Financing education

Financing education

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  FINANCING EDUCATION ON THEINSTITUTIONAL LEVEL
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  INTERNAL AND EXTERNAL COMPETITIVENESS OF EDUCATIONAL INSTITUTIONS MR. AARON JAMES LICO REPORTER
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  INTRODUCTION A discussionon financing education on the institutional level entails a prior analysis of the external and internal forces that will affect the operation of the educational institutions, most especially the competitiveness of the educational institution within the education sector as an industry.
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  EXTERNAL FORCES  arethe global and national demand for graduates which will have significant effects on the enrollment trend.  Many curricular programs that are in demand abroad such as nursing, maritime education, health-related courses such as nursing, physical therapy, occupational therapy, and medical technology have experienced increasing enrolment.
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   And also, Enrolment in teacher education has also increased. Why? Because of the demand for teachers abroad and the improvement of teachers’ salaries in the public education sector.
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  INTERNAL FORCES  Itdeals on the unique features of an institution such as the quality of its faculty, the environment, buildings and grounds, laboratory facilities, the research capabilities, financial aspects and the quality of the students.
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  MICHAEL PORTER  (1985) Developed a framework of industry analysis called the FIVE – FORCES MODEL.
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  PORTER’S FIVE FORCESMODEL  The nature of competition among educational institutions is heavily influenced by forces identified in Porter’s Five-Forces Model. These forces have significant effects of the financials operations of the institutions as part of the industry; such effects will have a major impact on institutional profitability. While these forces have traditionally been applied in business enterprises, these forces can also applied among educational institutions as a component of the education industry as discussed as follows:
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  PORTER’S FIVE FORCESMODEL
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  1. RIVALRY AMONGCOMPETING EDUCATIONAL INSTITUTIONS  The less intense the rivalry among competing educational institutions, the better is the institutional profitability. On the other hand, if there is intense competition among the educational institutions in the community, the profitability is less because the intense competition dissipates the institutional energy, due to such things as the funding of activities to maintain market share in such a highly competitive market.
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  2. POTENTIAL ENTRYOF NEW COMPETING EDUCATIONAL INSTITUTIONS  If entering as a competitor in this arena requires a huge investment, then the educational institution has better prospects for a high level of profitability, because the huge capital requirement for entry will serve as a deterring factor for potential competitors. To a great extent, in the education industry, entry is not that easy because of the huge level of capital investment required to have good physical infrastructures, laboratory equipment, and a highly qualified faculty. It is hard for just any institutions to be able to assemble all these to enter in to competition with existing educational institutions. Moreover, in the educational sector, almost all of the educational institutions have a long history and tradition of excellence; it is hard for any new competitor to rival such a reputation in so short a time.
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  3. POTENTIAL DEVELOPMENTOF ALTERNATIVE ACADEMIC PROGRAMS  In education, there is not much room for a substitute product because of quality variations across institutions, which lead to greater product differentiations, most especially the prestige of a degree from a prestigious institution known for each tradition of excellence.
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  4. BARGAINING POWER OF SUPPLIERS OF EXCELLENT HIGH SCHOOL GRADUATES 5. BARGAINING POWER OF EMPLOYEES OF GRADUATES
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  SUPPORTIVE ANALYSES TOPORTER’S FIVE FORCES MODEL  External Factor Analysis (EFA) To construct an EFA, one has to list down the various opportunities of and threats to the educational institutions. For each of the factors there should be an assigned weight, depending upon the importance of the factor.
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   EXTERNAL FACTORANALYSIS (EFA)
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  INTERNAL FACTOR EVALUATION(IFE)  An internal Factor Evaluation Matrix is also constructed in the same manner as the EFA. The Table is as follows:
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  COMPETITIVE PROFILE MATRIX(CPM)  A Competitive profile Matrix (CPM) is constructed by identifying the critical success variables contributing to the greater success of the operation of educational institutions.
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   All the above mentioned competitive forces and external and internal factors have tremendous impact on the financial operation of colleges and universities because the extent of competition and the inner strength of the institution, as well as the external forces that impinge on the operation of educational institutions, will affect enrollment and, in turn; affect the revenue generating capacity of the educational institutions.
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  THE END