Strategic Term Paper 2

8/8/2019 Strategic Term Paper 2

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OF

Stratgic Management

ON

TOPIC- PORTERS FIVE FORCES OF

MODEL ON SCHOOL

EDUCATION SECTOR

SUBMITTED TO:-

SUBMITTED BY:-

Ms. YOGITA SAHNI

AMANDEEP KAUR

SECTI

ON: -RR 1808

ROLL.NO:-A14


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REG.

NO:-10808915

Acknowledgement

First of all I would like to take this opportunity to thank the Lovely

University for having (Strategic Management) as a part of the

M.B.A 4th Sem.

Many people have influenced the shape and content of this term paper,

and many supported me through it. I express my sincere gratitude to

Ms.Yogita sahnifor assigning me a Term Paper on Apply the

Porters five forces model on School Education industry and

analyse the attractiveness of the industry for investment purpose.

This is an interesting and exhaustive subject.

She has been an inspiration and role model for this topic. Her guidance

and active support has made it possible to complete the assignment.

I also would like to thank my Friends who have helped and encouraged

me throughout the working of the term paper.


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Last but not the least I would like to thank the Almighty for always

helping me.

Amandeep kaur

TABLE OF CONTENT

i) Topicii) Introductioniii) Education in Post-Independence India: Some

Milestonesiv) Challenges in Education Sector

v) Objectives of educationvi) Mission/Vision of Education industryvii) Swot analysis of education industry

viii) Porters five forces modelix) Overall Higher Education Industry Assessment

x) Current Impressions of the Higher Education

Industryxi) Attractiveness of Indian Education Industry

xii)Education Industry to be a beneficiary of the newserved from India

xiii)Biblograply


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Introduction:

The Education sector in India

One area that will hopefully receive immediate attention from a government that has been

rescued from opposition within its ranks is Education. The Right to Education bill that was

drafted in 2005 has not been passed and all discussion on the role of the private sector in

Education had been scuttled. Therefore it was heartening to note that immediately after the vote

of confidence; the HRD ministry started talking of going to Parliament to initiate some critical

reforms in the education sector. The other area that is important is the deregulation of the

University sector and allowing foreign and private participation in colleges and universities. The

HRD Ministry has again started talking about deregulating and relicensing higher education in

line with the recommendations made by the Knowledge Commission. There is little time this

Parliament has and therefore it would be great if it could initiate these reforms quickly.

Education in India has suffered from severe problems. It has always been seen as an elitist sector

and the poor were always left out. Even now, there are thousands of village without access to

schools. Even if there are schools, they are meant to provide students to Universities, where the

elite go to. Technical and vocational education was ignored as that was not an area where the

elite sector would go to. Also, education was considered an area where the government would

have complete ownership and control. While commercialization was considered desirable in

other sectors, it was not simply seen as an option in education, and in similar ways in the health

sector. Both these sectors suffer as they only provide access to the rich and the urban India. But

in this column we shall not discuss the health sector. As a result what happened was that very

few schools and colleges were opened and because the sector was completely run by the


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government, the people it could recruit as faculty were usually of poor quality. The better faculty

were few and far between and more as exceptions. Even now the problem is acute as is reflected

in the more than 40 per cent vacancies that exist in our premier colleges like the Indian Institutes

of Technology and the Engineering colleges.

School Education is therefore rightly regarded as the base depending on which ones lifestructure takes shape. This realization has resulted in the increasing demand of good schools in

India. The corresponding rise of Indian schools to meet the demand of the growing populationhas also accelerated the competition among the Schools in India. And this is true for all kinds ofcity schools like residential schools, day- boarding schools, primary schools, secondary schoolsand the government schools.

Moreover new schools are also coming up across the cities and towns of India because of therenewed emphasis in education in the emerging knowledge economy". But parents andguardians still face problems in choosing the right city school for their ward. Therefore, on thispage, we have listed all the schools of leading cities in India, i.e., we have listed schools inDelhi, Schools in Mumbai, Schools in Pune, Schools in Kolkata, schools in Bangalore, schoolsin Hyderabad, schools in Chandigarh and schools in Ahmadabad.

We have tried to cover all types of schools in the cities across the country like residentialschools, boarding schools, primary schools, secondary schools, government schools and all othercity schools.

We have tried to provide as accurate information as possible about the schools in India.However, if you come across any error, do write to us about it. or, in case you need some moreinformation about any school mentioned here, do write to us about it. We would get back to youpromptly. And we would also welcome any kind of feedback on this page concentrating onIndian Schools as we are continuously striving to make it a very informative page on schooleducation in India.

NEW PROGRAMMS


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India is planning to set up a health and wellness club in all the Central Board of SecondaryEducation schools across the country to promote safe sanitation practice, Human ResourceDevelopment Minister Kapil Sibal said Tuesday. 'Health and wellness club will be set up in allschools for better sanitation. Let's promise for zero tolerance against poor sanitation,' Sibal saidafter launching the National School Sanitation Initiative. He said only nine percent of schoolstudents wash their hands before eating and these clubs will promote issues like these amongstudents. 'They are the future and their good health will help a build a better tomorrow.'

The initiative is a collaboration project between the HRD ministry and the urban development

ministry. It is estimated that 17 percent of the urban population in India currently has no accessto any sanitation facilities, while 50-80 percent of the wastewater is disposed untreated. AnshuVaish, secretary school education, said at least 45 percent of Indian schools do not have separatetoilets for girls. 'This is impacting girl students' admission and we have a long way to go inimproving this situation.' Initially the health and wellness club will come up in CBSE schools asit is the initiative of the board, Vaish told IANS. 'We will inform all the state boards and if theywant all the materials can be translated to desired regional languages.' S. Jaipal Reddy, who wasalso present at the event, said safe drinking water and sanitation are part of the millenniumdevelopment goals and the government is striving to better the situation.

In a shocking case of lethargy, a survey conducted by the state education departments Nagpur

division revealed that as many as 170 primary schools out of the 6,675 operated by the ZillaParishad lack even basic drinking water facilities. In the era when Right to Education Act hasmade school education compulsory for every child, such miserable conditions that too in thegovernment-owned prevents children from coming to the schools.The official disclosed that though the state government grants lakhs of rupees for improvinginfrastructure of the schools in rural areas with emphasis on drinking water facilities, toilets,classrooms and blackboards, the those funds failed to reach the schools. Even food grainsallotted under midday meal scheme by the government failed to reach the children and salaries ofteachers were held up for months.

EDUCOMP EDUCATION

The school believes in building leadership skills by developing individuality and discoveringpotential in each child. The focus is on making students independent decision makers, problemsolvers and to develop emotional intelligence. Parents are the first teachers and experts on theirchildren as they know them better than anyone else. The school believes in working as a teamwith parents and make sure that there is no gap in communication. We look at the role of parentsas more than just being the providers for their childs education and consider them as equalpartners in the childs growth. All Millennium teachers have been trained to effectively facilitatelearning in a variety of settings, with a variety of media, and for a wide range of diverse types of


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learners. High levels of passion, commitment, empathy for the students and a proactive attitude,mastery of subject matter, knowledge about the latest developments in the field of education andgreat communication & interpersonal skills are key attributes of the teachers at MillenniumSchool.The Millennium Learning System is the framework for everything- the schools culture,

philosophy, infrastructure, curriculum, lesson plans, learning levels and curricular activities. It isdesigned to help every child realize her or his potential. The school has a well structuredcurriculum with in depth plans to meet individual needs, enabling the learner to apply, what hehas learnt in daily life. The school has innovative textbooks- which are fun, interactive andfacilitate learning through activities and games; Project files to encourage students to developtheir research skills through projects which complement the curriculum, where they record theirexperiences; and a unique dictionary to build vocabulary where every word they have learnt fromtheir text is recorded and explained visually and simply. The outcome of their learning isdocumented through Minimum learning levels. The school uses formative assessment throughskill-based worksheets given at the end of every period for every level. Students performancedata is fed into unique software, which tracks the progress of the child right from the time hejoins the school till he leaves. Our teachers utilize a variety of teaching strategies, resources andorganizational skills to facilitate meaningful learning. Our structured plans guide teachers inmaking learning interactive and application oriented.

EDUCOMP PROGRAMSROOTS TO WINGSA root to Wings is a chain of pre-schools, designed to cater to the pre-schooling needs ofstudents from two to five years. Launched in 2006, it is the first structured and process driven IP

in the fragmented space for early childhood education. Currently there are 240 franchisee schoolsoperational. Roots to Wings has been awarded 'Emerging Franchisor of the Year 2008' forexcellence in Franchising and Business Development, by Franchise India Holdings Ltd. Thevision of the programme is to enable, energise and enhance childhood by fostering growth ofmind, body and spirit - leading students to become lifelong learners. Our mission is to nurtureyoung minds in a culturally sound environment and provide opportunities that will help themrealise their true potential. Our curriculum focusses on imparting skill-based knowledge, usingits unique Seven Petal approach and an eclectic approach.

The Seven Petal approach looks at enhancing the following skills:

Language Development Cognitive Development Fine and Motor Development Gross Motor Development Personal Awareness Socio-Emotional Development Individual-Potential Development


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Our curriculum is based on certain principles that we have borrowed from various schools ofthought on early childhood. Based on the best practices of the various methods and approaches,such as Project Method, Multiple Intelligence, Play Way, Montessori Method and Thematic

approach, Roots to Wings has evolved an eclectic approach.

The instructional delivery is organized and is responsible for providing skills and concepts,involving problem-solving, decision-making, questioning, evaluating and discovering, to thestudents. Our philosophy is to provide students with a culturally appropriate environment andvalues, love and protection needed to grow in body, mind and spirit. Our stimulatingenvironment and a scientifically based curriculum lays the foundation to help students achievesuccess in all phases of life.

ETEN

ETEN is Educomp Tele-Education Network. It is Educomps pioneering initiative to helpstudents get advanced, scientific and personalised coaching from acclaimed faculty, at theirhome town, and at a lower cost compared to what they would have incurred if they took face-to-face classes from the same faculty. ETEN makes available its services through a nationalnetwork of Educomp Learning Centres (ELCs). The ELCs are VSAT-enabled. Through state-of-the-art studios and telecommunication facilities, the ELCs channelise audio-, video- and data-enabled high-quality faculty lectures to students.

ETEN Delivery Model

The faculty uses ETENs smart attendance system, smart assessment system and audio-videofacilities to see, hear and talk to the students. The students can see, listen and participate in alecture through a computer and an LCD projector connected to the VSAT receiver. They interactwith the faculty as spontaneously and naturally as in a regular classroom. They can also markattendance, raise queries, respond to polls and attempt multiple choice questions andassessments. Educomp has, over the years, focused undiluted on delivering technology-enablednew-age learning. ETEN furthers this cause and reinforces Educomps mission of being atransformative learning-enabler through innovative technology-led initiatives.

EDUCOMP SMARTCLASS

Educomp smartclass is a digital initiative pioneered and invented by Educomp and has alreadybeen adopted by over 2500 progressive schools in India. smart class is transforming the wayteachers teach and students learn in schools. Its a new age technology movement that is fastbecoming an imperative for schools. Soon it will touch every class and every progressive schoolin India. This results in faster and accurate understanding of the concepts in class and helpsimprove the overall academic performance of students. Teachers are able to keep studentsengaged in the learning process and also get an instant and accurate assessment of learningoutcomes achieved at the end of the class.


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Education in Post-Independence India: Some Milestones

(1947) India achieves Independence

(1948-49) University Education Commission constituted; gives Report

(1950) India becomes a Republic. Free and compulsory education enshrined as one of the

Directive Principles of State Policy in the new Constitution

(1951) Decennial Census yields a Literacy Rate (5+) of 18.3% (overall), 8.9% (female)

(1952-53) Secondary Education Commission constituted; gives Report

(1956) University Grants Commission (UGC) established by Act of Parliament

(1958) Second IIT established at Mumbai 1959 Third and Fourth IITs established at Kanpurand Chennai, respectively


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(1961) Institutes of Technology Act passed by Parliament to provide a common legal

framework for all IITs

(1963) Fifth IIT established at Delhi

(1964-66) Education Commission constituted; gives Report

(1968) First National Policy on Education (NPE) adopted, in the light of the recommendations

of the Education Commission

(1963) Third IIM established at Banglore

(1975) Integrated Child Development Services (ICDS) Scheme launched to provide for

holistic development of children up to the age of six years

(1976) Education from being a State subject to a Concurrent

(1984) Fourth IIM established at Lucknow

(1985) Indira Gandhi National Open University (IGNOU) established by an Act of

Parliament

(1986) New National Policy on Education (NPE) adopted

(1987.88) All India Council of Technical Education (AICTE) vested with statutory status by

an Act of Parliament

(1992) NPE, 1986, revised, based on a review by the Acharya Ramamurti Committee

(1993) National Council of Teacher Education (NCTE) vested with statutory status by an Act

of Parliament

(1994) District Primary Education Programme (DPEP) launched to universalize primary

education in selected districts


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National Assessment and Accreditation Council (NAAC) established by UGC

(with headquarters at Bangalore ) to assess and accredit institutions of higher education

National Board of Accreditation (NAB) established by AICTE to periodically

evaluate technical institutions and programmes

Sixth IIT established at Guwahati

(1995) Centrally-assisted Mid-Day Meal scheme launched in government and semi-government

primary schools all over the country, with central assistance by way of free food grains

(1996) Fifth IIM established at Kozhikode 1998 Sixth IIM established at Indore

(2001)Sarva Shiksha Abhiyan (SSA) launched to universalize elementary education of good

quality all over the country

University ofRoorkee converted into (the seventh)IIT

(2002) Constitution amended to make Free and Compulsory Education, a Fundamental Right

(yet to be brought into force)

(2003) 17 Regional Colleges of Engineering converted into National Institutes of Technology,

fully funded by the Central Government

(2004) Education Cess levied for raising additional finance needed to fulfill Governments

commitment to universalize quality basic education

(2005) National Commission for Minority Educational Institutions established by Act ofParliament

(2006) Two Indian Institutes of Science Education & Research (IISERs) established at

Kolkata and Pune, respectively

(2007) The National Institutes of Technology (NITs) brought under a common

statutory framework by establishing NIT Act.


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India's education sector in (2009)

New Delhi: With the advent of a new year, a look back to the previous year - 2009 is imperative

taking into consideration the important developments being undertaken in the education sector of

India. Among those to hit the headlines the most in 2009, were the Central Board of SecondaryEducation (CBSE) Class 10 Board examinations becoming optional; the appointment of India's

new HRD Minister Kapil Sibal (who took over from Arjun Singh) and the Common Admission

Test (CAT) getting marred by technical glitches.

Challenges in Education Sector

Current Scenario in India

World well known higher education institutions

Challenge of maintaining quality of education in primary and secondary schools,

vocational studies, distance education

New emerging professions (like BPOs, clinical research, aviation, travel, tourism etc.)

Rough estimate of approx 8.8 lakhs elementary schools

3-4 lakhs upper primary schools

1.46 lakhs secondary and senior secondary schools

Around 7.7 lakhs ISO 9000 certified schools and 1.1 lakhs

ISO 14000 certified schools all over the world????

Hubs of excellence but no synergy

Need for Improvement in Quality in Schools


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Foundation for all further learning

National Policy on Education - emphasizes the importance of giving special attention to

quality aspects of primary education:

Improved quality of school provision

Focus on learning outcomes

Teacher Capacity Building

Presidents address to QCI during the 2nd National Quality Conclave to formulate a quality

accreditation system standard for schools and also develop a rating system for verifying the level

of adherence.

QCI developed a standard of educational quality management system with inputs from

educationists, administrators, quality experts and interested parties including parents.

RESEARCH METHODOLOGY

Discuss the research design, research problems, important of the study, scope and

significance of the study, source of data, questionnaire, sample design statistically techniques

used, and objective of the study and limitations of the study.

RESEARCH DESIGN:

A research design is an arrangement of conditions for collection and analysis of data in a

manner that aims to combine relevance to the research.

SOURCE OF DATA:


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The relevant data has been collected from the secondary sources. The primary data is

collected by a questionnaire from the employees. The secondary data is collected by news paper

company journals, magazines websites etc.

OBJECTIVES OF EDUCATION

Individual Development

Developing physical and mental faculties

Acquiring the capacities of understanding, appreciation and expression through word andact, are the fundamental aims of education

Aim of education should be to make children self- confident and self dependent, and tomake them strong physically and mentally

Education is meant to develop every child's character, personality and culture and asmuch knowledge as the child can assimilate not merely memorize.

Social and National Development

Social, aim of education in equally important because an individual lives in society andhas his obligations towards his nation.

There is a realization that, "The present education system does riot yield required resultsmainly because it is divorced from the real social content and social goals".

Social Transformation

Education should not merely equip an individual to adjust with society to its customs andconventions, but it should enable him to bring desirable changes in the society.


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It has been, therefore, suggested that, "Every educational institution from secondary

school to university college should be developed to become an agency of change...."

However, it is essential that we should be quite clear about the purpose of change.

Value Education

Education is a methodical effort towards learning basic facts about humanity. And thecore idea behind value education is to cultivate essential values in the students so that thecivilization that teaches us to manage complexities can be sustained and furtherdeveloped.

It begins at home and it is continued in schools. Everyone accepts certain things in his/herlife through various mediums like society or government.

Value education is important to help everyone in improving the value system that he/sheholds and put them to use.

Everyone has understood their values in life they can examine and control the various

choices they make in their life. One has to frequently uphold the various types of values in his life such as cultural

values, universal values, personal values and social values.

Thus, value education is always essential to shape one's life and to give him anopportunity of performing himself on the global stage.

The need for value education among the parents, children, teachers etc, is constantlyincreasing as we continue to witness increasing violent activities, behavioral disorder,lack of unity in the society etc.

The family system in India has a long tradition of imparting value education. But withthe progress of modernity and fast changing role of the parents it has not been veryeasy for the parents to impart relevant values in their wards.

Therefore many institutes today conduct various value education programs that areaddressed to rising problems of the modern society.

These programs concentrate on the development of the children, young adults etc.focusing on areas like happiness, humility, cooperation, honesty, simplicity, love,unity, peace etc.

Sports Education

To set up an exclusive Sports school with the objective of catching them youngand bringing GOLD in the Olympics of 2020. The school is set up along theRussian & Chinese model of identifying sporting talent in children at a young ageand nurturing them for representing the country at international level tournaments


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Mission/Vision of Education industry:

Mission

To establish technology incubation centre, software development park &

entrepreneurship cell training facility

To strengthen the linkages with industries, professional societies, accrediting bodies and

statutory authorities and share common goals and responsibilities

To establish campus for international students in academic collaboration with globally

acclaimed premier institutions

To provide the state-of-art facilities for all facets of professional training

To improve the work culture and develop congenial organizational set-up.

Vision

To be a provider of globally-competitive Proficient Professionals.

To nurture and sustain academic excellence, programmed to promote innovation,

scholarship and abilities to analyze, experiment and synthesize.

To foster academic-industry/professional synergies and to forge strategic alliances for

greater upward mobility.


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Impart need-based education and create an ethos for research of relevance.

Contribute to social & industrial development of the region.

To create a world class infrastructure with state of the art sporting complex and top levelcoaches & supporting staff to nurture talents with an ultimate objective to stabilize India

at the pinnacle of world Sports and help become a leading contender in Olympics.

SWOT ANALYSIS OF EDUCATION INDUSTRY:

Strengths:

The agency has an experienced and dedicated workforce

There is a good training program for new employees

Senior management is committed to workforce planning

Human resource staff are easy to work with and willing to try new recruitment

ideas

50% of the staff holds a professional certification

Specialisation in sports

Focus on Olympics


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Weaknesses:

Over 50% of the managers and supervisors are eligible for retirement

The agency does not offer a mentoring program

The agency lacks the technology tools to be more efficient

Procedural manuals need to be updated

The current workforce is not very racial/ethnic diverse

Sports education is a new concept

Few specialised coaches available

Opportunities

New information technology tools can provide quicker data sharing between

agencies and client information retrieval

There are job sharing opportunities with other agencies

A large number of retired baby boomers are considering returning to the

workforce on a part-time basis

Federal and state agencies have expressed interest in merging services

Universities are looking for internship opportunities for their students

Increased coverage & penetration of sports

Success of Indians in Beijing Olympics has raised hopes and demand for moresportsmen & women

Threats

There is less federal money available for training grants

Budget and full-time positions have been limited by the legislature

Educational institutions are reducing the number of courses offered in this field


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The number of residential treatment centers has been declining steadily

In India people are Academic centric.

Competition is with Sports Authority of India, Sports schools by Govt.

PORTERS FIVE FORCES OF MODEL ON SCHOOL EDUCATION

INDUSTRY

Although probably one of the most widely taught frameworks for industry analysis, Porters FiveForces still rarely leaves the business school domain and thus the need for the rather lengthydiscussion. Each of the five forces will be applied to the specifics of the higher educationindustry.


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The threat of the entry of new competitors

Residential schools are usually very large organizations with extensive administrative operations,pervasive facilities and grounds, invaluable brands and a alumni base that can have a legacy well

over a hundred years old. These characteristics, the capital and endowments required to supportthese long-term assets, including land grant entitlements, almost per se define large economies ofscale, which certainly represent formidable barriers to entry. Probably one of the mostcontroversial barriers to entry into specific areas of higher education is the requirements andrestrictions imposed by accrediting associations. General assessment shows that in a school thereis no exit barrier as such especially in private schools, but here a government aid is involved sothe exit barrier in this case will be higher. Public schools and colleges are usually very largeorganizations with extensive administrative operations, pervasive facilities and grounds,


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invaluable brands and a alumni base that can have a legacy well over a hundred years old. Thesecharacteristics, the capital and endowments required to support these long-term assets, includingland grant entitlements, almost per se define large economies of scale, which certainly representformidable barriers to entry. Federal and state governments also regulate the establishment of

publicly supported schools based on policy needs and budget constraints. While public sourcesof student loans continue to decline, one unintended consequence is mounting barriers to entry asrelated to the for-profit sector. Approximately 93 percent of for profit institutions cash flowconsists of tuition and fees. The crucial point is 64 percent of the tuition and fees consist offederally backed student loans. Please review Exhibit 1 in the appendix for details. As the federalbacked student loan industry continues to spiral towards crisis, for-profit higher education firmshave noticed weaker earnings, sporadic enrolment drops, and falling stock prices, all of whichsignal extreme caution to any potential new entrant. An additional barrier to entry, althoughtangential, is the existence of intellectual property and technology transfer offices within mostuniversity systems. These offices protect and monetize university research, which representsaddition cash flow, and benefit from existing economies of scale and departmental synergies.Probably one of the most controversial barriers to entry into specific areas of higher education isthe requirements and restrictions imposed by accrediting associations. These organizations, whilepromoting curriculum standards, affinity group branding and visible education outcome metrics,also cleverly protect the incumbent members with an accredited by license. The success andreputations of business schools, medical colleges and law schools are critically interwoven withcertification and accreditation. Surprisingly, incumbent universities control most accreditationboards. An example of the control that an industry managed accreditation board has is where theAssociation to Advance Collegiate Schools of Business, the most influential business schoolaccreditation board, will not accredit the business school of the University of Phoenix.

The intensity of competitive rivalry

The education industry has a high fixed cost ratio and the premier school market is effectivelyconcentrated, which makes competitive rivalry predictably high. To some extent, the benefits ofbeing a growth industry offset the high degree of rivalry. Overall rivalry is mitigated becauseseveral schools have large capacity enrollments, and are content seeing premier schools satisfygrowing demand by targeting niche markets. An overall competitive rivalry assessment ismoderate. The education industry has a high fixed cost ratio and the premier school market iseffectively concentrated, which makes competitive rivalry predictably high. To some extent, thebenefits of being a growth industry offset the high degree of rivalry. Overall rivalry is mitigatedbecause several schools have large capacity enrollments, and are content seeing premier schoolssatisfy growing demand by targeting niche markets. An overall competitive rivalry assessment ismoderate. The Indian higher education industry includes approximately 4000 degree grantingcolleges and universities. The adjacent pie chart illustrates the industry breakdown by sector.Although, higher education may appear fragmented with over 4000 competing entities, theindustry is actually quite concentrated due to over 50 percent of the approximately 17.7 millionstudents being enrolled in only 400 of these colleges or universities. The resulting consequenceof this enrolment pattern is that 10 percent of the industry has over 50 percent of the marketshare. In 2007, the industrys combined revenue was approximately $200 billion. Although thefor-profit sector only earned $13 billion, this sector represents the fastest growing segment of


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higher education and revenues for the top 10 for-profit universities are predicted to double overthe next five years. This growth trend appears to be long term and predictable, with 17.7 millionstudents currently enrolled in U.S. universities, and projected to grow to 19.5 million by 2014.As demand for Indian higher education escalates, state supported universities and community

colleges will most likely cap enrollments with the for profit sector quickly responding to theincreased demand with a corresponding increase in supply. The for-profit segment is much moreflexible, agile to market conditions, and eager to accept change than the traditional statesupported universities, essentially due to its governance structure .Generally, organizationswithin the higher education industry have an exceedingly high fixed cost to total cost ratio. Thisfinancial structure requires these organizations to operate at full or near capacity, as measured byenrolment, to have a chance of realizing competitive economies of scale. The for-profit segmentis an exception here. Most of these organizations lease classroom space, do not provideresidential accommodations, have limited resources, and do not provide tenure tracks for facultyemployees, so consequently, have substantially lower fixed costs.

The bargaining power of customers (buyers)

Buyers are widely fragmented across the market and in general, these potential students havelimited influence on the higher education industry. The role of freely available and instantaneousinformation relating to course descriptions, college amenities, and school rankings most certainlyshifts the information asymmetries giving potential students more power of choice. This shift, toa degree, offsets the effect of market fragmentation and consequently gives buyer power anoverall neutral assessment.With roughly 17.5 million currently enrolled students in highereducation institutions in the India, without any specific target groups representing a majoritymarket share, buyers are fragmented and diffused across the market. This buyer characteristic

limits the effective power any one specific student may have in terms of negotiating tuition rates,admission requirements and other amenities. There is one acceptation to this observation. Publicand private universities are targeting and aggressively recruiting the standout 15-25 percent ofhigh school classes with the predictable, but unintended consequence of giving this marketsegment generous power to choose their options and to negotiate. In todays information age, thecontents of an undergraduate record of course descriptions is only a mouse click away. Schoolsearch and evaluation data is a frictionless, symmetrical and essentially free process. Of course,this not was always the case. Twenty years ago, a high school student had to patiently waitweeks to receive an university record by mail to assist with college evaluations. It is axiomaticthat the more information a buyer has, the more balanced the transaction or exchange will be.Two additional components that influence the degree of buyer power are the rate of growth forthe specific industry and the strategic value of the buyer to the industry as a whole. A growingmarket diminishes buyer power relative to a market with an average growth rate and along thatsame argument, the more distributed buyers are over a given geographic location, the less powerthey accrue.

The bargaining power of suppliers

Schools and colleges frequently represent large stable contracts to vendors, so the ensuing


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competition for bids among these vendors is typically frenzied. Within the education industry,there are numerous suppliers of a variety of products and services, fragmented across theindustry. An overall supplier power assessment is low. The degrees of supplier concentration andsupplier importance, in respect to the higher education industry are essentially the same side of

the economic coin. If there are few suppliers to an industry and these suppliers sell an essentialcomponent or service to the industry, then supplier power will be high relative to otherindustries. A classic example of this principle is the Industry Rivalry Barriers to Entry SuppliersBuyers Substitutesclout and influence Intel has over the personal computer manufacturingindustry. There areeffectively only two CPU manufacturers supplying the most importantcomponent to theindustry. Within the higher education industry, there are numerous suppliers ofa variety ofproducts and services, fragmented across the industry. Even highly regardedtextbookpublishers, clamor for faculty time and compete for each text approval and unit sold.Universities and colleges frequently represent large stable contracts to vendors, so the ensuingcompetition for bids among these vendors is typically frenzied. Based on the observation ofnumerous vendors selling essentially generic products and services, and low motivation by thesesuppliers to vertically integrate into higher education delivery, suppliers ability to influencethe industry is low.

Threat of Product or Service Substitution

There are an estimated 1.07 million schools and that quantity alone would arguably indicate awide variety of education options. Price points widely differ between the public and privateeducation segments. Since private schools are perceived as high in quality relative to governmentschools, the student is already price conditioned which makes transferring to a more expensiveprivate school a realistic option.At first, one may think that the options or alternatives related to earning a college degree or

obtaining additional higher education would be constrained by location, level of income orpossibly cultural influences. Although possibly true 20 years ago, these limitations to highereducation are significantly less relevant today. At present, the variety of educational productsis extensive and continues to increase as influenced by the exponential advances in informationtechnology. Classic economic theory classifies information technology as product compliment, because the existence of the product or service augments the features and benefits of anincumbents product offering.An additional economic process that measures the threat of substitution is the availability ofprice-performing product alternatives. As an example, most state supported universities within aspecific state have similar tuition rates and largely, the state tuition structure is equivalent forpotential students. Thus, it essentially costs the same to attend Management Institute and State

University as to attend the University of Delhi. Potential students or even transfer students couldview these two universities as proxies.Switching costs between products and services are a concrete aspect of the abstract concept ofproduct substitution. As an example, the process of transferring between universities or collegesis relatively fluid within the India. More specifically, moving between one business school andanother is an example where the tangible and intangible switching costs are low because of theavailability of compatible curriculums. Obviously, one could get caught in the details of transfercredits, course descriptions, and degree requirements, but as compared to the cumbersome tasks


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of transferring to a new school in the India . India students probably only have a slight emotionalcost involved. Not to over generalizing but, younger adults are more disposed to change thanolder adults. Youth brings out the attitude of what do I have to lose as contrasted to theanchors of age associated with older adults. It is not a stretch to conclude that younger adults

have a higher propensity to substitute than older adults do, within the same population of highereducation students. Of course, these examples are hypothetical and best measured by transferrates and graduation rates. Price points widely differ between the public, private and for-profithigher education segments. For-profit universities deliberately price their degree programsbetween the public and private tuition schedules. In economic terms, the for-profit sector overall,prices at the price elastic point of the higher education demand curve. However, this strategydoes have some weaknesses, including the unintended consequence of effectively minimizingswitching cost between a public university and a for-profit institution. In addition, since for-profit tuitions are high relative to public universities, the student is already price conditionedwhich makes transferring to a more expensive private school a realistic option. The overallassessment of the threat to substitute is high and not beneficial to the industry incumbent.

Overall Education Industry Assessment

From the perspective of a education industry incumbent, a synthesis of Porters Five Forces isinvaluable in gaining and maintaining an overall strategic plan. The analysis helps managershave a wider competitive horizon than a day-to-day myopic operational outlook. According toMichael Porter, the extended rivalry that results from all five forces defines an industrys

structure and shapes the nature of competitive interaction within an industry. Industry outsiders,attempting to determine the probabilities of a successful move into the industry, can also use thissynthesis. As illustrated in the adjacent diagram, industry rivalry is moderate meaning itrepresents a worry or nuisance to industry members. This moderate assessment is the result ofthe tradeoff between the disadvantages of industry fragmentation with the accruing benefits of agrowth industry. The barriers to entry such as high capital and high fixed cost are quite high andact as the strongest protecting force for the higher education industry. Low supplier power, basedon low concentration and fragmentation, is also beneficial to industry incumbents. The threat of


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substitution is high with numerous forms of higher education and from the incumbentsperspective; it probably represents the most adversarial force to incumbents. Buyer power isneutral, which on the surface appears to be relatively benign, but buyer power is growing at amuch higher rate as compared to the remaining competitive forces and over the long term will

probably become the most threatening economic force for incumbents to monitor. From thepreceding industry analysis, based on the Porters Five Force framework, the overall assessmentof the higher education industry for both the incumbents and potential entrants is neutral. Whilethe overall higher education industry analysis may seem ambiguous and not of standoutsignificance, by being in the middle of the competitive road, most industry strategist would arguethat industries with a neutral competitive assessment represent some of the greatest challenges tomanagers. There are no clear road signs to follow while navigating the ever changing direction tosustainability and profits.

Current Impressions of the Education Industry

The Carol Keese story is an example of current trends prevalent within the education industry. Itis common knowledge that demand for higher education has increased significantly over the lastdecade. There is a Baby Boom Bubble in progress. The Baby Boomers children are now goingto college, along with a greater diversity of students including adults, women, part-time students,commuters, international students and minorities such as Hispanics and Afro- Americans. Thesedemographics have pushed demand for public higher education beyond most practical capacitylimits .New information technologies, outsourcing pressures, and specific skill set deficient, allcontribute this rising demand. The for-profit sector has noticed these trends and marketed toindividual such as Carol Keese, seeing very profitable growth opportunities targeting adults,women and part-time students. An additional interesting observation that is somewhat masked, isa trend of declining enrollment in full time residential undergraduate and graduate programs.These trends, on the surface, might sound contradictory to the casual observer. How canresidential or traditional student enrollment be decreasing while total demand for higher


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education has outpaced supply? The for-profit sector has recognized these market changes anddeveloped business strategies to take advantage of them, by offering numerous programstargeted at profitable niche markets. This increases supply, but concurrently, small private liberalarts colleges are closing their doors at an alarming rate, decreasing supply and leaving the public

universities to act as a supplier of last resort .One could argue that non-profit universities arekeenly aware of these trends and have formally incorporated them into their long range planning,but are not changing their current business models and marketing strategies. Why you may ask?They do not have to, because they are producing at capacity. Laureate Education, Inc. aleading for-profit provider of higher education predicts all industry members stand to gain overthe long run because demand for higher education will continue to increase. Laureate bases their prediction on a growing youth population, a growing middle class that understands thateducation is the key to social mobility, and global industrys demand for a technically educatedwork force. Following that same line of thought, Richard S. Ruch, says in his book, Higher Ed,Inc., the combination of public and corporate dissatisfaction with traditional education,favorable demographic trends, and the infusion of a new kind of endowment privateinvestment capital into the for-profit segment suggests that the for-profits will probablycontinue to take an increasing share of the education market.

ATTRACTIVENESS OF INDIAN EDUCATION INDUSTRY

Education Industry is booming too!

The education market is now thriving on the back of the workforce proving itself equal to theircounterparts elsewhere in the world in productivity. Given the predominantly young population,the education market is bound to accelerate rapidly.THE MUCH sought after Indian workforce that has propelled India to the top of several global

competitive indices is not only attracting prospective employers to the country but also theeducation system behind this workforce is now driving a prolific education market. It seems tobe a boom time for the education industry in India as the concept of business through educationcatches up with the Indian market.

Indias youth, often referred to as its demographic dividend, accounts for over 50 per cent of itstotal population, with 367 universities and 18,000 colleges with half-a-million teachers and about11 million students on the rolls, India could reap huge returns off its demographic dividend.
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Speaking on the topic, Ritesh Hemrajani, Consultant, IMS, said if one looks at the last five yearsthere are about 1,500 management colleges, close to about 3,500 engineering colleges and about1,200 medical colleges. In terms of private schools mushrooming day in and day out and amajority of the new institutions being private, if one wants to put a number to it, the privately-

managed part of it would not be anything less than 20 to 25 thousand crores.

In recent months, the education segment has also seen the rising interest of private equityplayers. India-focused PE firm Gaja Capital Partners invested 8.25 million dollars in CareerLauncher. Similarly, SAIF Partners invested 10 million dollars in the English training academyVeta and ICA Infotech. Some of the other listed companies in the education segment areEducomp Solutions, which posted a return of 374 per cent. Everonn Systems, which got listed inAugust 2007, gave a return of 130 per cent in just five months. Not far behind are the olderhorses such as Aptech and NIIT, which fetched returns of 162 per cent and 124 per cent lastyear. He also added, In the next five years, I dont see any reason why we shouldnt be lookingat a thousand crore market.

It is believed that based on the current and future manpower requirements of the various sectors;

there is a huge demand-supply gap in the education space. This has attracted many players to

invest in education and training institutions with the aim of building valuable franchises that can

be rapidly scaled up.

Education Industry to be a beneficiary of the new "Served from India"

scheme

The Economic Times (Sep 01, 2004) reports that the Education Industry would be a beneficiaryof the "Served from India" scheme announced as part of the foreign trade policy 2004-2009unveiled by the Commerce Minister, Kamal Nath

It's time to stand up and serve with a new confidence. The foreign trade policy has recognised the

stupendous performance of the services sector and has decided to go all out and brand the

activity with a powerful and unique 'Served from India' catch phrase.

It would impact all 161 tradable services covered under the General Agreement on Trade inServices - though the government's efforts would focus on non-IT services as the latter has

already established itself.

The government also reserves the right to specify from time to time the category or type ofservice exports that are eligible as well as the goods which do not qualify for import under thescheme.

Healthcare, education and hotel industry would be major beneficiaries. Under the proposal, thedetails of which are still being worked out and is bound to involve advertising, marketing and
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publicity campaigns, all service providers who have a total foreign exchange earning of at leastRs 10 lakh in the preceding or current financial year shall be eligible to qualify for a duty creditentitlement of 10% of total foreign exchange earned by them.

The duty credit entitlement may be used for import of any capital goods including spares, officeequipment, professional equipment, office furniture and consumables, related to the main line ofbusiness of the applicant.

Only those educational institutions involved in exporting education are likely to benefit under

this scheme. Will this scheme help incentivise more educational institutions to get involved in

exporting education? The amount of foreign exchange earnings per year required to qualify for

the duty credit entitlements is quite low at just Rs. 10 Lakhs or US$23,000. The average annual

tuition fee for foreign students in India is about US$ 4,000. Presumably any institution with 6 or

more foreign students will be able to qualify under this scheme.

RECOMMENDATIONS

Education business in Punjab was mainly imparted through PANJAB University ,P.A.U,

& G.N.D.U, P.T.U. these universities provide education in an theoretical and old manner.

Of late, many new universities are in the process of opening their campuses in Punjab

and L.P.U. has become 1st Pvt. University with U.G.C.Recgonition. In Pb. Area . there is

a need to bring more Pvt. Universities that are based on American Formats and Provide a

platform for overall personality development & orientation.

EDUCOMP has set up an era in India where whole concept of learning has been

shaped online in a very lucid & practical way. Now, children need not carry heavy bags

full of books and note-books. EDUCOMP provides education in a simple but effective
http://www.indian-embassy.dk/Edcl.htmhttp://www.indian-embassy.dk/Edcl.htmhttp://www.indian-embassy.dk/Edcl.htmhttp://www.indian-embassy.dk/Edcl.htm


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way. But it is very costly for the poor peoples; they can never pay the higher fees. So it

should be less.

As far as porters model is concerned threat of new entrants capturing the market in India

stands high after recent Education Bill Regulating Entry of Foreign Universities.

To start with, it was about clearing the Foreign Education (Regulation of Entry and

Operation) Bill which aims to allow entry of foreign universities to set up their campuses

on Indian shores. This will provide a stiff competition to all existing GOVT. based

universities.

More and more no. ofIIMS and IITS are in pipeline . it will surely change the whole

scenario of education industry in India.

R EFERANCES

www.quickmba.com/strategy/porter.shtml

www.marketingteacher.com/Lessons/lesson_fivefoces.htm

www.pdfqueen.com/pdf/po/porters-5-forces-for-education-industry

www.12manage.com/methods_porter_five_forces.html

www.allfreeessays.com/topics/porter-5-forces...industry/60

Journals
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Shailey Minocha1 (2005) Role of social software tools in education: a literature

Yvonne Boora2 (2006) strategic planning in higher education: a review of the literature

Simon Saukville, Tom Browne

3

(2007) Accommodating the newfound strategic importance ofeducational technologists within higher education

Jane Hensley-Brown, Iskar Palatka4 (2008) Universities in a competitive global marketplace:

A systematic review of the literature on higher education marketing

BOOK

Strategic management

a) John A Pearce

b) Richard B Robinson

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