Documente Academic
Documente Profesional
Documente Cultură
On
March 23, 2018
By Group: E6
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Contents
Introduction ................................................................................................................................ 3
Threat of Substitutes............................................................................................................... 4
Industry Attractiveness:.......................................................................................................... 5
Arena ...................................................................................................................................... 5
Vehicle ................................................................................................................................... 6
Staging.................................................................................................................................... 6
Differentiators ........................................................................................................................ 6
Endnotes................................................................................................................................... 10
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Introduction
Power of suppliers
The availability good quality teachers is limited and these teachers have multiple options to
deliver their service viz. schools, brick and mortar coaching centres, online portals or their
own facilities. Moreover, customer loyalty is teacher driven which implies that coaching
centres would like to maintain a certain level of quality and consistency in their faculty, and
thus, would be unwilling to switch the content providers.
For the tech providers and software developers, the percentage of their business coming from
education industry is low, giving them the position to extract good profit from the firms as
they do not depend heavily on this source of revenue, which is the case vice versa.
Power of Buyers
The key decision making unit for the buyer segment are-
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Parents for students in classes 8-12
Students in undergraduate and master’s segment.
Students in K-12 segment generally prepare for entrance examinations such as BBA, BMS,
IITJEE, CLAT etc. With 70% of parents claiming that investment in their child’s education is
the best investment they could make, the price elasticity of demand for education is low as
their primary focus is on quality. However, there are multiple players in test prep industry
increasing the number of options available to them, bargaining power is quite high in this
case. Undergraduate and Master's students generally prepare for higher education entrance
examinations such as CAT, GMAT, GRE etc. In their case also bargaining power is high
owing to fragmented market.
Threat of Substitutes
Though there are not major specific substitutes available to test prep industry, certain
colleges/educational institutes have started incorporating courses related to entrance test
preparation in their curriculum. The more professionalised and successful these courses
become, the more would be the threat to the current test prep industry. Also, free material is
becoming readily available. Channels such as Youtube, Facebook Groups etc attract a lot of
students seeking support on a daily basis. The duration till which these channels remain free
determines the threat.
Owing to low entry barriers in this industry, threat of new entrants is very high. Also, there is
customer loyalty evident towards people from the same industry, for example, a fresh IIM
graduate could start providing free content and mentorship thereby attracting hordes of
students, seeking guidance from people who have been recently been through the same
rigmarole. Post a short duration, once trust has been built up with these students, he/she could
start charging a nominal amount in lieu of starting a course/sharing of new material, thereby
becoming a part of industry themselves.
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Rivalry among Existing Competitors
Each segment of the industry is oligopolistic in nature with a few dominant players. For
example, in law CL-LST, CLAT possible and Legal Edge dominating the industry, in MBA it
is CL, TIME and IMS etc. Thus, the industry in itself is divided into sub-segments with
different players available in different segments and few being common across. Smaller
players, in different sections, cater to a specific niche/loyal segment of customers. Moreover,
global organizations such Khan Academy and Coursera have also started to focus on the
Indian market for the potential it offers.
Industry Attractiveness:
Based on the analysis of competitive forces shaping this industry, the industry
attractiveness is on the lower side primarily because of high bargaining power both
upstream and downstream with the presence of high competition.
Arena
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Present in South Asia through Singapore based subsidiary
Kestone Asia PTE Limited
Vehicle
Staging
Differentiators
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(CAT, CLAT etc.)
Economic Logic
They own certain tools that they have applied patents for.
Premium prices due to These are like features of the products that they sell and will
proprietary product features help them make their products even more attractive for the
students. For example- IIM profilizer.
Career Launcher acquired ETEN, the test prep division of Pearson's IndiaCan Education
Private Limited on 13th April 2017. The deal consisted of a staggered payment of ₹6 crore
over two and a half years and revenue share of 4% for the next three years.
About ETEN
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ETEN is the test preparation business division of the publishing giant Pearson's JV-
IndiaCan. Pearson India in an attempt to move away from non-core areas has been divesting
off its business divisions.
CL's brief acquisition history
Career Launcher has been acquiring companies in an attempt to diversify its offerings.
Through acquisitions, it has focused on filling gaps in its product offerings and acquiring key
technologies. Some of its key acquisitions have been mapped here-
Strategy Evaluation
Various strategic drivers which were the reasons behind this acquisition are:
Career Launcher gets access to the VSAT network of ETEN through this acquisition. The
widespread VSAT network of ETEN in over 100 centres across India gives Career Launcher
the opportunity to sell its existing popular CAT prep offerings to Tier 3 and 4 cities through a
low cost delivery network.
ETEN has a strong product portfolio consisting of IAS, CA and CS preparation owing to its
high quality faculty. Career launcher has been trying to develop its knowledge based test
prep portfolio and didn't have CA preparation products. Through this acquisition, Career
Launcher gets a well-structured CA preparation platform with proven performance
of benefitting more than 30,000 students.
Strengthening reputation
ETEN has a strategic partnership with Khan Study Circle (KSC) with a history of producing
All India Rank 1's like Tina Dabi (2015) in civil services exam. This will help in gaining
credibility for the IAS offerings of Career Launcher itself. Moreover, this also enables Career
Launcher to position itself as a low cost, high quality educational content provider thereby
competing effectively with Byju's which has a similar value proposition.
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Testing the Quality of Strategic Decision
Q1. Does your strategy fit with what’s going on in the environment?
The success of Byju’s has shown that there has been a shift in Indian preferences for test prep
delivery through high quality videos. Worldwide, MOOCS like Coursera and Edx are
ushering in a new revolution of delivering education through internet. Therefore, acquisition
of ETEN fits perfectly with the environment and offers a healthy profit potential in future.
This acquisition leads to a wider product portfolio for the existing, broad student base of
Career Launcher. Students will be provided with test prep content from high profile ETEN
teachers. It’s technical prowess also gets bolstered via this acquisition enabling it to target its
existing students with live VSAT classes.
ETEN acquisition opens up access to newer markets through VSAT and therefore the
combined entity now has a strong presence as a test prep centre for multiple exams and this
diverse portfolio of products will be difficult for competitors to match.
CL’s internal strategy relies on using technology and quality teachers for content
development, publishing and delivery. It already has test prep exams for other entrance
exams and the strategy elements for the existing services are consistent with the requirement
of the combined entity post acquisition.
Career Launcher earned 156 crore in revenues with a profit after tax of 7.2 crores in FY 17
and has been managing 170+ centers across India. Therefore, an acquisition worth 6 crore
staggered over a period of two and a half years doesn’t place much financial burden on it.
Evaluation: The decision to acquire ETEN seems fairly well in light of the strategy of CL.
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Endnotes
Primary Source:
Gautam Bawa, Group Product Head, Test Preparation, CL Educate Ltd. (Career Launcher)
Email: gautam.bawa@careerlauncher.com
Secondary Sources:
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