Nous Intercative Case Study 1

Establishment of Golden Coast Tech Nous Group interactive case study

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Nous Group interactive case study Establishment of Golden Coast Tech |

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Contents 1

Introduction ....................................................................................................................................... 3

2

Case study .......................................................................................................................................... 4 2.1

Background ............................................................................................................................. 4

2.2

Question 1 ............................................................................................................................... 5 2.2.1

2.3

Question 2 ............................................................................................................................... 7 2.3.1

2.4

Answer to question 4 ............................................................................................... 12

Question 5 ............................................................................................................................. 13 2.6.1

2.7


Question 4 ............................................................................................................................. 11 2.5.1

2.6

Answer to question 2 ................................................................................................. 8

Question 3 ............................................................................................................................... 9 2.4.1

2.5

Answer to question 1 ................................................................................................. 6


Question 6 ............................................................................................................................. 14 2.7.1

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1 Introduction Thank you for taking the time to work through this practice case study. It provides an example of the work we do at Nous Group (Nous) and the foundational skills w e expect from our consultants. It also offers an example of the type of question you may be asked a t a candidate interview, though it is likely to be briefer in an actual interview. Just like a rea l interview case, information outside of that provided is not required. As with a real interview case, you should be less concerned with getting the right answer in a precise sense, and more focused on how you approach the problem. The solutions we offer are just one possibility. Importantly, they provide a structured approach to thinking about the problem. Feel free to provide any feedback at [email protected] if you think we could make this case even more useful for you and others. Thank you, People Team

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2 Case study 2.1 Background USEQ is looking to capture growth

The University of South East Queensland (USEQ), a traditional research-based university, is looking to open a subsidiary university. The proposal is in response to changing conditions in student demand for bachelorlevel qualifications. Over the past few years, USEQ has observed growing demand in the region for: 

bachelor degrees in particular areas of regional skills shortages



bachelor degrees based on a more practical – rather than theoretical – pedagogy



bachelor degrees that include work placements during study and a fast track to employment.

The subsidiary university, to be known as Golden Coast Tech, would focus on meeting these new sources of student demand, most likely in a way that would complement USEQ’s current – and preferred – strategy of focusing on students with an Australian Tertiary Admission Rank (ATAR) greater than 70.* If established, Golden Coast Tech would also operate in the south east Queensland region, at a site a lready owned by USEQ. USEQ has engaged Nous Group (Nous) to determine the high-level feasibility of establishing Golden Coast Tech as a subsidiary university. USEQ requires a report for its governing body, which is meeting in three weeks.

* A student’s ATAR measures how they fared in their Year 12 studies relative to their peers in each state. For example, an ATAR of 90 implies a student was in the top 10% of their year; an ATAR of 80 implies the student was in the top 20%; and so on.

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2.2 Question 1 To determine the high-level feasibility of Golden Coast Tech a number of pieces of analysis will be required. A Nous Principal has asked you to think about the areas of analysis we should primarily f ocus on considering the short timeline f or the project’s delivery. a. Of the following modules of analysis, what should be the core focus over the three-week engagement? Select 3 to 5 to focus on.  Attractiveness of the

tertiary education market

 Competitive environment  Legal and regulatory environment for

new tertiary education institutions

 Scenario analysis  Business relationship between Golden Coast

Tech and USEQ

 Analysis of overseas models of tertiary education  Management skills of

USEQ executives

 Value chain analysis  Golden Coast Tech’s potential students  Student satisfaction with USEQ

b. Of the 3-5 modules you have selected above, list 2-4 more specific areas of focus (i. e. sub-questions) that you think the team should focus on.

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Nous Group interactive case study Establis hment of Golden Coast Tech |

2.2.1 Answer to question 1 Suggested modules – and most critical areas in each – to focus on 1a

1b

(i)

Attractiveness of the tertiary education market

(ii) Golden Coast Tech’s potential students

Specific areas to consider: 









Market size


Forecast market growth, including likely trends in tertiary education





Market profitability (revenue and expenses) Financial barriers to entry, i.e. start-up costs



Likelihood of relevant federal and state government policy changes

ATAR band


Type of qualifications of interest Desired delivery styles and learning methods (e.g. classroom, on-line, work place)

(v) Legal and regulatory environment for new tertiary education institutions

(iv) Business relationship (iii) Competitive environment between Golden Coast Tech and USEQ





Willingness to travel to access preferred tertiary education course/institution

Specific areas to consider:

Threat of substitutes, i.e. other higher education providers





Market share Market fragmentation, i.e. possibility for market share to be eroded over time





Specific areas to consider:

How should Golden Tech be branded?



Should Golden Coast Tech compete with USEQ, with similar course offerings?



Should Golden Coast Tech be a ‘f eeder’ for USEQ, i.e. preliminary courses that provide a basis for further university study?



Legal relationship with USEQ, i.e. part of USEQ or completely separate? Time and cost to obtain initial regulatory approval On-going legal and regulatory requirements

Is there a possibility for USEQ to redefine its own strategy to further complement Golden Coast Tech?

The areas identified aim to broadly determine feasibility: A. Is there sufficient demand? B. Can we compete? C. Can we implement?

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2.3 Question 2 The following questions will explore the first three modules. Let’s begin by reviewing the attractiveness of the market. The Nous project team has examined federal government data on undergraduate enrolments to gain a macro picture of domestic demand for tertiary education (see Exhibit 1 below). All students who gain a place in a bachelor degree are selected on the basis of their ATAR, except those listed below as nonATAR entries (e.g. mature age students). Exhibit 1: New undergraduate enrolments in Australian universities Students (000s) grouped by ATAR band

CAGR (NB: Total = 8%)

160

140 4.7 3.7

3.6

3.0

3.0

12.5

2.4

2.5

10.9

2.1 8.2

9.5

120 1.9

100

1.7 7.2

6.3

27%

4.7

22%

15.7

17%

28.2

12% 23.5

21.3 19.4 17.6

16.0

30.1

80

26.4

6% Non-ATAR


2.3 Question 2 The following questions will explore the first three modules. Let’s begin by reviewing the attractiveness of the market. The Nous project team has examined federal government data on undergraduate enrolments to gain a macro picture of domestic demand for tertiary education (see Exhibit 1 below). All students who gain a place in a bachelor degree are selected on the basis of their ATAR, except those listed below as nonATAR entries (e.g. mature age students). Exhibit 1: New undergraduate enrolments in Australian universities Students (000s) grouped by ATAR band

CAGR (NB: Total = 8%)

160

140 4.7 3.7

3.6

3.0

3.0

12.5

2.4

2.5

10.9

2.1 8.2

9.5

120 1.9

100

1.7 7.2

6.3

27%

4.7

22%

15.7

17%

28.2

12% 23.5

21.3 19.4 17.6

16.0

30.1

80 22.6

23.5

24.4

25.4

6% Non-ATAR

26.4

entries 50 or below

60 32.2

40

25.4

26.1

26.9

27.7

5%

50.05-60.00

28.5 60.05-70.00 70.05-80.00

4%

20 28.3

28.8

29.4

30.0

30.6

34.2

80.05-90.00 90.05 or more

0 2007

2008

2009

2010

2011

2012

CAGR refers to the compound annual growth rate, i.e. the rate of growth if this growth were at a steady rate. What are the key insights from this chart?

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2.3.1 Answer to question 2 The market for tertiary education is dominated by those with ATARs of over 70, even if lower ATAR cohorts are increasingly enrolling in undergraduate degrees in Australian universities. Student enrolments have grown moderately each year, except in 2012 where growth was more significant. Fastest growth is in cohorts with lower ATARs and non-ATAR entries, with year-on-year growth in the cohorts of students with ATARs of 70.05 and above lower than the overall CAGR of 8%. Notwithstanding the CAGR of 8% over the period is potentially misleading, noting that growth from 2011 to 2012 was much higher than earlier. An important question to consider is whether this is a once-off trend (possibly due to a population anomaly) or is indicative of future growth in tertiary education. Based on the trajectory of previous enrolments, there would appear good prospects for continued growth, particularly in students with lower ATARs.

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2.4 Question 3 Let’s now review the potential for Golden Coast Tech to focus on a particular segment of the market for students in south east Queensland.

The Nous team prepared Exhibit 2 to better understand the opportunity for students in the region, again with a focus on ATARs. In conducting this analysis the team was reminded by the client of USEQ ’s strong preference to remain a traditional research-based university with a focus on students with ATARs above 70. This may provide a market opportunity for Golden Coast Tech to focus on students with lower ATARs, to occupy a complementary market position. Exhibit 2: Undergraduate enrolments in south east Queensland universities (2012)

Students 100% grouped by 90% ATAR band 80% 70%

6%

7%

7% 24%

56%

3%

3%

3%

4%

17% 27% 26% 23%

1% 12% 16% 15% 2%

1%

50.00 or less

45%

60%

50.05 70.00

50% 40%

74% 69% 70% 71%

30% 20%

84% 87% 79% 82% 70.05 or more

48% 38%

10% 0%

. h c e T . o f n I

s s e n i s u B

n o i t a c u d E

s t r A e v i t a e r C

s h t e l i t a i e n a H m u H

e r u t l u c i r g A

e r u t c e t i h c r A

e c n e i c S

g n i r e e n i g n E

What are the key insights from this chart? What does this mean for Golden Coast Tech ’s opportunity considering USEQ’s preferred strategy?

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2.4.1 Answer to question 3 Undergraduate enrolments are generally dominated by students with ATARs of 70+, but there is some variance amongst degrees. Information technology and business degrees comprise a comparatively larger share of students with ATARs below 70. Accordingly, there is a captive market in Information Technology and Business for Golden Coast Tech due to the large number of students seeking one of these degrees if USEQ focuses less on those students with ATARs less than 70. The size of this captive market depends on the extent to which USEQ has market share of south east Queensland universities in these areas. Another (counter) inference might be drawn: there is a captive market for those courses at the right end of the chart because students who would like to study courses in these areas (e.g. science and engineering) are not currently able to do so in south east Queensland. However, this chart makes no indication of the size of this potential grouping. Moreover, there may be other reasons why students with lower ATARs are not typically enrolled in these courses, e.g. typical dif ficulty of such courses. For these reasons, the former inference is preferred.

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2.5 Question 4 Let’s continue with the second module of analysis to gain a more detailed view of the type of student – in terms of their academic standing – that Golden Coast Tech might focus on.

The Nous team is aware that an educational researcher, Professor John Kimble, has just finished a study looking at completion rates at Australian universities based on a student’s ATAR (see Exhibit 3). In his sample, he looked at degrees that are: 1. Vocationally focussed, e.g. applied business, applied information technology 2. Theoretically focussed, e.g. traditional humanities, science, engineering Exhibit 3: Undergraduate completion rates at Queensland universities grouped by ATAR (2008-2011)

90%

79%

80% 67%

70% 60% 50% 40%

63% 55%

53%

64% 56%

77%

77% 77%

67% Theoretical focus

44%

30% 20% Vocational focus

10% 0% w o l e b r o 0 5

0 0 . 0 6 5 0 . 0 5

0 0 . 0 7 5 0 . 0 6

0 0 . 0 8 5 0 . 0 7

0 0 . 0 9 5 0 . 0 8

e r o m r o 5 0 . 0 9

What are the key insights from this chart? What does this mean for Golden Coast Tech?

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2.5.1 Answer to question 4 There would appear a consistent correlation between a student’s ATAR and their likelihood of completing an undergraduate degree. For students with an ATAR above 70, the likelihood of completion does not vary between vocationally focused or theoretically focused degrees. For those with an ATAR less than 70, completion rates are much higher for those studying degrees with a vocational focus.

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2.6 Question 5 USEQ Vice-Chancellor wants a mid-project update. Nous’ Principal on the project has asked you to update the Vice-Chancellor on the team’s analysis and findings to date. The principal asks you to complete a short PowerPoint slide pack (3-5 slides) for the Vice-Chancellor with a summary of our findings so far. What major points (3-4) would you include in the PowerPoint slide pack, including an overall headline?

2.6.1 Answer to question 5 A major opportunity exists for Golden Coast Tech to capture the high-growth demand for vocational Bachelor’s degrees by low -ATAR students, particularly in Information Technology. 







There was solid growth in the enrolments for bachelor-level degrees, with CAGR of 8% from 2007 to 2012 (with a noticeable spike from 2011 to 2012). There was very strong growth in enrolments for students with ATARs less than 70 and those without an ATAR (though from a low base). In nearly all fields of study most students have ATARs of more than 70. In Information Technology and Business the majority of students have ATARs less than 70. Students with ATARs less than 70 are more likely to complete their degree if it is vocationallyfocused.

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2.7 Question 6 Following the briefing from the Nous project team, USEQ asked Nous to undertake a preliminary assessment of the feasibility of establishing a degree in information technology to ascertain approximate students numbers and therefore potential revenue. The selection of a degree in information technology was supported by anecdotal evidence from local employers of a skill shortage in this area. Now focusing on the third module of analysis, the Nous team and the client a greed this degree could be particularly successful if it: 

targeted students with ATARs of less than 70 or applicants without ATARs



is vocationally-focused in terms of its teaching and delivery



has a limited intake of 50 students each year to ensure maximum support for each student such that ‘extraordinarily high’ completion rates are possible.

USEQ has provided some internal analysis about forecast student applications for information technology degrees in the region (see Exhibit 4). This is based on trend data collected by USEQ. Exhibit 4: Applicants for information technology degrees in Golden Coast Tech’s regional area

Number of applications

1200 1000 800

75 210

77

80

82

216

223

229

84 236 Non-ATAR entry 50.00 or below

600 250

258

265

273

281

400 200

50.05 - 70.00 70.05 or more

350

361

371

382

394

2014

2015

2016

2017

2018

0

USEQ also believes that an information technology degree offered by Golden Coast Tech could 'capture’ a percentage of this available market. Again, based on collected trend data, USEQ has provided likely capture rates, where the capture rate refers to the market share of potential applicants that Golden Coast Tech could expect from the forecast number of applicants for information technology degrees in the region. See Exhibit 5 for these capture rates.

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Exhibit 5: Anticipated capture rates by ATAR band Student cohort

Forecast market share or ‘capture rate’ for Golden Coast Tech

Non-ATAR entry

10%

50.00 or below

10%

50.05 - 70.00

5%

70.05 or more

1%

Based on the data provided in Exhibit 4 and Exhibit 5, how many students could Golden Coast Tech expect to be teaching in information technology each year between 2014 and 2018 (inclusive)? Round st nd rd the number of students (broken down by 1 year, 2 year and 3 year) to the nearest integer. NB: The proposed degree would be for three years of study, and USEQ has requested that Nous assume a 100% completion rate of the degree to provide a maximum possible figure.

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2.7.1 Answer to question 6 Student enrolments were forecast by applying the ‘capture rate’ to each cohort. Each cohort was then summed to provide annual enrolments. For example, year 1 intake in 2014 was calculated as follows: (10% of 75) + (10% of 210) + (5% of 250) + (1% of 350) = 44.5 (rounded to 45). This intake continues in year 2 and year 3. 100% ‘completion rates’ were assumed, meaning that all students enrolled in 2014 proceeded to 2nd year in 2015 and 3rd year in 2017. For reference, the maximum intake of 50 would be reached in 2018. Exhibit 6: Forecast enrolments at Golden Coast Tech for an information technology degree

Forecast student 160 enrolments 140 120

45

46

47

100

3rd year students 80 45

60

46

47

49

2nd year students 1st year students

40 20

45

46

47

49

50

2014

2015

2016

2017

2018

0

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Nous Intercative Case Study 1

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