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ENVIRONMENTAL THREAT AND OPPORTUNITY PROFILE (ETOP)

 Assessment of the environmental information and determining the relative


significance of threats and opportunities require a systematic evaluation of
the information developed in the course of environmental analysis.
 The ETOP is the useful device for this.
 As a summarised depiction of the environmental factors and their impact
on future conditions the profile is a convenient means by which attention
of the top management may be drawn to the most critical factors and their
potential impact on the strategy of the firm as a whole and key aspects of
its operations.
 For example
ETOP of BHEL ltd [you write an example of your choice]

Environmental sector impact (+) opportunity (-) threat

Socio-economic (+) Continued emphasis on infrastructure


development which includes power supply for
industry, transport, and domestic consumption.
(-) Severe resource constraints.
Technological (+) High growth envisaged in industrial production
and technology up gradation.
(-) Sources of technology will become scarce due to
formation of technology cartels.
Government (+) liberalisation of technology import policy.
Competition (-) Customers will become more discerning in their
requirements due to an increasing role of power
plant consultants.
(-) Public sector will find it increasingly difficult to
retain specialists and highly qualified personnel.

 The preparation of ETOP involves dividing the environment into different


sectors and then analysing the impact of each sector on the organisation.
 A comprehensive ETOP requires subdividing each environmental sector
into sub factors and then impact of each sub factor on the organisation is
described in the form of a statement.
 The preparation of an ETOP provides the strategists with a clear picture of
which sectors (and the different factors in each sector) have a favourable
impact on the organisation.
 By means of an ETOP, the organisation can see where it stands with
respect to its environment
 Such an understanding can be of great help to an organisation in
formulating appropriate strategies to take advantage of the opportunities
and counter the threats in its environment.

G.Dileep 1
Tools for organisational appraisal
 The purpose of organisational appraisal is to determine the
organisational capability in terms of strengths and weaknesses that lie
in the different functional areas.
 The various considerations involves in organisational appraisal relate to
the factors that affect appraisal, the approaches that can be adopted to
appraise them and the sources of information available to perform the
appraisal.
 The factors that affect organisational appraisal relate to the strategists,
the organisation, and to the internal environment.
 The approaches adopted for preparing organisational appraisal may
range from highly systematic to an adhoc approach.
 The sources of information for organisational appraisal could be
internal and external and verbal and written.
 The methods and techniques for organisational appraisal are similar to
those used for performance evaluation.
 The methods and techniques are described under the three groups of
internal, comparative and comprehensive analyses.
 Internal analysis consists of value chain analysis, quantitative analysis-
including financial and non-financial analysis and qualitative analysis.
 Comparative analysis consists of the techniques of historical analysis,
industry norms and benchmarking.
 Comprehensive analysis is done through the methods of balanced
score card and key factors rating.
 Balanced score card identifies four key performance measures viz,
Customer perspective, Internal business perspective, Innovation and
learning perspective, and financial perspective.
 Key factors rating consider the key factors of the different functional
capabilities viz, Financial capability, Marketing capability, Operations
capability, Personnel capability, Information capability and General
management capability.
 A detailed Organisational Capability Profile (OCP) and a summarised
Strategic Advantages Profile (SAP) could do the structuring of the
organisational appraisal.

G.Dileep 2
Organisational capability profile (OCP)
 The OCP is drawn in the form of a chart.
 The strategists are required to systematically assess the various functional
areas and subjectively assign values to the different capability factors and
sub factors along with a scale ranging from the values of –5 to +5.
 A detailed OCP may run into several pages where each of the sub factors
constituting the different functional capability factors can be assessed.

Summarised form of OCP:

Capability factors

Weakness normal strength


-5 0 +5
Financial capability factors
 Sources of funds
 Usage of funds
 Management of funds
Marketing capability factors
 Product related.
 Price related
 Promotion related
 Integrative and systematic
Operational capability factors.
 Production system
 Operations and control system.
 R&D system
Personnel capability factors
 Personnel system
 Organisational and employee characteristics
 Industrial relations
Information management capability factors.
 Acquisition and retention of information.
 Processing and synthesis of information.
 Retrieval and usage of information.
 Transmission and dissemination of information
 Integrative, systematic, and supportive
General management capability factors.

 General management system


 External relations
 Organisational climate

 After completion of the chart, the strategists are in a position to assess the
relative strengths and weaknesses of an organisation in each of the six
functional areas and identify the gaps that need to be filled or the
opportunities that could be used.
 The preparation of an OCP provides a convenient method to determine the
relative priorities of an organisation vis-à-vis its competitors, its
vulnerability to outside influences, the factors that support or pose a
threat to its existence, and its overall capability to compete in a given
industry.

G.Dileep 3
STRATEGIC ADVANTAGE PROFILE (SAP)
[Analysis of strengths and weaknesses]
[Internal analysis or organisational analysis]

 SAP is a summary statement, which provides an overview


of the advantages and disadvantages in key areas likely to
affect future operations of the firm.
 It is a tool for making a systematic evaluation of the
strategic advantage factors is significant for the company in
its environment.
 The preparation of such a profile presupposes detailed
analysis and diagnosis of the factors in each of the
functional areas (Marketing, Production, Finance, And
Accounting, Personnel And Human Resources, R &D).
 The relevant data for the critical areas may go as a
supplement to the profile.
 For example

Strategic Advantage Profile Of ABC India Ltd [you write an example of your
choice]

Internal area (+) strength (-) weakness

Marketing (+) Capable sales force; sales agents dispensed with


(-) Shrinking market for most products.
Operations (-) Stagnating sales performance
(+) Profits after tax picking up after 1982.
(-) Plant facilities are old.
R&D (-) No R&D effort so far.
(+) Backing in R&D expected from parent US company.
Finance (-) No additional investment since 1980.
(-) Heavy reliance on fixed deposits and bank loans
(+) Parent US Company now interested in expansion.
Corporate resources (+) Management team comprises young, ambitious
executives.

 In summarising the functional competencies a comparative view needs to


be taken in the light of external conditions and the time horizon of
projections since the strengths and weaknesses are very much related to
the external conditions and time horizon of projections.
 In the preparation of SAP one must also reckon the probability of the
strength or advantage continuing in future and how long can it be relied
upon.
 A company may identify its relative strength in the personnel area with
highly skilled workmen and technical staff manning the production
department; however, its production facilities may be old and outdated.
 It is obvious that the technical competence in the personnel area can
hardly regarded as a potential strength unless the company removes the
weakness of outdated production facilities.
 The company must recognise the danger of relying on strengths in a
particular area without simultaneously reckoning the capabilities in other
interdependent units of activity.

G.Dileep 4

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