Apollo Group, Inc. University of Phoenix Term Paper

Pages: 7 (2040 words)  ·  Style: APA  ·  Bibliography Sources: 5  ·  File: .docx  ·  Topic: Business

¶ … Apollo Group, Inc. - (University of Phoenix)

Company overview/key strategic issues.

Company name/industry in which they operate. The Apollo Group, Inc. (hereinafter "Apollo" or, alternatively, "the company") competes primarily in the adult education market and operates a number of subsidiaries that provide a wide range of educational programs and services at high school, college, and graduate levels (Apollo Group profile, 2008). The company's current subsidiaries and their respective offerings include the following:

(UPX). UPX offers associate's, bachelor's, master's, and doctoral degree programs in business, criminal justice, general studies, health administration, and information technology at 79 local campuses and 117 learning centers in 38 states and in the District of Columbia, Puerto Rico, Canada, Mexico, and the Netherlands; this business segment also provides its educational programs globally through its online educational delivery system (Apollo Profile, 2008). Degreed enrollments for UPX as of November 30, 2007 were approximately 325,000 (Form 10-Q, 2008).

Institute for Professional Development, Inc. (IPD). IPD provides program development and management consulting services, including degree program design, curriculum development, market research, student recruitment, accounting, and administrative services to regionally accredited private colleges and universities at 21 campuses and 36 learning centers in 23 states (Apollo Group profile).

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The College for Financial Planning Institutes Corporation (CFP). CFP provides financial planning education programs; graduate degree programs in financial planning, financial analysis, and finance; and certification programs in retirement, asset management, and other financial planning areas through its campus in Colorado (Apollo Group profile).

Western International University, Inc. (WIU). WIU offers undergraduate and graduate degree programs at local campuses in Arizona and through various joint educational agreements, in China and India (Apollo Group profile).

Term Paper on Apollo Group, Inc. University of Phoenix Assignment

Insight Schools, Inc. (Insight). Insight operates an online high school and engages in the business of servicing cyber high schools and other online education (Apollo Group profile, 2008).

As of August 31, 2007, Apollo offered educational programs and services at more than one hundred brick-and-mortar campuses and 157 learning centers in 40 states and the District of Columbia; Puerto Rico; Alberta and British Columbia; Canada; Mexico; and the Netherlands (Apollo Group profile). The company was established in 1973 and maintains its headquarters in Phoenix, Arizona (Apollo Group profile).

Statement and discussion of the case and major issues. The business case presented by Robinson and his colleagues identifies numerous strengths and few constraints to the continued growth of Apollo in the adult education market in the years to come. Indeed, the authors paint a very rosy picture of the company's future, and cite a number of opportunities for growth.

Company history. Apollo was founded as a for-profit educational institution by Dr. John G. Sperling, a professor at San Jose State University in 1976 (Robinson et al.). According to the company's Web site, "Sperling anticipated the confluence of technological, economic, and demographic forces that would in a very short time herald the return of ever-larger numbers of working adults to formal higher education" (History, 2008, p. 2).

Inception and key milestones. Despite struggling for the first decade after its inception in 1976, Robinson and his colleagues report that the corner was turned in the early 2000s: "By mid-2003 Apollo soared all the way to the number seven spot on BusinessWeek's Hot Growth 100 Companies list" (p. 47-1). This growth was fueled in large part by the economies of scale the company is able to realize through its distance learning platforms and by keeping its brick-and-mortar operations "lean and mean." As Vedder emphasizes, Apollo spends about one-third of the cost of the typical state university (around $6,000) to educate a full-time equivalent student for a year, which is even less than the cost at the typical public community college. According to this author:

They do it by watching costs and single-mindedly emphasizing instruction. There are no recreational centers, art galleries, or football teams. The administrative staff is lean and mean. Classroom buildings are typically clean and comfortable but not luxurious. Facilities are used heavily 12 months a year, unlike in traditional higher education, where many classrooms are empty literally a majority of days of the year. Professors teach double or more the teaching load at the typical state university for any given amount of compensation. (p. 280)

Another milestone in the company's history occurred on October 22, 2007 when the company formed a joint venture with the Carlyle Group. The new entity, Apollo Global, will pursue investments in the international education services sector. According to its most recent Form 10-Q filing, "Carlyle, based in Washington D.C., is one of the world's largest private equity firms, managing over $76 billion in assets for over 1,000 institutional investors, including several of the largest pension funds in the U.S." (Form 10-Q, p. 20).

Mission statement. According to the company's promotional literature, "Lifelong learning requires an institution dedicated solely to the education of working adults" (About Apollo Group, 2008, p. 2).

Recent company performance. According to Morey, "Shares in Apollo Group started at $2 per share. Since then, the stocks have split several times" (p. 300). In his essay, "Market-Based Education: What Can We Learn from Universities?," Vedder (2005) reports that from 1998 to 2003, enrollments at Apollo Group schools (primarily the University of Phoenix) almost tripled to more than 200,000. The company achieved this meteoric growth by "Taking advantage of the falling price differential," and opened new campuses in dozens of new locations. Taking advantage of its own rising tuition and efficiencies derived from economies of scale, UOP now makes about 30 cents pretax profit on each dollar of sales, a profit margin virtually unheard of in American industry. A comparison of the company's recent performance compared to its major competitors is provided in Figure 1 below.

Figure 1. Apollo Group, Inc. stock performance vs. major competitors - 1996 to date.

Key:

CECO = Career Education Corp.

DV = DeVry, Inc.

ESI = ITT Educational Services Inc.

Industry = Education & Training Services

An age breakdown of the University of Phoenix's student enrollment is provided in Table 1 and Figure 2 below.

Table 1.

Age percentage distribution of incoming University of Phoenix students.

Age

Percentage of Students

25 years and under 26 to 33 years

34 to 45 years

46 and over Source: Robinson et al., p. 47-12.

Figure 2. Age percentage distribution of incoming University of Phoenix students.

Source: Based on tabular data in Robinson et al. At p. 47-12.

Positives. (a) the company is the market leader in its industry (Robinson, Pearce & Eisner); (b) the company achieved a 11.4% growth in its degreed enrollment for the three months ended November 30, 2007; when compared to the 3-month period ended November 30, 2006 weighted for geographic area and program, this growth rate resulted in a 16.9% increase in revenue during this period (Form 10-Q); and, - growing reputation for quality of programs, classes and services (Robinson et al.).

Negatives. (a) the higher education market is highly fragmented and has become increasingly competitive (Robinson et al.); (b) lingering (but diminishing) perception of "diploma mill" for its distance learning programs (Robinson et al.); and - market saturation levels are being reached in some cases that will constrain future growth (Robinson et al.).

Section 2. In depth analysis/review of the data presented in the case.

SWOT analysis is typically used to identify the strengths, weaknesses, opportunities, and threats related to the situation. For this purpose, strengths are positive aspects internal to the entity; weaknesses are negative aspects internal to the entity; opportunities are positive aspects external to the entity and possible threats are negative aspects external to the entity (Morrison, 2003) and these areas are applied to the company below; however, because the company operates a number of business segments in different markets, the SWOT analysis is focused primarily on Phoenix University.

Strengths:

Strong brand name recognition among the targeted market (Morey, 2001; Robinson et al.).

Efficient educational services delivery system already in place (Robinson et al.).

Competent leadership among corporate leadership team (Robinson et al.).

Distance learning alternatives offered by the company are highly cost effective compared to comparable tertiary educational programs (Robinson et al.).

Distance learning alternatives are more convenient for the targeted market (Robinson et al.).

Weaknesses:

Lingering (but diminishing) perception of "diploma mill" (Robinson et al.).

Very low ratio of full-time vs. adjunct faculty (Robinson et al.).

Opportunities:

Increased share of the international adult education market is possible through careful positioning (Robinson et al.).

Continuing technological innovations are providing superior e-learning methods and are attracting working adults in the age range between 26 years and 45 years (Robinson et al.).

Marketing opportunities for the company's digitized textbooks that compare highly favorably with the increasingly expensive textbook formats required at other institutions (Robinson et al.)

Growth opportunities in overseas market (Robinson et al.).

Threats:

Increasing competition for distance learning providers (Robinson et al.); a number of other providers are growing even faster than the company, which is the current the market leader (Vedder).

Increasing competition from traditional brick-and-mortar institutions (Robinson et al.)

Current age groups representing majority of enrollments will… [END OF PREVIEW] . . . READ MORE

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