Five-force Analysis for Top MBA/EBMA Programs

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  • 70% of the customers (the core buyers) has low bargain power – also the major revenue contributor of the business.
    Rest will be subject to the situation of the customers – given the limited capacity of the program and larger amount of candidates, unless there are massive scale of innovation that affects the industry(MOOC), or part of the industry (e.g. entrepreneur), the business is unlikely to be harmed.
  • 70% of the customers (the core buyers) has low bargain power – also the major revenue contributor of the business.
    Rest will be subject to the situation of the customers – given the limited capacity of the program and larger amount of candidates, unless there are massive scale of innovation that affects the industry(MOOC), or part of the industry (e.g. entrepreneur), the business is unlikely to be harmed.
  • 70% of the customers (the core buyers) has low bargain power – also the major revenue contributor of the business.
    Rest will be subject to the situation of the customers – given the limited capacity of the program and larger amount of candidates, unless there are massive scale of innovation that affects the industry(MOOC), or part of the industry (e.g. entrepreneur), the business is unlikely to be harmed.
  • 70% of the customers (the core buyers) has low bargain power – also the major revenue contributor of the business.
    Rest will be subject to the situation of the customers – given the limited capacity of the program and larger amount of candidates, unless there are massive scale of innovation that affects the industry(MOOC), or part of the industry (e.g. entrepreneur), the business is unlikely to be harmed.
  • 70% of the customers (the core buyers) has low bargain power – also the major revenue contributor of the business.
    Rest will be subject to the situation of the customers – given the limited capacity of the program and larger amount of candidates, unless there are massive scale of innovation that affects the industry(MOOC), or part of the industry (e.g. entrepreneur), the business is unlikely to be harmed.
  • Five-force Analysis for Top MBA/EBMA Programs

    1. 1. Strategic Analysis for Top Management Programs (Tony Gu, TIMBA15)
    2. 2. Executive Summary Top-tier business education industry (with key players like Harvard, INSEAD, Wharton, LBS, Tsinghua) have been enjoying prosperous business and handsome profit for many years. Their key competitive advantages are primarily built upon strong reputation, as rooted in the their legacy, of providing high quality education and delivering tangible value for both business and individuals. In addition, the alumni network and strong industry connection help a lot with job placement and business development, which reinforced the tops school’s value proposition as buy-side economy of scale. However, recent innovations of online education (e.g. MOOC) and program specialization (by sector or by geographic), post challenges to the industry. Although the trend is just starting and hasn’t yet affected industry’s profitability, it might change the future landscape of the industry. As illustrated later in this document, this could be done by targeting the non-core customers (like knowledge seekers and Entrepreneurs) first, and later, when proven effective, luring away the core customers (managers in MNCs). Top business schools like INSEAD should be prepared to leverage, instead of being taken advantages of, this trend to innovate themselves and create more value for each customer segments. A sound strategy is needed. Some areas of discussion are proposed in the end of the presentation.
    3. 3. Five-Force Analysis Overview Low to Moderate Bargin Power High Barrier of Entry ∆ ∆ ∆ Demand side benefit of Scale ∆ ∆ ∆ Reputation/Legacy ∆ ∆ Access to Premium Jobs ∆ Capital Requirement Buyers ∆ ∆ ∆ Indivisual Buyers – Knowledge & Research ∆ ∆ Indivisual Buyers – Business Start-up/Growth ∆ Indivisual Buysers – Career Advancement ∆ Business Buyers – MNC ∆∆ Business Buyers - SME Rivalry Moderate to High Subsitute Price-Performance Tradeoff ∆ ∆ ∆ MOOC (for knowledge) ∆ ∆ ∆ Start-up Incubator (for Biz Stratup) ∆ Modular Training (in-house or Consultant) ∆ ∆ Linked-in (for Aluminy Network) Weak Supplier Power ∆ Professors/Researchers Moderate Rivalry ∆ Marketing & Advertising ∆ ∆ Premium Job Placement ∆ ∆ Program Innovation ∆ ∆ Global Expansion
    4. 4. Consumer Bargain Power – Low to Moderate Assumption: All the customers are high-potential professionals who are qualified for top programs Key Buyers What they buy Their objective – Why they buy Bargain Power Analysis Individual Buyer – Knowledge Seekers (5%) Knowledge Personal growth. Further research. Strong as there are alternatives – books, MOOC, other biz school Individual Buyer – Biz Strater (15%) Knowledge Alumni Network Recognition For a new business Moderate - This depends on the scale of the biz and the customer’s budget. Bargain power is lower if they have bigger budget or biz scale is bigger. Individual Buyer – Manager (50%) Knowledge Recognition Job Placement Alumni Network Career Advancement Career Switch Low. They are faced with limited options. And top programs have proven higher ROIs. Business – MNC (20%) Knowledge Alumni network Recognition To grow business Low. They are faced with limited options. Top programs have proven quality of education. Also have benefit of scale. Business – SME (10%) Knowledge Alumni network Recognition To grow business Moderate – depends on the scale of the biz and the education budget.
    5. 5. Supplier Bargain Power – Low Key Suppliers What they Supply Bargain Power Analysis Staff (Prof. Researchers) Knowledge Time Low. As there are a large pool of capable professors. The reputation of the school also serves as intangible value for professors so they tend not to ask only for money.
    6. 6. Threat of Substitute – Moderate to High Key Substitute Value Prop Target Customer Segment Threat Analysis MOOC Price-performance Trade Off for knowledge acquisition Individual Knowledge Seeker High. MOOC provides equally, if not better, education content. It is particularly suitable for courses that doesn’t rely too much on human interaction for effective learning. And it’s currently offered for free. Start-up Incubator Price-performance Trade Off for knowledge acquisition Laser-focus on Entrepreneurship Individual Biz Starters High. Incubators like Y-Combintor are claiming they are providing better than MBA training for start-ups, which includes complimentary services like mentorship and funding. A few Harvard drop-outs joined the programs and build interesting start-ups Modular Training (inhouse or consultant) Price-performance trade off. Specialized focus – like M&A, Trading, Digital Marketing Business Moderate. Especially in those fast-changing industries like internet, technology, bio-tec, green energy. Social Netowrk Linkedin Price-performance trade off for almuni network All Low. Almuni network is a stronger connection than general social network which is virtual. However, the situation could change in future
    7. 7. Barrier of Entry – High Key Entry Barriers Target Customers Barrier Analysis Demand side Benefit of Scale All High. Willing to pay as many proven succese and strong reputation. Strong Almuni network Reputation/Legacy/R ecognition All High. Due to history/legacy. Impossible to duplicate. Access to Premium Job Placement Individual Moderate. Good jobs are limited and goes to top programs first. New comers are difficult to prove its value. Possible areas are emerging industries if new comers can have a strong niche. Capital All Low. Mostly staff cost. No huge capex required. Key Potential Entries Target Customers Entry Analysis Second Tier Biz Schools All Sector focus. Or Geographic focus
    8. 8. Threat of Rivalry – Moderate Key Areas of Competition Target Customer Segment Competition Analysis Among Top Schools Competition Analysis Among All Biz Shcools Pricing All Low. Pricing parity among top schools are maintained. High. About half of top biz schools. Marketing & Branding All Moderate. As top schools are not many with limited capacities, and there are many demand from the market. Moderate Program Innovation All Moderate. Even top schools are innovating to be relevant to business and differentiate from others with focuses on sector (e.g. Entrepreneurs/Finance) or Geographic (e.g. Asia) Moderate. Global Expansion All Moderate. High. The geographic closeness and less interruption to work/life is the key value of regional biz schools. They are competing aggressively with localized expertise and affordable prices. Industry Tie-up for Job Placement Individual Moderate. Since most companies establish multiple connections with a few schools. Moderate. As they are targeting different segmen of jobs.
    9. 9. Value-based Analysis for Top Biz Program Key Drivers of Willingness to pay for top schools For Individual: Quality Education Career Services Network Building Self Recognition For Biz: Quality Education with Proven ROI Reputation (less risks) Key Drivers of Costs: Staff Facilities Marketing
    10. 10. Value-based Strategy – Among 2nd Tier Biz Schools INSEAD Willingness To Pay Opp Cost •Quality of Education (Reputation) •Specialization by sector or geographic •Access to good job •Bigger Salary increase •Strong Alumini Network •Star Professor •Self Recognition •Offer online + offline education t •Good HR warefare & Relation to school brand (for staff) •Marketing advantages (association with industry leaders & Alumini) •Donation •Customized employee hunting service (for for jobs) 2nd tier school •MBA Ranking Info •Distance is less a barrier •Less access to top job •Higher marketing cost required to reach top of mind
    11. 11. Value-based Strategy – Among Top Schools INSEAD Willingness To Pay Opp Cost •Quality of Education (Reputation) •Specialization by sector or geographic •Access to good job •Salary increase •Strong Alumini Network •Star Professor •Good HR warefare & Relation to school brand (for staff) •Marketing advantages (association with industry leaders & Alumini) •Donation •Customized employee hunting service (for for jobs) Other Top Schools •Lower Priority than INSEAD in some areas (e.g. Asia) • Lower Salary Increase % •Higher cost of staffing in particular areas because best ones have been retained in INSEAD •Less famous for certain industry/market
    12. 12. Value-based Analysis for Online Education Key Drivers of Willingness to pay for top schools 1)High Quality Education content – comparable to top biz school 2)Convenient & save time/cost for travel to physical location 3)Discuss form for interactive (limited) 4)Recognized course credit (pay more) Key Drivers for Cost: 1)Content production 2)Licensing cost 3)Platform Operating cost (technology, marketing, operation)
    13. 13. Suggestion to INSEAD Dean The Solution: Create customized (and more) value to different segment. Leverage digital innovations. Below are 3 areas of further discussion. 1) Consider growing sectors like start-ups (incubator – own or collaboration). Take equity for education provided. E.g. Founder’s Institute. 2) Geographically, keep focusing more Europe & Emerging Markets (not a good idea to break into US) 3) Online Strategy  Acquisition - light weight course with recognized credit (different but convertible to formal credit) to reach out to global audience and earn extra profit. The approach should be content oriented – e.g. no point of running own platform, but working with multiple platforms instead. This also drives down the willing-to-pay to other schools in case the students took INSEAD online course which can be used as formal credit.  Integration – Integrate digital classroom into overall courses structure. Start from non-core courses like Executive Training, Seminar, Career Service, etc.. Create unique and expelling customer experiences for more value.

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