Entrepreneurship and Society: A case of Private School

Teaching Notes

Synopsis

This case takes its roots from the impressionable mindset of the parents of young
children in Pakistan and elaborates on the factors that make this mindset gullible. It
sheds light on how private schooling for children becomes a priority for a post-
colonial generation of parents and how this desire awakens and gets fueled by the elite
of the society. The case further explains the distinctive factors between the public and
private schools in the country and how both are discrete entities: the lack of
discipline, funds, and the nature of environment and teaching in public schools pose
no threat to the well-run and sustained systems of the private schools. The case
acknowledges the caliber of private schools programs that induce a well-groomed
personality in a bright student through their various set-ups that include vivacious
extra-curricular activities to extremely well sustained educational competitions that
extract out the best in the student. However, this case snubs the staggering profit
motives of private schools that have plundered the parents for too long and how it is
absolutely incumbent upon the society to reconsider their choices of education for
their children. The constitution of Pakistan doesn’t put any limits to the profits made
by any business but the private schools are certainly standing on a shaky ethical and
moral ground that they should budge from.

Learning Objectives

1. Learn how stereotypical mindset helps any business idea to flourish.

2. Distinguish between the public sector schools of Pakistan and a developed country
and the factors that derail public education in developing world.

3. To study the profit and loss details and profitability ratios of private school
4. Learn about the behavioral finance and underlying material circumstances in the
case study

5. To study how the society plays a role in pressurizing an individual to take decision

6. To learn the key factors involved in the entrepreneurship process and how
important it is to study the society before launching a business

Position in the course

This entire study can be taught in various courses like psychology as well as
economics. It can also be taught in behavioral finance. Why psychology? This study
highlights the societal pressure on an individual and explains his actions and reactions
when such situation occurs. It can be taught how to overcome such pressure in the
course of psychology. Why Economics? Well the main determinant that plays an
essential role in such decision making process is the Income. If an individual have
more income, then its obvious that he/she has the ability to bear such heavy expenses
and vice versa. For example if Zafar earns a monthly income of Rs 150,000, it seems
like he can easily afford the academic fee of Rs 20,000 per month of a single child.
However, he needs to cut the other expenses in order to maintain a reasonable
purchasing power according to his salary. This comes under the umbrella of
economics as income is pivotal factor that is being taught in the course of micro and
macroeconomics. Why behavioral finance? This case study would help in making the
decision between the alternatives through the financial stress. Although, financial
stress or any other stress is not good for one’s health, but it plays an important role in
making the right decision. This case study can also be taught in the course
entrepreneurship to discover key points about stereotypical mindset and how it helps a
business to flourish and grow

Relevant Readings

 Alderman, Harold, Jooseop Kim, and Peter F %J Economics of Education

review Orazem. "Design, Evaluation, and Sustainability of Private Schools for
 the Poor: The Pakistan Urban and Rural Fellowship School Experiments.
(Alderman, Kim, & Orazem, 2003)" 22, no. 3 (2003): 265-74.
 (Alderman et al., 2003; Alderman, Orazem, & Paterno, 2001)

 Alderman, Harold, Peter F Orazem, and Elizabeth M %J Journal of Human

resources Paterno. "School Quality, School Cost, and the Public/Private
(Alderman et al., 2001)." (2001): 304-26.
(Alderman et al., 2001)

 (Alderman et al., 2001)

 Amjad, Ravish, and Gordon %J Idara-e-Taleem-o-Aagahi MacLeod, Lahore,

Pakistan. "Effectiveness of Private, Public and Private-Public Partnership
Schools in Pakistan." (2012).

 Andrabi, Tahir, Jishnu Das, Asim %J World Bank Khwaja, and Harvard
University. "The Rise of Private Schooling in Pakistan: Catering to the Urban
Elite or Educating the Rural Poor?". (2002).

 Aslam, Monazza %J Education Economics. "The Relative Effectiveness of

Government and Private Schools in Pakistan: Are Girls Worse Off?". 17, no. 3
(2009): 329-54.

 Jimenez, Emmanuel, and Jee Peng %J Comparative Education Tan.

"Decentralised and Private Education: The Case of Pakistan." 23, no. 2 (1987):
173-90.

 Siddiqui, Nadia, and Stephen %J International Journal of Educational

Research Gorard. "Comparing Government and Private Schools in Pakistan:
The Way Forward for Universal Education." 82 (2017): 159-69.

Assignment Questions
 comment on the income statement of the private school ?

 with reference to the market type discussed in the case, how do you think that
government strategies can protect consumer from exploitation?

 explain the concept of behavioral finance and explore its applicability in the case.

 explain the concept of entrepreneurship and figure out the reasons can a society
be the source of a business idea

 explain the profitability ratios applied in the case.

Teaching Plan
explain to the students the environment of society and its 15 minutes
prejudices. Teachers should start from the point where Zafar was
given suggestions by his friends

highlight the concept of behavioral finance and explain how the 20 minutes
budding entrepreneurs benefit from the societies mindset

Explain the differences between the private and public sector 10 minutes
school, and then ask students what they think which one is better
and why?

explain to the students the increasing profitability by explaining 10 minutes

the income statement and profitability ratios

Separate the accounting information and then ask the students to 10 minutes
prepare the income statement and calculate profitability ratios

explain the concept of market type in the case and its advantages 5 minutes
and disadvantages

explain how financial burden reduces the disposable income of an 10 minutes

individual by referring to the case of Zafar

Ask students about a related dilemma in which they have to take 5 minutes
decisions from two or more alternatives

Summarize the key points and all the objectives 5 minutes

Questions for Advance Assignment

 Imagine yourself as Zafar. What factors would you consider before taking such
decision?

 Imagine a situation in which you have to take the decision from two or more
alternatives. Explain the whole background like Zafar’s case?

 What are the best possible ways to avoid the societal pressure ?
 Imagine yourself as one of Zafar’s friend. How would you suggest Zafar about
private school? How would you react if he decides to keep his children in public
school where they are currently studying?

Answers of Assignment Questions

 Income Statement of the private school shows a positive net profit. According to
the statement of income the operating income is 401,565,995, which is sufficient
enough to cover the expenditure. The operating expenditure include teaching cost
which is 164,676,837, research cost which is equal to 40,427,701, Auxiliary
Facilities cost which is 34,666,742, administrative cost that is 15,318,138,
depreciation and amortization which is equal to 20,791,778 and financial cost
which is 30,708. These costs are deducted from operating income and other
income has been added to give net profit of 141,524,547. The profit shows that
private schools generate more revenues as compare to public schools as we can
see a positive trend in the profit.

 There are two types of markets when talking about schools that are public sector
school and private sector schools. According to the research and analysis, it is
found that private schools are better than public ones. But it’s not possible for
everyone to get enrolled in private schools due to high fee structures. Due to elite
class environment and high quality education, these private schools are charging
so much fees that is beyond the scope of our imagination. Although these schools
have what every parent exactly wants for their children, but they are trying to
exploit them with high fee structures. Government needs to design such strategies
to protect the rights of these customers, and if any schools try to exploit that
particular strategy, then government should charge strict penalties. Government
should reduce the fee and should force the schools to remove the irrelevant
charges in order to reduce the fee structure. Government should apply a law to cut
down the fee to 50% for those students who get more than 80% marks. Secondly,
these schools should not charge fee for summer breaks that would also release
burden from parents. Government can also play an essential role by designing the
standard fee structure for each course throughout the primary, ordinary and high
school levels.
 Behavioral finance is the study of the psychology's effect on investor or financial
analyst behaviour. This also involves the consequences to the markets that follow.
This acknowledges the fact that investors are not always rational, have limitations
on self-control, and are motivated by their own prejudice. According to this case
study, behavioral finance also exists actively. Zafar faces the financial stress
when he figures out the fee structure of private school that is Rs 20,000 per
month for one child. Obviously, he started thinking so much that how he will
manage the financial crises once he transfer his kids to the private school. He
considered all the pros and cons before he take the final decision, but here
societal pressure has a major involvement in his decision making process.

 Entrepreneurship is the phase in which a new business is planned, launched and

managed, and is always initially a small business. Entrepreneurship is defined as
the ability, capacity and willingness to create, organize and manage a new
business and any risks associated to make profit. Throughout the world,
entrepreneurs take keen interest in developing a value perception about their
product or service in the mindset of the society. A problem is identified and
innovative solutions are introduced by entrepreneurs. In Pakistan, over the recent
decades, we find numerous examples of how entrepreneurs have achieved success
by educating or exploiting a certain mindset. For example in this case study, the
mindset of a common man Zafar has been exploited when he visited the private
schools. Not only Zafar became the target of these clever entrepreneurs, his
friends were also targeted. Obviously, they would have also visited the luxurious
environment of these schools, that’s why they suggested it to Zafar. However,
one can not deny the fact that courses are same as taught in public schools, but
people perceives that its much better than public schools. Its just a matter of
perception that is being cultivated in the mindset of these people. There are other
examples associated with this concept. For example, the packaged milk was
introduced as a hygienic alternative for loose milk. Gradually, the majority of the
society succumbed to this idea of packaged milk being a much safer product to
consume. One example is of body building supplements. Body building
supplements is a recent phenomenon especially in Pakistan and entrepreneurs
actively indulge in educating their market about the supplements. Previously the
 natural protein sources were considered safe but gradually the societal head space
is diluted by entrepreneurs to achieve success.

 The profitability ratios consists of net profit ratio and operating profit ratio. Net
profit ratio 42.12%. This NP ratio shows a positive indication and assess the
overall performance of the activities of the school, and it also shows the measure
of how well the trading activities of a school are conducted. Operating profit ratio
is more than 100% that is 119.50%. The operating profit ratio creates a strong
correlation between operating income earned and operating net revenue.

Possible Supporting Material

There are approximately 227,316 numbers of total schools in Pakistan and 68848 are
the number of private schools, making them the 30% of the total schools in Pakistan.
During the past, leaders and politicians sought to win over the province of Punjab, as
it is Pakistan's most heavily populated province that holds the right of any political
party to join a federal government. So obviously, as per infrastructure installation and
facilities, Punjab is the most developed province that gives rise to economic activities
and thus results in the development of people with higher per capita income. This is
illustrated by the fact that the number of children attending private schools in Punjab
is a staggering 43%. Sindh comes second to Punjab with 39 per cent going to private
schools led by KP 31 per cent and lastly Pakistan Baluchistan's least developed
province as 10 per cent enrollment in private schools.

According to Harold Alderman and Peter F. Orazem in their article School Quality,
School Cost, and Public/Private school choices of low income households in
Pakistan, Variations in school characteristics, distance and fees across
neighbourhoods are used to classify variables that influence whether
average households should send their kids to public school, private school or no
school. Analysis reveals that even the poor households make substantial use of private
institutions, and that utilization increases with income. Reducing private school
tuition or distance or increasing assessed quality standards leads to private school
admissions, partly through transferring from public schools and partly through the
admission of children who may not have gone to school otherwise. The high demand
for private institutes is associated with reports of bigger achievement in mathematics
and languages in private schools relative to public schools. Such findings clearly
endorse an expanded involvement in offering private schooling services to average
income people in developed countries.

Conclusion

There are private sector and public sector schools around the world. It is important for
an individual to study both the markets and make a suitable choice according to their
income. One should not be influence by the society as the people will just say
whatever they feel like. After all, It is you who need to live your life and face the
consequences, not the society! So its really important to cope up with the societal
pressure. Secondly and most importantly, entrepreneurs should stop to exploit the
mindset of the society for their own benefit.

Key Words

Societal pressure, income, stereotypes, prejudice, post-colonial, entrepreneurs, public

schools, private schools

Alderman, H., Kim, J., & Orazem, P. F. J. E. o. E. r. (2003). Design, evaluation, and
sustainability of private schools for the poor: the Pakistan urban and rural fellowship
school experiments. 22(3), 265-274.
Alderman, H., Orazem, P. F., & Paterno, E. M. J. J. o. H. r. (2001). School quality, school cost,
and the public/private school choices of low-income households in Pakistan. 304-
326.