International Business Environment:Accompanying Notes for Students

CASE 2: Internationalization of Higher Education
Read the case study by Southern titled ‘Case Study: The Internationalization of Higher Education’ and consider the questions set out below.  This case concerns the University of Liverpool, your own institution, and looks at one aspect of the University’s strategy for internationalization.

As you read the case think objectively about what it is that the University seeks to achieve in developing a portfolio of online programmes with a for-profit partner.  You might find this case intriguing because you are part of the strategy the University has for internationalization.  Make a note of some questions that you would like to explore in more detail and relate these to some of the theories from the module.

Think about the following.
•    How is the international higher education sector changing?
•    What type of change is taking place at the national level?
•    What challenges face an institution like the University of Liverpool given the change experienced internationally and nationally?
•    Is Liverpool’s internationalization strategy going to provide more choice for students and/or a better student experience?
•    Would it be better if the University focused more on their own on campus provision rather than partnering with for-profits or other institutions, like the one in China?
•    From this case can you identify some pros and cons from globalization?

Alan Southern
February 2015

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Case Study: The Internationalization of Higher Education
Alan Southern
Introduction
This case considers the internationalization of higher education. Higher
education in the UK has undergone considerable change in the last three
decades and one part of this is the way it has become much more
international. However, this has been a slow burner and has taken a long
time to come to fruition. Since 2000 there has been an increased emphasis
on the international character of the higher education sector, with global
league tables providing greater levels of information on leading higher
education institutions (HEIs) and intense competition for the brightest home
and international students. This has been further stimulated since 2010 by
reforms introduced by the Coalition Government that encourage more private
enterprise in the delivery of UK higher education. Some would argue that
these changes represent neoliberal policies driven by globalization that seek
to serve wealth creation over and above all other objectives, such as the
provision of free universal education as a public good. At the same time there
is evidence of technological disruption as more HEIs offer online distance
learning and the emergence of Massive Open Online Courses known as
MOOCs. We look at this in more detail in the following section and then turn
specifically to how one institution, a well established UK university, sought to
increase its global standing through the development of an online distance
learning provision with a for-profit partner. The university in question, the
University of Liverpool, is a member of the elite Russell Group and recognized
as a top 100 global HEI.1
The global demand for higher education
The demand for higher education is global and is increasing. HEIs in the UK
appear to be well placed to recruit and to compete for what are regarded to be
the brightest students around the world who are able to travel to get the
education they regard as the best. In this sense degrees are increasingly
1 Ranked in 65th position according to the Times Higher Education 2015 Global Rankings.
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seen as a positional good, something with a relative standing in the world so
university rank is important. At the same time the provision of higher
education has become increasingly commodified with evidence to suggest a
growing divide in the recruitment of privately education and state-educated
students to the Russell Group HEIs.2 UNESCO (the United Nations
Educational, Scientific and Cultural Organization) recently estimated that in
2012 around 4 million students3 studied with an institution abroad, a figure
that has doubled from 2 million in 2000. Traditionally it has been HEIs in
developed countries such as the USA and the UK that have proven to be the
most popular destination although HEIs in the developing countries are now
proving attractive not least because they can act as a regional hub, involve
less cost to the student and can often provide more suitable education
centred on particular cultures.
Table 1 Demand for international higher education, 2012
Most popular destination % Country of origin No.
USA 18 China 695,000
UK 11 India 190,000
France 7 Republic of Korea 124,000
Australia 6 Germany 118,000
Germany 5 Saudi Arabia 62,500
Russian Federation 4 France 62,500
Japan 4 USA 58,500
Canada 3 Malaysia 56,000
China 2 Vietnam 54,000
Italy 2 Iran 52,000
Source: UNESCO, numbers rounded up to nearest 5004
As we can see in Table 1 the top five country destinations for international
students entering higher education in 2012 accounted for nearly half of the
total. Five destination countries hosted nearly one-half of total foreign
students: the United States (hosting 18%), United Kingdom (11%), France
(7%), Australia (6%), and Germany (5%). Yet this top five have seen their
ability to attract international students drop from 55% of the total in 2000 to
2 See Top university ‘not a destination for many schools’. Available: http://www.bbc.co.uk/news/education-31005170
Accessed 27 January 2015.
3 This figure refers to students who have crossed a national border to study and does include distance-learning
students.
4 See Global Flow of Tertiary Level Students, UNESCO Institute of Statistics. Available:
http://www.uis.unesco.org/Education/Pages/international-student-flow-viz.aspx Accessed January 10th 2015.
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47% in 2012. The UNESCO figures show growth in demand for higher
education from all the major new economy regions such as the Middle East,
Central Asia and sub-Saharan Africa. Almost 700,000 students travelled from
China in 2012 to attend university abroad, almost 200,000 from India and over
100,000 each from the Republic of Korea and Germany. These figures
indicate how accessibility to mass higher education has become a norm for
many young people and that prestige, research-led HEIs in developed
countries are committed to providing international education at a time when
resources at home are becoming scarcer and competition is increasing.
The supply of international students is part of a broader globalization trend
and has provided a new opportunity for HEIs in the UK to internationalize.
Overseas tuition of around £3 billion accounted for about 10% of the total
revenue to UK HEIs in 2010/11.5 Meanwhile the UK Higher Education
Statistics Agency (HESA) show of 2.3 million students studying at HEIs in
2012/13 in the UK, over 425,000 were from outside the UK. There were a
further 600,000 students who were studying for a UK qualification while
overseas. Of these 60% were registered with overseas partner organizations,
just over 20% studied via distance learning and 3% studied at an overseas
campus of a UK HEI.6 There are at least four options for international
students: they can be recruited to UK HEIs to study on campus here in the
UK; they can study on campus abroad when the host university is able to
provide an education partnered with a UK HEI, or on an overseas campus
that is owned or part owned by a UK HEI. Alternatively they may study by
distance learning with a UK university. The sector is also coming to terms
with new forms of technology impacting on provision. This is technological
disruption driven through initiatives such as MOOCs provided by for-profit or
not-for-profit collaborations such as Coursera and FutureLearn. Yet in the UK
the present Coalition Government has given out a mixed message about
higher education and international student recruitment.
5 McGettigan, A. (2013) The Great University Gamble Money, Markets and the Future of Higher Education, Pluto
Press: London.
6 See Free Online Statistics – Students & qualifiers, HESA. Available: https://www.hesa.ac.uk/free-statistics
Accessed January 10th 2015.
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On the one hand the Department for Business, Innovation and Skills has
argued that higher education is a key export sector and has encouraged HEIs
to nurture the market for their education provision. David Willetts previous
Minister for Universities and Science, and Secretary of State Vince Cable
have sought to foster more private sector involvement in the delivery of higher
education. The Coalition have actively supported the involvement of for-profit
organizations such as Pearson and US-based Apollo Group in the sector
while calling for a greater debate on the form UK HEIs should take to access
investment and ensure they are viable and fit for competition. This has taken
place at a time when they have withdrawn the role of the state as underwriter
of those institutions who may experience financial difficulty and while
considering new ways to expand degree awarding powers to for-profit
institutions such as the University for Law. In contrast the Home Office has
implemented changes to the visa system that has made it more difficult for
many international students to travel to the UK for the purposes of attending a
university. Greater powers have been given to the UK Borders Agency to
enforce more stringent monitoring of international students while at university.
Despite this many HEIs are looking at innovative ways in which they can
augment recruitment from home and abroad especially in light of changes to
the funding of home and EU students (specifically the introduction of £9,000
fees and student loans) and as austerity cuts have reduced their access to
available public finance. At the same time there appears to be increased
interest from the international private sector to invest into UK HEIs as the
demand both global and national, for higher education continues.
One aspect of contemporary policy associated with globalization is the effect
upon public services such as education. Governments have attempted to
restrict the levels of public finance available to public services not only in the
UK but in other developed countries. Alongside this they have expected
public sector institutions and local authorities to become more business-like
and work in or develop markets for their goods and services. For some, it is
the anti-competitive aspect of publically financed organizations that provide
goods and services that mean they are not well suited to compete in
international markets. By encouraging more laissez faire, more free-market
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enterprise into these sectors it is argued, then this provides the way that
globalization can have an impact on providing more efficient delivery of
services that ultimately serves consumer choice.7 And of course the demand
for higher education is concomitant with a growth in student debt in many
developed countries, but especially in the USA where student debt is often
referred to as the next subprime crisis. Andrew McGettigan sees the reforms
aimed at HEIs as a means to privatize the sector by turning higher education
into a commodity, enabling greater levels of consumer choice and
transforming what was once regarded as the role of the public university with
broader civic responsibilities.
Delivering online higher education, everyday all over the world
Providing higher education on a global scale has become one important
aspect for the university that has a design on international prestige and
reputation. One university that has pursued an international strategy and
which launched online higher education provision at the end of 1999 was
seen as a market leader in this field. The initiative has already met with some
success in terms of student recruitment while future enrolment on online
education is forecast to continue growing.8 The University of Liverpool
entered into a partnership with a private sector provider of online programmes
and we look at the details of this here. It was an initiative that was part of a
broader strategy to raise its global profile through greater international links
with peer institutions to explore research opportunities, through the
recruitment of international students for on campus learning and by partnering
a Chinese university to create a joint venture in China, Xi’an Jiaotong-
Liverpool University in Suzhou. By the end of 2013 the University had 22
online programmes, wholly owned by the University and delivered in
partnership with the USA-based Laureate Education Inc.9 At the University
around thirty academics and a further cohort of nine professional support staff
were employed specifically to work on their online programme portfolio.
7 Deem, R. (2001) Globalisation, New Managerialism, Academic Capitalism and Entrepreneurialism in Universities: Is
the local dimension still important? Comparative Education Volume, 37(1) pp.7–20.
8 Allen, I.E. and Seaman, J. (2013) Changing Course Ten Years of Tracking Online Education in the United States,
Babson Survey Research Group, Pearson Sloan-C.
9 Laureate claim to be the largest higher education provider in the world. The for-profit have an estimated 850,000
students spread over 29 countries.
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The story of the online programmes at Liverpool begins back in 1998 when
the University had discussions with a small technology enterprise founded in
Israel called Kidum about distance learning teacher training. Kidum put
forward two proposals to the University for consideration: develop franchised
undergraduate programmes that could be delivered on campus in a number of
local HEIs outside the UK or alternatively, a wholly online distance learning
postgraduate programme. It was the second proposition that formed the
basis for further discussion, and then agreement was reached about how the
operation would be managed and development began. The University
believed that such an initiative would support their strategy for increased
postgraduate numbers, more international students and a greater global
profile while not adding to the stress on resources that physical attendance
can bring on buildings and staff time. In Liverpool an e-Learning Unit was
formed to manage the operation “based at the University and staffed by
University employees, responsible for quality assurance…” with an appointed
Director who leads the initiative on behalf of the University. The Unit becomes
accountable for ensuring University procedures are implemented and
standards of academic management are governed accordingly.
Meanwhile Kidum created a new company called KIT located in the
Netherlands. This was a separate enterprise with a sole objective of
managing the relationship with the University and putting the plan into
operation, thereby holding day-to-day responsibility for much of the
management of the online programmes. Teaching materials are specified by
University academics who work with KIT developers to ensure they are of the
correct quality. Classes are run on an IT platform in a virtual learning
environment with an average class size of around 12 students. Lecturers run
seminars across a period of eight weeks are employed as part-time staff by
KIT and approved as Honorary University staff. This means that the financial
risk is shifted from the University to KIT and allows the University to manage
its own risk to reputation while expanding its postgraduate student numbers
on an international scale. In the background at this time are an education
provider from Baltimore called Sylvan who provide some limited hands on
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support for KIT. So as a precursor to the launch of the first online programme
is the partnership between the University and KIT, and between KIT and
Sylvan, the latter a relationship that becomes much more important.
In the years between 2000 and 2004 the online programmes become
established in the University. The first programme in an MSc in IT located in
the Department of Computer Science and in 2001 the second, an online
Master of Business Administration (MBA) programme is launched prior to the
University opening a new Management School in 2002. KIT move to new
offices in Amsterdam and in the University staff are seconded from Computer
Science and the Management School to the e-Learning Unit. A new set of
Quality Assurance procedures is put in place dealing with academic affairs,
student progression and academic integrity, some of which predate the
policies on campus as the University is aware of the potential for queries
raised against the method of teaching and delivery of this type of
postgraduate learning. By 2004 over 1,500 students from across the world
are registered on the two online Masters programmes. The online MBA is
hosted in the new Management School where a new on campus MBA has
also been launched. Staff in the University recognize that there is now a
discrepancy between the curriculum of the two programmes and the Director
of the Management School calls for this to be addressed to aid moves to
achieve external accreditation for the School. Meanwhile a second IT
programme is developed and launched. The University is satisfied at this
stage with how the operation is being run despite it operating at a net cost.
The period from 2004 up to the end of 2006 sees a marked shift in the
delivery of the University online programmes. A major development is the
acquisition of KIT by Sylvan. As a small enterprise operating on a global
scale KIT reach a limit to what they can manage; they have already grown
their operation and expanded their offices in the Ajax Arena in Amsterdam
and now realize that unless they put in place a plan for expansion they will
face difficulties in achieving further growth. The University, informed of the
discussions taking place between Sylvan and KIT recognize that their
agreements with KIT will need to be reviewed as the takeover occurs. Sylvan
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restructure and part of their operation is sold off and they turn their focus
towards higher education realizing the potential for growth from a growing
global market. Sylvan rebrand themselves under their new name ‘Laureate’
and identify their target markets as national in the USA, and globally with a
plan to acquire more for-profit owned HEI campuses. Representatives from
the University travel to Baltimore and approve the relationship with Laureate,
sign a new legal arrangement and develop joint plans relating to growth and
revenue. Agreement is reached in principle to launch a new online Masters in
Public Health (MPH). From working closely with a small for-profit enterprise
that had its headquarters in Amsterdam to develop its online operation the
University now found itself working with a major provider of education, a large
for-profit with headquarters in Baltimore who had much more aggressive
plans for global growth than KIT could manage or envisage.
In the five years from 2007 into 2011 there is a marked period of growth for
the University and its partnership now with Laureate. In the early years a
number of new programmes are launched all at postgraduate Masters level in
health, management, finance and law. Towards the end of this period plans
are outlined to develop two professional doctorate programmes, a Doctorate
of Business Administration (DBA) and a Doctorate in Education (EdD). The
University expands the number of academics and support staff working on the
programmes although maintains its centralized management. Recognizing
the continued questions arising about providing online education and with a
for-profit partner, the University further details its management operation and
reinforces its Quality Assurance systems. A programme accreditation
strategy leads to third party accreditation for the online MBA by the European
Foundation for Management Development (EFMD) and for the MSc
Operations and Supply Change Management by the Chartered Institute of
Purchasing and Supply (CIPS). Other programmes are submitted for the
same type of third party accreditation, such as the IT programmes through the
British Computer Society accreditation process. The first online doctorate, the
DBA is launched in September 2010 followed 12 months later by the second,
the EdD. In 2011 a new Masters programme in psychology begins. New
structures are put in place to deal with the expanding numbers of part-time
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lecturers who teach on the programmes to ensure they are committed to
continuous improvement, while new systems to manage research ethical
review and approval for dissertation and doctorate students are implemented.
Figure 1 Number of graduates from online programmes, 2003-2011
By the end of 2011 there were around 9,000 students registered and in class
on the University of Liverpool online programmes. The average age of the
student was 38 years with the youngest student aged 21 and oldest aged 81.
Around 20% of students were under the age of 30 years and 46% aged
between 31 and 40 years. Only 3% of students had less than five years work
experience. While 38% of students were resident in Africa, 33% were African
by nationality. From the Middle East 15% were resident and 9% national;
18% resident in the American continent (North and South) and 18% nationals,
20% European residents with 30% nationals and 9% resident in Asia with
10% nationals. Less than 10% of all students were resident in the UK. As
Figure 1 shows, nearly a thousand students graduated in 2011 many of them
visiting Liverpool for the first time. While Laureate, responsible for employing
the lecturing staff, by this time employed 400 online academics to teach on
0
250
500
750
1000
2003 2004 2005 2006 2007 2008 2009 2010 2011
964
785
741
657
495
608 606
66 90
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the programmes, from 50 countries with over 50% of these based either in UK
or USA.
Final points
At a time of change in the higher education sector in the UK the University of
Liverpool chose an ambitious internationalization strategy. This was a risk for
the University because of the newness of the teaching method and the deal
with a for-profit partner. The focus on ensuring high levels of quality in the
provision of learning and teaching not only ensured that the University met the
regulatory conditions required by the Quality Assurance Agency in the UK, but
meant that its reputation in a global market place had a firm base from which
to promote the programmes. The programmes were targeted at a segment of
the international marketplace that previously only received marginal attention;
those in work with experience and often with family commitments that reduced
their opportunity to travel to access UK higher education. The delivery of
Liverpool education by the for-profit partner to places such as Africa and Asia
has widened the global appeal of the University. The formation of the e-
Learning Unit meant that in the early years standardized processes were
implemented across the programmes to embed the work into the daily
activities of the University and to make sure that whether the University’s
education was delivered on campus or online, that there was credibility in the
claim that standards were equal. The programmes were innovative at the
time, driven by a strong learning method and provided a stable revenue
stream from which more activities could be developed. However, the global
market has changed even in the short period of Liverpool’s relationship with
Laureate.
On the learning and teaching front one potential global change has come from
the emergence of MOOCs. Not only does this offer an alternative form of
learning, one that appears revolutionary, many of the HEIs involved are
prestigious institutions including the likes of Princeton, Johns Hopkins, and
the University of Manchester. While it is still to early to tell, MOOCs may also
represent technological disruption that comes to change management
cultures across many universities in the sector, particularly at the interface
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between quality standards and consumer choice. Reforms set out by the UK
Coalition Government has also changed the environment for the strategy
pursued by the University of Liverpool. By encouraging more for-profits into
the sector it would seem Liverpool is at the leading edge here too, with its
innovative partnership with such a large organization as Laureate. In this
regard however, the relationship has not translated into greater levels of
debate about consumer choice and student experience on campus. Although
the University does have an agreement with another for-profit called Kaplan,
through the Liverpool International College to provide access for international
students who are able to move on campus and register on either an
undergraduate or a postgraduate programme. The University has moved
quickly to achieve competitive advantage in the international online market
and is now also a partner with the MOOC FutureLearn in an initiative
completely separate to their relationship with Laureate. Whether they can
maintain such an advantage remains to be seen and how the larger political
debate about the role of the public university comes to influence the sector is
also unclear. At the very least it will challenge the corporate form of HEIs who
seek to develop their strategy for internationalization.
END
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Further Reading
If you are interested in following up this case I can suggest some further
reading as follows.
Brown, R. (2013) Everything for Sale? The Marketisation of UK Higher
Education, Routledge: London.
Deem, R. (2001) Globalisation, new managerialism, academic capitalism and
entrepreneurialism in universities: is the local dimension still important?
Comparative Education Volume, 37(1) pp.7–20.
Grist, M. (2012) Future universities towards a genuinely sustainable system,
Demos in collaboration with the Pearson Centre for Policy and Learning:
London.
Healey, N.M. (2008) Is higher education in really ‘internationalising’? Higher
Education, 55(3), pp.333-355.
McGettigan, A. (2013) The Great University Gamble Money, Markets and the
Future of Higher Education, Pluto Press: London.
To reference this paper cite as follows:
Southern, A. (2015) Case Study: The Internationalization of Higher Education,
University of Liverpool.
This work is available under a Creative Commons Attribution. For details click
here: http://creativecommons.org/licenses/by-nc-nd/3.0/deed.en_US
For any further enquiries about this case please contact Alan Southern on the
following email address: [email protected]

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