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Module Project 21st Century Business

Author: Date: Publication

Richard Miller July 20th 2005 University of Liverpool MBA-CB-050609-04

TABLE OF CONTENTS Chapter 1 Introduction________________________________________________ 3 Chapter 2 Strengths and Weaknesses_____________________________________6 Chapter 3 Threats and Opportunities _____________________________________8 Chapter 4 Financial analysis ___________________________________________10 Chapter 5 Strategic Issues _____________________________________________13 References and Works Cited__________-_________________________________15

CHAPTER 1 INTRODUCTION The Ritsumeikan Academy
Profile of an ever-growing educational institute


Ritsumeikan Academy first started in 1868 as a law school by Prince Kinmochi Saionji . Later it developed into a full-fledged private university with full accreditation by the Japanese government (this took place in the early part of the 20th century). By the end of the 1980s it found itself with falling enrollment and fewer students taking the entrance exams. [0]In order to over come this, the university took several proactive steps to change the direction that things were going. One thing that they did was to raise the academic standard and increase the difficulty of entering the university. They did this two ways; by making the entrance exam more difficult, and by requiring the entering students to have a stronger academic record. While this may have harmed the short-tem enrollment, it had the opposite effect long term. [1] By raising its standards it started to increase its prestige in Japan. In today’s newspaper it is listed as the ‘top private university in Western Japan for policy science’ [2]. It also renovated and built new buildings on its main campus (Kinugasa), added several other schools and broadened its scope of students. The students that the university sought were those who had spent time away from Japan (know as returnees), older students and graduate students. Along with this, the number of international students and scholars has increased. Today, the university is known as one of the best in the Kanasi region-KAN-KAN-DO-RITS is the acronym that many people reefer to when talking about the 4 best private universities in the region (of 20 million people and economy similar in size to Canada’s). In addition, they are growing, with a new law department building and an expanded junior high school. Ritsumeikan has a history of liberalism (it proudly remembers the fact that it “accepted seventeen professors who were forced by the government to leave Kyoto Imperial University for their pacifist activities in the 1930’s. In addition, Prince Saionji was an ‘internationalist’. The Origins of the name "Ritsumeikan"

The word ritsumei comes from a passage in the Jinxin chapter of the Discourses of Mencius. This passages states that: "Some die young, as some live long lives. This is decided by fate. Therefore, one's duty consists of cultivating one's mind during this mortal span and thereby establishing one's destiny."

Ritsumeikan thus means the "place to establish one's destiny." [3]

The university system is made up of 3 junior high schools/ high schools (in Hokkaido and Kyoto) , the main university with two campuses in Kyoto making up 30,000 students and an international school that is in . It is known as APU (located in Oita Prefecture), and it describes itself as; “With approximately half of its students coming from over 50 different countries, APU is a “multicultural community.” APU takes the following as its ethos: “freedom, peace, and humanism,” “international mutual understanding,” and the “creation of the future of the Asia Pacific.” [4] The university is made up of several departments, an international university, a junior high school and a high school. The departments of the main university are; Law, Social Sciences, International Relations, Policy Science, and Letters as well as Economics, Business Administration, and Science and Engineering

THE CULTURE In order to describe the culture at the university, (and what those of us have to endure) a very brief introduction to some of what I think might be relevant cultural aspects of Japan should be attempted. Japanese tend to do things through consensus, with meetings a regular part of group activities; “unity in which all people aim for the same goal is strictly enforced” [5]. This can go from small corporations to large one’s, as well as universities. While there is consensus, there is a head of the university, and each department has its’ own head “the social structure of Japan developed a vertical organization that stresses one’s place within the group and in which one’s rank or status is clearly distinguishable, often based on seniority within the group” [5]. Therefore, getting things changed and direction ratified is often seemingly an exercise in democratic and bureaucratic processes, however the decision has been made before it was ever discussed. In

addition to the Japanese aspect, the fact that it is a university puts it into a slightly different category. The culture of many universities can often be described as what David Damrosch called “a universe of sorts. . .a universe obeying its own laws and deriving from its own history, intimately linked to current social realities at some points but bafflingly distant from them at others” [6]. It is these two cultural perspectives that the university operates within. STAFF
As for the faculty at the university, one thing that the university has done with respect to the instructors is to divide the type of contracts that propel are issued. There has been a big cutback on the number of tenure track positions, with non-tenure five-year term contracts the norm. All instructors are placed into one of 6 positions sennin (tenured), jokin koshi (full time lecturer, five year term), shokutaku (special full time, five year term), hijokin (part-time, yearly) and visiting scholars. The lower number of tenured positions has allowed the university to be rather flexible with the teaching staff, and to introduce change into the system. In addition, they are able to save money because the part-time and non-tenure positions are so much lower paid. It does lead to lower loyalty with the teachers. I have seen several teachers leave half way through the year to get another job. Although with the number of qualified teachers looking to work there, filling a vacancy does not seem to be a problem (there were more than one hundred applicants for a recent shokutaku position).

The budget for the university, for 2004 was about 90 million US dollars. There were 956 faculty and 777 staff. The student body was made up of 31 275 undergraduate, 2 407 graduate students and 540 foreign students at the university. At APU there were 4 898 students, and at the high schools/ junior high schools there were 4 946 students. Finally, there were 264 383 alumni from the university[7].

Chapter 2 Strengths and Weaknesses
The first part of the acronym SWOT is top describe the organization’s strengths and weaknesses. These are generally thought to be what the organization has internally to help it deal with opportunities and threats in the external environment. STRENGTHS The name of the university is perhaps one of its biggest strengths (it has become a brand name). This is perhaps, at least in some part, to the rank of the university; as recently as June 22, 2005 it was ranked 11th overall in public administration. [8] The university is known as one of the best in the Kanasi region-KAN-KAN-DO-RITS (Kangaku, Kansai Daigaku, Doshisha and Ritsumeikan) is the acronym that many people reefer to when talking about the 4 best private universities in a region of 20 million people and economy similar in size to Canada’s).[9,10] The university was ranked number one in both foreign lectures and foreign instructors by the Asahi newspaper for 2005 [11] [12] In addition, the university has quite a long 136 year history. Another is the diversity of the Ritsumeikan University system; from elementary school to graduate schools, spread from southern Japan (Asia Pacific University in Southern Honshu to the high school in Hokkaido) has attracted a lot of positive attention. The university is a private university system, and that allows the university some leeway with policy and direction (all within the boundaries of the Ministry of Education, of course). A further strength that the university has is the infrastructure of the university in both assets as well as human resources. It has expanded and been upgrading several things in recent years, from renovated buildings and building new buildings to having the entire university wireless. In addition, there are a large number (1286) of instructors, lecturers and professors working at the university-all with at least a master’s degree. The university also increased the number of foreign language instructors and built up a number of ties with foreign universities (including American University in Washington DC and UBC in Vancouver). These steps helped to build a bigger profile for the university within Japan. [IBID] Finally, the size of the university system allows students to choose from a variety of schools. These include various faculties as well as various levels of education. The levels run from junior high schools, high schools, Ritsumeikan Asia Pacific University (APU), Ritsumeikan University and the recently acquired elementary school. The 2004 enrollment stood at 43,141. WEAKNESSES There are several areas that can be considered both strengths and weaknesses; as well a being a strength, being a private university is also a weakness. There is the cost of attending a private university; it is considerably more expensive than a public university and the perception that it is not as prestigious as a public university. In addition, the

university has not produced a single prime minister, or many political leaders (this compared to a private Tokyo University and Waseda, which have produced numerous Japanese prime ministers and political leaders). Therefore there is a lot of competition for the best and brightest students that private universities must face. Of the 702 universities in Japan, 526 of them were private, versus 176 that were private. Out of the 2,803,980 university students the vast majority (2,061,113) were in private institutions. [13] Another strength that could also be construed as a weakness is the system of having junior and senior high schools. This allows students from the high schools within the school system to freely enter the university. The problem is that the students from the Ritsumeikan High Schools are often not at the same academic level as the students who entered from the general population. The dichotomy between the two may lead to a lowering of the academic standards. The level of foreign language students over the past two years has dropped in several departments. [14] This could lead to very serious internal policy problems and competition between departments for the better students. Even now, it is well known that the Law Department is much more difficult to enter than the Arts Department (though this has been true of universities that I’ve studied at, it seems to be particularly striking here). [IBID] An internal weakness that has come up recently has been labor related with some of the lecturers. This is due to the limited time contracts that are offered to the teachers among other working conditions. Recently there have been a number of union activities that have been documented in the Japanese press. Aside from disgruntled employees this has a tendency to look bad in the Japanese press. [15]

Chapter 3 Threats and Opportunities The second part of the SWOT represents the opportunities and threats that exist in the external environment. OPPORTUNITIES While the population of Japan is falling, the university has positioned itself to attract more students. There are more students from the school system that can be brought into the university from the (new) elementary school, expanded junior high school and existing high schools. As the university has improved the brand name, the number of students from the general student population has increased. In addition, the area of older students returning to study (known in Japanese as Shakaijin) is also increasing. With the aging of the population, this leaves plenty of room for expansion with this type of student. Traditionally in Japan, the population of university students were homogenous in ages, between the ages of 18 and 24. Recently more and more working people have begun to return to university to study. Finally, with there are more and more Japanese high schools sending students overseas to study for a year, individual families sending their children overseas for a time and employers sending entire families abroad. This has greatly increased the number of returnees that are now in the general population. As Ritsumeikan has special classes and programs for this type of student, they are sure to expand in numbers. [16] A unique opportunity that is open to Ritsumeikan comes from its long history with law pedagogy. The school has a long history of having a strong law department, and with the new changes in the system of certifying lawyers in Japan, this can become a major asset in the near future. Up until recently, the bar exam allowed only 3% of candidates to pass the exam and become lawyers. This figure was revised last year, allowing for ‘substantially more’ candidates to become lawyers. In response to this opportunity, the law department acquired a property about two miles from the main campus in Kyoto and they are now proceeding to develop the property with a new school. THREATS The biggest threat is the education market and the falling population in Japan, combined with 14 years of slow to negative economic growth, which has had an overall detrimental effect on the educational institutions all over the country. Everything from kindergartens to graduate schools has felt the population decline. While this is more an external threat, it leads to a problem of falling enrollment. The drop in enrollment in some educational schools is quite dramatic, particularly the expensive private sector schools (of which Ritsumeikan is a part). There has been a steady decline in the total number of college and university students since 1995 in Japan. [17] The university has continually increased its student body while the rest of the country has gone in the opposite direction.

Threats from other universities are again an external threat that become internal when competition changes the standards. There are a number of institutions that are competing for the dwindling stunned population. For example, Doshisha is already allowing more returnees to enter the student population there. [18] In addition, there are more and more returnee programs in other universities like Konnan University. [19] As the success of Ritsumeikan becomes well known, they can expect more competition from other institutions trying to implement some of the successful strategies that they have worked at Rits.

Chapter 4 Financial analysis

Financial Statements for Ritsumeikan University, 2002/2003 BALANCE SHEET (unit: thousands of yen) ASSETS Non-current assets Property and equipment Other non-current assets Current Assets Total LIABILITIES Long-term liabilities Current Liabilities Total liabilities Trust Equity TOTAL 18,859,405 14,588,485 33,447,890 218,472,076 250,346,983 18,124,731 23,449,286 41,574,017 206,504,427 247,344,988 2003 214,433,977 174,115,396 40,318,581 35,913,006 250,346,983 2002 209,438.835 167,084,284 42,354,551 37,906,153 247,344,988

INCOME STATEMENT (unit: thousands of yen) [1] INCOME Student fees Processing Fee’s Donations Subsidies Investments Gains from Sale of assets Income from business Miscellaneous TOTAL EXPENSES Personnel Research Maintenance Interest Depreciation & Asset stripping TOTAL Net income 2003 43,670,122 3,531,266 1,773,790 6,166,368 309,869 379,312 1,853,867 929,735 58,654,289 2003 23,663,106 19,090,204 4,153,666 263,207 355,984 47,526,167 11,128,122 2002 41,420,898 3,363,054 1,205,759 6,117,481 319,787 0 1,638,891 893,078 54,958,948 2002 22,425,287 17,716,522 3,658,024 402,405 1,626,344 45 828 582 9,130,366

Financial ratios RATIOS Current Ratio Leverage 2003 2002 Current Assets 35,913,006 37,906,153 ------------------------------- =2.46 -------------= 1.62 Current Liabilities 14,588,485 23,449,286 Total Liabilities 33,447,890 ------------------- -------------=0.15 Trust Equity 218,472,076 Net Income --------------Trust Equity 41,574,017 --------------=0.20 206,504,427

Return on Equity

11,128,122 9,130,366 --------------=4.4% ---------------=3.7% 250,346,983 247,344,988

RATIOS The current ratios are quite solid. The biggest change from 2002 to 2003 was due to the debt retirement. This had a fairly large effect on the current ratio. Leverage: Because the leverage ratios are well below one, there is little debt to equity. There was a major reduction of debt between the two years, bringing the ratio down further. The return on equity seems low, but a couple of things must be kept in mind. Restrictions on funds used by the trust limit the amount of debt the university can have. In addition, the return in Japanese banks or government bonds is less than one percent in this market. Other information; While there was about a 1% increase in the number of students (42,677 in 2002 versus 43,141 in 2003). During the same period, there has been an increase in the number of faculty by 15% (956 in 2002 versus 1,116 in 2003). While this has led to higher personnel cost (a five percent increase), it has also led to a lower student/teacher ratio (35.79 in 2002 versus 30.58 in 2003). While it seems high when compared to American universities [20], it is a bit below many of the other universities in Japan. [21] In addition, other assets relevant to a university that Ritsumeikan has are 2,304,083 books, 4,989 computers and information equipment and 504,831 square meters of building space (an increase of 29,710 square meters from the year before) on 2,051,481 square meters of land (a decrease after 11,371 square meters was sold). Being a private university, the largest source of revenue, by far is the tuition (and processing fees) from the students (it represented approximately 80 percent of the revenues for 2003 and 81 percent in 2002). Note that there has been some resistance to the tuition increases from the students. Protests have disturbed classes on at least one occasion this academic school year. There are more increases scheduled for the 2006/7 school year.

Chapter 5 Strategic Issues Ritsumeikan, being a university, perhaps a look at what kind of organization it is would help clarify the parameters that it finds itself in. The university system can be described as the following; “the university has played an important role in the development of thought and culture. It is at least as old as the societies formed during the Middle Ages upon the model of craftsmen's guilds that furnished mutual protection for teachers and/or students. It has continued, not entirely uninterrupted, to its present highly developed and Americanized mien as big business and clearinghouse of ideas. Nevertheless, the university is unparalleled as an agent of innovative thought, creative dialogue, and sociological change. . .” [22] Ritsumeikan has declared that it is a university with a liberal history, and therefore a liberal institution. From this background and within the Japanese cultural norms, it has at least attempted to develop in a very western framework (having been founded shortly after the opening up of Japan during the Meiji era) and it has seemed to have worked within those parameters. While a successful institution, it still faces threats. The biggest external threats area a combination of declining population along with an economic slump that continues in Japan. However, the financial future of the university looks bright. The low debt ratios and increasing revenue have left the university with plenty of room for problems. The financial situation of the university is quite strong as they have plenty of reserves to last over the next several years in the event of any economic problems that might hit the university. In addition, there are several areas that the university has room for expansion. The new Law Department is being set up to take advantage of law school grads. The letters and international relations departments are expanding shakaijin (mature students) and returnee’s classes. In addition, the recent purchase of the primary school has had the school system set up to educate some students form the earliest age to graduate school. In addition, there is the expansion of language teaching (increased number of language teachers). The increased competition in Japanese competition seems to have led the university on the path that it has taken. The aggressive expansion program that has been implemented led to an interesting and dynamic institution. A fairly new and successful area that the university has spent time and resources has been the increased connections with foreign universities, the expansion of its international curriculum and the increases in foreign students. This is another example of the success that the administration has had with attempting new things; the APU MBA programs is rated one of the best in Asia [11]. With English language universities there are the international exchanges with the University of Oklahoma, UBC, University of Boston and American University. As far as other languages, there are several exchanges set up with Chinese universities in Shanghai and Beijing and Spanish exchanges with the

University of Mexico. These changes were planned well in advance and have contributed not only to increased enrollment, but to a higher visibility in Japanese society for the university, which is very important in this environment. In order to continue on with its expansion and exploit its opportunities and overcome its threats, it needs to continue to keep the academic standards of the university and resist the temptation of allowing students with less academic ability to enter the university simply because they can pay. As the population of Japan continues to decline along with post secondary education enrolment, this temptation may become more difficult to resist. By continuing to aggressively expand into new markets and adapt to the changes that are taking place, they seem to be on course to do that. Finally, the university should also objectively examine the situation with the lecturers. By inviting labor strife they are defeating several purposes. These include the alienation of both students and teachers as well as risking the reputation of the university; all for a relatively small sum of money (in order to bring the salaries on par with other universities). [23] In conclusion, there are a number of changes taking place in the post secondary education systems in Japan today. There have been numerous failures of some institutions, and Ritsumeikan is an example of one institution that seems to be thriving on change. With continued forward looking, there should be further dynamic growth with this university.

[0] [1] [2] [3] Daily Yomiyuri Japanese version June 22nd, 2005 [4] [5] Osamu Ikuno, Roger Davies The Japanese Mind: Understanding Contemporary Culture Tuttle, Tokyo: 2002 [6] We Scholars: Changing the Culture of the University by David Damrosch Harvard University Press, Cambridge 1995 pp 18 and 19 [7] ml
[8] The Daily Yomiyori June 22, 2005. [9] [10] [11] [12] [13] [14] Escandon, Arturo ‘Education/learning Resistance in the Foreign-Language Classroom: A Case Study: Ritsumeikan University Presented September 15th, 2004. [15] [16] [17] [18] [19] [20] cher_ratios.htm [21] [22] [23]