1. 11.1 Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 Understanding Organisational Context 2e Slides by Claire Capon Chapter 11 Stakeholder and SWOT analyses Defining stakeholders Analysing stakeholders Strengths, weaknesses, opportunities and threats Guidelines for SWOT analysis

2. 11.2 Capon: 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

3. 11.3 Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 Figure 11.2 Stakeholder diagram

4. 11.4 Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 Internal stakeholders Employees Directors Shareholders Trade Unions Managers Owners Employee associations

5. 11.5 Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 External stakeholders Suppliers Competitors Government Associations e.g. CBI Customers Banks Financiers Society

6. 11.6 Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 Stakeholders and the organisation Satisfied stakeholders tend to demonstrate loyalty and remain with the organisation Disappointed stakeholders often relinquish their stake in the organisation

7. 11.7 Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 Stakeholders and the organisation - sometimes stakeholders remain with the organisation and attempt to use their sources of power to persuade the organisation to change

8. 11.8 Capon: 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

9. 11.9 Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 Figure 11.3 Power and interest matrix Source: Johnson, G and Scholes, K (1999) Exploring Corporate Strategy, 5th edition, Prentice Hall Europe. Reprinted with permission.

10. 11.10 Capon: 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

11. 11.11 Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 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

12. 11.12 Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 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

13. 11.13 Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 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

14. 11.14 Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 Power and interest of Category B Category B stakeholders: - have low power individually - have their needs addressed via information

15. 11.15 Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 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

16. 11.16 Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 Power and interest of Category A Category A stakeholders have low power and interest, and the organisation need only invest minimal effort

17. 11.17 Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 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?

18. 11.18 Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 Assessing stakeholder power and interest Assess which stakeholders are more important Identify and meet stakeholder expectations

19. 11.19 Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 Differing stakeholder expectations Shareholders and pension funds want big profits Employees want more pay Local governments want people employed

20. 11.20 Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 Differing stakeholder expectations Production managers want investment in new technology National Government wants tax Pressure groups want ‘green’ improvements

21. 11.21 Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 Comparative stakeholder analysis Plot stakeholders on power and interest matrix, showing how they would line up in relation to proposed changes

22. 11.22 Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 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

23. 11.23 Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 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

24. 11.24 Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 SWOT analysis Strengths Weaknesses Opportunities Threats

25. 11.25 Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 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

26. 11.26 Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 A strength is a competence, valuable resource or attribute that an organisation uses to exploit opportunities in the external environment Strengths

27. 11.27 Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 Strengths An organisation should utilise its strengths to: - fulfil industry and market KSF - develop competitive advantage - meet customer requirements

28. 11.28 Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 Strengths Competitive advantage arises from the unique features that a product or service possesses and for which customers are prepared to pay extra

29. 11.29 Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 Weaknesses 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

30. 11.30 Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 Opportunities 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

31. 11.31 Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 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

32. 11.32 Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 Opportunities KSF may be established by: - the organisation itself - the industry in which an organisation operates - customers and consumers

33. 11.33 Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 Threats Threats: - have the potential to damage an organisation’s performance in the marketplace - may arise from competition, technology, legislation and taxation

34. 11.34 Capon: 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

35. 11.35 Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 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?

36. 11.36 Capon: 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).

37. 11.37 Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 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?

38. 11.38 Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 Guidelines Decide if the organisation has the appropriate strengths on which to build and exploit its opportunities Which strengths should the organisation develop?