The Economics of On-line Training

De BISAWiki

It becomes important to raise the question, as more and more universities are opening up to the idea of online proposition: "Can online-schooling be a profitable and sustainable business? " To respond to this, let us check out the many significant areas of this version which could decide the feasibility and monetary sustenance of the e-strategy. Some crucial parameters to be considered would be the need, power to source, delivery and technology procedure. Click here

The demand for the services are abundant as previously discussed and thus will be the availability of marketplace players who could serve this expanding need. Therefore, the viability in the task sits only around the problems of properly giving the services and selecting or rather designing a suitable business design. It is critical to evaluate these aspects to gauge the economics of your thought:

-Internet school versus. conventional university (in alteration)

-Promoting commodity vs. marketing expertise

-Technological innovation: costs and availability

-Procedure of giving differentiation and quality

-Price analysis: First versus. marginal

Internet University or. Classic School

There can be two different models of your on the internet training: a virtual on the internet version and an pre-existing college broadening its traditional version to fit the online undertaking. Equally models have diverse business economics. An online product starts off from the beginning and possesses no prior knowledge about a regular schooling version; it prepares curricula both by itself or jointly with an existing academic school; it also has lower facilities bills but concurrently no advertising help.

What matters are the quality of content and the process of delivery, although it is relatively easy to start this business. For common modules or applications, this appear to be a great endeavor as being the content would not be challenging or expensive to produce or disperse. However, care needs to be taken to ensure the target segment for the program is carefully identified, as this model is not only competing with traditional models but also with online propositions of existing reputed educational institutions.

On the other side are the current colleges that would be stretching out their services to e-discovering. These do experience an issue of following an enterprise product which will not be suitable for their pre-existing proposition. You will find a risk of cannibalizing their current profitable business model. If to be continued simultaneously, need to be targeting reasonably different markets, both models.

This version has an benefit more than a new online setup when it comes to previously readily available content and present and productive brand; hence the institution could fee reduced. The design does not require large fees since the content articles are available, and merely must be digitized; additionally it is comparatively easier to generate interest in the proposition, driving on the rear of the existing standard model. The institution still needs to work towards differentiating the model, not by the content but by the process of delivery.

Offering Asset vs. Offering Practical experience

The institution may well decide to market ten thousand qualifications annually or could similar to a variety which is reduced (i.e. < 200). The question is whether the institution is attempting to focus on the quality of the education and students or is merely happy with building the numbers and playing on cost. Online education does provide an opportunity to reach the masses with very low marginal costs but simultaneously could affect its reputation.

Though it is extremely hard to replicate the environment and experience of a traditional model, an attempt to get the program experience as close to the traditional experience would be considered a good differentiating factor. From the content delivery process reaching the end user, even though this experience would not stem from the content of the program as it is easily replicable. Again, the type of module and the class of customer segment would decide upon the extent of the "experience" required to be instilled in the program.

Technology: Availability and Costs
The complete business idea of online education is dependent on technology. The base of this technology is the internet which is the fastest growing tool in terms of number of users. "It took 37 years for TV to reach 50 million homes and it took the web 4 years to do the same., according to Lance Secretan" Though the base technology (the internet) does not seem to be a constraint, the bandwidth available to support the online education is questionable. Technology such as streaming audio and video requires huge bandwidth which may not be a constraint for institutions but for end users.

In most countries, the internet is at a nascent stage. More importantly the bandwidth to support "virtual reality" is not available. Even in developed countries it would be very expensive to have interactive and synchronous video lectures or sessions.

Though the pace of technological advancements is increasingly fast, and thus the bandwidth problem would soon be resolved, it may still be expensive to have a model that provides a similar learning experience to a traditional model. Therefore, the educational institutions would need to strike a balance between the "experience" and the cost depending on their target market segment(s).

Delivering Quality and Differentiation
In order to differentiate itself from others, it would be essential for an institution to focus on the process of delivering value to the end users. Educational institutions, keeping in mind their target market(s) and the available technology, would have to decide on the extent to which they should replicate or rather extend the strengths and benefits of their existing traditional model, if any, to the online proposition.

Aspects such as how to hold online lectures or how to transfer digitalized case material or even how to structure the program to make it more effective, would need to be evaluated.
If the proposition is to sell the program as a commodity, it would be better to conduct it in an asynchronous fashion, focus on delivering standard requirements, and cut down costs rather than add a new "experience" to it. This excludes premium programs with higher fees. These ones would be targeting people who are willing to pay for the technology needed to get a real experience of learning.

Cost Analysis: Initial vs. Marginal
The costs associated with an online proposition are low when compared to the ones of a traditional model which requires much greater infrastructure. The profits would depend upon the economic rent that could be derived from the services offered. If the institution has sufficiently differentiated itself from its competitors, this economic rent could only be sustained in the long run.

The online model also has very low marginal costs compared to the initial set-up expenses. Unlike a traditional model which is limited by the size of its buildings (physical infrastructure) or the number of its faculty members, the capacity of an online model can be stretched to a great extent. This would help reduce marginal costs until a further increase in users requires significant investments in technology upgrades.