Abstract
This paper will discuss the analysis of porters five forces in the Zicklin school of Business which is regarded as one of the three biggest accredited schools situated in the USA, the school is reported to be delivering a high valued quality of education to its students. Porters five forces analysis has been used by many companies to analyze their position in the industry and therefore strategically position itself to handle the issue of competition. Since the issue has been identified as a major threat to the existence of the Zicklin school of Business, this kind of analysis is thus suitable for companies which would like to understand their competitors, their customers, buyers, sellers, suppliers, and other stakeholders in the business. (Porter, 1985)
Introduction
Zicklin school of Business is regarded as one of the three biggest accredited school situated in the USA, the school is reported to be delivering a high valued quality of education to its students. The school is founded with a strong educational environment that allows its students to get more knowledge in the business related studies.
To meet its competitive advantage the college has been in a position to provide to its students various programs such as masters and doctoral to its students that has made the institution beat its competitors globally.
The objectives of the school include the rededication of the quality of education it offers by building its tradition of excellence by strongly adhering to the aspirations of its students, workforce and the alumni at large.
It is very important for the Zicklin School to use the five forces to ensure that they strategically position themselves in a way that they become very competitive to make sure that they remain in business and also make and maximize profits. Managers have a very important role in ensuring that they do enough analysis so that they employ strategies to make them make the best out of the business that they do. Porter’s forces can be analyzed to act as yard sticks for the Zicklin School of business to position themselves so as to do a profitable business as they face a very competitive and saturated environment that is very sensitive to changes.
The Zicklin School of business should utilize the Michael Porter’s five forces analyses as a framework to guide them operate in the competitive environment. The forces that affect the school are those that are close to them and need to be properly analyzed since they affect their ability to effectively serve their consumers and also make profits. When the Zicklin School of business face changes in the five forces, they need to re-examine the market place and make decisions that will ensure that they remain profitable and challenge their competitors. Their management should highly depend on research and marketing intelligence to gather the necessary information that will help them make sound decisions that will help their firms since they are faced with a lot of competition from their rival competitors.
The closeness of substitutes
Substitutes are alternative products that have the ability to satisfy similar needs and give solutions. Substitutes in the business education sector reduce the potential returns since they place a ceiling on the prices offered for the services being offered. Firms that realize that services being offered bring a lot of profits look for substitutes services that can substitute so that they may also enjoy profits. (Porter, 2008)
The Zicklin School of business face a big challenge since scientists and researchers are coming up with educational services that compete very much with the existing original services offered by the school. Research indicates that many business schools are discovering new services every day that are either more effective or offer the same quality as that of the Zicklin School of business. This has become a very big challenge since the market has become open and new discoveries are welcome every time. Students will always be tempted to try the new services to see whether they are more effective and are made to believe that the newest services on the market are the best since they are more new.
Zicklin School of business is facing very stiff challenges since many business schools are opening up everyday with better supplies from substitute services that make them appear to be cheaper than the others. Consumers will go to those schools with variety of substitutes so that they may get more cheap services that can meet their needs. Zicklin School of business faces a stiff challenge from the others and therefore need to do extensive advertising, introduce new cheap services every time and increase service to the consumers since there is a stiff competition from other schools. Other institutions will always try to take consumers from each other by winning them with the substitutes that they offer and services that they also offer at a cheaper price.
The Intensity of Rivalry among Established Companies
Zicklin School of business faces a very competitive environment that has a big concentration of rival competitors making it a very competitive venture in business. They compete with heir rivals across al levels and try all strategies to ensure that they beat their rivals and try to do extensive marketing and innovation to attract more customers every day. There are many established companies that are more organized and have better strategies than the new ones that come up and therefore have a competitive edge over the others. An established company will mean having a well developed network that has a good client base and that is supported by customer loyalty and therefore locking out the new firms that try to make an impact by trying the existing markets. The well established Zicklin School of business give a big challenge to the new companies in the market that try to make their services known. Even though substitute services are received in the market, it becomes easy for the established firms to push customers to start using their new services in the market since they have a name in the market and customers are loyal to them.
Customers will always be pulled to go to the already established schools that they are used to them and will always feel that their services are the best. They also believe that products and services that are offered in the established schools such as the Zicklin School of business are the best and all they offer are the best to take care of their needs. The Zicklin School of business is highly challenged and must therefore position itself strategically by ensuring that they price their services well and also do extensive advertising to market their products and services and have new customers and prospects that will be customers in future. Competitors in the schools have diversities and therefore make them very unique and unequalled and thus being very hard to compete with them in a very competitive environment due to high concentration of players who are doing the same businesses. There is need for e advertising to market both individual services and the Zicklin School of business due to the stiff competition from rival players in the same field that is concentrated highly.
The bargaining power of suppliers
Suppliers take advantage of their unique supplies to ask and bargain for what they want and enjoy the monopoly and charge expensively for the products or services that they offer. Customers are very sensitive to any changes that may affect them that are caused by the bargaining power of the suppliers. Suppliers are a competitive threat in drug industries because they can raise the prices of new and the old supplies and therefore making the customers to try substitute products that can satisfy the same need. Suppliers may cost the Zicklin School of business a lot of financial constrain if they switch and fail to supply their services as it is involving to get new and reliable suppliers that can give quality and be efficient all the time. (Porter, 2008)
The school management will recommend their clients to use substitutes according to their financial abilities and are in a position to refer them to use any of the substitutes. Zicklin School of business must try as much as possible to bargain well with their suppliers so that they may get quality products at the right price so that they may also sell and price their products well in relation to those of the competitors so that they may not loose customers to the other supermarkets. Suppliers will have more power if they are few or alone in the market and will give their products at a very high price and will affect the sales of the supermarket in the long run. (Porter, 1985)
It is very important for the Zicklin School of business to have suppliers that can supply substitute services that are more or less the same so that their consumers will not run to the other outlets that have the services that they need. In the event that the suppliers reduce their service quality and raise the price of their services, it will be a great competitive challenge to the schools of business that offer the same services as the Zicklin School of business. The determinants of the suppliers’ power in the education sector include: suppliers concentration in one particular place that is central in location, volume of suppliers that they offer to the schools and finally the costs related to the total purchases that they do. The suppliers ensure that they take advantage of their strengths to bargain and register as much profits as possible and make the buyers of their suppliers to accept what they offer and fix high prices. (Grant, 2005)
The Risk of Entry by Potential Competitors
The new competitors enter into business with an intention to bring new capacities that never existed before so that they may give competition to the existing firms. Every new entrant into the education business is a big threat to the existing firms since they may pose a big danger when they come and take the existing customers by intimidating them with good attractive services and also set their businesses in strategic points that will attract more customers. The Zicklin School of business has been very profitable and therefore it has been attracting very many new entrants who perceive it as a good profitable business that has a lot of assurance since the customers will always need the services offered. (Porter, 2008)
The Zicklin School of business face a lot of competition from new entrants who come up with new and customer satisfying services that are very attractive to their consumers thus they take the schools consumers. They are few barriers to the new entrants in this field and many businessmen are thinking of opening up business schools that are in strategic positions to attract customers. There are many barriers that might be in the education sector that may affect the Zicklin School of business. They include the following: government policies on schools, economies of scale, capital requirements that are needed to start an institution, brand identities and reactions from firms in the education sector. New entrants in this sector are seen by those that are already in existence as a threat since they take and reduce their market share and make them reduce their sales and therefore register fewer profits from the sales. Though governments might create barriers to help streamline the industry, it will not fully succeed since many new entrants might meet the requirements put on them and give challenge to the already flocked market. The higher the entry barriers, the less it is likely for outsiders to enter the industry. (McGahan, 2004)
The Bargaining Power of Buyers
This is the marketplace of outputs. Customers in the education sector put the Zicklin School of business businesses a lot of pressure since they are very sensitive to any change in prices and are always ready to move around to find where prices are relatively cheap. The availability of substitute services in business schools has made it very challenging for all those who run these businesses including the Zicklin School of business and are therefore supposed to learn the behaviour of their customers so as not to scare them to their competitors and therefore reducing their profitability. Many business institutions give room for their consumers to bargain and make the competitors to be on toes. It is very important for the Zicklin School of business to highly depend on market intelligence so as to be very strategic in their pricing since there are many business institutions that are ready to reduce their prices by negligible amount that can attract customers from their competitors. (Porter, 2008)
Buyers are ready to run into substitute products/services that are being marketed everyday in the institutions due to the changing technologies that are leading to cheaper and quality production of substitute services. Advertisers are taking advantage of the sensitivity that the consumers have to market new products that hit the market daily. The Zicklin School of business should have a variety of substitutes in their business premises to pull all the customers and reduce the customers from moving to their competitors who offer various products in different prices. Since buyers are the ones that ensure that there is continuity of business, the Zicklin School of business should learn and be very sensitive to the changing tastes and preferences in order to win buyers and also ensure that they remain loyal to them since the concentration of many firms is a big threat. (Porter, 1985)
Competitors and Porters Forces
Although Zicklin School of Business and in this case Baruch College has been successful in its operations; it faces stiff competition from other colleges, schools and universities that offer business studies. Just to mention but a few of its competitors in the U.S, they include; University of Chicago, University of California, Columbia University situated in New York, University of Michigan, New York University, Yale University, Cornell University, university of Virginia and University of Texas among other young and upcoming schools of business studies. Research reveals that Baruch College of Business has been facing stiff competition in terms of student’s enrolment; this imply that the threat of new entrants in to the market i.e. provision of university education has brought about intense competition since such new schools of business offers the same courses that Baruch College offers. Further, Zicklin School of Business faces competition from other universities in terms of substitute courses that other colleges offer that can be done by students instead of the programs that are provided the school (Zicklin School of Business, 2009).
For instance, New York University offers degree and diploma programs which in one way or another are related to what Zicklin School of Business Studies offers. Although Zicklin School of Business has an upper hand in terms of popularity than New York University; the later has in the recent past been able to acquire modern resources such as technological advancements, textbooks and other resources which are considered the best in the education market so far. Such upcoming school of business studies like the one in the New York University has massive resources in terms of capital thus can acquire any resource without much strain unlike Zicklin School of Business which does not enjoy such advantage since it depends heavily on student’s enrolment that pay fees thus generating revenue to the university. Further, New York University has brought about modern way of learning thus attracting more students to the school of business; this implies that parents now opt to enrol their students in other colleges like New York University than enrolling them in Zicklin School of Business.
Conclusion
The Zicklin School of business must ensure that they use the Porter’s analysis since it faces stiff and very competitive challenges from firms that have realized that they can make lucrative profits from the school business since they are assured of a lot of profits from a large customer base that is attracted by these firms. The school need to assess the market very well and ensure that it learns its consumers very well and also ensure that it positions itself to compete more effectively to remain in business and also maintain a good relationship with its customers so that the competitors may not take away their customers. It is only through these methods that it will be assured of remaining in business tomorrow.
Reference
Grant, R. (2005): Contemporary Strategy Analysis: – Blackwell Publishing Ltd., Oxford Porter, M. (1985): Competitive Advantage:-Techniques for Analyzing Industries and Competitors. The Free Press, New York.
McGahan, A. (2004): How Industries Evolve: – Principles for Achieving and Sustaining Superior Performance. Harvard Business School Press.
Porter, Michael E. (2008). The Five Competitive Forces that Shape Strategy. Harvard Business Review.
Zicklin School of Business, (2009): Baruch College: Web.