Divine Mbong Eseh OMDE 606 April 2, 2007 The Competitive Vulnerability of DTUs Assignment 2

Vulnerability of DTUs

The Competitive Vulnerability of Distance Teaching Universities Does the increased availability of ICT amplify the vulnerability of distance teaching institutions? And if so is Rumbles vulnerability thesis still relevant in light of these recent technological developments? By Divine Eseh For Professor T. Huelsmann Spring 2007

Divine Mbong Eseh OMDE 606 April 2, 2007 The Competitive Vulnerability of DTUs Assignment 2

Vulnerability of DTUs

Abstract
In 1992,Greville Rumble(2003) addressed the Strengths, Weaknesses, Opportunities, and Threats (SWOT) facing Distance Teaching Universities today.(Schermerhorn & Chappell, 2000, p. 92) From this analysis , he observed that the dedicated distance teaching universities (DTUs) were vulnerable to competition from campus based universities (CBUs)as the latter morphed into dual mode universities(DMUs)by using distance teaching methods. Huelsmann (2007) in a response to this article , says that Rumbles argument does not suggest that the conventional university, which develops into a dual mode one, offers the better quality or is more cost-efficient. Instead, what makes the dedicated institutions so vulnerable is the piranha effect: the aggregate effect of mushrooming competition, which eats into the formerly captive market of distance learners, thus eroding the much needed scale economies. The purpose of this paper is two fold: First the paper will present the main arguments put forward by Rumble that support and explain the piranha effect. Next, the paper will describe how the proliferation of information and communication technologies (ICT) have impacted the educational institutions and from this, evaluates whether or not Rumbles vulnerability thesis remains relevant in light of these recent technological developments.

Divine Mbong Eseh OMDE 606 April 2, 2007 The Competitive Vulnerability of DTUs Assignment 2

Vulnerability of DTUs

The Competitive Vulnerability of Distance Teaching Universities Does the increased availability of ICT amplify the vulnerability of distance teaching institutions? And if so is Rumbles vulnerability thesis still relevant in light of these recent technological developments?
Globalization, fierce competition, the remarkably diverse workforce, the Continuing explosion of information and technology, economic and social Upheavals are only a few of a plethora of signals from the marketplace we must Begin to heed. The message is clear: If survival is the aim, change is the game (Pahal, 1999, para 16).

BACKGROUND When most distance teaching universities (DTUs) were created in the late 1960s, it was assumed that campus-based universities (CBUs) were not direct competitors and that the distance education market, of mostly adult learners, was very limited. Today, demand for adult education has grown significantly and new technologies have made it easier than ever to deliver and support distance teaching and learning. As a result, DTUs are no longer walled off from competition from CBUs who have been adding distance learning methods to become dual mode institutions (DMUs) (Rumble, 2003). This paper will present the main arguments in the debate over the competitive vulnerability of distance teaching universities (DTUs). It will also describe how information and communication technologies (ICT) have impacted the educational institutions and whether or not Rumbles vulnerability thesis still remains relevant in light of these recent technological developments. In order to do this, the intent of this paper is presented in two (2) parts with a conclusion Part one; includes a discussion of factors that support the Rumble vulnerability perspective; Part two; includes an evaluation of the impact of ICT on Rumbles vulnerability thesis. Is it still relevant or not? Finally it ends with a Conclusion and Recommendation for a survival strategy.

Divine Mbong Eseh OMDE 606 April 2, 2007 The Competitive Vulnerability of DTUs Assignment 2

Vulnerability of DTUs

Based on Rumbles SWOTS assessment, Huelsmann (2007) identified and classified six sources of vulnerability: 1. Competition for students 2. Credentialism 3. Scale and Scope 4. Cost Attribution 5. The Piranha Effect 6. New Developments and the impact of ICTs. What follows is a discussion of these sources of vulnerability. (Rumble, 2003) PART 1: THE RUMBLE PERSPECTIVE COMPETITION
FOR STUDENTS

One factor that has been responsible for increased competition between the DTUs and DMUs has been the changes in the demographic structure. This trend has created a steady growth in demand for continuing and adult education. DTUs have traditionally prided themselves on serving adults returning to school to complete degrees or retrain. CBUs on the other hand have tended to marginalize the priorities of this population. Recently, however, that adult population has swelled to a large segment of the educational market. In 1988, 43% of U.S. students were adult, part-time degree seekers, a significant increase from the 1960s (p.71). This clear demand for adult education has drawn the attention of CBUs looking for additional students and revenue sources (Rumble, 2003). Competition for students threatens DTUs economies-of-scale. DTUs have justified high, fixed course production costs by spreading them over large student numbers. Because of their low variable cost per student, DTUs have kept down total costs. As CBUs change into DMUs as they compete for students, DTUs often have to increase marketing and support services to stay competitive in order to attract and retain sufficiently high student numbers. These activities add to costs and, potentially, stimulate more competition for students. What these activities do is to fragment the market share DTUs and hence make them more vulnerable. Also, Rumble (2003) argues that because of competition DMUs can form consortia to give them access to the large student populations that make DTUs even more vulnerable and subject to the piranha effect.

CREDENTIALISM CREDENTIALISM This competition for students creates a second vulnerability through the impact of credentialism and the degree to which quality determines which institution students attend.

Divine Mbong Eseh OMDE 606 April 2, 2007 The Competitive Vulnerability of DTUs Assignment 2

Vulnerability of DTUs

DTUs argue that they produce higher quality programs because of extensive distance teaching expertise and a unique focus on distance students needs. Rumble (2003) argues, however, that students are only concerned with quality to a point. Students often select lesser quality courses if the courses come from a renowned school or apply toward a particular degree. Since CBUs are older, they frequently have the name recognition students seek. SCALE AND SCOPE With regard to quality, Rumble (2003) argues that DTUs are again vulnerable because the high development costs of good courses limit the number of courses a DTU can afford to offer. Huelsmann (2006) agrees to this argument and says that a further weakness of dedicated distance teaching institutions is the trade-off between scale and scope (course load, i.e. the number of courses an institution offers). Any attempt to substantially diversifies course offerings means eroding the scale economies, on which cost-efficiency is based. COST ATTRIBUTION A final vulnerability comes from CBUs ability to use marginal cost accounting to justify the addition of DE courses (Rumble 2003). Here, distance learning can be considered as an adjunct to campus activities and overhead costs shared and broadly distributed. This potentially keeps course prices low and puts even more pressure on DTUs to attract students and moderate course prices. SUMMARY
OF

RUMBLES PERSPECTIVE

In summary DTUs when faced with competition by DMUs they became subject to the piranha effect. Huelsmann (2006) says that Rumbles diagnosis does not suggest that the conventional university, which develops into a dual mode one, offers the better quality or is more cost-efficient. What makes dedicated institutions so vulnerable is the piranha effect: the aggregate effect of mushrooming competition (most universities nowadays run some distance teaching courses ), which eats into the formerly captive market of distance learners, thus eroding the much needed scale economies

Part 2: WHAT

ABOUT THE IMPACT OF THE

PROLIFERATION

OF

ICTS ?

Does the increased availability of ICT amplify the vulnerability of distance teaching institutions? Is Rumbles vulnerability thesis still relevant in light of these recent technological developments? The short answer is yes. But lets examine this issue in some detail.

Divine Mbong Eseh OMDE 606 April 2, 2007 The Competitive Vulnerability of DTUs Assignment 2

Vulnerability of DTUs

According to Rumble (2004) education was, and to a large extent still is labor intensive. By the 1970s, few countries could afford the cost of providing education for the burgeoning populations of young people, let alone the emerging growing demand from adults or non traditional students wanting lifelong learning. Further more the continued emphasis on increased efficiencies coupled with a search for alternative funding sources --- most notably from the students themselves made distance teaching methods an attractive option. Education managers now began to explore opportunities for compensatory savings that might arise if and when technology was substituted for human labor (p.73).The solution to all this shortcoming was for distance education managers to experiment with ICTs by applying distance teaching methods either as groups of consortia or setting up adjunct branches of DMUs with a different cost attribution accounting systems. The use of ICTs provides lots of opportunity for DMUs to develop new approaches to teaching and learning. Also these technologies can improve the quality of education as well as enable access to new target groups. Bates (2005). CONCLUSION AND RECOMMENDATION The advent of ICTs has made the marketing, creation and delivery of online courses easier and turned many CBUs in to DMUs. Improvements in the last fifteen years have also blurred the once solid line between DTUs, CBUs and DMUs.With many more institutions competing globally for large numbers of students, ongoing issues of how to assess costs and price, set quality standards, and provide adequate course offerings have heightened the vulnerability debate. So the proliferation of ICTs (i) intensify the vulnerability debate (ii) facilitates the easy entry of competitors to the distance learner market which further drives up variable cost per student at least if the new ICT capabilities of communicating at a distance is to be fully exploited and (iii) fragments their market share and brings back the piranha effect. This paper has tried to show how vulnerable DTUs are in the face of competition from CBUs or DMUs and the ICT revolution has even amplified this vulnerability. Therefore, it is now very clear, now more than ever, when Rumble recommends that best survival strategy for DTUs is to either turn itself to a DMU, or merge and form partnership with CBUs. REFERENCES Bates, A. W. (2005). Technology, e-learning and distance education. London New York: Routledge. Hlsmann, T. (2006). From Baobab to Bonsai: Revisiting methodological issues in the costs and economics of distance education and distributed e-learning. In W. J. Bramble, Panda, S. (Ed.), Economics of distance and online learning. London: Kogan Page

Divine Mbong Eseh OMDE 606 April 2, 2007 The Competitive Vulnerability of DTUs Assignment 2

Vulnerability of DTUs

Hlsmann, T. (2007, March 23). The vulnerability debate[Message posted to] http://tychousa5.umuc.edu/OMDE606/0702/9040/class.nsf/Menu? OpenFrameSet&Login Rumble, G. (Ed.). (2004). Papers and debates on the costs and economics of distance education and online learning (Vol. 7). Rumble, G. (2003). The competitive vulnerability of distance teaching Universities (1992). In G. Rumble (Ed.), Papers and debates on the costs and economics of distance education and online learning (Vol. 7, pp. 67-88). Oldenburg: bis. Schermerhorn, J.R. & Chapell, D.S. (2000). Introducing Management. New York: John Wiley & Sons