Impact of Currency Fluctuations on the Flow of Students to Foreign Countries - Research Proposal Example

?Introduction Extraordinary events have unfolded in various sectors which has affected the entire world economy. It was generally believed that education and health were the two sectors that would not be affected with the recession. However, the economic downturn has affected all sectors especially in the developed countries. The UK too is deep in recession with declines in output leading to rising unemployment. This impacts the flow of immigrants into the UK which in turn impacts several sectors thereby adversely impacting the UK economy. Fewer immigrants also translate into fewer international students seeking tertiary education in the UK (Papademetriou, Sumption & Somerville, 2009). Immigrants in the UK from the OECD countries are the worst affected by the downturn. The internationalization of higher education in the past 30 years has been the driver for the growth of the sector globally (Bodycott, 2009). The number of international students since 1995 has almost doubled to 2.7 million globally. The motivations for internationalization differ across countries and institutions. The drive to internationalize has also led to the development of ‘transnational education’ programs. Internationalization has led to strategic alliances and use of technology to deliver education to students located in various countries. Today universities around the world seek quality international students to enhance their reputation, to enrich their campuses and programs through contributions from different sources. While education is a priority sector, student inflows have been found to be sensitive to economic conditions in their home countries and to the exchange rates (Papademetriou, Sumption & Somerville, 2009). Economic conditions and currency fluctuations influence the student flow between the host country and the source countries. Downturn has reduced the individual savings in sending countries. This would likely reduce the number of self-financed international students as they would prefer an educational institution closer to home. This is also because the students work during their studies in order to support themselves (Somerville & Sumption, 2009). Rationale for research Following the recession, the GDP of the UK contracted by 1.5 percent in the fourth quarter of 2008 and the decline was unusually rapid over the entire year (Somerville & Sumption, 2009). This downturn has been unusual as all sectors have been hit. The effect of recession is very prominent in the international students’ inflow in the UK. Students account for a quarter of total of migrants into the UK and the UK is the second most important destination country for international students worldwide. The precise number of international students in the UK is not known but as per the figures of 2008-09 approximately 214,000 non EU students studied at the public-funded schools in the UK (UKCISA, 2010). The non EU students are bound to pay the entire costs of the education which typically ranges between ?8,000 and ?15,000. The fees from the international students account for 10-30% of the income of the universities. This translates into ?2.5bn earnings of the UK universities with another ?2.5bn spend by international students on goods and services. This contribution is only from the public –funded colleges and when the earnings of the private colleges are added, the international students contribute about ?8.5bn to the UK economy. About 26 UK institutions derive at least 10% of their income from foreign students’ fees (Somerville & Sumption, 2009). The UK receives the highest number of students from China. During the Asian crisis on 1997 also the flow of Malaysian students to the UK was affected (Somerville & Sumption, 2009). In addition the UK universities face stiff competition from the US and Canada international schools. The global market for international students is increasingly competitive (Bodycott, 2009). This results in the UK universities incurring loss of revenue. Under the circumstances, the UK universities need to attract international students. Research Aims and Objectives Thus, based on the above rationale, the research aim is to devise an international marketing strategy for the promotion of UK universities. With this aim, the objectives of the study are: To evaluate the current international marketing strategy adopted by universities globally. To evaluate the drivers of change in the current environment. To determine the factors that influences the location decision in the field of tertiary education. To evaluate the forces that influence change at the target sending countries. Significance of the study Many universities in the UK are affected by the recession and are looking for different strategies to overcome the situation. They are trying to attract international students through different methods and hence an evaluation of the current environment would help them make decisions accordingly. As the economic environment has changed the universities have to respond to the changed needs in the field of education and learning. This new era has profound economic, social, cultural, and educational implications as the intellectual assumptions have been challenged (Rae, 2010). Entrepreneurship too has changed in this era which has implications on the educators and the universities. Literature Review The financial crisis The world banking and the financial systems came to a virtual collapse towards the end of 2008 but was averted because of the massive injection of finance by the government. Major banks were affected by the crisis in financial confidence, and this resulted in lasting contraction in the availability of credit to individuals, businesses and even the governments (Rae, 2010). Banks have, to some extent, recovered their profitability through servicing government borrowing. Nevertheless, the underlying economic fundamentals have changed permanently. In this new era, the old certainties have disappeared and these have been replaced by loss of confidence in markets and institutions. Students experience a culture shock when they face rising unemployment after graduating. There is a change in the nature of graduate careers. International marketing strategy International marketing is an important facet in the marketing discipline. Target market selection and product line management across markets are the factors that continue to challenge the marketers even today. International marketing strategy refers to the deployment of the right marketing mix that would lead to sustainable advantage in the international marketplace (Wong & Merrilees, 2007). Differences in culture, political stability, changing consumer lifestyle and needs, government regulation across boundaries create new challenges while also providing new opportunities in international marketing. All these factors influence the targeting, the segmenting of the market as well as product positioning. The right strategy can enhance the overall marketing performance. The marketing decision can change the consumer knowledge about the product or service thereby influencing the decision. Segmentation helps in selecting a homogenous group of consumers and then servicing their needs. International students Over 2.9 million tertiary students enrolled globally in 2006 in institutions outside their home country (Walker, 2010). Students often come from countries where tertiary education is still developing and opportunities for higher education are limited. Other reasons for students to seek education overseas could be because of the unstable political situation at home or discrimination against minority groups in the home country. There are yet others who can afford to avail of the best education possible and exercise their rights as consumers. The internationalization of tertiary education mirrors the growing globalization of societies and economies. The growth in international students has been phenomenal in the last decade. From 1.5 million in 2000 it has grown to 2.44 million by 2006 (Walker, 2010). While the USA has been historically the dominant service provider, there has been a decline in its market share of international students. The UK now ranks as the world’s second largest higher education provider of international education with a market share of 11.3 percent in 2006. The UK has been keen to increase the number of international students because of its contribution towards long-term political and economic benefits to the UK (Walker, 2010). However, the current situation has caused a decline in the number of international students targeting UK as a destination for higher education. Somerville and Sumption (2009) argue that the downturn might result in more of the EU students entering the UK education market as this could help them avoid entering the labor market during this period of crisis. Moreover, the EU students pay a much lower fee than non EU students for the same course. Students are a potential source of skilled migrants in the UK as they are allowed to work for 12 months after graduation. Thus, as the student inflow reduces, the demand for skilled workers would increase. It would also adversely impact the UK educational institutions as they would incur loss of revenue. Export of education brings in rewards and students from Mainland China have been contributing approximately A$5.9bn to the Australian economy (Bodycott, 2009). For countries such as Singapore foreign students increase and maintain scientific, technological and economic competitiveness. Hong Kong benefits through socio-cultural advancement in taking in foreign students. Overall, the motivations may vary but the host campuses benefit due to the development of an institution’s research and innovation profiles. Mainland China is the largest source country for international students in the world (Bodycott, 2009). The country now has sustained economic development which has made higher education overseas affordable for a larger population. International education institutions overseas would be happy with the report by China Daily (2007) that there has been a steady increase in the number of students opting to study overseas. However, the trend keeps changing and the international education marketers must be cognizant of the changing trends and the requirements as per changes in the economic and political environment. Research Methodology Based on the literature review the research methodology would be devised. Research phenomenon The global economic recession has brought bat a shift in the employment pattern which in turn affects the education and career requirements. The recession has also impacted the international student’s inflow at the UK universities. The phenomenon under study is what strategy should be adopted to attract international students. Through literature review an estimate of the students that come from each country would be derived. This information is essential as it would help to select the right target segment and focus marketing attention on that segment. Moreover, the cultural attitude and the behavior of the target segment are essential to devise the right marketing strategy. It would also help in positioning the product in the right manner. The product may need to be altered. The courses on offer may have to revisited or amended to suit the changed economic environment globally. All these decisions can be taken only when the right target segment has been selected. Deductive and inductive methods There are several ways to conduct research and the two most common ways are logical positivism or phenomological interpretivism. Logical positivism allows the hypotheses to be formulated in advance and is quantitative in nature based on experimental methods (Amaratunga et al, 2002). In implementing this method of research the researcher should ensure independence of the observer from the subject being observed. In the interpretive method, a qualitative approach is used efforts are made to inductively understand the experience based on the context in which it has been set. This approach does not accept the belief that objects of experience are independent events. Regardless of the method used, the research process must fulfill the purpose of the research, answer the research questions and achieve the objectives and aim of the study. To take an informed decision, the research methods should be evaluated based on the purpose of the research, the time availability, budget, and the sample size including the subject of research. Research approach A qualitative approach will be adopted for this study as, in the words of Knox (2004), this approach enables the researcher to have an insider perspective on social actions. The scenarios may differ across circumstances and this approach will enable to articulate different scenarios while also enable to study the phenomenon under natural settings. Research strategy Both primary and secondary data will be collected through the qualitative method. This method will help explore new ideas effectively. Data collection Secondary data would be essential to achieve the first objective, which is to evaluate the current international marketing strategy adopted by universities globally. Data would be sourced through academic journals and reputed websites. The second objective too would be determined through secondary data as it pertains to evaluating the drivers of change in the current environment. The change in the environment can be ascertained through journals and reports which would help understand the changed educational requirements of the students. Past data on the two issues is available in plenty and this may require segregating the relevant ones and eliminating the unimportant ones. Data from secondary sources have their own importance and relevance in any research as they help generate new ideas through reflection (Feurer & Chaharbaghi, 1995). Primary data would be collected to achieve the third objective which is to determine the factors that influence the location decision in the field of tertiary education. Data would be collected from the current students, faculty and the guardians of a London based college that has been attracting international students. Qualitative primary data would be collected through in-depth interviews of at least one member from the management team of at least 5 universities in London and Wales. Interviews reveal the subtle realities that form the basis of any decision-making. It is essential to understand on what basis the management determines the academic courses and the requirements. Interview offer flexibility of time, place as well as questions, which can be reframed as the interview progresses (Herod, 1993). Social and personal matters cannot be revealed through telephonic interviews and hence face-to-face would help capture the emotions and the right reasons. The interview questions would be open-ended which permits reframing and reformulating the questions depending upon the responses. Questionnaires survey would be conducted among the international students to determine the circumstances under which they have managed to come to the UK, the problems and barriers they faced, and what according to them could attract more international students. Research design To determine the international marketing strategy that the UK universities should adopt, knowledge of the factors such as location decision, education and career requirements are considered essential. This would help devise the right marketing mix and offer the product suitable to the target segment. This is essential to achieve the research objectives. Thus, a London based college that has been receiving overseas students but the number has declined in the recent past, would be the focus of research. In addition, attempts would be made to collect data from four other similar universities. Interviews would be taken of at least one member from the management or faculty at each of these universities. Attempts would be made to ensure that the member has been with the concerned university for a period not less than five years. The interview questions would aim to determine the reasons why students were attracted to the university and why the number has reduced. Attempts would also be made to try and understand what according to the management, could be changed to attract more overseas students. The interview would also seek to evaluate which country sends the largest number of students and what is their choice of subjects/career. The survey through questionnaire would seek to collect data on the students’ and guardians’ aspirations/expectations from the UK colleges. Data would also be collected on the sending country’s political and cultural environment. Data analysis Data collected through interviews and questionnaires would be used to evaluate the situation through the use of tools such as SWOT analysis and Porter’s Five Forces (though not limited to these). These would help understand the dynamics of the changed environment and arrive at the appropriate marketing strategy that the UK colleges should apply. Limitations While efforts would be made to collect as much data as possible, it is likely that the management may not be willing to divulge much inside information. Not much of problem is envisaged in collection of secondary data. 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