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Expansion of Student Population by Globalising Education Services.

In: Business and Management

Submitted By lawh123
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This report aims to analyse the two possible steps that Eton College could potentially take to expand their student population. The first plausible action would be to increase the number of foreign students in the UK and the second is to set up a new school in China. Throughout the paper, one will focus on the issues facing Eton College with regards to the globalisation of its education services and how it will impact the school.

Context for globalisation of services.
Many other schools and universities have already taken the approach to expand their campuses into foreign countries, many of which are in China. Should Eton just increase their student population in their current school, it will find it difficult to compete with other renowned schools competitively in the future. As observed by Dirk Willem teVelde in 2005, “The education sector itself is subject to globalisation (Sauvé, 2002).” Although for many years, education has been very much considered a public good, it is now debated that “GATs (General Agreement on Trade in Services) is becoming more flexible in governments being able to decide whether or not they wish to open up to education provision from foreign providers, whilst there are others who suggest that education is about more than just a (traded) commodity.” Therefore, as a result, many educational institutions are branching out away from their original locations and creating replicas or slightly adapted versions of themselves in other countries, namely in the Asia-Pacific region. In order for Eton to maintain its competitiveness, it too must expand its portfolio and either diverse or enlarge its capacity in its Windsor campus.
There are problems which could be encountered when attempting to globalise education, or at least one’s style of education. Teaching is a pure service and is consumed as it is produced, it is also tailored and perishable (therefore cannot be inventoried). Although there are some subjects which do not have any subjectivity, e.g. Mathematics, others do and so this calls on the problem of each location that Eton may wish to expand to becoming an individual bound customised project. This leads onto the problem of new expansions of schools being centralised or decentralised. Should the new school in China be a centralised procurement, it would mean that purchasing decisions are made by Eton Windsor.
Conversely, a decentralised procurement would mean that the new school’s activities are spread out and that decisions are delegated to the management team of the Chinese school. One way to decide which procurement method Eton should take is to determine how much significant value centralising could add. “If centralization is not mandated, it should be adopted only if it adds significant value. The problem, however, as illustrated by the product-management example, is how to judge whether it will do so. This point is particularly difficult because corporate strategies rarely provide clarity about the major sources of additional value that underpin the argument for bringing different business activities together in a group. The solution, we find, is to set a hurdle high enough so that the benefits of centralization will probably far outweigh the disadvantages, making the risks worth taking.”
As with all globalisation projects, the subject of location is greatly important. Eton should which provinces in China have the largest number of students and decide amongst the top three to five (Zhejiang, Jiangsu and Beijing). Theoretically, the higher the number of students mean the higher the demand for education. By locating to one of those areas, they should be close to their target market and have a large demand for their service.

Recommendation of Mode of Entry.
The school in China would be classed as an equity investment. When entering a foreign country, they must make an entry mode choice and decide whether they will enter a joint venture (JV), strategic partnership or a wholly owned subsidiary (WOS).
The only legal and viable mode of entry for Eton is by setting up a joint venture. “Foreign investors are not allowed to set up wholly foreign-owned education institutions which enrol Chinese students. This means finding a strategic alliance to form a partnership to share intellectual property, assets, knowledge and profits. By setting up a joint venture, Eton must place trust with decision making with the management team in the school in China therefore sufficient information to foresee partners’ behaviours must be gathered. “Under this circumstance, the shared equity arrangement of JV bears the ex ante transaction costs…as well as the ex post transaction costs” The best partner for Eton would be the government as it would make the business more secure. “This is because higher level governments have more authority in approving projects, interpreting government policies, and exercising controls.”
If it were to be permitted, a wholly owned subsidiary (WOS) would be more suitable towards Eton’s decision to expand to China. This solution would allow Eton to have full control over the new school and make decisions at their discretion meaning that there is no possibility of the management team in China attempting to gain from potential opportunistic behaviour. It is the culture of Eton being compared to royalty of schooling that enables them to attract students from afar. By making it clear that they have full responsibility in decision making in their teaching, potential parents can be reassured that the standard of education that their children will be receiving at the Chinese campus will be similar to the one at the Windsor campus.

Analysis of the new school in China.
Like many other developing nations, China is on the road to multiculturalism but at a lot slower rate than its counterparts. As a result, it may be wise for Eton to create a physical replica of itself for the new school (for example, in its uniform designs and its school traditions). However, due to the government’s sensitivity towards certain matters, for example religion, they can adapt the subjects and school traditions slightly to fit in with the Chinese norms, e.g. instead of studying Latin, they are able to study Chinese History or Chinese Art.
Due to the legislation restrictions, it has already been noted that only a joint venture is viable for Eton. Therefore, they would need to adjoin two supply chains in order to ensure the education of the students are of the same standard in the different campuses. Furthermore, they may wish to address the matter of procurement and whether there will be a central supply of facilities. If they do, they must decide which language the students in China will be taught in. This matter is incredibly important and adds a whole new cost to Eton as it changes the matter of buying books; if the students are taught in Chinese, will the supplier be local; if they are being taught in English, will the books be from the supplier which currently supplies to Eton Windsor?
As mentioned, parents need to be reassured that the standard of teaching their child is receiving at the Chinese campus is comparable to the Windsor campus therefore the curriculum can only be adjusted to a certain extent. This not only reassures the parents but it is also beneficial to Eton as they can make comparable data between the two campuses and see what needs to be developed or dealt with.
With China being communist, the curriculum and more importantly, the management team ‘s decisions must be agreed by the local government as Western theories of management and education are perceived as “capitalism being preached in China” Although as a joint venture, Eton Windsor and Eton China may be equal in terms of its own strategic and operational plans and budgets, Eton Windsor and the board of directors and Eton China should approve of strategic plans first to ensure that it follows the same course as its partner. In other words, there should be one central strategy for both schools so that student development, traditions, values and more importantly, results can be measured and compared. In order to successfully compare the schools, the in-house hierarchy of both schools should be similar. “Strategic decision-making lies with the governing body, the Provost and Fellows, who normally meet twice each term at Eton...The Head Master is responsible to the Provost and Fellows for the management of the school. The Bursar is responsible for the financial, property and non-educational administration of the College...The Bursar is responsible to the Head Master in respect of school activities and to the Provost and Fellows in respect of investment and trading activities.”
Moreover, Eton must consider the matters of pricing. Eton must decide if they will charge the same as its Windsor students, if they will make the prices lower to level with the standards of living in China, or if they wish to increase it by comparison to ensure its image of prestige. They must not only consider the pricing of the tuition fees but also of their teachers and staff. It has been found that “most American managers of joint ventures in China are especially unhappy with the policy requiring Chinese counterparts of U.S. managers to be paid salaries comparable to the Americans. The Chinese argued that there should be equal pay for equal work.
Another matter which needs to be addressed is whether they will have boarding accommodation or any other sort of accommodation at the Chinese premises. The Chinese culture is more open to sending their children to boarding schools and believe that it encourages the young to become more independent and gain better life skills by being away from home. In a recent International Business Times article, it read “More than one third of the foreign secondary school children in Britain now come from China, as its wealthiest citizens are keen to send their children to top boarding schools in the U.K. to ensure they receive the best education and mingle with children of the elites from a young age.” Therefore, instead of the Chinese sending their children to the UK, it is a possible and viable move for Eton to build a unit of itself in China.
In conclusion to this report, one can gather that although setting up a joint venture in China involve many challenges. “However, these challenges are not simply because of these two cultures’ systems and structures being different, but rather due to lack of interpersonal and cross-cultural communication skills of both sides of the partnership.” Therefore, both management teams and board of directors must put time into communication, ensuring that all information is understood whilst putting aside cultural differences in management styles. The other option apart from setting a new location in China was to increase the student intake in Windsor. Purely increasing their Windsor population is not going to enable Eton to advance in the future and stay competitive with its rival schools. By setting up another campus where many of their students already originate from mean that, thereotically, they should able to supply more of their education and somewhat level with the demand there. The Chinese economy has shown signs of stabilising but it is the world’s second-largest economy and its GDP “grew at an annual rate of 7.7% in the October-to-December period, down from 7.8% in the previous quarter. But it was still higher than the government's target rate of 7.5%.” This, along with the points raised throughout the report shows that China, particularly Southern China where a lot of the wealthy live and work, is a great location for Eton to expand their presence to.

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