Introduction
Within the last few decades, the global higher education sector has grown and changed dramatically (Altbach 1). Different trends have underpinned this change. For example, changing population demographics, changing workforce requirements and globalization have underpinned the changes in the higher education sector (Hijazi 68). Similarly, increased competition and higher education delivery methods have also spurred the dramatic changes in this sector (Guinier 36). Despite these changes, many observers are optimistic that the higher education sector is growing in the right direction (Altbach 1). However, these changes could push some institutions into oblivion. This is why industry incumbents, in both the private and public sectors, continually scan the global higher education environment for positive and negative changes in the sector and align their strategies accordingly.
The intent of this paper is to compare the higher education sectors of Boston (United States of America) and Dubai (United Arab Emirates). This strategic analysis will use six strategic management tools – SWOT Matrix, CPM, Porter’s five forces, Boston Consulting Group (BCG), integration strategies, and strategic formulation. The findings of this paper will be useful to policy-makers and education leaders in making strategic decisions and planning for higher education initiatives in their respective jurisdictions. However, before delving into these details, it is important to understand the Dubai and Boston higher education sectors.
Higher Education in Dubai
This study categorizes higher institutions of education in Dubai as those that have a physical presence in the city. Such institutions should also have a dedicated full-time faculty to teach their students. According to the Dubai Knowledge and Human Development Authority (1), there are only 52 higher institutions of education in Dubai. They offer associate degrees and higher certifications. Compared to their global counterparts, higher institutions of education in Dubai are relatively young, and so is the country. In the 1960s, there were only a few primary and secondary schools in the Emirate, without any institution of higher learning. The United Arab Emirates (UAE) University was the first institution of higher education started in the country, in the late 1970s. It only had 400 students (Dubai Knowledge and Human Development Authority 1).
Soon after, higher colleges of technology emerged in the 1980s. The entrance of Zayed University, followed this growth in the 1990s. The AUD Emirates Academy made a debut in Dubai’s higher education sector from 2000 to 2003 (Dubai Knowledge and Human Development Authority 1). Since then, Dubai has experienced growth in its higher education sector, which has not only seen the proliferation of UAE-based universities, but also the increased emergence of foreign-based institutions of higher learning. For example, since 2003, the knowledge village and Dubai International Academic city have set up operations in Dubai. Similarly, the DIFC education center, Dubai Silicon Oasis, Health Care City (Harvard Medical city), and 28 international universities have set up education centers in the emirate (Dubai Knowledge and Human Development Authority 1).
In the last decade, Dubai’s higher education sector has witnessed increased public and private investments that have not only increased the number of colleges and universities in the city, but also expanded the range of courses offered by these institutions. While universities offer degree courses, technical colleges offer vocational training programs (Dubai Knowledge and Human Development Authority 1). Their range of education programs depends on institutional classification (Hijazi 68).
For example, the UAE government classifies public universities as institutions that have a direct relationship with the UAE Ministry of Education (Dubai Knowledge and Human Development Authority 1). Only three institutions in the UAE fit this description – UAE University, Zayed University and the Higher Colleges of Technology. Citizens of the UAE often get free education in these institutions. The law deems all other institutions as “private.” They form the majority of higher education institutions in Dubai because of the creation of the free zones, which give foreign-based institutions incentives to set up campuses in Dubai. Today, they form a critical part of Dubai’s higher education landscape.
Higher Education in Boston
Many people know the Boston higher education sector for its high quality education standards (Guinier 36). Observers also know it for the tremendous contributions made by its students in different professional fields, including medicine, business, engineering, technology and other sectors of the economy (Kowalcky 1). Boston has enrolled more students per capita than any of its rivals in America (Kowalcky 1). Boston’s higher education sector has also contributed to the city’s diverse demography because many students, not only from around the country, but around the world, study in Boston. More than 46% of the students in the city’s higher education sector comes from out-of-state, while 8% of the total student population comes from outside America (Kowalcky 1).
These students provide the intellectual capital needed for driving the local and national economy. Characterized by more than 35 colleges and universities, institutions of higher learning in Boston generate significant economic benefits for the state of Massachusetts. This is why Kowalcky (1) says the Boston higher education sector is a critical part of the city’s economy. The sector also plays a vital role in the country’s economy because experts estimate that it has an economic impact of more than $7 billion. Since Boston and Dubai both have vibrant higher education sectors, it is pertinent to compare their strategies using different strategic tools. The first tool we use in this analysis is the SWOT matrix
SWOT Matrix
The SWOT matrix is an acronym used by industry experts to define a sector’s strengths, weaknesses, opportunities, and threats (Evans 49). In the context of this assessment, this matrix will evaluate the strengths, weaknesses, opportunities, and threats that define the higher education sectors of Boston and Dubai.
Strengths
Dubai has carved a name for itself as a leading and progressive city, not only in the Middle East, but around the world as well. It has managed to do as within a relatively short time (Dubai Knowledge and Human Development Authority 1). To make sure that this reputation materializes, the country has aligned its higher education goals to support the country’s social, political and economic development initiatives. This step is in line with the country’s 2015 strategic plan. Aligning the country’s higher education needs with its social, political and economic goals is a key strength of Dubai’s higher education sector because it ensures its posterity and relevance. Indeed, as the Dubai Knowledge and Human Development Authority (1) argues, most of the courses offered in the country’s institutions of higher education are likely to solve some of the pressing social, economic and political problems of the country.
Boston’s strengths in the higher education sector differ from those of Dubai’s higher education sector because the sector’s main strengths come from the positive reputation of its schools. Indeed, many Boston colleges and universities have developed names as some of the most prestigious schools in America and around the world. Dubai has not been able to do so, partly because its institutions are still young (Kowalcky 1). Boston’s institutions of higher education are also leaders in federal grants and research and development rewards. These competencies attract more than $500 million, annually, to the sector (Kowalcky 1). Conversely, Boston schools are national leaders in specific research areas that include medicine, sciences, and engineering. These dynamics outline the strengths of institutions in Boston and Dubai.
Weaknesses
The distribution of the types of courses pursued in a country symbolizes the growth of the education sector (Altbach 1-3). People perceive countries that have a wider distribution of courses to have more mature education sectors as opposed to those that have fewer courses on offer (Altbach 1-3). Dubai suffers from this fact because many students pursue only a small selection of courses. Business-related courses constitute the majority of courses preferred by many students in Dubai. Society, law and religion constitute the second most desirable course selection in the sector, while engineering, information technology and media follow each other in that order. Business-related courses comprise about 42% of the courses pursued by students in the emirate (Gupte 269).
Society, law and religion account for 19% of the courses pursued by students (Dubai Knowledge and Human Development Authority 3). Engineering, information technology and media account for 9%, 6% and 7% of the courses pursued by students. These statistics show that two course categories account for more than 60% of the courses pursued in Dubai – business and social courses. In this regard, there is little variety in terms of student course selection in the Emirate. This phenomenon limits the diversity and dynamism that would otherwise categorize the higher education sector in Dubai (Gupte 269).
Boston’s weaknesses are different from Dubai’s weaknesses because the city grapples with low population numbers as its main weakness. Population numbers often affect student enrollment numbers within a region. Furthermore, they influence the demand for education. Dubai’s population is slightly more than 2,000,000 people (2013 figures). Comparatively, Boston has a population of slightly more than 600,000 people (Hijazi 68). These figures show that Boston has few opportunities to increase its student enrollment numbers locally. Furthermore, it may be difficult for the city to attract international universities within the metropolis because of the low number of people in the city, relative to the existing number of universities.
Opportunities
There are new opportunities for institutions of higher learning in Boston and Dubai to exploit. Some of these opportunities link with some of the threats and weaknesses discussed in this paper. For example, Boston’s high tuition fees and reduced state funding have limited opportunities for students to access quality education. In this regard, one new opportunity for this sector is to improve access and equity. Another opportunity is improving the linkages between university courses and industry needs. This opportunity stems from the mismatch between Boston’s high levels of bureaucracy and the fast-paced changes in the industrial space. In this regard, Boston-based colleges and universities need to show more flexibility in their curricula through university-industry linkages.
Dubai’s opportunities stem from its huge population of expatriates who work in the emirate, in different capacities. More than 80% of the 2,000,000 people who live in the emirate are expatriates (Gupte 269). More than 80% of them are young people aged between 18 and 49 years (Gupte 269). There is an opportunity to extend learning opportunities to these groups of people because some of them would be willing to advance their professional careers for purposes of advancing their careers. Based on the high population of expatriates in the country and the steady inflow of foreign students, Dubai has an opportunity of aligning its higher education standards with internationally recognized standards of higher education. This step would elevate its profile in the global higher education map.
More opportunities also exist in increasing Dubai’s enrollment numbers because, compared to Boston, Dubai has a low student enrollment rate. There are only 39,127 students enrolled in Dubai’s institutions of higher education (Dubai Knowledge and Human Development Authority 1). This figure includes both full-time and part-time students. In fact, the majority of universities in the emirate has less than 500 students. Only seven universities can boast of having a student population of more than 2,000 students (Dubai Knowledge and Human Development Authority 1). Comparatively, Boston universities and colleges have enrolled more than 152,000 students, with most universities having more than 5,000 students (Kowalcky 2). In fact, some of the city’s leading universities, such as Boston university, have more than 32,000 students. Northeastern university has more than 21,000 students and the Boston College has more than 14,000 students (Kowalcky 1). The table below shows the number of student enrollments in some of Boston’s leading higher education institutions.
Although the student enrollment numbers in Dubai have marginally increased, they show that there is more room for growth, in terms of recording high student enrollment numbers. The high student enrollment numbers in Boston, relative to its population, show this opportunity because Dubai’s population is more than three times Boston’s population, yet its student enrollment numbers are three times less than Boston’s numbers. By positioning itself as a center of education excellence, Dubai could still attract more students from other countries because it has the capacity to do so.
Threats
There are fewer threats to Dubai’s higher education sector compared to Boston. One significant threat is the rapid and unplanned growth in the sector. It may undermine efforts to maintain high standards of education and possibly cause conflict among universities. The government’s “excessive” liberal policies to attract foreign investments within the Dubai higher education sector could partly explain this challenge. It is prudent for the sector to undertake growth initiatives that it could handle. Comparatively, the threats to Boston’s higher education sector center on poor funding and increasing tuition fees. Adequate funding is an important resource for the growth of the city’s education sector.
Similar to other public organizations, such as public libraries and health care centers, Boston universities are grappling with the problem of reduced funding, especially in public universities. The decreased funding has not only affected the city because Guinier (9) says the phenomenon has affected higher learning institutions in Massachusetts. In fact, compared to other states in America, Massachusetts has cut state funding to colleges more than 40 states have (Guinier 10). The decline in state funding has mainly hit hard from 2001 to 2013. This is why experts say that the decline in state funding for Massachusetts is 13% compared to the national average of 10% (Guinier 10). The diagram below shows a holistic understanding of this phenomenon.
Dubai’s institutions of higher education have not experienced the same reduction in funding, at least for public universities. This is largely because the UAE government has not experienced the same fiscal pressures of the American government. However, recently, the government has had to increase the entry requirements for students to enroll in public universities, partly because it does not want to grow faster than it should (Hijazi 12).
The high cost of tuition in Boston also poses another threat to the city’s higher education sector. Experts attribute this fact to the rising cost of living and the increased demand for quality higher education in the country (Kowalcky 2). Guinier (36) says that there has been a $3,684 rise in tuition costs in many federally sponsored institutions of higher learning in Boston. Similarly, there has been a tuition cost rise of $2,294 in state-sponsored colleges and a $918 increase in the cost of tuition fees in Boston’s community colleges (Guinier 36). Students have shouldered most of these cost increments because of the reduction in federal funding. Experts fear this phenomenon could contribute to the loss of the “public character” in many publicly funded Boston universities (Kowalcky 2). In fact, the Chancellor of Boston College says that the increasing cost of tuition and the reduction in state funding for the same institutions are putting public universities at the risk of becoming private (Kowalcky 4). Comparatively, Dubai does not have this problem because public funding to higher education institutions has remained largely unaffected. Consequently, the “public” nature of these institutions remains as so. Furthermore, the introduction of the free zones has helped international universities to maintain low tuition costs. Indeed, as Guinier (36) says,
the government established these free zones to attract international universities that would provide alternative degrees that are locally unavailable. The Dubai Knowledge Village (DKV) is a product of these free zones. Since its inception in 2003, there has been a 77% increase in the number of international education institutions exploiting the free zone opportunity to expand their operations (Guinier 36). For example, the Dubai government attracted eight institutions to operate in the DKV within the first year of its establishment. Some of the players were operating in Dubai, but outside the free zones. The success of the first free zone encouraged the government to establish more free zones, which include the Dubai International Financial Center and the Dubai Health, care City (established in 2004). Today, there are five free zones in Dubai. Most international education institutions have exploited the Dubai International Academy city as the most appropriate free zone that supports their operations because of its focus on enabling the activities of educational institutions. Plans are underway to create an enabling environment at DKV to improve the services of training providers (Gupte 269).
The following diagram summarizes the SWOT matrix outlined in this section of the report
Table 1: SWOT Matrix
CPM
The competitive profile matrix (CPM) focuses on identifying a university’s competitor and evaluating their strengths and weaknesses, relative to the strategic position of the university under focus. The main factors characterizing the university’s internal and external environments are the critical success factors in this assessment. Based on this analysis, CPM compares firms and their rivals by evaluating their relative strengths and weaknesses. In line with the focus of this study, Ahmad (451) says the critical success factors in the higher education sector include quality assurance, project management and financial resources, change management, bureaucracy and participation, technology use. This assessment uses these criteria to compare Dubai and Boston’s higher education sectors.
Quality Assurance
Quality assurance is a key component of a successful economic sector (Altbach 11). Dubai’s higher education sector recognizes this fact and strives to make sure that the quality of graduates, leaving its education institutions, is high. To maintain this standard, the Ministry of Education introduced the University and Quality Assurance International Board (UQAIB), in 2008, to supervise all aspects of quality control in the sector. This board has different responsibilities such as making sure that the quality of education offered at satellite campuses is the same as that offered on the main campuses. The board has qualified members who are proficient in the quality management sector. Furthermore, they have a global outlook of higher education quality control because they hail from different parts of the world (Hijazi 68). The government does not accredit Institutions of higher education that operate in the free zones. The quality board assumes this responsibility. Upon full accreditation, they receive an operating license.
Similar to Dubai, the quality of education in American higher institutions of learning is high (compared to its peers in the developed world). The same is true for institutions of higher learning in Boston. This is why experts have ranked some of Boston’s higher education institutions, such as Boston University, among the best learning institutions in the country (Guinier 37). Experts have assessed these quality rankings based on an institution’s capacity to add value, an institution’s assessment of outcomes, the quality of inputs employed at the university and its overall reputation in the higher education fraternity (Guinier 37). Overall, the quality of education in Boston and Dubai are high. Nonetheless, some observers believe that institutions of higher learning in Boston have a higher quality of education compared to their counterparts in Dubai because Boston’s universities and colleges are older and have had more time to perfect their education standards (Kowalcky 1-3). This view is debatable.
Effective project Management and Financial resources
Within the last few decades, universities and colleges in Boston and Dubai have undertaken massive construction projects to expand their service offing to students in both regions. Boston has recorded the highest levels of investment in this sector because it has reported massive construction projects within the last five years alone. For example, Boston University has built a Photonics center worth $75 million (Kowalcky 2). Suffolk University has also started a $65 million construction project to build a law school. Emerson College has reported similar construction projects by planning to transform small buildings into dormitories through a $25 million project plan. North Eastern University also plans to build a $32 million material sciences building (Kowalcky 2).
The same university has also announced plans to build a 700-bed dormitory that would be worth $40 million (Kowalcky 2). With millions of dollars diversified in different project plans, the higher education sector in Boston is likely to be a significant contributor to the state’s local economy. Such projects would not only benefit students, but local contractors (through job creation) and researchers (through sponsorships) as well. Dubai also has similar plans of increasing the opportunity for new businesses and investments in the higher education sector. However, most of the projects undertaken in the Emirate are of a lower scale compared to Boston.
Change Management
The change management concept emerged from the private sector. Therefore, it has little application in the higher education sector because of its “public” nature. However, this fact does not undermine its importance in this field. Dubai’s higher education sector has a better record of change management, compared to Boston because it has had to manage many environmental issues compared to its rival. For example, it has had to deal with an increased influx of international students and expatriates by providing educational products that align with their needs (Dubai Knowledge and Human Development Authority 1). The sector has had a relatively positive record of success in managing these issues, despite its young stature, compared to other higher education sectors, not only in Boston, but around the world as well.
According to the Dubai Knowledge and Human Development Authority (3), the Dubai higher education sector has adopted positive change management practices that have improved the country’s education standards to align with global standards. The change management process has been designed to fulfill several goals, including “promoting national development, global competitiveness, to improve citizens’ standards of living, achieve democratic participation, meet labor force needs, meet international development goals, and to promote the nation’s participation in global development goals” (Guinier 115). Regional influences and development strategies have played an important role in defining Dubai’s change management activities within the higher education sector.
Institutions of higher learning in Boston also have a good record of change management as their counterparts in Dubai do. However, these institutions have different motivations for adopting positive change management practices. Efficiency is at the top of the list of priorities that have driven change management practices in Boston (Altbach 5). The change management priorities for the sector have also strived to improve resource allocation and student services. For example, Boston College recently adopted change management practices by combining multiple student services to reduce the runaround required for students to undertake their academic activities (Altbach 5). The campus adopted several innovative technologies to make this happen. Different institutions in Boston have adopted change management practices differently. Often, experts fuel these change management processes, but in specific cases, students could also drive the changes. Nonetheless, overall, the higher education sector in Boston has a positive change management record. This fact shows that both Boston and Dubai higher education sectors have a positive change management culture, albeit driven by different needs.
Bureaucracy and Participation
Although many commentators still perceive American universities as beacons of hope in the country’s struggling economy (Ginsberg 3). Critics say transformations within the academic community have increased bureaucracy within the sector (Altbach 1). Ginsberg (3) attributes this phenomenon to a growing number of administrators who are more concerned with turning institutions of higher learning into “cash cows,” as opposed to imparting gainful knowledge and churning quality graduates. The Boston higher education sector suffers from this problem because within the last few years, there have been a burgeoning number of bureaucrats running some of the biggest institutions in the region. The ideal situation would be that there is more input from faculty members in managing these institutions (Ginsberg 3).
To demonstrate the high level of bureaucracy in most of Boston’s higher education institutions, Ginsberg says, “There are armies of functionaries – vice presidents, associate vice presidents, assistant vice presidents, provosts, associate provosts, vice provosts, assistant provosts, deans, deanlets, and deanlings, each commanding staffers and assistants” (3). Increased bureaucracy in the Boston higher education sector links with the increasing cost of living within the industry because high levels of bureaucracy have increased the cost of operations, which has been transferred to students through high tuition fees. The high levels of bureaucracy in Boston also mirror the wider bureaucratic processes that have increased in America since the 9/11 attacks. For example, foreign students are having a much more difficult time getting student visas compared to past years when it was easier to do so (Gupte 269). Coupled with the high cost of tuition, the Boston education sector is becoming more unattractive for some students.
The Dubai higher education sector has not suffered under the weight of high levels of bureaucracy because the country is struggling to maintain the image of a free economy. Further, the education sector benefits from a wider economic liberation concept that has dominated Dubai and the wider UAE since the 1970s (Dubai Knowledge and Human Development Authority 1). To attract students from around the world, Dubai has eliminated bureaucratic hurdles that would impede foreign institutions or students from coming to Dubai. Based on these efforts by the government to reduce bureaucracy, Dubai’s higher education sector has a better performance record of eliminating bureaucracy as an impediment to achieving the goals of the higher education sector. Conversely, Boston is lagging behind in this regard.
Technology
Dubai has a good record of adopting technology-based tools in not only its education sector, but in other industries as well. The prominence of distance learning and the use of technology-based tools in learning (paperless learning) offer a glimpse of the acceptance of technology in defining Dubai’s higher education sector. According to the Dubai Knowledge and Human Development Authority (3), the use of technology has been mainly applied in higher institutions of education where English is not the main language used. For example, the Higher Colleges of Technology (HCT) gave more than 6,200 iPads to its students to help them learn English. Dubai has recognized that increased penetration of technology in the higher education sector depends on the instructors’ recognition of its importance in learning and their proficiency in understanding how to use them. Consequently, the Arab Bureau of Education in the Gulf States has offered to train several teachers on how to use modern technology and emphasize the importance of imparting the same skills to their students (Dubai Knowledge and Human Development Authority 4).
Although Dubai has a good record in embracing technology-based learning tools, Hijazi (69) says the main impediments to its adoption is the high cost of software, hardware and the limited availability of skilled instructors. However, the UAE government, through the Ministry of Education, has the capability to overcome these challenges and keep up with its peers around the world, in terms of increasing technology integration in the higher education sector. To emphasize Dubai’s stature as a technology hub, the Dubai Knowledge and Human Development Authority says, “In line with this trend to integrate information and communication technologies (ICTs) in education, the UAE has embraced to use technologies in all educational levels to facilitate learning and teaching, and increase access to learning opportunities” (p. 1). This statement shows that technology use has transcended different tenets of Dubai’s higher education sector. Therefore, it has a positive record in this regard.
Boston’s higher education sector has an equally impressive record, in terms of adopting modern technologies in its learning practices. Similar to Dubai, the sector has widely embraced online/virtual learning. This learning platform accommodates several services including student enrollment and online classroom supplements. Students have benefitted through remediation classes and credit recovery programs. Some universities also allow their students to take core and elective subjects virtually. The successful use of technology has also created full-time online schools in Boston, where students do not have to attend Brick and Mortar classes. They can receive full credits online and graduate as other students (who attend brick and mortar schools) do. Other applications of technology in Boston’s higher education institutions include the creation of open educational resources and the introduction of blended learning. The diverse application of technology in different aspects of Boston’s education processes affirms its positive record in technology adoption. This record is stronger than Dubai’s record of adopting technology because Boston has had a longer period of perfecting its technology-adoption strategies. Comparatively, Dubai has only done so in the past two decades.
Porter’s Five Forces
Michael Porter (a professor from the Harvard Business School) introduced five forces of strategic analysis. These five forces include the potential for developing substitute products, consumer bargaining power, potential entry of new competitors, bargaining power of suppliers, and rivalry among competing firms. These factors interact with one another as defined below
Rivalry among competing Firms
Evans (213) says that the rivalry among competing firms is perhaps the most influential factor in porter’s five forces. This attribute encourages competing firms to focus on their competitive advantage to outwit their competition. Some of the factors that cause rivalry among these firms include high numbers of competing firms, similar sizes of competing firms, similar competencies among competing firms, falling demand for products, and falling prices of services in the industry. When we apply this analysis to our case study, we find that Dubai has more than 52 institutions of higher learning that cater to the needs of more than 39,000 students (Dubai Knowledge and Human Development Authority 3). Institutions of higher education in Dubai fall in three distinct categories – federal institutions, institutions that operate within the free zones and those that do not operate within these zones (Dubai Knowledge and Human Development Authority 3).
Therefore are few federal institutions of higher learning compared to the other two alternative institutions of higher learning. The only federal institutions of higher learning include Zayed University, Dubai Women’s College, and Dubai Men’s College. These institutions comprise only 6% of the total number of higher education institutions in the emirate (Dubai Knowledge and Human Development Authority 3). Established by a federal decree, these institutions of higher education mainly cater to local students (Emirati students). Privately sponsored and international students often attend higher institutions of education that operate in the free zones. There is little or no competition among the three distinct categories of institutions mentioned above. International universities operate within the free zones and rarely compete with those that fall outside their scope of operations. Comparatively, Boston has a strong rivalry among competing firms because there are many universities and colleges within the city. The lack of segmentation, as it is in Dubai, makes competition in Boston stronger than Dubai.
Potential Entry of New Competitors
Barriers to entry are important in evaluating the success or failure of competing firms. Firms that have to manage this challenge have often focused on quality, pricing and marketing as possible strategies for doing so (Gupte 269). Dubai has few regulations that restrict the entry of new universities or colleges in the emirate. Particularly, the creation of free zones attracted new universities in the country. Therefore, the government has made tremendous strides to limit the barriers to entry in the higher education sector. The low barrier to entry in the Dubai higher education sector mirrors the same model that Dubai has adopted in business – free market economy. Indeed, similar to how it has done in the higher education sector, Dubai has created duty free zones to attract new investors in the emirate. So far, this strategy has worked in attracting new business in both the education and economic sectors.
Boston’s higher education sector has a high barrier to entry because, although America is a free market economy and does not impose unnecessary restrictions for new entrants in the education sector, the huge capital investments required to set up institutions of higher learning are prohibitive. Furthermore, public universities are often very large organizations with expansive operations. Most of the existing ones have taken years to build. Starting a new one would take a very long time. Developing a good reputation would even take longer. Lastly, one of the most controversial barriers to entry in Boston’s higher education sector is the stringent requirements imposed by accrediting institutions. Although they strive to uphold high standards of education in the city, their stringent accreditation requirements protect incumbents from competition because the incumbents already have accreditations, while the new ones struggle to get them. Accreditation is a critical success factor for some of these institutions because the credibility of medical, law, engineering and similar professional degrees depend on accreditation. Stringent requirements for accreditation may make a new investor to hesitate in venturing in this sector. Collectively, these factors define some of the existing barriers to entry in Boston.
Potential Development of Substitute Products
In the past, the potential for developing substitute products in the higher education sector was low. This was largely because of cultural barriers, geographical barriers, differences in income levels and similar factors (Altbach 5). However, today, technology and the erosion of cultural barriers have made it possible for substitute products to permeate the higher education sector. The classic economic theory supports this fact because it says that developments in information technology have made it easy for universities to replicate their rival’s products (through the augmentation of features and benefits) (Altbach 5).
Similar price-performing product alternatives have worsened the trend in Boston because state-supported universities within the region have similar fee structures. Thus, it may cost the same amount of money to attend a university in Boston, as it is to attend a university in Phoenix, or any other place. Switching costs for products and services in Boston’s higher education sector is low. Therefore, it is easy for students to transfer between different universities. Compatible curriculums have helped support this trend. Altbach (5) affirms this assertion by saying that institutions of higher learning are bound to suffer from this problem if there is a reduction in the cost of undertaking similar courses in a rival university. Such an eventuality would mean that most students would benefit from a low switching cost.
Dubai has a relatively low potential development of substitute products compared to Boston because it has few institutions of higher learning. Moreover, the available institutions are different, in terms of their structure, curriculum and tuition fees. For example, few colleges offer courses in English because most of them offer their courses in the local dialect. Private universities also differ from public universities because of differences in education curriculum and fee structures. These differentiating factors make it difficult for students to switch courses, as they would do in Boston. Therefore, the potential development of substitute products in Dubai is lower than Boston’s.
Bargaining Power of Suppliers
Supplier bargaining power often varies depending on the number of suppliers in the market (Hijazi 69). Lecturers and supporting staff would be the main suppliers in the higher education sector. Therefore, the power of unions and staff organizations would determine the bargaining power of suppliers in this sector. Suppliers in the Dubai higher education sector have a high bargaining power partly because there is a shortfall in the number of English-speaking tutors in many institutions of higher learning. Hijazi (69) says the demand for English-speaking tutors has increased by 30% in the last five years. This surge in demand stems from the high number of students who want to study in English. Comparatively, Boston does not have this high demand for English speaking tutors. Furthermore, there is a relatively stable supply of instructors in the state of Massachusetts. In this regard, the bargaining power of suppliers is relatively low, compared to Dubai.
Bargaining Power of Consumers
In the context of this report, the bargaining power of consumers refers to students’ ability to influence the decisions of higher institutions of education through their demands for quality education and their opportunity to pursue their chosen courses in different universities. According to Evans (25), the bargaining power of customers is high when universities offer undifferentiated courses or have the same standards of education. Boston and Dubai both suffer from this challenge because most universities are undifferentiated.
Boston Consulting Group (BCG)
The BCG matrix is mainly applicable in large companies that have several operational divisions (Evans 25). These divisions may span across different industries. The BCG tool uses different symbols to define different company positions. Key symbols include question marks, stars, “cash cows” and dogs. The question mark refers to a situation where a company has a relatively low market share in an industry that has high growth (Evans 56). A Star is the opposite of a question mark because it refers to a situation where an organization has a high market share in a high growth industry. A “cash cow” refers to a situation where a firm has a high market share in a relatively low growth industry (Evans 56). Lastly, dogs refer to a situation where a company has a low market share in a low growth industry. The different company positions, relative to economic conditions require different strategies across the four divisions of the BCG matrix. The diagram below explains the distinctive strategic alternatives across the four divisions
The Boston Higher Education Sector
The Boston higher education sector is a “cash cow” because it has a high market share in a low growth industry. The strong market share comes from the high number of colleges and universities that operate in the region, compared to Dubai. Stated differently, there are more institutions of higher learning in Boston than Dubai. However, these institutions operate in a low growth market because the higher education sector is more competitive today than it was in the past. Already, experts are projecting that American universities will have a tougher time securing their positions, as some of the best universities in the world because other universities, from other countries, are similarly offering quality degrees (Altbach 1-3).
For example, India, China, Korea and Japan are slowly claiming top spots in university rankings (Altbach 1-3). Dubai is also faring well in this regard. Future growth in the higher education sector will depend on how well countries, states or regions position their universities and colleges to have an international appeal. Already, Boston is getting some slack for having high tuition fees. It is also suffering under the pressure of improving education quality standards from other institutions. Therefore, it is a “cash cow” based on its current high market share, but low growth prospects.
The Dubai Higher Education Sector
The Dubai higher education sector is a question mark in the BCG matrix. The question mark refers to a situation depicting a low market share in a high growth industry. Indeed, compared to Boston, Dubai has a low market share in the global higher education sector. The low levels of student enrollment in the emirate depict this fact. The potential for growth in Dubai’s higher education sector is higher than Boston’s because experts believe the emirate has tremendous potential in increasing its access to education through the increased adoption of innovative teaching methods (Altbach 3). In line with this potential, Burgelman says, “Increasing internet penetration is going to help the digital content providers take their products and services to the students, who are unable to travel long distances for education, as well as the female students, who are not allowed to go to school” (1). Based on this potential for growth, Dubai’s higher education sector is a question mark.
Integration Strategies
Strategic integration refers to an organization’s quest to integrate its internal competencies with external factors. Operational integration is a key component of this fact. In line with this observation, Burgelman says “Strategic integration involves more fully exploiting growth potential by combining resources and competencies from business units and directing those units toward new business opportunities that extend the existing corporate strategy” (1). Different companies may pursue different types of integration strategies. Horizontal and vertical integration strategies are the main types of integration strategies available. Vertical integration occurs when organizations strive to control the supply chain.
Each component of the supply chain may produce different products, but they all belong to one company. In this type of strategy, an organization may control the production of raw materials, manufacturing processes, advertising, and distribution channels. Those that choose to adopt this strategy do so to have a better control of their business processes (Evans 6). Comparatively, the horizontal integration strategy refers to situations when organizations strive to have different interrelated products or services. These products or services may be complementary or competitive with one another. For example, if Tesco buys out Wal-Mart, it would have adopted the horizontal integration strategy. Institutions of higher learning in Boston and Dubai have adopted different integration strategies. They appear below
Boston’s Horizontal Integration Strategy
For a long time, the Boston higher education sector has had a vertical integration strategy. Many institutions of higher learning in this region have always focused on knowledge creation and teaching. Others have focused on testing and credentialing. However, a common attribute among these colleges has been offering these services in-house. Recent advances in technology have changed the focus from a vertical integration strategy to a horizontal integration strategy because they have decoupled teaching and learning (Kowalcky 3). Universities and colleges within the locality are increasingly offering massive open online courses at a fraction of the cost it would take to attend brick and mortar colleges. Entities like edX, Coursera, and Udacity are some organizations that have reaped big from making this happen, because they have successfully helped different colleges to aggregate their classes into one virtual platform (Kowalcky 3).
People are not shying away from using this platform because Altbach (3) observes that many students are using the virtual platform to forge new educational pathways. There has been a growing trend of Boston colleges and universities to seek the services of third parties to administer exams on these platforms and conduct tests. For example, private testing firms have been beneficial to these institutions because they have immense knowledge in using such platforms to administer tests to many students. The pursuit of the horizontal integration strategy is part of several intensive strategies defined by Evans (5) to include market penetration, market development, and product development. Market penetration characterizes most of the activities in Boston’s higher education sector. This strategy defines efforts by institutions to expand their market share through increased marketing efforts.
Dubai’s Vertical integration Strategy
According to Evans (28), intensive organizational strategies include market penetration, market development, and product development. The market development strategy characterizes most of the integration strategies adopted by existing institutions of higher learning in the Emirate. Many private institutions have pursued this strategy in Dubai because they want to increase their geographic outreach in overseas markets. This paper has already shown that most of Dubai’s growth in the higher education sector has happened within the private sector. The establishment of the free zones has helped most overseas-based universities to set-up campuses in Dubai.
Some of them include American University in the Emirates, Birla Institute of Technology and Science (BITS Pilani), Boston University, Institute for Dental Research and Education, CASS Business School, European University College Brussels, and the Institute of Management Technology (Dubai Knowledge and Human Development Authority 7). Together, these institutions are more than 32. Besides the three federal institutions, there are only 17 other institutions offering higher education in Dubai. The 17 institutions operate outside the free zones. Therefore, the 32 institutions that operate within the free zones account for a majority of the institutions that define Dubai’s higher education sector (Dubai Knowledge and Human Development Authority 7). The free zones have supported their entry in Dubai. Since most of them are foreign universities, their entry strategy defines the market penetration strategy, which reveals attempts by foreign institutions to venture into new geographical areas to expand their activities.
Strategic Formulation Framework
According to Evans (30), the strategy formulation framework has several stages. The first stage involves the formulation of the framework through external factor evaluation, competitive matrix profiling, and internal factor evaluation. The second stage is the matching stage, which includes the TWOS matrix (threats-opportunities-weaknesses-strength), SPACE matrix, BCG matrix, IE matrix, and grand strategy matrix. This step paves the way for the last stage, which is the decision stage. This section of the paper uses this framework to evaluate the strategic directions of Boston and Dubai’s higher education.
Stage 1: Strategic Formulation Framework
The Input Stage
External Factor Evaluation Matrix
According to the strategic formulation framework, external factors, internal competencies, and competition should influence the current higher education environment in Dubai. External influences include a high population of expatriates who seek education in the region. English is also not a primary language of communication among these institutions. The EFE total weighted score for Dubai’s higher education sector is 2.47 (see table 1). This score means that its management of strengths and weaknesses is slightly below the 2.5 average, signifying the need to manage its threats in a more competent manner. Doing so will help it to minimize the effects of external factors on the sector.
Table 2: Key external factors (Dubai)
Internal Factor Evaluation Matrix
Some of the Dubai’s internal competencies include a high level of government support and a free-market economy that welcomes international players in the higher education sector. A comprehensive assessment of its internal factors appears below
Stage 2: Matching Stage
For purposes of this assessment, we will use the BCG matrix to compare the strategic directions of Boston and Dubai. This paper has already shown that both sectors are “cash cows” and “question marks” respectively. These positions are the products of independent analysis of market shares and industry growth analyses. Evans (56) says that forward, backward and horizontal integration strategies are appropriate for both sectors. Since Dubai’s higher education sector is in the question mark category, safely, one could say it should follow a grow and build strategy. According to Evans (57) this strategy should largely be characterized by an intensive or integrative plan. If it chooses to pursue an integrative strategy, backward and forward integration strategies are appropriate for its success. Comparatively, the Boston higher education sector is in a “cash cow” position because it has a relatively high market share in a low growth market. It needs to capitalize on its strengths (such as good reputation) to leverage its position in the industry. Collectively, these strategies show how both sectors could use their external and internal environments for purposes of future success.
Decision Stage
The decision stage is the last step in the strategy formulation process as outlined in the strategic formulation framework. Based on the outcomes of the matching stage, the Boston and Dubai higher education sectors have three alternative strategies at their disposal. They include market penetration, market development and product development. The justification for the selection of these strategies is the frequency of choice in both sectors of education. The following table represents the outcomes of techniques used in the matching stage
When developing the above table, we considered the extents that both the Dubai and Boston education sectors have capitalized on their internal competencies to exploit their external opportunities. We have also considered the appropriateness of each of the alternative strategies mentioned above and given selective scores for each. The sum of the scores is 5.32. This score shows that the market penetration strategy is an appropriate strategy for the Dubai higher education sector. Comparatively, market development and product/service development are attractive strategies for the Boston higher education sector.
Conclusion
Although this paper has shown the differences and similarities between the higher education sectors of Boston and Dubai, the collective success of their strategies depend on their willingness to demonstrate how their products align with workforce or market needs. Similarly, in today’s world of increased competition, the sectors should maintain rigorous standards of quality education because without them, they would lose credibility. Lastly, in today’s technologically aggressive world, the institutions should demonstrate that they correctly apply technology to their traditional educational models to improve service delivery. Such advancements should also help them to create more contemporary and holistic learning experiences for their students.
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