Perhaps the most decisive moments in a students' life are the times he or she has to decide upon the future course of action they need to follow in their career. Considering the number of options / courses / streams now available, this task of selection becomes all the more difficult.
A Master's of Business Administration (MBA) a three letter magical word is an advanced degree offered by most business schools to college graduates. MBA coursework teaches students essential skills for the corporate world by focusing on both the technical (e.g., finance and economics) and personal (e.g., leadership and management) abilities. Earning an MBA has become an essential step in establishing a successful career in the business world. Some companies are willing to sponsor their employees' education, either while they are working part-time, or during a hiatus from their employment (with a contract to return afterwards).
Today most business people in management positions have MBAs. While it is possible to achieve success in the business world without an MBA, not having a degree from a top business school can be a severe handicap because so many people continue their education and training. Both the quantitative and qualitative skills taught in MBA programs are qualities that are in high demand in the real business world. If you decide not to pursue an MBA, it is possible that you are making a decision that will hinder your future success in the corporate world.
As Indians continue to climb the economic ladder, the composition of their spending will change considerably. In a pattern witnessed in many other developing countries, discretionary expenditures, such as mobile phones and personal-care products, will take up more room in the nation’s shopping basket. The middle class in India currently numbers some 50 million people, but by 2025 it will reach to 583 million people—some 41 percent of the population. These households will see their incomes balloon to 51.5 trillion rupees- 11 times the level of today and 58 percent of total Indian income.
When America's middle class was growing, they bought homes where as Middle class in India put a tremendous amount of investment in education. In rural areas, families emerging from poverty is making educating their children a top priority, while higher-income urbanites is spending more on better-quality education, university degrees, and study-abroad programs.
Before taking any decision regarding admission for MBA and before one can calculate a personal ROI (return on investment), one should think about the skills, values, and interests, and how this degree could help. Once it’s known where to end up, it’s easy to know more precisely what the potential return is.
Return on investment (ROI) can be used as a primary tool for forecasting and evaluating the benefits of doing MBA. Any investment can be evaluated by three measures:
• The breakeven point,
• The internal rate of return, and
• The net present value.
The Breakeven point (BEP) represents the number of years it takes for the income from an investment to pay for the investment. For example : In 2009, a 23-year old who had earned a full-time MBA had invested an estimated Rs. 10,00,000 in the degree — Rs. 6,00,000 in tuition, plus Rs. 4,00,000 in lost compensation or opportunity cost (money lost for time you take off from work). He could expect to pay that off in 8 years.
One thing that should be considered while calculating your ROI is the ranking of Business School. The top-rated MBA programs from IIM’s which is not only the most reputed management institute of India but one of the best business schools in the world offers a very strong return on investment and they provide the greatest potential to maximize the future earning power of somebody who graduates from that program.
The Internal rate of return (IRR) is the effective interest yield that results from the investment. If a student paying his tuition fees for the MBA as an investment and the extra money that he earns over the course of his career as return on that investment, The effective interest rate that one is getting is the internal rate of return. The industry average comes to around 18%. So, that is, in layman’s terms, for every Rupee put into tuition for an MBA degree, one can expect a return of Rs. 1.18.
The Net present value (NPV) of an investment is the present (discounted) value of future cash inflows minus the present value of the investment and any associated future cash outflows.
NPV accounts for the time value of money by expressing future cash flows in terms of their value today. It recognizes that money has a cost (interest), so that you would prefer to have Rs. 1.00 today to having Rs. 1.00 a year from now. If you earn 10% interest on your money, Rs. 1.00 today will be worth Rs.1.10 a year from now. Or, turning that around, the "Present" value of Rs. 1.10 one year out is Rs. 1.00. Subtract the initial investments from Present value, it is called NPV. One should not make an investment that's estimated to produce a negative NPV. The bigger the NPV—other things being equal—the more attractive the investment is.
Finally in conclusion one can say that deciding to pursue MBA can be a solid investment in once career, with the sacrifices being time and money
No comments:
Post a Comment