Strategic Planning for Learning Organizations Session 8. Analysis of External Environment

Objectives of Day 3 Discuss principles and describe processes to undertake analysis of external environment Discuss principles and describe processes to undertake analysis of internal environment Discuss why gap analysis is necessary and describe its steps

Tentative Schedule of Day 3 08:30 – 09:00 Opening of the Day’s Activities 09:00 – 10:30 Session 8. Analysis of External Environment Tea/Coffee Break 10:45 – 11:15 Session 8. (Continued) 11:15 – 13:00 Session 9. Analysis of Internal Lunch Break 14:00 – 14:30 Session 9. (Continued) 14:30 – 15:30 Session 10. Gap Analysis 15:45 – 17:15 Session 10. (Continued) 17:15 – 17:30 Feedback on the Day’s Activities and PAPA

Objectives of Session 8 Explain why an external environment analysis is necessary Analyze the boundaries between the external and internal environment Identify the components of the external environment analysis Describe how to conduct an analysis of the external environment

Purpose of Analysis of External Environment Study the relationship between the institution and its environment in terms of opportunities and threats Provide capacity to respond to critical questions from the external environment

Purposes of External Environment Analysis (cont’d) Explore future conditions of the institution’s external environment Identify and prioritize emerging threats and design strategies to handle them Identify and prioritize potential opportunities and design strategies to exploit them Provide information on how these factors will affect attainment of the vision

What Type of Analysis? Should do prospective analysis Involves monitoring, interpreting and evaluating the relevant external environment Identifies the probable scenarios in order to build a desired future Identifies trends to guide policy formulation and design effective strategies

Boundaries Between Internal and External Environments Traditionally, any stakeholder outside the organization was considered as part of the external environment The innovation systems paradigm and similar approaches such as the AR4D recognize the need to involve other stakeholders as part of the innovation system The question is where are the boundaries drawn? The boundary depends on the objectives and who needs to be involved to make it happen

Methodologies for External Analysis There is no universal methodology Use combination of concepts and methods for specific situations Qualitative brainstorming, pooling of expert judgment, and scenario building Quantitative methods include dynamic models, risk forecasting and trend analysis With the innovation systems paradigm, need more participatory analysis

Relevant External Environment A multidimensional combination of general or operational elements directly affecting present or future activities of the institution Socio-cultural, economic, political, legal, and technological factors Includes forces, aspects, events, facts and actors

Critical External Environment Any element (force, event, fact or actor) that can directly affect the organization’s general performance or the performance of some of its activities Should be considered in the external environment Bear in mind the issue of boundaries and level of objectives

SWOT Analysis External environment analysis deals with the OT part of the SWOT analysis The opportunities offered by the external environment are identified The threats posed by the external environment are identified Some tentative effects of these on the attainment of the vision can be deducted

Opportunities Any factor that can be exploited to advantage to enhance the performance of any of the organization’s or AIS’ most important initiatives Opportunities must be recognized and exploited to increase the contribution and impact of the organization or AIS

Threats Any factor that can become a disadvantage, risk or danger for the performance of any of the organization’s or AIS’ most important activities Threats must be recognized to avoid them or to reduce their impact

Who Should Conduct the Analysis? Interdisciplinary Coordinating Committee should be appointed before formulating a strategic plan If at system level, committee should involve multiple stakeholders and institutions

Who Should Conduct the Analysis? (cont’d) Require political will to succeed: Financially- enough funds to carry out process Politically- constant participation from top management Logistically-adequate materials, equipment, personnel Technically- ability to consult external experts

Methodology and Steps for Prospective External Analysis Steps- Strategic Diagnosis (Finding out) Steps- Strategic Prognosis (Projection) 1. Identify the relevant external environment 4. Identify and evaluate the trend for each critical factor chosen 2. Identify the critical external factors in hierarchical order 5. Identify and evaluate opportunities and threats 3. Identify key sources of information for each critical factor 6. Analyse implications for vision, mission, objectives and strategies