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“Added value” and “exclusiveness” are key factors in the competitiveness of small education agencies in Australia

05.10.2016

“Added value” and “exclusiveness” are key factors in the competitiveness of small education agencies in Australia

Опубликовано в журнале "Менеджмент в России и за рубежом" №5 год - 2016

Chang R. I.,
professor, faculty of business King’s
Own Institute, Sydney, Australia

Petrov А.,
M.Chem.Eng. M.Eng.Mgmt,
M.B.A, Sydney, Australia

John R. Magin J. R.,
Grad. Dip., M. App. Sci.,
D.B.A. (candidate), Sydney, Australia

Limarev P.V.,
PhD economic, associated professor
in economics and marketing,
Nosov Magnitogorsk State Technical University,
Russia

Belkovsky A.N.,
cheef of information and organizational department,
Lotoshinskiy district
of Moscow region

 The stakeholders of the education services for overseas students in Australia

The main stakeholders of the education services for overseas students in Australia include but are not limited to the government agencies of the host country Australia and the government of the country the students come from, industry, broader community, professional associations, education providers (in this particular case the University of the Sunshine Coast), the sponsors of the sponsored students and the international students themselves [1]. As independent business entities, the educational agencies also play a significant role in the recruitment and the attending of international students.

Among the stakeholders who pay money for the educational services we focus mainly on actually international students or their sponsors. Also, we have excluded cases where the government of the home country or Australia is funding the students. According to this simplification we consider international students as “donors” and education providers, education agents and government agencies of both the home countries and Australia as “beneficiaries” of the educational services for international students in terms of their funding.   

The competitiveness of the agencies and institutions on the educational markets

Educational Services for Overseas Students is the fourth largest export for the Australian economy [2]. Australia is one of the largest providers of educational services for overseas students worldwide [3]. Australia is one of the leaders of the so-called ‘Western Economies’. The official language in Australia is English that is the “lingua franca” (world-recognized language of communication) by default.  It makes Australia one of the most popular destinations for international students.

There are many higher educational institutions both Universities and private education providers that offer various courses for international students. Higher education has the biggest share of this export market. Many different universities and non-university higher education providers compete for the international students in the market for educational services [4]. Australian private higher education providers depend heavily on the incomes from the tuition and other fees paid by international students and for numerous providers it is the only source of funding they have. Universities are partly funded by the Australian government and better protected by its agencies according to historical records and reputation. However, the performing non-university higher education providers successfully compete for international students.

Educational agents play a significant role in Australia and are responsible for bringing 50% to 60% of commencing international students to higher education providers [5]. The activity of the educational agents who represent the higher education providers is not heavily regulated by government and it makes this business very lucrative and very competitive at the same time. Usually, the price of the education for international students includes the educational agents’ commissions that are meant to be the main or only income for the educational agents.

“Added value” makes educational agencies look and work better than others

Educational agents in Australia represent the education providers. However, as we know the market is very competitive and education providers expect educational agents to add value to the educational product the providers offer to their students. The combined effort of the education providers and the agents who represent them helps international students with their studies and life in Australia and can make a difference between similar courses offered by similar higher educational institutions.

The ‘added value’ component can appear in form of offers that educational agents usually make to their students and any other extras which might compliment the services that the education provider offers and usually stays “out of the scope” of educational agents. Usually educational agents provide their students with all possible information on education providers and the courses they provide the prospective students. The “Education Services for Overseas Students” (ESOS) Act 2000 regulates the relationship between the education providers and the education agencies they partner [6].  In addition various courses for educational agents are available in Australia and the educational agents are taught extensively about the services available and the desirability for the agents to provide these services to their students.

However, more or less any education agent can, must or should provide similar services as mentioned above to their students. “Ceteris paribus” the educational agents who really want to stand out from the wide range of agents available to the students should use any possible means to add some value to what they propose to the students and the qualifications and study processes the education provider proposes to the students. It can be English language training, the establishment of cross-institutional connections between the education providers they represent, taking an active part in the academic research the providers and the students conduct, employment assistance for the graduates of the education providers and many other possible items depending on the skills, experience, goodwill and financial capacity of the agents. 

These “extra” services and students’ support might be either gratuitous to the students or for free. As mentioned above, international students in Australia historically are not charged by the educational agents whose main or only income is commissions paid by the education providers [7]. The ability to deliver the ‘added value’ to their students free of charge would significantly increase their chances of winning in such a tense competition for the right to represent the students. In other words, directly or indirectly, the ‘added value’ will be the pay off for those education agents who provide these services to their students.

Does size really matter? Competitiveness of small agencies on the market

Large educational agencies as well as any big businesses have their “advantages” and “drawbacks”. No doubt, the big agencies have a large proportion of the education providers’ representation and subsequently are in a more favourable position with Australian immigration authorities, yet the biggest educational agent IDP is partly-owned by the Australian universities [8] . Large education agencies have more resources to fund their activities including those ones we can refer as to ‘added value’.

At the same time smaller educational agents are more flexible and inventive due to the need to survive. Smaller educational agents are usually more bound to their education providers whereas large agencies work with many of them and spread their resources among various education providers. Large agencies may be big in terms of the numbers of students they bring overall, but for each particular education provider they might be as not as big as the smaller education agencies in terms of the numbers of students delivered to each education provider.

Smaller agents are able to create a “critical number” of students to win a particular education provider over. The agents can take the initiative and set up a partnership between the education providers they represent. The cooperation of the providers gives them more bargaining power in their communication with governmental bodies and the competitiveness to attract potential international students. Smaller agencies and individuals usually Australian residents and have very close contact with the students and the education providers they represent. The working relationships between education agents, education providers and international students make the quality of their education services higher especially because of their very efficient and fast two-way communication.

Is exclusiveness the proper way for relationships between agents and institutions?

Australian education providers sometimes make exclusive agreements with the most efficient and largest education agencies in certain geographical markets of the international students. There are reasons for such exclusiveness. The agencies specialize in these markets and any market has its own specifics. Well established educational agencies with a recognized reputation among the case officers of the Australian immigration offices abroad have better chances for their offshore international students to be qualified as “genuine temporary entrants”. Subsequently, their students have more chances to be granted with student visas that significantly pulls down the number of unsuccessful applications and the ratio of visa refusals for the education providers. It is a very important criteria for the education providers in terms of the so-called “immigration risk factor” of Australian education providers and new government arrangements regarding future initiatives toward streamlined visa processing [9].

As mentioned above for a particular education provider not only a large education agency can benefit from exclusivity. Smaller educational agencies with the ability and the will to tie themselves to only a few education providers can be very competitive and can bring more students compared to large agencies with the larger number of education providers they work with. Such exclusive relationships might be justified by a written agreement but that’s not the only case.

There are certain benefits for the education providers and the educational agents to have an exclusive arrangement with each other. The education providers would not need to spread their marketing support to as many different educational agents. The expenditures on education agencies’ management would be minimized. Subsequently, education providers can increase student–staff ratios without compromising on the quality of their education [10]. A long lasting partnership develops mutual trust and interdependence which makes businesses runs faster and more efficiently. The education providers have the ability to coordinate their activities together with the exclusive educational agents and develop strategic management plans for the education provider’s operation.

There are certain benefits for the educational agencies which choose to work only with a few selected education providers rather than spreading their efforts among many.

Only those education agencies which are based in Australia have access to communication with government authorities such an Austrade via education providers. The education providers would support the education agencies only in those cases where they help the educationl agencies work exclusively for the education providers. In those cases where the education agency willingly chooses to work only for the education providers, the education providers represent the interests of the educational agencies before the government authorities.

The education agencies with the exclusive rights can concentrate their activities on helping their students and the education providers they represent.  They do not need to interact with many education providers that takes up time and resources. The exclusive educational agencies become ‘tied up’ to the education providers and are able to help the providers not only with student recruitment but also in fields that are usually “out of scope” for education agencies. It might be academic researches, publishing, public relations and building inter-institutional networks with other education providers and educational agencies. All the above activities can be called ‘added value’ that the educational agents provide their partner education providers with.

Symbiosis of different education institutions with “shared” best agents

The ability to ‘add value’ and be the most welcome education agencies for the education providers makes a unique bond to join the providers to each other. Global university alliances and the advantage of co-working in the industry [11] is the way that most advanced Australian universities develop their strategic competitive advantage in the market of education services including those for international students. Unlike the university sector, private higher education providers in Australia usually do not have the ability or the will to make strong coalitions to withstand the sometimes hostile environment for education services for overseas students. Being mostly in the public sector, universities have obvious preferences from the government. Private education providers have no government funding and a much lesser level of support if any from the government. Whilst it is highly competitive and divided, the private sector of higher education needs some ‘centres of crystallization’ which can be the exclusive only commissions-based education agents limited in number to two and three agents [12] who are however very well trained and are supported by the education providers and are loyal to them.

The exclusive educational agents strongly back up the education providers of their choice. However, the education providers have sometimes very different courses and qualifications to offer. Some of the education providers are actually business schools, some of them technical institutes while others offer qualifications in Arts or sport. Also, the educational agents represent not only higher education providers but language schools, high schools and vocational education and training colleges which can be a pathway to the higher education.

The exclusive education agents become ‘shared’ by the education providers in case the courses the education providers offer ‘compliment’ but not ‘overlap’ each other. It is of mutual benefit to the exclusive education agents and the education providers to promote each other to prospective international students. If this is a case, the education providers and the educational agents can combine their marketing efforts and communication with government authorities and can become more competitive when dealing with universities and other non-university education providers. 

“Do or die” principle as a guide to increase “added value” and become “exclusive” for many small education agents

Larger educational agents in Australia are competitive at the ‘premium level’ because they usually have large number of offices overseas, sufficient funding and can provide "guest" university representatives with venues for exhibitions and events. At those times when the Australian government obviously favours the university sector, larger educational agents which have agreements with the top Australian universities have more opportunities to survive. They can bring a significant number of students for many universities and the universities value that but they cannot or do not want to ‘tie’ themselves up to one or a few particular education providers and this is an opportunity for their smaller counterparts.

The smaller educational agents usually lose at the university level because of the reasons mentioned above. They are simply not big enough and the economy of scale works against them. They must be better for the international students, closer to them and be ready to help at any time by helping the education providers to communicate with the students and provide the students with all possible support.  The increasing numbers of recruited “international students have allowed institutions to maintain and develop academic programs” [13]. The “exclusiveness’ of the education institutions for the education agents makes the education agents larger for the particular education providers.

Working for just a few education providers is one of the ways of maintaining an advantage for smaller educational agencies. That certain level of trust which comes from the cooperation will enable the smaller agencies to add some strength and competitiveness which provide them with their entrusted education providers in exchange for the loyalty of the educational agencies. Adding value to the educational services the education providers offer to their international students is the way the educational agents can ‘pay back’ the education providers support in the market and their communicating with the government authorities. The smaller education agencies would hardly overcome the tough competition between themselves and the contest from larger education agencies. Literally, adding value to the education services education providers offer to the international students and working with only a few carefully selected education providers is the question of ‘do or die’ for many smaller education agencies in Australia.

Conclusion:

The “added value” of educational services by education agencies is the exceptionally clear and understandable factor available to all stakeholders of Education Services for Overseas Students in Australia. It can be exposed and proven for the international students and Australian government agencies including the Department of Immigration and Border Protection. The evidence of “added value” would be a good indicator for all prospective partnering institutions prior to the recruitment of the agents by the institutions. The education agencies which willingly want to become “exclusive”, devoted and loyal just for a few education providers have proven to be more successful and have more support from the education providers they represent.  The agents who set the highest standards in the business will finally be followed by other agents in the industry or they will simply become extinct. The significant improvement of the quality of services of education agents with the “added value” approach will have a very positive impact on overall performance and quality assurance of the whole of the education for international students industry.

References: 
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