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External Factors That Could Impact American Higher Education

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How will higher education be delivered in the future?


What is the outlook of the higher education sector in the United States of America? What factors have the potential of having a positive or negative impact on the future of the American higher education industry? Should higher education institutions even be concerned with what is up ahead? Or, can they simply continue their day-to-day and year-on-year activities with a business as usual mindset?

Commenting about business schools in particular, Schoemaker (2008) notes that the traditional paradigm is not adequate for addressing changes in today’s society. In more general terms, a special commission appointed by the U.S. Department of Education (2008) concluded that U.S. higher education “needs to improve in dramatic ways; that it is time to be frank; and that [education leaders] must not be blind to the less than inspiring realities of postsecondary education in the country.” With those appraisals in mind, what can university presidents and their advisory boards do to make necessary shifts in strategy and organizational culture in order to be better prepared to the future needs of their institutions and students?

Hughes & Beatty (2005) suggest that the first step to change strategy at any organization is to “assess where we are now” which includes environmental scanning in order to gain an understanding of what factors present opportunities or threats to the survival of the group’s enterprise. This paper explores potential environmental conditions that could have a positive or negative impact on the future of higher education. It does so by engaging in a S.T.E.E.P. analysis conducted by way of personal interviews with leaders in the U.S. higher education field and augmented by secondary sources. First, what is environmental scanning and what is involved in the S.T.E.E.P. analysis method?

Environmental Scanning and S.T.E.E.P. Analysis

 Environmental Scanning

            In order to gain a better picture of external conditions which could have an impact on an organization and its industry, leaders of postsecondary institutions should engage in the practice of environmental scanning (Morrison, 2005; Fathi & Wilson, 2009). Briefly, environmental scanning is “a vital organizational competency” by which organizations of all types recognize and take advantage of opportunities for growth and avoid detrimental pitfalls that hinder long-term viability (Hughes & Beatty).  It involves paying attention to “data, trends, or ideas on the horizon that could potentially have significance for the organization’s effectiveness.” One way an organization or business can assess the external horizon is to do a S.T.E.E.P analysis.

S.T.E.E.P. Analysis

Kyler (2009) explained that “the S.T.E.E.P. analysis tool is a framework to gauge how the external environment will impact a given company's strategic plan to remain competitive.” It scans the external environment by taking a close look at five factors from which it derives its name. Those factors are social, technological, environmental, economic, and political. Through this analytical tool, executives and other stakeholders of a respective business, organization, or institution can gain an understanding of the potential opportunities and threats to their future operations.  The remainder of this paper focuses on a STEEP analysis of the external factors that could impact the future of higher education in the U.S.   

S.T.E.E.P. Analysis of American Higher Education Sector

What social, technological, environmental, economic, and or political factors could have the potential of having a positive or negative impact on American higher education?

Social Factors That Could Impact Higher Education in the United States

The first area analyzed in the S.T.E.E.P. framework is the social and cultural environment. In this section of evaluation, business and organizational leaders are concerned with such things as

1. Demographics

2. Lifestyles

3. Religion

4. Education

5. Age distribution of the population (MBA Boost)

Some of the social and cultural trends that are relevant to the future of higher education in America are (a) increased globalization of the student population through technological advances (e.g. college programs made available online through the Internet) and increased mobilization (movement from home culture to the United States) (Rohm, personal communicaton; Kennedy, personal communication; Winston, personal communication; and Walkemeyer, personal education); (b) the “millennial” generation beginning to reach college age (demanding new ways of teaching and learning) (Winston, personal communication); (c) students adapting new attitudes towards higher education (e.g. “taking a more “cafeteria” approach, and taking classes at multiple institutions before getting a credential”) (U.S. Department of Education); and (d) a greater number of older adults returning not to receive degrees, but to improve their career opportunities (U.S. Department of Education). Furthermore, Fathi & Wilson, 2009, point out the increased number of low-income students applying to attend universities and the need for finding funding sources for them as another important demographic trend to be considered within the American higher education system. Additionally, Fathi & Wilson noted another significant trend in American higher learning, “But perhaps the most easily recognizable change in student demographics is the increasing number of Latino and Asian students on American campuses. It is predicted that within the next decade, most universities will no longer have a single racial ‘majority’ group.” Through analysis of population trends, Murdoch & Hoque (1999) foresaw “the student population will become older, more ethnically diverse, and poorer.”

Overall the demographic framework within which a college or university now operates is one of constant flux, causing university executives and trustee boards to find ways to adapt in order to survive. Authors from MBA Boost point out: “Changes in the social environment can create havoc on an established strategic plan. Analysts must be careful when monitoring trends in society to arrive at the correct conclusions.”

Technological Factors That Could Impact Higher Education in the United States

Another set of trends university executives must monitor for their potential impact on the future of higher education are technological factors. Technological factors have to do with innovation within an industry. Concerning opportunities and threats brought about by advances in technology Kyler wrote:

Industries that rely on technological advances to generate new products and services are prone to be affected by rapid changes in the environment. It is the job of analysts to monitor and measure the effects the changes within the technological environment will have on their respective product-development strategies. This task may take years to conduct depending on how the industry is driven by innovation.

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More specifically related to technology and high education, Fathi & Wilson highlighted,

“Perhaps the largest determinant of change across higher education is the advent of new and emergent technologies. The Internet, and all other forms of electronically mediated learning, continue to thrive across all levels of higher education, and are increasing on a daily basis.”

This sentiment was echoed by other experts in the field (Walkemeyer; Herrity; Rohm; Kennedy; personal communication, September 2009). One question the experts were asked to consider for this evaluation was: “What are the top 2 or 3 trends driving the future of the higher education sector?” Walkemeyer, Herrity, Rohm, and Kennedy were all quick to point out technological advances in the telecommunication industry (personal communication) as a significant trend in the external environment. Due to the advances in Internet and virtual classroom technologies Rohm and Walkemeyer predicted an increased decentralization from brick and mortar schools to more localized education through online programs (personal communication, September 2009). Both Schoemaker and Fathi & Wilson echo this idea at least to the point where universities must shift their paradigms of how a university approaches their constituency. Fathi & Wilson noted

While it is unrealistic to suppose that any traditional school will completely move to a consumer-driven model of higher education rather than a provider-driven model, it is realistic for the more traditional “brick and mortar” schools to expand their online presence in the new world of virtual learning. Universities that cannot meet the demands of today’s society and technologically driven constituents will quickly find themselves left behind and suffering from decreased enrollment, and consequently, decreased federal and state funding.

Environmental (Ecological) Factors That Could Impact Higher Education in the United States

The ecological element considers the present-day situation of the physical and biological environments that companies can face (MBA Boost). When asked about the potential impact of environmental or ecological factors Winston did not see any concern in this area and Herrity thought the question was to speculative to answer. However, Fathi & Wilson highlighted, “Environmental and political concerns and issues have dramatically changed the day-to-day operations of higher education. Leading the way in the “green revolution,” are many colleges and universities who are focusing on sustainability, as well as a reduction in green house gases.” Furthermore they observed that the focus on and awareness of green initiatives offer huge opportunities for universities and colleges for “more students across the globe are seeking ‘green’ studies and careers.” Both Canton (2006) and Friedman (2008) also wrote of the growing opportunity for innovation and economic growth in industries pertaining to environmental issues and solutions.

Two more perhaps mundane ways in which higher education institutions can co-operate with the sentiments of ecological concerns in general would be to help conserve natural resources (a) by requiring paperless assignments and (b), especially in regards to commuter schools, by making more classes available online or through virtual classroom media in order to cut down on the amount of driving the students would have to do. Furthermore, those who have a burning passion to open entirely new institutions of higher education could offer all their courses online and forego the need to take up large pieces of land.

Economic Factors That Could Impact Higher Education in the United States

The fourth external condition evaluated in the S.T.E.E.P. analytical tool is economic factors. This category refers to the prevailing financial situation and how it results in an opportunity or threat for a given business or organization (MBA Boost). In regards to higher education in the United States, the current economic downturn poses both an opportunity and a threat; an opportunity in that more citizens are returning to school to upgrade their knowledge and skills in hopes of better job prospects and a threat in that state-run institutions are receiving less government assistance due to necessary budget cuts (Osborne, 2009; Leonard, 2009). More specifically, the adverse economic conditions currently faced by state governments (e.g. California, Virginia, and Maryland) has had a negative impact on state-run schools due to large budget cuts to state-sponsored services (including postsecondary education provided by the community college, California State University, and the University of California systems, respectively) (Editorial Board, 2009). For example, California State University, Fullerton (one of the larger commuter schools in southern California) recorded a budget reduction of $584 million for 2009-10, and ceased acceptance of applications from new students for the Spring 2010 semester (CSU’s Chancellor’s office). Elsewhere, “Virginia and Maryland were the latest to cut higher education funding. Over the next year, Virginia will cut their higher education funding by 20-30 percent and Maryland will cut their funding by 10 percent--$30 million last month alone--not to mention the fact that states are increasing tuition at an alarming rate” (Editorial Board). The economic woes in the U.S. bring about positive and negative effects on enrollment at private universities as well. Due to the financial downturn many students are choosing to attend less expensive state schools rather than attend higher priced private institutions. However, since some states have been forced to cut the budgets in their higher education programs (as mentioned above), those who wish to pursue a college degree have little choice but to pay the higher prices at the private universities (Osborne; Healey & Snyder, 2009). As of June 2009, enrollment at the University of Phoenix was up 22% over the previous year. Further down the road, enrollment in postsecondary education programs is expected to increase at an annual rate of 12% through 2018 which will result in a larger group of applicants competing for a limited pool of financing options (Editorial Board; Fathi & Wilson).

Political Factors Which Could Impact Higher Education in the United States

The fifth aspect of the external environment measured by the S.T.E.E.P. analysis framework is political factors. Kyler observed

This element of the analysis consists of understanding the political and legal environments of a specific country or region where companies select to operate. Failure to understand and adapt to the political and legal environments will result in overcoming barriers which may be too costly to deal with, given the expected return on investment.

Altbach (2009) outlined the work of federal government and state governments in higher education. Concerning state governments he wrote: “The policies of the state governments concerning student tuition, financial support, access and accountability, and the size and shape of state systems of higher education are all crucial to public higher education. State policies also affect private universities and colleges.” Of federal government involvement Altbach added:

Federal regulations affect such aspects of academic life as athletic programs, which are subject to regulations concerning gender equality and access, the use of human subjects in research, the treatment of animals in laboratories, and access to facilities through the Americans with Disabilities Act.

When asked about political factors that could impact higher education in the future, Herrity noted “the increasing involvement of supra-national governments”; while Winston foresaw the US government moving more toward a Marxist/socialist government that will lead to education standardized and controlled at the federal level” (personal communication, September 23, 2009; personal communication, September 21, 2009).

Update: New Developments in Higher Education

Since the initial publication of this article, movement towards a less traditional and more highly accessible higher education model began to intensify. Top professors from top-tier universities like Stanford, University of Pennsylvania, MIT, and Carnegie Mellon became more convinced that higher education should be made equally accessible to all who desired to benefit from it, regardless of their income or social status. Accordingly, many professors began putting their courses online for little or no cost to the student. Websites like Coursera and Udacity began to co-op with these professors from across the United States to offer these courses in an easy to use format. At the time of this update in 2013, the American Council on Education even endorsed four courses and urged its member schools to accept the courses as transfer credits.


This hub has taken the opportunity to gaze into the future to ascertain some of the potential factors that could have a positive or negative impact on the future of higher education in the United States. It has not been an exhaustive work by any means. Still, as Altbach (2009) so adeptly pointed out, universities are not ivory towers and are subject to pressures and influences from the outside world. As seen above, institutions of higher learning are not immune to shifts to external factors such as those explored through the S.T.E.E.P. analysis; namely, socio-cultural, technological, environmental/ecological, economic, and or political circumstances. As such, university executives and their boards must actively monitor what is going on around them in order to design relevant strategies from their respective institutions. Only by being actively aware of present and future trends in the external environment and responding in a proactive manner will leaders at postsecondary institutions be able to offer programs that are applicable to the needs of their constituency.


Amos Watentena on September 11, 2017:


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ecoggins (author) from Corona, California on January 12, 2011:

mbrosius thank you for sharing your ideas. I agree with you. I have a daughter who is currently attending a private university and a son at a public university. The administrations at each campus know that the federal government will give each student nearly as much loan money as they need to pay the fees whatever the cost. So, they force the students into debt while fattening their bank accounts and skimming profits for more building projects and expansion.

mbrosius from Mid West on January 12, 2011:

Very good analysis and perspective! I appreciate the detail and time you took. I am a corporte training manager and quality education is an important concern for me.

In one area of your report you included a statistic that the general polulation would get "poorer". What bothers me the most is that in spite of this, costs will continue to rise. I've noticed that rather than revamp their programs to attract more enrollees, universities are resorting to increasing fees and tuition as a way to stay in business. In business, it is never a good idea to force your customers to pay for your inadequacies.

mo on January 04, 2011:


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