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Understanding the globalization of K-12 schooling through the lens of a multinational education company: a case study of Fairmont Education Group

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Understanding the globalization of K-12 schooling through the lens of a multinational education company: a case study of Fairmont Education Group

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Content Running Head: GLOBALIZATION OF K-12 EDUCATION 1

UNDERSTANDING THE GLOBALIZATION OF K-12 SCHOOLING THROUGH THE
LENS OF A MULTINATIONAL EDUCATION COMPANY:
A CASE STUDY OF FAIRMONT EDUCATION GROUP

By

Yu-Wen Taylor

A Dissertation Presented to the
FACULTY OF THE USC ROSSIER SCHOOL OF EDUCATION
In Partial Fulfillment of the
Requirements for the Degree
DOCTOR OF EDUCATION

Dr. Guilbert C. Hentschke
Dr. Patricia Burch
Dr. Michael Diamond

August 2013

Copyright 2013 Yu-Wen Taylor

GLOBALIZATION OF K-12 EDUCATION

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Table of Contents

List of Tables 4
Abstract 5
Chapter One: Introduction to the Study 6
The Problem 6
Background to the Problem 7
Conceptual Underpinnings for the Study 10
Statement of the Problem 17
Purpose of the Study 19
Research Questions 19
Delimitations, Limitations, and Assumptions 21
Summary 21

Chapter Two: Review of Related Literature 24
The Case for Human Capital and the Rising Demand for Education 25
Tendencies and Patterns of Privatization in Education 29
The Role of K-12 Multinationals in the Globalization of Education 37
Summary 53

Chapter Three: Research Design and Methodology 55
Problem and Purpose Overview 56
Research Questions 57
Population and Sample 58
Data Collection and Instrumentation 59
Data Analysis 62

Chapter Four: Data Analysis 63
Overview of Fairmont Education Company 64
Findings by Research Question One 68
Findings by Research Question Two 86
Findings by Research Question Three 94
Findings by Research Question Four 98

Chapter Five: Conclusions, Implications, and Future Research 106
Conclusions 106
Implications for Practice 116
Recommendations for Future Research 119

Bibliography 121

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Appendices
Appendix A 125
Appendix B 127

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List of Tables
Table 1: Operational Parameter of Major K-12 Multinationals 38
Table 2: Fairmont Private Schools Five Year Financial Summary 101
Table 3: Joint Diploma Program 2011-2012 Financial Summary 102
Table 4: Joint Diploma Program Five Year Forecast 104

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Abstract
Trends in globalization and privatization have begun to radically and fundamentally alter the
context and landscape of K-12 schooling. Accosted with rising demand for education on one
side but flanked by budgetary and institutional constraints on the other, governments worldwide
have opted for privatization as a policy lever for increasing the supply of education. Despite the
potential and promise of K-12 multinationals to meet the rising global demand for education,
their role in the provision of K-12 schooling remains controversial. Furthermore, the paucity of
information regarding their financial and operational reach has obfuscated attempts by
governments to assess their inherent risks and rewards and associated externalities. This
qualitative case study of Fairmont Education Group, a K-12 multinational headquartered in
California, answered research questions relating to the motivational and contextual factors, along
with organizational and operational characteristics, which have influenced the company’s
international growth. The findings of this study indicate that macro educational reforms across
the globe have created the conciliatory market conditions for Fairmont to respond to an
education gap in rapidly developing economies. As Fairmont faces significant policy risks and
operational challenges, the sustainability of its international growth hinges on its capability to
reconcile the dichotomous needs for greater adaptability to local conditions and integration as
one collective unit. This study serves as a revelatory case from which replication and further
empirical work can extend the body of knowledge regarding the nature of K-12 multinationals’
role in the globalization of K-12 education and public sector reform.

GLOBALIZATION OF K-12 EDUCATION

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Chapter One
Introduction to the Study

The Problem
The new millennium is witnessing a precipitous spike in the aggregate demand for all
levels of education across the world. Despite substantial public expenditure on education, the
supply of publicly financed and operated schooling in both developed and developing nations
has not kept pace with demand. The imbalance in the demand for and the supply of K-12
education is of great concern and importance to governments worldwide. More so than in higher
education, primary and secondary education is where the accrual of the public good through
education is widely believed to outweigh the accrual of the private good through education.
Driven by contradictory demands in the public agenda—the political, social, and economic
imperative to provide an adequate foundational education to all and the financial pressure to
contain public spending—governments worldwide have resorted to finding alternative sources of
funding for the expansion of educational systems.
Privatization, henceforth, has emerged as a policy lever by governments to shore up the
supply of K-12 education. Whereas the public sector has been relatively tentative in addressing
the rising demand for education, the private sector has already begun to capitalize on the new
opportunity created by that excess demand. A number of education institutions and companies
have risen to the challenge of meeting the new demand by expanding their operations to serve
new customers not only in their country of origin, but also in foreign nations. Given that the
importance of these K-12 multinational education companies lies beyond the boundary defined
GLOBALIZATION OF K-12 EDUCATION

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by their transactional capabilities, their growth and development, occurring at the crossroads of
privatization and globalization, beg these broader contextual questions: 1) How do the scope and
scale of their global operation impact the macro trends in public sector reform across nations? 2)
What are the externalities, both positive and negative, associated with their business and
education models? 3) How will they leverage economies of scale and the global supply chain to
fulfill their promise to provide a form of K-12 education that is more efficient, effective, and
innovative at addressing the need for global awareness and citizenship and twenty-first century
skills? To contribute to the public discourse on the controversial role of pro-profit companies in
the provision of K-12 schooling, this case study focused on the growth and development of a K-
12 multinational as a springboard for jumpstarting the empirical work necessary to answer the
aforementioned broader contextual questions.

Background to the Problem
Globalization—perched on concomitant developments in the velocity and impacts of
technological innovation as well as the extensity and intensity of the integration of the world—
has ushered in a new economic paradigm in which human capital is the key to productivity and
global competitiveness, hence the rise in the demand for education. The ratcheting up of demand
for education is remarkably robust and acute in high-growth developing nations, such as India,
China, and Brazil. In these emerging economies, the demand for Western-based K-12 education
has outpaced supply as the expanding middle class increasingly espouse the belief that mastery
of the English language and a modern curriculum fostering twenty-first century skills—inventive
thinking, critical inquiry, and digital-age literacy—are crucial to success in the global economy.
GLOBALIZATION OF K-12 EDUCATION

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However, a heightened demand for more education on the part of individuals, businesses, and
national entities is not matched by a copasetic increase in the public provision of education.
Governments, circumscribed by budgetary constraints, burdensome bureaucracies, and factious
political coalitions, have been slow to adapt and reform a monolithic education system to meet
the new demand. This asymmetrical development results in an imbalance between the demand
for and the supply of education.
Initially spawned by globalization, this new economic paradigm has in time created the
conciliatory conditions for the globalization of education. Robust evidence suggests that the
globalization of higher education is well under way. Both non-profit and pro-profit higher
education institutions have undertaken initiatives to globalize their brands, embed global
expansion in their strategic and operational framework, and export their education models across
national borders via satellite campuses. Whereas prestigious universities cater to elite learners
around the world, pro-profit higher education targets students and lifelong learners seeking
career-oriented degrees. The growth of pro-profit higher education has undergone a steep incline
in Asian and Latin America. Even though a majority of postsecondary institutions are
domestically owned and operated, a new group of global corporate pro-profit postsecondary
providers, based predominantly in the U.S., are on the rise. Among the leaders of that pack are
Laureate, Whitney International, Apollo Global, Kaplan Inc., and DeVry Inc. Global higher
education institutions have grown primarily in response to the expanding middle class
populations, especially in Asia and Latin America, whose demands higher education have not
been met due to inadequate public funding for postsecondary education (Wildavasky, 2010).
GLOBALIZATION OF K-12 EDUCATION

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Parallel developments in the globalization of education are occurring in the K-12 sphere.
At the primary and secondary level, globalization of education is not only expressed by a shift in
curricular and instructional contents from a parochial to a global orientation at local schools, it
also reflected by the proliferation of international schools, international collaborations between
public and private schools from different countries to offer joint-diploma programs, and foreign-
owned and operated schools. Fairmont Education Group, Mosaica Education, GEMS, Meritas,
and SABIS Educational Services, INC. are among the pioneers of K-12 multinational education
companies. Globalization, the ascent of formerly stagnating economies, and the activities of
multilateral agencies such as the World Bank (WB) and the Organization for Economic Co-
operation and Development (OECD) to promulgate privatization and lower barriers to trade
helped to create the favorable preconditions for K-12 multinationals to service an expanding
clientele.
The burgeoning global education market provides the backdrop for the growth of K-12
multinational education companies. Since 1990 educational services have become an emerging
market for foreign direct investment. The valuation of the global market in educational services
outside of the U.S. is around $111 billion a year with a potential consumer base of 32 million
students (Spring, 2009). As of 2006, the global market for private higher education is valuated at
about $400 billion (Wildavsky, 2010). The global market potential of K-12 education business
hovers around $16.4 billion. The market for premium international and mixed curriculum K-12
schools is staggering: $0.7 billion in the Kingdom of Saudi Arabia; $1.9 billion in United Arab
Emirates; $0.4 billion in India; and $1.7 billion in China (The Parthenon Group, 2011). As a
matter of fact, investment in education now forms a crucial part of the investment portfolio of
commercial, financial, and private equity firms. To the extent that privatization is largely a
GLOBALIZATION OF K-12 EDUCATION

10
policy transfer from highly industrialized Western nations to developing nations, most
companies that profit from global patterns of privatization are located in the Western
industrialized nations (Catlaks, 2009).

Conceptual Underpinnings for the Study
Publicly funded and operated schools, institutionalized in the twentieth century, served as
a political vehicle to foster the civic unity, homogenization of citizens, and inculcation of
common knowledge necessary for nation building. The development of common schools in the
U.S, for example, is built on the ideal of having all children, particularly immigrants from non-
English-speaking countries, receive a common education that inculcates the political and moral
values of the dominant culture (Spring, 2010). As the notional right to education gained
legitimacy and wide acceptance in the latter half of the twentieth century, governments—
operating from the assumption that a change in demand is a quantitative, rather than a
qualitative, difference—committed vast resources to expanding and improving the public
education system largely via the replication of the existent model to increase citizens’ access to
education. States have come to see themselves not only as responsible for building schools, but
also as responsible for ensuring that citizens avail themselves of educational opportunities
(OECD, 2006).
The expansion of the common schools is also facilitated by the de facto economic policy
of improving the human capital as the basis for economic growth. Human capital, succinctly
defined, is the accumulated training and skills that workers possess. Human capital theory
upholds a plastic view of human capability in its calculus of the intrinsic productive capability of
GLOBALIZATION OF K-12 EDUCATION

11
human beings. Human capability encompasses not only an individual’s innate abilities, but also
all the skills and knowledge she has gained from education and training (Eide & Showalter,
2010). Because education enhances human capital, an investment in education is sine quo non to
higher labor productivity and higher equilibrium output. Educated individuals are the fodder for
new ideas, and, as ideas build on, extend, and amplify each other, educated individuals enhance
the multiplier effect of education through the transmission, diffusion, and improvement of new
and existing knowledge and skills. Metaphorically speaking, the human capital framework
posits that an investment in education is an investment in the innovative capacity of the economy
to shift the productivity frontier.
In light of empirical evidence supporting both the private and public good of education,
by the end of the twentieth century national leaders across the globe have largely accepted the
idea that the development of human capital is germane to raising a nation’s standards of living
and, ipso facto, indispensable to reducing poverty and inequality of income. During the same
period, developed nations have come under increasing economic pressure for productivity
improvement as international competition stiffens in the face of globalization. Globalization
refers to a set of processes which facilitates the hyperconnectivity of the world through
economic, cultural, technological, and, to a lesser extent, political exchanges and integration.
Jumpstarted by technological breakthroughs in telecommunications, information technology, and
transportation, on the one hand, and the desire of political leaders post WWII to create a more
integrated capitalist global economy through trade agreements, on the other, globalization has
assumed distinctive economic features favoring global sourcing and marketing, foreign
investment, and liberalized trade (Stromquist & Monkman, 2000).
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According to Carnoy (2000), given that knowledge is the fundamental driver and fuel, the
raison d’être, for globalization, it follows that globalization should also have a corresponding
impact on the transmission of knowledge. The increasing pace of technological innovation in
different sectors changes the organization of production and nature of employment relationships,
while revolutionizing the transformation of inputs into outputs. As businesses come under
increasing pressure to out-adapt and out-innovate their competitors, they need to decentralize
their operations to specialize in core competencies. A flatter organization entails a trade-off
between the quantity and the quality of employees. Having fewer employees, organizations need
to vest greater authority and problem-solving responsibilities in and demand greater performance
from all of them (Karoly, 2004). In so far as capital, labor, raw materials, management, and
markets are linked through global networks, organizations are compelled to source talents
worldwide in order to coordinate with subsidiaries in multiple nations, grow new markets, and
enhance their comparative advantage (Spring, 2009).
The new form of business organization harbors a strong bias for people with strong
cognitive skills who can collaborate with people in diverse cultural and linguistic settings. The
growth in the quantity, quality, and density of knowledge necessary for the design, production,
and marketing of products means that globalization has distributional consequences: It is linked
to a relative decline in earnings among less-skilled workers and a rise in wage premium for
skilled workers (Karoly, 2004; Stromquist & Monkman, 2000). The distributional consequences
favoring knowledgeable, skilled workers leads to a growing proportion of people who seek
educational experiences which promise to prepare them for the challenges and opportunities of
the twenty-first century. The lower transaction costs associated with transportation and
information transmission and dissemination brought about by technological innovations enable
GLOBALIZATION OF K-12 EDUCATION

13
consumers of education to benefit from services not just from domestic, but also foreign,
educational suppliers. Economic integration, therefore, leads to the expansion of capital flow
and mobile population as both financial and human capital roam the world in search of the best
opportunities and returns.
The mobility of human capital escalates the global competition for talent. Thomas
Friedman (2008) terms the relative erosion of America’s scientific and engineering base which is
manifested by a critical shortage of home-grown scientists and engineers as the “quiet crisis”
whose intermediate and long-term impacts cannot be ameliorated by the myopic policy of
importing talents from abroad due to global competition for talent. Passed with bipartisan
support, the No Child Left Behind Act of 2001, which aimed to increase the academic
achievement of all students through standards and accountability measures, reflects American
leaders’ enduring preoccupation with stemming the tide of mediocrity in American schools in the
wake of the 1983 publication of “A Nation at Risk” (Spring, 2010).
In the U.S., as elsewhere across developed nations, education is a central policy lever in
increasing a nation’s global economic competitiveness. Despite pressure on all public
expenditure, from 1995 to 2008 public expenditure on education typically grew faster than total
public spending in the OECD nations, accounting for an average of 12.9% of public expenditure
(OECD, 2011). Between 1998 and 2009 the proportion of adults who had not completed upper
secondary education fell from 37% to 27%, while the proportion of those completing tertiary
education rose from 21% to 30% in OECD nations (OECD, 2011). Even though an increase in
the quantity of schooling neither denotes nor connotes quality, it nonetheless reveals that
GLOBALIZATION OF K-12 EDUCATION

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providing funding, opportunities, and accessibility for formal education is a top social and
political priority among developed nations.
If the changing macroeconomic context has compelled developed nations to invest in
education, developing economies which aim to catch up with the developed nations, a fortiori,
also follow suit to make education a top priority on the national agenda. Michael Spence (2011)
describes the reversal of the pattern of economic divergence between the industrialized West and
the rest of the world after WWII as the “next convergence.” Specifically, the enormous income
gaps, and by implication the differentials in the living standards, between industrialized nations
and those of the high-growth developing economies is decreasing at an alarming rate. Three
quarters of largest non-oil producing poor countries had an average growth in GDP per person of
3.3 percentage points higher than that of the U.S. from 2000-2007 (O’Sullivan, 2011). China, for
example, has been able to sustain extraordinary high growth for over three decades: Since
adopting market-oriented reforms in 1978, the GDP per capita of China has risen from 400 then
to over 3,500 now, doubling more than three times and moving hundreds of million people out of
poverty (Spence, 2011). China’s economy has grown by an average of 10% a year over the past
ten years. Assuming that the American economy will grow at 2.5% and that the Chinese
economic growth will taper to 8% as its working-age population starts to contract, China could
overtake America in the next decade as the biggest economy in the world (O’Sullivan, 2011).
The Economist (2011) predicts, rather conservatively, that should the emerging markets continue
its growth trajectory of three percentage points a year faster than America, they will account for
two-thirds of the world’s output by 2030. Four most populous emerging markets—China, India,
Indonesia, and Brazil—will constitute two-fifth of global GDP, while the combined weight of
America and the European Union will shrink from more than a third to less than a quarter of the
GLOBALIZATION OF K-12 EDUCATION

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world economy. In fact, urban segments of the Chinese economy have already made the middle-
income transition.
Economic growth is by no means a linear process. At some point along the economic
growth curve, the law of diminishing returns operates to counteract the effectiveness of the
existing growth model, resulting in the middle income trap. Middle-income countries (with
earnings per person of at least $10,000 in 2005 prices) have a tendency to experience a drop in
their growth rate by at least two percentage points in the past half-century because of a slump in
total factor productivity (O’Sullivan, 2011). Developing nations which have successfully sprung
to the middle income country status have hitherto relied on the low-cost labor model as their
main—along with technology transfer from developed nations and capital-intensive investments
as attendant—growth strategies. As economies grow richer, these growth strategies generate less
and less returns; accordingly, these countries will have to rely on a skilled workforce with the
technical and tacit knowledge to drive efficiency based on innovations in core and peripheral
technology, the organization of production, and the management of aggregate demand
(O’Sullivan, 2011). Moreover, in order to attract more foreign direct investment and become
tantalizing offshoring production bases for multinational companies, developing nations have to
be able to provide a relatively well-educated workforce (Thurow, 2000). The WB credits a
substantial improvement in the human capital of labor force participants created by strong
elementary and secondary schooling for the success of high-investment and high-growth Asian
Tigers—Hong Kong, Singapore, South Korea, and Taiwan—which are among the few middle
income countries heading for advanced incomes status. (Gwartney & Stroup, 1997). In short, the
ability of developing nations to leapfrog the middle income trap is contingent on building the
GLOBALIZATION OF K-12 EDUCATION

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educational infrastructure to facilitate a shift in comparative advantage from cheap to skilled
labor.
Having relied on a publicly-dominated monolithic model of school provision for
economic development thus far, both governments and citizens across the globe have come to
recognize that the extant education system is inadequate for the new economic paradigm. For
one thing, state monopoly of education entails a trade-off between equity and efficacy and
efficiency. Milton Friedman (1995), a champion of free markets in education, advanced the
argument that the government administration of schools in the absence of competition leads to
inefficiencies. Extending Friedman’ legacy, John Chubb and Terry Moe (1990) contended that
the political economy of public schooling characterized by the existence of large hierarchical,
rule-bound bureaucracies dominated by interest groups imposing external goals, structures, and
regulations on schools works to the detriment of students by hindering efficacy and
effectiveness. The need to improve efficiency, measured in output per dollar invested, is
exacerbated by the need of governments in developed nations which are beset by chronic
structural deficits to reduce the footprint of public enterprises. In addition to a lack of efficiency,
public schools have also come under attack for lacking the capacity to innovate. Generally
speaking, public services organizations, plagued by inherent cultural or organizational
constraints, experience a high degree of organization inertia in their efforts to systematically
institutionalize transformative change. (Albury, 2005). Specifically, the presence of a large
number of relatively small delivery organizations in the public sector creates diseconomies of
scale, thereby inhibiting the system-wide development and diffusion of innovations.
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In addition to failing to meet the pressure for performance improvement, one-size-fits-all
public schools have also fallen short of meeting differentiated demands from the grassroots.
Parents and students, increasingly seeing schools as service institutions which should be
responsive to their needs, have become more vocal at articulating their demands on the education
systems. Individuals and collectives express their demand via two avenues: exist and voice. In
choosing to exit from the system, participants forfeit the opportunity or right to improve the
system and instead seek alternative forms of education. Those participants who have divergent
expectations of the education system but choose to stay seek to change the system through
political lobbying or interest group politicking. In either scenario, the growing diversity of
demands on a hitherto monolithic system creates tremendous pressure for governments to
diversify the supply of schools. Many countries have adopted policies to encourage the
decentralization of schools and the development of school autonomy as a means to increase the
range of school choice available to parents and students (OECD, 2006). The shift in mindset
from supply-dominated to demand-sensitive schooling across the world, in concert with the
economic and political pressure to improve efficiency, helped to facilitate the privatization of
education and the growth of multinational education companies.

Statement of the Problem
Under the new economic paradigm, a convergence of macro and microeconomic
factors—the expansion of the middle class in developing nations, the need for human capital in a
globalized, knowledge-intensive economy, and the earnings premium associated with
education—has contributed to an increase in the demand for education across countries along
GLOBALIZATION OF K-12 EDUCATION

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various stages of economic development. Yet, just when the stakes for having an educated
citizenry are higher than ever, governments worldwide, due to both budgetary and institutional
constraints, have found themselves limited in their capacity to meet the new demand.
Privatization has, therefore, emerged as both a policy and market response to the imbalance in
the demand for and the supply of education. In higher and K-12 education alike, education
companies have answered the world’s call for responsive supply by transcending national
boundaries to service new customer bases. However, notwithstanding the increasingly
prominent role played by multinational education companies in the provision of K-12
educational services on a global scale, there is a dearth of information on their business and
education models.
Relative to higher education multinationals, K-12 multinationals operate in a less
transparent environment because they are predominantly privately held companies. As such,
they are not required by the Securities Exchange Commission (SEC) to disclose detailed
financial and operating information along with management responses to market conditions on a
regular basis to the SEC and to the company’s stockholders. The executives of K-12
multinationals, unlike their counterparts in higher education, do not need to boost investor
confidence by divulging hard and soft information about their corporation’s prospects through
earnings guidance, pro forma earnings (earnings before interest, taxes, depreciation, and
amortization), and conference calls with industry analysts. This paucity of information results in
a vacuum of knowledge and information regarding an important development in the
globalization and privatization of K-12 education which will not only shape the development of
the education industry as a whole, but, more importantly, directly influence the cognitive and
social development of an increasing number of global students. Even though the relative role of
GLOBALIZATION OF K-12 EDUCATION

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the public and private sector in the provision of K-12 schooling is of great public concern, the
paucity of information about K-12 multinationals obfuscates attempts by governments
worldwide to make sound policy and regulatory decisions regarding the activities of these
companies.

Purpose of the Study
The purpose of this study was to understand the globalization of K-12 education by
answering key research questions relating to the growth and development of a multinational
education company which provides K-12 educational services in multiple countries. This study
aimed to identify distinguishing strategic, operational, and organizational characteristics of K-12
multinationals as a means to shed light on their potential to deliver a more effective, efficient,
and relevant education in the globalized, knowledge-driven economy of the twenty-first century.
Given the extent of the externalities associated with their operation, their social purpose is as
important as their economic purpose. Above all, discovering new knowledge about these K-12
multinationals will help guide policy decisions on the proper role of the private sector in the
controversial realm of primary and secondary education where many believe should be reserved
for governments alone.

Research Questions
This study addressed these four key research questions:
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1. What has motivated the company to expand internationally, and what contextual factors
have facilitated or hindered that expansion?
2. In what ways has the company organized itself differently in order to grow as a
multinational? How has that reorganization impacted instructional practices and
programmatic offerings?
3. What parts of global demand does the company most want to address and is the most
capable of responding to? What parts of global demand does the company least want to
address and is the least capable of responding to?
4. How does the company define and measure success in a multinational context? How has
the definition and measure of success changed from the time when the company operated
only in the U.S.?
These questions were developed to enable the researcher to gain a coherent understanding of
the overall pattern of the development of a domestic education company into a multinational.
Contextual factors, representing a set of challenges and opportunities, serve as a parameter for
the company’s strategic decisions. Strategic decisions optimize the environmental fit between
the company’s capabilities and the parts of global demand that the company chooses to address.
Strategic decisions and organizational structures are linked together in a feedback loop to guide
and shape the growth of the company. The former provides the overarching framework for the
alignment of the organizational structures. The latter, by supporting the capacity and capability
of the company, affects the company’s educational delivery model and, consequently, its
economic and educational efficacy.

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Delimitations, Limitations, and Assumptions
Delimitations, or the chosen limits of the study, were the contextual and
organizational barriers and factors shaping the growth of a U.S.-based educational company from
a domestically-oriented firm into a multinational. This study did not involve a cross-case
analysis of a number of K-12 multinationals. Delimiting this study to one unique firm potentially
limited the external validity and generalizability of this study to the larger population of K-12
multinationals. Assuming that there exist common themes and patterns in the endogenous and
exogenous variables affecting the development of all K-12 multinational education companies,
this case study nonetheless resulted in a valid conceptual and theoretical framework which may
be applied to the study of other K-12 multinationals and the industry as a whole.
As a qualitative case study, this study had several limitations inherent to the nature of the
research design. To begin with, the researcher had no control over the events and behaviors not
observed by the researcher as well as the level of access to documents, classrooms, and teachers
granted to the researcher by the firm. Moreover, the researcher had no control over the veracity
of the answers obtained from interviews, surveys, and observations. This case study relied on
the assumption that all the participants willingly provided valid information in an honest manner.

Summary
Globalization in the economic sphere has invariably and inevitably led to the
globalization of education. As governments, organizations, and individuals worldwide invest in
the development of human capital in order to gain comparative advantage in the global
competition for scarce resources, they have inadvertently spurred on the demand for not only
GLOBALIZATION OF K-12 EDUCATION

22
more, but also higher quality, education. The excess demand for high quality elementary and
secondary education creates a vexing policy problem for governments as the universal access to
foundational education has widespread social, economic, and political ramifications. Increasing
the supply of schools to meet differentiated demands requires more resources from the public
coffer; meanwhile, the public sector has come under siege for its lack of efficiency,
effectiveness, and innovation. In an attempt to increase access to quality K-12 education,
governments worldwide have enacted privatization policies to allow market forces to play a
more decisive role in guiding the provision of K-12 schooling. The global trend in the
privatization of K-12 education has created the conciliatory market conditions for pro-profit
education companies to globalize their business practices. Even as the financial and operational
reach of these companies have profound social implications, stakeholders lack valuable
information about them. This study aimed to illuminate the business and education models of a
K-12 multinational as the basis for further empirical study to address broader contextual issues
relating to the role of the private sector in the globalization of the provision of K-12 schooling.
The remaining chapters of this study consist of the Literature Review and Methodology.
The Literature Review (Chapter Two) is a review of the relevant literature related to this study.
Chapter Two examines the theoretical and empirical work pertaining to the rising demand for
education, patterns and trends in privatization, and the role of K-12 multinationals in the
globalization of education. These overarching themes depict the contextual factors affecting the
demand for and the supply of K-12 global schooling. The Methodology (Chapter Three) explains
the research design and methods the researcher employed to answer the research questions.
Topics in Chapter Three include the rationale for using a qualitative case study as the research
design, population and sample, data collection and instrumentation, and data analysis. Research
GLOBALIZATION OF K-12 EDUCATION

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methods, such as data and methodological triangulation, used to ensure the rigor, validity, and
reliability of the study will be discussed at length.

GLOBALIZATION OF K-12 EDUCATION

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Chapter Two
Review of Related Literature
Multinational education companies have increased their cross-border business activities
within the last decade in response to the growing demand for education in emerging markets.
Leveraging economies of scale and the global supply chain in their design of an international
model of schooling or a global network of schools, these K-12 multinationals claim to be better
positioned to provide an education that is relevant to the global economy. One can reasonably
expect the expansion of the business and education models of these multinationals to have
significant impacts on the education of an increasing number of students across the globe. Given
that some of these K-12 multinationals’ expansion to new markets occurred at the behest of, or
are authorized by, foreign governments implementing educational reform or economic
development initiatives, one can also reasonably expect these K-12 multinationals to have
groundbreaking impacts on public sector reform as it diffuses best practices to promote
innovation, efficiency, and effectiveness via transnational cross-pollination. However, due to the
emerging nature of this global development, stakeholders—parents, students, educators, business
leaders, and policymakers—lack adequate understanding to make sound and informed decisions
regarding their own role and the role of K-12 multinationals in the globalization of K-12
education.
To allow the illumination of the evolution of the globalization of K-12 schooling through
the lenses of multinational education companies, the literature review delves into three
overarching themes essential to the theoretical and empirical understanding of the development
of multinational education companies: 1) the case for human capital and the rising demand for
education in a globalized knowledge economy; 2) patterns and trends in privatization, locally
GLOBALIZATION OF K-12 EDUCATION

25
and globally; and 3) the role of K-12 multinationals in the globalization of education. Together,
existing literature on these themes has depicted the complexity of the mechanisms and factors
affecting the supply of and the demand for K-12 education in both developed and developing
nations. Having laid the theoretical as well as empirical foundations for understanding the nature
of the shift in the demand for global schooling, the last theme frames the emergence and growth
of multinational education companies as a market response to the shift in that demand. The
literature review concludes with an examination of the development of multinational education
companies in praxis, with a particular focus on the contextual, strategic, and organizational
challenges of growing new customer bases across national borders.

The Case for Human Capital and the Rising Demand for Education
Total factor productivity highlights the relative importance of nonhuman—land, physical
capital, and natural resources—and human resources in the transformation of raw inputs into
value added goods and services. Since the Industrial Revolution in the eighteenth century, factor
markets have recognized the increasingly important role played by human capital in the
production of goods and services; consequently, the demand for skilled labor has increased
concomitantly with a nation’s economic development. Accumulated evidence from analyses of
economic outcomes in cross-national studies has revealed cognitive abilities, as measured by
mathematics and science test scores that are larger by one standard deviation, are associated with
an average annual growth rate in GDP per capita that is two points higher over the whole 40-year
period from 1960 to 2000 (McMahon, 2010; Hanushek & Wobmann, 2010). As the application
of knowledge increases the level of productivity so that more goods can be produced using fewer
GLOBALIZATION OF K-12 EDUCATION

26
hours of human labor, knowledge has trumped the ownership of capital as the source of new
wealth. The shifting of power away from the owner and manager of capital to knowledge
workers has signaled the increasing weight of human resources in total factor productivity (Eide
& Showalter, 2010).
Human capital and economic development are mutually reinforcing. Economists have
generally concurred that a readily available supply of skilled labor is not only an outcome of
economic development, but also a necessary but insufficient condition for a nation’s economic
growth (Eide & Showalter, 2010; Gwartney & Stroup, 1997; Karoly, 2004; O’Sullivan, 2011).
The institution of universal free public education through grammar school in the mid-nineteenth
century producing a vast literate and numerate workforce, augmented by increasing immigrants’
access to high school between 1910 and 1940 to prepare them for highly skilled technical and
managerial jobs, contributed to the rise of America’s economic hegemony (Spring, 2010).
Specifically, human capital theorist Theodore Shultz has attributed the differential between the
growth in national income and the combined traditional inputs of land, hours worked, and stock
of nonhuman capital during the post-WW II economic boom in the U.S. to the growth in the
skills and abilities of workers (Eide & Showalter, 2010).
To economists and policymakers, an improvement in human capital heralds economic
boom; conversely, a decline in the quality of human capital portends economic doom. During
the past two decades, major industrial economies have experienced a substantial reduction in
growth. The salient reason for the slowdown in economic growth from 3.3% to 2.7% a year
between 1970 and 1985 in the U.S. is a sharp decline in labor productivity (Salamon, 1991).
Since 1973 the growth per capita GDP of the U.S. has fallen from the post-war boom of 2.5% to
GLOBALIZATION OF K-12 EDUCATION

27
1.5%. During the same period, annual growth rate of hourly worker productivity fell from three
to 1.2%, accompanied by the dismal growth of real compensation per hour at the meager annual
rate of only 0.6%. A reduction in the average achievement level of the new labor-force
entrants—as measured by the declining SAT scores of high school graduates and other measures
of basic skills—, argued economists, was a major retardant to economic growth (Gwartney &
Stroup, 1997). More recently, McKinsey& Company (2009) has equated the economic cost of
the underutilization of human potential in the U.S., as evidenced by the existence of pernicious
achievement gaps along four dimensions (between the U.S. and other nations; between black and
Latino students and white students; between students of different income levels; and between
similar schools in different systems or regions), to a permanent national recession. By McKinsey
& Company’s estimation, had the U.S. students performed as well on the PISA as those of
Finland or South Korea, the U.S. GDP in 2008 could have been $1.3 to $2.3 trillion higher, or
the equivalent of nine to 15 percent of GDP. The human cost of academic underachievement is
incalculable as the opportunities of a knowledge economy are foreclosed to low-achieving
students living in economic dead zones, or communities experiencing economic decline due to a
dearth of skilled labor pool.
A growing corpus of empirical data has not only established a positive association
between cognitive ability and economic performances on the macro level, but also a
corresponding correlation between years of schooling and individual earnings at the micro level.
In accordance to the law of supply and demand, wages for educated labor are determined by the
demand for educated labor relative to the supply of educated labor. In so far as investments in
human capital entail explicit and implicit costs, the supply of unskilled workers will outstrip the
supply of skilled workers. Given that skilled workers have higher marginal product, or an
GLOBALIZATION OF K-12 EDUCATION

28
increase in the total product resulting from a corresponding increase in the employment of a
person, the demand for skilled labor will be high (Gwartney & Stroup, 1997). As long as the
demand for skilled labor is greater than the supply of skilled labor, skilled labor will be able to
command a wage premium in the labor market. Using the full discounting method of financial
analysis—taking into account after tax earnings less direct costs and foregone earnings—,
researchers have found the private market rate of return to education to be around 10% in
developed nations. Notwithstanding an increase in the supply of higher-educated persons, the
wage differentials between skilled and unskilled persons has in actuality increased, indicating
that an increase in the supply of higher-educated personnel is offset by an even greater increase
in the demand for such persons (Gunderson & Oreopoulos, 2010). Reaching 11%, the private
market rate of return to education is even higher in developing nations, reflecting the scarcity of
skilled labor relative to demand in these economies (Patrinos & Psacharopoulos, 2010).
The increasing funding and provision of schooling by governments spanning the wide
spectrum of economic development in an effort to capture its positive externalities, including,
but not limited to—higher wages for both skilled and unskilled workers, increased democratic
and civic participation, lower criminal activity, and lower social transfer and welfare—has the
paradoxically effect of shifting, rather than satisfying, the demand for more education. In other
words, government policies promoting economic growth has triggered a chain of cascading
effects leading to demand for more education at the microeconomic level. The mechanism for
this chain of reaction lies in the fact that growth in productivity is the principal impetus for the
growth in earnings (Gwartney & Stroup, 1997). Assuming that the increasing provision of
education results in a better educated workforce, rising incomes will ensue as productivity
improves. The expanding middle class in the developing world which has resulted from rising
GLOBALIZATION OF K-12 EDUCATION

29
productivity is a case in point. All else equal, increases in income will cause the equilibrium
price and quantity of education, a normal good, to increase. The income elasticity of education
is compounded by the status accorded to education as a competitive positional good to shift
demand for education. Concerned with the relative, as opposed to the absolute, attainment of
education, consumers of education augment their competitive advantage in the knowledge-based
economy by acquiring an education that is superior to their peers in quantity and/or quality. As a
result, the democratization of the access to education aimed to promote the growing participation
of formerly marginalized populations in the system has effectively created a continual demand
for even more educational access (OECD, 2006). Provided that individuals continue to derive
satisfactory utility from the marginal consumption of education, their desire to optimize both
tangible and intangible resources would result in them demanding for and investing in more
education.

Tendencies and Patterns of Privatization in Education
Privatization in education, which can assume an array of prismatic hues encompassing
government divestiture, supply-side, demand-side, and wholly private provision, is henceforth a
long term trend developed in response to the changing landscape of public education. Supply-
side privatization, more prevalent in the U.S., occurs when governments outsource services to
and/or subsidize private providers for supplying goods and services (Hentschke & Wohlstetter,
2007). Governments can contract out services relating to either or both core competencies—
curriculum and pedagogy, technology, professional development, remedial services, and content-
specific programming—as well as non-core competencies. An exogenous form of privatization,
GLOBALIZATION OF K-12 EDUCATION

30
supply-side privatization involves the participation of the private sector in the design,
management, or delivery of certain aspects of public education on a pro-profit basis (Catlaks,
2009). One type of government-initiated and grassroots response to the pressure to improve
efficiency and efficacy against the backdrop of budgetary shortfalls is the growth of public-
private partnerships (Kwong, 2000). Spurred by the federal NCLB legislation, local educational
areas have contracted with supplemental education providers such as Sylvan Education
Solutions, whose revenues have accelerated since the implementation of the NCLB Act, to
provide remedial services. Milwaukee alone spent $3.2 million during the 2004-2005 school
year to provide after-school tutoring to students (Burch, Donovan, & Steinberg, 2006).
Other forms of supply-side privatization, such as using private providers to design, build,
operate, and/or manage state education institutions, reduce public expenditure by having the
private sector assume some capital cost and risks. A common expression of this form of supply-
side privatization is the contracting of the management of schools to educational management
organizations and charter schools. As a hybrid between purely private and public schools,
charter schools, operating in a semi-autonomous fashion, must meet the specified achievement
goals stipulated in their charter in a specified period of time or face closure. By agreeing to
produce higher student achievement with the same or less per-pupil cost to the district as a
similarly situated pubic school, profit-making education companies which operate charter
schools claim to have the capability to run schools with greater efficiency through an intensive
use technology and performance management techniques (Hochschild & Scovronick, 2003).
The spectacular amount of venture capital funds invested in pro-profit charter school operators
such as SABIS, Edison, Advantage Schools, National Heritage, and Chancellor Beacon, which
was in excess of one billion dollars in the 1990s, highlights the prevalence of this form of
GLOBALIZATION OF K-12 EDUCATION

31
supply-side privatization in the U.S. (Sandler, 2010). The genesis of Mosaica Education, Inc., a
pro-profit charter school operator that has acquired Advantage Schools and established private
schools in Dubai and India, is tied to the U.S. government’s policy to promulgate supply-side
privatization.
Contrary to supply-side privatization, demand-side privatization involves governments
subsidizing end users who then buy services from private and/or public providers. In the U.S.,
political and business leaders react to the perceived inefficiency and ineffectiveness of the public
school system, which has resulted in pernicious achievement gaps between students of different
backgrounds, by advocating market-oriented reforms, or using market discipline as a form of
accountability to drive low-performing public schools to finally initiate and sustain evidence-
based reforms. Vouchers, or government-funded tuition coupons issued to parents who can
redeem them at the public or private school of their choice, are prime examples of demand-side
privatization in education. The New American Schools project, headed by industry leaders
convened by President H. W. Bush in 1991, sought to establish replicable model schools, private
for-profit schools, school choice, and vouchers as vehicles for improving school capacity to
prepare students to compete in the competitive global economy (Sandler, 2010). Even though
the New American Schools agenda failed to push through large scale reforms, it nevertheless
demonstrated the potential of demand-side privatization to foster innovation in public education.
Alternatively, governments do not actively or directly promote the consumption of
services in purely private markets in which consumption patterns of education are principally
determined by private funding and the private provision of schooling (Hentschke & Wohlstetter,
2007). The need for the private provision of schooling reflects the inability of one public system
GLOBALIZATION OF K-12 EDUCATION

32
to create responsive supply to meet diverse client needs. The rising expectations for what
students need to know and do in the globalized, knowledge-based economy and the growing
dissatisfaction with the current educational system’s capability to customize and personalize
educational services for all have served as the impetus for the private provision of schooling.
Better educated parents are more likely to exercise choice. Those who select private schools
often do so because of their smaller class size, a focus on individualization, and innovative
curriculum and pedagogy (OECD, 2006). Despite governments’ effort to diversify the supply of
public schools through charter schools and alternative comprehensive school designs, significant
incongruence between suppliers and consumers still exist for these schools tend to be built to
realize the vision of the founders and leaders rather than serve distinctive client needs gleaned
from demand-driven data (Smith & Peterson, 2010). Parents and consumers of education whose
needs have not been adequately served by the monolithic public system and those who uphold
divergent educational, cultural, or religious ideologies resort to private options for schooling.
As in the U.S., privatization in other parts of the world has emerged in part as a solution
for the development and expansion of public education systems around the world. Privatization
tendencies have increased on a global level, as manifested by the burgeoning of the diversity of
forms of privatization in and of public education services (Catlaks, 2009). Highly industrialized
nations tend to be the first adopters of novel forms of privatization, which are then exported to
developing nations. On average in OECD countries, private spending for educational institutions
has increased between 2000 and 2008; in more than three-quarters of OECD countries, the
growth of private spending on education has outpaced the growth of public spending on
education. Countries such as Australia, Chile, Japan, Korea, the United Kingdom, and the U.S.
witnessed private funding reaching or exceeding 29% of all expenditure on education. For
GLOBALIZATION OF K-12 EDUCATION

33
primary, secondary, and post-secondary non-tertiary education, private expenditure in all OECD
countries for which comparable data are available has reached 10% (OECD, 2011). The role of
private funding has grown in importance as governments forge new partnerships to garner new
resources and share the rising costs associated with accommodating the participation of an
increasing number of people in a wider selection of educational programs offered by an
increasing number of providers.
Multilateral agencies, including the World Bank, OECD, International Monetary Fund,
and World Trade Organization, have actively promoted privatization as a fundamental
educational reform strategy in developing nations where private finance is a necessary resource
to realize education for all by fostering and embodying choice, autonomy, and accountability.
To enable the International Finance Corporation, the private sector lending arm of the World
Bank Group whose goal is to support the development of private educational activities in
member countries, to more effectively identify promising investment opportunities in private
education in developing nations, the World Bank commissioned the study titled “Investment
Opportunities in Private Schools and Universities in Developing Nations” in 1997 to learn key
characteristics of successful private educational companies operating in developing nations
(Tooley, 2001). The study has found that the private education sector in developing countries is
rather large at all levels: primary, secondary, and tertiary. Furthermore, expanding rapidly, it
features remarkable innovations characterized by the growth of large school chains, vertically
integrated education systems, application of innovative technology for instruction as well as for
distance learning, and creative student financing schemes such as cross-subsidy and student loan
programs to ease the financial burden on low-income students.
GLOBALIZATION OF K-12 EDUCATION

34
Worldwide data on educational attainment portraying the dismal state of educational
inequality have critics worried that privatization may exacerbate the obdurate persistence of
educational inequality, which is most pronounced in countries and regions with high degrees of
income inequality. Household income, household location (urban as opposed to rural), and
gender are consistently correlated with educational inequality. Across nations people from the
top expenditure quintile have about four more years of formal schooling than people from the
bottom quintile. Ninety percent of children from the top expenditure quintile and merely 65.3
percent from the bottom quintile complete primary school. Children from households in the
highest expenditure quintile have net attendance rates of about 10 percentage points higher than
those of children from the lowest expenditure quintile. The difference in net attendance rates
between urban and rural children is about five percentage points at the primary and 15
percentage points at the secondary level. Disparities in net attendance rate, reaching 20
percentage points, are the largest in South Asia and Sub-Saharan Africa. At the current pace of
reduction of just 0.5 per year in disparities in school attainment between the people from the top
and bottom expenditure quintile, it would take more than 100 years to achieve educational
equality by income level (World Bank, 2011).
Tooley (2001) has countered the charge levied by cynics that private providers
contravene government mandated equalization efforts by widening the educational opportunity
and quality gap between the rich and the poor. The IFC study findings—that there exists a
range of private education opportunities which cater to every socioeconomic group—have
invalidated the prevailing perception that private providers serve exclusively the elites. In
countries such as India and South Africa a type of not-for-profit and pro-profit private schools—
run by charities, religious groups, or proprietors—offer education to clients with low income
GLOBALIZATION OF K-12 EDUCATION

35
groups in rural or urban areas, albeit with high student/teacher ratios and inconsistent quality.
When considering the issue of educational inequality in developing nations, Tooley (2001) has
pinpointed two often overlooked caveats: 1) public education can be disproportionately costly to
families of the low income strata; and 2) public funding of education in these countries can favor
the affluent in the form of subsidy to students from higher-income families at higher levels of
education. Factoring both the direct and indirect cost of public education (tuition, uniform, exam
fees, books, learning materials, transportation, etc.) in the calculation of annual family
expenditure on education significantly narrows the gap between the cost for a public and private
education in developing nations. The IFC study has underscored that private education
institutions actually promote gender equality more than public ones by educating male and
female students in more equal numbers (Tooley, 2001).
The development of private schools in China serves as an illustrious example of the
tendency of developing nations to relax their grip on a single, unified, state-run system to
embrace privatization as a reform agenda. Privatization was a major goal subsumed under the
Chinese national strategic initiative to diversify and decentralize the educational system to meet
the demand for creative talents in the knowledge economy (Guan & Meng, 2007). Privatization
has dovetailed with the Chinese national agenda of easing unemployment and closing the gap
between the rich and the poor. Principally, the Chinese government has legitimized private
investment in the provision and administration of schooling because it has recognized that the
private sector is more responsive to training students for the new skills needed by business and
industry. Similar to the situation in many developing nations where school provisions are highly
stratified across social classes, China’s public expenditure for education has disproportionately
benefitted higher income groups. While the urban elites can afford to pay for Western-style
GLOBALIZATION OF K-12 EDUCATION

36
education, poorer strata of the society often struggle to pay for under-resourced and less-quality
schools. The direct (tuition and user fees) and indirect costs (opportunity costs from loss of
earnings, etc.) of attending school have acted as formal and informal mechanisms to keep
children out of school. The governments of China and other developing nations have aimed to
allocate more scarce resources for the education of the poor by providing avenues and
opportunities for rich groups to opt out of public education (Tooley, 2001).
Faced with the immense burden to provide quality education to more than 200 million
students, China, having outlawed private schools until the mid-1980s, passed a law in 2005 to
promote the establishment of privately run schools. Currently, 54 % of tertiary institutions, 20 %
of pre-schools, 9 % of vocational high schools, 3 % of middle schools, and 0.4 % of elementary
schools are privately operated (Tooley, 2001). While China’s ratio of educational funds to GDP
increased from 3.38 % in 1991 to 5.21 % in 2002, China’s share of private spending in total
education funding increased from 37.2 to 43.2 during the same period (Chow & Shen, 2005).
Beijing, Xian, and Shanghai have already privatized state schools; other coastal cities have
contracted state schools to private operators. The People’s Congress of China has announced
that it will continue to reform education laws to make education an attractive investment for the
private sector and international organizations (Tooley, 2001).
As shown, privatization of education, widely believed to have the potential to spur on
innovation, improve efficacy, and meet differentiated demands, have developed out of the need
to address the shortcomings of the public provision of schools. Detractors of privatization
perceive privatization as facilitating a shift from education as a public good to the
commodification and commercialization of education as a competitive private good (Catlaks,
GLOBALIZATION OF K-12 EDUCATION

37
2009). Despite this and other concerns relating to the ambiguous empirical evidence showing
privatization’s positive achievement effects consistently across educational systems and content
domains, multilateral agencies and many educational reformers have still upheld the dominant
paradigm which touts the superior efficacy of private educational institutions with a posteriori
certitude (Rutkowski & Rutkowski, 2008). Even though the percentage of students impacted by
privatization is small compared to the overall student population, their number is likely to
increase in the future as consumers demand greater choice and diversity in supply. The growing
trend toward greater range of choice in education, coupled with the need to restrain public
expenditure, means that education will continue to evolve as a big business as an increasing
number of national and international firms look to profit from selling services to schools and
governments worldwide. The landscape of education in the future will likely be shaped by an
intricate interplay and delicate balance between the public and private education sectors.

The Role of K-12 Multinationals in the Globalization of Education
Globalization has dovetailed with the tendency of governments in an increasing number
of countries to liberalize the provision of K-12 schooling by inviting the participation of private
providers of educational services to finance and operate new schools and turn around
underperforming public schools to engender the growth of erstwhile domestic education
companies into multinationals. This study defined K-12 education multinationals as pro-profit
private providers of K-12 educational services which conduct education-related business in more
than one country and whose cross broader activities may encompass educational consulting,
building and operating brick and mortar schools, partnering with local schools to offer joint
GLOBALIZATION OF K-12 EDUCATION

38
diploma programs, licensing proprietary programs to schools and school systems, and impacting
global students via online programs. While an appraisal of the precise scope and scale of these
K-12 multinationals is difficult given that they are predominantly privately held companies
which do not have to abide by public disclosure requirements, a reasonable estimation of their
growing market share is evidenced by their growing student enrollment in different countries.
Table 1
Operational Parameter of Major K-12 Multinationals
Name of K-12
Multinational; years
in operation; and
country of origin
Types of educational
services provided by
the company
Countries in which
the company
conducts business
Number of schools
and total enrollment
Fairmont Education
Group; over 59 years
in operation; U.S.A.
Owns and operates K-
12 private schools;
partners with Chinese
schools to offer joint
diploma programs;
offers hybrid e-
learning; and provides
professional
development and
consultative services
to schools in other
countries
U.S.A., China, and
Vietnam
Six U.S. private
schools and eight joint
diploma programs
with Chinese schools
impacting over 2600
students
Mosaica Education,
over 15 years in
operation; U.S.A.
Operates charter
schools in the U.S.A.
as an education
management
organization; provides
international
consulting; operates
independent and
private schools
abroad; and offers e-
learning programs.
U.S.A., India, Qatar,
Abu Dhabi, Dubai,
and Turkey
Over 90 K-12 schools
with a total
enrollment of
approximately 15,000
students
GLOBALIZATION OF K-12 EDUCATION

39
Table 1 (Continued)
Name of K-12
Multinational;
years in
operation; and
country of origin
Types of educational
services provided by
the company
Countries in which
the company
conducts business
Number of
schools and
total
enrollment
Meritas; over 50
years in operation;
U.S.A.
Owns and operates K-
12 independent schools
U.S.A., China,
Mexico, and
Switzerland
20 schools with
a total
enrollment of
over 11,000
students
SABIS Educational
Systems, INC.;
over 27 years in
operation; Lebanon
Owns and operates
private schools in
multiple countries;
operates charter schools
as an education
management
organization in the U.S.;
and licenses programs
to schools and school
systems in both the
private and public sector
Lebanon, Germany,
United Kingdom,
Romania, U.S.A.,
Egypt, United Arab
Emirates, Iraq,
Pakistan, Syria,
Qatar, Oman,
Jordan, and Bahrain
Over 61 schools
with a total
enrollment of
over 28,000
students
GEMS; over 53
years in operation;
Dubai
Owns and operates
private K-12 schools;
provides consulting
services in strategy and
planning, school
improvement, and
school infrastructure
services; and manages
outsourced schools
United Arab
Emirates, Kingdom
of Saudi Arabia,
Egypt, Jordan,
United Kingdom,
India, China, and
U.S.A.
Over 100
international
schools with a
total enrollment
of 100,000
students
(Data obtained from company websites)
The bi-directionality associated with the growth of these K-12 multinationals—from the
U.S. to overseas as well as the reversal expansion of overseas companies into the U.S.—indicates
the increasing globalization of curricular content, programmatic offerings, and governance of K-
12 schools. Globalization, in its broader economic, cultural, and political contexts, has set the
GLOBALIZATION OF K-12 EDUCATION

40
stage for the globalization of education. The globalization of education is a multi-faceted
phenomenon; one facet of which is the demand for an education with an international
orientation. Business and educational leaders have come to recognize the need to prepare
students for a globalized, knowledge-based society and global citizenship (Wood, 2011; Wagner,
2008; Neubauer, 2008). There is recognition among parents in the West that a Western-centric
education will no longer be avant-garde in the decades ahead and a reciprocal apprehension
among parents in other parts of the world that integration into the global economy requires a
Western-style education and mastery of the English language (Whittle, 2009). This perception
that a Western-style education equips one with a comparative advantage in the global
marketplace fuels the desire of students to study abroad, particularly in English speaking nations.
In 2009 almost 3.7 million tertiary students were enrolled outside their country of citizenship,
signaling an increase of more than 6% over the previous year; over 77% of students worldwide
who studied abroad did so in OECD countries, including Australia, Canada, France, Germany,
the United Kingdom, and the U.S. Among the destination nations, the English-speaking nations
hosted more than half of the world’s international students in 2009. Asians accounted for 52%
of all students studying abroad worldwide. The largest numbers of international students were
from China, India, and Korea. China was the biggest single source country, accounting for
19.5% of all students studying abroad in OECD area (OECD, 2011).
The status of English as a global currency and the dominance of Western higher
education institutions have a trickling down effect on the demand for K-12 education in the
newly industrialized and developing nations. K-12 international schools, English bilingual
schools, and schools with an international orientation are a free market response to a global need
for qualifications that are portable between schools, transferable between education systems, and
GLOBALIZATION OF K-12 EDUCATION

41
highly marketable in the global labor market. Parents opt for schools with an international
orientation as a reaction to the tightening of the local positional competition and the global
nature of that competition. As more people gain local qualifications, those with financial
resources seek to improve their access to the global labor market by earning global qualification
of educational achievement (Cambridge & Thompson, 2004). International schools and pro-
profit schools that serve as a segue or bridge into Western-based universities have therefore
become the school of choice for the urban elites in developing nations. For these reasons,
families who hold dual citizenship in China overwhelmingly choose international schools over
domestic schools. The majority of the 3000 students who attend the 50 acre campuses of the
American School in Shanghai, for example, are Chinese who hold dual citizenship rather than
American expatriates (Whittle, 2009).
Other than attending international schools, another pathway to the attainment of global
educational qualification is through the International Baccalaureate (IB) Diploma Programme, a
prescriptive curriculum created to develop an understanding and appreciation of diverse cultures
and points of view underpinned by an interdisciplinary, research-based academic foundation, and
Advanced Placement credits. Those families who wish to keep up with the pace of globalization
and fear that their local schools may be subjected to curricular obsolescence seek schools with
the IB Programme. The increasing number of adoption of the IB Progamme by both private and
state schools worldwide reveals the growing demand for international education in a practical
context (Cambridge & Thompson, 2010). All of these K-12 multinationals offer IB Diploma
Programme in their schools; several of these K-12 multinationals offer hybrid or dual curricula to
satisfy both the requirements for the local state curriculum as well as the demand for an
international curriculum. Whereas these K-12 multinationals have embedded twenty-first
GLOBALIZATION OF K-12 EDUCATION

42
century skills into their curriculum and instruction, public schools addressing the needs of a
twenty-first century education, more often than not, have encountered significant barriers—buy-
in of all stakeholders, a realignment of the vision and mission to address the dynamics of
globalization, and substantial capacity-building and system-changing capability—all of which
can only be overcome by the tenacious political will and commitment of key leaders and
stakeholders (Wood, 2011). The presence of these and other barriers make cottage-industry,
domestically minded private schools, and politically constrained public schools ill-positioned to
meet the new demand.
Contrariwise, multinational education companies targeting the K-12 education market
seem well positioned to capitalize on the rising demand for education. For one thing, the
emerging global education infrastructure consisting of private schools, multinational
corporations, governments, international organizations, and nongovernmental organizations has
facilitated the expansion of pro-profit education on a global scale (Spring, 2009). The IFC has
supported the start-up or expansion of private educational initiatives not only in post-secondary,
but also in primary and secondary, schooling. In 1986 the IFC provided the initial start-up
capital for the growth of the pro-profit educational enterprise, SABIS, as a way to serve the
educational needs of a rapidly growing and young population across the Middle Eastern and
North African region. In less than three decades, SABIS has expanded from one school in a
small village in Lebanon to a network of 61 K-12 schools in 14 countries with a total enrollment
of 28,000 students from more than 120 nations (Spring, 2009).
The WTO, consisting of 151 member nations and 31 observer countries as of 2007, also
lowered some barriers to entry for multinational educational companies to conduct business in
GLOBALIZATION OF K-12 EDUCATION

43
foreign nations through its General Agreement on Trade in Services (GATS) and Agreement on
Related Intellectual Property Rights (TRIPs). These agreements oblige the WTO nations to
provide protection for the global sale of knowledge-related products and equal and consistent
treatment of all trading partners; should a country allow a foreign school to establish a branch
campus, the same country must then allow other foreign corporations to establish branch
campuses (Spring, 2009). Some governments wishing to pursue long-term sustainable growth
through an investment in educational infrastructure, such as those in the Gulf Cooperation
Council (GCC) which need to diversify their economy to reduce dependence on oil, have
intimated a willingness to create favorable business environments for multinational education
companies (The Parthenon Group, 2011). The Abu Dhabi Education Council has recruited
foreign educational firms, such as SABIS, Mosaica, and GEMS, to manage over 30 of its public
schools (Whittle, 2009).
Other than benefiting from a propitious global education infrastructure, K-12
multinationals aiming to expand globally have also enjoyed other competitive advantages. Faced
with the threat of new and potential entrants, these companies are ready to apply market-based
best practices to optimize classroom capacity and the integration of technology into curriculum
and instruction. Given the sheer market potential of global K-12 education business, successful
companies can potentially reach significant economies of scale. Leveraging economies of scale
and the global supply chain, these companies have the capability to source best practices and
faculty members and diffuse faculty know-how and innovations across their chain of operation
with efficiency. The tuition premium and scale enjoyed by these multinational education
companies would enable them to invest in substantial research and development, potentially
leading to breakthroughs in pedagogy and instructional practices (Whittle, 2009). These K-12
GLOBALIZATION OF K-12 EDUCATION

44
multinationals have touted their international model as a superior platform for delivering an
innovative and globally-minded curriculum that is relevant for today’s global economy.
According to George Saad, Vice President of Operations of SABIS Educational Systems, Inc.,
SABIS is not just a network of schools but a synergistic system with a sizeable in-house R&D
arm and an Information Technology (IT) department, which having grown hundreds of percents
over the past decades, currently house 215 engineers who develop proprietary software for
school management as well as proprietary curricular and instructional materials with a particular
focus on improving efficiency and effectiveness (personal communication, February 29, 2012).
Both Gene Eidelman, founder of Mosaica, and David Hicks, Chief Academic Officer of
Meritas, have echoed SABIS’ claim that globalizing their business has made their instructional
and programmatic offerings more innovative and effective. Mosaica’s own curriculum design
capability has enabled it to customize its programs for both international and local standards
while infusing them with a global perspective. Mosaica’s experience of turning around schools
in Qatar and Abu Dhabi within a very short time frame has honed its capability to turn around
schools in the U.S. Additionally, having schools in multiple countries has the padded benefits of
engaging students and teachers in exchange programs, leveraging the talents of math and science
teachers from abroad to improve math and science instruction in the U.S., and enriching the
curricular units on the Middle East and India with the input of local employees from those
countries (G. Eidelman, personal communication, February 20, 2012). Meritas has also
leveraged its global reach to enhance its educational model: It has attracted and developed
talented teachers from around the world by providing them with a forum to share best practices
within the Meritas network of schools. Students enrolled in Meritas’ schools have deepened their
cultural knowledge through real world interactions, collaborative problem solving via shared
GLOBALIZATION OF K-12 EDUCATION

45
Wiki site, and video-conferencing debates with their global counterparts (D. Hicks, personal
communication, February 30, 2012).
Harvesting the rising demand for education requires more than capabilities; it beseeches
the application of organizational capabilities to exploit opportunities in a strategic way.
Mosaica’s international growth strategies have consisted of 1) matching its core competencies
with nations which are in need of educational reform and 2) establishing an operational hub with
local staff in the geographical axis of South Asia and North Africa from which personnel and
logistical support can be dispensed to surrounding regions. Having gained much experience
from upgrading charter schools in the U.S., eight years ago Mosaica decided to expand globally
into nations which were in need of educational reform, such as Qatar, the first country in the
world outside the U.S. to undertake a reform similar to charter schools. Having established a
presence in the hotbeds of educational reform, Abu Dhabi and Dubai, which are strategically
located in the center of Asia, Europe, and North Africa, Mosaic then developed connections with
countries such as India and Turkey which wanted to examine and emulate the reform efforts in
the Middle East. When selecting locations for expansion, Mosaica has compared different
regulatory environments with different growth opportunities. Strategywise, Mosaica has
preferred to be the first mover in locations with high growth potential, coupled with substantial
barriers to entry, in order to exploit the first mover advantage with minimal threat of new
entrants. Having established a large office in Abu Dhabi of 40 people, Mosaica is
geographically capable of supporting the operation of schools in nearby countries such as India
and Turkey. Whereas Mosaica’s profit margin as a charter school operator in the U.S. has
stabilized at around 12.5%, its profit margin from its schools in other countries can reach 15% to
20%. Mosaica has expected the higher profit margin to internally finance the opening of other
GLOBALIZATION OF K-12 EDUCATION

46
schools and the maintenance of a standalone and self-supporting regional office for professional
development and accounting. To maximize long-term sustainability and profitability, Mosaica
has aimed to use local expertise and resources to the greatest extent possible. (G. Eidelman,
personal communication, February 20, 2012).
Akin to an increasing number of multinational companies which have chosen
international partnership as a predominant mode of entry into those growing markets, Mosaica
has also favored this mode of entry into foreign markets. It has sought to leverage its local
partners’ extensive knowledge of the economic and socio-political environment and access to
local resources and facilities (G. Eidelman, personal communication, February 20, 2012). In
general, businesses and entrepreneurs in the developing world have been very keen to form
partnerships with a foreign partner as a means of implementing their corporate strategy through
technology and knowledge transfer. Despite these mutually beneficial advantages, international
partnerships have encountered issues involving strategic perspectives of both parties and the
selection of partners. Studies have shown that multinationals which underestimate the need to
understand the motivation, capability, and experience of their local partners during the selection
process frequently find disappointing results. The more their local partners show an autonomous
and articulated strategy, the more likely these companies are to complain about the lack of skills,
attitudes, and motivations of their local partners. Their local partners, on the other hand, resent
the lack of trust and realism concerning the anticipated results (Lasserre, 1983). Inter-
organizational strategic alliances, including international partnerships in educational ventures,
require meeting certain preconditions and the undertaking of intra-organizational activities that
support both internal and external networking, interdependent flow of communication, and
cultivation of the relationship (Davies & Hentschke, 2006).
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47
As a K-12 multinational expanding into the American market from abroad, SABIS has
offered a different strategic perspective. SABIS’ penetration into the American education
market, which began with the successful opening of a private school in Minnesota, was a natural
and logical progression from its strategic focus on preparing students in other countries to attend
the best universities and colleges in the U.S. It has leveraged its existing capability at aligning
its programs to the U.S. higher education to seize opportunities presented by the demand of the
American middle income families for high quality schools and the charter school movement in
the 1990s. In the U.S., SABIS currently operates eight charter schools, four licensed schools,
and one private school. Relying on operational efficiency, SABIS’ private school in Minnesota
has been able to offer more AP courses, higher quality academic programs, and state of the art
facility at 60% of the tuition charged by its competition, thereby attracting families from private
schools as well as middle income families from public schools. SABIS does not select its
students for its private school; rather, its objective is to add value to every student so all students
can maximize their academic achievement to attend the university of their choice. As a charter
school operator, SABIS can recoup its investment at a faster rate than as a private school
operator as significant enrollment can be reached in the first year at a charter school. However,
the benefit of achieving a quicker return on investment has been offset by higher risks: While
SABIS has to invest a lot in facilities up front, it has only a five year contract and for whatever
reason the contract is not renewed or voided, SABIS can lose its investment altogether. Lacking
shareholders and venture capital funds, SABIS has relied solely on profits to finance or back the
loans for the construction of facilities for charter schools from scratch. In the U.S. SABIS
charges a management and licensing fee of 14% rather than taking profits from schools. Once
the Board of Trustees and Board of Directors of charter schools have built up sufficient reserve,
GLOBALIZATION OF K-12 EDUCATION

48
they may decide to purchase the property from SABIS. Even though in some states SABIS has
rented facilities for its charter schools, it has to ensure that adequate enrollment is achieved in
order to reach the break even point. To maximize the profitability of its schools, SABIS has
ensured that every classroom is filled to capacity and teachers reach the largest amount of
students in the most efficient way. Given the limitations and risks of managing schools in the
U.S., SABIS’ overall strategic vision is to move away from school management to the licensing
sector where it licenses all components of its programs (curriculum, assessments, and school
management software) to schools and school systems (G. Saad, personal communication,
February 29, 2012).
Unlike Mosaica and SABIS whose international expansions have been primarily
internally financed with existing revenues, as a private equity firm Meritas’ growth into new
markets has been externally financed by institutional investors who seek long-term growth and
returns on their investment in the education sector. Meritas has scoured the world to identify
distressed private or independent schools located in an area characterized by poorly performing
public schools. Rather than building schools from scratch, Meritas has preferred to buy these
distressed schools and turn them around to unlock the hidden value in these schools. The
investors’ long-term time horizon for returns has allowed Meritas to deviate from its typical
strategy of buying distressed schools to take up on the People’s Republic of China’s (PRC)
invitation to lease and operate a newly built 50 acre international school for expatriates in
Chengdu. The PRC built Southwest China’s largest international school, expecting enrollment to
be in the thousands as Chengdu becomes a more desirable offshoring base for foreign
companies. Even though enrollment in Léman International School has fallen short of
expectations and Meritas has been operating at a loss in Chengdu, Léman International School
GLOBALIZATION OF K-12 EDUCATION

49
has occupied a strategically significant position in Meritas’ portfolio of schools for it has
strengthened Meritas’ brand as an international family of college-preparatory schools (D. Hicks,
personal communication, February 30, 2012). Increasing partnerships between Chinese state-
owned enterprises and foreign companies in Chengdu to tap into the growing Chinese market for
technology, transportation, and consumer goods, such as recent joint ventures involving Cessna,
Bombadier, and Siemens, will likely have a positive effect on Léman International School’s
enrollment.
An examination of the growth strategies pursued by Mosaica, SABIS, and Meritas has
revealed that even though, prima facie, multinational education companies seem to be well
positioned to harvest the growing global demand for education, in practice they must contend
with significant strategic and organizational challenges in their effort to penetrate new markets.
Under a competitive strategy framework, these companies must position themselves to maximize
the value of their distinctive capabilities (Porter, 1980). The first obstacle these companies
encounter is the strategy they pursue in regards to establishing a beachhead in a new market.
Strategic options range from establishing a brand new brick and mortar school, entering into a
joint venture or partnership with a local public or private franchise, or acquiring existing schools
and operating them as a network or family of schools. The optimal strategy may differ
depending on the regulatory environment, market readiness for its products and services, risk
profile of the new market, competition, as well as the company’s tolerance for risk, financial
strength, and core competencies (Svensson, 2001).
The strategy these companies pursue is also determined by the fragmentary or emerging
nature of the private K-12 education market in the target country. Due to the newness of the
GLOBALIZATION OF K-12 EDUCATION

50
private K-12 education industry in emerging markets, no firm has yet developed the skills and
resources necessary to command a significant market share. The landscape of the market for K-
12 education is, more often than not, dominated by small to mid-sized privately held or family-
owned firms. Coping with fragmentation requires differentiation to increase margins,
specialization by customer type, or a focus on certain geographic areas to create economies of
scale (Porter, 1980). While the overall market potential for K-12 education may tickle the
imagination of eager investors and company leaders, investment considerations for K-12 schools
center primarily on the dynamic of local supply and demand. Therefore, market area analysis
accounting for a multitude of factors—driving time to school, parent preferences, income
distribution, population settlement patterns, vacant seats in competitor schools—must be given
serious consideration in the overall strategic planning.
Successful operation in the complex and unpredictable nature of any new market may
require significant strategic redirection. The learning school of strategy formation has viewed
strategy formation as an emergent process which the organization learns over time. Mintzberg,
Ahlstrand, and Lampel (1998) have reckoned that strategic redirection may result from collective
changes in the accidental or serendipitous actions and decisions made by all participants as they
try to cope with new and unfamiliar situations rather than from the formal, conscious,
preconceived plans of one chief strategist. Strategy formulation and implementation, henceforth,
becomes a fused process. Under this strategic formation framework, the validity of a strategy
lies in its capacity to deal with unknowable events and to redeploy and reallocate resources as
opportunities emerge. The company as a collective system engages in continuous learning from
its successes, and, more importantly, from its mistakes. Instead of dictating the outline and
content of strategies, the role of leadership is to manage the process of strategic learning.
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Operationally, it is imperative that the organizational structures of a multinational
education company facilitate the steep learning essential to navigating in uncertain regulatory
environments, abruptly changing market conditions, and unfamiliar cultural contexts.
Unanticipated changes in buyer segments served, buyers’ learning and preferences, innovations
in marketing, services, and products, and government policies are not uncommon in rapidly
developing economies. The experience curve also forms the feedback loop that enhances the
management of the partnership and changes in the organization’s culture, capacity, and
capability that emerge as a result of the partnership. It can function as a double-edged sword; it
is simultaneously a barrier to entry to new and potential entrants and a comparative advantage
for those who have developed it as a form of proprietary knowledge (Porter, 1980).
The organizational structures of a multinational company must also maintain a balance
between (a) flexibility and adaptability, i.e., responsiveness to local conditions and autonomy to
local subsidiaries and (b) multinational integration needs, i.e., consistency of organizational
arrangements, management mechanisms promoting central control, coordination, and fidelity of
program implementation across a wide range of locations, and global strategic discipline. The
flexibility to continually balance the trade-offs between local responsiveness and multinational
integration constitutes the key organizational capability of a multinational (Melin, 1992). To
accomplish this, Mosaica, for example, has reorganized itself to diversity its workforce and
management team to recruit talents who have deep knowledge of both the American education
system and local needs (G. Eidelman, personal communication, February 20, 2012). SABIS has
balanced centralization with localization by establishing five regional centers which support
schools in different regions in areas of curriculum and instruction, IT, quality assurance, and
governance. Viewing local management as an extension of SABIS, it provides annual training to
GLOBALIZATION OF K-12 EDUCATION

52
local managers to ensure that their practices are well aligned to the SABIS strategy (G. Saad,
personal communication, February 29, 2012).
The typical approach to global expansion adopted by Western companies—exporting
their existing business model to cater first to expatriate communities or opening one or two
stores on a trial basis—has often failed because they overlook the importance of adapting their
business models to local idiosyncrasies (Bell & Shelman, 2011). Multinational education
companies embracing this approach have typically opened international schools in expatriate
communities serving primarily expatriate families. This approach has the innate limitation of
focusing on a very narrow customer segment; expanding the customer base beyond expatriate
communities will not occur without glocalization, or adapting business and education models
based on a deep understanding of developing markets, taking into account demographic factors,
psychotropic characteristics of potential customers, and the cultural context (Svensson, 2001).
Even as the company remains flexible enough to respond to local conditions, it must have
systems and processes in place which transcend spatial and temporal boundaries to assure
consistency in educational outcome. SABIS, Mosaica, and Meritas have relied on internally
developed interim assessment systems in addition to external accreditation to continually
monitor student learning progress; the headquarter, having being immediately alerted of any
glitches or red flags related to student learning outcomes or governance, responds by allocating
man power to solving these problems at the local site (G. Eidelman, personal communication,
February 20, 2012; G. Saad, personal communication, February 29, 2012; D. Hicks, personal
communication, February 30, 2012 ). Along with standardized quality in teaching and learning,
a multinational education company must have a consistent definition of educational efficacy
GLOBALIZATION OF K-12 EDUCATION

53
across national borders and reliable means of measuring it, which is by no means an easy feat
given that education is a cultural and social construct. Internal quality assurance efforts may be
particularly problematic in the case of partnerships or joint ventures where congruence on what
constitutes quality and how best to measure it is not a given. However, issues relating to quality
and accountability directly impact customer satisfaction and retention, branding, and reputational
capital, and therefore, cannot and should not be taken lightly by any company striving for long-
term profitability.

Summary
A synthesis of the literature on the complex mechanisms contributing to the demand for
and the supply of K-12 schooling in both developed and developing nations has revealed that the
forces undergirding the demand pull and cost push for efficient, effective, and innovative models
of educational delivery will only strengthen in the foreseeable future. Among the forces which
accentuate the demand for education are the increasing weights of human capital in total factor
productivity in the global economy, the increasing funding and provision of schooling by
governments worldwide as an investment in economic growth, and the increasing marginal
consumption of education by individuals who seek to differentiate themselves in the competitive
labor market. In the K-12 sphere, the nature of the change in the demand for education is as
qualitative as it is quantitative: As more people, including the expanding middle class in
developing nations, view education as preparation for success in the globalized, knowledge-
driven economy of the twenty-first century, the higher the demand for education that addresses
global citizenship and twenty-first century skills.
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The emergence and evolution of the globalization of K-12 schooling has revealed that the
economic paradigm of the globalized, knowledge-intensive world of the twenty-first century
behooves a reconceptualization of the fundamental issues concerning the political, technical, and
socio-cultural nature of schooling, i.e., provision, pedagogical content, goals of schooling, and
modes of education delivery. Arguably, the new economic paradigm has rendered the
monolithic, monopolistic nature of publicly funded and operated education system as inadequate.
Under increasingly more pressure to produce an educated citizenry in the face of budgetary and
institutional constraints, governments have forged partnerships with private providers and relied
on market forces to share the rising costs associated with the expansion of educational access and
opportunities. Multinational education companies, as beneficiaries of the overall ecumenical
trends in globalization and privatization, have emerged as the promising engine and catalyst of
change in the provision of K-12 schooling.
Despite the potential of K-12 multinationals to fundamentally alter the context of
schooling in the twenty-first century, there existed a serious gap in the current literature on the
growth and development of these companies. The goal of the researcher was to add value to the
existing literature on the globalization of K-12 schooling by conducting an in-depth case study of
a K-12 multinational. By examining the motivational and contextual factors which have
facilitated the growth of a K-12 multinational, along with its organizational and operational
characteristics, the researcher aimed to establish the foundational scholarship from which further
research can be conducted to address broader policy issues relating to the role of the private
sector in public sector reform. Furthermore, this study will help stakeholders interested in the
field of globalization and education to understand the potential of K-12 multinationals to fulfill
their promise of educating students to be true global citizens with twenty-first century skills.
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Chapter Three
Research and Methodology

As set forth in Chapter Two, this study defined K-12 education multinationals as pro-
profit private providers of K-12 educational services which conduct education-related business in
more than one country and whose cross broader activities may encompass educational
consulting, building and operating brick and mortar schools, partnering with local schools to
offer joint diploma programs, licensing proprietary programs to schools and school systems, and
impacting global students via online programs. The research questions proposed in this study
illuminated contextual and organizational issues related to the development and growth of a
domestic U.S.-based K-12 education company into a multinational. The understanding of the
problems in this study necessitated research that is contextual and descriptive to produce a
wealth of detailed information about a company, rather than research which yields broad,
generalizable set of findings about a large number of people or cases. Because the qualitative
case study method allowed for the collection of comprehensive, systematic, and in-depth data to
add details and nuance about the unit of analysis, it was the research design most suited to
answer the stated research questions.
The case study method resulted in a holistic portrayal of the dynamic and evolving nature
of a growing multinational company. Qualitative inquiry also captured the complexity and
interdependencies of different subunits involved in the analysis. As this case study involved the
analysis of subunits across national borders, the qualitative method also had the advantage of
accounting for cultural and social contexts in the interpretation of data by allowing participants
to have their voices heard without being constrained by predetermined categories of analysis.
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56
The case study model—as opposed to research relying solely on standardized measures which
limit varying perspectives and experiences to a number of predetermined responses to allow for
the statistical comparison of data—provided the researcher with the deep, open, and detailed data
necessary to identify relational or casual patterns during data analysis, leading to the drawing of
conclusions for replication.

Problem and Purposes Overview
Because K-12 multinationals are predominantly privately held companies, there exists a
paucity of information about their business and educational models. Unlike publicly traded
companies, they are not required by the SEC to publicly disclose detailed information relating to
their current financial and operational status. Knowledge about these K-12 multinationals is
critically needed in order for stakeholders other than shareholders and policy makers to
understand the impacts these companies have on the globalization of K-12 education and public
sector reform. To illuminate the role of K-12 multinationals in the provision of K-12 schooling
across national boundaries, this study identified the motivational and contextual factors
facilitating the growth of a domestic education company into a multinational. This study also
examined how the company had reorganized itself during the expansion process as well as the
instructional and programmatic outcomes of that reorganization. Lastly, by helping the public
understand how a K-12 multinational defines and measures success in a multinational context,
this study laid the empirical groundwork for further study on the inherent risks and rewards as
well as externalities associated with their activities.
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57
The subject of study was Fairmont Education Group, a family-owned educational
services provider headquartered in Orange County, California. The criteria for selecting the
company as the subject of this case study were: publicly-or privately-held pro-profit corporation
which operates K-12 schools initially in the U.S.; has established a pattern of providing K-12
educational services in other countries via brick and mortar campuses, joint ventures or
partnerships, e-learning, and/or a hybrid brick-and-click model; and has long-term goals of
expanding K-12 businesses abroad. Even though the total number of students educated by this
highly specified category of educational institutions is small in comparison to the total student
population, they are of particular interest to educators because of their unique capability to
deliver an educational model that promises to be more innovative, efficient, and effective at
addressing twenty-first century skills and global awareness.
Fairmont Education Group owned and operated six U.S. campuses offering pre-school to
twelfth grade instruction to domestic as well as international students. It established joint-
diploma programs and partnerships with schools in China and Vietnam. It also had an
international hybrid e-learning division. The company had long-term goals to grow its
educational services abroad (R. Chandler, personal communication, January 5, 2012).

Research Questions
This study addressed these four research questions:
1. What has motivated the company to expand internationally, and what contextual factors have
facilitated or hindered that expansion?
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2. In what ways has the company reorganized itself differently in order to grow as a
multinational? How has that reorganization impacted instructional practices and programmatic
offerings?
3. What parts of global demand does the company most want to address and is the most capable
of responding to? What parts of global demand does the company least want to address and is
the least capable of responding to?
4. How does the company define and measure success in a multinational context? How has the
definition and measure of success changed from the time when the company operated only in the
U.S.?

Population and Sample
The subject of the case study was Fairmont Education Group. Fairmont Private Schools,
Fairmont Summer Programs, Fairmont International Education, Thesys International, and
Fairmont Homestay/Housing forged the fan-shaped morphology of Fairmont Education Group.
Fairmont’s menu of international ventures included joint diploma programs in China, an
education partnership with the American School of Vietnam in Ho Chi Minh City, English
language and American Culture Camp for elementary students, English as a Primary Language
Program for junior high and high school students, professional development programs for
foreign teachers, and consultative services to schools from countries around the world.
A fleet of six school campuses in California serving 2,217 domestic students from grades
pre-K to 12, Fairmont Private Schools is the largest non-sectarian private school in California.
Twenty percent of students attending Fairmont Private Schools were international students
GLOBALIZATION OF K-12 EDUCATION

59
representing 21 countries. Fairmont had joint diploma programs serving approximately 300
students at eight schools in different cities throughout China.

Data Collection and Instrumentation
As preparation for the case study on Fairmount Education Group, the researcher
interviewed executives of Mosaica Education, Meritas, and SABIS Educational Systems, Inc. to
gather data on common patterns of development and industry trends. Data for the case study on
Fairmont Education Group were collected from multiple sources. The researcher conducted
standardized open-ended interviews with key company leaders and Chinese partners to answer
research questions. Interviews were audiotaped and transcribed verbatim. Prior to answering the
research questions, interviewees were asked to tell the researcher a little about themselves, such
as their professional experiences and background. Data from interviews with different
stakeholders about the same phenomena were used for triangulation. The researcher had planned
to conduct parent and teacher surveys to gather data regarding instructional and programmatic
changes. However, the company objected to the parent survey and the teacher survey had a low
response rate. The researcher examined company documents, including marketing materials,
company website, contracts, summaries of financial statements, and memorandum of
understanding, to triangulate data collected from interviews.
Research question one. What has motivated the company to expand internationally, and
what contextual factors have facilitated or hindered that expansion?
Data for question one were sourced from standardized open-ended interviews with key
company leaders: Chairman of the Board and President, David Jackson; Chief Executive Officer,
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60
Robertson Chandler; Director of International Education; Director of Marketing; Vice President
of Human Resources; Director of Operations; Director of Summer and Immersion Programs;
Campus Directors; Headmaster of Fairmont Preparatory Academy; and General Manager of
Thesys International. Standardized open-ended interviews were also conducted with Chinese
educators and industry leaders, including the Executive Principal, Director of International
Education, and teachers of Beijing Twenty-First Century International School; principal of
Fuxian Number Nine Senior Middle School; General Manager of Shinyway Education; and
financial officers at Ambow Education Group. Interviews from multiple sources were used for
triangulation, thereby ensuring construct validity. Additional data for this research question were
obtained from the following documents: State of Fairmont Address March 20, 2012; Vistage
Inside Program Interviews with Fairmont Executives; General English Joint Diploma Program
Contract; English Joint Diploma Program Contract Appendix; Joint Diploma Program
information session invitation; Joint Agreement and Memorandum of Understanding between the
American School of Vietnam and Fairmont Schools; and custom contract press release.
Research question two. In what ways has the company reorganized itself differently in
order to grow as a multinational? How has that reorganization impacted instructional practices
and programmatic offerings?
Data for question two were sourced from standardized open-ended interviews and
document analysis. First, interviews were conducted with the same aforementioned company
executives. The following company documents were analyzed: Fairmont Private Schools
Executive Leadership organization chart; Fairmont International Education organization chart;
Fairmont International Education brochure; Joint Diploma Program online ad; Joint Diploma
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61
Program presentation for agents and school administrators; U.S. History course flyer; Thesys
Plan 2011/2012; Summer English Immersion Programs flyer; and English Camp and American
Culture flyer.
Research question three. What parts of global demands does the company most want to
address and is the most capable of responding to? What parts of global demand does the
company least want to address and is the least capable of responding to?
Evidence for this question was sourced from standardized open-ended interviews with the
same company executives.
Research question four. How does the company define and measure success in a
multinational context? How has the definition and measure of success changed from the time
when the company operated only in the U.S.?
Evidence for this question was sourced from standardized open-ended interviews with the
aforementioned company executives and Fairmont’s Chief Financial Officer. Additionally, the
researcher examined company marketing materials, website, Fairmont Student Survey results,
Fairmont Parent Survey results, Fairmont Teacher Survey results, Fairmont Private School’s
Five Year Financial Summary, Joint Diploma Program 2011-2012 Actuals vs. Budgeted, and
Joint Diploma Program Five Year Forecast.

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Data Analysis
Once multiple sources and forms of data were collected, the researcher utilized analytic
strategies to make sense of the meaning of the data to construct a case study narrative. Patton
(2002) outlines the following process for constructing a cast study:
1. Organize and assemble the raw data to prepare for analysis
2. Construct a case record to organize and classify data into a manageable and
accessible file for subsequent analysis
3. Write a final case study narrative
The construction of a case study narrative required content analysis, or reducing and making
meaning of qualitative data to identify core consistencies and meanings. The researcher
developed a coding scheme to categorize, classify, and label the identified patterns in the data.
Inductive analysis was used during the early stage of content analysis to identify patterns,
themes, and categories. Once patterns, themes, or categories had emerged, the researcher then
utilized deductive analysis, or analyzing data according to an existing framework, to test and
confirm the authenticity of the inductive analysis by carefully examining deviate data.
Substantive significance of the findings—a measure of how coherent the evidence is in support
of the findings, the extent to which the findings increase and deepen the understanding of the
questions studied, and the extent to which the findings are consistent with other knowledge—was
determined by the consensual validation obtained from the researcher, the participants of the
inquiry, and the dissertation committee.

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Chapter Four
Analysis of Data
The purpose of the study was to answer research questions relating to the organizational
characteristics along with the contextual factors influencing the growth and development of a
multinational education company. As K-12 multinational education companies monitor the
pulse of the global consumer demand for education, studying how they conduct their business
activities will shed light on the emerging trends in the globalization of K-12 education. Data
about privately owned multinational education companies are sorely needed to help
policymakers make sound regulatory decisions regarding the transnational business transactions
of these companies and assess the impacts their activities have on an increasing number of global
students. The following research questions guided the study:
1. What has motivated the company to expand internationally, and what contextual
factors have facilitated or hindered that expansion?
2. In what ways has the company reorganized itself differently in order to grow as a
multinational? How has that reorganization impacted instructional practices and
programmatic offerings?
3. What parts of global demand does the company most want to address and is the most
capable of responding to? What parts of global demand does the company least want to
address and is the least capable of responding to?
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4. How does the company define and measure success in a multinational context? How
has the definition and measure of success changed from the time when the company
operated only in the U.S.?
This chapter presents the findings of the research in several sections. The first section
contains a brief history of Fairmont Education Company, beginning with its founding in 1953 as
a private school to its present international business model. This description of the company’s
enduring vision, culture, and pattern of development sets the backdrop for the data analysis that
is to follow. The subsequent sections will present findings based on an analysis of data derived
from interviews with Fairmont executives and Chinese educators and company documents.

Overview of Fairmont Education Company
Fairmont Education Company was founded in 1953 by Kenneth Holt, a WWII veteran
who became a public school educator in Anaheim, California. Concerned that the holistic
learning movement sweeping across public schools was eroding academic fundamentals, Mr.
Holt started a summer school to address the shortcomings of prevailing instructional practices.
Due to overwhelming parental support, Mr. Holt’s one classroom grew into a four classroom
school in his house. A commitment to academic fundamentals, coupled with high expectations
for both teachers and students, formed the core of Mr. Holt’s educational philosophy. As the
baby boomers were coming of age, the demand for Mr. Holt’s brand of educational services
mushroomed. Mr. Holt responded accordingly by buying a big house next door and converting it
to a school. Sensing that his schools were not meeting the needs of children with mental
challenges, Mr. Holt started a third school for this often neglected segment of student population.
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However, lacking adequate funding for the kind of top-notch quality he sought to provide, Mr.
Holt had to close that school down after one year. In subsequent years, he decided to focus on
serving the educational needs of families which demand academic excellence. David Jackson,
Mr. Holt’s stepson, explained the reason for the closing of the school for students with mental
retardation:
Unfortunately, in the 50’s the government didn’t help out much at all, so the parents of
the kids there pretty much have to pay the bill and he just couldn’t charge enough to
make it work. So after about a year he closed it down. And finally he realized that you
got to focus. You can’t do everything for everybody. You got to find your niche and
focus on what you’re good at.
When Mr. Jackson took over the business in 1979, Fairmont had 500 students and a
second school. Prior to running Fairmont, Mr. Jackson, a self-starter par excellence, owned and
ran an aircraft washing business. He led Fairmont with the same entrepreneurial drive.
Motivated by his desire to reach more families, Mr. Jackson expanded the scope and scale of
Fairmont’s campuses and educational offerings:
When enrollment time came up, people were really wound up because they knew that if
they didn’t enroll soon, there will be no room. I started to say this is ridiculous. Why
should I turn down kids and families that could go ahead and be successful here? Let’s
go ahead and expand. I went ahead and found a way to open up a couple more
classrooms and just started doing it from there. The expansion just continued.
In the early 1980s when more mothers joined the workforce, Mr. and Mrs. Jackson started a
preschool to satisfy the hunger for learning among two and three year olds. At that time,
Fairmont’s eighth grade graduates matriculated to private schools and the best public schools.
Mr. Jackson tried to help these private and public high schools where Fairmont graduates were
excelling with minimal effort strengthen the rigor of their curriculum, but to no avail. The desire
to continue to challenge Fairmont graduates prompted Mr. Jackson to start a high school. In the
early 1990s Mr. Jackson purchased a bank repossessed property for $950,000 in an auction
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during an economic downturn by mortgaging his house and invested an additional $100,000 to
convert it to Fairmont Preparatory Academy (FPA).
Over the years Fairmont Private Schools had witnessed the increasing diversification of
its student population, representing 37 ethnicities and students from 21 countries across five
continents. Asian Americans, constituting 35% of its domestic student population, was the
largest ethnic group, followed by Caucasian Americans at 31%, Arab/Persian/India Americans
at 21%, Latino Americans at 10%, African Americans at 2%, and European Americans at 1%.
As a result of having enrolled an increasing number of first and second generation Asian
Americans, words about Fairmont reached Asian countries. Consequently, attracted to
Fairmont’s reputation for academic excellence, students from overseas, in particular Korea,
Vietnam, and China, were demanding to study at Fairmont. Responding to demands from
international students, Fairmont in 2003 decided to start Fairmont International Academy (FIA).
In the ensuing years what had begun as a one-year program of intensive English language
learning had evolved into a well structured academic program serving as a segue into quality
high schools.
Fairmont International Education had under its umbrella joint diploma programs, teacher
professional development, immersion and specialty programs, and joint venture schools. The
bulk of Fairmont International Education’s business transactions occurred in China where
Fairmont partnered with Chinese public and private senior middle schools to offer the joint
diploma program (JDP). Started in 2010 and implemented within the international department of
Chinese senior middle schools, the JDP was a carved out privately funded program whose
objective was to prepare Chinese students to study in U.S. colleges and universities. Upon
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passing the Chinese high school exit examination called Hua Kao, a government-mandated
Chinese curriculum, three AP courses and tests, English courses, and a summer U.S. History
course, JDP students would receive a dual diploma from their Chinese school and Fairmont.
The JDP was designed to be scalable, sustainable, and replicable. According to the
Agreement on Chinese-American Joint Diploma Program, JDP schools were to maintain the
current senior middle school curriculum, but Fairmont was to supply specific curriculum for
certain courses, teachers’ oversight for these courses, teacher professional development, and
college guidance support. The Chinese school was to handle the application and approval
procedures with the Chinese government, provide teaching site and facilities, publicize the
program, collect tuition, and pay for the round-trip air tickets, accommodation, and
transportation for ten American master teacher visits each year. The American master teacher
was to provide professional development to JDP teachers, review students’ portfolios, and
evaluate student performance. Each master teacher visit was to be one week and the total
number of their visits was to be five to ten each year. In accordance to the contract, Chinese
partner schools were responsible for recruiting their own JDP teachers; however, Fairmont’s
Human Resources Department was to assist with teacher recruitment by providing a database of
AP and English teachers, screening resumes, and conducting initial interviews with foreign
teachers.
Not yet three years in operation, the JDP had reached a seminal milestone as measured by
the number of fully contracted Chinese partner schools: three existing partner schools contracted
during its first year of operation, five newly contracted schools ready to begin in the fall of 2012,
and three other newly contracted schools still waiting for approval from the Chinese government.
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As of July 2012, the JDP was just shy of 300 students. Each student at the three schools
contracted during the first year paid an annual tuition fee of $1500 to Fairmont; subsequently
contracted students paid $2000 per year to Fairmont. The students were in the JDP throughout
their three years at the senior middle school in China. Over the three year period, each JDP
student was expected to pay approximately $7000 to Fairmont, including tuition for summer U.S.
History course. The actual cost of the program to JDP students was higher because Chinese
schools also charged fees to cover the additional instructional and curricular costs associated
with administrating the program.

Findings
Research question one. What has motivated the company to expand internationally, and
what contextual factors have facilitated or hindered that expansion?
Limited growth opportunities at legacy campuses. Triangulation of data from interviews
with executives at Fairmont Education Group revealed that the company’s expansion into the
international market constituted an integral part of its overall strategy to grow its annual revenues
from $40 to $100 million by the year 2017. Growth opportunity was limited at Fairmont’s brick
and mortar campuses, not least because of a national trend in declining enrollment at private
schools. In the aftermath of the global financial crisis, the company lost $98,000 in net profit
before taxes and 257 students at its legacy campuses. Aside from the recession, the shift in
demographics within a 10 to 15 mile radius around Fairmont schools (a significant number of
higher socio-economic families had moved to the South County or the inland empire) resulted in
a shrinking pool of potential families which value and have the financial resources to invest in an
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academically rigorous private education. As Fairmont was a destination school which served
primarily the middle and upper middle class, its consumer demand can be highly elastic. The
owner family’s generous commitment to financial aid, which had doubled over the last six years,
reaching as many as 65% of the students at the Citron campus and impacting as many as 400 out
of 2217 Fairmont students, had mildly helped to blunt the sting of the recession.
Mr. Robert Chandler, the CEO of Fairmont, estimated that altogether Fairmont can fill
200 to 250 more seats at its legacy campuses, which will increase tuition revenue from $36
million to $45 million when factored in compounded annual price increases. Even though
demand from international students remained vigorous as Fairmont can easily fill the FPA with
more international students who paid a higher tuition at approximately $25,000 as opposed to
$20,000 for domestic students, Fairmont had to cap the international student population to dispel
negative perceptions by both American and international parents. Because of this barbell
squeeze on domestic and international enrollment at its legacy campuses, Fairmont had
considered building another campus in the South County to expand its capacity for enrollment.
However, a scarcity of great locations, tougher government regulations, competition from
magnet and charter schools, and an anemic economy had inveighed against capital-intensive
investments. Given the growth constraints inherent in brick and mortar campuses, real growth
opportunities will have to come from less capital-intensive business ventures catering to new and
growing markets.
Visionary Leadership. Division heads and managers at Fairmont unanimously cited the
visionary leadership of Fairmont’s founder and current owner as the principal reason for
Fairmont’s development from a one classroom school into a multinational company. Mr.
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Jackson’s educational mission is to prepare students to succeed at quality colleges and become
exemplary citizens of a global society. As a family-owned and operated company, Fairmont was
able to align its execution to its compelling vision based on the passion the owners have for
making meaningful differences in the lives of people all over the world. The Headmaster of
Fairmont Preparatory Academy attributed Fairmont’s drive for expansion to Mr. Jackson’s grand
vision:
The company has a real desire to affect as many people as possible. Our owner David
Jackson is a visionary and when he talks about educating students he wants to impact as
many people as possible, as evidenced by his interactions with public school districts in
the area. He is the President of Orange County Private Schools Association, something
he doesn’t need to do. He is quite honestly helping the competition. Our online and
international education programs prove that Fairmont wants to impact as many people as
possible because our outcomes are really second to none when you look at our
demographics.
The Director of Thesys concurred:
The owner is very passionate about education. It is very clear that he believes that
Fairmont provides a very high quality education. He wants to affect more people in the
world. He knows there is bad stuff out there. He generally wants to make a difference in
people’s lives.
Tellingly, Mr. Jackson’s passion for affecting positive change transcended national and cultural
borders. On his humanitarian missions abroad he had frequently visited schools and noticed the
need for improving educational delivery models in many countries. Hence his support for
Fairmont to conduct cross border education ventures. The driving force behind Mr. Jackson’s
relentless pursuit of excellence was not profit, but rather his desire to improve lives around the
world. Mr. Jackson wanted to make a difference in the world:
When I traveled around the world I usually visit other schools. I saw how Russian
schools were even worse than here and it shocked me. The Chinese culture is so steeped
in hard work and that kind of motive helps them be really successful. But the Chinese
school model wasn’t very impressive.
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Mr. Jackson’s passionate and grand vision had energized and mobilized the stakeholders at
Fairmont to strive for excellence.
Entrepreneurial culture and strong business fundamentals. Fairmont’s entrepreneurial
culture had enabled it to respond adroitly to opportunities in other countries. Mr. Jackson built
on the founder’s legacy of entrepreurialism by aggressively growing the schools whenever he
saw a need. The history of Fairmont is replete with episodes of risk taking for which it was
handsomely rewarded, such as starting FPA and FIA. The willingness to divest and prune as well
as to invest, as evidenced by the closing of a school for children with mental retardation,
according to changes in market conditions also underpinned the entrepreneurial culture of the
company. Mr. Jackson believed that profits and greatness are complementary in an education
business:
You can’t just run a great school. You have to run a great business. If you go ahead and
throw out the profits you can end up having a financially ruined company. If you put
profits ahead of being the best school you also get the wrong motive. So to be the best
school you need to have the best business practices. The combination really works.
Mr. Jackson’s entrepreneurial drive led him to appoint Mr. Chandler, a business executive with
extensive experiences in starting up and turning around businesses in the banking and healthcare
industries, as the CEO of Fairmont Private Schools eight years ago. Seeing in Robert Chandler
the optimal leader to catapult his company to the next stage of development, Mr. Jackson
charged Mr. Chandler with shoring up the financial side of the business and building the
infrastructure for growth. When Mr. Chandler took over the reign at Fairmont, the company,
generating approximately $21 to $22 million in annual revenues, had been losing money for
three years. Albeit robust on its execution side, or the academic performance of its schools, its
financial side was in need of a turnaround as Mr. Jackson had grown the campus capacity at a
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rate faster than the market was ready to absorb. After a year of focusing on growing the campus
enrollment, the company was able to generate a net profit.
The omnipresent vision of the owner fused with the business acumen of the CEO to build
the strong business fundamentals necessary for growth. Fairmont cash flowed about 10% of
revenue, even though an organization like Fairmont should have an EBITA around 15% to 18%
and a net profit of 10%. Mr. Chandler explained that the reason for that shortfall was growth-
driven: Fairmont was willing to accept a lower net profit in exchange for future growth
potentials by investing in the kind of overhead necessary to professionalize the organization and
build the platform for growth. An essential part of infrastructural building at Fairmont had been
developing the staff of Fairmont to become more effective leaders, assume new leadership
responsibilities, and focus on the same goals. Toward that end, Mr. Chandler had participated in
Vistage CEO Group for the past seven years and engaged his leadership team in the Vistage
Inside program, an executive development program that leads to greater ownership and
accountability for action through enhanced trust, collaboration, quality peer review, and
transparency. Mr. Chandler’s goal for Vistage Inside program was to significantly accelerate the
growth of the company in the next four years by getting “the leadership team to partner together,
increase trust, collaboration, and transparency―and to get them aligned on how they are going to
participate in the growth of the organization.” In the monthly Vistage Inside meetings, the
leadership team worked toward constructing clarity around the roadmap for growth and building
an actionable plan around shared vision. Participation by a few key people in the organization
affected organization-wide change as each member of the Vistage Inside group implemented the
strategies and tactics she or he had learned from the program in her or his respective role in the
company, effectively improving the bottom line through increased sales and profitability.
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Strong business fundamentals transformed international growth at Fairmont from an
organic reaction to demands from international students into a viable and sustainable strategy.
Fairmont’s Director of Marketing explicated that “the international expansion didn’t come from
conscious planning at the very beginning, but from an organic need that we explored and decided
to focus on.” Because Fairmont had a successful record of educating not only first and second
generation immigrants, but also successive waves of international students, Fairmont executives
recognized that it had a strong core capability in meeting the education needs of global students
seeking to complete their higher education in the U.S. Even though Fairmont executives had
made a conscious decision five years ago to expand internationally, they didn’t execute that
decision until two years ago, only after careful deliberation and assessment of its core
capabilities and market needs.
A viable strategy for growth materialized as the management at Fairmont began to notice
key interdependencies among its different divisions and how its core competency at customizing
education served as the coefficient of all its related businesses. The company thus decided to
pursue a core-out strategy whereby it leveraged its core capabilities as its comparative advantage
to compete in new markets, such as international programs in China, professional development
of foreign teachers, and hybrid e-learning. Chad Jackson, a third generation family member
serving as the Director of Operations, elaborated on Fairmont’s core-out strategy:
Over the years what got us initially into the international area was just the fact that we are
attracting international students to our school by virtue of our location here in California
and also by being a high achieving student outcomes school. As we brought international
students to our school we have that entrepreneurial spirit my father and grandfather,
subsequently, Rob and others have in the organization. We have a desire to grow, reach
out, and touch other people. We realized it was a core competency we have with
international students, not only helping them learn English, but also helping them
perform well in school and preparing them to enter into competitive colleges. We started
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to find that there is interest outside the U.S., in China and in other places, for programs
that we could offer to help students who can’t come here and still have the desire to
attend a university in the U.S.
Investing for sustainable long-term growth was de rigueur in Fairmont’s way of doing
business. Fairmont executives sought smart growth and understood the time and money it would
take to grow market share in countries such as China. Even though as a family-owned business
Fairmont’s access to capital was limited by its revenues, its borrowing powers, and returns on
investment, it was unwilling to bring in partners who will likely impose forced exit strategies.
Chad Jackson, along with other Fairmont executives, expressed a strong commitment to
investing in and growing the Fairmont franchise in China for the long haul, as opposed to a
short-term stint aiming for a quick windfall. Despite the tremendous market potential in China,
Fairmont eschewed the snare of capital absorption by growing its overseas franchise responsibly
and mindfully, always ready to readjust its overhead to match market conditions.
Favorable macro educational contexts. Even as Fairmont was well-positioned to
expand internationally, its international expansion could not have occurred without favorable
changes in the macro education contexts abroad. Administrators of Beijing Twenty-First
Century International School (Beijing 21
st
CIS), Fairmont’s first Chinese partner school,
attributed the Chinese government’s sanction for greater local autonomy and the diversification
of instructional programs to China’s curriculum reform. Conceived and enacted by the Ministry
of Education to facilitate China’s transition to the knowledge economy, modernize its
educational system to stay abreast of technological innovations, and shift an examination-
oriented education to a quality education based on the all-around development of students,
China’s curriculum reform set the tone for decentralization trends in China’s education landscape
characterized by a multiplicity of school investors and administrators from the non-governmental
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sector. Rather than prescribing specific implementation procedures, the Ministry to Education at
the national level established broad reform guidelines. It was the purview of provincial
educational administrations to develop the local curricula according to unique local contexts and
direct how schools should implement the curriculum. School administrators, in turn, had more
flexibility to design and select alternative curriculum and instructional strategies, opening the
door for schools to experiment with a variety of international programs. Under this more open
and flexible educational climate, Beijing 21
st
CIS received a special waiver to substitute six of
the ten compulsory subjects with JDP courses in 2011.
The Chinese administrators underscored that the new openness in Chinese government’s
educational policy was a reaction to not only increasing global competition, but also to
tremendous bottom-up market pressure for multiple pathways to higher education. China’s
Ministry of Education (2012) statistics show that there are 121 million students in elementary
schools and 80 million students attending over 70,000 junior and senior middle schools.
Matriculation from junior to senior middle school and from senior middle school to college was
dependent on performance on national examinations called Zhong Kao and Gao Kao,
respectively. In excess of 80% of the junior middle school graduates entered senior middle
school, and in excess of 70% of the senior middle school graduates successfully matriculated to
post-secondary education. Because school funding came primarily from local governments, the
quality of educational facilities and teachers varied greatly, to the detriment of families living in
less economically developed areas in Central and Western China.
Limited in supply and unbalanced in distribution, high-quality educational resources were
concentrated in a small number of key middle schools and national key universities serving elite
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learners. Add to the sheer number of students an unequal distribution of educational resources,
the emerging picture was one depicting fierce competition among students, impelling families to
allocate a significant amount of their disposable income to preparing their children for success on
either rigorous national examinations or on alternative routes to post-secondary education. As
incomes rose in China, so did the demands for high quality educational resources. Rising wealth
from coal mining and electrical industries in Liaoning, for example, resulted in a rising demand
for international education among the families of Fuxian Number Nine Senior Middle School,
prompting the school to enter into a JDP contract with Fairmont. The spike in the demand for
international programs in Chinese senior middle schools was related to an unequal and limited
access to high-quality educational resources in an expansionary educational market buoyed by
rising wealth.
Similar trends in the diversification of educational providers and programs in countries
other than China had also strengthened Fairmont’s presence in the Pacific Rim region. At the
behest of the Vietnamese Ministry of Education, The American School of Vietnam (TASV) in
Ho Chi Minh City entered into a Memorandum of Understanding with Fairmont, establishing
Fairmont’s role as an advisor and consultant in matters relating to curriculum and instruction,
student assessment, and professional development. According to the Joint Agreement and
Memorandum of Understanding between TASV and Fairmont Schools, this partnership would
facilitate educational exchanges between school personnel, cultural and academic exchanges
between students, and the on-going improvement of TASV’s curriculum models, leading to the
successful transition of TASV students to an all-English curriculum. The partnership was an
important stepping stone in TASV’s goal to prepare expatriates and Vietnamese students for
studying in U.S. colleges.
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Changes in the U.S. immigration policy worked in concert with changes in the
educational policies of other countries to help facilitate Fairmont’s international expansion.
More U.S. colleges and universities, besieged by budget crunches, witnessed a disproportionate
increase in their acceptance and enrollment of international students, particularly those from
China, in part to subsidize the tuition of domestic students. Recent actions by Canada and
Australia to restrict the increasing influx of Chinese students in response to a limited capacity to
accommodate these students helped to funnel more Chinese students to the U.S. As the sector of
higher education was a comparative advantage for the U.S. economy, the U.S. government had
been willing to issue more student visas to Chinese students, effectively increasing the Chinese
students’ demand for international programs serving as a bridge into U.S. universities.
Fairmont’s Director of International Education formulated a marketing strategy to capitalize on
this trend. According to him, close to 200,000 Chinese students were studying in U.S. colleges
and universities. By providing Chinese students with challenging AP courses taught with
American methodologies, the JDP can help Chinese students to differentiate themselves in the
eyes of U.S. college admissions officers.
Regulatory environment in China. Changes in policy and regulation presented
challenges as well as opportunities. In China, the opacity of the policy and regulatory
environment can confound Fairmont’s effort to effectively plan and deploy resources for growth.
A typical application for international partnership moved from the local to the provincial
governments, and ultimately up through the bureaucratic hierarchy to the Ministry of Education
at the national level. Even the Chinese partner schools lacked clarity about existent rules
regulating international partnerships. What Fairmont had learned as it moved through the
application process was that the provincial governments typically performed the due diligence
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necessary for proper approval as they endeavored to vet the legitimacy of the foreign school and
the nature of the partnership. The questions asked by provincial governments had been quite
standard across different provinces. As of yet, the Chinese government had not rejected any
Fairmont application. However, Fairmont had encountered lengthy delays where the provincial
government, like in Zhejiang, was swamped by a swarm of in-coming applications for
international programs.
Fairmont had already noticed a change in the regulatory process as manifested by the
lengthening of time it now takes to obtain approval from the Chinese government. When
Fairmont started in China two years ago, it was fairly easy to obtain approval, but now the
Chinese Ministry of Education is looking more closely at applications for international programs
and putting holds on applications as it demands more documentation. Several reasons may
account for this tightening of the regulatory belt. During the initial stage of policy
implementation, all levels of the Chinese government lacked the capacity to effectively evaluate
the legitimacy, academic performance, and fitness of foreign schools as viable candidates for
partnership beyond examining oral interviews and documentations provided by applicants. In
rare incidences, the provincial educational administrations actually requested the U.S-based
Chinese Consulates to visit the foreign schools under question. On a cautionary basis, cities,
such as Shenyang, which were using joint diploma programs with foreign schools as a means for
advancing curricular reform on an experimental basis limited the number of international
programs within their jurisdiction to keep supply in line with demand and minimize academic
risks. As joint international programs became more entrenched, educational administrations at
local and municipal levels now can collect data about existing programs to assess program
implementation and effectiveness and gather expert opinions and feedback from administrators
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and other stakeholders for directions on future development. Data about joint international
programs, including student achievement outcomes, became more readily available as similar
programs reached maturity. Fairmont’s Director of International Education believed that while
having joint international programs put under a microscope would present higher hurdles for new
entrants, it may actually benefit rather than hinder early movers such as Fairmont which had
already established a viable presence in China.
Complexities of micro educational contexts. In the short-term, growth in China was also
mitigated by Fairmont’s need to be disciplined with partner school selection in order to enhance
its brand equity and profitability. In the words of Fairmont’s Director of International Education,
“Fairmont has worked hard for great outcomes. We want to make sure that when we’re
partnering with a school, the school has great outcomes as well.” To ensure “smart growth,”
Fairmont had identified partner schools in China by first working with agents to source the right
leads and then qualifying these leads with a fine-toothed comb. After examining approximately
70 leads, Fairmont had 13 more schools it was conversing with as part of its qualification
process. Fairmont’s Director of International Education had already qualified 40 school leads by
personally visiting these schools and talking to administrators. Fairmont refused to contract with
any school that cannot commit to having a minimum enrollment guarantee of a specified number
of students per year. Fairmont’s Director of International Education underscored that Fairmont
was not keen on forming a partnership with schools which wanted a one-size-fits-all program for
those students who want to opt out of Gao Kao and will issue a diploma regardless of the
students’ academic performance:
We want our joint diploma students to be successful so they must meet minimum
qualifications. From the Chinese side they want the joint diploma program to fit all of
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the students who don’t fit in the regular Gao Kao program. Chinese schools are feeling
pressured to do something for students who don’t fit in the Gao Kao path. The stumbling
block we are hitting right now is the more we admit students who don’t know what they
want to do, the less successful the program will be.
Fairmont also rejected outright schools which, refusing Fairmont oversight of the program or
visits by Fairmont master teachers, looked for a nominal rather than a substantive partnership.
Managing and maintaining a working relationship with schools in a completely different
political and cultural context had been fraught with challenges for Fairmont executives.
Fairmont considered the typical traditional Chinese teaching and learning strategy based on
memorization of vocabulary and passages an inadequate and ineffective preparation for U.S.
higher education, as U.S. colleges had encountered an increasing number of Chinese students
with perfect SAT scores but lacked advanced oral and written communicative competence in
English. Fairmont’s Director of Academics and Advanced Studies, in line with the company’s
overarching mission, had worked assiduously with administrators and teachers at JDP schools to
help facilitate curricular and pedagogical changes to ensure that student not only get admitted to,
but also succeed in, U.S. colleges and universities.
My job entails working with schools in China to maintain high standards. Fairmont has
to work with teachers to understand what high standards mean in a different educational
setting. Certainly there are different views of high standards, academic rigor, of
expectations of students, so helping to translate what Fairmont knows to be important for
effective college preparation in the U.S. to helping teachers, administrators, parents, and
students understand why what we’re doing is different. It’s not easier or less effective or
less meaningful, but it’s different and a different style of learning with a different set of
outcomes.
Mr. Chandler acknowledged that one of Fairmont’s biggest challenges had been entering
into a partnership with a Chinese school thinking it had secured a mutual understanding on a
certain course of action, only to discover a month or two later that nothing had happened. When
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asked about the challenges of conducting education-related business in other countries, Mr.
Chandler commented:
That’s a big learning curve for us. It’s important for us to operate with a high level of
integrity and it’s also important for us to operate on a level with a certain set of standards
that we have here so we weren’t willing to cut corners. Our learning curve in operating
in other countries is really to learn the culture, learn about the political realities of doing
business in a country. Our biggest challenge has been going in and getting what we think
is in agreement on a certain course of action and finding out a month or two later coming
back in that nothing has happened. So the challenge is how you can make things happen
for the students because this is really about the students and at the same time bringing the
administrators along so they see the benefits of what’s going on. They seem very
conservative and nobody really wants to step out and be the first one out taking risks.
The Director of International Education elaborated on the difficulty of getting Chinese
administrators to buy into Fairmont’s pedagogical approach:
I think there in education, especially in China, a tendency to not embrace something new.
To the Chinese administrators, it is a student’s only high school experience and you don’t
want to jeopardize their future with something that you are not already the master of. So
we see resistance, hesitancy, and a little anxiety among the leadership of the school.
Under this light, Chinese school administrators appeared quite conservative, or even risk-averse,
to Fairmont executives who generally had been frustrated by the perceived resistance or
hesitancy on the part of Chinese administrators to embrace change in the form of adopting
Western methodology and a comprehensive English curriculum in lieu of a laser-sharp focus on
test-preparation for TOEFL and SAT.
On the flip side, Chinese administrators attributed some of the barriers to an effective
working partnership to Fairmont’s lack of understanding of China’s people, culture, history, and,
consequently, China’s change process. The administrators at Beijing 21
st
CIS resented what they
perceived as Fairmont’s strong-armed approach to impose changes on China without having first
established any credibility in China and gained a clear-eye view of China’s education ecosystem
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as well as the specific circumstances surrounding Beijing 21
st
CIS, a school with deep political
connections serving predominantly the children of the nouveau riche. As a private school
struggling to stay afloat in a fiercely competitive education marketplace where greater than half
of all private schools established in the 1990s had perished, Beijing 21
st
CIS contracted with
Fairmont as a business strategy to reverse its declining student enrollment.
Fan ShengSu, the Executive Principal of Beijing 21
st
CIS, questioned the future of a
partnership that was unidirectional in influence and attenuated by Fairmont’s unreasonable
demands and excessive impingement on his authority and the school autonomy, particularly in
light of the fact that Number Eleven Senior Middle School, a top ranking school where he served
as an advisor prior to assuming the principalship at Beijing 21
st
CIS, had just terminated its
partnership with a Canadian school due to inadequate accrued benefits from the relationship. As
an honored educator in China who was responsible for sending 35 of the graduates to top 50
American universities, Mr. Fan was critical in his appraisal of the efficacy of the JDP relative to
the school’s overall mission of developing world class talents. The knowledge that none of his
principal acquaintances had a satisfactory working relationship with their foreign partner schools
only deepened his skepticism of the way joint international programs had been conceived,
structured, and implemented in China. Mr. Fan drew parallels between Fairmont’s approach
toward Beijing 21
st
CIS and the U.S.’s diplomatic role as the police of the world, dictating what
is right and wrong through the prism of its own strategic objectives. A decorated member of the
Chinese Communist Party, Mr. Fan did not want the JDP to be an instrument of cultural
imperialism from the West. Mr. Fan insisted that anything less than an authentic bilateral
program designed with inputs from the Chinese educators to meet the particular needs of Chinese
students in the Chinese context will not garner support from local administrators.
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China’s hyper-focus on high-stakes tests had a historical antecedent. For millennia the
imperial civil service examination was the great equalizer, a sacred vehicle for socio-economic
mobility in a highly stratified society. Since adopting market-based economic reforms,
increasing gaps between the wealthy and the poor had heightened Chinese people’s anxiety
about unequal access to resources and opportunities. Even well-intentioned attempts by the
Chinese government to de-emphasize the use of high-stakes testing in educational advancement
had been thwarted by the popular perception that national examinations level the playing field
for students from poor and under-resourced backgrounds. In the absence of a feasible substitute
to ensure impartiality and equality in educational advancement and attainment, many Chinese
educators believed that the sanctity of high-stakes tests will likely to endure and persist in China.
China’s hyper-competitive outcomes-based academic culture was a major contributor to
the preference by Chinese educators for incremental rather than radical changes. In Sichuan
senior middle school principals were evaluated not only based on the number of students they
send to universities in China, but also to universities abroad. Teacher compensation was tied to
student academic achievement. Though smitten with American higher education, Chinese
educators were generally skeptical of the efficacy of American K-12 education. Even though
Fairmont advised Chinese schools to cherry-pick students with high academic caliber for the
JDP, Chinese educators, parents, and students still had to face considerable academic risks.
Chinese administrators would have to wrestle with a hornet’s nest of angry parents should JDP
students not have the three passing AP scores to receive a diploma from Fairmont. Chinese
students, without the prerequisite courses and skills for Gao Kao, would not have a Chinese
university as a back up should they get rejected by the American colleges and universities of
their choice. Unlike Fairmont which has its core business in the U.S., Chinese schools must
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contend, for years to come, with any fallout associated with dips in student achievement which
can last for as many years as necessary to establish the efficacy of a transformational education
innovation involving the integration of western methodology into a Confucius-based society.
From an implementation standpoint, typical JDP Chinese administrators had to overcome
many formidable challenges aside from their lack of foreign language skills and knowledge of
foreign schools. Competition for highly qualified AP and English teachers was fiercely intense
in China as the demand greatly outstripped supply. Beijing 21
st
CIS recently lost an AP
Economics teacher to another school which had been attracting teaching talents with more
generous remunerations. For existing and potential JDP administrators, particularly those in less
prosperous areas where teacher pay was less competitive, recruiting and retaining highly
qualified teachers for the international program can be a formidable hurdle. Considering that
JDP teachers were employees of the Chinese schools, they were directly answerable or
accountable to their Chinese principals rather than to Fairmont―a personnel arrangement which
also confounded Fairmont’s efforts at facilitating curricular and pedagogical changes at Chinese
schools.
Not only did Chinese schools have to compete for the best teachers, they also had to
compete for students. Student enrollment was not guaranteed even in public schools; hence in
order to attract and retain students schools had to constantly outperform each other in various
measures of academic performance and/or offer specialized programs for niche markets. On any
given day, principals in well-resourced cities such as Beijing can expect to receive several calls
from educational entrepreneurs who, viewing schools as a fount of quick revenues, pitch ideas
for various configurations of international programs and summer study abroad programs. More
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than 20 public schools in Beijing had applied to become international schools; as of 2012 ten
offered joint diploma programs. The pressure to compete for students had also prompted schools
to offer within one campus multiple international programs catering to various student needs.
Prior to contracting with Fairmont in 2012, the vaunted Shishi Senior Middle School in
Chengdu, Sichuan,—known as both the oldest school in the world and the first school appointed
by the provincial government to offer an international exchange program in 1979—had already
contracted with schools from England, Canada, and the U.S. to offer three different dual diploma
programs.
The multiplicity of parties involved in the negotiation and management of a JDP can also
complicate the dynamic of the Sino-American educational partnership. Lacking foreign
language skills or knowledge of foreign schools, more and more Chinese administrators secured
the service of a business agent or a third-party to help them source and/or manage the
international program. Granted a third-party with experience in international education can bring
certain finesse to the business relationship, it can also undermine the educational integrity of the
partnership as its business interest in the program creates a conflict of interest. Shinyway
Education, a relationship broker between Shishi Senior Middle School and Fairmont, was an
education company established in 1996 by a director in the provincial department of education
who saw in the rising trend of students who want to study abroad and the liberalization of
China’s education policy a great business opportunity for a company which specializes in foreign
language training, test preparation, college counseling, and educational tourism. Obviously,
Shinyway’s partnership with highly reputable brick and mortar schools such as Fairmont and
Shishi can create many exciting marketing as well as recruiting opportunities for its core
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services. It still remains to be seen if Shinyway’s mediation in the relationship will enhance or
detract from the educational missions of Fairmont and Shishi.
Research question two. In what ways has the company reorganized itself differently in
order to grow as a multinational? How has that reorganization impacted instructional
practices and programmatic offerings?
Strategic apex and home office. In less than 60 years, Fairmont Schools had grown from
a one-room private school into a multinational company comprising of five distinct divisions. A
reorganization of the company, which began with Mr. Chandler’s tenure as the CEO eight years
ago, enabled the company to branch out from its legacy campuses. Mr. Chandler built the
infrastructure that facilitated Fairmont Private Schools’ evolution into Fairmont Education Group
by virtue of creating new departments and business ventures. Perched on the strategic apex was
the Executive Board of Directors consisting mostly of family members: the founder, Ken Holt,
serving as an emeritus member; President, David Jackson; CEO, Robert Chandler; and Director
of Operations, Chad Jackson. Board membership can be in a state of flux as expert advisors
from various fields may also participate in board meetings. To realize economies of scale and
achieve efficiency, Fairmont centralized human resources, finance, education, admissions,
marketing, and information technology.
To support the marketing needs of all the divisions, the marketing department, for
example, had grown into nine employees, some of whom served part-time. Fairmont’s
Marketing Director stressed that Fairmont relied on low cost strategies, such as word-of-mouth
and referral, to gather market intelligence in order to reinvest the maximum amount of surplus
back into the schools. To support its international division, the marketing department, poised
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ready to initiate targeted advertising through any channel the company deemed necessary to
source more prospects, had under development a website for the Chinese market. The most cost-
effective marketing strategy employed by Fairmont had been investing in and developing a great
product in the first place.
Programmatic and instructional changes at legacy campuses. At its legacy campuses,
Fairmont’s growth spurt resulted in programmatic and instructional changes. The most palpable
changes occurred at FPA, which shared its campus with FIA. Of the 700 students at the high
school, 130 were in the FIA and 570 were in the FPA. Not yet proficient in English and
comfortable with American teaching methodologies, international students were placed in a
customized program, English as a Primary Language, designed by the Education Department
specifically to facilitate their acquisition of academic English skills for higher-order thinking
activities. Fairmont had typically admitted about 130 to 160 new international students each
year. FPA started out having 10% of its student body being international students; over the years
the proportion of international students had grown to 60%. Whereas international students were
perceived as outsiders by domestic students nine years ago, today international students are well-
represented in all facets of campus life. Fairmont worked diligently to create an inclusive and
integrated learning community where all students can flourish in a globally-minded environment.
Teaching students with diverse learning styles and backgrounds necessitated Fairmont
teachers to increase their repertoire of instructional strategies. Fairmont had recharged its
professional development programs to address the need for understanding multiculturalism and
multiple learning modalities. When recruiting education professionals, Fairmont’s VP of Human
Resources vied for people who are multilingual or have international experiences and are willing
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to continually stretch themselves beyond the traditional offerings in the U.S. To be culturally
responsive to its Asian students who are used to extended structured learning after school,
Fairmont created Prep Plus Program to offer tutoring and supplementary courses to all students
until six o’clock everyday. Another difference the critical mass of international students had
made at FPA was the creation of an advanced math track where students can earn up to 22
transferable college credits.
Programmatic and instructional changes had trickled down to the junior high campuses.
The Mable campus was the site of an international program last year, and this year Fairmont will
roll out an international program at the Anaheim Hills campus. The international students at the
junior high had their own courses and teachers, remaining largely separated from the mainstream
courses except for math and electives. The Campus Director of Mable wanted the junior high
international program to have a strong language acquisition as well as cultural integration
component. As cultural integration can be a challenge to many of the 23 international junior
high students who had weak English skills, the Campus Director of Mable planned to have each
of the teachers in the junior high serve as a mentor to two or three international students in an
advisory role. She also underscored that “to avoid putting the cart before the horse,” preparation
for the international programs at the junior high level should include not just the physical
infrastructure for additional classrooms, but also the soft infrastructure to support relationship-
building among different stakeholders and the strengthening of hierarchal and lateral channels of
communication for knowledge sharing and problem solving. With a tighter coupling of disparate
units, the Campus Director at Mable can serve as a resource for the Campus Director of Anaheim
Hills, and FPA can serve as a resource for the junior high campuses in matters relating to
programming and admissions standards.
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The creation of Fairmont International Education. Having reached a critical mass of
international students at FPA, Fairmont decided to start a new division called Fairmont
International Education in order expand their educational reach to students who want to study in
their home country. The Director of International Education expounded on the evolution and
growth of JDPs:
The JDPs are evolving. The intention of the JDP is to partner with schools. We
originally thought it would be with private schools in China, but in fact most of the
interest came from public schools in China. It’s to create a carved out program for high
schoolers who want a different experience other than studying Gao Kao in China during
their junior and senior year. More and more parents are looking for a touch of Western
methodology in the education of their children. They want their children to learn English
at a younger age, learn critical thinking skills, project-based learning, and cooperative
learning.
Since the creation of the International Education division two years ago, Fairmont’s Director of
International Education and Director of Academics and Advanced Studies had traveled
extensively between China and the U.S. to establish new JDPs and support existing JDP schools.
During vacations and breaks, they brought master teachers from FPA to China to work with JDP
teachers and students, examine lesson plans, and review student works. To provide effective
support to geographically dispersed JDP schools, Fairmont International established a China-
based staff. The U.S.-based staff provided centralized services such as accounting, marketing,
information technology, and human resources. Its China-based staff consisted of a Business
Development Manager and three JDP Managers. The China-based Business Development
Manager’s primary responsibility was to source and qualify leads for new partner schools. The
JDP Managers were responsible for coordinating between Fairmont International leadership and
schools in China to ensure that the JDP is implemented with fidelity. The position not only
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required residency in China and the ability to travel extensively between schools, but also the
diplomatic skills to negotiate across cultures.
When assembling the China-based staff, Fairmont’s Director of International Education
looked for a team of people with complementary skills. One of the JDP Managers was an
American with teaching and administrative experiences in the U.S. and abroad. Another JDP
Manager was a Chinese national who was a graduate of Beijing University with a Ph.D. in
Chemistry and work experiences in the U.S. As a bilingual scientist with enviable qualifications,
this JDP Manager could gain credibility from the outset and support teachers with AP math and
science curriculum and instruction. Another JDP Manager was a Chinese national who was the
former Director of International Education at Beijing 21
st
CIS. As the JDPs grow and expand,
the JDP Managers will morph into administrative roles and lead a team of master teachers who
will provide direct support to JDP schools. The plan was to have one JDP Manager for every
five schools or 10 JDP managers for 50 JDP schools.
The creation of Thesys International. Although originally created for the domestic
market, Thesys International― a hybrid education curriculum and learning programs provider
whose aim was to integrate classroom and online technologies to make education relevant for
today’s learners who are “tech-savvy, knowledge hungry, and world-aware”―was designed to
synergize with Fairmont International Education. Organized as a LLC managed by Fairmont
Education Group in 2010, Thesys International emerged from the academic strategy of Fairmont
Private Schools to be an early adopter of innovative technology as a means to maintain its edge
as a leading school in the Orange Country area. From the process of developing and piloting
hybrid courses for academic use by FPA, Fairmont developed proprietary content for a suite of
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hybrid courses―17 college preparatory UC-approved courses in math, science, English, and
social science, 10 AP courses, and a cluster of English as a Primary Language courses―for use
at U.S. and global high schools. The General Manager of Thesys International viewed Thesys as
an extension of the core vision or capability of Fairmont to provide academically rigorous
learning experiences for advanced learners:
My vision for Thesys is that it’s just an extension of the overall vision. What I loved
about Thesys is this idea of the global citizen and advanced, high-end premium
academics. Thesys takes what Fairmont does well and takes it to other places. From a
business perspective, the weakness of Fairmont is that everything is tied up in six
campuses, and demographics aren’t particularly favorable. There are not a lot of options.
With this development of Thesys Fairmont can make an entry into a market and do it
with a relatively low cost of investment, relatively low risk, and still have enough
potential and opportunity to grow and diversify.
Thesys International’s domestic market niches included the eight states (Alabama,
Arizona, Florida, Idaho, Indiana, Michigan, New Mexico, and Tennessee) which had adopted
requirements for students to take online courses, private schools lacking the scale to develop
their own hybrid program, and charter management organizations seeking to improve efficiency
through economies of scale. In addition to conducting pilot programs in both under-achieving
and higher-achieving schools in the U.S., Thesys also targeted international markets, including
international schools catering to expatriates and JDP schools. By 2013, Thesys aimed to
integrate the complete use of AP courses in three Chinese JDP schools and conduct one
concurrent on-line AP course with students from China and the U.S. for joint participation in
projects, discussion boards, and wikis. Thesys also planned to invest in the on-going
development of English as a Primary Language courses, online assessment tools included, for
global English language learners in China and elsewhere. Moreover, Thesys was exploring
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opportunities to provide educational content to One Media Tech, a supplier of portable tablet
computers whose target markets included the Ministry of Education in Colombia and Brazil.
Growth of summer and immersion programs. The Summer and Immersion Programs
division had also undergone expansion in response to greater international demands. In 2011 the
summer programs grew by 26%. To prevent spreading the responsibilities of campus directors
or counselors too thinly, and thus detracting them from meeting the needs of domestic students,
Fairmont appointed two managers to focus exclusively on developing and managing summer and
special projects. Fairmont offered summer programs in four different locations, a summer
school on all five campuses plus FIA, and enrichment workshops serving students from
kindergarten through twelfth grade. About 40% of the summer students were non-Fairmont
students, including a large volume of international students. The bulk of the summer
international students came from China and South Korea, with some representation from South
America and Europe.
Fairmont had put a lot of new thinking behind designing summer programs for the
international K-12 market. Over the years Fairmont’s summer programs had become more
cohesive and synergistic with the educational core. For the K-sixth grade group, Fairmont
offered the English Language and the American Culture Camp, combining English language
acquisition with cultural immersion. Because a large percentage of international students were
fourth to ninth graders, Fairmont also developed new programs specifically geared for that
market. In the past three years, the summer language camp had grown substantially, from eight
to about 50 kids per week. There was also a trend of students enrolling for a month or longer
rather than just a few weeks. While some of the international students looked for homestay
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during the summer, most of them were on vacation with their family and friends who reside in
Southern California. For the seventh to twelfth grade market, Fairmont offered a summer
program at FIA. Students in that age group had shifted their demand for summer programs.
Whereas in the past most of the international summer program students attended the summer
program as an academic jumpstart to FIA, more and more students now come just for the
summer experience. Realizing that Fairmont’s summer programs were not meeting the demand
for academic plus recreation, Fairmont tweaked the program to blend the best of both worlds,
restructuring the English language acquisition camps for grades seven to twelve into thematic-
based language learning centered around the California experience.
Fairmont also offered customized summer courses to Chinese students. More than eighty
students from Beijing 21
st
CIS came to Fairmont for the summer U.S. History course in 2012. A
whole other market for Fairmont was offering summer academic programs to non-JDP students
from China. Two years ago, 15 students from a school with IB Diploma Programme in Shanghai
came during the summer for a pre-IB Diploma Programme to hone their critical thinking skills
and global perspective. Last year that group grew to 50. Fairmont planned to build a community
service component into the summer academic program for Chinese students based on the
Chinese schools’ demand for opportunities to apply learning and work in teams. Fairmont’s
Director of Summer and Immersion Program credited Fairmont’s success with summer and
immersion programs to the company’s nimble ability to work with new groups and customize
components of existing offerings.
New housing project. The housing division was also poised for growth. Fairmont had
260 international students and 190 hosting families participating in the homestay program. As
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the international student population had grown over the years, it now makes financial sense for
Fairmont to build a dormitory, an investment which will open up a whole new market of
international clients from Russia and Asia. Many of the international families had been caught
by surprise of what a typical American family actually looks like. From the American mass
media, these families expected to live with white Anglo-Saxon families, but in reality about half
of the hosting families were not white. When international families discover the discrepancy
between expectation and reality, they may prefer to have their children live in a dormitory. A
dormitory would allow these students to be within walking distance to the school, a convenience
highly cherished by international students. Even though Fairmont had not yet invested in the
dormitory project, it had already gone through a business plan. An agreement should be in place
for purchase prior to the end of 2012.
Research question three. What parts of global demand does the company most want to
address and is the most capable of responding to? What parts of global demand does the
company least want to address and is the least capable of responding to?
Fairmont International Education had several businesses under its development: joint
diploma programs, teacher professional development, immersion and specialty programs, and
joint venture opportunities. Other than actively developing and growing its summer and winter
programs for students looking to come to America for language learning, cultural immersion,
and recreational activities, Fairmont had also been building the capability to provide professional
development to teachers in non-Western nations where governments, schools, and parents have
the financial resources and the willingness to supplement their system with an infusion of
American innovation in curriculum and methodology. Fairmont identified a huge demand for
teacher professional development in Asian countries, such as China, South Korean, Vietnam, and
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Singapore. Outside of Asia, Fairmont had also heard of demands for professional development
from South America and Africa.
Fairmont drew from the expertise and deep smarts of its own teaching staff to develop
teachers from other countries. Almost all of Fairmont administrators and teachers had
participated in the professional development of teachers from other countries in various
capacities ranging from allowing guest teachers to observe their classes to hosting international
administrators and teachers at their homes. A number of Fairmont teachers had actually peer-
mentored foreign teachers abroad. Fairmont’s Director of Education made the following
observation regarding the professional development of foreign teachers:
There is global demand for teacher training, giving our existing teachers an opportunity
to train internationally. Our teachers here become better teachers if they go overseas. It
enhances their teaching skills whether they teach domestic or international, having to
teach at that level, having to break down their craft, and having to go over to China and
experience those students.
From the administration’s point of view, overseas experiences are an invaluable opportunity for
Fairmont teachers to fine tune their craft and enhance their capability to teach all kinds of
students, including foreign-born American students, first or second generation immigrants, and
internationals students.
Aside from developing teachers from other countries, Fairmont wanted to focus on
growing the JDP in China and learn as much as it possibly can about improving programs there.
More importantly, Fairmont wanted to ascertain that it had a sustainable JDP model before
branching out to other areas. Fairmont executives envisioned a symbiotic relationship between
Thesys and JDP, in which JDP builds the relationship between schools and Thesys provides the
content and vehicle for translating these relationships to authentic collaborative learning across
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geographical borders. This cross-divisional capability―Thesys functioning as the bricks and
JDP the mortar—served as an important lever in cultivating global awareness among its staff and
students. Fairmont rejected many offers to become a sister school to Chinese schools for it
viewed that relationship as an empty shell likely to be exploited by foreign schools as a
marketing ploy. Fairmont was least interested in test preparation.
In addition to China, Fairmont had explored opportunities in Brazil where the
government was pumping more money into education-related technology. According to the
General Manager of Thesys, WiFi Internet cafes had sprung up across Brazil where students had
undertaken educational activities on their own. In an effort to integrate technology into schools,
Brazil had a $700 million request for proposal with responses by May, 2012, soliciting any idea
in regard to technology and education. Singapore, a nation which was ramping up its investment
in hybrid learning, may also present some opportunities for Thesys. The ability of Thesys to
customize its products enabled it to adapt to different market needs in diverse parts of the world.
Strategic discipline and fiscal prudence had restrained Fairmont from capitalizing on
risky opportunities which may compromise its brand. Even though Fairmont executives had
been in discussion with a partner to open a school in China, they had concerns about partnership
selection and market conditions. The Director of International Education explained why
Fairmont was not actively pursuing to open a school in another country:
We have seen several schools rushing to open a school in Korea and not be very
successful. It has to be the right school, the right situation, with the right partners. We
have people who approach us to open a school and all they talk about is the financial part
of it, how it will be a cash cow. That is not what we’re looking for. We wanted to be
about the opportunity to provide a great educational experience. We want to make sure
that the regulation allows us to open the kind of school that we want to open.
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Mr. Jackson also expressed reservations about opening brick and mortar schools all over
the world:
There is a danger of going in and saying we are very proactive at working with
governments wherever they are, we would teach the people to obey the laws of the land,
and we’re not trying to do anything to cause problems to the government. We come in
and say we’re going to start some schools and show your schools that they’re lousy.
Most of the countries I visited in the third world are run by dictators or organizations
where they don’t want the people to be smart because if they are educated they will wise
up. I want to be part of the driving force that makes the difference.
Mission-driven with an leaning toward long-term growth, Fairmont wanted any school it would
open anywhere in the world to provide a great educational experience, a feat requiring the
necessary due diligence and market research to ensure that the regulation is amenable to
Fairmont’s vision and mission.
Deeming the market catering to expatriates mature and saturated, Fairmont executives
had chosen to not compete in that sphere. Considering that Indians already speak English due to
India’s historical ties to the Great Britain, Fairmont executives did not favor India as a top
destination for its JDP even though domestically Fairmont had a number of Indian or second
generation Indian-American students attending the Mable campus, known for its
multiculturalism and openness to the Sikh tradition. Located on the Pacific Coast, Fairmont
perceived itself as having a geographic advantage in the Pacific Rim rather than in the Middle
East where East Coast schools and European companies may have more brand recognition.
Fairmont executives had not seen demands from European nations, other than Russia, for
its programs and services. There was a growing demand for family programs in Russia whereby
parents and/or older siblings come to America with younger children for a dual children and
adult summer program. In European markets where families are really just looking for a one
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year study abroad experience, the academic outcomes may not be as important. This European
concept of studying abroad is vastly different from the Asian concept in which students come
specifically for the academic preparation to get into American colleges. Given that Fairmont is
essentially a bridge into American colleges, its executives were not rapt on catering to families
that look for just a one year study abroad experience without any plan for studying at the U.S. for
the long haul.
Research question four. How does the company define and measure success in a
multinational context? How has the definition and measure of success changed from the
time when the company operated only in the U.S.?
Academic outcomes and organizational efficacy. As a purveyor of educational services,
Fairmont Education Group’s definition of success was bifurcated into interrelated and mutually
reinforcing measures: academic and financial. The order of priority for Fairmont was learning,
academic results, enrollment, revenues, and profit. An examination of company literature
revealed that Fairmont used a multitude of metrics to gauge the efficacy of a spectrum of its
academic programs and their impacts on students:
 1769 average SAT compared to 1500 nationally
 A passing rate of 79.5% on AP tests
 17% of FPA students graduate with IB diploma
 86% graduates accepted to top 100 colleges and universities
 An average GPA of 3.661 among the graduating class
 85:1 student to counselor ratio
 19,601 hours of community service
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In the spirit of upholding high expectations for all learners, Fairmont made the conscious
decision to not adjust their educational statistics to accommodate the large number of
international students. Fairmont educators viewed success as placing students in the college that
best fits their needs, even if it falls out of the top 100. Successful Fairmont alumni added value
to Fairmont’s tangible and intangible assets by strengthening its brand. In order to achieve the
aforementioned educational statistics in student achievement, Fairmont included the following
components in the performance review of its campus directors: enrollment, financial, parent
satisfaction, academic outcomes, hiring and retaining the very best teachers and staff, and
campus specific goals.
As a service organization driven by people, Fairmont also measured the quality of
stakeholder experiences (teachers, parents, and students) at its legacy campuses through
satisfaction surveys and retention rates. The 2012 student survey results showed that the
majority of the students strongly agreed that their teachers are enthusiastic, helpful, organized,
competent, and professional. Close to 83% of the students surveyed looked forward to coming
to school each day because their teacher made the class enjoyable. The 2012 parent survey of
500 parents representing 50% of the Fairmont pre-school to eighth grade families indicated that
the top three reasons parents sent their kids to Fairmont schools were reputation for academic
rigor, low students to teacher ratio, and caring and nurturing environment. Half of the parents
surveyed revealed they were very satisfied with the Fairmont experience; 35% extremely
satisfied; and 14% somewhat satisfied. The 2012 teacher satisfaction survey also showed an
overall high level of satisfaction with regard to school climate, collegiality, professional
accountability, and administration. Stakeholder surveys measured the level of internal
engagement by staff members throughout the entire organization.
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A well-articulated principle abided by Fairmont executives was that under no
circumstance will Fairmont compromise its hard-earned brand in the pursuit of short-term profits
as it grows its international business. Being perceived as an elite American private school gave
Fairmont much coveted marketing clout and goodwill in the eyes of regulators, parents, and
educators in the international arena. Fairmont held the same high expectations for its JDP
students. Just two years into the JDP, Fairmont had yet to collect data on JDP students’
academic performance on AP tests and college acceptances. In principle, Fairmont expected the
JDP students’ academic outcomes to measure up to the students at FPA. The Director of
Marketing couched success in terms of Fairmont’s ability to change school culture in a way that
best prepares students for American colleges:
Success is to identify individuals and organizations who want to head into a Western
direction and to be able to take that Western ideology and methodology and start to
infiltrate into the next layer down. We really need the faculty and administrators of our
partner schools to be impacted. We need them to understand what the Western stuff is all
about. They need to understand the why, how, where, and when to be able to be that to
their students because our master teachers’ interface with the students is quite limited. So
we want the joint diploma students to have the most authentic experience possible.
Being regarded by other education companies and schools as an industry leader in international
education and a model to emulate constituted another measure of success for Fairmont.
Financial measures of success. Fairmont’s sole source of revenues was tuition. As a
family-owned pro-profit company, Fairmont cannot rely on endowments or capital campaign to
run or grow its business. Mr. Chandler made a conscious decision to not raise capital to finance
expansion:
By definition we have in some ways as a family-owned business limited access to capital.
What I mean by that is we could raise capital, but that would force exit strategies and
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bring in third-party partners—that is not something we want to do. So we’re growing at a
level that the capital we generate, our borrowing powers, and all returns can justify.
As a result, Fairmont had been using the revenues from its core campuses to not only reinvest
back into the campuses, but also to invest in international programs and Thesys. In Mr.
Chandler’s analysis, Fairmont’s “core campuses are really the driver in core competencies
enabling Fairmont to reach out as well as the financial foundation for Fairmont to invest in these
service-oriented types of businesses.”
Under this financial framework, mission and profit formed a positive feedback loop: The
execution of educational mission and vision produced the profit which was reinvested back to
drive educational excellence. Eight years ago the company generated $22 million in revenues; in
2012 that figure stood at $40 million. The company had grown steadily over the past five years
with the exception of 2008-2009 and 2009-2010 when it lost enrollment due to the recession.
The profit dip in 2009-2010 can partly be explained by the executives’ decision to invest in
ramping up marketing to pave way for future growth. The following summary of financial
metrics from 2007-2012 shows the company’s five year growth trend:
Table 2
Fairmont Private Schools Five Year Financial Summary
Fiscal Year 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
Revenue 31,516,000 32,147,000 31,139,000 34,916,000 39,266,000
Net Profit
Before Taxes
2,090,000 1,420,000 (98,000) 2,082,000 2,242,000
EBITDA 2,758,000 2,459,000 981,000 3,130,000 3,297,000

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According to the State of Fairmont Address given by Mr. Chandler on March 10, 2010, Fairmont
had a total of 2,541 students and 450 employees. Fairmont executives expected to have 23,380
students and 675 employees by 2017.
Fairmont’s goal was to make $100 million in annual revenues by 2017. Given that
growth opportunities were limited at its legacy campuses, Fairmont looked to its new
investments in international education, Thesys International, and, to some degrees, housing to
drive most of the revenue growth. Margins in bricks and mortar were different than margins
from online and strictly service-oriented business. The bricks and mortar had the slimmest
contribution margin, running about 18% to 20% at its K-eighth campuses and 35% at FPA, or
24% across the board. The contribution margin would increase somewhat in the online business
and substantially in the service model depending on how it is structured. Quite possibly, the
contribution margin from the international program could reach 35% to 40%. Fairmont made an
initial investment of $185,000 into the JDP. With practically no capital expenditure or fixed
costs, Fairmont expected the JDP to reach the breakeven point in the third year even including
the costs associated with developing and employing three JDP managers.
Table 3
Joint Diploma Program 2011-2012 Financial Summary
Revenue Total Operating
Expenses
Contribution
Margin
Student Count
2010-2011 $132,000 $327,331 $(195,331) 88
2011-2012 $739,450 $708,871 $30,579 296

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Fairmont’s goal with the JDP was to accelerate the its velocity of growth to reach its
benchmark of 50 partner schools in five years. Fairmont expected to have close to 15 JDP
schools in the fall of 2013. Having already recruited 300 students just two years into the
program, Fairmont executives viewed the JDP’s growth potential as highly promising, expecting
it to surpass 500 students in its third year and 1,000 the year after. The enrollment growth would
come from the existing students in the program plus new students added each year, resulting in a
multiplier effect and a quantum leap in profitability as the JDP reached a critical mass. In order
to be financially viable, Fairmont needed 50 students to start a JDP in a Chinese school. At 50
students per grade level in the tenth, eleventh, and twelfth grades, each JDP school would have
150 students. Assuming that Fairmont had 150 students in each JDP program, it would then
have 7,500 students in 50 JDP schools. Multiply 7,500 students by the annual tuition for each
student, which was set at $2,000, Fairmont’s return on investment can be quite enviable by
industry standards. Mr. Chandler asserted that “the JDP’s rate of return can be phenomenally
high when there was not a lot invested up front,” and once the company recouped its initial
investment in the third year “the rate of return can be stratospheric.” Even though Fairmont
executives maintained that the JDP was a long-term commitment, Mr. Chandler made it
unequivocally clear that Fairmont’s interest in the JDP was in no way unconditional: “Because
we don’t have any bricks and mortar and other fixed costs, everything is variable costs for the
JDP. For some reason something went wrong in China and we have a problem with it, we can
shut it down quickly.”

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Table 4
Joint Diploma Program Five Year Forecast
Year 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
Number of
Schools
8 16 25 38 50
Number of
Students
556 1,142 2,290 4,200 5,030
Total
revenues:
tuition +
summer
$1,415,695 $2,963,455 $7,008,300 $13,498,175 $18,354,550
Total
Operating
Expenses
$1,414,355 $2,635,503 $4,214,351 $6,202,891 $8,078,026
Contribution
Margin
$1,340 $327,952 $2,793,949 $7,295,284 $10,276,524

Thesys had a different business model. Fairmont had already invested about $1.3 million
and had plans to invest an additional $500,000 into Thesys in 2012. Fairmont’s goal with Thesys
was to have Thesys devote its first two years to developing products and the third year getting
traction with pilot programs. Thesys’s goal was to establish 10 pilots for the summer of 2012,
three to five courses per pilot, building up to 40 pilots in the fall of 2012. Provided that Thesys
gained traction this year with piloting and Fairmont made a decision to continue on with Thesys,
Thesys could reach the breakeven point in the next two years. Mr. Chandler’s target for Thesys
was $10 million within five years; the General Manager of Thesys International had set a more
aggressive target at $25 million with a 35% contribution margin. Thesys adopted an all-you-can-
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eat pricing model, charging schools $5000 per course, in order to give schools a greater control
of their budget.
Mr. Chandler envisaged Fairmont borrowing money to purchase the real property for a
dormitory, but funding its operation through cash flow. Out of concerns over partnership
selection, Fairmont scratched its initial plan to work with a limited partner to help finance the
building of a dormitory. Fairmont might resort to creative financing such as owner subordinated
debt or bring in another party as an equity partner in the second round of financing. Homestay
was $3.2 million a year business for Fairmont with a contribution margin of 16% to 18%.
Buying a hotel and converting it into a dormitory would move that contribution margin up to
28%. A low risk proposition, the dormitory project should reach the breakeven point in the first
year.
Every quarter Fairmont executives met to assess the whole sales funnel, infrastructure,
and staffing needs in order to make decisions on how to move forward. Fairmont decided to put
a cocoon around its legacy campuses to protect them from outside capital and carve up the
company in ways that will allow it to raise money for new entities if necessary. Should Fairmont
decide in the future to spin off the international division or Thesys International, Fairmont could
raise money into them, offset its risks, and share the burden of growth. Presently, the cash flow
from Fairmont Private Schools was what drove the investment in international expansion and
other divisions. As these divisions become profitable in and of themselves, the ensuing profit
will afford Fairmont other investment opportunities.

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Chapter Five
Conclusions, Implications, and Future Research
Chapter Five is the conclusion of the entire study. It begins with a presentation of five
key themes extrapolated from the data analysis described in Chapter Four. Following the
presentation of the five emerging themes is a discussion of implications for practice. Ideas and
thoughts on future research conclude Chapter Five.

Conclusions
Fairmont Education Group is a trailblazer in the globalization of K-12 education. The
crystallization of Fairmont’s international expansion occurred when preparation met opportunity.
Just as when private and public spending on education contracted in the U.S. and other Western
nations, private and public spending on education in China and other emerging economies
expanded, buoyed by rising wealth. Have built an infrastructure for growth, Fairmont executives
were ready to seize the opportunity presented by favorable macro educational contexts in high-
growth, high-investment Pacific Rim nations to impact a growing student base while reaping a
higher yield. The U.S. government, recognizing that higher education is among the nation’s top
service sector exports, increased its student visa quota to welcome more international students to
its colleges and universities. This policy aligned with China’s educational reform to contribute
to the growth of international programs in China, the leading sending nation of international
students to the U.S. Even though favorable macro educational contexts had created a propitious
tailwind for Fairmont, it faces strong headwinds ahead. Operationally, Fairmont needs to
quickly understand the micro educational context of each school and overcome the challenges of
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providing logistical support presented by geographic dispersion. Volatility in market conditions
portend unpredictable policy and regulatory changes yet to come. Despite these challenges,
Fairmont executives have committed to a long-term strategy in China and remained steadfast to
their goal of having 50 joint diploma programs in China by 2017. Emerging themes from this
study are as follows:
Fairmont Education Group’s expansion into the international markets seems to be a
form of geo-arbitrage responding to an education gap in rapidly developing economies.
The odyssey undertaken by Fairmont to grow from a domestic educational company into a
multinational has been propelled by the deep currents of globalization. Rising income in rapidly
developing economies has shifted the demand for both high quality schools and higher
educational attainment. The limited opportunity to obtain higher education, exacerbated by the
unbalanced and unequal distribution of high quality educational resources, in rapidly developing
economies such as China has created bottlenecks for an increasing number of families who have
the financial means and ambition to invest in education as a competitive positional good. The
spillover effect of that education gap is that a greater number of the wealthy and middle class
families in rapidly developing economies look to attend western-based colleges and universities.
The globalization of higher education has trickling down effects on K-12 education. Fairmont
Education Group exports American college preparatory curriculum and methodology to the part
of the world where they can command a premium for their products and services, harvesting a
higher margin than its brick and mortar campuses in the U.S. The low market threshold of the
joint diploma program, coupled with high market capacity, can yield a considerable return on
investment even in a dispersed market.
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In this particular case, the family-owned pro-profit model seems to provide the
organizational and financial structures for opportunistic disciplined growth undergirded
by a long-term commitment to realizing its vision of impacting students worldwide.
Fairmont’s opportunistic predisposition has concocted with the owner’s passion for making
positive impacts to students worldwide to imbue Fairmont with the tenor to grow globally. As a
family-owned business that does not have to capitulate to pressure by outside capital to turn a
quick profit and liquidate its holdings, worry about quarterly reports, or distribute its earnings as
dividends to shareholders, Fairmont Education Group can plow back all its earnings. The owner
of Fairmont Mr. Jackson believed that the pro-profit model drives growth and continuous
improvement: "The profit motive isn't the driving force. The difference between a pro-profit
and non-profit is it is ours. We own it. In a non-profit, you are just an employee. There is no
motivation to take on more." Touting the benefits of a family-owned pro-profit model,
Fairmont's Director of Operations expressed a shared sentiment among Fairmont executives:
"We are an organization that wants to grow, change, and improve. We have an owner who can
make decisions and empower our CEO to make decisions, where other schools might be tied up
in bureaucracy with board politics." In this light, profits form the capital enabling the translation
of the enduring vision, which has permeated and percolated through the organizational
architecture to make it an organization with the foresight and intent to grow, innovate, and
improve, to reality.
However, in their appraisal of their company's organizational structure, Fairmont
executives may have overlooked several limitations endemic to this particular model. The
family-owned pro-profit model does not guarantee that the company is able to reconcile conflicts
between its educational mission and financial objectives without a bias toward the latter. The
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decisions to close down the school for children with special needs and select only high-caliber
students for its JDP indicate that financial objectives can override its educational mission of
impacting more learners. In so far as the family-owned pro-profit model enables decisions to be
made with few external constraints and, often, without the rigorous debate of board members
with diverse points of view, it can also result in the type of groupthink which has led Fairmont to
parachute headlong into China's complex educational system without having first gained a clear-
eyed view of its target market.
Resolving an important paradox at Fairmont may enable it to sustain its
international growth. Fairmont Education Group’s core capability is educating advanced
learners with middle to high socio-economic status in Orange County, California. Fairmont has
established an educational Weltanschauung based on its particular track record of serving
specific segments of the student population in a local context. Fairmont enhanced and expanded
that core capability as it incorporated international students into its student base and developed a
new competency, English as a Primary Language, in the process of assimilating these students.
Using a core-out strategy, Fairmont aims to leverage its core capability, which has been
developed out of a local context, to cater to students across diverse socio-cultural, institutional,
and political contexts. However, in order to be effective across different contexts, Fairmont will
need to differentiate its core capability to adapt to local conditions. A strong learning orientation
will likely guide the company toward greater differentiation and specialization of its divisions to
be microexperts to macromarkets. The company’s desire to stick close to its knitting, all while
becoming relevant to multiple markets will be a strategic challenge.
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In order for international growth to continue, staffing up and retooling will have to
address the need for adaptability and building the cross-cultural intelligence that is
essential to close the knowing-doing gap. Though still in its incipient stage, the joint diploma
program has already transitioned from the sales phase to the full continuum of sales, servicing,
and retention phases. Going forward, longevity in a market like China will likely require a
company ethos built on customer-centricity. Ultimately, Fairmont’s success in foreign markets
may be determined by its ability to recruit, develop, and retain the types of talents necessary to
managing cross-cultural relationships. An increasingly competitive educational marketplace
means that Fairmont can ill-afford any mishap caused by cultural miscues. Even though
Fairmont views itself as globally minded, it has yet to perfect cultural code-switching, or the
ability to modify behavior in specific situations according to vague cultural norms. Vast
amounts of local knowledge, including competitive intelligence and policy intelligence, will be
necessary for Fairmont to make quick adjustments to rapid shifts in market conditions and
engage in scenario building for the medium- and long-term. Cross-cultural intelligence will
facilitate the co-learning that underpins the co-adaptation essential for a fruitful long-term
partnership.
Policy risks and regulatory changes could be game changers upsetting Fairmont’s
business model in a fragmented and rapidly evolving market. By importing quality
American high school courses, teachers, and educational methodology, Fairmont’s joint diploma
program should, in principle, advance the Chinese government’s goal of driving economic
growth through education policies. The Chinese government has employed a hybrid form of
hierarchy and market to regulate the supply of international programs. Similar to it establishing
special economic zones as epicenters of economic reform, the Chinese government has set aside
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special education zones where innovations such as joint diploma programs were allowed to
flourish under the watchful eyes of the Ministry of Education. As the market matures, increasing
sophistication in consumer knowledge and regulation will intensify the competitive pressure
among suppliers, heralding a reshuffling of the market in favor of those with superior capabilities
to simultaneously meet consumer and government demands. The Chinese government has
already begun to tighten the regulatory belt around joint diploma programs lest it be hoodwinked
by poorly managed and ill-fated cross-border partnerships with ambiguous educational merits.
Lacking diversification in its products and services, Fairmont’s business activity in China may
face policy risk should the Chinese government change its policy course. The opacity of the
Chinese regulatory bodies has made it difficult for companies like Fairmont to see through a
shroud of haze for any abrupt changes in regulation and policy which may cause a major
restructuring of the education marketplace. In an environment characterized by a high degree of
uncertainty, diversifying its products and services may be Fairmont’s best insurance against
unforeseen calamities.
In conclusion, the growth of Fairmont Education Group as a K-12 multinational reveals
several key patterns in the development of the globalization of K-12 education. Educational
reform agenda in China based on a quasi-market approach points to the global convergence of
broad educational policy frameworks around a shared vision of best practices to serve the
demands of a global economy. This study highlights that the growth of K-12 multinationals is
tightly knitted into a public sector reform agenda subscribing to a policy framework which
leverages privatization, contracting-out/out-sourcing, and public-private partnerships as vehicles
of institutional reform or redesign. Once co-opted by educators and policymakers, these policy
and governance schemas create the prime political economy for private vendors who brand
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themselves as partners with cost-effective solutions for public sector’s intractable problems
relating to performance improvement.
Fairmont has sought to leverage reform mandates as part of its marketing and growth
strategies. In China the decentralization policy promulgating devolution of fiscal and curricular
authority to local governments and schools has provided a climate of necessity and greater
resources at the local level for schools to be entrepreneurial and innovative. Fairmont views itself
and the JDP as helping their Chinese partner schools to differentiate themselves from their
competition by developing a distinctive brand and capability to address a growing market need.
As a jigsaw piece in China’s macro educational reform, Fairmont Education Group is among an
elite group of edu-businesses at the forefront of an emerging development in the globalization of
K-12 education―supply-pushed and demand-led cross-border educational partnerships as an
innovation allowing schools to tinker at the margin. The joint diploma program is an
experimental educational innovation with the explicit goal of building institutional capabilities to
meet the demands of the twenty-first century for international talents: The Agreement on
Chinese-American Joint Diploma Program stipulates that the Chinese school and Fairmont
Schools enter into the contract “in order to expand personnel training capabilities, to better serve
Chinese students, to cultivate first-class patriotic and advanced international talents, and to
promote international education exchange and cooperation between the Chinese and American
Schools.” Here, an alignment between company interests and national policies could not be
more opportune.
Albeit promising as a vehicle for transformative change, cross-cultural educational
innovations such the joint diploma program can easily succumb to the sudden death syndrome.
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Serious disruptions to both sides are an inevitable by-product of cross-border collaboration as the
novelty and uncertainty in the interactions between them challenge hitherto unexamined and
deeply cherished beliefs and assumptions. However, just as the merging of stars produces a
more luminous star and a great biodiversity exists at the confluence of different ecosystems,
effectively managed international educational partnerships can be a wellspring of fresh energy
and ideas capable of overcoming an institution’s fossilized logic. The cross-over effects of deep
cross-cultural collaboration, akin to a DNA swapping, could be the catalyst for novel solutions to
the grand challenges of the twenty-first century. Sino-American educational partnerships are
important, not the least because it fosters the most important bilateral relationship in the world.
This study also hints at other contingencies associated with the globalization of K-12
education. Despite the polarity of forces―including many local entrepreneurs and reformers―
fomenting the globalization of K-12 education, it is not a movement without contestation. In its
predominant form, globalization is abhorred by those who deem westernization or
Americanization as its underlying subtext. Detractors’ aversion to cultural homogenization,
whereby the Western culture dominates or supplants the local culture, can result in a severe local
backlash through the expression of nationalism. Fairmont Education Group, by the market
segments it has chosen to compete in, is particularly susceptible to this type of backlash. Unlike
other K-12 multinationals, Fairmont has chosen to forgo opportunities in expatriate communities.
Fairmont’s desire to stick to its knitting has also led it to pass over immense opportunities in the
less-regulated supplemental education industry. These opportunities have been well exploited by
multi-billion dollar Chinese education brands Ambow and New Oriental; according to industry
insiders, the top five education companies in China altogether command well less than ten
percent of the supplemental education market share.
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Fairmont has chosen to grow market share in the most regulated market segment of
education in China: government-regulated private schools and government-operated public
schools, institutions charged with the all-important social and political purpose of forming a
cohesive national and cultural identity among the nation’s malleable youths. Fairmont’s tenuous
relationship with its first Chinese partner school, Beijing 21
st
CIS, is didactic for K-12
multinationals: An unrealistic timeline for change based on an incomplete understanding of the
local ecosystem can beget it push back from local administrators and teachers. Resentment by
some local stakeholders toward a unicentric model of globalization in the K-12 sphere can result
in the erection of strong psychic barriers to an effective cross-border educational partnership.
The joint diploma program is just one instrument among many in the Chinese government’s
portfolio of strategies to reform its monolithic educational system. Negative feedback from
administrators about their experiences with international partnership, once reverberated back to
the municipal education bureau and up through the chain of command to policymakers, can
engender a portfolio reallocation by the Ministry of Education. Fairmont’s strategic choice thus
entails a tough trade-off: Even though partnering with local schools can minimize its financial
risks and maximize its return on investment and impacts on students, it can also subject Fairmont
to a heightened level of regulation and policy risk.
Universal stakeholder buy-in to the ideals and practices of the globalization of K-12
education pivots on whether the process is truly polycentric in nature. A growing body of
evidence suggests that globalization is, in practice, a multi-polar process anchored by reciprocal
learning and multilateral influences. International students who gain global skills necessary to
create solutions to twenty-first century challenges inevitably globalize their host campuses and
communities, as evidenced by the instructional, curricular, and organizational changes at
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Fairmont’s legacy campuses. In other sectors, innovations developed in emerging markets for
emerging markets are ingeniously adapted by multinationals to flow reversely to meet the
demands of advanced economies for greater efficiency. To promote successful reverse
innovation, multinationals rebrand their company’s future and shift their corporate center of
gravity to emerging markets (Govindarajan, 2012). The prevalent global trade pattern in
education flows from the advanced economies as the suppliers of educational goods and services
to rapidly developing economies as consumers of these goods and services. However, one can
reasonably expect variant forms of reverse innovation to occur in education when K-12
multinationals such as Fairmont enhance their capacity to innovate for local markets. The
potential of Thesys International to synergize with Fairmont International to build a
technological platform for authentic collaborative learning across nations may yet signal the
increasing polycentric nature of globalization.
Admittedly, global economic integration has heralded not only a convergence of broad
educational policy frames across nations, but also the advent of greater connectivity and
interdependencies among public and private educational suppliers from different countries,
including public schools, private schools, and edu-businesses selling complementary goods and
services. This study suggests that educational innovations will increasingly be about building
parallel processes in different learning institutions and organizations so they can work in deep
collaboration to help students acquire twenty-first century skills. Transnational educational
ventures, however, present new challenges to policymakers and regulators. Policy shifts in
China have left regulatory agencies in tow of rapid changes in the educational marketplace where
innovations have occurred at a pace faster than the capacity-building abilities of regulatory
agencies. Current knowledge about an educational innovation resides in practitioners in the field
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rather than in regulators. Regulators whose purview used to be defined by geographical
boundaries will have to acquire new capacities in order to regulate transnational organizations
which operate beyond sovereignty. The globalization of K-12 education not only complicates
the dialectical relationship between regulators and those being regulated, but also the input,
throughput, and output process of policy-making as policy-making itself is no longer a national
or local affair and policy a national or local artifact. Against the backdrop of an emerging
convergence of global education policies has sprung a nascent trend toward greater globalization
in educational governance and service delivery.

Implications for Practice
With the twenty-first century certain to see a soaring demand for international talents,
Fairmont Education Group’s star might seem in the ascendant still. Be as it may, the findings of
this study do lead to one startling implication: Education as a form of geo-arbitrage has inherent
limitations. The globalization of K-12 education is not about the importation, transplantation,
and deposition of one set of ideals and practices and layering it on top of another. Iterative and
discursive, the practice of globalizing K-12 education is about harnessing the permutations that
come from the integration, hybridization, and intermingling of different sets of ideals and
practices, each with its own internal logic and tried-and-tested axioms. On a pragmatic level, the
real challenge of any organization engaging in boundary spanning is incorporating the now-
wider range of stakeholders to cooperate. The sustainability of international educational
relationships requires a productive predisposition and an iterative approach to managing the
merger of systems. In so far as authentic partnerships last because they provide tangible benefits
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for the majority of the stakeholders, the success of the joint diploma program will increasingly
hinge on Fairmont’s ability to apply the lessons it has learned from the storming phase of the
partnership to counteract the socio-cultural and political dissonance a foreign partner school can
experience in China in order to facilitate the transition to the performing phase of the partnership.
The continued success of Fairmont Education Group as a K-12 multinational requires it
to build the key organizational capability of continually striking the perfect balance between
tight and loose coupling, or the trade-offs between multinational integration needs and local
responsiveness. Fairmont had focused on developing the core capability to synergize across
divisions so that the whole is greater than the sum of its parts. Even though its reputation for
academic excellence at home provided the elemental mulch for its international growth and its
home market was the linchpin for its global operation, continued success in the home market is a
necessary but insufficient condition for success in the international arena. More germane than
the increased scale and scope of economies derived from synergies between its divisions to its
global success is the ability of each in-country operation to differentiate to focus on local
conditions. Only as a microexpert of each country and region will Fairmont be able to fulfill its
promise as a true multinational capable of synthesizing different facts and points of view to
create new possibilities along the frontier of education in the twenty-first century.
Macroscopically, transparency in the regulatory process, visibility in the policy direction,
and specificity in the policy language can remove many structural barriers to an effective cross-
border educational relationship. Cross-border educational partnerships are in general a risky
enterprise requiring patience, forbearance, and commitment from all parties in anticipation of
uncertain educational pay-offs far into the future. In the absence of policy and regulatory clarity,
GLOBALIZATION OF K-12 EDUCATION

118
transparency, and stability, the market tends to be teemed with vendors with strong profiteering
motives rather than providers with the long-term commitment to building the kinds of
infrastructure necessary for genuine educational outcomes. A well-articulated policy with
specific language addressing the concern for the need to balance the centripetal and centrifugal
forces of globalization—maintaining and preserving the relevance of national and local values
and approaches amidst the urgency to integrate and synchronize with the rest of the world—can
quell local stakeholders’ fear of and disdain for the perceived encroachment into their local
autonomy and the cannibalization of their culture by foreign interests.
As an emergent phenomenon, international collaboration between schools in the form of
joint diploma diplomas presents a high level of uncertainty for all parties. Direct engagement
among the municipal education bureau, local schools, and foreign partners may be necessary to
help stakeholders to clarify any ambiguity in the policy language, compensate for the fragility of
new cross-border educational partnerships, and manage the risks associated with on-going
collaboration. Putting this feat in practice, however, entails formidable challenges. Most
notably, the specter of more (not necessarily effective) regulation, bureaucratic red tape, and
political wrangling―all of which would stifle and contravene the intent of the policy to promote
experimentation and innovation at the local level―may heighten the local and foreign schools'
reservations about entering into a partnership. Fears of political outcomes harbored by local
administrators may also deter them from engaging in risky partnerships. Nonetheless, executed
well, this can help foreign partners understand the rules of engagement and provide the assurance
the local schools need to take risks with their instructional programs. The evolutionary forces of
global economy, policy, and competition will continue to shape and hew the globalization of K-
12 education. The joint diploma program, along with other experiments from global K-12
GLOBALIZATION OF K-12 EDUCATION

119
laboratories, are prototypes of their kind whose future has yet to be determined by the
adjustments gleaned from recursive policy learning as well as institutional reflexivity.

Recommendations for Future Research
A survey of the future leaves one great and indeterminate question: Will K-12
multinationals, by virtue of their role and participation in the globalization of K-12 education,
exacerbate the very problems they are called upon by governments to help rectify in the first
place? The global trade of education as a commodity promises to provide novel solutions to
intractable problems relating to educational development, quality, and access. Among China's
policy's goals are to expand the supply of and the access to high-quality education. However, in
a calculated effort to protect its brand Fairmont has restricted access to its programs to well-
resourced elite learners. In the short term, at least, this case study suggests that the involvement
one K-12 multinational in the provision of K-12 education seems to champion quality at the
expense of access. However, over a longer time horizon, innovations occurring at experimental
school sites might, through trickling down and multiplier effects, yield broad-based benefits to
the overall student population. Future research will be necessary to determine whether schools
and policymakers are able to resolve this trade-off between access and quality.
The technical know-how transfer engendered by variant forms of cross-border private-
public partnerships might imply the potentiality for governments to build capacity in areas of
perceived weakness. Certain government functions might be rendered functionally obsolete as a
result of enrolling a greater number of parties in the K-12 sphere, while others have yet to be
developed. The pursuit of new opportunities might lead K-12 multinationals to enlarge their
GLOBALIZATION OF K-12 EDUCATION

120
footprint in the global educational infrastructure of the twenty-first century by partnering with
governments responsibly to unleash the human potential at the bottom of the academic and
socio-economic pyramid. It still remains to be seen if, over the long-term, K-12 multinationals
can be engines of a globalization premium (derived from deducing the total costs associated with
the globalization of K-12 education from its total realized return).
Future research on the topic of globalization of K-12 education should include cross-
sectional case studies of Fairmont Education Group and other K-12 multinationals to determine
whether these companies will in fact fulfill their potential and promise to deliver a more
efficient, effective, and relevant education in the globalized society of the twenty-first century.
Further cross-sectional case studies could also be used to determine convergent and divergent
patterns of development or themes among K-12 multinationals. As these K-12 multinationals
focus on different geographical and international niches, data concerning their commonalities
and differences can lead to a better understanding of the diverse trends in the globalization of K-
12 education across different nations.
The goal of future research would be to collect sufficient empirical data to bring
transparency to the activities of K-12 multinationals as a means to assess their immediate and
cascading impacts, leading to a greater understanding of the externalities associated with their
role in global educational governance and delivery. On-going data about these companies will
contribute to recursive policy learning and appropriate policy adjustments. Furthermore,
successful strategic, operational, and organizational characteristics of K-12 multinationals could
be replicated at other educational institutions seeking to embrace globalization in their
institutional redesign.
GLOBALIZATION OF K-12 EDUCATION

121
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Appendix A
Document Review Master List – Categorized
Contextual Factors Facilitating or Hindering International Expansion
 State of Fairmont Address March 20, 2012
 Vistage Inside Program interviews with Fairmont executives on March 3, 3012 and
March 6, 2012
 General English Joint Diploma Program Contract
 English Joint Diploma Program Contract Appendix
 Joint Diploma Program information session invitation
 Joint Agreement and Memorandum of Understanding between the American School of
Vietnam and Fairmont Schools
 Fairmont custom contract press release
Reorganization and Instructional and Programmatic Changes
 Fairmont Private Schools Executive Leadership organization chart
 Fairmont International Education organization chart
 Fairmont International Education brochure
 Joint Diploma Program online ad
 Joint Diploma Program presentation for agents and school administrator
 U.S. History course flyer.
 Thesys Plan 2011/2012
 Summer English Immersion Programs flyer
 English Camp and American Culture Camp flyer
Definition and Measurement of Success in a Multinational Context
 Company marketing materials
 Fairmont Private Schools website
 Fairmont Student Survey results
GLOBALIZATION OF K-12 EDUCATION

126
 Fairmont Parent Survey results
 Fairmont Teacher Survey results
 Fairmont Private School’s Five Year Financial Summary
 Joint Diploma Program 2011-2012 Actuals vs. Budgeted
 Joint Diploma Program Five Year Forecast

GLOBALIZATION OF K-12 EDUCATION

127
Appendix B
Interview Questions
Fairmont Executives Interviewed
 Owner and President
 Chief Executive Officer
 Vice President of Human Resources
 General Manager of Thesys
 Director of Marketing
 Director of Summer and Immersion Programs
 Director of Operations
 Dean of Academics and Advanced Studies
 Director of Mable Campus
 Director of Anaheim Hills Campus
 Director of Edgewood Campus
 Headmaster of Fairmont Preparatory Academy
 Chief Financial Officer
Chinese Educators and Industry Leaders Interviewed
 Executive Principal of Beijing Twenty-First Century International School
 Director of International Education at Beijing Twenty-First Century International School
 English teachers at Beijing Twenty-First Century International School
 Principal of Fuxian Number Nine Senior Middle School
 General Manager of Shinyway Education
 Financial Officers at Ambow Education Group

GLOBALIZATION OF K-12 EDUCATION

128
Standardized Open-ended Interview Questions for Fairmont Executives:
1. What has motivated the company to expand internationally, and what contextual factors
have facilitated or hindered that expansion?

2. How do both the local and international regulatory and policy contexts play into
mediating the company’s activities?

3. How does the regulatory environment differ in the countries in which the company
conducts business?
4. In what ways has the company organized itself differently in order to grow as a
multinational? How have instructional practices and programmatic offerings changed
over time?

5. What parts of global demand does the company most want to address and is the most
capable of responding to? What parts of the global demand does the company least want
to address and is the least capable of responding to?

6. How does the company define and measure success in a multinational context? How has
the definition and measure of success changed from the time the company operated only
in the U.S.?

Standardized Open-ended Interview Questions for Chinese Administrators and Teachers`:
1. What has motivated the school to enter into a joint diploma program with
Fairmont and what contextual factors have facilitated or hindered that partnership?
2. How does the regulatory and policy context play into mediating the school's decision to
enter into the joint diploma program and the implementation of the joint diploma
program?

3. How has the joint diploma program impacted the organizational and instructional
practices of this school?

4. How does the school define and measure the success of the JDP?

Abstract (if available)

Abstract Trends in globalization and privatization have begun to radically and fundamentally alter the context and landscape of K-12 schooling. Accosted with rising demand for education on one side but flanked by budgetary and institutional constraints on the other, governments worldwide have opted for privatization as a policy lever for increasing the supply of education. Despite the potential and promise of K-12 multinationals to meet the rising global demand for education, their role in the provision of K-12 schooling remains controversial. Furthermore, the paucity of information regarding their financial and operational reach has obfuscated attempts by governments to assess their inherent risks and rewards and associated externalities. This qualitative case study of Fairmont Education Group, a K-12 multinational headquartered in California, answered research questions relating to the motivational and contextual factors, along with organizational and operational characteristics, which have influenced the company’s international growth. The findings of this study indicate that macro educational reforms across the globe have created the conciliatory market conditions for Fairmont to respond to an education gap in rapidly developing economies. As Fairmont faces significant policy risks and operational challenges, the sustainability of its international growth hinges on its capability to reconcile the dichotomous needs for greater adaptability to local conditions and integration as one collective unit. This study serves as a revelatory case from which replication and further empirical work can extend the body of knowledge regarding the nature of K-12 multinationals’ role in the globalization of K-12 education and public sector reform.

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Asset Metadata

Creator Taylor, Yu-Wen (author)

Core Title Understanding the globalization of K-12 schooling through the lens of a multinational education company: a case study of Fairmont Education Group

School Rossier School of Education

Degree Doctor of Education

Degree Program Education

Publication Date 05/21/2013

Defense Date 03/06/2013

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

Tag Globalization,international education,K-12 education,multinational,OAI-PMH Harvest,twenty-first century education

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Advisor Hentschke, Guilbert C. (committee chair), Burch, Patricia E. (committee member), Diamond, Michael A. (committee member)

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