Michael Porter's Five Forces And Distance Education

Michael Porters theory of five competitive forces and distance education

Who is Michael Porter

Michael Porter, born in 1947, is an important business economy theorist. He has a degree in Aeropsace Engineering from Princeton University followed by an M.B.A. from Harvard Business School and a Ph.D. in Business Economics (Harvard Business School Institute for Strategy and Competitiveness, n.d. “About Michael Porter”). At present, he is a professor at Harvard Business School and co-founder and director of the Institute for Strategy and Competitiveness (Harvard Business School Institute for Strategy and Competitiveness, n.d. “The essential Michael Porter”). Michael Porter advises the U.S government and other governments across the globe. Moreover,

Porter identifies five competitive forces that determine a company’s competitiveness and that are of crucial importance to formulating a successful business strategy. The combination of these forces indicate the potential profit margin within an industry. It varies from one industry to another which forces are most prominent (Porter, 1979). The identified five forces are: (1) “thread of new entrants”; (2) “bargaining power of suppliers”; (3) “bargaining power of customers”; (4) “threat of substitute products”; (5) “the industry jockeying for position among current competitors” (Porter, 1979, p. 36). In the 2008 revision of his own theory, Porter rephrased the fifth force as “rivalry among existing competitors

In terms of competitiveness and strategy, there are some significant differences between accredited institutes and commercial training institutes that are not accredited. Differences are most articulate in profit margins, barriers to new entrants, access to distribution channels, dependence of and limitation by government policy coupled with advantage of government funding.

1. The threat of new entrants.

This threat is limited by market entry barriers for new online education institutes or e-learning providers. First of all, establishing an online learning program or a distance education institute, requires great investments. An existing university can enter the online learning market with more ease than a total newcomer. This can be attributed to the fact that a university already has qualified staff, accreditations, an established academic reputation and access to government funding (Farahat Farahat, 2011). Nevertheless, a university needs to invest significantly in online curriculum design, content development, e-learning software and IT personnel (Engelbrecht,