Misaligned market assessment and cost management : Case of U21Global

A recent story on U21Global highlights the challenges of executing a vision which has arrived ahead of its time.

U21 had a very unique positioning of leveraging the power of university consortium and technology to build a global online university. However, it seems to have missed on two important aspects--market readiness and cost management. For example, its biggest target markets like India and China are still not ready for online programs which are expensive, although they are ready for cheaper programs that add "credentialing" aspect to their profile.

As pointed out in this article, price of brick-and-mortar courses in China was US$2,000 as compared to US$7,000 for U21.

Likewise, in India, Symbiosis Centre for Distance Learning (SCDL), started right around the same time as U21, claims to enroll more than 200,000 students and charges around US$500 for similar programs. Thus, while on the revenue side, U21 has limitations on the tuition pricing. On the cost side, U21 has heavy expenses associated with international administrators and faculty members. This has resulted in inefficient administration of the venture.

Online education model works on scalability and not selectivity. And the scalability in markets like India exists with the price conscious mass segment. With the transfer of controlling stake to Manipal Education, cost structures could be better balanced with the market needs in China and India.

At other level, U21 needs to expand its outreach by partnering with institutions in different segments. For example, U21's partnership with IGNOU to offer joint Postgraduate Programme in Information Technology Management would enable it to leverage IGNOU's large student base (total enrollment of 2million students) and established credentials in a price-sensitive mass segment. The program is priced at $3,750 and accepted 112 students for its first intake in Sept'09. For global online universities considering to enter Indian market this reaffirms the pricing challenges in Indian market.

posted by:
Rahul Choudaha, PhD
New York
http://www.dreducation.com/

India: Enabling Investments in Education

This post was written by Rahul Choudaha, who runs Dr. Education.

India's Human Resources Minster Mr. Kapil Sibal aims to increase Gross Enrollment Ratio (GER) in higher education from current 12% to 30% by 2020.

Mr. Sibal, who is control of the country's education portfolio, says that this translates into a need for 14,000 additional general colleges, 12,775 professional institutes and 269 universities over the next 11 years. (Indian higher education system follows the model of multiple independent colleges affiliated to a common degree-awarding university). Government understands that it would not be able to achieve it without private investment. To achieve this scale of expansion with speed, Mr. Sibal is actively exploring options to streamline regulatory structure and encourage private investment.

Apart from a host of public-private partnerships the minister is also considering to allow for setting up a not-for-profit entity under Section 25 of the Companies Act 1956.

Current regulatory structure only recognizes institutions which are set up as non-profit trusts or societies. While the registration under section 25 as company would still require a non-profit objective it would enable recognition from the regulatory body and help in managing in a more scalable, professional and accountable manner at a national level.

Posted by:
Rahul Choudaha (PhD, MBA, BE)
blog: Dr. Education
New York, New York

For-profit education: US Trends and Lessons for India

This post is from Rahul Choudaha, who writes for Dr. Education.com.

I have posted an entry on the trends in the US for-profit higher education and its implications for the Indian higher education market at my other blog.

The biggest constraint for India remains the regulatory environment, even though there is significant interest and energy from investors and entrepreneurs. Apart from changes required in the investment and regulatory environment, one key lesson for investors and entrepreneurs interested in the Indian higher education market is the ability to create a sustainable and competitive business model. Prof. Vance H. Fried in his recent article on the future of for-profit higher education comes to this conclusion: "Higher education is a large, mature industry that is being reshaped by innovation. While some of the innovation is in technology, the primary innovation is in business models."


Detailed posting is available at DrEducation.

Rahul Choudaha, PhD
New York

Indian Education Market: Ready, Steady...

The Indian education market is undergoing rapid transformation since the new minister of education, Mr. Kapil Sibal took charge in May 2009. It all started with the minister's announcement of a 100-days plan to improve quality and access.

This also raised expectations for much awaited clarity on the regulations related to entry of foreign universities. More recently, government has announced that 14 innovation universities will be open for private investments.

Several international education institutions including universities and colleges, K12 schools and support service organizations are keen on engaging with the Indian market. The market is just getting ready for the big investments and is edupreneurs are also sensing the opportunity. A Business Today magazine recent cover story The Advent of Edupreneurs focused on this emerging opportunity.

I also covered this trend of emerging models of education entrepreneurship in India on my blog. There is a lot of optimism and expectations from the new minister and if the changes do take place in the direction conducive to investors, speed to market and deep understanding of the market characteristics will emerge as the critical success factor.

Posted by
Rahul Choudaha, PhD
New York
Dr. Education
rchoudaha[at]yahoo.com

Education Entrepreneurship in India

I have posted a blog on "education entrepreneurship in India" on Dreducation.com. In this posting, I have highlighted some of the models of education and some exemplars in each segment. American investors exploring an entry into the Indian market should actively consider the opportunities presented by the spectrum of innovative models of education and related services. Undoubtedly, there are regulatory constraints in India, but the demand and opportunities may provide handsome returns in long run.

This post was brought to the Eduvest Blog by Rahul Choudaha, who will be one of the speakers at the upcoming Education Industry Investment Forum.

Resource for Indian Education Market

You want a little more information on the Indian education industry, you say?

You should really talk to Rahul Choudaha, who wrote this dissertation (click on the link) about finding a core competency curriculum in international education.

Rahul will be joining us on this blog, where he will be writing from time to time about the intersections and differences in the India-United States for-profit education industry relationship.

Rahul also writes the Dr. Education: Diagnosing Indian Education blog.