What Is a Master of Business Administration (MBA)?

What Is a Master of Business Administration (MBA)?

A master of business administration (MBA) is a graduate degree that provides theoretical and practical training for business or investment management. An MBA is designed to help graduates gain a better understanding of business management functions.

An MBA degree can have a general focus or a specific focus in fields such as accounting, finance, marketing, and international business.

How a Master of Business Administration (MBA) Works

An MBA is a level up from an undergraduate business degree and generally places the graduate well above those with only undergraduate degrees. Most major universities and colleges provide MBA programs, which usually last two years.

To get into an MBA program, an applicant needs to take the Graduate Management Admission Test (GMAT) and be accepted by the program based on its particular selection criteria. Some programs may require the GRE instead or accept it as an alternative standardized test.

Program Focus

MBA programs typically include core classes in accounting, management, finance, marketing, and business law. Management training is at the heart of any MBA curriculum, with a focus on leadership, planning, business strategy, organizational behavior, and the more human sides of running a large or small business.

Increasingly, MBA programs include training in international business and a focus on the responsibilities and corporate accountability of businesses within their communities.

The MBA degree is the most common route into certain fields, including strategic planning and private equity. Other financial services fields, however, may no longer consider an MBA an entry-level degree. Each company will have its own requirements for different positions. But MBAs can certainly help distinguish candidates.

Types of MBA Programs

MBA programs will vary between disciplines, specialties, and schools. It is highly likely that most MBA candidates will be able to find an educational solution that works with their schedule, interests, and time commitment restraints.

Two-Year Full-Time

One of the most common type of MBA program involves a two-year commitment during which candidates attend school full time. During the first year of the program, MBA candidates may learn fundamental business skills such as strategy or communication. It's normal for candidates to choose more specific electives during the program's second year.

Although it requires a substantial amount of time, a two-year program allows candidates to pursue an internship between the years. The longer duration is also intended to help foster relationships between classmates and give candidates more time to absorb materials.

One-Year Full-Time

Accelerated programs crunch a two-year program into a single year. Better for candidates that don't want to spend too much time away from work, this type of MBA program is more intensive, faster paced, and often must sacrifice content quantity.

During a one-year full-time MBA program, candidates may still learn general business skills while selecting specialized electives. However, less time may be dedicated to either group due to the condensed nature of the coursework. One-year programs are often chosen by students trying to accelerate their current career paths as opposed to jumping to different ones.

Part-Time

Students not looking to leave work and willing to attend school for a longer time may pursue a part-time MBA program. This type of program often offers greater flexibility related to how many courses can be taken at once and how quickly a student must move through the program.

Part-time programs may be more favorable for candidates wanting to study at their own pace. In addition, part-time programs may be better suited based on lifestyle demands (e.g., a single parent may only be able to attend classes during a certain time of the day). Part-time programs may offer the flexibility of evening or weekend classes, allowing candidates to balance part-time, freelance, or gig economy work.

Online

One type of MBA program that overlaps with the options above is an online MBA. Often a two-year, one-year, or part-time choice, an online MBA allows students to attend school remotely.

This type of MBA program grants candidates even greater flexibility concerning when they take classes and how they attend school. Online programs may also have different approaches to fostering collaboration compared to in-person programs.

International

Some MBA programs focus on global operations. Candidates interested in a wider focus and who want to branch out from just domestic companies or segments of a company might choose an international program.

An international MBA can help candidates build an international network and develop opportunities around the world. International MBA candidates may be more diverse than traditional or domestic MBAs, especially if the international MBA offers online classes. In addition, international MBA programs may be better suited to candidates preparing to work in a multinational corporation.

Executive

Specialized MBA programs are also available for students whose lives and careers do not permit them to attend school full time.

For example, executive MBA programs are designed for working professionals hoping to add to their credentials and qualifications. These courses of study typically involve classes at night and on weekends. Some also may require short residencies of intensive coursework.

Executive MBA programs are typically only open to candidates who already have substantial professional experience. Thus, they tend to focus on more advanced topics such as leadership development.

Specialized

While MBA candidates can focus on one of the core disciplines of the degree, such as management or finance, many MBA programs allow students to concentrate in specific industries. For example, an MBA student might specialize in sports management, entrepreneurship, the entertainment business, or healthcare management.

Even within a management specialty, MBA programs can allow for a concentration on information technology, hospitality, education, or criminal justice. Some MBA programs team up with various professional healthcare programs, such as nursing schools, to offer joint degrees.

Special Considerations

The most prestigious MBA programs are nicknamed "M7 MBA Programs". They are offered by these schools:

• Harvard Business School.
• Stanford Graduate School of Business
• MIT Sloan School of Management
• Northwestern University's Kellogg School of Management
• University of Chicago's Booth School of Business
• Wharton School at the University of Pennsylvania
• Columbia Business School

Acceptance by an M7 school is considered more difficult than acceptance by non-M7 schools. In addition, tuition is substantially higher at M7 schools, though financial assistance is usually available in the form of financial aid, fellowships, or sponsorships.

Uses

Broadly speaking, an MBA gives degree holders two uses: accelerated advancement in the career they are already pursuing or a strong pivot in a new direction with a newfound skillset.

The Wharton School of the University of Pennsylvania communicates the following benefits and uses of an MBA to its prospective candidates:

• Greater Awareness of a Global Market. Candidates can use their MBA to better understand business taking place in different areas of the world.
• Improved Communication Skills. MBA candidates often must communicate with other professionals, write research papers, and give formal presentations. They can use their coursework to improve their ability to connect with others and build relationships.
• Expanded Professional Network. Meeting others, forging relationships, and building a network are central benefits of an MBA program. In addition to the knowledge obtained, the MBA program can connect candidates with their peers for mutual long-term benefits. Through formal or informal networking, you can exchange information or ideas with like-minded individuals.
• Better Job Opportunities. MBA candidates are often more desirable than other job candidates based on their proven skillset and dedication to their profession. In addition, advancement opportunities may be more available to those with an MBA compared to those without the degree.
• Better Time Management. MBA candidates may have to juggle school, work, family, and life obligations. An often overlooked use of an MBA program is the soft skill practice of managing priorities, meeting deadlines, and organizing one's time to meet all expectations.

Candidate Requirements

Every MBA program will have different requirements. More prestigious programs or schools will have more competition, and these programs will often require more of candidates before accepting them into the school.

The following list is taken from the University of Washington Bothell's MBA program admission requirements:

• Two or more years of full-time, professional-level work experience
• Two (or more) short application essays
• Two professional references
• Official four-year Bachelor's degree transcript
• Demonstration of English Language Proficiency (program and candidate dependent)
• Minimum 3.0-grade point average for the past 90 quarter credits or 60-semester credits
• Interview with admissions committee before acceptance or decision

Some programs may require submission of a GMAT/GRE score. Other programs, like UW-Bothell, may waive the requirement if certain criteria are met.

Cost

As programs offer different services and benefits, the cost of an MBA will vary widely between program or school. Top-tier MBA programs will often be more expensive than local, smaller options.

For the 2023-2024 academic year, the first-year budget for the Wharton MBA program was $124,476. This includes $87,370 for tuition, $26,028 for room and board, $6,868 for books and supplies, and $4,210 for health insurance. Wharton offers many Fellowship Programs to alleviate the financial burden of the program.

Other two-year, full-time programs may have similar expenses; the two-year program at the University of Chicago costs $161,922 in tuition alone for the class of 2025.

Shorter-term or online programs may be substantially cheaper. For example, an online MBA at the Eller College of Management through the University of Arizona has a tuition cost $56,250 as of February 2024. The program is promoted as completable in as little as 14 months.

Salary Benefits

Those with an MBA often have greater skills, capabilities, and professional competency that can lead to a more successful career. Though an MBA involves a material expense, this cost often can be recovered over time through high-paying employment.

According to Glassdoor, as of October 2023, those with an MBA received an average annual compensation package of over $119,000. Salary historically has been skewed towards degree holders with experience. Individuals with one year or less of experience earned over $77,000 per year, while individuals with greater than 15 years of experience earned more than $139,000.

MBA holders often make substantially more than undergraduate business majors. The Raymond A. Mason School of Business at William & Mary reports that an MBA holder's salary was as much as $20,000 a year more than that of a holder of a bachelor's degree.

The Bottom Line

A Master of Business Administration degree can be a boon to individuals on business or investment management career paths. The MBA degree distinguishes those awarded it due to the aptitude, study, and training it requires. The MBA meaning can confer a special quality on holders of the degree that sets them apart from others.