Porter's Five Forces Analysis of USJ

For USJ, I think the bargaining power of buyers – students’ power in Macau is not that high because we only have few good universities in Macau. As the high school graduate students wants to take their licentiate degree, it seems they don’t have many choices, but still have some, as the result, I think that students’ power is right in the medium level. On the other case, If the student wants to student in Macau and learning under a totally western teaching system, the power of them are low, because USJ is the only one which is running western teaching system in Macau.

In the bargaining power of suppliers, I would like to give one example here. For instance, USJ wants buy 1000 chairs from A company, once there only has one chair supply in the market, the supplier’s bargaining power must be very high. However, if there have some different suppliers, USJ will try to contact with other supplier in order to cut their cost and increase the value. Under this situation, USJ has more bargaining power than the supplier. As we know there have various suppliers in Mainland or other places for supplying chairs, so that USJ seems has high bargaining power in this case.

USJ is an education institution of providing service in Macau, it provides high quality of education to students. If someone establishes an institution for providing similar courses to the Macau resident, those institutions will affect the income of USJ, they make another choice for customers, so that those institutions are the substitute of USJ. Under this pressure, USJ has to increase its competitive advantages and promote its unique selling point – western teaching style to keep raising the rate of new register. Also, USJ should increase its teaching quality as well or cut their tuition fee to attract more students.

Threat of new entrants, to run an university in Macau, investor has to invest a lot of money on the project owing we don’t have many students here in Macau, so that it’s really hard for new competitor to achieve break-even, and also it needs to spend huge money on getting people’s eyes. I think capital is one of the threats of new entrants. Secondly, new entrants have to reach the requirement from the government, this is another threat.