The pros & cons of the Common Admission Test

The Ivy League of the Indian MBA – the Indian Institutes of Managementand the Indian School of Business – have for long stood the test of time, and with great success, as shown by the number of Indians as the chief executives of several big firms. Also, a chain of close tie-ups & student exchange programs between various Indian and foreign universities and the breakthrough of big Indian MBA players such as SP Jain Institute of Management & Research and Institute of Management Technology into regions such as Singapore and Dubai, providing  evidence of the emerging global footprint that India offers in terms of higher education & its wide acceptability.

 

Admission to these coveted colleges has been based on the Common Admission Test, the CAT. This is an all-India test conducted by the Indian Institutes of Management (IIMs) as an entrance exam for the management programs of its seven business schools. According to Wikipedia, bout 250,000 students took CAT in 2008 for about 1,500 seats in the IIMs. 

With more than a thousand affiliated & privately funded colleges accepting the scores of the CAT alone, the pressure is bound to be immense on the proper and fair conduct of the exam.

Of late, with the recent proliferation of business schools, students are often left in a fix to apply to the school of their choice. With the skyscraping rates of applications to individual institutions and their corresponding exams, often in the price band of Rs.1000 to Rs.1600 each, I seriously doubt the capability of a typical aspirant in the developing Indian subcontinent, with a per capita income of a meager Rs.38,084 to be able to fill the forms and successfully attempt a shot at his choice of school amongst a cut-throat competition. What I would suggest is a centralized system of testing at the Master’s level on the example of the GMAT, relieving the candidate of the monetary limitations imposed by individual application and thus providing a wider pool of colleges to choose from.

Another pressure is to keep up with the paperwork involved in testing the aptitude of an increasingly greater number of students every year. To tackle this, the CAT governing body decided to twist things a bit from this year. The plan to conduct the CAT in its online format was justified enough to deal with such progressive hiccups and also ensure a swift & fair testing procedure. Things seemed all set for a metamorphosis when IIM authorities tied up with Prometric (of GRE fame) in a $40m deal for 5 years, starting from November 28th 2009.

But, things started to go wrong right from day one of the testing procedure. With a series of reports of server crashes, unidentified virus attacks on the server, confusion over slot bookings, the testing stations behaving erratically, answers not being submitted at all for a few candidates on almost every testing day, the most awaited test in the country suddenly became the most dreaded exam to deal with. With the authorities failing to take immediate control of the situation and even the Ministry of Human Resource and Development leaving the onus on the CAT organizers’ to take charge of things, it seems hard to be able to call this year’s CAT a success.

But as they say in cricket, you never lose till you face the last ball. The same is the case here. The CAT can still have the scope of getting the same respect it used to have until this downturn happened. I would suggest the following three-point approach for immediate reprise.

1.    Scrap this year’s CAT, whatever the implication may be, for the good of both the students and the legacy of the famous institutions to admit only the best brains in the country. Support in this regard is quite widespread both amongst students and their teachers alike. Charters of signed petitions for a ‘fair’ and ‘hassle-free’ test are already making news on almost every big web portal. So making the students agree for the same will not be a problem.

2.    With the data that has been accumulated, setup an inquiry to probe into concrete causes of failure for this year’s CAT along with supporting proof of inadequacies in the system setup by Prometric.

3.    Conduct CAT online from next year again, but this time with ample number of dry runs and load testing over a substantial period of time. Also, extending the window of testing will do a bit of good.

With these steps, and a robust administration, resurrecting the golden image of CAT, and thereby of the distinguished colleges of the Indian MBA sphere, should not seem a distant dream. Till then, it’s in the hands of the governing bodies to decide the fate of whether a compromise on the talent pool seems justified enough or not.

Source:http://www.topmba.com/articles/student-voices/pros-cons-common-admission-test

Is my age right for an MBA?

There is no right or wrong age for education and the same applies to an MBA as well.

What matters more is what your objective is? 

What are you seeking from an MBA?

Should you be pursuing a PhD instead?

These are often questions that crop up in the minds of students who have seen their batch-mates from bachelor’s degree programs undertake an MBA program in Asia or abroad right after finishing their undergraduate degree. The applicant on the other hand has spent the same time working in the corporate world and may feel over-aged for an MBA program.

Firstly, unlike in Indian business schools where the average age of students is close to 22-23 and almost zero work experience, the average age in US B-Schools ranges from 25 to 30 with 3-4 years of work experience on an average. Most MBA students overseas already possess a masters’ degree in some discipline before they embark on an MBA.

Secondly, you will just not be able to contribute to an MBA class in overseas B-schools, if you have not spent a sufficient amount of time understanding the nuances of corporate life by spending some years working in an organized environment.

But one needs to also keep in mind that there is no point being in a class of students where the average age is 28 while you are 35 years old already. As you move up the age scale, you can consider various alternatives-a part-time MBA, an executive development program or even an intensive specialized program in your chosen field. Of course the selection criteria and the profile of students changes drastically.

It is therefore important to identify what you are seeking from an MBA and then weigh what kind of program you should chose at a particular age.

The ROI of an MBA

In the last couple of weeks I've met with students at ISB, Great Lakes, ICFAI Business School Hyderabad and IIM Indore. And the one concern which unites students across one year and two year programs is the burden of the EMI.

The average ISB student will be paying an EMI of 25k over 7 years, an IIM student 25k over 5 years (going for the exchange program could jack that up by another 4-5k per month). So the concern students have is: "What will be my ROI?"

The way in which a bschooler calculates ROI is very direct: compare what I spent on the course, with the placement salary at the time of exit. In case you have significant work experience, also factor in one year of 'lost income'.

OK. By this method of calculation, the ROI - for a majority of students - will be negative. 

The published figure for average domestic salary at ISB last year is Rs 16.47 lakhs p.a. (CTC).

The fees for this batch were approximately Rs 19 lakhs, while the average incoming salary was Rs 8 lakhs p.a.

Do the math and you can see that there is much heartburn. Especially for the 50% of the batch which must - necessarily - bag a job lower than the 'average'. 

The same holds true for an ICFAI Business School graduates, where fees + living expenses for the course would works out to Rs 9-10 lakhs.

The average placement salary would be in the range of Rs 5-6 lakhs. A large % of candidates are freshers or with 1-2 years of work ex so we can discount the income loss component.

Now let us examine the case at IIM Indore. The average salary for the class of 2010 was Rs 10.29 lakhs. 

The cost of the 2 year course for this batch was approximately Rs 8 lakhs.

Of course, 50% of the batch would have bagged jobs in the Rs 6-10 lakhs range but prima facie IIM seems to provide maximum chances of a high ROI.

However. As they say with mutual fund investments, past performance may not be indicative of future returns. So students who are considering the MBA today - be warned.

The class of 2010 at IIM Indore consisted of 175 students. That number went up to 235for the batch of 2011. The class of 2012 is a record 450 students.

No doubt this will affect the average salary figure. (In fact the larger the batch, the more focus the institute puts on 'quantity' over quality). 

Moreover from this year, the cost of attending IIM Indore has also gone up to Rs 10 lakhs. Making the 'equation' far less favourable.

I can bore you with several more examples but you get the drift. 

The origin of this entire mess go back to 2008, when the market was booming. It appeared that the MBA was a Golden Degree which, like the yellow metal, could only go up, up and up.

Record placement salaries, record number of jobs - and a relatively low fee structure - made the MBA a most exciting qualification. The better the bschool brand, the more excitement, of course.

At this stage two things happened:

1) In April 2008, IIM Ahmedabad more than doubled its fees (from Rs 4.3 lakhs to Rs 11.5 lakhs). Other IIMs followed.

2) At the same time, year on year, IIMs began admitting more students (seats increased btw 40-100%)

Let me be honest, when IIMA first hiked its fee, I thought it was a good thing. The course was highly subsidised, there seemed to be no reason for taxpayers to underwrite the careers of bright students bagging excellent jobs. 

What's more, IIMs promised that no one would be denied a seat due to lack of funds. Education loans were made available to all and also merit scholarships, based on family income. 

But. The consequences of these actions were not limited to IIM students.

In the world of finance the Reserve Bank of India signals changes in rates. Similarly, IIMs hiking their fees sent a clear signal to the entire bschool industry. Practically every bschool in India increased its fees by 50-100%.

In a strange and convoluted way, the low fees charged by IIMs kept fees of all bschools low. Because no one - apart from ISB, with its own unique brand - dared to charge more than the market leader.

To compound the problem, the market crashed. Jobs disappeared. The class of 2009 saw the worst of it - higher fees and lower placement salaries. The number of students appearing for CAT in 2009 also declined - for the first time in years. 

So, what does this all boil down to? MBA karna chahiye - ya nahin??

Well, I think the 'Gold Rush' era is over. If you are looking for quick and safe returns, you will be disappointed.

I do think an MBA will add a lot of value to your career over the long term. By long term I mean a 10-15 year horizon. But you will begin to see the difference in as little as 3-5 years.

Certain avenues in the corporate world do open up for you, if you have the right 'branding'.

And if you are not from the best known schools you still have the chance to work your way up the ladder through performance and personality.

40 years of working life lie ahead of most of us, a one or two year program is an investment whose returns cannot and should not be calculated merely at the end of the course.

And yes, demand and supply is the inexorable law of Nature. Bschools may well have to go back to smaller batches and lower fees - to make themselves more attractive.

The other - and tougher way - is to provide such value addition that recruiters are happy to shell out more to snap up students. A scenario so implausible... the more practical method would be to hire Leonardo di Caprio. 

And let the 'Inception' team loose at one of those CXO Summits where delegates struggle to stay awake :)


from http://youthcurry.blogspot.com/2010/07/roi-of-mba.html#links