Documente Academic
Documente Profesional
Documente Cultură
WWW.IBISWORLD.COM
Dmitry Diment
15 International Trade
28 Key Statistics
Industry Definition
16 Business Locations
28 Industry Data
Main Activities
Similar Industries
18 Competitive Landscape
Additional Resources
28 Annual Change
3 Industry at a Glance
28 Key Ratios
4 Industry Performance
20 Barriers to Entry
Executive Summary
21 Industry Globalization
Current Performance
22 Major Companies
Industry Outlook
24 Operating Conditions
13 Products & Markets
24 Capital Intensity
13 Supply Chain
25 Revenue Volatility
14 Demand Determinants
15 Major Markets
27 Industry Assistance
WWW.IBISWORLD.COM
Main Activities
Tutoring
Exam preparation
Similar Industries
Additional Resources
IBISWorld
WWW.IBISWORLD.COM
Industry at a Glance
Tutoring & Test Preparation Franchises in 2014
Key Statistics
Snapshot
Revenue
Profit
Wages
Businesses
$861.0m 0.3%
2.1%
$491.4m 1,254
$56.0m
% change
Kumon North
America Inc.
8.7%
16
12
% change
Market Share
4
0
4
Year 06
0
1
08
10
12
Revenue
14
16
18
20
Year
08
10
12
14
16
18
20
Employment
SOURCE: WWW.IBISWORLD.COM
p. 22
35%
Exam preparation
Percentage of services
conducted online
Number of K-12 students
65%
Number of college
students
Tutoring
p. 4
SOURCE:
WWW.IBISWORLD.COM
SOURCE:
WWW.IBISWORLD.COM
Industry Structure
Growth
Regulation Level
Light
Revenue Volatility
Low
Technology Change
Low
Capital Intensity
Low
Barriers to Entry
Low
Industry Assistance
Low
Industry Globalization
Low
Concentration Level
Low
Competition Level
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 28
Medium
WWW.IBISWORLD.COM
Industry Performance
Revenue
WWW.IBISWORLD.COM
Industry Performance
14
12
10
% change
Year
08
10
12
14
16
18
20
Year 05
07
09
11
13
15
17
19
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
Industry Performance
Dip in demand
Industry revenue
16
12
% change
Current
Performance
8
4
0
4
Year 06
08
10
12
14
16
18
20
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
Industry Performance
Educational concerns
and government
funding
Competition squeeze
To
combat rising
competition, operators
have boosted marketing to
emphasize teacher quality
by emphasizing teacher quality and the
benefits of their programs.
An emphasis on teacher quality has led
some operators to hire more teachers.
Consequently, employment is expected to
expand at an annualized rate of 6.4% to
53,436 workers over the five-year period.
Wages, too, have risen, albeit at a slower
rate of 4.5% per year on average, as the
industry has continued to favor the
traditional approach of part-time
employment, keeping the average wage
relatively low. Although industry profit
has risen since bottoming out in 2009,
wage growth and stagnating revenue
throughout much of the period have
squeezed profitability. Fixed costs like
rent, utilities and administration limited
the adjustments that operators could
make to their business models.
WWW.IBISWORLD.COM
Industry Performance
Benefits of
franchising
Industry
Outlook
Demand expansion
Working
consumers will
have less study time, but
higher incomes will offset
demand declines
enrollment in higher education grew as
people unable to find jobs went back to
school. Although this trend is expected
to slow as the unemployment rate
declines, rising employment and
disposable income levels will also enable
families to better pay for college
educations, causing the number of
college students to grow at an even
faster rate. During the five years to 2019,
college enrollment is anticipated to
increase 1.1% per year on average to
about 22.3 million students, spurring
demand for industry services as a result.
WWW.IBISWORLD.COM
Industry Performance
Demand expansion
continued
Competition
pressuring
profitability
Further challenges
Schools
WWW.IBISWORLD.COM
Industry Performance
Further challenges
continued
WWW.IBISWORLD.COM
Industry Performance
The market for tutoring and test
preparation is expanding
20
Maturity
Quality Growth
Company
consolidation;
level of economic
importance stable
15
10
Quantity Growth
Business Coaching
Trade & Technical Schools
Computer Stores
Public Schools
Private Schools
Decline
-5
Shrinking economic
importance
-10
-10
-5
10
15
20
WWW.IBISWORLD.COM
Industry Performance
industry
is G
rowing
WWW.IBISWORLD.COM
Supply Chain
61111b
61131a
61131b
9901
Consumers in the US
Consumers use this industry for tutoring services and preparation for standardized
examinations.
44312
45121
45321
53112
Exam preparation
Accounting for about 35.0% of industry
revenue, exam preparation services
include preparation for college entrance
35%
Exam preparation
65%
Tutoring
Total $861.0m
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
Demand
Determinants
Disposable income
Per capita disposable income is key to
determining demand for tutoring and
test prep services. As disposable income
increases, more consumers are able to
afford additional tutoring and test
preparation services, which are
discretionary. However, when disposable
income is low, consumers will seek less
costly test preparation alternatives, such
as online programs and services.
Government assistance and policy
Government funding for education is an
important determinant of demand for
industry services. During times of low
government funding for education,
individuals will seek tutoring and test
preparation services to supplement
available education at public schools.
However, when government funding for
education is high, schools and
universities will provide more
individualized tutoring services, which
may reduce the need for consumers to
find outside help. Because funding for
education is largely determined at the
state and municipal levels, this factor
varies significantly on a regional basis.
Nonetheless, broad changes in
education requirements and spending at
WWW.IBISWORLD.COM
Major Markets
30%
College students
70%
K-12 students
Total $861.0m
International Trade
SOURCE: WWW.IBISWORLD.COM
K-12 Students
K-12 students represent the largest market
for industry services, accounting for about
70.0% of total industry revenue. During the
past five years, this market has grown as a
percentage of industry revenue as more
parents seek to provide their children with
an advantage in an increasingly
competitive academic environment. K-12
students use tutoring services to improve
academic skills and receive better grades in
preparation for college applications. At the
same time, K-12 students use exam
preparation services for specific
standardized tests, such as the SATs and
ACTs, which are required by many
universities for admission.
College students
College students represent about 30.0%
of the industrys revenue. During the past
five years, this market has declined as a
percentage of industry revenue because
online resources have increasingly
become available to college students.
These students use exam preparation
services for standardized testing related
to graduate school applications for
business school, law school, medical
school and other graduate programs.
While some college students use the
industrys private tutoring services,
on-campus tutoring services are offered
through universities, reducing demand
from this market.
WWW.IBISWORLD.COM
West
New
England
AK
0.3
Great
Lakes
WA
ND
MT
3.1
Rocky
Mountains
ID
OR
1.2
West NV
0.6
1.8
SD
0.1
WY
0.4
MN
0.1
0.3
Plains
CO
1.1
KY
0.5
OK
0.7
NC
2.6
TN
AZ
NM
1.8
0.5
Southwest
TX
6.0
HI
0.6
2 NH
3 MA
4 RI
5 CT
6 NJ
7 DE
8 MD
0.4
1.4
0.6
4.1
2.8
0.2
SC
Southeast
0.5
MS
AL
0.7
1.0
GA
3.7
0.4
LA
1.1
FL
6.7
Establishments (%)
0.4
2.7
AR
0.2
1.2
16.1
WV VA
2.9
0.9
1.1
CA
West
2.8
MO
KS
2.5
OH
1.7
4.0
3.2
IN
IL
0.4
UT
PA
2.5
0.6
0.7
1 2
3
NY
8.5
5 4
MI
1.8
IA
NE
0.2
WI
ME
MidAtlantic
9 DC
0.5
Less than 3%
3% to less than 10%
10% to less than 20%
20% or more
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
20
10
Southwest
Southeast
Rocky Mountains
Plains
New England
Mid-Atlantic
Great Lakes
0
West
Business Locations
Establishments
Population
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
18
Competitive Landscape
in
this industry is L ow
identifies
250 Key Success
Factors for a
business. The most
important for this
industry are:
Cost Structure
Benchmarks
Understanding government
policies and their implications
Establishments need to know how they
can benefit from various government
policies on education, most importantly
the No Child Left Behind Act.
Profit
Industry profit, measured as earnings
before interest and taxes, is estimated to
account for 6.5% of revenue in 2014.
Compared with the entirety of the
education sector, which is largely run on
a nonprofit basis, this is relatively high.
During the past five-year period, profit
margins bounced back somewhat after
contracting during the recession, as
declining revenue hampered operators
bottom lines. In 2009, average industry
profit stood at just 4.2% of revenue.
Nonetheless, profit margins remain
below prerecessionary highs and are
expected to continue to remain
pressured. As competition from online
services has escalated, companies have
spent an increasing proportion of
revenue on wages, which has impeded
profit growth.
Wages
The Tutoring and Test Preparation
Franchises industry is service oriented,
and the majority of revenue is dedicated
to wages as a result. IBISWorld estimates
that wages will total about 57.1% of
revenue in 2014. During the past five
years, slowing industry growth and
demand for more personalized attention
have resulted in a significant increase in
wages as a share of revenue, from about
46.4% of revenue in 2009. In particular,
competition from online tutoring and test
preparation businesses has resulted in a
higher emphasis on staff quality at
learning centers. IBISWorld expects
these trends to persist during the next
five year, with wages rising to an
estimated 61.1% of revenue during the
next five years as employment growth
outpaces revenue growth.
WWW.IBISWORLD.COM
19
Competitive Landscape
Purchases
Companies are expected to spend an
estimated 9.6% of industry revenue on
purchases in 2014. Franchised
establishments benefit from buying most
materials through the larger franchise of
which they are a part. This helps reduce
purchases costs because franchise
organizations are able to procure supplies
in bulk. Furthermore, as wage costs have
skyrocketed, companies have cut back
spending on educational materials during
the five years to 2014, particularly
because an increasing amount of
information can be sourced and
distributed online.
Rent and utilities
Expenditure on rent and utilities,
estimated to account for 8.8% of
industry revenue in 2014, are
Percentage of revenue
Cost Structure
Benchmarks
continued
Average Costs of
all Industries in
sector (2014)
Industry Costs
(2014)
100
6.5
6.5
80
31.2
57.1
60
Profit
Wages
Purchases
Depreciation
Marketing
Rent & Utilities
Other
19.4
40
20
2.6
2.8
8.5
29.0
3.0
9.6
3.3
8.8
11.7
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
20
Competitive Landscape
Cost Structure
Benchmarks
continued
Other costs
Depreciation, legal fees and administrative
expenses make up the majority of
remaining industry costs. Overall, these
costs are relatively steady as a share of
revenue from year-to-year because they
can be anticipated ahead of time.
Basis of Competition
Internal competition
Firms in the tutoring and test
preparation industry compete heavily on
quality. Industry franchises must
establish a reputation for quality, which
is highly attractive to students looking
for direct results from test preparation.
At the same time, parents that seek
tutoring services for their K-12 children
also consider a companys reputation
when investing in the future of their
children. As a result, industry operators
must hire highly skilled employees that
are experts in the fields that they tutor.
Also, instructors must be highly
proficient in effectively teaching their
respective subjects.
Competition among the test
preparation segment is higher due to the
standardized nature of the industry.
in
this industry is
Mediumand the
trend is I ncreasing
Barriers to Entry
Level & Trend
arriers to Entry
B
External competition
The industry is facing increasing
competition from companies that provide
tutoring and test preparation services
solely online. Online tutoring has become
more popular during the past five years
and poses a threat to traditional tutoring
and test preparation services. At the same
time, more online courses have become
available for test preparation and for all
kinds of standardized testing. These
online interactive courses provide a
cost-effective and time-saving alternative
for students with limited resources.
Level
Medium
Low
Growth
Low
Low
Light
Low
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
21
Competitive Landscape
Barriers to Entry
continued
Industry
Globalization
in this
industry is L owand
the trend is S
teady
WWW.IBISWORLD.COM
Major Companies
Kumon North America Inc. | Other Companies
Major players
(Market share)
91.3%
Other
Player Performance
Kumon North
America Inc.
Market share: 8.7%
SOURCE: WWW.IBISWORLD.COM
Revenue
($ million)
(% change)
Operating Income
($ million)
(% change)
2009
69.0
N/C
7.0
N/C
2010
70.0
1.4
7.5
7.1
2011
72.0
2.9
7.6
1.3
2012
73.0
1.4
9.3
22.4
2013
75.0
2.7
9.5
2.2
2014
75.0
9.3
-2.1
*Estimates
SOURCE: ANNUAL REPORT AND IBISWORLD
WWW.IBISWORLD.COM
Major Companies
Player Performance
continued
Other Companies
Educate Inc.
WWW.IBISWORLD.COM
Operating Conditions
of capital
intensity is L ow
Capital intensity
Economy
Information, Communications,
Mining, Finance and Real
Estate. To increase revenue
firms need superior debt
management, a stable
macroeconomic environment
and a sound investment plan.
Capital Intensive
Labor Intensive
Old Economy
Agriculture and Manufacturing.
Traded goods can be produced
using cheap labor abroad.
To expand firms must merge
or acquire others to exploit
economies of scale, or specialize
in niche, high-value products.
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
Operating Conditions
Capital Intensity
continued
Technology
& Systems
Level
The level
of
Technology
Change is L ow
Revenue Volatility
Level
The level
of
Volatility is L ow
WWW.IBISWORLD.COM
Operating Conditions
Volatility vs Growth
1000
Revenue Volatility
continued
Hazardous
Rollercoaster
100
10
1
0.1
Stagnant
30
10
Blue Chip
10
30
50
70
Regulation is
Lightand the
trend is S
teady
WWW.IBISWORLD.COM
Operating Conditions
Industry Assistance
Level & Trend
he level of
T
Industry Assistance
is L owand the
trend is S
teady
WWW.IBISWORLD.COM
Key Statistics
Industry Data
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Revenue
($m)
721.6
772.0
867.3
858.8
849.4
856.3
844.5
842.8
850.3
861.0
879.9
901.1
917.1
934.4
953.6
Annual Change
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Revenue
(%)
7.0
12.3
-1.0
-1.1
0.8
-1.4
-0.2
0.9
1.3
2.2
2.4
1.8
1.9
2.1
Industry
Value Added
($m)
405.3
439.5
461.5
491.3
456.0
486.9
533.4
544.6
557.6
572.6
593.8
615.2
635.4
655.0
677.1
Establishments
1,881
2,017
2,395
2,509
2,531
2,663
2,745
2,813
2,882
2,967
3,053
3,156
3,253
3,355
3,449
Enterprises Employment
792
27,587
849
30,757
1,004
34,099
1,061
37,173
1,071
39,122
1,122
43,683
1,157
49,122
1,187
50,248
1,216
51,870
1,254
53,436
1,289
55,508
1,333
57,528
1,374
59,553
1,418
61,444
1,458
63,596
Exports
----------------
Industry
Value Added
(%)
8.4
5.0
6.5
-7.2
6.8
9.6
2.1
2.4
2.7
3.7
3.6
3.3
3.1
3.4
Establishments
(%)
7.2
18.7
4.8
0.9
5.2
3.1
2.5
2.5
2.9
2.9
3.4
3.1
3.1
2.8
Enterprises Employment
(%)
(%)
7.2
11.5
18.3
10.9
5.7
9.0
0.9
5.2
4.8
11.7
3.1
12.5
2.6
2.3
2.4
3.2
3.1
3.0
2.8
3.9
3.4
3.6
3.1
3.5
3.2
3.2
2.8
3.5
Exports
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Key Ratios
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
IVA/Revenue
(%)
56.17
56.93
53.21
57.21
53.68
56.86
63.16
64.62
65.58
66.50
67.48
68.27
69.28
70.10
71.00
Imports/
Demand
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Exports/
Revenue
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Revenue per
Employee
($000)
26.16
25.10
25.43
23.10
21.71
19.60
17.19
16.77
16.39
16.11
15.85
15.66
15.40
15.21
14.99
Imports
----------------
Wages
($m)
326.2
355.1
367.1
390.8
394.4
425.3
456.7
464.8
478.0
491.4
509.9
528.4
546.1
563.1
582.3
Domestic
Demand
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Imports
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Wages
(%)
8.9
3.4
6.5
0.9
7.8
7.4
1.8
2.8
2.8
3.8
3.6
3.3
3.1
3.4
Domestic
Demand
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Wages/Revenue
(%)
45.21
46.00
42.33
45.51
46.43
49.67
54.08
55.15
56.22
57.07
57.95
58.64
59.55
60.26
61.06
Employees
per Est.
14.67
15.25
14.24
14.82
15.46
16.40
17.90
17.86
18.00
18.01
18.18
18.23
18.31
18.31
18.44
Average Wage
($)
11,824.41
11,545.34
10,765.71
10,513.01
10,081.28
9,736.05
9,297.26
9,250.12
9,215.35
9,196.05
9,186.06
9,185.09
9,169.98
9,164.44
9,156.24
Share of the
Economy
(%)
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
Industry Jargon
IBISWorld Glossary
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