SWOT Analysis: The Apollo Group - Case Study Example

Running head: SWOT ANALYSIS ASSIGNMENT SWOT Analysis: The Apollo Group s The main aim of this report is to undertake the SWOT analyses of Apollo Group, a multinational leading education provider. The report sheds light on the strengths and weaknesses of the Group as compare to its rivals. The report will also undertake the evaluation of the opportunities for the business to attract more and more customers from the Market by introducing new innovative products, improved marketing techniques and employee and customer satisfaction programs. First part of the report provides information about the companys performance last year. The report also contains the objectives of business according to the social, economical, technological and political factors influencing the business. The objective for the competitive position of the business is also defined. The report will also define the segments which need to be addressed by the Apollo group in order to enhance its business. Introduction to Company: Apollo Group headquartered in the US has a multinational network of institutes. The main aim of formation of the Apollo group was to cater the education needs of working adults. The group undertakes its business through subsidiaries. Listing few of them are: the University of Phoenix having its online campus also, the College for Financial Planning, and Western International University etc. The courses offered at the institutes are innovatively designed according to the needs of 21st century. Apollo Group experienced improved financial performance in 2008 having consolidated net income of $476.5 million, or $2.87 per diluted share, on consolidated revenue of $3.1 billion, a 15% increase. The degree enrolments reached at the record highest levels at 362,100 which were 12% more than 2007. The Group is progressing through its aggressive marketing techniques and continuous expenditure on research and development in the field of new teaching techniques. The group has gained accreditation with the prestigious Association of Collegiate Business Schools and Programs (ACBSP). SWOT Analysis: SWOT or strengths, weaknesses, opportunities and threats analysis is a technique used by business analysts to identify and analyze environmental factors that influence a business organization’s performance in a variety of ways, including its decision making and corporate behavior (Mello, 2003, p.40). “The Threats-Opportunities-Weaknesses-Strengths (TOWS) Matrix is an important matching tool that helps managers develops four types of strategies: So Strategies, WO strategies, ST Strategies, and WT Strategies. SO strategies use a firm’s internal strengths to take advantage of external opportunities. WO Strategies aim at improving internal weaknesses by taking advantage of external opportunities. ST Strategies use a firm’s strengths to avoid or reduce the impact of external threats. WT Strategies are defensive tactics directed at reducing internal weaknesses and avoiding environmental threats.” (David, 180-181) SWOT analysis enables the organization to plan and execute its programmers of action with a degree of certainty about the external environmental factors that influence its own existence. A baby store would necessarily be faced with a number of external economic influences such as the government policies on taxation, interest rates, inflation, money supply, balance of payments, Gross Domestic Product, National Income, foreign governments’ protectionist policies and so on. Imported baby-care products would be more expensive if the government imposes a higher import tariff on them. The government might impose higher corporation taxes in order to control inflation. This would affect the business in a number of ways. SWOT Analysis of Apollo Group’s current position STRENGTHS Steady revenue: Funded by state, local as well as European Union’s support programs. Culture centric educational activities for school groups and culturally sensitive social groups The groups informative printed material (successful bulletins, leaflets) and technology oriented marketing techniques. Presence awareness due to aggressive marketing by the group. Enthusiastic stuff Friends organisation (approximately 3000 subscribed members) – keen volunteers Good relations with local media WEAKNESSES Over-reliance on state and local authority funding Restricted ability to raise prices OPPORTUNITIES Major national trend of promotion and introduction of cultural activities related to conservation and heritage issues More people moving into area Computer technology for promotion purposes. Entry in new international markets. THREATS Current economic climate, e.g. Announcements by the Greek government for financial reforms with negative impact to middle and lower social classes’ income – less spending on culture Leisure city centre expanding Results to be achieved in future can be less than projected. Changes in regulations can lead to decreased profitability. Security threats to the group database. Strengths: Apollo Group is positioned as the market leader in the more attractive and the largest sector (Working Adults) of the Graduate and undergraduate student segment of the United States Education Industry. The Apollo Groups subsidiaries such as Phoenix University and its on line campuses may enjoy almost universal students awareness and strong loyalty in United States and other countries. The group opened its first resource center in order to provide the students with the facilities of group meetings, tutoring and counseling sessions. The group had an employee base of approximately 18,000 employees, plus more than 26,000 faculty members at the end of fiscal year 2008. Most of these employees come from the minority communities, representing the adoption of diverse cultures by the organization. The company expects higher number of students to be attracted and retained in a cost effective manner through the acquisition of Aptimus. The purpose of branding is to achieve a market position that will represent a sustainable competitive advantage. Companies are increasingly extending the line of variants available under a given brand, resulting in a family of related offerings. The reason for this is essentially economic and Apollo Group has gain many such advantages by successful introducing a range of products. The company has safe guarded its brand reputation by providing quality education, open and friendly employee policy and implementation of good governance and corporate social responsibility policies. The online library of the group allows the students to access the books and all the education material online thus reducing the cost for the students. This confers upon it advantages of the experience curve (accumulated learning) as well as scale economies, far in excess of its competitors. As a result of strong brand loyalty, the Company is able to charge a price premium on its price to the service provision. This allows the company to realize better profit margins in a sector where most brands compete on price. The company has achieved its current position through following "Market Busting moves: Creating a new niche to win Eliminate tolerables and emerging dissatisfiers Break up existing segments Digitize to combine or replace links in an existing chain Add compelling parallel offerings" (Hunt, 2005) Weaknesses: Over reliance on the internet and technological tools further aggravated by the fact that there are high and continuous threat of security to the online services. Ability to raise prices is restricted both by cheaper competition and the availability of substitutes in shape of public institutes. Opportunities: "The domestic non-traditional education sector is a significant and growing component of the postsecondary education industry, which was estimated to be a more than $373.0 billion industry in 2006, according to the Digest of Education Statistics published in 2007 by the U.S. Department of Education’s National Center for Education Statistics." (Apollo Annual Report, 2008) The growing pool of children is an opportunity for one of its online high school subsidiary Insight Schools which expanded the number of schools it serves from 3 to 11 in 10 states and the group plans to continue with that. Several small players who compete only on price and therefore, have low profitability may be squeezed out cleaning up the industry of marginal players and providing an opportunity for growth in market share of more established competitors. The group is expanding its operations by acquiring several other institutes such as an arts and Communications University in Chile on the other hand the group acquired a dentistry school in Mexico. The company is also ready to explore the Canadian provinces and territories. Threats: The foremost threat facing the group is the economic downturn being experienced in the world. The changes in the regulations regarding the education industry can affect the “Accreditation and Jurisdictional Authorizations,” “Financial Aid Programs,” and “Regulatory Environment;” There are also some regulatory requirements, in case of failure to follow them the group will have to face certain penalties and fines. The failure to comply can also lead to the loss of provision of U.S. federal student loans and grants for the students studying at the institutes. The changes in laws of different states regarding the accreditation, authorization to operate in various states can reduce the profitability of business. "Action by the U.S. Congress to revise the laws governing the federal student financial aid programs or reduce funding for those programs could reduce student population and increase costs of operation." (Apollo Annual Report, 2008) References Apollo Annual Report, (2008). The Power of Learning: The Apollo Group Inc., retrieved as on 18th February 2009 from http://www.apollogrp.edu/Annual-Reports/2008%20Annual%20Report.pdf Fred R. David, Strategic Management Concepts and Cases, Eleventh Edition, p.165-166 Hunt, L., (2005). Market Buster: Apollo Group Inc., Retrieved as on 18t February, 2009 from www.marketbusting.com/casestudies/Apollo Group Report.pdf Mello, S. (2003). Customer-centric Product Definition: The Key to Great Product Development. Massachusetts: PDC Professional Publishing. Read More