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
11.5Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004
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
11.8Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004
Guidelines
• Identify key stakeholders
• Be aware of stakeholder power and interest
• Plan to meet stakeholder needs and expectations
11.9Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004
Figure 11.3 Power and interest matrixSource: Johnson, G and Scholes, K (1999) Exploring Corporate Strategy, 5th edition, Prentice Hall Europe. Reprinted with permission.
11.10Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004
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
11.34Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004
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?
11.36Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004
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?
