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Competitiveness Analysis Using System Dynamics -Report
By: Zeina Abbas & Rahman Oloritun10/28/2010
The objective of our university, University B, is to increase the number of students of the
university which, in our industry, is equivalent to the demand. The demand is mainly driven by
the attractiveness of the program. A model of this problem was created in Vensim to have a
clear view of the factors affecting our main stock (Number of students). The diagram was
broken down to smaller loops to offer a better understanding of the reinforcing and balancing
loops that we created (See attached figures). The competitor(s) to University B is represented
by University A in the Figure.
The first diagram shows that the rate of admission of students is the inflow to the stock of
number of students, and rate of graduating is the outflow of the stock. The rate of admission is
affected by the total demand (carrying capacity) in the industry. Both Universities A and B are
positively affected by the increase in total demand. Rates of admission are also affected by the
market shares of the Universities. The market share of University B is affected positively by the
attractiveness of the program in University B (Program B), and negatively affected by the total
attractiveness of programs. This is shown as the Share saturation loop in the diagram. Also,
both Universities A and B have the same influencing factors, but our focus will be on University
B. So, the main figures that are explained later are concerned with University B. However,
diagrams referring to University A are also included. Another stock included is the Alumni of the
university. The inflow to this stock is the rate of graduating.
The second diagram includes the influencing factors of attractiveness. These factors (in
decreasing order of importance) include: quality of program, tuition, quality of faculty, quality
of facilities, faculty to student ratio and optimistic word of mouth. All the factors, except for
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tuition, are positively related to the attractiveness of the program. As for the optimistic word of
mouth, it is affected by the alumni of the university positively.
The third diagram shows that the net income of University B affects three of these factors,
namely: qualities of program, faculty and facilities. This is because as the net income increases,
qualities of program, faculty and facilities increase as well, which will ultimately increase the
effect of factors on attractiveness of the program. These relations are shown via the quality
improvement, faculty improvement and facilities improvement loops.
The fourth diagram shows that the revenue of the university is affected by the tuition,
donations from Alumni of university, and the number of students. All the relations present
positivity and increase the revenue. An increase in the revenue however will decrease the cost
of operation, which will increase the net income of the university, leading to an increase in the
rate of recruitment of faculty. Ultimately, the increase in number of faculty increases the cost
of operation.
The fifth diagram explains the different connections of the faculty to student ratio. As
mentioned earlier, an increase in the faculty to student ratio increases the attractiveness of the
program. It also decreases the rate of recruitment because of the large number of faculty. It is
also affected by number of students and the number of faculty. As the number of students
increases, the ratio decreases. Also, as the number of faculty increases, the ratio increases
leading to a decrease in the rate of recruitment. This is illustrated by the Faculty student
burden loop.
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As for our University’s current strategy, we are always operating within the range of
competitiveness. In the case of the quality of our program, it is medium and towards the upper
end of the range of competitiveness. As for the tuition, it is moderately high and falls in the
middle of the range. With respect to the quality of faculty, it is relatively high and towards the
end of the range. As for the quality of facilities, it is medium and lies in the middle of the range.
Furthermore, the faculty to student ratio is high and lies towards the upper end of the range.
Finally, the optimistic word of mouth is relatively high and lies towards the upper end of the
competition.
If we had a limited budget for additional market research or empirical work, the budget would
be spent on understanding the relationships between
Net Income and Quality of Program
Net Income and Quality of Faculty
Net Income and Quality of Facilities
There are inherent delays in raising quality of program, Faculty and Facilities and complexity in
determining what will be the quality benchmark in a competitive market, there is need to do
more market research into what constitute high quality Faculty, program or facilities, to raise or
reduce quality of program, faculty and facilities to conform with the most popular preferences
to make the program attractive to the most number of students and raise enrolment.
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