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Week 7: Exapplied todon Bleu

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Explain Le Cordon Bleu generic competitive strategy.  (15 points)

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Le Cordon Bleu Will Close All U.S. Schools

All 16 Le Cordon Bleu cooking schools in the U.S. will be shut down, with the for-profit college operator that owns them citing the impact of the federal government’s new regulations on career colleges.

Career Education Corporation had previously said it was looking to sell off its Le Cordon Bleu culinary schools. But on Wednesday, the company announced it would instead close down the campuses — a quicker and ultimately cheaper option than going after a sale, according to the company. Current students will finish their courses but the schools will stop enrolling new students in January.

Internationally, Le Cordon Bleu is the world’s largest cooking and hospitality school, perhaps best known for its Paris flagship location, where Julia Child was a student. In the United States, thanks to a marketing agreement with Career Education Corp., Le Cordon Bleu became a chain of for-profit schools strung throughout the country, offering cooking classes alongside government-subsidized associate’s degrees and even online degrees in hospitality and management.

The company’s advertisements, featuring white-coated chefs with flashing knives entreating students to “follow your passion,” were shown frequently in the 2000s. But Le Cordon Bleu’s trade degrees — which had seen huge surges in popularity during the recession (Links to an external site.)Links to an external site. — were threatened by the federal government’s gainful employment rule, which cuts off federal financial aid to schools where graduates borrow money at high rates to pay for school but earn little after graduation.

In accusations that echoed those made against many other for-profit colleges, several Career-owned Le Cordon Bleu schools have been accused of misleading (Links to an external site.)Links to an external site. students about their chances of getting well-paying jobs, and falsifying job placement rates among graduates.

Many Le Cordon Bleu graduates, according to allegations in a class-action lawsuit the company settled for $40 million, made salaries of $12 an hour and worked in jobs that did not require training, as line cooks and baristas.

Career Education Corporation announced in May (Links to an external site.)Links to an external site. that it planned to exit the career education business altogether, focusing on online schools that have lower margins and enroll less risky students than career colleges.

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