International Journal of Research in Advanced Technology - IJORAT

Vol. 1, Issue 7, JULY 2016

ISSUES & CHALLENGES FACED BY

MANAGEMENT INSTITUTIONS IN THIS
CONTEMPORARY SITUATION OF INDIAN
ECONOMY
Prabakaran.V1, Gowtham.B2 & Krishna Priya.S3
1

Prabakaran.V, Assistant Professor, Department of Management Studies, SNS College of Technology, Coimbatore 641 035.
2
Gowtham. B, Student, Department of Management Studies, SNS College of Technology, Coimbatore 641 035.
3
Krishna Priya. S, Department of Management Studies, SNS College of Technology, Coimbatore 641 035.

Abstract:During pre liberalization only 50 Business Schools was available in India. At present, 3556 business schools
are available in India with varying level of intake capacity. Quantitatively, the growth of business schools is impressive.
But, there is no sign of equal amount of increment from demand side. Many institutions are struggling to survive due
to inconsistent in quality deliverable, quality faculty, education system and its regulatory mechanism, etc. On this
background, the study aimed to understand the issues and challenges faced by business schools in India in the
emerging scenario considering challenges such as threats of new coming institutes, academic curriculum, industry
interactions, institute rankings, promoting research culture and faculty quality. Also the study revealed considerable
suggestions on the development and sustainable growth of business schools.
Keywords: B-Schools, Education in India, Education System, Management Education, Quality of Faculty, Regulatory
Framework.

I.

INTRODUCTION

Few years ago, management education was the

platinum card for entering into global market. Due to
heavy competition, the scenario has changed remarkably.
More than 3,00,000 students are getting their MBA degree
in a year, but not all of them having competency to fight in
the international market. Inspite of getting a degree, they
could not clear the campus recruitment process and to get
placed in a reputed company. The basic objective of any
business school is to inculcate business knowledge in the
students mind, impart decision making skills,
entrepreneurial skills, etc. But the regulatory mechanism
failed to adopt contemporary developments in the
academic curriculum. Majority of the business schools
never take initiatives for the development of the students
and they teach only what is available in books and ensure
their degree after two years. Its high time for the business
schools to wake up and find out their threats in the market
for their sustainable development. By considering this, the
study was aimed to analyze the issues and challenges
faced by the business schools in the contemporary
situation in this dynamic world.

II.

EVOLUTION OF MANAGEMENT
EDUCATION IN INDIA

Every year 3,00,000 degree holders are coming

out of management institutions in India. The liberalization
All Rights Reserved 2016 IJORAT

of Indian economy during 1990s was responsible for this

development. In India, the management education started
its tenure during 19th century. The first business school
had begun its operation during 1903 in the name of
Commercial School of Pachiappa Charities. Sydenham
College in Mumbai was the first college level business
school founded in the year 1913 by Shri Ram College of
Commerce. During that period, students were interested to
join in science stream and not shown interest in
management education.
In 1961, two IIMs were launched. IIM, Calcutta
was established with collaboration from Sloan School of
Management and IIM, Ahmadabad was launched with the
help of Harvard Business School. As the management
education started growing, more IIMs were established in
many cities. The growth of Business Schools was double
during post liberalization period. ICFAI set up its schools
in the year 1994 and it has opened many branches all over
India. IGNOU also extended its hand in spreading
management education in India. Later 2000, the
competition among the business schools was raising to
attract creamy layer students. They had tie with many
foreign universities to give greater exposure to the
students and also there was a frequent change in teaching
pedagogy to facilitate the learning process.

International Journal of Research in Advanced Technology - IJORAT

Vol. 1, Issue 7, JULY 2016

Since number of management institutions and

their intake capacity was increased than the exact demand,
the students preferred the institute offers quality education.
Late 2006, the number of institutions was terribly
increased as people started to perceive this as a business.

They concentrate more as revue generating business rather

than concentrating on quality. The below table indicates
the growth pattern of business schools and its intake
capacity in India since 2006.

TABLE 01: Growth Pattern of Business Schools in India

S.No

Year

1
2
3
4
5
6
7
8

2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14

Total no. of Business

Growth
Intake
Schools
Percentage
2614
247201
2915
11.5
275666
3120
7.0
295052
3290
5.4
311129
3469
5.4
328057
3541
2.1
334865
3471
-2.0
349369
3364
-3.1
354421
Source: AICTE, New Delhi

14

Institute Growth
Percentage Intake Growth Percentage
-

12
Growth Percentage

Growth
Percentage
11.5
7.0
5.4
5.4
2.1
4.3
1.4

10
8
6
4
2
0
-2

2007-08

2008-09

2009-10

-4

2010-11

2011-12

2012-13

2013-14

Year
Fig. 1 Growth Pattern of Business Schools in India

During the year 2012 & 2013, the number of

business schools was reduced since many institutions were
closed due to its inefficient management. However, the
successfully running institutions were increased their
intake capacity, as they wish to penetrate more in to
market and as well to increase their revenue pattern. As on
June 15, 2015, 3556 management institutions are available
in India.

III.

students are getting a campus placement (excluding top 20

business schools) compared with 41% during 2008. So, to
attract students, the management institutions are started to
projecting their placement record.
The Indian education system allows two type of
management program.

DEMAND AND SUPPLY

The number of business schools existed in India

has almost tripled during the last five years and as well
existed institutes increased its number of intake capacity.
There is no much of incremental sign from demand side;
students show less interest to pursue management
education. The job opportunities available in this country
are also not booming as equal to increase in number of
available management seats. Study says, only 29% of

All Rights Reserved 2016 IJORAT

MBA course approved by AICTE and affiliated

to some university. The number of approved seats
is restricted and fee fixation is also influenced by
its respective state government.
The other course is Post Graduate Diploma
accredited by AICTE. But it has no standard
curriculum and having no external influence by
the state government. They may offer the course
at a high price since their curriculum is more
industry oriented, which leads to get good
placement.

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International Journal of Research in Advanced Technology - IJORAT

Vol. 1, Issue 7, JULY 2016

Institute like IIMs, ISB are admitting students

without any difficulties as they have good reputation
among the students community. Though their fee structure
is higher end, students prefer to join. Tier 2, tier 3 or
middle level business schools are struggling to fill up the
approved seats. They also pay up to Rs.40,000 to the
management consultant to fill up a seat. They also
influence the present student to refer prospects and pay
accordingly. This is spoiling the education system and the
mindset of the students.
The management force to fire few faculty
members if they dont get the admission filled. They
cannot spend money for their operational expenses, hence
the faculty also invariably forced to ensure the students
admission to safe guard their job. The institute pioneer in
this kind of activities may get sufficient number of
admission; rest with difficulties in running the institutes.

IV.

IMPORTANCE OF MANAGEMENT
EDUCATION

Developed countries and developing countries

require effective management of available resources, said
by Peter Drcuker. Management education has opened the
eye on every individuals, society & organizations.
Management education will facilitate the entrepreneurial
venture and help in establishing new business. In this
dynamic environment, business is always venture with risk
and the role of a manager is to face the risk and resolve it
successfully. A real manager is not only managing
complex business situation, but also to handle the
problems which is common to all individuals life that
bring satisfaction. The teaching community guides the
students to meet the challenges in this dynamic world and
also help them in choosing their career.

V.

LITERATURE REVIEWS

Quantitatively, it is an impressive growth of

management education in India since liberalization.
However, the quality of education delivered by most of the
institutions is the disturbing aspects of this positive
narrative. Premchand, an active member in ranking Indias
business schools concluded after thorough review with
various business schools, around 1.5% of the total number
of business schools is having the systematic process to
deliver the quality education. Many institutions are
functioning as placement agencies, and many were
inefficient to deliver quality education. During the year
2000, 70% of the colleges did not have a faculty who
authored a case or research paper or book. About a decade
ago, approximately 20 business schools had their own
journals. At present, many institutions are having own
journals, but not more than 10 are meeting with the
international standards. Finally he, concluded that many
institutions were lacking in quality faculty members and
negligent important were given to entrepreneurship
development.
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Many business schools were closed after 2008,

due to weak regulatory mechanism & concentrate more on
profit without quality. Students graduating from those
institutions were unemployed and they spread negative
word of mouth about those institutions. As a result of this,
institute could not able to fill the sanctioned intake and
hence forced to close the institute, said by Rahul
Choudaha. Due to lack of clear cut vision and mission,
around 185 business schools were closed during 2012 and
another 150 institutions are struggling to continue its
presence, Saraswathy, M. People who afford for a greater
investment had a great opportunity to start up an institute
and fulfilled the gap between demand and supply, said
Dhiraj Mathur, executive director at Price Water House
Coopers.

VI.

QUALITY OF EDUCATION AND

CORPORATE EXPECTATIONS

The quality and standard of business education in

India is not equal to the standards at China. Association to
Advance Collegiate Schools of Business (AACSB)
accreditation provides international recognition for
business schools. In India only four institutes got this
certificate, in compared with 20 institutes in China. The
scope of a business schools is not only to train the students
technically and being expertise in his/her domain, but also
to develop them with good attitude. This is the most
important criteria that corporate expects to recruit a
candidate. The other expectations of a corporate are as
follows.

A candidate must have willingness to learn.

A management graduate must be an outcome
oriented.
The candidate not only knows how to plan, they
should be an action oriented.
Students should work as a team. A graduate must
respect others and be open to the ideas and
opinion of others.
Over riding the above, a management student
must have entrepreneurial attitude and public
interest.

All of the above, India is lacking in number of

entrepreneurs coming out of a business schools in a year.
India has significant entrepreneurial talent, but it require
major reforms to unleash it, study carried out by Gallup.
India secured 166th place out of 183 countries with regards
to number of entrepreneurs starting a new business in a
year. This figure remains unchanged since 2011, indicates
the business initiation carried out in our country for
opening a new business.

VII.

CHALLENGES FACED BY BUSINESS

SCHOOLS

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International Journal of Research in Advanced Technology - IJORAT

Vol. 1, Issue 7, JULY 2016

Though number of committees have suggested

many improving factors for the growth of business
schools, the researcher have selected the below important
issues. The researcher felt the below issues are the most
important and having higher level of threat to the existing
institutions. Many researchers are also stressed upon the
below facts are the possible threats to the business schools
growth.

Threat from upcoming Business Schools: Late

2006, many business schools have been
established and captured smaller amount of
market share by giving fake promises to students.
Though they do not offer quality education, the
students select those institutions due to lower fee
compared to premier business schools like IIMs.
Sooner or later, those institutes may shut down
their operation, as students passing out from that
institute may not be placed in a reputed company.
The negative word of mouth will pull them down.
Academic Curriculum: Many institutions have
not changed their academic curriculum which are
outdates long back. The affiliated institutions
need to follow the syllabus framed by their
affiliated
universities.
Few
institutions/universities do revise/update the
curriculum in accustom
with industry
requirement. By doing this, the gap between
industry requirements and the delivery by the
academician were nullified. The outdated
curriculum may not be sufficient to develop the
students to the international standard.
Quality of the faculty: This is the most important
criteria to be a successful intuition. But, most of
the institutions failed to retain or acquire quality
faculty. They may not have adequate industry
exposure or exposure with consulting activities.
Currently industry is facing 30% shortage of
faculty and the figure may go up 50% if this
situation doesnt change, Dave, 2011.
Education as business: Most of the business
schools are managed by its Charitable Trust or
Educational Society where the Trustee from the
same family having the powers to manage the
institute. In order to safeguard the interest of
others, AICTE has advised the institute to form a
governing council composition of both industry
and academia. However, many institutions are
not following this regulation and showing a fake
numbers in their mandatory disclosure. The
quality outcome of the meeting is not revealed
anywhere. Due to the absence of external
influence / opinion, there may be a possibility of
bias and driving the institute away from its actual
vision.
Promote research culture: The management
Institutions are started to recognize the

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importance of research, but not all the institute.

This requires a good learning resource centre, and
expects the senior researchers to guide the
juniors. The scholars may be invited to do
research in the area of management with
international interest. Unfortunately, we do not
have many supervisors having sufficient
knowledge in the field of management to guide a
scholar.
Interaction with industry: This is one of the
parameter where Indian business schools are
lacking to fulfill. Many Indian business schools
did not have any mechanism to interlink the
academic curriculum with the industry. Foreign
business schools are very strong in this through
teaching, research, consulting and final
placements. Though few business schools in
India are in this tract, many other business
schools are yet to start.
Institute
recognition
like
ranking
and
accreditation: Many institutes do not have a
process and record of the activities/achievements
carried out recently. Strong process and
documentation is required to get an accreditation.
Nowadays, institute go for accreditation to
eligible themselves to charge extra amount in
their tuition fee. The mindset of getting
accreditation should be changed from generating
additional revenue to improving quality of the
system.
Employability of the graduates: Though
employability should not be the main motto for
any business schools, it also requires fulfilling the
interest of the students. Many business schools
are incapable to place their students through
campus recruitment. As saying goes, satisfied
customer will bring new one, the satisfied student
will bring loyal to the institute.

VIII.

CONCLUSION

Business schools across the country are facing

the unique crisis of unfilled seats. All the aspect of
business education such as quality of the students,
education system, governance, faculty quality & research
are under critical scanning. Revamping of business
education is required in order to get sustainable growth
and to meet the expectation of the stakeholders. A broad
consulting with all the stakeholders will bring a holistic
view of effective business school management.
Business schools have no choice but to cope with
the changing dynamic environment and to produce future
managers equipped with decision making skills, leadership
and team work. In addition to the above, the academic
curriculum to be modified with industry requirement,
building social & ethical values, etc. In other words,

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International Journal of Research in Advanced Technology - IJORAT

Vol. 1, Issue 7, JULY 2016

business schools must be creative and innovative with

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