There are various different ‘metrics’ which companies use to measure business performance, but easily the most important is ‘market share’. During 2010-2011 I managed a TBI school which had contracts with some large automotive manufacturers and also with people in the tobacco industry. I noticed at the time that businesspeople from those companies often mentioned this concept of ‘market share’ when we were discussing results- especially when I ran a Business Presentations course, unsurprisingly. Strangely enough, TBI almost never discussed market share when I was there, and I think the reason is obvious. TBI has been losing market share for a long time, and they certainly don’t want that information to get out, especially to investors. No one wants to invest in a shrinking player in the market. This week we want to illustrate how TBI has rapidly been losing market share- a trend which has left it in the shade not only of EF, the market leader, but now Wall Street Indonesia as well. Why is market share important? Here is a decent general explanation:
Market share is a key indicator of market competitiveness— that is, how well a firm is doing against its competitors. This metric, supplemented by changes in sales revenue, helps managers evaluate both primary and selective demand in their market. That is, it enables them to judge not only total market growth or decline but also trends in customers’ selections among competitors. Generally, sales growth resulting from primary demand (total market growth) is less costly and more profitable than that achieved by capturing share from competitors. Conversely, losses in market share can signal serious long-term problems that require strategic adjustments. Firms with market shares below a certain level may not be viable.
It is hard for the average person to get a sense of market share in this industry because there are few statistics out there. There may well be good reasons for this. As various informed people have told us, the TEFL language mills are often a front for money from the coal and plantation industries, which is the sector of the Indonesian economy most heavily mired in tax evasion scandals (though the whole tax system of Indonesia is riddled with corruption). Also many of these schools are registered as charities, making large swathes of the TEFL industry in Indonesia little more than a tax dodge. It is hardly surprising in these circumstances that the industry is no beacon of transparency and openness. Still, it is possible to see the big picture, even if the details are going to elude us. In the first part of this exposé, we will head out to Bekasi and see how Binsar has screwed the pooch in this booming industrial town.