Issue link: http://www.e-digitaleditions.com/i/62913
Shanghai, China You could reap significant cost sav- ings from having a percentage of classes taught by local faculty, and you could ensure quality of instruc- tion because they would be paid directly by your university and be accountable to it. CONS: The main drawback of this model is the significant upfront investment. You have to take on real financial risk, because there's no guarantee that you'll attract enough students to ensure that your revenues balance your costs. Something else to consider is that the government leaders in emerg- ing nations sometimes change their minds about allowing educational institutions to operate in their countries without a partner or with the goal of making a profit. For example, India recently passed a law allowing foreign direct investment in the educational sector, but banned universities from repatriating their profits. It probably won't be long before Indian government officials start auditing these institutions. In other countries, local governments might insist that a foreign university take on a partner long after the uni- versity has already invested all the initial startup money. One way to get around the need for significant investment capital is to utilize the third strat- egy for globalizing business edu- cation, which is to work directly with the local government. Strategy 3: The Investment Model In this model, the government of a specific region or country invests in a school's startup operations because it wants to promote better educational offerings in that area. For instance, the European Union 28 May/June 2012 BizEd partnered with the Chinese Minis- try of Foreign Trade and Economic Cooperation in 1994 to create the China Europe International Busi- ness School (CEIBS), now based in Shanghai. In May 2009, CEIBS started an MBA program in Ghana. There are many other examples. Georgetown University of Wash- ington, D.C., collaborated with the government of Qatar, which essentially built the entire infra- structure for the university's School of Foreign Service. Similarly, Duke University is relying on the govern- ment of Kunshan to absorb a sig- nificant portion of the investment cost of building the classes for Fuqua's programs in China. PROS: The biggest advantage of the investment model is that the university planning a program in the host country does not incur a significant upfront cost or major financial risk. The entity that makes the initial investment— whether that's a government or another institution—provides financial and personnel resources to ensure the continuity and suc- cess of the program. The trick is to make sure that the investing institution has the proper financial incentives to make a long-term commitment to the success of the project, which will reflect on the reputation of your business school. CONS: The main potential nega- tive is that investors may be more interested in the short-term ROI than the quality of the educational program or the brand equity of your business school. Your faculty probably will not be willing to com- promise on admissions standards, quality of instruction, or level of student performance, but your partner may be interested in large enrollments and full classes, which will help it pay off its investment more quickly. Business school administrators could be stuck in the middle of an intense argument. Each side might be able to back up its position by pointing to contractual obligations, such as those required by tenure. Your obligation to investors would make it difficult to walk away from the venture, while a lack of support from faculty might make it difficult to actually implement the academic programs. This can be a very tough spot indeed. Where Do You Start? Once you've decided to expand into an emerging market, you must figure out how to get started— and how you can manage such a venture even if you're on a shoe- string budget. There are several approaches that can be successful: ■ Seek advice. Talk with other business school leaders about what worked and what didn't. AMANA IMAGES/GLOW IMAGES