Overall evaluation of INCAE (Instituto Centroamericano de Administracion de Empresas)

EVAL, PREPARED FOR ROCAP, GUATEMALA, WAS BASED ON STUDY OF BACKGROUND MATERIALS, FIELD VISITS TO INCAE, INTERVIEWS WITH CA GOVT, BUSINESS OFFICIALS, DISCUSSIONS WITH ROCAP. EVAL NOTE MAJOR INCAE ACADEMIC GROWTH UNDER LOAN (FACULTY, ENROLLMENT,PROG QUALITY) BUT CENTERS ATTENTION ON PROJ PURPOSE OF ENSURING INCAE'S LONG-TERM FINANCIAL VIABILITY. LATTER HAS NOT BEEN ACHIEVED. PROJ STRATEGIES FOR THIS (ACHEIVING ECONOMIES OF SCALE, DEVELOPMENT OF INCAE CONSULTING BUSINESS, STUDENT LOAN FUND, INCREASED FUND RAISING) HAVE PROVEN UNREALISTIC,INEFFECTIVE. ELEMENTS OF INCAE NOT ORIGINALLY GRASPED AS CONTRIBUTORY TO ITS COSTLINESS ARE: SCOPE OF ITS PROGRAMS (MODELLED ON HARVARD BUS SCHL), TEACHER-STUDENT RATIO (40-175), FULL RESIDENCE REQUIREMENTS FOR ALL STUDENTS, CASE METHOD OF INSTRUCTION, HIGH PERSONNEL TURNOVER, HIGH COST OF FUNDRAISING, COMPLEXITY OF MANAGEMENT, AND ESP LACK OF ENDOWMENT AND OF FIXED ANNUAL SUPPORT. INCAE HAS OPERATED WITH DEFICIT SINCE ITS INCEPTION (1964). CUMULATIVE DEFICIT UNDER AID LOANS (1970-76) IS $1.5 MIL AND TOTAL DEBT IS $4.5 MIL. PROBLEMSWILL WORSEN IN NEXT 2 YEARS, EVEN MORE WHEN LOAN REPAYMENT COMES DUE IN 1983. YET BECAUSE OF EXCELLENCE, IMPORTANCE IN CA, INCAE MUST BE SALVAGED. TO THIS END EVAL RECOMMENDS: 1) COST REDUCTION PROG IN INCAE PROGRAMS, FACULTY AND CLOSE MONITORING OF COSTS; 2) GENERATION OF NEW REVENUE BY E.G., SMALL SEMINARS, IMPROVED FUNDRAISING FOR PRIVATE SECTOR, REASSESSMENT BY BRD OF DIRECTORS OF ATTITUDES TO CA GOVT AID: 3) THAT BOARD BECOME MORE FINANCIALLY KNOWLEDGEABLE OF INCAE AND INSIST OF FINANCIAL RESPONSIBILITY; AND 4) THAT BOARD ASSESS AT ONCE AND DEVELOP STRATEGY FOR INCAE'S LONG-TERM FINANCIAL NEEDS OF PERMANENT CAPITAL ($3-4 MIL) AND FIXED ANNUAL INCOME, ESP IN VIEW OF FUTURE LOAN REPAYMENT. EVAL CONCLUDES BY STATING THAT STRUCTURAL CHANGES IN INCAE MAY BE NECESSARY. LARGE PACKAGE OF BACKGROUND MATERIALS IS APPENDED TO EVALUATION.