Five Forces Model Analysis Macro Industry Environment Business Essay


The economic environment

In the United states, It was a breathtaking moment of free fall in the private sector since 2008. GDP was falling at a breakneck pace by 2009. Capital markets collapsed. National output fell at rates not seen in decades and Long-term interest rates fell during this period. Inflation and company brankpucy make millions of people in America lost their jobs. The economic crisis affect the U.S badly which not only about the country but also the American people's life.

However, the Rockefeller Institute released a report recently showing that colleges and universities are taking an increasingly active role in states' economic development. (Education-portal,2010)

Higher education can lead to economic growth through both private and public channels. The private benefits for individuals are well established and include better employment prospects, higher salaries, and a greater ability to save and invest. These benefits may result in better health and improved quality of life, thus setting off a virtuous spiral in which life expectancy improvements enable individuals to work more productively over a longer time further boosting lifetime earnings.

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Public benefits are less widely recognized, which explains many governments' neglect of higher education as a vehicle for public investment. But individual gains can also benefit society as a whole. Higher earnings for well-educated individuals raise tax revenues for governments and ease demands on state finances. They also translate into greater consumption, which benefits producers from all educational backgrounds.

Since education in America is a key component of economic growth, economic restructuring need a changed policy climate in education.

The political environment

In 2009, President Obama set an ambitious new goal for America: by the end of the decade, America will once again have the highest proportion of college graduates in the world. (Economic report of the president, 2009) The overall goals of the American Recovery and Reinvestment Act (ARRA) are to stimulate the economy in the short-term and invest wisely, using these funds to improve schools, raise achievement, drive reforms and produce better results for children and young people for the long-term health of our nation.

Furthermore, Federal efforts to increase financial aid and investment in education, particularly the Pell Grant Program which has fallen at all types of colleges and universities over the past five years, even as published tuition has risen substantially. Access to higher education was maintained through an expanded Pell Grant program and proactive efforts that helped protect Federally subsidized student loans from recent credit issues faced elsewhere in the economy. Also, access to the U.S. higher education system has improved through expansions of the Pell Grant program and reforms enacted in the student loan program. This is to make higher education more accessible to all students. (NAFSA,2007) In addition, there are other programe and international education policyfor school construction and modernization and attract domestic and international students.

Porters Five forces:


Generally, students (and their parents) deserve to be treated as customers in education industry. The bargaining power that customers do have is based on two main factors which are information and choice.

Information enables customers to compare services in terms of quality and breadth of offerings, among other features. In higher education, accrediting agencies, state governments, and third parties, such as U.S. News, World Report and the Financial Times, provide information on colleges and universities. Institutions also provide information about themselves.

In an industry where options are plentiful, customers have more choice and buyer power increases. In the higher education markets, a rich diversity types of institutions exists, ranging from world-class private elite universities to specialized culinary institutes. Since the government putting more funds to improve education areas, America arise the new university and institution which with the support of a broad range of leaders in academia, business and government. These new entries will enhance the customer bargaining power.

We know that high buyer bargaining power makes an industry less attractive and decreases profit potential for the seller. Thus, educational institutions worldwid are undergoing fundamental shifts in how they operate and interact with their customers and how they rival among existing firms.

Rivalry among existing firms

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We have mentioned that the reason for high rivalry is because a number of organizations compete for those customers. Furthermore, the rapid expansion of colleges and universities in the United states, significant increases in college education costs combined with demographic shifts in the population may force colleges to think differently about the role of student satisfaction for their survival (Kotler and Fox, 1995). Thus, focusing on enhancing the customer satisfaction at colleges and universities is crucial in developing customer value.

In higher education, technological innovation has influenced rivalries on both the teaching and research fronts. Those institutions that capitalize on technological innovation enhance their competitive position as they move to the forefront of teaching and research

Convenience, like time, is largely a response to consumer demand for education and training delivered at times and in ways that are customized to individual needs. Evening and weekend courses are now common. Module offerings over the Internet that can be viewed at any time are also available. Podcasts offer yet another alternative to the standard place- and time-bound classroom lecture.

Competitors that offer substitutes often combine convenience, time, and application, largely because of expanded delivery options made possible by technology.

Because of the need to concentrate more on customers, many institutions are once again turning to technology-this time to customer relationship management (CRM) software. CRM is both a business strategy and a set of discrete software tools and technologies, with the goal of reducing costs, increasing revenue, identifying new opportunities and channels for expansion, and improving customer value, satisfaction, profitability, and retention. Faced with widespread economic, technological, and cultural change, academic institutions are looking to enhance the value and effectiveness of their existing customer relationships, while attracting new and loyal customers. As institutions begin embracing ebusiness and e-learning, the driving forces behind CRM will become even stronger. The notion of effective customer information management as a productivity issue is being replaced by the need for effective customer management as a competitive advantage. Tomorrow's systems will go far beyond productivity-related features (such as Web-based student registration) to the development of customer information as a strategic advantage. The concept of students, alumni, faculty members, and staff members as "customers" will become a competitive imperative with profound impact on how colleges and universities attract, retain, and serve customers of all types.

Background: Harvard University is a private institution that was founded in 1636. It is located in Cambridge, Mass., just outside of Boston. It has a total undergraduate enrollment of 6,655 and its setting is urban. Harvard strives to create knowledge, to open the minds of students to that knowledge, and to enable students to take best advantage of their educational opportunities.

Strength: 1. With a rich history and a dedication to the pursuit of excellence, Harvard University offers unique learning experiences across a broad spectrum of academic and social environments.

2. it have a goodwill. Harvard University's ranking in the 2011 edition of Best Colleges is National Universities.

3. exceptional resources, IT system, Harvard's extensive library system houses the oldest collection in the United States and the largest private collection in the world.

4. high teacher quality and good teaching method and closeness to practice. There are many outstanding and talented students and elites from other countries.

5. Harvard University offers a number of student services including nonremedial tutoring, women's center, placement service, health service, and health insurance. Harvard University also offers campus safety and security services like 24-hour foot and vehicle patrols, late night transport/escort service, 24-hour emergency telephones, lighted pathways/sidewalks, student patrols, and controlled dormitory access (key, security card, etc).

6. At Harvard University, 60.1 percent of full-time undergraduates receive some kind of need-based financial aid and the average need-based scholarship or grant award is $37,620.

Paying for college doesn't have to be difficult or devastating.

Weakness:1.expensive fees

2. It is most selective, with an acceptance rate of 7.5 percent.

3.students in Harvard got more pressure than others universities.


Opportunity: 1. Society needs the high education people, people have to meet this demand by pursue advanced studies in a good university.

2. people who come from poor families but have talents and brilliance get more aids from government. Thus they have chance to complete their academic performance.

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Treats: 1.the new entry competitors threat the applying rate.

2. more and more people prefer choose to open their own business than continue education.


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R. J. & Sala-i-Martin X. (1995). Economic Growth. New York: McGraw-Hill.

Kotler, P., and Fox, K. Strategic Marketing for Educational Institutions. EnglewoodCliffs, N.J.: Prentice Hall, 1995.

Education-Portal,(2010). "Higher Education plays growing role in Economic Development"(online)(cited 4 Mar 2011). Available from:

NAFSA Home, (2007)"An internatioanl Educaiton policy for U.S. leadership".(online) (cited 29 Feb 2011). Available from

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