The Business economics of On-line Schooling

De BISAWiki

---

Edição de 21h02min de 30 de janeiro de 2015

As more and more universities are opening up to the idea of online proposition, it becomes important to raise the question: "Can online-education and learning be described as a sustainable and profitable organization? " To answer this inquiry, let us discover the various essential areas of this product which could decide the feasibility and monetary sustenance from the e-concept. Some key variables to be considered will be the require, power to offer, delivery and technology approach. Website

The requirement for the service is ample as previously discussed and thus is the accessibility of industry players who could meet the needs of this developing require. For this reason, the viability of the undertaking rests entirely about the concerns of effectively delivering the services and selecting or instead developing a proper business structure. It is important to examine the following aspects to evaluate the business economics in the strategy:

-Internet school vs. conventional university or college (in change)

-Promoting product or. marketing expertise

-Technologies: costs and availability

-Procedure for supplying quality and differentiation

-Charge analysis: Preliminary versus. marginal

Internet College or. Classic College

There can be two distinct types of any online training: an online online design plus an current college increasing its traditional product to accommodate the web proposition. Both designs include diverse economics. A virtual design commences on your own and it has no before knowledge about a normal schooling version; it prepares curricula sometimes itself or along with an existing instructional school; it also has very low facilities costs but concurrently no marketing and branding assist.

It is relatively easy to start this business, but what matters are the quality of content and the process of delivery. For standard segments or programs, this seems to be a good business as the information would not hard or expensive to develop or spread. 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 opposite side will be the current schools that could be stretching out their professional services to e-understanding. These do face a challenge of adopting an organization model which will not be compatible with their existing undertaking. You will discover a risk of cannibalizing their existing effective business design. Both models, if to be continued simultaneously, need to be targeting reasonably different markets.

This product comes with an edge spanning a new internet setup regarding presently accessible information and existing and productive company; as a result the school could fee limited. The product fails to demand huge costs since the content articles are readily available, and merely must be digitized; also, it is fairly much easier to create interest in the undertaking, biking on the rear of the present traditional design. The institution still needs to work towards differentiating the model, not by the content but by the process of delivery.

Selling Product vs. Offering Practical experience

The institution may well opt to sell 10,000 degrees annually or may possibly such as a number that may be far lower (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. This experience would not stem from the content of the program as it is easily replicable, but from the content delivery process reaching the end user. 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. According to Lance Secretan, "It took 37 years for TV to reach 50 million homes and it took the web 4 years to do the same." 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. This economic rent could only be sustained in the long run if the institution has sufficiently differentiated itself from its competitors.

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.