Board Brief Finance

International Academy Dubai Summer

Summer Spark! Program - Feasibility Study

July 15, 2016

Shannon Page

Maria Voicu

Kelsey Giroux

Doug Hopkins

Tim Wilson

International Academy Dubai

Executive Summary

At the request of the board, the aim of this study is to inform the board’s decisions making process regarding the feasibility of implementing a summer program at the International Academy Dubai (IAD) in 2017.  Programming will make use of the exceptional facilities already available at IAD and will include Project-Based Learning (PBL) that highlight the students’ passions in collaboration with Response To Intervention (RTI) methodology to assist their areas of need.  The investment in time and resources in quality summer programming will yield short and long term financial gains; firstly, a profit which can be re-invested in the regular school operations and secondly, an increased presence in the marketplace which in turn builds our brand equity.

Background

Market research results indicate growing demand for summer programming at IAD.  In our sixth year of delivering a high standard of education to Dubai’s international and local community, the Summer Spark Program will assist us towards meeting our steady-state enrollment goals within five years.  The school mission statement places direct value upon the student's talents and future contributions to their own communities.  Summer Spark! connects to the IAD core values by focusing on the passions of the students to drive their projects while also embracing their talents which translates into developing areas of academic need.  Strategically, summer program alignment falls within the procedure of continuously reinvesting in the school in order to retain a high standard of quality and continue to connect with our sustainability momentum.

Recommendations

The aims of the summer program involve maximizing the usage of facilities year-round and also drawing on year-round support staff while generating extra income and expanding brand equity within Dubai.  Based upon the findings of research conducted it is advisable that the program begins with a conservative enrollment quantity of 66 students to create demand, first within the school and then outwards to tap into potential new families and families looking to enter children into our forthcoming International Baccalaureate Diploma Program (IBDP).  This model draws upon the ability to create expanded programming beyond projected population figures to expand as demand would dictate.  The programming selection (RTI and PBL) as well as suggested pricing ($600/week, $2400/month) is based upon continuation and growth of school equity while remaining faithful to keeping quality in all areas as our highest priority.

Issues

Strategy Implications

The Board of IAD has assigned the Head of School with the development of the Summer Spark! Program. The purpose of the Summer Spark! Program is to maximize the use of the existing facilities and utilize the year-round employees (support staff). Through the Summer Spark! Program the school will be able to market its academic programs and generate supplementary income to support International Academy Dubai. The Summer Spark! Program enrollment growth is in alignment with the school’s maximum designed enrollment as outlined in the business plan.

Financial Implications

The financial implications of the Summer Spark! Program will provide positive impact over the course of the 5 year prospectus. The budgeted program has positive financial implications on IAD, while also offering an opportunity with minimal risks. With a tuition price point that indicates quality to our market, the program has a great deal of financial flexibility. For instance, attaining 50% enrollment rates will ensure we break even and recover costs each year (see appendix). Attaining 75% of enrollment capacity equates to an Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of 34% in year 5. Additionally, attaining the targeted full enrollment capacity equates to an EBITDA of 59% in year 5. The Net Present Value (NPV) is 685,059 over the course of 5 years which suggests that implementing the Summer Spark! Program will be profitable for IAD.

Risk Analysis

Identified Risk	Risk Likelihood (H,M,L)	Impact of Risk (H,M,L)	Strategy to Manage Risk
Low enrollment	High Based upon market saturation	Low Half enrollment still equals no loss financially	Conservative first year enrollment strategy to create demand
Lack of staff interest	Low Incentive has been calculated based upon duties above and beyond standard salary	High Low staff interest could result in reevaluation of compensation or negative impact of program quality	Manage interest in compensation Drive staff ownership of program through creative input
Substitute product	Mid Many other international schools in the market which could develop similar products	Mid High Impact enrollment numbers	Get there first and establish market presence and brand equity before other schools
Delay in Steady State Achievement	Mid Estimated enrollment begins with current students and expands to potential students beginning with year 2 of the camp	Low Continuous steady enrollment will still generate profit to compensate for the variable	Focus on enrollment sources in order to capitalise on sources of highest enrollment and adjust in areas of need
Reassigning work units within Marketing and Administrative departments	Low The launch of the Summer Spark! Program is an integral part of the Marketing Plan of the school	Low Given that it is a summer program the Marketing and Administrative departments will only experience short term effects	The Marketing and Administrative departments will have a percentage of their work-load allocated to supporting the Summer Spark! Program

Corporate Governance and Compliance

Internally, the implications (financially and marketability) will be revisited at a minimum during the three annual board meetings within the first year and to be followed annually thereafter.  Review will focus on timelines associated with compliance of growth, administrative tasks, and program execution.  Steered by IAD’s guiding statements and strategic plans decisions regarding program continuation, expansion, and/or retirement will be be decided upon by the Chairperson of the Board with recommendations brought forth by the Head of School.

Management Responsibility

Proposal responsibility lies with the Head of School. He/She will be responsible for the market research, calendar planning, recruitment and the estimated financial implications. The Head of School will be responsible for the recruitment of the Head of Summer Spark! Program. The  Head of Summer Spark! Program will fulfill the administrative duties on a day to day basis: operations, schedules, duties, enrollment, marketing etc.

Signing of Board Paper

Head of School

Associated Staff

K. Giroux D. Hopkins S. Page M. Voicu T. Wilson