Context

You recently applied for, and were appointed to, the role of Executive Director of an Educational Charity in Simulandia, on the East Coast of Africa.

Simulandia has surprised many for the speed at which it is developing after many years of bitter struggle. Over the past few years, the democratically-elected government has made great strides in improving the national infrastructure, passing international business-friendly legislation, and reducing the crime and corruption rates.

However, much remains to be done, and the government wishes to stimulate education at all levels in society. For this reason, it looks favourably on charities that help support its educational aims.

The charity in question – International Education Worldwide (IEW) – is based in Europe and supports over 60 schools in 20 low-GDP countries. With a total turnover of over €50 million p.a., IEW invests a certain amount per year in new projects.

This year, IEW has decided to invest €100,000 in Simulandia and they have appointed you to manage the project – the IEW Educational Centre

The Simulandia Educational Centre

The intention is to develop two main streams of commercial activity – Teacher Training and Occupational Training – that will generate sufficient funds to then establish a primary school, a secondary school, and then, if all goes well, a College of Further Education.

The commercial activities must be managed in order to generate sufficient surplus to:

1. Maintain a steady flow of income to ensure sustainability of both the commercial activities and the fully-funded primary and secondary schools (it is envisaged that fees might be charged for the FE College, or else it might be funded by external agencies)

2. Invest in the leasing, building and furnishing of the community school premises

3. Cover the running costs of the community schools

A large plot of land, totaling 64,000 square metres has been leased from the government on the outskirts of the capital city, Simulberg. This provides plenty of space for a whole campus on which the various different educational establishments can be built. The lease has been granted for a total of five years at no cost to the IEW.

If, at the end of five years, the project is considered sustainable, the government will begin to charge a rental for the land, based partly on the IEW Centre’s revenues and its investments into education in the country.

On the other hand, if the project fails, the land and all buildings will be returned to the government, and IEW will disinvest. This process will include the termination of your contract with the organisation.

The decisions you must make

Success in the project depends on a number of inter-relating factors:

• The number of competitor schools that open in Simulberg, and their success in attracting paying customers to their programmes. You must ensure that you either charge less than they do, or alternatively, provide sufficient differentiation in quality that you can charge more than they do.

• The Brand Reputation of your educational institution – the higher your reputation, the more sustainable the project. You must therefore pay close attention to public relations, the quality of the services, the materials and buildings, as well as your contribution to the community and the local environment.

• The satisfaction of customers with the services they pay for. If the prices outweigh the perceived benefits, customers will not remain loyal for long.

• The satisfaction of your staff with their terms and conditions of service (TACOS).
  
  There are several administrative staff, all of whom are locally employed. These include Registrar, receptionists, handymen , cleaners, IT support …
  
  The Teacher Training Unit will initially contract teachers from overseas. Over the period of five years, it is hoped to train sufficient excellent students to take over from the ex-pat staff, especially since the latter are comparatively expensive to employ and maintain.
  
  The Occupational Programmes will be tutored primarily by locally-employed teachers, who might require further training and support.
  
  Attention needs to be paid to the remuneration, support, and development of your staff.

• Your marketing expenses are critical to attracting customers, especially in the early stages of the project. As brand reputation grows, so your marketing budget can be reduced.

• The number of programmes you offer must reach a level which can generate sustainable surpluses to be invested in the community schools. It is expected that you will need at least eight Teacher Training and Occupational Training programmes each in order to achieve this target.
  
  Each time you open a new programme, there are start-up expenses of furnishing and setting up a new classroom, recruiting teachers (whether local or ex-pat) and buying the necessary materials. There are additional operational expenses to cover staff salaries and other overheads
  
  The actual number of programmes you open depends on how (quickly) the project progresses.

• The local bank has agreed a certain overdraft option in case of need. The amount available depends on your Credit Rating. Greater use of this facility can result in a more rapid increase in the number of classes opened. It can also lead to loss of Credit Rating, so it must be used with great care.

• IEW’s contract with the government stipulates that the new Primary School must be opened at the end of the first year (end of Semester 2). The school will be paid for from IEW’s revenues, and it will take one year to build and equip. Thus, it must be ready for full operation by the beginning of Year 3 (Semester 5)
  
  At the same time (beginning of Semester 5), work will begin on the construction of the Secondary School, which will be finished by the end of Semester 6 to start operations at the beginning of Year 4 (Semester 7)

	Year 1: Sems 1 & 2	Year 2: Sems 3 & 4	Year 3: Sems 5 & 6	Year 4 Sems 7 & 8	Year 5
Teacher Training	Begins				Full Operations End-of-year Review
Occupational Training	Begins
Primary School		Is Built	Opens
Secondary School			Is built	Opens

The starting point

As the simulation begins in Semester 0, you find the following situation:

• There are a total of 20 available classrooms in the main centre, with a maximum capacity of 30 students each.

• Two programmes (One Teacher Training and One Occupational Training) have already been promoted.

• Before the programs begin, you can decide to:
• increase or decrease the Marketing Budget
• adjust the Price 
• make Additional Investments