Uk Universities and Market Forces - Case Study Example

Marketing – Case study Executive Summary The higher education scenario in UK has been undergoing a fast change in the last few decades. The higher education has moved from being a privilege of select few to the mass system. There has been a tremendous increase in students opting for higher education. Though this has been welcomed by educationists, this has also brought in its share of challenges and problems. There has been acute infrastructure issues with less space and buildings being allocated for higher education. The government policies have also changed form granting funds to both universities and students to promoting self-sufficient business units capable of producing profits. Thus higher education has been privatized and allowed to develop in the free market. The onset of Internet revolution has brought in many opportunities with the opening up of online courses and distance learning courses. All these changes have brought in exciting challenges and opportunities for the education industry and today the industry is poised for growth in a big way. In this paper, we examine the background of UK universities and higher education scenario with particular emphasis on University of East Anglia. And we study its progress and future opportunities on the newly popularized Value curve approach. Background: The higher education scene all over the world is undergoing a rapid and dramatic change due to the advances in technology in all other fields. There are a number of factors or trends that can be seen emerging from the current chaos, which will have profound impact on the direction these changes, will take in the near future. There is an increase in the diversity of student population with many culturally and ethnically different students joining higher education institutions in UK. This has brought in the conflict between majority and minority sub groups into open and have also led to changes in the traditional modes and methods of teaching to accommodate these groups. Another factor, which is crucial, is the infrastructure constraints being faced by the top universities. As the student population increases, there is a demand for more courses and more seats which is not being met successfully. Similarly, changes in global world order and increased acceptance of jobs in different countries has led to the education being brought on to international level. And the onset of Internet revolution has brought people and world closer than ever before and online courses and distance learning are becoming popular choices all over the world. Thus technology has emerged as the major driving force of change in higher education as well. There are other factors as well, which do not have a direct impact on this segment but still have a ling role to play in the overall dynamics. These are in terms of government policies towards Universities and high education institutions, the environmental and social changes due to migrant populations and their integration into mainstream culture. Economic considerations on the global level and opportunities or lack of opportunities will further demand changes in the current system. UK Universities and Market forces Prior to 1980s, UK universities in general were all public universities but autonomous in their functioning. But they received grants from the national government, hence there were few concessions or policies made by the government. These included the salary and pay structure of the faculty and the students or course fees. Thus the universities themselves did not have any motivation to seek additional funds through other means. But they were independent in their functioning as they were allowed to design their course curriculums and award their own degrees. They also employed faculty directly and national international students were also recruited by them. The competition was limited to attracting the best students or the students with better scores. This was because teachers could gain better results with good students and good results led to more meaningful teaching responsibilities or more grants for research. (Williams, 2004) Besides this personal prestige factor, there were no incentives for universities to seek academic excellence. And since the students also received funding from government to study, even they were not highly critical of academic standards and thus there was no pressure on universities to raise their academic quality. (Johnstone, 2004) And therefore, although autonomous the universities were not able to operate as market entities and were not able to produce the same levels of quality or innovation as we see in a segment driven purely by market forces. The changes were brought in by the 1988 Education Reform Act and the 1992 Further and Higher Education Act. These acts laid provisions for independent and autonomous polytechnics and thus eliminated the binary system of differentiation between polytechnics and universities. (Barr, 2004). These policies were responsible for sowing the seeds of competition and business rivalries between UK universities. As per Williams (2004), the national government reduced state funding for higher education and was able to decrease the public expenditure per student in UK higher education by around 35% between 1980 and 2000. All this came about due to policies of successive conservative governments in UK who were committed to market forces and were very keen to provide reforms in this education sector.(Bird, 1994). These changes proved to be the turning points in the history of UK universities and they started o explore other alternatives means of funding and revenues to keep afloat. This also brought about the much-needed perspective towards competition and led to the pursuit of winning students and faculty on the basis of academic excellence. Thus universities started seeking and using better management practices and began focusing on cost savings, better academic results by encouraging greater responsibility and accountability for teaching and research activities or brand positioning themselves as the viable throbbing business unit. (Dill, 1999) And this was the time also sought foreign students who could pay more fees as well. Thus universities became international and tried to attract more and more students and thus began the full commercialization of UK universities. Many studies such as (Rolfe, 1993 and Lindsay and Rogers, 1998) later tried to explore the effect of market competition on academic improvement in universities. These studies showed that effect was welcoming in the sense that now the universities were focusing on providing better environment to students and were now more interested in providing good facilities for research to attract top level teachers and experts.( (Hare, 2003; Dolton, Greenaway, and, Vignoles; McNay, 1999) The job market for faculty also became competitive with experienced and well qualified teachers becoming harder to recruit and retain because they were seeking positions at universities with high rankings. Rolfe (2003) also showed that Courses content were becoming important since students were seeking admission to universities based on the course and course contents (driven by career concerns) rather then the name of the university. But unfortunately, this need for getting top ranked by students on the basis of number of research papers being written etc seems to be backfiring as more and more teachers are concentrating on their research activities rather than teaching and thus students are getting disillusioned with the teachers and universities. This is one of the major challenges of future that universities will have to face and that is to maintain a perfect balance between teaching and research activities or complete commercialization or a welfare tool to society. This has created differences in institutions with some of them being the research-intensive universities and some being the teaching intensive universities. The actual difference is in the income generated or the overall assets of these institutions. The rich ones are research intensive with less focus on teaching and more of old style of management while the poor ones are teaching intensive and have highly developed managerial style and trying to cost effective.(White, 2006) Current Business Strategies: Business Strategies of traditional colleges and universities can be divided into four categories. (White, 2000) They are: • Incremental: The newer technology is used as an addition to the existing classroom teaching such as online material or extra reading materials etc. • Distance education: This is increasingly becoming popular as universities are trying to increase their student base and market reach. But currently, the courses are offered within the same geographical area and long distance markets are yet untapped. • Alliances: This strategy aims to increase market presence and visibility by allowing a new or another institution to use its brand name and course content etc to start a course. They charge some fees for using their name. The advantage is that the universities are not investing in anything and the current course and content is being shared by other who pays them the partnership fee. • Market entry: Some of the old institutions are directly entering the new markets themselves without aligning with any partner. Notable examples are Harvard and Columbia with their HBSi and Morningside Ventures, respectively. Critical Success FACTORS: The key factors today are the brand names and courses available with the universities. National and International students look for good universities because the job markets or the companies look for degrees from these universities. The only problem is that in some sectors such as IT – the course content needs to be regularly updated with the change in technology. The old traditional universities take a longer time to adopt the changes while the new companies or institutions offering online courses are able to make adjustments very quickly. Thus rapid adaptation of new technology is critical for the course success. Another area of focus is the Part time or long distance learners In fact, the traditional universities such as Harvard, Columbia, MIT, London School of Economics, Stanford etc. have now included courses which are available to students who are not formally enrolled in their institution. Moreover, the popularity of theses options have ensured that more than 50% the 3,600 accredited institutions of higher education already offer distance learning courses. (International Data Corporation, 1999) Thus in the changing scenario, the important critical factors for the universities to compete are : 1. The courses on offer --- Students are these days looking for specific courses for their careers. And they do not settle for anything less. Thus depending upon the job market, the courses in demand will decide whether a students chooses a particular university or not. 2. The target students – The universities will need to attract students internationally as well. For this they need to up to date with the technology and have own websites and online communities and help and courses as well. 3. The curriculum design and content of the courses – The content is important and more specific and career oriented the course is – more the students will be attracted to it. 4. The teaching methodology and practice – The teaching methods need to include online methods, easy availability of online material and a good website Moreover, online courses offer flexible timings and options to students to complete their courses. It has been seen that online and self motivated students have better retention than traditional students. 5. Fees and price. The tuition fees are usually lower when we talk about online courses as the infrastructural costs are totally eliminated. Cisco estimates that online training reduces costs to one tenth of those of an instructor-led class. And according to Russell (1999) the retention rates increase by 25 to 60 %. 6. Quick adaptation to newer technology and updating of course contents. University of East Anglia: The University of East Anglia (UEA) admitted its first students in 1963 in English Studies and Biological Sciences undergraduate courses. The UEA is an internationally acclaimed university with over 13000 students in its campus and is known for providing top class academic and sports facilities. According to its website it has been voted as one of the top three universities for student satisfaction in the first National Student Survey by the Sunday Times. UEA is also known for its top notch research effectiveness and research facilities. The University provides courses on four subject-based groups representing the humanities school, social sciences schools, the sciences schools and the health and professional schools. UEA has more than 9,000 undergraduate students and nearly 4,000 post graduates students. About one-third of students study part-time and around 1000 students are from outside the European Union Current Policies and practices: The university is known for its penchant for doing things differently and this mindset is reflected in its choice of motto that says ‘Do Different’. Thus it is always looking for new ways and methods of providing quality university education. Actually the higher education has changed in past few decades from small group to a mass system of education. As per Shelley (2005) the number of 18-30 year olds in higher education rose from 12% in the 1980s to 43% by 2002. Thus there is a need for universities to respond to this challenge. As Trowler (2005) said that there is a need to make dramatic changes which involve best practices and fits and re-organize them into something which is more appealing to all classes and groups of students. University of East Anglia has been more or less quite successful in this transformation. They have not only adopted the newer technology of internet and online learning well but also used it to its competitive advantage. Their online website is very useful and meaningful to the students and students and teachers have formed communities and use intranet to discuss important points and seek clarifications even after the class timings. Thus in terms of student support and guidance, they have been pretty good. In fact, according to the findings of a review in February 2001 of the quality of education in business and management provided by the University of East Anglia -- the quality of education in business and management at the University of East Anglia has been approved. See Table below for the grades – Aspects of provision Grade Curriculum Design, Content and Organization 4 Teaching, Learning and Assessment 3 Student Progression and Achievement 4 Student Support and Guidance 4 Learning Resources 4 Quality Management and Enhancement 4 Grade 4 is the highest grade. Value Curve: Let us now take a different look at the UEA policies and practices. This new approach is called the Value Curve. It is a market-based approach as compared to a resource-based approach to strategy development. Kim and Mauborgne (1999) talk about strategic development in terms of innovative practices and their value to the customers. They focus on finding new territories or space for the new products and allege that unless the innovations are in accordance with the consumer requirements or preferences – they will not work. The traditional resource based view focuses on the resources of the company and how best to deploy a strategy that leverages the best resource of the company. Or in other terms, it advocates the development of key resources as the source of competitive advantage of a company. On the other hand, the value curve simply advocates aligning the product innovations with the customers and looking across the traditional customer base to gain competitive advantage. Their theory is quite valid in the sense that today’s market is customer oriented and customer is the king. Thus for any product to capture a market, it should appeal to not only one set of target audience, but should cover people across different segments. The value curve is thus a graphical way of representing a product based on its key factors of success and comparing it with the alternative product. The current value curve for UEA is : Recommended strategy: Since UEA is already doing fine, it needs little adjustment only in its current policies. That is it needs to be more cost effective and should try to reduce the pricing of its courses. These seem to be a little on the heavier side and to gain wider access to student population the UEA should try to reduce price of its offerings. Moreover, it should try to increase its online offerings. Thus the new curve is: References: Barr, N. (2004) The Economics of the Welfare State (4th Edition). Oxford: Oxford University Press. Bird, R. (1994) Reflections on the British Government and Higher Education in the 1980s. Higher Education Quarterly, 48(2): 75-91 Dill, D. D. (1999a) Academic Accountability and University Adaptation: The Architecture of an Academic Learning Organization, Higher Education, 38(2): 127-154. Dolton, P. J.,Greenaway, D. and Vignoles, A. “Whither Higher Education?” An Economic Perspective for the Dearing Committee of Inquiry, The Economic Journal, 107(442): 710-726 Hare, P (2003) The UK’s Research Assessment Exercise – Its Impact on Institutions, Departments, Individuals, Higher Education Management and Policy, 15(2):. International Data Corporation, 1999a, Online Distance Learning in Higher Education 1998–2002 (Boston, Mass.: International Data Corporation, 1999). Johnstone, R. B. (2004) In P. Teixeira, B. Jongbloed, D. Dill, and A. Amaral (eds.) Markets in Higher Education: Rhetoric or Reality?, pp. . Dordrecht, the Netherlands: Kluwer Kim and Mauborgne, (1999) , Creating New market Space, Harvard business review, Lindsay, G. and Rodgers, T. (1998) Market Orientation in the UK Higher Education Sector: The Influence of the Education Reform Process 1979-1993. Quality in Higher Education, 4(2): 159-171 Review in February 2001 of the quality of education in business and management provided by the University of East Anglia Rolfe, H. (2003) University Strategy in an Age of Uncertainty: The Effect of Higher Education Funding on Old and New Universities. Higher Education Quarterly, 57(1): 24–47. Russell, The No Significant Difference Phenomenon (Raleigh,N.C.: North Carolina State University, Office of Instructional Telecommunications, 1999). Shelley, S. (2005) Working in Universities: the realities from porter to professor, Glasgow, Humming Earth. Trowler, P. (2005) Reinventing the University: visions and hallucinations, http://www.ru.ac.za/academic/adc/conference/docs/PaulTrowler.pdf. visited 22 December 2005. UEA, http://www1.uea.ac.uk/cm/home/ White, S. A. (2006) Higher Education and Learning Technologies: An Organisational Perspective. Electronics and Computer Science. Southampton, UK, University of Southampton. Williams, G. L. (2004) The Higher Education Market in the United Kingdom. In P. Teixeira, B. Jongbloed, D. Dill, and A. Amaral (eds.) Markets in Higher 30 Education: Rhetoric or Reality?, pp. 241-269. Dordrecht, the Netherlands: Kluwer. Read More