Porters Forces For University

Porters Model
Threat of new entrants: Low

Also companies would want to do an economies of scale growth model and ensure
brand loyalty which would be difficult for a new comer into the ever burgeoning
market
High Capital Requirements to set up educational facilities
Demand side benefits of scale- Students are more inclined towards those
institutions that have a good reputation and enjoys greater popularity amongst
peers
High Customer Switching Costs- The student has to face high tangible and
intangible costs in switching institutions
Restrictive Gov policy- Due to high entry barriers that a new university would
face such as legal, tax, red tapism etc.
Threat of Substitutes: Low
The substitutes for the higher education sector are vocational training, corporate
universities, online courses etc. Even though these courses are on the rise, their
number and demand is substantially less than what its is for the higher education
industry presently.
The students cost in switching to these substitutes are high
Bargaining Power of Buyers: Low
The bargaining power of buyers is low because of the low number of players in the
market. The demand is much greater than the supply for the same.
There are a large number of buyers ie.students in the country
The students face high switching costs in changing institutions
The services offered are not standardized i.e the pedagogy and facilities offered by
institutions vary
The students are more focussed on quality and are little price sensitive
Bargaining Power of Suppliers: High
The bargaining power of suppliers is high. Here the suppliers refer to the academic
staff employed by the university.
Due to the dearth of academically qualified professionals capable of providing
academic insight into the subject matter, the perceived power of the suppliers is very
high. The supply for such people is very low compared to the demand for the same.
University faces high switching costs is finding and selecting suitable faculty.
There is also no substitute for academicians in universities.
There is also the threat of faculties forward integrating i.e. creating coaching facilities
to provide education.
Also each academic is unique and enjoys an individualistic repute which can
increase or decrease their demand.
The suppliers could also refer to the suppliers of books and other academic material.
Since higher education is somewhat a niche market, there are few suppliers
available who can wield high power over the industry.
Intensity of Rivalry: High
Due to the presence of large number of universities offering similar courses at almost
similar prices, the intensity of rivalry would be very high. As the universities are
independent the decision of one university in the market affects the other universities
drastically.
The Indian higher education sector has witnessed particularly high
growth in the last decade, with enrollment of students increasing at a
CAGR of 10.8% and institutions at a CAGR of 9%.
Private institutions now account for 64% of the total number of
institutions and 59% of enrollment in the country.
India's higher education sector is still plagued with several
challenges, e.g., its relatively low GER, inequitable access to higher
education by community, gender and geography, and lack of high-quality
research and education institutions, resulting in sub-optimal
outcomes.
No of university and university level institutions: 675 (2012)
Courses offered vary from science, arts, commerce to engg, law, medicine etc
Challenges:
(1) Shortage of teachers
(2) Low General Employment ratio
(3) Infrastructure and technology problems
PESTEL
Political
1.
2.
3.
4.
5.
Government Policy on Higher Education

Impact of government term and change
Government regulations that govern institutions mandatory functions
Political stability in the country
Teachers Union and students Union issues
Economical
1. Economic cycle stage (e.g. prosperity, recession, recovery)
2. Funding if any by Government
3. Comparative advantage of the country for higher education
Social
1.
2.
3.
4.
5.
Demographic factors types of students and ethnic composition

Types of students and their level of competency in languages
Expectations parents, students and employers
Attitudes of stakeholders
Learning habits, culture and diversity of stakeholders
Technological
1.
2.
3.
4.
Recent technological developments and opportunities

Technologys likely impact on institutional mandatory functions
Impact on cost structure
Access to technology
Environmental
Legal
1. Accreditations required
2. Max permissible intake
3. Credibility of professors (min eligibility)

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Porters Forces For University

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Porters Model

Threat of new entrants: Low

Government Policy on Higher Education

Demographic factors types of students and ethnic composition

Recent technological developments and opportunities

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