What Cash Cow?

<p>I tend to agree with poet. The ETS practices, as well as their gold plated campuses, coupled with their efforts to promote their testing programs, STINK. The only ones really served well by these efforts is ETS.</p>

<p>For some reason, many folks assume that if an organization is a nonprofit, they will automatically behave nicely, and not engage in monopolistic business practices. Not true. For a great example, look to Boston at Partners Health Care, the parent of Massachusetts General Hospital and Brigham and Womans Hospital. Their efforts to increase market share and profits have nearly destroyed several other Boston area hospitals, led to some of the highest costs in the country and created great strains within Harvard Medical School - but brought good profits to partners.</p>

<p>couple of thoughts -- </p>

<p>1) not-for-profit doesn't mean NO profit. As nmd points out, the biggest not-for-profits in the country are hospitals, which, I'm sure, pay their CEO's a pretty penny. Not to mention, the CEO's at non-profit health agencies (Heart Assoc, Cancer Soc), or United Way, or hundreds of other large non-profit orgs. Not-for-profit just means that the org doesn't have to pay income taxes, unless it has unrelated income.</p>

<p>2) Testing dates depend on schools being open (ignoring contracting out). Since two big states (TX and FL, amoung many others) start school in Aug and end in May, late June testing is a non-starter. OTOH, not sure why there can't be an early Sept test date.....</p>

<p>3) Also, every state and school district has different holidays -- we certainly don't receive Columbus Day off.</p>

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<p>I know of someone who had a couldn't-be-missed concert practice on a Saturday. When he tried to switch to Sunday, he was told that he couldn't take the SAT on Sunday unless he had a signed statement by his religious leader stating that the religion prevented him from taking the test on Saturday.</p>

<p>SAT may be an 800 pound gorilla, but it does listen to whom it considers its customers. When the UC system threatened to not require the SAT because of some deficiencies in the test, SAT made changes. Colleges are the important people the College Board needs to make happy--not so much the test takers.</p>

<p>ellemenope, </p>

<p>Good point. ETS is a good example of a market failure, I think. It really is a remarkable system: ETS generates data of supposed use to colleges, who don't even pay the cost.</p>

<p>Exactly. It is the market/business model which is faulty. Markets work best with many suppliers, many consumers, and perfect information. In this case, Company A (monopoly) provides service to pool of Consumers B (colleges & universities, essentially an oligopsony) and gets revenues from Third Party C (students, parents, public school districts, a huge number of individuals). The only direct transaction between producer and consumer (college pays for mailing lists) is also dependent upon the primary relationship, and is a minor source of revenue. There is no incentive for A to lower price, huge incentive for B to over-consume.</p>

<p>So A markets to B and collects from C. There are several solutions (all of which are harmful to A's market share and bottom line, of course). </p>

<pre><code>1. B can refuse to participate--we all know some of these schools, and they seem to be growing in number and in some cases banding together. There is some sort of consortium, can't remember the name exactly that is using student-college "fit" as an alternative? Someone help me out here :)

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<p>There are also the non-selective B's, including land grant universities, community colleges and a few private.
2. C can provide an alternative to B directly. The NY regents exam used to be (I don't know about now) one of these.<br>
3. B can provide it's own alternative product. This is practical in cases where, for instance, B requires placement exams anyway, or requires "portfolio" submission, or auditions. This is also done extensively in Europe, where some universities give their own admissions tests.
4. C can refuse to participate, saying costs are too high. Most likely, this will require the school district members of C to pass costs on to the individual members of C before there would be an incentive for C to seek a substitute. If all AP test takers had to pay the $82 per exam the private school students do, you can bet there would be squeals of pain.
5. A substitute product could be developed as a result of technological advance. This is probably where potential competitors to A should focus their efforts.</p>

<p>This is such a smart group, maybe we should do some brainstorming and start our own company :)</p>

<p>PS. There are many other examples of 3-way relationships interfering in markets, if you think about it. This one is pretty benign IMHO.</p>

<p>I wasn't suggesting the spring SAT's should be a different times. I know that schools end on different dates. Given their evident financial ability,they should give the tests on MORE dates. Your schools may end in May, but private schools here finiahs around 6/10 and publics go into the last week of June. There should be additional dates in spring and summer.</p>