What Is a Master of Business Administration (MBA)?

What Is a Master of Business Administration (MBA)?

A master of business administration (MBA) is a graduate degree that provides theoretical and practical training for business or investment management. An MBA is designed to help graduates gain a better understanding of general business management functions.

An MBA degree can have a general focus or a specific focus in fields such as accounting, finance, or marketing, and relationship management.

Key Takeaways

  • An MBA is a graduate business degree focused on management, business, and entrepreneurship.
  • MBA students can also focus on other aspects of business, like finance or risk management.
  • Many schools now offer specialty programs, like sports management, the entertainment business, or healthcare management.
  • Executive MBA programs are available for experienced professionals who cannot commit to a full-time schedule.
  • MBA programs may be full-time, part-time, online, or international, and each program usually has a varying degree of requirements for acceptance.

MBA Vs Executive MBA: Which Is Better?

How a Master of Business Administration (MBA) Works

A master of business administration (MBA) is a level up from an undergraduate business degree and generally places the graduate well above those with only undergraduate degrees. Most major universities and colleges provide MBA programs, which usually last two years. To get into an MBA program, an applicant needs to take the Graduate Management Admission Test (GMAT) and be accepted by the program based on its selection criteria.

MBA programs typically include core classes in accounting, management, finance, marketing, and business law. Management training is at the heart of any MBA curriculum, with a focus on leadership, planning, business strategy, organizational behavior, and the more human sides of running a large or small business.

Increasingly, MBA programs are broadening their focus to include training in international business and to focus on the responsibilities and corporate accountability of businesses within their communities.

The MBA degree is seen as essential to enter certain fields, including strategic planning, hedge funds, and private equity firms. Other financial services fields, however, may no longer consider an MBA an entry-level degree to get started.

It is not uncommon to gain professional experience before applying to an MBA program. Many programs require a work resume and demonstration of real world experience prior to joining the program, while other programs may be suitable for candidates straight out of college.

Types of MBA Programs

MBA programs will vary between disciplines, specialties, and schools. It is highly likely that MBA candidates are able to find a solution that works for their schedule, interests, and time commitment restraints.

Two-Year Full-Time

One of the most common types of MBA programs is a two-year commitment in which candidates attend school full-time. During the first year of the program, MBA candidates may learn more fundamental business skills such as strategy or communication. It's more common for candidates to choose more specific electives during the candidate's second year.

Although requiring a substantial amount of time, a two-year program allows candidates to pursue an internship between the years. The longer duration is also intended to help foster relationships with classmates and give candidates more time to absorb materials.

One-Year Full-Time

Accelerated programs crunch a two-year program into a single year. Better for candidates that don't want to spend too much time away from work, this type of MBA program is more intensive, faster paced, and often must sacrifice content quantity.

During a one-year full-time MBA program, candidates may still learn general business skills while selecting specialized electives. However, less time may be dedicated to either group due to the condensed nature of the coursework. One-year programs are often chosen by students trying to accelerate on their current career path as opposed to jumping to a different career path.


Students not looking to leave work and willing to attend school for a longer time may pursue a part-time MBA program. This type of program often has greater flexibility on how many courses can be taken at once and how quickly a student must move through the MBA program.

Part-time programs may be more favorable for candidates wanting to study at their own pace. In addition, part-time programs may be better suited based on lifestyle demands (i.e. a single parent may only be able to attend classes during a certain time of the day). Part-time programs may offer the flexibility of evening or weekend classes, allowing candidates to balance part-time, freelance, or gig economy work.


One type of MBA program that overlaps with the options above is an online MBA. Often a two-year, one-year, or part-time option, an online MBA allows students to attend school remotely. This type of MBA program grants candidates even greater flexibility around when they take classes and how they attend school. Online programs may also have different approaches on how to foster collaboration compared to in-person options.


Some MBA programs focus on global operations. Candidates interested in a wider focus wanting to branch out from just domestic companies or segments of a company can help candidates build an international network and foster opportunities around the world. International MBA candidates may be more diverse than traditional or domestic MBAs, especially if the international MBA offers online classes. In addition, international MBA programs may be better suited to prepare candidates for working in a multinational corporation.


Specialized MBA programs are also available for students whose lives and careers do not permit them to attend school full time. For example, executive MBA programs are designed for working professionals hoping to add to their credentials and qualifications. These courses of study typically schedule classes for nights and weekends, sometimes also requiring short residencies of intensive coursework.

Executive MBA programs are typically only open to candidates who already have substantial professional experience, and they thus tend to focus on more advanced topics such as leadership development.


While MBA candidates can focus on one of the core disciplines of the degree, such as management or finance, many MBA programs allow students to develop concentrations in specific industries. For example, an MBA student might specialize in sports management, entrepreneurship, the entertainment business, or healthcare management.

Even within a management specialty, MBA degrees can allow a concentration on information technology, hospitality, education, or criminal justice. Some MBA programs team up with various professional healthcare programs, such as nursing schools, to offer joint degrees.

MBA programs will have varying length requirements. For example, a degree at Franklin University typically requires 60 credit hours, while the University of Nebraska Omaha program is comprised of 33 credit hours.

Special Considerations

The most prestigious MBA programs are nicknamed "M7 MBA Programs". These schools include:

  • Harvard Business School.
  • Stanford Graduate School of Business.
  • MIT Sloan School of Management.
  • Northwestern University's Kellogg School of Management.
  • University of Chicago's Booth School of Business.
  • Wharton School at the University of Pennsylvania.
  • Columbia Business School.

Acceptance into an M7 school is considered more difficult than obtaining acceptance at non-M7 schools. In addition, tuition is substantially higher at M7 schools, though there is usually financial aid, fellowships, or sponsorships available.

MBA Degrees Uses

Broadly speaking, an MBA gives degree holders two uses: accelerated advancement in the career they are already pursuing or a strong pivot in a new direction with a newfound skillset.

The Wharton MBA through the University of Pennsylvania communicates the following benefits and uses of an MBA to its prospective candidates:

  • Greater Awareness of a Global Market. Candidates can use their MBA to better understand what is going on in different areas of the world.
  • Improve Communication Skills. MBA candidates often must communicate with other professionals, write research papers, and give formal presentations. MBA candidates can use their coursework to improve their ability to connect with others and build relationships.
  • Expand Professional Network. An MBA degree can be used for the people met along the way. Meeting others, forging relationships, and building a network is a central benefit of an MBA program. In addition to the knowledge obtained, the MBA program can be used to connect with others with the prospect of mutual long-term benefit with your peers. Through formal or informal networking, you can exchange information or ideas with like-minded individuals.
  • Increased Job Opportunities. MBA candidates are often more desirable compared to other candidates based on their proven skillset and dedication to their profession. In addition, advancement or higher positions may become available to candidates that would otherwise not be considered for roles.
  • Better Time Management. MBA candidates may have to juggle school, work, family, and life obligations. An often overlooked use of an MBA program is the soft skill practice of managing priorities, meeting deadlines, and organizing one's time to meet all expectations.

Over the past decade, more Americans are prioritizing higher education. In 2021, 24.1 million U.S. citizens age 25 and over held a Masters (not necessarily MBA) degrees. This is an increase of over 8 million citizens compared to 2011.

MBA Degree Candidate Requirements

Every MBA program will have different requirements. More prestigious programs or schools will have more competition, and these programs will often require more of candidates before accepting them into the school. For example, the following list is taken from the University of Washington (Bothell)'s MBA program admission requirements:

  • Two or more years of full-time, professional-level work experience.
  • Two (or more) short application essays.
  • Two professional referees.
  • Official 4-year Bachelor's degree transcript.
  • Demonstration of English Language Proficiency (program and candidate dependent)
  • Minimum 3.0-grade point average for the past 90 quarter credits or 60-semester credits.
  • Interview with admissions committee before acceptance or decision.

Some programs may require submission of a GMAT/GRE score. Other programs like UW-Bothell may temporarily have waived the requirement.

MBA Degree Cost

As programs offer different services and benefits, the cost of an MBA will widely vary between program and school. Top-tier MBA programs will often be more expensive than local, smaller options.

In 2022, the first-year budget for the Wharton MBA program was almost $119,000. This includes $85,000 for tuition, $23,000 for room and board, $7,000 for books and supplies, and $4,000 for health insurance. Wharton offers many Fellowship Programs to alleviate the financial burden of the program. Other two-year, full-time programs may yield similar expenses; an estimated two-year program at the University of Chicago cost almost $156,000.

Shorter-term or online programs may be substantially cheaper. For example, an online MBA at the Eller College of Management through the University of Arizona will cost $51,525. The program is promoted as completable in as little as 14 months.

MBA Salary Benefits

The result of an MBA is often to have greater skills, capabilities, and professional competency that will lead to a more successful career. Though an MBA results in a material short-term expense, the intention is to often recover this cover over time with a higher salary.

According to Glassdoor, an MBA at the end of 2021 received an average annual compensation package of roughly $106,000. Salary has historically been skewed towards degree holders with experience. Individuals with one year or less of experience earned less than $104,000 per year, while individuals with greater than 15 years of experience earned more than $144,000.

By comparison, MBA holders often make substantially more than undergraduate business majors. A 2019 study by William & Mary found MBA holders' salary was twice as high as Bachelor's degree holders.

What Does MBA Mean?

MBA stands for Masters of Business Administration. An MBA is an advanced degree that provides theoretical and practical training in business principles and leadership skills. MBA recipients obtain this postgraduate degree to further enhance their marketability as a professional.

What Is the Salary of an MBA?

As of December 2021, an MBA earns an estimated total pay of $106,000 per year. Pay is widely contingent on the industry, company, and underlying position occupied by the degree hold er. For example, the same salary data indicates a possible salary range between $45,000 to $518,000 per year for an MBA.

What Is an MBA Good for?

An MBA is good for two primary purposes. First, business professionals that obtain an MBA undergo a rigorous set of classes that improve the candidate's skillset. At the end of an MBA program, the MBA candidate should have learned new skills, expanded their network, better understand how to strategically approach problems, and be a more competent professional.

In turn, the second primary benefit of an MBA is a higher degree of desirability with one's employer. Armed with a greater skillset, MBA candidates often have an advantage during job searches and may command higher pay. In general, possessing an MBA often makes an employee more desirable for a company to hire and retain.

What Are the Disadvantages of an MBA?

Obtaining an MBA is considered a very strenuous endeavor. For starters, MBAs are usually more difficult to get into. Candidates may find it demanding to compile a resume impressive enough to be accepted into their goal program. MBA programs may also be expensive. Not only is there is a considerable financial burden, MBA candidates may have to scale back or step away from work as they pursue their degree. Though an MBA carries substantial long-term value, there are several short-term hurdles a candidate must overcome.

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. MBA. "What Are the Different Types of MBA Programs?"

  2. Franklin University. "How Long Will It Actually Take To Earn Your MBA?"

  3. University of Nebraska Omaha. "MBA Curriculum."

  4. Wharton. "Should You Get an MBA?"

  5. United States Census Bureau. "A Higher Degree."

  6. Wharton. "Wharton MBA Tuition, Cost, & Financial Aid Information."

  7. The University of Chicago. "Full-Time MBA Cost."

  8. University of Arizona. "Online MBA Cost - Eller College of Management."

  9. Glassdoor. "MBA."

  10. William & Mary. "How Much Does An MBA Increase Your Salary?"