility they need to continue working and meeting other responsibilities.
Then there is the matter of whether attending part-time or full-time or completing an accelerated MBA program. Rampano College of New Jersey describes these options as follows:
- Part-time MBA program: This is a good option for those who do not have the time or money to devote to a full-time MBA program. Most schools that offer a part-time MBA program require students to complete it within a determined period. Five years is standard, although most part-time students finish much sooner than that. Students take the same courses as their full-time counterparts but fewer courses each term.
- Full-time MBA program: This program generally takes two years to complete, regardless of its format. These programs may take place on campus evenings and weekends or online. Students will typically complete similar first-year courses as other students even if they chose a specific concentration. Elective courses would come in the second year.
- Accelerated MBA program: Accelerated programs allow students to complete their MBA degree and begin earning a return on their investment faster. Programs are typically full-time, and students should expect to understand the coursework more quickly because classes run fewer weeks than those of typical MBA programs. This is a demanding track but a good option for those who want to finish school as quickly as possible.
The time it takes to complete an MBA depends on the specifics of the program and whether students opt to complete courses full-time, part-time, or at an accelerated pace. The typical timeline for a full-time MBA is two years, a part-time MBA programThe typical timeline for a full-time MBA is two years, a part-time MBA program can be completed over three to four years, and an accelerated program could be as short as one year.
The following core coursework at Kenan-Flagler Business School is typical of what students can expect from most MBA programs:
- Business communication
- Business strategy
- Management and leadership
An MBA is an investment that can pay off in tangible and intangible ways. Deciding to enroll in a program is the first of many big decisions MBA students will face. Taking the time to research all options is the best thing prospective MBA candidates can do for themselves.