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LETTERS

Back-to-Basics MBA Programs Will Thrive

March 10, 1985

On March 3, stories in the Business Section dealt with the difficulty that firms in such diverse industries as wine-making, farm machinery and economic forecasting were having in adapting to declining market opportunities.

By coincidence, the same issue featured columnist Earl Cheit's observation that the luster of the MBA degree is bound to diminish in the next few years. Thus, the question is raised as to what strategies management schools should pursue to meet the probable decline in the market for their students. Cheit did not address that question, crucial though it is.

Historically, the MBA graduate offered three advantages to an employer. First, a candidate with an MBA demonstrated a greater interest in management--or appeared to--than other job applicants. Second, the MBA graduate could state that he or she had succeeded in passing through a rigorous, competitive academic environment and therefore was likely to succeed in a similar business climate. Third, the MBA graduate could claim to have acquired useful academic knowledge.

The first advantage is now passe; as Cheit documents MBAs are no longer rarities in the labor market. The second advantage has also faded; management schools succumbed to the same grade inflation and slippage of standards that afflicted the rest of higher education in the 1970s.

So what is left is essentially a matter of content. Here, too, the 1970s took their toll. Faculties lost confidence in the utility of what they had been teaching and tried to substitute "complex interpersonal decision making" and the like for traditional subject matter. Unfortunately, the typical management school is ill-equipped to compete with the numerous private seminar consultants whose efforts fill urban hotel meeting rooms on a typical day.

The lesson is clear: Those MBA programs that follow the budding "back to basics" trend now developing at all levels of education will prosper in the 1980s and 1990s. Those who do not will suffer the fates of the wine-makers, farm machinery manufacturers and economic consulting firms who misread their markets.

DANIEL J. B. MITCHELL

Professor, UCLA Graduate School of Management

I am impressed with the two pieces about MBAs ("An MBA Degree Has Meant a Rosy Future but Bloom May Soon Fade," Viewpoint, and "MBA Students Enjoy This Pressure," Sidelights).

As Chrysler Chairman Lee A. Iacocca has well demonstrated, after all, business is people, and that means humanizing the Masters of Business Administration in the workaday world.

SHERRY TERZIAN

Los Angeles

Help Save Teachers' Eyesight

As a high school history teacher, I must disagree with your column "Matrix System Has Advantages" (Computer File, Jan. 28), in which you stated, "Why spend money to make a state-of-the-art computer emulate an old-fashioned typewriter . . ."

In the case of personal or home computers, which are being heavily advertised for student use ("Why every kid should have an Apple after school," claims the Apple ad), I know I speak for many teachers who are unhappy with student work handed in that is done on dot matrix. Even with the strike-over feature, there is an unattractive, mechanical look about the fonts. Moreover, the dots are often light blue in color, and this puts a burden on a teacher who has to read a lengthy research paper or even short essays, book reviews, chapter summaries, or other class assignments.

Insofar as student use is concerned, I would therefore urge parents to spend the money for a letter-quality printer. It would make English, history, biology, journalism and many other teachers happy, if not preserve their eyesight.

ABRAHAM HOFFMAN

Benjamin Franklin High School

Los Angeles

There's a Difference in Zeros

Regarding "Zero-Coupon Bonds and Your IRA," (Money Talk, Feb. 21), the author implies that investing in municipal zeros and U.S. Treasury zeros requires the same kind of "homework." Investing in tax-exempt municipal zeros is actually so filled with potholes as to make the road to investing virtually impassable. A beginner's list of potential problems follows:

- While U.S. Treasury zeros are noncallable for 20 years, municipal zeros usually have optional redemption provisions, which makes them callable at almost any time if interest rates decline. Buyers of zeros offered by single-family mortgage bond issuers should take a cardiac stress test before reading the fine print in the offering prospectus.

- There are tricky tax traps in tax-exempt zeros. For instance, the cost basis of a zero for calculating capital gains or losses on subsequent sales is based on the "Compound Accreted Value" tables listed in the offering prospectus. That cost basis changes daily. If you sell your original issue zero, the new owner must adjust his cost basis daily using a very complicated formula. In addition, if you buy an out-of-state municipal zero, you will owe state income taxes, each year, on the imputed interest earned even though you received no cash interest payments.

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