Sky Academy “Sustainability & Value generation”

Date: 9/30/2020

EMBA 581

Abir Ward

Today, I will try to answer two questions that many of you have in mind: How can Sky Academy be financially

sustainable? What strategic and business value can the academy add to Emaar, The Economic City (EEC) and

king Abdullah Economic City (KAEC)?

As you know, the Saudi government has allocated around 17.6% of its annual budget for education big part of

which goes mainly to vocational education. With the current short supply and high demand for vocational

education, Sky Academy has a golden opportunity to fill the supply gap and play a vital role in positioning

KAEC as the best socio economic enabler in KSA and one of the main contributors to the realization of vision

2030.

How can the academy be financially sustainable?

As real estate developers, it is about time to transition from education service provider to enablers/facilitators

for third party education providers to invest and operate from KAEC. That being said, partnering with an

international training service provider on a revenue share basis to operate and manage the academy where we

contribute with a fully furnished and serviced building while the partner invests in manpower and training

material will waive the operational risks and minimize heavily the financial ones. To date, two contracts has

been signed reflecting the above business model with two well renowned international training service

providers who have local experience and presence.

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On the other hand, to secure a positive cash flow for the upcoming ten years, we are in final steps to sign a

facility lease agreement for half a floor in the academy for the women driving school securing a minimum

guaranteed SAR 750k with 5% annual increase which will ensure the financial sustainability of the academy.

What strategic and business value is the academy going to add?

From business perspective, Sky Academy will:

• Positively contribute to the cash flow of EEC for the upcoming 10 years

• Act as an internal training academy of EEC saving minimum of 20% training cost

• Become a platform to attract training service providers to invest & operate from KAEC

• Improve productivity & standardize the quality of EEC vendors

From strategic perspective, the Academy will:

• Set the foundation to position KAEC as the ‘ Vocation Hub’ of Saudi Arabia & a main contributor to the

realization of vision 2030

• Reinforce the attraction of government related projects & funds (Ex: SEZ, SABIC, Tourism

development fund etc..)

• Enable differentiated educational outcomes further supporting the attractiveness of the city for students

and employers alike

• Enhance city development & indirect job creation via demand for commercial services and residential

real estate.

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I hope it is clear to you by now the business and strategic value and importance of sky academy. I will leave

you with one main question for you to answer: Is it wise to shut down the academy and deprive KAEC from

the opportunity of realizing its value proposition and increasing its profitability?