ChiefViperMaster622
using this article: “Bolivia is a small landlocked country of…
using this article:
“Bolivia is a small landlocked country of 1,100,000 square kilometres (425,000 square miles), inhabited by 11 million people. In the year 2000, 68.2% lived below the poverty line and had very low levels of education. Bolivia’s per capita GDP was $988 ($2,336 adjusted to PPP). The Universidad Privada Boliviana (UPB) started out as a private undergraduate institution in the city of Cochabamba. Established in 1992, UPB enrolled the first 57 undergraduate students in 1993 and offered higher quality university education than government-run schools, which had highly politicized curricula. The University grew at a measured pace, adding five undergraduate programs and increasing enrolment. By 1998, UPB admitted 250 students per year. In terms of its financial situation, in 1994 UPB generated losses of 49 percent. By 1997, with increased enrolment, losses were reduced to 12 percent. It reached breakeven in 1998. Then life became more complicated. Native Bolivians in the tropical regions of Cochabamba and La Paz rely heavily on coca farming. Coca leaves are used to produce a harmless tea that is popular in South America, akin to coffee, but the majority of coca produced in the Chapare province of Cochabamba is sold to be refined into cocaine. As part of an anti-drug effort, government officials decided to reduce the number of coca farms, resulting in protests from growers, who were unionized. Tensions were already high when a private company that ran the water utility in the city of Cochabamba dramatically increased water rates. This resulted in a violent uprising known as the Cochabamba Water War. Leading the coca farmers was Evo Morales, a fiery populist who looked to Venezuela’s Hugo Chavez for inspiration and vowed to bring “21st century socialism” to Bolivia: “Globalization creates economic policies where the transnationals lord over us, and the result is misery and unemployment,” is a typical quote. Morales quickly gained political traction. In the national elections held in 2002, he obtained 21% of the popular vote and was only narrowly defeated by former President Gonzalo Sanchez de Lozada, who obtained 22.46%. Many saw this as the beginning of the end of the neoliberal era in Bolivia that started in 1985. They were proven right when the socialists forced the president to resign in 2003 following a popular uprising. Morales was elected president in 2005 with 53% of the popular vote. UPB’s focus on business and engineering was entirely apolitical, but the violence in the streets and the threat of a Chavez-style government worried parents, prospective students and existing faculty. With the Cochabamba Water War, enrolment declined sharply in 1999 and many professors left, especially those with PhD degrees. The prior President retired. The new President, Manuel Olave, explains. It was at this moment, at the beginning of the year 2000, that I was hired. From the start, I realized that turning around the university was going to be a challenge. Besides the social, political, and economic turmoil, I was leaving a comfortable life in La Paz and working in both Bolivia and the US to move far away to an uncertain future. My family was less than enthusiastic about moving to Cochabamba, but they understood that I wanted to take on a challenge and make a contribution to Bolivia. My first task was to organize a task force to study UPB’s strategic challenges. By the year 2000, new enrolment had declined to 169 students. Initially, we used the traditional competitive strategy tools to create a strengths-weaknesses-opportunities-threats (SWOT) chart. The results were dismal, heavily weighted towards threats. Potential strengths, including our prestige and brand might not be appreciated by the ascendant socialists. Undeterred, the board of directors tasked me to create “the best private university in the country, and to become a point of reference for quality education in Latin America” Competitive strategy, I quickly realized, was not going to solve UPB’s problems much less allow us to thrive. There were other private schools that responded by reducing tuition. A price war fighting industry rivals, using competitive strategy terminology – seemed likely to leave us all bruised and bloodied. In the case of Bolivian private universities, with all the political and socioeconomic changes, traditional competition seemed an especially bad idea. I pivoted towards ideas I had read about in a series of articles by W. Chan Kim and Renée Mauborgne that have since been expanded into the books Blue Ocean Strategy and Blue Ocean Shift. Kim and Mauborgne seemed to intuit UPB’s position, describing it as a red ocean of competition where market incumbents fight until only one or two win. In contrast, in a blue ocean, rather than focus on competing, market boundaries are redefined to make competition irrelevant. To chart our own blue ocean, we studied customers and noncustomers. We commissioned a study in 2000 to calculate the potential market for the University in Cochabamba. Results showed that 39,933 students graduated from high school. We reduced that number to those interested in careers offered by the UPB. Next, we eliminated those who decided to emigrate from Cochabamba. We calculated those whose families could afford to study at UPB and eliminated those who had a low probability of passing the admissions test. The final result was a potential market of only 1,667 students per year, of which 10.14 percent already chose to attend UPB. Studying these low figures we realized, as Blue Ocean Strategy suggests, focusing solely on as-is buyers would leave us mired in a red ocean. Instead, we used the blue ocean shift process to develop strategic alternatives.? We first set up our blue ocean team and sought to get a picture of the current state of play in higher education to understand where we were and align everyone around the need to make the shift. We then tried to figure out what our potential blue oceans could be by using blue ocean methodologies like Kim and Mauborgne’s Buyer Utility Map, Strategy Canvas, and the ERRC Grid. To make the shift, we finally selected and implemented our chosen blue ocean move based on the process to deliver both differentiation and low cost in a way that created a win-win for students and ourselves. Specifically, after a lot of work we identified three strategies: 1) shift the value-cost frontier for undergraduate programs 2) expand the pool of undergraduate noncustomers beyond the city of Cochabamba, and 3) expand the market for graduate studies by opening up a unique fulltime MBA program in Bolivia, the first in the country. 1. Shift the Value-Cost Frontier for Undergraduate Programs Following the blue ocean shift process, we looked at the key factors of our offering and realized they had converged into an unsustainable me-too of red ocean competition. Our value curves, drawn on Kim & Mauborgne’s Strategy Canvas, did not look especially different than the curves of other schools. To meaningfully differentiate and reconstruct market boundaries we worked on which factors we could change, plotting them on Kim & Mauborgne’s Eliminate-Reduce-Raise-Create Grid. We needed to attract highly qualified students and faculty to our undergraduate programs but realized that traditional marketing was inefficient and ineffective. Advertising, especially television advertising, was expensive to produce and broadcast, performed poorly at attracting students, and arguably cheapened UPB’s brand. We eliminated broadcast advertising. Some factors added value to students but cost more than the value they generated; we reduced those. We’d always been (and purposefully remained) a private secular university, a meaningful point of differentiation in Bolivia. As an engineering and business school, our curriculum was broad, but supporting niche classes incurred expenses that did not align with value to the overall student body. We reduced niche interest classes; any class that enrolled five or fewer students was transformed into an independent study. There were factors that required investment but vastly increased buyer value and we raised those. TV ads and niche classes wouldn’t attract the best and brightest, but a top-quality faculty would, so we raised the number and credentials of full-time professors. We also raised English proficiency standards, switched to the case method for classroom learning, and dramatically expanded our internship agreements with the leading firms in Bolivia. We saw this as critical to build their practical work experience and bolster their CV and distinctive profile upon graduation – and thus their employability. Finally, we created an entirely new key factor – applied research centers in business and engineering, which would lift the prestige and reputation of UPB and simultaneously attract stronger faculty to UPB, resulting in us delivering an even higher level of quality of education. We further created a new campus in the capital city of La Paz. 2. Expand the Pool of Undergraduate Noncustomers beyond the City of Cochabamba As defined in the book “Blue Ocean Strategy”: … [The first tier of noncustomers is closest to your market. They sit on the edge of the market. They are buyers who minimally purchase an industry’s offering out of necessity but are mentally noncustomers of the industry. They are waiting to jump ship and leave the industry as soon as the opportunity presents itself. However, if offered a leap in value, not only would they stay, but also their frequency of purchases would multiply, unlocking enormous latent demand. The second tier of noncustomers is people who refuse to use your market’s offerings. These are buyers who have seen your market’s offerings as an option to fulfil their needs but have voted against them. Third tier: ‘Unexplored’ noncustomers who are in markets distant from yours. The third tier of noncustomers is farthest from vour market. Thev are noncustomers who have never thought of your market’s offerings as an option. By focusing on key commonalities across these noncustomers and existing customers, companies car understand how to pull them into their new market]… Our unique challenge was that, as a quality institution of higher education, the field of noncustomers was limited by the constraint that we only admit well qualified students. A selective university by definition cannot and should not admit anybody. Our academic program is rigorous and a limited number of students qualify for admission, especially with our unique requirement for English proficiency. Even if we were willing to lower quality by reducing our admission requirements (on the contrary, we’ve been steadily raising them they would be unable to keep pace, frustrating themselves and other students. Given that, and having already adjusted our program to admit academically qualified students who struggled financially or logistically, finding more qualified students in Cochabamba was not realistic. In response, I proposed creating a new campus in the city of La Paz. Studies showed that most administrative overhead could be covered by staff in Cochabamba (fixed costs), and we could add a new campus without a commensurate increase in administrative overhead. There were skeptics: adding an entirely new campus in a city 380kms (236 miles) away, a seven- hour drive, seemed like a stretch for a university that was financially insecure. I faced strong opposition from some board members who insisted that the “Harvard model” (one campus, one city) should be maintained. They ignored the market limitations that we faced in Cochabamba and the lack of intra-country mobility of Bolivian students unable or unwilling to relocate. They outright threatened to fire me but I stood firm. Even with my position as president in jeopardy, I insisted that expansion was our only way out of our financial situation; we were functionally bankrupt. With the support of the chairman of the board and the past-president, I was able to convince the majority of board members, who eventually understood the strategic benefits and agreed to support the vision. In 2002, we opened our new campus in La Paz. In La Paz we concentrated on noncustomer high school graduates whose first choice was a business-oriented university but who did not want to incur the extra cost of traveling to Cochabamba for a university education at UPB. A second group of noncustomers were those willing to pay a higher price for a quality education preferably in a non-denominational institution, considering that the most prestigious competitor was the much older Catholic University. We also looked towards students we thought should enrol but did not, particularly for economic reasons, and found that many of them were academically qualified but their family income prevented enrolment at UPB. To address this issue, we offered scholarships based on family income, as well as based on the entrance exam results. 3. Expand the Market for Graduate Studies Opening up a Unique Full-Time MBA Program in Bolivia The third-tier noncustomers were especially interesting to us. The most obvious group were people who already had degrees and careers and would have no interest in an undergraduate school. There were no full-time MBA programs in Bolivia, so people who wanted an advanced degree had to move to a different country. This was a steep financial and emotional barrier, leaving family, friends and their support system behind. To address these needs we decided to offer the first full-time master’s in business administration (MBA) degree in Bolivia, and, soon after, PhD degrees in economics and finance. We faced some formidable barriers: lack of faculty experienced in teaching graduate students, lack of bandwidth for our existing faculty, lack of physical infrastructure, and the challenges of student recruitment. By hiring a top-tier academic director with deep experience in case teaching we were able to overcome the lack of experience. Existing faculty stepped up to the challenge of teaching the graduate programs. Along with others, we built the infrastructure; I personally helped design and build teaching amphitheaters similar to those found at leading business schools. Most importantly, young Bolivian professionals responded positively to the challenge and, in 2004, our first class of 30 students started the first full-time MBA program offered in Bolivia. After 14 months of intensive study, that culminated with successful three-month internships in the most reputable firms of Cochabamba, twenty-six students obtained their MBA degrees. Most were employed within two months of graduation and their average salaries increased by 40 percent with respect to their previous jobs. A brief survey of their actual professional accomplishments shows the majority of them hold high level positions in top firms in Bolivia and a few outside of the country. At least five have created and manage new ventures. Where We Are in 2019 At UPB’s 25th anniversary commencement ceremony, speaking to the 14th class of MBAs on the eve of my retirement, I emphasized the fact that they were graduating from the best business school in Bolivia, which is ranked 15 of the top business schools in Latin America. From our situation in 2004, with a vision of where we wanted to be in the future – and a faculty team that enthusiastically supported and enacted the strategy I proposed – we were able to successfully implement Chan Kim and Renée Mauborgne’s blue ocean shift. Of course, I also thanked UPB President, Fernando Illanes, vice president, Fernando Campero, of the board of directors, and past-president Julio León Prado, whose support and generous donations made the program viable, under the most difficult circumstances. Perhaps the most valued recognition came in 2018, when the prestigious QS World Rankings of top universities, positioned UPB as the best private university in Bolivia. Our next challenge is to plan the university’s future. To this end, I have established a task force to diagnose where we are now, imagine where we want to be, and define a strategy to lengthen widen, and deepen our blue ocean over the next decade Where We Are From 2000 to 2007, the university continued to experience losses until the results of the blue ocean strategic shift began to bear fruit. Due to increased enrolment, total university revenue in 2007 increased by 50 percent from the year 2000. Ten percent of that was generated by the La Paz campus, ten percent by the business school, and the remainder by increased enrolment at Cochabamba. From 2007 to 2017, total revenue increased threefold and the contribution of the business school increased fivefold. The following lists our accomplishments in the decade-and-a-half since we applied blue ocean strategy to redefine our market in Bolivia: The Cochabamba campus offers 16 undergraduate programs to 1800 students in the colleges of Business and Engineering. UPB’s La Paz campus offers the same programs to 1300 La Paz students. The MBA program, initially offered in Cochabamba, has grown into a full-blown business school. We offer three doctorates in business and economics, two full-time MBA programs in La Paz and Cochabamba, seven executive MBA programs offered in seven of the nine major cities in the country, and eleven in-company MBA executive programs offered to major firms in the country. Thirteen research centers directed by PhDs from prestigious international universities publish an average of eight papers per year in indexed ISI international journals. According to Google Scholar, UPB ranks first among Bolivian universities. UPB researchers are among the top 20 with the highest “H” impact index for their work. Our students hold leadership positions at companies in Bolivia and around the world. UPB alumni work at the world’s leading businesses, banks and law firms, and move up fast in their careers. Besides UPB doing well, Bolivia is too. From 2002 to 2017, GDP per capita grew from $879 to $7,500, which is comparable to Eastern European countries.5 Morales remains President of Bolivia, serving his third term as of 2018. His economic bluster turned out to be mainly that: he threatened to expropriate foreign oil companies, but they are still producing the majority of natural gas whose high prices fulled the economy’s growth during the last decade. The price boom for natural resources has helped UPB alumni, among others, to obtain lucrative jobs in the private sector and to create new enterprises. Where We Want to Be – Expanding our Blue Ocean Moving forward, the board of directors has agreed to limit the size of the student body on each campus, increasing entrance requirement levels in order to maximize academic quality and maintain high employability levels for our graduates. The board has also set a target ratio of two-to-one between undergraduate and graduate students. Directors also adopted a proposal to open a third new campus in Santa Cruz de la Sierra, the largest and most prosperous city in Bolivia. Santa Cruz generates 35% of Bolivia’s gross domestic product and 60% of all the food produced in Bolivia (see Appendix A). The ability to open this new campus is supported by the strong financial standing and academic reputation of the institution. Additionally, UPB has entered into a dual degree program with the University of London. Qualified graduates will be eligible to receive degrees from both UPB and the University of London, strengthening the value of the UPB degree at home and abroad.”
answer these questions:
What does UPB do?
Which were the two main strategic actions undertaken by UPB?
Examine requirements of infrastructure, professors and administrative support for the new campus
Identify the change agents that will make the new campus a success
What should there be the primary forms of communication of information to the different stakeholders on this project?
Define Goals and controls for project implementation
List and prioritize the recommended project goals
What performance criteria should be established to measure the attainment of those goals?
What should be the control process to measure goal attainment?
