Porter’s Five Forces for The SUDA Group Higher Education in Vietnam
The report should identify and analyse the most significant factors that have a direct bearing on the client’s business. It should concisely address the following question:
What competitive forces exist in the industry that may limit the ability to make a profit? (Analysis tool: Porter 5 Forces
PORTERS FIVE FORCES:
Higher Education within Vietnam (VN)
1. Competitive Rivalry
a. Lots of competitors, trends show in:
i. 1987: 38 colleges and 63 universities
ii. 2003: 119 colleges and 111 universities
iii. 2009: 226 colleges and 150 universities
b. This data provides evidence of increasingly high growth rates as more competitors enter into the Vietnam education market.
c. Even with this high growth, most education centres within VN are not able to provide adequate staff to fill these institutes and are short supplied.
d. A Vietnamese citizen will be more loyal towards a university or college depending on the universities reputation. The better the reputation the more likely they will stay. Also university is not cheap within Vietnam thus most students will stay committed to the university in which they are admitted into.
e. With education having some of the highest barriers to entry, it would be assumed exit barriers are high with more to lose once invested into the sector. (need to find source for this)
2. Threat of New Entrant
a. Higher education has some of the highest barriers to entry (gaining accreditation and state licensing.)As the opening of an higher education centre within Vietnam requires many resources such as (faculty, training, staff, equipment, licensing etc) these can be seen as high barrier costs factors that once invested will become hard to leave the market.
b. In relation to above point, High capital start-up costs
c. In switching to another university, buyers/students may be deterred as they will not want to take the risk of losing a spot at a university they have already gained entrance into.
d. Product differentiation: Newer universities may be able to offer better standards of higher education within Vietnam providing updated courses etc. (PS: could be used as a strength for SUDA group)
e. Government policies will need to be gained (accreditation and state licensing)
3. Threat of Substitution
a. Higher education substitutes are low as credentials and degrees are not able to be obtained without finishing a course within a university.
b. There is however other jobs that can be obtained within Vietnam such as taking up a ‘professional training course’ without the need for university in a labouring job. (May need to source this properly).
c. General consensus in Vietnam is for children to make it into a university.
4. Supplier Power
a. The higher reputation of the university, the more power it has as it has fewer available spots for people wanting to gain entrance. May be more selective in who they allow in.
5. Buyer Power
SOURCES: Not yet referenced
Outline of applying Porters Five Forces to education: US related:
Barriers of Entry Higher Education:
Higher Education information related to Vietnam
Vietnam: Higher education and training sector assessment
The Education System in Vietnam
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