This document provides an analysis of Udacity and the MOOC market. It begins with an introduction to MOOCs and Udacity, followed by a PESTEL analysis of the MOOC industry environment. Porter's Five Forces model is applied, and the key MOOC players (Udacity, Coursera, edX) are examined. A SWOT analysis of Udacity's current situation is presented. Finally, two strategic alternatives are proposed and recommendations are provided for Udacity to improve its business model and attract more customers.

1. INTEGRATIVE GROUP PROJECT
Team Members: Bac Tran Hong Quang
He Huang
Siqi Li
Qing Li

3. Can Udacity survive in the MOOC market?

4. TABLE OF CONTENTS
I. An introduction to MOOC and Udacity
II. PESTEL Analysis for MOOC
III. Porter’s Five Forces Analysis
IV. The Key Players - Udacity, Coursera & EDX
V. Udacity: SWOT Analysis and The Current Situation
VI. Strategy Alternative

5. Introduction to MOOC and Udacity

7. STANLEY
At Stanford, Thrun won the
DARPA challenge to create a
driverless vehicle.
SEBASTIAN THRUN: Artificial Intelligence Innovator
GOOGLE GLASS
This augmented-reality
eyewear has captivated the
imagination for wearable
tech.

8. THE EPIPHANY
Thrun was inspired to pursue
online education after seeing
Sal Khan's TED Talk.
THE HOOK
Thrun fully got the bug after
160,000 people signed up
for his first Internet course.
THE PIVOT
Thrun first embraced
corporate training in late
2012 -from Google,
Autodesk, and Nvidia.
UDACITY: The Beginning

9. PESTEL Analysis for MOOC

11. Political
- The U.S. Federal Government does not
directly support higher education.
!
- The reduction of state and federal
appropriations to state colleges, causing
the institutions to shift the cost over to
students in the form of higher tuition.

12. Economic
- Student debt is increasing and students are
questioning the value they are getting from their
degrees.
!
- Keeping tuition increases at the rate of inflation
would require the state kick in $128 million more
tax dollars between now and 2015.
!
- U.S. Congress' occasional raising of the 'loan
limits' of student loan.

13. Social
Current Situation
!
- Universities are not providing students with
the skills necessary to get jobs.
!
- Limited financial resources and time.
!
-There has been a huge increase in the growth
of international students over the last 5 years.
!
-Customer preferences are changing: Students
are now more technologically aware.
Customer Needs
!
-Individuals returning to higher education do so
to increase their current skills or develop new
skills.
!
-Seek lower cost options and greater flexibility.
!
-Want skills that facilitate mobility and
transferability for the global economy.
!
-Expect online access to professors and study
groups and access from mobile devices.

14. Technological
Learning
!
-The era of all-the-time Internet connectivity,
also mobile devices.
!
-MOOCs typically use cloud computing.
!
-The platforms have availability requirements
similar to media/content sharing websites, due to
the large number of enrols.
!
-Udacity: closed captioning and Python language.
Test
!
-Screen sharing software.
!
-Biometric sensors such as palm-scans and
pictures.
!
-Forensic analyses.
!
-Keystroke recognition research.

15. Legal
-Lack of consumer protection.
!
-The reauthorised Education Act of 2008, the Department of
Education now requires that distance learning institutions
have processes in place that ensure that a person who
registers in online courses also does the coursework and
receives the academic credit.
!
-Udacity and edX have both announced partnerships with
Pearson VUE, where students interested in an official
certification can take a final exam in any of the 4000 Pearson
VUE test centres around the world for a nominal fee.

16. Transfer Credit

17. Porter’s Five Forces Analysis

18. Buyers:
!
-Students
-Employers
-Academy faculty
Suppliers:
!
- Owners (Institution &
Academy)
-Technology companies
Threat of New Entrants:
!
Pearson Education
(moderate)
Threat of Substitute
Products or Services:
!
- University education
- Corporate training
- Apprenticeship (moderate)
Rivalry among Existing
Competitors

19. Rivalry(among(
exis0ng(
compe0tors:(
Coursera EdX Udacity
Credentials Founded by
Stanford CS
faculty
Collaboration
between Harvard
and MIT
Founded by
Stanford faculty
and Google
employees
Classes 190+ courses, in
diverse subjects
8 courses
currently,
expanding in 2013
15 classes,
primarily in skills
and computer
science
Connections Stanford,
Michigan,
Princeton,
Edinburgh
Harvard, MIT, Cal,
University of
Texas
Google, Stanford,
Silicon Valley
employers

20. The Threat of Substitute
Products or Services
- Traditional higher education threat: high offer high
quality course, supervision of teacher, verified
certificated, interact with teachers.
- Corporate training: (moderate) supervision,
motivation from company, professional tutors.
- Especially in companies like internet, tech, bio-tech,
green energy.
- Apprenticeship: (moderate) useful knowledge for
your own work, experienced tutors.
- Social network - Linkedin: Low (for Udacity: high)
Threat of new entrants:
- Pearson Education : Moderate
!
Demonstrating that they can provide a credible
assurance of the achievement of students in
non-accredited contexts such as MOOCs.

21. Bargaining power of suppliers
Powerful suppliers transfer costs to the enterprise or retain power and control over key
aspects of the industry.
!
The collegial owners of the institution and responsible for much of the leadership of the
academy who offer the courses.
!
Technology companies (Microsoft, Google, and Blackboard) achieve the level of
scalability and robustness needed to support MOOCs with potentially hundreds of
thousands of students. (think MOOC as a platform)

22. Bargaining Power of Buyers (niche market):
- Students : High
Students depend on the system to deliver significant personal benefits, and make substantial
personal investments in the system.
Buying volume: low (personal) high (total)
Other options: tradition school,books, EDX, Udacity, Coursera.
Buyer price sensitive : high
!
- Employers & Government: Moderate
Buying volume: moderate
Other options:They can buy courses from MOOC or they can invite professional person
or some training institution to train people
They can get the employees information from linkedin (for employers)
Buyer price sensitive: moderate
!
- Academy faculty : moderate
Target: the institutions do not have capital to depend upon.
Buying volume : moderate
Other option: Pearson education, books, hire professional teachers
Buyer price sensitive: moderate

23. The Key Players - Udacity, Coursera & EDX

24. Free vs. Full Courses

25. UDACITY’S BUSINESS MODEL
KEY PARTNERS KEY ACTIVITIES VALUE PROPOSALS RELATIONSHIPS CUSTOMER SEGMENTS
(1)Universities:
San Jose State University
Georgia Tech
!
(2)Industry partners:
Google
Facebook
Autodesk
Cloudera
Salesforce.com
-Content creation
!
-Manage and analysis the
platform and information
!
-R&D, marketing
-High quality courses in
sciences or tech subjects:
+Free: access to courses
+Full: have personalised
support and certificates.
!
-Job-matching programs
!
-Corporate training
!
-Informations about tops
students.
-Community
!
- O f f e r e m p l o y m e n t
opportunity
(1)Students - focus on
higher education (Initial
customer segment)
!
(2)Working professionals -
(new focused segment)
!
(3)Recruiters/Employers
KEY RESOURCES CHANNELS
-HR (Founder team)
-Online: Website - Blog -
Social media
!
-Meet-ups
COST STRUCTURE REVENUE STREAM
-Equipment: Servers, PC, Recording softwares...
-Software/platform developing
-Business development
-Salary, course instructors...
(1)Free/Subscription fees
(2)Sponsorships or fees from employers
(3)Commissions from recruiters

26. COURSERA’S BUSINESS MODEL
KEY PARTNERS KEY ACTIVITIES VALUE PROPOSALS RELATIONSHIPS CUSTOMER SEGMENTS
(1) Participating
universities
-Manage the platform
-Finding new partnerships
-Marketing
(1)Wide range of courses
covering many subjects:
+Free
+Verified certificate (not
all of the courses)
+Specialization: a group of
related courses
!
(2)Students’ data for
recruitment
-Community
(1)Students
!
(2)Employers/Recruiters
KEY RESOURCES CHANNELS
-Online
!
-Meet-ups
COST STRUCTURE REVENUE STREAM
(1) Revenue and income shared with partner universities
(1)Certificate fees
(2)Commissions from recruiters
(3)Other possible values (in the future): tutoring, sponsorships and
tuition fees

27. EDX’S BUSINESS MODEL
KEY PARTNERS KEY ACTIVITIES VALUE PROPOSALS RELATIONSHIPS CUSTOMER SEGMENTS
-Universities
!
-NGOs
!
-Business Organizations
-Manage the platform
!
-Find new partners
-Free university-level
courses
!
-Certificates
!
-Corporate training
!
-Blended model learning
!
- M O O C s f ro m n o n -
university partners
(1)Students
!
(2)Companies
!
(3)Universities
!
(4)Organizations
KEY RESOURCES CHANNELS
-Open Source platform -Online
COST STRUCTURE REVENUE STREAM
-Hardwares/Softwares
!
-Revenue shared with participating universities
-Investments/Sponsorships
-Certificate fees
-Other possible revenues: Sell courses to universities (blended model
learning), using MOOCs for corporate training.

28. Origin 2012 / Stanford 2012 / Stanford 2012 / Harvard - MIT
Commercial Yes Yes No
Courses
12 Full / 26 Free
(in house)
641
(contents from partners)
176
(contents from partners)
Users 1.6 million 7.1 million + 2.1 million +
Subjects Sciences and Tech Widest range of subject Wide range of subject
Important Partners Industry Universities Universities
Investments
-Charles RiverVentures
-$300,000 of Thrun's money
-$15 million: Andreessen Horowitz
-$2 million in seed capital:AT&T
$85 million in venture capital as of
Dec 2013
Harvard and MIT have each
contributed $30 million
Students’ data for
recruitment
Yes (In the future) (In the future)

29. Udacity: SWOT Analysis and The Current Situation

30. Strength
!
- Able to sign in with Facebook or Twitter
- All advertised courses are available to enrol
- All courses feature a video overview of the course
- Courses do not follow a traditional textbook format
- Highly interactive tutorials
- Able to learn at your own pace with no deadlines
- All courses offer certificates
- Courses divided on three levels (beginner, medium, advanced)
- Some courses offer a proctored exam (Fee payable)
Weakness
!
!
!
- Limited range of courses
- Not much written information on individual course contents
- Does not currently offer any form of translation into foreign
languages
Opportunities
!
-
Developing the new program with Master degree from
Georgia Tech, maybe into some developing countries.
-
Working with more big companies (especially in technical
fields)
- Leverage partnerships/collaborations with other universities
locally and globally.
Threats
!
-
The courses from Competitors are more comprehensive.
- Face the issues of the global distribution, the lecture content
posted on youtube is already blocked in several countries

31. PILOT PROJECT WITH SAN JOSE STATE UNIVERSITY
!
Jan 2013, SJSJ announced a pilot project with Udacity to jointly create
three introductory mathematics classes. The courses will be free
online, but students who want credit from San Jose State will be able
to take them for just $150, far less than the $450 to $750 that
students would typically pay for a credit-bearing course.
!
If the project continues beyond the pilot, the university will keep 51%
of revenue after costs are covered and Udacity will keep 49%.
!
After two semesters of experimentation, the project is on hold
because of low pass rates.

33. PILOT PROGRAM WITH GEORGIA TECH CASE
!
- An online-only master's degree program is offered by Udacity
and the Georgia Institute of Technology. Fees will be $6,600 for the
equivalent of a 3-semester course of study.
!
Why is it special?
- Not only because it is the first accredited degree to be offered by a
provider of MOOCs but also because of how it's structured.
!
- Georgia Tech will teach the courses and handle admissions and
accreditation, and students will get a Georgia Tech diploma when
they're done, but Udacity will host the course material.
!
- AT&T’s role: The program doesn’t ultimately cost either Udacity or
Georgia Tech anything. Expenses are being covered by AT&T, which
put up $2 million in seed capital in the hope of getting access to a
new pool of well-trained engineers.

34. Strategy Alternative

35. Knowledge
Professional Skills
Student
Oriented
Employer
Oriented
Universities
Coursera
EDX
Udacity

36. Knowledge
Professional Skills
Student
Oriented
Employer
Oriented
Universities
Coursera
EDX
Udacity
Scenario 2
Scenario 1

37. Scenario 1 Spot The Best
Purpose - Find the best students and sell the informations for employers or recruiters
Change
- Focus on hard-science courses
- No tuition fees
Pros
- Can approach the students from everywhere, not just the students who
can afford the programs like the traditional universities.
- Easy and safety to do because Udacity is doing it well (only they are
providing students’ data now)
- The costs to develop the courses are affordable
- Have number of alternative ways to generate revenue: Licensing the
courses to universities, certificate fees
Cons
- There is a question whether if this model can be scaleable because
- Simple revenue structure, not diversify
- It’s hard to attract large scale of students

38. Scenario 2 Provide Professional Training
Purpose - Build the courses/training for employers
Change - The programs fully designed for the needs of the employers
Pros
- The revenues are optimistic and also the investments
- The scale of Udacity will go larger
- Gain the technical support
- Enlarge network with more companies
Cons
- Have to build a wide numbers of courses because the purposes from the
employers are specific.
- Need a lot of resources.
- Have a rough competition with the training companies & a bigger player:
Coursera

39. Senerio 1 Senerio 2
Profitability
Long-term
Possibility
Customers
Competitors
Investments
Cost

40. Recommendation
Objective 1: attract more and more customers
offer more basic hard-science courses
systematise and integrate all aspects of courses
offer courses in different languages
increase the interactions with students
Objective 2: be more popular
advertisements
put more videos in different platforms of different countries
encourage students to promote Udacity by bonus
Objective 3: provide more and better information to customers
integrate selective system of top students

41. Conclusions

42. Conclusions
- MOOCs is a whole new model of education and can
coexist with the traditional universities.
!
- Udacity should aims to recruitment market to
differentiate from its competitors: Coursera and EDX.
!
- To do that they need to continue focusing on high quality
scientific and technology courses and keep in touch with
the industry.
!
- Udacity can survive in the future.
!
- Because of the current business model is not affordable
and sustainable, it has to be improved.
!
- Current situation: Udacity & Moocs
!
- In order to avoid the biggest competitor—Coursera,
Udacity make itself in a specific position in the Moocs
market by BlueOcean strategy.

43. Thank you