Competitive analysis of College of Central Florida using Porter's Five Forces

College of Central Florida via Porter’s Five Forces

Executive Summary

Many people don’t think of public colleges as business institutions, but the reality is that they are under many of the same pressures as other local and national entrepreneurial endeavors. Public colleges have to compete with their rivals in the marketplace, engage in self-promotion, and invest in their own resources. If they wish to thrive in the current climate they need to aggressive in promoting themselves and finding their competitive edge.
The paper examines the College of Central Florida, a public college in the southeast which is unique in a lot of ways. In many ways, as this paper will examine, this college is a leader in its class. This paper examines the competitive strengths of the college in relation to Procter’s Five Forces. This paper will discuss how these unique strengths help to make the college highly competitive and rise above its rivals in the field.
Conversely, this paper will also examine the notable weaknesses of the college in relation to these same five forces. There will be a discussion how some of these weaknesses make the college a target for mediocrity and obscurity. A college can only be a summation of both its strengths and weaknesses and its ultimate relation to its competition.
Finally, this paper will offer guidance as to how the college can create a legitimate sustainable competitive advantage. There will be a discussion of what exactly this looks like for a college like CF. In addition, there will be a discussion regarding what pillars and manifestations of foundation a college like CF already possesses and how those can be exploited to make the college even more competitive over the next ten years and subsequent decades. Extraordinary development requires extraordinary investment and commitment to change. A college like The College of Central Florida (CF) already has so many of the basic structural support in place to achieve competitive dominance.

Competitive Strengths
The College of Central Florida offers numerous marked advantages to students, making it both an attractive proposition for higher education, and a competitive option for residents of the state of Florida. One of the aspects that make it so competitive around the nation and state, is the fact that it has campuses in several different counties: Marion, Citrus, and Levy. This offers the college a certain degree of “supplier power.” Since it is a public college, it’s not interested in driving up prices, however it does need to attract a large student enrollment and high student grade point averages. By having several campuses around the state, it can attract a more diverse student body in this manner. This gives the college a certain strength of supply.
As a result of the fact that this is a public college, one can argue that the buyer power is large, simply as a result of the fact that with public colleges, there is an expectation that they maintain the highest level of affordability possible. In this sense one could argue that buyers have the ability to drive the price down. According to Porter’s Five Forces, the ability of buyers to drive the price down revolves around “This is driven by the: number of buyers in the market; importance of each individual buyer to the organization; and cost to the buyer of switching from one supplier to another. If a business has just a few powerful buyers, they are often able to dictate terms” (cigma.org, 2015). In the case of public colleges, the prices have to be low so that college can be affordable to more students. In the case of this public college, they’ve been pushed to set their tuition rates very competitively so that they can undersell their competition, and use that as a means of marketing themselves. For example, the college advertises on their website that, “CF tuition consistently ranks among the top colleges in the nation for affordability. For six years in a row, we have not raised tuition rates. The average cost of tuition for a 12-credit course load for two semesters is $2,522 for associate-level courses and $2,906 for bachelor's-level courses. These rates, combined with CF’s financial aid, allow a huge percent of our students to graduate with little to no debt” (cf.edu). Hence, The College of Central Florida takes something that they don’t have a tremendous amount of control over (their tuition rates, which they kind of have to keep low) and use that as a springboard to attract more applicants. Their tuition rates, along with their small class sizes, are something that they use to attract interest in students. This creates a very strong and very significant competitive edge for them, in distinguishing themselves from other public colleges.

Competitive Weaknesses
One of the main competitive weaknesses of the college is that it advertises a low student to teacher ratio, though it does not specify what this exact ratio is. This lack of specificity is what can give prospective students a bad feeling and is what something that competitors can readily exploit. Doing just a modicum of research, one sees that the student to teacher ratio is 32:1 (learn.org). This is lower than the national average which is just under 30:1. According to Porter’s Five Forces, this hurts the reputation and the overall marketability of the college when compared to other public colleges. This increases the competitive rivalry, as it opens the door for other public colleges to attempt to highlight this discrepancy. Moreover, this issue increases the overall threat of substitution, according to Porter’s Five Forces. This mediocre student to teacher ration creates a situation when “…close substitute products exist in a market, it increases the likelihood of customers switching to alternatives in response to price increases. This reduces both the power of suppliers and the attractiveness of the market” (cigma.org, 2015). In the case of the College of Central Florida, their standard of excellence is now sufficiently lowered that anyone can just sweep in and make them look further unexceptional. This is because the college of Central Florida has made two mistakes in this case: they have misrepresented their student-to-teacher ratio and used this false ratio to aggrandize their reputation, and they have not been exceptional enough to actually provide a low ratio in this regard to their actual students.
Another competitive weakness of the school is that it attempts to portray itself as accessible to all students (with its low price tag), but in reality the rate that it accepts students is 17.8 percentage points beneath the national average (learn.org). This means that the school is difficult to get into. This is problematic because students don’t like being rejected and if the school is known as being a tough one to get into, this creates a negative reputation for the school. Furthermore, the graduation rate is 6 percentage points beneath the country’s average rate (learn.org). All of these factors work against it in order to bolster what Porter’s Fifth Force details as the, “Threat of new entry. Profitable markets attract new entrants, which erodes profitability. Unless incumbents have strong and durable barriers to entry, for example, patents, economies of scale, capital requirements or government policies, then profitability will decline to a competitive rate” (cigma.org, 2013). The fact that this college is making itself such a target to be overtaken by competitors suggests that there will be new entrants to the market.

Strategic Positioning Analysis
Despite some of the concerning weaknesses that the college possesses, it still has a number of Unique Selling Points which directly connect to its current and future viability. As already discussed, its biggest selling point has got to be its extreme affordability. “Cost of tuition and living expenses is $2,313 lower than the national average for in-state students… Student debt following graduation is $5,976 lower than the national average” (learn.org). So many people turn to the public college sector to begin with because they can’t afford private college tuition and because they don’t want to graduate with loads of debt. CF is able to deliver exactly what so many students are looking for, without sacrificing any of their academic standards. The college offers over 70 degree programs in a host of fields, from agribusiness to criminal justice technology. They can educate and prepare students for literally any career they could possible dream of. Hence, the college has been able to achieve what so many higher institutions continue to strive for: they’ve made a first class higher educational experience accessible and obtainable for students all over the state.
Creating a strategy for a sustainable competitive advantage is not as a daunting for a college like CF, because many of the pillars for such an endeavor are already in place. For example, the school has many cutting edge programs in technology, informational sciences, computer science and comparable aspects. The campuses are also very new, with many state of the art informational technology stations and parts of infrastructure. The school needs to make these traits a more sustainable aspect of the college identity. "‘Sustainable’ means over the longer term - not just today. ‘First to market’, for example, is not sustainable. It may buy you a few months, but if you show traction, competitors with deep pockets will catch up and bypass you quickly, jeopardizing all your investments” (Zwilling, 2010). In the case of CF, in ten years, their technology is going to seem outdated if it’s not updated regularly. This is an expensive commitment to make, but its one which will serve the college well over time, it being a place that is synonymous with “cutting-edge technology.” The school already has a number of accolades which add to its unique selling points. Perhaps its most unique selling point, is that it really does offer a great deal of academic excellence.
The level of academic excellence provided is comparable to that of a private university. “CF was ranked among the top 150 colleges in the nation for quality in 2011, 2013 and 2017 in by the Aspen Institute College Excellence program. Rankings are based on how much students learn, how many complete their programs on time, and their success in the job market upon graduation” (cf.edu). This demonstrates that CF already has the strong foundation in place to attempt to heighten its academic credibility. The accolades that it has already achieved are indeed rare for a public college. As part of its strategy to gain a greater competitive advantage, the college needs to exploit its current strengths even more.