By Dr. Vlad Krotov
Business programs may face enrollment issues for a variety of reasons. These issues can stem from factors within the business school itself, changes in the external environment, shifts in student demographic or educational preferences, or a combination of all these factors.
Some common reasons for enrollment challenges include:
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- Program Relevance: If a program’s curriculum does not align with current industry trends, potential students may opt for programs that offer more relevant and marketable skills. For example, many business programs today incorporate modules and courses related to Artificial Intelligence (AI) – a very powerful and potentially disruptive technology across all major industries.
- Market Saturation: In some cases, there might be an oversaturation of similar programs in the market, leading to stiff competition for enrollments. For example, the market for MBA programs is known to be highly saturated in major cities in the United State. In an attempt to gain easy access to a large pool of working professionals, a variety of public, private, in-state, out-of-state, or even international business schools offer their MBA programs at various price points within all major cities in the US.
- Lack of Awareness: If a business school fails to effectively market its business programs or communicate their unique value, potential students may not be aware of them. To attract potential students, business programs need to be known for something (e.g. value, entrepreneurship focus, international accreditation, alignment with professional certifications, etc.) It is for this reason that accreditation agencies, such as AACSB, require each accredited business school to have a unique and distinct mission statement.
- Quality Perceptions: If a business program is perceived as lower in quality or less prestigious than others in the field, it could lead to lower enrollments. Accreditation by an international accreditation agency, such as AACSB, usually addresses most quality concerns among students.
- Location: The location of an institution can influence enrollments. Programs situated in less desirable or inaccessible areas might struggle to attract students. For example, many business schools located in remote, rural areas have problems attracting students simply because there are not too many people there who are both willing and qualified to join a graduate business program. Many of these programs have no choice but to go online or open branch campuses in major population areas.
- Changes in Demand: Rapid shifts in industry trends or technology can lead to shifts in demand for certain programs, leaving some academic offerings less appealing. The rapid advancements in Artificial Intelligence technology, for example, can increase demand for Computer Information Systems programs and decrease demand for accounting degrees due to concerns that simple accounting functions can be automated by AI.
- Economic Factors: Economic downturns or changes in job markets can influence students’ decisions to pursue certain programs that they perceive as having better job prospects. Usually, economic downturns are negatively correlated with university enrollment. During economic downturns, workers may choose to go to school to upgrade their skills or to change their careers. Economic downturns within a specific industry, such as technology, can cause students to turn away from business majors pertaining to that industry.
- Inadquate Pricing: High tuition fees or other associated costs can discourage potential students from enrolling in certain business programs, especially if they believe the return on investment might not be sufficient. Regardless of how valuable, prestigious, and unique a business program may be, it must be competitively priced or students may not enroll.
- Competition: Competing business schools offering similar or more attractive programs can draw students away from a particular program. Some markets are characterized by “hypercompetition” among business schools. For example, more than 60 local, regional, and international institutions offer MBA programs in the United Arab Emirates (UAE) – a country with roughly 10 million people.
- Demographic Changes: Changes in demographics, such as declining birth rates or shifts in the age distribution of potential students, can impact the number of students seeking higher education in general. One area of the United States with serious demographic problems is the Midwest. Business schools and universities in the Midwest are putting more emphasis on attracting international students in order to combat the negative effects of declining birth rates on student enrollment.
- Institutional Reputation: A business school’s overall reputation can affect enrollments in its programs. If an institution faces negative press or widely publicized ethical controversies, this might lead to decreased interest among students. Revocation or suspension of accreditation is one of the worst things that can happen to a business school from a publicity standpoint. Press coverage of incidents like that is usually extensive. Students will often avoid such schools for fear that their diplomas will not be recognized by employers. The reputation of an “uncredited school” will haunt the business school for years even if accreditation is reinstated shortly after the incident.
- Online Education: The growth of online education and the availability of remote learning options can lead to increased competition among business programs. Business schools that are slow to adapt to online learning or fail to administer online business programs in a way that supports the mission of the business school may soon be left behind by more agile competitors offering attractive online options to students.
To address enrollment issues, business schools might need to undertake various strategies such as conducting market research, updating program offerings, improving marketing efforts, enhancing program quality, and adjusting tuition and financial aid options.
Prior to implementing any changes, it is important to understand the specific reasons for enrollment challenges. Academic consultants and market research firms are hired by many business schools to better understand the factors impacting enrollment and devise strategies and action plans to resolve the issues.