Globalization of the higher education market

Theodore Levitt was perhaps the first major marketing theoretician to identify and
conceptualized the globalized market phenomenon through his seminar article ‘The
Globalization of Markets’ (Levitt,1983). Levitt stated that globalization is a powerful force
which ‘now drives the world toward a single converging…global commonality, thus
homogenizing markets everywhere…the result is a new commercial reality-the explosive
emergence of global markets for globally standardized products, gigantic world-scale markets
of previously unimagined magnitude’ (Levitt,1986, p. 20).

Although Levitts’s statement seems somewhat excessive, it can be observed that there is now
a constellation of globalized products in virtually every corner of the world. These products
include items such as clothing, footwear, fast-food franchise products, soft-drinks, cosmetics,
pharmaceuticals, motor vehicles, heavy transport equipment, computer equipment and home
appliances. In addition, there are now considerable globalized services such as airline travel,
banking, entertainment, television programs and telecommunications.

In considering globalization it must be emphasized that there are often minor regional
differences in many globalized products and services. Nevertheless, there is a clear and
continuing movement leading commercial product and service market towards a global
community to service needs. Thus, globalized products and services become highly
standardized, receive minimal regional adaption and are subject to mass distribution channels.
They satisfy broad market needs, and they are promoted and advertised globally with
reasonably common themes (Gatfield, 1995).

However, one globalized service that is frequently overlooked is higher education. The
international marketing dimension of higher education and students is not a new phenomenon.
Students have been engaged in international travel for higher education from around 600BC
since universities were first established (Altbach et al, 1993). The early universities were
international in scope and international students were in the norm. Although, the number of
mobile students in the early centuries was sight, by 1950 there were about 100 000international
students studying outside their own countries. There are now in excess of one million students
studying internationally and this is valued at about A$ 10 billion in international trade (Maslen
& Slattery, 1994).

Although some higher education degree programs serve local interests and appeal to niche
market groups such as courses in aquaculture, agriculture and tropical medicine, and other
courses, such as business studies, have clearly become a global service. Within the business
degree programs offered in the global arena there is a substantial homogeneity of content,
structure and delivery method. Virtually every higher education undergraduate degree consists
of three years study over six semesters, covering 24 units of study and each with about 50 hours
lecturing and tutorial contact time. The teaching language is predominantly English and the
text material is normally American or North European. Business courses comprise a generic
mix of subjects focused primarily on accounting, economics, management, information
systems, marketing, and human resource management. There are only a few subjects that are
country specific demanding local content, these include subjects such as industrial relations
and law. The business degree now has become a generic global product that form the basis for
entry into lower levels of management or for studying higher degrees in most countries of the
world.

There are multitude of factors that drive globalization. These depend on the product and service
being offered. The primary forces that drive the globalization of education industry, especially
as they relate to business degrees, are: government directives; the alignment of the world best
practice in management and commerce; standardization of products, articulation with
universities internationally; the pursuit of economies of scale; the standardization of English as
a trade language; education communication technology; and the pursuit of rationalization.
These aspects are briefly examined below.

For example, in pursuit of the Australian federal government directives to decrease the balance
of payment deficit, special attention has been given to assist universities to export their
education product. International education center has been sponsored in key Asian countries
such Singapore, Hong Kong, Malaysia and Thailand to recruit students. Australia promotes
itself as an international player in the market and students come to Australia from every point
on the globe. The universities gain financially because they can charge market base fees beyond
cost recovery and retain any surplus obtained. All Australian universities now engage an
international office and actively engage in international recruitment initiative drives.

The rapid advance of communication on a global scale has promoted international best practice
in many areas of management and commerce. These best practices include factors such as
Quality Assurance (QA) and Total Quality Management (TQM) practices, Management by
Objectives (MBO) Autonomous Work Group, Theory Z practices, Just in Time Inventory
Controls (JIT), Time Based Management (TBM), Shareholders Value Analysis, and Accrual
Accounting. These aspects, and many others not mentioned, are now global practices and built
into the content of the majority of business degree units. As an adjunct, many of the factors
mentioned are now firmly established and practiced by university academics and
administrators.

One major advantages of globalization is homogenization, standardization, ensuing assurance

of quality and cost reductions. In the domain of higher education, there is clear evidence of
international standards generated in many disciplines. Economies of scale, due to
standardization, lead to cost reductions and increased institutional surpluses. As Australian
universities are non-profit institutions this leads to improved facilities which should in turn
increase quality for all stakeholders.

Due to the considerable mobility of international students, and the international competitive
market behavior of higher education institutions, it is common practice for organizations to
develop articulation policies for credit in courses that are deemed similar. This has led
universities to design their business subject offerings with a high degree of resemblance or
homogeneity.

The dominant language of international trade is now English. This has had an homogenizing
effect on education subjects, and universities and colleges have expanded English language
course such as ELICOS throughout the western world. The flow-on effects of English
language course on business degrees have been substantial.

The effects of communication technology are obvious and do not warrant discussion. However,
the effects of communication technology in higher education are often overlooked especially
in a globalized context. It is normal practice for every university in the world to have its own
website and inquiring students can access virtually any institutions ant any time. In addition,
the potential international students can quickly and efficiently undertake all necessary searches
on relevant factors such as country employment opportunities, demographics, sociographics,
local housing and living costs and even down to visa requirements and exchange rates.
However, that is only one aspect of the World Wide Web. A recent educational development
is flexible learning where education and, in this context, business education can be undertaken
without face-to-face lectures, in any country of the world. This form of education is now well
developed by most western universities and will make an increasing impact on the globalization
of business degree programs where flexible workplace practices can me married to a flexible
learning delivery mode.
Rationalization of education programs in the past decade has become an important issue. All
public universities in the global village are substantially funded through government grants.
However, grants have declined in relative terms over a number of decades. The pressure has
been for universities to become more efficient and resource conscious. Some of the outcomes
of those aspects have been: concentrating on developing subjects that are in areas of high
demand; grounding courses to the labor market; selecting low-cost courses which offer good
economies of scale through large class sizes. Thus, the accent as been on advancing subjects
like business study degrees in preference to studies in arts and humanities. These subjects have
substantially declined in the last decades.

Australia, for instance is very firmly and competitively positioned in the university business
education global marketplace and the industry makes a substantial contribution to the nation’s
economy. Currently there are about 96 000 international university students studying in
Australia representing 89 different countries and comprising 10% of the total student body
(Selected Higher Education Statistics, 2000). It is estimated that international students in higher
education in Australia now contribute about $3.2 billion to the total economy
(www:langcanada.net/English/AUSTRALIA.HTML).

One of the important features of globalization is the dampening of market fluctuations caused
by negative external factors. This has been a notable feature in the marketing of higher
education in Australia. For example, despite the Asian financial crisis of 1997 the market
demand remained very strong. This is illustrated in table below. The table shows the five largest
Asian student countries performance record over five period commencing a year before the
Asian financial crisis.

Table: Students studying in Australia from selected countries

Country 1996 1997 1998 1999 2000

China 2212 2575 2275 4219 4387
Hong Kong 6924 9052 11924 12781 13852
Indonesia 4714 5968 6880 8088 8973
Malaysia 11208 13928 13132 14269 16362
Singapore 9672 11339 14104 15546 16652
Thailand 1731 2226 2376 2517 2807
Source:adapted from selected Higher Education Statistics (2000).
The table also illustrated that financial crisis of the Asian nations have not affected market
growth to any appreciable level across the six most important nation groups. The industry is
substantial in size and importance for Australia in the immediate climate and the long-term and
hidden benefits are of significant magnitude. For traditional globalized products and services
there is a tendency for the primary supply agent country to be the net beneficiary but, for higher
education business courses there are considerable global benefits. Higher education through
the global marketplace enriches, encourages and promotes multilateral business activities.
While nations are communicating and working together there is a tendency towards peace and
long-term international stability. Education, and especially higher education, assists in
dissolving international prejudice, and through cultural diversity aids in expanding
understanding. This understanding promotes not just business activities but social and
community welfare needs.

The long-term prospect in the 21 st century in globalization of higher education appear

substantial in consideration of the following trends: continuing government funding reductions;
excess university places being offered at full cost to domestic undergraduate students; post-
graduate students being charged full-fees; the international education market flourishing; the
advances in student mobility; the expansion of education technology and the decrease in the
size of global village. The indicators are that there will be an increase in the globalization of
higher education well beyond business degree programs.

(Adapted from Globalization of the higher education market : the case for Australia, by Terry
Gatfield, Griffith University,Nathan Campus)

QUESTIONS

1. The case study in general is slanted to seek out the advantage of globalization.
a. Discuss with appropriate examples five advantages of globalization
b. List and discuss the difficulties and potential problems associated with the education
industry as it moves into the decade.
2. The case study suggest that business degree programs have become a globalized product in
the western and developing countries. Generally, universities have create their own
marketing and differentiation strategy in the international marketing environment.
Critically analyze the international marketing strategy of a university (preferably HELP
 University) or any university that you are familiar with which has a substantial interest in
business degree programs and answer to the following questions:
a. How effective do you think the strategies are?
b. What marketing strategies would you change to increase the effective of the
organization?
c. What countries does your university focus on currently and what recommendations
would you make into the new millennium taking into the current global environment?
d. What are your recommendations to increase the globalization advantages of business
degree programs?
3. The data shown in the table indicates that despite the Asian financial meltdown in 1997 the
higher education market in Australia hardly changed. Why do you this was the case?
4. In your opinion, to what extend does the covid-19 pandemic affect higher education in
Malaysia? Justify.