Business Schools

B-Schools Feel the Effects of SARS


Until a couple of months ago, the soft job market was the worst crisis most business schools had faced in years. Then came the outbreak of severe acute respiratory syndrome (SARS). In less time than it took the U.S. to invade Iraq, SARS and the efforts to contain it have wreaked havoc on at least six B-school programs with overseas campuses or study-abroad curriculums. Though the financial damage has been modest so far, the affected schools could suffer significant setbacks should SARS spread and the crisis continue.

To date, the program that has been hurt the most appears to be the Rotman School of Management at the University of Toronto, which is located in the North American city with the most SARS cases. James Fisher, the school's associate dean of executive programs, says it may have lost $500,000 (Canadian) in revenue from executive programs it postponed in the wake of an Apr. 23 World Health Organization (WHO) warning to steer clear of Toronto.

Corporate travel had already been curtailed travel because of the U.S. invasion of Iraq, and with the threat of SARS, companies pulled employees out of Rotman's classes. Those included 100 executive MBA students from a Brazilian B-school, 23 DaimlerChrysler (DMC) executives, and about 50 University Health Network employees from throughout Canada. Muses Fisher: "We were having a great year before this."

QUARANTINE TIME. Anything that hurts executive programs is serious, because most B-schools depend disproportionately on income from executive instruction. Rotman, for example, charges about $500 per day per employee for nondegree executive education -- money that's particularly crucial for Canadian B-schools now that they receive fewer subsidies from their once-generous provincial governments and must increasingly fend for themselves.

The WHO lifted its Toronto advisory on Apr. 30, but it will be June, at least, before it's clear if Rotman will resume its normal routine. That's when Fisher hopes to enroll 25 students in the school's Global Executive MBA program, which is taught partly in Toronto, China, and Europe.

Another key date for the Rotman School will be Sept. 1, when the its next class of 260 full-time MBAs is scheduled to arrive -- including about 50 students from China. The way things look now, the school may have to ask these students to come early, so they can be quarantined for 10 days before classes begin. "Canceling a few executive-education programs will be the smallest of our issues" if SARS disrupts the school's full-time program, Fisher says.

RIPPLE EFFECT. If SARS isn't under control in Asia by fall, the Rotman school won't be alone in feeling the pain: In a normal year, students from Asia account for 9% to 20% of the starting classes at the top 10 U.S. schools in BusinessWeek's biennial B-school ranking.

Nowhere are schools more affected than at their operations in China, Hong Kong, and Singapore. Over the past five years, dozens of non-Asian B-schools have spent millions of dollars sending their faculty to teach management to Asian execs -- or sometimes, to build entire campuses. Their two-pronged goal was to expand their influence and boost income.

Now, though, the schools that have moved most aggressively are finding that "SARS has made our lives miserable," says Ravi Kumar, executive director of international programs for the Marshall School of Business at the University of Southern California.

MAYBE NEXT YEAR. Kumar works in Los Angeles, more than 7,000 miles away from Hong Kong, but since the end of March, the disease has been his biggest problem -- and expense. First, he has had to rearrange trips for the 122 full-time MBA students who had been scheduled to travel this month to Beijing, Shanghai, Hong Kong, and Singapore. They're now going to Mexico, Cuba, and Chile, among other places. (Marshall MBAs are required to travel abroad for one week during their two-year program.)

"We begged companies [with operations overseas] to be part of this trip," says Kumar. "Now, I have to tell them that we're not coming -- sensitively, because we want to be there next year." Coca-Cola (KO) and Motorola (MOT) are among the companies that Kumar hopes will welcome back his MBAs in 2004.

The Marshall School also stands to lose tens of thousands of dollars if it has to postpone a new executive MBA program in Shanghai. It's still slated to begin in October for 25 managers, many from China, and will be taught in conjunction with Shanghai Jiao Tong University's B-school. But now, after nine months of preparation, "we can't even get into China to recruit students," says Kumar.

CAMPUS DISRUPTIONS. Even if China can shake its reputation for being unable to control the epidemic, Kumar asks, "who would want to sit in a classroom with [potentially infected] Chinese students?" Thus, the new program may not start until January. Also in Shanghai, the Olin School of Washington University in St. Louis has canceled May classes for 140 Chinese students who are working toward an MBA -- and it may cancel classes in June as well.

The effect has been similar in Singapore, another country for which the WHO has issued a travel advisory. The University of Chicago's Graduate School of Business, which normally holds executive MBA classes every six weeks at its campus in downtown Singapore, postponed its classes in May and may have to again in July -- in part because professors who normally travel there to teach have been unable to do so.

INSEAD, BusinessWeek's No. 1 B-school outside of the U.S., has also had to postpone or move some executive education programs from Singapore to its main campus in Fontainebleau, France, says Inger Pedersen, director of the school's Singapore operation. INSEAD professors may also cancel a July trip to China for 10 MBAs.

At affected schools, SARS has also disrupted almost every facet of student life. The University of Western Ontario's Ivey School of Business has been disinfecting its Hong Kong campus regularly since the illness appeared. And anyone who has been in contact with a SARS victim is quarantined, as are people living in housing complexes where SARS patients have resided.

ROLLING WITH THE PUNCH. Ivey's 88 executive MBA students, faculty, and staff wear surgical masks during class -- and the school has postponed many lectures. For the first time, moreover, one of the school's executive MBA classes is now offered on the Net, or via video conferencing -- by an instructor who's in Manila, says Larry Wynant, associate dean of Ivey Asia and a professor of finance.

Meantime, finding a post-MBA job position is even harder in SARS-affected countries than it was before the scare began. The few companies that are recruiting in Asia have had to alter their travel routes so that they don't go to INSEAD's Singapore campus after being in infected regions. And of course, students from INSEAD who planned to travel to Hong Kong or mainland China for job interviews during a four-day break in May have been asked by the school not to do so.

The only positive effect SARS may have had on B-schools is to teach them to roll with a punch. After New York University's Stern School of Business canceled a week-long trip to China for its executive MBA students in April, for example, Stern rushed to create "China in New York Week," shuttling its students between lectures, visits, and events having anything to do with China.

The NYU students may have been unhappy about swapping a first-hand look at the Forbidden City for a private tour of the Metropolitan Museum of Art's Chinese exhibits. But no one has much appetite for seeing the real thing if it means risking exposure to SARS. By Mica Schneider in London


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