The failure of major language-school operator Geos Corp. occurred because the company didn't trim unprofitable branches fast enough at a time when the industry was facing a drastic drop in students, people in the industry said.
Although the bankruptcy of industry leader Nova Corp. in October 2007 damaged the image of the commercial language school industry, the impact this time is likely to be contained somewhat by the swift response of G.communication Co., another language chain that has offered to take over about two-thirds of Geos' branches.
"I think the biggest factor was the decline in students," said Masami Sakurabayashi, director of the Japan Association for the Promotion of Foreign Language Education, a Tokyo-based organization that promotes sound management of foreign-language schools. Geos, the second major language school to fail in the past three years, is not a member of the group.