B-School Turf Wars

Smaller programs are under siege as top-tier universities expand their reach

It was a little like being a mom-and-pop grocer and finding out that Wal-Mart (WMT ) was opening a Supercenter down the block. When Rice University and Texas A&M University learned that the University of Texas at Austin planned to open a part-time B-school program on their Houston turf, they were less than pleased. The war of words that followed was the academic equivalent of a steel cage match, with both local programs asking the state to look into the matter and Rice pointedly criticizing UT's plans in the Houston Chronicle.

Why no Longhorn love? "We're such a powerful brand name," says Larry Abeln, associate dean and director of executive education at UT's McCombs School of Business. "It's natural that others felt we would be a threat in the marketplace."

These days no B-school's fiefdom is secure, it seems. It used to be that even mid-tier programs in thriving business hubs such as Miami, Portland, Houston, and San Francisco had plenty of local managers to fill their part-time and executive MBA (EMBA) programs. Now top-tier programs such as Kellogg, Wharton, Cornell, and Columbia are making aggressive moves into these promising new markets -- a brand of B-school imperialism that may well leave casualties in its wake.

The rush to expand comes as the EMBA market is beginning to show signs of weakening. During the three-year drought in applications to full-time programs, many schools viewed the EMBA, offered to working professionals, as a cash cow. But now even EMBA application growth is slowing. Many programs are looking for expansion opportunities far from home, and that sometimes means going head-to-head with local providers.

But as UT found out, that is not always as simple as it sounds. As big-name programs move into new markets, lesser-known local programs are trying to fend off these competitors by making internal improvements, stepping up marketing efforts, or expanding their own offerings. After the UT program in Houston opened in August with 115 students -- twice as many as UT expected -- Rice finalized plans to challenge the invaders by launching its first-ever part-time program in July.

In Portland, Ore., where Wellesley (Mass.)-based Babson College will begin offering classes later this year, the reaction has been equally swift. The University of Oregon, Portland State, and Oregon State, which offer a combined EMBA, have hired a marketing firm to get the word out about the advantages of a homegrown education, including access to the combined faculties of three schools. Later this month they're moving the program to a new downtown Portland facility featuring cutting-edge wireless technology and classroom space with stadium seating designed specifically to teach case studies. "We haven't served the market as aggressively as we might have," admits University of Oregon B-school Dean Jim Bean. "We're changing the rules of engagement."


When the big boys swoop into promising markets, they sometimes open new campuses, as Wharton did in San Francisco in 2001 to tap into the tech industry in Silicon Valley, and as Kellogg did in Miami in January to access the Latin American markets. But more often than not the ideal political solution is to partner with a local provider in the target region to blunt opposition to the move.

Such a strategy has academic benefits, too, giving students access to two sets of faculty and two alumni networks. Columbia Business School in New York teamed up with the University of California at Berkeley to offer a West Coast-based EMBA program in 2002, while Cornell University in Ithaca, N.Y., partnered with Queens University in Kingston, Ont., opening a distance learning program in June. The program entails three on-campus sessions and interactive broadcasts to 10 locations in New York and Canada three times a month. It's a model Cornell believes would work well in many markets, so the school is actively scouting locations. Says program director Danny Szpiro: "There are people everywhere who would like to do an MBA with Cornell."

That's an edge few brand-name programs would be willing to ignore. As the race to capture qualified candidates intensifies, many lesser-known players that thought they dominated the local market may be in for a surprise.

By Lindsey Gerdes

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