Harvard Case - 51Talk: Navigating China's New Tutoring Policy
"51Talk: Navigating China's New Tutoring Policy" Harvard business case study is written by Jiqing Zhu, Alex Beamish, Paul W. Beamish. It deals with the challenges in the field of General Management. The case study is 10 page(s) long and it was first published on : Dec 8, 2022
At Fern Fort University, we recommend that 51Talk pivot its business model to focus on a hybrid online-offline approach, leveraging its existing technology platform while expanding into physical learning centers. This strategy will allow 51Talk to navigate the new tutoring policy, cater to diverse student needs, and maintain a strong competitive edge in China's evolving education landscape.
2. Background
51Talk, a leading online English tutoring platform in China, faces a significant challenge due to the government's new tutoring policy, which restricts for-profit tutoring for core subjects and limits operating hours. This policy significantly impacts 51Talk's core business model, forcing the company to adapt and explore new avenues for growth.
The main protagonists in this case study are:
- Huang Jiajia: 51Talk's founder and CEO, who needs to navigate the new policy and chart a new course for the company.
- 51Talk's Management Team: Responsible for implementing strategic decisions and adapting the company's operations.
- 51Talk's Students: The primary stakeholders whose needs and preferences are crucial for the company's success.
- Chinese Government: The policymaker whose regulations directly impact 51Talk's operations.
3. Analysis of the Case Study
We can analyze 51Talk's situation using a combination of frameworks:
a) SWOT Analysis:
- Strengths: Strong brand recognition, established online platform, experienced teachers, large student base, technology and analytics capabilities.
- Weaknesses: Dependence on online tutoring, limited offline presence, potential vulnerability to policy changes.
- Opportunities: Expanding into hybrid learning models, offering supplementary courses, partnering with schools, leveraging technology for personalized learning.
- Threats: Continued policy restrictions, increased competition, changing student preferences, economic uncertainty.
b) Porter's Five Forces:
- Threat of New Entrants: High, due to the ease of entry into the online tutoring market.
- Bargaining Power of Buyers: Moderate, as students have multiple options but value quality and affordability.
- Bargaining Power of Suppliers: Low, as teachers are numerous and can be easily replaced.
- Threat of Substitute Products: High, as traditional tutoring and other educational services are available.
- Rivalry Among Existing Competitors: High, as the market is crowded with both online and offline players.
c) Balanced Scorecard:
- Financial: Revenue growth, profitability, student retention, cost optimization.
- Customer: Student satisfaction, learning outcomes, brand loyalty, accessibility.
- Internal Processes: Teacher quality, platform efficiency, curriculum development, operational excellence.
- Learning and Growth: Innovation, employee development, data-driven decision making, strategic partnerships.
4. Recommendations
51Talk should adopt a hybrid online-offline strategy to navigate the new policy and capitalize on emerging opportunities:
a) Hybrid Learning Model:
- Online Platform Enhancement: Continue to invest in the online platform, improving user interface, adding interactive features, and offering personalized learning experiences.
- Physical Learning Centers: Establish a network of physical learning centers across China, providing a complementary offline experience to online learning.
b) Diversification of Services:
- Supplementary Courses: Offer supplementary courses for non-core subjects, such as arts, music, and sports, which are not subject to the new policy restrictions.
- School Partnerships: Collaborate with schools to provide English language training programs, leveraging existing infrastructure and reaching a wider audience.
c) Strategic Partnerships:
- Technology Providers: Partner with technology companies to enhance the online platform, integrate AI and machine learning, and personalize the learning experience.
- Educational Institutions: Collaborate with universities and colleges to develop joint programs and offer advanced English language training.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core Competencies and Consistency with Mission: 51Talk's core competency lies in its technology platform and experienced teachers. The hybrid model leverages these strengths while expanding into new areas.
- External Customers and Internal Clients: The new model caters to diverse student needs, offering both online and offline learning options. It also provides teachers with more opportunities for professional development and career growth.
- Competitors: The hybrid model allows 51Talk to differentiate itself from competitors by offering a unique combination of online and offline learning experiences.
- Attractiveness: The hybrid model is expected to increase revenue, improve student retention, and enhance brand value.
6. Conclusion
By adopting a hybrid online-offline strategy, 51Talk can navigate the new tutoring policy, maintain its competitive edge, and achieve sustainable growth in China's evolving education landscape. This approach will allow the company to cater to diverse student needs, leverage its existing technology platform, and expand into new market segments.
7. Discussion
Other alternatives not selected include:
- Complete Online Focus: This would involve focusing solely on online tutoring, potentially offering alternative subjects or shifting to a subscription-based model. However, this approach may limit the company's reach and expose it to further policy changes.
- Pure Offline Presence: Establishing only physical learning centers would require significant capital investment and may not leverage 51Talk's existing technology infrastructure.
Risks associated with the hybrid model include:
- High Initial Investment: Establishing physical learning centers requires significant capital investment.
- Operational Challenges: Managing both online and offline operations requires careful coordination and resource allocation.
- Competition: The hybrid model may attract more competition from established offline players.
8. Next Steps
- Develop a comprehensive strategic plan: Define the specific goals, target markets, and implementation timeline for the hybrid model.
- Conduct market research: Identify potential locations for learning centers, assess student demand, and analyze competitor offerings.
- Secure funding: Raise capital to support the expansion into physical learning centers.
- Recruit and train staff: Hire qualified teachers and support staff for the offline operations.
- Develop a marketing strategy: Promote the hybrid model to existing and potential students, emphasizing the benefits of both online and offline learning.
By taking these steps, 51Talk can successfully navigate the new tutoring policy and position itself for continued growth in China's education market.
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Case Description
On July 24, 2021, Chinese authorities issued the Double Reduction Policy to ease the burden of excessive homework and off-campus tutoring for students undergoing compulsory education in China. Off-campus English tutoring became strictly regulated, and hiring foreign teachers abroad to carry out training activities was strictly prohibited. 51Talk had achieved great success in the K-12 English online tutoring market, and this business accounted for more than 95 per cent of the company's total revenue. However, the company would not be able to continue its K-12 student English online tutoring business in the Chinese market under the Double Reduction Policy. Jack Huang, 51Talk's founder and chief executive officer, had to consider how to transform the company in order to survive.
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