The Economics of On the web Education and learning

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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 and learning be described as a profitable and sustainable organization? " To reply to this inquiry, we will discover the various important areas of this version which will decide the feasibility and financial sustenance of the e-thought. Some key guidelines that need considering will be the need, capacity to provide, delivery and technology method. Website

The demand for the service is ample as previously referred to and thus will be the availability of industry players who could cater to this expanding require. Consequently, the viability of the task sits only about the troubles of properly providing the help and choosing or quite developing a suitable business structure. It is essential to analyze the next factors to assess the economics in the concept:

-Internet college or. conventional school (in transformation)

-Marketing commodity compared to. promoting encounter

-Technologies: costs and availability

-Procedure of giving quality and differentiation

-Charge assessment: Preliminary vs. marginal

Online School versus. Traditional University

There could be two diverse types of the online training: an online online product along with an present school increasing its classic version to fit the web task. Each models have different economics. An online design begins from scratch and it has no before knowledge about a normal education model; it readies curricula possibly itself or along with a pre-existing educative organization; additionally, it has reduced facilities costs but concurrently no branding assistance.

It is relatively easy to start this business, but what matters are the quality of content and the process of delivery. For normal units or programs, this seems to be a good business as being the content would not really hard or expensive to develop 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 are definitely the pre-existing educational institutions that could be extending their services to e-learning. These do deal with a challenge of taking on an organization version which is probably not appropriate for their existing proposal. There is a risk of cannibalizing their pre-existing productive business model. Both models, if to be continued simultaneously, need to be targeting reasonably different markets.

This version has an edge over a new digital setup regarding previously offered content and current and successful company; hence the establishment could fee reasonably limited. The model fails to require big expenses because the content articles are available, and just has to be digitized; additionally it is reasonably much easier to generate need for the proposition, driving on the back of the present conventional version. The institution still needs to work towards differentiating the model, not by the content but by the process of delivery.

Selling Asset versus. Promoting Encounter

The school might plan to offer ten thousand levels each year or may possibly like a number which is 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 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 synchronous and interactive 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.