Referencing Styles : APA Describe and illustrate one of the three portfolio approaches. · Explain why a business would choose a low cost, differentiation, or speed-based strategy. · Conduct a strategic analysis and choice for a multi-business company. The PowerPoint template for this Assignment can also be found in Doc Sharing. For extra help on using this template, watch the Assignment video by clicking on the Presentation icon. For general PowerPoint tutorials, click on the Tutorial icon. In this Assignment that focuses upon the idea of conducting a case study analysis with respect to multi-business strategy using one of the three portfolio approaches to move the company competitively forward, you will engage in developing the following professional competency: · Leadership with respect to knowing how to use software for job to support business analysis and operations THE CASE Case 3: The Apollo Group, Inc. [University of Phoenix] Richard B. Robinson 1 A 55-year-old college professor at San Jose State University with a PhD from Cambridge University and previous teaching jobs at Maryland, Ohio State, and Northern Illinois, John Sperling was a surprise entrepreneur when he started the Apollo Group, parent company of the University of Phoenix, in 1976. Ambitious, his goal was to revolutionize conventional higher education. Most people would say that Sperling, recently celebrating his 91st birthday, has done just that. 2 Rather than catering to 18- to 22-year-olds looking to find themselves, Sperling focused on the then-neglected market of working adults. And he recruited working professionals as teachers, rather than tenured professors. UOP (on-campus and online) has more than 33,000 faculty members with less than 5 percent being full-time. Most radical of all, while nearly all other universities are nonprofits, Sperling ran his university to make money. Those ideas sparked overwhelming resistance from the education establishment, which branded UOP a “diploma mill.” The result? “We faced failure every day for the first 10 years,” said founder Sperling, who turned 91 in 2012. 3 From an IPO adjusted price of $0.76 to a mid-2005 high of $98, Apollo’s stock reflected a company BusinessWeek considered among the top 50 performing companies on Wall Street. The Phoenix-based company, whose day-to-day operations were still generating average annual revenue growth exceeding 30 percent over that time, saw its revenues reach $5 billion in 2010 with net income exceeding $550 million. It has also joined the S&P 500. 4 Tuition at Apollo averages only $18,000 a year, 60 percent of what a typical private college charges. A key factor, says Sperling, is that universities for the young require student unions, sports teams, student societies, and so on. The average age of a UOP student is 35, so UOP doesn’t have those expenses. It also saves by holding classes in leased office spaces around the country, and online, By 2010, over 75 percent of UOP students studied at University of Phoenix Online. 5 By 2010, the UOP had become the dominant player in the online education market that still has lots of potential for growth. The bricks-and-mortar University of Phoenix was one of the first institutions to identify and serve the burgeoning market for educating working adults. In the late 1980s, long before the Web debuted, the school began to experiment with offering its classes online. It got off to a slow start, “and we lost money for a number of years,” recalled Brian Mueller, Apollo’s former president. 6 As a result of this head start, however, UOP’s online option was ready to capitalize on an online-education market that began exploding in the mid-1990s. Today, it is estimated that over 10 percent of the U.S. students earning a degree via the Net are enrolled through the UOP’s online option. UOP’s online option also garners an outsize share of the industry’s revenues—about one-third of the total. That’s because as the market leader, it can charge higher tuition than most rivals. Undergraduates pay a little more than $18,000 a year at UOP, while students seeking a master’s degree pay nearly $25,000. “They’re by far the giant in this industry,” says Eduventure market analyst Sean Gallagher. 7 Online education is rapidly growing, but it is still just getting started. “There are 70 million working adults in this country who don’t have a college degree,” says Gallagher. Increasingly, they realize that they need a degree to get ahead. But because they often have a family as well as a job, studying online is the most convenient solution. Howard Block, an analyst at Banc of America Securities, predicts “dramatic enrollment growth” for UOP’s online option. He expects that half of the students in postsecondary education will one day make at least some use of the Internet to earn their degrees. GLOBAL OUTREACH 8 UOP began to seriously tap the international market with its online option in 2005, initially “bringing in about 500 students a month,” said Mueller. “But that’s just the tip of the iceberg.” Though the UOP started offering online classes only in English, it has begun to offer courses in Spanish and plans to introduce Mandarin soon as well. Ironically, UOP has done all this with plain-vanilla technology. While other companies charged into online education with dazzling digital content, UOP has historically offered primarily a text-heavy format that can easily be accessed with dial-up modems. 9 This might sound like a recipe for failure. But UOP realized that interaction with humans—the professor and other students in the class—was far more important to success than interaction with the digital content. Thus, UOP keeps its classes small, averaging just 12 students. And to combat the Achilles heel of distance education—a high dropout rate—it offers its students plenty of hand-holding, including round-the-clock tech support. The result: 65 percent of its students go on to graduate. 10 Some see plain technology as a potential negative for the virtual college. “At some point, UOP online will need to upgrade the sophistication of its platform,” warned Trace Urdan, an analyst with ThinkEquity Partners, a boutique investment bank. That will require more spending on research and development and information technology, he warns, which could crimp margins. Still, any extra spending could be easily offset if UOP bumped up its class size to 15 students, argueed Block. Even with today’s small classes, operating profit margins now top 20 percent. As if listening to them, the UOP now has an excellent, visual explanation of how this type of multifaceted online educational approach works.1