Strategic Management

Presented
Southwestern Adventist
University a Case study By

Mark Samraj

04/25/10
 Strategic Management

History
In 1892, Seventh-day Adventists living near Dallas chose a
In 1892, Seventh-day Adventists living near Dallas chose a
committee to locate property for a school in Johnson
committee to locate property for a school in Johnson
County. The committee members personally financed the
County. The committee members personally financed the
purchase of 800 acres, five miles east of Cleburne, for
purchase of 800 acres, five miles east of Cleburne, for
$8,000.
$8,000.
 
 
At a time in our nation when railroads went broke, banks
At a time in our nation when railroads went broke, banks
closed, and businesses failed, hearty Adventist families
closed, and businesses failed, hearty Adventist families
converged on the land in November and December 1893.
converged on the land in November and December 1893.
They brought all their earthly possessions in covered
They brought all their earthly possessions in covered
wagons and began to clear the land and build houses. Most
wagons and began to clear the land and build houses. Most
lived in tents during those first winter months.
lived in tents during those first winter months.
 Strategic Management

Proposed Vision Statement

We will strive to be the best Adventist University in the

We will strive to be the best Adventist University in the
North America Division. Giving students a world class
North America Division. Giving students a world class
education that includes the Spiritual Development of a
education that includes the Spiritual Development of a
person as well as it is up to date with present Market
person as well as it is up to date with present Market
demands
demands
 Strategic Management

Mission Statement
Mission Statement
Mission Statement
The mission of Southwestern Adventist University is to
The mission of Southwestern Adventist University is to
offer quality higher education in a Christ-centered
offer quality higher education in a Christ-centered
environment.
environment.
Core Values
Core Values
God is the ultimate source of knowledge and meaning.
God is the ultimate source of knowledge and meaning.
Committed to the Seventh-day Adventist value system.
Committed to the Seventh-day Adventist value system.
Commitment to the continual growth of the whole person.
Commitment to the continual growth of the whole person.
Committed to a heritage of diversity, tolerance, concern
Committed to a heritage of diversity, tolerance, concern
and compassion for others.
and compassion for others.
Commitment to the personalized development of
Commitment to the personalized development of
students.
students.
Academic excellence
Academic excellence
 Strategic Management
Proposed Mission
Statement

SWAU would like to reach the expectations of Students

SWAU would like to reach the expectations of Students
attending SWAU, in the following
attending SWAU, in the following
Highest quality Education
Highest quality Education
Up to date Market requirements
Up to date Market requirements
Low Tuition
Low Tuition
Philosophy, of do unto others what you want others
Philosophy, of do unto others what you want others
to do to you.
to do to you.
 Strategic Management

Problem Statements

 
 
Enrolment growth is too minimal. Growth is not as
Enrolment growth is too minimal. Growth is not as
expected. There has been a steady Attrition of Students in
expected. There has been a steady Attrition of Students in
the third and fourth year of the program. Retention of
the third and fourth year of the program. Retention of
Students SWAU has limited funding for expansion
Students SWAU has limited funding for expansion
 Strategic Management
Financial Analysis
%
change 08 to 09 to
SWAU Budget           06 to 07 07 to 08 09 10

  2006-2007 2007-2008 2008-2009 2009-2010 2010-2011        

FFTE Enrollment 746 750 787 826 867 1% 5% 5% 5%
                   
Income                  

Net Student Inc 8,544,911 8,979,640 9978072 11,085,063 12,269,527 5% 11% 11% 11%

Appropriations Inc 2211770 2322748 2369203 2416587 2464918 5% 2% 2% 2%

Investment Inc 1110486 1133000 673000 473000 273000 2% -41% -30% -42%

Donations-Unrestd 391830 210000 150000 150000 150000 -46% -29% 0% 0%

Miscellaneous 212,484 171,000 160000 160000 160000 -20% -6% 0% 0%

Axiliary Enterprise 3,010,440 2854692 2997426 3,147,297 3304662 -5% 5% 5% 5%

                   

Total Income 15,481,921 15,671,080 16,327,701 17,431,947 18,622,107 1% 4% 7% 7%

                   
Expenses                  

Academic Support 650443 720615 742233 764500 787435 11% 3% 3% 3%

Public Service 81,909 89255 91932 94690 97531 9% 3% 3% 3%

Institutional Support 3640418 3609073 3717345 3828865 3943731 -1% 3% 3% 3%

Instructional 4577455 4856559 5002255 5152323 5306893 6% 3% 3% 3%
Student Services 1253512 1362246 1403113 1445206 1488562 9% 3% 3% 3%
Maintenance exp 1,965,461 2195510 2261375 2329216 2399093 12% 3% 3% 3%

Auxiliary Enterprise 2894523 2836725 2978561 3127489 3283863 -2% 5% 5% 5%

                   
Total Expense 15063721 15669983 16196814 16742289 17307108 4% 3% 3% 3%
                   

Net Income 418,200 1,097 130,887 689,658 1,314,999 -100% 11831% 427% 91%
Strategic Management
SWAU Consolidated
Balance Sheet 2009 Total

Assets  
Cash 3310181
A/C Rec 611352
Notes Rec 43525
Inventories 161113
Prepaid Expenses 101933
Assets of Discontinued op 664961
Total Current Assets 4893065
   
Plant Assets Net 18437188
   
Other Assets  
Cash Restricted for Endowments 4359774
Investments 2405421
Notes Recievable, Long-Term 379111
Total Other Assets 7144306
   
Total Assets 30474559
   
Liabilities  
Current Liabilities  
A/C Payable 1,017,280
Deposits Payable 96550
Deferred Income 126399
Liabilities of Disc operations 564961
   
Total Current Liabilities 1,805,190
   
Other Liabilities  
Advances from Government 341689
Total other Liabilities 341689
Total Liabilities 2,146,879
   
Owner's Equity  
Stockholder's equity  
Unrestricted Unallocated 825004
Unrestricted Allocated 2369903
Unrestricted Net invested in plant 18437188
Total Unrestricted 21632095
Temporarily Restricted 414149
Permanantly Restricted 6281436
Total Onwer's Equity 28327680
   
Total Liabilities and Net Assets 30,474,559
 Strategic Management

Financial Office

The following budget shows the future financial position

The following budget shows the future financial position
of SWAU is going to be good. The Budget predicts an
of SWAU is going to be good. The Budget predicts an
average increase of enrollment of 5% in the couple of
average increase of enrollment of 5% in the couple of
years. Net student income is predicted to increase by
years. Net student income is predicted to increase by
11% in the couple of years. Total income is predicted to
11% in the couple of years. Total income is predicted to
increase by 7% where as the Expenses to increase by
increase by 7% where as the Expenses to increase by
about 3% so SWAU would be expecting higher net
about 3% so SWAU would be expecting higher net
income. In the financial ratios SWAU has a poor current
income. In the financial ratios SWAU has a poor current
ratio $1 of debts only produces $2.71 of Current Assets.
ratio $1 of debts only produces $2.71 of Current Assets.
SWAU has a good Quick ratio $1 of debts produces
SWAU has a good Quick ratio $1 of debts produces
$8.38 of Current Assets. And SWAU keeps its liabilities
$8.38 of Current Assets. And SWAU keeps its liabilities
really low which is a good thing.
really low which is a good thing.
 Strategic Management
SWOT Matrix
STRENGTHS WEAKNESSES

SO – Strategies WO – Strategies
1. Further expand into 1. New marketing
the Arlington Fort strategyW2, W4,
OPPORTUNITIE worth, new campus W3, O1, O3, O10).
S area(S3,S4, S3, O1,
O3)
2. To develop new
courses
(S3, O10)

ST – Strategies WT – Strategies
1. Apply for more 1. Expand in the
THREATS Government Aid and Distance Education
Grants. S3, S4, program W3, T1,
W2,W3
W2,T4
 Strategic Management
Space Matrix
Financial Strength (FS) (+2.5) Environmental Strength (ES) (-1.5)
1. The University is 1. Low staff and faculty
currently not doing well income in comparison
financially, but the growth with other local hospitals.
2. Strong competition from
of the students has been bigger Universities.
increasing.
Competitive Advantage (CA) (-4) Industry Strength (IS) (+2)
1. Southwestern Adventist 1. As the population of
promotes proactive and Keene grows SWAU
openness. would benefit.
2. Poor brand awareness:
Southwestern 2. SWAU promotes a
University’s presence is holistic education
not evident. Many people
do not know of its
existence.
Strategic Management
Space Matrix
Conservative FS Aggressive
+6

+5

+4

+3

+2
(-2,1)
+1

CA IS
-6 -5 -4 -3 -2 -1 +1 +2 +3 +4 +5 +6
-1

-2

-3

-4

-5

-6

Defensive Competitive
ES
 Strategic Management

BCG Matrix

RELATIVE MARKET SHARE

High POSITION Medium Low
1.0 0.50 0.0

High +20 SWAU

STARS QUESTION MARKS

#2 #1

Medium 0 Andrews
CASH COWS DOGS
#3 #4

Oakwood
Low -20
R
a
pi
d Strategic Management
M
ar
e
Grand Matrix Strategy
t Growth

Quadrant Quadrant
#1 #2
Strong Weak
Competitive Competitive
Position Position
titive Quadrant #3
Position Quadrant #4

Slow Market Growth

 Decision Making Table
Strategic Solution 1: (Market Development) Expand in the Distance Education program

Strategic Management
Strategic Solution 2: (Market Development) Add a new Campus in the Arlington, Fort worth Area

Decision Making Strategy

Decision Making Table
Decision Making Table
 
 
 
 
Strategic Solution 1: (Market
Strategic Solution 1: (Market
Development) Expand in the Distance
Development) Expand in the Distance
Education program
Education program
 
 
Strategic Solution 2: (Market
Strategic Solution 2: (Market
Development) Add a new Campus in the
Development) Add a new Campus in the
Arlington, Fort worth Area
Arlington, Fort worth Area
 Strategic Management

Strategic Solution (Market Development) 1 should be

Strategic Solution (Market Development) 1 should be
Chosen
Chosen
 
 
Expand in the Distance Education Program by
Expand in the Distance Education Program by
bringing down the tuition fees.
bringing down the tuition fees.
REASON
REASON
SWAU would be using these Strategies to increase
SWAU would be using these Strategies to increase
Market share. SWAU sees this as an opportunity to
Market share. SWAU sees this as an opportunity to
increase enrollment through market Development. Since
increase enrollment through market Development. Since
there is a lot of schools nearby. SWAU’s objective would
there is a lot of schools nearby. SWAU’s objective would
be to use a Market penetration strategy, since it feels that
be to use a Market penetration strategy, since it feels that
there are available students who want to pursue
there are available students who want to pursue
education.
education.
 Strategic Management

Implementation Year 1 Actionable Plan

Description of Task Note Bud Person
get Responsi
ble
Jul – Check with the $20,0 $20, VPAA
Dec Accreditation body on 00. 000
2010 How many Dist ed
courses can be offered
and list the courses
Jul Publish in Newspapers 200 Enrollment
2010 and the internet. On Departmen
– Jun what courses and t
2011 degrees that can be
done through the
university
 Strategic Management

Year 1 Actionable Plan

 
 
Production / Operation (R& D) Department: Select
Production / Operation (R& D) Department: Select
teachers, have meetings give them an orientation and an
teachers, have meetings give them an orientation and an
itinerary. $20,000 to develop the new syllabi of the
itinerary. $20,000 to develop the new syllabi of the
courses. $200,000 for hardware and software cost.
courses. $200,000 for hardware and software cost.
Each site has a secured storage area for equipment and
Each site has a secured storage area for equipment and
supplies
supplies
Human Resource Department: $400,000 Addition of 5
Human Resource Department: $400,000 Addition of 5
new departments and 14 new teachers. Increase faculty
new departments and 14 new teachers. Increase faculty
by 30% the following year. Instructor has completed
by 30% the following year. Instructor has completed
training for both equipment and methodology. It is
training for both equipment and methodology. It is
important to include faculty development programs for
important to include faculty development programs for
distance education programs.
distance education programs.
Financial Resource Department –
Financial Resource Department –
A new fees structure for the Distance Education
A new fees structure for the Distance Education
departme
departme
 Strategic Management
Year 2 Actionable Plan

Registrar (Management) – List the number of new

Registrar (Management) – List the number of new
courses.
courses.
Enrolment Department: $20,000 to publish in
Enrolment Department: $20,000 to publish in
Newspapers and the internet.
Newspapers and the internet.
Human Resource Department: $300,000 Addition of 2
Human Resource Department: $300,000 Addition of 2
new departments and 4 new teachers
new departments and 4 new teachers
Financial Resource Department – Capital Budgeting
Financial Resource Department – Capital Budgeting
MIS. Evaluate the needs of the enrolled students. To
MIS. Evaluate the needs of the enrolled students. To
improve the performance of the university, by improving
improve the performance of the university, by improving
the decision quality. To have marketing firm provide data
the decision quality. To have marketing firm provide data
on enrollment and attrition of students.
on enrollment and attrition of students.
 Strategic Management
Year 3 Actionable Plan
 
 
Registrar (Management) List the additional new
Registrar (Management) List the additional new
courses added to the Distance Education program. And
courses added to the Distance Education program. And
the number of degrees in the Undergraduate level and
the number of degrees in the Undergraduate level and
the number of courses in the Graduate level.
the number of courses in the Graduate level.
Undergraduate programs Graduate
Undergraduate programs Graduate
Programs
Programs
BBA MA Sociology,
BBA MA Sociology,
Economics
Economics
Testing of the Desire to Learn system and the grading
Testing of the Desire to Learn system and the grading
system in the summer semester. Strictly no pure science
system in the summer semester. Strictly no pure science
would be offered in the Distance Education program.
would be offered in the Distance Education program.
Enrolment Department: $10,000 to publish in
Enrolment Department: $10,000 to publish in
Newspapers and the internet. Human Resource
Newspapers and the internet. Human Resource
Department: $200,000 Addition of a new department
Department: $200,000 Addition of a new department
and 3 new teachers
and 3 new teachers
 Strategic Management

Capital Budgeting
      Years  
  0 1 2 3
Investment Outlay        
Added Departments ($400,000)      
Marketing -30,000      
Syllabi exp -10,000      
Hardware and software exp -200,000      
Initial net investment ($650,000)      
         
Operating Cash Flows        
Added students   175 200 225
Fees   $3,500.00 $3,500.00 $3,500.00
Total revenues   $612,500 $700,000 $787,500
Depreciation   50,000 50,000 50,000
Total costs   $362,500 $400,000 $387,500
Operating Income   $250,000 $300,000 $350,000
Taxes on operating income   0 0 0
A-T Operating Income   $250,000 $300,000 $350,000
Depreciation   $250,000 $300,000 $350,000
Operating cash flow   $300,000 $350,000 $400,000
Terminal Year Cash Flows        
Recovery of net working capital
       
Salvage Value        
Tax on salvage value        
Total Termination cash flow        
Project Cash Flows        
Net cash flows ($650,000) $300,000 $350,000 $400,000
NPV $250,075      
IRR 29.25%      
 Strategic Management

Capital Budgeting
NPV= 250,075
NPV= 250,075
IRR= 29.25%
IRR= 29.25%
The following information above is calculated based
The following information above is calculated based
on estimated increase in revenue based on increase in
on estimated increase in revenue based on increase in
enrollment, and a subsequent increase of expenses by
enrollment, and a subsequent increase of expenses by
half the amount. From the following information we see
half the amount. From the following information we see
the NPV is 250,075 and the IRR is 29.25%. The first
the NPV is 250,075 and the IRR is 29.25%. The first
year would see an increase of 150 students in the
year would see an increase of 150 students in the
distance education program, the second year we expect
distance education program, the second year we expect
to have 175 students in the program and the following
to have 175 students in the program and the following
year 200 students in the Distance education program.
year 200 students in the Distance education program.
The proposal would permit a total of 1000 students in the
The proposal would permit a total of 1000 students in the
Distance education program.
Distance education program.
 Strategic Management

Controlling and Evaluation

Year 1: Evaluation Criteria

Year 1: Evaluation Criteria
Management: Evaluate the Number of new applicants.
Management: Evaluate the Number of new applicants.
Marketing Department: Evaluate how effective the new
Marketing Department: Evaluate how effective the new
Marketing strategy is.
Marketing strategy is.
Human Resource Department: Evaluate the Teacher’s
Human Resource Department: Evaluate the Teacher’s
performance teaching in the Distance Education
performance teaching in the Distance Education
department.
department.
Financial Resource Department: Evaluate the increase
Financial Resource Department: Evaluate the increase
in revenue by the implementation of this strategy this
in revenue by the implementation of this strategy this
following year.
following year.
 Strategic Management

Controlling and Evaluation

Year 2 : Evaluation Criteria

Year 2 : Evaluation Criteria
Management: Evaluate the Number of new applicants.
Management: Evaluate the Number of new applicants.
Marketing Department: Evaluate how effective the new
Marketing Department: Evaluate how effective the new
Marketing strategy is.
Marketing strategy is.
Human Resource Department: Evaluate the Teacher’s
Human Resource Department: Evaluate the Teacher’s
performance teaching in the Distance Education
performance teaching in the Distance Education
department.
department.
Financial Resource Department: Evaluate the increase
Financial Resource Department: Evaluate the increase
in revenue by the implementation of this strategy this
in revenue by the implementation of this strategy this
following year.
following year.
 Strategic Management

Controlling and Evaluation

Year 3: Evaluation Criteria

Year 3: Evaluation Criteria
Management: Evaluate the Number of new applicants.
Management: Evaluate the Number of new applicants.
Marketing Department: Evaluate how effective the new
Marketing Department: Evaluate how effective the new
Marketing strategy is.
Marketing strategy is.
Human Resource Department: Evaluate the Teacher’s
Human Resource Department: Evaluate the Teacher’s
performance teaching in the Distance Education
performance teaching in the Distance Education
department.
department.
Financial Resource Department: Evaluate the increase
Financial Resource Department: Evaluate the increase
in revenue by the implementation of this strategy this
in revenue by the implementation of this strategy this
following year.
following year.
 Strategic Management

Conclusion
 
 
Southwestern Adventist University continues to be a
Southwestern Adventist University continues to be a
University supporting Adventist education. It is a closed
University supporting Adventist education. It is a closed
knit community where Education thrives, It has produced
knit community where Education thrives, It has produced
great leaders in the Adventist church as well as leaders
great leaders in the Adventist church as well as leaders
in the Business world and also in the Medical field. I
in the Business world and also in the Medical field. I
personally feel if SWAU would invest in the Distance
personally feel if SWAU would invest in the Distance
Education program, there would be an increase in cash
Education program, there would be an increase in cash
flows that could be used in expansion of the University.
flows that could be used in expansion of the University.
Armed with a systematic plan that lists goals and
Armed with a systematic plan that lists goals and
priorities, a financial strategy that allows for life cycle
priorities, a financial strategy that allows for life cycle
planning, a reliable and robust IT infrastructure,
planning, a reliable and robust IT infrastructure,
adequate support services, and incentives for faculty to
adequate support services, and incentives for faculty to
experiment with information technology in their classes,
experiment with information technology in their classes,
higher education institutions will be well-positioned to use
higher education institutions will be well-positioned to use
distance education effectively
distance education effectively
Strategic Management

(heading)