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Case study: A Great Idea ESL for You is a small enterprise operating in Japan. The company was started by a group of four English as a Second Language (ESL) instructors employed at private schools in Tokyo. In Japan, foreign instructors' work visas allow them to tutor outside their regular work hours and it is common for ESL instructors to supplement their income by privately tutoring business people to assist with improving their English language skills. John England and Terry Malcolm are Americans who have been in Japan for five and seven years, respectively. Both men taught ESL in other countries prior to going to Japan, mostly in South America. They have known each other for ten years, and met while teaching at the International Language School in Buenos Aires, the capital of Argentina. The other half of the ESL for You founding team is Cecilia Pond and Lawrence Hunt. Both instructors are from England and have taught at the same school in Japan for the past four years. ESL for You is a tutoring service focused mainly on providing private ESL instruction to Japanese business people. The majority of their clients are individuals looking to improve their conversational English skills in order to increase their level of opportunity and success in the workplace. The company began when all four instructors were working at schools and providing tutoring to local business people as and when they could. The group had been discussing the frustration each was experiencing trying to prove to potential private clients they had the right qualifications and experience to provide quality, reliable tutoring. They thought it could be beneficial to have a company name behind them; something that would guarantee clients that the instructors they were interviewing had operational standards of performance and dependability That day, the idea for ESL for You was born, and within six months, the company was operational. Within two years of starting the company, the four instructors had quit their full-time jobs, were working solely as operators and tutors, and employed 24 full-time tutors working locally in Tokyo. It was time to begin thinking about expanding the business into a new market. The Details In researching and planning its expansion, ESL for You identified Buenos Aires as its target market. The ESL industry is booming there and the market has room for the service it offers. There are many ESL schools in operation in the city, but no organized tutoring services. The tutoring industry in Buenos Aires is serviced by ESL instructors employed at local schools who are taking on private tutoring work in their spare time. The employment visa offered to instructors at Argentinian schools does not include working privately: instructors are not legally permitted to do so unless they hold a separate work visa. Despite this, private tutoring is a common practice in the city and the authorities tend to ignore it. As part of its offerings, ESL for You is planning to ensure all its instructors are working legally on visas. This could be a factor that sets its services apart from others' demonstrating corporate social responsibility, in addition to the guarantee of reliability and high educational standards. The team's research has shown that although there is an application process and additional cost involved, the plan is achievable, and in the long term the benefits outweigh the disadvantages. John and Terry's experience in Argentina is another major reason for choosing Buenos Aires. Over the past two years, the foursome has learned that word of mouth and reputation are the most effective ways to grow their business and plan on using that to their advantage by returning to a place where they already have connections. The plan is for John and Terry to fly to Argentina and start ESL for You in Buenos Aires; in the meantime, Cecilia and Lawrence will stay in Japan and continue to run the business there. In the future, the company's founders envision expanding further into East Asia and, should the Argentina expansion prove successful, into South America as well. In Japan, the group had begun by running business operations out of Lawrence's apartment. The tutors began simply with business cards to represent their company. When the business began to grow, they hired an IT consultant to build a basic website in Japanese and rented a small office inside the ESL school where Cecilia was working. Over time, the company built a partnership with the school that involved mutual referrals. When students at the school inquired about private lessons, the school referred them to ESL for You; in turn, when the tutoring service was asked about schools in the area, it recommended Cecilia's employer. Due to the success of this strategy in Japan, when they arrive in Argentina, one of John and Terry's first tasks will be to visit the school where they used to be employed, and explore partnership options. As its business in Japan grew, ESL for You was able to form partnerships with some of the businesses its clients worked for. After it had successfully worked with two or more employees from one company, the tutoring service would approach the company with a proposal to offer a discounted rate for its employees if the company would refer them solely to ESL for You for their English instruction needs. The deal was beneficial for both parties, as the businesses could be confident their employees were receiving quality instruction, and ESL for You received new clients who were seriously invested in their lessons. Some businesses had even incorporated ESL instruction into their education benefits package, which meant the clients from this category purchased, on average, a higher number of lessons per student. This is another strategy the group is hoping to use as it begins to build a client base in Buenos Aires. Additional strategies the company will use to gain clients and become successful in the Buenos Aires market are targeted directly to Argentinians and their customs, culture, regulations and financial outlook. What next? John, Terry, Cecilia and Lawrence know they still have a great deal of work ahead of them. They will need to approach a financial institution to assist with funding for the new venture. They are researching small business grants that may be available to them in their respective home countries. They have completed rough calculations that indicated the expansion idea was viable; however, they still need to put together a detailed financial plan they can present to potential investors. Lastly, they are planning to develop specific goals and benchmarks they will use to evaluate the short- and long-term outcomes of opening and operating a new branch of ESL for You in Buenos Aires. It is at once a stressful and exciting opportunity, and the four are looking forward to seeing where their next move will take them Case Study Questions: 1. What market entry strategy does ESL for You plan to use (e.g., direct exporting, licensing, etc.)? What are the advantages and disadvantages associated with this type of strategy? 2. What costs will the ESL for You group have to take into account when writing the detailed financial plan? 3. ESL for You may identify numerous partnerships to research and evaluate. When evaluating a proposed partnership with a local ESL school in Buenos Aires, what factors will the group need to consider to determine whether the partnership will be successful