Why Hasn’t TBI Gone Bankrupt?

One of the more sensible questions we have been asked by our critics is, “Why hasn’t TBI gone bankrupt if it is as bad as you say?” That is not only a good question, it is also a complex one, but we will attempt to answer it today in the broader context of our investigation into TBI’s unacknowledged collapsing market-share crisis.

Firstly, we would like to emphasize that dysfunctionality in a business does not lead to immediate collapse. Customers can be very loyal. Hard-working individuals in TBI have produced impressive results at times despite the incredible handicap of having to work for Mariam and her “advisors”. It is well-documented in the literature on business that dysfunctional companies can survive and even thrive for a while. Enron got some great press and had some high-profile promoters before finally becoming a byword for unethical business practices and going bankrupt. A dysfunctional business culture may work in its own warped way, as people are highly adaptive and will work around the craziness to produce results. In TBI Bandung, for example, people knew Luke Preece was a nasty piece of work but they tried to keep out of his firing line. In TBI Jakarta everyone knew of Mariam’s massive ego and learned to kowtow to her and keep out of her way. In the franchise schools managers learned to keep a low profile to try and prevent Head Office from coming in and meddling and making everything worse. 

But if dysfunctional companies can lumber on, what they cannot do is evolve. Dysfunctional companies have a proven inability to change and evolve their corporate culture. It is always the ‘same old same old’ in dysfunctional companies and they never address their most fundamental problems. This means when the market changes suddenly, these are companies that do worst. Dysfunctional companies are often the ones which go belly-up once an economic recession hits, for example. Bear Sterns and Lehman Brothers failed in 2008 while Goldman Sachs actually made profits. We would argue that around 2009-2010 major changes come to the TEFL industry in Indonesia which have precipitated a sharp reversal of fortune for TBI.

Before 2009 the market for Native Speaker teachers was dominated by EF, the market leader. Despite being the market leader, EF had some glaring weaknesses, especially in the area of academic standards. It is well-known that some schools employed backpackers and other “low-cost” adventurers on a gap year. While I know for a fact that EF always had some good teachers (I worked at a branch in 2005 and had several serious colleagues) there were also some classes taught by 21 and 22 year olds from abroad which seemed to consist mostly of students screaming in Indonesian. By insisting that its teachers have a degree or CELTA (not always both), TBI managed to have a bit more quality control over teachers than EF. I would stress that TBI has had some poor expat teachers- you do not have to be “good” to pass CELTA-  but they at least knew the basics of grammar and had some idea of how to structure a lesson. TBI’s academic standards were never as high as they made out, but they did at least manage to take academics more seriously than many EFs, where backpackers were able to reinvent themselves as teachers! But around 2009, this cozy world started to fall apart for TBI, and obsessed with internal politicking as always, TBI barely noticed. 

The first change was the arrival of Wall Street, a company which was already established in 20 countries around the world. They came to Indonesia armed with a serious war-chest of cash, renting high-profile premises in expensive malls and spending a fortune of glossy, upscale marketing. TBI should have been really scared at this point, as they now faced a serious new competitor, and one which didn’t rely on the backpacker fraternity to fill teaching jobs. Instead, TBI was enraptured by the attempt of Chris Needham, a Dutchman without a degree, to roll Ibu Mariam as Director! The fallout from this scandal left every single central Jakarta school without a manager. In the end, Luke Preece- a South Australian con-man without a degree- was sent to “clean up” TBI Jakarta. He ended up being even more manipulative and disruptive than Chris Needham in his attempts to gain ever more power within the organization. As TBI managers turned on each other with monotonous regularity, Wall Street hoovered up several thousand new business students impressed by their slick, corporate image.

The second change to come to the TEFL industry was that DIKNAS (The Department of Education) started insisting on much higher qualifications for TEFL teachers at the “language mills”. With Luke Preece in charge- a surfer dropout with a Photoshopped Geology Degree- TBI made the incredible decision to employ unqualified teachers on VKUs (business consultancy visas) and fly they them in and out of Singapore every two months for renewals. Mariam, the clueless TBI Director (in the position by virtue of her marriage to a rich hedge-fund owner) agreed to Luke’s proposal and TBI became chock-full with illegal teachers while Wall Street lifted salaries to get teachers who met DIKNAS regulations. This was too big a secret to keep, and various angry former teachers and managers outed TBI as a serial law-breaker. They had always been an illegal company which didn’t pay tax, so they responded to the DIKNAS challenge by more illegality. They have proven incapable of reforming their culture of backstabbing and illegality, and in the new environment which has emerged since around 2009-2010, their old way of doing business has started to cost them dearly. It might have been good enough to get them a profitable niche when EF was all they had to worry about, but they are now going backwards rapidly.

In conclusion, TBI has not gone bankrupt, but it is rapidly going backwards. Wall Street has been in Indonesia for just 5 years and they have reached 9000 students. TBI’s 5 group schools had a combined registration of around 3500 students in 2011. So in no time, Wall Street is already twice as big as TBI Group Schools in terms of student numbers. In terms of revenue, the picture is much worse. Wall Street gets around 10 million a year from its customers whereas it would cost a TBI Global English student only 2.7 million for 7 months of study. This means that Wall Street is not only twice as big as TBI these days, it gets twice as much revenue per student too. TBI’s market share has gone into rapid decline. Making things worse, 2 of its schools have also closed: TBI Malang and TBI Semarang are no more. TBI may not be bankrupt, but it is becoming a bit player and is facing complete irrelevancy as a market player in Jakarta.

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