Environmental Analysis

1. Environmental Analysis Justin F. Keogan keoganj@tcd.ie

2. Contents • Public and private strategy making • PEST • External and Internal Analysis • SWOT • SLPO • Resource Audit • Maslin Multi-Dimensional Matrix • Stakeholder Mapping

3. Private Pace of change Size of investments Pressure for profits Competition - survival Product / market scope Public Pace of change – relevance of the environment Scarce resources Value for money Scope of activity Accountability New Public Management Why is strategy relevant? Training of staff of Enterprise Estonia Justin F. Keogan ES01.07.01-1.1.2.3

4. Public Sector and the Environment • Unlike private companies, public organisations are in the politico-administrative sphere and therefore more likely to have an impact on the general state of affairs including the economy • But to what extent is it possible to alter the sensitivities of an organisation to its environment through strategic decisions? Training of staff of Enterprise Estonia Justin F. Keogan ES01.07.01-1.1.2.3

5. Public Vs Private Training of staff of Enterprise Estonia Justin F. Keogan ES01.07.01-1.1.2.3

6. Public Vs Private Wilcox and Harrow (1992) Training of staff of Enterprise Estonia Justin F. Keogan ES01.07.01-1.1.2.3

7. Stability Global economy Political Environment Prevailing ideology The Public Political studies Business cycle Legislation / regulation Economic forecasting Public relations Inputs The Organisation Outputs Exchequer returns International developments Diplomacy Citizen/client needs Labour market Consumer confidence Openness to influence Political directives Capital and material supplies Economic Environment New technology • Demographics • Education • Migration • Attitudes • Lifestyle R&D Public relations Minister / Secretary General / Senior managers Community relations Technological forecasting Attitudinial studies Scientific discoveries Management expectations, organisational appraisal, ethics, ethos Technical Environment Social Environment Information systems Middle Managers Front line staff

8. Economic GDP trends Interest rates Money supply Inflation rates Unemployment levels Wage/price controls Devaluation/revaluation Energy availability and cost Disposable and discretionary income Technological Total government spending for R&D Total industry spending for R&D Focus of technological efforts Patent protection New products New developments in technology transfer from lab to marketplace Productivity improvements through automation Political-Legal Antitrust regulations Environmental protection laws Tax laws Special incentives Foreign trade regulations Attitudes toward foreign companies Laws on hiring and promotion Stability of government Sociocultural Lifestyle changes Career expectations Consumer activism Rate of family formation Growth rate of population Age distribution of population Regional shifts in population Life expectancies Birth rates Training of staff of Enterprise Estonia Justin F. Keogan ES01.07.01-1.1.2.3

9. Regulation Competition Legal Political Structure Substitutes External Analysis Policy New Entrants Market Technology Segment- ation Economy Inputs Outputs Social Trends Enablers

10. Resources Infrastructure Tangible Non- Tangible Core Processes Supporting Processes Internal Analysis Products/ Services Customers Internal Significance External Significance Strategic Non- Strategic

11. Weaknesses Strengths Opportunities Threats SWOT

12. Central Government; Politicians, Treasury, Auditors Suppliers; Equipment, Consultants, IS providers Citizen-client; Families, Communities Street Level Public Organisation (SLPO) Related SLPOs Professional associations, Standards, Career ladders Street Level Public Organisation

13. Central Government Suppliers & Providers Citizen-client (SLPO) Related SLPOs Associations & Standards Career ladders SWOT SWOT SWOT SWOT SWOT

14. Resource Audit • Physical resources: machines equipment, facilities ,etc, • Human resources: skills base, and adaptability to change, • Financial resources: ability to obtain capital, debtor and creditor control, shareholders interest etc. • Intangibles: goodwill, reputation, organisation culture, etc. Training of staff of Enterprise Estonia Justin F. Keogan ES01.07.01-1.1.2.3

15. Comparisons • historical • sector norms • benchmarking • Core competencies • To outperform competition • To create new opportunities • Rigidities • Preventing change Resource Audit • Competencies • In separate activities • Through linking activities Some are … • Assessing balance • Resources • Competencies • Business units • Identifying key issues • SWOT analysis • Critical Success Factors Underlying Strategic capability

17. H Relative Market Growth L Problem Child Launch Phase Star Growth Phase Cash Cow Maturity Phase Dog Decline Phase H Relative Market Share L Boston Matrix

18. Boston Matrix • Limitations in applicability to public sector • Based on simple, purely rational view of markets and economic man • Does not take into account political context and priorities Training of staff of Enterprise Estonia Justin F. Keogan ES01.07.01-1.1.2.3

19. Maslin Multidimensional Matrix • Tool to guide the management of a portfolio of services • Not just limited to marketing issues as the Boston matrix is but can be used in general strategic planning • It does not take a prescriptive stance in relation to decision making but in descriptive • It helps but doesn’t replace decision making • It deals with the issue of political (defined need) versus environmental priority (user defined dimension) Training of staff of Enterprise Estonia Justin F. Keogan ES01.07.01-1.1.2.3

20. H User defined dimension (s) L Continue but monitor Disequilibrium Lobby and rematch Equilibrium Withdraw Review and evaluate L Client group needs or wants H (must be carefully and clearly defined) Maslin Multidimensional Matrix

21. Maslin Multidimensional Matrix • Want and needs are defined by some group (political, legal or societal) according to some particular set of priorities • User dimensions are defined by the user of the model through their interpretation of their environment • Wants and needs: poor relief • Environment: determines that scare resources and other constraints will result in the public body not being able to prioritise poverty relief actions Training of staff of Enterprise Estonia Justin F. Keogan ES01.07.01-1.1.2.3

22. Maslin Multidimensional Matrix • Many possible user dimensions (you pick the more important ones) • Examples • Level of concern by elected members • Level of concern of the community • Level of concern by other agencies • Level of finance available • Level of non-financial resources available • Level of statutory duty • Level of current activity Training of staff of Enterprise Estonia Justin F. Keogan ES01.07.01-1.1.2.3

23. Maslin Multidimensional Matrix • Different levels will be of interest to different stakeholders – conflict • Equilibrium – common interest • Disequilibrium - conflict Training of staff of Enterprise Estonia Justin F. Keogan ES01.07.01-1.1.2.3

24. Maslin Multidimensional Matrix • Example • X-axis – needs or wants of a client group laid down by some authority • Y-axis – level of elected member concern and existing level of provision Training of staff of Enterprise Estonia Justin F. Keogan ES01.07.01-1.1.2.3

25. Maslin Multidimensional Matrix H Level of provision L Lobby and rematch Continue but monitor Review and evaluate Withdraw L Client group needs or wants (general population) H Rural Public Telephones Training of staff of Enterprise Estonia Justin F. Keogan ES01.07.01-1.1.2.3

26. Maslin Multidimensional Matrix H Level of elected member concern L Lobby and rematch Continue but monitor Review and evaluate Withdraw L Client group needs or wants (general population) H Rural Public Telephones Training of staff of Enterprise Estonia Justin F. Keogan ES01.07.01-1.1.2.3

27. Withdraw • Politically unproblematic, activities, resources and requirements are well matched • Level of need and provision has decreased significantly with ubiquity of personal telecommunications • Rural public telephones are not a priority • What’s left could probably be abandoned Training of staff of Enterprise Estonia Justin F. Keogan ES01.07.01-1.1.2.3

28. Maslin Multidimensional Matrix H Level of provision (A) Level of elected member concern (B) L Lobby and rematch Continue but monitor B A Review and evaluate Withdraw L Client group needs or wants (old rural dwellers) H Rural Public Telephones Training of staff of Enterprise Estonia Justin F. Keogan ES01.07.01-1.1.2.3

29. Action to be taken • Increase provision or • Redefine the level of need as it applies to your organisation Training of staff of Enterprise Estonia Justin F. Keogan ES01.07.01-1.1.2.3

30. Maslin Multidimensional Matrix H Level of Provision (A) Level of elected member concern (B) L Lobby and rematch Continue but monitor A B Review and evaluate Withdraw L Client group needs or wants H Child Protection Services Training of staff of Enterprise Estonia Justin F. Keogan ES01.07.01-1.1.2.3

31. Continuebut monitor • Needs of group are clear cut and not perceived as ambiguous • Level of provision and share of resources expended are relatively high • Political concern high, though not necessarily actively preoccupied with the issue Training of staff of Enterprise Estonia Justin F. Keogan ES01.07.01-1.1.2.3

32. Maslin Multidimensional Matrix H Level of Provision (A) Level of elected member concern (B) L Lobby and rematch Continue but monitor Ba A Bb Review and evaluate Withdraw L Client group needs or wants H Municipal Golf Courses Training of staff of Enterprise Estonia Justin F. Keogan ES01.07.01-1.1.2.3

33. Lobby and rematch • Or why are we still doing this? • Need is low – relatively speaking • Provision is surprisingly high • Elected member concern may be in favour of • Retaining provision – Ba – disequilibrium • Abandoning provision – Bb – equilibrium Training of staff of Enterprise Estonia Justin F. Keogan ES01.07.01-1.1.2.3

34. Maslin Multidimensional Matrix H Level of Provision (A) Level of elected member concern (B) L Lobby and rematch Continue but monitor A B Review and evaluate Withdraw L Client group needs or wants H Recycling Facilities Training of staff of Enterprise Estonia Justin F. Keogan ES01.07.01-1.1.2.3

35. Review andEvaluate • Why aren’t we doing this? • Need is high • Provision is low • Elected members may favour other priorities or wait for another level of government to deal with the issue • Disequilibrium – it should be a matter of concern for the organisation and the subject of future planning Training of staff of Enterprise Estonia Justin F. Keogan ES01.07.01-1.1.2.3

36. Stakeholders • Individuals or groups who depend on the organisation to fulfil their goals and whom, in turn, the organisation depends Training of staff of Enterprise Estonia Justin F. Keogan ES01.07.01-1.1.2.3

37. Stakeholder Expectations • Strong political dimension to formulating and implementing strategy • Especially for public organisations • Implications for strategic choice and managing change Training of staff of Enterprise Estonia Justin F. Keogan ES01.07.01-1.1.2.3

38. Employee Shareholder Sells labour Wholesaler or Retailer Distribute Organisation Invest Capital Competitors Compete Banks Customers Suppliers Buy products Sell materials Stakeholders - internal

39. Local Community Positive or negative impression Government General Public Jobs/Clean environment Tax & Regulations Organisation Business Support Groups Foreign govt. Hostile or Friendly IBEC/Chamber of commerce Media Social Activist Groups E.g. Green peace or consumer societies Image/Publicity Stakeholders - external

40. Level of Interest Low High A Minimal Effort B Keep informed Low Power High C Keep Satisfied D Key Players Stakeholder Mapping

41. Power / Interest Matrix • Relevant to specific strategies • Plot those that matter • Exclude groups that will remain indifferent • Don’t over estimate power of stakeholders Training of staff of Enterprise Estonia Justin F. Keogan ES01.07.01-1.1.2.3

42. Sources of power • Think internal and external • Hierarchy – politicians • Influence – media • Control of resources – DoF • Expertise – professions • Control of the environment – unions in negotiation • Involvement in strategy implementation Training of staff of Enterprise Estonia Justin F. Keogan ES01.07.01-1.1.2.3

43. Indicators of power • Again think internal and external • Status • Resources • Representation • Symbols Training of staff of Enterprise Estonia Justin F. Keogan ES01.07.01-1.1.2.3

44. Acid test • If I were to pursue this strategy with disregard to the views of this particular stakeholder, could / would they stop me? • If yes, reconsider • If no, fire away Training of staff of Enterprise Estonia Justin F. Keogan ES01.07.01-1.1.2.3

45. Level of Interest Low High B Clients Suppliers A General Public Lobby groups High Power Low D Unions Staff C Media Politicians Example Reduce staff numbers

46. Political battleground Dream ticket Worthy Cause Lone Champion Classification of strategy by maps + + + - - - + + + + + + + + + + + + +

47. Dogged Opponent Political Trap Potential lost cause Political time bomb - - - - - - _ - - - - - - ? ? ? ? ? ?

48. Autocrat’s dream ? ? ? ? ? ?

49. After Environmental Analysis • What’s actionable? • What should we respond to? • Identify the factors that are controllable and those that are not controllable Training of staff of Enterprise Estonia Justin F. Keogan ES01.07.01-1.1.2.3

50. Probable Impact on Corporation Low High Medium High Medium High Priority Priority Priority High Low Medium High Priority Priority Priority Medium Probability of Occurrence Medium Low Low Priority Priority Priority Low Issues Priority Matrix Training of staff of Enterprise Estonia Justin F. Keogan ES01.07.01-1.1.2.3