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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