Current and the Best Suited Strategies for Kaplan - Case Study Example

Table of Contents Executive Summary 2 Introduction 3 Current Strategy of Kaplan 3 Goals & Expectations 6 Strategies available for Kaplan 7 Best Suited Strategy for Kaplan 9 Conclusion 10 References 12 EXECUTIVE SUMMARY Kaplan Education has emerged as one the largest education companies globally with its huge presence in the European market and variety of courses offered by it in the field of higher education. It has been able to create a brand image of its own and tasted huge success with its efforts of diversification strategy adopted by the company. The company has recently set up new goals and objectives which are in line with its core values of integrity, knowledge, support, opportunity and results. Kaplan Education has huge potential to further tap the uncovered Asian markets for which the company has recently showed signs. The current diversification strategy has done well for Kaplan Education, however when it comes to Asian markets the external and internal factors differ greatly from the European markets and the company should adopt a dual strategy of diversification along with merger strategy to lower its capital expenditure and make its presence felt in the Asian markets. Apart from its Asian market expansion plan, the company should also try to apply a dual strategy of diversification in its services offered by introducing newer courses in its list of services offered in the existing European market along with a retention strategy to hold on its existing students and increase the revenue and thus achieve higher growth and higher profits in the future to come. INTRODUCTION Kaplan Education is one the largest profit education companies and offers programs at all degree level. It has developed from a small test preparation provider to one the largest education companies in the world. It has achieved great success in its endeavor to provide education at all levels globally. It presence can be largely felt in European countries however, the company has still a larger Asian market to be covered and tapped in the near future. With more than 30000 employees and its presence in above 30 countries it is widely preferred by the European students as their first preference for higher education. This report throws a light on the current diversification strategy adopted by the organisation and various other business strategies which are suited for the organisation in the current scenario. Among the list of various strategies a best strategy has been selected and reasons for same are discussed in details along with recommendations and conclusion for the same. The report thus provides a complete strategic approach currently used and available for Kaplan Education. CURRENT STRATEGY OF KAPLAN Kaplan Education at the onset of its business faced numerous problems on account of student retention problem, employee complaints and lower growth, however today Kaplan remains the global market leader in test preparations and has assisted over 3 million students in its 70 long years of business. It was its diversification strategy adopted by the head management of the company that Kaplan Education is known worldwide for its various courses offered. Kaplan diversification strategy helped the company to achieve excellent growth over the last decade with its revenues increasing over 12 times. It can be rightly said that today Kaplan Education is the largest diversified private educational company in the world, with revenue exceeding over $3 billion. Diversification is a renowned corporate strategy to increase the revenue via higher sales generation from its products or services offered to the consumers. Diversification strategy can be expanding into a new segment or investing in a new business outside the normal business of the firm or making an international expansion by making its presence felt in other countries of the world to make a global impact and cover a larger market segment. Kaplan Education used its diversification strategy by getting into international expansions and making its service available to the larger parts of the globe. It established its major presence in the United Kingdom in the field of higher education in 2003 and ever since it expanded its business in other European counties to became one the Europe’s largest diversified educational companies (Newman & Jahdi, 2009). Today its presence can be felt in over 30 countries with over 600 campus locations and over 150000 students enrolled in the list of the company over Europe. It also diversified its services offered starting from test preparations and specialist in accountancy trainer it diversified its business to provide higher education for all degrees. Here is a small list of the same. VERTICAL CUSTOMER DELIVERY LEVELS PRINCIPAL COUNTRY ACCOUNTANCY & TAX DOMESTIC STUDENTS FULL TIME CAMPUS MASTERS UK- ENGLAND, SCOTLAND AND WALES BUSINESS & MANAGEMENT MAJOR EMPLOYERS PART TIME CAMPUS BACHELORS EUROPE- IRELAND AND SPAIN ENGLISH LANGUAGE UNIVERSITY PARTENERSHIP ONLINE TRAINING PROFESSIONAL AWARDS MIDDLE EAST- ABU DHABI LAW INTERNATIONAL STUDENTS BLENDED LEARNING CPD OTHER- AUSTALIA, NZ Etc. ENGINEERING GOVERNMENT FUNDED PUBLISHING VOCATIONAL TRAINIG Thus, we see its presence in many countries like Australia, New Zealand, Abu Dhabi, England etc. Kaplan has certainly set a benchmark through its diversification strategy in the field of higher education. Kaplan higher education is based out of Chicago. At the end of 2011, 35 percent of the company’s students were enrolled in Bachelor’s program, about 30 percent in Associates, 25 percent in Certificate and over 13 percent in Masters. Kaplan has moved with time and set up huge online classes with the latest use of technology and providing satellite classes in order to impart best education from best faculties known worldwide. Approximately over 65 percent of the students are enrolled via its huge online networking system. It has more than 70 campuses in over 21 States with a huge online program. Kaplan education was indeed the first in the education field to diversify the company services to such great extent and make a market of its own (Krampf & Heinlein, 2001). GOALS AND EXPECTATIONS Kaplan Education has set up high goals and objectives for its services offered. Its mission is to help individuals to achieve their career goals and objectives in a smooth and easy manner. Its core values are integrity, knowledge, support, opportunity and results. It develops its long and short term goals and objectives in line with its core values. The current objective of the company is to provide its services to the Asian students for which its diversification strategy is of utmost important as the management is well equipped with its success of diversification strategy in Europe. Students all round the globe desire to be a part of the Kaplan Education however; Asian students are still away from the same as they need to travel to European countries to be a part of the same. There are still no online education services offered by Kaplan Education in the Asian countries as a result of which the cost of expenditure to study in Kaplan Education shoots up when it comes to the Asian students imparting knowledge from the same. Kaplan Education short term goals are in line with its longer prospective (Bingham, 2008). Recently the company has announced to set up online satellite classes in Asian countries which is a move by the company to tap the untouched Asian markets and certainly a sense of relief and joy for the Asian students. It is to be noted that students all round the globe expect Kaplan Education to come up with new courses and best faculties of which the management has always taken care and provide its customers with same. Expectations from Kaplan Education is always on a higher note and not surprisingly the company has been doing well in meeting the same with its efficient management system along with regular review of both its short term and long term goals and objectives (Berry & Allen, 2007). STRATEGIES AVAILABLE FOR KAPLAN Business strategies vary differently as per industry and business requirements. Strategies play an important role in the success of any organisation and choosing the best strategy as per the internal and external factors affecting a business is of prime importance for any organisation. Currently Kaplan Education has been doing well in its diversification strategy and has certainly brought a revolution in the field of higher education via its online satellite classes and providing services as per the demand of a course in a particular country (Estler & Nelson, 2005). There are numerous strategies which the company can think of at its current operation level which has been discussed as under. Growth strategy: This strategy is normally applied by an organisation when it is doing well in terms of generating revenues from its business. It can be introducing new products or adding new features to the existing products (Krachenberg, 2002). Kaplan can definitely add more courses to its existing European Market or enter into a new field of imparting primary and secondary level education by opening new schools or making collaboration with renowned schools in its country of operation. Price-skimming strategy: This strategy involves setting high prices for its products and services offered particularly during its introductory phase and skim higher profits to boost larger revenue. This strategy can be applied by Kaplan Education by offering new courses in its existing market or by making more diversification in its uncovered Asian Markets. However the same may create a negative impact if the prices are charged biased. Acquisition strategy: This strategy is normally applied when an organisation has larger capital structure and to gain a competitive advantage over its existing competitors (White & Dozier, 2002). Kaplan Education can definitely acquire its counterparts in the Asian Market and then carry on the business under its name which will provide the company a speedy start then setting up its wholly owned subsidiaries. Retention strategy: This strategy is usually applied to overcome economic situations in times of recession or economic slowdown. However, Kaplan Education can use the same strategy in a different way by concentrating on students who tend to leave the courses in middle of their term due to financial problems or personal reasons (White & Dozier, 2002). Approximately 13 percent leave their courses in midway thereby incurring large loss to the company in terms of money and reputation. Building on this strategy will definitely help Kaplan Education to generate higher revenue and strengthen its brand image considerably. Profit maximization strategy: This strategy is mostly eyed by organisations all round the globe. Tools such as cost cutting or increasing sales by higher promotion are used to increase the profit margin. However, care is to taken as it can adversely affect the sales to get lower, quality is always at risk in cost cutting strategy and it might also affect the reputation and brand image of the company. Kaplan Education is in its growth stage of product life cycle and it is really the right time to maximize profits by offering exclusive services in its courses offered (White & Dozier, 2002). However care needs to taken for the quality of services it provides, it should at no means lose its bet faculties for which it is known for. This strategy can be applied in line with growth strategy and diversification strategy to gain optimal advantage in the field of higher education services delivered by Kaplan Education. BEST SUITED STRATEGY FOR KAPLAN Kaplan Education has done well in the last decade to maximize its profits about 12 folds which show signs of the company applying a profit maximization strategy in a hidden manner along with its diversification strategy. Since the company is operating successfully in European countries. The company should now aim for a dual strategy rather than just following the diversification strategy. The company has recently announced its new objective and aim to tap the untouched Asian markets. A thorough analysis of the Asian market is thus a necessity as conditions such as political, environmental, social, logical, technological etc may vary greatly from its existing operation in the European market. Kaplan Education should continue with its diversification strategy but apply a dual strategy by mixing its diversification strategy with acquisition strategy or a merger strategy (Wright, 2008). Applying a merger strategy will help the organisation to overcome many difficulties in the Asian market. Problems of slow start will be eliminated to a considerable extent and business expenditures will be lowered to a great extent. In its initial application of making a presence of its brand image in Asian market, it will help the company to create a larger market base with higher enrollments in its courses offered than opening its wholly owned subsidiaries. Once the company is able to gain its initial share in the Asian market it can then go for complete Acquisition strategy and dominate the market as it does in the European market. For the European market, Kaplan Education should focus more on its existing market base then looking for further diversification or expansion. Diversification should be made in its courses offered by bringing newer courses in its existing services offered. The company should look upon retention strategy to lower the students being carried away with different courses offered by its competitors which will help in increasing the profit of the company and automatically make the company operate a growth strategy with lesser efforts. Thus on a whole it is important for the company to apply a dual strategy of diversification along with retention in its existing European market (Maringe, 2006). Thus in a nutshell applying an acquisition strategy in its expansion or diversification strategy in Asian market will lower and mitigate many external and internal factors risk and help the company to create a brand image of its own in the latter growth phase in the Asian market. Kaplan should also apply a retention strategy in its existing market to gain an edge over its competitors and make a base for creating market dominance in the European market of its name and became a leader in the field of higher education creating a monopolistic market of its own and build on its profits (Grunig, 2007). However special care is to be taken to ensure that the quality of the services at no means is set-off for any of the strategies adopted by Kaplan Education. CONCLUSION: This reports highlights on the current diversification strategy adopted by Kaplan Education and how the management of the company has been able to apply a hidden profit maximization strategy to increase its profits 12 folds in the last decade. The company has recently showed signs of tapping the uncovered Asian market after making its presence felt in the European market. However, conditions may vary highly when it comes to the Asian markets and the company should adopt a dual strategy of diversification and merger or acquisition strategy to lower its cost of capital requirement and take the advantage of speedy process. It should also adopt a dual strategy in its existing European market not by expanding geographically but introducing new services and courses in its existing list of courses offered in order to widen its market base and generate higher profits. Further the company should also apply retention strategy of students who deviate from the courses offered by Kaplan Education and switch to its competitors. A successful retention strategy of students shall definitely increase its revenue and profits in the future years to come. References Berry, L. L., & Allen, B. H. 2007. Marketing's crucial role for institutions of higher education. Atlanta Economic Review, 24-31 Bingham, F. G. 2008. 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Marketisation of education: marketing, rhetoric and reality. Journal of Further and Higher Education, 33(1), 1-11 White, J., & Dozier, D. M. 2002. Public relations and management decision making. In J. E. Grunig (Ed.), Excellence in public relations and communication management (pp. 91- 108). Hillsdale, NJ: Lawrence Erlbaum Associates. Wright, R. 2008. Targeting, segmenting and positioning the market for college students to increase customer satisfaction and overall performance. College Student Journal. 42(3), 891-894 Read More