I. Overview of Strategy-Development Process II. Profile of the Environment

1. Contents . . . . . . . . . . . . . . . . . . 4 • I. Overview of Strategy-Development Process • II. Profile of the Environment • • Summary • • Implications • Auburn University (AU) • • Profile • Students • Research • Extension • Finances • • Assessment of Strengths, Weaknesses, • Opportunities, and Threats (“SWOT” Assessment) • • Strategic Challenges and Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 80 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 . . . . . 113 . . . . . . . . . . . . . . . . 117 Messina & Graham 2

2. I. Overview of Strategy-Development Process 1. SITUATION ASSESSMENT 2. OPTION GENERATION 3. OPTION EVALUATION 4. STRATEGY SELECTION 5. EXECUTION • Candidate • strategic • objectives • and directions • Rationale for • each option • Detailed • assessment • of each option • Comparison of • options • Rationale • Full description, • including goals • and action • initiatives • Profiling the • environment • Profiling Auburn • - Main campus • - AUM • Identifying • strategic • challenges and • implications • Implementation • plan, responsibility • assignments • Progress measures, • review milestones • Adjustments and • adaptation Messina & Graham 4

3. II. Profile of the Environment • • Summary • - Pervasive Trends • - Forces Affecting Higher Education • • Implications • - For all universities • - For AU (Illustrative) Messina & Graham 6

4. Summary FORCES AFFECTING HIGHER EDUCATION PERVASIVE TRENDS • Enrollment Growth • Affordability Challenge • Demands for Quality • Improvement • Efficiency Imperative • Diverse Perspectives on the • University in the Twenty- • First Century • Globalization • Information Revolution • Natural-Resource Demands • and Environmental Strain • Aging Populations and • Increasing Minorities Messina & Graham 7

5. AU Total Applications, Acceptances, and Enrollment – 2005 Chart 6 Note: 81.5 percent of applicants are accepted, with a 36 percent yield Source: AU OIRA 34 Messina & Graham

6. AU Competitor Rankings in USNWR – 2005-06 Chart 14 BEST UNDERGRADUATE ENGINEERING SCHOOLS BEST UNDERGRADUATE BUSINESS PROGRAMS TOP PUBLIC UNIVERSITIES 2005 2006 2005 2006 2005 2006 9 8 Georgia Tech 16 13 UFL 19 21 UGA 21 21 Texas A&M 34 30 Clemson 38 39 Auburn 38 39 UTN 50 39 U of A 52 52 FL ST 52 54 USC 6 6 Georgia Tech 14 17 Texas A&M 31 30 UFL 57 60 Clemson 67 60 Auburn 67 71 UTN 102 * U of A 102 * USC 26 29 UFL 30 29 UGA 30 29 Texas A&M 35 35 Georgia Tech 40 42 USC 47 42 FL ST 47 42 UTN 57 51 Auburn 57 60 U of A 77 73 Clemson 87 83 UAB 87 83 UMS * Not listed among top 105 49 Messina & Graham

7. Freshmen ACT Scores for Leading Competitors – 2005 25th to 75th Percentiles Number of National Merit Scholars Chart 16 GA Tech 100 28-32 UFL 230 25-31 UGA 49 25-30 Clemson 31 25-30 FL ST 10 23-28 USC 40 23-28 UTN 21 23-28 UAH 1 22-28 GA Southern 1 22-26 AU 29 21-27 U of A 68 21-27 UMS 36 20-26 20 25 30 35 Source: USNWR, August 2006;National Merit Scholarship Corporation Annual Report, 2005 53 Messina & Graham

8. Measures of Auburn’s Value-Added Chart 23 COLLEGIATE LEARNING ASSESSMENT(CLA) 2005 – 2006 AU’s OVERALL RESULT At Expected Level (on par with 60-75% of CLA-participating schools) SENIORS’ PERFORMANCE BY TASK (RELATIVE TO EXPECTED LEVEL) Analytic Writing Make an Argument Critique an Argument Performance Task Below Expected Level At Expected Level Below Expected Level At Expected Level Source: AU OIRA 67 Messina & Graham

9. Measures of Auburn’s Value-Added (Continued) Chart 23 NATIONAL SURVEY OF STUDENT ENGAGEMENT (NSSE) Academic Challenge 79.8 82.5 Active, Collaborative Learning 75.7 87.7 Student-Faculty Interaction 77.1 76.4 Enriching Experiences 75.3 70.1 Supportive Campus 88.7 88.5 Implied Improvements More Assigned Reading and Writing More Time Preparing for Class More Emphasis on Developing Higher-Order Cognitive Skills AU Scores – 2006* Freshmen Seniors *Where 100 equals the average score of the top 10 percent of participating schools Source: AU OIRA 68 Messina & Graham

10. AU versus Median of SREB Non-Medical Peer Group On TheCenter’s Measures – 2005 Chart 32 Research University Quality Indicators AU In Relation to Median Values for Non-Medical School Members of SREB Peer Group SREB Median = 100 83 78 77 70 64 61 0 Total Research Total, Per Faculty* Federal Research Federal, Per Faculty* Endowment Annual Giving National Academy *Tenure and Tenure-Track 90 Messina & Graham Source: TheCenter; AU OIRA

11. AU versus Median of SREB Non-Medical Peer Group On TheCenter’s Measures – 2005 (Continued) Chart 32 Research University Quality Indicators AU In Relation to Median Values for Non-Medical School Members of SREB Peer Group SREB Median = 100 68 67 67 60 59 46 Faculty Awards Doctorates Awarded Doctorates Per Faculty* Postdocs Merit Scholars Merit Scholars Per 1000 *Tenured 91 Messina & Graham Source: TheCenter; AU OIRA

12. Auburn’s Federal Research Funding as a Percentage Share of Total Federal R&D Dollars – Four-Year Average – 2000 to 2003 Chart 37 1.38% 0.89% 0.79% 0.50% 0.49% AU’s Overall R&D Share (%) 0.19% Overall R&D All Engineering Civil Eng. Chem. Eng. Mech. Eng. Agricultural Science 39.8 15 2.5 1.8 2.2 9 $ Millions Source: NSF; AU OIRA 98 Messina & Graham

13. 1996 2001 2005 State Appropriations as Share of Auburn’s Total Revenue FY 1996 - 2005 Chart 37 41.9% 34.4% 30.1% Source: AU OIRA 105 Messina & Graham

14. State Appropriations per FTE Student Auburn versus Competition – FY 2005 Chart 38 $10,062 $9,006 $8,281 $8,144 $7,281 $6,010 $5,622 $5,180 $4,502 FL ST U of A Clemson UGA UFL UTN AU UMS GA Tech Source: SREB; AU OIRA 107 Messina & Graham

15. Assessment of Strengths, Weaknesses, Opportunities, and Threats (“SWOT” Assessment) Auburn University STRENGTHS • AU’s big-school, big-time sports, small-town campus near fast-growing Atlanta is attractive to many Alabama and Georgia students. AU draws the top share of Georgia students who leave their home state for a Southern Region Education Board public research university • AU has notable strengths in selected academic areas. AU’s Wireless Engineering program is a leader. The undergraduate Engineering and Business programs rank well in USNWR’s lists. Several of AU’s College of Architecture programs rank strongly in the Design Intelligence Survey • AU ranks well on USNWR’s retention value-added measure and on the National Survey of Student Engagement’s “supportive campus environment” measure • AU has research strengths in selected engineering and agri-science areas • AU has a track record of good financial management, and development has recently shown great progress with “It Begins at Auburn” • AU’s large alumni base expresses strong Auburn spirit – and AU has solid political support in Alabama Messina & Graham 113

16. WEAKNESSES • Academically, AU lags nearby states’ best universities in measures of incoming undergraduate quality. It also has a reputation for students who do not study hard and are consumed by athletics • AU’s undergraduate education likely does not prepare students as well as it could to enable them to compete in the twenty-first century. On the Collegiate Learning Assessment, AU’s seniors achieve “at expected level,” like the students of a majority of other participating schools. The Spellings Commission and others regard “the expected” as no longer good enough. AU’s scores on National Survey of Student Engagement measures are Bs and Cs relative to the top ten percent of schools. AU’s six-year graduation rate is below that of its competitors as well as the national average for four-year schools • AU is not competitive on key measures in most research areas, and being located away from a major growth and research hub is problematic for research leadership • AU is under-resourced – for its array of programs and relative to competitors – owing to historically declining real state appropriations, comparatively low endowment and alumni giving, and limits on feasible tuition increases • AU’s cohesiveness as a community has been adversely affected over the last five years or so by several factors – including lack of consensus on vision and mission, a divided Board, presidential turnover, and frayed relations among the Board, administration, faculty, and other constituencies Messina & Graham 114

17. OPPORTUNITIES • Coalesce Board and faculty behind a new President and an agreed-upon vision • Market AU’s stronger undergraduate programs and the Honors College much more proactively to win more talented students • Build on AU’s past lead in value-added retention by enhancing undergraduate education quality for the current profile of AU students; experimenting with innovative approaches in program design, teaching, and learning; and using the results to market to prospective students • Focus research in a few areas of natural strength and relative advantage, and drive collaborations with nearby research powerhouses, taking advantage of telecommunications technologies • Rationalize program offerings to moderate expense growth and gain critical mass in areas of focus • Harness technology thoughtfully to improve quality while containing costs in selective distance-learning offerings, elements of undergraduate instruction, back- office operations and extension • Continue to strengthen alumni and friends’ financial support of the University through “It Begins At Auburn” and intensified annual-fund campaigns, leveraging these communications opportunities to build greater awareness and understanding of Auburn, its accomplishments, and its aspirations Messina & Graham 115

18. THREATS • Demographic trends in high-school graduates are neutral for student enrollment, and the growing fraction of Hispanic students will present a new challenge for AU • AU’s dependence on Georgia for students paying out-of-state tuition is vulnerable to any flattening in Georgia’s high-school graduate numbers and to lesser-ranked Georgia colleges’ becoming more competitive with AU • AU could face increasing financial challenges if Alabama state appropriations do not keep pace with AU expense increases and if resultant tuition hikes meet market resistance • AU’s value proposition could erode if students, parents, or the state begin to emphasize the college years as a time for gaining competitive skills – unless AU can demonstrate stronger value-added • The U of A’s aggressive recruitment of high academic achievers could reduce AU’s share of strong in-state students and damage AU’s reputation. It may also have the potential to discourage state appropriations to both universities if the schools are perceived as using public funds to compete for prestige • Technology developments in higher education create opportunities for fast-moving competitors, so AU must be constantly vigilant about remaining at the forefront of applying relevant techniques Messina & Graham 116