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Return On Investment In MBA: Importance, How To Calculate, Examples & More

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Return On Investment In MBA: Importance, How To Calculate, Examples & More

Edited By Pramod Nagpal | Updated on Dec 01, 2022 09:10 AM IST | #MBA

One common aspect that is considered when people contemplate on and evaluate MBA programs is the Return on Investment (ROI), the reason simply being that an MBA or PGDM is an expensive programme. Also, the fee and costs associated with MBA programmes are increasing at an exponential rate.

Let us first understand what ROI is. According to Investopedia, ROI is a performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of a number of different investments.

Roi

The investment/cost of an MBA program typically comprises the following components:-

  • financial cost of the programme, which includes all direct costs viz. tuition fee, boarding and lodging expenses, books and laptop, travel expenses, etc. Any amount of scholarship should be deducted from the total cost.
  • loss of earnings, for the time spent in an MBA programme – this is called the opportunity cost.
  • interest on education loan, as reduced by Income Tax benefit thereon (interest on education loan is allowed as a deduction from income)

How Should You Calculate ROI?

One should ideally take the following factors into consideration while calculating the financial ROI of an MBA programme:-

  • cost of the programme (including tuition fee)
  • Duration of MBA programme – generally, MBA programmes in India are of 21-months duration (excluding some exceptions)
  • salary package, in the first year after completion of the programme and placement (First-year package generally includes one-time joining bonus and stock options, which may vest over a number of years after joining). In case a person is working before joining an MBA programme, increase in salary post completion of MBA should be taken into consideration.
  • increase in salary over a period of, say, ten years. This cannot be a standardised number, since it will vary on various factors like type of industry one is working in, type of experience gained and skills acquired during the course of service, performance and delivery etc.
  • Salary to Debt Ratio – starting salary to total debt incurred to attain the degree. The ratio can be a good indicator to compare ROI from different MBA colleges. To get a more credible and comparable parameter, debt can be replaced with the total cost of getting the MBA. Joining bonus should be considered because it can help students repay the debt earlier and to reduce interest burden.
  • Payback period – a simple method to evaluate ROI is to see the payback period. Payback period is calculated by computing the number of months in which total investment for pursuing an MBA programme is recovered from the salary earned (or increase in salary after completing MBA, for those already employed)
Return On Investment In MBA: Importance, How To Calculate, Examples & More
Return On Investment In MBA: Importance, How To Calculate, Examples & More

Also Read | Can I Do An MBA After Class 12?

A Look At A Few Colleges

The table below shows the fees and initial salaries offered by some of the leading MBA colleges in India. However, while reading through the table, a few points may be kept in view:-

  • Data has been taken from the official websites (mentioned alongside).
  • Year to which data relates has also been indicated alongside (except for cases where the year wasn’t mentioned).
  • Since the years to which fees and placement salary packages relate (initial salary post completion of MBA) are different, the data is strictly not comparable and may be used only as a reference point. Also, factors like whether a student is working or not, before taking up an MBA, work experience (both number of months and nature of experience) will affect computation of ROI.
  • Median salary has been taken into consideration for the purpose of calculating payback period since, at median salary level, 50% of students will be drawing higher and 50% of them would be drawing lower than the median salary. Average salary of an MBA batch has not been considered, because even a few very high salary packages (particularly international packages) are likely to escalate the average salary.

Also Read | Careers In Commerce That Did Not Exist 10 years ago

Name of MBA College

Fee

Initial CTC - Median Salary

Payback period

Source


Year

Amount (Rs/ Lakhs)

Year

Amount (Rs/ Lakhs)

Number of months


IIM Ahmedabad

2021-23

23.00

2021

24.50

11.27

www.iima.ac.in

IIM Bangalore

2021-23

24.50

2021

28.60

10.28

www.iimb.ac.in

ISB, Hyderabad* (Fees - Rs 36.50 lakhs)

2022-23

16.25

2021

27.00

7.22

www.isb.edu

IIM Lucknow

2021-23

19.25

2022

29.00

7.97

www.iiml.ac.in

XLRI Jamshedpur


20.50

2022

30.00

8.20

www.xlri.ac.in

SP Jain Institute of Management & Research

2021-23

19.00

2022

30.10

7.57

www.spjimr.org

IIM Indore

2022-24

21.24

2021

22.60

11.28

www.iimidr.ac.in

IIM Kozhikode

N.A.

20.50

2022

26.50

9.28

www.iimk.ac.in

FMS, Delhi University

N.A.

2.00

2022

32.40

0.74

https://news.career360.com

MDI Gurgaon

2021-23

16.00

2022

23.50

8.17

www.mdi.ac.in

IIFT, New Delhi

2021-23

21.48


24.00

10.74

www.iift.ac.in

Jamnalal Bajaj Institute of Management Studies

N.A.

6.00

2022

26.48

2.72

www.jbims.edu

IIM Rohtak

2022-24

17.90

2022

15.00

14.32

www.iimrohtak.ac.in

IIM Jammu

N.A.

15.55

2022

12.75

14.64

www.iimj.ac.in

IIM Udaipur

2022-24

13.10

2022

15.60

10.08

www.iimu.ac.in

SIBM. Pune

2022-24

21.28

2022

20.80

12.28

www.sibm.edu

SIMSREE, Mumbai

N.A.

0.67

2021

11.80

0.68

www.simsree.org

**For calculating the payback period, fee is reduced by a nine months proportionate salary, since the programme is of 12-month duration against 21 months for other colleges.

Inferences

A few inferences from the above table are:-

  • Without an iota of doubt, MBA from FMS, Delhi University provides the highest ROI, the primary reason being very low fees.
  • ROI in case of SIMSREE and JBIMS is also notably high because fee is relatively less. Yet it must be noted that median salary in case of SIMSREE is also relatively on the lower side. Therefore, it might take students many years (and may be a few job changes) to reach the salary levels of students from other leading MBA colleges in India.
  • Students may take into account above factors, keeping in view options available to them and individual factors applicable to them and work out comparable ROI, before taking a final decision. They may also take into consideration intangible returns as well, as explained below.

Also Read | Check Out The Top Career Options In Commerce

mba roi, roi on mba, mba roi calculator, mba roi calculator indiaChoosing the right MBA programme, one that best suits your needs, can put you on an extremely fulfilling academic and professional journey.

Intangibles You Should Note

While considering the ROI of an MBA programme, it is also important to take into consideration its intangible returns.

Value Of Education Itself

Knowledge and learning of advanced business concepts, management tools and skill set acquired, presentation, communication, problem-solving, crisis management and leadership skills gathered, are some of the major assets that will hold a person in good stead towards a promising career.

Greater Self-Confidence

An important non-financial benefit of a good MBA programme is greater self-confidence and self-worth in a student. Needless to add that this significant value addition to one’s personality acts as a catalyst to one’s career and earning potential.

Road To Entrepreneurship

An MBA degree from a prestigious MBA college not only provides the right skillset to become an entrepreneur, but is invaluable in today’s times of start-ups and venture funding because of the value it adds to the potential of the entrepreneur from the perspective of prospective investors.

Also Read | 9 Careers You Can Pursue With A Degree In Economics

Expansion Of Network

The alumni and peer network of an MBA college is a great platform for networking, which can lead to lifelong support, work-related understanding and professional relationships. Alumni and peer professionals from one’s MBA college can act as mentors, promoters, influencers or even motivators. Such networks go a long way in career growth and development. Connections shared by college professors might also be extremely helpful since they would’ve been cultivated by the latter over decades.

Placement Advantage

Placement resources of MBA colleges usually get students much better jobs and higher salaries as compared to what the latter might get on their own through other routes like job portals, etc.

Also Read | Placements And Salary Details: Top Non-IIM Management Colleges

World Becomes Playground

An MBA from a top MBA college prepares you for a role not only in India but anywhere in the world. The curriculum will include case studies from across the world. Foreign immersion/exchange programs offered by some of the reputed MBA schools are a good opportunity to study one semester in top universities in the world.

Choosing the right MBA programme, one that best suits your needs, can put you on an extremely fulfilling academic and professional journey. Hence, ensure that you evaluate your course options carefully in terms of ROI before you narrow down on one.

Pramod Nagpal is Chartered Accountant by training, (Retd.) Managing Director, Central Cottage Industries Corporation Of India Ltd. (A Govt. Of India undertaking, under Ministry Of Textiles). He holds close to four decades of experience in the areas of finance and commerce. Pramod has keen interest in the field of education, and guiding students on harnessing available opportunities to achieve their goals.

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Questions related to MBA

Have a question related to MBA ?

Hello,


There are several reputable universities offer free online MBA courses, but not all provide certificates or credentials. However, platforms like Coursera, edX, and FutureLearn offer free courses from top universities and institutions that often provide certificates upon completion.


hope this helps,

Thank you

Hello aspirant,

Here below I am providing you with the name of some of the top colleges for MBA with low fees:

  • FMS, Delhi
  • MSU Baroda
  • Delhi School of Economics, DU
  • Department of Financial Studies (DFS), DU
  • Tata Institute of Social Sciences (TISS), Mumbai
  • FMS BHU

For more information you can visit our website by clicking on the link given below.

https://bschool.careers360.com/articles/mba-colleges-in-india-with-low-fees

Thank you

Hope this information helps you.

I have completed my B.Tech in 2021 .After that I am preparing for government jobs .I have less than 60 percentage in 10th & 12th .I want to go for online mba ? Which one should I choose ?


10 th and 12th marks matter in mba placements ?

Hello aspirant

If you wish to become an expert counselor in psycology then you must go for phD in psycology. For that you will have to complete master's degree in psycology then go for phD program.

After completing phD you will become a doctor and can add a prefix " Dr "  before your name .

Eligibility criteria for master's course in psycology is that you must have obtain bachelor degree ( in any subject but you must have stydied psycolgy subject in your bachelor course ) with minimum 55% marks .

Psychologists are great servers , they have important duty of understanding people , mind reading skills , face reading skills.

So according to me this way will be best for building career in psycology .

Good luck.


Hello Neha

As you mentioned you are pursuing bsc in botany and biotechnology , after completing your bachelor's degree you may go for master's Course in botany or biotechnology  or MBA . Master's in biotechnology or botany will be specialized Course which makes you expert but these days as competition is going fierce day by day ,  a person should explore more .

More you explore yourself you will get more experience . With more experience you will earn more .

So after bachelor's Course you must go for MBA

By pursuing MBA you will learn a lot not only in  your field but it will cover all the skills required to make a stand in today's corporate world.

Now that is my suggestion,  Final decision will be yours .

Good luck for your future.




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Are you searching for a Corporate Executive job description? A Corporate Executive role comes with administrative duties. He or she provides support to the leadership of the organisation. A Corporate Executive fulfils the business purpose and ensures its financial stability. In this article, we are going to discuss how to become corporate executive.

2 Jobs Available
Multimedia Specialist

A multimedia specialist is a media professional who creates, audio, videos, graphic image files, computer animations for multimedia applications. He or she is responsible for planning, producing, and maintaining websites and applications. 

2 Jobs Available
Welding Engineer

Welding Engineer Job Description: A Welding Engineer work involves managing welding projects and supervising welding teams. He or she is responsible for reviewing welding procedures, processes and documentation. A career as Welding Engineer involves conducting failure analyses and causes on welding issues. 

5 Jobs Available
QA Manager
4 Jobs Available
Quality Controller

A quality controller plays a crucial role in an organisation. He or she is responsible for performing quality checks on manufactured products. He or she identifies the defects in a product and rejects the product. 

A quality controller records detailed information about products with defects and sends it to the supervisor or plant manager to take necessary actions to improve the production process.

3 Jobs Available
Production Manager
3 Jobs Available
Product Manager

A Product Manager is a professional responsible for product planning and marketing. He or she manages the product throughout the Product Life Cycle, gathering and prioritising the product. A product manager job description includes defining the product vision and working closely with team members of other departments to deliver winning products.  

3 Jobs Available
QA Lead

A QA Lead is in charge of the QA Team. The role of QA Lead comes with the responsibility of assessing services and products in order to determine that he or she meets the quality standards. He or she develops, implements and manages test plans. 

2 Jobs Available
Structural Engineer

A Structural Engineer designs buildings, bridges, and other related structures. He or she analyzes the structures and makes sure the structures are strong enough to be used by the people. A career as a Structural Engineer requires working in the construction process. It comes under the civil engineering discipline. A Structure Engineer creates structural models with the help of computer-aided design software. 

2 Jobs Available
Process Development Engineer

The Process Development Engineers design, implement, manufacture, mine, and other production systems using technical knowledge and expertise in the industry. They use computer modeling software to test technologies and machinery. An individual who is opting career as Process Development Engineer is responsible for developing cost-effective and efficient processes. They also monitor the production process and ensure it functions smoothly and efficiently.

2 Jobs Available
QA Manager
4 Jobs Available
AWS Solution Architect

An AWS Solution Architect is someone who specializes in developing and implementing cloud computing systems. He or she has a good understanding of the various aspects of cloud computing and can confidently deploy and manage their systems. He or she troubleshoots the issues and evaluates the risk from the third party. 

4 Jobs Available
Azure Administrator

An Azure Administrator is a professional responsible for implementing, monitoring, and maintaining Azure Solutions. He or she manages cloud infrastructure service instances and various cloud servers as well as sets up public and private cloud systems. 

4 Jobs Available
Computer Programmer

Careers in computer programming primarily refer to the systematic act of writing code and moreover include wider computer science areas. The word 'programmer' or 'coder' has entered into practice with the growing number of newly self-taught tech enthusiasts. Computer programming careers involve the use of designs created by software developers and engineers and transforming them into commands that can be implemented by computers. These commands result in regular usage of social media sites, word-processing applications and browsers.

3 Jobs Available
Product Manager

A Product Manager is a professional responsible for product planning and marketing. He or she manages the product throughout the Product Life Cycle, gathering and prioritising the product. A product manager job description includes defining the product vision and working closely with team members of other departments to deliver winning products.  

3 Jobs Available
Information Security Manager

Individuals in the information security manager career path involves in overseeing and controlling all aspects of computer security. The IT security manager job description includes planning and carrying out security measures to protect the business data and information from corruption, theft, unauthorised access, and deliberate attack 

3 Jobs Available
ITSM Manager
3 Jobs Available
Automation Test Engineer

An Automation Test Engineer job involves executing automated test scripts. He or she identifies the project’s problems and troubleshoots them. The role involves documenting the defect using management tools. He or she works with the application team in order to resolve any issues arising during the testing process. 

2 Jobs Available
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