International & Commercial
Perspectives on the Post-Browne
Landscape
March 1, 2011
THE PARTHENON GROUP
Boston • London • Mumbai • San Francisco
Objectives for today
1. Provide a perspective on the post-Browne landscape informed by experience overseas
and commercial tools
1. US
2. India
3. Commercial frameworks and tools
2. Offer a commercial framework for thinking about the new landscape
3. Detail two commercial tools, and explain how they are useful
1. Business model analysis
2. Cost curve analysis
DDYYCODE_##
2
Perspectives on the Post-Browne Landscape
The Browne reforms mean HEIs need to complement existing strategic analyses with
new, market-oriented tools
• The Browne reforms create a quasi-marketplace for English higher education. This reform adds to already significant forces at work:
– Globalisation of higher education, especially student and researcher movement
– Global tightening of immigration rules as a reaction
– Concentration of research funding
– Changes to teacher training
• As with most large reforms, we believe people are over-estimating the short-term impact (and probably under-estimating the longer term
implications)
– Even in the US, where tuition fees are a much freer market and a higher proportion of students enter higher education, the basis
of competition is not predominately price, but a complex mixture of factors, including in-state subsidies for local universities.
– In India, IIT and other top universities are achieving scale whilst retaining student intake quality due to the size of the domestic
market. The private provider scale model is also proving viable
– In England, demand will still exceed supply and it is likely that most institutions will be able to charge £7,000 - £9,000 per annum
in the short term. The overall financial impact for most institutions that are not directly targeted by specific changes in government
programmes (e.g., teacher-training colleges) will be moderate
– In countries where higher education is market-like, the for-profits have a strong interest in delivering at scale for lower-achieving
students who want vocational & career-oriented qualifications. They will cherry-pick students from universities that have use these
students and subjects as cash cows
• To understand the medium and longer term implications, market-oriented analysis and tools are required. In any market success
depends on delivering what the market is seeking. This requires institutions to align strategies and business (or operating) models to
demand, and adopt organisational and leadership models that are aligned with the business model
DDYYCODE_##
3
Perspectives on the Post-Browne Landscape - US For-Profits
The typical focus is low income, ethnic minority and older students
Low-Income Student
Enrolment Growth, 2004-08
Non-White Student
Enrolment Growth, 2003-07
20%
Age 25 and Over Student
Enrolment Growth, 2003-07
20%
20%
17%
15%
Low-income
Enrolment
CAGR
('04-'08)
5%
0%
CAGR (‘03-’07)
CAGR (‘04-’08)
10%
15%
14%
13%
10%
Non-white
Enrolment
CAGR
('03-'07)
5%
3%
0%
CAGR (‘03-’07)
15%
5%
0%
-1%
-2%
-5%
DDYYCODE_##
Public Sector
Age 25 and
Over
Enrolment
CAGR
('03-'07)
10%
Private Sector
-5%
Public Sector
Private Sector
-5%
Public Sector
Private Sector
Note: An independent student’s income or the income of a dependent student’s parents is considered “Low Income” if it falls within the lowest quintile of US household income. The upper limit of the
lowest quintile was $18,500 in 2004 and $20,712 in 2008. “Private Sector” category excludes private not-for-profit institutions
Source: NCES BPS 1996-2001; NCES BPS 2004-2006; NCES IPEDS database; Census Bureau; Parthenon Analysis
4
Perspectives on the Post-Browne Landscape - US For-Profits
There is a much more intensive focus on marketing than in public universities
• US providers spend very significant sums of money on advertising
and other promotional campaigns
Marketing and Promotional Expenditure
of Selected Providers, 2009
$1,000MM
• All manner of media are used including TV, radio, print, internet etc.
− “You can hardly go a day without seeing a University of Phoenix
advert on TV, print, the internet or even billboards and flyers”
Enrolment Counsellors
and Other
Promotional Expenses
$960MM
$800MM
Marketing Spend
$600MM

• The companies make huge investments in generating leads
through
$484MM
– Inbound enquiries through website/campaigns
– Buying lists of phone numbers/emails
$400MM
• Every lead is fed into a sophisticated CRM system and is assigned
an “enrolment advisor”
Advertising
Spend
$200MM
$0MM
Operations Manager, University Of Phoenix
The Apollo
Group
Marketing
Expenses
as a % of
Revenue
$146MM
Career
Bridgepoint
Education Education
$100MM
$85MM
• Each lead is owned by an advisor who is responsible for constantly
working on it until conversion or failure
Capella
Grand
Canyon
• Metrics such as conversion rate, lead to start rate are measured to
track efficiency
• Significant sums are also spent on training the sales force
24%
26%
32%
30%
33%
− “If I were to leave my details with Phoenix, I can be sure that
someone will give me a ring in the next 60-90 minutes. They’re
that good”

President, Madison Education Group
Note: Selling and Promotional costs includes costs associated with enrolment counselors and other activities under marketing. Selling and promotional spend for Career Education is calculated by
adding admissions and advertising spend. Splits between advertising and enrolment counselor expenditures from 2008 applied to 2009. Grand Canyon is a Christian university based in Arizona
Source: BMO Capital Markets Report, Company Filings
DDYYCODE_##
5
Perspectives on the Post-Browne Landscape
Organisations in any market must create alignment between four elements
Market Needs and
Responses
• What are the main
segments in terms of
attitude and beliefs about:
- Price, Debt, reputation
etc
• How will these segments
evolve as:
- The market matures and
new offers/ entrants
emerge
- Customers become
better informed
• How do we communicate
our brand and offers?
Identity & Strategy
• What are we really good at –
what is in our DNA?
• Which segments does this
mean we are best placed to
serve?
• Do we offer every subject,
even if it’s loss-making?
Business Model
• What do we subsidise:
research vs teaching,
overseas vs domestic,
sciences vs arts?
• What is the optimal profile of
teaching & academic staff
cost and quality?
• Where do we invest?
• What range of curriculum is
required?
• Which geographies are
crucial to us?
• How much choice and
support do we give students
Organisation and
Leadership
• What new skill sets do we
need for the post-Browne
landscape?
• What skill sets do we need
for our business model?
• How do we resolve tensions
between academic freedom
and commercial pressures
in our organisation?
• How do we find and/or
develop senior managers
with commercial instincts
and credibility with
academics?
• How does price impact this?
DDYYCODE_##
6
Perspectives on the Post-Browne Landscape
Cluster analysis reveals 12 types of university business model
Rationale
• Most analyses of the sector are heavily oriented towards academic (research) quality and ranking
• However, the post-Browne marketplace will favour institutions that are excellent at what they do, be it research, teaching,
providing value-for-money or creating economies of scale. All these factors are important elements of a business model
• Different institutions can legitimately have different cost structures and spending priorities; benchmarking within groups of
institutions with the same business model is much more meaningful than comparing across business models
• We have used cluster analysis across a range of variables to identify institutions that have broadly similar business models
Methodology
• Cluster analysis (least squares) based on 5 variables for each of 40 cost centres (using HESA data)
– Total academic spend (teaching and research, excluding overheads, facilities etc)
– % of student FTEs
– Research and teaching spend per student
– Total research money
– UCAS entry points
Clusters
• 12 identifiable clusters and sub-clusters and number of institutions in each cluster, including
•
DDYYCODE_##
1. General Teaching (3 sub-clusters)
58
2. Art, music and drama specialists
22
3. Small Academic
18
4. Focused teaching
13
5. Traditional Academic
9
6. Science and engineering research
5
7. Scale & Research
4
8. University of London Research
3
There are also several other specialist clusters - agriculture and forestry, medicine, education, Oxbridge and a range of
other ‘one-off’ models, e.g.: Buckinghamshire, The Open University, Cranfield
7
Overview of Clusters
There is a very strong correlation between % academic spend on research and average
UCAS entry requirement. This gives a conventional view of the clusters’ standing
Research as a % of Total Spend versus Average UCAS Entry Requirement
% of Total Academic Spend spent on Research
50%
Oxbridge
London Research
40
Traditional Academic
Education
30
Scale and Research
Small Academic
Medical Specialists
Bubble size is
total number of
Student FTEs
in the cluster
20
10
General
Teaching
Focused Teaching
0
200
Art,
Music,
Drama
Science and Engineering Focused Research
200,000
FTEs
Agriculture and Forestry
400
600
Average UCAS Entry Requirements
DDYYCODE_##
Note: Academic Spend is teaching plus research, and excludes operational and capital expenditure e.g. facilities and some overheads
Source: HESA Finance Plus Data 2008-2009
8
Overview of Clusters
However, plotting academic spend per student against the average number of
students shows the greater similarity between several business models
Academic Spend per Student versus Average Student FTEs per Institution (Bubbles = total spend)
£20,000
Academic spend per student
Medical Specialists
Oxbridge
Traditional
Academic
Agriculture and Forestry
London
Research
10,000
Focused Teaching
Scale and
Research
Small
Academic
Art, Music, Drama
General
Teaching
Education
Bubble size is
total academic
spend in the
cluster
Science and
Engineering
Focused
Research
£1BN
0
0
10,000
20,000
30,000
35,000
Average Number of Students per Institution
DDYYCODE_##
Note: Academic Spend is teaching plus research, and excludes operational and capital expenditure e.g. facilities and some overheads
Source: HESA Finance Plus Data 2008-2009
9
Overview of Clusters
Average academic spend per institution plotted against average UCAS entry
requirements splits the clusters by teaching and research focus
Total Academic Spend versus Average UCAS Entry Requirements of Universities
Average Academic Spend per Institution
£400M
300
Oxbridge
Scale and
Research
London Research
200
Bubble size is
total number of
Student FTEs
in the cluster
Traditional
Academic
General Teaching
100
Education
Focused
Teaching
Small
Academic
Science and
Engineering
Research
Focus
200,000
FTEs
Medical Specialists
Art,
Music,
Drama
0
200
400
600
Agriculture and Forestry
UCAS
DDYYCODE_##
Note: Academic Spend is teaching plus research, and excludes operational and capital expenditure e.g. facilities and some overheads
Source: HESA Finance Plus Data 2008-2009
10
General Teaching Universities
The large General Teaching cluster has at least three sub-clusters
Total Academic Spend versus Average UCAS Entry Requirements
£125M
Sub-Cluster 3
Plymouth
Manchester Met
Sheff. Hallam
100
Total Academic Spend
Sub-Cluster 2
Central Lancashire
Hertfordshire
Northumbria
UWE
Nott. Trent
Kingston
Liv. John Moores
Portsmouth
Birmingham City
Westminster
Leeds Met
Wolverhampton
Greenwich
South Bank
Thames Valley
50
Derby
Staffordshire
Canterbury Christ Church
Edge Hill
Northampton
25
UWS
Bradford
Sunderland
Cumbria
Brunel
Glasgow Caledonian
Bournemouth
Essex
Bangor
Aston
Southampton Solent
Robert Gordon
Stirling
Edinburgh Napier
Chester
Gloucestershire
Lincoln
Worcester
Bolton
Abertay Dundee
0
175
Dundee
De Montefort
Huddersfield Oxford Brookes
Glamorgan
Coventry
Teesside
East London
Bedfordshire
City
Ulster
Salford Brighton
Middlesex
75
Sub-Cluster 1
Queen Margaret
275
375
400
Average UCAS Entry Requirements
DDYYCODE_##
Note: Essex has been sorted in with Sub Cluster 1 due to the % of its total spend that goes to research. Academic Spend is teaching plus research, and excludes operational and capital expenditure e.g. facilities and
some overheads
Source: HESA Finance Plus Data 2008-2009
11
General Teaching Universities - Sub-Cluster 3
Total academic spend shows the focus on key subjects for this cluster; education,
business, nursing, design and IT
Total Academic Spend of Institution by Cost Centres 2008-2009, £M
12
Education
Biosciences
Humanities
Social
Studies
Design
Medicine Biosciences
Design
Design
Biosciences
Education
Biosciences Mechanical Agriculture
Engin
IT
Architecture
General
Engin
Social
Studies
Electrical
Engin
Media
Psychology
IT
Health and
Community
Health and Humanities
Community
Social
Studies
Architecture
Civil
Engin
IT
Architecture
Architecture
40
Nursing &
Paramed
Education
Business
IT
Design Nursing &
Paramed
Humanities
Social
Studies
20
Business
Business
Design
Psychology
Biosciences
Mechanical
Engin
Design
Design
Business
IT
Health and
Community
DDYYCODE_##
Social
Studies
Psychology
Humanities
Architecture
Biosciences
Materials
Engin
General
Engin
Catering
Electrical
Engin
General
Engin
IT
Electrical Engin
Pharmacy
Psychology
Geography Catering
Health and
Community
Humanities
Electrical
Engin
Humanities
Media
Design
Media
Biosciences
Catering
Health and
Community
IT
Media
Social
Studies Mechanical
Media
Modern
Languages
Social
Studies
Design
Biosciences
Sports
Science Social
Architecture
Humanities Studies
Mechanical
Engin
Architecture
Health and
Community
Architecture
Health and
Community
Biosciences
Medicine
Architecture
Humanities
Biosciences
Civil
Engin
Chemistry
Social
Studies
Social
Studies
Nursing &
Paramed
Social
Studies
Design
Psychology
General
Engin
Engin
Psychology
Sports
Science
Business
Geography
Health and
Community
General
Engin
IT
Mechanical
Engin
Social
Studies
Chemistry
Education
Social
Studies
Biosciences
Social
Studies
Mechanical
Engin
IT
Mechanical
Engin
Design
Psychology
Electrical
Engin
IT
Psychology
Biosciences
Social
Studies
Social
Studies
Health and
Community
Nursing
&
Paramed
Social
Electrical Studies
Engin
Sports
Science
IT
Sports
Science
General
Engin
Civil
Sports Engin
Science
Social
Studies
Sports
Science
IT
Design
Health and
Community
Architecture
Sports
Science
Social
Studies
General
Engin
Humanities
Social
Studies
Media
Psychology
Media
Education
Social
Studies
Biosciences
Business
Health and
Community
Design
Nursing &
Paramed
IT
IT
Social
Studies
IT
Social
Studies
Design
Nursing &
Paramed
Business
Business
Nursing &
Paramed
Electrical
Engin
Media
Design
Business
Education
Education
Social
Studies
Business
Design
Sports
Science
Business
Business
IT
Nursing
&
Design Paramed
Design
Humanities
IT
Nursing &
Paramed
General
Engin
Nursing &
Paramed
Nursing
&
Paramed
Nursing &
Paramed
Business
Nursing &
Paramed
Education
Education
Education
Design
IT
Nursing &
Paramed Business
IT
Nursing &
Paramed
Business
Education
Business
Nursing &
Paramed
Business
Design
Media
Media
Humanities
Health and
Community
Nursing &
Paramed
Social
Studies
IT IT
Materials
Engin Media
IT
Education
Business
Civil
Engin
Sports
Science
Design
Nursing &
Paramed
IT
Media
Electrical
Social
Engin
Studies
General
Engin
Design
Chemistry
Business
Nursing Business
&
Paramed
Design Business
IT
Electrical
Engin Business
Sports
Science
Social
Studies
Pharmacy
Mechanical
Engin
Architecture
Education
Catering
Media
Social Media
Studies
Sports
Sports
Science Humanities Science
Civil Engin
Business
Sports
Science
Mechanical
Engin
IT
Sports
Science
Modern
Languages
Design
Pharmacy
Nursing &
Paramed
Brighton
Liv John Moores
Westminster
Agriculture
Catering
Psychology
Chemistry
Media
Civil Engin
Modern
Languages
Psychology
Agriculture
Sports
Science
Nursing &
Paramed
Psychology
Business Design
Nursing
&
Paramed
Media
Social
Studies
Business
Business
Education
Birmingham City
Psychology
Physiology
Chemistry
Media
Media
Design
Business
Design
Biosciences
IT
Business
Nursing &
Paramed
Media Anatomy &
Health and
Community
Media
Catering
Biosciences
Sports
Science
Media
Biosciences
Humanities Earth, Marine
&
Environment
Earth, Marine
& Environment
Business
Design
Business
Health and
Community
Biosciences
Social
Social
Studies
Studies
Education
IT
Sports
Science
Business
Electrical
Engin
Nursing & Education
Paramed
Anatomy &
Physiology
Education
Humanities
Media
IT
Geography
Humanities
Modern
Languages
Psychology
Design
Catering
Biosciences
Education
Anatomy &
Physiology
Health and
Community
IT
Business
Ulster
Portsmouth
Kinston
Nottingham Trent
Northumbria
Health and
Community
General
Engin
Earth, Marine &
Environment
Business
Business Business
Electrical
Engin
Architecture
IT
Social Social
Studies Studies
Nursing
&
Paramed
Nursing &
Paramed
Media
Geography
IT
Geography
Biosciences
Sports
Science
Nursing &
Paramed
Architecture
Architecture
Social
Studies
Mathematics
Chemistry
Archaeology
Education
Electrical
Engin
Nursing &
Paramed
Psychology
Catering Electrical
Engin
Biosciences
Anatomy &
Physiology
Psychology
Health and
Community
Nursing
&
Social
Studies Paramed
Psychology
Humanities
Anatomy &
Physiology
Civil Engin
Sports Anatomy &
Science Physiology Electrical
Mechanical
Engin
Catering
Mathematics
IT
Social
Studies
Sports Science
Mechanical
Engin
IT
Humanities
IT
Mechanical
Engin
Health and
Community
Psychology
IT
Health and
Community
Civil Engin
Psychology
Design
Education
Electrical
Health and
Biosciences
Engin
Community
Electrical
Modern
Engin
Languages Electrical Humanities
Architecture
Engin
Pharmacy
IT
Biosciences
Chemical
Engin
Civil Engin
Mathematics
Engin
Chemistry
Media Physics
Humanities
Education
Mechanical
Engin
Media
Design
IT
Business
Business
Central Lancashire
Hertfordhsire
Univ. Western Eng
Manchester Met
Sheffield Hallam
Education
Plymouth
0
Education
Modern
Languages
Biosciences
Design
Nursing & Nursing &
Business Paramed Paramed
Civil Engin
Architecture
Media
Civil
Engin
Pharmacy
Architecture
Architecture
Architecture
Sports
Science
Sports Science
Nursing &
Paramed
Design
Nursing &
Paramed
Modern
Pharmacy
Languages
IT
Business
Nursing &
Paramed
Social
Studies
Media
Biosciences
Pharmacy
Social
Studies
Design
Modern
Languages
Health and
Mechanical
Community
Engin
Anatomy &
Physiology
Education
Earth,
Marine &
Environment
Education
Electrical
Engin
General Engin
Business
Business
Humanities
Humanities
Mechanical
Humanities
Engin
Education
Electrical
Psychology
Engin
Education
General
Engin
Education
Architecture
Health and
Community
Biosciences
Catering
IT
Humanities
Catering
Design
Education
IT
IT
Design
Architecture
Biosciences
Humanities
Earth, Marine &
Environment
Modern
Humanities Languages
Physics Chemistry
64
Geography
Mathematics
Media
Modern Languages
Earth, Marine &
Environment
67
Education
Psychology
Note: Academic Spend is teaching plus research, and excludes operational and capital expenditure e.g. facilities and some overheads
Source: HESA Finance Plus Data 2008-2009
Queen Margaret's
Biosciences
Chemistry
Health and
Community
Earth, Marine &
Environment
73
Civil Engin
Geography
Worcester
Social
Studies
Health and
Community
Sports Science
Civil Engin Psychology
Media
Earth, Marine &
Environment
Chemistry
Mathematics
Catering
73
Psychology
Physics
Bolton
Abertay Dundee
Social
Studies
Media
Biosciences
Civil Engin
Psychology
74
Civil Engin
UWS
Stirling
South Solent
Edge Hill
Lincoln
Northampton
Chester
Gloucestershire
Health and
Community
Health and
Community
Biosciences
Health and
Community Psychology
Chemistry
Sports Science
Psychology Psychology
Modern Languages
Catering
Edinburgh Napier
60
Media
Psychology
Anatomy &
Physiology
Civil Engin
Electrical Engin
Health and Community
Pharmacy Geography Sports Science
Mathematics
75
Mathematics
Bangor
IT
General
Engin
Humanities
Agriculture
Electrical Engin
Education
76
Education
Anatomy &
Physiology
IT
Cumbria
Total Academic Spend
Psychology
Earth, Marine
& Environment
Sports
Science
Sports Science
Mechanical Engin Electrical Engin
Chemistry
Media
Mathematics
77
Humanities
Canterbury
Social
Studies
Design
Architecture
Psychology
Health and Community
Pharmacy
Derby
Sports Science
Media
Civil Engin
Modern Languages
79
Staffordshire
Biosciences
Mechanical Engin
80
Humanities
Media
Bradford
Electrical Engin
80
Pharmacy
Earth, Marine &
Environment
84
Sports Science
Sunderland
Humanities
Geography Psychology Psychology
Electrical Engin
Dentistry
85
Mathematics
Physics
Bournemouth
Catering
Mechanical Engin
Media
Chemistry
Geography
Glasgow Caledonian
Civil Engin
Electrical Engin
Health and Community
Physics
Media
Geography Mathematics
88
Mathematics
Modern Languages
Teeside
Architecture
Chemistry
Earth, Marine &
Environment
90
Pharmacy
Mathematics
Modern Languages
Glamorgan
Dentistry
Humanities
Catering
91
Sports Science
Modern Languages
Huddersfield
Modern Languages
91
Mathematics
Chemistry
Coventry
Mechanical Engin
Architecture
104
Electrical Engin
General Engin
Materials Engin
Oxford Brookes
Mathematics
De Montefort
105
Nursing & Paramed
Agriculture
Leeds Met
107
Salford
100%
21
58 58 57 57 53 51 51 48 48 47 43 42 42 41 39 37 36 35 33 32 32 3123 12
12
Overview of Clusters
The most focused clusters are the University of London research-intensive and
‘focused teaching’ institutions
Average Number of Cost Centres With Over 10% of Student FTEs versus Average UCAS Entry
Requirements
Average Number of Cost Centres with >10% of FTEs
5
London Research
4
3
Focused Teaching
General Teaching
Small Academic
Scale and Research
Education
2
Traditional Academic
Oxbridge
Medical Specialists
Agriculture and Forestry Science and Engineering Research Focus
Art, Music, Drama
1
0
200
300
400
500
600
Average UCAS Entry Requirements
DDYYCODE_##
Note: Academic Spend is teaching plus research, and excludes operational and capital expenditure e.g. facilities and some overheads
Source: HESA Finance Plus Data 2008-2009
13
Cost Curve Analysis
Economies of scale are not being achieved in most subjects (1 of 2)
Academic Spend per Student versus
Number of Student FTEs for Business and Management Studies
Academic Spend per Student
£20,000
10,000
0
0
2,000
4,000
Absolute Number of Student FTEs
DDYYCODE_##
Note: Academic Spend is teaching plus research, and excludes operational and capital expenditure e.g. facilities and some overheads
Source: HESA Finance Plus Data 2008-2009
14
Cost Curve Analysis
Economies of scale are not being achieved in most subjects (2 of 2)
Academic Spend per Student versus
Number of Student FTEs for Psychology and Behavioural Sciences
£10,000
Academic Spend per Student
8,000
6,000
4,000
2,000
0
0
200
400
600
800
1,000
1,200
1,400 1,500
Absolute Number of FTEs
DDYYCODE_##
Note: Academic Spend is teaching plus research, and excludes operational and capital expenditure e.g. facilities and some overheads
Source: HESA Finance Plus Data 2008-2009
15
Perspectives on the Post-Browne Landscape
Summary of takeaways
• There is no market in the world in which the predominant basis for competition is price, although there are price-sensitive
segments
• Reputation and scale are much more common bases of competition
• In any market or quasi-market, alignment between the market needs, institutional strategies, business models and organisation is
key to success
• Unlike typical ‘rankings’, there are several broad viable business models available (and plenty of variants of these).
• Most institutions have multiple departments that have no financial viability
• The ‘broad academic offer’ – which is the default for most universities – is financially challenging, and most institutions will not be
able to sustain it in the longer term unless the breadth is a distinctive part of their offer
• ‘Winner-takes-all’ economies of scale mean that even profitable departments may find themselves under threat in the medium term
DDYYCODE_##
16
Appendix
DDYYCODE_##
17
The Parthenon Group
Overview
About Us
•
Practice Areas
Capability Areas
Founded in 1991 as a boutique
strategic advisory firm
• Business and Financial Services
•
200 members in 2010
• Education
• Competitive Analysis
•
Offices in Boston, San Francisco,
Mumbai and London
• Healthcare and Life Sciences
• Corporate and Business Unit Strategy
The firm serves CEOs and
business leaders of Fortune 500
companies, high growth
companies, private equity firms
and educational institutions
• Industrials
• Cost Improvement
•
• Information/Publishing
• Econometric Forecasting
• Private Equity
• Innovation
• Technology
• Marketing and Distribution Strategy
• Consumer, Retail and Restaurants
• Change Management and
Implementation Support
• Merger and Acquisition Strategy/Due
Diligence and Execution
• Policy Development and Systems
Design
• Pricing
• Sales Force Optimization
• Strategic Resource Allocation
DDYYCODE_##
18
The Parthenon Group
Representative Corporate Clients
Fortune 500
DDYYCODE_##
Middle Market
19
Education Practice
Mission and Vision
MISSION AND VISION
To be the leading strategy advisor
to the global education industry
Unique
Institutional Capability
• Highly capable and experienced
education team leaders
• Comprehensive engagement in the
education industry
• Experience across the globe
• A history of sustained investment
in education
Unmatched
Client list
• K-12 (primary and secondary)
schools in both public and private
sectors
• HE and other post-secondary
institutions
• Corporate training, skills
• Foundations and grant-givers
• Local, regional and central
governments
• Publishers, technology and other
education support service
companies
DDYYCODE_##
Success Stories
and Impact On Learning and
Business Outcomes
• Success that encompasses both
business and educational results:
− Educational success, as
measured by improved student
outcomes and policy/system
reform
− Business success, as
measured by economic valueadd
• Unique perspective on success
that enhances Education Center of
Excellence capabilities and
opportunities
20
Education Practice – Unique Institutional Capability
Experts in Educational Markets
Capital
Markets
Education
Support
Services
Educational
Markets
Policy and
Regulation
DDYYCODE_##
Higher
Education
Skills and
Vocational
Primary &
Secondary
(K-12)
21
Education Practice – Unmatched Client List
Global Presence in Over 400 Education Projects Since 2001
= On-the-Ground
Education Sector
Projects Completed
= Parthenon Offices
DDYYCODE_##
22
Education Practice – Unmatched Client List
Representative Education Clients
Primary and Secondary Education
(K-12)
DDYYCODE_##
Higher and Further Education
Educational Services
(Including Publishing)
23
Education Practice – Unmatched Client List
Representative Education Transactions (Completed Deals)
Commercial due
diligence
Commercial due
diligence
Commercial due
diligence
Commercial due
diligence
Vendor
Commercial due
diligence
Equity Provider:
Star Capital Partners
Equity Provider:
CBPE Capital
Equity Provider:
Englefield Capital
Vendor:
Bowmark Capital
Equity Provider:
CHAMP Ventures
February 2007
September 2007
October 2007
Equity Provider:
Baring Private
Equity Asia
June 2008
July 2008
August 2008
Independent provider of
aviation training, personnel
solutions and technical
support services
Provider of vocational
training in the UK
Co-educational school for
international children
Operator of international
schools and services
Educational travel services
business, providing activity
and adventure trips,
educational tours and
school ski trips
UK based job search,
recruitment and training
agency
Commercial due
diligence
Commercial due
diligence
Commercial due
diligence (refinancing)
Commercial due
diligence
Commercial due
diligence
Vendor
Commercial due
diligence
Equity Provider:
Apollo Global (Carlyle)
Equity Provider:
Nord Anglia
Debt Provider:
Ares Capital Europe
Equity Provider:
Sovereign Capital
Equity Provider:
Providence Equity
July 2009
September 2009
March 2010
June 2010
July 2010
Provider of professional
services training
Private day and boarding
school in Switzerland
Provider of vocational
skills training and
employability services
Provider of vocational
skills training
Provider of university
access and English
language programmes
provision of world-class
university access and
English language
programmes.
DDYYCODE_##
Commercial due
diligence
Vendor:
RJD Partners
July 2010
Provider of supply
teachers, teaching
assistants and nursery
nurses, both short and
long term, to schools
throughout England and
Wales
24
Education Practice – Success Stories
International Strategy Development for UK University
 Parthenon’s client is a leading provider of distance learning in the UK and internationally
Situation
 International positions reflect historic activities, and do not take account of new opportunities
 Identify 1-3 attractive markets for the client to enter
Objectives
 Give an overview of the kinds of customers, offers and partners required for success
 Total opportunities to be material in the context of the overall institution
Parthenon
Activities
 Identified potentially attractive markets by screening every country in the world through a series of macro-economic and
demographic filters
 Examined the regulatory and market dynamics of around 20 most-attractive countries, and evaluate their suitability for market entry
 Surveyed potential students and partners in four most-promising countries to identify the most appropriate offer and potential
partners
 Identified four markets – one developed and three emerging – that were suitable for entry
Selected
Results
 For each market, identified partners who expressed an interest in partnering with the client, and set up follow-up meetings
 Identified the offers most suited to that market
 Now providing support to the client in considering market entry strategy
DDYYCODE_##
25
Education Practice – Success Stories
International Competitor Analysis for UK University
Situation

This distance education oriented university is undergoing a strategic review. The Vice-Chancellor is aiming to turn the
university in to a more nimble, innovative university of the future

Having established a new internal strategy team, the vice-Chancellor retained Parthenon to assist the internal
team with refreshing parts of the overall strategy

Determine the potential impact of entry of U.S. for-profit higher education providers into the UK market (e.g.,
Apollo, Capella, DeVry, Bridgepoint)

Conducted detailed landscape of the U.S. market to understand the for-profit private higher education providers

Developed in-depth profiles of competitors (business models, price points, spend on marketing)

Engaged in scenario planning / game theory (developed a point of view on how U.S. competitors might enter the UK
market (e.g., through acquisitions or partnerships)

Identified critical areas where the university needed to invest in order to be stay ahead of its competition and to protect its
student base from being taken by new competitors/market entrants

Recommended a more student-centric approach:
Objectives
Parthenon
Activities
Selected
Results
DDYYCODE_##

Increase spend on marketing since the university had traditionally been very passive in acquiring new students

Introduce more flexibility in start dates rather than continue the “one-size fits all” approach

Adjust price points to ensure competitive position
26
Education Practice – Success Stories
Business Plan Development for Oxford University’s Saïd Business School

Oxford University’s Saïd Business School (SBS) was established in 1996 and is one of Europe’s leading business schools

Its flagship program, the one-year MBA, represents the majority of the School’s focus and revenues, and is a differentiating factor
when compared to other UK-based business schools

The School was considering an expansion (additional MBA stream and expanded Executive MBA) which would require the School
to make a capital investment in new facilities. At the request of the key donor (Mr. Saïd), an independent party (Parthenon) was
engaged to conduct a review of the expansion plan that had been developed by the School

Conduct a high level assessment of the School’s business plan

Validate and challenge the achievability of the School’s business plan, including the robustness of the plan’s structure, key
inputs and assumptions and the deliverability of the financial projections

Advise on the School’s ability to repay debt (required to finance the expansion) at the levels envisaged in the plan

Determine whether the School will be able to increase its funding in areas key for its competitive performance (such as faculty
salaries, doctoral and MBA scholarships, and the Careers and Alumni Relations Services)

Conducted interviews with key members of the SBS management team to develop a better understanding of the assumptions
underpinning the business plan

Conducted desk-based research and analysis to benchmark SBS against comparable leading international business schools

Ran sensitivities on financial projections, determined impact of sensitivities on projections

Developed a view of the achievability of the School’s business plan

After pressure testing the assumptions, determined that the business plan was achievable

Identified opportunities to drive improvements in efficiencies/ lower costs (to increase potential margins)

Established that even in the worst case scenario cash flow generation would be sufficient to support the School’s debt
payments
Situation
Objectives
Parthenon
Activities
Selected
Results
DDYYCODE_##
27
Education Practice – Success Stories
Growth Planning in Private Post-Secondary Education Provider
 Parthenon’s client is a leading for-profit U.S. provider of post secondary education that serves ~100K students annually
Situation
Objectives
 Declining rates of enrollment growth across the for-profit market required the development of a growth strategy to improve our
client’s core offering
 Assess relative company performance measured by local market share – determine the most meaningful definition of market
share for the company
 Identify drivers of profitability by local market and determine key levers to increase operating profit in near and medium term
 Develop clear enrollment and financial targets in each metro area to achieve above-market growth over 3-5 years
 Collected and analyzed specific enrollment data for both the client and competitors
Parthenon
Activities
 Modeled enrollment demand and growth
 Conducted detailed cost allocation analysis and variance by location
 Interviewed students, faculty, administrators and leading external industry experts to assess performance drivers
 Created comprehensive financial models and strategic growth plans for each individual market
Selected
Results
DDYYCODE_##
 Developed strategic growth plan intended to double revenues and triple contribution margins over 5 years
 First quarter results exceeded expectations, with ongoing performance analysis underway
28
Education Practice – Success Stories
Strategic Planning for Graduate School of Education
Situation
Objectives
Parthenon
Activities
Selected
Results
DDYYCODE_##
•
The Graduate School of Education program is a premier U.S. and global education institution, and is part of a leading private
university
•
The school offers Masters and Doctoral degree programs and Executive Education programs, and also conducts cutting
edge education research
•
New leadership at the school seeks to develop a robust strategic plan to support ongoing investment priorities and corresponding
growth initiatives
•
Develop a comprehensive situation assessment and fact-base, including an overview of the school’s mission, an assessment of
current degree and non-degree programs, and an in-depth profile of students/alumni and faculty
•
Assess potential growth opportunities, including adjustments to current degree programs and the possibility of new degree
offerings, particularly in the area of education leadership
•
Provide recommendations regarding strategic priorities, corresponding investment requirements and an actionable
implementation plan
•
Conducted comprehensive interviews of the school’s administration and faculty to help inform and develop consensus around
the school’s mission and programmatic priorities
•
Analyzed market needs, gaps and preferences via in-depth discussions with and surveys of potential employers (e.g., U.S.
public school districts, education foundations, etc.), prospective students and education leaders
•
Completed a full assessment of the school’s current program portfolio, including an evaluation of Masters, Doctoral and
Executive Education offerings within the context of recent market trends and broader financial planning requirements
•
Identified a tangible market need for more robust and effective training programs for education leaders, with a specific
demand for programs with a blended focus on education, management, and policy/politics
•
Validated the Graduate School of Education’s strong positioning to address this specific market need
•
Prioritized opportunities for the school to optimize its current portfolio of programs offerings through adjustments to its
Masters programs and ongoing development of its Executive Education offering
29
Education Practice – Unique Institutional Capability
Team Bios – Management team
Tammy Battaglino
Partner
Karl Cheng
Partner
Robert Lytle
Partner
Tammy co-founded and leads the firm’s Education
Practice. For over 15 years, she has advised clients on
issues related to operational excellence, strategy
development, and new venture creation. Her clients
include a wide range of organizations from start-ups to
Fortune 100 companies, school districts, government
agencies, and some of the world’s largest foundations.
Karl has advised a broad range of clients in education,
publishing, financial services, and industrial businesses.
His functional areas of expertise include corporate
strategy, business plan development, and pricing. He
also has experience across both the private and public
sectors, having advised corporations, non-profit entities,
and public/private partnerships.
Tammy’s extensive education experience spans forprofit and public sector entities across the K-12, higher
education, and corporate training continuum. She has
led dozens of engagements with organizations that
include the NYC DOE, NY State DOE, Boston Public
Schools, DC Public Schools and leading educationfocused foundations and non-profits.
Karl’s public sector education experience includes
improvement strategies and business planning
engagements with Charlotte-Mecklenburg Schools,
Chicago Public Schools and DC Public Schools. Karl
also manages multiple client engagements with
education-focused foundations.
Rob co-leads Parthenon’s Education Practice, with a
focus on global for-profit education markets. For over
15 years, he has led client engagements on general
strategy, profit improvement, and investment due
diligence across a broad spectrum of business models
in the following sectors: K-12 and post-secondary
schools; educational publishing, testing, and service
provision; and consumer education products and
services. His clients include high-growth companies,
publicly listed Global 100 companies, financial
investors, and international governments.
She holds an A.B. in Economics from Harvard College.
She received her M.B.A. from Harvard Business School
and her M Ed from the Harvard Graduate School of
Education.
DDYYCODE_##
Prior to joining Parthenon, Karl worked at Booz·Allen
and Hamilton and ExxonMobil Corporation. Mr. Cheng
received an A.B. from Harvard College, magna cum
laude in Economics, as well as an M.B.A. from Harvard
Business School.
In addition, Rob has participated in numerous highprofile corporate turnarounds, mergers, divestitures,
and privatizations in Europe, North America and Asia.
Prior to joining Parthenon, he was with Bain and Co.
and served as a U.S. Army aviator. He holds a B.S.E.
in Economics from the Wharton School of Business
and an M.B.A with high distinction from The Tuck
School of Business at Dartmouth.
31
Education Practice – Unique Institutional Capability
Team Bios – Management Team
Lisa Cloitre
Director, Education Center of
Excellence
Lisa is the Director of Parthenon’s
Education Center of Excellence and a
member of the firm’s management
team.
Lisa advises both corporate and public
sector clients in the education industry,
with a focus on engagements with state
and district departments of education,
foundations, school operators, and
education nonprofits. She specializes in
strategy development and
implementation, business planning,
portfolio optimization, and education
reform.
Within Parthenon, Lisa helps oversee
the firm’s Women in Business network
and broader diversity initiatives. Prior to
joining Parthenon in 2002, she worked
for Fidelity Investments in Boston and
Deloitte and Touche’s International
Assignment Services in Brussels,
Belgium.
Lisa holds an M.B.A. from the Tuck
School of Business at Dartmouth and a
B.A., cum laude in Government and
French from Dartmouth College.
DDYYCODE_##
Haven Ladd
Partner
Chris Ross
Partner
Haven is a Partner with The Parthenon
Group, which he joined in 1997.
Chris is a Partner with The Parthenon
Group, which he joined in 2001.
While at Parthenon, he has focused on
strategic issues facing companies and
schools in the U.S. education market. He
brings a perspective on strategy built on
11 years of consulting across education
and corporate clients in a variety of
industries including professional
information services, healthcare,
insurance technology, manufacturing, and
many others.
He works on numerous corporate and
education clients. Typical projects have
included G&A optimization, merger
integration, growth strategies, pricing
strategy, portfolio optimization, and sales
productivity.
His work in education has included
developing district-wide strategies to
increase high-school graduation;
designing sustainable growth plans for
post-secondary providers, and building
data and performance management
systems across districts and networks.
Functionally, his experience includes
finance, organizational design,
operations, and corporate strategy.
Haven received his undergraduate
degree in 1997 from the Harvard
University, Magna cum laude. He
received his M.B.A. with distinction in
2003 from the Tuck School of Business at
Dartmouth, where he was a Tuck Scholar.
In addition to client work, Chris
coordinates all Associate training for the
firm. Prior to joining Parthenon, he
worked at PricewaterhouseCoopers in
their D.C. office.
He holds a B.A. in Economics from
Williams College and an M.B.A from the
Tuck School of Business at Dartmouth,
where he was elected Edward Tuck
Scholar.
Karan Khemka
Partner and
Mumbai Office Head
Karan is the Head of Parthenon’s
Mumbai office and international ECE
practice.
He has extensive experience in the
Asian private education sector, including
business plan development across
education verticals, a due diligence of
an international language school with
assets in China, a due diligence of an
Indian IT training school, analysis of the
Chinese market for English Language
publications, and a due diligence of a
network of for-profit universities in
China.
Other education projects include U.S.
and UK market entry strategies for a
major multi-national educational
publisher, and a due diligence of a
leading UK educational publisher. He
has worked extensively for clients in
Asia, the Middle East, and Europe.
Karan holds a bachelor’s degree in
International Relations from Georgetown
University and a M.A. in Law from
Cambridge University.
32