IKEA Franchising Strategy

IKEA Franchising Strategy IKEA is an international home furniture company that selling the wide ranges of well-designed and functional products which packed in form of ready-to-assemble. According to IKEA (2012), its business is founded in 1943 by 17 years old Ingvar Kamprad in Sweden. The headquarter company of IKEA is placed in Delft, Netherlands. With the time turned, furniture retailer IKEA becomes one of successful companies around the world and has ability to take advantage of globalization. Therefore, now IKEA has 325 stores in 38 countries in which 287 stores in 26 countries is wholly owned INGKA Holding (non-for-profit corporation) and the remaining 38 stores are run by franchisees which under Dutch company (for-profit corporation) (n.a, 2012). INGKA Holding is parent company of Dutch company. The largest stores around the world are placed in China, German and Sweden (IKEA, 2012). The IKEA business is developed starting with home selling and then turn to become international nowadays. Originally, IKEA only sold small home accessories and trinkets products in its home, Sweden. Until 1948, IKEA began to design its own furniture products and sold in low price with high quality (Ellis, 2010). The process of business development is from home selling the products, open a retail store in Almhult town, Sweden (1958), then develop a larger retail outlet in Norway (1963). In 2012, IKEA committees plan to develop a wholly-own subsidiary corporate in India countries after did the market investigation. Currently, majority of IKEA stores are wholly owned and managed by INGKA Holding (also known as Stichting INGKA Foundation). The wholly owned subsidiary strategy explain that majority of stores operations, management, its furniture design and manufacture are overseen by INGKA Holding. For the case, IKEA has long eyed the retail market in India, now plan to invest  Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬900 million to create a wholly own subsidiary in India (Kinetz, 2012). On the other hand, IKEA also implements the franchising strategy in some countries to manage minority stores. The franchisees who allowed using IKEAs concept and trademark to run business have to pay 3% of revenue back. Since the culture and value is different in every country, IKEA committees evaluate the countrys local market and its future expansion opportunities before go in. For the future expansion, we suggest that IKEA should take joint venture strategy as business expansion strategy in India country. Joint venture is a good strategy to assist a company enters into a different cultural market. As an example, Wal-Mart knew nothing about Asian retail market, they choose entered into Hong Kong via joint venture with Thai conglomerate (Neelima Mahajan-Bansal, 2012). Second recommendation we suggest to IKEA is using wholly owned subsidiary to enter Brazil. The reason we choose Brazil as another target market because it has stability of political economy environment which can reduce various risk of business (n.a., 2011). IKEA also can take the advantage of Brazil since there has full of high quality woods as the resource for business (n.a., 2011). 2.0 Current Expansion Strategy Wholly owned Subsidiaries IKEA use wholly owned subsidiary as their main expansion. The IKEA corporate structure is divided in to two parts which are operating and franchising. Most of the IKEAs operations practices are overseen and managed by INGKA Holding B.V. INGKA Holding B.V is wholly owned by Stichting INGKA Foundation, a non-profit registered in Leiden in the Netherlands which is controlled by the Kamprad family (IKEAFANS, 2009). In year 2011, there are IKEA stores in 38 countries operating around the world such as United States, Canada, United Kingdom, Switzerland, Netherland, France, Russia, Saudi Arabia, China, Malaysia, Australia, and etc. There are 287 stores run by the INGKA Holding B.V and the remaining 38 stores are run by franchisees (Inter IKEA Group, n.d.). IKEA can either set up new operation in the country or can acquire an established firm in the host nation and use that firm to promote its promote its product as long as IKEA own 100 percent ownership of the stock. Habitat Retail Ltd. is a household furnishings retailer in the United Kingdom, Germany, France and Spain and in the year of 1992, IKEA acquired Habitats UK and French chain with about pound 55m to expand their business (Moore. J, 1992). IKEA own all of their buildings and land, and stores are custom built and designed for efficiency and sales potential. In order to do that, IKEA do not cut back investment in retail stores. (Deniz, Marco Art, 2012) The main purpose of the IKEA use this expansion strategies is to ensure operational control, standardization, and provide a smooth entry into to a new market. The attractive way to use wholly owned subsidiaries is where IKEA can reduces the risk of losing control over their core competence and its concept. This expansion strategies give IKEA have the full control over operation practices such as marketing, logistics and decision in different countries to meet their standard. In addition, all the profits will go to IKEA due to having full control on every operation. It is necessary for them engaging in global strategic coordination. Wholly owned subsidiaries also required IKEA to realize location and experience curve economies (Hill et. al., 2011). This which means, IKEA able to achieve economic of scale by manufacture more products and reduce the average cost of products (Hill et. al., 2011). Indirectly, this also fulfill the IKEA porter generic strategies which is cost leadership. However, wholly owned subsidiary strategy is highly expensive choice for company that would lead to severe financial risk if not successful. IKEA have to bear the full costs and high risk by themselves of setting up the factories, stores and retail shops operations in other nations (Hill, et. al., 2011). Japan was the first country in Asia that IKEA considered to enter in 1970s during their expansion to the international market. Their first entry to Japan market was in 1974 (n.a, 2008). Due to the differences between culture, lifestyle and behavior lead to IKEA face the failure and they had to withdraw their store out of Japan. However, IKEA decided to re-enter the market in 2002. This time IKEA conducted a thorough study of the markets and understand their requirement (Alexandra, 2009). At present, there are five IKEA stores in Japan, last of which was opened in year 2011(Inter IKEA Group, n.d.). Besides that, there are political risks of entering in to the market wholly in the form of nationalisation threats or corruption and bribery (Back et. al., 2010).   Recently in year 2009, there have been issues about corruption in the opening of retail store in Russia (n.a., 2011). It has been held by safely officials requests for payments and IKEA is refusing to so. Thus, IKEA has ended up by would not build more stores outside the Moscow region until Russian officials stop withholding permission and freeze expansions on Russia (n.a., 2011). Franchising Strategy The IKEA concept which bring IKEA franchise worldwide is belong to the Inter IKEA System B.V in Netherlands. Inter IKEA Systems B.V is the franchisor and it is the owner of the IKEA concept and trademark (IKEAFANS, 2009). The franchisees have the right to operate IKEA store under the franchise agreements in accordance with franchisors systems and methods to use IKEA trademarks establish by Inter IKEA Systems B.V(Inter IKEA Group, n.d.). Besides, IKEA franchisees able to access to the product range of IKEA and opportunity to continuously take part in IKEA concept development in their own stores. (Inter IKEA Group, n.d.). Then, IKEA franchisee has its own responsibilities to manage, develop and run their local market business with efforts after granting the rights of IKEA concept. The main concept of IKEA want to expand its market by implement franchising is due to the objective of Inter IKEA Systems B.V.. According to the objective of Inter IKEA Systems B.V., its objective is to increase the availability of IKEA products through world-wide franchising the IEKA concept (IKEAFANS, 2009). So, this encourages the IKEA wanted to create infinity for IKEA through franchising. Besides, the decisive factors for IKEA to franchise for long-term approach are due to its ownership structure and total independence in furniture market (Inter IKEA Group, n.d.). Thus, IKEA bring out the franchising method so that it can secure an infinite life for the IKEA concept when the different companies in different countries able to build the resources needed to expand global under IKEA concept (Inter IKEA Group, n.d.). Moreover, the franchisor, Inter IKEA Systems B.V. acts role to perform some important tasks such as expand IKEA business, improve and develop IKEA concepts, transfer know-how of IKEA to its retailers, monitor IKEA concept implementation and protect IKEA concept (Inter IKEA Group, n.d.). Currently, total of 38 IKEA franchisees are located over 11 countries. The countries with IKEA franchisee included 2 stores in United Arab Emirates, one stores in Kuwait, 3 stores in Saudi Arabia, 2 stores in Australia, 7 stores in China Taiwan, one stores in Cyprus, 5 stores in Greece, 3 stores in Malaysia and Singapore, 5 stores in Turkey, one stores in Iceland, 2 stores in Israel, 1 stores in Dominican Republic and 4 stores in Spain (Inter IKEA Group, n.d.). Franchises strategy not only provide the firm with high control of brand and strategy, but it is also a low financial investment risk and enabling the company to benefit from local knowledge (Back, Andrew Sparapani, 2010). Furthermore, some benefits can be able to gain through franchising by IKEA. For instance, it can earn extra source of income in term of loyalty and franchise fees since it franchises its retail stores located over 38 countries. The franchisees who allowed to use the concept and trademarks of IKEA is necessary to pay 3% of revenue earn to Inter IKEA Systems B.V annually (IKEAFANS, 2009). So, this intentionally provides other cash inflow for the IKEA. Although by using franchising strategy, IKEA can relief of many of the cost and risk of opening a foreign market (Hill Hernà ¡ndez-Requejo, 2011). However, this could make IKEA difficult to control the standards and quality where some franchisees may not concerned about these issues. This could be happened and hard to detect due to the geographic distance between franchisees and main franchisor. This might lead to affect consumer views of IKEAs product if the standards of products are not standardize in its own country compare with the IKEA main stores. 3.0 Future Expansion Strategy Joint Venture to Enter into India Market Joint venture is suitable for IKEA to enter into India Market. It refers to the set up of a new company that is jointly owned by two or more participants (Hill Hernà ¡ndez-Requejo 2011). Each partner must have something special and important such as knowledge, skill, and capital to offer the venture and simultaneously provide a source of gain to the other participants.  The reason for enter into India market is India furniture retail market has been classified by CSIL Milano as one of the 14 largest furniture markets in the world with the worth of US$8 billion and is growing at 30% annually (n.a., 2012). The second reason is that the furniture industry in India is highly unorganized. Nearly 85% of the home furnishing industry is in the unorganized sector and remaining 15% is in the organized sector which included domestic players and also imports (n.a., 2009). The reason to use joint venture is due to the government policy in inviting foreign company to invest in India. According to past policy in India, foreign firms can only own up to 51 percent of joint venture (Sharma Hansegard, 2012). The policy has changed last year by allows some retailers to own 100% of their Indian units. After the change of policy, IKEA have applied for permission to invest into India. However, the result of permission still has not come out. IKEA should not realize on the permission of the wholly own subsidiary given by the local government. If government reject its application, is it IKEA will not enter into the one of the 14 largest furniture markets in the world? There are many successful example of joint venture or cooperative between foreign furniture companies with local company in India today. Arrital Cucine, an Italian furniture company sells its products in India through its Indian partner, Overseas Connexions while the Germany company, Wilhelm Bolt C o. has a technical agreement with Arvind furniture to produce furniture at India (Mukherjee Patel, 2005). There is no time for IKEA to waste as they should quickly enter into India market through joint venture with local company to set up its manufacturing plants and also sell its product around the India. Culture is an important aspect that multinational company should consider before take an action to enter into a specific country (Hill et. al, 2011). Indian culture and their home decoration style are different from western country. Consumers may not accept the western design furniture as they are used to purchase traditional design of furniture which suit to their culture. Thus, set up a joint venture with local firm is a better way to doing business in India and hence can reduce the risk of failure. The difference of culture can directly affect the way how a business operates in that country. The experience of IKEA in China should be take note. Although there is a rapid increase in the number of visitors and sales volume in China, IKEA had yet to make a profit in China. IKEA showed local consumers new home decoration concepts using its various products but Chinese consumers do not accept it (Li Xu, 2007). IKEA have 25 years of procurement experience in China but yet still cannot understand deeply about the Chinese culture and consumers living style, preferences and taste. Thus, before set up its own retail store in India, they should make a deeply study on the local market. Joint venture with local company can bring more valuable information and knowledge for IKEA. IKEA can build relationship with local suppliers, distributors, and media. They can get the data and information form the joint venture firm. Besides that, cooperation with local branded company can quickly promote its brand name into consumers mind. Who should IKEA select to cooperative is crucial. Durian, Furniturewala, Zuari, Renaissance, Furniture Concepts, Millenium Lifestyles, are some of the key players in Indian furniture industry. Local company who can provide marketing expertise, local knowledge, have strong relationship with government, suppliers and distributors should be consider as they can provide many benefit to IKEA for their future operating its own subsidiary in India (Hill et. al, 2011). Besides that, good reputation and image of the local company also is one of the aspects to be considered for cooperative. Company with good reputation can bring IKEA into local market and also consumers mind easily. In contrast, cooperative with company possess bad reputation will straightly harm IKEA brand name and thus being bookmark as poor image company in consumers mind. Thus, companies mentioned above are the best local company for cooperation. According to IKEA Company, the requirement of purchase at least 30% of goods from local small and medium size enterprise under the new policy will remain a challenge for the company (Sharma etc. 2012). Thus, direct investment may not be a best strategy as they are not familiar with local business and industry. Until now, they still cannot truly build the supply chain network in India, so how are they going to set up its own retail store and run the business by themselves. Thus, when should they enter into India? If they do seriously consider the joint venture strategy, they should enter into India 1 or 2 year ago. With joint venture with local firm, IKEA can quickly access to local suppliers through the network of the local company and operate its business smoothly. The growing of furniture industry in India is due to two reasons, Indias large size and Indian tastes have started changed and Indian people are looking for more western furniture style (n.a., 2010). The market attractiv eness is not a problem and it is a chance to take the advantage for establishes its own retail store in coming year. As conclusion, due to local government policy, cultural difference, and also local business network, IKEA should use joint venture as entry mode to enter into India. This action enables them to build up a strong base for future expansion. Wholly Owned Subsidiary to Enter into Brazil IKEA needs to expand the business by entering into new foreign markets in order to ensure the companys future growth. We recommend IKEA can enter into Brazil in South America by considering the wholly owned subsidiary strategy. IKEA have entered into Europe, Asia, North America, Middle East and Caribbean but have yet entered into South America (IKEA, 2012). Two of the mandatory requirements for IKEA to move into Brazil are that the host country must be a member of the World Trade Organisation and a signatory to the agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) (Back et.al., 2011). The reason we choose to enter into Brazilian market because of the stable political economy factors. Political factors, economic factors, demand factors are factors that will influenced the potential attractiveness of a foreign markets (Hill et al., 2011). The Brazilian economys entered into a stable growth stage after the recovery form financial crisis in 2008. Besides that, Brazil estimated to grow 4.0% in 2012 and the economy is expected will rises from the seventh worlds largest to the fifth within next few years (n.a., 2011). Comparing with other countries in South America, Brazil has the highest Market Potential Index (MPI) (n.a., 2011). As a result, Brazils economy is the best that all of other countries in South America (CIA, 2012). Since domestic savings are not sufficient to sustain long-term growth rates, Brazil is currently encourages foreign direct investment (FDI) and it is the largest recipient of foreign direct investment in South America (n.a., 2011). The entry of IK EA can increase the employment rate of Brazil and increase the revenue of government. Furthermore, IKEA may exploit the market of South America by grabbing this opportunity. Furthermore, the furniture and furnishings sales in Brazil has grown by 5% in 2009 to reach over R$18 billion (U$ 555,435,224.08) and expected continue to grow in the next few years (Ong, Ng and Wu, 2010). This indicated that the demands of consumers are increasing and providing the opportunity for business to grow. IKEA expand into the Brazil market would form early market entry because it enters first into South America markets before other foreign firms. According to Lieberman and Montgomery (1988), the advantages of first mover are the ability to pre-empt rivals, capture demand by building s strong brand name, rides the learning curve ahead of rivals and the ability to create switching costs that tied customers into their products and services. For example, Walmart entered into the China market as early mover, which gained the ability to pre-empt rivals and capture early demand and still dominating the market over the late over Tesco (Waldmeir, 2010). IKEA has experienced as an early mover into the markets in the past. The company has entry into Canada markets in 1976, USA in 1985 and China in 1998 (IKEA, 2012). Thus, IKEA have the advantages of pre-empt rivals and riding the learning curve ahead of its rivals. However, IKEA also suffered from the pioneering costs when they realised of the need for localisation of its American product range (Back et al., 2011). The reasons IKEA failed in the Japanese markets was because IKEA lack of readiness for the Japanese market and lack of readiness of Japanese consumers for IKEAs do-it-yourself concept  (Wijers-Hasegawa 2006). Consequently, IKEA need to beware that riding the learning curve can be a long ride if the market is not ready to adapt the products. We suggest IKEA use wholly owned subsidiary because there are around 16,000 furniture companies in Brazil and most are family owned companies. There are few key domestic players included Florense, Brazil Furniture Group, and others. The furniture market is keep growing and there is yet well known and large furniture company emerge in the market. (Evans, 2012). Thus, the furniture market in Brazil is still unexplored by multinational furniture company. Thus, a well known brand name is easily discover by the market and the consumer when large company entering into that industry. IKEA, a world famous furniture company, have the competency to entering into furniture industry in Brazil and create strong brand image to the entire furniture market easily. As there are many small furniture companies, it is easily for IKEA to enter and dominate the Brazils market. The worlds largest rainforest, The Amazon, is located in Brazil. Thus, Brazil has abundance of high quality woods as the raw material for IKEA produce high quality furniture to consumers. This is the main reason for IKEA to use the wholly owned subsidiary to entry into Brazil. Besides that, the labour cost in Brazil is cheap compared to Europe and America (n.a., 2011). In other words, Brazil has significant comparative advantages compared to others exporting countries because it has excellent quality of raw materials at low costs and flexible labor (n.a., 2004). Wholly owned subsidiary can enable IKEA gain full control over the businesss operations which will also lower the brand risk in the same time (Back et.al., 2011). By wholly owned subsidiary, IKEA can get 100 percent profits that generated in Brazil. Besides that, by adapting wholly owned subsidiary, IKEA can gain the ability to realize location and experience economics as the company is adopting transnational strategy (Hill et. at., 2011). Thus, IKEA can make full decisions to produce products that are customized to the local customer wants and needs. In the South America Context, Brazil is the most preferred country for investment. Entering into South America market is an imported step of the IKEAs globalization strategy. 4.0 Conclusion In conclusion, we knew that IKEA is a very successful worldwide home furniture company. But, they are also facing franchising control management problem due to geographic distance. If franchises do not operate well in the current market, this will affect IKEAs reputation. They tend to reduce this problem by using wholly owned subsidiaries for expansion. This strategy also not very well for IKEA because full control over their competence and its concepts but instead increasing the risks for entry the market due to cultural conflict. We can see that IKEA was failure to entry in Japan before due to diff culture, lifestyle and purchasing behavior. So, we recommended that joint venture is suitable for IKEA to further expand. This strategy can reduce risk for entry and for better handle the market culture and policy. The joint venture that enable IKEA cooperative with those company that fulfill marketing expertise, local knowledge and skill and the most important factor is have strong relationship with government. These benefits encourage IKEA enable to operating well in the specific country. A successful company should analyze all the variables that will lead to failure before enter into a specific market. Although this strategy has occurs some problem and risk but compare to previous strategies, this strategy is better for IKEA sustainable development. Furthermore, cooperative with well known company will also increase IKEA reputation and influence local consumer purchasing behavior. Finally, a very successful company will not stop growing their business and finding the ways that lead to further expansion. They must know well their limit and beat all the deadlines. IKEA has put a lot of efforts on developing their business that strengthen capacity for further expansion. Consequently, they should use joint venture strategy to expand in other countries. The more understanding other countries culture, lifestyle and behavior, the closer the gaps for success.

Expectations and Education :: Learning Education Essays

Expectations and Education One of the most sought-after goals in the world of marketing is a high degree of consumer satisfaction. But in the world of education, satisfaction by itself should not be the criterion for success. If both satisfaction and performance are high, we have cause for celebration. If satisfaction is high and performance is low, as is currently the case in the United States, we have cause for serious alarm. According to Stevenson and Stigler in "The Learning Gap", American parents whose children generally score below Asian children on tests of academic achievement, gave the most positive evaluations when asked about their children's schools and how their children were performing. If the children are doing well, such high levels of satisfaction would be justified. But maintaining high levels of satisfaction with poor performance creates a huge obstacle to the improvement of education. Before you can solve a problem, you have to admit that you have a problem. Why should children study hard i f their parents already express high levels of satisfaction? Why should schools pursue reform with enthusiasm and resolve when they already meet generally high levels of public approval? Americans want a good life for their children. They want their children to be happy and well adjusted. But Americans have not realized that access to the good life and happiness in the future will be blocked if we fail to prepare our children for the competition they will face in an ever more competitive world. As Americans, we have historically had a high opinion of ourselves. In only a few centuries we have opened up a continent, established an effective political and economic system, and brought the nation to prosperity. Americans have been thought of as courageous, industrious, and creative. Early in the American history, people believed they could achieve almost anything with enough effort. Nevertheless, many Americans assume that positive self-esteem is a necessary precursor of competence and place a higher priority on life adjustment and the enhancement of self-esteem than on academic learning. They forget that one of the most important sources of children's self-esteem is realizing that they have mastered a challenging task. We have gradually come to emphasize the limits of what can be accomplished imposed by innate differences among individuals. There are individual differences among human beings in whatever characteristics are measured. But this variability should not be interpret ed to mean that the general level of accomplishment cannot be raised.

Academic Performance of College Students Essay

The lack of adequate background and/or preparation, among other things, causes many students to withdraw from college or to graduate with low grades, which often makes it difficult for them to obtain suitable jobs. This paper examines the academic performance and efforts to seek assistance for academic and related problems of undergraduate students at North Carolina A&T State University. To that effect, the grade reports of business and economics majors and responses to a survey of students enrolled in business and economics courses were qualitatively analyzed. See more: Foot Binding In China essay The results of the analyses indicated that many students experienced academic deficiency and did not seek assistance when faced with problems. The results also revealed that many of the students who sought assistance rated the services they received as ineffective and indicated their preference for school-level advisement services. The development of a school-specific academic monitoring and advisement center would alleviate these problems. Such a center, with a comprehensive and extended advisement and counseling program, will be more effective than university-wide services in improving student academic performance and marketability upon graduation. ********** Teaching, research and service are usually used as a yardstick to measure faculty contributions to higher education institutions. Major universities have long stressed the importance of research activities relative to teaching. Over the last two decades, many of smaller teaching institutions, including the Historically Black Colleges and Universities (HBCUs) where research activities were recognized only to the extent that they would keep educators and the knowledge they transmit to students current, have been under pressure to acquire external funds for scholarships, faculty development, and meeting accreditation standards (Fielding 1985). As these institutions, particularly the HBCUs, placed more emphasis on faculty research productivity, they are faced with the challenge of striking a balance between teaching and research activities. Nevertheless, most colleges and universities recognize that teaching is the ultimate goal of their institutions (Wiley 1993). The main factors considered for improving teaching effectiveness among other things, include teaching approaches and techniques and faculty availability for student assistance and advisement. However, students in higher education institutions must be motivated and committed to make reasonable efforts toward handling various activities, such as reading, written assignments, class discussion, presentation and examinations, effectively. Accordingly, the students’ commitment to attain a good education, their study habits and cooperation, their motivation and efforts to seek assistance, when needed, are equally critical for learning. Thus, since the provision and consumption of education service occur simultaneously, the students’ active participation in the process is a necessary condition to transform teaching to effective learning (Norales and Addus 2003). This paper assesses the academic performance and efforts of undergraduate students to seek assistance for academic and related problems at North Carolina A&T State. The paper (1) examines the academic performance and deficiencies of the students in terms of their overall grade point averages; (2) identifies the relative magnitude of student academic and related problems from freshman to senior classifications; (3) presents student evaluation of the effectiveness of advisement and counseling services available to students; and (4) recommends the development of a school-specific academic monitoring and advisement center to improve student academic performance and marketability upon graduation. Methods and Instrumentation The 1998 grade point averages (GPAs) of undergraduate business and economics majors were used to determine the levels of student academic performance and deficiencies, with the application of chi-square statistic test to the relevant data. The student grade reports (the most recent data available) were obtained from the North Carolina A&T State University’s School of Business and Economics. In addition, data from students were collected through a student survey of 2002. The sample for the student advisement and counseling effectiveness questionnaire consisted of students enrolled in business and economics courses at North Carolina A&T State University. The questionnaire items were designed to elicit responses from students to determine the magnitude of student academic and related problems, efforts to seek assistance to solve their problems, evaluation of effectiveness assistance they received, and preference for the location of advising and monitoring services within the University. The results of this study can be used as a source of data that can provide information on the curriculum effectiveness at North Carolina A&T State and other universities. Such data can assist educators in curriculum planning and development so that they can better meet the needs of students. Student Academic Performance and Survey Results The results of this study are based on the examination of the School of Business and Economics student GPAs and the student advisement and counseling survey of students enrolled in business and economics courses at North Carolina A&T State University. The results are centered around (1) the student academic performance levels and deficiencies; (2) the magnitude of student academic and related problems; (3) the students efforts to seek assistance to solve problems; (4) the student evaluation of effectiveness assistance received; and (5) the student preference for the location of advising and monitoring services. The following are the findings of the study based on student grade point averages and student advisement and counseling services questionnaire responses. Student Academic performance. The school of Business and Economics at North Carolina A&T State University consists of accounting, business administration, business education and economics and transportation/logistics departments. The distributions of grade point average of students enrolled in the School during the 1998 fall semester are presented in Table 1. For the data in the Table, the chi-square test statistic is significant. This indicates that grade distributions by classification are statistically different. Generally, the number of students with low grade point averages decreased from freshman to senior classifications. In other words, more freshmen maintained lower grades relative to seniors, and more seniors maintained higher grade point averages than freshmen. More specifically, the data indicates that, in the School of Business and Economics, 55% of freshman, 14% of sophomore, 16% of junior, and 6% of senior students maintained below 2. 00 grade point averages. The decline in the proportion of students with lower grades from the freshman to senior levels is an indication of either grade improvements, transfer from one program to another or withdrawal and/or suspension/dismissal from the university. In their senior year, 41% of students maintained a GPA of below 2. 50, 23% below 2. 25, and 6% below 2. 00. For all classifications, 53% of students maintained a GPA of below 2. 50, 39% below 2. 25, and 26% below 2. 00. The School of Business and Economics cannot afford to ignore 23% students who may graduate with a GPA of lower than 2. 25 and 41% below 2. 50, only to find it difficult to find professional jobs of their choice in their respective fields. Apparently, students need to be monitored, encouraged and assisted to play an active role in their pursuit to achieve their education and career objectives. Student Survey Results Of some 206 students who responded to the survey, 52% were female and 48% were male students. By classification, 10% were freshmen, 30% sophomore, 37% junior and 23% senior students. In terms of general fields of study, 68% majored in business and economics and 32% in other areas, including arts and sciences, education and engineering (Table 2). These figures suggest that the survey represents a balanced coverage on gender, student classification, and various fields of study. Magnitude of Student Academic and Related Problems: Of 154 who sought assistance, 52% were female and 48% were male students. By classification, 9% were freshmen, 30% sophomore, 37% junior and 25% were senior students (Table 3). The data in the Table is indicative of the fact that the number of problems faced by students generally declined from freshman to senior year of their study. Of 52 students who did not seek assistance, 52% were female and 48% were male students. By classification, 17% were freshmen, 30% junior, 37% sophomore and 19% senior students. A total of 56% who did not seek help were junior and senior students. The reasons indicated for not seeking assistance are that 19% did not have any problems, 17% did not have time to seek assistance, 19% did not know the availability of assistance, 14% did not believe such assistance would be useful, and 15% indicated a combination of the above factors (Table 4). Student Efforts to Seek Assistance: Out of 206 students who sought assistance, 60% consulted with their academic advisors and 30% with course instructors or respective departments. Only 4% indicated to have sought assistance with the University Center for Success (Table 5). Student Evaluation of Assistance Effectiveness: Of 154 students who sought help, 72% indicated that the assistance they were offered was effective resulting in grade improvements, enhanced self-confidence, remaining in major for the better, and changing major for the better. However, 28% indicated that the assistance they received was not effective at all (Table 6). Student Preference for Advising and Monitoring Services: Of 206 survey respondents, 147 (71%) indicated their preference for student monitoring and counseling services at school/college level (as opposed to counseling at the university level); and 92% indicated that they would seek assistance more often if such services were available at school/college level (Table 7). The Case for Academic Monitoring and Advising Center The findings of this study reveal that relatively low grades and high failure rates were maintained by upper level undergraduate students with the possibility of marketability problems. The findings further show that 28% of survey respondents said the assistance services they received were not effective. Another 28% of the respondents, of which 56% were juniors and seniors, did not seek help to resolve their academic and related problems. In addition, 71% of respondents indicated their preference for a school-level assistance services, and the overwhelming majority (92%) said they would seek help more often if such services were available at the school level. It follows that a school-specific academic monitoring and advisement center (AMAC), with a comprehensive agenda for student advisement and counseling, will be effective in improving student academic performance and marketability. The need for the AMAC is underscored by other studies. The main problems affecting student academic performance include inadequate background, working long hours, lack of time to study and seek advice, lack of time management skills, bad study habits and skills, and lack of self-confidence. Many students are also faced with various impediments in their pursuit of higher education and career objectives, including financial problems, family responsibilities, and social and extracurricular activities. Some of these activities do not only take away from the time needed for sleeping, attending class and studying, but they also cause considerable stress resulting in negative effects on academic performance as measured in terms of GPA (Womble 2001). The results of a survey of 239 university students enrolled in business and economics courses at North Carolina A&T State University indicated that most students did not have sufficient time to read the textbook and study, and that their absence from class was work related. The majority (56 %) of the students stated that they could not take lecture notes while listening, and 29 % said they could not understand the lecture (Norales and Addus 2003). Kelly et al (2001) classified college students into short sleepers (individuals who slept six or fewer hours a day), average sleepers (individuals with seven or hours of sleep a day), and long sleepers (individuals sleeping nine or more hours a day). They found that the individuals who represented long sleepers reported higher GPAs than the first two groups. Many students are admitted to a university as a result of their performance in examinations that do not demand the same preparation levels required to succeed in higher education. Thus, one of the main factors affecting the academic performance of college and university students is the lack of adequate preparation skills (Beswick and Ramsden 1987). Entwistle et al (1989) studied the academic performance of electrical engineering students and found that low course grades were associated with inadequate study skills, and that many students had not established adequate independent study strategies required to succeed in higher education. Eikeland & Manger (1992) looked into factors affecting student achievement, especially those factors related to high failure and dropout rates. The findings showed that organized study habits had a positive impact on self confidence during the students’ first semester, but such study habits did not have a direct effect on grades until as late as their fourth semester in college. In a survey of close to 350,000 students attending four-year public and private colleges, over 70 items related to the students’ educational experiences on the survey instrument were grouped into 12 factors. (1) The survey results indicated that out of these factors, public college/university students rated academic advising as the most important aspect of their educational experiences. Private college/university students rated academic advising second to only instructional effectiveness in importance. When students were asked to rate five items (2) comprised academic advising, both public and private college/university students rated the academic advisor’s approachability and the academic advisor’s knowledge about major requirements as strengths–meaning most important and most satisfying (Noel-Levitz 2003). In general, the success or failure in higher education are not explained by the student attributes or faculty teaching efficiency in isolation, but by the complex interactions between students and the learning environments they experience (Entwistle 1990). Thus, students are in need of comprehensive advisement, counseling and support services including time management, stress management, efficient study style, habits and skills, reading, writing, and lecture note taking skills, and other support services. These must help students enhance their capacity to master the relevant subject, self confidence, verbal and written communication, academic performance, and to be competitive and productive members of the community. Academic Monitoring and Advising Center The findings of this study, along with the discussion of relevant literature, suggest that a school-specific AMAC, with a comprehensive agenda for student advisement and counseling, will be effective in improving student academic performance and marketability. The primary purpose of the AMAC is to enhance student academic performance and produce marketable graduates by providing extended assistance and guidance to students in academic activities and related areas. At North Carolina A&T State University there are university-wide student support services, including the Center for Student Success (which is focused on student retention) and school-level academic assistant services. In addition, there are programs which are designed to mentor students with high academic standing, in collaboration with potential employers, to prepare them for the real world work environment upon graduation. However, many students who for various reasons fail to perform to their potential levels deserve to be uplifted through a similar program provided by the AMAC. Compared with university-wide academic counseling services available for students, the AMAC will be more effective for needy students can be given individual and unique attention suited to their specific needs by their respective schools. In addition to regular advisement provided by academic advisors, the AMAC will provide counseling services for students who fail to reach a minimum GPA of 2. 50 during each semester. To start with, such students will be able to discuss issues regarding specific courses and their course loads with an advisor from the AMAC, and receive advice on how to successfully manage their time and handle their course loads. Also, the AMAC if necessary, can suggest changes in course, course loads and schedule to help the students balance their time between school and work. As mentioned above, one of the biggest problems that many students have is lack of time and time management skills. If this problem is solved early, students will be able to maintain a more marketable GPA. The AMAC will continuously monitor students and evaluate their grades throughout each semester to insure that these students continue to do well in the school, and graduate within a reasonable period of time. Students who need assistance must be identified at the appropriate time and be given intensive advice and counseling. It will maintain a data base for all students in the School of Business and Economics with an overall GPA of 2. 50 or less. The data can be collected from student applications, academic records, and surveys (Seidman, 1996). The AMAC will coordinate its activities with university programs designed to provide remedial services to students with deficient backgrounds. It will refer students to other departments and and University support services for problems outside its responsibilities. Such intensive intervention will likely help not only improve academic performance, but also retain students and enable them to graduate with decent grades. Student participation in the AMAC’s program shall enhance their capabilities to improve their academic standing through sound advice and counseling which will positively influence their attitude toward learning and grades, time management skills and study habits. The AMAC will further facilitate development of university policies and programs designed to overcome academic deficiencies and encourage students to stay in school and achieve their academic and career objectives. Conclusions Academic advising is a very important aspect of students’ educational experiences in higher education. In order to enhance teaching and learning effectiveness, higher education institutions must listen to their students unique needs and priorities by assessing assistance services available to students. The results of such assessments can be used to develop targeted action plans for serving specific student population. The results of the analyses of data obtained from the School of Business and Economics grade reports and a survey of students enrolled in business and economics courses at North Carolina A&T State University, along with other relevant literature, imply that many college students need a school-specific academic monitoring and advisement services at an early stage of their college career. It is apparent that it becomes difficult, if not impossible, for junior and senior students to make meaningful grade improvements due to the short span of time available to them during their last years of study before graduation. This may pose a serious marketability problem for some of the graduates of these programs with low grades. In the real world of ever increasing globalization and more competitive job market environments, college students need to acquire higher skills and GPAs. The proposed AMAC is certainly a first step to guide needy students in this direction. References Beswick, D. and Ramsden, P, (1987). How to Promote Learning with Understanding. Working Paper 87:1. Melbourne: Center for the Study of Higher Education, University of Melbourne. Eikeland, O. J. and Manger, T. (1992). Why Students Fail During Their First University Semesters. International Review of Education 38(5), 489-503. Entwistle, N. J. (1990). How Students Learn and Why They Fail. Paper Presented at Conference on Talent and Teaching, University of Bergen. Entwistle, N. J. , Hoursell, D. , Macaulay, C. , Situnayake, G. and Tait, H. (1989). Success and Failure in Electrical Engineering Courses in Scotland. Summary of a Report to the SED. Edinburgh: Department of Education and Center for Teaching, Learning and Assessment. University of Edinburgh. Fielding, G. J. (1985). Transportation Education, Part Two. Report of Joint Conference, Eno Foundation Board of Directors and Board of Consultants. Transportation Quarterly, 39(2), 207-233. Kelly, W. E. , Kelly, K. E. and Clanton, R. C. (others) (2001). â€Å"The Relationship between Sleep length and Grade-Point-Average among College Students,† College Student Journal. Noel-Levitz Research (2003). â€Å"Academic Advising Highly Important to Students,† www. noellevitz. com. Norales, Francisca O. and Addus, Abdussalam A. (2003). â€Å"University Students’ Learning Efforts,† Texas Business and Technology Educators Association Journal, Vol. VII, No. 1. Seidman, A. (1996). Retention revisited: R = E, ID + E & In, Iv. Journal of College Student Retention. 71(4), 18-20. Wiley, III, Ed (1993). Re-Emphasizing Teaching. Black Issues in Higher Education. Womble, Laura P (2001). â€Å"The Impact of Stress Factors on College Students’ Academic Performance,† Working Paper, University of North Carolina, Charlotte, N. C. ABDUSSALAM A. ADDUS Associate Professor DAVID CHEN Associate Professor ANWAR S. KHAN Professor Emeritus Department of Economics and Transportation/Logistics North Carolina A&T State University Notes. (1) the factors are: academic advising, campus climate, campus Life, campus Support Services, concern for the Individual, instructional Effectiveness, recruitment and financial aid effectiveness, registration effectiveness, responsiveness to diverse population, safety and security, service excellence, and student centeredness. (2) the items are: the academic advisor’s approachability, the academic advisor’s knowledge about major requirements, the academic advisor’s concern about the student’s success as an individual, the academic advisor’s assistance to set goals and work toward, and the clearness and reasonableness of major requirements. Table 1 Grade Distribution of Students in the School of Business and Economics by Classification, Fall 1998 Grade Range Classification Freshman Sophomore Junior No. % No. % No. % 3. 50-4. 00 20 6 46 19 20 10 3. 00-3. 49 26 7 44 18 32 16 2. 50-2. 99 45 13 62 25 45 23 2. 25-2. 49 33 9 33 13 33 17 2. 00-2. 24 37 10 28 11 34 18 Below 2. 00 200 55 35 14 31 16 Total 361 100 248 100 195 100 Chi-square: 278. 38 * Grade Range Classification Senior All No. % No. % 3. 50-4. 00 18 7 104 10 3. 00-3. 49 42 17 144 13 2. 50-2. 99 90 35 242 24 2. 25-2. 49 47 18 146 14 2. 00-2. 24 44 17 143 13 Below 2. 00 14 6 280 26 Total 255 100 1059 100 Chi-square: 278. 38 * Note: * Statistically significant at 5 percent probability level. Source: School of Business and Economics, NC A&T State University. Table 2 Profile of Survey Respondents Item Frequency Percent Gender (n = 206): Male 99 48. 1 Female 107 51. 9 Classification (n = 206): Freshman 21 10. 2 Sophomore 61 29. 6 Junior 77 37. 4 Senior 47 22. 8 Major Area Unit (n = 206): Business and Economics 140 68. 0 Other Areas * 66 32. 0 * Include Arts and Science, Education, and Engineering. Table 3 Distribution of Number Problems for Students who Sought. Assistance * (n = 154) Classification Number of Problems and Gender One Two Three Four Five Six Total Plus Classification: Freshman 4 1 3 2 1 2 13 Sophomore 16 4 7 9 8 2 46 Junior 14 14 12 6 4 7 57 Senior 6 7 14 7 3 1 38 Total 40 26 36 24 16 12 154 Gender: Male 19 15 15 11 8 6 74 Female 21 13 19 13 8 6 80 Total 40 26 36 24 16 12 154 * Problems include adding/dropping courses, choosing major, changing major, improving grades, time management, internship opportunities, personal problems which affect academic performance. Table 4 Distribution of students who did not Seek Assistance (n = 52)  frequency Percent of Total Classification: Freshman 9 17. 3 Sophomore 14 29. 9 Junior 19 36. 5 Senior 10 19. 3 Total 52 100. 0 Gender: Male 25 48. 1 Female 27 51. 9 Total 52 100. 0 Reason for not Seeking: Did not have problems 10 19. 2 Did not have time 9 17. 3 Did not know availability of assistance 10 19. 2 Did not believe it is useful 7 13. 5 Combination of last three 8 15. 4 Other reasons 8 15. 4 Total 52 100. 0 Table 5 Student Efforts to Seek Assistance for Academic Problems (n = 154) Assistance sought from Frequency Percent Academic Advisor 89 59. 7 Department/Course instructor 44 29. 5. University Center for Success 6 4. 0 SOBE resource Lab 3 2. 0 University Counseling Service 3 2. 0 Career Counseling 2 1. 4 Financial Aid 2 1. 4 Table 6 Student evaluation of Effectiveness of Assistance Sought (n = 149) Item frequency Percent Grade improved 13 8. 7 Enhanced self-confidence 4 2. 7 Remained in major 15 10. 1 Changed major for better 16 10. 7 Two or more of above 60 40. 3 No effect 41 27. 5 Table 7 Student Preference for Counseling/Monitoring Services Location (n = 206) Item Frequency Percent Prefer student Counseling at school level Yes 147 71. 3 No 44 21. 4 Indifferent 15 7. 3. Would seek assistance more often if Available at school/college level) Yes 92 44. 7 No 15 7. 3 Not sure 45 21. 8 Indifferent 54 26. 2 Gale Copyright: Copyright 2007 Gale, Cengage Learning. All rights reserved. Economic Scene Colleges Are Failing in Graduation Rates Top of Form Bottom of Form †¢ Share By DAVID LEONHARDT Published: September 8, 2009 If you were going to come up with a list of organizations whose failures had done the most damage to the American economy in recent years, you’d probably have to start with the Wall Street firms and regulatory agencies that brought us the financial crisis. From there, you might move on to Wall Street’s fellow bailout recipients in Detroit, the once-Big Three. Multimedia [pic] From the Most Selective Colleges, More Graduates Related The College Dropout Boom Economix: Which Colleges Are Doing Their Job? Reader Responses: Failing Colleges Readers’ Comments Share your thoughts and read responses to readers’ comments from David Leonhardt on the Economix blog. †¢ Read All Comments (113)  » But I would suggest that the list should also include a less obvious nominee: public universities. At its top levels, the American system of higher education may be the best in the world. Yet in terms of its core mission — turning teenagers into educated college graduates — much of the system is simply failing. Only 33 percent of the freshmen who enter the University of Massachusetts, Boston, graduate within six years. Less than 41 percent graduate from the University of Montana, and 44 percent from the University of New Mexico. The economist Mark Schneider refers to colleges with such dropout rates as â€Å"failure factories,† and they are the norm. The United States does a good job enrolling teenagers in college, but only half of students who enroll end up with a bachelor’s degree. Among rich countries, only Italy is worse. That’s a big reason inequality has soared, and productivity growth has slowed. Economic growth in this decade was on pace to be slower than in any decade since World War II — even before the financial crisis started. So identifying the causes of the college dropout crisis matters enormously, and a new book tries to do precisely that. It is called â€Å"Crossing the Finish Line,† and its findings are based on the records of about 200,000 students at 68 colleges. The authors were able to get their hands on that data because two of them are pillars of the education establishment: William Bowen (an economist and former Princeton president) and Michael McPherson (an economist and former Macalester College president). For all the book’s alarming statistics, its message is ultimately uplifting — or at least invigorating. Yes, inadequate precollege education is a problem. But high schools still produce many students who have the skills to complete college and yet fail to do so. Turning them into college graduates should be a lot less difficult than fixing all of American education. â€Å"We could be doing a lot better with college completion just by working on our colleges,† as Robert Shireman, an Education Department official who has read an early version of the book, says. Congress and the Obama administration are now putting together an education bill that tries to deal with the problem. It would cancel about $9 billion in annual government subsidies for banks that lend to college students and use much of the money to increase financial aid. A small portion of the money would be set aside for promising pilot programs aimed at lifting the number of college graduates. All in all, the bill would help. But it won’t solve the system’s biggest problems — the focus on enrollment rather than completion, the fact that colleges are not held to account for their failures. â€Å"Crossing the Finish Line† makes it clear that we can do better. †¢ The first problem that Mr. Bowen, Mr. McPherson and the book’s third author, Matthew Chingos, a doctoral candidate, diagnose is something they call under-matching. It refers to students who choose not to attend the best college they can get into. They instead go to a less selective one, perhaps one that’s closer to home or, given the torturous financial aid process, less expensive. About half of low-income students with a high school grade-point average of at least 3. 5 and an SAT score of at least 1,200 do not attend the best college they could have. Many don’t even apply. Some apply but don’t enroll. â€Å"I was really astonished by the degree to which presumptively well-qualified students from poor families under-matched,† Mr. Bowen told me. They could have been admitted to Michigan’s Ann Arbor campus (graduation rate: 88 percent, according to College Results Online) or Michigan State (74 percent), but they went, say, to Eastern Michigan (39 percent) or Western Michigan (54 percent). If they graduate, it would be hard to get upset about their choice. But large numbers do not. You can see that in the chart with this column. In effect, well-off students — many of whom will graduate no matter where they go — attend the colleges that do the best job of producing graduates. These are the places where many students live on campus (which raises graduation rates) and graduation is the norm. Meanwhile, lower-income students — even when they are better qualified — often go to colleges that excel in producing dropouts. â€Å"It’s really a waste,† Mr. Bowen says, â€Å"and a big problem for the country. † As the authors point out, the only way to lift the college graduation rate significantly is to lift it among poor and working-class students. Instead, it appears to have fallen somewhat since the 1970s. What can be done? Money is clearly part of the answer. Tellingly, net tuition has no impact on the graduation rates of high-income students. Yet it does affect low-income students. All else equal, they are less likely to make it through a more expensive state college than a less expensive one, the book shows. Conservatives are wrong to suggest affordability doesn’t matter. But they are right that more money isn’t the whole answer. Higher education today also suffers from a deep cultural problem. Failure has become acceptable. Students see no need to graduate in four years. Doing so, as one told the book’s authors, is â€Å"like leaving the party at 10:30 p. m. † Graduation delayed often becomes graduation denied. Administrators then make excuses for their graduation rates. And policy makers hand out money based on how many students a college enrolls rather than on what it does with those students. There is a real parallel here to health care.

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