More Porter Vice Chancellor - Final post

In my final exploration of Michael Porter's 5 forces model as it applies to competition in the UK HE marketplace I turn to industry rivalry.  Typically this relates to the features of the competitors such as their size and number (the more Universities there are the greater the competition).  So no fears there then for the status quo - new providers are thin on the ground.  The model also considers features such as:

Differentiation / Switching costs - try as they might, governments cannot make Universities uniform.  Each institution is unique and strengthens its own particular brand, ironically helped by government metrics and league tables designed for making comparison easier but actually enabling all institutions to be in the "top 5" for something.   University groupings such as the Russell Group do aid differentiation for those who do not fully understand the entry criteria.
If it is easy to switch, however, there might be more competition.  The fact is, however, that students typically stick with one instiution and find it difficult to switch mid way through a programme due to the unique nature of each offering.  Maintaining Universities as their own examining bodies is a clear barrier to switching.

Industry growth / life cycle - have we yet reached capacity in HE? probably NOT as the brand is strong internationally and on-line provision is not well embedded in many places.  However, the increased capacity of the traditional student body of the last 15 years has probably peaked.  So the areas of contestability are in innovative teaching and appeal to new audiences such as degree apprentices in the short-run.

Fixed costs / Perishablity - Universities are burdened with high fixed costs and extreme perishability of  the service provided.  This ensures constant renewal and a drive to liquidity as salaries form a large part of the fixed costs.  The logic here is that Universities will fight tooth and nail to maintain independence.

Units of incremental capacity change -is an inteersting feature.  Research teams, departments and Faculties can move from one institution to another.  On a unit scale top Researchers can also do this and so capacity change can be at the level oof the individual.  This makes individual institution growth easier and the need to compete "head on" with rivals very distant.

Exit barriers (ease and costs of exit) - these are pretty high as decommissioning of the workforce and repurposing of buildings and land would be a huge feat.  HE institutions would also have the burden of continuing students who did not want to transfer to one of the vulture institutions hovering over the sickly University

Corporate stake - just how much financial and intellectual capital is tied up in the provision of HE? - virtually 100% in most cases unless we count the odd catering or conference facility provision or the huge endowments enjoyed by a small number of HE institutions.

So, to summarise.

Higher Education is not a "market" where retail style competition can flourish.  How short-sighted and ill informed are those who think that everything is a profit making business,,,

Helpful translations for new HE staff

As we start a new year and new teaching term there will inevitably be a number of colleagues new to academe that require guidance on some of the arcane and less arcane terminology that academics use to mystify the "outside world" and to confirm (in their own minds at least) how complex and difficult a job they do.
The basic challenge for many academics is to appear to pay full attention to teaching, innovate in pedagogy, entertain and provide high student satisfaction whilst at the same time maximising the opportunities for reward and promotion through research.  Despite the protestations of many "Research led" and "Research Informed" Universities the key factors affecting Teaching and Research are almost totally dichotomised.
So, here are some helpful definitions and explanations:

More Porter Vice Chancellor? (4)

In this fourth look at Porter's model I consider the power of suppliers. Again, that's Porter terminology for those relied upon by the industry to supply its raw materials and other resources.
In the case of undergraduate Higher Education that's:

• Breweries
• Accommodation
• Support staff
• Teaching staff
• Alumni
• Researchers
• Debt funders
• Schools / Colleges (remember students are raw materials in the HE process - involved, engaged and not mere consumers).

Picture of Bar Steward by vectorolie at freedigitalphotos.net

Like Porter's buyers we look at things that give suppliers power to impact competition such as:
Control over their own prices; ability to group together; uniqueness of product supplied; generation  of high switching costs; credibility of forward integration; importance of product to the HE market (in this case) and importance to the supplier of the HE market.

Rather than try to devise a matrix as in my last post on Porter I'll just lok at Teaching staff and Researchers to try to estimate the level of power they hold:

Researchers exercise some mild power, not by virtue of any benefit they bring to undergraduates but by virtue of their ability to win funding bids (in some disciplines).  They can influence prices by REF transferability (soon to end) but derive most power from the fact that Universities crave the acolades that they can bring.  The constant threat from Researchers in many STEM fields is that industry not only craves but also rewards their innovative output too.

Oh.... and research begets Professorial status - and, of course, Professors can do anything, including running Universities, managing staff, walking on water, teaching (well some can).

Teaching staff (lecturers if you like) have absolutely no power at all.  they accept the "going rate" and either regret or avoid joining a Union.  They are viewed by HE providers as interchangable with other Teachers / On-line education and with Research staff and their ability to market themselves to private industry is very limited.  Teaching is, however, important to the HE sector, but this must not be confused with Teachers, themselves.

The outcome?  Dico quod si quæritis circumspice*.


In the final Porter review I try to sum all of this up and consider "rivalry" within the market, wondering if it should simply be confined to the Boat Race.


* if you seek evidence of what I say look around you (Google Translate)

Happy 2017

On the cusp of the New Year it may be sensible to review the changes that the globe has seen in 2016 and ponder on their influence on Higher Education in the UK as the bright new year of 2017 emerges.

MAY - May as Home Secretary can be said to have decimated the policies of HE Institutions to rely on a constant flow of overseas students to prop up their aspirations and accounts.  May, as PM, has other fish to fry and Universities can go back to their "stack 'em high" principles and focus relentlessly on the emerging South East Asian middle classes.


BREXIT - If Brexit means confusion, uncertainty and risk 2017 will see a continuation of this as HE leaders fail to trust the negotiations and focus relentlessly on the emerging South East Asian middle classes.


TRUMP - UK HE institutions may benefit from  an exodous of affluent US students seeking to undertake their studies in the UK but this will be marginal.  Better to focus relentlessly on the emerging South East Asian middle classes - who, after all, may see the slightly less barmy UK a safer haven than the absolutely ranting US.

So, less 2017 and more 2016 #2!!