The Global Market for Higher Education a Decade On – by Tim Mazzarol

Said Business School, University of Oxford

photo credit: wit via photopin cc

What significant trends in higher education have occurred so far in the 21st Century?

In 2001, Tim Mazzarol and Geoff Soutar published a book entitled The Global Market for Higher Education: Sustainable Competitive Strategies for the New Millenium, in which they identified a number of key areas that higher education institutions around the world might need to focus on in the future in order to become effective contenders in an ever-competitive market.  These included: introducing practical and vocational training, developing new and innovative programs of study, forming alliances with industry groups and corporations, and establishing a ‘university brand’.  Their book also included predictions in terms of rising tuition fees, the privatisation of the higher education sector and commercialisation of academic research and teaching, and the emergence of ‘virtual universities’.

In the following article, Tim discusses how these forecasts compare with how the higher education global market has evolved over the past decade.  Going forward, what strategies does he think institutions will need to adopt in order to be successful?

The late 20th and early 21st centuries saw a rapid expansion of higher education systems throughout the world, driven by rising demand from both domestic and increasingly mobile international students. The rising cost of this revolution in education led to the commercialisation of higher education which emerged as a competitive enterprise. Universities now compete globally for students and charge high fees for places in the more prestigious institutions.

The Global Market for Higher Education (2001)In 2001, in conjunction with my co-author Geoff Soutar, I published a book The Global Market for Higher Education: Sustainable Competitive Strategies for the New Millennium via Edward Elgar Publishing. The focus of the book was on the emergence of the international market for higher education and the competitive forces that were driving it. Of particular importance within our study was the ability of universities and colleges to develop a sustainable competitive advantage within international markets that were becoming highly competitive. As we stated in the book:

“Through the adoption of unique courses or programs, or by servicing niche markets, institutions can establish defensible positions within saturated and competitive markets. Such strategies of differentiation do not rely upon offering competitive prices and can allow premiums to be charged if the product is perceived by the student/consumer as valuable.” (p. 135)

In our final chapter we identified six key areas that we suggested were likely to become important trends within the global higher education market over the medium term. During late 2012 we published an invited paper in the Asia Pacific Journal of Marketing and Logistics, which revisited our book and examined each of these six areas over the intervening decade. Let me summarise the findings from our study.

1. Universities as places for the pursuit of knowledge versus vocational training centres

The first trend we noted was the emerging tension over the role of universities. Were they to be viewed as places for the pursuit of universal knowledge regardless of its practical application, or were they to become centres for the vocational training of professionals?

This issue has been a source of tension within the higher education sector for a long time. The balance between the theoretical and the applied continues as an unresolved issue amongst academics and their institutions throughout the world. However, the emergence of fee for service courses and the rising competition between institutions for top students has served to exacerbate this tension.

The Ecole Supérieure de Commerce of Paris (now...

The Ecole Supérieure de Commerce of Paris (now ESCP Europe) is the oldest business school in the world (Photo credit: Wikipedia)

The role of business schools within universities is perhaps emblematic of this. The first dedicated business school emerged in France in 1819 with the establishment of the Ecole Supérieure de Commerce of Paris. Despite its long history, the network of Ecole Supérieure de Commerce (ESC) business schools across France have remained largely outside the mainstream French universities and continue to be viewed as less “serious” academic institutions than their university counterparts.

Business schools in the English-speaking world are integrated into their universities, but despite being successful from a financial perspective, they also find it difficult to win full acceptance from many of their counterparts in other faculties. This is particularly the case for MBA degree programs, which by their nature tend to be professional education training schools for managers rather than places of theoretical research.

Attempts to make business schools centres of scholarly research and generators of new theories have often seen them become less relevant to the very managers and their organizations upon which they depend. These student/consumers are seeking knowledge and skills they can apply to the solving of real world problems. If theory is to be useful it must be interpreted into actionable outcomes.

2. The need to generate new education programs to meet rapidly changing market needs

The second trend we forecast was the need for universities to respond more rapidly to changing market needs by investing in a process of new program development. Like any product there is a lifecycle effect and over time courses will mature and eventually decline. Maintaining a competitive edge requires being in the forefront of new innovative program development.

One of the most globally contested markets is that of MBA programs. In the past decade the number of these programs has swelled to the point where almost all business schools were offering such courses. This has triggered increasing competition and the need for more differentiation of product.

Examples of such “product differentiation” we cite in our paper include the emergence of Executive MBA programs by the Judge Business School at Cambridge University and the Said Business School at the University of Oxford. Both institutions were late comers to the business school scene, but have leveraged their reputations to secure substantial funding and to attract high proportions of students from overseas.

There are also the examples of Johns Hopkins University’s Carey Business School, MIT’s Sloan School of Management, and the Wharton Business School at the University of Pennsylvania, all of which now provide innovative new MBA programs. These focus on the development of managers who can work more easily across international borders, and who can apply creativity and innovation. They include unconventional teaching approaches such as the use of improvised dance and “hip-hop” music.

3. The increasing cost of higher education

A third trend we identified was the rising cost of higher education fees as governments increasingly withdrew from the direct funding of universities. This trend also included the privatisation of the higher education sector and the commercialisation of academic research and teaching. As we noted:

“Increasing costs, both from the public and private purse, will see the pressure for greater market responsiveness and commercialisation being placed upon institutions. Programs and faculty that cannot attract sufficient funds to remain financially viable are likely to be squeezed or closed.” (p. 161)

As we outline in our paper, according to The Organisation for Economic Co-operation and Development (OECD), over the past decade the proportion of government funding to higher education has declined, while the proportion of expenditure from student fees has risen. Significant declines in government funding of education can be seen across 18 of the 34 countries within the OECD.

The Global Financial Crisis (GFC) has had a particularly severe impact on government revenues as well as the demand for places from students. Returns to investment in university education in many countries impacted by the GFC have fallen. Many universities are now engaged in cost cutting, staff layoffs and the raising of tuition fees within an environment of declining enrolments.

These trends were also noted by a report to the UNESCO World Conference on Higher Education in 2009 written by Philip Altbach, Liz Riesberg and Laura Rumbley. They painted a largely gloomy picture of a higher education system facing falling government funding, rising tuition fees, staff cuts and workforce casualization. They also noted the rapid privatization of higher education, with around 30% of such services being offered by private institutions.

4. Developing industry alliances

Our fourth trend was the need for universities to forge strong alliances with industry groups and corporations. These alliances are important to the institutions’ ability to secure the necessary funding for research, teaching and capital works programs.

A feature of these industry alliances is the interest such private sector partners have in the commercialisation of university intellectual property. Research undertaken within universities has traditionally been funded through government research councils and utilises public monies.

The ability to secure industry funding for research can offset the reduction in such public spending. However, it can also lead to research being viewed as less than partial and the need for commercial confidentiality of findings can suppress the publication of data for the public good.

5. The emergence of new business models

The fifth area of focus we identified was the emergence of new business models that might pose a challenge to the established university business model. We identified the emergence of online or virtual universities and the rise of corporate universities.

In the 1990s the number of corporate universities across the United States rose from about 400 to over 1,600. Some were linked to conventional universities while others were independent colleges or academies.

The rise of virtual universities was still in its infancy in 2001, but the past decade has seen these models mature and prosper. They include the likes of the Clyde Virtual University (CVU) in Europe, the African Virtual University (AVU) with operations in over 20 countries, and the Western Governors’ University (WGU) in the USA. Such institutions have grown and matured in recent years with WGU providing education to over 25,000 students via around 50 undergraduate and postgraduate degree programs.

In more recent times we have seen the emergence of Massive Online and Open Courses (MOOCS) provided via groups such as Coursera and Udacity. The rise of MOOCS has again shaken up the conventional higher education institutions with administrators and academics seeking to predict their likely impact and future direction.

6. The need to build brand equity

Our sixth area of focus was the need for higher education institutions to develop their brand equity and institutional image in order to remain competitive in a globalized market. Institutions that already possess a prestige brand would find it easier to maintain their competitive position.

As our paper suggests, the embracing of marketing and branding by many universities over the past decade has been significant. Institutions now spend a substantial amount of money engaged in marketing and brand building. A key issue is the ability to develop the promise and identity aspects of the brand. What does the brand name promise to the students who might seek to enrol, and what does it say about the institution and its graduates that offer a distinctive point of difference?


In conclusion we noted that all six areas had become key points of focus for universities around the world. Further, the level of global competition within the higher education sector had increased substantially. As our paper summed up the situation:

Major universities that have a strong brand identity and substantial resources should be able to capture an even greater market share in the future. Strategic partnerships with industry and offshore campuses in new or growing market hubs will be key success factors. For smaller institutions with less prestigious brands the future may be more problematic. Some may success by focusing on niche areas that allow them to concentrate their limited resources in order to develop internationally competitive skills and reputation around a few fields. Alliances between smaller regional players and major global players may also be a viable strategy, as these major institutions seek reliable subsidiary partners to serve as agents in local markets. What seems unlikely to be a successful and sustainable strategy is to remain small, comprehensive and locally focused.” (p. 732)

Tim Mazzarol: author of The Global Market For Higher EducationDr Tim Mazzarol is Winthrop Professor in entrepreneurship, innovation, small business, strategy and marketing at the University of Western Australia Business School. He is also an Affiliate Professor at the Burgundy School of Business, Groupe ESC Dijon Bourgogne France and President of the Small Enterprise Association of Australia and New Zealand. He is a Qualified Practising Market Researcher (QPMR) with the Australian Market and Social Research Society (AMSRS) and the author/co-author of 27 books, book chapters and monographs, 51 peer reviewed journal articles, over 100 peer reviewed conference papers and numerous industry research reports. His research focuses on strategic marketing and management of services, the marketing of higher education, strategy and innovation within small firms, word of mouth communication in marketing, and the sustainability of the co-operative enterprise business model.

, , , , , ,


Subscribe to our RSS feed and social profiles to receive updates.

No comments yet.

Leave a Reply

%d bloggers like this: