Strategy Management

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There are several types of institutions, such as private colleges, community colleges, polytechnics, universities colleges, universities. In the case of Nilai University, it was acknowledged as university college before upgrading as university. Under the regulation of Private Education Department within the Ministry of Education, the Private Higher Education Institutions Act 1996 had allowed Nilai University College for the establishment of private universities to upgrade as Nilai Uniersity. Nevertheless, the barrier of new entrants will be increased as the establishment of government policy.

Bargaining power of buyer

The bargaining power of buyers is defined as the ability of buyers to bargain down companies’s prices or to increase the companies’s costs by obtaining better products or services. Buyer concentration means buyers have high power when the buyers are concentrated and represent a majority market share. Powerful buyers will be assumed as threat because they can lower price of products, resulting in a loss of companies. Bargaining power of buyers will be increased in several conditions. There are a few customers purchase in large volumes, standardized products but distinctive from other competing products, low switching cost from original supplier to new supplier and customers are able to communicate the suppliers directly for their own activities.

The category of buyers basically consists of students and parents. Pringle and Huisman (2011) concluded that the bargaining power of students increases as the standardized programmes offered in the universities. Similar programmes in different universities allow students to compare and think twice whether which university is better than the others. In the perspective of Bachelor degree of business administration (BBA), there are a lots of universities offering the programmes such as University Putra Malaysia, UCSI University, INTI International University & Colleges, Manipal International University, Multimedia University and others. It shows that not only Nilai University is offering BBA programme, students have the choices to choose other universities. When the number of choices increases, it will also increase the power of students. Conversely, Nilai University also offers the specific programme which is Diploma in Aircraft Maintenance Engineering. Many of the students are attracted to study this programme as there are little universities offering aircraft programmes which are University Kuala Lumpur, Management and Science Univerisity, Lincoln University College, and Taylor’s Unversity. In this case, the power of students will be decreased because the choice of students decreases.

Switching cost also influences the bargaining power of students. Normally, buyers’ switching cost happened when products are standardized and formalized. Buyers are unable to influence the product or price. Wilkinson (2013) said low switching cost will increase students’ power. For the case of same programme, the lower tuition fee’s programme certainly will attract more students to enrol. Additionally, those universities located at convenient location area with lower tuition fee have more influencing power to attracting new students for studying. Among numbers of private universities, Nilai University can be considered as top rated and affordable private university. If compared to the universities that located in Nilai area, INTI Nilai and Manipal International University are much more expensive than Nilai University. Hence, high switching cost to other universities will cause students to stay in Nilai University, because students and parents can save a lots of money.

Other than that, at the age of information system, internet has been widely used in education area. Juan et al. (2012) stated that online distance teaching method is popular in universities. Some of the students do not need to attend for the lecture and tutorial class. As the case in Nilai University, besides face to face interaction teaching method, it also provides online learning mode for students to study in off-campus. In nutshell, the information and knowledges delivered are no longer important in universities. Students nowadays are not emphasis on the quality of universities. So, it will increase the bargaining power of students.

Bargaining power of supplier

Supplier power refer to the ability to apply the pressure to the customer by raising the prices, reducing the availability or lowering the quality of their product. Supplier power is one of the force that can built up the competitive structure of an industry which can affect the competitive environment of the buyer and influence the amount of the profit earned by the company. The supplier power can divided into 2 categories which is strong and weak. For example, strong supplier power can enforce the buyer by raising the product prices and lowering the product quality without affecting the demand of product by the buyer. On the other hand, a weak supplier will make the industry less competitive and help the buyer to increase their profitability.

There are some factor which can determine the supplier power which is supplier concentration, cost of switching, threat of forward integration, price sensitive, availability of substitute of product, product differentiation and so on. Supplier concentration means that there are only a few supplier but many buyer in the industry. The cost of switching means the cost needed to switch to the original supplier to the other supplier. Price sensitive means the buyer not really realize the market price. If the supplier have high supplier concentration, the supplier power is high. If the buyer have high cost of switching, not price sensitive, the supplier power is high. If the availability of substitute of product is unavailable, the supplier power is high.

The category of supplier in university consist of academic staff, administrative staff, book publisher, technology services, and so on. For example, Nilai University also has the same category of supplier. As a supplier, Nilai University provide high quality academic staff to lecture all the students. It also have the high quality administrative staff which help the students to settle any problem. For example, Nilai University has a program which is use to help the student who has financial problem. Nilai University also got provide large amount of reading materials in library and high technology service. For example, Nilai University has provide large amount of books, a number of computers which are sufficient for students.

Nilai University has high supplier power due to some of the factors which is cost of switching and product differentiation. For example, a student