In India, the scenario of management education is sadly inclined towards business than imparting good knowledge and valuable expertise. Even the esteemed Business Schools of the country fail to produce industry-ready professionals or guarantee a secure career to students since they focus more on generating revenue than on providing the needed education.
Students, on the other hand, pursue MBA or PGDM either to change their career course or land into a well-paying job. They invest their time and money into earning management degree or diploma and yet struggle hard to make their mark in the corporate sector.
Here in this post, we try to unravel the functioning of top Indian Management Institutes by taking certain assumptions and instances to understand why students fail to get a fair return on their investments.
What is the Main Goal of a Company?
The main goal of the company is to maximize profits while delivering a good quality product/service to their customers. Thus, any decision related to business is taken keeping the profits in mind.
Profit = Revenue – Expenses
To understand this process better, let’s assume a company that manufactures cycles, Jupiter Cycles. The employees and workers make sure the cycles are being made and delivered to the customers every day.
Let’s assume that for each cycle,
- Revenue (selling price) = Rs. 4000
- Expenses (production and delivery cost) = Rs 2500
Now, on each cycle sold, the company makes a profit of:
Revenue – Expense = Rs (4000-2500) = Rs. 1500
Every employee at Jupiter Cycles works continuously to achieve the goal of profit maximization. They take the following two ways:
1. By increasing the revenue i.e by increasing the selling price of each cycle.
2. By decreasing the expenses i.e by reducing the production and delivery cost. However, in this case, the quality of the cycle produced would also be compromised as poor quality of raw materials and delivery services would be used.
Both these steps are not in favour of their customers. In one case, the customer is paying much more than that is worth and in the other case, the customer is receiving a poor quality product. Thus, the steps taken by Jupiter Cycles to maximize the profits are at the expense of their customers.
How does a Management Institute work?
In a similar way, let’s assume an MBA institute as a company. Since the main goal of the company is to make profits while delivering a good quality product/services to their customers. Here,
- The product/service offered is quality education and placement in the corporate sector.
- The customers are replaced by students.
Now, revisiting the above formula, Profit = Revenue – Expenses where,
- Revenue = Tuition fees + Hostel charges (if required by the student)
- Expenses = Faculty/Staff Salaries + Industry Interaction + Placement Expenses
Thus, the institute makes a profit when the revenue earned via student fees is much more than the expenses incurred on faculty/staff salaries, and the benefits and facilities provided to the students.
Like most companies, the MBA institute has one primary goal: Maximizing Profit. So, it takes the following steps to achieve this goal:
- By increasing the revenue earned on each student enrollment
The MBA institute extracts a huge sum of money from the students as course fees. In fact, every year they keep on increasing their course fees without improving the quality of education provided. Thus, the students are forced to pay hefty amounts without gaining industry-oriented knowledge or placement in the corporate sector.
- By reducing the expense incurred by the Institute
The Management Institute hires inexperienced faculty members with poor industry-connect to reduce the salary expense. Also, by providing minimal internship opportunities and limited industry interactions and placements, the institute successfully saves upon the expenses incurred on the facilities. This, however, does not provide the students with the industry skills required for placement drives.
Both the steps taken by the MBA Institute to maximize their profits are against the student’s interests. In the first case, the student pays expensive course fees and gets a poor quality education in return. While, in the second case, the student is not provided with a placement in the corporate sector. Thus, both the steps are not in favour of the student.
What makes Sunstone Eduversity different?
Sunstone Eduversity focuses on training students to become industry-ready and takes full responsibility of placing a student in a well-paid job. In fact, it is India’s first management institute to adopt the ‘Pay After Placement’ model for its PGDM course.
According to this unique model, a student would start the course by paying a small registration fee. After the course gets completed and the student gets placed, he would pay 12 times of the monthly salary as his course fees. Till date, Sunstone Eduversity has a 100% placement record with over 200 recruitment companies.
Now let’s see how Sunstone Eduversity earns its revenue.
Let’s assume that Sunstone Eduversity was only able to place around 80% of its students. According to the ‘Pay After Placement’ model, the remaining 20% of students will not pay the course fees. Thus, Sunstone would be at a loss.
Sunstone Eduversity follows a unique business model where the goal of the company is inclined with the student. This implies that the company will gain its profit only when it will be able to provide the student with better placement.
In fact, the ‘Pay After Placement’ model has proved to be quite beneficial for the students in the following three ways:
- It reduces the financial risks and encourages students to pursue Management courses.
- It aligns the goals of Management students and the institute which regains the lost trust between them.
- It focuses on career and industry-ready students as the final outcome, rather than a degree.
Thus, the company will gain the maximum profit only when the student prospers.