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Digital Universities Rival B-Schools With More Online MBA Degrees

Nasdaq-listed education tech group 2U became the second digital group to announce plans to launch online MBA degrees in a month, heaping more pressure onto business schools.

Tue Jan 20 2015

2U, the Nasdaq-listed education technology company, said it has joined forces with a business school that will offer online MBA degrees, the second digital group to announce such a move in the space of two weeks.

2U has extended its partnership with American University’s Kogod School of Business, based in Washington, to bring Kogod’s MBA into the cyberworld for the first time.

The pair will hope to capitalize on the surge in interest in online education, as traditional business degrees loose some of their lustre and business schools begin to evolve offerings to include part-time programs.

Chip Paucek, CEO of 2U, said it is clear that “students are seeking degree programs tailored to their specific career interests”.

Kogod will also offer an MSc in Analytics within its MBA, following the lead of dozens of high-ranking business schools which have launched master’s courses focused on utilizing big data, in response to career demand.

Erran Carmel, dean of Kogod School of Business, said: “We consider relationship-building and an interactive learning environment to be key factors for student success.”

Both programs are expected to begin in October 2015, but are pending approval from the American University.

The online MBA – called MBA@American – is expected to offer concentrations in marketing, finance, international business, IT analytics, and consulting and entrepreneurship.

Analytics@American is expected to offer a range of concentrations in business policy, healthcare, and financial and marketing analytics.

Both programs will require students to complete two immersive courses in Washington and in “other major business centres globally”.

The Kogod MBA program marks the second joint venture between 2U and the business school – they already offer an MA in international relations.

The new MBA will become the third MBA program powered by 2U and the company’s fifth announced program launch for 2015.

Chip, CEO, added that it will allow students across the globe to receive their degrees without having to relocate.

Earlier in January, rival online provider University of the People, which is not-for-profit, revealed it was developing two MBA programs in management and entrepreneurship, following accreditation from the Distance Education Accrediting Commission in 2014.

The success of digital universities is heaping more pressure on business schools, which have face a barrage of competition from providers of Moocs, or massive open online courses, which are becoming more vocational and are beginning to charge fees.

UoPeople, which has been funded by foundations and companies including drugs giant Pfizer, already runs successful undergraduate business administration degrees online.

In a poll of leading business school deans conducted by BusinessBecause this month, many cited digital disruption as a key theme that will alter business education in 2015.

Ivan Bofarull, director of the Global Intelligence Office at ESADE Business School in Spain, said a group of new players with lower cost structures will tap into the “ocean of opportunities” that digitization has unleashed.

He added: “Some of these new players will deliver appealing value propositions in the elite segment of business education, which will push traditional players to choose between reasserting their value propositions or go into troubled waters.”

2U in particular has gathered much attention because of rapid growth it has achieved, and the revenue it is expected to generate from online education services.

Michael Tarkan, an analyst at Compass Point, said in a report at the end of 2014 that 2U’s management has built an “annuity stream of future earnings through new program launches at high-demand institutions”.

He added: “We continue to view TWOU [2U] as a unique growth story that is well-positioned to capitalize on the secular shift towards online education.”

Jean-François Fiorina, associate dean of Grenoble Ecole de Management, a leading French business school, said that business education is “facing a revolution”.  “The teaching methods of tomorrow are being tested today,” he added.

Horary HEC Paris proffessor Joseph E Stiglitz, former chief economist at the World Bank, said at an event at the French business school this week: “Changes in technology – such as Moocs – are currently allowing changes in learning of unforeseen magnitude.”

2U, which has a market cap of $722 million, saw its shares climb slightly on news of Thursday’s announcement.