THE APOLLO GROUP (University of Phoenix) Case
Instructor’s Guide
Case Summary
This case provides a description of the University of Phoenix and three other educational
businesses that comprise The Apollo Group, Inc. It is an exciting story about an education
business built by a visionary entrepreneur, John Sperling, who was concerned about the
inadequate higher educational options provided to working adults by traditional colleges and
universities. Dr. Sperling, with a PhD from Cambridge and an MA from UC-Berkeley, started
the University of Phoenix in 1976 out of this concern. It now has locations throughout the U.S.,
Canada, and Puerto Rico. With over 500,000+ students annually [and growing at a 20%+ clip], it
has become the largest private university in the U.S. Starting with the University of Phoenix,
Sperling has now expanded The Apollo Group, Inc. to include UOP’s online campus, the
Institute for Professional Development [IPD], the College of Financial Planning [CFP], and
Western International University [WIU] which became a part of the new globally focused joint
venture, Apollo Global, in 2007. IPD provides educational programs for working adults under
management agreements with other educational, governmental, and private organizations, with
20,000 degree-seeking students now being served. CFP was recently acquired and is one of the
largest providers of financial planning programs and certification, with 25,000 students
currently enrolled. WIU serves students through six campuses [three in Arizona, and one in
London, England, China, and India]. In addition to WIU, Apollo Global [86% owned by Apollo
Group; 14% by the Carlyle Group] includes for-profit colleges in the UK – BPP; Chile –
UNIACC; and Mexico – ULA. Apollo Global is intended to be the vehicle for Apollo
Group/UOP’s global expansion.
While it has these four units, 95% of the Apollo Group’s revenue comes from its UOP
operations. So this case focuses primarily on the UOP and its unique strategy with the “higher
education industry.” The trend toward privatization and online delivery in this industry are
worldwide in the 21st century.
The UOP has become the dominant leader of the for-profit [proprietary is the word preferred by
what is now approximately 1,000 proprietary participants, including 12 major public companies.]
The Apollo Group is now part of the S&P 500. This industry has come under intense
“Adult Education Market” industry note contained within the case.
Key points
The importance of internal assessment (Chapter 6)
The importance of financial analysis (Chapter 6)
Corporate Social Responsibility and Ethics (Chapter 3)
Related Chapters
Chapter 1: Strategic Management, Chapter 2: Company Mission, Chapter 4: External
Environment, and Forecasting, Chapter 5 Global Environment; Chapter 7: Long-term Objectives
and Strategies, Chapter 8: Business Strategy, Chapter 9, Multi-company Strategy, Chapter 11:
Organizational Structure, and Chapter 14: Innovation and Entrepreneurship
Teaching Guidelines
attention to the proprietary educational institution segment and current key issues shaping that
industry; and UOP’s comprehensive new vision/strategies responding to the significant industry
changes. It is a case that allows you to explore their decision to adjust their strategies in
response to these regulatory issues; and delve rather deeply into 3-4 of those key regulatory
should also be quite sensitive to, and “expert” in, the student loan issue. That issue, and the
attempt to regulate proprietary colleges and universities relative to it … while also attempting to
reconcile the needs of societies to bring their population up to collegiate education levels, should
make for a quite interesting, and lively class discussion with this and the following, American
Public Education, inc. case.
company with a military/public service focus strategy that has made it into a formidable UOP
competitor]. Indeed, you could examine several key regional competitive offerings to adult
students as a basis for examining this case and your school. Whatever the exact approach, this
descriptive case allows you to conduct a systematic strategic analysis paralleling the model
personal critique of course].
NOTE: You should preview the interesting NPR documentary on the proprietary [for-profit]
higher education industry aired in 2010. It is good background for you in teaching this case if
you haven’t seen it. You might well decide to show it, or have you students view it outside of
class. If you use it in class, you could do so at the beginning of the case .. or, you could cover
The University of Phoenix created a website to share and enable its students and other to respond
to this “documentary.” It is available at:
http://www.phoenix.edu/about_us/media-center/university-of-phoenix-responds-to-frontline.html
Our UOP case includes an expansive “industry” section, entitled the Adult Education Market,
strategy [2011+], which is an interesting contrast to the past and to the UOP [Apollo Group’s]
aggressive strategic response in an actionable, change-oriented way, seemingly to have it
continue to lead the industry by, in this case, taking dramatic steps in its core vision and its key
strategic priorities. The UOP undertakes some major strategy moves influencing how it operates
1. What was the basic vision that guided the founding of The Apollo Group? How has that
vision, now a company mission, changed in the first 35 years of the company?
Apollo’s vision of 35 years ago remains the mission guiding the company today: Established
itself as a leading provider of higher education programs for working adults by focusing on
servicing the needs of the working adult.
Apollo s mission is to become the preferred provider of higher education programs for working
adult students. Apollo is managed as a for-profit corporation in a higher education industry
served principally by not-for-profit providers. By design, Apollo treats both its adult students
and their employers as its primary customers.
A useful way to discuss mission and evaluate its clarity is see how well one can answer the
questions What? Who? Why? About the company based on its mission.
WHAT benefit was to be sold? Adult-friendly higher education coursework that accommodates
differences between adults and younger, traditional-aged students.
additional higher education.
WHY would the benefit be desired? Working students faced numerous institutional road blocks
as they sought to work on degrees at most higher education institutions. Practical, lifestyle and
livelihood accommodations were essential if a working, independent adult wanted to
The Apollo Group, Inc. was founded in 1976 in response to a gradual shift in higher education
demographics from a student population dominated by youth to one in which approximately half
the students are adults and over 80 percent of whom work full-time. Apollo’s founder, John
Sperling, believed-and events proved him right-that lifelong employment with a single employer
Lifelong learning, Sperling believed, required an institution dedicated solely to the education of
working adults. Today, Apollo Group, Inc., through its subsidiaries, the University of Phoenix,
the Institute for Professional Development, the College for Financial Planning, and Apollo
Global [Western International University, etc.], has established it as a leading provider of higher
The Apollo/UOP management team believes that the unique needs of working adults include the
following
• Convenient access to a learning environment (including both location and delivery system)
reasonable amount of time
• Programs that provide knowledge and skills with immediate practical value in the workplace
• Education provided by academically qualified faculty with current practical experience in
fields related to the subjects they instruct
• Recognition of adult students as critical consumers of educational programs and services
• A learning environment characterized by a low student-to-faculty ratio
location
I have highlighted parts of this statement that will more than likely be raised as ways UOP is
fundamentally different from most traditional higher education institutions. You can expect, or
elicit, considerable discussion about these points.
2. How does Apollo/UOP view and assess the traditional higher education market?
• Increasing demand/unique adult working population needs = major market opportunity
• This focus results in a capital intensive teaching/learning model Which is available only
Sept.-mid-Dec. and mid-Jan.-May;
the spring, winter and summer breaks
• And requires attending course 3Xs/week, commuting to a central site, take work time to do
• The net result being a working adult takes 7-10 years to earn an undergraduate degree
3. What were the key elements of the UOP’s business strategy to address the opportunity
that has existed given the focus of traditional colleges and universities on 18-24 year olds?
The UOP has historically had a very simple, two-part strategy to allow it grow quickly, and build
Market Development:
• Establish New UOP Campuses and Learning Centers in the US, Canada and other foreign
locations
• [quickly establish presence in every major urban market in North America]
• Establish New IPD relationships
• institutions to obtain state authorizations.l
• International Expansion [Entered Canada; Puerto Rico; Latin American, European & Asian
markets where the UOP model would fit]
• Market aggressively — $485 million spent in 2005 and growing to over $1.1 billion in 2010 vs.
the average traditional undergraduate intensive university advertising budget, some anecdotally
claim, of perhaps $10 million. [NOTE: The Apollo Group disputes that different in its white
paper excerpted at the end of the case by showing a much more equivalent expenditure when
figured on marketing expenditure per enrollee!]
• Expand Educational Programs
• [gradually adding new degree programs compatible with current locations & internet-based
delivery systems]
• Expand Aaggressively via the Internet
• [convert current courses onto the Internet]
6. What appear to be the strengths, and strategic value, of the IPD services and the Financial
College?
• IPD —This allows Apollo to enter markets it is otherwise closed to; it helps Apollo
eliminate potential competitors; it offers Apollo immediate access to students that may
come back to Apollo, perhaps directly, in the future or when they move; it allows Apollo
to control the knowledge of how to conduct adult-friendly educational services, and keep
a joint venture partner dependent on Apollo if demand is strong
• Financial College — There has been an explosion in the number of and demand for
financial planners Apollo, through “the college,” is the top certifier of financial planners
through its position as the key provider of accredited coursework and examination
necessary to become certified and regularly renew certification
At this point in teaching the case, you can take two different approaches having to do with the
major regulatory attention and national scrutiny the UOP and its peers have faced in the last two
years; key aspects of which are described in the case, in particular in the “Adult Education
Market / Industry” section.
One approach is to go somewhat chronologically, and finish examining what the UOP’s
operating characteristics have been like … then go over the dramatic changes of recent years in
some detail as covered in the Adult Market/Industry section .. then have discussions centered on
the question “What has the Apollo Group / UOP done in light of changing external conditions
regarding …. – whatever aspect you [e.g. strategy, tactics, etc.] want to discuss.
A second approach is to bring in the current industry circumstances [regulatory, etc.] in the
context of each question about the UOP you use to guide the class and focus on what UOP has or
topic for discussion by asking how it has changed [e.g. “How does it seem UOP has changed its
strategy, or strategic priorities? Do these seem real and serious changes? … ].
If you take the second approach, it is still probably best to keep a bit of a historical perspective
by asking questions #4 and #5 first, as further “getting out” of the nature and fit and consistency
approach.
4. What, historically, has been the UOP’s teaching/learning model?
UOP‘s teaching/leaming model appears to have had and retains several enduring characteristics:
• Faculty: masters or doctorate; minimum 5 years professional experience in the instructional
area; participate in ongoing evaluation and development efforts; Most faculty are part-time,
rather than full-time like traditional colleges and universities.
• Sequential enrollment: one or two courses at a time, sequentially; rather than taking courses
concurrently; so a UOP student concentrates intensely on one, or two topics during a course;
rather than juggling and studying 4-5 courses at one time for semester.
• Academic Quality: Serious student and peer teaching evaluations; Standard measurement of
student cognitive development.
5. How do the structural components of the UOP’s historical strategy & teaching model
match their target customers’ needs?
In addition to the features described in question #4 above, UOP believes some additional
elements drive a successful match between what they do and why it effectively and profitably
meets their students’ needs:
live and work.
Low instructional costs—Part-time faculty, contracted on a course-by-course basis
This helps moderate tuition costs; runs the coursework compatible with the sequential—0ne
course at a time-model; makes the school less instructor dependent; gets more interesting and
Low facility costs-Leases its campus and learning center facilities, keeping facility costs
variable — Leasing additional classroom space on a short-term basis keeps facility cost more
variable; and leasing greatly reduces the capital intensity facing other institutions.
support, entertainment, etc.
These students don’t need dorms, student centers, food services, counseling, sports, etc.
Employer Support— Some of UOP’s students receive partial tuition reimbursement. And that is
sources.