Global Strategy of Business Education in the UK - Essay Example

Global Strategy of Business Education in the UK Table of Contents Global Strategy of Business Education in the UK 1 Business Education in UK 2 PESTEL Analysis of UK Education Environment 3 Higher Education Environment of USA 4 Higher Education Environment of Australia 5 Five Forces Analysis 6 SWOT Analysis 9 Strategies to be Adapted 9 Financial Structure 10 Conclusion 12 References 13 Bibliography 17 Overview There are many B-Schools offering the degree of MBA to candidates all around the globe. Providing opportunities to enter high profiled corporate class, these schools have always tried to maintain their reputation and attract desired candidates. To put into account, there are various institutes in many countries like USA, UK, Australia, China, and Spain which were ranked top among all business schools in the world. As such, London Business School was ranked first, University of Pennsylvania: Wharton of USA second, IE Business School of Spain as fifth (The Financial Times Ltd., 2010). Over the past decade many business-schools have witnessed the rise of candidates willing for MBA and hence the number of institutes also increased that were set to provide the students a level of proficiency. In UK, the government has set up a new association for business education, namely the Association of Masters of Business Administration and currently it registers almost 36 top institutes in UK. As a record, the students opting for full-time MBA courses have increased by 56% in recent years (Arnot, 2006). In this context, it will become too hard to follow a major diversification in such a competitive market and with a cost constraint. Therefore, it will be better to start up with a regular course that students generally opt for, such as MBA in Finance, Marketing and Advertisement, and Human Resource but accordingly provide a little of innovative courses, such as Event Management, International and Public Relations, Media Science. As, the only key factor that can prove the school competitive is the differentiation in courses offered. Business Education in UK In the modern era, when there is a change in all dimensions of human life, educational environment is also not excluded. As a matter of fact, today’s system of higher education is primarily quality based. There are numerous business schools all around the globe with similar opportunities and challenges, the only line to differentiate among them is the quality of knowledge that an institute provides. As such, the constraints appearing in UK environment are that schools were rather less focused on the experience of the student than required and therefore need a proper quality control system. There are even schools which have undergone detailed research of the quality factors but failed to use the data collected in a productive way (The QuBE Project, n.d.). Notably, many innovative entrepreneurs around the globe are also focussing on the educational industry and are attracted by the growth and opportunities it possesses. One of the successful business men who marked his sign in this modernisation is Mr. Aaron Etingen. He was the chief to bring up the idea of London School of Business and Finance (LSBF) which within seven years of its starting became renowned among the potential candidates (Huggins, 2010). With this belief, unlike any other business the incorporation of a business school also comprises of a certain amount of research work and an insight look on both the native and global environment to grab the opportunities and overcome the challenges. On this context, the UK environment shall be studied and simultaneously two other countries, USA and Australia aiming to provide a better insight about the industry. PESTEL Analysis of UK Education Environment With new norms and new philosophy, the UK environment of higher education is presently undergoing several problems in its macro-economic perspective. Recently, it has been noted that the number of students who moved overseas for their higher education are becoming more reluctant to have an experience there. Having candidates without the experience of overseas environment can affect the economy, as there is an increasing demand for professional who studied abroad, among the employers. Any new reform in this case shall affect the idea of setting up a new MBA institute (Shepherd, 2010). As per the PESTEL model of analysis, the political environment of UK certainly seems to be in a course of change and instability, as well as the falling GDP growth rate is also affecting the educational sphere of the economy. The sociological aspect of the economy as stated above is also changing with decreasing number of students willing to study abroad. Even the technology that has been brought into use will additionally have its impact on the context. Since, presently most of the students who are pursuing higher education irrespective of full-time or part-time courses are commonly dependent on online education. On the contrary, the legal aspect seems to be tricky for a new institute, with cutting off the interest rates on educational loans during 2009-2010 and substantially increasing it though in a lower rate during 2010-2011. This for sure has a direct contribution on the matter bringing variations for the duration of loan taken and not on the amount or monthly repayments (Bolton, 2010). Higher Education Environment of USA USA has always been one of the finest places of technical management studies, and in case of MBA degrees it was worth mentioning that the degree was first put into consideration by the US innovators. Understanding the present competitiveness of the global educational environment, US government has taken it up as a situation to win. But today the country lacks in education than compared to any other growing economy. One note that Secretary Duncan remarks is that the technical know-how of American Students are lesser than many other economies and the students would be provided the opportunity to recover the educational drawbacks (U.S. Department of Education, 2010). Keeping all the facts about globalisation and privatisation of educational institutes and schools, the USA government tends towards improving their educational system. Another fact that influence the educational system of USA vastly is that, it comprises mostly of immigrant or foreign students for higher education. In order to bring the same kind of passion in the native students, US government is likely to collaborate with economies performing better in the global education industry (U.S. Department of Education, 2010). Higher Education Environment of Australia The next country that provides good quality education is Australia. A substantial growth has certainly been witnessed in its recent years. Alike USA and UK governments, Australian government has also enforced some reforms in order to nourish the growth of higher education system of the country. The reforms ensure an increased amount of fund to the higher education industry and collectiveness of knowledge in the worldwide sphere. And of course a significant reform to judge the institutes by their merit and not by their paying ability. Therefore, the factor that is going to matter is the core knowledge that students will get instead of their tuition fees (Deewr, n.d.). The new reforms and increased funding might look good and attractive but the Business Education Committee has raised a significant question that the agenda only states the vision and mission that it is going to work with, rather than providing an insight of how they are going to do it (Matchett, 2010). No doubt, that the Australian Higher Education Industry is growing rapidly but it also has some drawbacks. The ambiguity of the proposed agenda regarding higher education is a significant factor is this respect. Five Forces Analysis According to Porter’s Five Forces Analysis model, the competency level of any industry or market can be affected by five constraints, i.e. threats of new entrants, bargaining power of buyers, bargaining power of suppliers, threats of substitute products and competitive rivalry. To enter the higher education industry of UK economy and other countries, every institute has to be different and better than the other to build its value and competitive edge. For this reason, the threat of fresh competitors and substitutes is in fact a matter of concern, in today’s world. The present higher education industry especially for the MBA institutes is becoming more and more competitive with increasing demand and simultaneously increasing number of participants. By relating the scenario with Five Forces Model, one can analyse the opportunities and threats of a new entrant with a global perspective. Threats of new entrants In the case of higher education, there are increasing numbers of government and private colleges in UK, USA as well in Australia. The government norms and new reforms are acting as a fuel to the entrants. This of course is an advantage for new business schools, but it is also arising as a threat to many new entrants. This kind of problem can be overcome by an innovative way of teaching and providing the students something more and worthy than other institutes are providing, e.g., providing better practical knowledge about the science of management and full participation of students. Aaron Etingen is the best example in this case. He came up with a new idea to provide free study materials online to its students (Etingen, 2010). Bargaining power of suppliers To bring new innovations and thinking in the sphere of MBA institutes, it costs a huge amount to the entrepreneur. These new techniques and innovations are indeed costly but are essential from the perspective of new entrants as it enhances the competitive edge. As such, the new institute should overlook a very cost effective structure and hence increase its bargaining power. Bargaining power of buyers If the fees structure of mega and large business schools are considered, they have a very high amount fixed only as tuition fees. For instance, in European MBA institutes the highest charged fees for the course was recorded to be more than € 50,000 in 2009. And including the living costs it became a figure of more than € 1, 00,000. But after completing the course, average salary recorded was a fair amount of € 80,000. Therefore, the only way most of the students choose is to take a bank loan and repay it as soon as possible from their salary or else go for a substitute which is comparatively less costly (Geraghty, 2010). Threat of substitutes An updated MBA course not only requires a huge amount of tuition fees but also an appropriate amount of smartness and intelligence to make their contribution rather than merely to hold a degree. As such many potential students do tend towards other alternatives of MBA. To put into context, substitutes for Masters in Advertising or Marketing may be psychographics, or demographics, or the study of appropriate analytics and business metrics but obviously compromising the appraisal of business topics. Therefore, a student can go for substitutes, compromising the facts of a real MBA due to the fee charged or any other factor (Asher, 2006). Competitive Rivalry With continuous participation from other global institutes and a steep growth in demand is in fact affecting the competency of the industry at a higher rate. The new innovations that are introduced with abolishing the traditional trend of education are marking their existence all around the world. Thus, the competitive rivalry between institutes does rise. Moreover the increase in online course preferences is also affecting the competency. To stand against these circumstances a new entrant should follow a wide range of diversification in its structure (Hampson, 2010). SWOT Analysis Considering the global point of view, the strengths of any new B-school shall be the diversity and growth of the industry. The weaknesses to be referred in the context can be the low market share and challenges that it might face with providing excellent faculty and support to the students. Opportunities lie scattered in the industry that a well organised institute can easily grab, such as the fund allotments of Government for higher education and grouping that are associated in order to minimise risk and attain optimum diversity in the global scenario. The threats to be considered shall be surely the increasing number of competition in the global market. Strategies to be Adapted In this case, the school can apply Porter’s Generic Strategies not only to survive in the market but also to mark its presence. As the present higher education industry comprises of a broad sphere with undefined segmentation and differentiation, the new school should follow cost leadership strategies and differentiation strategies to minimise the burden of costs and enhance its uniqueness. As such to start up with selected courses will surely be useful. To state about diversification as a response to market segmentation, the new school should involve a certain amount of innovation as presently it is the key factor that can influence the competency level of an MBA institute. Additionally, the school must keep the quality factor of provided education under concern, since an MBA degree strictly comprises of practical and in depth knowledge of business and technical know-how of the environment. As such, the core competencies that should be put into account are the quality of education rendered, the efficient use of advanced technology, and the diversity in the courses offered. Another very important theory that the school should keep in mind while aiming to create its position in the global market is the Value Chain Analysis. The primary activities in this case are obviously important. The inbound logistics should be to target the global market in a competitive manner by procuring international level education and a friendly environment to eliminate the cultural problems. As well as the marketing also should be in a global perspective with the involvement of broadband service and other media technologies. The secondary activities like infrastructure and organisational management should also be ahead to the margin and become the cash cows of the industry within a couple of years. In the initial stage of any institution, it proves to be very helpful to become a part of any other successful institution on the same sphere following a growth strategy. For example, being a part of British Quality Foundation or Association of Business Schools can help a step forward in the UK market. As such the institute should plan to fall in the group of cash cows because it can generate a sustainable amount of market share and contribute to the growth rate of the institute. Financial Structure Setting up a new B-School does not only require good strategic planning but also a certain amount of revenue to implement the long-term planning. In case of a global MBA institute, the amount to be introduced as capital is huge. As such some amount of support shall be provided by the government according to the reforms or loans can also prove beneficial. But although it is not possible to gain such a big amount only from financial institutions, therefore some other means are also required. The investors and supporting associations can play a significant role in this case. Rather, it shall be better to go into partnerships and alliances to attain the growth stage by the desired time. With such a structure and a growth in the expected number of students it can be hypothetically stated that, to attain a sustainable level of goodwill and reach the break-even point it can take five to seven years of time period. Conclusion There are lots of challenges that a business school can face in the near future, such as globalisation, privatisation, government rules and reforms, cultural dissimilarities, ensuring appropriate governance structure, keeping balance in financial aspects and faculty shortage among others. Certainly, if all these challenges are conquered successfully, a new school can enjoy its opportunities. For instance, the internationalisation of business studies is surely an advantage to new schools planning to start up globally. As in the long term future, it is expected that the education industry will continue growing, it can prove to be lucky and the best time for setting up a new institute in the global market. All the three economies, i.e. UK, USA and Australia, are falling in the line to encourage new learning systems and assure funding to institutes creating a promising ground for new entrants in the market. One of the key strategies that it should follow is the growth strategies which involve updated teaching techniques to become one of the market leaders (Hawawini, 2005). References Arnot, C., 2006. How The MBA Brand Lost Value. The Guardian. [Online] Available at: http://www.guardian.co.uk/education/2006/jan/03/highereducation.mbas [Accessed November 09, 2010]. Asher, D., 2006. Alternatives to the MBA. Graduate Studies. [Online] Available at: http://www.gradview.com/articles/graduatestudies/alternatives_to_mba.html [Accessed November 09, 2010]. Bolton, P., 2010. Student Loan Statistics. 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