The competitive forces that shape Australian higher education: An industry analysis using Porter’s Five Forces Framework

Year: 2016

Author: Mahat, Marian

Type of paper: Abstract refereed

Strategic positioning in higher education is a process through which universities make strategic choices to locate themselves in niches where they can make use of their resources effectively and efficiently. For most universities, the dynamic process of adjusting to environmental change and uncertainty—of maintaining an effective alignment with the environment while managing internal interdependencies—is enormously complex, encompassing myriad decisions and behaviours at several organization levels.As a sector that is increasingly operating in a highly turbulent and dynamic environment, and facing increasing dual pressure towards marketization and competition, this paper calls for an analysis of higher education as an industry, and a call for a more business-oriented framework for application to higher education. Using medical education as a case study, this study applies Porter’s five forces framework (Porter, 2008) defined by the following forces of threat of new entrants, supplier power, buyer power, the threat of substitutes, and industry rivalry. Seen through the lens of the framework and drawing on data from semi-structured interviews of staff from medical schools, the findings identified three contributions to the analysis of medical education. Firstly the findings recognized the wider community/society as one of the ‘buyers’ in medical education. Secondly, organizations and individuals which supply resources in the form of funding were acknowledged as ‘suppliers’ in medical education. Finally, and perhaps most importantly, regulatory bodies, in the form of Federal and state governments, accrediting agencies, and the university itself, were identified as a sixth force within the medical education industry. These competitive forces have considerable influence to the structure of medical education, through expanding, creating, enabling, or limiting the market. The paper makes a contribution to strategic leadership and management practice and has advanced the body of knowledge by focusing on how Porter’s five forces have shaped the strategic management of universities in Australia, a practice that has previously been reserved for the corporate world. Theoretically, the study provides sufficient empirical evidence that an analysis of higher education as an industry using an extended version of Porter’s five forces is justifiable and possible. Practically, the findings suggest that policy-makers and institutional leaders will need to consider more seriously the impact of specific forces when seeking a competitive position within the Australian higher education system.ReferencePorter, M. E. (2008b). The five competitive forces that shape strategy. Harvard Business Review, 86(1), 78–93.