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W27745
THE SCHOOL OF MANAGEMENT: HANDLING ADMISSION LEAKAGE
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Copyright © 2022, Ivey Business School Foundation Version: 2022-12-02
On April 5, 2021, Ajinkya Gupta was discussing various student admission strategies with his team for the
current school year. Gupta was a professor of analytics and the chair of the admissions committee at The
School of Management (TSM), a reputable master of business administration (MBA) institute in
Gandhinagar, the capital of the state of Gujarat in western India. Gupta wanted to ensure that all students
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who had received admission offers in April joined the program by July. During this three-month period,
however, many students could decide not to join the MBA program, even after having accepted the
admission offer and paid the relevant fees.
Before 2020, Gupta’s team had rolled out additional admission offers based on average rates of withdrawal
(informally referred to as “leakage”) by prospective students in previous years. This was done at each phase
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of the admission process, which started with admission offers and ended at the final enrolment. As a
professor of analytics, Gupta wanted to find the most accurate estimate of additional admission offers to
send out to prospective students above the actual number of available spaces in the program. The team had
to consider the degree of uncertainty involved in a candidate’s decision to accept or decline an admission
offer. The ideal number of enrolled students in the program should not fall below the available capacity.
But Gupta wanted to be sure that no candidate who had been offered admission into the program would
later be turned away due to lack of space. Therefore, it was critical to estimate the ideal number, with
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reasonable accuracy, to avoid both financial and reputational cost to TSM.
Gupta believed that understanding the uncertainties in the decision-making process of prospective students
would allow his team to devise appropriate retention strategies and that investing in such strategies would
be of significant value. He asked one of his team members, Yogendra Singh, to gather all data related to
admission offers and leakage for the previous three years, and he prepared for a detailed analysis of that
information. Gupta had a meeting scheduled for the following week with TSM’s dean, at which point he
would present the results of his analysis.
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THE SCHOOL OF MANAGEMENT
TSM was established in 1980 in Gandhinagar. Within a few years of its inception, TSM had established
itself as a premier private business management school in India that groomed its students for leadership
roles in the industry. In four decades, more than 1,000 of its alumni became C-suite executives at some of
the top organizations across India and around the world.
This document is authorized for educator review use only by Jose Guillermo Diaz, HE OTHER until Apr 2024. Copying or posting is an infringement of copyright.
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TSM was one of the most sought-after management schools among aspiring MBA students, despite the
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opening of many new public and private business schools within India in recent years. TSM remained a
preferred choice of students due to the quality of education it offered students for a relatively low tuition
fee of ₹1.2 million1 for a two-year program. In comparison, the five leading campuses of the reputable
Indian Institute of Management (IIM)—IIM Ahmedabad, IIM Bangalore, IIM Calcutta, IIM Lucknow, and
IIM Kozhikode—charged an average MBA tuition fee of ₹2.14 million.2 Costs of TSM’s MBA program
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were largely fixed, especially in the short term, with only 5.5 per cent of total costs being variable. TSM’s
fee was intended to cover all business expenses and earn a small profit.
TSM’s MBA Program
TSM’s two-year fully residential MBA program had a fixed capacity of 300 students, which was based on
the minimum faculty-to-student ratio prescribed by India’s National Institutional Ranking Framework and
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the number of available residence rooms at TSM.3 The school maintained a faculty-to-student ratio of one
instructor per 15 students, with 40 faculty in its MBA program. Every instructor was expected to teach a
minimum number of hours per year. The faculty member’s teaching hours, research, and institutional
services were considered in the annual performance appraisal. The faculty workload for an academic year
was determined and frozen in April, three months before the start of the next academic year. The recruitment
of new faculty members was based on a need–gap analysis. The entire process, from recruitment to
onboarding, took three to six months. TSM had 600 single-occupancy residence rooms that would be
occupied by both first-year and second-year MBA students.
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Regular classes at TSM were held weekdays from 9:30 a.m. to 6:30 p.m. Extra-curricular and co-curricular
activities, industry engagement activities, conferences, and seminars were held beyond regular hours and
over weekends. TSM had nine tiered classrooms with fixed seating arrangements and two classrooms with
movable seating. With a student capacity of 300 and its current level of activities, TSM had an approximate
classroom use rate of 80 per cent. All courses were normally taught in person, although the COVID-19
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pandemic caused TSM to invest in creating an online teaching infrastructure and swift transition to virtual
teaching. Approximately 90 per cent of TSM’s students came from 90 different cities across 22 Indian
states, with the rest coming from Gandhinagar.
Growth of MBA Programs in India
Business management education in India had witnessed steady growth since the late 1940s. In 1949, two years
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after India achieved independence from British colonial rule, the first management institute was established—
Xavier Labour Relations Institute.4 Over the years, many public and private business schools were established
to meet the growing need of management professionals in the corporate world. Among them, the prestigious
IIM opened 20 institutes across India.5 By the 1990s, MBA graduates were among the most highly sought-
1
₹ = INR = Indian rupee; ₹73.3 = US$1 on April 5, 2021; all currency amounts are in ₹ unless otherwise specified.
2
Government of India, “India Rankings 2020: Management,” National Institutional Ranking Framework (NIRF), Ministry of
Education, accessed July 25, 2022, https://www.nirfindia.org/2020/ManagementRanking.html; Sundararajan, “IIM Fees for
MBA 2022—Check Complete IIM MBA Fee Structure,” Careers360, September 15, 2022, https://bschool.careers360.com/
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articles/iim-fee-structure-and-seats#IIM-Fees-for-MBA-2022.
3
Ministry of Human Resources Development, NIRF India Rankings 2021: National Institutional Ranking Framework:
Methodology for Ranking of Academic Institutions in India, accessed July 25, 2022, https://www.nirfindia.org/nirfpdfcdn/
2021/framework/Management.pdf.
4
Ritika Mahajan, “India’s Management Education Growth Story: A Retrospect,” AIMA Journal of Management & Research, 9,
no. 2/4 (May 2015), https://apps.aima.in/ejournal_new/articlesPDF/2%20Ritika%20Mahajan.pdf.
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The first two IIM institutes—IIM-Ahmedabad and IIM-Calcutta—were established in 1961, followed by IIM-Bangalore in 1972
and IIM-Lucknow in 1984, with 16 more institutes established after that time. CL Educate Ltd., “List of IIMs in India,” Career
Launcher, accessed October 5, 2022, https://www.careerlauncher.com/cat-mba/List-of-iims-in-india.html.
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after workers in the Indian industry.6 Between 2002 and 2006, an average of 189 business management
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schools were established each year in India, demonstrating the tremendous demand for management education
among aspiring students.7 By 2021, there were more than 5,000 business schools in India.8
Business schools invited prospective MBA students to the admission process based on results from national-
level entrance examinations such as the Common Admission Test (CAT) conducted by IIMs, the Xavier
Aptitude Test (XAT) conducted by Xavier Labour Relations Institute, the Common Management Admission
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Test conducted by the National Testing Agency under the Indian government’s Ministry of Education, and
the Management Aptitude Test conducted by the All India Management Association. Many business schools
also considered scores in the Graduate Management Admission Test (GMAT), the Graduate Records
Examination (GRE), and other state-level common entrance tests. Of the many entrance examinations, the
CAT, XAT, and GMAT were most popular among the top business schools in India. For example, all IIMs
considered scores from the CAT or GMAT for their admissions process, whereas TSM considered the CAT,
XAT, or GMAT scores for its admission process. Every year, a large number of aspiring MBA students took
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these examinations. In 2020, the number of candidates who took the CAT examination was 231,000.9
The Admissions Process at TSM
TSM’s admissions team was led by Gupta. The team was responsible for promoting TSM’s unique strengths
and facilitating the process for prospective MBA students to apply for admission through the TSM portal.
The admissions portal, which served mainly as a gateway to the various TSM websites, provided
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prospective students with an information brochure and comprehensive details on the application steps,
selection process, and fee structure. To be evaluated for entrance into the program, applicants were asked
to provide relevant information, including age, gender, academic background, work experience, entrance
examination scores, specialization preferences, eligibility for scholarships, and socio-economic status. The
eligibility criteria for the program included a minimum score in the entrance examination, which was higher
at TSM than at some competing business schools. Applicants were also required to write statements of
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purpose that elicited their motivation to join TSM’s MBA program.

The admissions team shortlisted applicants and invited them to attend personal interviews with the selection
panel based on an evaluation of the information they provided. The selection panel carefully assessed the
candidates’ information before the personal interviews. The interview process allowed the panellist to closely
assess the candidates’ suitability for TSM’s MBA program. Based on the selection panel’s recommendations
and a composite score of the candidate’s academic background, work experience, and entrance examination
score, the admissions team created a merit list of candidates and sent out admission offers in several stages.
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A candidate’s chances of securing admission into TSM’s MBA program depended on the applicant’s
performance score during the entire selection process and on the number of available spaces in the program.
After receiving an admission offer, the candidate could secure a space in the program by paying an admission
fee, which was equivalent to 5 per cent of the program’s tuition fee, within one month of the offer date. The
rest of the tuition was due at the beginning of each of the program’s six terms, with the first term’s fee due
one week before the start of the MBA program. Most TSM students relied on education loans from various
financial institutions to fund their program fees, but the admission fee was normally provided by the applicant.
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6
Shiv Taneja and Paranjoy Guha Thakurta, “Pampered with Plush Perks, MBAs Now Control Levers of Power in all Kind of
Companies,” India Today, March 1 1990, https://www.indiatoday.in/magazine/economy/story/19900228-pampered-with-
plush-perks-mbas-now-control-levers-of-power-in-all-kind-of-companies-813737-1990-03-01.
7
Mahajan, “India’s Management Education Growth Story.”
8
Pathfinder Publishing Pvt Ltd., “MBA Colleges in India 2021,” Careers360, accessed November 28, 2021,
https://bschool.careers360.com/colleges/list-of-mba-colleges-in-india.
9
MBA Universe, “Only 2.31 Lakh Candidates Register for CAT 2021; Much Lower than Pre-COVID Numbers,”
MBAUniverse.com, September 25, 2021, https://www.mbauniverse.com/articles/cat-registration-numbers.
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A candidate could decline the admission offer at any time before the start of the program. In such cases, TSM
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would refund all fees paid to date (e.g., admission fee and first term fee, if already paid), except a nominal
administrative charge of ₹1,000. Candidates could also request a withdrawal after the start of the program, in
which case TSM would retain pro rata charges for the number of days the student was in the program. TSM’s
refund policy was similar to those of other competing business schools. All refund requests were referred to
as the leakage rate by the admissions team. A typical admissions cycle in a given year spanned several stages,
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including promotion and applications, selection, admission offers, and enrolment (see Exhibit 1).
Offer-to-Enrolment Stage
The April–July stage of the process was a critical three-month period. During this time, the admissions
team sent out offers, processed refund requests, and monitored the number of prospective students entering
the program. The team held weekly reviews, discussed numbers, and made decisions about sending out new
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offers. There were three key phases in this stage: admission offer to admission fee, admission fee to first
term fee, and first term fee to final enrolment.
Phase 1: Admission Offer to Admission Fee
After receiving the admission offer, a candidate had to pay an admission fee of ₹50,000 within one month
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of the offer date to secure a space in the MBA program. Some candidates would officially decline the offer,
some would accept the offer and pay the admission fee before the deadline, some would request an
extension to the payment deadline, and the rest would neither formally decline nor request an extension.
One week before the admission fee payment deadline, a reminder was sent to those candidates who had not
declined the offer but had not yet paid the fee. Candidates who requested extensions would typically be
granted extensions of 10 to 15 days. On average, 35–40 per cent of applicants who received admission
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offers would pay the admission fee during this first phase.
Phase 2: Admission Fee to First Term Fee
After a candidate paid the admission fee, an acknowledgement email was sent out with details for payment
of the first term tuition fee. During this phase (i.e., after paying the admission fee but before the due date
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for the first term tuition fee), some applicants would request refunds of the admission fees, having decided
to decline the offers after all. The rest of the applicants would either pay the first term tuition fees or request
extensions to the payment deadline. As per TSM’s refund policy, all refund requests received before the
start of the program had to be honoured, with an amount of ₹1,000 retained as an administrative charge.
Phase 3: First Term Fee to Final Enrolment
Candidates who had paid the first term fee could still decide to withdraw from the program before or at the
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start of the term and request a total refund of all fees paid (minus the administrative charge). Some
candidates requested refunds after the start of classes, in which case the refund amounts were adjusted on
a pro rata basis to account for the number of days the students spent on campus. All remaining candidates,
who had not requested refunds, consisted of students enrolled in TSM’s MBA program.
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Gupta’s team would then send out additional offers to candidates who had been placed on a waiting list.
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These offers were based on the current leakage rate at each phase and the anticipated leakage in future
phases. The entire process included a series of steps, from the initial offer to the final student enrolment
(see Exhibit 2). Every year, approximately 1,370 offers were sent out in the initial phase, followed by
additional offers made in subsequent phases, as the situation unfolded. Based on data from the previous
three years, the average leakage rate was 65 per cent in Phase 1 of the process but dropped to 13 per cent
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by Phase 3 (see Exhibit 3).
RETENTION STRATEGIES
Over the last few years, the admissions team had conducted various events at different stages of the process
to retain applicants. These events included targeted digital marketing promotions, information sessions
about the program, interaction sessions with senior alumni, panel discussions by senior industry leaders,
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week-long masterclasses on contemporary themes, live sessions with faculty members, and interactions
with the current students. Competing schools also used similar types of applicant retention approaches.
However, the choice, intensity, and timing of the retention methods varied across schools, depending on
prevailing leakage rates and other extraneous factors. The average leakage rate of candidates in competing
schools, after the initial fee had been paid, was approximately 20–30 per cent.
At TSM, as soon as a refund request was received at any stage of the admission process, Gupta’s team would
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call the candidate to gain insight on the reasons for withdrawal. Decisions to withdraw could be broadly
classified under two categories: received an admission offer from a preferred school or postponed higher
education plans due to financial, health, or other personal reasons. Gupta would also employ teams of current
students to hold informal interactions with the candidates about various aspects of TSM’s MBA program. The
insight received from these interactions was critical for devising retention strategies. Analysis of leakage data
in previous years, insight received from interaction with candidates, and the team’s own experience helped
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Gupta estimate the effectiveness of these interventions in reducing the leakage rate (see Exhibit 4).
THE CHALLENGE
With only three months available in the process, Gupta wanted to ensure that the number of students who
were finally enrolled in the program came as close as possible to the available capacity of 300 spaces. A
final enrolment number that fell below the available student spaces at TSM would result in loss of revenue,
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loss of contribution toward TSM’s business expenses and profit, and underuse of the institute’s resources.
However, the failure to accommodate students who had been sent admission offers posed a more significant
challenge to Gupta. TSM’s dean, Vijesh Shah, had made the issue clear:
We need to be very careful about how many students we offer admission to. Denying a space to a
candidate who has already been offered admission, due to limited availability, would be a greater
loss than having a student space go unfilled. It will not only adversely affect our admissions in the
future but also have an undesirable impact on the image of the school. My guess is that every unhappy
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candidate results in a net indirect loss equivalent to three or four times the tuition fee amount.
Gupta was able to use the various waiting list numbers to minimize the number of unfilled student spaces.
However, there was also a drop in the quality of students with successive offers made to candidates in the waiting
list. Although the leakage rate estimates over the various phases were useful, Gupta felt that understanding the
uncertainties associated with a student’s decision to decline TSM’s offer was essential to estimate the ideal
number of additional offers to send out. Gupta saw this problem on two levels: tactical and strategic.
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From a tactical viewpoint, Gupta wanted to minimize the sum of potential indirect losses that resulted from
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unhappy candidates and the loss of revenue and contribution toward TSM’s business expenses and profit
by determining the optimum number of admission offers to send out in each of the three phases. From a
strategic viewpoint, Gupta wanted to discourage candidates from applying for refunds in the first place and
devise appropriate retention strategies in different phases to reduce the number of waiting list offers.
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Armed with these pieces of information, Gupta began his analysis. He had to present his findings and
recommendations to the dean in the upcoming admissions committee meeting, scheduled for the next week
(see the accompanying spreadsheet: The School of Management: Handling Admission Leakage - Student
Spreadsheet, product no. W27748).
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EXHIBIT 1: TYPICAL ADMISSIONS PROCESS IN FOUR STAGES

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Selection Admission Offer Enrolment Stage
Activity Promotion and Application Stage
Stage Stage
External CAT results;
Event CAT XAT or CMAT
Examination exam and
results
Timelines 1st week of 1st week of 2nd week of
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3rd week of March 3rd week of
August to 3rd 4th week of January to 1st February to
to 2nd week of June to 4th week 1st week of July
week of November week of 2nd week of
June of June
November February March
TSM Promotional
Personal Admission offers
Admissions campaign
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interviews and sent out by stage
Activities Online Online
group
Online application application Induction Academic
discussion Retention
application on closed for opens for program sessions start
rounds campaign for
admissions portal Phase 1 Phase 2
conducted in candidates with
for
six cities admission offers
Phase 1
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Notes: CAT = Common Admission Test (national level test for admission in MBA programs conducted by Indian Institutes of Management); XAT = Xavier Aptitude Test (national
level test for admission in MBA programs conducted by the private business school Xavier School of Management); CMAT = Common Management Admission Test (national
level test for admission in MBA programs conducted by India’s National Testing Agency).
Source: Created by the case authors.
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EXHIBIT 2: OFFER-TO-ENROLMENT PROCESS STEPS
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Offers Made
Declined No Information
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Send Additional Accepted
Offers
Declined
N
Extension
Request
No Information
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Are the
numbers AF Paid
sufficient?
Y Notification for T1F

Payment
Hold
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Extension
AF Refund Request
T1F Paid
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(T1F + AF) Send Additional Offers

Refund
Are the numbers N

sufficient?
No
Stop Offers
Term 1 Begins
(T1F + AF) Refund

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Students Officially
Enrolled
Notes: dotted line (-----) = leakage; AF = admissions fee; T1F = first term fee.
Source: Prepared by the case authors with information from the case.
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EXHIBIT 3: AVERAGE LEAKAGE RATE, 2018–2020
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Phase 2018 2019 2020 Average Leakage (Approximate)
1. Admission Offer to 63.5 64.7 66.0 65%
Admission Fee
2. Admission Fee to 23.5 25.6 34.7 28%
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First Term Fee
3. First Term Fee to 11.0 12.0 16.0 13%
Final Enrolment
Expected Final Enrolment 1,370 × (1 – 0.65) × (1 – 0.28) × (1 – 0.13) = 300
Number (Approximate)
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EXHIBIT 4: EFFECTIVENESS OF RETENTION STRATEGIES
Phase Potential Reduction in Leakage

1. Admission Offer to Admission Fee 15%
2. Admission Fee to First Term Fee 15%
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3. First Term Fee to Final Enrolment 15%

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THE SCHOOL OF MANAGEMENT: HANDLING ADMISSION LEAKAGE

Copyright © 2022, Ivey Business School Foundation Version: 2022-12-02

reasonable accuracy, to avoid both financial and reputational cost to TSM.

THE SCHOOL OF MANAGEMENT

TSM’s MBA Program

Growth of MBA Programs in India

The Admissions Process at TSM

purpose that elicited their motivation to join TSM’s MBA program.

Phase 1: Admission Offer to Admission Fee

Phase 2: Admission Fee to First Term Fee

Phase 3: First Term Fee to Final Enrolment

EXHIBIT 1: TYPICAL ADMISSIONS PROCESS IN FOUR STAGES

Y Notification for T1F

(T1F + AF) Send Additional Offers

Are the numbers N

(T1F + AF) Refund

Source: Created by the case authors.

Phase Potential Reduction in Leakage

Source: Created by the case authors.

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