MT460 Management Policy and Strategy Case 7: The Apollo Group, Inc. (University of Phoenix) Student Learner: Shawnna Burchfield

 Introduction  Synopsis/Background  Key Issues/SWOT  Define the problem  Alternative Solutions  Selected Solution  Implementation  Recommendation  Conclusion  References

Apollo Group, Inc (University of Phoenix, UOP) was founded in 1973 in response to the increase of working adults pursuing a higher education (Apollo Group, Inc., 2011). Instead of being a non-profit university Apollo Group is a for profit university. This branded the university as a “diploma mill” (Pearce & Robinson, 2011). Despite the overwhelming resistance, UOP has become the dominant online education market. UOP has created a competitive advantage by focusing on low cost, differentiation, and rapid response capabilities. The following case analysis focuses on UOP’s portfolio approach, their low cost, differentiation, & speed-based strategy.

UOP’s tuition typically costs less than private colleges who offer conventional classes, averaging only $10,000 a year (Pearce & Robinson, 2011). However, because UOP is the market leader it is able to now charge more. For example, undergraduates pay just over $10,000 while those seeking master’s degrees pay around $12,500 (Pearce & Robinson, 2011). In addition, UOP classes average twelve students. This approach focuses on the interaction between the professor and the students instead of just with the digital content (Pearce & Robinson, 2011). Ultimately, UOP offers working adults a chance of a higher education through online courses.

Currently, UOP’s platform is not as sophisticated as other online universities and some see plain technology as a potential negative for the virtual college (Pearce & Robinson, 2011). Therefore, it is important for UOP to begin spending more on research and development while improving their information technology in order to maintain their dominance in the online education market because other on-line universities are able to offer sophisticated platforms.

Strengths Focus on the then-neglected market of working adults Tuition at Apollo averages only $10,000 a year, 55% of what a typical private college charges Phoenix Online keeps its classes small, averaging just 12 students 65% of its students go on to graduate operating profit margins now top 30% Weaknesses online learning is not as good as face-to-face instruction currently offers 15 degree programs 65% of its students go on to graduate Opportunities There are 70 million working adults in this country who don’t have a college degree and are realizing that they need a degree to get ahead. But because they often have a family as well as a job, studying online is the most convenient Working adults are seeking accredited degree programs that provide flexibility to accommodate the fixed schedules and time commitments associated with their professional and personal obligations Opportunity to increase programs offered Threats Some see plain technology as a potential negative for the virtual college Phoenix Online will need to upgrade the sophistication of its platform, which will require more spending on research and development and information technology Other on-line universities

Increasingly other universities are offering online courses to working adults which poses a threat to the UOP. Currently, “working adults are seeking accredited degree programs that provide flexibility to accommodate the fixed schedules and time commitments associated with their professional and personal obligations” (Pearce & Robinson, 2011). However, these adults are also seeking universities with the most up-to-date technology at the best price. UOP does not fit either of these. Therefore, it is important for UOP to reexamine their focus market and make the necessary changes to keep a competitive advantage.

 UOP currently has an opportunity to increase its market to individuals 25 years and under which is currently only 16.5 percent of current students enrolled (Pearce & Robinson, 2011).  UOP also has the opportunity to increase its programs offered.  UOP has growth opportunity within the remaining 15 United States and the expansion into the international market.

“Market focus allows some businesses to compete on the basis of low cost, differentiation, and rapid response against much larger businesses with greater resources. Focus lets a business “learn” its target customers—their needs, special considerations they want accommodated—and establish personal relationships in ways that “differentiate” the smaller firm or make it more valuable to the target customer. Low costs can also be achieved, filling niche needs in a buyer’s operations that larger rivals either do not want to bother with or cannot do as cost effectively” (Pearce & Robinson, 2011). Therefore, continuing to focus on market focus will allow UOP to compete against its bigger rivals and maintain its current position as the dominant online education market.

It is important for UOP to maintain a competitive advantage in order to survive the increasing competitive market. It appears that UOP could implement a new differentiation strategy that focuses on offering their services at a lower cost to its buyers. Currently they charge a higher rate because they are the dominate online education market. In addition, implementing strategies that create speed-based competitive advantages, UOP managers can create competitive advantages (Pearce & Robinson, 2011). By increasing the availability of rapid response to UOP students, UOP is able to increase loyalty and satisfaction.

 Continue focusing on the then-neglected market of working adults. These individuals tend not be up-to-date with technology and would prefer UOP’s current platform.  For the newer generations, I recommend upgrading the sophistication of the platform. This requires more spending on research and development and information technology.  Focus on adding more degree programs to the currently offered 15 degree programs

Therefore, it is important for the UOP to focus on their low cost, differentiation, and speed-based strategies. UOP has created a competitive advantage by focusing on these strategies and has become the dominant online education market. Despite the overwhelming resistance that branded the university as a “diploma mill” because UOP is a for profit university instead of a non-profit university. Ultimately, UOP is successful at responding to the increasing demand of working adults seeking to pursue a higher education.

Apollo Group, Inc. (2011). Apollo group, inc. official website. Retrieved from Pearce, J. A., & Robinson, R. B. (2011). Strategic management: Formulation, implementation, and control. (12 th ed.). New York, NY: McGraw- Hill/Irwin.