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Business News/ Opinion / Views/  Struggling educational businesses should get strategic

Struggling educational businesses should get strategic

They need to practise what strategy classes preach and look at unfamiliar options such as M&As

The struggle to strike a balance between admission numbers and faculty strength has been perennial.Premium
The struggle to strike a balance between admission numbers and faculty strength has been perennial.

Over 550 professional colleges, or nearly a tenth of India’s total, are estimated to have pulled down shutters in the last five years on account of non-viability. A black-swan event like the covid pandemic is not the only culprit. The higher education sector has problems of declining student enrolment (barring medical colleges) and financial challenges that require radical changes in the way it functions. A financial stress test will probably confirm that more colleges face closure.

Colleges often struggle because their various departments work in mutual isolation, with no alignment. As competition for students, high-quality faculty and corporate recruiters heats up, it is all the more crucial for the academic, admission, marketing and placement folks to come together and forge a cohesive action plan to increase revenues and enhance the college’s reputation.

The struggle to strike a balance between admission numbers and faculty strength has been perennial. Good teaching staff not only means higher salary bills, but a better brand reputation as well.

Educational institutions, like other organizations, also suffer from their marketing departments working in silos. Dwindling revenues have reduced budgets, and without a collaborative effort, marketers in this sector cannot hope to make an impact.

Existing and new institutions will have to fight for potential students in many streams. As if this is not daunting enough, they must contend with changing preferences and rising questions about the value of a college degree in the wake of high unemployment. While thousands of engineering graduates find it hard to get gainful employment, three-year degree holders have it worse. Starting salaries have been stagnant for most of them, even in the hallowed IT corridors. Yet, tuition fees have been rising every year.

Many promoters lose sleep over how to convince students and parents of the value of a degree. In an empirical study conducted by Medici Institute, most promoters and administrators admitted a lack of data to measure it and articulate their differentiated value propositions. This resonates with findings in the US market, where most universities and colleges have a broad positioning that promises everything to everyone.

Marketing departments in this sector tend to be under-staffed and under-funded, with little strategic thinking to speak of. Lessons from success stories, though, show that they succeeded because of cross-functional teams working together on campaigns with good coordination among academics, the admissions wing and marketing. Experiential tours, outreach programmes, participation in ranking exercises and, of course, plain vanilla advertising can all help. Here is what these businesses can do:

Seal leaky buckets: One of the growing issues is of increasing drop-outs. This is a direct revenue hit, as seats vacated midway can’t be filled. A policy can be made to acquire students in any year via migration from other colleges. Also, supporting existing students to continue their education is far cheaper than acquiring new ones. Faculty attrition is another issue that needs addressing. Courses that attract low enrolments should be eliminated to release resources and improve return on investment.

Develop new business models: What is preached in strategy classes should be put in practice. Colleges can do a ‘SWOT analysis’ of ‘strengths, weakness, opportunities and threats’ to arrive at a differentiated value proposition. There may exist a sweet spot for a mid-size university or a specialized hi-tech institute like CalTech. Positioning the institution as small enough to give personal attention but big enough to offer a variety of courses would hold merit. How much flexibility the regulatory body is willing to offer is critical to this approach. Another business model could ask students to pay only once they start earning.

Co-create course content with the real world: The sector should embrace the real world closer. Institutes should connect with local industry, chambers of commerce, MNCs and alumni to co-create courses that let students hit the road running once placed in companies. This way, jobs can be guaranteed, which is a key factor for enrolment and brand reputation. Most higher education aspirants in India look for jobs, and so a job guarantee makes higher tuition fees easier to justify. For instance, a college could team up with employers in fast-emerging fields to offer highly specialized courses that raise employability.

Bounce back with an opportunistic product mix: The turbulence caused by the pandemic has created educational demand from those who lost jobs and want to up-skill and re-skill themselves. Opportunities also lie in short-span training courses for emerging sectors. This initiative could be expanded to corporate training, which is a lucrative segment across the world, with revised key-performance targets for the faculty. External faculty members could also add great value.

Mergers and acquisitions: The higher education sector could do with M&A activity to become more competitive. While India has not seen much of this, there are many cases in the US where ailing institutions have merged with or got acquired by others. The 135-year old California-based CST, for example, was acquired by the Oregon-based Willamette, and moved its campus to Oregon, where real estate prices and taxes are lower. Like in other fields, once this trend starts, its pace will probably pick up sharply. It’s another way to enhance value.

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Published: 21 Aug 2023, 09:37 PM IST
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