11.1Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004

Understanding Organisational Context 2e

Slides by Claire Capon

Chapter 11

Stakeholder and SWOT analysesDefining stakeholders

Analysing stakeholders

Strengths, weaknesses, opportunities and threats Guidelines for SWOT analysis

11.2Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004

Defining stakeholders

• A stakeholder is anyone or any group with an interest in the organisation/industry

• Some stakeholders are internal and some are external

11.3Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004

Figure 11.2 Stakeholder diagram

11.4Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004

Internal stakeholders

• Employees

• Directors

• Shareholders

• Trade Unions

• Managers

• Owners

• Employee associations

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External stakeholders

• Suppliers

• Competitors

• Government

• Associations e.g. CBI

• Customers

• Banks

• Financiers

• Society

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Stakeholders and the organisation

• Satisfied stakeholders tend to demonstrate loyalty and remain with the organisation

• Disappointed stakeholdersoften relinquish their

stake in the organisation

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Stakeholders and the organisation

- sometimes stakeholders remain with the organisation and attempt to use their sources of power to persuade the organisation to change

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Guidelines

• Identify key stakeholders

• Be aware of stakeholder power and interest

• Plan to meet stakeholder needs and expectations

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Figure 11.3 Power and interest matrixSource: Johnson, G and Scholes, K (1999) Exploring Corporate Strategy, 5th edition, Prentice Hall Europe. Reprinted with permission.

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Power and interest of Category D

• Category D players (key players) are often involved in managing the organisation

• Needs of key players should be given high consideration as they have power to veto plans

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Power and interest of Category C

• Institutional shareholders often fall into Category C and must be kept satisfied

• Category C stakeholders are generally passive - difficulties arise if their level of interest is underrated

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Power and interest of Category C

• Sometimes Category C stakeholders exert their power and reposition to Category D

• This often frustrates a company’s or industry’s plans

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Power and interest of Category C

• Therefore develop a good working relationship with Category C stakeholders via good communication and the role of non-executive directors

• This will keep you informed of their views and potential actions

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Power and interest of Category B

• Category B stakeholders:

- have low power individually

- have their needs addressed via information

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Power and interest of Category B

• Category B stakeholders can:

- influence more powerful stakeholders (C and D)

- act collectively, become more powerful and reposition to Category D

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Power and interest of Category A

• Category A stakeholders have low power and interest, and the organisation need only invest minimal effort

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Assessing stakeholder power and interest

• Plot stakeholders on power and interest matrix

• For each stakeholder assess:

- how great is their interest in the organisation?

- how strong is their power over the organisation?

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Assessing stakeholder power and interest

• Assess which stakeholders are more important

• Identify and meet stakeholder expectations

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Differing stakeholder expectations

• Shareholders and pension funds want big profits

• Employees want more pay

• Local governments want people employed

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Differing stakeholder expectations

• Production managers want investment in new technology

• National Government wants tax

• Pressure groups want ‘green’ improvements

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Comparative stakeholder analysis

• Plot stakeholders on power and interest matrix, showing how they would line up in relation to proposed changes

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Comparative stakeholder analysis

• Plot stakeholders on a second power/interest matrix, showing how you would like them to line up if the changes are to succeed

• Compare the two power and interest matrices, looking for mismatches

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Comparative stakeholder analysis

• Assess which stakeholders need to be influenced and actively managed

• Some stakeholders may need to be encouraged to maintain their current position

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SWOT analysis

Strengths

Weaknesses

Opportunities

Threats

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SWOT analysis

• SWOT analysis is concerned with the ability of an organisation to:

– use its strengths & weaknesses (internal) to operate successfully in its external environment

– influence opportunities and threats (external) on an organisation

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• A strength is a competence, valuable resource or attribute that an organisation uses to exploit opportunities in the external environment

StrengthsStrengths

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Strengths

• An organisation should utilise its strengths to:

- fulfil industry and market KSF

- develop competitive advantage

- meet customer requirements

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Strengths

• Competitive advantage arises from the unique features that a product or service possesses and for which customers are prepared to pay extra

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WeaknessesWeaknesses

• A weakness is a lack of a competence, resource or attribute that an organisation needs to perform better than its competitors in the external environment

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OpportunitiesOpportunities• Opportunities:

- are openings or chances in the external environment which

organisations pursue or exploit to gain benefit

- may arise from new markets and at all levels of the

external environment

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Opportunities

• The success of an organisation in exploiting opportunities relates to its ability to meet its key success factors (KSF)

• KSF are what an organisation must do well and better than its competitors if it is to succeed

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Opportunities

• KSF may be established by:

- the organisation itself

- the industry in which an organisation operates

- customers and consumers

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Threats

• Threats:

- have the potential to damage an organisation’s performance in the marketplace

- may arise from competition, technology, legislation and taxation

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Guidelines

• Identify key threats, opportunities, weaknesses and strengths

• Do not produce long lists

• Consider the questions on the following slides

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Guidelines• Do threats need managing

more urgently than pursuing opportunities?

• Which threats need managing in the short term and which in the long term?

• Can threats be turned into opportunities?

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Guidelines

• Are there any changes to existing consumers and markets?

• Can suitable new markets be identified?

• Consider how customer numbers can be increased (see Customer growth options in Chapter 6).

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Guidelines

• Is remedying weaknesses more urgent than building on strengths to exploit opportunities?

• Does ignoring weaknesses make the organisation vulnerable to threats?

• Can weaknesses be turned into strengths?

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Guidelines

• Decide if the organisation has the appropriate strengths on which to build and exploit its opportunities

• Which strengths should the organisation develop?