The Business economics of Online Training

De BISAWiki

As more and more universities are opening up to the idea of online proposition, it becomes important to raise the question: "Can on the internet-education be a sustainable and profitable organization? " To answer this, allow us to explore the various significant elements of this design which will determine the feasibility and economic sustenance from the e-strategy. Some important factors to be considered will be the require, capability to offer, delivery and technology method. Click here

The need for the services are numerous as previously referred to therefore may be the availability of market participants who could meet the needs of this expanding need. For this reason, the viability of your task sits exclusively around the troubles of successfully giving the assistance and selecting or quite developing a proper business structure. It is crucial to examine the next aspects to evaluate the business economics from the thought:

-Digital university or. standard university or college (in change)

-Offering asset vs. selling encounter

-Technologies: costs and availability

-Technique of providing quality and differentiation

-Price examination: Initial versus. marginal

Virtual School compared to. Conventional School

There may be two diverse versions of your online education and learning: an online on the web model as well as an pre-existing university or college increasing its traditional model to support the web undertaking. Both models have diverse business economics. A virtual design starts off from scratch and contains no before experience with a regular training design; it readies curricula both by itself or together with a current educational establishment; additionally, it has lower structure expenditures but at the same time no marketing assist.

What matters are the quality of content and the process of delivery, although it is relatively easy to start this business. For normal segments or courses, this appears to be a great endeavor as the content material would stop being difficult or costly to produce or distribute. 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 would be the present schools that could be extending their services to e-learning. These do deal with an issue of taking on an organization version which will not be works with their pre-existing proposition. You will discover a probability of cannibalizing their present successful business design. Both models, if to be continued simultaneously, need to be targeting reasonably different markets.

This design has an side more than a new digital setup when it comes to previously available information and current and effective brand name; thus the organization could charge limited. The design fails to need huge charges since the content articles are readily available, and merely needs to be digitized; it is also relatively simpler to create requirement for the undertaking, driving on the back of the existing conventional product. The institution still needs to work towards differentiating the model, not by the content but by the process of delivery.

Selling Investment vs. Offering Expertise

The organization may well opt to offer ten thousand diplomas each year or may such as a number that is far lower (i.e. < 200). The question is whether the institution is attempting to focus on the quality of the students and education 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 experience and environment 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. "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. 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.