Macro Environmental Analysis
Melanie Verreault STMT-500 Strategic Management Analysis of Child and Family Services of Timmins and District Word Count: 2,494 November 8, 2009 Tracy Hillier Table of Contents Introduction……………………………………………………………………………….. 3 External Situation……………………………………………………………………….
. 3 Internal Situation………………………………………………………………………… 5 Five Forces Analysis…………………………………………………………………… Competitor Analysis…………………………………………………………………… 9 Objectives…………………………………………………………………………………. 11 Conclusion………………………………………………………………………………… 11 References………………………………………………………………………………… 12 3 Introduction In 2000, CFSTD became the second social services organization in Ontario to amalgamate Children’s Mental Health and Protection Services.
An appreciation of CFSTD and its services can be obtained by visiting its website: http://www. timminschildfamily. org In order to gain a greater understanding of CFSTD, a strategic management analysis will be completed. This goal will be achieved by completing the following: 1. an analysis of CFSTD’s external and internal situation; 2. an evaluation of CFSTD by using Porter’s Five Forces model, and; 3. an analysis of CFSTD’s main competition. Based on this assessment, strategic objectives will be identified and recommended.
External Situation As presented by Grant (2007), macroenvironmental factors are beyond a firm’s control. To adapt and remain competitive, a firm must understand how these external influences “affect the firm’s industry environment” (p. 66). The six factors impacting the endeavours of a firm are demographic, economic, political/legal, ecological, socio-cultural, and technology. Barney (2007) states an analysis of the external situation identifies a firm’s “critical threats and opportunities in its competitive environment” (p. 1) and “examines how competition in this environment is likely to evolve and what implications that evolution has for the threats and opportunities a firm is facing” (Ibid). The following outlines these factors and their level of influence on CFSTD. Demographic:High The population of the City of Timmins can best be described as aging with a decrease in birth rate. It is important to add that the population of Native People migrating to the Timmins area from the James Bay coast is increasing.
Since CFSTD’s main reason for operating is to offer services exclusively to youth under the age of sixteen and their respective families, the demographic factor scores high. Without this, threats such as decrease in ministry funding and personnel layoffs can occur. To 4 adapt to the changing demographic environment, CFSTD can implement new and creative initiatives by collaborating with other service providers. Economic:High The current economic situation has impacted most if not all of the world. As a result, government funding to organisations has been affected.
Due to current budget cuts, CFSTD is facing threats of potential downsizing in various services, capping travel and other expenditures and suspending relevant personnel training initiatives. To respond to the changing economic environment, CFSTD can explore amalgamating programs and services, developing new partnerships and increasing its capacity in the volunteer sector. Political:Medium Whenever a new government is elected, changes to the legislation can be anticipated. Amendments made to provincial legislation such as the Child and Family Services Act impact CFSTD’s operation.
Threats CFSTD can face due to the changing political environment are mostly cost and time demanding: development of new operation and administrative procedures, staff training in these areas, to name a few. However, developing and implementing new initiatives can translate into opportunities for CFSTD with the influence of the political environment. Ecological:Low Although located in a city where extreme weather conditions are experienced such as harsh winters with abundant snowfalls, the ecological situation poses minimal impact on CFSTD’s service delivery.
Fortunately, with the implementation of videoconferencing services, travel to various areas is reduced. Thus, programming continues to be offered to the client population. Social/Cultural:Medium CFSTD’s culture encompasses a unionized personnel, which is mostly female, with a diversity in educational backgrounds, expertise and work experience. In addition, some of the personnel are fast approaching retirement. This factor can pose threats such as a delay in services offered to clients due to union issues, potential work stoppage, and a wealth of knowledge and expertise lost when veteran personnel retire.
Should this be the case, an opportunity that CFSTD could explore, as mentioned in an article by Dychtwald et al. (2004), is to “create a culture that honors experience” (p. 51), 5 that is, to offer flexible contracts to retiring staff who can “step in at a moment’s notice by filling gaps and help bringing the next generation of leaders up to speed” (p. 54). Technological:Low CFSTD ensures that new technological initiatives are implemented on a regular basis. Potential threats could be additional staff training and resistance to endorsing new technological initiatives.
Technology creates many opportunities such as improving efficiency of work practices and reducing overall costs. In sum, the DEPEST analysis indicates that demographic and economic factors significantly impact CFSTD while technological and ecological factors are minor influences. The socio-cultural and political factors have a mid-level effect on the organization. The external analysis points out the possible threats and opportunities that CFSTD faces. To complement this external analysis, an internal assessment will follow.
As noted by Barney (2007), “an internal analysis helps a firm identify its organizational strengths and weaknesses” (p. 11). Furthermore, it will illustrate “which of its resources and capabilities are likely to be sources of advantage and which of them are less likely to be sources of such advantages” (Ibid). CFSTD’s internal situation will be analyzed using the VRIO framework. Internal Situation Barney (2007) states the VRIO framework is a “structured in a series of four questions to be asked about the business activities in which a firm engages” (p. 138).
In addition, the “answers to these questions determine whether a particular firm resource or capability is a strength or a weakness” (Ibid). The following table summarizes the VRIO questions as they apply to CFSTD. 6 TABLE 1: VRIO analysis of CFSTD RESOURCES| CAPABILITIES| VALUABLE| RARE| IMITABLE| ORGANIZATION| IMPORTANCE| Annual funding| Staff are remunerated for providing services; covers capital costs for overall agency functioning. Finances are ministry driven. | YES| NO| NO| YES| High| Technology| Records agency’s overall administrative tasks (i. e. reports).
Communication vehicle for staff. Video-conferencing services are available. | YES| NO| YES| YES| Medium| Personnel| Certified employees providing expertise inservices to client population. | YES| YES| NO| YES| High| Quantitative and qualitative assurance measures| Data collected through client surveys and agency’s network enables the agency to identify the client needs, develop new programs and initiatives and ensures the client population is being adequately serviced. | YES| NO| YES| YES| Medium| Location| Where services are provided for clients. Programming occurs in these various locations. YES| NO| YES| YES| Medium| Services| Multi-disciplinary agency providing a wide range of services to meet client population needs. | YES| YES| NO| YES| High| The findings of the VRIO analysis indicate which resources and capabilities are of significant importance to CFSTD. Ministry funding, is extremely relevant. Although provided on a quarterly basis, funding can change based on data regarding client 7 volume. CFSTD is bound to a funding formula which is reviewed on an annual basis by the government. Despite its potential for fluctuation, funding is a strength for CFSTD.
Technology is a pertinent vehicle of communication. Technology permits CFSTD to offer specialized services to clients that are not readily accessible in the North. CFSTD personnel present as a relevant resource. The diversity and expertise of the personnel is of great value, strength and rarity. Data is another noted strength. The gathered information, analyzed with evidenced-based qualitative and quantitative measures, enables CFSTD to assess the needs and pressure points and, in turn, develop proposals and implement new initiatives that will better serve the client population.
Services are also a relevant resource. CFSTD is the largest social service organisation within the area offering more than twenty programs and services that are unique and valuable. Annually, service enhancements take place via the program review process. Furthermore, collaborative projects are occurring with other service providers to offer services that meet clientele needs. Currently, location resources are a weakness. CFSTD is facing a potential closure of one of its facilities due to the constant low number of young offenders coming into custody.
CFSTD is communicating with the ministry at this time regarding next steps. Overall, the internal analysis of CFSTD clearly identifies areas of strength and weakness and those requiring improvement. It is important to analyze how and where CFSTD fits into the non-profit industry and determine the intensity of competition and profitability (in this industry, profit is viewed by client volume and ministry funding). In order to do so, an evaluation of CFSTD will be conducted using Porter’s Five Forces of Competition Framework. Five Forces Analysis
Grant (2007) states “Porter’s five forces of competition framework views the profitability of an industry as determined by five sources of competitive pressure” (p. 71). The following table evaluates CFSTD with these five forces. 8 TABLE 2: Evaluation of CFSTD using Porter’s Five Forces FACTORS| INDUSTRY: Non-Profit Child and Family Social Services Organisations| Threat of New Entrants| New government policy and/or amendments to legislation directly impact licensing requirements and overall service operations in social services organisations.
Thus, new procedures are developed and new criteria must be met to receive allocation of funds and subsidies for programs and initiatives. | Bargaining Power of Suppliers| Unionized organisations are threatened by disagreements on job descriptions, training and worker performance, thus creating significant delays in service delivery and having an impact on funding. There is a threat of the collective bargaining agreement review and negotiation turning into a strike thus halting service operations. | Bargaining Power of Buyers| Ministry allocated funds for program proposals regarding new initiatives that meet Ministry expectations.
Other service providers looking to collaborate and develop new partnerships for Ministry driven initiatives in order to receive financial allocation. | Threat of Substitute Products or Services| Private firms offering similar services. New provincial initiative where psychiatric services in the north will be offered via video-conference instead of face-to-face thus, decreasing the wait-time and wait-list for clients. New legislation regarding young offenders indicates that youth involved with the law are kept out of custody and instead assisted in their local communities.
Thus, the number of youth entering facilities has decreased to the point of facility closures. | Rivalry Among Existing Competitors| Similar firms within the industry are competing for Ministry funds. Some firms are collaborating and creating partnerships on some initiatives thus dividing Ministry funds among them. | The findings in this analysis reveal the most significant aspects of CFSTD’s competitive environment. In his article, Porter (2008) note the “strongest competitive force or forces determine the profitability of an industry and become the most important to strategy formulation” (p. 0). Threat of new entrants and bargaining power of buyers are significant forces for CFSTD. Interesting enough, these forces pertain to the same entity: government. More 9 specifically, government legislation and funding influence CFSTD’s course of action when it comes to service implementation and development. However, in the non-profit industry, there is dual influence occurring. Funding, for instance is service/client driven. Thus, if CFSTD’s client volume is high, funding forecasts are at a higher level. Another significant factor is the bargaining power of suppliers.
In this case, it is the firm’s personnel. Similar to the government, staffing poses as a threat and/or opportunity. The vision of CFSTD is to offer services to clients in order to promote well-being and safety. This goal cannot be achieved without the expertise and efforts offered by CFSTD employees. Although Porter’s model is better served in the profit industry, it has validity in the non-profit sector. It identifies the fundamentals and constraints of CFSTD all the while permitting CFSTD to have a certain degree of flexibility and creativity in this prescribed environment.
In sum, Porter’s model is good to predict changes of profitability. In the case of CFSTD, profitability is a combination of funding with client and service volume. How can CFSTD predict the competitive moves rivals are likely to initiate? One possibility is to conduct a competitor analysis. The following will examine how information regarding rivals can assist in predicting behaviour. Competitor Analysis Grant (2007) notes that competitor analysis is an intra-industry analysis involving a “systematic approach of information gathering that makes clear what information is required and for what purposes it will be used.
The objective is to understand one’s rival” (p. 107). At present, there are social services firms offering similar services to CFSTD. This paper focuses on the competitor most similar to CFSTD: Kunuwanimano Child and Family Services (KCFS). More details about KCFS can be found at their website: http://www. kunuwanimano. com The tool selected to complete this analysis is Porter’s four-part framework for predicting competitive behaviour. The following table outlines these details. 10 TABLE 3: Analysis of KCFS Factor| Comments|
Strategy| * KCFS focuses on delivering child welfare and mental health services to First Nations children within their catchment area and work collaboratively with the communities they service. * Children and families will be cared for by the community and inherit the skills, knowledge and cultural traditions that will be provided by community members (www. kunuwanimano. com) * Approaches to working with youth and families guided by the seven sacred teachings. | Objectives| * Develop a service model respecting the inherit authority for child protection matters. Develop policies and procedures and protocols with service providers and First Nations communities that will address decision-making regarding child protection matters. * Obtain Ministry designation to offer mandated services. | Assumptions| * All First Nations people want to obtain services from KCFS. * All First Nations people want to inherit and learn traditional, cultural skills, customs and knowledge. | Resources and Capabilities| Strengths: * Culturally specific services offered by staff with Native ancestry. * Ability to service eleven Native communities.
Weaknesses: * No child welfare designation. * Collaboration with service providers in order to develop protocols, policies and procedures. * Frequent changes in personnel. | Currently, KCFS is at a standstill in obtaining its designation due to their unwillingness to collaborate with similar community service providers. In order for a firm to obtain designation from the Ministry, supervision by a similar firm is required. KCFS refuses to have CFSTD as their supervisor. Based on the above-mentioned, CFSTD can predict the following: 11 KCFS will not obtain its designation for several years and thus will not take over CFSTD’s Native client population; * There is a probability that many of CFSTD’s Native clients will choose to remain as clients of CFSTD, and; * CFSTD will remain as the leading organisation in child welfare services for the Timmins area. It is important to note that CFSTD continues its efforts to work with KCFS, in most part, to no avail. This framework has enabled CFSTD to assess key components of KCFS in order to make future predictions. Objectives
Based on the various analyses completed in this paper, recommended strategic objectives are for CFSTD to: * Develop and implement a performance appraisal tool that encompasses competency modelling and that is congruent with CFSTD’s strategic plan; * Develop a contingency plan with the Ministry in the possibility of the closure of one of CFSTD’s locations; * Research and identify a framework such as management innovation that can be applied agency wide and that is in alignment with CFSTD’s strategic plan, and; * Develop and implement a plan to recruit qualified Native professionals.
Conclusion Overall, the analyses completed in this paper have allowed us to better understand CFSTD. Now, we can appreciate how CFSTD is doing, what is working well, what requires enhancing and what directions CFSTD plans on going into in the near future. 12 References Barney, J. B. (2007). Chapter 1: What is strategy? In Gaining and sustaining competitive advantage (3rd ed. , pp. 1-16). Upper Saddle River, NJ: Prentice-Hall. Barney, J.
B. (2007). Chapter 5: Evaluating firm strengths and weaknesses. In Gaining and sustaining competitive advantage (3rd ed. , pp. 127-169). Upper Saddle River, NJ: Prentice-Hall Inc. Dychtwald, K. , Erickson, T. , & Morison, B. (2004). It’s time to retire retirement. Harvard Business Review, 82(3), 48-57. http://library. athabascau. ca/mbadrr/STMT-500/ Chapter 5-Evaluating firm strengths and weaknesses. pdf Grant, R. M. (2007).
Contemporary strategy analysis (6th ed. ). Malden, MA: Blackwell Publishing. Kunuwanimano Child and Family Services (2009). Retrieved November 7, 2009, from http://www. kunuwanimano. com . Porter, M. (2008). The five competitive forces that shape strategy. Harvard Business Review, 86(1), 78-93. http://0-search. ebscohost. com. aupac. lib. athab ascau. ca/login. aspx? direct=true;AuthType=url, ip,uid;db=bth;AN=28000138;site=ehost-live