Business Petersburg, June 21, 2010

A HARD NUT OF KNOWLEDGE TO CRACK, Anzhelika Tikhonova

Trend. Will the wave of mergers and acquisitions flood the Russian business schools? SPb. The two last years on the European market of business education were marked by a series of mergers and acquisitions. What will Russia face and will this have an effect on the business efficiency at all? The deals in France became the most noticeable of the latest European examples. Thus, in summer of 2009 merger was announced by CERAM Business School and Groupe ESC Lille. According to experts, this deal should have an effect on configuration of forces on the market of business education not only in France but also in Europe as a whole. Another big acquisition happened in April of 2010. INSEEC Group, belonging to American Career Education Corporation (CEC) acquired 100% of shares of International University of Monaco (IUM), a business school that specialized in management for the luxury market. In Europe СЕС group also owns Italian design and fashion school Istituto Marangoni with campuses in London, Paris and Milan. Thus, acquisition of IUM will enable INSEC Group that has campuses in Paris, Lyonnais, Bordeaux and London to become one of the biggest European business schools. According to Director of INSEEC Group Catherine Lespen, this deal will also increase the inflow of foreign students (now they account for 40% of all 10,500 students). In turn, According to Vice President of the school in Monaco Sandrine Rikar, IUM received new opportunities for further growth. According to the report of CEC, the value of the deal amounted approximately to $12.2 million. The crisis is not to blame Dean of Stockholm School of Economics (SSE) Russia Anders Liljenberg is convinced that the reason for such mergers is not the crisis as such but the growing competition. Liljenberg explains, "The educational market becomes more global and you cannot just stand still. It is necessary to increase the scale of your activity permanent." The fact that difficulties of the crisis period are not the main reason for such mergers is also indirectly confirmed by Director of the St. Petersburg campus of Vlerick Leuven Gent Management School Alexander Yanchevsky. According to Yanchevsky, during the crisis demand for in presentia MBA programs grew by 30-40% (see Delovoi Peterburg, No. 031/10, www.dp.ru). Along with this, according to some estimates, enlistment to MBA programs in Russia decreased by 50%. However, according to Anders Liljenberg, in Russia the crisis is not the worst evil for the educational market and the demographic pit has a bigger effect. The dean of SCE explains, "During a crisis educational institutions usually increase their activeness, at least on the level of education of those who come after school. The last thing that people are ready to sacrifice is education of their children. It is clear for me that demographic difficulties may force some local educational institutions that do not work very successfully to quit the market." Sergei Fedorov, Executive Director of Open Business School, also presumes that players will quit the market rather than merge. He explains, "There are too few big business schools and many of them are state-run and, of course, cannot merge or acquire." Along with this, Anton Ryaguzov, expert for relations with business schools of Begin Group, presumes that mergers and acquisitions is the best way for the educational institutions to survive in conditions of bitter competition. Ryaguzov says, "There are examples of such mergers in Russia but there are only very few of them. There are several Russian business schools that have changed the strategic partner in the crisis situation due to various reasons, for example, a big higher educational institution at which they have existed. It is also possible to speak about small schools that have joined the bigger ones in their programs." What depends on what Despite that nobody expects big merger and acquisition deals on the Russian market of business education in the near future, Anders Liljenberg is convinced that this international trend will remind about itself. He forecasts, "The market of business education will become more global. Successful institutes will be able to attract students from all over the world, whereas less successful institutes will suffer because they will have to yield the students to the others. Thus the market will receive less local students and successful educational institutions will be able to combine work on the local and foreign markets." Re-division of this market will have positive effect on quality of education. Along with this, it is unknown if this will improve management in business. Some analysts presume that there is no direct dependence between efficiency of business and quality of education because business education is not a determinant. According to, for 47% of companies it does not matter if this education exists or does not. Some others are convinced that there is the connection. According to Begin Group, 57% of top-ranking and middle-rank managers try to obtain business education including MBA degree.