Sustainable competitive advantage for educational institutions: a suggested model

This paper outlines a model of the factors that are critical to the establishment and maintenance of sustainable competitive advantage for education services enterprises in international markets. It draws together theories of competitive advantage developed by industrial economics and management theory, with literature relating to services marketing. In examining a theory of sustainable competitive advantage for services exports, the paper discusses the concepts involved and presents a model of the process involved in achieving it. The model seeks to explain the strategic decision making environment in which the education exporter operates, and the outcome ideal to achieving a competitive advantage. four dimensions. Using Lovelock's framework, education services can be described as having the following characteristics: 1 The nature of the service act ± the education service act is directed at people (their minds rather than their bodies), it is primarily `̀ people based'' rather than `̀ equipment based'' (Thomas, 1978), and involves largely intangible actions (Shostack, 1977). 2 The relationship with the customer ± education involves a lengthy and formal relationship with the client and a continuous delivery of the service. Students have what Lovelock (1983) refers to as a `̀ membership'' relationship with the service provider, offering an opportunity to develop strong client loyalty and enhanced client services. 3 The level of customization and judgement in service delivery ± some services require greater customization and judgement on the part of service providers than others. The extent to which education services are customized is variable. Small tutorials or individual supervision are more customised than mass lectures. In most cases, the extent to which a service provider exercises judgement in meeting the needs of individual students is high. This is particularly the case with teaching staff. A problem arising from this is the possibility that quality can be affected by the variability of service delivery (Nicholls, 1987). 4 The nature of demand relative to supply ± a service can involve a widespread demand (e.g. electricity) or a narrow demand (e.g. insurance). At the same time, the ability to alter supply quickly, to meet demand fluctuations, varies. While electricity services can be increased fairly quickly to meet peaks, if capacity is available, hotel accommodation is more difficult to regulate. In education, demand is subject to relatively narrow fluctuations over time. However, supply can be difficult to manage, with limitations on the availability of staff and places in courses. 5 The method of service delivery ± the delivery of services may be classified into those requiring single or multiple site outlets and the nature of the customer interaction with the service. Customers may move to a service provider, or a service provider may move to meet them. International education services traditionally required the student to come to the institution to complete their courses. However, this is changing, with the establishment of offshore teaching programs and distance education (Soutar and Mazzarol, 1995) and modern technologies (Hamer, 1993). In a comprehensive examination of the services marketing literature, Zeithaml et al. (1985) identified four primary service characteristics, namely intangibility, the inseparability of production and consumption, heterogeneity and perishability. All of these dimensions can be found in education and each creates problems that must be overcome by deliberate marketing strategies. Intangibility Intangibility is a major distinguishing feature of services that applies particularly to education, where the specific nature of the service offering is difficult to define. Intangibility creates difficulties for patent protection (Judd, 1964), which is a major problem within international markets, particular in Asia (LEK, 1994, p. 98). Intangibility also makes it difficult to display or communicate services to the customer (Rathmell, 1966). This has been a problem, for example, for the promotion of Australian international education, which has received criticism for supplying insufficient detail and taking a glossy `̀ touristy'' approach to publicity materials (AGB, 1992). Further, the setting of prices in many service industries is made more difficult because of intangibility (Dearden, 1978; Thomas, 1978). Not surprisingly, therefore, fee setting in international education has been a contentious issue (Harris and Jarrett, 1990). Inseparability of production and consumption The difficulty in separating production from consumption in services poses additional problems. One of its principal outcomes is the need to involve customers in the production of the service (Booms and Nyquist, 1981). This is particularly the case for education, where students' participation in their own learning process is a critical success factor (Shuell and Lee, 1976). Another aspect is the likelihood that more than one consumer will be jointly involved in the production of the same service (George, 1977; Gronroos, 1978). Education has long been undertaken within a group and the group has been viewed as an important cultural transmission process (Singleton, 1974). Most education institutions are `̀ socializing organisations'', designed to process large groups of people (Brim and Wheeler, 1966, p. 57). The concentration of students into mass lectures or large classes with a common or `̀ core curriculum'' is an attempt by institutions to overcome the difficulty of centralizing production (Upah, [ 288 ] Tim Mazzarol and Geoffrey Norman Soutar Sustainable competitive advantage for educational institutions: a suggested model The International Journal of Educational Management 13/6 [1999] 287±30