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Medium Profitability Competitive Strategy Market Share

MOOC Madness

#Higher Education #Education
ProHub Comment

This case requires candidates to analyze industry trends affecting a traditional university's market position and develop a strategic response to competition from online and alternative education models. The analysis demonstrates how to quantify competitive threats using market share calculations and evaluate capital investments using financial payback metrics.

Estimated Time 15 minutes
Difficulty Medium
Source Darden
50 / 100
Our client, Greg Wilkinson, is the Dean of the business school at a mid-sized, four-year university. They are experiencing declining application rates and have brought us in to help determine the reason for the decline and how to bolster converted admissions. He must present to the Board of Visitors on the topic later this week.

Clarifying Information

  1. How is “application rates” defined? How is “converted admissions” defined? Application rate is the number of applicates to the university. Schools like to see this number grow, indicating preference and prestige of the school. Converted admissions is the number of applicants who have been offered admission to the school and accept that offer to attend.
  2. Why does Greg Wilkinson want to pursue this? Schools need tuition dollars of a certain threshold to cover their operating budget, so a decline in quality, interested prospective students (i.e. declining application rates) makes that threshold more difficult to reach.
  3. What is the business model for a university? Universities receive “revenue” mainly through tuition dollars and endowment donations. They have a large set of fixed operating costs to cover, so budgets are typically tight.
  4. What is the current state of the education industry? More information later.
  5. How will Greg measure success? He wants to increase converted admissions to drive tuition dollars.