Background of St. Gregory the Great Catholic School
St. Gregory the Great Catholic School was founded in 1955 as a Catholic mission school to serve the locals. The institution is wholly owned and managed by Sisters of Presentation of the Blessed Virgin Mary Congregation. It handles students from Pre-K3 to 8th grade (Bauch 44). The institution also tries to take care of the spiritual needs of its students and the local community. Since its foundation, the institution has been relying on the donations from the well-wishers to supplement the little income it gets from the school fees (Graca and O’Keefe). The institution has a number of students who are under full scholarship because of their needy backgrounds. As such, it forces the institution to look for alternative sources of income to support its activities (Gregory 38). This may be brought to an end if alternative sources of funds can be found. The management will need a strategy that can help it get additional income from its current activities other than having to rely on donations (Murphy 65). As a consultant to this institution, the researcher has come up with a possible way of addressing this problem by allowing the current students a discount of 10% on their school fees if they bring new students to the school.
The Strategy
The new strategy is primarily based on the concept of economies of scale. Under this strategy, the current students will be encouraged to influence their friends to come and be part of the student body at this institution. The strategy is expected to make the institution have more students and in the process have more income. Currently, the number of students is not as many as would be expected. Some classes have as few as only ten students. According to Rodger (67), a standard classroom should have between 20-25 students. However, there can be a compromise of 26-30 students as long as student-to-teacher ratio is not affected (Hüllermeier 53). It means that these classes with 10 students can still accommodate as much as two times their current population without compromising the quality of education offered (Shulcloper 36). It simply means that the institution’s income could be increased almost three times without the need to increase the number of teachers. The discount offered to the students will not affect the overall financial benefit that the institution will get.
Financial Impact of the Strategy
It will be important to have actual data that will help in determining how much money this strategy will bring to the institution if it is implemented in an appropriate manner. For the year 2016/2017, the annual tuition fee at St. Gregory the Great Catholic School is $ 6,390 for a parent with one child at the institution. It will be necessary to determine the financial benefit that this firm will get by employing this new strategy.
Based on the above data, it means that even though this firm will be losing 10% for every referral made by their current students, the overall effect will be a consistent increase in its revenues. The data can be presented graphically as shown below.
It is clear from the above calculations that the strategy employed by the firm will make a financial difference at St. Gregory the Great Catholic School. From a single student, it will earn $ 6390 per year. However, the new strategy can create a big change in the firm’s income. However, this changes the moment a single additional student is recruited with the help of the existing students. The effect of the discount will not hurt the revenues of the firm. The overall impact will be an increase in income for the firm (Pride, Hughes, and Kapoor 78). The other students will continue paying school fees but less than 10%. The strategy can work up to a given level where economies of scale no longer give the benefit desired (Poulfelt and Andersen 112). The management can have a target beyond which the strategy may be stopped. This is necessary to ensure that the quality of education at this institution is not compromised for the sake of earning more income. Issues to do with institutional capacity will have to be taken into serious consideration for that matter.
Comparative Analysis
The discounting strategy is an approach that has been tried and tested at different institutions around the world. According to a report by Rajagopal (74), the discounting strategy is currently used by a number of institutions. St. Mary Catholic School in Stayton and Regis High School are the perfect examples of institutions that are currently using this strategy. Other institutions have tried the approach and it was confirmed that it works (Ferrell and Hartline 77). This institution only needs to find effective implementation strategy.
SWOT Analysis
It will be necessary to conduct a brief SWOT analysis to help understand some of the internal and external forces that may make this strategy work for this institution (Ackerman 29). The main strength for this institution is a good name it has earned as a Christian institution that highly values moral and spiritual development of its students. However, its major weakness is the fact that it heavily relies on donation to support some of its important activities. The market presents numerous opportunities worth taking advantage of as it tries to increase its revenue. The community within which this institution is located is dominated by Christians (Benyoucef, Hennet, and Tiwari 121). Given that it positions itself as a Christian institution that values moral teaching in the bible, it is likely to get more clients.
According to Pride (90), most American parents prefer learning institutions that can help them shape the habit of their children. This is what St. Gregory the Great Catholic School offers. The management should consider taking advantage of this market need. Some of the current students are struggling to pay school fees. If offered opportunity to benefit from discount, they will do everything within their powers to influence their friends to join the school. This offers the institution an opportunity to expand its student population. The good neighborhood within which this school is located is also offers it an advantage in terms of comparative attractiveness. Stiff competition in the market is a threat that the management of this institution will need to find a way of dealing with as it employs the new strategy (Tang, Huynh, and Lawry 48). It will also need to deal with the increasing need to improve on quality of education offered.
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