What Is a Master of Business Administration (MBA)?

What Is a Master of Business Administration (MBA)?

Let me tell you directly: a Master of Business Administration, or MBA, is a graduate degree that gives you theoretical and practical training in business or investment management. It's designed to help you gain a deeper understanding of how business management works. You can choose an MBA with a general focus or specialize in areas like accounting, finance, marketing, or international business.

Key Takeaways

Here's what you need to know upfront. An MBA is a graduate business degree centered on management, business, and entrepreneurship. You can focus on other areas too, such as finance or risk management. Many schools now offer specialty programs in fields like sports management, entertainment business, or healthcare management. If you're an experienced professional who can't commit to full-time study, executive MBA programs are an option. MBA programs come in full-time, part-time, online, or international formats, each with its own acceptance requirements.

How a Master of Business Administration (MBA) Works

An MBA takes you a step above an undergraduate business degree, positioning you ahead of those with just a bachelor's. Most major universities and colleges offer these programs, which typically last two years. To get in, you'll need to take the Graduate Management Admission Test (GMAT) and meet the program's selection criteria—some accept the GRE instead.

Program Focus

MBA programs usually include core classes in accounting, management, finance, marketing, and business law. At the core is management training, emphasizing leadership, planning, business strategy, organizational behavior, and the human aspects of running a business, whether large or small. More and more, these programs cover international business and the responsibilities businesses have in their communities. The MBA is a common path into fields like strategic planning and private equity, though some financial services roles may not see it as entry-level anymore. Each company sets its own requirements, but an MBA can definitely help you stand out. It's common to gain professional experience before applying—many programs require a work resume and real-world experience, though some accept candidates straight from college.

Types of MBA Programs

MBA programs vary by discipline, specialty, and school, so you'll likely find one that fits your schedule, interests, and time constraints. The two-year full-time program is one of the most common, where you attend school full-time. In the first year, you learn fundamental skills like strategy or communication, and in the second year, you pick specific electives. It takes a lot of time, but it allows for internships between years and helps build relationships with classmates while giving you more time to absorb the material.

If you don't want to spend that much time away from work, consider a one-year full-time accelerated program, which packs everything into a single year. It's more intensive and faster-paced, often sacrificing some content depth. You still learn general skills and choose electives, but with less time for each due to the condensed schedule. These are often for those accelerating their current careers rather than switching paths.

For those not wanting to leave work and okay with a longer timeline, a part-time MBA offers flexibility in course load and pace. It's great if you want to study at your own speed or have lifestyle demands, like being a single parent with limited class times. These programs often have evening or weekend classes, letting you balance part-time or gig work.

Online MBAs overlap with the above options and can be two-year, one-year, or part-time, allowing remote attendance. They give you even more flexibility in when and how you take classes, though collaboration might differ from in-person programs.

If you're interested in global operations, an international MBA focuses on that, helping you build a worldwide network and opportunities. These programs attract diverse candidates, especially if online, and suit those preparing for multinational corporations.

Executive MBAs are for working professionals who can't go full-time; they often involve night and weekend classes or short residencies. They're open to those with substantial experience and focus on advanced topics like leadership development.

Specialized MBAs let you concentrate on industries like sports management, entrepreneurship, entertainment, or healthcare. Even within management, you can focus on areas like information technology, hospitality, education, or criminal justice. Some programs partner with professional schools for joint degrees. Keep in mind, program lengths vary— for example, Franklin University requires 36-60 credit hours, while the University of Nebraska Omaha needs 33.

Special Considerations

The most prestigious MBA programs are the 'M7' ones, offered by 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, and Columbia Business School. Getting into an M7 is tougher, and tuition is higher, but they offer financial aid, fellowships, or sponsorships.

Uses

Broadly, an MBA helps you advance in your current career or pivot to a new one with fresh skills. From what the Wharton School says, benefits include greater awareness of global markets, improved communication skills through interactions, papers, and presentations, an expanded professional network for long-term gains, better job opportunities due to your proven skills, and enhanced time management from juggling responsibilities. Over the past two decades, more Americans have pursued master's degrees—in 2021, 24.1 million over 25 had one, up by over eight million since 2011.

Candidate Requirements

Every program has different requirements, with more prestigious ones being competitive and demanding more. For example, the University of Washington Bothell requires two or more years of full-time professional experience, short essays, professional references, a bachelor's transcript, English proficiency if needed, a minimum 3.0 GPA for recent credits, and an interview. Some require GMAT or GRE scores, though others waive them if criteria are met.

Cost

Costs vary by program and school—top-tier ones are pricier than local options. For 2023-2024, Wharton's first-year budget was $124,476, including $87,370 tuition, room and board, books, and health insurance; they offer fellowships to help. The University of Chicago's two-year program costs $161,922 in tuition for the class of 2025. Shorter or online programs are cheaper, like the University of Arizona's online MBA at $56,250, completable in 14 months.

Salary Benefits

With an MBA, you gain skills that lead to successful careers, and though expensive, it pays off through higher-paying jobs. As of October 2023, Glassdoor reports average compensation over $119,000, with new grads at over $77,000 and those with 15+ years at over $139,000. MBA holders often earn $20,000 more annually than bachelor's holders, per the Raymond A. Mason School of Business.

What Does MBA Mean?

MBA stands for Master of Business Administration—it's a postgraduate degree for advanced training in business principles and leadership to boost your professional marketability.

What Is the Salary of an MBA?

As of February 2024, an MBA holder earns about $136,174 total pay per year in the U.S., varying by industry, company, and role—most range from $102,000 to $191,000, though some earn outside that.

What Is an MBA Good for?

It serves two main purposes: rigorous education to improve your skills and making you more desirable to employers, often leading to better jobs and pay.

What Are the Disadvantages of an MBA?

It requires money, time, and effort—you might need an impressive resume to get in, programs can be expensive, and you may have to cut back on work. Despite long-term value, there are short-term challenges.

The Bottom Line

An MBA can greatly benefit your career in business or investment management. It sets you apart through the aptitude, study, and training involved, giving you a special edge over others.