Here is a real-world situation.
You’ve been hired by an industry association representing the 3,000 colleges located in the United States. Due to COVID-19, nearly all universities in the United States will be conducting classes via video conference at the start of the new academic school year, which begins in August 2020.
A few months ago, the association sent out a survey to the college students attending their member universities. The survey asked a simple question:
Given the remote learning situation, do you plan to re-enroll and attend school in the next academic year?
25% responded “No.”
What should the association’s member universities do regarding this finding? How would you structure this problem? What are the possible implications of this finding?
Post your answers in a comment below.
24 thoughts on “Real-World Case”
This is how I would approach it.
My hypothesis is that universities want to maintain financially viable until the outbreak is resolved. To approach this problem, I would like to break down my analysis into three main components.
1. Short-term Impact Assessment
1.1 Financial
– Impact on tuition fee, subsidies and grants
– Changes in variable cost (e.g. utility, materials needed for classes,
– Do colleges need to explore financing options to keep up with fixed costs (e.g. buildings and staffs)
1.2 Non-financial
– Classes, modules, department impacted
– Number of staffs and buildings that need to be operational
– Number of students requested for deferrals to next year
2. Options to Improve
2.1 Immediate
– Government schemes available to maintain university staffs (e.g. furlough scheme)
– Renegotiate rent and request for holiday payment and shut down buildings / area temporarily that will not be needed
– Consolidate classes / offerings to perspective students starting next academic year
2.2 Mid to long term
– Explore new segments (e.g. apprentices and adults)
– Explore new modules and remote learning options that universities can offer that are in line with market demand (e.g. DIY at home and programming)
3. Execution
3.1 Assess universities capability & capacity
– Online readiness
– Ability to develop online friendly content in limited timescale (do we need to outsource?)
– Marketing capability to reach targeted students effectively
3.2 Assess benefits of improvement options identified to…
– Prioritise actions to implement
– Conduct further market research to confirm that there is demand
– Pilot improvement to prove the concept
3.3 Identify risks and ways to mitigate them
– Availability of staffs to support new learning methods
– Non-performing colleges (pre-covid) may need extra assistant
Thank you for this relevant case. Please find my analysis below
I would like to first structure the problem to understand what is causal effect it can have, then I would like to transition into possible implications the finding could have and lastly list a few things the associations member universities in USA could look into with regards to the survey results.
Structure the Problem
In order to proceed further there are a few assumptions I would like to make that would help us with our analyses. Based on the calculation blow it seems that this is a profit decline problem.Rvenues have gone down from $975bn to $731bn , thereby resulting in profits to go down by 48.12% (~$244bn).
Assumptions
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1. Average number of students (post graduate undergraduate) attending a university (2019 -2020) = 13,000 students
2. Total number of students (UG PG) attending 3000 universities across USA = (3000*13,000) = 39,000,000 (~39 million students)
3. Average cost of maintaining a university for a student = $12,000
4. Total cost of maintaining all universities for all students = (12,000*13,000*3000) = $468,000000000 (~468 billion dollars)
5. Average Tuition fees for a course (UG PG) = $25,000
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Based on the following assumptions above: below the findings are stated with regards to the 25% of the students not wanting to re-enroll.
1. Revenue for the year 2019-2020 = 25,000*39,000000 = $975,000000000 (~975 billion dollars)
2. From a total of 39 million students, the number of students not wanting to enroll for august 2020 batch as per the survey = (0.25* 39,000,000) = 9,750,000 students (~9.75 million students will opt out)
3. New number of students remaining for batch August 2020 onwards = 29,250,000 students (~ 29 million)
4. Assuming the cost of tuition fees has not gone down, the new revenue with regards to the total students attending in August 2020 =
(29,250,000 * 25,000) = $731,250,000000 (~731 billion dollars). So revenue has gone down from ~$975 billion to ~ $731 billion.
5. Profit for 2019-2020 = (revenue – cost) = ($975bn – $468bn) = $507 billion
6. Estimated Profit for the next year with 25% of students dropping out = (revenue – cost) = ( $731bn – $468bn )= $263 billion
7. Comparing 5 & 6, we get the profit decline in the next year of = 48.12%. This is considering 25 % of the existing students would not re-enroll.
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Possible implications the finding could have
1.The profit is estimated to decline by 48.12% for the next batch year (Aug 2020) if 25% of respondents who said “No” do not re-enroll. This could indirectly more students to opt out mid way which would spiral down the revenues and profits.
2. Depending on the customer segment that is disinterested to re-enroll (in our case the assumption is the international students), the universities as a whole will possibly have to target more local students to fill in the gap.
Additionally, they might have to lower the cost of tuition fees significantly to keep the 25% re-enrolled.
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List a few things the associations member universities in USA could look into with regards to the survey results.
1. The associations member universities in USA must attempt looking to find out why 25% of the respondents in the survey don’t prefer video conferencing classes. There could be a whole list of issues starting from certain courses are designed for group sharing versus individual accountability for course completion. It might also be that certain students from a specific cohort ( for instance MBA) choose to opt out the most as majority of their course is based on experiential learning (sharing management and leadership experiences). Shifting the whole course online will not allow the face to face engagements which are imperative for networking. Trying to Zoom chat individually might not seem to cater to mitigating that gap.
2. They should also try to reword their survey to understand and justify that understand the number 25%. They should try to find out from students what alternatives would they prefer over video conferencing given the Covid scenario.
3. It could also be that majority of the disinterested 25% respondents could be international students studying in USA. International students pay a huge amount for international education which not only involves tuition fees but also living expenses and health insurance etc. Additionally, what is of most value to them in my opinion is that they would not mind paying extra for a top college in USA where they could get global exposure. Global exposure is one of the crucial things for anyone in today’s times and discounting that might disinterest more students in the future.
4. Having said that point 3 segway’s into considering the cost of a program considerably for such students. To make them understand about how Covid affects us but we still need to move comes with a price for all of us. The price that the universities need to pay for this is to lower tuition fees so that they don’t lose students which will affect their profit margin greatly. Additionally if the numbers stay in tact the money coming in could easily be used to grant some scholarships to keep students engaged and also scale up online infrastructure.
I would like to break this problem into two parts
One looking at all the Students and then Universities
Students
1. Have the students who have answered no spread out or are the majority from a similar college or area.
2. Are any of these students in their final year?
3. The reasons could be
Q lack of connectivity or expensive network charges
This can solved through the Government asking the Telecom companies to form student network plans that are available at cheaper rates.
Q Then there could be a problem, that laptops arent available
This can be solved by the Asscociation temporarily renting laptops till the semester resumes but the students should be held accountable for any damages
Q The students may feel that high prices are justifiable?
This can be solved by colleges only charging tution fees and any extra fees should be cancelled as students arent using any on campus facilities
Q Students have heavy loan burdens and are worried for future job prospects and not being able to pay the loan?
The universities can contact their alumnis for help or lower the fees for these students secretly.
Q Are these students transferring to different universities?
Nothing much can be done in this case rather than hearing out why the student is do so
QThe students looking at the bleak economy have thought it would be better to start their own venture rather than look for jobs?
Make them understand that this is a suddne drop in supply of jobs and everything will return back to norrmal as soon as evrything is under control
4. Another survey should be sent for finding their reasons and what can the universities do to help them?
Universities
1. I would try to understand how much revenue would be lost by drop of those students?
1st yeat students would make the most loss as they will be skipping most payments rather than students in their third years.
Is this loss bearable by the Universities?
2. Will the reputation of these colleges fall and their college ranking may fall?
I don’t think this would be that big of an issue considering the current situation
3. Will the fall in revenue for the college affect them in operating or is it something that they cant operate without?
If they will still be able to function after the loss, then they should try as much as possible to help those 25% students but if nothing is possible then they should just let them go
If they cant operate without them, then they can either take a loan or gather funds. Raising the fees is not an issue
Firstly I would like to clear the objective of the problem: So we are trying to list out the possible reasons for the students who answered a NO in the survey and then maybe devise or think of some solutions to solve this problem.
After clearing the objective of the case, we can analyze the data from the survey. What other useful insights can be obtained? For instance, we can try to look for:- The students are into which year of their college degree. We can simply ignore the final year students through this analysis as the survey becomes irrelevant for them.
We can try to look into the geographical segmentation of the students. How many of these students are local or foreigners and from which country? This might be helpful in concluding whether the students who have an alternative of joining a course in their respective country (non-US residents) are leaving or is it just any other reason.
We can also segregate the students on the basis of their disciplines i.e. what courses are they enrolled in? The majority of students might be from courses that involve creative practices (ex. dance, music, theatre, etc.) which require more personal interactive sessions. Or most of the students are some Ph.D. or research scholars who require lab work to continue their studies. Here the key point of the problem is that students are unwilling to re-enroll due to the absence of more physical interaction and work.
We can also look into the academic guidelines of the institute now, are online courses receiving normal scholarships/credits or is there some changes involved that might be a reason for these problems. Several other short analysis like do the students use other regional languages other than English which might be making them uncomfortable for online sessions or are the students physically challenged and therefore it won’t be an easy use of gadgets for them.
Considering all these aspects will be helpful to us in listing out a detailed analysis and the key drivers of the issue.
Now we can prioritize the issues by using the 80-20 rule and look towards the more important problem to solve.
The issues can be further divided into small sub-issues and we can identify where the problem actually lies, whether it’s the admission, fee problem, online mode of studying, educational resources, etc. The solution can then be devised like developing a more interactive session with GDs, group gaming sessions, group weekend exercises for students, and some personal sessions with the instructors, etc. One more solution could be providing translators and facilitators or using some key features in the online video platform to solve the problem of language and making the online classes more accessible. Some special incentives like a free course on personality development, a course on industry business models to make the course curriculum more enamored. The academic curriculum should be modified in such a manner that the students don’t feel the missing space of personal interactions and lab work. The issues tree created for the problem structure can be used to resolve issues by thinking of relevant solutions.
We can also think of an approach that would compel the students to re-enroll for the next year such as a compulsory course to obtain the transfer certificate from the university etc. The Industry association should try to balance their market reputation in applying such rules which will bind the students to enroll for the next year to some extent.
What should the association’s member universities do regarding this finding?
Understand the objectives of the university. It could be:
a) Profit oriented
b) Social impact objectives (ie.) impart education, knowledge and required skill-sets among the younger generation
How would you structure this problem?
Case 1: Profit oriented objectives
Member universities should:
1. Breakdown the available survey data into (at a university level):
– Fields of study
– Courses
– Final year students or others
– Resident or international students
2. Identify the most profitable courses which would have the maximum impact on profits on account of drop outs as presented by the survey
3. Within the selected critical courses:
– Compare the historical drop out% of all students with the actuals presented as per survey
– Break this down into final year students and other students
– Compare with historical conversion rates for final year students enrolling into higher studies
4. Identify the mix of resident and international students who have opted out
5. Conduct additional surveys for specific target audience after detailed analysis across various parameters and identify reasons
Case 2: Social impact objective
Member universities should:
1. Identify the key courses / fields of study that are gaining popularity and have significant employment prospects
2. Identify mix of opt outs in the above identified courses / fields
3. Further, break this down into drop outs of final year students and other students. Also identify the mix of resident and international students
4. Conduct additional surveys for specific target audience after detailed analysis across various parameters and identify reasons
‘Reasons for drop out could be:
Reason 1: Financial constraints due to loss of jobs in the US market
Reason 2: Unwilling to opt for online classes because costs don’t justify the benefits
Reason 3: Unwilling to opt for online classes for want of in-person classroom experience
Reason 4: Decline in opportunities around the field of study resulting from Covid-19
Reason 5: The student would’ve dropped out either way (normal drop out every year)
[The above list is indicative of the various reasons for students opting out in the given scenario and is not an exhaustive list. Additional reasons could be identified from the above analysis across various parameters]
Possible action by the member universities for the reasons listed above:
Solution 1: Alter the pricing strategy to pass on the cost savings achieved from online classes to the students;
Solution 2: Include course add-ons; innovate the delivery format of lectures; try and provide the classroom experience as much as possible;
Solution 3: Apart from point (b) above, include additional course offerings which were previously not included as part of the in-person program, thereby providing incentive for students to re-enroll
Solution 4: Amend the course structure to ensure that the latest technological developments are factored in; Tie up with companies in the field for employment opportunities
Solution 5: Limited action from university (inevitable drop outs)
[in solution no. 1, 2 and 3 above, member universities have to conduct a thorough cost-benefit analysis to ensure that they remain profitable if the students who have opted out continue to attend college]
Additionally, in case of universities with social impact objectives:
Solution 6: Promote courses that are in high demand such as data analytics, machine learning, artificail intelligence etc. thereby developing the required skill-sets and providing employment opportunities
Solution 7: Provide sufficient financial aid for worthy candidates and for courses with high prospects, encouraging the eligible students to opt for these courses
The colleges within the industry association are concerned that if 25% of current students do not enroll in the Fall of 2020 to continue their studies, the decrease of tuition revenues coming from students and accompanying federal sources will significantly impair the colleges’ financing of operations, faculty retention, endowment and university ranking. Furthermore, many colleges have lost income from the halting of NCAA and NAIA sporting events, as well as observed the delay of federal grant funding related to scientific investments coming from agencies such as the NIH, which serve as considerable funding sources for certain colleges.
Solving this problem is paramount for the 3,000 colleges in efforts to stabilize and ultimately thrive during the COVID-19 global pandemic and most of all, continue on their path of developing today’s students into tomorrow leaders for the US and around the Globe. If successful action-steps to remedy this problem are not executed, institutions of higher learning could face closures and mergers (such as the Thunderbird School of Global Management merging with Arizona State University). What is most salient to realize is that each college encompasses a unique “DNA” and financial positioning relative to the COVID-19 outbreak. Given the distinct complexities each college encompasses, the proper solution at this time is for all 3,000 colleges to retain the services of management consultant teams that will focus on three areas: 1.) Student Body Data Generation and Analysis 2.) Initiation of Proactive Programs 3.) Implementation of Austerity Measures
Student Body Data Generation and Analysis
Although the initial survey findings illuminate a grim reality, colleges will need to discover and uncover more survey data to qualify and quantify and discriminate the responses/feedback from colleges’ respective communities because what may hold true for a medical school may not be the same for an engineering, business, or A&H college. More investigation is required to better understand how a particular college community feels regarding students’ desires to not return to school, because a myriad of responses exists – which consequently corresponds with a multitude of corrective actions to take to mitigate risks of lack of enrolment. Management consulting teams hired for each institution will focus on the task of timely and rapid data inquiry and analysis to provide new gems of wisdom for each respective college. Lastly, it should be noted that the survey was conducted months ago, thus the findings may not hold entirely true and may have morphed today and this is important to reconcile.
Initiation of Proactive Programs
While consultants are gathering data and performing analysis of college student bodies, and creating new recommendations for each respective college, these programs listed below should be executed immediately to prepare for an elongated COVID-19 presence:
A.) Intense Sanitizing Programs the Campus
B.) Pilot programs for class cohorts to start at different times than the normal Fall, Spring, and Summer terms – such as classes starting every 6 weeks.
C.) Alumnus Charitable Contributions Overdrive Programs
D.) State, Local, and Federal Outreach Programs to Maximize Governmental Assistance
Austerity Measures Programs
Although this may seem like common sense at this time, management consultant teams will diligently work on new methods and ways to improve financial conservation at colleges to stretch each penny to maximize a university’s financial prosperity. This program will seek to review all dimensions of a university to find savings opportunities and management consultants are trained to help organizations with making and saving money during the good and bad times.
Conclusion:
There is no blanket solution for the 3,000 colleges and this memorandum is not to indicate such. However, the three programs listed above are a “guide” for management consultant teams to focus on at each respective college, because management consultant teams are a dedicated team of staff that is “value” oriented and is willing to work day and night on achieving their clients goals. Please be warned that although some colleges may choose to opt out of assistance from consultants, it would be unwise to not allow “business doctors,” who are ready to assist, with helping your institution
Hello Victor,
Thank you very much for this opportunity.
This is how I would structure my strategy to solve this case study.
1) Identifying the real problem
• Why is the decrease of students enrolling next year a problem for member universities?
• Is the number of students not enrolling significantly increasing compared to previous years?
• Are the students not enrolling next year from most member universities or from a specific group?
• What is the association expecting from implementing my recommendations?
Answering these questions will help me to test my first 2 hypothesis:
• An unusual decrease of student enrollment is expected for next school year.
• The data reflects a general feeling among universities members .
2) Designing the analysis and gathering data
• The findings in identifying the problem will tell me if the analysis must focus on all member universities or specific group.
• Were 3000 students a large enough sample to truly understand the issues? If not, what is the optimal sample size for this research? Can we reach out to the 25% students not expecting to enroll next year or we need to interview a new sample? – The answers will lead me to know if we can build upon the existing survey or we need to create a new study with a more sample.
• The analysis must tell why students are not enrolling next year and how switching to virtual learning is influencing in their decision.
The gathered data will validate or reject the following hypothesis:
• Students are not enrolling because they do not see enough value in virtual learning.
If most students are not enrolling because of other reasons, then I would have these other hypotheses to resolve
• Not enrolling students are graduating. They do not need to enroll next year.
• Not enrolling students do not have access to the necessary resources to learn virtually.
• Not enrolling students are not able to afford school expenses for next year.
3) Interpreting results
The results of the analysis will tell if the solution must focus on improving virtual learning experience, helping students understand the advantages of virtual learning compared to in-person learning, helping students with the financial resources to enroll in classes and learn from home, or a combination of efforts in the mentioned areas. It is possible find a different reason with the interpretation of the data.
4) Presenting a solution
The mentioned steps will allow me to show the client why some students are not expecting to enroll in classes the next school year and if this applies to most university members or a specific group. As the client understands the source for the problem, a data-driven recommendation can be presented to help these students change their mind and enroll in virtual classes the next calendar year.
The Problem: most universities will react to this statistic from a pricing perspective; collectively this would lead to a price-war with long term ramifications for the industry as a whole
The Solution: Communicate to member universities the merits of approaching this problem with the objective of increasing students’ perceived value of remote education
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My advice to universities would be focused on what I believe the associations’ chief goal should be during this time: avoiding a price war between higher education institutions that could leave the industry in worse shape than before COVID.
I’d acknowledge the fact that many universities, individually, would see this statistic and immediately start approaching this as a pricing problem: the demand curve has just fundamentally shifted due to various factors affecting students’ perceived value of a remote learning environment; therefore, pricing must adjust to this curve to maximize revenue to avoid potential long-term effects of budget shortfalls.
There will be some universities with the ability to absorb short-term losses by increasing contributions from endowments and other revenue-generating functions. However, this would set a poor precedent and may be detrimental to the majority of universities, who, by nature of their brick-and-mortar establishments and specialized faculty may be tempted to further exacerbate the falling price of tuition rather than give up altogether. If even, 25% of colleges were forced to exit the industry, substitute products such as Credentials, Certificates, and Training with Industry may become increasingly normalized and threaten future demand.
With the tendency of universities to approach this from a pricing perspective, and identifying how detrimental that would be in the long-term to the industry, I would set our objective (as the industry association) to increase student’s perceived value of remote education.
This is where I would be interested in segmenting the responses, and designing future surveys and focus groups to identify the ‘WHY’ behind this concerning statistic.
I would want to know, what are the most prevalent and mitigatable factors contributing to students’ decisions not to enroll this next academic year? Some examples may be:
– Attending a different university or another substitute
– Cannot afford tuition due to underlying economic conditions
– Learning style does not support online classrooms
– Mainly interested in social scene/football games
– Tuition is too expensive for perceived value of online classes
– Concerns about job prospects after graduation that do not support student loan repayment
Answers to these questions would most likely vary from each school’s unique demographic, brand, and core competencies. Therefore, solutions to increasing their student’s perceived value would be correspondingly unique and require further analysis. At a minimum, I would urge the association to release as much raw data as they are allowed to each member university to support this further study.
First, this is quite an interesting and fitting question.
Secondly, I would like to break down the survey even further see if there are any trends hidden within that 25%. For example, campuses thank ranked higher in campus life may have a higher percentage of students that are unwilling to participate in online classes. Another possibility is that campuses with a higher number of older and returning students may be more impartial to the remote classes. Lastly, income could be another factor that is driving this statistic as lower-income people could be affected by poor internet service, no place to study, or simply do not find online schooling worth taking on more student debt.
With the information I have at the moment, I would also like to explore the capacities that the universities have. If there is wiggle room in the budget, the schools could look at expanding the campus to unused buildings or expanding through the use of portable classrooms – such as the containers used by construction companies. This solution could allow for a mixture of online and in-person education. The classes could have one online lecture and two in-person labs. Eg: class of 200 in the online lecture and eight, one-hour labs to teach 25 students at a time. This solution would hopefully reengage some of the 25% that declined next semester.
The implication of this survey is mixed, as this 25% could be mixed with those who graduated, are transferring, have dropped out, or are academically unable to continue at the school.
My recommendation at this time would be to break the survey results down further and determine the root cause of this problem. However, the idea of having smaller labs and an extended campus could be implemented regardless to ensure that there is still a semblance of the “campus-life” that makes be a university student so special.
Given the limited information, here are a few assumptions on what the clients would like to know:
1) If running the course online is a viable option?
2) will they go belly-up if they made this switch to an online course?
3) Will this just affect some college, or all colleges in the association? And what can they do to maximise number of students.
1) Calculate the number of people we are talking about:
Google tells me there are about 14 million people enrolled in US public colleges, and about 5 million people in private colleges. Assuming the association has a 50:50 mix of private:public colleges – lets say there are around 10 million people in the approx.5500 colleges in the US. Assuming, all colleges are the same size, the association has approx. 5 million students.
25% (1.25 million) says “No”, but 3.75 million people MIGHT consider returning. First, I would want to know how many people are definitely returning to college (how many people have paid/committed to the next academic year) – group this information according college, year of study and course (also group accordingly in subsequent analyses); then calculate how much income can be expected.
2) Assume half of the “Yes/maybe” students re-enrole = approx 1.9 million people. Course fees in the US appears to range between 10,000-30,000, but given the situation and potential unwillingness to pay full fees for onlines courses (?), lets keep to the lower estimate of USD 10000 per student; also not factoring the 5% international students for a conservative estimated). Total estimated income across the whole association would be USD 190 billion (also group according to college, etc.). Work out fixed cost for each collage, and investment (if any) needed to support good quality on-line learning platforms.
If cost to run the online course > income (for college or overall) then it is not a good idea unless they can bring costs down/increase income – which is another discussion. If Income> than running cost – online learning appears to be a viable option to consider in more depth.
3) Find out whether the overall 25% “No” students are from a few select colleges (i.e. perhaps 85% says no in one college (college A), and only 5% in another (college B); or is the distribution quite even.
With this data, it should be possible to determine if certain courses from some colleges will not be able to run (i.e. Collage A), but have a better level of confidence that collage B might have enough people to run this course online.
Then the question is if college B can further maximise numbers by absorbing the 15% (from college A) who might be interested in attending college online. Do the colleges within this association work have enough flexibility to offer combined courses or transfer between colleges? How much excess capacity do they have on their online platform without affecting quality of connections? Can they offer these courses online to more people (i.e. students from other colleges; furloughed or newly redundant population), and how many such places they can offer?