Coursera’s Competitive Advantage: Introduction


Chapter 1. Introduction

Update: This document is now published on ResearchGate with DOI: 10.13140/RG.2.1.2902.8088

1.1 Research Background

All over the world, more people are going to university (Excellence v equity, 2015). Nevertheless, there are remaining gaps in terms of access and opportunity. UNESCO data as published by the World Bank (UNESCO Institute for Statistics, 2015) shows that global enrolment ratio (henceforth, GER) for tertiary education of both sexes in South Korea is 97% (2014) and in Finland 92% (2013); these are some of the most educated population on Earth. In Asia, China’s Hong Kong SAR has a GER of 67% (2013), Macao SAR 63% (2013), and mainland China 30% (2013). Among South East Asian countries, there is a huge gap from Lao’s 18% (2013) to Thailand’s 51% (2013) with Indonesia (32%, 2012), Philippines (34%, 2014), and Malaysia (37%, 2012) occupying the middle ground.

In a knowledge economy a university education is unquestionably beneficial for the holder. Not only it opens doors to jobs with better pay, university graduates have also been documented to have better job satisfaction, healthier lifestyle, and more active societal participation (Baum, Ma, & Payea, 2013; Bok, 2012) not only benefiting themselves but also the society at large. It is therefore in the interest of the society and the government as well to get to make it possible for more people to go to university. It is not an easy feat though, as The Economist (Excellence v equity, 2015) noted:

But access to higher education is not binary. Some provision is excellent and some is not, and the returns to low-quality higher education are poor. So the ambition expressed by pretty much all governments everywhere to widen access to good-quality higher education conflicts with another global force: competition to create the best universities.

Questions of quality and accessibility remain. Attending university is not only costly in terms of the tuition fee, but also living costs and the loss of potential income during the time spent studying vis-à-vis working. To moderate between these interests, the Germans have been known with their apprenticeship system (Ein neuer Deal?, 2013) and the British have had The Open University since 1969. In more recent time the presence of the World Wide Web has opened a new vista of learning possibilities that to some degree decoupled learning from the traditional learning institutions and opened the pathways for individuals to customise their own learning to satisfy their unique interests and needs. Noteworthy among these are the Massachusetts Institute of Technology’s OpenCourseWare (henceforth, MIT & OCW) and Apple’s iTunes U. MIT OCW provides recording of courses from MIT classes for free to be downloaded by anyone while iTunes U offers free audio and video from various institutions such as universities, museums, and news portals as means for edification. The language of delivery has been and is overwhelmingly English.

The year 2012 witnessed a new innovation in education. In that year a new jargon was introduced to the English vernacular: MOOC, short for massive open online course. Three MOOC companies were established, in chronological order: Udacity by Stanford’s Sebastian Thrun, Coursera by Stanford’s Daphne Koller & Andrew Ng, and edX by Harvard University & MIT. In November that year, the New York Times crowned 2012 as “The Year of the MOOC” (Pappano, 2012) while the MIT Technology Review published an article hailing “free online learning … particularly … MOOCs” as “the most important innovation in education in the last 200 years” (Regalado, 2012).

In June 2012 Daphne Koller, the co-founder of Coursera, shared in her TEDGlobal talk that Coursera had a goal “to take the best courses from the best instructors at the best universities and provide it to everyone around the world for free” (Koller, 2012). In other words, reflecting upon the data presented earlier, Coursera had the ambition to close the GER gap of global tertiary education among the more affluent and the less fortunate people across the globe. To fulfil this ambitious goal Coursera then needed to partner with those instructors and universities, provide the platform to deliver the courses to “everyone around the world”, and employ a business strategy that would enable it to do the delivery “for free” – and obviously, in a sustainable manner.

In the intervening years there have been a number of pivots done by the MOOC providers and increasing number of studies conducted on MOOC. A number of people who have worked at, with, or on Coursera recently offered their perspective on the current state of MOOC (Chen, et al., 2015):

… The overwhelming majority of people who complete MOOCs report career or educational benefits, and a substantial proportion report tangible benefits such as getting a new job, starting a business, or completing prerequisites for an academic program. … Among nonstudent MOOC completers, people with lower socioeconomic status, people with lower levels of education, and people from developing countries are all more likely to report educational benefits.

… Of course, MOOCs are still available only to people who have access to the internet, and completion rates remain low. However, there are now over 1 million people who have completed courses from Coursera alone, more than 100,000 people have certified completion from HarvardX and MITx courses, and our findings suggest that many of them derived career or educational benefits from the opportunity.

These claims mean Coursera, alongside other MOOC providers, have succeeded to some degree in achieving the goal its co-founder Koller stated in 2012, offering many people opportunities they would not otherwise have. Along the way they have built altogether a new industry and chart paths previously unknown. The challenges they face would be figuring out the shape of this new industry, their position in it, and the stirring the dynamics of the industry for their best advantage. So far, the major players have managed to do well. Their challenge would be how to keep their competitive advantage and monetise their product sufficiently so they can fund their own operations and pay back their venture capitalists.

This dissertation aims to analyse MOOC industry structure, the competitive advantage that has enabled Coursera to achieve the successes it claimed in the intervening years, and how it maintains a sustainable competitive advantage in the future.

1.2 Definition of Terms

In order to assist readers to gain better comprehension on the scope of this work that may lie beyond their convenient areas of expertise, a list of abbreviations and terms is provided here alongside their definition and/or brief explanation. This list is sorted in alphabetical order.

Gross enrolment ratio (GER): The number of students enrolled at certain education level (e.g. high school) divided by the population of that particular age group. It is usually measured by country, age group, and sex. In percentage, the GER can be more than 100% if there are students enrolled from lower or higher age group. This has sometimes been the case, for example, in South Korea. GER for tertiary education is calculated as five years (or five age groups) after the last year of secondary education. (cf. Soubbotina, 2004, pp. 136-137).

Higher education institution (HEI): a generic name for institutions offering post-secondary education; these institutions may include various types of academies, colleges, and universities that may vary from country to country. It may be used interchangeably with similar terms such as institutes/institutions of higher learning, institutes/institutions of higher education.

IDCourserians: A community of MOOC users in Indonesia. It has presence in several cities with a core team based in Jakarta, Indonesia. This is one of the longest-running MOOC community in the world that has grown from Coursera users and has been documented in a dissertation submitted to Graduate School of Education, University of Bristol (Firmansyah, 2015).

MOOC: massive open online course; it’s called “massive” because typically a course enrols thousands of learners, “open” because it’s free, and “online” for the method of transmitting the learning experience.

1.3 Research Questions

This dissertation aims to answer the following questions.

  1. What are Coursera’s business-level strategy and competitive advantage?

By asking this, a quest is set to (a) define the MOOC industry, (b) define Coursera’s SWOT, and (c) delineate Coursera’s value chain. Due to Coursera’s unique role as the one of the first players in MOOC industry and one of its biggest players, special attentions will also be paid to history-bending events in the short history of MOOC and Coursera for these may also shine some light into the current state of Coursera’s competitive advantage.

  1. How can Coursera maintain its competitive advantage sustainably?

While it is interesting to look backward and understand how things have become the way they are, it is also desirable to look ahead and see how new grounds can be broken so that Coursera can stay ahead in fulfilling its mission. This is the second aim of the dissertation.

1.4 Methodology

To assess the competitive advantage of Coursera and the overall working of the MOOC industry, the main method that will be employed in this dissertation is that of literature review. Resources from primary and secondary sources will be reviewed and synthesized to provide a systemic understanding of the working of the subjects at hand.

Whenever possible, other methods such as user interview and metadata will also be put into use either to corroborate or to contradict the claims made by the reviewed resources. The use of these latter methods is not likely to be significant though, considering the very limited time available for the writing of this dissertation.

The overall scheme of this dissertation will take the form of a case study. Coursera will be the main subject of the case with the MOOC industry as the context. To provide more rigour and coherence to the analysis and suggestions, other case studies published by renowned sources may be employed in the process of the writing. Whenever this is done, as in the case of any other resources, proper attribution will be provided to inform the readers of the part and extent these sources are used.

It’s high time to highlight some caveats the reader would inevitably encounter in reading this dissertation. The title and research questions of this dissertation may have prompted the readers that Porter’s five forces and value chain analysis will play a significant role in this dissertation. It’s worth noting though that Porter’s five forces was first published in 1979 and it has since been “reaffirmed, updated, and extended” in 2008. The Internet and its start ups have introduced new approaches and praxes of doing business. Porter himself has written specifically on this, titling his work Strategy and the Internet (2001) in which he dedicated one box titled “Words for the Unwise: The Internet’s Destructive Lexicon” in which he wrote:

Instead of talking in terms of strategy and competitive advantage, dot-coms and other Internet players talk about “business models.” This seemingly innocuous shift in terminology speaks volumes. The definition of a business model is murky at best.

Another series of work has made a major entry into the world of strategy in the past couple of years, Osterwalder & Pigneur’s Business Model Generation (2010) and its sequel Value Proposition Design (2014). One can perceive that these works don’t always align with the Porter and his now-classic five forces – and that’s why they are ground breaking and useful.

This dissertation will not be constrained within any single framework but instead will make use of a rich and eclectic approach employing multiple frameworks to capture the essence of the task at hand and make the best effort to cover some ground within these limited pages.

1.5 Dissertation Structure

This following discussion in Chapter 2 will start with dissecting the MOOC industry and Coursera’s place in it. First, the supply and demand characters of the MOOC industry will be assessed, followed by a definition of Porter’s five forces and the players in the MOOC industry. Chapter 2 will then conclude by delineating key factors for competing in the MOOC industry.

Chapter 3 will take a closer look at Coursera’s internal conditions: its history, the pivotal role it plays in the birth and formation of MOOC industry, and its current value chain. It will conclude with an assessment of the core competencies Coursera has developed up to this point. This will be followed by a zoom into Coursera’s business strategy in Chapter 4. This chapter will start with an analysis of Coursera’s SWOT, its target market and positioning, and how Coursera configures its value chain activities. A concluding remark on Coursera’s competitive advantage will wrap up Chapter 4.

The fifth chapter will discuss the changing landscape of HEI and life-long learning. It will start with discussing adjacent industries affected by MOOC, how MOOC also affects casual life-long learners, and afterwards conclude with a survey of the changing landscape of the world of learning.

Chapter 6 will look forward to sustaining Coursera’s competitive advantage. It will start by dissecting how the five forces of MOOC industry and their dynamic interaction affect Coursera and how Coursera’s value chain would adapt or maybe even pre-emptively anticipate the dynamics of the world of learning. This chapter will conclude by offering some remarks on the sustainability of Coursera’s competitive advantage. The last chapter, Chapter 7, will offer a conclusion of the whole dissertation while reflecting on its limits.

 

Let us now turn our attention by looking closer into the MOOC industry, starting with defining this emergent industry.

 

Bibliography

This is a tentative list, based on my latest overall work, not only the chapter posted above. Some of the sources below may not be quoted in the above chapter.

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Bok, D. (2013). Higher education in America [Rev. ed.] [Kindle Voyage version]. Retrieved from Amazon.com

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