A

Project Study Report

On

Training Undertaken at

Element Akademia

Titled
"------------------- (BENCH MARKING) -----------------------"

Submitted in partial fulfillment for the

Award of degree of

Master of Business Administration

Submitted By: - Submitted To:-

Devendra Singh Mr.SuhaibSiddiqui
MBA 4th SEM

2007-2009
 ACKNOWLEDGEMENT

With deep sense of gratitude, I would like to take this opportunity to Mr. Suhaib Siddiqi

Under whom guidance I had completed the current project. I also like to pay my

Gratitude to Mr. Vinay Sharma (M D Element Akademia). Their involvement & unstinted

support has always gives me the confidence to do my work. Without their guidance this

project report would not have seen the light of the day.

I am also thankful for my friends for their kind co-operation to complete this project

report. I would like to thank the people who took their time to help me to complete this

project. I would like thanking my friends who were of immense help to me.

Last but not the least; I would like to thank my parents who were a source of support

throughout the making of the report.

Thanks

Devendra Singh

M.B.A. 4th Sem.

 PREFACE

The viewing of the marketing in business administration of an organization is a fast

growing concept in India. Marketing in any undertaking requires aptitude, skills,

expertise, knowledge and efforts in sales as well as marketing. Marketing is considered

to be the most valuable asset of the organization in revenue generation, which is

greatly influenced by the performance of its executives.

All professional post graduates course like MBA envisage for a student to acquire

proficiency in academic knowledge as well as its application in practice by way of

exposure to the business world. Projects and case studies are therefore a part of MBA

curriculum, which helps in developing analytical and interpreting skills in the students

through application of several concepts of management to understand the functioning

of industries. This study has been taken over the “Vocational Institute in Jaipur."

Devendra Singh

M.B.A. 4th Sem.,

 Objectives

Objectives specify what learners will be able to do, or perform, to be considered

competent. As such, they provide clear reasons for project study... Another way to view

objectives is that they are goals redrafted to state performances in terms that are

clearly tangible to the reader.

Reasons for objectives:

Objectives are useful for students, instructors, and instructional designers. Some of the

ways in which they are used include:

To select and design instructional content, materials, or methods, it is necessary to

have a sound basis by which success can be measured. Clearly defined objectives

allow designers and instructors a method to find how successful their material has

been.

The purpose of instruction is to improve performance. By clearly stating the results we

want the learners to accomplish, we can identify if they have gained the appropriate

skills and knowledge.

During Survey I have following objectives:-

* To know where EA stands against competitors in jaipur city.

* To know awareness of EA between Graduate students.

* To know what a future prospect think while joining an institute

.* To know how prospects get information for selecting an institute

 ABOUT Company
Elements Akademia is a private limited company registered in NCR, India. It is fully
funded by the management team and a group of angel investors, who are typically IIM
alumni and mid/senior professionals from some of the world's most admired companies
like Goldman Sachs, CSFB, GE, P&G, and Bank of America etc.

We have a BIG, BOLD vision to be the leader in high-quality job oriented courses in
India and other developing countries. We have courses on Banking, Financial Services,
and Retail and Insurance being offered to students in North India and courses on LPO,
KPO etc. in the pipeline - our focus on growth makes us continue to look at niche, as
yet unexploited areas.

Our tie-up with SIMSR (KJ Somaiya's Bschool, India' Top 20 MBA programmes)
assures a very high academic rigour and quality. The current growth projection is "10
by 10"... $10mn revenues by 2010.
 Vision

Providing 10,000 jobs by 2010

Elements Akademia - conceptualized, funded and run by a group of IIM Alumni - is

envisaged as an innovative national chain of vocational schools.

India's Service Sector is booming (60% of GDP, up from less than 40% in 1970) but
faces an acute skilled manpower shortage, despite the presence of a large graduate
pool (15mn+). A part of the malady is perhaps in our university education system which
offers degrees but often fails to make graduates "employable".

Elements Akademia

Aims to bridge that gap by offering a 6 month part-time vocational course designed
with the help of our corporate partners, who are leading players in various service
sectors like Insurance (MNYL), BPO/KPO (Genpact), Retail (Reliance), Banking (KMB)
etc. This prepares Graduates in Tier II cities for Entry Level Jobs in the booming
Service Sector of India like Insurance, KPOs/BPOs, Banking, Retail, Telecom,
Hospitality etc.
 MANAGEMENT TEAM

CEO: Nishant Saxena

Nishant has eight years of experience in Corporate Finance/Planning with Procter & Gamble – including
Strategic Planning, M&A, and Corporate Finance. Worked across various geographies in Asia (Japan,
Philippines, India and Singapore). Nishant has also taught in IIM-Bangalore, IIM-Lucknow, National
University of Singapore and SP Jain as guest/adjunct faculty. He has been profiled by Business World as
a "Leader-in-Making", and has been a consistent top talent within P&G. He is returning to India to start
this company. Nishant is a BE from NITT and MBA from IIML.

COO: Vinay Sharma

Vinay has 12 years of work experience in some of India’s Bluechip companies like Bharti Airtel, Comsat
Max (JV with Lockheed Martin), Blowpast (Makers of VIP luggage). He has a very rich cross industry
experience across Marketing and Sales function - including Product Launches, Advertising
Communication, Business Development, Institutional Sales, and Customer Relationship Management –
and has handled full P&L responsibility. He has consistently won Outstanding Performer Awards or
equivalent based on consistent target achievement.
Vinay is a BE (PEC, Chandigarh, 1994) and MBA (IIM Calcutta, 1996).

Honorary Dean: Prof. Tapan Bagchi

Prof. Bagchi served 16 years in Exxon Mobil US and was a recipient of Extraordinary Contributor award.
He then returned to India to teach in IIT Kanpur – where he set up IITK's Bschool, then headed NITIE
and finally moved as Dean, SP Jain Dubai Bschool. He has authored 6 test books and 75 papers. He
currently is associated with IIT Mumbai and is leading research into KPOs.
Prof. Bagchi is a BTech from IIT Kanpur and PhD from University of Toronto, Ontario in Canada.

Head, Operations: Ankur Agrawal

Ankur brings extensive experience in starting companies. Most recently, he started an HR
consulting/recruiting firm (jobsjunction), and scaled it from zero to 5 cities in less than a year. Prior to
that, in ICICI Lombard (new client acquisition) and Philips (setup rural distribution network in 4 states).
Ankur is a Commerce Graduate and an MBA from IIML.

Head, Training: Amit Jyot Singh

Amit has been working in field of training and capability development for the last 9 years, with a long
experience in leading training delivery at Hero ITES. He has also worked with companies like Bharti,
Vangurad info, etc. Amit is a Post Graduate in English from DU.
 ACADEMIC ADVISORS

Overall Advisor: Prof. Pritam Singh, Padmashri. Former Director, IIM Lucknow.
Former Director (and Professor of Eminence), MDI Gurgaon
Dr. Pritam Singh has devoted his life to the development of management education: He led refocussing
of IIM Bangalore as an integrated management school, catapulted IIML to India's Top Bschool, delivered
a dramatic turnaround of MDI and developed more than thirty international collaborations in 5 years. He
is on the board of nearly a hundred top institutions (RBI, HAL, Oriental, SCI, UTI etc). He has also been
conferred with many prestigious awards including ESCORT Award¸ FORE Award¸ Best Motivating
Professor IIM Bangalore Award¸ Best Director of Indian Management Schools¸ Outstanding CEO (Chief
Executive Officer) National HRD Award etc.
Dr. Singh is the author of seven academically reputed books and published over 50 research papers.
An M.Com (BHU) ¸ MBA (USA) ¸ Ph.D. (BHU) ¸ Dr. Singh is the author of seven academically reputed
books and published over 50 research papers.

Advisor, Academic Programme: Prof. Suresh Ghai, Director, KJ Somaiya Business

School
Prof. Suresh Ghai has been the Director of K J Somaiya Institute of Management Studies and Research,
one of the top 20 Management Institutes in India, since 2001. Prof. Ghai has worked in the Industry for
28 years in the areas of Marketing and International Business. He has conducted several senior level
MDPs and has presented papers at several prestigious conferences and seminars. Prof. Ghai is the
Honorary Secretary of Bombay Management Association.
Prof. Ghai is a BE from IIT Roorkee and an MBA from IIM, Ahmedabad.

Advisor, Operations: Prof. Rajiv Srivastava, Former Dean, IIM Lucknow

Rajiv Srivastava is a Professor at IIM Lucknow focusing on Operations Management. His emphasis on
Manufacturing and IT applications in Operations Management has helped create one of the most
comprehensive collections of Operations Management software in any academic institution.
Prof. Srivastava is Batch (IIT K), PGDIE (NITIE Mumbai) and Ph.D. (Virginia Tech. USA)

Advisor, Business Communication: Prof. Neerja Pandey, Chair Communications

Group, IIM Lucknow
Prof Neeraja Pande is an Associate Professor in IIM Lucknow in the communications group. She
teaches Communication for Management and International Business Communication courses. Her
research interests are in Corporate Communication; Managerial Excellence through Effective
Communication and Organizational Integration Through Strategic Communication.
She is currently consulting on Interpersonal Communication Skills; Media and Crisis Communication
Skills and Communication Strategies for Business Image Development. Prof. Pandey is a PhD in English
from LU.

Advisor, Managerial Effectiveness: Prof. Archana Shukla, PGP Chair, IIM Lucknow
Prof. Archana Shukla is a Professor in the Human Resource Management group in IIM Lucknow. She
teaches Organizational Structure & Design and Team Building courses. Her research interests are in
Knowledge Management and New forms of organizations. Her consulting interests are in Group
dynamics, Team building and Organizational design. She has been a management consultant for J&J,
Reckitt Benkiser, Hughes Software, SBI, SAIL; Crompton Greaves etc.
Prof. Archana Shukla has a Ph.D. (Organizational Behaviour) from IIT Kanpur.
 INVESTORS
Elements Akademia is a private limited company incorporated in NCR, India and
started operations in Sept 2007. It is fully funded by the management team and a group
of 10 IIM Alumni investors, who are typically senior professionals with experience in
some of world's most admired companies.

It believes that the current university education system in India has an inherent flaw in
that it offers degrees but not jobs. Elements bridges that gap by offering a high quality
but affordable vocational training, designed with the help of its corporate partners who
are leading players in various service sectors like Insurance (MNYL), BPO/KPO
(Genpact), Retail (Reliance), Banking (KMB) etc. The 6 month part-time course is
targeted at graduates in Tier II cities.

The angel investing round is now complete (Mar 2008) and the company has raised the
requisite capital at the targeted valuation. The next round (VC Series A) is envisaged
for first quarter of 2009 requiring $2mn funding to help expand in 15 more cities.
Investors interested may write to [email protected].
 Partners
Elements Akademia partners with leading MNCs to design job-oriented courses in the
most booming sectors of Indian economy. Typically, we have spent many weeks to fully
understand the skill requirements of our corporate partners, and then – together with
them and our academic advisors – design a curriculum that prepares students for the
career with these companies.

Our academic partner, SIMSR, KJ Somaiya’s Business school (India’s Top 20 MBA
programme) supervises the academic rigour and offers their formal certificate to
successful candidates.
 8REASONS TO JOIN EA

“We offer Careers, not just English.”

1. A Comprehensive Life Enhancer Course:
While English Language capability is an important component, this course offers a
complete set of skills required to succeed (managerial and domain skills, grooming,
sensitization to MNC work environment, IT skills etc.). This is different from usual
courses that either offer only language or only personality development etc. We have
seen success requires a balance between various skills.

“World’s best companies, who also return your course fees.”

2. Placement opportunities:
Our lead corporate partner is Genpact - ranked by Nasscom as India's largest 3rd party
BPO Company for 2 consecutive years. Our unique tie-up with them ensures
reimbursement of your course fees (Rs. 10,000) after a year of service, so effectively
your course becomes almost free. In the worst case that you don’t get selected, we
provide retraining and re-interviews (also with other partners). Our planned conversion
is 90%+.

“This is a serious school, not a coaching centre”

3. Rigorous Academic Programme:
Students are required to attend regular classes (minimum 85% attendance or else
asked to leave), do regular homework (1-1.5 hour of self-study every alternate day),
and regularly take assessments (to know how they are improving). Conversely,
students give regular feedback on the class/faculty.

“Highly Credible Management Team”

4. Conceptualized, funded and run by IIM alumni:
Conceptualized, funded and run by IIM alumni - many returning to India with the vision
to make India's youth employable. Very capable management team (Our Honorary
Dean is the former Chair of the IIT Kanpur Business School). Course content advised
by senior IIM Faculty. We are also Associate Members of Nasscom, India's leading
chamber of commerce for BPO/KPO.

“Formal Course Certificate”

5. Long Term Value:

Our Academic Partner, SIMSR, KJ Somaiya’s Business School, ranks amongst the Top
20 MBA programmes in India. Each student who successfully passes the course will be
given a certificate endorsed by SIMSR. This is a nationally recognized certificate with a
lifelong intrinsic value.

“Not everyone who applies is admitted”

6. Honest Assessment:
There is a strict entrance criterion to admit only those students who can realistically be
“employable” in 6 months. Our research shows that very modest level of English
typically requires longer duration courses and even then success rates are low. We are
honest with such individuals and recommend them against joining this course.
“We teach exactly what the industry wants”
7. Industry relevant course:
We have done extensive research with multiple companies to understand what exactly
are they looking for in a candidate and then worked with their HR to design this course.
The objective is that our course/exam is exactly in line with the entrance recruitment
process of these corporates, so success in our exam should mean success in actual
recruitment.

“You will be our student ambassadors”

8. Ongoing Relationship:
Once you have successfully completed our course, you join our exclusive alumni
network for life – which provides help on various alumni issues. Example: we provide a
comprehensive relocation advisory if you need help in changing cities. We also try to
find industry mentors, and ongoing networking opportunities. Your and our destinies are
intertwined – we can only grow together.
 BUSINESS MODEL

Elements Akademia offers an industry customized Pre-Hire Training School – providing

a consistent quantity of trained manpower.

We work with our corporate partners to design a programme and then:

Do focused marketing to attract target number of students of “right profile” in at least 15

non-metro cities. We expect to hire approximately 500-1000 per city per year.

Formally screen them before programme enrollment on “fit” specifications laid down by
our corporate partners.

Train them on skills/content designed based on inputs from our corporate partners.

Enable hiring with constant equity building of corporate partner, early visibility of
candidates, and campus interviews.

Help in Relocation by providing complete relocation advisory to the students.

We minimize commitment on the part of our corporate partners – they only hire
students who meet their hurdle rate in the usual hiring interview.

Our key request to the corporate partner is to help us fully understand their
requirements – so we can develop the right pre-screening and right training
programme. Our internal goal is to ensure 90% of our students get selected
 CONTACT

NEW DELHI (Corporate Office):

Elements Akademia Pvt Ltd.
Corporate Office
#C -1067, Sushant Lok Phase I,
Gurgaon - 122001 Tel: +91 (0124) 4203235
Mobile: +91 9717298732
Email: [email protected]

BHOPAL CENTRE:
SF - 15, 2nd Floor,
Mansarover Complex,
(Near Habibganj Railway Station)
Bhopal - 462016
Tel: +91 (755) 4290010
Mobile: +91 9993500700
Email: mailto:[email protected]

JAIPUR CENTRE:
D-103/C, Lal Kothi Marg,
Siwad Area, Bapu Nagar,
Jaipur - 302015
Tel: +91 (141) 4028855
Mobile: +91 9929066555
Email:mailto:[email protected]

KANPUR CENTRE:
16/79H, Civil Lines,
(UTI Lane, Behind RBI),
Kanpur - 208001.
Tel: +91 9307207200
Mobile: +91 9793093333
Email: mailto:[email protected]

LUCKNOW CENTRE:
A-1/9B, Sector B
Aliganj,
Lucknow - 226024
Tel: +91 (522) 4000050
Mobile: +91 9956290290
Email: [email protected]

ENTREPRENEUR DETAIL
Entrepreneur's Details

Name Nishant Saxena

Age 31

Hometown Allahabad, Uttar Pradesh

Family background First gen entrepreneur

More than 1 company? No

Education Masters

Graduated from IIM

Former employer P&G Asia Pacific

Former designation Head of M&A

Area of responsibility Head

Favorite book/movie The Shawshank Redemption

INTERVIEW

Can you give an insight about the elements that make ‘Elements Akademia’ so
sang-froid.

After spending quite some years in corporate life, objective was to do something which
is not only a good business but also serves the larger interests of our country and
society. So, education and within education, employability is a burning issue which is
not only leading to societal unrest on one side but also is a slowing the growth of
economy due to dearth of right skilled people.
We have twin customers. The student whose #1 unmet needs (survey across
graduates in 10 Tier II cities) is a Job. We help them get a top notch placement in a
good MNC. The Corporates are our other customers. The #1 unmet need of HR there
is the availability of large pool of ready to perform hires. We meet this need by training
students on precisely the skill sets required by the companies.

“We offer Careers, not just English.” Element Akademia offers scope in
Insurance, KPOs/BPOs, Banking, Retail, Telecom, Hospitality etc whereas
English is a major concern for only BPO’s - Why did particularly emphasize on
rectifying something that no one is pondering about?

After interacting with leading influencers and educationists we understood this problem
of un-employability. On the other hand, our interaction and experience in industry tell us
the real shortage of talent especially at entry level for service sectors like Retail,
banking, insurance and BPO/KPO.

Hence, we found this to be win-win propositions where in we can develop a business

model by bridging this skill gap

Tell us about your team members. Are you planning to include some more work-
force at present?

Nishant Saxena, CEO, an IIM-L alumnus, has extensive Pan-Asian (Japan, Philippines,
India, Singapore) experience in P&G, consistently rated as one of World’s Top 3 Most
Admired companies. He worked in areas of Finance and Strategy (Regional M&A Head
and before that deputy CFO of India Operations), and has been profiled by Business
World as a “Leader-in-Making”. He is also a visiting faculty in IIMs, NUS, SP Jain etc.

Vinay Sharma, COO, an IIM-C Alumnus with more than 12 years of experience, was
most recently BU Head of Marketing in Airtel India, and prior to that was a Senior
Manager in Comsat Max (JV with Lockheed Martin), Blowplast (Makers of VIP luggage)
etc. He has consistently won Outstanding Performer awards and brings with him rich
Marketing & Sales experience.

Prof. Tapan Bagchi, BTech from IIT Kanpur & PhD from Canada, is the Honorary Dean.
He brings with him four decades of experience which spans 16 years in Exxon Mobil
US, as well as founding Chair of IIT Kanpur’s B-school, which he set up in 1983. He
also headed NITIE as Director and helped setup SP Jain Dubai B-school as Dean. He
has authored 6 test books and 75 papers.
The Academic Advisory Board includes Padmashri Prof. Pritam Singh (former Director,
IIML), Prof. Rajeev Srivastav (Former Dean, IIM Lucknow), Prof. Neerja Pandey (IIML,
founder chairperson of communication group), Prof. Archana Shukla (IIML, National HR
expert) and Dr. Sashi Rai (Member, UGC).

So, each plays a complementary role leading to expertise and experience in all critical
areas. We keep on recruiting as and when required but as of now team has stabilized.

What are the growth prospects of a pass out from Elements Akademia? How far
should he ascertain his career horizon?

Students are undergoing our 6 month Executive Programme in Services Management

in our centers and are getting placed with our corporate partners like Genpact, MNYL,
Bank of America, Shopper Stop etc. After that, they can grow and build good careers
within these top companies

Institutes and corporates avail our services leading to enhancement of their students/
employees and making them more productive and employable

What are your plans about geographical expansion?

Scale up shall happen through 5 avenues:

1. Immediate will be to become bigger in existing cities. Currently our revenue in

most existing centers is only 20% of the revenues of the largest education
company in that same city. We need to bridge this gap.
2. Second will be geographic expansion. Once we hit Rs. 1-1.5 crore revenues in
key cities, we will expand from current 5 cities to 20 cities.
3. We will focus more on Strategic Alliances and long term contracts. We are in
final stages of discussions with various governments, MFIs, and organizations
for contracts worth 50 lac each.
4. We will look at offering more/high priced courses.
5. Long term, we see the same unmet need being present in most developing
countries.

India is a country with huge manpower resource with more job seekers than
providers; do you think that the trend will change?
We don’t think the scenario will change immediately. However there is an important
issues of mismatch between what job providers want and what job seekers have. This
gross mismatch in skills if taken care of can significantly affect the unemployment
problem and let these youth join mainstream corporate sector. This is what we are
trying to do.

Hence, skills development as opposed to conventional education will be more effective

in solving unemployment problem.

What would you like to share about your revenue model?

Our revenue Model has three revenue streams

1. Fees provided by students who undergo the courses in our centers.

2. Fees received from companies for providing trained manpower.
3. Revenue from strategic training assignments with leading institutions and
companies.

How did the cash flow in the initial stages of Elements Academia? How did you
bootstrap?

Personal savings and fund support from friends and mentors. Networks amongst High
Net Worth individuals, a business plan that appealed to people and personal credibility.

We started off at the usual slow note where the first trench of funds took 9 months to
materialize. But then the moment we had shown initial success, and were ready to go
for Series B funding, we had more subscribers than investment needed and actually
had to say no to some people. What a circle!

How do you plan to legalize? Government licensing as a school or a firm under

Companies Act?
Ours is a private limited company which is a ‘for profit’ organization

What’s the biggest surprise you’ve had in the Elements Academia recently?

Success we received in our strategic business despite starting late on this part of
business.

What are the learning experiences at Elements Academia?

• Scaling up while maintaining consistency and quality of training delivery

• Building a high performing second level of team at centers which can help
release our bandwidth for expansion and new initiatives
• Building a scalable training engine which has technology solutions
• Building a retail brand
•

What’s your opinion about the similar training Institutes and how do your institute
differ from them?

At one level our competition is similar employment oriented courses like NIIT, Aviation.
At second level, competition is also from tier II, tier III MBA colleges where also
students go for enhancing employability. AT third level, there are mom and pop shops
which claim to offer English/personality/job oriented courses but (generally) deliver very
low quality. However, the market is so big and diffused that a quality offering with
results which we are providing will surely make us a Tier I service provider
Benchmarking: A Discovery Mechanism for Six Sigma Learning
Abstract

The process of benchmarking was developed in the late 1970’s by Xerox Corporation
as it needed to rapidly learn how to combat the ongoing commercial attack by
Japanese industry and preserve its survival in the copier business. In this process
Xerox learned that evaluating competitors and copying what others are doing, while
this may be a time-honored characteristic of human behavior from the earliest of times,
it is not a necessary and sufficient condition to ensure that an organization remains
competitive. This fact raises an important question: What has characterized the
development in this process of benchmarking and what have we learned over the past
thirty years it has been practiced? Perhaps even more important is the question: What
is the role that benchmarking fulfills in a modern quality management system whose
foundation is built upon the principles and methods that are characterized as "Six
Sigma" methods for quality management? This paper describes how the method of
benchmarking is being blended into the analysis methods for process improvement
approach using Six Sigma, Lean Enterprise solutions, and Decision Workouts to
stimulate change management. Process benchmarking acts as the critical methodology
for generating a portfolio of improvement projects which can systematically increase
organization performance effectiveness, efficiency, and economy as it continues in its
journey toward performance excellence.

Introduction
Ever since 1990 when Roger Milliken declared that "benchmarking is the art of stealing
shamelessly" the definition benchmarking has evolved into a "quick fix" for making
quick business performance improvement. Benchmarking is a systematic and scientific
methodology for comparing performance between organizations to evaluate the relative
excellence of their alternative business practices based on the measured
achievements of analytical benchmarks. But, benchmarking is not a quick fix, it is a
rigorous process that requires both sweat equity, learning about one's own processes
and coordinating logistics of study mission to other organizations, and analytical
integrity, measurement and analysis of sustained work process performance through
the detailed mapping of processes and head-to-head evaluation of performance
differences.
In a typical benchmarking study the analytical information contained in a benchmark or
a comparative measure of process or results performance is used to establish which
organization is candidate for a "best practice" for a particular business process. Then
the business process must be specified in detail to understand how the benchmark
result was achieved and to determine which specific activities enabled the successful
performance. Finally, learning must be customized to apply new knowledge to
organizations that have not attained the level of "best of the best." A benchmarking
study must be analytically as well as culturally successful. The methodology should
heed the warning of Dr. W. Edwards Deming who said (Deming, 1982): "It is hazard to
copy. One must understand the theory of what one wishes to do." Cultural and
business model adaptation is necessary to assure that the lessons observed in one
organization can be successfully transferred to another organization whichoperates in a
different cultural framework. As Dr. Deming further cautioned (Deming, 1982): "Adapt,
don't adopt. It is error to copy."

In the development of Total Quality Management (TQM), benchmarking has a unique

place as both a tool to stimulate improvement and a management technique that aids
in strategic positioning of an organization. Benchmarking provides opportunities for full
organizational participation in business process improvement by engaging the
management team in the architecture of change and choice of focus areas for study;
involving the middle managers in self-assessment of the work processes that they own
and in adapting the lessons learned from other organizations; and relying on the study
of related processes by the organization's front-line process experts who are charged
with discovery of the significant differences that lead to performance gaps.

The objective of benchmarking is to accelerate the strategic change leading to both

breakthrough and continuous improvement in products, services, and processes,
thereby resulting in enhanced customer satisfaction, lower operating costs, and
improved competitive advantage by adapting best practices and business process
improvements of those organizations that are recognized for superior performance.
Benchmarking is a method that forces organizations to look outside them selves in
order to avoid myopic illusions of grandeur that come from reflecting on internal
experience without external validation.

Benchmarking is not just a checklist or set of numbers that are used to make
management feel better about their current performance. Benchmarking really should
make management uncomfortable due to the identification of gaps in business
performance. Benchmarking should challenge management due to the discovery of
performance enablers that could help them to improve. Perhaps the following
juxtapositions can help describe this situation

Benchmarking is: Benchmarking is not:

A discovery process A fixed, rigorous cookbook process
An improvement methodology A panacea for developing all problem
A source of breakthrough innovation Supporting continuation of "business as
An opportunity to gain profound knowledge A management fad or "tool of the day"
An objective analysis of working processesBased on a subjective "gut feeling" or
A process-based learning approach Just a measurement of performance results
A way to generate ideas for creative Merely a set of quantitative comparisons
A way to capture tacit process knowledge Limited to within industry/competitor
analysis
Table 1: Benchmarking Application Scope Analysis

It is important to observe that the logic of the benchmarking process does not fail the
test that was issued by Dr. Deming in the early 1980s, when he cautioned executives
against deadly diseases in the management of business that were derived from setting
arbitrary goals based solely on visible performance measures, without understanding
the depth of profound (process-related) knowledge that lay underneath most high level
performance measures.

For instance, Deming would call "arbitrary" the use of benchmarking using the logic
that is described in the first column of Table 2 where change is made based on
superficial observations or anecdotal evidence. The logic of benchmarking is much
more process-oriented and requires the development of the type of profound
knowledge advocated by Dr. Deming - knowledge of how the process achieves
statistically significant results based on the operational definition of work process
activities which have been meticulously specified in order to understand those specific
differences that could then be properly called the "root cause" of the performance
distinctions that have been observed. This logic is based on statistically sound
observations of process performance in order to discover the drivers of exceptional
results as shown in the second column of Table 2.
Traditional Logic: Benchmarking Logic:
The price of our competitor's product is The leading companies have very similar
15% lower than our costs; therefore, we operations that are consistently 20% more
must reduce our costs by 15%. effective and efficient that our operations.
The reasons that there operations are more
effective and efficient is because they have
implemented these specific enablers.
The specific practices used to improve this
work and produce this outcome include a
limited set of performance drivers.
The following enhancements in our way of
working would be appropriate for our own
business model and culture and should be
able to lead us to improved performance.
The estimate of performance improvement
that could be gained from implementing a
program of process enhancements would
be able to attain this theoretical gain.

Table 2: Comparison of Traditional Logic with Benchmarking Logic

The ability to apply this logic to learn about and understand the root cause of process
improvement at the benchmark organization thus encourages translation of these
lessons into appropriate change for the investigating organizations. By this process of
conscientious learning and cautious adaptation, a company can learn the lessons
needed to transition it to a level of World Class performance. Lee Raymond, CEO of
ExxonMobil, remarked in a meeting that I attended: "Benchmarking has been the most
important practice for the continuous improvement of our corporation."

History of Benchmarking
Benchmarking is a management process developed in the 20th century. It has
transitioned through four generations of development and now is in a fifth generation of
maturity. This chapter expands on previous writings and clarifies the relationships in the
transition of benchmarking that has brought it to its current level of global benchmarking
through the ubiquitous access to data and information that is offered through the
Internet (Watson, 1992, 1993, and 2007). Tracing the historical context of
benchmarking allows an improved understanding of how it can contribute to
performance improvement today. Let's begin this historical journey by gaining the
perspective from the close of the 19th century to understand how the industrial revolution
and its approach to interchangeable parts fostered the idea of interchangeable business
processes and the application of the scientific method to study business became
extended into the use of business measurements to define best practices.

The maturing of benchmarking could be viewed as a series of generations or stages in

development... This taxonomy of benchmarking is messy as the stages overlap and
some have no clear beginning or ending. But, perhaps by putting them in writing, along
with the logic that defines their boundary conditions, this will help managers to clarify
what exactly it is they are doing when they seek information to improve their business.
However, in this paper we will observe that there have been about five generations of
development for this methodology.

Moreover, we can observe, just like Sir Isaac Newton, that benchmarking enables us to
say: "If I have seen further, it is because I have stood on the shoulders of giants." We
see more clearly and make better decisions because we are not replicating the
mistakes of the past, but using the analysis of the past to sharpen our focus on the
future! Discovering profound knowledge from history can help you to see the future with
more perfect vision!
The Dawn before Benchmarking Science
In the late 1800's the management science work of Frederick Taylor encouraged
comparison of work processes through the application of the scientific method. Taylor's
concept was that there was "one best way" to do work and that it could be discovered
through the scientific study of the way that work was performed. When the best way
was discovered then this should be applied as the standard for work performance until
a better way was discovered.

These technical studies of work practices were conducted by industrial psychologists

and industrial engineers. During the Second World War, this practice of making
comparisons extended so that it became commonplace for companies to 'check' with
other companies in order to develop standards for pay, working hours, safety
regulations and related business hygiene factors.

First Generation — Competitive Product Analysis and Reverse Engineering

This first generation of benchmarking could also be labeled 'natural curiosity and its
natural extension.' Even when production was done by craftsmen forming individual
works with their own hands - artisans who saw each piece for its uniqueness, there was
a tendency to compare your own work with that of others to determine which was the
'best of the best' in your field. This concept of 'best of the best' is described by the
Japanese word 'dantotsu' which was the term Fuji Xerox used to describe the object of
the search for best practice. Today, this practice is observed through the engineering
teardown analysis used in reverse engineering to understand how competitive products
have been designed, what materials have been used, and what technologies were
employed in their production. Another focus is the competitive product analysis which
can take one of two forms: marketing-based comparing features or functional
performance to customer perception and technology-focused comparing degree of
performance that is delivered against a standard (e.g., computer run speed for a
benchmark software program). This form of 'benchmarking' will probably continue ad
infmitum.

Perhaps the most interesting insight in this period leading up to the development of
benchmarking comes from comments describing how comparative product analysis and
reverse engineering were applied in Japanese industry. In his book describing the
development of the Toyota Production System, Taiichi Ohno, former vice president of
manufacturing and co-architect of this system with industrial engineer colleague
Shigeo Shingo, described the visit that opened their eyes to the possibility of 'lean
manufacturing' as he talks about the observation of the stock replenishment system
that allowed fruits and vegetables to be sold while fresh and reducing waste from
spoilage. As he admits: "from the supermarket we got the idea of viewing the earlier
process in the production process as a kind of a store." He further observed (Ohno,
1990) that the Japanese adopted many of these practices because of their innate
"curiosity and fondness for imitation."
Indeed during the period of 1950-1975 many American businessmen felt that Japan was
merely a Sopycat' and therefore it did not present a serious business threat since it did
not invent any new technologies. At the macro-economic level this may be true, but what
the Japanese did invent was the ability to produce products with minimum waste
because they did not have a resource-rich environment that could tolerate the loss to
society that came from indiscriminate use of its scarce materials or poor productivity
practices. Indeed, during this time many Americans joked about the stereo-type
Japanese industrial tour where engineering visitors came gawking at the magnitude of
American industry taking many photographs to illustrate its greatness. These pundits
missed the point of the tours - to identify ideas that could be transitioned to Japanese
industry and improved to assure congruence with their developing manufacturing
practices that focused on lean operations. At the same time that its engineers toured
American plants, others stripped down the products and looked for ways to deliver the
same functions at lower prices - effectively value engineering the products by
eliminating waste from the design and its production process simultaneously.

Second Generation - Informal Visits and Process Touring

In a paradoxical way the second generation of benchmarking is once again more art
than science in benchmarking. There is a syndrome among managers to seek the
popular, adopting what is new, and worshiping what is popular without making a critical
assessment of its validity or applicability. These are weaknesses that are inherent in
many 'art-like' benchmarking processes. Taking a walk in a factory does not constitute
a benchmarking site-visit - this is industrial tourism. Brief conversations with colleagues
at a conference are not benchmarking - these are chats. Benchmarking must include
three elements: definition of an object of study, performance measurement of the object
and comparison to other similar objects in order to determine which alternative has
achieved the best capability and why. While these forms of 'benchmarking' will probably
also continue ad infinitum, they should be strongly discouraged, as they cannot
produce profound knowledge of the process that allows your organization to drive
improvement.

During this same period, American industry tended to internalize its efforts rather than
look toward external influences as if they would somehow poison the miracle of the
post-war industrial might that was transforming American into the world's greatest
economy. In its arrogance, many leaders in American industry believed that Yankee
ingenuity' was the solution to everything and that they had no need to look elsewhere
for creative ideas in either product or process technology. Given this internal focus, it is
not surprising that in the 1950's business leaders like Hewlett-Packard's Bill Hewlett
and Dave Packard encouraged their engineers to develop "next bench syndrome" - the
practice of checking with engineering colleagues to define those functions and designs
to be developed and implemented. This commercial arrogance was prevalent in
American products -engineering push of features into the marketplace without
consulting customers about needs or desires. This lead to a systemic vulnerability that
could be exploited by Japanese companies if they could discover what it was that
customers wanted and deliver it first. And they did exploit this vulnerability.

Throughout this first seventy-five years of the last century, methods related to
benchmarking could be best described as an art rather than a science. The
development of benchmarking into a science was the contribution of the Xerox
Corporation as it sought to fight an onslaught of Japanese businesses that were taking
advantage of a court ruling that stripped Xerox of its patent protection for its copier
business due to its monopolistic business practices. The largest beneficiary of this
ruling were the Japanese firms that developed disruptive technology at the low-end of
the copier business and caused Xerox to lose market share drastically in the period
from 1976 to 1979 - with a subsequent drop in return on net assets from 25% to under
5%. How did Xerox respond to this crisis?

Third Generation — Competitive Benchmarking (1976-present)

This phase of the benchmarking evolution was marked by the use of a scientific
approach to benchmarking commenced by competitive benchmarking as an extension
of competitive intelligence and market research. Competitive benchmarking seeks to
discover the specific actions that are being taken by competitors to gain advantage in
the market place through their strategic choices and capital investments in products
and processes. Since competition is the defining ingredient in a free market, this type
of benchmarking is an essential ingredient in every informed company's portfolio of
tools in their strategic business planning process.

After Xerox was forced to put its patents into the public domain in 1975, a steady
stream of foreign
Competitors entered its markets - lead by Canon of Japan and Savin from France. The
manner in which they chose to enter into competition caused little concern among
Xerox managers because the competitors were only producing personal copiers - low
throughput devices that fit onto a manager's desktop or file cabinet and were only
capable of reproducing a single page at a time and very slowly, compared to the large,
big-speed copiers that Xerox sold for use in central copying locations. However, it
became clear over a number of years that these small machines were taking work
away from the larger machines and the Xerox business model leased the machines but
sold individual copies that they produced. Thus, Xerox was losing its business one
page at a time!

The Xerox benchmarking of mail-order giant L. L. Bean is a classic tale in modern

business history. However, one lesson has been lost in this history - what was the
catalyst for doing this study and how did it get exposed? The Xerox management team
learned about their performance gap to their new competitors in Japan from their
Japanese subsidiary - Fuji Xerox, a joint venture firm that had been established
between Xerox and Fuji Photo Film. Yotoro "Tony" Kobyashi was the CEO of Fuji Xerox
at the time and it was his people who evaluated their Japanese competitors to allow a
three-way comparison to be accomplished. By comparing scarce open source
knowledge of the Japanese competitors to the detailed knowledge of a fierce, but
captive competitor (Fuji Xerox), Xerox Corporation was able to 'triangulate' (which
means to estimate performance of a third party using two known variables) and
determine their standing against the competition. This is what Bob Camp would call
'Step Zero' in a benchmarking study - a strategic discovery process that I call strategic
benchmarking (Camp, 1995 and Watson, 1993). Without this step and discovery, Xerox
would not have the insight about what or where it must focus its benchmarking lessons
to learn about what must change in its operations in order to make improvement
endure.

Xerox CEO David Kearns turned to his Fuji-Xerox Japanese joint venture lead by
Kobyashi to discover what could be done to stem the tide of lost sales and profitability.
The Xerox benchmarking method was borne out of the business requirement to
estimate their competitor's strength by triangulating from two known sets of
performance results (Xerox USA and Fuji Xerox) to learn about the unknown capability
of their Japanese competitors (Hillkirk,1986; Camp, 1989, and Palermo and Watson,
1994). This created a real wakeup call for the Xerox business leaders - not only were
Xerox new products twice as long in development, but their manufacturing cost was
equal to the sales price of the competing products. Thus, there was no way that Xerox
could compete head-to-head on these disruptive technologies.1 This provided the first
indication that there was real trouble at Xerox -performance indicators that
demonstrated that there was a gap in performance, but it didn't tell what the gap was,
why it existed, or what to do about it! Competitive benchmarking proved its value by
delivering this wake-up call, but it wasn't capable of providing a change agenda that
would return Xerox to profitability. For this, Xerox had to learn from business leaders in
each of the performance areas where they suffered from shortfalls against the
competition, so they put together a team to create a process for learning which they
called benchmarking.

While the lessons learned from competitive benchmarking told what was wrong and
estimated how far Xerox lagged behind the competition, it was the benchmarking of
industry best practice that gave sparks to fuel the creative imitation of leading
processes that brought Xerox out of its crisis. Xerox turned to companies with
successful practices in those areas where they had observed their own
1
Harvard Professor Michael Porter in is early book Competitive Strategy (New York:
The Free Press, 1985) describes the competitive dynamic for a market entrant where
the barrier to competition has been removed (patent protection) and the entrant has
cost-differentiated itself from the market leader. Harvard Professor Clayton M.
Christenson in his insightful books, The Innovator's Dilemma (New York: Harper
Business, 2003) and The Innovator's Solution (with Michael E. Raynor (Boston Harvard
Business School Pres, 2003)), calls this approach to a competition 'disruptive
innovation' in which new market entrants fundamentally change the game of the
competition by seeking a lower-profit, vulnerable market from which to attack the
mainstream market. In this environment, the new market entrant is given freedom to
operate in this market because it costs too much in terms of lost gross profit margin for
the entrenched leader to defend a poor profit market. Over time the market entrant
earns the right to compete for the mainstream market. This is precisely what Canon
and its Japanese competitive cohort did to Xerox.

shortcomings - the retailer Sears provided insights into inventory management, while
the mail order firm L. L. Bean contributed learning of warehouse operations. Learning
was incorporated at a furious rate and Xerox converted itself into a new company with
the result that by 1985 Xerox had increased its return on net assets to over 10%.
However, benchmarking was restricted at this time to the few companies that Xerox
studied and was largely held as an internal practice within the Xerox Benchmarking
Network - about 100 middle managers who conducted these studies. It was only after
Xerox put these methods into the public domain by opening sharing the practice after
they won the Malcolm Baldrige National Quality Award in 1989 that the interest in
benchmarking expanded

Afterwards Corporate Partnerships and Sharing Flourished

In 1981, a second event stimulated interest in business improvement. Dr. W. Edwards

Deming was featured in the NBC television White Paper titled "If Japan Can, Why Can't
We?" A challenge was issued to American management - they could improve their
business and survive or allow it to grow stagnate in the face of the Japanese competition
and die! At this time many American industries were under attack by Japanese firms -
Xerox was not alone; however, the influence of Deming was just to focus management
on the need to improve. Deming was not a big fan of benchmarking (Deming, 1982): "I
think that the people here [in America] expect miracles. American management thinks
that they can just copy from Japan. But they don't know what to copy."

However, Dr. Joseph M. Juran was the quality consultant who most influenced Xerox and
it is unclear if Dr. Deming ever really understood how the Xerox benchmarking
methodology worked. Deming talked as if he felt that benchmarking was more an art
than the science it had become under the coaching of Kobyashi at Xerox! But, Deming
always asked the question: "How do you know?" It is this question that is central to any
effort at benchmarking and is the point where Deming's philosophy and benchmarking
merge.

The effect of Deming's television white paper should not be diminished - it did
stimulate both an active dialog among companies as well as the sharing of best
practices (although not derived using the scientific method as at Xerox). In the early
1980s a number of companies engaged in cross-company sharing and studies which
were foundational as subsequent benchmarking networks. Some examples from my
direct experience at Hewlett-Packard during this time include:

•General Motors Cross Industry Study of quality best practice in quality and reliability
-a
1983 study of business leaders in different industries to define which quality
management
practices lead to improved business performance.
•General Electric Best Practice Network - a consortium of some sixteen companies
who met
regularly to discuss best practice in non-competitive areas. These companies were
selected so
that none competed against any other participant, thus creating an open
environment for
sharing sensitive information about business practices.

Hewlett-Packard also had a wide variety of collaborative efforts with other businesses.
For
instance, HP helped Proctor & Gamble understand about policy deployment (hoshin
kanri or
the planning process that grew to maturity at HP's Yokagawa Hewlett-Packard
subsidiary).
The nature of this collaboration included inviting two P&G executives to work inside of
HP
for a six-month period to experience first-hand how this planning process

•Worked. Another
company that enjoyed a special relationship was Xerox as it actively sought to learn
from the
leaders in product development and HP had a strong reputation for effective new
product
development. Also, Ford and HP conducted business practice sharing on many
different
levels as the chief executive officers were on each others boards of directors. HP also
was a
founding member of the GOAL/QPC Research Committee, a consortium of some thirty
or so
companies established to study Japanese quality practices and translate Japanese
training and
academic research material into English. Finally, HP joined with many other firms to
give
support to Florida Power & Light as they successfully challenged the Deming Prize of
the
Japanese Union of Scientists and Engineers (JUSE). FPL and HP shared the same
Japanese
Quality consultants which facilitated this cross-company learning (most notable among
these 'shared consultants' were Dr. Hajime Makabe and Dr. Noriaki Kano).

The Diffusion of Benchmarking as a Practice

Another significant event that accelerated the spread of benchmarking as a recognized
business best practice was the presentation of the Malcolm Baldrige National Quality
Award to Xerox which put a public spotlight on benchmarking as a practice that made a
difference at Xerox. David Kearns, the Xerox CEO who lead the company throughout its
turnaround effort, decided to put all of its quality practices into the public domain (these
included the benchmarking process, problem solving process and quality improvement
process) and Xerox also followed the practice of Baldrige Award Winners of offering
seminars to explain what they did and how it was accomplished. Bob Camp's successful
book reported on the work of "Team Xerox" to develop and deploy a common
method for benchmarking throughout the company. Following these efforts,
benchmarking gained more public attention as a number of books that were published
in the 1992-3 period that facilitated the diffusion of learning about the benchmarking
process.2

Fourth Generation — Process Benchmarking (1992-present):

Process benchmarking can be either strategic or operational in its focus depending on

where it is focused. The importance of the subject and the breadth of its application
distinguish between these types of studies. It is this type of benchmarking that forms the
core of scientific studies. Process benchmarking will be the continuing focus of serious
business investigations and will provide insights into the way businesses achieve
flawless execution of their processes to achieve excellence in the perspective of their
customers.

Institutionalization of the Practice of Benchmarking

However, it wasn't until the Houston-based American Productivity & Quality Center
(APQC) established The Benchmarking Clearinghouse (IBC) in 1992 that a common
methodology and approach for benchmarking was spread into a consortium of
companies who purposefully gather to share and study their internal practices in
common interest groups. The IBC was the brainchild of Dr. C. Jackson Gray son, the
founder of the APQC and one of the drivers behind establishment of the Malcolm
Baldrige National Quality Award. Grayson believed that benchmarking was not just a
fad but it was an essential business practice. Grayson had been a dean of two
graduate schools of business and administrator of the wage and price controls
process put in place to control runaway inflation in the early 1970s under the Nixon
administration. An endorsement about the business value of benchmarking coming
from him was indeed high praise, but to have him actively engage in a process to
broaden the scope of benchmarking through developing a forum that facilitated cross-
company learning was truly indicative that benchmarking had transitioned from a
company-specific quality improvement tool to an essential ingredient of management
best practice.3

The contribution of the IBC that lead to the eventual mainstreaming the practice of
benchmarking was four-fold:

•Creating a benchmarking network among a broad spectrum of industries and

supported by an
information data base and library located at its Houston office.
•Conducting benchmarking consortium studies on topics of common interest to
members.
•Standardizing training materials around a simple benchmarking process and
development of
generic business process taxonomy (in collaboration with Andersen Consulting) that
could
form a common process language and facilitate cross-company performance
comparison.
•Accelerating the diffusion of benchmarking as an accepted management practice
through the
propagation of the Benchmarking Code of Conduct that governs how companies
collaborate
with each other during the course of a study.

The final event that cemented the coming spread of benchmarking was its pervasive
inclusion in the criteria for the 1991 version of the Malcolm Baldrige National Quality
Award which mentioned the use of benchmarking or competitive analysis in 12 of the 32
evaluation criteria sections. This level of reference surpassed all other quality tools and
methods in terms of the number of mentions in the award criteria and indicates that
benchmarking was fast-becoming a mainstream practice during this time.

Mainstreaming Benchmarking into Business

By 1994 the IBC had directly reached over 1,000 companies in promulgating
benchmarking; the Malcolm Baldrige Award criteria had been ordered by over 100,000
companies and the combined sales of benchmarking books had surpassed 200,000
copies. Over the past ten years (1994-2004), a number of channels have come
available for diffusing the practice of benchmarking even further. Two channels for
benchmarking are worthy of particular attention: the Internet and the Global
Benchmarking Network (GBN).

It is clear that the advent of the Internet has changed many aspects of life by creating
'instant access' to both information and people. These are critical enablers of
benchmarking and thus allowing a much broader search for information and contact
possibility than was previously obtainable through personal contacts and cross-
organizational affiliations. The advent of the World-Wide Web as a global
communication resource strengths the ability to gain access to data, but it also
complicates the interpretation of information because there are no standards for analysis
and thus the web is inundated with a plethora of "Theory Opinion" that must be sorted
and sifted to discover truth. In my opinion, the full impact of the Internet on
benchmarking practices has yet to be felt.4

In 1993, discussions between the UK Benchmarking Centre, the Strategic Planning

Institute (SPI) (USA), the Swedish Institute for Quality (SIQ) (Sweden), the
Informationszentrum Benchmarking (IZB) (Germany) and the Benchmarking Club of
Italy came together to evaluate the possibility of a co-operative network. In 1994 the
Global Benchmarking Network (GBN) was officially established by these founding
members as a community of legally independent benchmarking centers, with the
objective to achieve a consistent understanding of benchmarking as a management
method and to promote its worldwide spread and utilisation. I view the GBN as an
extension of the Benchmarking Council of the Strategic Planning Institute which
preceded the founding of the APQC International Benchmarking Clearinghouse, but
focused on a few member companies following the model used by The Conference
Board for cross-company sharing thereby reducing its impact on diffusion of the
benchmarking methods to a wider audience.5 The GBN currently includes
benchmarking centers of
4
In an article that I wrote the potential for e-Benchmarking and other electronic tools is
described: Gregory H.
Watson, "Digital Hammers and Electronic Nails," Quality Progress, volume 31, number
7, July 1998, pp. 21-26.
5
The Strategic Planning Institute has returned to their original focus as provider of the
PIMS data base (Profit
Impact of Market Strategy) which was first developed by General Electric and
Harvard University and
Seventeen nations. Together, they represent more than 25,000 businesses and
government agencies. The President of GBN is Dr. Robert C. Camp of The Best
Practice Institute in the United States and author of the first book on benchmarking.6'7

Definitions

So, what is benchmarking? In order to understand this methodology we must first

define some key terms. There are three sets of definitions which will be presented.
The first terms that must be defined are those that identify the different ways to apply
benchmarking studies:
Process Benchmarking
Process benchmarking is a method for comparing performance between two unique or
distinct implementations of the same fundamental process. The method includes
internal inspection of an organization's own performance as well as the external study of
organizations recognized for achieving superior performance as evidenced by objective
standards by comparative analysis (the performance level is observed is called a
benchmark). The objective of a study for process benchmarking is not to calculate the
quantitative gaps in performance, but to identify best practices that may be adapted for
improvement of organizational performance. There are four types of process
benchmarking studies: strategic, operational, performance and perceptual
benchmarking.

Strategic Benchmarking
The process benchmarking of organizational strategy or key business process
performance in order to determine breakthrough opportunities for profitability and
productivity improvement is called strategic benchmarking. This type of study focuses on
those critical business areas that must change to attain or maintain the competitive
advantage of a business. Strategic benchmarking studies focus on critical business
assumptions, primary competence areas, core business processes, technology
inflection points, or business fundamentals that define organizational purpose. The
purpose of strategic benchmarking studies is to challenge the management to move
from a current state to a desired state of the whole business. Examples of strategic
benchmarking studies include: evaluation of options for the design of an organization's
governance structure; assessment of approaches used to implement advanced
technology (e.g., enterprise management software or paperless document handling); or
strategic business issues that are faced by the organization (e.g., creating a web-based
business capability; managing the technology transition across generations of
advancement; or managing the routine work of the organization through management
methods such as balanced scorecard, performance management and business
excellence assessments).

Operational Benchmarking
The process benchmarking of work processes or practices in order to discover
opportunities that will provide productivity improvement in the areas of effectiveness,
efficiency, or economy of the routine business operations is called operational
benchmarking. This type of study focuses on specific work activities that need to be
improved and seeks to identify the work procedures, production equipment, skills or
competence training, or analytical methods that result in sustained performance
improvement as indicated by objective measures of process productivity

(Process throughput, cost per unit, defect opportunities, cycle time, etc.)- Examples
of operational benchmarking studies include: analysis of invoicing procedures to
determine the most productive process; evaluation of production methods to determine
the highest throughput methods that deliver lowest cost and least defects; and study of
logistics distribution methods that result in both high delivery service performance and
low levels of finished goods inventory.

Performance benchmarking

The process benchmarking of product or service results using a standard comparison

or test under known operating conditions is called performance benchmarking. This
type of study seeks to answer the question: which product or service is better based
upon rigorous assessment using objective performance criteria. Examples of
performance benchmarking studies include: consumer product analysis that evaluates
products on a "head-to-head" basis using a fixed set of criteria for performance;
evaluate of product performance using a standard test, such as operating time to run
a specific application; or endurance tests that identify the ability of product to perform
over a fixed period of time under comparable operating conditions.

Perceptual Benchmarking
The process benchmarking feelings or attitudes about process, product, or service
performance by the recipient of the process output is called perceptual benchmarking.
This type of study seeks to answer questions like: how do you perceive the delivery of
service, performance of product, or execution of process by the people who are
recipients of these outputs? Perceptual benchmarking uses attribute or categorical data
to quantify subjective feelings and establish relative ranking of performance based on
such criteria as timeliness of performance, goodness of knowledge transfer, soundness
of information, courtesy of delivery agents, etc. Examples of perceptual benchmarking
include: surveys of training satisfaction at the completion of a course; employee
satisfaction surveys to assess work climate or structural issues about compensation
and benefits; or customer satisfaction with the product or service delivery to the market.

A second set of definitions identify sources of data used in conducting a specific

benchmarking study. These terms categorize benchmarking practices according to the
relative utility of information from the information sources.

Competitive Benchmarking

An approach to benchmarking that targets specific product designs, process

capabilities, or administrative methods used by one's direct competitors. For example, in
order to stimulate business model change Compaq made a detailed study of the study
of the performance in the laptop computer industry to determine business model
features that should consider as it initially determined how to enter into this market.
Here they studied the performance of the business models of those companies that
would become its competitors.

Industry Benchmarking
An approach to benchmarking that seeks information from the same functional area
in a particular application or industry (e.g., benchmarking the purchasing function to
determine the most successful approach for managing a supplier base).

Internal Benchmarking

An approach to benchmarking where organizations learn from "sister" companies,

divisions, or operating units that are part of the same operating group or company (e.g.,
the study of internal research and development groups to determine best practices that
reduce time-to-market for the new product introduction process).

Generic Benchmarking
An approach to benchmarking that seeks process performance information that is from
outside one's own industry. Enablers are translated from one organization to another
through the interpretation of their analogous relationship (e.g., learning about reducing
cycle time in production operations by the study of inventory management methods used
in stocking fresh vegetable in grocery stores).
Comparative advantages and disadvantages of these alternative benchmarking
data sources are presented in below in Table 3.

Source of Data Advantages Disadvantages

Competitive Provides a strategic insight -Legal issues regarding
Benchmarking into marketplace data
competitiveness and a sharing among
"wake-up" call to action. competitors.
-Study detail may not be
Industry Benchmarking Takes advantage of good
functional and professional enough for process
networks to gain study diagnosis.
participants.
-Functional concentration
Internal Benchmarking tends to support
Provides highest degree of operational
process detail and rather than strategic
simplified access to studies
Generic Benchmarking process information. -Does not challenge
paradigm
-Has the greatest of functional thinking.______
opportunity The internal focus tends to
for process breakthroughs be operational, rather than
-Because organizations strategic, and reinforce the
don't organization's cultural
compete, reliable detailed norms.
information is usually -Difficulty in developing an
available analogy between dissimilar
-Provides incentive for businesses.
strategic change initiatives. -Difficulty in identifying the
companies to benchmark,
-Difficulty in establishing
the
appropriate contact for a
study.
 Table 3: Benefits Analysis of Benchmarking Data Sources
Another set of terms are used to describe the different components of a benchmarking

study: Benchmark
A benchmark is a performance measure that is used to compare the products, services,
or processes between two analogous organizations in order to establish superiority in
sustained performance. Note that many of the benchmarks that are publicly promoted
indicate only "spot" performance at a specific point in time and do not meet the criteria of
"enduring success" by failing to establish the difference in performance between a
"special cause event" and a "common cause" management process. A lack of statistical
discipline in the use of benchmarks threatens to diminish the perceived value of the
process of benchmarking (see the section of this paper on presenting analysis results).

Best Practice
Best practices are that set of activities, tasks, resources, training, and management
methods that created an observed benchmark performance in a work process. In a
process benchmarking study, in order to qualify as a "best practice" the performance
must be observed and mapped to
Assure that the work performed is properly identified and that process experts have
validated and verified the distinctions between observed best practices and merely
good practice. Without the objective assessment by work process experts, "best practice"
becomes a subjective claim that is not verifiable.

Critical Success Factor (CSF)

These are quantifiable, measurable, and auditable indicators of process performance and
process capability in key business processes. They indicate in basic business terms the
performance level obtained in a comparative manner using such basic building blocks
of processes to describe the performance of business effectiveness (quality), efficiency
(cycle time), and economy (cost). Key critical success factors are universal and may
be used for cross-organizational comparisons for the same process.

Enabler

The specific activity, action, method or technique that stimulated progress in one process
over the comparative processes and lead to identification of a best practice (e.g., the way
Quality Function Deployment or Failure Mode and Effects Analysis was used in a
product design process; a process for data presentation that more clearly indicated the
action to be taken by front-line operators; or an employee training and development
system that delivers the appropriate skills and competence to process workers as they
require these methods to perform their work in a changing technological environment).

Entitlement
The set of key work process actions that are derived by examination of one's own
processes and discovery of wasted activities, duplicated steps or non-value added work
that can be eliminated or modified based solely on the self-analysis phase of
benchmarking. An organization is "entitled" to make such process changes without
relying on the lessons learned from external discovery. Such improvements permit the
process to operate as intended and represent gap closure between original process
design and current process performance. Entitlement also refers to the gap that may
exist between the capability designed into the process and the process capability
achieved during the discipline of its daily management. Organizations are entitled to
receive the performance that they designed and investing in. However, the methods of
standard cost accounting provide only average estimates (based on summary data)
thereby obscuring the effect of variation and making it more difficult to understand what is
the potential improvement that is achievable in the process if it could operate consistently
close to its design capability.

Gap Analysis

This methodology evaluates the performance difference between current internal

performance and benchmark performance at the best practice organization. To be
effective, a gap analysis should include both the use of statistical confidence intervals and
tests of difference (for both means and variance) to demonstrate that a real performance
gap has been observed, not a gap due to chance observations.

Radar Diagram

This graphical presentation tool provides a multi-variable display of comparative

performance for several dimensions of interest (e.g., cost, cycle time, quality, and
productivity). These dimensions are displayed on a single chart as spokes from the center
where each measure has its own unique scale, but all indicators are shown on the same
graphic to illustrate a performance profile for a specific process. The radar diagram
provides a more complete benchmarking assessment than a single point measure of
performance comparison.
Baseline Analysis

This analysis method compares performance baseline data across all benchmarked
processes. A common scale is used for each comparison based on the variation
observed in process performance. A best process is one that has both the highest
average sustained performance and the lowest variation in the daily results. The
performance baseline comprehends both of these factors using a standardized metric for
process comparisons (e.g., process standard deviation as calculated using the defects per
million opportunities as evaluated against a common customer requirement for targeted
performance). The baseline analysis may be presented as an Analysis of Variance
showing sampled performance as a function of the different process locations.

World Class
While it is intuitively clear that there is no one world best performance that exists at a
particular point in time (the enormity of analysis to support such a claim would be
unmanageable), it is possible to define a category of performance as "World Class" by
the fact that using a standardized measurement process (e.g., the performance baseline
analysis), the process was observed in the top 5% of all performance noted in the study.
This indicates that there is a high confidence level that the process is in a leadership
position and worthy of investigation for potential best practice areas.

The Benchmarking Process

The generic four-phases that these steps cover roughly follow a Plan-Do-Check-Act
(PDCA) process that is called the Deming Cycle and which is generic in all process
improvement models for process management and improvement. The PDCA approach to
process benchmarking is shown in Figure 1.
Plan - Do - Check - Act: Deming Cycle of Process Benchmarking

However, the process that I favor has seven steps which highlight the work that must be
done in a benchmarking study and which follow the four-phase. The seven activities in a
benchmarking process include:

•Identify Subject - choose what to benchmark

•Plan Study - identify your partners and plan your data collection
•Collect Information - actively collect the data and visit partners
•Analyze Data - analyze the data for performance trends and consistency over time
•Compare Performance - compare results and test differences for statistical significance
•Adapt Applications - prepare the lessons learned for transition to your own culture
•Improve Performance - implement projects to improve your processes

Each phase of the PDCA benchmarking process can be described using a set of
questions that identify items to address in these four phases of a study. Please note that
many of these questions are the same as the basic questions that one asks during any
TQM improvement project.

Benchmarking Step 1: Choosing the Benchmarking Topic and Planning the Study

Questions that must be answered in order to plan a benchmarking study include:

•What process should we benchmark?

•What is our process and how does it work?
•How do we measure it?
•How well is it performing today?
•Who are the customers of our process?
•What products and services do we deliver to our customers?
•What do our customers expect from our process?
•What are the critical success factors for this process?
•What is our process performance goal?
•How did we establish that goal?
•What data should we collect for comparisons?

Benchmarking Step 2: Identifying Partners, Collecting Data, and Answering

Questions
Questions that must be answered during this during the data collection phase of a
benchmarking study include:

•What companies perform this process better?

•Which company is best at performing this process?
•What can we learn from that company?
•Who should we contact to participate as our partners?
•What is their process?
•How representative is the process across different areas of their organization?
•How do they measure process performance?
•What is their performance goal and how was it set?
•How well does their process perform over time?
•Is there any difference in performance at different locations or based on seasonal
change?
•What business practices, methods, or tasks contribute to the process performance?

What factors could inhibit the adaptation of their process into our company?

Benchmarking Step 3: Analyzing Performance and Comparing Processes

Questions to be answered during this analyze phase of a benchmarking study include
•What is the basis for comparing our process measurements?
•How does their process performance compare with our process performance?
•What is the magnitude of the performance gap?
•What is the nature or root cause of the performance gap?
•How much will their process continue to improve?
•What characteristics distinguish their process as superior?
•What activities within our process are candidates for improvement?

Benchmarking Step 4: Implementing Recommended Change to Improve the

Process

Questions to be answered during this improve phase of a benchmarking study include:

•How does our knowledge of their process help us to improve our process?
•How should we forecast the future effectiveness of their process performance?
•Should we redesign our process or reset our performance goal based on this
benchmark?
•What activities in their process need to be modified to adapt it into our business model?
•What have we learned during this study that will allow us to improve on "best" practice?
•What goals should we set for our own process improvement?
•How can we implement the changes in our process?
•How will other companies continue to improve this process?

Note that many of the questions addressed above are the same as would be
addressed in managing implementation in any project improvement process.

Method Definition When to Use Advantages Disadvantages

Existing Data Review Analysis of Before A large numberMeasurements
data that conducting of sources maymay lack integrity
already exists original be available and not all of the
in-house or in in order to fix information important factors
the public the Systems. will be recorded
Domain. Baseline. to conduct a root
Cause analysis.
Mailed Questionnaire Written survey When you need Permits Response rates
provided to the to gather data data gathering are low; answers
benchmarking information over time, can may be
Organizations. from a large analyzed using and creative
It may contain number of computer rarely surface as
any type of different software and the there is no
question: true Or data is easy to and it is difficult
and false, Compile. to use a written
 multiple form to probe
forced choice, into difficult
scaled choice, "how to" types of
Or open- Questions.
Telephone Survey A written script If information is Can cover a Locating the right
of questions needed quickly group of person to
used to solicit or you need to respondents logistics of
data over the screen potential quickly and getting the
telephone in sources for people are likely on-line, and there
anticipation of in-depth follow to be more is only a small
engaging in a Up later. candid over the opportunity to
Specific dialog. Telephone. Exchange ideas.

Method Definition When to Use Advantages Disadvantages

Face-to-Face A meeting with When you need Encourages The interview
a one-on-one interaction, in- process takes
partner using interaction to depth time to
questions that probe and drive and open-ended and execute and
are prepared data collection questions - interviewees may
and distributed to a specific using a flexible be reluctant to
In advance. objective or style unexpected discuss sensitive
Level of detail. information can issues, concerns,
Be revealed. Or performance.
Focus Group An open-form When you want Direct sharing of Logistics must
panel or group to gather data data and internal carefully
discussion with information best practices Managed. If
a third-party from more than among partners is no openness,
facilitator one source at as a working "lowest common
coordinating same time or group that can denominator"
The dialog. when there are discuss topics may be found as
diverse a mutually set opposed to any
or ways to Agenda. Best practices.
toward an issue
Or problem.
Site Visit An on-premise When you need Can observe the Requires careful
meeting at a to observe actual practices, advanced plans
facility to the specific work or verify process And
follow-up to an Practices. performance For example,
interview, focus interpersonal its asks what
group or observation is characteristics, question of
and combines necessary to well as assess Whom?
data analysis evaluate enablers and the
with direct aspects" of the measurement
work process process Systems.
Observation. Performance.

Table 4: Comparison of Alternative Data Collection Methods Used in Benchmarking

Methods of Data Collection

In conducting a benchmarking study, there are several different approaches to data
collection that can be pursued by a benchmarking team. Table 4 describes the approach,
as well as the advantages and disadvantages, associated with each of the most popular
methods used in benchmarking studies.

Presenting Benchmarking Study Results

Some final points should be made about the process of benchmarking relative to the
analysis and presentation of benchmarking data. Care must be taken in the data
analysis efforts to assure that benchmarks are representative of real-world performance.
Specific cautions include the following statistical problems in benchmarking:

•Single data point measurements or observations that are passed off as a "benchmark"
•Measurement systems not validated for sensitivity of observation or calibration
•Averages used to represent performance benchmarks
•Missing variation data in process characterization
•Components of variance not identified according to their source
•Comparative charts not indicating both mean and variance

•Process changes not correlated with performance shifts

•Interactions not identified among the different process variables

Clearly, there can be many issues that create problems in the measurement and
analysis of results from benchmarking studies. Careful planning and solid data
collection and analysis efforts can achieve the elimination of these opportunities for
error introduction into a benchmarking study. Whenever possible, analysts conducting
benchmarking projects should have the same education as Six Sigma Black Belts in
statistical analysis to assure the analytical soundness of study results.

Perhaps it will help to consider some examples in order to understand benchmarking

studies a little better. Consider the following four examples of benchmarking studies and
the factors that caused management to initiate each study.

Triangulation Warning: Benefits and Pitfalls of Benchmarking

Benchmarking is a business process that encourages managed change. It encourages
an organization to take an objective, external perspective in evaluating its performance.
The benefit of benchmarking comes from three specific actions:

•The gap between internal and external practices creates the need for change.
•Understanding the benchmarked best practices identifies what must change.
•Externally benchmarked practices provide a picture of the potential result from change.

However, no business improvement methodology is a stand-alone solution to all

problems. Lest process benchmarking appear to be a panacea for problem-resolution,
the following set of potential pitfalls in conducting benchmarking studies must also be
disclosed:
•Selecting benchmarking partners that do not convince management (not-respected)
•Choosing benchmarking partners to meet popularity tests with no performance
substance
•Accepting public relations claims as process performance benchmarks
•Assuming that measurements are the same in different organizations (without checking)
•Identifying process measures that are not traceable from strategic to operational levels
•Conducting statistical analyses that represent surface observations - not root causality
•Failure to validate performance with on-site inspection to verify benchmark claims
•Enforcing implementation of a benchmarking lesson across a cultural barrier
•Use of "benchmarks" for management decisions without recalibration over time

These pitfalls in benchmarking applications can be avoided by taking a professional

approach to the conduct of a study and using trained employees to facilitate improvement
projects that will use this methodology to seek ideas for improvement. The improvement
through "creative imitation" as the study team seeks innovative ways to apply the lessons
it has learned through the study.

Comparative Analysis and Competitive Advantage

What does an organization gain in the way of competitive advantage from benchmarking?
In the long run competitive advantage comes from out-thinking and out-performing
competition. When an organization uses benchmarking effectively, they are able to think
ahead of their industry and to act efficiently by adapting lessons learned from cross-
industry studies to permit them to creatively imitate the best performing processes in the
world. Over the long-haul this can establish them as the thought-leader within their own
industry. In the final analysis, it is not out-thinking or prior knowledge that results in
competitive advantage, it is in the excellence of execution of such new knowledge and
the creative application of breakthrough insights that wins in the long-term. To achieve
a dominant position in a market, a company must both know and do better than its most
aggressive competitors. Benchmarking can help develop the competence to achieve this
position, but it must be supplemented by management will and knowledge in order to
make success happen.

Six Sigma Learning Approach

According to ancient Greek philosopher Heraclites "everything is in a state of
change." One often-expounded comment is: Do you need to manage change or change
the management? Unfortunately, many organizations take a 'slash and burn' approach to
"restructuring" or change management - cutting here and there, moving units or groups
to consolidate their functions, merging or acquiring, etc. - without fundamentally
understanding what is the critical issue facing their business and the way it is currently
working. This is not what we will consider in thinking about change management
stimulated by benchmarking. Our basis for thinking about managing change relies on
organizational learning principles of industrial psychology.

Harvard psychologist Chris Argyus defined "single-loop learning" as the 'detection and
correction of errors' or learning what to do. One could argue that this is the objective of a
Six Sigma project. "Double-loop learning" is 'questioning the system of learning itself
resulting in a correction of the underlying principles, theories, policies of the organization
or implementing insights for change that were identified in the detection and correction
process. (Argyris and Schon, 1978) One could also argue that this is the rationale for
leveraging the learning of in a benchmarking project. Robert L. Hood (Hood and Room,
1996) extended this concept to define triple-loop learning - learning what we need to
learn - learning how to learn differently - permanent learning that changes the way people
work at the institutional or cultural level because the change masters have the power to
mandate the new processes! Thus, in benchmarking projects, single loop learning
occurs during the analysis process and double-loop learning occurs during the
management review of the benchmarking project outcomes as the lessons are integrated
throughout the organization. Triple loop learning must occur through a senior level
reflective review of overall continuous improvement efforts of the organization focusing of
its work to "recognize" what change must be encouraged and selected as an improvement
project to create enduring quality as a way of working in their organizational culture.

An old point must be reiterated. In the mid-1900s industrial psychologist Allan H.

Mogensen -known as the father of work simplification - used the process chart (among
other tools) to organize and study work. He drew on the common sense of people who
did the actual work for improvement ideas. Mogensen (Graham, 2002) defended
participative management: "The person doing the job knows far more than anyone else
as to the best way to do that job, and therefore is the one person best fitted to improve it."
This describes a basic belief of employee involvement and teamwork programs. When
employees can 'see their fingerprints' on a change initiative they tend to be supportive
rather than resistant to change. However, failure of change initiatives is typically not
due to non-involvement of employees - it is usually a leadership problem. Harvard
Professor John P. Kotter observed that there are eight major errors that inhibit success
in non-enduring change initiatives - all of these errors are associated with the leadership
of an organization (Kotter, 1995):

• Not establishing great enough sense of urgency.

•Not creating a powerful enough guiding coalition.
•Lacking a vision.
•Under-communicating the vision by a factor of ten.
•Not removing obstacles to the vision.
•Not systematically planning for and creating short-term wins.
•Declaring victory too soon.
•Not anchoring the vision in the corporation's culture.

Indeed, there are some strong implications of these errors when doing process
improvement projects -especially regarding the need for appropriate communication
with the project's stakeholders. However, the far deeper application of error-correcting
behavior can be made when the organization's business leaders are engaged in
improvement project review and are active contributors to the definition, resourcing and
implementation of the solutions based on the project team's work. Close engagement and
alignment of managers to these projects will increase the effectiveness of solution
implementations as well as decrease the time required to make the solutions fully
operational.

Harvard Professor Rosabeth Moss Kanter (Moss Kanter, 1983) defined a change master
as: "those people and organizations adept at the art of anticipating the need for, and of
leading productive change." Becoming an effective change master is a challenge for the
business leaders who act as the champions change projects. While quality managers
and process improvement specialists (e.g., such as Six Sigma Black Belts) serve as the
'technical maestros' who drive the first two loops of the organizational learning process, it
is the business leaders who are the true catalysts of change at the triple loop level. The
Change Master is one who masters the circumstances of the organization, rather than its
detail. Only through anticipatory change can organic growth occur in an organization.
Thus, leading long-term, sustainable growth efforts - a critical success factor for business
leaders - requires mastery of the future state of the business and change focused in
the right direction to drive continuing success. This is the job of those people who
serve as business leaders and take the responsibility for bringing the organization to new
levels of performance improvement.

Adaptation of Learning from the Triple Loop of Benchmarking

Process benchmarking is an important tool in any organization's TQM methodology
repertoire and it can help improve strategic direction as well as operational performance.
However, the practice of process benchmarking is almost thirty years old. It has been a
discovery methodology that is used to stimulate learning and help organizations to think
about creative options to design and implement new ways to improve its business
processes. Coupled with solid statistical data analysis, best practice identification and
cultural adaptation have helped organizations to both "learn" and "do" business process
improvement more effectively. What is the next step in the development of
benchmarking?

Fifth Generation — Global Benchmarking (1996-present):

The roots of the fifth generation benchmarking were laid in the mid-1990s with the
advent of the Internet which provides global access to information. Thus, global
benchmarking was born in about 1996 and continues to the present. Global
benchmarking extends the boundary of benchmarking geographically to encompass the
best process that can be found in any location and in any analogous business. Thus
global benchmarking uses a generic approach as in process benchmarking for inter-
organizational comparisons of processes and it couples this with e-Benchmarking to
employ the Internet for screening performance information, identifying potential
benchmarking partners, and communicating in the study (via web-casts, pod-casts, wikis,
blogs, and other related group learning and communication techniques) to share the
results of studies. In this evolving age, benchmarking will become much easier and
more accessible as a learning device for organizational leaders
Aristotle taught that excellence is borne out of habit. We know that habit is the consistent
repetition or doing the exact same thing over and over again when confronted with
the same set of circumstances. This also happens to define the concept of a process.
When processes consistently are able to produce excellence, then they have become an
organizational habit which enables this result. It is the obligation of organizational
leaders to produce both short term excellence as well as long-term strength in the
organization so that it may sustain excellence. Today, Six Sigma represents the most
widely-accepted approach for assuring organizational excellence; however, it is not such
a comprehensive methodology that it is able to satisfy all improvement needs of an
organization. Indeed, organizations must blend their Six Sigma problem-solving
methodology with a number of other learning and organizational change methods

Change management is an essential success ingredient in any quality program; however,

the emphasis should be placed on the third order or 'triple-loop' role of the business
leaders who serve as project champions, steering committee members or deployment
leaders. For quality professionals and team leaders the emphasis should be placed on
the second level or 'double-loop' learning and their facilitation of change management
at the working level to make change more acceptable to the people who are affected by it
- by involving them in the project and actively communicating project progress to all
affected stakeholders so there are no 'surprises' at the end of the project. Finally,
people who are working on the front-line of the process should emphasize the primary
order of business or the first loop of learning which is getting the job done for the
customer - consistently delivering reliable results as judged by their customer's
performance standard.

Six Sigma methods do not provide a stand-alone solution to organizational problems any
more than do the methods of benchmarking. However, Six Sigma represents a best
practice methodology which managers can wield to improve issues facing their
organization and drive performance improvement in the content of the organization's
work.

Today the developmental journey of the Six Sigma methodologies has transitioned to the
point where it is blending a number of methodologies into a comprehensive quality toolkit
for design as a process of management (which is distinct from the content of both
strategy and management). This paper has describes how the method of benchmarking
has been blended into the process improvement analysis methods called Six Sigma. In
addition to process benchmarking, other methodologies that have been blended into the
core quality and statistical toolkit that initially defined Six Sigma methods, includes Lean
Enterprise solutions modeled after the management systems developed at Toyota,
policy deployment (hoshin kanri) planning systems developed through a number of
companies in Japan as coordinated by a number of quality experts, along with the Change
Acceleration Process and Decision Workouts that General Electric developed to
coordinate change management. Process benchmarking acts as the critical methodology
in this toolkit as it generates ideas that feed a portfolio of potential improvement projects.
Senior management must choose which projects to accomplish and how to coordinate it
resources to systematically increase organizational performance effectiveness, efficiency,
and economy as they continue in their journey toward performance excellence in the
conduct of their mission.

The leading organizations in the world plan to win and win by planning. Benchmarking
permits the improvement of performance for any organization by providing it with a
methodology to learn and thereby challenge its critical strategic and operational
assumptions by thinking differently about its direction and how it is planning to achieve its
vision. Applying benchmarking as a tool of quality management is an effective way to
evaluate options and perform an assessment of alternatives by considering the strategic
implications that may be observed in other analogous situations. Learning such lessons
will reduce the likelihood of "repeating the mistakes of others" enhancing the capability to
perform in the future.
 INDIAN RDUCATION SECTOR (IES)

IES: THE’ LARGEST'...

IES is by far the largest capitalized space in India with government spend of $30bn
(2006; at ^3.7% of GDP, it is in line with the global average). For the 11' 5-year Plan,
the Centre has allocated a 6x higher spend on education. Importantly, the extent of
the spends have created one of the 'largest' education networks globally of ^lm schools
and 18,000 higher education institutes (HEIs) in India, home to the largest population
within the age group 0-24 years.

The statistics are indeed impressive, but a closer look reveals that these spends are
not only 'insufficient' but also 'inefficient'. Considering global distribution patterns of
public education expenditure (international PPP$) and population, India's spend on
education is highly disproportionate! While countries in North America and Western
Europe account for more than half of the global spend on public education, less than
10% of the world's school-age population (5-25 years of age; from primary to tertiary
levels) lives in these countries. USA's assigned public spend amounts to 25% of the
cumulative spend on just 4% of the target population group. In sharp contrast, India's
public spend on education amounts to ^5.2% of the world's cumulative public spend, but
the country is home to 20% of the population in the target group.

Further, a break-up of government spend shows that only a miniscule 0.82%

component goes towards capital expenditure. A whopping 80% of the revenue
expenditure on teachers' salaries leaves little to be spent on infrastructure creation,
which eventually translates into 'ineffective' infrastructure/ quality of education. While
India has a network of more than 1m schools, 66% of these are only till the primary
level. Inefficiency of the public education system is amply captured in the fact that only
61% of the target group is enrolled in schools and with dropouts as high as 40%, net
enrollment levels are a dismal 37%.

Q 'Private' players - balancing the 'inefficient' equation

Given the dismal state that IES (read government-run schools/ institutions) is in,
consumers are increasingly veering towards private institutions, typically perceived as
hallmarks of quality (even though quality comes at a price). In this backdrop, the
market for private formal education has grown to a stupendous $40bn in size over the
past few decades. Not only that, a $10bn market has evolved around the formal
education segment.

We have divided the private spend of $50bn (IES opportunity) into two segments:
Formal ($40bn) and Non-Formal ($10bn) IES. Below we give the broad structure
followed by formal IES and the key non-formal segments flanking it.
Formal IES: The formal educational system in India broadly comprises schools
(often classified as K12 -kindergarten to 12th) and higher education (HE) level. All
the levels, from school to higher education, fall under the purview of the Ministry of
Human Resource Development (Department of School Education and Literacy &
 Department of Higher Education). Schools cater to the '3-17 years' age group. With
no central governing body for K12, they are ruled by state boards/ ICSE/ CBSE/
International Boards. Higher education institutes cater to the '18-22 years' & above
age group. With a single governing body (UGC), HE comprises graduate/
diploma/ professional courses. This may be followed by post graduation courses.
Non-formal IES: The non-formal education segments flanking the formal ones
include preschools (1.5-3 years), coaching classes, multimedia/ IT to schools and
colleges (catering to both private and public institutions), vocational training and
the books market. The segments are free of any regulations (i.e. no governing/
regulatory bodies for this segment).

Private institutes in the formal education space (K12 and HE) have proliferated rapidly
over the past many decades — and as many as 75,000 schools out of the total 1m
existing schools are privately-run. The importance of private participation is underlined
by the fact that even as only 7% of the total schools are private, they dispense
education to 40% of India's total students enrolled. This is despite K12 (schools) being
a focus area for the government as less than 10% of the total public expenditure on
education is assigned to higher and university education. As a result, 77% of India's
-18,000 HEIs are private.

Spends on private education to increase to $80bn by 2012E: India's current

spend on education is at 5% of average household (HH) income, showing a CAGR of
8.6% versus consumption growth of 3.2% over 1995-2005. Going forward, we expect
the consuming class, i.e. HHs with annual income >Rs90, 000, to burgeon from 28%
of the total population in 2002 to 48% in 2010. Increasing affluence has been fostering
higher aspirations for India's populace, and the ability as also willingness to pay are
guiding its education sector through a phase of price discovery. The $13bn spent
annually by Indians on higher education in the overseas markets asserts the pay power
of the education-hungry Indians.

With an inefficient public education system, a growing young population, a

bourgeoning middle class (with the intent and ability to spend) and price discovery that
the IES has seen over the past decade, we expect 14% CAGR in private spends on
education ($80bn by 2012). Non-formal segments are fast-growing areas of the
education landscape — we expect 18% CAGR for them over the next few years
against 13% CAGR for the formal education space. (For further details on formal and
non-formal segments of IES, refer to page 20 and 21.)

A failed public education system, high socio-aspirational value attached to education and
increasing affordability have all converged to drive demand for quality education
(synonymous with private institutes). The $50bn education market, estimated to
expand to $80bn by 2012, portends a great opportunity at hand for wealth creation.
BUT the ground reality is in stark contrast.
While private players have been active in the formal IES for a few decades, the 'not-for-
profit' mandate has kept profit-driven corporates away from the $40bn opportunity.
In the $10bn non-formal space, scalability remains an issue in most pockets. Inability to
transform the businesses into a 'process-driven' model from 'people-driven', as also
lumpy nature of revenues, has materially curtailed scalability in the highly fragmented
and largely regional markets. While scale is attainable in a few pockets, we maintain
education is a difficult business to scale - our stand is vindicated by the dearth of
scaled-up players in the space.

Q Formal IES - regulations a 'big bully'

While India has been proactive on liberalization, IES has remained largely
untouched by the reforms process. A 'priority sector' status does ensure fund flow to an
extent, but the government's agenda of 'social inclusion' has trapped IES in a regulatory
maze. Archaic rules mandate all formal educational institutes in India to be run as 'not-
for-profit' centers under a society (registration under the Societies Registration Act 1860)
or a public trust (Registration Act 1908). Any surplus funds generated in the process of
running formal schools/ HEIs have to be ploughed back into the same school/ HEI and
no dividends can be distributed.

K12 segment; At $20bn, schools (also popularly known as K12, i.e. from
Kindergarten to 12th standard) form a core of the total market. A student can
continue to be a part of the education system — or his/ her 10' or 12' grade scores
would be recognized — only if he/ she passes out from a K12 institute affiliated to a
board recognized by the system. Hence, all K12 institutes have to be affiliated to an
education board — either central boards like ICSE and CBSE or a state board. While a
few states confer on schools the right to act as profit-generating entities,
educational boards still demand strict adherence to the not-for-profit structure.

Of late, a trend has emerged wherein some schools have been seeking affiliations
with various international boards such as IGCSE (International General Certificate of
Secondary Education) and IB (International Baccalaureate from Geneva); in terms of
operating structure, while these schools can opt for either a not-for-profit trust or a for-
profit company, they can do so only after evaluating the state laws (e.g. Haryana
allows schools to be run for-profit while most states do not).

HEIs (Higher Education Institutes): At $6.5bn ($20bn including cash transactions of

^$1.5bn and the $13bn spend outside the country), HE is the second largest
opportunity in IES. HEIs seeking recognition by the apex regulatory authority named
UGC (University Grants Commission) also need to be run in the form of a trust/ society.
Technical education institutes find themselves regulated under various professional
councils as well — e.g. AICTE (All India Council for Technical Education) is the
regulating authority for engineering and MBA colleges.

With most of these bodies perceived as extremely corrupt and bureaucratic (a typical
case of'over-regulation but under-governance'), it is difficult for new players to enter
and existing players to expand in the space. However, an HEI (unlike K12) can do
without recognition from these bodies — as long as they are a quality institute with
acceptance from the industry (a student typically joins the industry after passing out from
HEIs). A case in point is ISB (Indian School of Business, Hyderabad — a premiere
business school), which has proved that a quality institute with strong industry acceptance
does not require the stamp of affiliation with these bodies.
This implies that 80% (formal IES) of the market potential is not directly exploitable
by corporates with profit-driven business models. Due to the high involvement of
politicians with respect to ownership and the shortage of quality institutes leading to
lucrative cash transactions, the much-required structural change in education does
not appear to be in sight. Other issues that plague the sector are high land prices and
little clarity on FDI pertaining to this space.

Q Non-formal IES - scores low on scalability

While we expect the non-regulated $10bn non-formal market to witness 18%
CAGR till 2012, the market broadly consists of segments that are inherently difficult
to scale. In fact, scalability can be achieved only in less than 5% of the market while
three of the largest segments (95% of the opportunity — coaching class; ^64%,
vocational training; 15% and books; 17%) offer limited value creation potential.

Market remains regional and fragmented...

India's non-formal education market is currently dominated by coaching class
business (accounting for 64% of the total). However, the business ($6.4bn; 15%
CAGR till 2012E) is inherently regional in nature and person-centric (a people-driven
model), which implies high dependence on a 'brand-teacher', or a low degree of stability
and scalability.

We believe ^80% of the coaching class market arises from subject/ concept-based
school and tertiary level coaching, which has to be localized to suit the dynamic needs
of various institutions and has high dependence on 'brand teachers'. Mahesh Tutorials
(revenues of Rs700m in FY09E) is one of the few coaching class players that have
managed to achieve some 'scale' in this non-scalable segment.

Notably, the remaining 20% of the coaching class market has lower dependence on
people and a larger focus on national level content, making it relatively easier for
players to attain scale. Against this backdrop, players in the test prep space - like FIIT-
JEE (revenues of Rsl.2bn), IMS (Rslbn), Career Launcher (Rs900m) and TIME
(Rslbn) - have attained a relatively higher scale.

The vocational training market ($1.5bn, 25% CAGR) accounts for 15% of the non-
formal IES pie. Though the market is continuously evolving with emergence of a host
of new avenues beyond IT trainings (financials, retail, aviation, management
certifications and spoken-English trainings), scalability remains low. Given the
dominance of unorganized segment, and inconsistent revenue flows in the corporate
and retail training verticals (trainings is a discretionary spend), there are hardly any
scaled-up/ scalable players.

In the books business ($1.7bn, 9% CAGR), high reusability of books has been
instrumental in capping the growth potential for players.
...scalability only in pockets
Barring a few like Educomp Solutions and NUT that have acquired the 'relevant' scale,
the 'largest' players across the space are still small. Some scalability has been seen
within the coaching class space focusing on the post-grad test prep space (medium-
high scalability in our view).

Going forward, we expect a few relevant players to be able to create scale and value
within the nascent organized preschool market ($300m; 36% CAGR till 2012E).
Multimedia for private schools, though currently a small market ($70m, "60% CAGR
till 2012E), offers value creation potential given that it is highly under penetrated
and a technology-driven model. Educomp Solutions has a lion's share ("45%) of the
multimedia for private schools market and a distinct first mover advantage in the space.
ICT (Information and Communication Technology — $90m, "70% CAGR till 2012E), at
market penetration of <11% suggests high potential, but ability to create value is
relatively limited in view of LI bidding followed for award of contracts.

LOW /Q OF IES, BUT WE ARE BETTING ON MAVERICKS_____________

While inefficiencies in the public education system and price discovery have created a
substantial opportunity in the private IES space, there is a dearth of players across
segments offering scale. We believe this is the key reason for the sector to have
attracted limited capital chase (private equity of $ 180m till date).

Notably, there have been no significant investments in the formal education space
(except Manipal Universal Learning). Also, ^20% of the investments in the unlisted
space have been in US-centric e-learning companies which cater to the outsourcing
needs of publishing houses and training needs of companies. Other deals have been
in non-formal areas such as preschools, tutoring, test prep, Multimedia/ ICT and
vocational training.

Q 4Cs differentiate the 'men' from boys

With few scalable players, the lucrative IES market possesses low IQ. We have
identified some unique KSFs which, according to us, equip players to attain a higher IQ;
thus, our investment thesis in IES rests on the 4Cs — Credibility (management intent
and ability), Capital (built to last), Creativity (ability to 'manage' the over-regulated
environment) and Content (ability to differentiate and build annuity).

Q Credibility - management intent and ability

A management's 'intent' and 'ability' to attain scale and create value are the key
factors to determine its IQin IES. While the success of Educomp Solutions
(among world's top 15 companies by market capitalization within the education
space; excluding the books market) has lured many a players to join the fray, we
believe just a handful of them has it in them to compete in the long haul.

Only a few players have been able to earn credibility in terms of ability to scale.
Players that have managed to do so as also create a BRAND will be at a distinct
advantage going forward (in education sector, brand creation is a tough and long-term
game — a minimum of three batches, i.e. six years, should pass out and be successfully
placed within the industry before an HEI creates a brand). Thus, we see incumbent
leaders with strong brands in respective segments scoring over peers.

Given that most segments of IES offer limited scalability, some players — to expedite
scale — are increasingly looking to lever their established credibility in one part of the
value chain to other areas of the education landscape. For example, preschool
operators like Kidzee, Euro Kids and Kangaroo Kids are levering their brands to enter
into the K12 space, while NIIT is extending its brand in IT trainings to BFSI, spoken-
English and BPO training segments. Coaching class players like IMS are planning to
straddle the HE spectrum (vocational training and HEIs), and Career Launcher is
working on attaining a footprint across the value chain. Going forward, consolidation
(acquisitions) could be adopted as a way to grow faster in existing and new operations
within IES.

Q Capital - built to last

Education is a capital-intensive business with majority of the formal and non-
formal segments requiring heavy upfront investments. Setting up a K12 school
entails a cost of ^RslOOm (excluding land cost) while HEIs require much higher
investments (a medical college would typically require Rs4bn-5bn). A few
businesses in the non-formal space also call for heavy upfront investments -
e.g. upfront capex of ^Rs85, 000 per class per school for Multimedia in private
schools and Rs250, 000-300,000 per school in the ICT business.

Q Creativity - 'manage' the over-regulated environment

Taking a cue from independent school-owners 'extracting' profits from trusts
(schools and HEIs) in the form of lease rentals and management fee, some
players have taken the age-old informal structure to the next level. The nascent
corporate activity in the formal education space is using a two-level structure to
circumvent the 'not-for-profit' diktat. While multi-layered regulations have meant
that 80% of the opportunity (formal education) remains elusive to commercial
activity, 'innovative' players like Educomp in K12 space are successfully using
these structures to scale up. A host of other players like Kidzee, Euro Kids,
Kangaroo Kids and Career Launcher are also looking to scale up within the K12
space by using similar structures.

Innovative structures — The 'innovative structures' have emerged to

break the 'trust' issue. The company creates a trust (a not-for-profit body)
that runs the educational institute at one level. It further creates a
subsidiary that supplies land, services and infrastructure to the trust in lieu
of rental/ fees. In this way, the entity manages to unlock the 'surplus' and
distribute it as dividends or use it to fund other ventures.
 Clearing the air on 'Regulatory Ambiguity'
With strong social connotations attached to education, the risk associated with
two-tier corporate structures cannot be completely eliminated. In this direction,
we sought views of various industry and legal experts on the survival quotient of
these structures. The key highlights are as follows:

Regulations governing the K12 space: The CBSE/ ICSE and state board
regulations stipulate running of a K12 institution ONLY as a trust or society.
Income from the trust is non-taxable but the 'reasonable surplus' (not
defined) can be used only for development of the same institution and cannot
be distributed as dividends.

Regulations governing the Higher & Technical Education space: The rules are
more stringent here than for K12 as an HEI is simultaneously governed by a
central body (University Grants Commission — UGC) and a regulatory body
specific to the field of specialization offered by the HEI (e.g. AICTE for
engineering and medical colleges). The UGC stipulates that the Higher and
Technical Education institutions be run as a trust or society where all the
infrastructure and capital goods have to be on the books of the university. AICTE
further has its own set of rules wrt infrastructure and curriculum - in case an HEI
fails to comply with the same, it is blacklisted (110 universities blacklisted as on
date).

However, taking UGC or AICTE's approval is the prerogative of a University.

For example, ISB and Amity have been running as not-for-profit structures but
without seeking recognition from AICTE.

Regulations governing a corporate entity providing management services and

land/ capital goods on lease to a K12 institution running as a trust: A company
set up to offer services and land/ capital on lease can be run as a for-profit body
and does not fall under the purview of the school education boards. The trust
will have teachers on the rolls and collect fees from students while the
remaining services are outsourced. This structure has been in existence for
years and has not been challenged. However, it is recommended for the trust
and the managing company not to be run by the same management and
common directors, and that the transactions are done at an arm's length. (The
transactions have to be done at a fair market value, as if the two parties were
unrelated.)

Q Content - ability to differentiate and build annuity

While education is a difficult business to scale up due to high dependence on people
and low revenue visibility, scale can be achieved with the 'right' content/ offerings. Thus,
we believe players with the ability to create a differentiated product/ process with
annuity business model can break the scalability barrier.
PRESCHOOLS: PLAY TIME

A part of non-formal IES, the $300m preschool segment is expected to be a $1bn market by 2012
(36% CAGR) led by low penetration (1 out of 100 preschool-aged children enrolled) and further
price discovery. With low entry barriers, corporate activity has gathered pace and 11 major chains
and ~10 smaller players are active in the space. While the scale-up has so far been on the franchisee
platform, corporates are increasingly forming JVs with builders/ partners and moving up the value
chain by upgrading to K12 schools. The strategy imparts resilience to the model against high lease
rentals besides ensuring scalability. With players planning aggressive rollouts, the organized segment
is growing faster than the industry (50% vs. 36% CAGR). Within this highly fragmented market, we
expect Euro Kids (one of the largest preschool chains) and Kangaroo Kids (an innovative player) to
be relevant players going forward.

Preschool market: multifold growth

Playschools, more popularly known as preschools, traditionally cater to the 1.5-3 years
age group. Increasing awareness among parents about the benefits of a quality
preschool education has been driving penetration levels and price discovery in the
segment. Led by these factors, we expect the market to expand by more than 3x in
size by 2012. While the market is currently highly fragmented and unorganized in
nature, increasing prosperity is driving a shift towards the organized segment. A
largely urban phenomenon, there has been rapid proliferation of organized preschool
chains beyond metros and tier 1 cities in the last five years.

Q Getting more organized

Households with annual income in excess of Rs200, 000, which form an estimated
8% of India's total population, are the primary target customers for preschools. We
estimate a target market of 5.5m preschoolers, of which 12% are currently enrolled.
Considering an average annual spends of Rsl8, 000 per student (price discovery still
in initial stages), we estimate the segment to be $300m in size.

Going forward, we expect the preschool market to grow on the back of low
penetration, increasing paying propensity and organized supply creating awareness
about the importance of preschool education. We expect the total preschool market to
touch $lbn (on a low base of ^1,700 schools and 200,000 students) by 2012.
Interestingly, the organized market is likely to grow faster, at a CAGR of 50% over
Organized market: supply creating demand
The preschool market has, over the last 5-6 years, seen a shift towards organized players.
KidZee (recently renamed as Zee Learn) - India's largest preschool chain -has set up 623
preschools in just five years since inception and plans to add another 1,000 preschools
over the next two years. There are 11 major preschool chains in India including KidZee,
Euro Kids, Bachpan, Apple Kids, Shemrock, Kangaroo Kids, Podar Jumbo Kids, Tree
House, Mother's Pride, DRS Kids and Sunshine, and around 10 smaller players.
Organized players have largely scaled up using the franchisee route (-1,700 schools
catering to 200,000 students).

These preschools cater to segments across income groups ranging from consuming to affluent.
While Kangaroo Kids is primarily a premium brand at an average annual fee of Rs35,000-
45,000, Tree House charges an average annual fee of Rsl8,000.

Players in other segments of the education value chain are also entering this space — e.g. Mahesh
Tutorials' (a brand in the private tuitions space) 'Little Tigers' and Career Launcher's (test
prep) 'Ananda'. The trend of rapid rollouts indicates that 'quality' supply of preschools is
bringing latent demand to the fore. Further, education major Educomp has forayed into the
space under the brand 'Roots to Wings' (60 preschools at present) and has also acquired a 50%
stake in Euro Kids (-484 centers) for Rs390m.

Despite the increasing share of organized segment (currently 17% of the total market), the
preschool market remains highly fragmented and regional in nature. Though the shift is clearly
evident, the largest player (Kid Zee) holds only 7% share of the total market.

...BUT, THE BUSINESS NOT A CHILD'S PLAY

There is enough demand for preschools (as reflected by the rapid proliferation) and
capex requirements are also relatively lower, which means that it is play time for
preschool chains. However, the model is fraught with risks including the inability to
attract preschoolers beyond a catchment area of 2km, high lease rentals, intense
competition from the unorganized segment (at considerably lower cost to customer)
and increasing competition among organized players.

Q Limit to lever infrastructure for preschool children

Any preschool, however strong the brand, ideally has a customer pull within a 2km
radius (parents prefer to send toddlers within a limited radius for safety/ comfort
reasons). Also, the segment caters only to customers who can afford annual fees of
Rs20,000-45,000, which further limits the scope of the market.
Q Tail wags the dog - rental costs!
Preschools are currently being run primarily on the franchisee model, which has so far
evolved largely on the back of two factors - low cost of setting up a franchisee, and
housewife occupation that typically does not consider the opportunity cost of lease
rentals (schools are being set up on existing premises which otherwise also do not
generate returns).
Considering the economics of the preschool business, lease rent forms the largest
expense for running a preschool and can eat into profitability of the business.

Q The unorganized neighbor

With awareness levels still low, the unorganized market provides 'the same' care but at
a much lower price. With more than 80% of the target market still with the 'trustworthy'
neighbor, it may take some time before organized players are able to establish the
importance of a quality preschool education.

Q A non-regulated market - low entry barriers

The preschool market is non-regulated and hence entails no regulatory barriers for
new entrants. Given the relatively low investment required, competition is
intensifying in this segment.

Q Economics of a preschool
Except for a few preschool chains (Kangaroo Kids going in for JVs with developers
and Tree House with largely owned schools), all other players have opted for the
franchisee model to scale up. Under this model, a franchisee has to pay a brand/
franchisee fee (Rs60,000-70,000 pa) as also some part of the revenues to the
franchisor (^20% of total) in lieu of using the latter's brand name and for the hand-
holding required to run a preschool.
Assumptions: We have assumed a model premise of 1,200 sq. ft with rent at Rs70 per
sq. ft. (Only 60% of the total area can be used for classrooms and a minimum of 10-
15 sq. ft per student is considered optimal). The one-time capex broadly comprises
furniture and fittings cost and excludes brand fee (we have assumed an average
franchisee fee of Rs200,000, which is renewable every three years and amortized over a
period of three years).
We have assumed three classes and two batches a day, which translates into a
maximum capacity of 20 students per class (thereby a maximum of 120 students
per preschool) and an annual fee of Rs25,000.
IQ: high (subject to benign lease rentals)

A non-regulated space, preschool chains have largely grown using the franchisee route. Low
upfront investment requirements by a franchisee (ideal for housewife occupation) and an under
penetrated market have led to the emergence of a high-growth market.

However, the limited catchment area for a preschool implies limited scalability per branch; also,
with a large section of the franchisees being run on owned premises, the model ignores lease
rentals — a major cost-head. Thus, the business for a franchisee runs the risk of becoming
economically unviable in a scenario of high rentals (it has been observed that while franchisees
keep mushrooming, there has also been a considerable churn in existing franchisors under high
rental costs). To improve economic viability of the model, some franchisors are seen to be
levering the existing infrastructure beyond the 1.5-3 year age group for programmes like mother-
toddlers (children aged between 6-12 months) and activities like dance, music, pottery
classes, etc (children aged three years and above).

Going forward, increasing clutter in the organized segment would mean further fragmentation.
Having said that, dominant players like Euro Kids (50% acquired by Educomp) and those using
innovative models (like Kangaroo Kids) are expected to emerge as relevant players going
forward. Kangaroo Kids, besides expanding through the pure franchisee route, is also using a JV
model for further scale-up. The company has signed 400 such JVs with developers and key
partners. Also, preschool chains that have their own high schools get a benefit premium over
standalone preschools. Kidzee, Euro Kids and Kangaroo Kids among others are upgrading to K12
schools, with the preschool population acting as a feed for the higher classes.

Globally, Kinder Care (USA), ABS Learning Centres (Australia, New Zealand and UK) and
Bright Horizons (USA, Europe and Canada) are a few scaled-up success stories among
preschool chains. But these models cannot be superimposed on the Indian market as the cost
structure and business models are quite different. Globally, preschools are primarily day-care
centres while in India they are perceived as early training grounds for children to develop skills
and secure admission into a good school.
K12 (SCHOOLS): A NO BRAINER? NOT YET!
K12, the largest segment ($20bn) within IES, is expected to grow to $30bn by 2012
(14% CAGR) on the back of world's largest school-aged population and price
discovery. While dominated by standalone schools and chains confined to
charitable, political and religious individuals/ groups, corporate activity is catching
up in this annuity business free from recessionary pressure. Though regulations
mandate K12 to be 'not-for-profit' structures run by only Trusts/ Societies, 2-tier
structures (a trust and a managing entity) are being adopted to unlock the surplus
as lease rentals, management fee, etc (an age-old practice followed by standalone
schools). Going forward, we believe serious players intent on gaining scale and
credibility should help dispel investor concerns on under-reporting of cash. The
space will realize its full potential the day favourable regulations fall into place. We
find 'commercial' K12 chains like Educomp Solutions (11 operational schools, 150
planned by FY12), Zee Learn (23 operational, 100 by FY11E), GEMS (6 schools
under a management contract) and Kangaroo Kids (6 operational schools) as
interesting plays in this space.

K12: THE LARGEST IN IES

Schools, globally known as K12 (Kindergarten to 12' grade), come under the formal
education space. These schools broadly address education needs of students
between the age group of 3-17 years. Some states in India follow the system of K-
10 + 2 (in which case, the last two years form a part of higher education).
Following a preschool stint (an optional course), a child has to be enrolled in a
recognized school (affiliated to/ registered with either a state board or central
boards like ICSE/ CBSE) in order to be considered as a part of the formal
education system.

Q Public K12 schools - short on efficiency

Globally, India has one of the lowest enrollment and highest dropout ratios,
translating into net enrollment levels among the lowest in the world. The 1,025,000
schools in India are clearly not enough to meet the demand in terms of both quality and
quantity. Notably, 66% of these schools are only till the primary level. With only 132m
(37%) of the Indian K12 population net enrolled in schools, the system has apparently
failed. According to NCERT, at least 200,000 schools are required to plug this gap.

Q Private market - large is attractive...

At 36lm, India has the largest population globally in the K12 age group (5.5x USA's K12
population). Despite a mere 37% of the K12 age group net enrolled on school rosters,
private spends on K12 schools stand at an astounding $20bn — which makes the
segment the largest within IES. The large market can be explained by a consistent
shift towards private schools - catalyzed by the absence of quality public schools and
growing awareness about importance of quality education as also increasing ability
and willingness of Indians to pay.
Out of the total 1m schools in the country, ^75,000 are private. With considerable
preference for private schools, the average number of students in a private school
stands at a much higher 1,200 versus 146 for a public school. The private
schools can be classified into private aided (that receive aid from the government in
order to run the school), private unaided standard and private unaided premium
schools. The private aided schools charge an average fee of Rs5,000-6,000 per
annum till the primary stage (5th grade), after which students are charged a
nominal fee. The private unaided standard schools charge an average tuition
fee of RslO,000 per annum while private unaided premium schools charge
Rsl5,000 (up to Rs45,000 per annum in some cases). We estimate an annual
total spend of $3bn in the private aided segment and $18bn in the private unaided
segment of K12.

Q ... .a $30bn market by 2012E

With aspirations and awareness meeting affordability, the K12 segment is in a price
discovery phase. To put this in perspective, Jamnabai Narsee Monjee School - a
premium and prestigious private school in the suburbs of Mumbai — has shown a 12%
CAGR in annual fees over the last 10 years. The school has recently also started an IB
(International Baccalaureate) division which charges an average annual fee of Rs600,
000. The relatively new trend of international schools is catching up slowly but steadily
across the country with K12 fees ranging from Rs500, 000-800,000 per annum. This
underpins the increasing paying propensity of the Indian populace.
Pay ability of education-hungry Indians is also indicated by the growing preference for
private schools - 40% of students enrolled in the K12 system attend private schools,
which are just 7% of total schools in the country. With public schools unlikely to
become efficient in the near future, we expect the shift to continue.
Within the private K12 space, the last decade has seen a gradual shift from private
aided to private unaided (i.e. costlier) schools. This clearly indicates that more and
more parents now prefer to spend substantially higher amounts in their quest for
better quality of education for their children.
Driven by such price discovery and growing acceptance of private schools as the
medium for quality education, we expect K12 to grow to a $30bn market by 2012 (14%
CAGR).

The 'big bad' corporate: ruled with an iron hand

Education has strong social connotations in any economy (more so in India). Thus,
schools have traditionally been a state responsibility to be run with a 'noble' cause and
without being tarnished by the 'ulterior motive' of making monetary profit out of the
activity. In this backdrop, it has always been mandatory by regulation that all schools be
registered as a trust or society; also, the educational trust/ society cannot distribute
dividends, or even invest the surplus to fund another school (refer to the judgment in
the Modern School versus Union of India case given below). Further, the surplus
generated is necessarily to be used for running the same school and only towards its
development.
Modern school vs. Union of India: Missing the woods for trees?
A three-judge bench of the Supreme Court - comprising Chief Justice VN Khare,
Justice SB Sinha and Justice SH Kapadia, in a 2:1 majority judgment delivered on 27
April 2004 — ruled that the Society or Trust running a school CANNOT invest the
surplus generated in running that school in another school (i.e. surplus money
generated by one school cannot be transferred to the parent society administering
the school and has to be kept for that very school). Regulations like these have
prevented the emergence of any major chains in the K12 space as a corporate running
various schools cannot create a common pool (internal accruals) to be used across
schools of that particular chain and every new school/ branch opened requires fresh
capital infusion. The rationale given is that if a society/ trust running schools has to
ring-fence each school separately in a financial sense, and is not allowed to transfer
funds from one school to another, it has no reason to try and generate a surplus in any
school (translating into low tuition fees in each school). We see this as a perfect
example of missing the woods (increasing the supply of high-quality education) for
trees (keeping fees as low as possible in each and every school).

Q School'rule book'
With no regulatory central body governing the K12 space, regulations vary from state
to state. A student can continue to be a part of the education system - or his/ her 10'
or 12' grade scores would be recognized — only if he/ she passes out from a K12
institute affiliated to a board recognized by the system; hence, all K12 institutes have to
be affiliated to an education board — either central boards like ICSE and CBSE or a
state board. While states may or may not relax the 'not-for-profit' stipulation, the
boards mandate the schools to be run as a society/ trust.
While a school can be affiliated to any board, it needs to secure an NOC from the state
and has to abide by any additional rules imposed by the state. In order to get the
NOC and affiliation to a board, schools are mandated to be established by societies
registered under the Societies Registration Act 1860 of the Government of India or
under Acts of the state governments as educational, charitable or religious societies
having non-proprietary character or by Trusts (some states like Haryana do not follow
this structure and allow 'for-profit' activity in the segment).

Q If there's a rule, there must be a way to bend it!

The not-for-profit mandate is the single-largest deterrent that has kept serious
corporate activity at a bay in the otherwise attractive K12 segment. Most schools in
India are standalone and any chains till recently were usually set up by private
charitable, political and/ or religious groups — including Vidya Bharti schools
(affiliated to the right wing political organization RSS) with more than 18,000 schools,
Dayanand Anglo Vedic (DAV) schools with >600 schools and Chinmaya Vidyalaya with
75 schools among others. DPS (Delhi Public School) with its 120 schools — 107 in India
and 13 outside — is a franchisee chain.
Two-tier structures - a norm in the making?
Ironically, when corporates looking to set up large for-profit chains have been
cautious to tread here, individual schools have been 'profit-making' propositions
since long. The entities have been using indirect means like lease rentals,
management fee, etc to extract the surplus stuck in the trust. Taking a cue from
these schools, IES has been witnessing some corporate activity in the K12 space on
similar lines, but in formal version of these age-old structures. Archaic regulations have
been surmounted through an innovative two-tier structure, which bypasses the 'trust'
regulation and enables promoters (on corporate level) to generate profits from the
venture.

In order to own and operate schools, companies like Educomp Solutions have
created a structure wherein a trust (non-profit body) is created to run the school at one
level. At another level, the company creates an entity that supplies the trust with land,
services and infrastructure for a rental/ fee. In this way, the 'surplus' profit flows to the
latter entity in the form of fees for providing these services and is at its disposal to be
then distributed as dividend or used to fund another venture. The model runs the risk
of being struck down in view of education being a 'socially sensitive' sector, more so at
K12 level. However, the structure has been in existence for a long time at the
standalone school level and we believe the model could become the norm till regulations
change for the better.
Higher education: time to 'degree shop'?
India's private HEIs have grown to be a $6.5bn market (excluding $1.5bn-2bn 'capitation'
spends), with 12% CAGR estimated over FY08-12. Of late, private HEIs have mushroomed
with the trend veering towards professional courses with high payback potential
(engineering, medical and MBA colleges). However, the not-for-profit mandate, regulatory
obeisance to multiple bodies, hefty investments required to set up an HEI and longer
gestation cap IQ of the segment. Given the high participation of politicians in the field
(vested interests), we do not see any structural change in the near term. With a head-start in
the capital- and time-intensive business, we believe Manipal Universal Learning (equipped
with the 4Cs) is the only player in the space promising value creation potential.

HIGHER EDUCATION: HIGHER PRIVATE SPENDS

A part of the formal education system, the Indian Higher Education market - at $8bn — is
next only to the K12 segment in size. Considering the $13bn spent on importing education, we
estimate the paying propensity of Indians within the HE space to be at ^$20bn. The HE segment
consists of graduation (targeting population between 18-21 years) and post graduation (>22
years) courses, offered after completion of K12 stint. The graduation market can further be
classified based on the nature of education into graduate courses (18-20 years), diplomas/ non-
graduate courses (16-20 years) and professional courses (18-21 years) such as Engineering (4-year
tenure at graduate level) and Medical (5-year).

While indirectly controlled by the Ministry of Human Resource Development, all colleges
offering these courses need to be affiliated to a University (in turn under the purview of the
central regulatory body called UGC — University Grants Commission). While most
universities are administered by the state government, there are 24 Central Universities
maintained by the Centre. Further, each stream is monitored by an apex body (e.g. AICTE is
the regulatory body for Engineering and Management colleges). While India may have one
of world's highest enrollments for HE (llm) as also networks of HEIs (currently
estimated at 18,064), it has abysmally low GER of 9.97.

Q Private HEIs dominate

Over the years, public spend on higher education has been gradually reducing — and
rightly so as the focus of governments globally is (and should be) on primary
education. But the strategy has resulted in India having one of the lowest public
spends per student on higher education.
Given the dearth of quality institutes, private HEIs have boomed since 2004 and the
number is growing. With liberalization opening up newer and better job avenues, the
proliferation of private institutions has largely been in the area of professional courses
like Engineering and Medical as also post graduation courses like MBA. Other factors
that have contributed to the phenomenon include the increasing pay propensity of
Indians and prospects of higher returns (payback in the form of fat salary packages)
offered by these career-focused products. Today, more than 40% of India's HEIs are
privately owned and funded (77% are privately owned).
However, more is necessarily not enough. Despite the speed and extent of
privatization in the segment, there still exists a yawning demand-and-QUALITY supply
gap which is apparent in the high cash transactions (donations/ capitation fees)
within quality institutes. This gives rise to the need for more conventional as also
alternative modes (such as distance learning) of disseminating higher education.

Q India goes degree shopping!

The HE space is bestowed with high potential volumes. The increasing ability as also
intent to pay in return for securing a 'good career', and hence a 'good future', has led to
a $6.5bn private spend — primarily on career-focused courses (more than 80% of the
estimated spends on engineering courses). Interestingly, even though India has more
than 1,600 engineering colleges (1,200 of these are private), most of the colleges
have seats which are 'sold' at as high as 5x the regular fee. High capitation fee —
currently deemed illegal — and black marketing of 'NRI Quota' seats are estimated to
account for $1.5bn-2bn of additional spend in the space.

Also, a large number of Indian students opt for further education outside the
country and spend a whopping $13bn every year on securing quality education.
This further underpins the paying propensity of Indians. At 30% of the total inbound
US HE traffic, India is one of the largest exporters of education globally.

Higher education: rules, rules and more rules

HEIs are a part of the formal education system and in order to seek recognition from the
central regulatory body (UGC) are required to be run under a not-for-profit trust/
society (Rules are more stringent than at the K12 level). In contrast to the K12 segment
wherein a school has to be affiliated to a board recognized by the formal education
system, it is possible to set up an HEI outside the purview of UGC regulations
(applicable only in case of niche world class institutions that find acceptance with
industry and academic circles; but cannot be superimposed on the entire segment).

The higher education segment is a part of the formal education system, and like
other segments in the space, is required to be run under a not-for-profit trust/
society. However, regulations are more stringent here vis-a-vis the K12 segment. The
process of securing registration/ affiliation with a regulatory body is long-drawn and a
single HEI is simultaneously governed by various bodies. While UGC (University Grants
Commission) is the central governing body, there are individual regulatory bodies for
specific professional courses, e.g. AICTE (All India Council for Technical Education) for
management and engineering colleges and MCI (Medical Council of India) for medical
colleges. Accreditation for universities in India is required by law unless it has been
created through an Act of Parliament. Without accreditation, "these fake institutions
have no legal entity to call themselves as University/ Vishwvidyalaya and to award
'degrees' which are not treated as valid for academic/ employment purposes"
-University Grants Commission Act 1956.

These bodies not only have very stringent and archaic rules, they are considered
highly corrupt by most industry factions. As of date, AICTE has black-listed 110
universities for not seeking recognition from the body. Further, regulations within the
space are not clear - as can be seen in the ambiguity in judgments for private HEIs in
the past.

Regulatory conditions are unlikely to change in a hurry as education is a highly

politically and socially sensitive sector. If the government does decide to throw open the
formal education sector to for-profit private players, we expect the liberalization process
to start with HE. Though there have been talks of liberalizing private HE entities
(especially Medical Colleges), there is no single bill pending in the Parliament with
the intent. Further, the high involvement of politicians (^70% of HEIs in Maharashtra
are run by politicians) given the segment's high profit generation potential (though
indirect) make the much-needed realignment and a structural shift look too difficult to
achieve.

Q No regulations - an option
Unlike in the K12 segment wherein a school HAS to be affiliated to one board or the
other for its pass-outs (grades 10' and 12 ) to be recognized as part of the formal
education system and eligible for further studies, it is possible to set up an HEI
outside the purview of UGC regulations. The products of these institutes (students
passing out) do not have to conform to acceptance standards of the education system
but of the industry. As long as industry quarters perceive the products to be of
superior quality, the HEI can do without these cumbersome affiliations. For
example, ISB (Indian School of Business, Hyderabad) is a venerated name in the
industry corridors despite it not being affiliated to any regulatory board. The diploma
offered by ISB holds as much (arguably more) value as any UGC-accredited certification.
But importantly, this status requires maintenance of world-class quality and strong
industry support. Thus, it cannot be superimposed on the entire segment.

HIGH HOPES FROM INNOVATIVE STRUCTURES

Issues related to trust formation, regulatory ambiguity and vested political interest are
the key barriers to capital commitment from for-profit organizations. Setting up an HEI
is an investment-heavy proposition (^Rs5bn for a medical college). However, there
are some players that, despite being affiliated and hence recognized by the relevant
regulatory bodies, have managed to extract legitimate profits from these universities
through innovative structures.

Q Distance Education - an alternate mode

India's low GER renders a greater need for a higher number of conventional
institutions as also an alternative mode of HEIs such as ODL (Open and Distance
Learning) institutes. One way to improve GERs is to allow foreign universities to set up
shop in India. FDI in education, including higher education, has been allowed under
the automatic route without any sectoral cap since 2000; yet there is ambiguity
around the space and degrees awarded by foreign universities are not recognized by
the UGC or AICTE.

This further underscores the need for alternative forms of learning. Supplementing the
brick-and-mortar educational institutes, Distance Education can be considered an
effective and low-cost alternative to on-campus HEIs. The DEC (Distance Education
Council), set up under a clause within IGNOU (Indira Gandhi National Open
University), has till date extended approval to more than 130 institutions to offer
distance education. Also, the ODL model does not impose any limits on the number of
students in terms of infrastructure.

Currently, IGNOU is India's largest distance education provider with ^ 500,000

students enrolled for 1,100 courses through 129 programmes, 64 regional sub-
centers and 1,621 study centers. The body is also the regulator in the space, which
has led to certain quarters raising demand for an autonomous body to govern the
space (a bill is pending approval pertaining to the same).

There is large untapped potential in the segment as out of the "10% population
enrolled in HEIs in India, a miniscule -7% go in for Distance Education. Though this
portends a huge opportunity, perception of low quality has led to Distance Learning
being treated inferior to on-campus education.

While Distance Education has low entry barriers for suppliers, the industry too has low
regard for this medium. However, given that quality of a course can be controlled
by improving the input and thus the output, we feel that an apt model and superior
pedagogic measures can establish a strong brand. By doing all the right things, Sikkim
Manipal University (SMU; a distance learning institute) has managed to achieve
significant scale with ^100,000 students enrolled for its various programmes

IQ: high (but long-gestation period)

Globally, most of the top education companies by market cap belong to the US
(where Tor-profit' education is permitted) and also to the HE space where they have
managed to create strong brand equity over the years. Extrapolating the returns that
these companies have generated over a period of time, we observe that most of them
have outperformed the benchmark index performance consistently and significantly.

While Indian HE space is dominated by private institutions, we do not see any

Apollos (revenues at $2.7bn) or Devrys (revenues at $933m) in the country. This is
largely due to HE being a part of the formal education and mandated to be run as not-
for-profit trusts and over-regulated by bodies like AICTE. The largest player within the
space is Manipal Universal Learning (revenues at $180m).
Overall, higher education is a long-term game and players in the space will have to
invest considerable assets and time to gain credibility. The capital-intensive nature (a
medical college entails an investment of ^Rs5bn) and long gestation (minimum six
years required to build a worthwhile brand) make this a long-term game.

Scalability and value creation can be achieved only by those players that have
managed to establish creativity (to circumvent the regulatory requirements), capital (built
to last), content (reputed courses with pricing & annuity power) and credibility (of
the management to build a long-term value proposition). Having earned a name in
the field, it then becomes an annuity model. Due to the lower capex requirements for
setting up MBA colleges, we expect maximum private participation in this part of the
opportunity.

While distance education (as against setting up brick-and-mortar institutes) is an

alternative and less capital-intensive model to build scale, time taken to build a brand
and the low brand perception emerge as the key concerns.

While it is not yet time for degree shops in India, we believe players like Manipal
Universal — that have an already-established scale and brand in the HE space — are
at an advantage vis-a-vis new players moving up the value chain (like IMS and
Career Launcher — two strong brands in the coaching class market).

VOCATIONAL TRAINING: NEW VISTAS

The imperative for students/ employees to draw on skill sets to effectively compete in a
dynamic business environment has given birth to vocational training - a parallel $1.5bn
education system. Also, the increasing relevance of services sector in the Indian economy
calls for enhanced technical/ soft skill sets. Corporates (across industries) too are gleaning
from their global counterparts the culture of continuous upgradation in skill sets of
employees at all levels. While the factors suggest rapid growth (25% 3-year CAGR) as new
training areas (retail, aviation, hospitality, management, English language/ soft skills
trainings, etc) emerge, the space remains highly fragmented. Also, non-sticky nature of
corporate trainings implies low revenue visibility, thereby hampering scale. At this stage,
only a few players like NUT and Aptech (leaders in IT trainings) have managed to
accumulate mass. Others players with the potential to 'scale' include ELEMENT
AKADEMIA (English training) and ICA (financials trainings).

Vocational training providers: new kids on the block

Vocational training has been broadly defined as training that prepares individuals for
specific vocations or jobs. Vocational training has assumed growing importance in
India's growth story. The economy's 8%+ growth for three consecutive years can
largely be attributed to increasing contribution from its services sector (up to -55% in
the last decade or so).

Further, vocational training has moved beyond IT/ ITES into verticals like
financials, retail, media, aviation, hospitality, etc. In any services business, human
capital is the key asset and upgradation of workers' skills at all levels becomes an
imperative to sustain growth. In developed economies, a month per year is reserved for
training/ re-training/ re-education of employee’s right up to the age of 55-60 years.
Also, corporates are laying ever-increasing emphasis on productivity from day one, which
is prompting employees to work on enhancing their skill sets.

Q India a largely untrained nation

Nearly 95% of the youth in the 15-25 years age group formally learn a trade or
acquire a skill/ competency in most of the developed world. In contrast, only 5% of
India's young labour force (19-24 years) is estimated to have acquired formal
training.

Low enrollments and high dropout rates throughout the education chain result in an
inefficient supply of workforce. With a net 37% enrollment at school level, ^230m
Indians are not equipped to work in the organized sector. Further, 87% of the
people drop out after the school level. This leads to only 10% of college-aged
population actually attending HEIs; further, 80% of the graduates in general streams
(i.e. non-career specific courses) like BSc/ BA are unemployable. Due to the high
dropout rates and inefficiencies rampant in the system, a large chunk of the
population needs to be trained.

The government, to provide vocational training at various levels, has set up a

network of ITIs (Industrial Training Institutes) falling under the purview of the labour
ministry. The ^5,500 government-run ITIs impart vocational training covering 110
trades including carpentry, electricians, masonry, etc and offer a collective capacity of
749,000 seats. Also, there are 500 polytechnic colleges offering diplomas in technical
courses. However, quality and capacity constraints as also growing relevance of new-
age trades mean that this network is not sufficient to meet the demand.

Q A $1.5bn private market; growing rapidly

The space encompasses training services at all levels, be it for students passing out
from schools and colleges or re-training needs of the employed set. We estimate the
$1.5bn market to grow rapidly (^25% CAGR) in the coming years. The following exhibit
points to the high underlying demand for vocational training across sectors like IT,
financial services, retail, aviation, hospitality and English language training.

While the importance of corporate trainings has not been completely realized in the
Indian market, it forms 10% of the Indian IT training market and is expected to grow.
Infosys (one of the largest recruiters in India) has set up a Rs2.6bn Global Education
Center in Mysore (Karnataka) in 2005 with a further Rs6bn planned to be spent on
the facility for expansion. Also, the company spends Rs200, 000 on every graduate
selected for the global training programme. While this presents a large opportunity for
private players in the space of training before and after employment, it does not
convert/ translate into opportunity if not outsourced. Currently, the corporate training
market (predominantly in IT) stands at ^$50m.

A new order setting in — formal education meets vocational: The ever-changing

dynamics of education and employability in a knowledge-driven economy are
throwing up interesting trends. Employers are increasingly seeking employees that
can contribute to the company's topline/ bottomline from day-one and skill sets have
to be continuously updated to remain competitive.
In this backdrop, the lines between formal and non-formal education have started to
blur. To ensure quality training, employer companies are joining hands with private
players to impart customized training to future employees. An interesting example of the
same is the arrangement between ICICI and Manipal University to form ICICI-Manipal
Academy (IMA) — a 1-year campus programme that is employer (ICICI) sponsored and
guarantees employment to students after completion of the course. Manipal University
charges a mutually agreed fee to ICICI for the same.

PPP — a beginning has been made: Another opportunity, though small in size, is on the
horizon for private players in the space. The Centre has approved PPP, or Public Private
Partnership, Scheme to upgrade 1,396 ITIs and transform them into Centres of
Excellence. Educomp has taken over running of 18 ITIs as well as 12 skill
development centers erstwhile run by the state government in Gujarat. More such
arrangements are expected to follow.

The focus of the Indian government is to dispense education with stress on

employment. The 11' Plan has allocated Rs721bn to be spent on ICT and
Vocational training. Of this, Rs4llbn has been earmarked for setting up ICT labs for
computer aided learning and Edusat Centers for distance learning programmes while
Rs310bn has been allocated to National Skill Development Programme for training
through Virtual Centers for Vocationalization. According to the statement of Mr. N. K.
Singh, Deputy Chairman, Planning Commission, 250,000 vocational schools will be
opened in India in next five years in PPPs, wherein the corporate sector will play a
major role.

With quality skills-related training, India could capitalize on potential

global workforce shortage
Based on current and estimated population demographics, India would have
a surplus of 47m people in the working age group by 2020 while Row would
see a shortage of 56m in this age group. In this backdrop, increasing mobility of
the Indian workforce and its unique demographic dividend (a young working
age population) can work in India's favour, subject to the country upgrading the
quality of its education and skill set development.

IQ: Low (still to scale)

Vocational training, a non-formal and non-regulated segment of IES, has emerged into
a $1.5bn market. We expect 25% CAGR in the market over 2008-12. With the high
degree of dropouts and non skilled workforce, there is a substantial need for vocational
trainings. However, the market has not evolved to its full potential yet as the importance
of training over the lifecycle of an employee has not been fully realized in India.
Further, a shortage of quality trained personnel to dispense this education and lack of
process-driven models have kept scalability at bay. While corporate spends on training
are discretionary and based on competitive pricing, a lumpy stream of revenues within
this space is another deterrent to scalability.

The market has remained largely fragmented barring a few like NUT and Aptech
(leading players in IT training space). In the English Language training space, VETA
(revenues of Rsl.2bn) has grown by using a mix of owned and franchisee outlets with
smaller players like Liqvid tapping the opportunity through the product licensing
route. ICA in the accounting training space as also Frankfinn in aviation and hospitality
trainings are other leading players in their respective categories.

Coaching classes: Is the 'coach' scalable?

The $6.4bn coaching class market is growing at ~15% yoy led by a dearth of quality
institutions in India and cut-throat competition for entry into professional colleges. Notably,
80% of the market lies in 'subject-based tutoring in schools and colleges' - and thus is
highly dependent on local 'brand-teachers'. Despite its non-regulated nature, people-
centric models make scalability onerous in the space and cap value creation. Mahesh
Tutorials is the only player to have achieved a relatively higher scale (revenues of
~Rs700m) on the back of some process-driven effort. While the Grad and Post-Grad test
prep market ($1.2bn) offers limited scalability as it is more content-driven, FIITJEE, Bansal
Classes, IMS, TIME and Career Launcher have achieved scale within the segment and are
extending their presence across segments to expand the addressable market.

The quality conundrum: genesis of coaching class market

India's already inadequate education system is being further stretched due to its
increasing population. So much so that a $6.4bn segment (64% of the total non-
formal IES; next only to K12 and HE) - coaching classes - has sprouted around
formal IES. The market is rapidly growing as the Indian education system lays heavy
emphasis on marks scored in an exam. A shortage of quality HEIs is further fuelling
growth. This is evident in the fact that the number of seats in Indian IIMs (Indian
Institutes of Management) has increased merely 3% (2003-2008) but the number of
CAT aspirants has shown a CAGR of 19% in the same period.

Q Tuitions market- low scalability

At $5.1bn, the tuitions market forms 80% of the coaching class opportunity and are
inherently difficult to scale. A highly fragmented market, the business is person-centric
and individual teachers attached to schools/ colleges are much in demand. For exams
held on a national level (10 , 12 and university exams at tertiary level), our interactions
with industry players throw up instances of students moving en-masse to another
coaching class, to follow the brand-teacher who has joined a particular institute.
Thus, crowd-pulling ability in this segment rests with brand-teachers (especially
attached to schools/ colleges) and not brand-institutes. This, in turn, translates into lack
of stability and scalability for coaching classes.
Q Online tutoring market - in its infancy
The phenomenon of online tutoring is very new in India. With ^3m broadband
connections (less than 1% penetration), India is way behind the global average. In the
coming few years, penetration is expected to double as the national Broadband and
Wireless Policy targets to bring 25m subscribers to the broadband fold by 2012. Players
like Tutor Vista that have a pure online model in the US are looking to follow a hybrid
model in India to tap the potential in this segment.

IQ: Low: A non-regulated space, the $6.4bn coaching class market is one of the
largest opportunities within the IES (following K12 and HE) and is expected to
witness 15% CAGR till 2012. Yet, we see limited value creation potential in the space
as scalability is a challenge in 80% of the market (tuitions). In the remaining 20% of
the market offering coaching for aptitude-based entrance exams to engineering/
professional courses, players find it relatively easier to attain scalability.
 RESEARCH METHODOLOGY

Research is a common parlance refers to search of knowledge. Infact one can define the

research as scientific and systematic search for pertinent information on specific topic.

Research comprises defining and redefining the problem, formulating hypothesis,

suggest solution, collecting, organizing, and evaluating data, reaching at a specific

conclusion and at the same time careful evaluation of the conclusion.

Marketing research is a systematic and objective process of identifying and formulating

the market problems, setting research objectives and method for collecting, editing,

coding, tabulating, evaluating, analyzing, interpreting and preventing data in order to find

justified solutions for these problems.

Research methodology is a systematic way to solve the research problem. The research

process consists of series of closely related activities and to solve a research problem

adopt the following process.

1) Research Design:

“A research design is needed because it facilitates the smooth sailing of various

operations thereby making research as effective as possible yielding maximum

information with minimum efforts. The research was descriptive, as it required

studying the scope of investment options in the low interest regime. A formal design

is required to ensure that the description covers all phases desired. Precise
statement of the problem indicated what information is required. Then the study was

designed to provide for the collection of this information.

2) Data collection method:

The information was collected through both primary and secondary data. The

information collected in the form of questionnaires was primary. The data was

collected through field investigation. Personnel interview was adopted, taking into

consideration the availability of time and other resources, whenever need arouse

various supplementary questions were asked to get maximum information from the

respondents. Secondary data was collected from the company profile of company,

pamphlets, magazines, web sites.

3) Sample Design:

Sample size and sample area is two important things in sample design. Sample size

means number of customers, clients visited during the project. Sample area means

area covered for conducting the research.

Sample Size: A sample of 73 clients of various categories viz. Business class, under

graduate, graduate, post graduate Professionals, Service Class was taken. The

number of respondents was less due to time shortage.

Sample Unit: The sampling unit included any individual who is investing his/her

money in any form.

 Sample Area: Sample area means the area in which research is conducted. For my

project sample area is jaipur only.

Target audience: Primary target: Graduate student

Secondary target: Post graduate

Third target : 10+2, Working class

4) Sampling Technique:

The universe and coverage area of the study was too large. As a result, samples,

which were easily accessible, were chosen.

5) Data Analysis and Interpretation:

After collection of data it was compiled, classified and tabulated manually. Using

appropriate mathematical tools then processed this data. The questions that had

alternate choices have been analyzed by taking percentages. In case of ranking

questions total score has been added, mean score was obtained and then final

ranking was given. In case of four-point scale question, weighted score ad

percentages were calculated. The questions to which there were specific answer

ranges have been clubbed and percentages were calculated. In case of explanatory

questions explanation has been given. Bar-diagram and pie charts have been used

for presenting more information.

 6) Preparation of Report:

Finally the report will be prepared on the basis of the above research
methodology
 BENCHMARKING ON INSTITUTES

Institute ASPIRATION

Duration of course 3 /4/5 month

Fee 3000/4000/5000

Class hour 1 hour

Total number of hour 90/60/45hour

Placement facility Yes

Trainers experience Fresher

Number of student in a batch 15

Total number of admission in a
month 2*15=30

Courses offered Spoken English

Mission statement none

Attendance and Assessment No

Walk ins NA

Student profile 10th ,10+2,Graduate,Post Gaduate,Working class

Certification No

Fee variation No

Impressive things None

Unimpressive things Lack of staff

Good or Bad points of counseling Informal language,Not convincing

Wi-Fi No
Institute ADROIT

Duration of course 3 month

Fee 3200

Class hour

Total number of hour 1 hour

Placement facility Yes

Trainers experience

Number of student in a batch NA

Total number of admission in a
month 40-45

Courses offered Power (YES) English,CAT,MAT,JEMAT,IELTS,TOFEL

Mission statement None

Attendance and Assessment Yes

Walk ins NA

Student profile 10th ,10+2,Graduate,Post Gaduate,Working class

Certification Yes(80% attendance is must for that)

Fee variation

Impressive things Spacious Rooms

Unimpressive things No library

Good or Bad points of counseling

Wi-Fi No

Location Vaishali Nagar

Institute AMERICAN

Duration of course 3 month

Fee 2800

Class hour 1 and half hour

Total number of hour Not based on hour

Placement facility Yes

Trainers experience More than 7 years

Number of student in a batch More than 50

Total number of admission in a
month 40-60

Courses offered Spoken English

Mission statement None

Attendance and Assessment No

Walk ins NA

Student profile From 8th standard to working class

Certification No

Fee variation Yes

Impressive things None

Unimpressive things Infrastructure(chair are bad quality),No AC

Good or Bad points of counseling counselor is trainer

Wi-Fi No

Location Vaishali nagar

Institute VETA

Duration of course 1,2,3 Month

Fee 220,044,006,200

Class hour 2 hour

Total number of hour

Placement facility No

Trainers experience Fresher to Experienced

Number of student in a batch 15-Oct

Total number of admission in a
month 60

Courses offered Spoken English

Mission statement Yes

Attendance and Assessment Yes

Walk ins 260 Per month

Student profile 10+2 to working class

Certification Yes

Fee variation Yes

Impressive things situated in prime location

Unimpressive things No library facility

counseling is based on current grammar knowledge
Good or Bad points of counseling of student

Wi-Fi No

Location Vaishali Nagar

Institute ACE

Duration of course 3 month

Fee 3200+10.3% tax

Class hour 1 and half hour

Total number of hour 90 hour

Placement facility No

Trainers experience 7 years

Number of student in a batch mora than 50,usually 150

Total number of admission in a 50-80

month
Courses offered Spoken English

Mission statement None

Attendance and Assessment No

Walk ins 500

Student profile 8 th standard to working class

Certification No

Fee variation Yes

Impressive things None

Unimpressive things Too many student in a batch

Good or Bad points of counseling counseling was not convincing

Wi-Fi No

Location Banipark
Institute Focus

Duration of course 3 month

Fee 3400

Class hour 1 hour

Total number of hour

Placement facility Yes

Trainers experience more than 10 years

Number of student in a batch 25

Total number of admission in a month 30

Courses offered Spoken English

Mission statement None

Attendance and Assessment Yes

Walk ins 70

Student profile 10th to working class

Certification None

Fee variation Yes

Impressive things Trainer is hard worker

Unimpressive things No fan/Ac when I visited center

Every prospect is suggested basic course
Good or Bad points of counseling irrespective of knowledge of that prospect

Wi-Fi No

Location Ambabari
Institute Kingfisher training academy

Duration of course 1 years

Fee 125000/135000

Class hour 2 hour

Total number of hour Not based on hour

Placement facility Yes

Trainers experience NA

Number of student in a batch 20

Total number of admission in a
month NA
Advanced Certificate Course in Aviation And Hospitality
Courses offered Management

Mission statement None

Attendance and Assessment Yes

Walk ins NA

Student profile 10+2

Certification Yes

Fee variation Not disclosed

Impressive things Virtual library, infrastructure

Unimpressive things None

Good or Bad points of counseling Counseling was comprehensive

Wi-Fi Yes

Location Lal kothi

Institute Speak well

Duration of course 3 month

Fee 3000/4000

Class hour 1 and half hour

Total number of hour Not based on hour

Placement facility No

Trainers experience 24 years

Number of student in a
batch 25
Total number of
admission in a month 40
English language and speaking ,Group discussion & interview
Courses offered technique, Creative writing,IELTS/TOFEL,GMAT/GRE

Mission statement None

Attendance and
Assessment No

Walk ins 120

Student profile 10+2,Graduate,Post graduate, Working class

Certification No

Fee variation No

Impressive things AC rooms

Unimpressive things None

Good or Bad points of
counseling No assessment of student

Wi-Fi No

Location Lal kothi

Institute VETA
Institute VCC

Duration of course 1&

2/3half month to 3 Month
Duration of course month

Fee Fee 3200/4200

2000/2650

ClassClass
hour hour 11and
andhalf
halfmonth
hour

TotalTotal
number of hour 80 hour
number of hour 111 hours

Placement facility No
Placement facility No

Trainers experience Around 7 years

Trainers experience More than 7 years

Number of student in a batch 25

Number of student in a batch 25
Total number of admission in a
Totalmonth
number of admission in a month 40
30

Courses offered Spoken

Courses offered SpokenEnglish
English

Mission statement None

Mission statement Develop self invocated creative youth

Attendance and Assessment Yes

Attendance and Assessment Yes

WalkWalk
ins ins NA
40-60 Per month

Student profile Graduate, Postto

graduate,
Student profile 8 th standard working working
class class

Certification Yes
Certification Yes

Fee variation Yes

Fee variation Yes

Impressive things Spacious room,18 running

Impressive things Library and spacious roombatch
Most student are 10 or 10+2,there is no scope for
Unimpressive things No library
Unimpressive things learning

GoodGood
or Bad
or points of counseling
Bad points of counseling Average
Trainer is counselor

Wi-FiWi-Fi No
No

Location Lal kothi

Location Jhotwara
Institute VARNISH

Duration of course 3 month

Fee 2000+200

Class hour 1 hour

Total number of hour Not based on hour

Placement facility No

Trainers experience 2 Years

Number of student in a batch 15

Total number of admission in a
month 30

Courses offered Spoken English, Diploma in animation

Mission statement None

Attendance and Assessment No

Walk ins NA

Student profile 10,10+2,Graduate

Certification No

Fee variation No

Impressive things Computer lab,Intrnet facility

Unimpressive things Single course for all student

Good or Bad points of
counseling Not in good location

Wi-Fi No

Location Vidhadhar nagar

Institute II JT

Duration of course 6 month,1 year

Fee 22000

Class hour 2 hour

Total number of hour Not based on hour

Placement facility Yes

Trainers experience Minimum 3 years

Number of student in a batch 10

Total number of admission in a
month NA

Courses offered Spoken English,Diploma in animation

Mission statement None

Attendance and Assessment No

Walk ins NA

Student profile 10+2,under graduate

Certification Yes

Fee variation NA

Impressive things Infrastructure, Well equipped computer library

Unimpressive things None

Good or Bad points of counseling Does not consider students level

Wi-Fi No

Location Lal kothi

Institute HERO MINDMINE

Duration of course 3 month

Fee 4000/5000/5500/6100

Class hour 2 hour

Total number of hour 200+60 hour for computer

Placement facility Yes

Trainers experience 2 and half years

Number of student in a batch 15-Jan

Total number of admission in a
month 30

Courses offered Spoken English(foundation,Level1,2,3)

Mission statement None

Attendance and Assessment Yes

Walk ins NA

Student profile Graduate, Post Graduate, Working Class

Certification Yes

Fee variation Yes

Impressive things Dyned software

Unimpressive things Location

Good or Bad points of counseling Good

Wi-Fi No

Location Adarsh Nagar

 AMERICAN (INSTITUTE OF ENGLISH
Institute LANGUAGE PVT. LTD.

Duration of course 3 MONTH

Fee 3000

Class hour 1 and half hour

Total number of hour 90 hour

Placement facility No

Trainers experience NA

Number of student in a batch 25-30

Total number of admission in a
month 100

Courses offered Spoken English

Mission statement None

Attendance and Assessment No

Walk ins NA

Student profile 8th standard to Post Graduate, Working Class

Certification No

Fee variation Yes

Impressive things None

Unimpressive things Number of student is more than 50.it is not 25

Good or Bad points of counseling Poor

Wi-Fi No

Location Adarsh Nagar

Institute ADROIT

Duration of course 2 and half month

Fee 2800

Class hour 1 hour

Total number of hour Not based on hour

Placement facility Yes

Trainers experience NA

Number of student in a batch 20

Total number of admission in a
month 30
Power (YES)
Courses offered English,CAT,MAT,JEMAT,IELTS,TOFEL

Mission statement None

Attendance and Assessment Yes

Walk ins 6
10th ,10+2,Graduate,Post Gaduate,Working
Student profile class

Certification Yes(80% attendance is must for that)

Fee variation Yes

Impressive things Spacious Rooms, library

Unimpressive things None

Good or Bad points of counseling Average

Wi-Fi No

Location Lal Kothi

Institute HERO MINDMINE

Duration of course 3 month

Fee 4000/4900/5350/5890

Class hour 2 hour

Total number of hour 200+60 hour for computer

Placement facility Yes

Trainers experience 2 and half years

Number of student in a batch 12-Jan

Total number of admission in a
month 12
Spoken
Courses offered English(foundation,Level1,2,3)

Mission statement None

Attendance and Assessment Yes

Walk ins 8 Per month

Graduate, Post Graduate, Working
Student profile Class

Certification Yes

Fee variation No

Impressive things Dyned software

Unimpressive things Location

Good or Bad points of counseling average

Wi-Fi No

Location Vaishali Nagar

Institute PLANET-EX

Duration of course 3 month

Fee 3200

Class hour 1 and half hour

Total number of hour Not based on hour

Placement facility No

Trainers experience Around 4 years

Number of student in a batch 20

Total number of admission in a
month 20-30

Courses offered Spoken english,IELTS,TOFEL

Mission statement None

Attendance and Assessment No

Walk ins 100 Per month

Student profile 10+2,Graduate,Post Graduate

Certification No

Fee variation No

Impressive things None

Unimpressive things Lack of staff

Good or Bad points of counseling Inexperienced counselor

Wi-Fi No

Location Vaishali Nagar

GOENKA PROFESSIONAL TRAINING INSTITUTE(BBC

Institute LEARNING)

Duration of course 3 month

Fee 4900/5900

Class hour 1 and half hour

Total number of hour Not based on hour

Placement facility No
Minimum 2 years, Director is one of the most experienced
Trainers experience in jaipur

Number of student in a batch 20

Total number of admission in a
month 40

Courses offered Spoken English,IELTS,TOFEL

Mission statement None

Attendance and Assessment Yes

Walk ins 5-10,20-30

Student profile Under Graduate,Graduate,Post Graduate, Working Class

Certification Yes(BBC Certification)

Fee variation No

Impressive things CBT Software, Computer Lab

Unimpressive things None

Good or Bad points of counseling Excellent counseling, Maintain Privacy

Wi-Fi No

Location Tilak Nagar

Institute NIFA

Duration of course 15 month

Fee 30652/33000
Class hour 2 hour

Total number of hour Not based on hour

Placement facility Yes

Trainers experience NA

Number of student in a batch 10

Total number of admission in a
month 10

Courses offered Diploma in Computer Accountancy

Mission statement None

Attendance and Assessment No

Walk ins NA

Student profile 10+2,Under Graduate

Certification Yes

Fee variation NA

Impressive things None

Infrastructure,Brochere was not available at
Unimpressive things counseling
Good or Bad points of
counseling Poor

Wi-Fi No

Location Lal kothi

Institute CREATE COMPILE CATER

Duration of course 3 month

Fee 3400
Class hour 1 and half hour

Total number of hour Not based on hour

Placement facility No

Trainers experience 5 years

Number of student in a batch 20

Total number of admission in a
month 35

Courses offered Speak English

Mission statement None

Attendance and Assessment Yes

Walk ins NA

Student profile 10+2,Graduate

Certification No

Fee variation No

Impressive things Library facility

Unimpressive things None

Good or Bad points of average/course is offered after according to
counseling knowledge

Wi-Fi No

Location Lal kothi

Institute Focus

Duration of course 3 month

Fee 4900

Class hour 1 and half hour

Institute
Total number of hour AHAbased on hour
Not

Duration
Placementof facility
course 3 Month
Yes

Fee
Trainers experience 25,000 5 years
Minimum

Class
Numberhour
of student in a batch 2 Hour
25

Total number of admission

hour in a Not Based
More on Hour
than 60
month
Placement facility
Courses offered Yes
Spoken English

Trainers experience
Mission statement NA
None

Number of student
Attendance in a batch
and Assessment 20
No

Total
Walk number
ins of admission in a 400 Admission Per Year
NA
month
Courses offered
Student profile Business Communication,
10+2,Under Diploma inGraduate
Graduate,Graduate,Post Aviation
&Hospitality
Certification
Mission statement No
None

Fee variationand Assessment

Attendance Yes
Yes

Impressive
Walk ins things 18 running
4000 batches,
Per Year thereSeminar
Including is environment to speak
English
Student profilethings
Unimpressive 10+2,Under Graduate
Administrative head is rude towards workers

Certification
Good or Bad points of Yes
Average
counseling
Fee
Wi-Fivariation NA
No

Impressive
Location things Infrastructure
Lal kothi

Unimpressive things None

Good or Bad points of Comprehensive & Good

counseling
Wi-Fi No

Location M I Road
Institute Planet Rex

Duration of course 4 month

Fee 4500

Class hour 1 and half hour

Total number of hour Not based on hour

Placement facility Yes

Trainers experience Minimum 3 Years

Number of student in a batch 15

Total number of admission in a
month NA

Courses offered Spoken English,IELTS,TOFEL

Mission statement None

Attendance and Assessment No

Walk ins NA

Student profile 10+2,Graduate,Post Graduate, Working Class

Certification NO

Fee variation NO

Impressive things Infrastructure, Directors publicity

Unimpressive things None

Good or Bad points of
counseling Average

Wi-Fi No

Location Vaishali Nagar

Institute ELEMENT AKADEMIA

Duration of course 3 Month

Fee Rs. 6000

Class hour 2 Hour

Total number of hour Not based on hour

Placement facility Yes

 QUESTIONNAIRE 1

Name : _________________________________________
Contact number : _________________________________________
E-mail address :
_________________________________________
DOB : _________________________________________
Sex (Male/Female) : _________________________________________

Q.1What is your academic qualification? Please mention name of college/course if

pursuing.

No. of Respondant

35
33

30

25

20

No. of Respondant
15
12

10

5
2

0
UG G PG
Q.2Do you have any work experience? If yes, which company and how many
months/years?

No. of Respondant

35

30
30

25

20
No. of Respondant
15
12

10 9

0
Yes No No Answ er
Q.3Are you looking for some course which can help you in getting a good job?

No. of Respondant

25
22

20

15
13
12
No. of Respondant

10

0
Yes No No Answ er
Q.4Where do you look for information related to different courses?(please Tick)
a. (A)newspaper
b. (B)friends
c. (C)parents
d. (D)hoarding/kiosks
e. (E)career fairs
f. (F) seminars
g. (G)any other (please specify)

No. of Response

40 38
36
35

30

25

20 No. of Response
16
15
15
11
10
6
5
2

0
new spaper friends parents hoarding/kiosks career fairs seminars any other
(please specify)
Q.5Whom do you consult to take decisions about your career?(please Tick)

(A)parents
(B)friends
(C)teachers/mentors
(D)career counselors
(E)any other (please specify)

No. of Response

35
31
30
30

25

19
20
No. of Response
15

10
10

5
1
0
parents friends teachers/mentors career counsellors any other (please
specify)
Q.6What are the criteria’s on which you decide to join any institute? Please tick the most
important ones.

(A)Course duration
(B)Course content
(C)Course fee
(D)Number of students in a batch
(E)Job interview guarantee
(F)Job placement guarantee
(G)Faculty
(H)Infrastructure
(I)Past placement record
(J)Credibility
(K)Distance from home/office
(L)Promotional offers/discounts
(M)Any other (please specify)

Score

35
31
30

25

20 17 18
16 Score
14 14
15 12

10 8
6 5 5 5
5 3
1
0
e

y
h

s
n

nt

lty
e

re

er
te

li t

)
tc

or

nt
fic
tio

te
fe

ify
te

cu

tu

sw
bi
n
ba

ou
ec
an

of
ra

ra

ec
n

di
e

c
Fa
co

e/

an
rs

sc
tr
ru
du

ar

ua
a

re

sp
m
ou

st

en

di
in

gu

C
e

tg

o
e

ho
fra

se
rs

/
C

N
rs

rs
s

ew

en
nt
ou

ea
In
ou

ce

fe
m
de

em
C

vi

of
fro
la

pl
C

er
tu

r(
tp

al
ac

ce
fs

he
in

s
pl

io
Pa

an
ro

ot
b

ot
Jo

t
Jo
be

is

y
An
D

o
um

Pr
N
Q.7Rate the following criteria’s in terms of priority from 1 to 13.
(1 being the most important and 13 being the least important)

(A)Course duration
(B)Course content
(C)Course fee
(D)Number of students in a batch
(E)Job interview guarantee
(F)Job placement guarantee
(G)Faculty
(I)Infrastructure
(J)Past placement record
(K)Credibility
(L)Distance from home/office
(M)Promotional offers/discounts
(N)Any other (please specify)
Score

25

20
20

15
Score
10
7
5
5 4 4
2
1 1 1 1
0 0 0 0
0
ee

ty
h

e
n

lty

s
e
e

er
en

)
tc

or

nt
fic
io

te
fe

li
ur

ify
nt

cu

bi

sw
ba
at

ec

ou
an
nt

of
ct
ra

ec
e

di
Fa
r

co

e/
rs

sc
tr

an
ru
du

ar
a

ua

re

sp
m
ou

st

en

di
n

C
se

tg

o
e

ho
g

ra

se
s/
C

N
rs

em
s
r

en
w
nt

r
ou

ea
In
ou

ffe
m
ie

ac
de

em
C

fro

pl
rv
C

lo
pl
tu

r(
te

ac

na
ce
fs

st

he
in

pl

io
Pa

an
ro

ot
b

ot
Jo

t
Jo
be

is

om

y
An
D
um

Pr
N
Q.8What are the most important skill as per you that you should have in order to get a
job with a top MNC

(A)communication skill
(B)PD/Grooming
(C)Managerial skill
(D)Domain knowledge/technical skill
(E)Any other (Please specify)
Score

30

25
25

20

15
15 13 Score

10

6
5
5

0
communication skill PD/Grooming Managerial skill Domain No Answ er
know ledge/technical skill
Q.9Have you ever joined any training to improve your skills? If yes, which institute

No. of Respondant

35 33

30

25

20
No. of Respondant
15

10
7
5
5

0
Yes No No Answ er
Q.10What is the right time to join any such training?

Response

20 19

18

16 15

14

12

10 Response
8
8

4
2
2

0
Winter Summer This Year No Answ er
Q.11Have you heard of these institutes? (Please Tick)
(A)Hero Mindmine
(B)Elements Akademia
(C)BBC English edge
(D)VETA
(E)Focus
(F)Ace academy

Aw areness

25

21
20
20 19

16

15
13
Aw areness

10
7

5 4

0
Hero Mindmine Elements BBC English edge VETA Focus Ace academy No Answ er
Akademia
Q.12Have you ever visited any of the above institutes and attended a counseling
session?

Visit

40

34
35

30

25

20 Visit

15

10
10

5
1
0
Yes No No Answ er
Q.13How do you believe that the institute is credible and established? Please tick the
important ones.
(A)placements
(B)branding
(C))infrastructure
(D)advertisements
(E)PR articles in newspapers
(F)fee
(G)tie-ups with companies/institutions
(H)certification
(I)management profile

Score

30

26
25

20
17 17

15 14 Score

11 11
10
8 8
6

5 4

0
e
e
ng

e
ts
ts

er
n
rs

ns

f il
fe
ur

io
en
en

sw
pe
di

t io

ro
ct

at
an

m
m

pa

tp

An
ru

fic
itu
se
ce

Br

st

ws

en
rti
st

No
r ti
a

fra

ce
/ in

em
ne
pl

ve
in

es

ag
ad

in

ni

an
s

pa
le

m
t ic

m
co
ar
PR

th
wi
ps
-u
ti e
Q.14If you wish to join any such course then who will pay the course fee? You or your
parents?

No. of Response

35

31

30

25

20

No. of Response

15

10

7
6

0
Parents Self Both No Answer
Q.15Which mode of payment will you choose to pay the course fee? Full payment or
installments?

No. of Response

20
19

18

16

14

12
12
11

10 No. of Response

4
3

0
Full Payment Installment No Answer Both

Thank you
 QUESTIONNARE 2
New Students Name Education
Family Income City

1. Are you a graduate/graduation FY student?

]
No. of Respondant

12th
G
Final Year
PG

9
2. Are you doing any professional course? If yes, which one?

NO. of Respondant

12 Yes
13 No
3. Are you interested in career in one or more of the following jobs? Tick the ones you
are interested in

BPO
BANKING
ACCOUNTS
SALES
OFFICE JOB/BACKENED OPERATIONS

If s/he is interested in BPO/office, than proceed.

Interest

19
BPO
Banking
Accounts
3
Sales
Office Job
No Answer

7
4. Have you applied/given interview for BPO/Office jobs?

Response

Yes
No
No Answer

16
 Response

Yes
5. Were you selected? If No, why No
No Answer

16
Response

Yes
No
No Answer

16
6. Do you think you need training for getting International BPO jobs?

Response

1
Yes
No
No Answer

19
7. What kind of training do you need?

Response

7 7

Communication Skills
Personality/Grooming
2
Confidence Building
Computer
Accent
English
Account
8 No Answer

1
3 1
8. What, as per you can be the duration and fee of such a training?

If fees mentioned are less than 15000/-, please ask this question

Response

3 Months
4 Months
6 Months
No Answer

Response

1
2

7 1

4000
5000
5500
6000
7000
8000
6 10000
1 12000
No Answer

1
4
9. If there is a very high quality institute providing specialized training for BPO/KPO
and office jobs including domain expertise, business communication, IT and grooming
and assuring jobs in top International BPOs like genpact,how much extra can you pay
for it

Response

10
1

0
1000
2000
8000
2500
No Answer

2
11

6
10 When are you planning to do this course?

Response

This Year
Next Year
No Answer
14

3
11 On what basis would you choose the institute?

Response

2
1
6
1

Aid
1 1
Publicity
1 No. of Student
Infrastructure
Content
Faculty
Placement
Fee
Time
No Answer
9

11
 MY FINDINGS

• During the survey it was found that EA has best facility in jaipur for business
communication.
• Lake of Awareness in student. Many people are not known about EA especially
under graduate.

• When I interviewed people then many of the people can not recall EA. It shows
Lake of Advertisement or advertisement is not timely given or advertisement is
not given on right time.

• In its advertisement is not using any brand ambassador which attracts all age
group people like VETA.

• There is lake of creativity in advertisement.

• BBC ENGLISH is main competitor and strategically better performer then EA.
 SUGGESTIONS

1. Company should increase awareness in exterior part of jaipur through news paper

2. According to my view company should open new centre in jaipur especially inVAISHALI

NAGAR

3. Company should search courses for increasing sales.

4. Company should give attractive offer to other institute like NFA

5. Company must make strategy to fight local brand

6. Company should hold seminar in RAJASTHAN UNIVERSITY

 LIMITATIONS OF STUDY

• Considering the fact that nothing is perfect in this world. Every individual is bound to
make mistake at some point or the other.

• The information is collected only from Institutes and by questionnaire form.

• Information collection took 15 days.

• The respondent may be based or influence by some other factor.

• The minor concept and technique at the marketing management are used significant in
the project concern.

• Some time respondents were not in reply with full confidence and sometime they reply
without thinking over the matter.