Strategic grouping” is a commonly used tool in sector analysis, which facilitates the creation of maps of the different companies operating in a given sector based on the most relevant criteria for making competitive decisions. A strategic group is one that groups companies that follow a similar strategy. The criteria for classifying strategic groups vary, depending on their range of products or services, the geographic markets they cover, distribution channels, brand consolidation, the degree of vertical integration in their spheres of activity, the quality of their product or service, and price range.
From a global perspective, seeing business schools in terms of strategic groups allows us to compare their performance, as well as to benchmark them, measure the barriers that prevent mobility between different groups, as well as to guide stakeholders.
Different classification criteria can be applied to business schools, but when giving presentations or developing strategies for my own school, I have focused on two:
- First, the global presence and reputation of the school, measured in terms of international accreditation, position in rankings, proportion of international teaching staff and students, international alliances, recognition by stakeholders (e.g., recruiters, faculty, alumni) and programs they have set up in other countries;
- Second, the range of programs a school has developed, as seen in the previous section, whether it is focused on specific types of programs, such as executive education, or if it covers all educational segments, and is a full-service school.
The graph above shows these two criteria according to whether they are vertical (based on reputation and global presence) or horizontal (based on their range of programs).
In the upper part of the chart are the most prestigious global schools, ranging from the so-called boutiques, centered on a segment of specific programs (IMD, which earns over 85 percent of its income from executive education programs is perhaps the best example of this) to the other end of the spectrum where the integrated schools—or full-service—are to be found, such as Wharton, which runs programs from undergraduate level to executive education, all at the highest levels of excellence.
Based on this classification of strategic groups, the continuing process of globalization will oblige business schools — particularly the elite institutions — to choose between two strategies:
- One, to find ways to set themselves apart from the competition through specialization in a particular aspect of management education (for instance,IMD in executive education, or the Centre for Creative Leadership in the area of leadership);
- Two, by becoming full-service business schools, thus attaining the critical mass that will allow them to cover all educational segments, and by having a broad-based teaching faculty, as well as a global presence.
The failure to opt for either of these strategies will result in being caught in the middle, that is to say, lacking sufficient differentiation as far as programs go, and by not being large enough to compete internationally.
I believe that this trend is already underway in Europe, as shown for example byLondon Business School or IE Business School’s decision to enter the Master in Management or Master in Finance segment of the market. Talking to the deans of US business schools that until now have offered only MBA programs, some say that they are looking at entering the undergraduate segment, or designing new Masters in Management for graduates with no business experience.
Obviously, there are strategic groups that will be able to survive based on other models than the two mentioned above, either because their reputation or global prestige are not key factors for them, or because they have a competitive edge through cost. This will be the case with distance-learning providers, or with providers of local education such as public universities offering management programs targeted at domestic constituencies and that are financed through government subsidies; factors that block them from competing in the global market.
In sum, business schools cannot rely on the “business as usual” maxim to compete in a global higher education world. I have proposed two generic strategies that provide a solid basis for future growth, but intense competition will however remain a constant reference in the future. It is now time to concentrate on the next shaping force of education, the impact new technologies have on the learning process.
This article was adapted from my book “The Learning Curve: How Business Schools Are reinventing Education” (London: Palgrave Macmillan, 2011).