The Economics of On the internet Education

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It becomes important to raise the question, as more and more universities are opening up to the idea of online proposition: "Can on the internet-education and learning be a profitable and sustainable business? " To reply to this inquiry, allow us to investigate the many significant areas of this version which may determine the feasibility and financial sustenance in the e-idea. Some key factors to be considered are the require, capability to source, technology and delivery method. Web Address

The requirement for the services are plentiful as previously discussed and so will be the availability of market gamers who could focus on this expanding desire. Therefore, the viability in the task rests exclusively in the troubles of effectively supplying the services and choosing or quite developing a suitable business structure. It is important to examine the subsequent factors to assess the economics of your concept:

-Virtual university or college compared to. classic school (in transformation)

-Promoting commodity or. offering encounter

-Technological innovation: costs and availability

-Process of delivering quality and differentiation

-Price assessment: Initial vs. marginal

Internet University or college or. Standard University or college

There might be two various variations of your on the internet training: a virtual on the web model plus an current school broadening its traditional model to allow for the online proposition. The two models have diverse business economics. An online product starts off on your own and it has no prior exposure to a regular training version; it readies curricula possibly on its own or together with a current academic organization; additionally, it has very low facilities expenditures but concurrently no advertising support.

It is relatively easy to start this business, but what matters are the quality of content and the process of delivery. For regular modules or applications, this appear to be a great business because the content would stop being tough or costly to produce 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 extending their professional services to e-discovering. These do deal with a challenge of taking on an organization product which may not be compatible with their existing proposition. You will discover a chance of cannibalizing their existing successful enterprise model. Both models, if to be continued simultaneously, need to be targeting reasonably different markets.

This version has an side more than a new virtual set-up regarding previously readily available information and current and productive company; thus the organization could demand a premium. The version fails to call for huge costs since the content is available, and simply has to be digitized; also, it is relatively much easier to produce requirement for the proposal, driving on the rear of the existing conventional design. However, the institution still needs to work towards differentiating the model, not by the content but by the process of delivery.

Marketing Asset compared to. Marketing Expertise

The institution might opt to sell ten thousand levels annually or might such as a number which 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 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. 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.