Montserrat Volcano Distance Learning Program Business Plan Termination Report
Prepared for CBET By 4P Group, Inc. 26 February 2002
Executive Summation
Montserrat Distance Learning Plan Strategic Intent The strategic intent of the Montserrat Distance Learning Business Plan was to establish a Montserrat Distance Learning Program that would become the Internet standard for quality content in Earth Sciences, Social Studies and Economics. By initially penetrating the US education markets (Universities, Colleges & Community Colleges; Secondary Public and Home Schools; and the Continuing Education Market) it was anticipated that first-year distance learning and direct tourism revenues could exceed $2.50 million. The objectives of the business plan were as follows: • • • • • • • Establish a profitable, sustainable, e-commerce, distance-learning business that will contribute to the local and regional economy; Use distance learning technologies to tap into global niche market demands; Combine real-time volcano data and Caribbean basin plate shift data to offer the premiere earth sciences content (Geology, Volcanology, Oceanography, Ecology) on the World Wide Web; Research, develop, test and deploy other profitable business opportunities; Increase visits to Montserrat via Montserrat Volcano Observatory (MVO) on site lab field trips; Position and market Montserrat’s distance learning program to attain a similar reputation as the University of Phoenix’s distance-learning program; Generate US$2.5 Million in revenues during year one.
Initial Assumptions Accomplishment of these goals were based on the following critical success factors and initial assumptions: 1. The Montserrat Volcano Observatory (MVO) would allow access to real-time volcano observatory data; 2. MVO’s staff would offer one-week Volcanology field lab courses; 3. The University of West Indies (UWI) would develop and offer an accredited distance learning Volcanology course via the Internet; 4. UWI would develop and offer additional Earth Science distance learning courses via the Internet; 5. US and international Universities would supplement their Earth Science programs with UWI developed distance learning courses; 6. The secondary school market would offer UWI developed courses to seniors for college credit; 7. AARP would offer watered down versions of UWI Earth Science courses to the seniors market. Initial Preliminary Financial Model Based on these assumptions the following preliminary financial model was constructed to estimate potential revenues attributable to this business plan 2
Institutions Volcanology Course Offering Earth Offered by University Science/ Volcanology of West Indies Undergraduate Institutions Graduate Institutions Distance Learning K12 Continuing Education Accredited Adult Education - Non Accredited 87 24
Institutions SuppleNumber of Students/ menting Program with class/ DL Courses semester 10 6 25 10
Number of Semesters per year 2 2
Total Students/ year
Tuition per course 2,000 2,400 450 700 100
Course Gross Revenues $ $ $ $ $ 1,000,000 288,000 1,350,000 210,000 100,000
Sales & Marketing Expense $300,000 $ $86,400 $ $607,500 $ $63,000 $ $45,000 $ $
Course Net Revenues 700,000 201,600 742,500 147,000 55,000 -
UWI Revenues $ $ $ $ $ $ 466,669 134,401 495,002 98,000 36,667 1,230,739 $ $ $ $ $ $
Montserrat Revenues 233,331 67,199 247,498 49,000 18,333 615,361
500 $ 120 $ 3000 $ 300 $ 1000 $
Montserrat Observatory Trips
Field 1 10 16 160 $ 1,250 $ $ 200,000 3,148,000 $20,000 $ $1,121,900 $ 180,000 2,026,100 $ $ $ $ $ $ 1,230,739 1,230,739 1,230,739 1,230,739 4,922,958 $ $ $ $ $ $ 140,000 755,360 615,361 615,361 615,361 2,601,442
Geology Course Ecology Course Oceanography Course Grand Total
Assumptions:
1. UWI will initially develop and offer an accredited Volcanology course via distance learning from Montserrat 2. UWI will develop and offer additional Earth Science courses from Montserrat via distance learning 3. UWI will establish a distance learning center on Montserrat 4. The majority of MVO lab field trip revenues would benefit the Montserrat economy (housing and meals) 5. MVO would get a fee for providing volcanology data 6. Sales and Marketing expenses would be between 30 and 45% depending on tuition fees 7. Course Net Revenue split would be 2/3 to UWI and 1/3 to Montserrat 8. Course development and administration costs have not been included 9. Costs for a UWI distance learning center on Montserrat have not been included
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Detailed Research and Investigation Results During the detailed investigation stage a number of obstacles surfaced that could not be overcome:
Potential Revenue Sources
Since people around the world expect to retrieve information free or at minimal cost from the Internet it became clear that the only way sufficient distance learning revenues could be generated was for distance learning courses to be accredited undergraduate and graduate level courses leading toward an undergraduate or graduate degree. Such courses could command revenues in the $2,300 - $2,800 range per student. Tuitions for secondary schools, however, could only be priced in the $500 - $600 range and fees for the seniors continuing education market could only command approximately $100 per student. But the potential market for these courses is severely limited as shown in the next paragraph.
Potential Market
Although more than 55,000 distance-learning courses are now offered in 130 countries through 345 distance education associations it was found that the market niche for Earth Science courses is very small. Of the 1,500+ colleges and Universities in the US only 87 undergraduate institutions and 17 graduate institutions offer Earth Science majors. Speaking with a few of these universities directly (Georgia Tech., Phoenix University and Waterloo University in Canada) one consistent message came back – the universities only offer on-campus taught courses via distance learning. In addition, they were not receptive to utilizing another institution’s courses to supplement their own curriculum. That, unfortunately, severely limited potential revenues.
Course Development
The University of West Indies was approached to determine their willingness to engage in this project by developing the initial Volcanology course. After extensive review and study their Distance Learning department as well as their Seismic Unit came back with a negative response. Without their sponsorship and accredited course offerings there was nothing to offer the market. Their participation was considered CRITICAL to the success of this business.
Montserrat Volcano Observatory Data
Conversations were started with MVO to determine their willingness to participate in this project by allowing real-time access to their data. That request was presented to them over three months ago and after a number of calls and inquiries no replies have been received. The only conclusion that can be drawn is that there is no interest on their part to allow access to this data. Without access to this data and a direct link to the Soufriere Hills volcano, Montserrat would gain no economic benefit from a Volcanology distance-learning course. Conclusion After completing our detailed investigation it became clear that there was an insufficient market to support a profitable and sustainable commercial distance learning business, and that the initial business case assumptions could not be supported. Without sufficient revenue potentials there is no incentive for anyone to overcome the additional obstacles listed above.
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However, our research did expose a potential Montserrat revenue opportunity by combining tourism with learning about volcanic activity. Such a program, similar in scope to the Hawaii Project LAVA, would allow Montserrat tourists the opportunity, while on vacation, to also learn about volcanic activity. This program would have to be sponsored by the MVO and its staff and could generate up to $US1,250 per person for a one week volcano learning experience. Recommendation Based on the facts presented and associated conclusion it is recommended that the Montserrat Distance Learning Business Plan project be terminated. Instead, the merits of a MVO based oneweek volcano learning experience should be explored. This analysis could be done via a 10-12 page Business Opportunity Brief at a cost of $5,000. Business Opportunity Brief Outline
1.0 Introduction 2.0 Business Opportunity 3.0 Trends and Directions 4.0 MVO Background
4.1 History 4.2 Executive Profiles 4.2 Mission Statement 4.3 Business Focus
5.0 Issues 6.0 Objectives 7.0 SWOT 8.0 Financial Models & Risk Analysis 9.0 Conclusions 10.0 Recommendation
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