1.1 Company Profile
Far Eastern University Inc., (FEU) is a non-sectarian private university composed of seven institutes and satellite campuses that offer baccalaureate and graduate programs. In November 1933, FEU became a result of the fusion of Far Eastern College which offered courses in the liberal arts founded in 1919 and the IABF which offered courses in accountancy, economics, business administration, and banking and finance founded in1929. FEU is guided by the core values of Fortitude, Excellence and Uprightness. FEU aims to be a university of choice in Asia. Committed to the highest intellectual, moral and cultural standards, the University aims to produce principled and professionally competent graduates.
The main source of financial stability of the university are the tuition and other fees collected from the students. These fees are moderate and subject to government regulation. Scholarships are also granted among deserving students. The university maintains excellent facilities to best serve the schooling of the students. Among these are laboratories, library with an expanding electronic footprint, audio-visual and multimedia rooms including smart classrooms; conference, meeting, and multi-function rooms; gymnasium, auditorium, clinic, and information technology enabled gate security system.
The high standard of quality of FEU is supported by a number of recognitions from the Commission on higher Education (CHED) as well as accrediting bodies such as the Philippine Accrediting Association of Schools, Colleges and Universities (PAASCU) and the Philippine Association of Colleges, Universities Commission on Accreditation (PACUCOA). Far Eastern University is one of the six Philippine universities that is a member of the ASEAN University Network (AUN). CHED conferred on FEU Manila the Autonomous university status starting July 25, 2012 until May 31, 2019. In addition, Far Eastern University is one of the top 50 publicly listed companies in the 2016 ASEAN Corporate Governance Scorecard (ACGS).
Far Eastern University has five other satellite campuses other than FEU Manila. These satellite campuses are as follows: FEU Institute of Technology (FIT) or FEU Tech is a private nonsectarian institution that provides quality education in the fields of engineering and information technology. The Nicanor Reyes Educational Foundation also known as FEU-FERN or FEU Diliman was established to commemorate the birth centennial of the founder and first president of FEU. FEU-FERN offers Basic Education, Secondary Education and Tertiary Education. FEU Cavite, located in Silang, Cavite offers Basic Education and Tertiary Education. FEU High School – Manila is an educational institution which aims to provide quality education in the senior high level. FEU High School opened academic track the following strands: Science, Technology, engineering and Mathematics (STEM); Accountancy, Business and Management (ABM); Humanities and Social Sciences (HUMSS); and General Academic Strand (GAS). Roosevelt College was purchased by FEU Inc on May 2016 and FEU was able to gain management. FEU Makati is one of the best law and business school situated at the heart of business in the Philippines. Lastly, FEU Alabang is set to open for the year 2018 offering Senior High School and Tertiary Education.
RESEARCH DESIGN AND METHODOLOGY
Macro-environmental data collected used in the external analysis and other sections of the paper were obtained through different sources. News, current events and trends were collected from credible online publications such as:
The Philippine Star: https://www.philstar.com
Commission on Higher Education: https://ched.gov.ph/
Philippine Statistics Authority: https://psa.gov.ph
Scope and delimitation
This is a strategic management paper about Far Eastern University, a publicly-listed non-sectarian private university in the Philippines
The first chapter discusses a short background of the company including the nature of the business, its products and services, current asset size, the markets served and other relevant information regarding Far Eastern University.
The second chapter talks more about the methods used as well as the sources of information.
The third chapter focuses on the external analysis. It is where the current and expected outlook for the higher education industry are discussed in terms of economic, socio-cultural, demographic trends, lifestyle changes, technological developments, political, legal, governmental aspects, ecological aspects translated into relevant data that are meaningful for the company which may either be classified as opportunities or threats.
In the fourth chapter are industry and competitor analyses which are analyzed by looking into market size and growth rate, number of players and their relative sizes, technology developments, industry financial analysis, problems in the industry, critical success factors in the industry, Porter’s five forces of competition and the external factors evaluation matrix. The competitors are based on the private nonsectarian higher education institutions from the Top 1000 Corporations in the Philippines by Business World.
The fifth chapter discusses and evaluates the company’s internal analysis of Far Eastern University, its performance in terms of the key performance indicators namely market share analysis, revenue/sales in the past five years, its growth compared to the industry and other players, its products, result of Mckinsey’s 7 s Framework, internal audit, internal factors evaluation matrix and its profitability.
The sixth chapter focuses on strategy formulation. Different matrices are used, namely, SWOT, SPACE, IE, Grand Strategy and QSPM. The results of these analyses are also explained.
The seventh chapter includes the writer’s recommendation for improved vision and mission statements, as well as the strategic and financial objectives, departmental programs and cost-benefit analysis.
The eighth chapter focuses on Balanced Scorecard which allows the company to monitor the strategies from different perspectives and the Financial projections.
The last chapter focuses on the conclusion regarding higher education industry, mainly Far Eastern University.
3.1 General Environment
3.1.1 Political Environment
Free Quality Tertiary Education Law signed
The Universal Access to Quality Tertiary Education Act, was signed into law as Republic Act 10931 by President Rodrigo Duterte on the 3rd day of August 2017. It provides full tuition assistance for students in State Universities and Colleges (SUCs), local universities and colleges, and state-run technical-vocational schools. The government also grants scholarships to public and private school students. Other than that, there are also available loans that students can use to finance their educational expenses. The allocated budget for the implementation of RA 10931 is a total of P40 billion, broken down for free higher education (P16 billion), tertiary education subsidy (P15.9 billion), student loan program (P1 billion), free technical vocational education (P7 billion).
With Republic Act No 10931, senators are looking forward that college graduates aided by the free tuition fee law will be equipped with skills and potential needed to help the economy grow.
With the full implementation of Republic Act No 10931 or the Free Higher Education Act set to begin, there is an expected increase in the enrollment in SUCs and LCUs thus lowering the enrollment in private higher education institutions. It is possible that some private schools may be constrained to close. Decline in enrollment will lead to fewer students, and not as many teachers and personnel will be needed as well.
Admission Policy of Senior High School Graduates to Colleges and Universities
In accordance to RA 7722 or Higher Education Act of 1994, the Commission on Higher Education issued Memorandum Order 105 Series of 2017 that aims to make sure that higher education institutions (HEIs) follow the policy adopted and enforced by the Commission, thus All Grade 12 graduates starting Academic Year 2017-2018 are qualified to enter college regardless of the track or strand taken in the Senior High School. No Grade 12 student or graduate shall be declined in applying for college entrance examinations in the higher education institutions (HEls). Current Grade 12 students who were previously disallowed to take the college entrance examinations shall be given a chance by the HEls to take the entrance examinations. In the exercise of the HEI’s academic freedom, Grade 12 graduates may enroll in any higher education program subject to the admission requirements of the college or university in they wish to attend.
As a general rule, in line with the HEIs academic freedom or right to choose their students, the applicant Grade 12 graduates may enroll in any higher education program subject to the admission requirements of the admitting HEI. Beginning AY 2017-2018, all Grade 12 graduates are eligible to enter college regardless of the track or strand they took in Senior High School (SHS) thus increasing the enrollment number in colleges and universities since there is a memorandum order aiding SHS graduates to apply to college.
Impact of K-12 to Tertiary Education Industry
The K-12 system was signed into law as the Enhanced Basic Education Act of 2013 (Republic Act 10533). The K-12 system is a necessity to align Philippine Basic Education Curriculum to that of the global standards which requires Grade 10 students to take an additional two school years in senior high school thus the first year college programs in some universities and colleges have not surprisingly suffered from the low number of enrollees. Due to the K-12 curriculum, the higher education in the Philippines is greatly impacted on three important fronts: the curriculum, and the people working in the higher education sector and most especially the revenues of the institutions.
K to 12 makes it imperative to adjust the college curriculum to make sure that the quality of education is improved. Since senior high school was implemented nationwide for the year 2016, students go through two more years of high school instead of going straight to college, resulting in low enrollment in colleges and universities nationwide and when they finally reach college, there will be a low enrollment as well since there will be no 3rd year and 4th year students. The private higher education sector is especially vulnerable to loss of revenue since they depend on tuition for salary of their personnel and operating expenses of the schools.
Tertiary Education Subsidy under RA 10931 to benefit private HEIs
The Commission on Higher Education (CHED) assured deserving students who are enrolled in Philippine Private Higher Education Institutions (HEIs) that they will also benefit under Republic Act 10931 or the “Universal Access to Quality Tertiary Education Act.” Through the Tertiary Education Subsidy (TES) aims to help students in private colleges and universities avail free education. It is a grants-in-aid program that gives additional financial assistance to Filipino students who wish to attend public or even private HEIs.
The Universal Access to Quality Tertiary Education Act (RA 10931) will put a dent in the enrollment of private institutions since students will opt to attend SUCs and LCUs, however, with the help of the Tertiary Education Subsidy, the students who wish to attend private schools will be given grants that will give financial assistance to attend private higher education institutions.
3.1.2 Economic Environment
Disposable income in Philippine households 2018
TRAIN cuts personal income taxes for a large swath of the population wherein the tax-reform law promises a higher take-home pay for Filipinos. However, there remains worry over the domestic consumption as prices continue to rise. In addition, the poor sector will still be negatively affected because they will suffer the most blow of the inflation. The middle class stands to benefit from this the most because of an extra 8.6% of their annual income while the poorest will benefit the least with a 0.1% bonus. In contrast, the super-rich suffer a sizable reduction in their take-home pay, to the tune of 7.3% to 9.2%. Despite the higher disposable income, it does not mean that Filipinos will be privileged with more spending.