Education and Training Industry - Research Paper Example

?FEASIBILITY REPORT E-learning industry has rapidly growing and has become a centre of attraction for many individuals and organizations. E-learning is a convenient and affordable way to enhance one’s skills and capabilities, this technique has gain popularity very swiftly. Evolution of this concept has provided a platform to many potential trainers and entrepreneurs to take advantage of this technology. Developing countries are huge market and constitute a major portion of the world population; therefore there is an opportunity in the market to cater the educational needs of these countries. Globalization and advancement in technology has developed a new concept of virtual organization, these organizations operates online without any physical existence, this concept can be used by businesses outside the developing countries to cater the need of affordable education in the region. This report talks about the feasibility of a virtual US based institute which would be offering vocational short and long term courses on particular subjects primarily to the developing countries, and to the local market. INTRODUCTION Learning and growth has become one of the important aspects for organizational and self growth. Globalization and technological advancement has made the competition very intense between organizations and individuals in different fields of life, this has increased the need for learning and growth. The need for learning and growth is not limited to local market, each and every individual and organization all around the globe needs it. Learning and growth enhances the skills and capabilities of individuals which is good for their self growth and for the growth of the organization in which they are working as human resources are the ultimate source of profits. Learning and growth are supported by education and training, and the industry of training and development is rapidly growing (Report Linker, 2012) therefore there is an opportunity in the market for interested players to cater the growing need of learning and growth by offering training and education services. Although the training and education industry is complex in nature because of various players and variations in the operating styles but still there is space available in the market for new entrants. New learning and training techniques has fueled the growth of this industry and has allowed businesses to expand their operations nationwide and worldwide. Individuals seek for quality education and training therefore the scope of education and training can never be narrow down. The report will analyze the feasibility of opening a virtual training and education institute which will be focusing on the emerging needs of developing countries and to the local market through the virtual and modern techniques of learning and training; the institute would be operating in a niche, focusing on business administration and career development courses. PRODUCT OR SERVICE The thought of the business is to start a new training and education institute, Excellence institute of vocational and organizational training. The institute would be offering online vocational and official training to organizations and individuals through using virtual and electronic techniques of learning. It would be catering needs of those organizations and individuals who look for convenience and speedy service. Quality of education and training is the primary thing potential customers look for; therefore high quality service would be the primary objective of Excellence institute. Modern techniques of learning would support the fulfillment of primary objective. Various short and long courses and diplomas will be offered to the target market on different subjects in demand with in the field of business administration and career development which would be classified in following categories: Entrepreneurship Leadership Career development and planning Business, finance Human resource management Management (general) International business studies Administration, office skills Financial management, accounting Secretarial skills Public Administration Management skills (specific) International Business studies Marketing management In addition the institute would be offering pleasant and motivational environment in virtual class and discussions, it would also provide distortion free speedy network to enhance the effectiveness of delivered lecture. TECHNOLOGY Excellence Institute would be using the latest techniques and technologies which are available in the market to enhance the effectiveness and practical outcomes of training and educational courses. The institute would be using different E-learning technologies of training and teaching which are listed below: Virtual sessions E-books Multimedia DVDs Audio\visual tapes Use of above E-learning technologies would ensure the best quality of service; in addition the institute would use the latest technology to increase the market and awareness of the business and services offered which would help the institute to achieve the break-even in shortest possible time and in long-run it will enhance the profitability and customer base of the business. MARKET ENVIRONMENT The impact of economic recession seems to be slow down, which has again increased individuals’ attention towards acquiring the best possible education and training, investment in the training and education sector in increasing as the demand for quality education is rapidly increasing, individuals are eager to attain appropriate training and education to stay employable. The trend has been changed in educational and training sector, in past individuals and organizations look for traditional technologies and techniques in training but today they look for more flexible learning techniques such as E-learning. Excellence institute would attempt to fill the gap and would take advantage from this opportunity. US market is quite large and majority of the people are literate, published literacy rate for USA is 98% which shows the demand for education and learning in the region (First Research, 2012). This ensures the growth the feasibility of the idea of training and education business within the region. People in developing countries consider the standard of education high in rich countries which would play an advantage for the virtual operation of the business. The other factor supports the growth of education and training sector is globalization and advancement in technology. Business administration and career development have become the important aspects for organizations therefore they look for training and development for their employees to ensure the growth and effective management, therefore the institute would be focusing on this subject and would develop expertise in this field (Harward, 2010). COMPETITION The competition in the education and training industry is intense, there are several physical and virtual institutes with in and outside the local market which would give a tough time to the newly start business. There are several players in the market which are offering business management and career development course which makes the presence of competitive advantage more crucial to the success of the institute (PRWeb, 2010). Competitive advantage Excellence institute would be enjoying competitive advantage over other players in the market. Combination of following factors would give the business competitive edge over others and would allow the institute to enjoy the competitive edge over others: Quality of education The institute would attempt to provide high quality education and training to the potential market. Indeed there are several players in the market which provide high quality education but the institute would facilitate the customers with new techniques with easy and interesting methods of learning which would shape the learning process flexible to a high extent. Cost advantage The institute would be enjoying cost advantage over others. The institute would be importing and integrating resources and skillful people from developing countries which would allow the institute to enjoy the upper hand over others. Outsourcing would also be considered wherever needed. In this way the institute would reduce its cost. Pricing Prices is one of the most important and critical factors that could influence the success of the firm (Kotler Armstrong, Wong, and Saunders, 2008). The fee charges of education and training of institutes of USA and developing countries is high which work as a barrier for many people, therefore Excellence institute would be offering the educational and training services at much low rate due to the cost advantage which would enable to the institute to distinguish itself with other institutes. Continuous improvement Continuous improvement is another factor which would contribute in developing the overall competitive advantage of the institute (U.S. Department of Education and Office of Vocational and Adult Education, 2012). It would allow the Excellence institute to better equip itself with advanced technological equipments of learning and management. Continuous improvement is actually the backbone of the business and allows the firm to stay competitive and updated. Niche market The Excellence institute would be operating in a niche which would allow it to develop expertise in the particular field. It would help the institute to develop a clear image in the market, claiming the expertise in various field can be confusing for the target market therefore niche market would largely contribute in shaping the competitive advantage for the institute. INDUSTRY ANALYSIS According to global industry analysis, by 2015 the world e-learning industry is anticipated to exceed $107 billion which shows the potential of e-learning in the field of education and training (ReportLinker, 2012). Reduction in operational cost, flexible learning solutions, simplified and easy training processes, and demand for workforce training will fuel the market growth of the overall industry. Internet penetration, declining telecommunication costs, and need for organization to achieve competitive advantage over competitors through corporate training are the other factors which contribute to the market growth and expansion. The US and the Europe together hold the strongest market position in the global e-learning sector with a market share of 70%. Asia pacific is the region recording highest growth rate and is expected to record more than 20% growth in revenue generated during 2015 (ReportLinker, 2012).   BUSINESS MODEL Excellence institute of vocational and organizational training would be a virtual institute and would be offering training and educational services to the USA market and outside the USA it would be catering the needs of developing countries, the primary focus would be on developing countries but local market is also important to generate expected sales. The institute would be trying to develop a distraction free convenient virtual environment where individuals could learn in a relaxing mode. The institute would be operating in a niche which would be giving a clear message about the area of specialty to the potential target market. However, by doing so the management of the institute would be making sure that the institute offer flexible and effective solutions to the problems of target market. MARKET AND SALES STRATEGY Excellence institute of vocational and organizational training would be spending appropriate amount on the marketing and sales of the services offered to attract potential target market and to develop a considerable market share in the market. The institute would be clearly state the advantages of courses in the promotional activities to attract more and more entities and individuals, the institute would not only make sure the efficiency of marketing efforts but it would also make sure the quality of services offered. Marketing strategies of the institute have been discussed in detail by using marketing mix 4Ps. Product The institute would offer the short and log-term vocational business management and administration courses. With in the business management and administration field, it would be covering all areas such as human resource, accounting, finance, marketing, and management. With business management and administration the institute would be offering career development and planning courses to individuals. E-learning would be the basic focus of the institute that would help the institute to expand the reach without incurring high cost. Price Excellence institute of vocational and organizational training would be offering educational services at relatively low charges than competitors in the US and in developing countries. The major reason is the decline in affordability levels of the people due to the hit of economic recession. In developing countries purchasing power of locals is low therefore low fee charges would attract the locals. By keeping the fee charges low, the institute would be able to target most of the individuals and organizations in USA and in developing countries. Place The institute would be operating virtually and targeting to the developing countries primarily and to the US residents as well. Virtual presence would provide the mobility of operations and would integrate the cost efficiencies in operations. One would easily access the institute by logging in to the institute website. Headquarter office of the institute would be located in the Waltham city of the USA. Promotion Excellence institute would be dependent on various promotional activities to generate sales. The institute would be using online and some other promotional and branding channels to create awareness and to develop a strong image in the market. Use of social media marketing, video marketing, and search engine optimization would be the basic strategies of branding and marketing which would be helpful in achieving the stated objectives of the business. The other channels would also be used too support the act such as advertisements in newspapers and magazines, flyers and brochure and many other, they usually be used for marketing in the US territory. PRODUCTION\OPERATIONS REQUIREMENT Excellence institute of vocational and organizational training would be operating as a virtual institute so it would need specific space for tutors and trainers to prepare themselves for lectures and to deliver the lecture, it would also need technological equipments for teaching and training, in addition to it would require some institute furniture, stationeries, and books. MANAGEMENT AND PERSONNEL REQUIREMENTS Excellence institute of vocational and organizational training would be focusing a lot to the training of trainers and lecturers as the entire success depends on them. The management would be giving special attention on required skills and abilities while hiring the trainers. The institute would hire the experts from various regions of the world which would allow the institute to have various skills and expertise and the currency difference would allow the institute to minimize the cost. REGULATIONS\ENVIRONMENTAL ISSUES Excellence institute of vocational and organizational training would require to all regulation related the operation of the online business. The institute should keep in mind that there are some legal factors with this sector which need to be catered by the institute. The institution would make sure the fulfillment of all legal issues and the management would follow all legal instructions by the authorities. As the institute would be operating virtually than as such it wouldn’t be facing any environmental issues, only the physical office in some regions need to take care of environmental issues. CRITICAL RISK FACTORS Excellence institute of vocational and organizational training need to consider various risk factors before starting the business, these factors are listed below: Financial Risk Laws and regulations of the industry Risk of capital Growth of the industry Level of competition Market Risk Potential of the business Consumer trends Growth of the educational sector as a whole Financial projections Income Statement of Excellence institute of vocational and organizational training Year 1 Year 2 Year 3 Year 4 Year 5 Revenue 450,000 562,500 703,125 878,906 1,098,633 Expenses Marketing Expense* 50,000 60,000 72,000 86,400 103,680 Salaries expense** 108,000 118,800 130,680 143,748 158,123 Cost of trainers 240,000 264,000 290,400 319,440 351,384 Utilities expense 15,000 18,000 21,600 25,920 31,104 Rent expense 60,000 66,000 72,600 79,860 87,846 Depreciation expense 18,700 18,700 18,700 18,700 18,700 Total Expenses 491,700 545,500 605,980 674,068 750,837 Net Income (41,700) 17,000 97,145 204,838 347,796 * Marketing expenses are expected to increase by 20% every year expect the first year where it will increase by 50% ** Salaries are expected to grow by 10% from third year Income statement Cash flow statement Year 1 Year 2 Year 3 Year 4 Year 5   Receipts           Cash sales 450,000 562,500 703,125 878,906 1,098,633 3,693,164 Cash from investors             Total Receipts 450,000 562,500 703,125 878,906 1,098,633 3,693,164               Payments             Salaries and wages 108,000 118,800 130,680 143,748 158,123 659,351 Cost of trainers 240,000.00 264,000.00 290,400.00 319,440.00 351,384.00 1,465,224 Marketing/promotion 50,000 60,000 72,000 86,400 103,680 372,080 Utilities expense 15,000 18,000 21,600 25,920 31,104 111,624 Rent expense 60,000 66,000 72,600 79,860 87,846 366,306               Total Payments 473,000 526,800 587,280 655,368 732,137 2,974,585               Cashflow Surplus/Deficit (-) (23,000) 35,700 115,845 223,538 366,496 718,579               Opening Cash Balance 63,000 40,000 75,700 191,545 415,083                 Closing Cash Balance 40,000 75,700 191,545 415,083 781,579   Balance sheet Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Assets Cash 63,000 40,000 75,700 191,545 415,083 781,579 Fixed Assets 187,000 187,000 187,000 187,000 187,000 187,000 Accumulated Depreciation (18,700) (18,700) (18,700) (18,700) (18,700) Net Fixed Assets 168,300 149,600 130,900 112,200 93,500               Total Assets 250,000 208,300 225,300 322,445 527,283 875,079 Equity Share Capital 250,000 250,000 250,000 250,000 250,000 250,000 Retained Earnings - (41,700) (24,700) 72,445 277,283 625,079 Total equity 250,000 208,300 225,300 322,445 527,283 875,079 Total Liabilities & Equity 250,000 208,300 225,300 322,445 527,283 875,079 Project appraisal Net Present Value Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Net Income -250,000 (41,700) 17,000 97,145 204,838 347,796 NPV 70,001 IRR 22.20% RECOMMNEDATIONS\FINDINGS With the rapid growth in the e-learning sector, and the expected increase in returns, it is suggested that the project is feasible. Although the competition is intense but the industry has the potential to grow, and space is available in the market where as the barriers to entry is also low therefore the new business has the potential to develop a sustainable market share. CONCLUSION The industry analysis says that there is a need of affordable education in US and especially in the developing countries therefore this project has the potential to grow. Affordable education from a US based virtual institution would be an attractive source for the residents of developing countries. Positive NPV ensure the feasibility of the business, whereas income projection ensures the growth of the business. REFERENCES First Research. (2012). ‘Education and Training Services.’ Market Research. Retrieved July 03, 2012, from http://www.marketresearch.com/First-Research-Inc-v3470/Education-Training-Services-6973723/ Harward, D. (2010). ’10 Predictions for 2011: trends that will reshape the training industry.’ TrainingIndustry.com. Retrieved July 04, 2012, from http://www.trainingindustry.com/articles/10-predictions-for-2011.aspx/ Kotler, P., Armstrong, G., Wong, V., and Saunders, J. (2008). Principles of Marketing. Harlow: Pearson Education PRWeb. (2010). Global eLearning Market to reach $107.3 Billion by 2015. Retrieved July 03, 2012, from http://www.prweb.com/releases/elearning/corporate_elearning/prweb4531974.htm ReportLinker. (2012). Education and training industry: market research, reports, Statistics, and Analysis. Retrieved July 03, 2012, from http://www.reportlinker.com/ci02402/Education-and-Training.html U.S. Department of Education and Office of Vocational and Adult Education. (2012). Integrating Industry-Driven Competencies in Education and Training through Employer Engagement. Retrieved July 04, 2012, from http://www2.ed.gov/about/offices/list/ovae/pi/cclo/brief-4-employer-engagement.pdf Read More