Story:
Some years back, when management education was just accepted as the most important thing to happen for India and people started participating in entrance tests with a lot of interest, there was a growth story that tickled many educators to start their own management schools and programs.
The biggest and the best names were definitely the IIMs (at that time, there were only 5 of them). Therefore most of the new business schools replicated what worked for the IIM.: curriculum, project work, case studies, etc. Some even went to the extent of creating illusionary cut-offs so that they are perceived in the same league as the best institutions.
What did this mean?
Ans: This meant the following:
1. If the IIM was charging a fee of Rs.4,00,000 for the entire program, these bschools too charged same or a bit less to maintain parity
2. If the IIM was showing certain trends in placements, these bschools too tried to get similar companies for their own placements.
3. If IIM was saying that an X-factor is important in the GD-PI or industry interaction was done in a "Y" way, then these bschools also tried to do the same.
So what transpired is that for every move the IIM made, there were about 1000 business schools who followed the same and talked the same language. Everyone talked about infrastructure in hostels, classrooms, library, industry interaction (Heck ! some even got themselves ranked as the ones who are the best in Industry interaction), PLACEMENTS, etc.
Anyone with a little analysis and common sense would now understand that whatever the IIM did, these bschools were certain to replicate that.
Things like these (replication i.e.) work for sometime and it did for a lot of these bschools.
Now, all of a sudden, the IIMs raised their tuition fee to about Rs.8-9 lakhs. This was interpreted by the other bschools as - "Students will now feel that with lesser fee, our bschools are providing lesser quality education. So let us increase our fee as well."
And they did!
The point missed by them was - the parity between the fee paid and the placement achieved along with the brand-value of an IIM is unbeatable and that IIMs will always have that leverage in the mindshare of aspirants.
They will never get there because they didnt have the number of years as a proof of quality educator and they also dont have the intellectual property that an IIM commands. We should also remember here that the IIM is a body thats supported by the Ministry of HRD itself.
Add to the this entire situation the current trend of aspirants profiling wherein about 60% of the entrance test takers are with prior work experience. these are people who are wary about the ROI equation and brand leveraging in their careers.
Almost every other business school has increased its tuition fee and therefore cannot back-track and work out any reduction in prices in the coming years. Which means that they now face a challenge of answering very tough questions -
Q1. Are they in the same league as of the IIMs with similar fee structures? So is it worth going for them vis-a-vis the IIMs who are now coming up with new branches? (they already have 6 campuses).
Q2. Given that placement figures from these other b-schools cannot provide anything similar to the IIMs, how will they ever explain the ROI of investing so much money as fees?
Q3. Most of the 2nd rung b-schools are run on leased premises and have high advertising costs and operations expenses. How will they manage the mathematics of survival given that admission rates will drop?
As of now, the future game looks like this:
-> IIMs and some other top-Business schools will open multiple campuses across India.
-> Their intakes will increase - it is a trend already and they can support such intakes with their infrastructure and Govt backing.
-> Placements will continue to be good at the IIMs due to their brand equity and also due to their Alumni base in India Inc.
-> IIMs will probably set the work-experience barrier and convince India Inc about the advantages of the same. This will lead to further narrowing down chances of survival of other 2nd rung business schools.
What does this mean for 2nd Rung Business Schools?
- End of the way: they will not be able to survive if IIMs increase their capacities and campuses and provide more choices to the students.
- These institutes may then get into super-specialized programs providing inexpensive solutions to certain domains.
It seems unlikely that the best minds in the IIMs were not aware of the trends that would happen after every action of theirs. They knew that every action they would have taken, things would have changed in the domain. And it really did. Thats the power of controlling the mindshare of lakhs of aspirants in India.
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