University of Pittsburgh

Exerpts from MBA Report, Latin Trade, October 2005

Back to school

Advanced business management courses in Brazil may pave your way to success or prove to be an utter waste of time

Alexandre Pinelli was growing restless. The 31-year-old product superintendent for private banking operations of Itau Bank—the second largest Brazilian bank in market value—had it all set in his career. However, looking for a boost in his skills, Pinelli decided he needed something beyond his experience at the bank: an MBA degree.

Last year, Pinelli managed to convince his manager that the course would be worthwhile (the bank agreed to pay 70 percent of the tuition) and started looking for a school. He considered the choices he would have abroad, but eventually chose a program in Brazil: the Executive MBA offered in Sao Paulo by the Joseph M. Katz Graduate School of Business of the University of Pittsburgh. “I compared it with programs offered abroad and felt it had what I needed to better understand global businesses,” Pinelli says.

It used to be that you would have to go overseas to get an MBA. After all, the program was originally designed in the United States in the 1940s, during the business boom that followed the end of World War II. MBA programs were later introduced in first-rate schools in Europe, as well as in Japan and other developed countries.

But that has changed. In the 1990s, the Brazilian government started to give freer rule to the market economy and to deregulate, opening the country’s door to a large number of foreign companies. This led to greater competition for market share, as well as for talents. Many schools decided to develop executive education courses, including MBA programs.

Initially, just a few schools would offer MBA courses shaped after the international executive MBA program. However, in the past few years, that number has skyrocketed, and today you can find hundreds of such programs in Brazil. Regretfully, according to professors in this field, many of these courses adopt poor educational materials. “This has become a very peculiar education market,” says Joao Simoncello, manager of the Advanced Business Institute (Instituto Superior da Empresa), a school in Sao Paulo that, since 1997, has operated in partnership with the IESE Business School of the University of Navarra, Spain, one of the most renowned in Europe. “Quality ranges from top-notch to unthinkably poor.”

In addition to the overall lack of experience in executive education in Brazil, the problem is compounded by a lack of stringent regulations. Higher education courses in Brazil fall into a number of different categories. Because MBA programs last less than two years and have fewer classes than a doctoral program, they are classified in the same category as vocational courses. Taking advantage of this regulatory loophole, many vocational schools started to offer as MBA programs their courses in accounting, marketing, human resources, or any other business-related activity. Such classes are not totally lacking in value, but they do lack a broader focus on strategy, debates, and leadership—the key characteristics in any MBA program worth its name. In sum, the name MBA is a fad and, thus, it now brands hundreds of poor-quality imitations.

“The MBA is a title that is misused by the available courses,” says Jerry Trapnell, executive vice president and head of accreditation of the Association to Advance Collegiate Schools of Business (AACSB) International, Tampa, Fla., which accredits many important business schools worldwide. “You have this explosive situation, just like the Wild West,” Trapnell says. “It’s an education wrestling match in which schools of different backgrounds and styles try to win in a deregulated market.”

This is not, however, a trend that will last forever. Following the initial mushrooming of programs, says Trapnell, comes the time of depuration. The education market grows more sophisticated, and “what you usually see is the emergence of demand for proven quality and consistency.”
This is precisely what is starting to happen in Brazil, and graduate schools of business are doing their part to speed up the process. Last year they joined efforts to establish the National MBA Association (Anamba), headquartered in Sao Paulo. Anamba affiliates 12 graduate schools of business that have agreed on basic quality standards for MBA programs in Brazil.

Anamba’s standards set minimum requirements for academic goals, credit hours, academic and professional qualifications of professors, and many other aspects based, according to Anamba’s members, on the “best practices” employed by major international schools.

Anamba and the government hope that compliance with these standards will be perceived as a quality seal for the programs and will help to guide the MBA market in Brazil. Membership in the association, just like world education accreditation, is voluntary. New members must adopt the association’s guidelines and be accepted by the other members and then will be associated with outstanding programs, according to the association’s founding members. “Business schools themselves can help to ensure that MBA programs in Brazil are minimally good,” says Luca Borroni, executive secretary of Anamba.

This is indeed a timely initiative. The Brazilian economy has been experiencing sustained growth and no longer goes through the ups and downs it used to go through until not so long ago. Optimistic forecasts inspire a larger number of young executives to look for an MBA certificate. In the Sao Paulo campus of the Brazilian Institute of Capital Markets (IBMEC), one of the best known business schools in Brazil, enrollment increased by 40 percent last year. “With brighter economic prospects, people become more interested in taking the course,” says Irineu Gianesi, MBA program coordinator of IBMEC Sao Paulo.

The MBA market in Brazil also benefits from the fact that important foreign schools—including Katz, IESE, and countless other institutions—are now establishing their own facilities here or entering into partnerships with local schools to offer content, management advice, and exchange programs for students and professors. Their presence in Brazil shows that these foreign schools believe that the long-term development of the business scenario in this country is promising.

Brazil is the largest South American economy and is an attractive market for major business schools now that every MBA program is expected to have an international approach, focusing on global markets and introducing students to the business practices and cultures of other countries. “A good program has to be multicultural,” says Richard Lucht, academic director of the College of Advertising and Marketing (ESPM), a member of Anamba. ESPM is a business partner of the University of California and of other international institutes so as to be able to offer its students the opportunity to fulfill part of their program abroad.

Katz decided to bring its program to Brazil after surveying other markets out of the United States. It has recently opened a program in Manchester, U.K. In the 1990s, it started to offer executive education courses in Central and Eastern Europe, benefiting from funding then offered by the U.S. Department of State to initiatives that would promote the business development of the former Iron Curtain countries. Katz started operating in Prague in 1998. Encouraged by its overseas success, Katz started looking for opportunities in other developing regions and started to offer courses in Sao Paulo five years ago. “As the Brazilian economy opened, we saw the need for organizations that could help develop local talents,” says Anne Nemer, Katz’s executive director for Executive MBA Worldwide programs. “Sao Paulo, as a hub of the Latin American economy, was another example of a market that needed executives to be in touch with cutting-edge education.”

Jimena Acosta Korczik, a 28-year-old Katz student, has enrolled in the program this year to acquire in-depth vision that can help her revitalize her family’s business. Korczik graduated from the Michigan State University in the United States in 2001 and then went back to the state of Rio Grande do Sul to help her father manage a shoe factory that was contracted to manufacture to foreign brands. At the time, the company employed 100 people, and after decades of operations was facing a great challenge: One of its key customers had been acquired by a company that already outsourced production to another factory in Brazil. The revenue of the Korcziks’ company decreased sharply. Father and daughter decided to introduce a new business model: They used to manufacture to the mass market but thought there was great sales potential in more upscale market niches. They believed that the Brazilian footwear industry could make fine products to brands looking for manufacturing costs lower than the ones in Europe.

The decision was correct, but tough: The company laid off more than half of its employees and had to undergo a costly restructuring process. Changes required the 30 remaining employees to receive additional training and the opening of two sales offices in the United States. According to Korczik, the whole experience made her realize that things can change really quickly in the world of business, even if your company has had many years of successful operations. She believes that attending an MBA course gives you the opportunity to exchange ideas with other students and to learn more about problems affecting industries other than yours, and that prepares you for future changes. “In the blink of an eye, someone overtakes you,” says Korczik, today in charge of managing the daily operations of the company. “It is important that you never stop to think and to broaden your horizons to learn more about what is going on in the world.”

As an independent executive who wants to manage a family concern, Korczik is an exception among students in MBA courses in Brazil. Many people take the course to leverage their career. The MBA can be a competitive advantage for young managers vying for jobs.

Specialists in the Brazilian executive job market say that a master’s degree, especially from a renowned school, is now a requirement for managers who want to work for top companies, whether Brazilian or multinational. “Continued education is a must today,” says Sergio Averbach, president for South America of Korn/Ferry International, a headhunter firm.

According to Averbach, companies want prospective executives to understand why the MBA is important beyond the career benefits it may bring. “Young executives should see the course as their own responsibility,” Averbach says. “The more executives take on the responsibility for their own educational and professional development, the more likely they are to work hard and grow in a company.”

Sure Investment

Globalization drives growth of MBA courses in Latin America

Katz—a window to the world. The Joseph M. Katz Graduate School of Business of the University of Pittsburgh, one of the oldest and most respected business schools in the United States, has been rapidly gaining worldwide renown.
In the past seven years, the school opened three campuses abroad—in Brazil, in the Czech Republic, and in the United Kingdom—to offer executives what the school specializes in: traditional MBA education in the American executive style. This means studying business administration in an intensive course and developing a broader view of companies and their operations.
“Brazil is positioning itself to take part in the global knowledge-based economy, and local companies want to equip their executives with the same tools and skills as their competitors,” says Anne Nemer, director of the Executive MBA Worldwide programs of Katz in Pittsburgh. “Competition poses a tough challenge and encourages them to think of education as a key element in their development strategies.”

The Katz approach to education can be seen in its campus in Sao Paulo, where 25 young managers from Brazil and neighboring countries meet to take part in a program designed to put students in touch with knowledge and practices that they would not be likely to experience in their own companies or industries. In addition to standard classes on economics, accounting, and other basic business subjects, the program includes courses on leadership, ethics, corporate governance, human resources, and marketing.

While some business schools, particularly in emerging countries, try to suit their MBA programs to the specific needs of an industry, Katz focuses on education that combines theory and practice of actual business management. “An executive MBA program must not be a specialization course,” Nemer says. “You need a comprehensive view of business to be able to grow in an industry or organization.”

This is why Rui Villela, a graduate of the 2002 class, chose Katz over other business schools in Brazil. With a degree in telecommunications engineering, Villela, 41, decided to get an MBA because he wanted to better fulfill his responsibilities after being promoted to services director for Latin America of Agilent Technologies. “I was suddenly in charge of a unit of the company that had its own profits and revenue commitments,” Villela says. “Therefore, I wanted a course that could help me learn more about basic business concepts, grow as a professional, and become more productive as a manager.”

Headhunters and companies that had their employees attend the MBA course at Katz say that the results are rewarding because the course combines the school’s experience with the American perspective and an increasingly international academic approach. Katz also encourages student exchange programs. The worldwide program includes seminars in other campuses of the school so that students may exchange ideas with colleagues from other parts of the world.

The Brazilian unit of American industrial giant Alcoa has chosen to have its promising managers attend the Katz MBA course as part of a program to introduce young executives to business practices from other industries and countries. According to Cinthia Bossi, a Brazilian who manages strategic development and learning programs at Alcoa US, the program helps employees to deal with different areas and scenarios. “We like it that Katz does not focus on the U.S.,” Bossi says. “Its worldwide programs offer a global perspective.”

Mario Ferreira is today supply manager for Nestle at the company’s headquarters in Vevey, Switzerland. Ferreira took the Katz MBA course when he was still working for Nestle in Brazil. “I learned to understand how different factors, such as economy and finances, affect colleagues in other companies,” he says. “You learn to see the common points that you share with industries such as banking, automotive, and telecommunications.”

Katz started operating in Sao Paulo in 2000, and its growing number of students in Brazil bears witness to its success in the country. The directors of the school believe that the trend also reflects the brighter prospects facing the Brazilian economy, as well as the increasing sophistication of Brazilian companies. As Brazil becomes a more important player in the global economy, Brazilian companies have to be able to compete with foreign companies in equal standing.
In the initial classes, 60 percent of students would be working for multinational corporations, whereas now only 40 percent of them do, according to the directors of the school. Today, most students work for Brazilian companies or have their own businesses.