An examination of the factors critical to the establishment and maintenance of competitive advantage for education services enterprises within international markets.
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The principal focus of the present study was to examine the factors critical to the development and maintenance of a competitive advantage for education institutions operating in international markets. International education involves over 1.3 million students' world wide, and injects billions of dollars into the economies of supplier nations. Despite its importance, little empirical research is available on the international marketing of education. This study draws together research from services marketing, industrial and organisational economics, strategic management and various studies and reports relating to the management and marketing of international education.Commencing with an overview of the international market for education, the study examines the education sectors of leading supplier nations particularly Britain, Canada, New Zealand and the United States. It then describes the education sector of Australia and its international education industry in depth.Following a review of the relevant literature that relates to services marketing and e development of sustainable competitive advantage, a theoretical model as to how an education institution might achieve competitive advantage in international markets is proposed, along with several research propositions.' The findings of a survey of 315 education institutions in Australia, Canada, New Zealand, the United Kingdom and United States are then outlined. Initial descriptive statistics suggest that:1. Australian tertiary institutions are less confident about their international market recognition than are their Canadian, American, New Zealand or United Kingdom (CANZUK) counterparts;2. Significant differences exist between the five supplier countries in the importance they place on targeting certain markets;3. Australian tertiary institutions were somewhat more pessimistic about the growth in their international student body that were their CANZUK counterparts;4. Australian institutions were significantly more concerned over government support and policy than were their CANZUK counterparts;5. Student word of mouth referral was identified as the most effective form of promotion for international education;6. Australian tertiary institutions were significantly more positive about the value of recruitment agents and mass media advertising than were their CANZUK counterparts.An exploratory factor analysis of the survey data found a series underlying dimensions measuring various aspects of an institution's perception of its marketing and strategic planning processes. These "factors" were used to generate twenty-six derived variables that were used for subsequent analysis. An examination of these factors was undertaken, both statistically and through a series of in-depth interviews with fifteen education institutions in Australia.Two regressions were used to estimate the relationship between the dependent variables of Cost Leadership and Differentiation (which are measures of generic positioning strategies adopted by the institutions), and a range of independent variables measuring institutional perception of their external and internal environments. A structural equation model was also used to estimate the relationships between these two regressions. This found that the adoption of generic positioning strategies appears to be determined by institutional consideration of:1. Market Factors - a measure of institutional consideration of the importance of buyer bargaining power when developing business strategies;2. Market Outlook - a measure of institutional consideration of the importance of the level of market saturation within the industry when developing business strategies;3. Experience and Psychic Distance - a measure of institutional consideration of the importance of knowledge or experience of foreign markets, cultural differences and foreign recognition of programs when developing marketing strategies; and4. Resource Factors - a measure of institutional consideration of the importance of internal resources when developing business strategies.The selection of Cost Leadership appears to be determined by the first three of these variables, while selection of Differentiation appears to be determined by all four. These findings support the propositions that industry structure and foreign market structure are determinants of the generic enterprise strategies adopted by education institutions seeking competitive advantage in international markets.A discriminant analysis was undertaken to examine the relationship between adoption of a generic enterprise strategy and marketing strategies. This found an association between differentiation strategies and marketing strategies. Institutions which adopted differentiation strategies (e.g. uniqueness of programs and/or concentration on niche markets) were more like to be classified by high activity on two variables:1. Promotion and Recruitment - a measure of the perceived actual performance of the institution in its use of agents, expenditure on advertising and promotion, possession of offshore recruitment offices, use of government promotional agencies and size of international student enrolments.2. Marketing Activity - a measure of the importance to market success placed upon the use of agents, spending on advertising and promotion, possession of offshore recruitment offices and teaching programs, international alliances and enrolment of international students.A third regression estimated the relationship between the dependent variable Market Success (a measure of the enrolment growth, financial benefit, demand and optimism over future growth) and twenty-five independent variables derived from the factor analysis. This suggests that Market Success be determined by institutional consideration of Resource Factors, adoption of Differentiation positioning strategies and the possession of key "distinctive competencies " as:1. Image and Products - a measure of the perceived actual performance of the institution in terms of its reputation for quality, level of market profile, strength of financial resources, size and influence of its alumni and range of courses and programs;2. Coalition and Forward Integration - a measure of the actual performance of the institution in its possession of international strategic alliances and offshore teaching programs.Further, the institution's Market Success was also found negatively correlated with two additional variables:1. People and Culture - a measure of the perceived actual performance of the institution in its encouragement of innovation, customer orientation, effective use of information technology, the quality and expertise of its staff and its level of technical superiority;2. Mass Advertising - a measure of the institution's perception of the effectiveness of promotion via TV, radio, newspapers and magazines.These findings support the propositions that generic enterprise (at least those involving differentiation) and market entry strategies are significant determinants of market success. They also support the proposition that quality of image, market profile, coalition formation and forward integration into the export channel are likely to strengthen an institution's competitive advantage. Although not measured directly, these distinctive competencies may provide a source of sustainable competitive advantage as they provide potential barriers to imitation by competitors. Such barriers produce isolating mechanisms, which assist the institution to sustain a competitive edge in the market.Several managerial and research implications emerged from this study. The importance of developing a sound understanding of the student consumer were highlighted, along with the need to effectively measure and communicate an image of quality to the market. Saturation within international education markets is growing and future growth is likely to be dependent on market segmentation and the adoption of differentiation strategies. Those institutions with superior market experience will be better placed to make effective decisions regarding their competitive positioning. In doing so, the more successful are likely to give consideration to supply-demand imbalance and the general management of internal resources (e.g. staffing, facilities and programs).Successful institutions are likely to be those that adopt differentiation strategies that enhance their image and reputation as quality service providers build upon a sound financial base and make effective use of their Alumni and student word of mouth networks. Such institutions will also be likely to have offshore teaching programs and valuable strategic alliances that enhance their marketing and service delivery.
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