Background of education industry assignment 2020
The education industry has gained attention in facilitating learning by different educational methods. This socio-cultural program is a booming service sector which is gaining support from both private players and government to improve the literacy, skill and capabilities to gain economic opportunities (Verger et al., 2017). The education industry is also promoting innovation in teaching methodology/ by collaborating with the information and communication technology (ICT) sector.
The technology is playing a significant role in improving the education sector but is also supporting disruptive innovation for better future of education on a global platform. Technology has reduced the cost of education, improved the possibility of good job placement and career prospects, and opening opportunities for fulfilling one’s life by improving the quality of education, open access to education, and providing affordable education (Zuckerman et al., 2018). The simulation learning, online/ e-learning, visual learning etc. are disrupting the traditional way of delivering knowledge through classroom teaching. These innovative disruptions in education industry provides diversity in teaching delivery, convenience and personalization self –service in learning (Hopwood et al., 2016), acquiring skills and knowledge and building a society of educated citizens. Thus, disruptive innovation in education business service industry is providing opportunity for the investors to invest in this industry to meet the demand of educational services for better returns as education market will grow in future. There is also opportunity for the companies to collaborate with institution to develop right educational program to deliver right knowledge and skills acquisition and employability skills as required in the dynamic business landscape and demanded by employer.
The report introduces the school, XYZ that engage in teaching the students’ practical oriented learning over theoretical knowledge. This is done to provide more exposure to students, prepare them with relevant skills to ease the process of gaining jobs for a good career. The purpose is also to develop skills and knowledge to get the student placed in good internship programs. For this, the school would make use of new technologies and innovative devices to deliver education services that is easy to understand by students and prepare them for job placements and to work in dynamic business landscape. The focus of the report is on simulation learning method as a disruptive innovation to conventional learning method that is changing the way knowledge is delivered.
The education industry needs disruptive innovation to deliver right knowledge and skills acquisition to students. Thus, the school would provide teaching through an innovative way via simulation learning in a professional manner to deliver relevant learning which is helpful for students getting job. The industry needs to change the higher education by disruptive innovations to change the content of learning, instruction practices and experience of learners. According to Hopwood et al. (2016), leaning through simulation exercises are yet to gain recognition as a disruptive technology aimed at improving training behavior, teamwork and interpersonal skills and experimental knowledge. Thus, the application of simulation learning in the e-learning environment is the focused to fulfill the industry needs.
For XYZ School, the clients are the students enrolling for the education services. Also, student require a learning method that is engaging and empower students to learn from their decision to develop more understanding by experience in a practical way over surface leaning through memorization (Rooney et al., 2015). In this concern, simulation learning would be offered to learn through experience. From a student perspective, quality of education and experience of students are also considered to improve the learning for skills and knowledge acquisition to be delivered via simulation learning methods. Thus, a proper education program is needed for this disruptive innovation management.
The purpose of XYZ School is to provide a new approach in student learning and student experience for better outcomes for employment and better career prospects in industry and government jobs. Another purpose is to change the content of education and add relevant content that develop and sharpen the employability skills of students.
The intended benefits of this disruptive innovation are:
- To improve the quality of education at school
- To provide alternative learning program for students and educators
- To provide knowledge and skill development program for student specific needs (Gough et al., 2012)
- Improvement in student learning experience
- More engagement with leaning content by combining the learner and online training in an unique experience (Hopwood et al., 2016)
- Better understanding of theoretical concepts, tools and techniques application in real-world business activities and practices in a simulated environment
Make the student realize the importance of teamwork and improves their teamwork skills
Allow the students to learn by experience in trying alternative business strategies and approaches for outcomes of their decision making while widening their knowledge.
Start-up Costs:
| Start-up Expenses | Cost (in AUD) |
| Website development costs | 8000 |
| Staff salary (12 Months) | 1080000 |
| Advertisement | 50000 |
| Insurance | 4000 |
| Stationary Expenses | 2000 |
| Other expenses | 6000 |
| Total Start-Up Expenses | 1150000 |
| Start-up Assets | |
| Premise | 20000 |
| Computers and IT equipment’s | 40000 |
| vehicle | 20000 |
| Furniture | 12000 |
| Total start-up assets expenses | 92000 |
| Total Start-up or Initial Cash Requirement | 1242000 |
On the basis of the above table, it can be stated that the firm will require AUD 1,242,000 in starting of the business to meet its initial cash requirements. To arrange this amount, the business owner will contribute entire amount through personal savings with small loan from bank.
Income Statement:
| Particular | Year 1 | Year 2 | Year 3 |
| Revenues | 850000 | 977500 | 1124125 |
| COGS | 400000 | 420000 | 430000 |
| Gross profit | 450000 | 557500 | 694125 |
| Operational expenses | |||
| Website development costs | 8000 | 4000 | 4000 |
| Staff salary (12 Months) | 108000 | 118800 | 130680 |
| Advertisement | 50000 | 55000 | 55000 |
| Insurance | 4000 | 4000 | 4000 |
| Stationary Expenses | 2000 | 2000 | 2000 |
| Other expenses | 6000 | 6000 | 6000 |
| Premise | 20000 | 22000 | 24200 |
| Computers and IT equipment’s | 40000 | 44000 | 48400 |
| vehicle | 20000 | 4000 | 5000 |
| Furniture | 12000 | 5000 | 6000 |
| Total operating expenses | 270000 | 264800 | 285280 |
| Profit before tax | 180000 | 292700 | 408845 |
| Tax (30%) | 54000 | 87810 | 122653.5 |
| Net profit | 126000 | 204890 | 286191.5 |
From above forecast, it can be determined that establishment of business in education market by providing simulation learning will be profitable as the firm will start to earn profit from the first year, which will increase continuously.
Balance sheet:
| Balance Sheet | |||
| (In AUD) | Year 1 | Year 2 | Year 3 |
| Assets | |||
| Current Assets: | |||
| Cash | 100000 | 140000 | 160000 |
| Other current assets | 4000 | 20000 | 30000 |
| Total Current Assets | 104000 | 160000 | 190000 |
| Fixed Assets: | |||
| Plant | 20000 | 22000 | 24200 |
| Vehicle | 20000 | 4000 | 5000 |
| Furniture | 12000 | 5000 | 6000 |
| equipment’s | 40000 | 44000 | 48400 |
| Accumulated depreciation | 4000 | 4400 | 4840 |
| Total Fixed Assets | 96000 | 79400 | 88440 |
| Total Assets | 200000 | 239400 | 278440 |
| Liabilities | |||
| Current Liabilities: | |||
| Current borrowing | 8000 | 10000 | 12000 |
| Accounts payable | 10000 | 29400 | 42440 |
| Total Current Liabilities | 18000 | 39400 | 54440 |
| Long term liabilities: | |||
| Bank Loans | 180000 | 180000 | 180000 |
| Total Non-current liabilities | 180000 | 180000 | 180000 |
| Total Liabilities | 198000 | 219400 | 234440 |
| Owner’s Equity | |||
| Retained earnings | 2000 | 20000 | 44000 |
| Total Equity | 2000 | 20000 | 44000 |
| Total Liabilities and Equity | 200000 | 239400 | 278440 |
| Ratios | Formula | Year 1 | Year 2 | Year 3 |
| Net profit ratio | Net profit/total sales | 14.82% | 20.96% | 25.46% |
| Gross profit ratio | Gross profit/total sales | 52.9% | 57.0% | 61.7% |
| Current ratio | current assets/current liabilities | 5.78 | 4.06 | 3.49 |
| Return on assets | Net profit/total assets | 63% | 86% | 103% |
| total asset turnover | net sales / average total assets | 4.25 | 4.08 | 4.04 |
| Debt ratio | total liabilities / total assets | 1.0 | 0.9 | 0.8 |
From the above table, it can be stated that the firm will generate high net profit and gross profit showing the higher returns on investment in this business. Apart from this, net profit and gross profit and return on assets will increase continuously showing the ability of the new business to generate sufficient returns. In addition, current ratio is quite higher than 2:1 showing the ability of the firm to pay current obligations on time. Apart from this, total asset turnover ratio is also quite high but with declining trend in coming three years as the efficiency of the firm to convert assets into sales may be declined. Debt ratio also shows the proper balance between the liabilities and assets of the firm.
The business model for XYZ School can be explained using the strategic management tool of business model canvas. The business model under the disruptive innovation comprises of use of ICT tools and technologies and other information infrastructure services to support and enable e-learning service environment in the education system.
Business model canvas of the XYZ School for simulation learning comprises of the following components:
Key partners: The simulation learning innovation will engage with teachers, trainers, IT group of XYZ School (for data center and hardware infrastructure), ICT specialists and software partners for simulation licenses and trainings (Archer et al., 2013).
Key activities: The core activities of the business would involve in-house and external training, curriculum material, technical system management for setting up simulation exercises, its execution and troubleshooting, creation of simulation teams as per student’s needs. The business activities also include sales and marketing activities to create awareness of new innovation in education services and to increase student enrolment.
Value proportion: It would be the diversity in learning method for students. The use of new technology to improve the education quality, student leaning practices and their experience to satisfy the students (Verger et al., 2017) while keeping into consideration the employment and career factor. Thus, the value proposition of XYZ School for simulation learning will reflect on education quality, personalization, and student experience and student satisfaction.
Customer relationship: This area will be managed by designing the simulation exercises that best matches and meets the specific learning needs of the students. In addition, XYZ school website and in parent-student handbook will be used to build up early relationship with the customers based on e-learning initiative awareness.
Customer segments: These will be students and their parents.
Key resources: These will include quality education program design, high quality educational content, competent employees (experienced educators, XYZ School marketing staff, ICT specialists/ trainers).
Channels: This will involve online channel through well dedicated website.
Cost structure: The cost considerations will be given to costs of acquiring technology/ software, implementation costs, training costs, trainers and educator’s salary, and marketing expenses (website development and print media).
Revenue streams: The source of revenue will be from student and their parents in the form of students’ enrolments and tuition fees.
The disruptive innovation decision-making process includes the following steps:
First was defining the problem to have clarity of problems in traditional education methods. The second step was to identify the requirements that the solution needs to meet in order to gain acceptance. The third step was to establish goals required to be achieved by the acceptable solution. The fourth step was to identify an appropriate solution to solve the problem. The fifth step is to define criteria and choose decision-making tool was to evaluate the alternative choices against the set criteria (Schiavone, 2011). The final step was to evaluate the alternative solutions and validate appropriate solution for implementation.
SWOT Analysis of XYZ School:
| Strength
It provides the quality of education. Fewer ratios of students is admitted within one classroom. It has a skilled and experienced faculty for teaching. XYZ School adopts updated technology in its education programs which brings positive vibes. It also has the school campus full of greenery (Baycheva-Merger and Wolfslehner, 2016). |
Weaknesses
In order to adopt new technology in its education programs, XYZ School needs lots of initial investment. It also needs funds for settling up its location. In concern of XYZ school, it is also found that there is a number of competitors who create the tough competition for it. |
| Opportunities
The school has the opportunity to develop two-way interaction and job assistance in concern of its employees. It also has the opportunity to create a friendly environment for students. It also has a great option for physically challenged. |
Threats
There is a major threat for school is competitors. In this way, immigration is also the issue that restricts the people to get the PR (Angel and Lewis, 2018). |
PEST Analysis of Education Industry:
| Political
Auckland has a stable government along with strong rules and regulations. In this way, the political change takes place in Auckland every three years and the new government makes new rules as well as regulations. |
Economical
In Auckland, there is an excellent economic situation. The country has around 6 or 7 million population that is why everything is available within the country plentifully (Davis and Higgins, 2015). |
| Social
As per the social system in Auckland, it is depended on the trade with other countries. There has regular demand in the system of economic (Perera and Collins, 2016). It depends on other countries for new technologies. |
Technological
Within the Auckland, it has its own education system that is organized by the Program of OECD for International Student Assessment. In this way, it is considered as the 7th best education system. In Auckland, students show their interest in mathematics and science. |
Five Force Analyses:
The five force analysis evaluates –
- Threats of new entrants – The threat to the new entrants are quite less, as the investment required is quite high and the time required for getting the quality services are less.
- Bargaining power of buyers – Bargaining power of the buyers in this industry is quite low, especially for the ones who demand for a quality educational system.
- Threats of substitutes – This threat are low as the investment cost, need to introduce better educational system, and technique requirements are quite high.
- Rivalry among the competitors – The competition is high, as people prefer to get a better education for themselves or their family members.
- Bargaining power of suppliers – The bargaining power of the suppliers is quiet high, as it helps in retaining the quality of the educational system needed for the students.
The disruption is based on the technology adoption that enables the teachers to provide the better services to the clients. This process enabled the management to provide the best education system to the students. The disruption process enables the managers or the managers to upgrade the quality of the educational system.
The simulation learning in education industry can potentially impact the functioning of the existing education industry as this form of e-leaning is disrupting the traditional classroom teaching method. Another impact can be seen in terms of promoting innovation and price competition in the industry (Archer et al., 2013). This can also impact in terms of demands for more online educational programs from established players to increase the attractiveness of the educational institutions (Bass, 2012). This disruptive innovation also impacts the educators/ trainers which needs to upgrade their knowledge, technical skills and competence in delivering education through simulations. The impact will also be change in the education policies that supports traditional teaching methods.
The simulation learning methods can potentially impact the students in terms of attending classes online, study at individual pace, and opportunity to learn by changing strategies and decisions. It also impacts the students in gaining access to quality education and personalized learning method. This disruption innovation impact on students will also be in terms of attracting students and in existing student retention for higher education (Archer et al., 2013) by providing affordability of educational services.
The call to act process allows the managers to make the right decision about upgrading the educational system. In the call to act, the managers make the decisions to make the changes in the technology adoption and improvement of the process that is being followed to upgrade the system. “Call to act” allow the managers to examine the existing educational system and provide the better services to the customers or the students. An analysis is done to evaluate the challenges with the system that would be needed for providing the better services.
It can be recommended to XYZ School in adoption and implementation of simulation learning method as a disruptive innovation in the education system to change the educational content/ curriculum and policy that influence student attraction for e-learning environment. It is also suggested to gain cooperation among teachers, trainers and ICT specialists to achieve collaboration in implementation of new business model for simulation learning.
It can be concluded that the simulation learning method can bring radical changes in the education system at XYZ School. The impact will be on the education industry and the students by brings change in the existing learning methods, practices and experience. The change in macro –environmental factors, education industry attractiveness, and profitability for simulation learning method is analyzed through PEEST and Porter five force framework. The SWOT analysis is also applied for this disruptive innovation in education system. Considering the industry and client needs, financial analysis, decision making process, business model and potential impact of simulation leaning method, it can be concluded that this disruptive innovation is needs for XYZ School to innovate its services and improve the educational system for the betterment of students in relation to their job placements and career.
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