PESTEL analysis of the education industry
This detailed ‘PESTEL analysis of the education industry’ aims to examine how the global education industry is influenced by several powerful factors. It explores the industry in different countries, particularly the UK, the USA, Australia, and Canada.
The rapid expansion of the global education industry has been propelled by several factors, including the rising demand for quality education, increasing investment in education technology, and the globalization of education services. Certainly, education is a fundamental human right for everyone in the world. However, not everyone has access to it even in the 21st century.
Political factors that impact on the education industry
Education industry is generally divided into three areas i.e. primary, secondary, and higher education. Some countries have excellent institutions across all areas, while others do not unfortunately. It is often very clear that those countries that have very good education systems and infrastructure are politically stable, and the governments provide institutions with a lot of support.
According to UNESCO (2020) 155 countries guarantee 9 years or more of compulsory education, while 99 countries guarantee at least 12 years of free education. In the UK, the government provides students with a variety of final supports to help them pursue higher education.
Likewise, both the federal and the state governments in the USA have grants for students as well (Federal Student Aid, 2023). However, higher education is expensive in many countries including the USA and the UK.
One of the primary ways in which governments support the education sector is through funding. They provide financial resources to educational institutions and organizations, ensuring that learners have access to quality education regardless of their financial circumstances.
Governments also play a critical role in regulating and overseeing the education sector. This includes setting standards for educational quality, accrediting institutions, and programs, and ensuring compliance with legal and regulatory requirements.
Additionally, governments often develop policies and initiatives aimed at improving educational outcomes, such as teacher training programs, curriculum development, and education reform efforts.
Countries have national curriculum setting out what students should be taught. Different countries have different requirements for a career in teaching. For instance, in the UK, teachers need to have a PGCE (Post-graduate Certificate in Education) qualification or willing to working towards to work in a primary and secondary school. In Australia, a university qualification is needed to work as a teacher.
Many developed countries have shortage of teachers in subjects such as finance and accounting, maths, engineering, and computer science and recruit qualified teachers from abroad. However, recruiting teachers from abroad is very difficult for many countries because of their immigration systems.
According to Longmuir (2023) teacher shortages have reached critical levels in the USA, UK, Australia, Europe, and Africa. Likewise, one in five schools faces difficulties in hiring teachers in Canada. However, reducing administrative burdens, and offering better salaries may be useful to counter this challenge.
Economic factors that impact on the education industry
The discussion on economic factors is a key part of this PESTEL analysis of the education industry. Higher education can be very costly in some countries. Attending a private university costs thousands of dollars per year which many students cannot afford. Even public universities are sometimes very expensive as well. Students need to take out loans or repayable grants to study there.
Many kids in poor countries cannot go to primary schools because of the cost of transport, and resources such as books or papers. In many countries, teachers are not well paid and therefore, do not stay in the jobs long-time. Even in England, teachers have recently taken part in industrial actions and strikes over pay issues (Clarke, 2023).
Often funds are raised for extra-curricular activities, and this may be disrupted if the local economy is in poor conditions. Likewise, local, or central governments may cut funding which affects the operations of educational institutes badly.
Global spending on education has been on the rise, with both public and private sector investments increasing. The private sector, in particular, has been playing a growing role, as companies invest in corporate training and development programs and venture capital firms invest in education technology start-ups.
Social factors that impact on the education industry
Analysing social factors is a key part in the PESTEL analysis of the education industry. Some parents prefer to send their kids to private schools and universities, while it is beyond the capacity of most of the parents. It is worth mentioning that though popular, many private institutes lack in resources to offer great quality education.
Suddenly, a large number of people moving into an area puts a huge pressure on local schools and other educational establishments. Conversely, a large number of people leaving an area may result in closures of many schools.
Many schools around the world do not have adequate facilities and resources to cater for the needs of the students with some kind of disability. Likewise, may people do not want to be teachers because of the workload and stress.
Some news reports indicate that that 1 in 3 teachers in England plan to quit the classroom within five years because of reasons such as workload and diminishing respect for the profession. Similarly, many teachers in Australia, Canada, the US, and many other countries quit their jobs in the first two years due to the heavy workload and burnout.
Technological factors that impact on the education industry
Technology is the next component in the PESTEL analysis of the education industry. There is no doubt that technology has dramatically changed the education industry globally. In fact, it has transformed the way education is delivered, accessed, and consumed.
Due to lockdowns, schools, colleges, universities, and other institutes offered education online, especially via Google Classroom, Zoom, and MS Teams. Many also used their own developed solutions. Interestingly, while many industries were closed because of lockdowns, the education industry continued to operate, thanks to technology!
The rise of e-learning platforms and online courses has revolutionised the global education industry, enabling learners to access educational content from anywhere, at any time. This has expanded access to education for millions of individuals worldwide and created new markets and opportunities for industry players.
The use of Artificial Intelligence (AI) in education has the potential to transform the way educators teach and students learn further. AI-powered tools can help educators personalise learning experiences, automate administrative tasks, and provide insights into student performance and progress.
However, it should be mentioned that AI has created some challenges as well. For instance, lecturers and assessors at UK universities and colleges have been urged to review the way in which their courses are assessed amid concerns that students are already using AI to produce high quality essays/reports/dissertations with very limited human input (Weale, 2023).
The education technology market is one of the fastest-growing segments of the global education industry, with significant potential for innovation and growth. Investment in edtech start-ups and companies can provide investors with exposure to this rapidly expanding market.
Students have easy access to information and other resources online. However, because of poverty, many parents cannot afford to buy equipment for their kids. Likewise, young children may be at risk being exposed to disturbing materials while surfing online.
Environmental factors that impact on the education industry
The education industry can impact on the environment in different ways. For instance, many institutes use huge amounts of photocopier toner and papers which is not environmentally friendly.
Likewise, general waste generated by organisations in the education industry, and their use of energy are also problematic. It should be mentioned that natural disasters destroy many educational institutes globally every year.
Legal factors that impact on the education industry
The discussion on legal factors is a key part of this PESTEL analysis of the education industry. As many educational institutions and providers operate across national borders, they must comply with a diverse array of legal and regulatory frameworks.
There are different rules and regulations that affect the education industry. For instance, Americans with Disabilities Act (ADA) requires both public and private colleges and universities to make programs accessible to students with disabilities. The UK’s Equality Act protects students from discriminations. Likewise, there are different regulatory bodies which inspect educational intuitions regularly.
Summary of PESTEL analysis of the education industry
The global education industry is very dynamic and rapidly evolving. As it continues to evolve, it faces challenges and opportunities. Therefore, it must navigate the complex regulatory and policy environment, address the skills gap, and ensure access and affordability. At the same time, it presents significant opportunities for investment, particularly in education technology, higher education, and professional training and development.
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Last update: 25 April 2023
Clarke, V. (2023) More strikes planned as teachers reject pay offer, available at: https://www.bbc.co.uk/news/education-65037421 (accessed 24 April 2023)
Federal Student Aid (2023) Federal grants are money to help pay for college or career school, available at: https://studentaid.gov/understand-aid/types/grants (accessed 24 April 2023)
Longmuir, F. (2023) How we can stop losing teachers, available at: https://lens.monash.edu/@education/2023/02/16/1385452/how-we-can-stop-losing-teachers# (accessed 24 April 2023)
UNESCO (2020) What you need to know about the right to education, available at: https://en.unesco.org/news/what-you-need-know-about-right-education (accessed 24 April 2023)
Weale, S. (2023) Lecturers urged to review assessments in UK amid concerns over new AI tool, available at: https://www.theguardian.com/technology/2023/jan/13/end-of-the-essay-uk-lecturers-assessments-chatgpt-concerns-ai (accessed 25 April 2023)
Author: M Rahman
M Rahman writes extensively online and offline with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.