Profile: Henley Business School at the University of Reading

If management schools can be judged by their business decisions, Henley Business School at the University of Reading would score highly at the moment. "A lot of people have said 'Boy, you got your timing right'," says Chris Bones, dean of the new institution.

The unlikely merger this year of Henley Management College, based at Greenlands, an elegant building on the banks of the Thames in Oxfordshire, with Reading University's business department, based at Whiteknights park, 10 miles away, raised many eyebrows. Henley is Britain's oldest management school and the merger was done, Bones says, only after "a very strong piece of strategic thinking".

As the first semester begins, it seems to be paying off. Applications for MBAs, both full-time and executive, are up. "Some of the brand concerns don't seem to have materialised," says Bones.

More important, the school now has financial strength in depth. The credit crunch is an obvious threat to executive education, the short courses that sustain many business schools, where full-time MBAs are often run as loss leaders. Henley's merger means that such corporate business represents only about a quarter of the new institution's income, perhaps £10m a year.

"The corporate market is very challenging for everybody," says Bones, who now spends a third of his time at Reading. "We are still winning business, but you can see people putting decisions off, and clients for open programmes dropping. The story for business schools over the next two years is going to be an increasing drive for consolidation in the sector, a search for security in scale and a stronger asset base. Well, we've already done it."

A quasi-independent Henley retains control of faculty – though its dean reports to Reading's vice-chancellor. Henley gets thousands of students (and their fees) plus Reading's expertise in finance and real estate, and its Masters courses; Reading gets the world's third-largest MBA supplier, a respected suite of executive and distance-learning programmes and a flagship building.

Together they will form one of Europe's largest full-service business schools, in terms of students. Nonetheless, some Henley MBA alumni have protested at the change in their brand. Bones, a businessman before he was an academic, shakes his head sorrowfully: "Some people have a view of Henley that is out of date," he says.

"The school has suffered for years from a shortage of capital," he explains. "Its founders back in the 1940s didn't have a vision beyond the first two or three years. Then, as Henley moved into executive education and MBAs, there were endless financial crises. The truth is, we need critical mass, intellectually and financially, and if we hadn't merged we would have faded into mediocrity."

Before the merger was announced, the school wrote to 35,000 alumni explaining the idea. At the end of the exercise only about 50 expressed dissatisfaction. Now money has gone into an alumni investment office and a legacy campaign, with fund-raising balls. "The alumni want to be back in touch with us. For a generation of people we were their education," says Bones. And no staff, he says, have resigned.

He can also point to some successes during his stint as dean. The corporate basis has doubled. The full-time MBA is in the top 20 in some rankings. "And it's a much sharper brand," he says.

Reading and Henley together are like a division of a multi-national, with 7,000 students, 150 faculty and annual revenues of £40m. John Hendry, head of the university's business school, is deputy dean. "He is an innovative academic where my expertise is communications," says Bones, who has been offered a chair.

Next year's full-time MBA class will be taught mostly at Greenlands, where the class size has doubled this year to 30. "It's a challenging, intensive course with very little lecturing and a lot of interactive learning," says Bones. "It will feel more like a work environment than a school. Students will go to China, South Africa and Europe."

The executive MBA, ranked 30th in the world by the Financial Times last year, will be run from Henley. The college's famous distance-learning programmes are facing hot competition from abroad, and some centres are closing, but this year's applications are the highest for five years.

Bridging the physical and cultural distance between these two centres will take skill. At the ICMA Centre at Whiteknights, a live dealing room is set to open and an entirely new business building is under construction. Henley hopes to upgrade its restaurant and bedrooms, already 4-star standard.

For the moment, the MBA focus remains by the riverside. The future, however, is up for grabs. Bones accepts that the MBA will change. He will move on eventually – but not, he says, until he has secured Henley's operational future.

'The MBA is of use to me every day'

Seamus Smith, 40, is general manager, Europe, Middle East and Africa, for American Express Global Network Services. He completed a part-time MBA at Henley Management College in 2003.

"I went for Henley for three reasons: the quality of the faculty; the diversity of the students; and the fact that they insisted on a lot of experience. It was hard work but then, the best learning takes you outside your comfort zone. I was living in central London and it was an easy drive to Henley. It was very conducive to learning, a good place to absorb information.

The MBA is of use to me every day. You need the ability to ask the right questions. The MBA teaches you that and to respect other people's viewpoints.

The merger? I did have some questions, but I can only think of it in a positive light. The market is more challenging now. People used to say, 'do you have an MBA?' Now they ask, 'where is it from?' There seems to be a synergy between Henley and Reading."