Economic factors for an educational institution are greater than is generally thought. Internal and external economic issues affect continued success and profitability of the organization. Receiving no tax monies, private educational institutions depend solely on students for their income stream. Economic forces affecting educational forces usually work in reverse of the current economic conditions present in the private sector. As the economy worsens on a national level more people consider returning to school. As a general rule enrollment standards during periods of economic slumps tend to increase as schools tighten admission requirements to admit only the most qualified students. Although outside economic forces on private educational institutions are minimal, internal forces on the University of Phoenix prove to be of greater impact on the profitability of the parent organization.
Private organizations respond to internal economic forces by limiting expenses due to the fact that limited funds and controllable expenditures are the most easily manipulated items in any budget. Many organizations feel that salaries are the greatest controllable cost for the organization. However, "Colleges are faced with 3 types of costs: 1. uncontrollable costs, which include utilities, books, supplies, and equipment, 2. controllable costs, which include wages, salaries, and contracted services, and 3. mixed costs, which include employee benefits and employment taxes." (Bernard & Beaven, 1985, 78) The University of Phoenix feels that... [continues]
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