Monday, April 28, 14

INTEGRATIVE GROUP PROJECT

Team members:

Bac Tran Hong Quang

He Huang
Siqi Li
Qing Li

Monday, April 28, 14

INTEGRATIVE GROUP PROJECT: UDACITY

I. What is MOOC?
II. An introduction to Udacity
III. PESTEL Analysis for MOOC
IV. Porter
V. SWOT
VI. The Current Business Model of Udacity
and Other Players, Recommendation

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What is MOOC?

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WHAT IS MOOC?

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An Introduction to Udacity

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Founder

Sebastian Burkhard Thrun (born May 14,

1967) is an educator, programmer, robotics
developer and computer scientist CEO and
co-founder of Udacity:
- Research professor at Stanford University
- Google Fellow
- Inventor of the autonomous car and project
lead on Google.

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An Introduction to Udacity
Udacity is a for-profit educational organization founded by Sebastian Thrun, David Stavens, and Mike
Sokolsky, the company is offering massive open online courses (MOOCs).
Feb 2012
Udacity was announced at The
Digital Life Conference

2011
Sebastian Thrun and Peter Norving
offered their Introduction to
Artificial Intelligence

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2014
9 full courses and 24 free courses

March 2011
90,000 students had enrolled the
initial two class

Investors

Oct 2012
Andreessen Horowitz led the
investment of another $15 million
in Udacity

Launched
Charles River Ventures + $300,000
of Thrun's personal money

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2014
AT&T, which put up $2 million in
seed capital: well-trained engineers.

Jan 2014
Masters degree program with
Georgia Tech. Expect generate $1.3
million by the end of its first year

PESTEL Analysis for MOOC (in US)

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Political

Economic

- The U.S. Federal Government does not

directly support higher education.

- Many families went into debt in order to pay for

their children to attend college.

- The U.S has one of the most expensive

higher education systems in the world. In
2012-13, the average cost of annual
tuition in the United States ranged from
$3,131 for public two-year institutions
(community colleges) to $29,056 for
private four-year institutions.

- Financial bubble.

- The reduction of state and federal

appropriations to state colleges, causing
the institutions to shift the cost over to
students in the form of higher tuition.

- Keeping tuition increases at the rate of inflation

would require the state kick in $128 million more
tax dollars between now and 2015.

- U.S. Congress' occasional raising of the 'loan

limits' of student loan which the increased
availability of students to take out deeper loans
sends a message to colleges and universities that
students can 'afford more

-Long-term price.

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Social

Technological

- Tuition increases in the U.S. have caused

chronic controversy since shortly after World
War II. It was during a time when the
workforce was slow from the aftermath of
war and higher education was blooming in
order to pursue more knowledge in hopes of
finding a successful, stable career.

- The era of all-the-time Internet connectivity.

- instructor and administrator expenditures.

- Media hype (YouTube)

- 47% of American parent surveyed do not

have the resources to put their children
through college

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- Affordable Internet connectivity to millions

of homes. Meanwhile, the smartphone era
ushered in by Apples iPhone launch in 2007
has removed most geographic constraints on
this connectivity

Legal
- Lack of consumer protection: Federal law removing all
standard consumer protections (truth in lending,
bankruptcy proceedings, statutes of limits, the right to
refinance, adherence to usury laws, and Fair Debt &
Collection practices, etc.) strips students of the ability
to declare bankruptcy.

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Porters Five Forces Analysis

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Threat of new entrants:

Pearson Education
(moderate)

Suppliers:
- Owners (Institution &
Academy)
-Technology companies

Rivalry among existing

competitors

Threat of substitute
products or services:
- University education
- Corporate training
- Apprenticeship
(moderate)
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Buyers:
-Students
-Employers
-Academy faculty

Rivalry(among(
exis0ng(
compe0tors:(

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Coursera

EdX

Udacity

Credentials

Founded by
Stanford CS
faculty

Collaboration

Founded by
Stanford faculty
and Google
employees

Classes

190+ courses, in
diverse subjects

8 courses
15 classes,
currently,
primarily in skills
expanding in 2013 and computer
science

Connections

Stanford,
Michigan,
Princeton,
Edinburgh

Harvard, MIT, Cal, Google, Stanford,

University of
Silicon Valley
Texas
employers

between Harvard
and MIT

The Threat of Substitute

Products or Services
- Traditional higher education threat : high offer
high quality course, supervision of teacher, verified
certificated, interact with teachers.
- Corporate training : (moderate) supervision,
motivation from company, professional tutors.
- Especially in companies like internet, tech, biotech, green energy.
- Apprenticeship : (moderate) useful knowledge for
your own work, experienced tutors.
- Social network - Linkedin: Low (for Udacity: high)

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Threat of new entrants:

- Pearson Education : Moderate
Demonstrating that they can provide a
credible assurance of the achievement of
students in non-accredited contexts such as
MOOCs.

Bargaining power of suppliers

Powerful suppliers transfer costs to the enterprise or retain power and control over key
aspects of the industry.
The collegial owners of the institution and responsible for much of the leadership of the
academy who offer the courses.
Technology companies(Microsoft, Google, and Blackboard) achieve the level of
scalability and robustness needed to support MOOCs with potentially hundreds of
thousands of students. (think MOOC as a platform)

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Bargaining power of buyers (niche market):

- Students : High
Students depend on the system to deliver significant personal benefits, and make
substantial personal investments in the system.
Buying volume: low (personal) high (total)
Other options: tradition school,books, EDX, Udacity, Coursera.
Buyer price sensitive : high
- Employers & Government: Moderate
Buying volume: moderate
Other options: They can buy courses from MOOC or they can invite professional person
or some training institution to train people
They can get the employees information from linkedin (for employers)
Buyer price sensitive: moderate
- Academy faculty : moderate
Target: the institutions do not have capital to depend upon.
Buying volume : moderate
Other option: Pearson education, books, hire professional teachers
Buyer price sensitive: moderate
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The Business Model

- The Udacitys current business model.

- Compare to Courseras business model
- Recommendation & strategy about a new business model for Udacity

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Value Proposals
Partners
Universities
Big Companies/
Start-ups

Main Activities

Free
Course

Value Creation

Relationships

Premium
Courses

Customers
Students

Community

Job-matching
Programs

Working Professionals

Informations about Top

Management & Analysis
Students

Employment
Opportunities

Main Resources

Channels

Founding Team

Online

Cost Structure

Recruiters

Revenue Streams

Equipments

Platform Management

Free

Subscription Fee

HR

Course Instructors, Office

From Recruiters

From Employers

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Partners
Participating
Universities

Main Activities

Value Proposals

Relationships

Customers

Develop Partnership

A Wide Range of
Courses

Coursera.org

Students

Develop Platform

Free or Affordable

Marketing

Easy to Access

Main Resources

Channels

Platform

Online

Cost Structure
Platform Maintenance

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Revenue Shared with

Partner Universities

Meet-up

Revenue Streams
Free

Certificate Fees

Recommendation

- Concentrate on scientific courses, make it to be the best one in technical field compare
to others.
- Extend range of target customer: ex. 2014 masters degree program with AT&T
- Create new partnership with more universities, like Chinese universities, to find new
market area.
- Provide the courses to universities.
- Continue to build innovative and interested way to teach

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