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MBA vs PGDM: Understanding the Difference

Posted on January 19, 2020 by Kritika Gadhvi  | Academics | Blog

If you are a recent graduate or an undergrad who is seeking advancement in his/her career, one of the most attractive options is to pursue a master’s programme, and if you wish to strengthen your managerial abilities and assume a management position post completion of the programme, more often than not, a postgraduate degree or diploma in management is what you are looking for, a.k.a, MBA or PGDM.

MBA vs PGDM: Understanding the Difference

An MBA stands for Master’s in Business Administration and a PGDM is Postgraduate Diploma in Management. The two courses revolve in the same realm of business management and operations, but there is a major difference between the two; an MBA is a degree programme while a PGDM is a diploma course. Understanding the difference between the two is key as it equips students with the proper knowledge of what each course entails in terms of curriculum, teaching methods and market value and also helps in better decision-making with respect to what a student might want to pursue.

What do they mean?

MBA or Master’s in Business Administration is an internationally recognised degree that helps candidates develop skills required for careers in business and management. Students tend to pursue an MBA after practically any undergraduate degree or professional experience, however, the most common undergraduate fields that form the base of an MBA or PGDM qualification are that of engineering, commerce, economics and business administration.

Any MBA programme covers various areas of business administration, such as accounting, applied statistics, business communication, business law, business ethics, finance, managerial economics, management, entrepreneurship, marketing, supply-chain management and operations management. An MBA programme is considered to have a more conventional curriculum and focuses more on technical and theoretical teaching of management concepts.

A PGDM or a Postgraduate Diploma in Management is a professional course that trains students in management and business aspects. A PGDM is aimed at students who want to enter the management field in any organisation. The course helps students build soft skills and is very industry-oriented. There can be several different types of PGDMs that are suitable for different industries. A PGDM is generally more pragmatic and has a dynamic curriculum suited for the modern-day business world.

Why are they pursued?

Both an MBA and a PGDM are management and business administration degrees. Students tend to choose an MBA because it is professionally recognised all over the world and the curriculum aspects remain the same more or less across universities.

In the case of PGDM, it is slightly different. The core course structure of a PGDM is similar to an MBA however, some universities offer PGDMs in specific areas of interest such as human resource management. Students tend to sway towards a PGDM if they want a specialisation in a particular area of business. A PGDM in many countries is considered equivalent to an MBA.

Difference between PGDM and MBA

A PGDM and an MBA are essentially the same degree but packaged very differently. The courses taught under both the degrees are more or less the same, barring few minor differences when it comes to picking up a specialisation course. The only major difference is that an MBA is offered by universities and their course structure is revised every 3 or 4 years and on the other hand, PGDMs are offered by institutions that aren’t at most times recognised by a single governing body. However, this does not mean that a PGDM is less valuable than an MBA. A typical PGDM course runs for a year and is considered equivalent to an MBA by most countries.

Since PGDM is often offered by autonomous institutions, they are at more liberty to modify their curriculum and keep it updated as opposed to a government-affiliated university that offers an MBA degree.

The major difference between the two is the fact that MBA is a degree programme whereas PGDM is a diploma course. An MBA is primarily offered by universities and colleges affiliated with that university and PGDM’s are offered by autonomous institutions that are recognised by the government as technical courses. For instance, in India, the government gives an AICTE (All India Council for Technical Institutions) to autonomous institutions that offer PGDM as a recognition.

Both an MBA and a PGDM are similar degrees/diplomas. The curriculum that is taught in both instances is the same. The course and module names might be different and sometimes you might find that some courses have been omitted completely due to time constraints. The core and ultimate knowledge that students gain from both courses is essentially the same. However, there is a minor difference when teaching these courses; MBA programmes tend to focus more on the theoretical and technical aspects of the course instead of the practical implementation of these skills. On the other hand, a PGDM focuses on teaching students the current industry trends and its practical knowledge.

Another interesting thing about a PGDM is that since it is offered by autonomous institutions, the courses are updated every year in accordance with what is trending in modern times. Such is not the case with MBA programmes as their curriculum revision depends on the university the college is affiliated to (which in most cases is every 3-4 years).

Below is a brief description of some of the courses offered taught in an MBA or PGDM:

Financial Accounting:

In this subject, students hone their financial accounting literacy skills so that they may better understand how a firm operates its financial holdings. This does not mean that they will become accountants but they will acquire a deep knowledge of financial information. This understanding can be applied at various positions such as an investor, financial advisor, management consultant, competitor, or employee of the firm. The course challenges you to develop critical thinking and communicating skills.

Organisational Behaviour

This course aims to increase your effectiveness and skill in observing, understanding and leading behaviour in organisations. The course deals with aspects of behavioural science and takes up concepts and ideas from psychology, social psychology and sociology to find out their implications on leadership and managerial practice. The course deals with communication in organisations; the role of individual differences in explaining behaviour; influence in a group setting; giving and receiving feedback; managing work; negotiation; and leadership. Some universities teach another aspect of organisational behaviour in addition to the above. Any MBA graduate should have an in-depth understanding of organisations functions. To seamlessly support this understanding the students must know how to develop strategies, effectively implement them, and act per the key issues/challenges faced by any organisation. It focuses on organisational design, power, culture and strategy implementation in an organisation.

Financial Markets and Valuation

This is usually an introductory finance course at most institutions. It deals with fundamental concepts of corporate finance and capital markets. It provides students with a set of tools and analytical mindset which is helpful in whatever career choice one makes after the programme ends. The course covers basic valuation concepts and techniques and provides an understanding of how to make value-creating investment decisions. The course also provides an understanding of the trade-off of risk versus return and trains students to apply these concepts to optimise investment portfolios. Students studying this course also gain an understanding of the difference between systematic and unsystematic risk and the implications for calculating a company’s cost of capital and market value. Students also learn to investigate financing choices and the effect of borrowing (leverage) on risk, return and the value of the company.

Prices and Markets

This subject aims to equip students with a basic understanding of the fundamentals of managerial decision making. The course uses microeconomic theories to understand how economic fundamentals – such as demand, cost, market structure and competition – shape pricing strategies, capacity choices, and market entry decisions. It gives you the technical knowledge to prepare a fact-based, logical analysis of a competitive market, identify the categories of costs that are relevant for critical business decisions; construct models of how firm interactions affect prices; make profit-maximising price decisions based on the interplay between cost and demand, and use several useful game-theory based models of competition.

Introduction to Strategy

This course helps students understand various factors that are involved in a company’s success and ask the right questions. Subsequently, the course equips students with the right tools to develop strategies that help in answering those questions. The strategies help in assessing a company’s sustainable competitive advantage, analysing industries and competitors, developing and implementing strategies at both business and corporate levels. Students learn to choose and combine the right tools and concepts that create the perfect strategy.

Corporate Financial Policy

In this day and age, the corporate financial policy has become an area of expertise in itself. The course provides insights and basic knowledge of securities. It helps them understand how things are priced, and who trades them and why. The students also learn the application of options pricing in corporate finance. The students gain insight into the valuation of convertible securities, executive stock options and risk management. Some parts of the course also deal with standard corporate finance topics like financing policy, pay-out policy, investment policy and mergers and acquisitions. Basic knowledge of mathematics and statistics is helpful for this course.

Managing Customer Value

Customers are the biggest part of any business, understanding them and their thought processes play an important role. Businesses have to start thinking about the customer from the very beginning; which is a systematic and proactive process. The course aims to make students familiar with customers as assets. It equips students with the right tools and techniques that are needed to execute marketing strategies. This is valuable for all aspirants, business managers and consultants alike. It teaches you to shape consumer behaviour so that they can sustain their products in a competitive market.

Managerial Accounting

Managerial accounting is a course that deals with internal planning, decision-making and performance evaluation. The course equips students with the knowledge to understand, evaluate, and act upon the many financial and non-financial reports used in managing organisations. The course helps students make complex decisions later in their careers.

Operations Management and Process

Operations management and process is a course that equips students to figure out the supply and demand of products that are in tandem with customer satisfaction. The students learn techniques that help them identify disparities between customer satisfaction and demand and supply. The business process teaches tools that let you analyse, improve and design activities within the company. The business operations management part teaches you about sourcing raw materials and delivering goods to the customer. The students become well-versed with managing the behind the scenes of organisations and businesses.

Leadership Communication

Communication plays an important role in any business. An effective leader in an organisation must possess exceptional communication skills. As a business grows, a leader’s responsibilities like dealing with increasingly complex issues, audiences and situations also grow. This course enables students to connect with people, ideas, and actions. It also provides techniques for effective communication directly relevant to their future business career and leadership development.

Macroeconomics in the Global Economy

When you are studying business administration, it is extremely important to get a global macroeconomic perspective. Everyone operates in an economic environment and this inter-relationship affects performance. Companies have to monitor changes in interest rates, exchange rates, monetary/fiscal policy, inflation, unemployment and phases of the business cycle. They do this to minimise risks and maximise profits. This course aims to help you build an understanding of the above working of organisations, individuals and others in an economic spectrum together and how it all affects global economic development.

Business and Society

This course deals with business ethics, the political environment and public policy to practice effective business administration. Ethics are taught to build awareness of issues of ethics and responsibility that students are likely to confront in business. These can be encountered at any level in an organisation. Any business practice has to keep in mind the political environment of the country and the world. These also help in understanding a firm’s non-market strategies. The students are made familiar with the rules and regulations & domestic and international institutions that chalk out the context behind social and market issues the firms are trying to address. Public policy plays a key role as it familiarises students with the markets and government by examining market failures and the government’s role in fixing it. The students are also taught the functions and roles business plays in such scenarios.

MBA vs. PGDM – Impact on Your Career

Students usually pursue an MBA or PGDM to move their career trajectories in business management, operations or sometimes to even shift their career. There are a plethora of career choices for students with an MBA or PGDM like banking and finance, investment banking, Commercial Banking, Liabilities Product Management, Cards Management, Transaction Banking, Corporate Banking, Compliance, Wholesale Risk, Credit Risk, Relationship Management and Treasury. Students can look for titles like business operations and credit analyst. Other career opportunities include management consulting, private equity, entrepreneurship, human resource management and much more.

How to Choose Between MBA and PGDM?

MBA and PGDM courses are not too far from each other. They both work in the same spectrum of business management and operations. We have already established that barring a few minor differences between the course updating process and choosing a specific path to pursue, both are essentially the same course. They are often even accepted in lieu of each other in some countries.

Choosing an MBA or PGDM depends solely on the student and what they want to pursue. If a student feels opting for a two year MBA programme doesn’t work for them, they can opt for the shorter route of pursuing a PGDM, which typically lasts a year. For students who are clear as to the career paths they want to pursue, it’s easier for them to decide. If a student wants to pursue a specific business administration course in human resource management, opting for a PGDM in HR is the right way to go. And if a student feels like opting for a course that gives them a holistic overall approach to all bits of business administration, opting for an MBA is the right choice.

However, there are a majority of students who do not want to undertake a 2-year course and are yet to decide their career path, can opt for a full-time postgraduate diploma programme, such as the 1-year full-time Graduate Diploma in Management offered by Indian School of Business & Finance (ISBF). The graduate diploma programme serves as the 16th year of education for students who wish to pursue their master’s abroad and also equips students with a world-class education since the curriculum is administered by The London School of Economics (LSE).

To begin your application for LSE Graduate Diploma programmes   Apply Now

The course aims to provide strategic and functional areas of a business enterprise and opens up multiple doors of opportunities for students; many students have gone on to pursue a full-time MBA after the completion of ISBF course or have gone on to study a full-time master’s course in a field of their interest.

Choosing between the two courses, MBA or PGDM, depends on the students’ preference. If you are looking to develop excellent business skills in the least amount of time then a PGDM is a viable option for you and if you are looking to gain a deeper theoretical understanding of the subjects taught then an MBA is your way to go.
Many students sometimes prefer to do a PGDM first to gain a perspective on the kind of curriculum they will be studying at an advanced MBA level and then go on to pursue a full-time executive MBA. Ultimately, it’s the career path that the student wants to build that tips the decision in the favour of one!

Explore more about Diploma in Management or an MBA? Here’s what will help you decide.

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