Porters Forces for University

8/9/2019 Porters Forces for University

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Porter’s Model

Threat of new entrants: Low Also companies would want to do an economies of scale growth model and ensurebrand 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 enoys greater popularity amongstpeers

• High Customer Switching Costs- !he student has to face high tangible and

intangible costs in switching institutions

• Restrictive "ov policy- Due to high entry barriers that a new university would

face such as legal# ta$# red tapism etc%

Threat of Substitutes: Low!he substitutes for the higher education sector are vocational training# corporateuniversities# online courses etc% &ven though these courses are on the rise# theirnumber and demand is substantially less than what its is for the higher educationindustry presently%

• !he student's cost in switching to these substitutes are high

Bargaining Power of Buyers: Low!he bargaining power of buyers is low because of the low number of players in themarket% !he demand is much greater than the supply for the same%!here are a large number of buyers ie%students in the country

!he students face high switching costs in changing institutions!he services offered are not standardi(ed i%e the pedagogy and facilities offered byinstitutions vary!he students are more focussed on quality and are little price sensitive

Bargaining Power of Suppliers: High!he bargaining power of suppliers is high% Here the suppliers refer to the academicstaff employed by the university%Due to the dearth of academically qualified professionals capable of providingacademic insight into the subect matter# the perceived power of the suppliers is veryhigh% !he supply for such people is very low compared to the demand for the same%)niversity faces high switching costs is finding and selecting suitable faculty%!here is also no substitute for academicians in universities%!here is also the threat of faculties forward integrating i%e% creating coaching facilitiesto provide education% Also each academic is unique and enoys an individualistic repute which canincrease or decrease their demand%!he suppliers could also refer to the suppliers of books and other academic material%Since higher education is somewhat a niche market# there are few suppliersavailable who can wield high power over the industry%

Intensity of Rivalry: High


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Due to the presence of large number of universities offering similar courses at almostsimilar prices# the intensity of rivalry would be very high% As the universities areindependent the decision of one university in the market affects the other universitiesdrastically%

!he *ndian higher education sector has witnessed particularly high

growth in the last decade# with enrollment of students increasing at a

CA"R of +,%. and institutions at a CA"R of /.%

0rivate institutions now account for 12. of the total number of

institutions and 3/. of enrollment in the country%

*ndia4s higher education sector is still plagued with several

challenges# e%g%# its relatively low "&R# inequitable access to higher

education by community# gender and geography# and lack of high-quality

research and education institutions# resulting in sub-optimal

outcomes%

5o of university and university level institutions6 173 89,+9:

Courses offered vary from science# arts# commerce to engg# law# medicine etc

Challenges6

8+: Shortage of teachers

89: ;ow "eneral &mployment ratio

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Environmental –

Legal –

1. ccreditation! reuired2. a- permi!!i#le inta/e

. +redi#ility of profe!!or! 'min eligi#ility)


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Documents

Porters Forces for University