Project Study Report

A Project Study Report On Training Training Undertaken at

Element Akademia

Titled "------------------- ( BENCH MARKING) -----------------------" Submitted in partial fulfillment for the  Award of degree of 

Master of Business Administration Administration

Submitted To:Mr.SuhaibSiddiqui

Submitted By: Devendra Singh MBA 4th SEM

2007-2009

ACKNOWLEDGEMENT

With deep sense of gratitude, I would like to take this opportunity to Mr. Suhaib Siddiqi Under Under whom guidanc guidance e I had complet completed ed the current current project. project. I also like to pay my Gratitude to Mr. Vinay Sharma (M D Element Akademia). Their involvement & unstinted support has always gives me the confidence to do my work. Without their guidance this project report would not have seen the light of the day. day. I am also thankful for my friends for their kind co-operation to complete this project report. I would like to thank the people who took their time to help me to complete this project. I would like thanking my friends who were of immense help to me. Last but not the least; I would like to thank my parents who were a source of support throughout the making of the report.

Thanks

Devendra Singh M.B.A. 4th Sem.

PREFACE The viewing of the marketing in business administration of an organization is a fast growing growing concep conceptt in India. India. Market Marketing ing in any undert undertaki aking ng require requires s aptitu aptitude, de, skills skills,, expertise, knowledge and efforts in sales as well as marketing. Marketing is considered to be the most valuable asset of the organization in revenue generation, which is greatly influenced by the performance of its executives. All professional post graduates course like MBA envisage for a student to acquire proficiency in academic knowledge as well as its application in practice by way of  exposure to the business world. Projects and case studies are therefore a part of MBA curriculum, curriculum, which helps in developing developing analytical and interpreting interpreting skills in the students through application of several concepts of management to understand the functioning of industries. This study has been taken over the “Vocational Institute in Jaipur."

Devendra Singh M.B.A. 4th Sem.,

Objectives

Objectives specify what learners will be able to do, or perform, to be considered competent. As such, they provide clear reasons for project study... study... Another way to view objectives is that they are goals redrafted to state performances in terms that are clearly tangible to the reader.

Reasons for objectives: Objectives are useful for students, instructors, and instructional designers. Some of the ways in which they are used include: To select and design instructional content, materials, or methods, it is necessary to have a sound basis by which success can be measured. Clearly defined objectives allow designers and instructors a method to find how successful their material has been. The purpose of instruction is to improve performance. By clearly stating the results we want the learners to accomplish, we can identify if they have gained the appropriate skills and knowledge.

During Survey I have following objectives:*

To know know wher where e EA EA stan stands ds agai agains nstt com compe peti tito tors rs in jaip jaipur ur city city..

*

To know know awar awaren enes ess s of of EA EA betw betwee een n Gra Gradu duat ate e stu stude dent nts. s.

*

To know know what what a fut futur ure e pro prosp spec ectt thi think nk while hile join joinin ing g an an ins insti titu tute te

.*

To kno know w how how pro prosp spec ects ts get get inf infor orma mati tion on for for sel selec ecti ting ng an an inst instit itut ute e

ABOUT Company Elements Akademia is a private limited company registered in NCR, India. It is fully funded by the management team and a group of angel investors, who are typically IIM alumni and mid/senior professionals from some of the world's most admired companies like Goldman Sachs, CSFB, GE, P&G, and Bank of America etc.

We have a BIG, BOLD vision to be the leader in high-quality job oriented courses in India and other developing countries. We have courses on Banking, Financial Services, and Retail and Insurance being offered to students in North India and courses on LPO, KPO etc. in the pipeline - our focus on growth makes us continue to look at niche, as yet unexploited areas.

Our tie-up with SIMSR (KJ Somaiya's Bschool, India' Top 20 MBA programmes) assures a very high academic rigour and quality. quality. The current growth projection is "10 by 10"... $10mn revenues by 2010.

Vision Providing 10,000 jobs by 2010 Elements Akademia - conceptualized, funded and run by a group of IIM Alumni - is envisaged as an innovative national chain of vocational schools.

India's Service Sector is booming (60% of GDP, GDP, up from less than 40% in 1970) but faces an acute skilled manpower shortage, despite the presence of a large graduate pool (15mn+). A part of the malady is perhaps in our university education system which offers degrees but often fails to make graduates gradua tes "employable".

Elements Akademia Aims to bridge that gap by offering a 6 month part-time vocational course designed with the help of our corporate partners, who are leading players in various service sectors like Insurance (MNYL), BPO/KPO (Genpact), Retail (Reliance), Banking (KMB) etc. This prepares Graduates in Tier II cities for Entry Level Jobs in the booming Service Sector of India like Insurance, KPOs/BPOs, Banking, Retail, Telecom, Telecom, Hospitality etc.

MANAGEMENT TEAM CEO: Nishant Saxena Nishant has eight years of experience in Corporate Finance/Planning with Procter & Gamble – including Strategic Planning, M&A, and Corporate Finance. Worked across various geographies in Asia (Japan, Philippines, India and Singapore). Nishant has also taught in IIM-Bangalore, IIM-Lucknow, National University of Singapore and SP Jain as guest/adjunct faculty. faculty. He has been profiled by Business World as a "Leader-in-Making", and has been a consistent top talent within P&G. He is returning to India to start this company. company. Nishant is a BE from NITT and MBA from IIML.

COO: Vinay Sharma Vinay has 12 years of work experience e xperience in some of India’s Bluechip companies like Bharti Airtel, Comsat Max (JV with Lockheed Martin), Blowpast (Makers of VIP lugga ge). He has a very rich cross industry experience across Marketing and Sales function - including Product Launches, Advertising Communication, Business Development, Institutional Sales, and Customer Relationship Management – and has handled hand led full P&L responsibility. He has consistently won Outstanding Performer Awards or  equivalent based on consistent target achievement. Vinay is a BE (PEC, Chandigarh, 1994) and MBA (IIM Calcutta, 1996).

Honorary Dean: Prof. Tapan Bagchi Prof. Bagchi served 16 years in Exxon Mobil US and was a recipient of Extraordinary Contributor award. He then returned to India to teach in IIT Kanpur – where he set up IITK's Bschool, then headed NITIE and finally moved as Dean, SP Jain Dubai Bschool. He has authored 6 test books and 75 papers. He currently is associated with IIT Mumbai and is leading research into KPOs. Prof. Bagchi is a BTech BTech from IIT Kanpur and PhD from University of Toronto, Toronto, Ontario in Canada.

Head, Operations: Ankur Agrawal Ankur brings extensive experience in starting companies. Most re cently, cently, he started an HR consulting/recruiting firm (jobsjunction), and scaled it from zero to 5 cities in less than a year. Prior to that, in ICICI Lombard (new client acquisition) and Philips (setup rural distribution network in 4 states). Ankur is a Commerce Graduate and an d an MBA from IIML.

Head, Training: Training: Amit Jyot Singh Amit has been working in field of training and capability development for the last 9 years, with a long experience in leading training delivery at Hero ITES. He has also worked with companies like Bharti, Vangurad info, etc. Amit is a Post Graduate in English from DU.

ACADEMIC ADVISORS

Overall Advisor: Prof. Pritam Singh, Padmashri. Former Director, IIM Lucknow. Former Director (and Professor of Eminence), MDI Gurgaon Dr. Pritam Singh has devoted his life to the develop ment of management education: He led refocussing of IIM Bangalore as an integrated management school, catapulted IIML to India's Top Bschool, delivered a dramatic turnaround of MDI and developed more than thirty international collaborations in 5 years. He is on the board of nearly a hundred top institutions (RBI, HAL, Oriental, SCI, UTI etc). He has also been conferred with many prestigious awards including ESCORT Award¸ FORE Award¸ Award¸ Best Motivating Professor IIM Bangalore Award¸ Best Director of Indian Management Schools¸ Outstanding CEO (Chief  Executive Officer) National HRD Award etc. Dr. Singh is the author of seven academically reputed books and published over 50 research papers. An M.Com (BHU) ¸ MBA (USA) ¸ Ph.D. (BHU) ¸ Dr. Singh is the author of seven academically reputed books and published over 50 research papers.

Advisor, Academic Programme: Prof. Suresh Ghai, Director, KJ Somaiya Business School Prof. Suresh Ghai has been the Director of K J Somaiya Institute of Management Studies and Research, one of the top 20 Management Institutes in India, since 2001. Prof. Ghai has worked in the Industry for  28 years in the areas of Marketing and International Business. He has conducted several senior level MDPs and has presented papers at several prestigious conferences and seminars. Prof. Ghai is the Honorary Secretary of Bombay Bomba y Management Association. Prof. Ghai is a BE from IIT Roorkee and an MBA from IIM, Ahmedabad.

Advisor, Advisor, Operations: Prof. Rajiv Ra jiv Srivastava, Former Dean, IIM II M Lucknow Rajiv Srivastava is a Professor at IIM Lucknow focusing on Operations Management. His emphasis on Manufacturing and IT applications in Operations Management has helped create one of the most comprehensive collections of Operations Management software in any a cademic institution. Prof. Srivastava is Batch (IIT K), PGDIE (NITIE Mumbai) and Ph.D. (Virginia Tech. Tech. USA)

Advisor, Business Communication: Prof. Neerja Pandey, Chair Communications Group, IIM Lucknow Prof Neeraja Pande is an a n Associate Professor in IIM Lucknow in the communications group. She teaches Communication for Management and International Business Communication courses. Her  research interests are in Corporate Communication; Managerial Excellence through Effective Communication and Organizational Integration Through Strategic Communication. She is currently consulting on Interpersonal Communication Skills; Media and Crisis Communication Skills and Communication Strategies for Business Image Development. Prof. Pand ey is a PhD in English from LU.

Advisor, Managerial Effectiveness: Prof. Archana Shukla, PGP Chair, IIM Lucknow Prof. Archana Shukla is a Professor in the Human Resource Management group in IIM Lucknow. She teaches Organizational Structure & Design and Team Building courses. Her research interests are in Knowledge Management and New forms of organizations. Her consulting interests are in Group dynamics, Team Team building and Organizational design. She has been a management consultant for J&J, Reckitt Benkiser, Benkiser, Hughes Software, SBI, SAIL; Crompton Greaves etc. Prof. Archana Shukla has a Ph.D. (Organizational Behaviour) from IIT Kanpur.

INVESTORS Elements Akademia is a private limited company incorporated in NCR, India and started operations in Sept 2007. It is fully funded by the management team and a group of 10 IIM Alumni investors, who are typically senior professionals with experience in some of world's most admired companies. It believes that the current university education system in India has an inherent flaw in that it offers degrees but not jobs. Elements bridges that gap by offering a high quality but affordable vocational training, designed with the help of its corporate partners who are leading players in various service sectors like Insurance (MNYL), BPO/KPO (Genpact), Retail (Reliance), Banking (KMB) etc. The 6 month part-time course is targeted at graduates in Tier II cities. The angel investing round is now complete (Mar 2008) and the company has raised the requisite capital at the targeted valuation. The next round (VC Series A) is envisaged for first quarter of 2009 requiring $2mn funding to help expand in 15 more cities. Investors interested may write to [email protected] [email protected]..

Partners Elements Akademia partners with leading MNCs to design job-oriented courses in the most booming sectors of Indian economy. Typically Typically,, we have spent many weeks to fully understand the skill requirements of our corporate partners, and then – together with them and our academic advisors – design a curriculum that prepares students for the career with these companies.

Our academic partner, SIMSR, KJ Somaiya’s Business school (India’s Top Top 20 MBA programme) supervises the academic rigour and offers their formal certificate to successful candidates.

8REASONS TO JOIN EA

“We “We offer Careers, not just English.” 1. A Comprehensive Life Enhancer Course: While English Language capability is an important component, this course offers a complete set of skills required to succeed (managerial and domain skills, grooming, sensitization to MNC work environment, IT skills etc.). This is different from usual courses that either offer only language or only personality development etc. We have seen success requires a balance between bet ween various skills.

“World’s “World’s best companies, who also return your course fees.” 2. Placement opportunities: Our lead corporate partner is Genpact - ranked by Nasscom as India's largest 3rd party BPO Company for 2 consecutive years. Our unique tie-up with them ensures reimbursement of your course fees (Rs. 10,000) after a year of service, so effectively your course becomes almost free. In the worst case that you don’t get selected, we provide retraining and re-interviews (also with other partners). Our planned conversion is 90%+.

“This is a serious school, not a coaching centre” 3. Rigorous Academic Programme: Students are required to attend regular classes (minimum 85% attendance or else asked to leave), do regular homework (1-1.5 hour of self-study every alternate day), and regularly take assessments (to know how they are improving). Conversely, Conversely, students give regular feedback on the class/faculty. class/faculty.

“Highly Credible Management Team” 4. Conceptualized, funded and run by IIM alumni: Conceptualized, funded and run by IIM alumni - many returning to India with the vision to make India's youth employable. Very capable management team (Our Honorary Dean is the former Chair of the IIT Kanpur Business School). Course content advised by senior IIM Faculty. We are also Associate Members of Nasscom, India's leading chamber of commerce for BPO/KPO.

“Formal “Formal Course Certificate”

5. Long Term Value: Our Academic Partner, SIMSR, KJ Somaiya’s Business School, ranks amongst the Top 20 MBA programmes in India. Each student who successfully passes the course will be given a certificate endorsed by SIMSR. This is a nationally recognized certificate with a lifelong intrinsic value.

“Not everyone who applies is admitted” 6. Honest Assessment: There is a strict entrance criterion to admit only those students who can realistically be “employable” in 6 months. Our research shows that very modest level of English typically requires longer duration courses and even then success rates are low. We are honest with such individuals and recommend them against joining this course.

“We “We teach exactly what the industry wants” 7. Industry relevant course: We have done extensive research with multiple companies to understand what exactly are they looking for in a candidate and then worked with their HR to design this course. The objective is that our course/exam is exactly in line with the entrance recruitment process of these corporates, so success in our exam should mean success in actual recruitment.

“You “You will w ill be our student ambassadors” 8. Ongoing Relationship: Once you have successfully completed our course, you join our exclusive alumni network for life – which provides help on various alumni issues. Example: we provide a comprehensive relocation advisory if you need help in changing cities. We also try tr y to find industry mentors, and ongoing networking opportunities. Your Your and our destinies de stinies are intertwined – we can only grow together.

BUSINESS MODEL

Elements Akademia offers an industry customized Pre-Hire Training School – providing a consistent quantity of trained manpower. We work with our corporate partners to design a programme and then: Do focused marketing to attract target number of students of “right profile” in at least 15 non-metro cities. We expect to hire approximately 500-1000 per city per year.

Formally screen them before programme enrollment on “fit” specifications laid down by our corporate partners.

Train them on skills/content designed based on inputs from our corporate partners.

Enable hiring with constant equity building bu ilding of corporate partner, early visibility of  candidates, and campus interviews.

Help in Relocation by providing complete relocation advisory to the students.

We minimize commitment on the part of our corporate partners – they only hire students who meet their hurdle rate in the usual hiring interview. interview.

Our key request to the corporate partner is to help us fully understand their  requirements – so we can develop the right pre-screening and right training programme. Our internal goal is to ensure 90% of our students get selected

CONTACT NEW DELHI (Corporate Office): Elements Akademia Pvt Ltd. Corporate Office #C -1067, Sushant Lok Phase I, Gurgaon - 122001 Tel: Tel: +91 (0124) 4203235 Mobile: +91 9717298732 Email: [email protected]

BHOPAL CENTRE: SF - 15, 2nd Floor, Floor, Mansarover Complex, (Near Habibganj Railway Station) Bhopal - 462016 Tel: +91 (755) 4290010 Mobile: +91 9993500700 Email: mailto:[email protected]

JAIPUR CENTRE: D-103/C, Lal Kothi Marg, Siwad Area, Bapu Nagar, Jaipur - 302015 Tel: +91 (141) 4028855 Mobile: +91 9929066555 Email:mailto:[email protected] Email:mailto:[email protected]

KANPUR CENTRE: 16/79H, Civil Lines, (UTI Lane, Behind RBI), Kanpur - 208001. Tel: +91 9307207200 Mobile: +91 9793093333 Email: mailto:[email protected]

LUCKNOW CENTRE: A-1/9B, Sector B Aliganj, Lucknow - 226024 Tel: +91 (522) 4000050 Mobile: +91 9956290290 Email: [email protected]

ENTREPRENEUR DETAIL

Entrepreneur's Entrepreneur's Details Name

Nishant Saxena

Age

31

Hometown

Allahabad, Uttar Pradesh

Family background

First gen entrepreneur

More than 1 company?

No

Education

Masters

Graduated from

IIM

Former employer

P&G Asia Pacific

Former designation

Head of M&A

Area of responsibility

Head

Favorite book/movie

The Shawshank Redemption

INTERVIEW Can you give an insight about the elements that make ‘Elements Akademia’ so sang-froid.

After spending quite some years in corporate life, objective was to do something which is not only a good business but also serves the larger interests of our country and society. society. So, education and within education, employability is a burning issue which is not only leading to societal unrest on one side but also is a slowing the growth of  economy due to dearth of right skilled people.

We have twin customers. The student whose #1 unmet needs (survey across graduates in 10 Tier II cities) is a Job. We help them get a top notch placement in a good MNC. The Corporates are our other customers. The #1 unmet need of HR there is the availability of large pool of ready to perform hires. We meet this need by training students on precisely the skill sets required b y the companies.

“We offer Careers, not just English.” Element Akademia offers scope in Insurance, KPOs/BPOs, Banking, Retail, Telecom, Telecom, Hospitality etc whereas English is a major concern for only BPO’s - Why did particularly emphasize on rectifying something that no one is pondering about? a bout?

After interacting with leading influencers and educationists we understood this problem of un-employability. un-employability. On the other hand, our interaction and experience in industry tell us the real shortage of talent especially at entry level for service sectors like Retail, banking, insurance and BPO/KPO.

Hence, we found this to be win-win propositions where in we can develop a business model by bridging this skill gap

Tell us about your team members. Are you planning to include some more workforce at present? Nishant Saxena , CEO, an IIM-L alumnus, has extensive Pan-Asian (Japan, Philippines, India, Singapore) experience in P&G, consistently rated as one of World’s Top Top 3 Most Admired companies. He worked in areas of Finance and Strategy (Regional M&A Head and before that deputy CFO of India Operations), and has been profiled by Business World as a “Leader-in-Making”. He is also a visiting faculty in IIMs, NUS, SP Jain etc.

Vinay Sharma , COO, an IIM-C Alumnus with more than 12 years of experience, was most recently BU Head of Marketing in Airtel India, and prio r to that was a Senior  Seni or  Manager in Comsat Max (JV with Lockheed Lo ckheed Martin), Blowplast (Makers of VIP luggage) etc. He has consistently won Outstanding Performer awards and brings with him rich Marketing & Sales experience.

BTech from IIT Kanpur & PhD from Canada, is the Honorary Dean. Prof. Tapan Bagchi , BTech He brings with him four decades of experience which spans 16 years in Exxon Mobil US, as well as founding Chair of IIT Kanpur’s B-school, which he set up in 1983. He also headed NITIE as Director and helped setup SP Jain Dubai B-school as Dean. He has authored 6 test books and 75 papers.

The Academic Advisory Advisory Board includes Padmashri Prof. Pritam Singh S ingh (former Director, IIML), Prof. Rajeev Srivastav (Former Dean, IIM Lucknow), Prof. Neerja Pande y (IIML, founder chairperson of communication group), Prof. Archana Shukla (IIML, National HR expert) and Dr. Sashi Rai (Member, UGC).

So, each plays a complementary role leading to expertise and experience in all critical areas. We keep on recruiting as and when required but as of now team has stabilized.

What are the growth prospects of a pass out from Elements Akademia? How far should he ascertain his career horizon?

Students are undergoing our 6 month Executive Programme in Services Management in our centers and are getting placed with our corporate partners like Genpact, MNYL, Bank of America, Shopper Stop etc. After that, they can grow and build good careers within these top companies Institutes and corporates avail our services leading to enhancement of their students/ employees and making them more productive and employable

What are your plans about geographical expansion?

Scale up shall happen through 5 avenues:

1. Immediate Immediate will will be to become become bigger in existin existing g cities. cities. Currently Currently our our revenue in in most existing centers is only 20% of the revenues of the largest education company in that same city. We need to bridge this gap. 2. Second will will be geographic geographic expansion. expansion. Once Once we hit Rs. Rs. 1-1.5 1-1.5 crore revenues revenues in key cities, we will expand from current 5 cities to 20 cities. 3. We will will focus more more on Strategic Strategic Alliances Alliances and long term term contracts contracts.. We are in final stages of discussions with various governments, MFIs, and organizations for contracts worth 50 lac each. 4. We will will look look at offering offering more/hi more/high gh priced priced course courses. s. 5. Long term, term, we see see the same same unmet unmet need being being present present in most most developin developing g countries. India is a country with huge manpower resource with more job seekers than providers; do you think that the trend will change?

We don’t think the scenario will change immediately. However there is an important issues of mismatch between what job providers want and what job seekers have. This gross mismatch in skills if taken care of can significantly affect the unemployment problem and let these youth join mainstream corporate sector. This is what we are trying to do.

Hence, skills development as opposed to conventional e ducation will be more effective in solving unemployment problem.

What would you like to share about your revenue model?

Our revenue Model has three revenue streams

1. Fees provided provided by by students students who who undergo undergo the courses courses in in our centers. centers. 2. Fees received received from compani companies es for providin providing g trained trained manpower manpower.. 3. Revenue Revenue from strateg strategic ic training training assignment assignments s with leading leading institut institutions ions and companies.

How did the cash flow in the initial stages of Elements Academia? How did you bootstrap?

Personal savings and fund support from friends and mentors. Networks amongst High Net Worth individuals, a business plan that appealed appeale d to people and personal credibility. credibility.

We started off at the usual slow note where the first trench of funds took 9 months to materialize. But then the moment we had shown initial success, and were ready to go for Series B funding, we had more subscribers than investment needed and actually had to say no to some people. What a circle!

How do you plan to legalize? Government licensing as a school or a firm under Companies Act?

Ours is a private limited company which is a ‘for profit’ organization

What’s the biggest surprise you’ve had in the Elements Academia recently?

Success we received in our strategic business despite starting late on this part of  business.

What are the learning experiences at Elements Academia?

• •

• •

Scaling up while maintaining consistency and quality of training delivery Building a high performing second level of team at centers which can help release our bandwidth for expansion and new initiatives Building a scalable training engine which has technology solutions Building a retail brand

•

What’s your opinion about the similar training Institutes and how do your institute differ from them?

At one level our competition is similar employment oriented courses like NIIT, NIIT, Aviation. At second level, competition is also from tier II, tier III MBA colleges where also students go for enhancing employability. AT third level, there are mom and pop shops which claim to offer English/personality/job oriented courses but (generally) deliver very low quality. However, However, the market is so big and diffused that a quality offering with results which we are providing will surely make us a Tier I service provider 

Benchmarking: A Discovery Discovery Mechanism for fo r Six Sigma Learning Abstract The process of benchmarking benchmarking was developed in the late 1970’s 1970’s by Xerox Corporation Corporation as it neede needed d to rapi rapidl dly y lear learn n how to comb combat at the the ongoi ongoing ng comm commer erci cial al atta attack ck by Japanese industry and preserve its survival in the copier business. In this process Xerox learned that evaluating competitors and copying what others are doing, while this may be a time-honored characteristic of human behavior from the earliest of times, it is not a necessary and sufficient condition to ensure that an organization remains compet competiti itive. ve. This fact fact raises raises an import important ant questi question: on: What What has charac character terize ized d the development in this process of benchmarking and what have we learned over the past thirty years it has been practiced? Perhaps even more important is the question: What is the role that benchmarking fulfills in a modern quality management system whose foundation is built upon the principles and methods that are characterized as "Six Sigma" methods for quality management? This paper describes how the method of  benchmarking is being blended into the analysis methods for process improvement approa approach ch using using Six Sigma, Sigma, Lean Lean Enterp Enterpris rise e soluti solutions ons,, and Decisi Decision on Worko Workouts uts to stimulate change management. Process benchmarking acts as the critical methodology for generating a portfolio of improvement projects which can systematically increase organization performance effectiveness, efficiency, and economy as it continues in its  journey toward performance excellence.

Introduction Ever since 1990 when Roger Milliken declared that "benchmarking is the art of stealing shamelessly" the definition benchmarking has evolved into a "quick fix" for making quick business performance improvement. Benchmarking is a systematic and scientific methodology for comparing performance between organizations to evaluate the relative excellence of their alternative business practices based on the measured achievements of analytical benchmarks. But, benchmarking is not a quick fix, it is a rigorous process that requires both sweat s weat equity, equity, learning about one's own processes and coordinating logistics of study mission to other organizations, and analytical integrity, integrity, measurement and analysis of sustained work process performance through the detailed mapping of processes and head-to-head evaluation of performance differences. In a typical benchmarking study the analytical ana lytical information contained in a benchmark or  a comparative measure of process or results performance is used to establish which organization is candidate for a "best practice" for a particular business process. Then the business process must be specified in detail to understand how the benchmark result was achieved and to determine which specific activities enabled the successful performance. Finally, Finally, learning must be customized to apply new knowledge to organizations that have not attained the level of "best of the best." A benchmarking study must be analytically as well as culturally successful. The methodology should heed the warning of Dr. W. Edwards Deming who said (Deming, 1982): "It is ha zard to copy. copy. One must understand the theory of what one wishes to do." Cultural and business model adaptation is necessary to assure that the lessons observed in one organization can be successfully transferred to another o rganization whichoperates in a different cultural framework. As Dr. Deming further cautioned (Deming, 1982): "Adapt, don't adopt. It is error to copy." In the development of Total Quality Management (TQM), benchmarking has a unique place as both a tool to stimulate improvement and a management technique that aids in strategic positioning of an organization. Benchmarking provides opportunities for full organiz organizati ationa onall partici participat pation ion in busine business ss proces process s improv improveme ement nt by engagi engaging ng the management team in the architecture of change and choice of focus areas for study; involving the middle managers in self-assessment of the work processes that they own and in adapting the lessons learned from other organizations; and relying on the study

of related processes by the organization's front-line process experts who are charged with discovery of the significant differences that lead to performance gaps. The objective of benchmarking is to accelerate the strategic change leading to both breakt breakthro hrough ugh and contin continuous uous improv improveme ement nt in produc products, ts, servic services, es, and process processes, es, thereby thereby result resulting ing in enhanc enhanced ed custom customer er satis satisfac factio tion, n, lower lower operat operating ing costs, costs, and improved competitive advantage by adapting best practices and business process improvements of those organizations that are recognized for superior performance. Benchmarking is a method that forces organizations to look outside them selves in order order to avoid avoid myopic myopic illusi illusions ons of grande grandeur ur that that come come from from reflec reflectin ting g on intern internal al experience without external validation. Benc Benchm hmar arki king ng is not not just just a chec checkl klis istt or set set of numb number ers s that that are are used used to make make management feel better about their current performance. Benchmarking really should make make manage managemen mentt uncomf uncomfort ortable able due to the identif identifica icatio tion n of gaps gaps in busines business s performance. Benchmarking should challenge management due to the discovery of  perf perfor orma manc nce e enabl enabler ers s that that coul could d help help them them to impr improv ove. e. Perh Perhaps aps the the foll follow owin ing g  juxtapositions can help describe this situation

Benchmarking is: A discovery process An improvement methodology A sourc ource e of of bre break aktthrou hrough gh inno innova vati tion on An opportunity opportunity to gain profou profound nd knowledge knowledge An objective objective analysis analysis of working working process processes es A proc proces esss-ba bas sed lear learni ning ng appr approa oach ch A way to generate ideas for creative A way way to captur capture e tacit tacit process process knowl knowledge edge

Benchmarking is not: A fixed, rigorous cookbook process A panacea for developing all problem Supp Suppor ortting ing con conti tinu nuat atio ion n of of "bu "bus sines iness s as as A managem management ent fad or "tool "tool of the day" day" Based on a subjecti subjective ve "gut feeling" feeling" or  or  Jus Just a meas easurem uremen entt of of per perfforma ormanc nce e res resul ults ts Merely a set of quantitative comparisons Limite Limited d to within within indus industry try/co /compe mpetit titor  or 

Table 1: Benchmarking Application Scope Scop e Analysis It is important to observe that the logic of the benchmarking process does not fail the test that was issued by Dr. Deming in the early 1980s, when he cautioned executives against deadly diseases in the management of business that were derived from setting arbitrary goals based solely on visible performa performance nce measures, measures, without without underst understandi anding ng the depth of profound (process-related) knowledge that lay underneath most high level performance measures. For instance, Deming would call "arbitrary" the use of benchmarking using the logic that is described in the first column of Table 2 where change is made based on superficial observations or anecdotal evidence. The logic of benchmarking is much more more proc proces esss-or orie ient nted ed and and requ requir ires es the the deve develo lopm pmen entt of the the type type of prof profou ound nd knowle knowledge dge advoca advocated ted by Dr. Dr. Deming Deming - knowl knowledge edge of how the proces process s achiev achieves es statis statistic tically ally signif significa icant nt result results s based based on the operat operationa ionall definit definition ion of work work process process activities which have been meticulously specified in order to understand those specific differences that could then be properly called the "root cause" of the performance distin distinct ctions ions that that have have been been observ observed. ed. This This logic logic is based based on statis statistic ticall ally y sound sound observations of process performance in order to discover the drivers of exceptional results as shown in the second column of Table Table 2. Traditional Logic: Benchmarking Logic:

The The pric price e of our comp compet etit itor or's 's prod produc uctt is The leading companies have very similar  15% lower than than our costs; costs; therefor therefore, e, we operations that are consistently 20% more must reduce our costs by 15%. effective and efficient that our operations. The reasons that there operations are more effective and efficient is because they have implemented these specific enablers. The specific practices used to improve this work and produce this outcome include a limited set of performance drivers. The following enhancements in our way of  working would be appropriate for our own business model and culture and should be able to lead us to improved performance. The estimate of performance improvement that could be gained from implementing a progra program m of process process enhance enhancemen ments ts would would be able to attain this theoretical gain. Table 2: Comparison of Traditional Logic with Benchmarking Logic The ability to apply this logic to learn about and understand the root cause of process improv improveme ement nt at the benchm benchmark ark organi organizat zation ion thus thus encour encourages ages transl translati ation on of these these lessons into appropriate change for the investigating organizations. By this process of  conscientious learning and cautious adaptation, a company can learn the lessons needed to transition it to a level of World Class performance. Lee Raymond, CEO of  ExxonMobil, remarked in a meeting that I attended: "Benchmarking has been the most important practice for the continuous improvement of our corporation."

History of Benchmarking Benchmarking Benchm Benchmark arking ing is a manage managemen mentt proces process s develo developed ped in the 20th century century.. It has transitioned through four generations of development and now is in a fifth generation of  maturity. maturity. This chapter expands expands on previous writings and clarifies the relationships in the transition of benchmarking that has brought it to its current level of global benchmarking benchmarking throug through h the ubiqui ubiquitou tous s access access to data data and inform informati ation on that that is offer offered ed throu through gh the Inte Intern rnet et (Watso atson, n, 1992 1992,, 1993 1993,, and and 2007 2007). ). Trac racing ing the the hist histor oric ical al conte ontext xt of  benchm benchmark arking ing allows allows an improv improved ed unders understan tanding ding of how it can contri contribut bute e to performance improve improvement ment today. today. Let's Let's begin begin this historical historical journey journey by gaining gaining the perspective from the close of the 19 th century to understand how the industrial revolution and its approach to interchangeable parts fostered the idea of interchangeable business proce process sses es and and the the appli applica cati tion on of the the scien scienti tifi fic c metho method d to study study busine business ss became became extended into the use of business measurements to define best practices. The maturing of benchmarking could be viewed as a series of generations or stages in development... This taxonomy of benchmarking is messy as the stages overlap and some have no clear beginning or ending. But, perhaps by putting them in writing, along with the logic that defines their boundary conditions, this will help managers to clarify what exactly it is they are doing when they seek information to improve their business. However, in this paper we will observe that there have been about five generations of  development for this methodology. Moreover, Moreover, we can observe, observe, just like Sir Isaac Newton, Newton, that benchmarking benchmarking enables us to say: "If "If I have seen further, further, it is because I have stood on the shoulders of giants." giants." We see more clearly clearly and make make better better decisio decisions ns becaus because e we are not replic replicati ating ng the mistakes mistakes of the past, but using using the analysis analysis of the past to sharpen sharpen our focus on the future! Discovering profound knowledge from history can help you to see the future future with more perfect vision!

The Dawn before Benchmarking Science In the late late 1800' 1800's s the manage managemen mentt scienc science e work work of Freder Frederic ick k Taylor aylor encour encourage aged d comparison of work processes through the application of the scientific method. Taylor's concept was that there was "one best way" to do work and that it could be discovered through the scientific study of the way that work was performed. When the best way was discovered then this should be applied as the standard for work performance until a better way was discovered. These technical studies of work practices were conducted by industrial psychologists and indust industria riall engine engineers ers.. During During the Second Second World World War War, this this practi practice ce of making making comparisons comparisons extended extended so that it became commonplace commonplace for companies companies to 'check' 'check' with other other comp compani anies es in order order to develo develop p stand standard ards s for for pay pay, work workin ing g hour hours, s, safe safety ty regulations and related business hygiene factors.

First Generation — Competitive Product Analysis and Reverse Engineering This first generation of benchmarking could also be labeled 'natural curiosity and its natural extensio extension.' n.' Even when production production was done by craftsme craftsmen n forming forming individu individual al works with their own hands - artisans who saw each p iece for its uniqueness, there was a tendency to compare your own work with that of others others to determine determine which was the 'best of the best' in your field. This concept of 'best of the best' is described described by the Japanese word 'dantotsu'  which was the term Fuji Xerox used to describe the object of  the search for best practice. practice. Today Today,, this practice is observed through the engineering engineering teardown analysis used in reverse engineering to understand how competitive products have been designed, what materials have been used, and what technologies were employed in their production. Another focus is the competitive product analysis which can can take take one one of two form forms: s: mark market etin ingg-ba base sed d comp compar aring ing feat featur ures es or func functi tion onal al performance performance to customer customer perception and technology-focus technology-focused ed comparing comparing degree of  performa performance nce that is delivere delivered d against against a standa standard rd (e.g., (e.g., comput computer er run speed speed for a benchmar benchmark k softwar software e program). program). This form of 'benchm 'benchmarkin arking' g' will probably continu continue e ad infmitum. Perhaps the most interesting insight in this period leading up to the development of  benchmarking comes from comments describing how comparative product analysis and revers reverse e engine engineeri ering ng were were applied applied in Japanese Japanese industry industry.. In his book describin describing g the development of the Toyota Production System, Taiichi Ohno, former vice president of  manufa manufact cturi uring ng and co-arc co-archit hitec ectt of this this system system with with industrial industrial engineer engineer colleague colleague Shigeo Shingo, described the visit that opened their eyes to the possibility of 'lean manufacturing' as he talks about the observation of the stock replenishment system that allowed fruits and vegetables to be sold while fresh and reducing waste from spoilage. As he admits: "from the supermarket we got the idea of viewing the earlier  process in the production process as a kind of a store." He further observed (Ohno, 1990) 1990) that that the Japanes Japanese e adopted adopted many of these these pract practice ices s becaus because e of their their innate innate "curiosity and fondness for imitation." Indeed during the period of 1950-1975 many American American businessmen felt that Japan was merely a Sopycat' and therefore it did not present a serious business threat since it did not invent any new technologies. At the macro-economic level this may be true, but what the Japanese did invent was the ability to produce products with minimum waste because they did not have a resource-rich reso urce-rich environment environment that that could tolerat tolerate e the loss to to society that came from indiscriminate use of its scarce materials or poor productivity productivity practices. Indeed, during this time many Americans joked about the stereo-type Japanese industrial tour where engineering visitors came gawking at the magnitude of  American industry taking many photographs to illustrate its greatness. These pundits

missed the point of the tours - to identify ideas that could be transitioned to Japanese industry and improved to assure congruence with their developing manufacturing practices that focused on lean operations. oper ations. At the same time that its its engineers engineers toured American plants, others stripped down the products and looked for ways to deliver the same functions at lower prices - effectively value engineering the products by eliminating waste from the design and its production process simultaneously.

Second Generation - Informal Visits and Process Touring In a paradoxical way the second generation of benchmarking is once again more art than science in benchmarking. There is a syndrome among managers to seek the popular, adopting what is new, and worshiping what is popular without making a critical assessment of its validity or applicability. These are weaknesses that are inherent in many 'art-like' benchmarking processes. Taking a walk in a factory does not constitute a benchmarking site-visit - this is industrial tourism. Brief conversations with colleagues at a conference conference are not benchmarking benchmarking - these are chats. Benchmarking Benchmarking must include include three elements: definition of an object ob ject of study, study, performance measurement of the object and comparison to other similar objects in order to determine which alternative has achieved the best capability and why. why. While these forms of 'benchmarking' will probably also also contin continue ue ad infini infinitum tum,, they they should should be strong strongly ly discou discourag raged, ed, as they they cannot cannot produce profound knowledge of the process that allows your organization to drive improvement. During this same period, American industry tended to internalize its efforts rather than look toward external influences as if they would somehow poison the miracle of the post-war post-war industrial industrial might that was transformi transforming ng American into the world's greatest economy. In its arrogance, many leaders in American industry believed that Yankee ingenuity' ingenuity' was the solution solution to everything everything and that they had no need to look elsewhere elsewhere for creative ideas in either product or process technology. Given this internal focus, it is not surprising that in the 1950's business leaders like Hewlett-Packard's Bill Hewlett and Dave Packard encouraged their engineers to develop "next bench syndrome" - the practice of checking with engineering colleagues to define those functions and designs to be develo developed ped and implem implement ented. ed. This commerci commercial al arroga arrogance nce was preval prevalent ent in Amer Americ ican an prod produc ucts ts -eng -engin ineer eerin ing g push push of feat featur ures es into into the the mark market etpl plac ace e witho without ut consulting customers about needs or desires. This lead to a systemic vulnerability that could be exploited by Japanese companies if they could discover what it was that customers wanted and deliver it first. And they did exploit this vulnerability. Throug Throughou houtt this this first first seventy seventy-fi -five ve years years of the last last century century,, method methods s relate related d to benc benchm hmar arki king ng coul could d be best best desc descri ribe bed d as an art art rath rather er than than a scie scienc nce. e. The The develo developme pment nt of benchm benchmark arking ing into into a scienc science e was the contri contribut bution ion of the Xerox Xerox Corporation as it sought to fight an onslaught of Japanese businesses that were taking advantage of a court ruling that stripped Xerox of its patent protection for its copier  business due to its monopolistic business practices. The largest beneficiary of this ruling were the Japanese firms that developed disruptive technology at the low-end of  the copier business and caused Xerox to lose market share drastically in the period from 1976 to 1979 - with a subsequent drop in return on net assets from 25% to under  5%. How did Xerox respond to this crisis? Third Generation — Competitive Benchmarking (1976-present)

This phase of the benchmarking evolution was marked by the use of a scientific approach to benchmarking commenced by competitive benchmarking as an extension of competitive intelligence and market research. Competitive benchmarking seeks to

discover the specific actions that are being taken by competitors to gain advantage in the market place through their strategic choices and capital investments in products and processes. processes. Since competition competition is the defining ingredient ingredient in a free market, market, this type of benchmarking is an essential ingredient in every informed company's portfolio of  tools in their strategic business planning process. After Xerox was forced to put its patents into the public domain in 1975, a steady stream of foreign Competitors entered its markets - lead by Canon of Japan and Savin from France. The manner in which they chose to enter into competition caused little concern among Xerox managers because the competitors were only producing personal copiers - low throughput devices that fit onto a manager's desktop or file cabinet and were only capable of reproducing a single page at a time and very slowly, compared to the large, big-speed copiers that Xerox sold for use in central copying locations. However, it became clear over a number of years that these small machines were taking work away from the larger machines and the Xerox business model leased the machines but sold individual copies that they produced. Thus, Xerox was losing its business one page at a time! The Xerox benchmarking of mail-order giant L. L. Bean is a classic tale in modern business history. However, one lesson has been lost in this history - what was the catalyst for doing this study and how did it get exposed? The Xerox management team learned about their performance gap to their new competitors in Japan from their  Japane Japanese se subsid subsidiary iary - Fuji Fuji Xerox, Xerox, a joint joint ventur venture e firm firm that that had been been establ establish ished ed between Xerox and Fuji Photo Film. Yotoro "Tony" "Tony" Kobyashi was the CEO C EO of Fuji Xerox X erox at the time and it was his people who evaluated their Japanese competitors to allow a thre threee-wa way y comp compar aris ison on to be acco accompl mplis ishe hed. d. By comp compar arin ing g scar scarce ce open open sour source ce knowledge of the Japanese competitors to the detailed knowledge of a fierce, but captive competitor (Fuji Xerox), Xerox Corporation was able to 'triangulate' (which means means to estima estimate te perfor performan mance ce of a third third party party using using two known variables variables)) and determine their standing against the competition. This is what Bob Camp would call 'Step Zero' in a benchmarking study - a strategic discovery process that I call strategic benchmarking (Camp, 1995 and Watson, 1993). Without this step and discovery, discovery, Xerox would not have the insight about what or where it must focus its benchmarking lessons to learn about what must change in its operations in order to make improvement endure. Xerox CEO David Kearns turned to his Fuji-Xerox Japanese joint venture lead by Kobyashi to discover what could be done to stem the tide of lost sales and profitability. The Xerox Xerox benchm benchmark arking ing method method was borne borne out of the busines business s requir requireme ement nt to esti estima mate te thei theirr comp compet etit itor or's 's stre streng ngth th by trian triangu gula lati ting ng from from two two know known n sets sets of  performance results (Xerox USA and Fuji Xerox) to learn about the unknown capability of their Japanese competitors (Hillkirk,1986; Camp, 1989, and Palermo and Watson, 1994). This created created a real wakeup call for the Xerox business leaders leaders - not only were Xerox new products twice as long in development, but their manufacturing cost was equal to the sales price of the competing products. Thus, there was no way that Xerox could compete head-to-head on these disruptive technologies.1 This provided the first indi indica cati tion on that that ther there e was real real trou troubl ble e at Xero Xerox x -per -perfo form rman ance ce indi indica cato tors rs that that demonstrated that there was a gap in performance, but it didn't tell what the gap was, why it existed, or what to do about it! Competitive benchmarking proved its value by delivering this wake-up call, but it wasn't capable of providing a change agenda that would return Xerox to profitability. For this, Xerox had to learn from business leaders in each each of the perfor performan mance ce areas areas where where they they suffer suffered ed from from shortf shortfalls alls against against the competition, so they put together a team to create a process for learning which they called benchmarking. While the lessons learned from competitive benchmarking told what was wrong and estimated how far Xerox lagged behind the competition, it was the benchmarking of 

indust industry ry best best practi practice ce that that gave gave sparks sparks to fuel fuel the creati creative ve imitati imitation on of leadin leading g proc proces esse ses s that that broug brought ht Xero Xerox x out out of its its cris crisis is.. Xero Xerox x turn turned ed to comp compan anie ies s with with successful practices in those areas where they had observed their own 1

Harvard Professor Michael Porter in is early book Competitive Strategy (New York: The Free Press, Press, 1985) describes describes the competitive competitive dynamic for a market market entrant entrant where the barrier to competition has been removed (patent protection) and the entrant has cost-d cost-dif iffer ferent entiat iated ed itself itself from from the market market leader leader.. Harvar Harvard d Profes Professor sor Clayto Clayton n M. Christ Christens enson on in his insigh insightfu tfull books, books, The Innova Innovator tor's 's Dilemm Dilemma a (New (New York: ork: Harper  Harper  Business, 2003) and The Innovator's Solution (with Michael E. Raynor (Boston Harvard Busi Busine ness ss Scho School ol Pres Pres,, 2003 2003)) )),, call calls s this this appr approa oach ch to a comp compet etit ition ion 'dis 'disru rupt ptiv ive e innova innovatio tion' n' in which which new market market entran entrants ts fundam fundament entally ally change the game game of the compet competiti ition on by seekin seeking g a lowerlower-pro profit fit,, vulner vulnerabl able e market market from from which which to attac attack k the mainstream market. In this environment, the new market entrant is given freedom to operate in this market because it costs too much in terms of lost gross profit margin for  the entrenched leader to defend a poor profit market. Over time the market entrant earns the right to compete for the mainstream market. This is precisely what Canon and its Japanese competitive cohort did to Xerox. shortcomin shortcomings gs - the retailer Sears provided insights into inventory inventory management, management, while the mail order firm L. L. Bean contributed contributed learning of warehouse operations. operations. Learning was incorporated at a furious rate and Xerox converted itself into a new company with the result that by 1985 Xerox had increased its return on net assets to over 10%. However, benchmarking was restricted at this time to the few companies that Xerox studied and was largely held as an internal practice within the Xerox Benchmarking Network - about 100 middle managers who conducted these studies. It was only after  Xerox put these methods into the public domain by opening sharing the practice after  they won the Malcolm Baldrige National Quality Award in 1989 that the interest in benchmarking expanded Afterwards Corporate Partnerships and Sharing Flourished

In 1981, a second event stimulated interest in business improvement. Dr. W. Edwards Deming was featured in the NBC television White Paper titled "If Japan Can, Why W hy Can't We?" A challenge was issued to American management - they could improve their  business and survive or allow it to grow stagnate in the face of the Japanese competition and die! At this time many American industries were under attack by Japanese firms Xerox was not alone; however, the influence of Deming was just to focus management on the need to improve. Deming was not a big fan of benchmarking (Deming, 1982): "I think that the people here [in America] expect miracles. American management thinks that they can just copy from Japan. But they the y don't know what to copy." However, Dr. Joseph M. Juran was the quality consultant who most influenced Xerox and it is unclea unclearr if Dr. Dr. Deming Deming ever ever really really unders understoo tood d how the Xerox Xerox benchm benchmark arking ing methodology worked. Deming talked as if he felt that benchmarking was more an art than the science it had become under the coaching of Kobyashi at Xerox! But, Deming always asked the question: "How do you know?" It is this question that is central to any effort at benchmarking and is the point where Deming's philosophy and benchmarking merge. The The effe effect ct of Demin Deming' g's s telev televis ision ion whit white e paper paper shoul should d not not be dimini diminishe shed d - it did stimula stimulate te both an acti active ve dialo dialog g among among compani companies es as well well as the the shar sharin ing g of best best practic practices es (although (although not derived derived using the scientif scientific ic method method as at Xerox). Xerox). In the early 1980s a number of companies engaged in cross-company sharing and studies which were foundational as subsequent benchmarking networks. Some examples from my direct experience at Hewlett-Packard during this time include:

•General Motors Cross Industry Study of quality best practice in qual ity and reliability

-a 1983 study of business leaders in different industries to define which quality management practices lead to improved business performance. •General Electric Best Practice Network - a consortium of some sixteen companies who met regularly to discuss best practice in non-competitive areas. These companies were selected so that none competed against any other participant, thus creating an open environment for  sharing sensitive information about business practices. Hewlett-Packard also had a wide variety of collaborative efforts with other businesses. For  instance, HP helped Proctor & Gamble understand about policy deployment (hoshin or  kanri  the plann planning ing proces process s that that grew grew to maturi maturity ty at HP's HP's Yokaga okagawa wa Hewl Hewlett ett-Pa -Pack ckard ard subsidiary). The nature of this collaboration included inviting two P&G executives to work inside of  HP for a six-month period to experience first-hand how this planning process

•Worked. Another  company that enjoyed a special relationship was Xerox as it actively sought to learn from the leaders in product development and HP had a strong reputation for effective new product development. Also, Ford and HP conducted business practice sharing on many different levels as the chief executive officers were on each others boards of directors. HP also was a founding member of the GOAL/QPC Research Committee, a consortium of some thirty or so companies established to study Japanese quality practices and translate Japanese training and academic research material into English. Finally, HP joined with many other firms to give support to Florida Power & Light as they successfully challenged challenged the Deming Prize of  the Japanese Union of Scientists and Engineers (JUSE). FPL and HP shared the same Japanese Quality consultants which facilitated this cross-company learning (most notable among these 'shared consultants' were Dr. Hajime Makabe and Dr. Noriaki Kano).

The Diffusion of Benchmarking as a Practice Another significant event that accelerated the spread of benchmarking as a recognized business best practice practice was the presentation presentation of the Malcolm Baldrige National Quality Award to Xerox Xerox which put a public spotlight on benchmarking as a practice that made a difference at Xerox. David Kearns, the Xerox CEO who lead the company throughout its turnaround effort, decided to put all of its quality practices into the public domain (these included the benchmarking process, problem solving process and quality improvement process) process) and Xerox also followed the practice of Baldrige Baldrige Award Winners of offering offering seminars to explain what they did and how it was accomplished. Bob Camp's successful book reported on the work of "Team Xerox" to develop and deploy a common method method for for benc benchm hmar arki king ng thro throug ugho hout ut the the comp compan any y. Foll Follow owin ing g thes these e effo effort rts, s, benchmarking gained more public attention as a number of books that were published

in the 1992-3 period that facilitated facilitated the diffusion of learning learning about the benchmarki benchmarking ng 2 process. Fourth Generation — Process Benchmarking (1992-present):

Process benchmarking can be either strategic or operational in its focus depending on where it is focused. The importance importance of the subject and the breadth breadth of its application application distinguish between these types of studies. It is this type of benchmarking that forms the core of scientific studies. Process benchmarking will be the continuing focus of serious busines business s investi investigat gations ions and will will provide provide insight insights s into the way business businesses es achieve achieve flawless execution of their processes to achieve excellence in the perspective of their  customers. Institutionalization of the Practice of Benchmarking

However, it wasn't until the Houston-based American Productivity & Quality Center  (APQC) established The Benchmarking Clearinghouse (IBC) in 1992 that a common method methodolo ology gy and appr approa oach ch for for benc benchm hmar arki king ng was was spre spread ad into into a cons consor orti tium um of  compan companies ies who who purpos purposefu efully lly gather gather to share share and study study their their intern internal al pract practice ices s in common interest groups. The IBC was the brainchild of Dr. C. Jackson Gray son, the founde founderr of the APQC APQC and one of the drivers drivers behind behind establis establishme hment nt of the the Malcol Malcolm m Baldrige National Quality Award. Grayson believed that benchmarking was not just a fad fad but it was an essential essential business business practice. practice. Grayson Grayson had been a dean of two graduate graduate schools schools of busi busine ness ss and and admini administ stra rato torr of the the wage wage and price price cont contro rols ls process process put in place to control runaway inflation inflation in the early 1970s under under the Nixon administr administratio ation. n. An endorsem endorsement ent about about the business business value of benchmarking benchmarking coming from him was indeed high praise, praise, but to have have him actively actively engage in a proces process s to broaden the scope of benchmarking through developing a forum that facilitated crosscompan company y learni learning ng was truly truly indica indicati tive ve that that benchm benchmark arking ing had trans transiti itione oned d from from a company-specific company-specific quality improvement tool to an essential essential ingredient of management management best practice.3 The contribution of the IBC that lead to the eventual mainstreaming the practice of  benchmarking was four-fold: •Creating a benchmarking network among a broad spectrum of industries and supported by an information data base and library located at its Houston office. •Conducting benchmarking benchmarking consortium studies on topics of common interest to members. •Standardizing training materials around a simple benchmarking process and development of  generic business process taxonomy (in collaboration with Andersen Consulting) that could form a common process language and facilitate facilitate cross-company performance comparison. •Accelerating the diffusion of benchmarking as an accepted management practice through the propagation of the Benchmarking Code of Conduct that governs how companies collaborate with each other during the course of a study.

The final event that cemented the coming spread of benchmarking was its pervasive inclusion in the criteria for the 1991 version of the Malcolm Baldrige National Quality Award which mentioned the use of benchmarking or competitive analysis in 12 of the 32

evaluation criteria sections. This level of reference surpassed all other quality tools and methods in terms of the number of mentions in the award award criteria criteria and indicates indicates that benchmarking was fast-becoming a mainstream practice during this time. Mainstreaming Benchmarking into Business

By 1994 1994 the the IBC IBC had had direc directl tly y reac reache hed d over over 1,00 1,000 0 comp compan anie ies s in prom promul ulgat gatin ing g benchmarking; the Malcolm Baldrige Award criteria had been ordered by over 100,000 companies companies and the combined sales of benchmar benchmarking king books had surpasse surpassed d 200,000 200,000 copi copies es.. Over Over the the past past ten ten year years s (199 (19944-20 2004 04), ), a numbe numberr of channe channels ls have have come come available for diffusing diffusing the practice practice of benchmarking even further. further. Two Two channels for  benc benchm hmar arkin king g are are wort worthy hy of part partic icula ularr atte attent ntio ion: n: the the Inte Intern rnet et and and the the Glob Global al Benchmarking Network (GBN). It is clear that the advent of the Internet has changed many aspects of life by creating 'ins 'insta tant nt acce access ss'' to both both inform informati ation on and people people.. These These are criti critical cal enable enablers rs of  benchmarking and thus allowing a much broader broader search for informati information on and contact possi possibil bility ity than than was previo previous usly ly obtain obtainable able throug through h personal personal contacts contacts and crosscrossorga organi niza zati tion onal al affi affili liat atio ions ns.. The The adve advent nt of the the World orld-W -Wid ide e Web as a glob global al commun communica icatio tion n resour resource ce stren strength gths s the abili ability ty to gain gain acces access s to data, data, but it also also complicates the interpretation of information because there are no standards for analysis and thus the web is inundated with a plethora of "Theory Opinion" that must be sorted and and sift sifted ed to disc discov over er trut truth. h. In my opin opinio ion, n, the the full full impa impac ct of the the Inter nterne nett on benchmarking practices has yet to be felt. 4 In 1993, discussions between the UK Benchmarking Centre, the Strategic Planning Inst Instit itut ute e (SPI (SPI)) (USA) (USA),, the the Swedi Swedish sh Inst Instit itut ute e for for Quali Quality ty (SIQ (SIQ)) (Swed (Sweden en), ), the the Informatio Informationszent nszentrum rum Benchmarking Benchmarking (IZB) (IZB) (Germany) (Germany) and the Benchmar Benchmarking king Club of  Italy came together to evaluate the possibility of a co-operative network. In 1994 the Global Global Benchm Benchmark arking ing Networ Network k (GBN) (GBN) was was offic official ially ly establi establishe shed d by these these foundin founding g member members s as a commu communit nity y of legall legally y indepe independe ndent nt benchm benchmark arking ing center centers, s, with with the objective to achieve a consistent understanding of benchmarking as a management method method and to promo promote te its worldwi worldwide de sprea spread d and utilisat utilisation ion.. I view view the GBN as an extens extensio ion n of the Benchm Benchmark arking ing Counc Councilil of the Strate Strategic gic Planni Planning ng Instit Institute ute which which preceded the founding of the APQC International Benchmarking Clearinghouse, but focused on a few member companies following the model used by The Conference Board Board for cross cross-co -compa mpany ny sharin sharing g thereb thereby y reduc reducing ing its its impact impact on diffus diffusio ion n of the 5 benc benchm hmar arki king ng meth method ods s to a wide widerr audi audien ence ce.. The The GBN GBN curr curren entl tly y incl includ udes es benchmarking centers of  4

In an article that I wrote the potential for e-Benchmarking and other electronic tools is described: Gregory H. Watson, "Digital Hammers and Electronic Nails," Quality Progress, volume 31, number  7, July 1998, pp. 21-26. 5 The Strategic Planning Institute has returned to their original focus as provider of the PIMS data base (Profit Impact of Market Strategy) which was first developed by General Electric and Harvard University and Sevent Seventeen een nation nations. s. Togethe ogetherr, they they repres represent ent more more than than 25,000 25,000 busines businesses ses and govern governmen mentt agenci agencies. es. The Presi Presiden dentt of GBN is Dr. Dr. Rober Robertt C. Camp Camp of The The Best Best Practice Institute Institute in the United States and author of the first book on benchmarking.6'7 Definitions

So, what is benchmarking? In order to understand this methodology we must first define define some some key terms. There are three sets of definitions definitions which will be presented. presented. The first terms that must be defined defined are those that that identify identify the different different ways ways to apply benchmarking studies:

Process Benchmarking Process benchmarking is a method for comparing performance between two unique or  distin distinct ct implem implement entati ations ons of the same same fundam fundament ental al proces process. s. The method method includ includes es internal inspection of an organization's organization's own performance performance as well as the external study of  organizations organizations recognized recognized for achieving superior performance as evidenced by objective standa standards rds by compar comparati ative ve analys analysis is (the (the perfor performan mance ce level level is observ observed ed is called called a benchmark). The objective of a study for process benchmarking is not to calculate the quantitative gaps in performance, but to identify best practices that may be adapted for  impr improv ovem emen entt of orga organi niza zati tion onal al perf perfor orma manc nce. e. Ther There e are are four four types types of proc proces ess s benc benchm hmar arki king ng stud studie ies: s: stra strate tegi gic, c, oper operat atio iona nal, l, perf perfor orma manc nce e and and perc percep eptu tual al benchmarking.

Strategic Benchmarking Benchmarking The proces process s benchm benchmark arkin ing g of organi organizat zation ional al strat strategy egy or key busine business ss proces process s performan performance ce in order order to determin determine e breakth breakthroug rough h opportun opportuniti ities es for profita profitabili bility ty and productivity improvement is called strategic benchmarking. This type of study focuses on those critical business areas that must change to attain or maintain the competitive advantage of a business. Strategic benchmar benchmarking king studies studies focus focus on critical critical business business assu assump mpti tion ons, s, prim primary ary comp compet eten ence ce area areas, s, core core busine business ss proces processes ses,, techno technolog logy y inflection points, or business fundamentals that define organizat organizational ional purpose. purpose. The purpose of strategic benchmarking studies is to challenge the management to move from a current current state to a desired desired state of the whole business business.. Examples Examples of strategi strategic c benchmarking studies include: evaluation of options for the design of an organization's govern governanc ance e struc structu ture; re; assess assessmen mentt of approa approache ches s used used to implem implement ent advanc advanced ed technology (e.g., enterprise management software or paperless document handling); or  strategic business issues that are faced by the organization (e.g., creating a web-based busi busine ness ss capa capabi bilility ty;; mana managi ging ng the the tech techno nolo logy gy tran transi siti tion on acro across ss gene genera rati tion ons s of  advancem advancement; ent; or managing managing the routine routine work of the organization organizatio n through management methods methods such as balanced balanced scoreca scorecard, rd, performa performance nce mana manage geme ment nt and and busi busine ness ss excellence assessments).

Operational Benchmarking Benchmarking The proce process ss bench benchma mark rking ing of work work proce process sses es or pract practic ices es in order order to disco discove ver  r  opportunities opportunities that will provide productivity improvement improvement in the areas of effectiveness, effectiveness, effi effici cien ency cy,, or econ econom omy y of the the rout routine ine busi busine ness ss opera operati tions ons is call called ed oper operat atio ional nal benchmarking. benchmarking. This type of study focuses focuses on specific specific work activitie activities s that need to be improved improved and seeks to identify identify the work procedures procedures,, production equipment, skills or  competenc competence e training, training, or analytica analyticall methods methods that result result in sust sustai ained ned perf perform orman ance ce improvement as indicated by objective measures of process productivity (Process throughput, cost per unit, defect opportunities, cycle time, etc.)- Examples of operat operation ional al benchm benchmark arking ing studie studies s includ include: e: analys analysis is of invoic invoicing ing proced procedure ures s to determine the most productive process; evaluation of production methods to determine the highest throughput methods that deliver lowest cost and least defects; and study of  logistics distribution methods that result in both high delivery service performance and low levels of finished goods inventory.

Performance benchmarking The process benchmarking benchmarking of product or service results using a standard comparison comparison or test under known operating conditions is called performance benchmarking. This type of study seeks seeks to answer answer the questio question: n: which product product or service service is better based upon upon rigo rigoro rous us asse assess ssme ment nt usin using g objec objecti tive ve perf perfor orma manc nce e crit criter eria ia.. Exam Exampl ples es of  performance benchmarking studies include: consumer consumer product analysis that evaluates produ product cts s on a "head "head-to -to-he -head" ad" basi basis s usin using g a fixe fixed d set set of criteria criteria for performance; performance;

evaluate of product performance using a standard test, such as operating time to run a specific application; or endurance tests that identify the ability of product to perform perform over a fixed period of time under comparable operating conditions.

Perceptual Benchmarking The process benchmarking feelings or attitudes about process, product, or service performance by the recipient of the process output is called perceptual benchmarking. This type of study seeks to answer questions like: how do you perceive the delivery of  servic service, e, perfor performan mance ce of produc product, t, or execut execution ion of proces process s by the people people who are recipients of these outputs? Perceptual benchmarking uses attribute or categorical data to quantify subjective feelings and establish relative ranking of performance based on such criteria as timeliness of performance, goodness of knowledge transfer, transfer, soundness of information, courtesy of delivery agents, etc. Examples of perceptual benchmarking inclu include de:: surv surveys eys of train training ing sati satisf sfac acti tion on at the the comp complet letio ion n of a cour course se;; employe employee e satisfaction surveys to assess work climate or structural issues about compensation and benefits; or customer satisfaction with the product or service delivery to the market. A second set of definitions identify sources of data used in conducting a specific benchmarking study. These terms categorize benchmarking practices according to the relative utility of information from the information sources.

Competitive Benchmarking An appr approa oach ch to benc benchm hmar arki king ng that that targ target ets s spec specif ific ic prod produc uctt desi design gns, s, proc proces ess s capabilities, capabilities, or administrative administrative methods used by b y one's direct competitors. For example, in order to stimulate business model change Compaq made a detailed study of the study of the performa performanc nce e in the laptop computer industry industry to determine determine business business model features that should consider as it initially determined how to enter into this market. Here they studied studied the performance performance of the business business models of those companie companies s that would become its competitors.

Industry Benchmarking Benchmarking An approach to benchmarking that seeks information from the same functional area in a particula particularr applicat application ion or industry industry (e.g., benchmarking benchmarking the purchasin purchasing g function function to determine the most successful approach for managing a supplier base). Internal Benchmarking 

An approac approach h to benchma benchmarki rking ng where where organiza organizatio tions ns learn learn from from "siste "sister" r" compani companies, es, divisions, divisions, or operating units that are part of the same operating group or company (e.g., the study of internal research and development groups to determine best practices that reduce time-to-market for the new product introduction process).

Generic Benchmarking An approach to benchmarking that seeks process performance information that is from outside outside one's own industry. industry. Enablers Enablers are translated from one organization organization to another  another  through the interpretation of their analogous relationship (e.g., learning about reducing cycle time in production operations by the study of inventory management methods used in stocking fresh vegetable in grocery stores).

Comparative advantages and disadvantages of these alternative benchmarking data dat a source so urces s are a re presented presented in below in Table Table 3.

Source of Data Competitive Benchmarking

Advantages Provides a strategic insight into marketplace competitiveness and a "wake-up" call to action.

Industry Benchmarking

Takes advantage of  functional and professional networks to gain study participants.

Internal Benchmarking

Generic Benchmarking

Disadvantages -Legal issues regarding data sharing among competitors. -Study detail may not be good enough for process diagnosis.

-Functional concentration tends to support Provides highest degree of  operational rather than strategic process detail and studies simplified access to -Does not challenge process information. paradigm of functional thinking.______  thinking.______  -Has the greatest The internal focus tends to opportunity for process breakthroughs be operational, rather than strategic, strategic, and reinforce reinforce the -Because organizations orga organi niz zatio ation n's cult ultural ural don't norms. compete, reliable detailed -Difficulty in developing an information is usually analogy between dissimilar  available businesses. -Provides incentive for  strategic change initiatives. -Difficulty in identifying the companies to benchmark, -Difficulty in establishing the appropriate contact for a study.

Table 3: Benefits Analysis of Benchmarking Data Sources Another set of terms are used to describe the different components of a benchmarking

study: Benchmark A benchmark is a performance measure that is used to compare the products, services, or processe processes s between between two analogous analogous organizat organizations ions in order to establis establish h superiori superiority ty in sustained performance. Note that many of the benchmarks that are publicly promoted indicate indic ate only "spot" performance performance at a specific point point in time and do not meet the criteria of  "endur "endurin ing g succ succes ess" s" by failin failing g to establ establish ish the differ differenc ence e in perform performanc ance e between between a "special cause event" and a "common cause" management process. A lack of statistical discipline discipline in the use of benchmark benchmarks s threat threatens ens to diminis diminish h the perceived perceived value of the process of benchmarking (see the section of this paper on presenting analysis results).

Best Practice Best practic practices es are that that set of activi activitie ties, s, tasks, tasks, resourc resources, es, trainin training, g, and managem management ent metho methods ds that created created an observed observed benchmark benchmark perform performance ance in a work process. process. In a process benchmarking study study, in order to qualify qualify as a "best "best practice practice"" the performance performance must be observed and mapped to Assure that the work performed is properly identified and that process experts have validated and verified the distinctions between observed best practices and merely good practice. pract ice. Without Without the objective assessment assessment by work process process experts, "best practice" practice" becomes a subjective claim that is not verifiable.

Critical Success Factor (CSF) These are quantifiable, measurable, and auditable indicators of process performance and process capability in key business processes. They indicate in basic business terms the performance level obtained in a comparative manner using such basic building blocks of processes to describe the performance of business effectiveness effectiveness (quality), efficiency (cycle (cycle time), and economy (cost). Key critical critical success factors are universal universal and may be used u sed for f or cross-organizational cro ss-organizational comparisons comparisons for the same same process.

Enabler  The specific activity, activity, action, method or technique that stimulated progress in one process over the comparative processes and lead to identification of a best practice (e.g., the way Qualit Quality y Function Function Deployme Deployment nt or Failure Failure Mode and Effects Effects Analysis Analysis was used in a product design process; a process for data presentation that more clearly indicated the action to be taken by front-line operators; or an employee training and development system that delivers the appropria appropriate te skills and competence competence to process process workers as they require these methods to perform their work in a changing technological environment).

Entitlement The set of key work process actions that are derived by examination of one's own processes and discovery of wasted activities, duplicated steps or non-value added work that that can can be elim elimin ina ated ted or modi modifi fied ed base based d sole solely ly on the the self self-a -ana naly lysi sis s phas phase e of  benchmarki benchmarking. ng. An organizat organization ion is "entit "entitled led"" to make make such such proces process s change changes s witho without ut relying relying on the lessons learned learned from external external discovery. discovery. Such improvements improvements permit the process to operate as intended and represent gap closure between original process

design and current process performance. Entitlement Entitlement also refers refers to the gap that may exis existt betwe between en the the capa capabil bilit ity y desi designe gned d into into the the proce process ss and and the proce process ss capabi capabilit lity y achieved during the discipline of its daily management. Organizations are entitled to receive the performance that they designed and investing in. However, the methods of  standard standard cost accoun accounting ting provide provide only average estimates estimates (based (based on summary summary data) data) thereby obscuring the effect of variation and making it more difficult to understand what is the potential improvement improvement that is achievable in the process if it could operate consistently close to its design capability.

Gap Analysis This This method methodol ology ogy evalu evaluat ates es the perfo performa rmance nce differ differenc ence e betwee between n curren currentt intern internal al perfor performan mance ce and bench benchmar mark k perfor performan mance ce at the best best pract practice ice organi organiza zatio tion. n. To be effective, effective, a gap analysis should include both the use of statistical confidence confidence intervals and tests of difference difference (for both means and variance) to demonstrate that a real performance gap has been b een observed, not a gap due to chance observations. observations.

Radar Diagram This This graphi graphica call presen presentat tation ion tool tool provi provides des a multimulti-va varia riable ble displa display y of compar comparati ative ve perfor performan mance ce for several several dimens dimensions ions of intere interest st (e.g., (e.g., cost, cost, cycle cycle time, time, qualit quality y, and productivity). These dimensions are displayed on a single chart as spokes from the center  where each measure has its own unique scale, but all indicators are shown on the same graphi graphic c to illus illustra trate te a perfor performan mance ce profil profile e for a specif specific ic proces process. s. The radar radar diagram diagram provides provides a more complete complete benchmarkin benchmarking g assess assessment ment than a single single point measure measure of  performance comparison. Baseline Analysis This analysi analysis s method method compare compares s perform performance ance baselin baseline e data data across across all benchma benchmarke rked d proc proces esse ses. s. A common common scale scale is used used for each each compari comparison son based based on the variat variation ion observed observed in process process perfo performa rmanc nce. e. A best best proce process ss is one one that that has both the highes highestt avera average ge sust sustai ained ned perf perform orman ance ce and and the lowest lowest varia variatio tion n in the daily daily result results. s. The performance baseline comprehends both of these factors using a standardized standardized metric for  process comparisons (e.g., process standard deviation as calculated using the defects per  million opportunities as evaluated against a common customer requirement for targeted perform performanc ance). e). The baseli baseline ne analysi analysis s may be presen presented ted as an Analysi Analysis s of Varianc ariance e showing sampled performance as a function of the different different process locations.

World Class While it is intuitively clear that there is no one world best performance that exists at a parti particul cular ar point point in time time (the (the enormi enormity ty of analys analysis is to suppor supportt such such a claim claim would would be unmanageable), it is possible to define a category of performance as "World Class" by the fact that using a standardized measurement process (e.g., the performance baseline analysis), the process was observed in the top 5% of all performance noted in the study. This indicates that there is a high confidence level that the process is in a leadership position and worthy of investigation for potential best practice practice areas.

The Benchmarking Process The generic generic four-ph four-phase ases s that these steps steps cover cover roughly roughly follow follow a Plan-DoPlan-Do-Che Checkck-Act Act (PDCA) (PDCA) process process that is called the Deming Deming Cycle and which is generic generic in all process process improvement models for process management and improvement. improvement. The PDCA approach to process benchmarking is shown in Figure 1.

Plan - Do - Check - Act: Deming Cycle of Process Benchmarking

However, the process that I favor has seven steps which highlight the work that must be done in a benchmarking study and which follow the four-phase. The seven activities in a benchmarking process include: •Identify Subject - choose what to benchmark •Plan Study - identify your partners and plan your data collection •Collect Information - actively collect the data and visit partners •Analyze Data - analyze the data for performance trends and consistency over time •Compare Performance - compare results and test differences for statistical significance •Adapt Applications Applications - prepare the lessons learned for transition to your own culture •Improve Performance - implement projects to improve your processes

Each Each phas phase e of the the PDCA PDCA benchm benchmark arkin ing g proc proces ess s can can be desc descri ribed bed using using a set set of  questions that identify items to address in these four phases of a study. Please note that many of these questions are the same as the basic questions that one asks during any TQM improvement project. Benchmarking Step 1: Choosing the Benchmarking Topic and Planning the Study

Questions that must be answered in order to plan a benchmarking study include: •What process should we benchmark? •What is our process and how does it work? •How do we measure it? •How well is it performing today? •Who are the customers of our process? •What products and services do we deliver to our customers? •What do our customers expect from our process? •What are the critical success factors for this process? •What is our process performance goal? •How did we establish that goal? •What data should we collect for comparisons?

Benchmarking Step 2: Identifying Partners, Collecting Data, and Answering Questions Questions that must be answered during this during the data collection phase of a benchmarking study include: •What companies perform this process better? •Which company is best at performing this process? •What can we learn from that company? •Who should we contact to participate as our partners? •What is their process? •How representative is the process across different areas of their organization? •How do they measure process performance? •What is their performance goal and how was it set? •How well does their process perform over time? •Is there any difference in performance at different locations or based on seasonal

change? •What business practices, methods, or tasks contribute to the process performance? What factors could inhibit the adaptation of their process into our company?

Benchmarking Step 3: Analyzing Performance and Comparing Processes Questions to be answered during this analyze phase of a benchmarking study include •What is the basis for comparing our process measurements? •How does their process performance compare with our process performance? •What is the magnitude of the performance gap? •What is the nature or root cause of the performance gap? •How much will their process continue to improve? •What characteristics distinguish their process as superior? •What activities within our process are candidates for improvement?

Benchmarking Step 4: Implementing Recommended Change to Improve the Process Questions to be answered during this improve phase of a benchmarking study include: •How does our knowledge of their process help us to improve our process? •How should we forecast the future effectiveness of their process performance? •Should we redesign our process or reset our performance goal based on this

benchmark? •What activities in their process need to be modified to adapt it into our business model? •What have we learned during this study that will allow us to improve on "best" practice? •What goals should we set for our own process improvement? •How can we implement the changes in our process? •How will other companies continue to improve this process? Note that many of the questions addressed above are the same as would be addressed in managing implementation implementation in any project project improvement improvement process. process. Method Definition Existing Data Review Analysis of data that alread already y exist exists s in-house or in the public Domain. Mailed Mailed Quest Question ionnai naire re Writte Written n survey survey prov provid ided ed to the the benchmarking Organizations. It may contain any any type type of ques questi tion on:: true rue and false,

When to Use Before conducting origina originall in order to fix the Baseline.

Advantages Disadvantages A large number Measurements of sources may may lack integrity be availab available le and not all of the information important factors Systems. will be recorded to conduct a root Cause analysis. When When you need need Permits Permits Respon Response se rates rates to gathe gatherr data data data data gath gather erin ing g are are low; low; answ answer ers s information over time, can may be from a large analyzed using and creative number of computer rarely surface as dif differen erentt softw oftwar are e and and the the there is no Or data data is easy easy to and and it is dif difficu ficult lt Compile. to use a written

multiple forced choice, scaled choice, Or openA wri written tten scri script pt of questions used to solicit data over the tele teleph phon one e in anticipation of engaging in a Specific dialog.

form to probe into difficult "how to" types of   Questions. If info inform rmat atio ion n is Can Can cove coverr a Loca Locati ting ng the the righ rightt needed quickly group of person to or you need to respondents logistics of  screen potential quickly and getting the sour source ces s for for peop people le are are like likely ly on-l on-lin ine, e, and and ther there e in-depth follow to be more is only a small Up later. candid over the opportunity to Telephone. Exchange ideas.

Method Face-t Face-to-F o-Face ace

Definition A meetin meeting g with with a partner using quest question ions s that that are are prep prepar ared ed and di distributed In advance.

When to Use When When you need need one-on-one interaction to probe probe and and dri drive ve data data coll collec ecti tion on to a specific objective or Leve Levell of of det detai ail. l.

Focus Group

An open-form panel panel or group group discussion with a thi thirrd-party facilitator coordinating The The dial dialog og..

Site Visit

An on-premise meeting at a facility to th the follow follow-up -up to an interview, focus grou group p or and combines data data analy analysi sis s with direct work pr process Obs Observ ervati ation. on.

Telep elepho hone ne Surv Survey ey

Advantages Encoura Encourages ges interaction, indepth and and ope openn-en ende ded d ques questi tions ons using a flexible style unexpected info inform rmat atio ion n can can Be revealed. When you want Direct sharing of to gather gather data data data and intern internal al information best practices from rom mo more th than among pa partners one source at as a working same time or group that can when when there here are disc discu uss topi topics cs dive divers rse e a mut mutuall ually y set or ways to Agenda. toward an issue Or problem. When you need Can observe the to observe actual practices, specific wo work or or verify process Practices. Practices. performa performance nce interpersonal its obse observ rvat atio ion n is char charac acte teri rist stic ics, s, necessary to well as as assess evalu evaluate ate enabl enabler ers s and and the the aspects" of the measurement process Systems. Perf Perfor orma manc nce. e.

Disadvantages The interv interview iew process takes time to and and exe execu cute te and and inte interv rvie iew wees ees may may be re reluctant to to discuss sensitive issu issues es,, con conce cern rns, s, Or performance. Logistics must carefu carefully lly Managed. If  is no no op openne nness, "lowest common denominator" may may be foun found d as oppo oppose sed d to any any Best practices. Requires careful advanced plans And For exampl example, e, asks what quest question ion of  Whom?

Table 4: Comparison of Alternative Data Collection Methods Used in Benchmarking

Methods of Data Collection

In conducting a benchmarking study, there are several different approaches to data collection that can be pursued by a benchmarking benchmarking team. Table Table 4 describes the approach, as well as the advantages and disadvantages, associated with each of the most popular  methods used in benchmarking studies.

Presenting Benchmarking Study Results Some final points should be made about the process of benchmarking relative to the analys analysis is and presentat presentation ion of benchm benchmark arking ing data. data. Care Care must must be taken taken in the data analysis efforts to assure that benchmarks are representative of real-world performance. Specific cautions include the following statistical problems in benchmarking: •Single data point measurements or observations that are passed off as a "benchmark" •Measurement systems not validated for sensitivity of observation or calibration •Averages used to represent performance benchmarks •Missing variation data in process characterization characterization •Components of variance not identified according to their source

•Comparative charts not indicating both mean and variance •Process changes not correlated with performance shifts •Interactions not identified among the different process variables

Clearly Clearly,, there there can be many issues issues that create create problems problems in the measurement measurement and analy analysi sis s of resul results ts from from benchm benchmark arking ing studi studies es.. Carefu Carefull planni planning ng and solid solid data data collectio collection n and analysis analysis efforts efforts can achiev achieve e the elimin eliminati ation on of these these opport opportunit unities ies for  error introduction introduction into a benchmarking benchmarking study. study. Whenever possible, analysts analysts conducting conducting benchmarking benchmarking projects should have the same education as Six Sigma Sigma Black Belts in statistical statistical analysis to assure the analytical soundness of study results. Perhaps it will help to consider some examples in order to understand benchmarking studies a little better. Consider the following four examples of benchmarking studies and the factors that caused management to initiate each study.

Triangulation Warning: Benefits and Pitfalls of Benchmarking Benchmarking is a business process that encourages managed change. It encourages an organization to take an objective, external perspective in evaluating its performance. The benefit of benchmarking comes from three specific actions: •The gap between internal and external practices creates the need for change. •Understanding the benchmarked best practices identifies what must change. •Externally benchmarked benchmarked practices provide a picture of the potential result from change.

Howeve Howeverr, no busine business ss improv improveme ement nt method methodolo ology gy is a stand stand-al -alone one soluti solution on to all problems. Lest process process benchmarking benchmarking appear to be a panacea panacea for problem-r problem-resol esolutio ution, n, the following set of potential pitfalls in conducting benchmarking studies must also be disclosed:

•Selecting benchmarking partners that do not convince management (not-respected) p opularity tests with no performance •Choosing benchmarking partners to meet popularity

substance •Accepting public relations claims as process performance benchmarks •Assuming that measurements are the same in different organizations (without checking) •Identifying process measures that are not traceable from strategic to operational levels •Conducting statistical statistical analyses that represent surface observations - not root causality •Failure to validate performance with on-site inspection to verify benchmark claims implementation of a benchmarking lesson across a cultural barrier  •Enforcing implementation •Use of "benchmarks" for management decisions without recalibration over time These pitfalls in benchmarking applications can be avoided by taking a professional approach to the conduct of a study and using trained employees to facilitate improvement projects that will use this methodology to seek ideas for improvement. The improvement through "creative imitation" as the study team seeks innovative ways to apply the lessons it has learned through the study.

Comparative Analysis and Competitive Advantage Advantage What does an organization gain in the way of competitive advantage from benchmarking? In the the long long run compet competiti itive ve advant advantage age comes comes from from out-th out-think inking ing and out-pe out-perfo rformi rming ng competition. When an organization uses benchmarking effectively, they are able to think ahead of their their industry industry and to act effic efficient iently ly by adapting adapting lessons lessons learned learned from crosscrossindustry studies to permit them to creatively imitate the best performing processes in the world. Over the long-haul this can establish them as the thought-leader within their own industry. In the final analysis, it is not out-thinking or prior knowledge that results in competitive advantage, it is in the excellence of execution of such new knowledge and the creative application of breakthrough insights that wins in the long-term. To To achieve a dominant position in a market, a company must both know and do better than its most aggressive aggressive competitors. Benchmarking Benchmarking can help develop the competence to achieve achieve this position position,, but it must must be supplement supplemented ed by managemen managementt will and knowledge knowledge in order to make success happen.

Six Sigma Learning Approach According to ancient Greek philosopher Heraclites "everything is in a state of  change." One often-expounded comment is: Do you need to manage change or change the management? Unfortunately, Unfortunately, many organizations take a 'slash and burn' approach to "restructuring" or change management - cutting here and there, moving units or groups to cons consol olid idat ate e thei theirr func functi tion ons, s, merg merging ing or acquiri acquiring, ng, etc. etc. - withou withoutt fundam fundament entally ally understanding what i s the critical issue facing their business business and the way it is currently currently working working.. This is not what we will consider consider in thinking thinking about change change manageme management nt stimulated by benchmarking. Our basis for thinking about managing change relies on organizational learning principles of industrial psychology. psychology. Harvard psychologist Chris Argyus defined "single-loop learning" as the 'detection and correction of errors' or learning what to do. One could argue that this is the objective of a Six Sigma project. project. "Double-l "Double-loop oop learning" learning" is 'questio 'questioning ning the system system of learning learning itself  itself  resulting in a correction of the underlying principles, theories, policies of the organization or implementing implementing insights insights for change that were identified identified in the detection and correction process. (Argyris and Schon, 1978) One could also argue that this is the rationale for  leveraging the learning of in a benchmarking project. Robert L. Hood (Hood and Room, 1996) extended this concept to define triple-loop learning - learning what we need to

learn - learning how to learn differently - permanent learning that changes the way people work at the institutional or cultural level because the change masters have the power to mandat mandate e the the new processes processes!! Thus, Thus, in benchmark benchmarking ing projects, projects, single loop learning learning occurs occurs during during the analys analysis is proc proces ess s and and doub double le-l -loo oop p lear learni ning ng occu occurs rs duri during ng the the management review of the benchmarking project outcomes as the lessons are integrated throug throughou houtt the organi organiza zatio tion. n. Tripl Triple e loop loop learni learning ng must must occur occur throu through gh a seni senior or level level reflective reflective review of overall continuous continuous improvement efforts of the organization organization focusing of  its work to "recognize" what change must be encouraged and selected as an improvement project to create enduring quality as a way of working in their organizational culture. An old point must be reiterated. In the mid-1900s industrial psychologist Allan H. Mogensen -known -known as the father of work simplificat simplification ion - used the process chart (among other tools) to organize organize and study work. work. He drew on the common common sense of people people who did the the actu actual al work work for for impr improv ovem emen entt ideas ideas.. Mogen Mogense sen n (Grah (Graham am,, 2002) 2002) defen defended ded participative management: "The person doing the job knows far more than anyone else as to the best way to do that job, and therefore is the one person best fitted to improve it." This describes a basic belief of employee involvement and teamwork programs. When employees employees can 'see their fingerprints' fingerprints' on a change initiative initiative they tend to be supportive supportive rather rather than resistant to change. However, failure of change initiatives initiatives is typically typically not due to non-involvement of employees - it is usually a leadership problem. Harvard Professor John P. Kotter observed that there are eight major errors that inhibit success in non-enduring change initiatives - all of these errors are associated with the leadership of an organization (Kotter, 1995): •

Not establishing great enough sense of urgency. urgency. •Not creating a powerful enough guiding coalition. •Lacking a vision. Under-communicating the vision by a factor of ten. •Under-communicating •Not removing obstacles to the vision. •Not systematically planning for and creating short-term wins. •Declaring victory too soon. •Not anchoring the vision in the corporation's culture. culture.

Indee Indeed, d, there there are some some stron strong g impli implica cati tions ons of these these error errors s when when doin doing g proce process ss improvement projects -especially regarding the need for appropriate communication with the project's stakeholders. However However,, the far deeper applicati application on of error-co error-correc rrecting ting beha behavi vior or can can be made made when when the the orga organi niza zati tion on's 's busine business ss leader leaders s are engage engaged d in improvement project review and are active contributors to the definition, definition, resourci resourcing ng and implementation of the solutions based on the project team's work. Close engagement and alignment alignment of managers managers to these these projects projects will increase increase the effecti effectivene veness ss of solution solution implem implement entati ations ons as well well as decrea decrease se the time time requir required ed to make make the soluti solutions ons fully fully operational. Harvard Professor Rosabeth Moss Kanter (Moss Kanter, 1983) defined a change master  as: "those "those people and organizations adept at the art of anticipating the need for, and of  leading productive change." Becoming an effective change master is a challenge for the business business leaders who act as the champions change projects. While quality managers managers and process improvement specialists (e.g., such as Six Sigma Black Belts) serve as the 'technical maestros' who drive the first two loops of the organizational learning process, process, it is the business leaders who are the true catalysts of change at the triple loop level. The Change Master is one who masters masters the circumstance circumstances s of the organization, organization, rather than its detail. Only through anticipatory change can organic growth occur in an organization. Thus, leading long-term, sustainable growth efforts - a critical success factor for business leader leaders s - require requires s mastery of the future state of the business and change focused in

the right direction to drive continuing continuing success success.. This is the job of those those people people who serve as business busine ss leaders and take the responsibility for bringing bringing the organization to to new levels of performance improvement.

Adaptation of Learning from the Triple Loop of Benchmarking Process Process benchmark benchmarking ing is an important important tool in any organiza organization tion's 's TQM methodol methodology ogy repertoire and it can help improve strategic direction as well as operational performance. However, the practice of process benchmarking is almost thirty years old. It has been a discovery methodology that is used to stimulate learning and help organizations to think about about crea creati tive ve optio options ns to desig design n and and imple impleme ment nt new ways ways to improv improve e its its busine business ss processe processes. s. Coupled Coupled with solid statisti statistical cal data analysis, best practice practice identificat identification ion and cultural adaptation have helped organizations to both "learn" and "do" business process impr improv ovem emen entt more more effe effect ctiv ivel ely y. What What is the the nex next step tep in the the deve develo lopm pmen entt of  benchmarking?

Fifth Generation — Global Benchmarking (1996-present): The roots of the fifth generation benchmarking were laid in the mid-1990s with the adven adventt of the the Inte Intern rnet et whic which h prov provid ides es glob global al acce access ss to info inform rmat atio ion. n. Thus Thus,, glob global al benc benchm hmar arki king ng was born born in abou aboutt 1996 1996 and and cont contin inue ues s to the the pres presen ent. t. Glob Global al benchmarking extends the boundary of benchmarking geographically to encompass the best process that can be found in any location and in any analogous business. Thus global benchmarking uses a generic approach as in process benchmarking for interorganizational comparisons of processes and it couples this with e-Benchmarking to employ employ the Inte Intern rnet et for for scre screeni ening ng perf perfor orma manc nce e info inform rmat atio ion, n, iden identi tify fyin ing g pote potent ntia iall benchmarking partners, and communicating in the study (via web-casts, pod-casts, wikis, blogs, blogs, and other related related group learning and communication communication techniques) to share the results results of studies studies.. In this this evolvin evolving g age, benchmarkin benchmarking g will will become become much easier easier and more accessible as a learning device d evice for organizational leaders Aristotle taught that excellence is borne out of habit. We know that habit is the consistent repetition or doing the exact same thing over and over again when confronted with the same set of circumstances. This also happens to define the concept of a process. When processes consistently consistently are able to produce excellence, then they have become an organiz organizati ational onal habit which which enables enables this this result result.. It is the obligati obligation on of organiza organization tional al leaders to produce both short term excellence as well as long-term strength in the organization organization so that it may sustain excellence. excellence. Today Today,, Six Sigma represents represents the most widely-accepted approach for assuring organizational excellence; however, it is not such a comprehensive methodology that it is able to satisfy all improvement needs of an organi organizat zation ion.. Indee Indeed, d, organ organiz izat ation ions s must must blend blend their their Six Sigma Sigma proble problem-s m-solv olving ing methodology with a number num ber of other learning and organizational change methods Change management is an essential success ingredient in any quality program; however, the emphasis emphasis should be placed placed on the third third order order or 'triple-loop 'triple-loop'' role of the business business leaders who serve as project champions, steering committee members or deployment leaders. leaders. For quality quality professio professionals nals and team leaders the emphasis should be placed on the second level or 'double-loop' learning and their facilitation of change management at the working level to make change more acceptable acceptable to the people who are affected by it - by involving involving them in the project project and actively actively communicati communicating ng project progress progress to all affected stakeholders so there are no 'surprises' at the end of the project. Finally, people who are working on the front-line of the process should emphasize the primary order order of business business or the first first loop of learni learning ng which which is getting getting the job done done for the

custom customer er - consi consist stent ently ly deliver delivering ing reliab reliable le result results s as judged judged by their their custom customer' er's s performance standard. Six Sigma methods do not provide a stand-alone solution to organizational problems any more than do the methods methods of benchm benchmarki arking. ng. However However,, Six Sigma represents represents a best prac practi tice ce meth method odol olog ogy y whi which mana manage gers rs can can wield wield to impr improv ove e issu issues es faci facing ng thei their  r  organization organization and drive performance performance improvement improvement in the content of the organizatio organization's n's work. Today the developmental journey of the Six Sigma methodologies has transitioned to the point where it is blending a number of methodologies into a comprehensive quality toolkit for design as a process of management (which is distinct from the content of both strategy and management). This paper has describes how the method of benchmarking has been blended into the process improvement analysis methods called Six Sigma. In addition to process benchmarking, other methodologies that have been blended into the core quality and statistical toolkit that initially defined Six Sigma methods, includes Lean Enterpri Enterprise se solution solutions s modeled modeled after after the managem management ent system systems s develope developed d at Toyota, oyota, policy deploym deployment ent (hoshin (hoshin kanri) kanri) planning planning systems systems develo developed ped through through a number number of  companies in Japan as coordinated by a number of quality experts, along with the Change Accel Accelera erati tion on Proce Process ss and Deci Decisio sion n Work Workout outs s that that Genera Generall Electr Electric ic develo developed ped to coordinate change management. Process benchmarking acts as the critical methodology in this toolkit as it generates ideas that feed a portfolio of potential improvement improvement projects. Senior management must choose which projects to accomplish and how to coordinate it resources to systematically increase organizational performance effectiveness, efficiency, and economy as they continue in their journey toward performance excellence in the conduct of their mission. The leading organizations in the world plan to win and win by planning. Benchmarking permi permits ts the the improv improveme ement nt of perfor performan mance ce for any organi organizat zation ion by provi providin ding g it with with a method methodolo ology gy to learn learn and thereb thereby y challe challenge nge its its criti critical cal strat strategi egic c and operat operation ional al assumptions by thinking differently about its direction and how it is planning to achieve its vision. vision. Applying Applying benchmarking benchmarking as a tool of quality quality managem management ent is an effect effective ive way to evaluate options and perform an assessment of alternatives by considering the strategic implications that may be observed in other analogous situations. Learning such lessons will reduce the likelihood of "repeating the mistakes of others" enhancing the capability to perform in the future.

INDIAN RDUCATION SECTOR (IES) IES: THE’ LARGEST'...

IES is by far the largest capitalized space in India with government spend of $30bn (2006; at ^3.7% of GDP, it is in line with the global average). For the 11' 5-year Plan, the Centre has allocated a 6x higher spend on education. Importantly, the extent of  the spends have created one of the 'largest' 'largest' education networks networks globally of ^lm schools and 18,000 higher education institutes (HEIs) in India, home to the largest population within the age group 0-24 years. The statistics are indeed impressive, but a closer look reveals that these spends are not only 'insufficient' but also 'inefficient'. Considering global distribution patterns of  public public educatio education n expenditur expenditure e (internati (international onal PPP$) and population population,, India's India's spend on education education is highly disproportionate! disproportionate! While countries in North America America and Western Western Europe account for more than half of the global spend on public education, less than 10% of the world's school-age population (5-25 years of age; from primary to tertiary levels) lives in these countries. USA's USA's assigned public spend amounts to 25% of the cumulative spend on just 4% of the target population group. In sharp contrast, India's public spend on education amounts to ^5.2% of the world's cumulative public spend, but the country is home to 20% of the population in the target group. Furt Furthe herr, a break break-u -up p of gove govern rnme ment nt spen spend d show shows s that that only only a mini minisc scul ule e 0.82 0.82% % compon component ent goes goes toward towards s capita capitall expen expendit diture ure.. A whoppi whopping ng 80% of the revenu revenue e expenditure on teachers' salaries leaves little to be spent on infrastructure creation, which eventually translates into 'ineffective' infrastructure/ quality of education. While India has a network of more than 1m schools, 66% of these are only till the primary level. Inefficie Inefficiency ncy of the public education education system is amply captured captured in the fact that only 61% of the target group is enrolled in schools and with dropouts as high as 40%, net enrollment levels are a dismal 37%. Q 'Private' players players - balancing the 'inefficient' equation Given Given the dismal dismal state state that IES (read (read governm governmentent-run run schools schools// institu institution tions) s) is in, consumers are increasingly veering towards private institutions, typically perceived as hallmarks of quality (even though quality comes at a price). In this backdrop, the market for private formal education has grown to a stupendous $40bn in size over the past few decades. Not only that, a $10bn market has evolved around the formal education segment.

We have divided the private spend of $50bn (IES opportunity) opportunity) into two segments: Formal ($40bn) and Non-Formal ($10bn) IES. Below we give the broad structure followed by formal IES and the key non-formal segments flanking it. Formal IES: The formal educational system in India broadly comprises schools (often classified as K12 -kindergarten to 12th) and higher education (HE) level. All the levels, from school to higher education, fall under the purview of the Ministry of  Human Resource Development (Department of School Education and Literacy &

Department Department of Higher Education). Education). Schools cater to the '3-17 years' age group. With no central central governing governing body for K12, they are ruled by state state boards/ boards/ ICSE/ CBSE/ International Boards. Higher education institutes cater to the '18-22 years' & above age group. group. With With a singl single e govern governing ing body body (UGC) (UGC),, HE compri comprises ses gradua graduate/ te/ diploma/ professional courses. This may be followed by post graduation courses. non-formall educatio education n segments segments flankin flanking g the formal formal ones Non-formal Non-formal IES: The non-forma include preschools (1.5-3 years), coaching classes, multimedia/ IT to schools and colleges (catering to both private and public institutions), vocational training and the books market. The segments are free of any regulations (i.e. no governing/ regulatory bodies for this segment). Private institutes in the formal education space (K12 and HE) have proliferated rapidly over the past many decades — and as many as 75,000 schools out of the total 1m existing schools are privately-run. The importance of private participation is underlined by the fact that even as only on ly 7% of the total schools are private, they dispense education to 40% of India's total students enrolled. This is despite K12 (schools) (schools) being a focus area for the government as less than 10% of the total public expenditure on education is assigned to higher and university education. As a result, 77% of In dia's -18,000 HEIs are private. Spends on private education to increase to $80bn by 2012E: India's current spend on education is at 5% of average household (HH) income, showing a CAGR of  8.6% versus consumption growth of 3.2% over 1995-2005. Going forward, we expect the consuming class, i.e. HHs with annual income >Rs90, 000, to burgeon from 28% of the total population in 2002 to 48% in 2010. Increasing affluence affluence has been fostering higher aspirations for India's populace, and the ability as also willingness to pay are guidin guiding g its educat education ion sector sector throug through h a phase phase of price price discov discovery ery.. The $13bn spent spent annually by Indians on higher education in the overseas markets asserts the pay power  of the education-hungry Indians.

With With an inef ineffi fici cien entt publ public ic educ educat atio ion n syst system em,, a grow growin ing g youn young g popu popula lati tion on,, a bourgeoning bourgeoning middle class (with the intent and ability to spend) and price discovery that the IES has seen over the past decade, we expect 14% CAGR in private spends on educa educatio tion n ($80b ($80bn n by 2012) 2012).. Non-f Non-for ormal mal segmen segments ts are fast fast-gr -grow owing ing areas areas of the education landscape — we expect 18% CAGR for them over the next few years against 13% CAGR for the formal education space. (For further details on formal and non-formal segments of IES, refer to page 20 and 21.) A failed public education system, high socio-aspirational value attached to education and increa increasin sing g affor affordab dabili ility ty have have all conver converged ged to drive drive demand demand for for qualit quality y educa educatio tion n (synony (synonymous mous with with privat private e institu institutes tes). ). The $50bn $50bn educati education on market market,, estima estimated ted to expand to $80bn by 2012, portends a great opportunity at hand for wealth creation. BUT the ground reality is in stark contrast. While private players have been active in the formal IES for a few decades, the 'not-forprofit' mandate has kept profit-driven corporates away from the $40bn opportunity. In the $10bn non-formal space, scalability remains an issue in most pockets. Inability to transform transform the businesses businesses into a 'process-d 'process-driven' riven' model from 'people-driven', 'people-driven', as also lumpy nature of revenues, has materially curtailed scalability in the highly fragmented

and largely regional markets. While scale is attainable in a few pockets, we maintain educati education on is a diffic difficult ult business business to scale scale - our stand is vindic vindicate ated d by the dearth dearth of  scaled-up players in the space. Q Formal IES - regulations a 'big bully' While While India India has been been proact proactiv ive e on libera liberaliz lizati ation, on, IES has remai remained ned large largely ly untouched by the reforms process. A 'priority sector' status does ensure fund flow to an extent, but the government's agenda of 'social inclusion' has trapped IES in a regulatory maze. Archaic Archaic rules mandate all formal educational institutes in India to be run as 'not'notfor-profit' centers under a society (registration under the Societies Registration Act 1860) or a public trust (Registration (Registration Act 1908). Any surplus funds generated in the process process of  running formal schools/ schools/ HEIs have to be ploughed back into the same school/ HEI and no dividends can be distributed.

$20bn, n, scho school ols s (als (also o popu popula larl rly y know known n as K12, K12, i.e. i.e. from from K12 segmen segment; t; At $20b Kindergarten to 12th standard) form a core of the total market. A student can continue to be a part of the education system — or his/ her 10' or 12' grade scores would be recognized — only if he/ she passes out from a K12 institute affiliated to a board recognized by the system. Hence, all K12 institutes have to be affiliated to an education board — either central boards like ICSE and CBSE or a state board. While a few few stat states es conf confer er on scho school ols s the the righ rightt to act act as prof profit it-g -gen ener erat atin ing g enti entiti ties es,, educational boards still demand strict adherence to the not-for-profit structure. Of late, a trend has emerged wherein some schools have been seeking affiliations with various international boards such as IGCSE (International General Certificate of  Secondary Secondary Education) and IB (International (International Baccalaureate Baccalaureate from Geneva); Geneva); in terms of  operating structure, while these schools can opt for either a not-for-profit trust or a forprofit profit company company,, they can do so only after evaluating evaluating the state laws (e.g. Harya Haryana na allows schools to be run for-profit while most states do not). HEIs (Higher Education Institutes): At $6.5bn ($20bn including cash transactions of 

^$1. ^$1.5b 5bn n and and the the $13b $13bn n spend spend outs outsid ide e the the coun countr try) y),, HE is the the seco second nd larg larges estt opportunity in IES. HEIs seeking recognition by the apex regulatory authority named UGC (University Grants Commission) also need to be run in the form of a trust/ society. Technical echnical education education institutes institutes find themselves themselves regulated under various various professional councils councils as well — e.g. e.g. AICTE AICTE (All India India Council Council for Technica echnicall Educa Educati tion on)) is the regulating authority for engineering and MBA colleges. With most of these bodies perceived as extremely corrupt and bureaucratic (a typical case of'over-regulation but under-governance'), it is difficult for new players to enter  and existing players to expand in the space. However, an HEI (unlike K12) can do without recognition from these bodies — as long as they are a quality institute with acceptance from the industry (a student typically joins the industry after passing out from HEIs). A case in point is ISB (Indian (Indian School of Business, Business, Hyderabad Hyderabad — a premiere business school), which has proved that a quality institute with strong industry acceptance does not require the stamp of affiliation with these bodies.

This implies that 80% (formal IES) of the market potential is not directly exploitable by corporates with profit-driven business models. Due to the high involvement of  politicians with respect to ownership and the shortage of quality institutes leading to lucrative cash transactions, the much-required structural change in education does not appear to be in sight. Other issues that plague the sector are high land prices and little clarity on FDI pertaining to this space.

Q Non-formal IES - scores low low on on scalability scalability

While we expect the non-regulated $10bn non-formal market to witness 18% CAGR till 2012, the market broadly consists of segments that are inherently difficult to scale. In fact, scalability can be achieved only in less than 5% of the market while three of the largest segments (95% of the opportunity — coaching class; ^64%, vocational training; 15% and books; 17%) offer limited value creation potential.

Market remains regional and fragmented... India' India's s non-fo non-forma rmall educat education ion marke markett is curren currently tly domina dominated ted by coachi coaching ng class class business (accounting for 64% of the total). However, the business ($6.4bn; 15% CAGR till 2012E) is inherently regional in nature and person-centric (a people-driven model), which implies high dependence on a 'brand-teacher', or a low degree of stability and scalability.

We believe ^80% of the coaching class market arises from subject/ concept-based school and tertiary level coaching, which has to be localized to suit the dynamic needs of various institutions and has high dependence on 'brand teachers'. teachers'. Mahesh Tutorials Tutorials (revenues (revenues of Rs700m in FY09E) FY09E) is one of the few coaching class class players players that have managed to achieve some 'scale' in this non-scalable segment. Notably, the remaining 20% of the coaching class market has lower dependence on people and a larger focus on national level content, making it relatively easier for  players to attain scale. Against Against this backdrop, players in the test prep space - like FIITJEE (reven (revenues ues of Rsl.2 Rsl.2bn) bn),, IMS (Rslbn (Rslbn), ), Caree Careerr Launch Launcher er (Rs900 (Rs900m) m) and TIME TIME (Rslbn) - have attained a relatively higher scale. The vocational training market ($1.5bn, 25% CAGR) accounts for 15% of the nonformal IES pie. Though the market is continuously evolving with emergence of a host of new new avenu avenues es beyon beyond d IT trai trainin nings gs (fin (finan anci cial als, s, reta retailil,, avia aviati tion on,, mana manage geme ment nt cert certifi ifica cati tions ons and spok spokenen-Eng Englis lish h train training ings) s),, scala scalabil bility ity remain remains s low. low. Given Given the the dominance of unorganized segment, and inconsistent revenue flows in the corporate and retail training verticals (trainings is a discretionary spend), there are hardly any scaled-up/ scalable players. In the the book books s busine business ss ($1.7 ($1.7bn, bn, 9% CAGR CAGR), ), high high reusa reusabil bility ity of books books has been been instrumental in capping the growth potential for players.

... scalability only in pockets

Barring a few like Educomp Solutions and NUT that have acquired the 'relevant' scale, the 'largest' players across the space are still small. Some scalability has been seen within the coaching class space focusing focusing on the post-grad test prep space (mediumhigh scalability in our view). Going forward, we expect a few relevant players to be able to create scale and value withi within n the nascen nascentt organi organize zed d presc preschoo hooll marke markett ($300m ($300m;; 36% CAGR CAGR till till 2012E 2012E). ). Multimedia for private schools, though currently a small market ($70m, "60% CAGR till 2012E), offers value creation potential given that it is highly under penetrated and a technology-driven model. Educomp Solutions has a lion's share ("45%) of the multimedia for private schools market and a distinct first mover advantage in the space. ICT (Informat (Information ion and Communication Communication Techno Technology logy — $90m, "70 % CAGR till 2012E), at market market penetrat penetration ion of <11% <11% suggests suggests high potentia potential, l, but ability ability to create create value is relatively limited in view of LI bidding followed for award of contracts. LOW /Q OF IES, BUT WE ARE BETTING ON MAVERICKS _____________ 

While inefficiencies inefficiencies in the public education system and price discovery have created a substantial opportunity in the private IES space, there is a dearth of players across segments offering scale. We believe this is the key reason for the sector to have attracted limited capital chase (private equity of $ 180m till date). Notably, there have been no significant investments in the formal education space (except Manipal Universal Learning). Also, ^20% of the investments in the unlisted space have been in US-centric e-learning companies which cater to the outsourcing needs of publishing houses and training needs of companies. Other deals have been in non-formal non-formal areas such as preschools preschools,, tutoring, tutoring, test prep, prep, Multimedi Multimedia/ a/ ICT and vocational training.

Q 4Cs differentiate the 'men' from boys With With few scala scalable ble playe players, rs, the lucrat lucrative ive IES market market posses possesses ses low IQ. We have have identified some unique KSFs which, according to us, equip players to attain a higher IQ; thus, our investment thesis in IES rests on the 4Cs — Credibility (management intent and ability ability), ), Capital Capital (built (built to last), last), Creativ Creativity ity (ability (ability to 'manage 'manage'' the over-regu over-regulate lated d environment) and Content (ability to differentiate and build annuity).

Q Credibility - management intent and ability A management's management's 'intent' and 'ability' to attain scale and create value are the key factor factors s to determ determine ine its IQin IQin IES. IES. While While the succes success s of Educom Educomp p Soluti Solutions ons (among world's top 15 companies by market capitalization within the education space; excluding the books market) has lured many a players to join the fray, we believe just just a handful of them has it in them to compete in the long haul. Only a few players have been able to earn credibility in terms of ability to scale. Players that have managed to do so as also create a BRAND will be at a distinct advantage going forward (in education sector, brand creation is a tough and long-term

game — a minimum of three batches, i.e. six years, should pass out and be successfully placed within the industry before an HEI creates a brand). Thus, we see incumbent leaders with strong brands in respective segments scoring over peers. Given that most segments of IES offer limited scalability, some players — to expedite scale — are increasingly looking to lever their established credibility in one part of the value value chain chain to other other areas areas of the education education landscap landscape. e. For example, example, preschoo preschooll operators like Kidzee, Euro Kids and Kangaroo Kids are levering their brands to enter  into the K12 space, while NIIT is extending its brand in IT trainings to BFSI, spokenEnglish and BPO training segments. Coaching class players like IMS are planning to stradd straddle le the HE spectr spectrum um (vocat (vocation ional al traini training ng and HEIs), HEIs), and Career Career Launch Launcher er is working on attaining a footprint across the value chain. Going forward, consolidation consolidation (acquisition (acquisitions) s) could be adopted adopted as a way to grow faster in existing and new operations operations within IES.

Q Capital - built to last Education is a capital-intensive business with majority of the formal and nonformal segments requiring heavy upfront investments. Setting up a K12 school entails entails a cost of ^RslOOm (excluding (excluding land cost) while HEIs require much higher  inve invest stme ment nts s (a medi medical cal coll colleg ege e woul would d typic typical ally ly requi require re Rs4b Rs4bn-5 n-5bn bn). ). A few businesses in the non-formal space also call for heavy upfront investments e.g. upfront capex of ^Rs85, 000 per class per school for Multimedia in private schools and Rs250, 000-300,000 000-300,000 per school scho ol in the ICT business. Q Creativity - 'manage' the over-regulated environment Taking a cue from independent independent school-owners school-owners 'extracting' profits from trusts (schools and HEIs) in the form of lease rentals and management fee, some players have taken the age-old informal informal structure to the next level. The nascent corporate activity in the formal education space is using a two-level structure to circumvent circumvent the 'not-for-profit' diktat. While multi-layered regulations have meant that 80% of the opportun opportunity ity (formal education) education) remains remains elusive to commercia commerciall activity, activity, 'innovative' 'innovative' players like Educomp Educomp in K12 space are successful successfully ly using these these struct structure ures s to scale up. A host of other other players players like Kidzee Kidzee,, Euro Euro Kids, Kids, Kangaroo Kids and Career Launcher are also looking to scale up within within the K12 space by using similar structures. Innovative Innovative structures — The 'innovative structures' have emerged to break the 'trust' issue. The company creates a trust (a not-for-profit not-for-profit body) that that runs runs the the educ educat atio iona nall inst instit itut ute e at one one level evel.. It furt furthe herr crea create tes s a subsidiary that supplies land, services and infrastructure to the trust in lieu of rental/ fees. In this way, the entity manages to unlock the 'surplus' and distribute it as dividends or use it to fund other ventures.

Clearing the air on 'Regulatory Ambiguity'

With strong social connotations attached to education, the risk associated with two-tier corporate structures cannot be completely eliminated. eliminated. In this direction, we sought views of various industry and legal experts on the survival quotient of  these structures. The key highlights are as follows: Regula Regulatio tions ns govern governing ing the K12 space: space: The CBSE/ CBSE/ ICSE ICSE and state state board board regulations stipulate running of a K12 institution ONLY as a trust or society. Income Income from from the trust trust is non-ta non-taxab xable le but the 'reaso 'reasonab nable le surplu surplus' s' (not (not defined) can be used only for development of the same institution and cannot be distributed as dividends. Regulations governing the Higher & Technical Education space: The rules are more stringent here than for K12 as an HEI is simultaneously governed by a central body (University Grants Commission — UGC) and a regulatory body speci specific fic to the field field of specia specializ lizati ation on offer offered ed by the HEI (e.g. (e.g. AICTE AICTE for  engineering and medical colleges). The UGC stipulates that the Higher and Technical Education institutions be run as a trust or society where all the infrastructure and capital goods have to be on the books of the university. AICTE further has its own set of rules wrt infrastructure and curriculum - in case an HEI fails to comply with the same, it is blacklisted (110 universities blacklisted as on date). However, taking UGC or AICTE's approval is the prerogative of a University. For example, ISB and Amity have been running as not-for-profit structures but without seeking recognition from AICTE. Regulations governing a corporate entity providing management services and land/ capital goods on lease to a K12 institution running as a trust: A company set up to offer services and land/ capital on lease can be run as a for-profit body and does not fall under the purview of the school education boards. The trust will will have have teach teachers ers on the the roll rolls s and and coll collec ectt fees fees from from stude student nts s whil while e the the remaini remaining ng servic services es are outsou outsource rced. d. This This struc structur ture e has been been in existe existence nce for  years and has not been challenged. However, it is recommended for the trust and and the the managi managing ng compa company ny not to be run by the same manage managemen mentt and common directors, and that the transactions are done at an arm's length. (The transactions have to be done at a fair market value, as if the two parties were unrelated.)

Q Content - ability to differentiate and build annuity annuity While education is a difficult business to scale up due to high dependence on people and low revenue visibility, scale can be achieved with the 'right' content/ offerings. Thus, we believe believe players with the ability to create create a differe differentia ntiated ted product product// process process with with annuity business model can break the scalability barrier.

PRESCHOOLS: PLAY TIME

A part of non-formal IES, the $300m preschool segment is expected to be a $1bn market by 2012 (36% CAGR) led by low penetration (1 out of 100 preschool-aged children enrolled) and further   price discovery. With low entry barriers, corporate activity has gathered pace and 11 major chains and ~10 smaller players are active in the space. While the scale-up has so far been on the franchisee  platform, corporates are increasingly forming JVs with builders/ partners and moving up the value chain by upgrading to K12 schools. The strategy imparts resilience to the model against high lease rentals besides ensuring scalability. With players planning aggressive rollouts, the organized segment is growing faster than the industry (50% vs. 36% CAGR). Within this highly fragmented market, we expect Euro Kids (one of the largest preschool chains) and Kangaroo Kids (an innovative player) to  be relevant players going forward.

Preschool market: multifold growth

Playschools, more popularly known as preschools, traditionally cater to the 1.5-3 years age group. group. Increa Increasin sing g awarene awareness ss among among parent parents s about about the benefits benefits of a qualit quality y preschool education has been driving penetration levels and price discovery in the segment. Led by these factors, we expect the market to expand by more than 3x in size by 2012. While the market is currently highly fragmented and unorganized in nature, nature, increa increasing sing prospe prosperity rity is drivin driving g a shift shift towards towards the organi organized zed segment segment.. A largely urban phenomenon, there has been rapid proliferation of organized preschool chains beyond metros and tier 1 cities in the last five years.

Q Getting more organized Households with annual income in excess of Rs200, 000, which form an estimated 8% of India's total population, are the primary target customers for preschools. We estimate a target market of 5.5m preschoolers, of which 12% are currently enrolled. Considering an average annual spends of Rsl8, 000 per student (price discovery still in initial stages), we estimate the segment to be $300m in size. Goin Going g forw forwar ard, d, we expe expect ct the the pres presch choo ooll mark market et to grow grow on the the back back of low low penetration, penetration, increasing paying propensity propensity and organized organized supply creating awareness awareness about the importance of preschool education. We expect the total preschool market to touc touch h $lbn $lbn (on (on a low base of ^1,7 ^1,700 00 scho school ols s and and 200, 200,00 000 0 stud student ents) s) by 2012 2012.. Interestingly, the organized market is likely to grow faster, at a CAGR of 50% over 

Organized market: supply creating demand The preschool market has, over the last 5-6 years, seen a shift towards organized players. KidZee (recently renamed as Zee Learn) - India's largest preschool chain -has set up 623   preschools preschools in just five years since inception and plans to add another 1,000 preschools over the next two years. There are 11 major preschool chains in India including KidZee, Euro Kids, Bachpan, Apple Kids, Shemrock, Shemrock, Kangaroo Kids, Kids, Podar Podar Jumbo Kids, Kids, Tree Hous House, e, Mo Moth ther er's 's Prid Pride, e, DRS DRS Kids Kids and and Suns Sunshi hine ne,, and and arou around nd 10 smal smalle lerr play player ers. s. Organized Organized players have largely largely scaled up using the franchis franchisee ee route route (-1,700 (-1,700 schools catering to 200,000 students).

These These preschool preschoolss cater to segments segments across income groups ranging from consuming consuming to affluent. While While Kangaroo Kangaroo Kids is primarily a premium premium brand at an average average annual annual fee of Rs35,000Rs35,00045,000, Tree House charges an average annual fee of Rsl8,000. Players in other segments segments of the education valu valuee chain are also entering this space space — e.g. Mahesh Mahe sh Tutorials' Tutorials' (a brand in the private tuitions space) 'Little Tigers' and Career Career Launcher's Launcher's (test (test   prep) prep) 'Ananda' 'Ananda'.. The trend trend of rapid rapid rollouts rollouts indicates indicates that 'quality' supply of preschools is  bringing latent demand to the fore. Further, education major Educomp has forayed into the space under the brand 'Roots to Wings' (60 preschools at present) and has also acquired a 50% stake in Euro Kids (-484 centers) for Rs390m. Despite the increasing share of organized segment (currently 17% of the total market), the  preschool  preschool market remains highly fragmented and regional regional in nature. nature. Though the shift is clearly clearly evident, the largest player (Kid Zee) holds only 7% share of the total market.

...BUT, THE BUSINESS NOT A CHILD'S PLAY There is enough demand for preschools (as reflected by the rapid proliferation) and capex capex requir requireme ements nts are also also relati relativel vely y lower lower,, which which means means that that it is play time for  preschool chains. However, the model is fraught with risks including the inability to attrac attractt presch preschoole oolers rs beyond beyond a catchm catchment ent area of 2km, 2km, high high lease lease rental rentals, s, intens intense e competition from the unorganized segment (at considerably lower cost to customer) and increasing competition among organized players. Q Limit to lever infrastructure for preschool children Any preschool, however strong the brand, ideally has a customer pull within a 2km radius radius (parents (parents prefer to send toddlers toddlers within within a limited limited radius for safety/ safety/ comfort comfort reasons). Also, the segment caters only to customers who can afford annual fees of  Rs20,000-45,000, which further limits the scope of the market.

Q Tail wags the dog dog - rental rental costs! costs!

Preschools are currently being run primarily on the franchisee model, which has so far  evolved largely on the back of two factors - low cost of setting up a franchisee, and housewife housewife occupation that typically does not consider consider the opportunity opportunity cost of lease lease rentals (schools are being set up on existing premises which otherwise also do not generate returns). Considering the economics of the preschool business, lease rent forms the largest expense for running a preschool and can eat into profitability of the business.

Q The unorganized neighbor 

With awareness levels still low, the unorganized market provides 'the same' care but at a much lower price. With more than 80% of the target market still with the 'trustworthy' 'trustworthy' neighb neighbor or,, it may take some some time time before before organi organized zed players players are able able to establi establish sh the importance of a quality preschool education. Q A non-regulated market - low entry barriers The preschool market is non-regulated and hence entails no regulatory barriers for  new entran entrants ts.. Given Given the the relati relativel vely y low inves investme tment nt requir required, ed, compet competit ition ion is intensifying in this segment.

Q Economics of a preschool Except for a few preschool chains (Kangaroo Kids going in for JVs with developers and Tree House with largely owned schools), all other players have opted for the franchisee model to scale up. Under this model, a franchisee has to pay a brand/ franchisee fee (Rs60,000-70,000 pa) as also some part of the revenues to the franchisor (^20% of total) in lieu of using the latter's brand name and for the handholding required to run a preschool.  Assumptions: We have assumed a model premise of 1,200 sq. ft with rent at Rs70 per  sq. ft. ft. (Only 60% of the total area can be used for classrooms classrooms and a minimum minimum of 1015 sq. ft per student is considered optimal). The one-time capex broadly comprises furniture furniture and fitti fittings ngs cost cost and excludes excludes brand fee (we have have assume assumed d an average average franchisee fee of Rs200,000, which is renewable every three years and amortized over a period of three years).

We have assumed three classes and two batches a day, which translates into a maximum capacity of 20 students per class (thereby a maximum of 120 students per preschool) and an annual fee of Rs25,000.

IQ: high (subject to benign lease rentals)

A non-regulated non-regulated space, preschool chains have largely grown using the franchisee route. Low upfront upfront investment requirements requirements by a franchisee franchisee (ideal for housewife housewife occupation) and an under   penetrated market have led to the emergence of a high-growth market. However, the limited catchment area for a preschool implies limited scalability per branch; also, with a large section of the franchisees being run on owned premises, the model ignores lease rentals rentals — a major major cost-hea cost-head. d. Thus, the busines businesss for a franchis franchisee ee runs the risk of becoming becoming economically unviable in a scenario of high rentals (it has been observed that while franchisees keep mushrooming, mushrooming, there has also been a considerable considerable churn in existing franchisors under high rental costs). To improve economi economicc viabilit viability y of the model, model, some franchis franchisors ors are seen to be levering the existing infrastructure beyond the 1.5-3 year age group for programmes like mothertodd toddle lers rs (children (children aged between between 6-12 months) months) and activitie activitiess like like dance, dance, music, music, pottery pottery classes, etc (children aged three years and above). Going forward, increasing increasing clutter clutter in the organized organized segment would mean further fragmentation. fragmentation. Having said that, dominant players like Euro Kids (50% acquired by Educomp) and those using innov innovati ative ve models models (like (like Kangar Kangaroo oo Kids) Kids) are expect expected ed to emerg emergee as releva relevant nt player playerss going going forward. Kangaroo Kids, besides expanding through the pure franchisee route, is also using a JV model model for furthe furtherr scalescale-up. up. The company company has signed signed 400 such JVs with developers developers and key  partners.  partners. Also, preschool chains that have their own high schools schools get a benefit benefit premium over  standalone preschools. Kidzee, Euro Kids and Kangaroo Kids among others are upgrading to K12 schools, with the preschool population acting as a feed for the higher classes. Globally, Kinder Care (USA), ABS Learning Centres (Australia, New Zealand and UK) and Bright Bright Hori Horizon zonss (USA (USA,, Europ Europee and and Canad Canada) a) are a few few scale scaled-u d-up p succe success ss stori stories es among among  preschool chains. But these models cannot be superimposed on the Indian market as the cost structure structure and business business models models are quite quite different different.. Globally Globally,, preschoo preschools ls are primari primarily ly day-care day-care centres while in India they are perceived as early training grounds for children to develop skills and secure admission into a good school.

K12 (SCHOOLS): A NO BRAINER? NOT YET! K12, the largest segment ($20bn) within IES, is expected to grow to $30bn by 2012 (14% CAGR) on the back of world's largest school-aged population and price disco discove very ry.. Whil While e domi domina nate ted d by stan standal dalon one e scho school ols s and and chai chains ns conf confin ined ed to charitable, political and religious individuals/ groups, corporate activity is catching up in this annuity business free from recessionary pressure. Though regulations mandate K12 to be 'not-for-profit' structures run by only Trusts/ Societies, 2-tier  structures (a trust and a managing entity) are being adopted to unlock the surplus as lease rentals, management fee, etc (an age-old practice followed by standalone schools). Going forward, we believe serious players intent on gaining scale and credibility should help dispel investor concerns on under-reporting of cash. The space will realize its full potential the day favourable regulations fall into place. We find 'commercial' K12 chains like Educomp Solutions (11 operational schools, 150 planned by FY12), Zee Learn (23 operational, 100 by FY11E), GEMS (6 schools under under a manage managemen mentt contra contract ct)) and Kangaro Kangaroo o Kids Kids (6 operati operational onal school schools) s) as interesting plays in this space.

K12: THE LARGEST IN IES Schools, globally known as K12 (Kindergarten to 12' grade), come under the formal educati education on space. space. These These school schools s broadly broadly addres address s educat education ion needs needs of student students s between the age group of 3-17 years. Some states in India follow the system of K10 + 2 (in (in which case, the last two years years form a part part of higher higher educat education ion). ). Following a prescho preschool ol stint (an optional optional course), course), a child child has to be enrolle enrolled d in a recogni recognized zed school school (affil (affiliat iated ed to/ registe registered red with with either either a state state board board or centra centrall board boards s like like ICSE/ ICSE/ CBSE CBSE)) in order order to be consi consider dered ed as a part part of the formal formal education system.

Q Public K12 schools - short short on on efficiency efficiency Global Globally ly,, India India has one of the lowest lowest enroll enrollmen mentt and highes highestt dropou dropoutt ratios ratios,, translating into net enrollment levels among the lowest in the world. The 1,025,000 schools in India are clearly not enough to meet the demand in terms of both quality and quantity. Notably, 66% of these schools are only till the primary level. With only 132m (37%) of the Indian K12 population net enrolled in schools, the system has apparently failed. According to NCERT, NCERT, at least 200,000 schools are required to plug this gap.

Q Private market - large is attractive... At 36lm, India has the largest population globally in the K12 age group (5.5x USA's K12 population). Despite a mere 37% of the K12 age group net enrolled on school rosters, rosters, privat private e spends spends on K12 schools schools stand stand at an astoun astoundin ding g $20bn $20bn — which which makes makes the segment the largest within IES. The large market can be explained by a consistent shift towards private schools - catalyzed by the absence of quality public schools and growing awareness about importance of quality education as also increasing ability and willingness of Indians India ns to pay.

Out of the total 1m schools in the country, ^75,000 are private. With considerable preference for private schools, the average number of students in a private school stands at a much higher 1,200 versus 146 for a public school. The private schools school s can be classified into private aided (that receive aid from the government in order to run the school), private unaided standard and private unaided premium schools. The private aided schools charge an average fee of Rs5,000-6,000 per  annum annum till the primary stage (5th grade), grade), after after which students students are charged a nominal nominal fee. The private private unaided unaided standard standard schools schools charge charge an average average tuition tuition fee of RslO,000 RslO,000 per annum while while private private unaided premium schools schools charge charge Rsl5,000 (up to Rs45,000 per annum in some cases) cases).. We estimate estimate an annual total spend of $3bn in the private aided segment and $18bn in the private unaided segment of K12.

Q

... .a $30bn market by 2012E

With aspirations and awareness meeting affordability, the K12 segment is in a price discovery phase. To put this in perspective, Jamnabai Narsee Monjee School - a premium and prestigious private school in the suburbs of Mumbai — has shown a 12% CAGR in annual fees over the last 10 years. The school has recently also started an IB (Internat (International ional Baccalaureat Baccalaureate) e) division division which charges charges an average average annual annual fee of Rs600, 000. The relatively new trend of international schools is catching up slowly but steadily across the country with K12 fees ranging from Rs500, 000-800,000 per annum. This underpins the increasing paying propensity of the Indian populace. Pay ability of education-hungry Indians is also indicated by the growing preference for  private schools - 40% of students enrolled in the K12 system attend private schools, schools, which which are just just 7% of total total schools schools in the country. country. With With public public schools schools unlik unlikely ely to become efficient in the near future, we expect the shift to continue. Within the private K12 space, the last decade has seen a gradual shift from private aided to private unaided (i.e. costlier) schools. This clearly indicates that more and more parents now prefer to spend substantially higher amounts in their quest for  better quality of education for their children. Driven by such price discovery and growing acceptance of private schools as the medium for quality education, we expect K12 to grow to a $30bn market by 2012 (14% CAGR). The 'big bad' corporate: ruled with an iron hand

Education has strong social connotations in any economy (more so in India). Thus, schools have traditionally been a state responsibility to be run with a 'noble' cause and without being tarnished by the 'ulterior motive' of making monetary profit out of the activity. activity. In this backdrop, it has always been mandatory by regulation that all schools be registered as a trust or society; also, the educational trust/ society cannot distribute dividends, or even invest the surplus to fund another school (refer to the judgment in the Modern School versus Union of India case given below). Further, Further, the surplus su rplus generated is necessarily to be used for running the same school and only towards its development.

Modern school vs. Union of India: Missing the woods for trees? A three-judge bench of the Supreme Court - comprising Chief Justice VN Khare, Justice Justice SB Sinha and Justice Justice SH Kapadia, Kapadia, in a 2:1 majority majority judgment delivered delivered on 27 April April 2004 2004 — ruled ruled that that the Society Society or Trust Trust running running a school school CANNOT invest the surplu surplus s genera generated ted in runnin running g that that schoo schooll in anothe anotherr school school (i.e. (i.e. surplu surplus s money money generated by one school cannot be transferred to the parent society administering the school and has to be kept for that very school school). ). Regulat Regulation ions s like these have have prevented the emergence of any major chains in the K12 space as a corporate running various schools cannot create a common pool (internal accruals) to be used across schools of that particular chain and every new school/ branch opened requires fresh capital infusion. The rationale given is that if a society/ trust running schools has to ring-fence each school separately in a financial sense, and is not allowed to transfer  funds from one school to another, it has no reason to try and generate a surplus in any school school (transl (translatin ating g into into low tuitio tuition n fees fees in each each school school). ). We see this this as a perfec perfectt example of missing the woods (increasing the supply of high-quality education) for  trees (keeping fees as low as a s possible in each and every school).

Q School'rule book' With no regulatory central body governing the K12 space, regulations vary from state to state. A student can continue to be a part of the education system - or his/ her 10' or 12' grade scores would be recognized — only if he/ she passes out from a K12 institute affiliated to a board recognized by the system; hence, all K12 institutes have to be affiliated to an education board — either central boards like ICSE and CBSE or a state state board. board. While While states states may or may not relax relax the 'not-fo 'not-for-pro r-profit' fit' stip stipula ulati tion, on, the boards mandate the schools to be run as a society/ trust. While a school can be affiliated to any board, it needs to secure an NOC from the state and has to abide abide by any additio additional nal rules imposed imposed by the state. state. In order order to get the NOC and affiliation to a board, schools are mandated to be established by societies regist registere ered d under under the Societ Societies ies Regist Registrat ration ion Act 1860 of the Govern Governmen mentt of India India or  under Acts of the state governments governments as educational, charitable charitable or religious societies societies having non-proprietary character or by Trusts (some states like Haryana do not follow this structure and allow 'for-profit' activity in the segment).

Q If there's a rule, there must be a way to bend it! The not-for-p not-for-profi rofitt mandate mandate is the single-l single-large argest st deterren deterrentt that that has kept serious corporate activity at a bay in the otherwise attractive K12 segment. Most schools in India India are standalone standalone and any chains till recent recently ly were were usually usually set up by privat private e chari charita tabl ble, e, polit politic ical al and/ and/ or religi religiou ous s grou groups ps — includ includin ing g Vidy Vidya a Bhart Bhartii scho school ols s (affiliated to the right wing political organization RSS) with more than 18,000 schools, Dayanand Anglo Vedic (DAV) schools with >600 schools and Chinmaya Vidyalaya with 75 schools among others. DPS (Delhi Public School) with its 120 schools — 107 in India and 13 outside — is a franchisee chain.

Two-tier structures - a norm in the making?

Ironic Ironicall ally y, when when corpo corpora rates tes looki looking ng to set up large large for-p for-prof rofit it chain chains s have have been been cautious cautious to tread tread here, here, individu individual al schools schools have been 'profit 'profit-mak -making' ing' proposi proposition tions s since since long. long. The The entiti entities es have have been been using using indir indirect ect means means like like lease lease rental rentals, s, management fee, etc to extract the surplus stuck in the trust. Taking a cue from these schools, IES has been witnessing some corporate activity in the K12 space on similar lines, but in formal version of these age-old structures. Archaic regulations have been surmounted through an innovative two-tier structure, which bypasses the 'trust' regulation and enables promoters (on corporate level) to generate profits from the venture. In order to own and operate schools, companies like Educomp Solutions have created a structure wherein a trust (non-profit body) is created to run the school at one level. At another level, the company creates an entity that supplies the trust with land, services and infrastructure for a rental/ fee. In this way, the 'surplus' profit flows to the latter entity in the form of fees for providing these services and is at its disposal to be then distributed as dividend or used to fund another venture. The model runs the risk of being struck down in view of education edu cation being a 'socially sensitive' sector sector,, more so at K12 leve level. l. Howev However er,, the the struc structu ture re has has been been in exis existen tence ce for for a long long time time at the the standalone school level and we believe the model could become the norm till regulations change for the better.

Higher education: time to 'degree shop'? India's private HEIs have grown to be a $6.5bn market (excluding $1.5bn-2bn 'capitation' spends), with 12% CAGR estimated over FY08-12. Of late, private HEIs have mushroomed with with the the tren trend d veer veerin ing g towa toward rdss prof profes essi sion onal al cour course sess with with high high payba payback ck pote potent ntia iall (engineering, medical and MBA colleges). However, the not-for-profit mandate, regulatory obeisance to multiple bodies, hefty investments required to set up an HEI and longer  gestation cap IQ of the segment. Given the high participation of politicians in the field (vested interests), we do not see any structural change in the near term. With a head-start in the capital- and time-intensive business, we believe Manipal Universal Learning (equipped with the 4Cs) is the only player in the space promising value creation potential.

HIGHER EDUCATION: HIGHER PRIVATE SPENDS

A part of the formal education system, the Indian Higher Education market - at $8bn — is next only to the K12 segment segment in size. Considerin Considering g the $13bn spent on importing education, we estimate the paying propensity of Indians within the HE space to be at ^$20bn. The HE segment consis consists ts of graduatio graduation n (targe (targetin ting g pop popula ulatio tion n between 18-21 years) and post graduation (>22 years) courses, offered after completion of K12 stint. The graduation market can further be classified based on the nature of education education into graduate courses (18-20 years), diplomas/ diplomas/ nongraduate courses (16-20 years) and professional professional courses (18-21 years) such as Engineering (4-year  tenure at graduate level) and Medical (5-year). While indirectly controlled by the Ministry of Human Resource Development, all colleges offering these courses need to be affiliated to a University (in turn under the purview of the central regulatory body called UGC — University Grants Commission). While most universities are administered by the state government, there are 24 Central Universities Universities maintained by the Centre. Further, each stream is monitored by an apex body (e.g. AICTE is the regulatory regulatory body for for Engineering Engineering and Managem Management ent colleges colleges). ). While Whil e India Indi a may have one of world's highest enrollment s for HE (ll m) as also networ networks ks of of HEIs HEIs (cur (curren rently tly estimated at 18,064), it has abysmally ab ysmally low GER of 9.97.

Q Private HEIs dominate Over the years, public spend on higher education has been gradually reducing — and rightl rightly y so as the focus focus of govern governmen ments ts globa globally lly is (and (and should should be) on primar primary y education. But the strategy has resulted in India having one of the lowest public spends per student on higher education. Given the dearth of quality institutes, private HEIs have boomed since 2004 and the number is growing. growing. With liberalizati liberalization on opening up newer and better better job avenues, the proliferation of private institutions has largely been in the area of professional courses like Engineering and Medical as also post graduation courses like MBA. Other factors that have contributed contributed to the phenomenon phenomenon include the increasin increasing g pay propensity propensity of  Indians Indians and prospects of higher returns (payback (payback in the form of fat salary salary packag packages) es) offered offered by these career-focus career-focused ed products. products. Today Today,, more than 40% of India's HEIs are privately owned and funded (77% are privately owned).

Howeve Howeverr, more more is neces necessar sarily ily not enough enough.. Despi Despite te the speed speed and exten extentt of  privatization in the segment, there still exists a yawning demand-and-QUALITY supply gap which which is apparent apparent in the high cash transac transaction tions s (donatio (donations/ ns/ capitat capitation ion fees) fees) within within quality quality institutes. institutes. This gives rise to the need for more conventiona conventionall as also also alternative modes (such as distance learning) of disseminating higher education.

Q India goes degree shopping! The HE space is bestowed with high potential volumes. The increasing ability as also intent to pay in return for securing a 'good career', and hence a 'good future', future', has led to a $6.5bn private spend — primarily on career-focused courses (more than 80% of the estimated spends on engineering courses). Interestingly, even though India has more than 1,600 engineering colleges (1,200 of these are private), most of the colleges have seats which are 'sold' at as high as 5x the regular fee. High capitation fee — currently deemed illegal — and black marketing of 'NRI Quota' seats are estimated to account for $1.5bn-2bn of additional spend in the space.

Also, a large number of Indian students opt for further education outside the country and spend a whopping $13bn every year on securing quality education. This further underpins the paying propensity of Indians. At 30% of the total inbound US HE traffic, India is one of the largest exporters of education globally globall y. Higher education: rules, rules and more rules

HEIs are a part of the formal education system and in order to seek recognition from the central central regulatory regulatory body (UGC) are required required to be run under a not-for-pro not-for-profit fit trus trust/ t/ society (Rules are more stringent than at the K12 level). In contrast to the K12 segment wherein wherein a school school has to be affiliat affiliated ed to a board board recogni recognized zed by the formal formal education system, it is possible to set up an HEI outside the purview of UGC regulations (applicable only in case of niche world class institutions institutions that find accepta acceptance nce with with industry and academic circles; but cannot be superimposed on the entire segment). The higher education segment is a part of the formal education system, and like other segments in the space, is required to be run under a not-for-profit trust/ society. However, regulations are more stringent here vis-a-vis the K12 segment. The process of securing registration/ affiliation with a regulatory body is long-drawn and a single HEI is simultaneously governed by various bodies. While UGC (University Grants Commission) Commission) is the central governing body, body, there are individual regulatory bodies bodies for  specific professional courses, e.g. AICTE (All India Council for Technical Education) for  management management and engineering engineering colleges and MCI (Medical Council of India) India) for medical medical colleges. Accreditation for universities in India is required by law unless it has been creat created ed through through an Act of Parliamen Parliament. t. Without Without accredita accreditation, tion, "these fake institut institutions ions have no legal entity to call themselves themselves as University/ University/ Vishwvidyalay Vishwvidyalaya a and to award 'deg 'degre rees es'' whic which h are are not not trea treate ted d as vali valid d for for acad academ emic ic// empl employ oyme ment nt purp purpos oses es"" -University Grants Commission Act 1956.

These bodies not only have very stringent and archaic rules, they are considered highl highly y corr corrupt upt by most most indus industry try fact faction ions. s. As of date date,, AICT AICTE E has black black-li -list sted ed 110

universities for not seeking recognition from the body. Further, Further, regulations within the space are not clear - as can be seen in the ambiguity in judgments for private HEIs in the past. Regulatory conditions are unlikely to change in a hurry as education is a highly politically and socially sensitive sector. If the government does decide to throw open the formal education sector to for-profit private players, we expect the liberalization process to start start with with HE. HE. Though Though there have been been talks talks of libera liberaliz lizing ing private private HE entities entities (especially Medical Colleges), there is no single bill pending in the Parliament with the intent. Further Further, the high involvement involvement of politicians politicians (^70% of HEIs in Maharashtra are run by politicians) given the segment's high profit generation potential (though indirect) make the much-needed realignment and a structural shift look too difficult to achieve.

Q No regulations regulations - an option Unlike in the K12 segment wherein a school HAS to be affiliated affiliated to one board or the other for its pass-outs (grades 10' and 12 ) to be recognized as part of the formal education system and eligible for further studies, it is possible to set up an HEI outside the purview of UGC regulations. The products of these institutes (students passing out) do not have to conform to acceptance standards of the education system but of the industry. As long as industry quarters perceive the products to be of  superi superior or quali quality ty,, the HEI HEI can do witho without ut these these cumber cumbersom some e affil affiliat iation ions. s. For  For  example, ISB (Indian School of Business, Hyderabad) is a venerated name in the industry corridors despite it not being affiliated to any regulatory board. The diploma offered by ISB holds as much (arguably more) value as any UGC-accredited UGC-accredited certification. But import important antly ly,, this this status status requir requires es mainte maintenan nance ce of worldworld-cla class ss quality quality and strong strong industry support. Thus, it cannot be superimposed on the entire segment. HIGH HOPES FROM INNOVATIVE STRUCTURES

Issues related to trust formation, regulatory ambiguity and vested political interest are the key barriers to capital commitment from for-profit organizations. Setting up an HEI is an investment-heavy proposition (^Rs5bn for a medical college). However, there are some players that, despite being affiliated and hence recognized by the relevant regulatory bodies, have managed to extract legitimate profits from these universities universities through innovative structures.

Q Distance Education - an alternate mode India' India's s low GER render renders s a greate greaterr need need for a higher higher number number of conven conventio tional nal institutions as also an alternative mode of HEIs such as ODL (Open and Distance Learning) institutes. One way to improve GERs is to allow foreign universities to set up shop in India. India. FDI in education, education, including including higher education, education, has been allowed allowed under  the automati automatic c route without any sectoral sectoral cap since since 2000; 2000; yet there there is ambi ambigu guit ity y around the space and degrees awarded by foreign universities are not recognized by the UGC or AICTE. This further underscores the need for alternative forms of learning. Supplementing the brick-and-mo brick-and-mortar rtar educational institutes, institutes, Distance Education can be considered considered an

effective effective and low-cost low-cost alternative to on-campus HEIs. The DEC (Distance (Distance Education Education Coun Counci cil), l), set set up unde underr a clau clause se with within in IGNO IGNOU U (Indi (Indira ra Gand Gandhi hi Nati Nation onal al Open Open Univer Universit sity), y), has till till date date extend extended ed approv approval al to more more than than 130 instit institutio utions ns to offer  offer  distance education. Also, the ODL model does not impose any limits on the number of  students in terms of infrastructure. infrastructure. Curre Currentl ntly y, IGNOU IGNOU is India' India's s larges largestt distan distance ce educat education ion provid provider er with with ^ 500,00 500,000 0 students enrolled for 1,100 courses through 129 programmes, 64 regional subcenters and 1,621 study centers. The body is also the regulator in the space, which has led to certain quarters raising demand for an autonomous body to govern the space (a bill is pending approval pertaining to the same). There is large untapped potential in the segment as out of the "10% population enrolled in HEIs in India, a miniscule -7% go in for Distance Education. Though this portends a huge opportunity, perception of low quality has led to Distance Learning being treated inferior to on-campus education. While Distance Education Education has low entry barriers for suppliers, the industry too has l ow regard for this medium. However, given that quality of a course can be controlled by improving the input and thus the output, we feel that an apt model and superior  pedagogic measures can establish a strong brand. By doing all the right things, Sikkim Mani Manipal pal Univ Univer ersi sity ty (SMU (SMU;; a dista distanc nce e learn learnin ing g inst instit itut ute) e) has has mana manage ged d to achieve achieve significant scale with ^100,000 students enrolled for its various program programmes mes

IQ: high (but long-gestation period)

Globally, most of the top education companies by market cap belong to the US (where Tor-profit' education is permitted) and also to the HE space where they have managed to create strong brand equity over the years. Extrapolating the returns that these companies have generated over a period of time, we observe that most of them have outperformed the benchmark index performance consistently and significantly.

While Indian HE space is dominated by private institutions, we do not see any Apollos (revenues at $2.7bn) or Devrys (revenues at $933m) in the country. This is largely due to HE being a part of the formal education and mandated to be run as notfor-profit trusts and over-regulated by bodies like AICTE. The largest player within the space is Manipal Universal Learning (revenues at $180m). Overall, higher education is a long-term game and players in the space will have to invest considerable assets and time to gain credibility. The capital-intensive nature (a medical college entails an investment of ^Rs5bn) and long gestation (minimum six years required to build a worthwhile brand) make this a long-term game. Scalability and value creation can be achieved only by those players that have managed to establish creativity (to circumvent the regulatory requirements), capital (built to last), content (reputed courses with pricing & annuity power) and credibility (of  the management to build a long-term value proposition). Having earned a name in

the field, it then becomes an annuity model. Due to the lower capex requir requirement ements s for  setting up MBA colleges, we expect maximum private participation in this part of the opportunity. While distance education (as against setting up brick-and-mortar institutes) is an alternative and less capital-intensive model to build scale, time taken to build a brand and the low brand perception emerge as the key concerns. While it is not yet time for degree shops in India, we believe players like Manipal Universal — that have an already-established scale and brand in the HE space — are at an advantag advantage e vis-a-v vis-a-vis is new players players moving up the value chain (like IMS and Career Launcher — t wo strong brands in the coaching class market).

VOCATIONAL TRAINING: NEW VISTAS

The imperative for students/ employees to draw on skill sets to effectively compete in a dynamic business environment has given birth to vocational training - a parallel $1.5bn education system. Also, the increasing relevance of services sector in the Indian economy calls for enhanced technical/ soft skill sets. Corporates (across industries) too are gleaning from their their globa globall counte counterpa rparts rts the the cultur culturee of contin continuou uouss upg upgrad radati ation on in skill skill sets sets of  employees at all levels. While the factors suggest rapid growth (25% 3-year CAGR) as new training training areas (retail, (retail, aviation aviation,, hospitali hospitality ty,, management, management, English English language/ language/ soft skills skills trainings, etc) emerge, the space remains highly fragmented. Also, non-sticky nature of  corporate trainings implies low revenue visibility, thereby hampering scale. At this stage, only a few players players like like NUT and Aptech Aptech (leaders (leaders in IT training trainings) s) have have manage managed d to accum accumul ulat atee mass mass.. Othe Others rs play players ers with with the the pote potent ntia iall to 'sca 'scale le'' incl includ udee ELEM ELEMEN ENT T AKADEMIA (English (English training) and ICA (financials trainings).

Vocational training providers: new kids on the block 

Vocational training has been broadly defined as training that prepares individuals for  specific specific vocations or jobs. Vocational Vocational training training has assumed growing growing importance importance in India's growth story. The economy's 8%+ growth for three consecutive years can largely be attributed to increasing contribution from its services sector (up to -55% in the last decade or so). Furthe Furtherr, vocat vocation ional al train training ing has moved moved beyond beyond IT/ IT/ ITES ITES into into verti vertical cals s like like financi financials, als, retail, retail, media, media, aviatio aviation, n, hospita hospitality lity,, etc. etc. In any servic services es busines business, s, human human capital is the key asset and upgradation of workers' skills at all levels becomes an imperative to sustain growth. In developed economies, a month per year is reserved for  training/ re-training/ re-training/ re-education of employee’s right up to the age of 55-60 years. years. Also, corporates are laying ever-increasing emphasis on productivity from day one, which is prompting employees to work on enhancing their skill sets.

Q India a largely untrained nation Nearly 95% of the youth in the 15-25 years age group formally learn a trade or  acquire a skill/ competency in most of the developed world. In contrast, only 5% of 

India' India's s young young labour labour force force (19-24 (19-24 years) years) is estima estimated ted to have have acquir acquired ed formal formal training. Low enrollments and high dropout rates throughout the education chain result in an ineffic inefficient ient supply of workfor workforce. ce. With With a net 37% enrollment enrollment at school school level, level, ^230m ^230m Indians are not equipped to work in the organized sector. Further, 87% of the people drop out after the school level. This leads to only 10% of college-aged population actually attending HEIs; further, 80% of the graduates in general streams (i.e. non-career specific courses) like BSc/ BA are unemployable. Due to the high dropou dropoutt rate rates s and inef ineffi ficie cienc ncie ies s ramp rampant ant in the the syst system em,, a larg large e chunk chunk of the the population needs to be trained. The govern governmen ment, t, to provi provide de vocati vocationa onall traini training ng at vario various us levels levels,, has set up a network of ITIs (Industrial Training Institutes) falling under the purview of the labour  ministry. ministry. The ^5,500 government-run ITIs impart vocational training coverin covering g 110 trades including carpentry, electricians, masonry, etc and offer a collective capacity of  749,000 749,000 seats. Also, Also, there there are 500 polytech polytechnic nic colleges colleges offerin offering g diplomas in technical courses. However, quality and capacity constraints as also growing relevance of newage trades mean that this network is not sufficient to meet the demand.

Q A $1.5bn private market; growing rapidly The space encompasses training services at all levels, be it for students passing out from schools and colleges or re-training needs of the employed set. We estimate the $1.5bn market to grow rapidly (^25% CAGR) in the coming years. The following exhibit points points to the high underlyin underlying g demand demand for vocational vocational training training across across sectors sectors like like IT, IT, financial services, retail, aviation, hospitality and English language training.

While the importance of corporate trainings has not been completely realized in the Indian market, it forms 10% of the Indian IT training market and is expected to grow. grow. Infosys (one of the largest recruiters in India) has set up a Rs2.6bn Global Education Center in Mysore (Karnataka) in 2005 with a further Rs6bn planned to be spent on the facility for expansion. Also, the company spends Rs200, 000 on every graduate selected for the global training programme. While this presents a large opportunity for  priva private te playe players rs in the spac space e of traini training ng befor before e and and after after employ employme ment nt,, it does not convert/ translate into opportunity if not outsourced. Currently, the corporate training market (predominantly in IT) stands at ^$50m. A new order setting in — formal education meets vocational: The ever-changing dynam dynamic ics s of educat educatio ion n and emplo employa yabil bility ity in a know knowled ledgege-dri drive ven n econo economy my are throwing up interesting trends. Employers are increasingly seeking employees that can contribute to the company's topline/ bottomline from day-one and skill sets have to be continuously updated to remain competitive.

In this backdrop, the lines between formal and non-formal education have started to blur. To ensure quality training, employer companies are joining hands with private players to impart customized training to future employees. An interesting example of the same is the arrangement between ICICI and Manipal University to form ICICI-Manipal Academy (IMA) — a 1-year campus programme that is employer (ICICI) sponsored and guarantees guarantees employment employment to students students after completion of the course. Manipal Manipal University University charges a mutually agreed fee to ICICI for the same. PPP — a beginning has been made: Another opportunity, though small in size, is on the horizon for private players in the space. The Centre has approved PPP, PPP, or Public Private Partn Partners ership hip,, Schem Scheme e to upgra upgrade de 1,396 1,396 ITIs ITIs and and trans transfor form m them them into into Centr Centres es of  Exce Excell llen ence ce.. Educ Educom omp p has has take taken n over over runn runnin ing g of 18 ITIs ITIs as well ell as 12 skil skilll development centers erstwhile run by the state government in Gujarat. More such arrangements are expected to follow. The The focu focus s of the the Indi Indian an gove govern rnme ment nt is to disp dispen ense se educ educat atio ion n with with stre stress ss on employ employmen ment. t. The 11' Plan Plan has has alloc allocat ated ed Rs721 Rs721bn bn to be spent spent on ICT ICT and Vocational training. Of this, Rs4llbn has been earmarked for setting up ICT labs for  computer aided learning and Edusat Centers for distance learning programmes while Rs310bn Rs310bn has been allocated allocated to Nationa Nationall Skill Skill Develop Development ment Programme Programme for training training through Virtual Centers for Vocationalization. According to the statement of Mr. N. K. Singh, Singh, Deputy Deputy Chairman, Chairman, Planning Commission, Commission, 250,000 vocationa vocationall schools schools will be opened in India in next five years in PPPs, wherein the corporate sector sector will will play play a major role.

With quality skills-related training, India could capitalize on potential global workforce shortage Based on current and estimated population demographics, India would have a surplus of 47m people in the workin working g age group group by 2020 while while Row would would see a shortage of 56m in this age group. In this backdrop, increasing mobility of  the Indian workforce and its unique demographic dividend (a young working age population) can work in India's favour, subject to the country upgrading the quality of its education and skill set development.

IQ: Low (still to scale)

Vocational Vocational training, a non-formal and non-regulated segment of IES, has emerged into a $1.5bn market. We expect 25% CAGR in the market over 2008-12. With the high degree of dropouts and non skilled workforce, there is a substantial substantial need for vocational vocational trainings. However, the market has not evolved to its full potential yet as the importance of training training over the lifecycle lifecycle of an employee employee has not been fully fully reali realize zed d in India. India. Further, a shortage of quality trained personnel to dispense this education and lack of  process-driven models have kept scalability at bay. bay. While corporate corporate spends on training

are discretionary and based on competitive pricing, a lumpy stream of revenues within this space is another deterrent to scalability. scalability. The market has remained largely fragmented barring a few like NUT and Aptech (leading players in IT training space). In the English Language training space, VETA (revenues of Rsl.2bn) has grown by using a mix of owned and franchisee outlets with smaller players like Liqvid tapping the opportunity opportunity through the product licensin licensing g route. ICA in the accounting training space as also Frankfinn in aviation and hospitality hospitality trainings are other leading players in their respective categories.

Coaching classes: Is the 'coach' scalable? The $6.4bn coaching coaching class class market market is growing growing at ~15% ~15% yoy led by a dearth dearth of qualit qualityy institutions in India and cut-throat competition for entry into professional colleges. Notably, 80% of the market lies in 'subject-based tutoring in schools and colleges' - and thus is highly dependent on local 'brand-teachers'. 'brand-teachers'. Despite its non-regulated non-regulated nature, peoplecentric models make scalability onerous in the space and cap value creation. Mahesh Tutori Tutorials als is the only player to have achiev achieved ed a relati relativel velyy higher higher scale (revenu (revenues es of  ~Rs700m) on the back of some process-driven effort. While the Grad and Post-Grad test prep market ($1.2bn) offers limited scalability as it is more content-driven, FIITJEE, Bansal Classes, IMS, TIME and Career Launcher have achieved scale within the segment and are extending their presence across segments to expand the addressable market. The quality conundrum: genesis of coaching class market India' India's s already already inadeq inadequat uate e educat education ion syste system m is being being furth further er stret stretche ched d due to its increasing population. So much so that a $6.4bn segment (64% of the total nonformal IES; next only to K12 and HE) - coaching classes - has sprouted around formal IES. The market is rapidly growing as the Indian education system lays heavy emphasis on marks scored in an exam. A shortage of quality HEIs is further fuelling growth. This is evident in the fact that the number of seats in Indian IIMs (Indian Institutes of Management) has increased merely 3% (2003-2008) but the number of  CAT aspirants has shown a CAGR of 19% in the same period.

Q Tuitions market- low scalability At $5.1bn, the tuitions market forms 80% of the coaching class opportunity and are inherently difficult to scale. A highly fragmented market, the business is person-centric and individual teachers attached to schools/ colleges are much in demand. For exams held on a national level (10 , 12 and university exams at tertiary level), our interactions with industry players throw up instances of students moving en-masse to another  coaching coaching class, class, to follow follow the brand-te brand-teache acherr who has joined joined a partic particula ularr instit institute ute.. Thus, Thus, crowd crowd-pu -pulli lling ng abilit ability y in this this segme segment nt rests rests with with brand-t brand-tea eache chers rs (espec (especial ially ly attached to schools/ colleges) and not brand-institutes. This, in turn, translates into lack of stability and scalability for coaching classes.

Q Online tutoring market - in its infancy The The pheno phenome menon non of onli online ne tuto tutori ring ng is very very new new in Indi India. a. With With ^3m ^3m broa broadba dband nd connections (less than 1% penetration), India is way behind the global average. In the coming few years, penetration is expected to double as the national Broadband and Wireless Policy targets to bring 25m subscribers to the broadband fold by 2012. Players like Tutor Tutor Vista that have a pure online model in the US are looking to follow follow a hybrid model in India to tap the potential in this segment.

IQ: Low: Low: A non-regulated space, the $6.4bn coaching class market is one of the largest opportunities within the IES (following K12 and HE) and is expected to witness 15% CAGR till 2012. Yet, we see limited value creation potential in the space as scalability is a challenge in 80% of the market (tuitions). In the r emaining 20% of  the market offering coaching for aptitude-based entrance exams to engineering/ professional courses, players find it relatively easier to attain scalability.

RESEARCH METHODOLOGY

Research is a common parlance refers to search of knowledge. Infact one can define the research as scientific and systematic search for pertinent information on specific topic. Resear Research ch compri comprises ses defini defining ng and redefi redefinin ning g the proble problem, m, formul formulati ating ng hypoth hypothesi esis, s, sugges suggestt soluti solution, on, collec collectin ting, g, organiz organizing ing,, and evalua evaluatin ting g data, data, reachi reaching ng at a specif specific ic conclusion and at the same time careful evaluation of the conclusion.

Marketing research is a systematic and objective process of identifying and formulating the market problems, setting research objectives and method for collecting, editing, coding, tabulating, evaluating, analyzing, interpreting and preventing data in order to find  justified solutions for these problems.

Research methodology is a systematic way to solve the research problem. The research process process consists consists of series of closely related activities activities and to solve a research research problem adopt the following process.

1) Research Design: “A research design is needed because it facilitates the smooth sailing of various operat operation ions s thereby thereby making making resear research ch as effec effectiv tive e as possib possible le yieldin yielding g maximu maximum m inform informati ation on with with minimu minimum m effor efforts. ts. The resear research ch was descri descripti ptive, ve, as it requir required ed studying the scope of investment options in the low interest regime. A formal design is requ requir ired ed to ensu ensure re that that the the desc descri ript ptio ion n cove covers rs all all phas phases es desi desire red. d. Prec Precis ise e

statement of the problem indicated what information is required. Then the study was designed to provide for the collection of this information.

2) Data collection method: The inform informati ation on was collec collected ted through through both both primary primary and second secondary ary data. data. The inform informati ation on collec collected ted in the form form of questi questionn onnair aires es was was primary primary.. The data data was collected through field investigation. Personnel interview was adopted, taking into consideration the availability of time and other resources, whenever need arouse various supplementary questions were asked to get maximum information from the respondents. Secondary data was collected from the company profile of company, pamphlets, magazines, web sites.

3) Sample Design: Sample size and sample area is two important things in sample design. Sample size means number of customers, clients visited during the project. Sample area means area covered for conducting the research.

Sample Size : A sample of 73 clients of various categories viz. Business class, under 

graduate, graduate, post graduate Professionals, Service Class was taken. The number of respondents was less due to time shortage. Sample Unit: The sampling unit included any individual who is investing his/her 

money in any form.

Sample Area: Sample area means the area in which research is conducted. For my

project sample area is jaipur only.

Target audience: Primary target: Graduate student

Secondary target: Post graduate Thir Third d tar targe gett

: 10+ 10+2, 2, Work Workin ing g cla class ss

4) Sampling Technique: The universe and coverage area of the study was too large. As a result, samples, which were easily accessible, were chosen.

5) Data Analysis and Interpretation: After collection of data it was compiled, classified and tabulated manually. Using appropriate mathematical tools then processed this data. The questions that had alternate choices have been analyzed by taking percentages. In case of ranking questions total score has been added, mean score was obtained and then final rank rankin ing g was was give given. n. In case case of four four-p -poi oint nt scal scale e ques questi tion on,, weig weight hted ed scor score e ad percentages were calculated. The questions to which there were specific answer  ranges have been clubbed and percentages were calculated. In case of explanatory questions explanation has been given. Bar-diagram and pie charts have been used for presenting more information.

6) Preparation of Report : Fina Finalllly y the the repo report rt will ill be prep prepar ared ed on the the basi basis s of the the abov above e rese resear arch ch methodology

BENCHMARKING ON INSTITUTES Institute

ASPIRATION

Duration of course

3 /4/5 month

Fee

3000/4000/5000

Class hour

1 hour  

Total number of hour

90/60/45hour  

Placement facility

Yes

Trainers experience

Fresher  

Number of student in a batch Total number of admission in a month

15

Courses offered

Spoken English

Mission statement

none

Attendance and Assessment

No

Walk ins

NA

Student profile

10th ,10+2,Graduate,Post Gaduate,Working class

Certification

No

Fee variation

No

Impressive things

None

Unimpressive things

Lack of staff  

Good Good or Bad Bad poi point nts s of coun counse selin ling g

Info Inform rmal al lang langua uage ge,N ,Not ot conv convin inci cing ng

Wi-Fi

No

2*15=30

Institute

ADROIT

Duration of course

3 month

Fee

3200

Class hour  Total number of hour

1 hour  

Placement facility

Yes

Trainers experience Number of student in a batch Total number of admission in a month

NA

Courses offered

Power (YES) English,CAT,MAT,JEMAT,IELTS,TOFEL

Mission statement

None

Attendance and Assessment

Yes

Walk ins

NA

Student profile

10th ,10+2,Graduate,Post Gaduate,Working class

Certification

Yes(80% attendance is must for that)

40-45

Fee variation Impressive things

Spacious Rooms

Unimpressive things

No library

Good or Bad points of counseling Wi-Fi

No

Location

Vaishali Nagar  

Institute

AMERICAN

Duration of course

3 month

Fee

2800

Class hour

1 and half hour  

Total number of ho hour

Not based on hour  

Placement facility

Yes

Trainers experience

More than 7 years

Number of student in a batch Total number of admission in a month

More than 50

Courses offered

Spoken English

Mission statement

None

Attendance and Assessment

No

Walk ins

NA

Student profile

From 8th standard to working class

Certification

No

Fee variation

Yes

Impressive things

None

Unimpressive things

Infrastructure(chair are bad quality),No AC

Good Good or Bad Bad poi point nts s of of cou couns nsel elin ing g

coun counse selo lorr is is tra train iner  er 

Wi-Fi

No

Location

Vaishali nagar  

40-60

Institute

VETA

Duration of course

1,2,3 Month

Fee

220,044,006,200

Class hour

2 hour  

Total number of hour  Placement facility

No

Trainers experience

Fresher to Experienced

Number of student in a batch Total number of admission in a month

15-Oct

Courses offered

Spoken English

Mission statement

Yes

Attendance and Assessment

Yes

Walk ins

260 Per month

Student profile

10+2 to working class

Certification

Yes

Fee variation

Yes

Impressive things

situated in prime location

Unimpressive things Good or Bad points of counseling

No library facility counseling is based on current grammar knowledge of student

Wi-Fi

No

Location

Vaishali Nagar  

60

Institute

ACE

Duration of course

3 month

Fee

3200+10.3% tax

Class hour

1 and half hour  

Total number of hour

90 hour  

Placement facility

No

Trainers experience

7 years

Number of student in a batch

mora than 50,usually 150

Total number of admission in a month Courses offered

50-80

Mission statement

None

Attendance and Assessment

No

Walk ins

500

Student profile

8 th standard to working class

Certification

No

Fee variation

Yes

Impressive things

None

Unimpressive things

Too many student in a batch

Good Good or Bad Bad poi point nts s of coun counse seliling ng

coun counse seliling ng was not not conv convin inci cing ng

Wi-Fi

No

Location

Banipark

Spoken English

Institute

Focus

Duration of course

3 month

Fee

3400

Class hour

1 hour

 

Total number of hour  Placement facility

Yes

Trainers experience

more than 10 years

Number of student in a batch

25

Total otal numb number er of admi admiss ssio ion n in in a mont month h

30

Courses offered

Spoken English

Mission statement

None

Attendance and Assessment

Yes

Walk ins

70

Student profile

10th to working class

Certification

None

Fee variation

Yes

Impressive things

Trainer is hard worker  

Unimpressive things Good or Bad points of counseling

No fan/Ac when I visited center   Every prospect is suggested basic course irrespective of knowledge of that prospect

Wi-Fi

No

Location

Ambabari

Institute

Kingfisher training academy

Duration of course

1 years

Fee

125000/135000

Class hour

2 hour  

Total number of ho hour

Not based on hour  

Placement facility

Yes

Trainers experience

NA

Number of student in a batch Total number of admission in a month

20

Courses offered

NA Advanced Certificate Course in Aviation And Hospitality Management

Mission statement

None

Attendance and Assessment

Yes

Walk ins

NA

Student profile

10+2

Certification

Yes

Fee variation

Not disclosed

Impressive things

Virtual library, infrastructure

Unimpressive things

None

Good Good or Bad Bad poi point nts s of of cou couns nsel elin ing g

Coun Counse seliling ng was comp compre rehe hens nsiv ive e

Wi-Fi

Yes

Location

Lal kothi

Institute

Speak well

Duration of course

3 month

Fee

3000/4000

Class hour

1 and half hour  

Total number of hour

Not bas based on hour 

Placement facility

No

Trainers experience Number of student in a batch Total number of  admission in a month

24 ye years

Courses offered

25 40 English language and speaking ,Group discussion & interview technique, Creative writing,IELTS/TOFEL,GMA writing,IELTS/TOFEL,GMAT/GRE T/GRE

Mission statement Attendance and Assessment

None

Walk ins

120

Student profile

10+2,Graduate,Post graduate, Working class

Certification

No

Fee variation

No

Impressive things

AC rooms

Unimpressive things Good or Bad points of  counseling

None

Wi-Fi

No

Location

Lal kothi

No

No assessment of student

Institute Institute

VETA VCC

Duration of course Duration of course

1& half month to 3 Month 2/3 month

Fee

3200/4200 2000/2650

Fee

ClassChlaosusr hour

11an ad ndha hlaf lm f hoonuth r  

TotalTnoutaml bneurmobf ehr oouf r ho hour

80 11h1ohuor u rs

Placement facility Placement facility

No No

Trainers experience Trainers experience

Around 7 years More than 7 years

Number of student in a batch Number of student in a batch Total number of admission in a Total otalm num no umbe berr of adm admis issi sion on in in a mont month h nth

25 25

CourC seosurosfe fesreodffered

SS po ng pkoekn enEE nlgislihsh

Mission statement Mission statement

None Develop self invocated creative youth

Attendance and Assessment Attendance and Assessment

Yes Yes

WalkW inaslk ins

N4A0-60 Per month

Stude Sntut dperonftilperofile

G8ratd grw ad teg, w osrksing class husataten,dPaordstto ou rkain cla

Certification Certification

Yes Yes

Fee variation Fee variation

Yes Yes

ImpreIm sspirveestshivinegtshings

SLpiabcra ioruysarnodom 1c8ioruunsnrionogmbatch sp,a Most student are 10 or 10+2,there is no scope for  Nlearning o library

UnimUnimpressive pressive thingthings s

40 30

Good or Bad points of counseling Average Good Good or or Bad poi point nts s of cou couns nseli eling ng Train rainer er is coun counse selo lor  r  Wi-Fi Wi-Fi

No No

LocaLtio oc nation

La l kootw thaira Jh

Institute

VARNISH

Duration of course

3 month

Fee

2000+200

Class hour

1 hour  

Total number of ho hour

Not based on hour  

Placement facility

No

Trainers experience

2 Years

Number of student in a batch Total number of admission in a month

15

Courses offered

Spoken English, Diploma in animation

Mission statement

None

Attendance and Assessment

No

Walk ins

NA

Student profile

10,10+2,Graduate

Certification

No

Fee variation

No

Impressive things

Computer lab,Intrnet facility

Unimpressive things Good or Bad points of  counseling

Single course for all student

Wi-Fi

No

Location

Vidhadhar nagar  

30

Not in good location

Institute

II JT

Duration of course

6 month,1 year  

Fee

22000

Class hour

2 hour  

Total number of ho hour

Not based on hour  

Placement facility

Yes

Trainers experience

Minimum 3 years

Number of student in a batch Total number of admission in a month

10

Courses offered

Spoken English,Diploma in animation

Mission statement

None

Attendance and Assessment

No

Walk ins

NA

Student profile

10+2,under graduate

Certification

Yes

Fee variation

NA

Impressive things

Infrastructure, Well equipped computer library

Unimpressive things

None

Good Good or Bad points points of coun counseli seling ng

Does Does not not cons conside iderr studen students ts level level

Wi-Fi

No

Location

Lal kothi

NA

Institute

HERO MINDMINE

Duration of course

3 month

Fee

4000/5000/5500/6100

Class hour

2 hour  

Total number of ho hour

200+60 hour for computer  

Placement facility

Yes

Trainers experience

2 and half years

Number of student in a batch Total number of admission in a

15-Jan

month

30

Courses offered

Spoken English(foundation,Level1,2,3)

Mission statement

None

Attendance and Assessment

Yes

Walk ins

NA

Student profile

Graduate, Post Graduate, Working Class

Certification

Yes

Fee variation

Yes

Impressive things

Dyned software

Unimpressive things

Location

Good or Bad points of counseling

Good

Wi-Fi

No

Location

Adarsh Nagar  

AMERICAN (INSTITUTE OF ENGLISH Institute

LANGUAGE LANGUAG E PVT. LTD. LTD.

Duration of course

3 MONTH

Fee

3000

Class hour

1 and half hour  

Total number of hour

90 hour  

Placement facility

No

Trainers experience

NA

Number of student in a batch Total number of admission in a

25-30

month

100

Courses offered

Spoken English

Mission statement

None

Attendance and Assessment

No

Walk ins

NA

Student profile

8th standard to Post Graduate, Working Class

Certification

No

Fee variation

Yes

Impressive things

None

Unimpressive things

Number of student is more than 50.it is not 25

Good or Bad points of counseling

Poor 

Wi-Fi

No

Location

Adarsh Nagar  

Institute

ADROIT

Duration of course

2 and half month

Fee

2800

Class hour

1 hour  

Total number of ho hour

Not based on hour  

Placement facility

Yes

Trainers experience

NA

Number of student in a batch Total number of admission in a

20

month

30 Power (YES)

Courses offered

English,CAT,MAT,JEMAT,IELTS,TOFEL

Mission statement

None

Attendance and Assessment

Yes

Walk ins

6 10th ,10+2,Graduate,Post Gaduate,Working

Student profile

class

Certification

Yes(80% attendance is must for that)

Fee variation

Yes

Impressive things

Spacious Rooms, library

Unimpressive things

None

Good or Bad poin oints of counselin ling

Average

Wi-Fi

No

Location

Lal Kothi

Institute

HERO MINDMINE

Duration of course

3 month

Fee

4000/4900/5350/5890

Class hour

2 hour  

Total number of ho hour

200+60 hour for computer  

Placement facility

Yes

Trainers experience

2 and half years

Number of student in a batch Total number of admission in a

12-Jan

month

12 Spoken

Courses offered

English(foundation,Level1,2,3)

Mission statement

None

Attendance and Assessment

Yes

Walk ins

8 Per month Graduate, Post Graduate, Working

Student profile

Class

Certification

Yes

Fee variation

No

Impressive things

Dyned software

Unimpressive things

Location

Good or or Ba Bad po points of of co counseling

average

Wi-Fi

No

Location

Vaishali Nagar  

Institute

PLANET-EX

Duration of course

3 month

Fee

3200

Class hour

1 and half hour  

Total number of ho hour

Not based on hour  

Placement facility

No

Trainers experience

Around 4 years

Number of student in a batch Total number of admission in a

20

month

20-30

Courses offered

Spoken english,IELTS,TOFEL

Mission statement

None

Attendance and Assessment

No

Walk ins

100 Per month

Student profile

10+2,Graduate,Post Graduate

Certification

No

Fee variation

No

Impressive things

None

Unimpressive things

Lack of staff  

Good Good or or Bad Bad poi point nts s of of cou couns nsel elin ing g

Inex Inexpe peri rien enc ced cou couns nsel elor  or 

Wi-Fi

No

Location

Vaishali Nagar   GOENKA PROFESSIONAL TRAINING INSTITUTE(BBC

Institute

LEARNING)

Duration of course

3 month

Fee

4900/5900

Class hour

1 and half hour  

Total number of ho hour

Not based on hour  

Placement facility

No Minimum 2 years, Director is one of the most experienced

Trainers experience

in jaipur 

Number of student in a batch Total number of admission in a

20

month

40

Courses offered

Spoken English,IELTS,TOFEL

Mission statement

None

Attendance and Assessment

Yes

Walk ins

5-10,20-30

Student profile

Under Graduate,Graduate,Post Graduate, Working Class

Certification

Yes(BBC Certification)

Fee variation

No

Impressive things

CBT Software, Computer Lab

Unimpressive things

None

Good Good or or Bad Bad poin points ts of of coun counse seliling ng

Exce Excellllen entt coun counse seliling ng,, Main Mainta tain in Pri Priva vacy cy

Wi-Fi

No

Location

Tilak Nagar  

Institute

NIFA

Duration of course

15 month

Fee

30652/33000

Class hour

2 hour  

Total number of ho h our

Not based on hour  

Placement facility

Yes

Trainers experience

NA

Number of student in a batch Total number of admission in a

10

month

10

Courses offered

Diploma in Computer Accountancy

Mission statement

None

Attendance and Assessment

No

Walk ins

NA

Student profile

10+2,Under Graduate

Certification

Yes

Fee variation

NA

Impressive things

None Infrastructure,Brochere was not available at

Unimpressive things Good or Bad points of 

counseling

counseling

Poor  

Wi-Fi

No

Location

Lal kothi

Institute

CREATE COMPILE CATER

Duration of course

3 month

Fee

3400

Class hour

1 and half hour  

Total number of ho h our

Not based on hour  

Placement facility

No

Trainers experience

5 years

Number of student in a batch Total number of admission in a

20

month

35

Courses offered

Speak English

Mission statement

None

Attendance an and Assessment

Yes

Walk ins

NA

Student profile

10+2,Graduate

Certification

No

Fee variation

No

Impressive things

Library facility

Unimpressive things Good or Bad points of 

None average/course is offered after according to

counseling

knowledge

Wi-Fi

No

Location

Lal kothi

Institute

Focus

Duration of course

3 month

Fee

4900

Class hour

1 and half hour  

ITnosttaitlunte umber of ho h our

AoHtAbased on hour   N

Dluarcaetim onenotf fcaocuilritsye P

3eM Y s onth

F Treaeiners experience

25in,0im 00 M um 5 years

C ssbehroo ufr student in a batch Nluam

225Hour  

Total otal number number of of admission ho h our in a

Not Bthan ased60 on Hour   More

month P lity Cloaucresm esenotfffearceid

Yp eo sken English S

Triasisnie xp rie M ornsseta teem en nc te

NoAne N

NtutemnbdearnocfesatunddeA nst sinesasbmaetcnht A

20 N o

T of admission in a Wotal alk number ins month Ctouudresn etsporfofefirle d S

400 N A Admission Per Year  esnsdeCroG mrm iorna,dDuiaptleo,m Arvaiadtuioante 1B0u+s2in,U aduunaictea,tG Pa osin tG

Ceisrstiifoicnas titoantement M

&Hospitality N Noone

Fettenvdaarinactieonand Assessment A

Y Yeess

IW maplrkeisnssive things

14800ru0nPneinrgYb einnvairo nment to speak eatrcIhnecslu, dthinegreSiesm

S Utnuid mepnrtep srsoivfielethings

English 1d 0m +2in,U A isntrdaetirvG e rhaedaudatise rude towards workers

C ertificor atBad ion points of  Good

Yes Average

counseling F Wei-eFvi ariation

NoA N

Im retisosnive things L op ca

sttrhui cture LInaflra ko

Unimpressive things

None

Good or Bad points of 

Comprehensive & Good

counseling Wi-Fi

No

Location

M I Road

Institute

Planet Rex

Duration of course

4 month

Fee

4500

Class hour

1 and half hour  

Total number of ho h our

Not based on hour  

Placement facility

Yes

Trainers experience

Minimum 3 Years

Number of student in a batch Total number of admission in a

15

month

NA

Courses offered

Spoken English,IELTS,TOFEL

Mission statement

None

Attendance an and Assessment

No

Walk ins

NA

Student profile

10+2,Graduate,Post Graduate, Working Class

Certification

NO

Fee variation

NO

Impressive things

Infrastructure, Directors publicity

Unimpressive things Good or Bad points of 

None

counseling

Average

Wi-Fi

No

Location

Vaishali Nagar  

Institute

ELEMENT AKADEMIA

Duration of course

3 Month

Fee

Rs. 6000

Class hour

2 Hour  

Total number of ho h our

Not based on hour  

Placement facility

Yes

QUESTIONNAIRE 1 Name : _________________________________________   Contact number : _________________________________________   E-mail address :  _________________________________________  DOB : _________________________________________   Sex (Ma (Male/Female) : ___ _________________________________________  Q.1What is your academic qualification? Please mention name of college/course if  pursuing.

No. of Respondant

35

33

30

25

20

No. of Respondant

15 1

10

5

0 UG

G

PG

Q.2Do you have any work experience? If yes, which company and how many months/years? No. of Respondant 35 30 30

25

20 No. of Respondant 15 12 10

9

5

0 Yes

No

No A ns w er

 

Q.3Are you looking for some course which can help you in getting a good job? No. of Respondant 25 22 20

15

13 12

No. of Respondant

10

5

0 Y es

No

No A ns w er

 

Q.4Where do you look for information related to different courses?(please Tick) Tick) a. (A)n (A)new ews spape paper  r  b. (B)friends c. (C)parents d. (D)h (D)hoa oard rdin ing/ g/ki kios osks ks e. (E)c (E)car aree eerr fair fairs s f. (F) seminars g. (G)any (G)any other other (pleas (please e speci specify) fy) No. of Response 40

38 36

35 30 25 20

No. of Response 15

16

15 11 10 6 5

2

0 new spaper

f riends

parents

hoarding/kiosks

career f airs

s eminars

any other   (please (please specify )

Q.5Whom do you consult to take decisions about your career?(please Tick) (A)parents (B)friends (C)teachers/mentors (D)career counselors (E)any other (please specify)

No. of Response

35 31

30

30

25 19

20

No. of Response 15 10 10

5 1 0 parents

f riends

teachers /mentors

c areer c ounsellors

any ot other (pleas e specify)

Q.6What are the criteria’s on which you decide to join any institute? Please tick the most important ones. (A)Course duration (B)Course content (C)Course fee (D)Number of students in a batch (E)Job interview guarantee (F)Job placement guarantee (G)Faculty (H)Infrastructure (I)Past placement record (J)Credibility (K)Distance from home/office (L)Promotional offers/discounts (M)Any other (please specify)

Score

35

31

30 25 20 15 10 5

17 14

18

16

6

Score

14

12 8 5

5

3

5 1

0

   t   e    h   e   r    t  y   e    )    t  s    t  y   r  d   n    i    l   r  e    l    t  e    i  c  e    t  c    i  o  n    i    t  e    f    f  e    f  y    t   n    i    t  e    f   a   c  o   u  n   w  e    t  u    b   n   c  u    i   a   c   a   n   o    b   s   e   e   c   o   r   r   /   a   a   d   r   e   r   a   r  s   e   e    F    t   c  o   a  n    t  r  u   d  u    i  s  c   u  a   s  p   u  a    i  n   g    C  r   o  u   o   e  n   /  d   o  m   g    a  s   s  e   e    t   s  e   r   s   r   s   C    N    h   s   r    f    t   m   r   u   a   u   n   e  n    I  n    f  e   m   c  e    i  e  w    f    l  e   C  o   d  e   o   p   C  o    l  a   r  v   e  m    f  r  o   (     l   u   p   e   c    t    t   a   r    t    l  a   n   s   c  e    i  n    f  s   p    h  e    t    b    t   i  o   a  n    P  a   o    b   r  o    t   o   o   o   e   s   J   y    i   J    b    D   o  m   A  n   m    P  r    N  u

Q.7Rate the following criteria’s in terms of priority from 1 to 13. (1 being the most important and 13 being the least important) (A)Course duration (B)Course content (C)Course fee (D)Number of students in a batch (E)Job interview guarantee (F)Job placement guarantee (G)Faculty (I)Infrastructure (J)Past placement record (K)Credibility (L)Distance from home/office (M)Promotional offers/discounts (N)Any other (please specify) Score

25 20 20 15 Score 10

7 5

4

5 1

0

1

4 0

0

1

1

2 0

0

   t   e    h   d   e   r    t  y   e    )    t  y    t  s    i    l   r  e    l    t  e    i  c  e    t  c    i  o  n    i    t  e   o  r   e  n    f  e    f    f  y    t   u   u   n    i    t    f   a   c   w  e    t    b   u  n   n   c   a    i   a   c   n   o    b   e   e   s   c   o   r   /   a   r   a   d   r   e   o   s   r   c   a   e   r   e    F    t   c   a  n   d  u    t  r  u    i  s   u  a   s  p   u  a    i  n   C  r   o  u   o   e  n   /  d   g    o  m   a  s   s  e   e    t  g    s  e   s   r   s   r   C    N    h   s    t    f   r   m   r   n   u   a   u   n   e    I  n    f  e   m   c  e    i  e  w    f    l  e   m   C  o   d  e   o   p   C  o    l  a   r  o   r  v   e    f   (    u    l   p   e    t   c    t   r    t   e    l  a   n  a    i  n    f  s   p    h  e   a  s   n  c   o    t    b    t   i  o   a    P   r    b   o   o    t   o   J   y    i  s   J  o   m    b  e    D   m   r  o   A  n   u    P    N

Q.8What are the most important skill as per you that you should have in order to get a  job with a top MNC (A)communication skill (B)PD/Grooming (C)Managerial skill (D)Domain knowledge/technical skill (E)Any other (Please specify) Score

30 25 25

20 15 15

Score

13

10 6

5

5

0 communic ation skill

PD/Grooming

Managerial s kill

Domain know ledge/technical skill skill

No Answ er 

Q.9Have you ever joined any training to improve your skills? If yes, which institute

No. of Respondant

35

33

30

25

20 No. of Respondant 15

10 7 5 5

0 Y es

No

No A ns w er

 

Q.10What is the right time to join any such training?

Response 20

19

18 16

15

14 12 10

Response 8

8 6 4 2 2 0 Winter

Summer

This Year

No Answ er

 

Q.11Have Q.11Have you heard of these institutes? (Please Tick) (A)Hero Mindmine (B)Elements Akademia (C)BBC English edge (D)VETA (E)Focus (F)Ace academy

Aw areness areness 25

20

19

20

21

16 15

13 Aw areness areness

10 7 4

5

0 Hero Mindmine

Elements nts Akademia

BBC Englis h edge

VETA

Foc us

Ac e academy

No A ns w er  

Q.12Have you ever visited any of the above institutes and attended a counseling session?

Visit 40 34

35 30 25 20

Visit

15 10 10 5 1 0 Y es

No

No A ns w er

 

Q.13How do you believe that the institute is credible and established? Please tick the important ones. (A)placements (B)branding (C))infrastructure (D)advertisements (E)PR articles in newspapers (F)fee (G)tie-ups with companies/institutions (H)certification (I)management profile

Score

30 26 25

20 17

17 14

15 11 10

Score

11

8

8 6 4

5

0

   t  s   e  n   m   e   c    l  a   p

  g     i  n   d   a  n   r    B

  e    t  u  r   c   r  u    t   s    f  r  a    i  n

   t  s   e  n   m   e    i  s    t   r   v  e   d   a

  s   e  r   a  p   p   w  s   n  e    i  n   s    l  e    i  c    t   a  r    R    P

  e    f  e

  n  s    i  o    t   u    t    i    t    i  n  s   /   e  s    i   n   p  a   m   o   c    h    t    i   w   p  s  -  u    i  e    t

  n    i  o    t   a    i  c    f    i    t   r   c  e

   l  e    i    f   o   p  r    t   e  n   e  m   g    a   a  n   m

  e  r   s  w   n   A    N  o

Q.14If you wish to join any such course then who will pay the course fee? You or your  parents?

No. of Response

35 31 30

25

20 No. of Response 15

10 7 6 5 1 0 Parents

S elf

B oth

No Answer  

Q.15Which mode of payment will you choose to pay the course fee? Full payment or  installments?

No. of Response

20

19

18

16

14 12 12

11

10

No. of Response

8

6

4

3

2

0 Full Payment

Thank you

Ins tall ment

No Answer

B oth

QUESTIONNARE 2 New Students

Name Family Income

Education City

1. Are you you a gradua graduate/ te/gra graduat duation ion FY FY stude student? nt? ] No. of Respondant

1 4

5

12th G Final Year  PG

9

2. Are you doing any professional course? If yes, which one?

NO. of Respondant

12

Yes 13

No

3. Are you interest interested ed in career career in one or more of the the following following jobs? Tick Tick the ones ones you are interested in BPO BANKING ACCOUNTS SALES OFFICE JOB/BACKENED OPERATIONS OPERATIONS If s/he is interested in BPO/office, than proceed.

Interest

4

6

19

BPO Banking Accounts

3

Sales Office Job No Answer 

8

7

4. Have you applied/ applied/given given interview interview for for BPO/Off BPO/Office ice jobs? jobs?

Response

3 6

Yes No No Answer 

16

Response

0

9

Yes

5. Were Were you you sele selecte cted? d? IfIf No, No, why why

No No Answer 

16

Response

0

9

Yes No No Answer 

16

6. Do you think you need need training training for for getting getting Interna International tional BPO jobs? jobs?

Response

5

1 Yes No No Answer 

19

7. What What kind kind of trai trainin ning g do you need? need?

Response

7

7

Communication Skills Personality/Grooming 2

Confidence Confidence Buil ding Computer  Accent English Account 8

7

1 3

1

No Answer 

8. What, as per you can can be the the duration duration and and fee of of such such a training? training? If fees mentioned are less than 15000/-, please ask this question Response

6 8

3 Months 4 Months 6 Months No Answer 

4

7

Response

1 2

1

7

4000 5000 5500 6000 7000 8000 6

10000 12000

1

No Answer 

2

1 4

9. If there is a very high quality institute providing specialized training for BPO/KPO and office jobs including domain expertise, e xpertise, business communication, IT and grooming and assuring jobs in top International BPOs like genpact,how much extra can you pay for it

Response

5

10 1

0 1000 2000 8000 2500 No Answer  2 11

6

10 When are you planning to do this course?

Response

8

This Year  Next Year  No Answer  14

3

11 On what basis would would you choose the institute?

Response

2 6

1 1 2

1

1

Aid Publicity No. of Student

1

Infrastructure Content Faculty Placement Fee Time 9

11

No Answer 

MY FINDINGS •

During the survey it was found that EA has best facility in jaipur for business communication.

•

•

•

Lake of Awareness Awareness in student. student. Many people are not known known about EA especially especially under graduate. When I interviewed people then many of the people can not recall EA. It shows Lake of Advertisement or advertisement is not timely given or advertisement is not given on right time. In its advertisement is not using any brand ambassador which attracts all age group people like VETA.

•

There is lake of creativity in advertisement.

•

BBC ENGLISH is main competitor and strategically better performer then EA.

SUGGESTIONS

1. Company Company should should increase increase awarenes awarenesss in exterior exterior part of jaipur jaipur through through news news paper  2. According According to my view company should should open new centre centre in jaipur jaipur especial especially ly inV inVAISHALI AISHALI  NAGAR 

3. Company should search courses for increasing sales. 4. Company Company should should give give attractiv attractivee offer to to other other institute institute like like NFA NFA 5. Company Company must must make strategy strategy to fight fight local local brand 6. Company Company should should hold seminar seminar in RAJASTHAN RAJASTHAN UNIVERSITY UNIVERSITY

LIMITATIONS OF STUDY

•

Considering the fact that nothing is perfect in this world. Every individual is bound to make mistake at some point or the other.

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The information is is collected only from Institutes and and by questionnaire questionnaire form.

•

Information collection took 15 days.

•

The respondent may be based or influence by some other factor.

•

The minor concept and technique at the marketing management are used significant in the project concern.

•

Some time respondents were not in reply with full confidence and sometime they reply without thinking over the matter.