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Magnificent MBA School: Market Analysis

This is a market analysis report for Magnificent MBA School which will be a premier MBA course institute in London offering high quality management courses. Vision UK has been a prominent location for educational courses and has been recognised all over the world to attract students. The chief vision of this institution will be to set base in London by setting up a high quality MBA school which will provide the most up to date courses in management and be known as a place to nurture exceptional management talent for students. The selected locations for to target students apart from UK will be India and China. Mission Magnificent MBA Schools primary objective is to provide best in class management education to goal driven individuals and ensuring that they turn into highly skilled MBAs who are better prepared to face the corporate world. According to Johannson (2002), corporate level managers are carefully crafted and driven towards their skills and not everyone is inherently born with them. Thus, Magnificent MBA School strives to be recognised as an exclusive institution for management courses. India and China will be the early target locations for attracting students apart from the ones from UK and the school has a business mission to ensure high revenues through obtaining optimum number of students undertaking its courses at every academic cycle. Market Research Segments Magnificent MBA School has planned to set up base in London and primarily target Indian and Chinese students to take up its courses and following that look to set up base in these locations. These markets are feasible as India gets a good number of students into the UK every year with the most recent number being 54,000 in 2010 and China is even higher at an impressive 67,000 (BBC, 2010). The product in this market analysis is MBA course and its market segmentation is based on three locations namely UK, India and China. Industry Analysis One of the main factors that a business has to look into before setting up a new business is to look at having a thorough knowledge about the business environment and be familiar with the

intricate market details before starting off (Dess, Lumpkin and Eisner, 2007). The chief objective of Magnificent MBA School is to start up an exclusive MBA school and if we consider the current management education situation in UK it is still bright with UK degree being recognised all over the world as quality endorsements of education (Smith and Reeves, 2010). The authors further state that the current situation is seen as one filled with a lot of players in the market especially for management courses as MBA has become one of the most famous degree around the world. The main reason for UK management degrees gaining high levels of popularity is due to the prevailing reputation that it has been carrying as a preferred location for education (Smith and Reeves, 2010). If we consider MBA courses, there have been an average of 22,000 students enrolling in the past three academic cycles and the reason can be estimated as the strong academic demeanour that is provided with an equally competitive practical approach (Phillips, 2010). The MBA institutions market is brimming currently with over 120 institutes offering this course and moreover, there are more than 30 business schools which possess reputation that is very difficult to challenge and have been well established in UK (Phillips, 2010). This means that Magnificent MBA School has to consider three types of MBA Schools who are currently operating in UK; the exceptionally famous ones, the good ones and the average ones.

PESTLE ANALYSIS Political- UKs political scenario has witnessed a change with the new government and it has been noted from the past 2 years that the education regulating authorities have come down heavy on education institution for not complying with the needed education standards. Phillips (2010) states that the government cancelled licences of several colleges and school for not providing the required quality of education and not maintaining strict measures for attendance of students. The political scenario in India and China currently is relatively stable with both in the emerging economies phase. Das and Khanna (2009) are of the opinion that there have been several instances in the recent past wherein the government has encouraged strategic tie-ups with UK universities. Moreover, in India there has been a concrete measure taken to enable this by Global Exposure Education Programme which was an initiative taken by the education ministry in India. This has enabled 3 Indian universities having courses designed with affiliation with UK universities. China has been witnessing a huge jump in its preference

for management education in English language and the government has taken concrete measures to ensure this by attracting extensive foreign investments and setting up priority units for quality English education (Yie, 2009). Economic- The UK economy has suffered from the past 2 years and businesses across various sectors have taken a back seat due to this (Smith and Reeves, 2010). The venture to start up an exclusive management school will be one of the contributing factors to the economy as the education sector in UK has been known to be a high revenue generating source. The current net worth of the UK education industry is a staggering 58 billion as per reports of BBC (2010) which means that this industry has been one of the high points during the economic recession. India has an immense potential in terms of students looking to pursue education from a UK institute as the middle class income is on the rise and the spending capacity of the Indian consumer is growing. The UK MBA courses have become affordable to the Indian student now as the income levels of Indians is increasing and more importantly the currency exchange value of the British Pound Sterling is falling (Das and Khanna, 2009). This means that there are close to 48,000 students who have come from India in the past 3 years which is a sharp rise from the 17,000 in 2004 (Das and Khanna, 2009). Nationalised banks in India have a special provision for education loans which is making it easier for aspiring students to obtain finance. China too has implemented a new economic initiative called Bright education programme which facilitates aspiring students to pursue education in foreign locations with stressed importance to English courses. This has resulted in a healthy 60,000 students coming to the UK in the most recent academic period. Social- Social and cultural norms wise there is a vast difference between all the three countries in focus: UK, India and China. The perception and approach towards education in UK is much more relaxed when compared to that of UK, India and China. Smith and Reeves (2010) comment that culture is an important aspect in this industry and UK universities are known to multi-cultural students from all across the world. As a result of globalisation there is an increased awareness of cultures and Indian students in particular have been noted to adapt to the UK culture quickly (Das and Khanna, 2009). Chinese people are hard working and have a methodological approach and a degree about management would be a feasible option for them. Moreover Yie (2009) and Das and Khanna (2009) note that MBA is one of the most popular degree among the students of all education backgrounds in these countries

which means that increasing social and cultural acceptance and tolerance will be able to draw students to UK for a MBA course. Technological- Technological factors have gained significant importance over the past decade and businesses are getting more dependent on technological factors for their improvements (Dess, Lumpkin and Eisner, 2007). Smith and Reeves (2010) state that UK education degrees are highly dependent on technological platforms and sophisticated technology is utilised to make sure the courses are carried out with the desired impact. Management degrees in UK are noted to have a special inclination towards using online technological platforms in their courses such as for role play games, simulations, quizzes, assignments etc. Moreover, the major bulk of administrative work is also dependent on technological resources. Considering the current scenario for India and China in terms of technology, it can be said that both the countries are providing ample technological resources for any industry or this industry in particular. New software products for education are developed with greater frequency with the presence of CDAC (Centre of Development and Advanced Computing). Extensive R&D investments are being undertaken by China to facilitate very good technological platforms and enable up to date technologies (Das and Khanna, 2009; Yie, 2009). Legal- The legal aspects relevant to strict laws and procedures has become noticeable in UK recently with the government coming down heavy on faltering colleges who were not providing the basic required levels of education and also in other administrative flaws. The UK Border Agency has become more cautious in issuing student visas to aspiring student from foreign countries and this was noticed when North Indian students were temporarily stopped issue of visas at the beginning of this year. This was because of dipping levels in quality of education and also due to basic shortage in proficiency in the English language (BBC, 2010). If the expansion plan of Magnificent MBA School is taken into consideration, the Indian law system is filled with bureaucratic flaws and challenges that come up constantly with the prevailing corruption. The situation in China is comparatively better as it has more transparent laws and other bureaucratic hassles are lesser with added benefits of taxation and ownership stakes that are higher in China when compared to India (Das and Khanna, 2009; Yie, 2009). Environmental- Environmental norms are taken seriously in the UK. There have been several campaigns as of today and in the past wherein UK has actively supported the wise use

of paper based products and taken up green campaigns to encourage education institution to use more electronic resources than paper resources. This will mean that the demand for paper wood will be lesser and there would be an initiative to stop the excessive use of paper (Anon, 2009). India and China have been following in similar lines and China especially has been noted to take environmental norms seriously. Magnificent MBA School has to be careful with regards to staying within the Corporate Social Responsibility (CSR) barometer and promote these measures as most businesses are required to do so as the common business scenario nowadays.

PORTERs FIVE FORCES Bargaining Power of Suppliers- The industry has a supplier which is the UK University which will be franchising the degree to Magnificent MBA School. The UK universities are known for education all across the world and they will be able to command a higher price in terms of evaluation with other countries. The same might not apply in India and China as the supplier does not provide the experience as it is in the UK. Frynas and Melahi (2005) state that the bargaining power of suppliers stays high if they are able to provide a unique product in the market and as Magnificent MBA School is looking at providing an exclusive MBA product there is a slight possibility of obtaining a higher price in the market. Bargaining Power of Buyers- The products with a relatively easy accessibility and of generic nature is likely to get a less price in the market (Frynas and Melahi (2005). The bargaining power of buyers in the UK is higher when compared to buyers from that of India and China as the same fees cannot be paid by the local UK students as the fees obtained from that of international students. Indias education system is superior to that of China and hence its bargaining power is higher to that of China which is coming up slowly in its education. UK pound has a greater value than the Indian and Chinese currency hence the currency plays a role in MBA courses as UK courses will cost higher than that in their domestic locations. Threat of Substitute Products- The risk of substitute products in any industry is possible when there is a relatively easier concept to be understood and the basic idea and the design can be replicated (Dess, Lumpkin and Eisner, 2007). The Indian and Chinese markets have a small threat of substitute products as similar type of institutes can open in these countries with the easy availability of resources. Additionally, the Indian and Chinese students have the

option of exploring a cheaper and more convenient option for studying in a similar MBA school. Even though this is very meagre possibility, the fact that price is a definite factor in influencing buyers decisions and the school planned is an upcoming venture not yet recognised in the management courses market, the risk of substitute products cannot be ignored. Threats of New Competitors- According to ABC (2002), there is a good chance of new market players coming up with the same product competition if there are inherent returns noted and if the business concept is seen viable. India and Chinas education industry is not as saturated as UKs hence there is a high possibility of new competitors entering the market. In UK, it will be highly risky for a new entrant to come up with a product which will just provide one course but in India and China where the demand for MBA degree is growing and the population factor there is likeliness of new players entering the market. Intensity of Rivalry- If there is a constant flow of customers the likeliness of intense rivalry in business is higher (Dess, Lumpkin and Eisner, 2007). The rivalry levels for Magnificent MBA School will be mediocre as the school is offering an exclusive MBA course as against many MBA schools in UK which have business schools which offer an array of management courses. India and China will also have rivalry levels as the school will be exclusive to aspiring MBAs only and long term business strategy wise other competitors will not see this as a threat.

OPPORTUNITIES AND THREATS Opportunities Even though UK has a lot of business and management schools it has very little or no niche MBA schools which offer this course as a unique and distinct product. The scenario in India is that the IIMs are the prominent institutions which provide MBA courses to highly talented individuals and where entry for admission is extremely competitive. China still has a lot of catching up to do in terms of offering quality MBA courses that are of world standards. Magnificent MBA School can tap this bright potential and strategically place itself as a high quality MBA only school which has the attractive UK degree tag plus which is relatively accessible for students who are not overtly brilliant but need a platform to shape their talents with expert education. Das and Khanna (2010) are of the opinion that medium level UK

MBA degrees are in a high demand as Indian students are finding it difficult to gain entry into top Indian management schools. Moreover, with China striving hard to improve its education standards, these opportunities should be aptly recognised by Magnificent Business School. Threats The biggest and obvious threat is competition as UK is filled to the brim with the number of institutions offering management courses and it has to carefully market itself as a niche product provider of MBA course only. With the existing players stamping their dominance, it becomes difficult to obtain expert faculty who will hold key in success of the quality MBA course that the institute aims for. It can also be noted that education industry products are generally selected with greater precision as the repeat value for products is nil and to convince Indian and Chinese students to choose Magnificent Business School over existing reputed UK institutions will be a difficult task.

CONCLUSION If a clear strategy of providing a unique designed MBA course with exclusive focus on it and nothing else is followed coupled with a competitively priced course, it can be concluded that the market analysis suggests that this project is a feasible option. Indian and Chinese students can be firstly attracted considering all the discussions in this report and the respective countries can also be looked for prospective investment through branches if all the strategic cards are played right.

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Journal, Vol. 18 , 10/11, pp. 981-96. Yie, S, C. (2009) Higher Education Scenario in Asia in the recent decade Journal of International Business, Vol. 177, pp 112-181