German University in Cairo

Business Economics

The Information Technology Department in the GUC

The Perspective from Business Economics

Submitted to:
Prof. Heiko Fritz
Submitted by:
Ali Sabry Mohamed
Submission Date:
9-5-2010

Table of content
1. Introduction to private education
2. German University in Cairo
3. Information Technology resource and its business value
a. What is IT?
b. IT and the scarcity theory
4. Scarcity problem
a. GUC scarcity problem
b. IT and the scarcity problem
5. What determines demand in the short run and long run for GUC
services?
6. Market structure and pricing

1. Introduction to private university industry and its Market

In the last few decades new tendency was emerged in Egypt is to go towards the private
university education (PUE) rather than the government university education (GUE). This
tendency was created because of the hardness of the GUE and its hardiness composed of
the huge amount of theoretical education with low practical education. So this trend was
created because of the awareness of the Egyptian parents about the practical education and

how it is effective after graduating for their children to get hired in outstanding companies.
Based on this perception a lot of businesses have evolved to fulfill this need, they promised
with high practices and good theoretical.
Several universities have emerged in the Egyptian market to get benefit from serving those
people with the private universities perception for example GUC, American University in
Cairo, French University and British University etc... We notice from the style of these
universities that they have studied the Egyptian market and concluded that Egyptian
perception towards the European education is very good.
GUC have got its reputation among its competitors with high quality of education, and that
didnt come by luck, but by the hard work among the internal employees and the high
experienced educated staff. Adding to that the coordination team which relied a lot on the
IT department to create synergistic business process for that huge number of the students,
staff, and tutors have been achieved.

2. German University in Cairo:

GUC is private university that founded in Egypt and contains four faculties (Engineering,
Pharmacy, Management, and Applied Arts)
Its Mission is to:

Achieve excellence in teaching and research.

Offer non-traditional study programs in science and technology that are built
on modern curricula in collaboration with the German State Universities and
other international institutions.

Produce the most comprehensively prepared, multidisciplinary and

innovative graduates being able to interact effectively with the challenges
and competitions created by global economy and being competent to play
leading roles in their areas of specializations.

Attract students of high potentialities.

Provide the chance for students from neighboring countries to pursue their
studies and obtain their academic degrees at international standards.

Award annual scholarships for distinguished students, thus promoting talent

and excellence among students.

Create an excellent and self-contained intellectual atmosphere of work and

study for both staff and students.

Develop scientific, cultural and business links with the national and
international institutions in Egypt, Germany and other countries.

Apply state-of-the-art information technology in teaching and research.

Open new channels for Egyptian-German cooperation in higher education

and in basic and industrial research.

Provide continuous training and professional services to the public, thus

helping individuals to acquire up-to-date knowledge and experience.

Commit itself to the training and development of academic and nonacademic staff as key resources to the success of GUC.

It is committed to the Total Quality Management philosophy with respect to:

-Students and Alumni

Offering top quality education for students to ensure complete satisfaction during the whole
course of study at this university and upon graduation, either with a job placement or with
further postgraduate studies.
-Parents
It is ensuring complete satisfaction of parents with respect to cost-benefit relationship as
well as their children's welfare.
-Staff
It is providing training, development and continuous improvement for staff (academic and
non-academic) to ensure the highest performance standards of education and research
output.
-Community
It is offering social activities and community services to contribute to the social and
economic well being of its local and national community.
-Business
Serving and developing partnership with local, national and international business and
industrial sectors as employers of GUC graduates as well as through research projects,
training and as partners in developing knowledge, practice and applications.
-Patron and Partner Universities
Developing, strengthening and expanding the mutual and multilateral relations with respect
to teaching, research and exchange of students based on quality, intensity and mutual
benefits and interests.

3. IT resource and its business Value

3.1.

Information technology

Information technology has become an integral part of modern organizations, a lot of

researches have elaborated its contribution to business performance, and recently, the use of
internet has become extremely common as it supports the distribution of information
among the chain members. IT asset is a vastly available, off-the shelf or commodity-like
information technologies that are used to process, save, and distribute information. Also
another definition for Information technology (IT) that it includes the data collection,
processing, storage, retrieval, display and communication of information or data, normally
through microprocessor equipment linked to each other through networks. IT has led to an
increase in the availability of information on product movement inside the supply chain.
Applications of IT can be used within retail process include the inventory control systems
that can receive, store, pick and move goods during warehousing operations in an
integrated way. Although several IT assets are customizable, and as such may not be
regarded as completely undifferentiated, they are still considered commodities because they
are not protected by isolating mechanisms. From a lower cost strategy, which considered
some firms main concern, IT can lower the cost of inner processes much more. Or it can
help any organization in delivering differentiated products or services (e-business).
IT systems can also provide valuable information about products specification and prices
through e-catalog and the transactions history through Data warehousing framework which
also provide customer, sales, and marketing history, forecasts, and promotion for customer
relationship management. And through the value chain inside the firm, suppliers and supply
chain, contractors, product line and lead times, quality, performance, inventory, and
scheduling for supply chain management. Production process, which Includes capacities,
commitments, and product plan for virtual corporations, could be merged with professional
IT systems. Also IT systems could provide transportation carriers, lead times, and costs for
just-in-time (JIT) delivery management.
3.2.

IT and the scarcity theory

Few researches have argued that the IT is not scarce resource it became ubiquity
commodity not strategic for any organization. As when the companies could have their
edge over their competitors by having or doing something others dont have or do, IT
resource has become affordable and accessible to everyone and it no longer offers strategic
value to anyone. This means that IT by itself couldnt be the competitive edge for any
organization by its own. These researches have stated a fact clearly reflected in companies
spending habits that when a resource becomes essential to competition but inconsequential
to strategy, the risks it creates become more important than the advantages it provides. So
from one side, IT can be considered as it is just an instrument but not a rare resource.

But on the other side a lot of researches have mentioned that IT's power and presence have
expanded, companies have come to view it as a resource ever more critical to their success.
And the strategic view of the IT coexists in the following, IT systems increase coordinating
efficiencies to provide economic value to the firm, therefore firms will have higher cost
structures if they do not adopt IT systems, also IT increase the knowledge sharing among
the firms employees which could achieve high internal performance.

4. Scarcity problem

4.1.

GUC scarcity problem

GUC is an evolving business in the field of private education, and although its huge success
which can be referenced by its huge reputation in the Egyptian market, still it faces a lot of
problems like, the lake of experiences among new comers to comply with this new internal
culture in educating jobs and administration jobs. Adding to that the huge amount of the
stakeholders (Staff, tutors and students) who should be managed efficiently in order to
achieve the university objective through a strong and discipline way of communication. So
apparently the internal coordination jobs must have superior candidates to conduct these
kinds of businesses. Here coexists the scarcity, the price of hiring high efficient and
experienced coordination employees in the education field with 2 foreign languages
(English and German) is very high and the demand on them is very high too. The lake of
superior internal coordination experiences to manage all that number of interacting people
inside the campus and in the same time innovate in the business process to shortening the
internal procedures, and if this superiority or required experience exists will it sustain or it
could be hunted from other firms.
4.2.

IT and the scarcity problem

In order to explore the rule of the IT in allocating this scarce resource, it is simply can be
summarized in the following
-

Offering coordination systems that can help those employees in conducting their

jobs in an easy way and very elastic to new requirements.

Training the staff (academic and administration) to react fast with this system.
Collect their complaints in unified format in order to ease the classification of the

complaints and analyze them well.

In joint with those high experienced internal coordination employees synergistic
cycle and process can be created and sustained. IT can provide those systems in
both English and German language, even if those expensive employees have been
replaced by fresh or low experienced employees they can run the business
approximately identical.

So the scarcity her can be solved or approximately turned out to be un-scarce resource

5. What determines demand in the short run and long run for GUC
services?
Price, Substitutes price and Taste are the main determinants for the GUC demand in the
short term and the long term. GUC has a very well known taste which is the Egyptian
perception towards the German industry culture and education, adding to that the
intermediate price among the other competitors which give approximately the same
services. Its substitutes, which are the high institutes and other education centers, give
low reputation with nearly the same price.
But for the long run determines of GUC services demand, reputation and the amount of
researches conducted by GUC researches could add market value for the GUC which
lead to the huge increase in the demand but with fixed numbers of the students
determined by the ministry of high education which indicate to the increase of the price
of the education services.

6. Market structure and pricing

According to the market efficiency point of view, the consumer and producer surplus
could be attained. There are no externalities that the welfare will depend on and there is

no market failure discovered to offer this kind of services. The customer willingness to
pay more to this kind of services is high for a vast majority of Egyptian parents based
on the previously mentioned perception. And with this comparative price the supplier
(GUC) gain more than the cost of production which attains the producer surplus.
The group segmentation of the private universities contain the AUC, GUC, BUE, FUE
in the first segment and others come next, adding to that the low price for services that
GUC offers compared with the leader and the follower in this field, and finally the high
reputation it gained in the few last years, assuring to it a very good market even if it
increases its services prices.

References:

1- Kohli, R., and Grover, V. 2008. Business Value of IT: An Essay on Expanding Research
Directions to Keep Up with the Times, Journal of the AIS (9:1), pp. 23-37.
2- Nevo S. and Wade M. 2010. The formation and value of IT-enabled resources: antecedents
and consequences of synergistic relationships, MIS Quarterly Vol. 34
3- Bourlakis M., Bourlakis C. 2006. Integrating logistics and information technology
strategies for sustainable competitive advantage, Journal of Enterprise Information
Management, Vol. 19 No. 4
4- 7- Nicholas G. Carr. 2003. IT Doesn't Matter, Harvard Business Review, MAY
5- http://www.guc.edu.eg/