Our experience suggests that undertaking a transactions-based approach to each venture will help achieve an optimal outcome in terms of delivering the international strategy while also minimizing risk and maximizing return.
Higher education institutions are adopting a broad range of operating models to facilitate their entry into new markets. Solo ventures, collaboration and/or partnership arrangements, and non-traditional delivery models such as online and distance education are some of the more common models but – across the board – the only constant is that the details of every arrangement are unique.
The importance of developing a strong framework for expansion cannot be overstated. All too often, overseas ventures are formed organically, born of relationships or sudden opportunities. Without an overarching governance and oversight model in place at the institutional level, these initiatives can create unexpected risk and complication down the road.
“Developing a robust strategy for transnational expansion is not easy,” said Mike Rowley, KPMG’s Global Head, Education. “It requires leadership teams to gain a strong appreciation for not only their institution’s internal capacity and risk appetite for expansion, but also the external factors and future trends that will influence the success of their strategy and the brand enhancement that will follow.”
Below is a basic approach that outlines key steps that an institution can follow to deliver successful expansion initiatives.
Some of the critical areas to consider include clearly defining expansion goals, conducting a situational analysis, developing a project plan and identifying the initial investment required, available internal resources and necessary regulatory and institutional approvals.
Once the business case is complete, a detailed environmental analysis of the proposed foreign market – backed by a robust business plan – must be developed next. The plan should include detailed strategies for key elements such as entry/exit, governance, student curriculum and demand, research, financing, tax structure, human resources (HR), infrastructure and technology.
Robust due diligence by local service providers is critical to vetting the plan and establishing proper assumptions before entering into any level of negotiation with other parties or strategic partners.
It may seem to be the logical next step but because the negotiating process is iterative, it can be lengthy. Institutions are advised to move forward efficiently to a binding agreement and obtain the necessary regulatory approvals.
This is where the rubber meets the road, the point at which the business plan becomes operational. This stage can be very complex and success is dependent on whether the governance and risk management models are the right ones.
Continual evaluation and assessment at each stage of the process may mean the difference between success and failure of any transnational expansion plan.