Strategic Cost Management Report: Higher Education Industry

This report delves into strategic cost management within the global higher education industry, utilizing various analytical frameworks to provide a comprehensive overview. It begins with an introduction to the evolving business environment and the importance of strategic cost management. A PESTEL analysis examines the macro-environmental factors influencing global higher education, including political, economic, social, technological, legal, and environmental aspects. Porter’s Five Forces analysis then assesses the competitive landscape within the Australian higher education sector. A SWOT analysis of Coursera evaluates its internal strengths and weaknesses and external opportunities and threats. The report concludes with recommendations for new entrants seeking to succeed in the online higher education market and strategies for traditional universities to compete with platforms like Coursera. The analysis highlights the impact of globalization and technology on the industry.

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Strategic Cost Management
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Table of Contents
1. Introduction.........................................................................................................................................2
2. PESTEL analysis of the Global higher education industry..................................................................2
3. Porter’s Five Forces analysis of the Higher Education Industry in Australia.......................................4
4. SWOT analysis of Coursera................................................................................................................5
5. Recommendations on how to succeed in the online higher education industry to a new entrant.........6
6. Strategies for traditional universities to compete with organizations like Coursera.............................7
7. Conclusion...........................................................................................................................................7
8. References...........................................................................................................................................9

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Strategic Cost Management
1. Introduction
The business environment has been changing slowly in the last few decades forcing
organizations to evolve and improve their business activities to survive in the market. Thomson
(2016, pp. 2) suggests that globalization and technology have force many business to adopt
strategic cost management opportunities that arise as a way of expanding their capabilities and
achieving strategic sustainability. This essay analyses higher education in Australia using
PESTEL analysis and Porters five forces and also presents a SWOT analysis of Cousera to
provide recommendations for any new entrant in the market.
2. PESTEL analysis of the Global higher education industry
Cerny (2007, P. 254) suggests that today institutions offering higher education have
developed the global approach in offering services making national and individual systems of
higher education to be understood about common global standards. PESTLE analysis is
framework for understanding macro-environmental factors that affect a business (Kotler and
Armstrong 2004, P. 11). This is an external strategic analysis of environmental factors that need
to be addressed when developing business strategy
Political
Political good will to improve institution capabilities through relevant .
Open university policies allowing universities to choose the resources to use develop there won
program like choosing which online progrma to use between cousera and EdX.
Economic

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Government funding of both international and national global higher education initiatives has
improved global operations.
Changing economic times have made it difficult to facilitate campus learning for all university
applicants thus online courses become the better option.
The neeed for higher funding in areas like staff, and technology to meet the growing global
education
Social
Social networks through their platforms have improved and necessitated access to information
and interaction.
Increasing number of participants in non-manual classes since the rise of the internet.
Technological
The rise of information technology has necessitated the rise of global higher education.
New technological tools like Sharepoint have created sharing platforms and easy management of
workflow.
Available online learning tools like Cousera and EdX.
Legal
Data protection and security issues may affect access to information for global student.
Changing legislations on immigrant policies may affect the movement of global students.
Environmental
The need for a green environment has led to reliance on technology to reduce paper work and
waste making the internet and other media sources the best option.
Increasing pressure to reduce energy consumption by IT resources and adopt green energy.
3. Porter’s Five Forces analysis of the Higher Education Industry in Australia.

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Australian higher education is competitive making universities to make strategic
decisions to stay relevant. These forces can be used to analyze the nature of competition in the
Australian industry.
Competition between suppliers
The Australian higher education is highly competitive from both private and public universities.
Reducing government funding has led to the need for universities to lower their costs to attract
more students.
Threat of new entrants
The cost of managing higher education institutions is high.
Competition has set benchmarks that make new entry difficult.
Bargaining power of buyers
Low bargaining power of buyers since there is increased need for higher education.
Availability of different learning modules make the bargaining power of students low.
Bargaining power of suppliers
Low bargaining power since there are enough lecturers in the sector.
High availability of real time learning technology reducing bargaining power of suppliers.
Threat of substitutes
Limited threat of new entrants due to business costs
4. SWOT analysis of Coursera
SWOT analysis is a planning method for evaluating four elements of an organization to identify
internal and external forces that affect an organization. This tool is used in business planning and
decision making to achieve business objective (Armstrong 2006, P. 12).
Strengths

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a) Students learn remotely
b) Resources are only needed in initial design of the course.
c) Wider use by universities around the globe. Cousera is the leading platform with over ten
universities utilizing its platform.
Weaknesses
a) It relies on other Universities for partnerships to get syudents.
b) Quality of education is not guaranteed
Opportunities
a) Increasing rise of online education.
b) Creation of different media platforms for learning
Threats
a) Innovation of similar technology by other universities
b) Copyright issues
c) Competition
d) Easy market entry with no restrictions
5. Recommendations on how to succeed in the online higher education industry to a
new entrant
The higher education industry is competitive all over the world. This is due to the
resources needed to run a higher education institution in any country (Oliver and Nikoletatos
2009, P. 10). This means that new entrants have to approach the field with a specific criteria to
survive.

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Taking advantage of the weaknesses of existing institutions in business. Since SWOT
analysis is a planning tool. It can be used to determine the weaknesses of a competitor allowing
to determine the areas to focus on as a new entrant (Osita, Onyebuchi and Justina 2014, P. 24).
Taking advantage of new technology to offer services in higher education. Most
universities started on analogue operations before upgrading to the new technologies. Using
these new technologies can give business benefits to any new entrant in the field of higher
education.
6. Strategies for traditional universities to compete with organizations like Coursera.
Online organizations like Cousera are not universities on their own but rather partnership
platforms for learning. Doherty, Steel and Parrish (2012) one strategy for competition with such
organizations is developing similar platforms. There is no restriction in creating such a platform
since most university offer programming courses and some students end up working in such
organizations.
Buying the rights and improving them from some of these online organizations can be
one way of competing. This will allow control of rights and continuously improve the platform.
One way of dealing with a competitor is buying their business rights thus being able to control
the market. This allows for controlling the online platform thus making it easy to control online
education.
Differentiating the nature of offering education can be one of the easiest way of
competing. Yang (2008, P. 637) argues that this can be achieved through focusing on specific
subsets of the market and meeting their needs. Institutional efforts can be focused on a narrow
segment thus requiring few resources to develop a suitable product for the market.
7. Conclusion

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Higher education has been affected by globalization and technology creating better
opportunities for organizations to work on. Online learning has been widely adopted across the
world as a global trend and a cost reduction strategy. From analysis of Cousera and the Australia
higher education industry, it is evident that globalization and technology are the game changer
tools on the market.

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References
Armstrong, M., 2006. A handbook of Human Resource Management Practice. 10th ed. London:
Kogan Page.
Cerny, P., 2007. Paradoxes of the competition state: The dynamics of political. Government and
Opposition, 32(2), pp. 251-274.
Doherty, I., Steel, C. & Parrish, D., 2012. The challenges and opportunities for proffessional
societies in higher education in Australia: A PEST analysis. Australasian Journal of Educational
Technology, 28(1), pp. 105-121.
Kotler, P. & Armstrong, G., 2004. Principles of Marketing. Upper Saddle River: Prentice Hall.
Oliver, B. & Nikoletatos, P., 2009. Building engaging physical and virtual learning spaces: A
case study of a collaborative approach. s.l., s.n.
Osita, C., Onyebuchi, I. & Justina, N., 2014. Organization's stability and productivity: the role of
SWOT analysis. International Journal of Innovative and Applied Research, 2(9), pp. 23-32.
Thomson, J., 2016. Why Strategic Cost Management Should Be A Priority This Year. Forbes, 15
August.
Yang, J. Z., 2008. Key Success Factors of Multinational Firms in Australia. Thunderbird
International Business Review; V, 40(6), pp. 633-668.