11/10/97 BUSINESS 101--USING REAL BUCKS

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BUSINESS 101--USING REAL BUCKS

Last spring, a team of 36 freshmen at the University of Oklahoma at Norman began a venture as part of their business course. Their idea: to sell consumers a $10 discount card honored by area merchants that offered price breaks of 15% to 50%. The students made a minimum of $2.50 on each card, which served the same purpose for merchants as coupons. The concept caught on, and in just one semester, the student enterprise--started with a $2,000 loan from the school--racked up revenues of $41,000 and profits of $15,400.
Unusual? Yes, but perhaps not for long. These courses and others like them are part of a trend that's bringing the real world into undergraduate business programs. By managing actual businesses, community service projects, or investment portfolios, students in these ''experiential courses'' glean lessons they can't acquire in a classroom alone.
At the dozen or so U.S. colleges and universities offering such courses, the most challenging typically combine introductory lectures on business subjects and several hours of lab work every week. The labs give students a crash course in the perils and pressures of trying to wring profits from ideas. Undergrads, who nearly always work in groups to learn teamwork, get one or two semesters to start and manage their projects, usually seeded by commercial bank grants and private endowment money. The ventures are generally liquidated when the course ends. Because of the intense pace and bottom-line demands, students end up treating their courses like full-time jobs. And they say they carry the lessons learned to later courses and jobs. ''It's the best class of my college career,'' says Heather White, a 22-year-old at the University of Oklahoma, who took the experiential course last fall.
The courses have won over many businesses: Heavy hitters such as General Electric, Johnson & Johnson, and Koch Industries often recruit from experiential programs. Professors, intent on teaching the social responsibilities of business, usually require students to fund and run a community-service project with the profits. That emphasis is pronounced at the University of Pennsylvania's Wharton School, where undergrads in its Management 100 do community-service work only. The biggest money maker is an annual Halloween event students organize for the Philadelphia Zoo. The students plan, promote, and run the program, which last year garnered $35,000 for the zoo.
Long part of MBA programs, experiential courses were introduced at the undergrad level in 1979 by Bucknell University management professor John Miller. Miller says it took him a decade to fine-tune the program. It was only after he wrote an article on experiential learning in The Journal of Management Education in 1991 that the approach caught the attention of other schools.
SPECIALIZED. Among the first to act was Babson College in Wellesley, Mass., where freshmen have been required to take the team-taught Foundation Management Experience since the fall of 1996. In this yearlong course, teams of about 30 students each write a business plan, then run their venture using financial statements, spreadsheets, and other tools.
Babson and other schools also offer more focused advanced courses. The University of Wisconsin at Madison, for example, has such courses in applied securities analysis and real estate.
At the University of Oklahoma's Michael F. Price College of Business, upper-class students in the securities investment course manage an investment fund of about $100,000. In the spring of 1999, the amount will increase to $200,000 and they will get a second $200,000 fund. The money will flow from an $18 million endowment that Franklin Resources fund manager Price gave to his alma mater in April. Echoing the growing number of ardent supporters of experiential learning, Price says he wants ''students to learn through hands-on experience.'' And they will get, in the words of Bucknell's Miller, ''instant street smarts.''
Carol Reed

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