You are on page 1of 30

Frank Stephen Thompson (Student ID: [W]12040015 )

SM0377 Understanding Strategy


BA (Hons) Leadership and Management Part-time
October 2013

Word Count (Part One) 3,205 words


Word Count (Part Two) 996 words

Contents
Part 1 4
1.0 Introduction .4
1.1 Defining Strategy 4
2.0 External Environment .5
2.1 Macro and Micro Environment ...5
2.2 PESTEL Analysis ...6
2.3 Porters Five Forces Analysis..7
2.4 Summary of the External Analysis .7
3.0 Internal Analysis 10
3.1 SWOT Analysis .10
3.2 BSM: Vision, Mission & Core Competences ....10
3.3 Summary of the Internal Analysis .10-11.
4.0 The Role of Employees in Strategy .......12
4.1 Why Employees Should be Involved in Strategy.......12
Part 2 ...13
Reflective Statement and Learning Log ..13
Reference List ..16
Appendices ...18
Appendix 1.1 - Table 1.1 - The Three Levels of Strategy ..18
Appendix 2.1 - Table 2.1 - External Environmental Analysis (Components) 19
Appendix 2.2 - Table 2.2 (A-F) - PESTEL Analysis..20-26
Appendix 2.3 Table 2.3 - Porters Five Forces Analysis ......27
Appendix 3.1 Table 3.1 - SWOT Analysis .. 28
2

Appendix 3.2 Table 3.2 - BSM: Mission, Vision & Core Competences . 29
Appendix 3.3 - Recommendations ...30

PART 1
1.0 Introduction
This report provides an appraisal and strategic analysis of Bangkok School of Management (BSM), a
Bangkok-based business school and course provider. Strategic frameworks are applied to the organizations
external and internal environment, so a critical evaluation can be made.

1.1 Defining Strategy


In Defining Strategy (2008), which refers to What is Strategy? (1996), a Harvard Business Review
article by Michael E. Porter, strategy is defined as deliberately making difficult choices when deciding
which avenues to pursue in order to best serve the needs of a group of customers. While targeting a
specific market isnt strategy, according to Porter, differentiating your product or service from
competitors targeting the same market is.
Jeffs (2008) defines strategy as, the management of the organizations resources and competences to
match the aims of the organization and the threats and opportunities in the environment. Similarly,
Johnson, Scholes & Whittington (2008) suggest strategy is, the direction and scope over the
longterm, which achieves advantage in a changing environment through its configuration of resources
and competences with the aim to fulfill stakeholder expectations.
Jeffs (2008) identifies three levels of strategy: corporate-level; business level; and operational level. A
detailed breakdown can be seen in Table 1.1 (Appendix 1.1, Page 22).
To illustrate the important role strategy plays in organizations, the author of this report will describe a
negative consequence for organizations that lose sight of key external issues. Jeffs (2008) states that a
phenomenon known as strategic drift takes place when an organization doesnt adequately address its
long-term strategic position, which can lead to underperformance. Ireland, Hoskisson & Hitt (2013
[Page 85]) suggest that since competitive advantages are not permanently sustainable, businesses need
to, make the most of their current advantages while using their capabilities and resources to generate
new ones that could lead to future competitive success.
This report outlines relevant definitions of strategy and goes on to examine the important role strategy
plays within organizations. It focuses on BSMs macro (external) environment, through the use of a
PESTEL (Political, Economic, Social, Technological, Environmental, Legal) analysis and the micro
environment by applying Porters Five Forces. It then provides an internal analysis, using a SWOT
analysis, which examines, Strengths, Weaknesses, Opportunities and Threats.
The final section examines the importance of employee buy-in when establishing or implementing
a strategy.

2.0 The External Environment


2.1 Macro and Micro Environment
Utilizing strategic framework tools, the author will present an analysis, which will examine relevant
external factors relating to BSM.
Many academic texts define an organizations external environment as being a combination of the
macro (far) and micro (near) environment. Jeffs (2008) says the macro environment includes:
all those influences that will affect every firm in the same industry or sector and often organizations in
other industries.

External factors may include government regulation, along with economic or technological changes that
an industry has no control over. For example, if legislation restricted immigration, this would belong in
a macro analysis if one were examining a company that relies on (legal) migrants, as it is likely to
impact upon the whole industry and not just one firm.
According to Campbell, Edgar & Stonehouse (2011), the micro environment can be defined as the
industry or competitive environment. Jeffs (2008 [Page 35]) suggests that the micro environment is
everything within the industry, which includes the business environment that the industry,
might have some influence over. Concerned with competitive dynamics and markets of a
sector or industry, this includes the industry itself and the customer interface. The former relates to
the competitive situation and strategic groups, while the latter refers to market segmentation and
products.
The acquisition and use of information about trends, events and relationships in an organizations
external environment is commonly referred to as environmental scanning. Jeffs (2008) defines
environmental scanning as:
the process of evaluating the external environment at the macro and micro level in order to identify
organizational threats and opportunities.

According to Aguilar (1967) and Choo and Auster (1993), this knowledge can be used to assist
management in planning future actions.
One of the major challenges when analyzing the external environment is that it is an area that is
fluid and therefore prone to rapid change, so timing is essential for the results to be relevant.
Environmental scanning is just one component within a four-tier process of external environmental
analysis. To view each component in detail, see Table 2.1 (Appendix 2.1, Page 23).

2.2 PESTLE Analysis


PESTLE stands for Political, Economic, Social, Technological, Legal and Environmental. The original
framework, known as PEST, was established by the Harvard professor, Francis J. Aguilar
(in
Scanning the Business Environment). Aguilar referred to the framework as ETPS in this
seminal
publication. The framework has been widely used in business as a tool to analyze an organizations
broad external environment. The analysis should list macro-economic factors
that already
affect a business, along with those that may do so in the future.
While a PESTLE analysis is typically linked with a SWOT analysis, the frameworks have
fundamentally different focus areas. While PESTLE examines macro factors that may influence a
decision, market or potential new area of business, a SWOT analysis explores these elements at a
business, product or product line level.

Benefits (advantages)
The UKs Chartered Institute of Personnel and Development (CIPD) states that the frameworks
simplicity is one of its key advantages.
A PESTLE analysis enables an organization to identify opportunities and fully exploit them, according
to Hopkin (2010). Hopkin suggests that it, encourages the development of external and strategic
thinking, while enabling an organization to anticipate future threats and take steps to avoid or
minimize their impact.
A PESTLE analysis allows for input from a diverse group of contributors. This can be useful, as aspects
which might not normally be considered by every area of an organization can come to the surface.

Limitations (disadvantages)
A presentation developed by the United Nations University Fisheries Training Program suggests that
the biggest problem with PESTLE is that the factors are, constantly changing. This means an
organization must constantly review the conditions, which can be time-consuming and expensive. It
adds that access to quality external data sources can also be expensive.
Some users, oversimplify the quantity of data used for decisions, according to Hopkin (2010).
Yuksel (2012) argues that since PESTLE factors generally have a qualitative structure, a quantitative
measurement cannot be made. Yuksel believes the present technical framework of a PESTLE analysis
ought to be further developed to accommodate measurement and evaluation.
Yuksel explains that a political situation, for example, could lead to social or economic implications.
Yuksel believes PESTLE ought to feature a format that examines the inter-dependence of the factors,
rather than examining each in isolation.

Since people from different domains need to be involved to ensure the accuracy of a PESTLE analysis,
this would typically be a barrier for smaller organizations, such as SMEs.
While Yuksel points to several disadvantages, Brooks, Weatherston & Wilkinson (2008) discovered that
by utilizing a PESTLE analysis, it is possible to develop a comprehensive, logical view of any
organizational environment. This supports Johnson, Scholes & Whittingtons view (2008) that applying
the framework identifies an important list of influences upon the possible success (or failure) of
particular strategies.
The PESTLE analysis of BSM (Table 2.2 [A-F], Pages 24-30) presents key factors that highlight
external issues or concerns that need urgent attention as well as ones that BSM has no control over.

2.3 Porters Five Forces Analysis


Developed by Porter, who first wrote about it in 1980, the Five Forces framework is often used to
identify the competitive nature of an industry. It is applied to compare similar segments at the strategic
business unit (SBU) level, according to Jeffs (2008).
The framework focuses on relations between: the power of buyers; the power of suppliers; the threat of
new entrants; the threat of substitute products/services); and competitive rivalry within the industry
being scrutinized. The framework focuses on the micro environment and is used to: determine the
attractiveness and profitability of an industry; highlight possible sources of competition in an industry;
identify possible threats to stability; and to assist in the development of future strategies.
Jeffs (2008) suggests that the forces in question can easily be influenced by factors that originate at a
macro level. For example, when videos became widely available online at low or no cost, operators of
video rental stores faced a major upheaval, which posed a significant challenge to the whole industry.
Grimm, Lee & Smith (2006) suggest that this framework assists organizations in achieving competitive
advantage, although Pearce & Robinson (2009) say it creates frustration among many managers, since
the external environment is prone to significant change at any time. Nevertheless, Johnson, Scholes &
Whittington (2008) stress the need for organizations to examine competition within the micro
environment, and Five Forces is arguably one of the most popular tools, hence the authors decision to
utilize it (see Table 2.3, Page 31).

2.4 Summary: External Analysis


Applying the PESTLE and Porters Five Forces frameworks, the author identified key external strategic
factors (macro and micro) which impact upon management schools and course providers. The author
will firstly summarize elements listed within the PESTLE analysis (Table 2.2 [A-F], Pages 23-29)

PESTLE analysis
P (Political)
While the government does not directly influence BSMs strategy, the political environment, both
domestically and regionally, can influence the firms prospects and it is likely to continue to do so.
So long as there is a reasonable degree of stability, the public can easily identify with BSMs unique
offerings, such as its BA (Hons) program, which allows students to work towards a bachelors degree
with a foreign university while remaining in Thailand. This course minimizes the amount of time a
student needs to be based overseas. Typically, overseas study can be a very expensive experience, so the
BSM option offers good value.
A crucial factor in the development of Thailands northeastern region (known as Isan), as identified in
Table 2.2 (A [Pages 23-24), will be the governments willingness to deliver on its infrastructure goals.
As the full analysis within the table points out, the government relies heavily on voters in Isan, which is
currently enjoying robust economic growth.
The governments ability to deliver on the positive claims it has made regarding the establishment of
the Asean Economic Community (AEC) in 2015 is not entirely clear. Further analysis could be useful in
the sense that the development of this common market may generate threats as well as opportunities.
With its own campus now operating in Yangon, BSM is demonstrating that it is aware of the regional
possibilities the development of the AEC may provide. While the media has tended to hail Myanmars
reforms, news of civil unrest there earlier this year suggests that significant problems remain.
E (Economic)
The Ministry of Finance (MOF) is positive about economic prospects, as evidenced in Table 2.2 (B
[Page 25]). As highlighted in the political (Table 2.2 [1A & 1B]) and economic (Table 2.2 [B]) sections
of the analysis, the development of Isan may lead to significant opportunities given the regions close
proximity to Cambodia, Lao PDR and Viet Nam, which offer handy trade connections with China.
S (Social)
Social developments could generate tangible benefits for BSM. The demographic trend referred to in
Table 2.2 (C [Page 26]) poses a threat, though, as it is likely to result in a smaller pool of potential
students in the future. This may be countered by the fact that there is plenty of evidence to suggest that
a workforce lacking the required skills training and education to compete economically could severely
dent Thailands ambitions. This may encourage the government to take serious action.
T (Technological)
The limited data presented in this section (Table 2.2 D [Page 27]) poses some interesting questions,
which could only be fully answered by conducting more detailed investigations and analysis.

L (Legal)
While some basic information about the structure of the legal system has been provided (in Table 2.2
[E]), the author considers this element to be minor, since legal implications identified within the macro
environment can only be discussed in a meaningful way with the assistance and support of a Thai
lawyer or analyst.
While many factors in this analysis might appear quite vague on the surface, the author hopes the
information presented nevertheless provides some useful insights.
E (Environment)
As mentioned (in Table 2.2 [F]), environmental factors do not impact upon BSM in a significant way
and an executive from BSM confirmed this during a recent interview.

Porters Five Forces framework


This analysis (Table 2.3, Page 30) suggests that BSM is currently in an advantageous position in
relation to its micro environment. The threat of new entry is the biggest concern, since there would
appear to be few barriers.

3.0 Internal Analysis


3.1 SWOT Analysis
Some negative findings were published in the 1990s relating to the SWOT framework. Menon et al.
(1999) asked 212 managers from Fortune 1000 companies about the (then) recent marketing strategies
implemented in their businesses. The responses suggested that SWOT had harmed the performance of
these firms. Moreover, findings published by Hill and Westbrook (1997) reported that a survey of 50
firms revealed that none had applied results generated by their SWOT analyses in developing their
strategies. Despite these criticisms, the popularity of the SWOT analysis continues unabated.
According to Jeffs (2008), an organization should conduct an internal analysis, along with external
analyses, to better envisage its strategic options. Johnson, Scholes & Whittington (2008) support this
view, suggesting that a SWOT analysis can be useful for identifying strategic options and assessing
future courses of action.
The SWOT Analysis (Table 3.1 [Page 31]) developed for this report is based on output gathered from
interviews with BSM executives.

3.2 Mission, Vision and & Core Competences


Jeffs (2008) notes that a mission statement represents guidelines from which objectives can be set and
which in turn will lead to the creation of strategies. Small-to-medium enterprises (SMEs) usually have
a vision and short-term strategies in place to help them meet their objectives, too. BSMs mission and
vision, along with its core competences can be viewed in the Appendices (Table 3.2, Page 32) of this
report.
Since there is little meaningful argument against using a mission and/or vision statement (they might be
termed ubiquitous), the author will analyze and comment upon Table 3.2 in the next section of this
report, which provides a complete Summary of the Internal Analysis.
3.3 Summary of the Internal Analysis
The authors internal audit of BSM reveals that the company possesses strengths and weaknesses, while
facing opportunities and threats, along with the potential to grow.
Although the author was unable to access significant financial data, through interviews with a BSM
executive it became clear that the company is making strides, as it expects to break even this year, after
recording a loss last year. The current owners did not establish the company, which had not previously
been profitable, having only acquired it fairly recently.
The author discovered that BSM is pursuing the key components of external environmental analysis
(scanning, monitoring, forecasting and assessing), as highlighted in Table 2.1 (Page 22). However,
since BSM isnt a large enterprise, its efforts in terms of developing strategy are largely determined by
the resources at its disposal.
10

It is not unusual for a Thai company to be Bangkok-centric, which is noted under Internal
Weaknesses, as, until recently, the capital has generally been the focus of business, commerce and
industry in the country.
The point regarding poor response times for distance learners might be easily addressed, but it should
not be taken lightly as it could cause learners to switch should competition in the marketplace heat up.
The question marks added to internal weaknesses suggest that the author believes management may
already have suitable solutions prepared to address these points.
BSM has good networking relationships, as well as positive links with organizations in fellow Asean
member states.
The author is under the impression that the points listed under Vision, Mission and Core Competences
(Table 3.2) are suitably realistic. The author notes under the recommendations presented in Table 3.3,
however, that clearer indications of a quality improvement framework would have helped in the
compilation of this report.

11

4.0 The Importance of Involving Employees in Strategy


4.1 Why Employees Ought to be Involved
Many companies suggest that their employees are their most important commodity, so the involvement
of this stakeholder group can be crucial during a significant development, such as a change
management process.
Jeffs (2008) refers to Carlos Ghosn, a senior Renault executive, who was charged in 1999 with saving
Nissan from bankruptcy. During the first stage of the process, Ghosn promoted open discussion of
Nissans problems and the serious consequences faced by the business. He then developed
crossfunctional teams drawn from all levels to analyze the problems and generate solutions,
according to Jeffs. The solutions were then implemented by the same teams and the success achieved
was in part due to reinvestment, open communication, performance-related promotion and other
performance incentives.
A commonly-held belief that resistance is generally an enemy of change is questioned in a research
paper by Waddell and Sohal (1998). The authors point out that recent literature includes evidence to
suggest that resistance may be useful and should not be discounted. They suggest that the difficulties
typically associated with organizational change are often made worse due to the mismanagement of any
resistance encountered during the process. Waddell and Sohal believe that management can greatly
benefit from techniques that carefully manage resistance to change by seeking ways of utilizing it rather
than attempting to overcome it.
These examples illustrate why it is important to include employees in strategy, especially in terms of
using their ideas to contribute towards improvements. Although BSM is relatively small at present, it
nevertheless has access to plenty of expertise given its position as a provider of business-related
courses. It may be in a position to tap into employees, staff and students, as a way of developing its
strategy and, if so, the author hopes that some of the points raised and recommendations made here may
be of use to the organization.

12

PART 2: Reflective Statement and Learning Log


Research carried out in the field of management and leadership places a great deal of emphasis upon the
importance of reflective learning.
According to Boyd and Fales (1983), reflective learning is the process of internally examining and
exploring an issue of concern, triggered by an experience, which creates and clarifies meaning in terms
of self, and which results in a changed conceptual perspective.
Watson & Reissner (2010) suggest that to utilize reflected learning effectively, individuals should
reflect upon the knowledge and skills they have developed and consider how it can be applied to their
roles in an organization. The authors suggest this lets each student develop a significant practical skill
that will be useful throughout their careers.
With these points in mind, I will now reflect upon the knowledge I gained from SM0377:
Understanding Strategy.
Knowledge developed as a result of completing the module

June 14-21 (Topic 1)


The main objectives of this topic are to define strategy and identify and discuss the three levels of
strategy.
Since I am based in Thailand, I accessed lectures online, referring to the workbook and weekly notices
via email, as well as reading extensively. I found the podcasts to be particularly useful, as Internet
connectivity here can be unreliable.
I began by reading Sections 2.1 and 2.2 of Strategic Management (Jeffs, C). These sections cover key
areas of the curriculum, examining various definitions of strategy. Section 2.2 refers to strategic
planning and control in organizations. The author refers to the importance of a good mission statement,
while detailing important aspects of strategic control. Strategic control is a form of corporate control
which aims to manage the behaviour and efficiencies from a diverse range of business interests.
Section 2.2 also examines organizational aspects and strategic drift a subject I refer to in the report in an
effort to stress how important strategy is to every organization.

13

June 21-28 (Topic 2)


This topic focussed on various forms of analysis, such as a PESTEL (Political, Economic, Social,
Technological, Environmental and Legal) analysis to examine the external (business) environment of
an organization and its role in shaping strategic objectives.
The requirements of this assignment include the development of a PESTLE analysis. I found I needed
to do quite a bit of additional reading to improve my understanding of the subject. This included an
article entitled, An analysis of the environmental and competitive dynamics of management education
(Thomas, H [2007]).
The student is required to define the organizations external (business) environment and identify the
PESTEL macro-environmental factors which influence the organization. I chose to examine Bangkok
School of Management (BSM), a Bangkok-based school of management and course provider, as the
subject of my analysis. In addition to the recommended texts, I interviewed a senior member of the
management team (Dr Jessen Felix).

June 28 July 5 (Topic 3)


The objectives were to define the organizations competitive industry and market environment and
discuss these roles in shaping strategic objectives. Sections 2.4 and 2.6 of Strategic Management
review strategic analysis frameworks suitable for micro-environmental analysis.
During this period of the course, I read, The five competitive forces that shape strategy (Porter, M
[2008]), which was published by Harvard Business Review.

July 5 12 (Topic 4)
This section of the course made me think carefully about exactly who is a stakeholder, as it may not
always be apparent. This section of the course requires students to review different corporate
governance systems and examine their relationships with various stakeholder theories. It made me
realize that different areas of an organization may serve different stakeholders.

July 12-19 (Topic 5)


This focused on the importance of developing a strategic vision, mission and objectives. Fortunately,
BSM was able to provide me with relevant information at an early stage, which was particularly useful.
I focused on reading the recommended text (directed learning), which was Section 2.13 of Strategic
Management, as well as The core competence of the corporation (Prahalad, C.K. and Hamel, G.
[1990]) from Harvard Business Review (May-June).
14

July 19-26 (Topic 6)


Sections 2.10 and 2.11 of Strategic Management introduce the concept of competitive advantage and
discuss alternative sources of competitive advantage. It was interesting to note that Porter did not
originally accommodate the idea of a Hybrid Strategy, although he has apparently adjusted his stance
to accommodate this over recent years.

July 26-August 1 (Topic 7)


In Section 2.8 of Strategic Management I learned about adding value. This section reviewed the value
chain analysis framework. I feel sure that BSM will consider adding value to its offerings, particularly
if the level of competition intensifies. Value can be added in a number of ways, some less obvious than
others. Arguably, BSMs blossoming alliances with other institutions in the region already offer plenty
of potential.

August 2-10 (Topic 8)


This focused on business development, or, more specifically, Directions and Methods of
Development. The relevant section of Strategic Management (2.11) refers to alternative strategic
methods of business development.

August 9 16 (Topic 9)
Topic 9 examined Corporate Social Responsibility (CSR) and business ethics. CSR can seem quite
open to interpretation, so it is also open to misinterpretation. Since it is a topical subject, I plan to
conduct further research into CSR and business ethics.
August 16-23
This topic focused on strategizing, or the process of making strategy. Sections 2.15 and 2.16 of
Strategic Management explore this theme, asking the student to identify who is involved in the process
of making strategy while evaluating the different management roles and responsibilities.

Case Studies
It soon became apparent during the early part of this course that it was important that students begin to
refer to case studies as a method of supporting an argument or illustrating a point. In this regard, I found
it useful to refer to a publication called The Management of Strategy: Concepts and Cases (Ireland,
15

Hoskisson, Hitt). Although it is not a recommended text, it includes relevant material pertaining to
various areas of the course.
Reference List
Aguilar, F.J. (1967), Scanning the Business Environment. New York, NY: Macmillan Co.
Boyd, M. & Fales, A.W., (1983) Reflective Learning: Key to Learning from experience (article),
published in the Journal of Humanistic Psychology (Volume 23, Number 2).
Brooks, I., Weatherston, J. & Wilkinson, G. (2011) The International Business Environment:
Challenges and Changes. 2nd edn. Essex: Pearson Education Limited.
Campbell, D., Edgar, D. & Stonehouse, G. (2011) Business Strategy: An Introduction. Hampshire:
Palgrave MacMillan.
Chartered Institute of Personnel and Development (CIPD [UK]), Factsheet (PESTLE Analysis).
Available at: http://www.cipd.co.uk/hr-resources/factsheets/pestle-analysis.aspx (Accessed: 11 October,
2013).
Choo, C.W. & Auster, E. (1993) Environmental Scanning: Acquisition and Use of Information by
Managers (article) published in: Annual Review of Information Science and Technology, edited by
Williams, M.E., Medford, NJ: Learned Information, Inc for the American Society for Information
Science.
Grimm, C.M., Lee, H. & Smith, K.G. (2006) Strategy as Action. Oxford: Oxford University Press.
Hendry, J. (2000) Strategic decision making, discourse, and strategy as social practice. Published in
The Journal of Management Studies (Volume 37 [7], pages 955-977).
Hill, T. & Westbrook, R. (1997), SWOT Analysis: Its Time for a Product Recall (article), Long Range
Planning, 30, No. 1, 46-52.
Hopkin, P. (2010) The Fundamentals of Risk Management. The Institute of Risk Management. Kogan
Page (Safari Books Online).
Available at: http://my.safaribooksonline.com/book/-/9780749459420/14-risk-classificationsystems/137
(Accessed: 21 October, 2013).
Ireland, R.D., Hoskisson, R.E. & Hitt, M.A. (2013) The Management of Strategy: Concepts and
Cases. 10th edn. South-Western CENGAGE Learning.
Jeffs, C. (2008) Strategic Management. London: Sage Publications.

16

Johnson, G., Scholes, K. & Whittington, R. (2008) Exploring Corporate Strategy. 8th edn. Essex:
Pearson Education Limited.
Menon, A. et al. (1999), Antecedents and Consequences of Marketing Strategy Making (article),
Journal of Marketing, 63, pages 18-40.
Pearce, J.A. & Robinson, R.B. (2009) Formulation, Implementation & Control of Competitive Strategy.
11th edn. New York: McGraw-Hill Irwin.
Porter, M.E. (2008) The five competitive forces that shape strategy. Published in Harvard Business
Review (January, pages 78-93).
Prahalad, C.K. & Hamel, G. (1990) The core competence of the corporation. Published in Harvard
Business Review (May-June).
Seth, A & Berkshire Strategic LLC, Defining Strategy (2008), Berkshire Strategic.
Reference: Porter, M.E., What is Strategy? (1996), Harvard Business School Press.
Available at: http://www.berkshirestrategic.com/site/defining-strategy-strategies-are-sustainable
(Accessed: 10 October, 2013).
Thomas, H. (2007) An analysis of the environment and competitive dynamics of management
education. Published in The Journal of Management Development (Volume 26 [1], pages 9-21).
United Nations University Fisheries Training Program Powerpoint Presentation (reference: Page 12)
Available at: www.unuftp.is/static/files/short_courses/pcm_sri.../D2_L2_PESTLE.ppt
Waddell, D. & Sohal, A.S., (1998) Resistance: A constructive tool for change management (research
paper), Management Decision (Vol 36, Issue 8, pages 543 548).
Watson, G. & Reissner, S.C. (2010) Developing Skills for Business Leadership, Chartered Institute of
Personnel and Development (CIPD).
Yuksel, I. (2012) Developing a Multi-Criteria Model for Pestle' (article), The International Journal of
Business and Management (Volume 7, Issue 24 [published 24 November, 2012]).

17

APPENDICES

TABLE 1.1: THREE LEVELS OF STRATEGY


According to Jeffs (2008), this area of strategy is focused on overall
growth and the development of multiple businesses within an
organization. Corporate-level strategies ought to aim to generate added
value beyond mere management of business units. Corporate-level
Corporatelev
strategy is concerned with the allocation of resources, the diversity of
el Strategy
products and services, formal partnerships and acquisitions, geographic
coverage, governance and maximizing economies of scope and scale
between business units and geographic locations.
At the Strategic Business Unit (SBU) level, the aim will be to gain
competitive advantage in specific markets. The emphasis at this level
will be to develop competitive advantage in specific markets.
Businesslev
el Strategy

Investment in research and development (R&D) and enhancing services


and products on the basis of market research will also be stressed here.

Operational
Strategies

Also known as functional strategies, these tend to be based on shorter


timescales, according to Jeffs (2008). These strategies (operational) are
focused on the ability to deliver corporate and business unit strategies,
particularly with regard to the process of implementation and the
allocation of resources. These strategies are likely to be developed in
order to implement effectively higher-level strategies. Some of these
strategies may be non-quantifiable (such as customer satisfaction),
while others are quantifiable and therefore easier to measure and
compare, according to Jeffs.

18

TABLE
2.1:
(COMPONENTS)

SCANNIN
G

EXTERNAL

ENVIRONMENTAL

ANALYSIS

Scanning involves identifying early signals of


environmental changes and trends.

MONITORI
NG

Monitoring involves the process of detecting


meaning through identifying early signals of
environmental changes and trends.

FORECAST
ING

This involves developing projections of


anticipated outcomes based on monitored
changes and trends.

ASSESSI
NG

This involves determining the timing and


importance of environmental changes and
trends for companies strategies and their
management.

FACTOR 1 (A)

PESTLE: Influence on BSMs Strategy (Oct 2013)

19

Politics

DOMESTIC

(Government Despite various upheavals over recent years, the Royal Thai government has shown a
)
serious commitment to improving the standard of education in the country. Four years ago,
it entered into the 2nd Decade of Education Reform [2009-2018] and the vision behind this
reform is based upon every Thai person being able to access high-quality lifelong learning.
In short, the government is committed to providing its citizens with 15 years of free
education.
BSM aims to attract Thais and Thai residents (aged 18-24) to enroll on its courses, based
on an interview conducted with a senior BSM executive. According to the management, the
companys courses, which are delivered in tandem with leading foreign universities, are
significantly different from rival offerings, as outlined in greater detail within the
Appendices of this report (see Table 3.2, Bangkok School of Management [BSM]: Mission,
Vision and Core Competences [on Page 33]).
While it is formally recognized by the Ministry of Education, BSM is operating in the private
sector at present (Oct 2013) and does not rely on government funding. While Thailands
education policy clearly promotes the ideal of delivering a high standard of education to its
citizens, a recent report (24 June, 2013) by the Education Policy and Reform Unit of UNESCO
Bangkok (the United Nations Economic, Scientific and Cultural Organization [Bangkok
office]) suggests that bridging policy and implementation gaps continue to pose a
challenge.
While government policy and implementation could easily influence BSMs strategy going
forward, the most significant aspect of domestic politics for any company doing business in
Thailand is stability. This point was made clear in an interview earlier this year with Kim Eng
Tan, an analyst from Standard & Poors Rating Services (S&Ps), which was published in The
Nation newspaper. Referring to the near term, Tan said that S&Ps greatest concern was
politics and political instability. To a large degree there has been general political
stability so far this year and while there have been some major protests, such as
demonstrations in the South by disgruntled rubber farmers, the protests have not featured
the level of violent upheaval seen on TV screens around the world between the colorcoded political groups (red, yellow and others) in 2010.
SUMMARY: The outlook generally seems to be quite positive, although Thai politics
might best be descr perpetually unstable and is notoriously difficult to predict.

TABLE 2.2A: POLITICS (DOMESTIC)

FACTOR 1 (B)

PESTLE: Influence on BSMs Strategy (Oct 2013)

20

Politics

REGIONAL PERSPECTIVE

(Governmen
At the 12th Asean Summit (Jan 13, 2007 [in Cebu, the Philippines]), members of the
t)
Association of Southeast Asian Nations (Asean), which includes Brunei Darussalam,
Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore,
Thailand and Viet Nam, reaffirmed their collective commitment to accelerate the
establishment of the Asean Community and its Asean Economic Community (AEC)
pillar by 2015.
During a recent interview with the author of this report, a BSM executive referred to
the
importance of the establishment of the AEC. The author notes that the
company has Malaysian citizens among its senior management and the school already
has a campus in Yangon
(Myanmar). While demographic trends and educational
abilities among the citizens of Asean member states are likely to play a role in the
development of an organizations strategy within
the region, this will be referred
to in further detail under other headings featured within this analysis.
While Asean and its members have stated their clear intent to support the
establishment of the AEC by December 2015, a report (October 2013) from the Asian
Development Bank (ADB) suggests this may be out of reach, describing the progress
as steady but slow.
Although it [Asean] has come a long way toward meeting its own targets, it is likely to fall
short of the deadline. How close it gets to these targets will depend on the progress of
reforms in the next two years.

SUMMARY: The outlook generally seems reasonably positive, but as the old
adage goes: The proof is in the pudding.

TABLE 2.2B: POLITICS (REGIONAL)

FACTOR 2

PESTLE: Influence on BSMs Strategy (Oct 2013)

21

The Economy Thailand has had to focus on recovery since significant economic losses were
caused by the devastating floods (of 2011). While the floods claimed over 700 lives,
the World Bank
estimated in 2011 that the damage cost the country US$45.7
billion (1.4 trillion baht).
In a report issued in September (2013), the Ministry of Finance (MOF) projects that
the Thai economy will grow at an annualized rate of 3.5% this year (2013). Its
outlook for 2014 is an annualized rate of 5.1% (within a range of 4.6-5.6%). Growth
in 2014 will largely be driven
by the expansion of private consumption, a revival
in exports and substantial investment by the government sector, according to the
report. Private consumption is expected to expand faster
(at a rate of 3.4%) due to higher household non-farm income, the raise in the
minimum wage
(300 baht [US$10]), a positive employment situation and a very low unemployment
rate (estimated at 0.7%), according to the report. The MOF notes that in 2014,
government
spending will continue to be, the key growth driver for the Thai
economy.
On another positive note, Thailand ranked high (31st [and its best showing among
12 pillars] in the World Economic Forum (WEF) Global Competitiveness Report
(2012-2013) due to its
very favorable fiscal situation, its high savings rate, and
an inflation rate under control [at
about 3%], and [in an international
comparison] a relatively good debt-to-GDP ratio of about 44% [in 2012]. The
report notes that Thailand continues to improve in terms of its Financial
Development (32nd) and Market Efficiency (34th) pillars, climbing 17 and 10 places,
respectively, over the past four years, although there is room for improvement in
some areas, particularly when it comes to promoting domestic consumption (60 th),
according to the report.
There is a significant political side to the Thai economy. For example, the current
administration relies heavily upon the votes of residents of the countrys
northeastern region, known as Isan (or Isarn). According to Bangkok Business Brief
(Vol 2, Issue 9 [Aug-Sept
2013]): Isan is booming. The article notes that
growth in Isan reached 40%
during 2007-2011, whereas Bangkok only
recorded 17% growth during the same period (the rest of Thailand grew by 20%).
The floods (2011) led to another form of investment boost for Isan since some
facilities around Bangkok and other cities in the central region were forced to stop
production. Many firms decided to build facilities elsewhere and Isan benefited from
this trend. Isan is also handily located to benefit from flourishing trade opportunities
with
Cambodia, Lao PDR and Vietnam (and China [via these three nations]),
which has only added to its allure among domestic and foreign investors, the
report suggests. The bullish sentiment regarding Isan will be highly dependent upon
the realization of some highly-publicized infrastructure improvements. The
government plans to spend US$71 billion (2.2 trillion baht)
on rail, highway and
seaport projects during the period 2014-2020, the reports author notes.
To provide readers with some perspective, consider a quote from S&Ps Tan. Tan
said that
while Thailands infrastructure needs a lot of improvement, many
governments have come in and out, and many mega-projects have not been
pursued in a very major way.
SUMMARY: The outlook is positive overall, as long as the political situation

remains calm.
Navin Johnson.

TABLE 2.2C: THE ECONOMY


22

FACTOR
3

PESTLE: Influence on BSMs Strategy (Oct 2013)

Social

In a case study focusing on Thailand, which was launched in March 2012 by UNICEF (the United
Nations
International Childrens Fund) called Narrowing the Gaps for Equity (Imagining a
future for children in 2027), one common theme emerged: participants (from a variety of
backgrounds and age groups) want to see,
improved quality and access to education for all
children, including media literacy, maintaining Thai
culture, life skills and sex
education. While none of these factors seem to relate directly to BSMs current
course
offerings, such aspirations would suggest that Thai citizens, or society as a whole, would
appear to see the need for a significant improvement in the standard of education in the
kingdom in general.
While Isans roaring economic success recently has already been examined (under Political
and Economic), it is worth noting that the Bangkok Business Brief article points out that the
regions 21 million people now enjoy a higher level of disposable income thanks to improved
wages. Since many (former migrant) workers returned to Isan following the 2011 floods, the
region is now able to compete with Bangkok in the labor
market as wages are now on a par
with the capital, according to the report.
If the push from the Thai people (society) is not enough to spur the government into action,
perhaps
economic factors and face may do so.
S&Ps Tan cautioned in his interview earlier this year with The Nation that a lack of reforms in
the education sector could undermine the nations long-term economic prospects.
Meanwhile, the Education Ministry
announced in September that it would test the
accuracy of the World Economic Forum (WEF) Global
Competitiveness Report, which
states that the quality of Thailands education system ranks as the worst
among eight
Asean member states (after Singapore [1], Malaysia [2], Brunei Darussalam [3], the Philippines
[4], Indonesia [5], Viet Nam [6] and Cambodia [7]). Sermsak Pongpanich, the deputy education
minister
was quoted in an article published by Thailands National News Bureau in
September (2013) as saying that if it can be proven that the countrys education system is
substandard, measures would be urgently
worked out, such as preparing incentives for
teachers through increased salaries, curriculum reform and by lifting the standards of
instructors. He added that students must also be ready both physically and
mentally
for education reform.
Another important consideration when examining social factors in Thailand at this point in time
is
demographics. According to a report jointly commissioned by Thailands National
Economic and Social
Development Board (NESDB) and the United Nations Population
Funds (UNFPA) entitled, Impact of
Demographic Change in Thailand (2011), Thailand
benefited from, the positive effect of demographic
transition on economic growth until
2010 when the first demographic dividend [for Thailand] was expected to end. According to
the report: Population aging will eventually result in negative growth in Thailand if other
factors remain constant.
SOCIAL: The report cited above highlights some of the challenges facing Thai society
regarding
demographic trends. The author recommends that BSM study in
greater depth the content of this report.

TABLE 2.2C: SOCIAL

23

FACTOR 4

PESTLE: Influence on BSMs Strategy (Oct 2013)

Technologic As well as emphasizing the importance of learning a second and third language,
participants in the
Thailand survey produced for UNICEFs Narrowing the Gaps for
al
Equity (Imagining a future for
children in 2027) report stressed the need for
children to develop computer literacy skills that, all
children should have in 2027.
When considering technologies beyond mobile telephony, the WEFs Global
Competitiveness Report (2013-2014) ranks Thailands readiness as low (78 th in its
rankings). The report suggests that only a quarter of the countrys population accesses
the Internet on a regular basis and only a fraction of these users do so at broadband
speeds. Nevertheless, on the upside, growth in terms of Internet
usage is described
as rapid.
In Bangkok Business Briefs report on Isan, the author refers to a report by the research
company,
GfK. This research suggests that smartphone sales in Isan during the first quarter (2013)
grew by
344% compared with just 11-17% growth in Bangkok. It may be worth
conducting further research
in order to establish whether or not technological
development in Thailand is in fact being driven by
mobile telephony. If so, this might in
fact suggest that the outlook is somewhat rosier than the
Global Competitiveness
Report suggests.
SUMMARY: Largely negative based on these findings, although a more detailed
dedicated
technological analysis may reveal additional relevant factors (both
negative and positive).

TABLE 2.2D: TECHNOLOGICAL

24

FACTOR 5

PESTLE: Influence on BSMs Strategy (Oct 2013)

Legal

The Thai legal system is based on civil law and all administration of justice has to conform to
written
legislation. The court system is divided into three sections: the Courts of First
Instance, the Courts of
Appeal and the Supreme Court.
Companies operating in the kingdom need to comply with Thai laws, while if they have any
significant
foreign ownership, they must comply with the Foreign Business Act (1999
[2542]). Due to the fact that
Thai law relies upon the Thai language, most businesses rely
upon the use of local legal representatives
order to ensure that their operations keep
abreast with legal developments.
There are some quite negative elements that relate to the law in Thailand from a business
perspective,
as highlighted in the WEFs Global Competitiveness Report (2013-2014),
which notes that: the
competitiveness challenges remain considerable.
Political and policy instability, excessive red tape, omnipresent corruption and clientelism,
security concerns, low
reliability and high uncertainty around property rights protection
seriously undermine the quality of Thai public
institutions [which are ranked 85th in the
report].

In light of these points, it is actually quite difficult for a foreigner or foreign resident to
comment on legal aspects relating to a business operating in the kingdom, as local-language
expertise is an essential
requirement in order to properly evaluate the relevant
elements. This is the main reason the author has
given the legal aspect of this PESTLE
analysis a lower priority than the PEST factors.
SUMMARY: For companies operating in the kingdom, the legal environment should be
addressed by a highly-qualified, local legal representative. The level of success for a
company operating in the kingdom will largely be determined by the quality of its legal
representation. Based on the facts available at the
present time, the author wishes
to categorize this element of the analysis as neutral to positive.

TABLE 2.2E: LEGAL

25

FACTOR 6

PESTLE: Influence on BSMs Strategy (Oct 2013)

Environme Given the impact of the 2011 floods on Thailands industrial infrastructure and economy
as a whole, the environment is clearly a crucial PESTEL factor that the countrys
nt
business community needs to
monitor closely. However, since BSMs operations do
not rely much upon the physical environment, it not seem relevant to explore this factor
in too much depth within the context of this analysis.
A BSM executive explained in a recent interview with the author of this report that the
company only uses limited supplies of paper and office supplies. Nevertheless, the
company tends to purchase such items with the well-being of the environmental in mind.
The 2011 floods reminded Thais that the
environment (the weather and climate in
this case) is completely uncontrollable. However, the fact
that it is capable of being
the source of so much economic damage means that businesses operating the kingdom
clearly need to ensure they have appropriate contingency plans in place. In the case of
BSMs student population, a repeat of floods of the magnitude experienced in Bangkok in
2011 might require that they switch to distance learning (while working from home
options would need to be
considered for the companys staff, one might suppose,
based on the 2011 experience).
A joint World Bank-Asian Development Bank (ADB) report released in 2010, proved to be
somewhat prophetic, projecting that Bangkoks flood-prone areas, will experience more
extreme weather. In
2009, an ADB report noted that Thailand, is already
experiencing more frequent and destructive
extreme weather events than in the
past. The author would assume that persons regarding such
warnings as
scaremongering might have since adjusted their stance somewhat!
SUMMARY: Somewhat negative in that Bangkok is prone to extreme flooding.
Discounting factors relating to the weather and climate, the author would describe
the situation as neutral.

TABLE 2.2F: ENVIRONMENTAL

26

Table 3:
2. Porters Five Forces
Key Factors
Threat of New Entry
--

Competitive Rivalry ++

A companys power is also affected by the ability of others to enter your market.

Threat
of New
Entry

BSMs customers (students) do not really require elaborate technology in order to


complete their tasks. Durable barriers toallow
entrya company to preserve a
favorable position and take fair advantage of it, but the author would suggest that
such barriers do not currently exist, so competitors
be in
could
a good position to
quickly enter BSMs market and weaken its position.

At present, BSM appears to enjoy tremendoush strengt


in this sense, since no
other institution locally offers anything remotely
at present
similar. In short,
there is limited competition at the present time, although BSM must remain
agile, as such a position cannot be assured beyond the short term.

Supplier Power

Buyer Power

Competitive Rivalry

Supplier Power ++

Bu yer Power ++
This aspect of Porters Five Forces analysis asks: How easy is it for
buyers to drive down prices?

This aspect of Porters Five Forces analysis relates to the ability of suppliers to drive up prices.
BSMs

major course provider is the UKs Northumbria


niversity.
U
While it could raise its prices,
there is intense competition in the education sector at the present time worldwide, so it would not
seem to make sense to do so. The relationship between Northumbria and BSM would seem to
provide the British univ ersity with some useful exposure to the Thai market, so, assuming there
are no difficulties in the relationship, the author cannot
Northumbria
see why would choose to
imposean unreasonable hike.

Threat of
Substitution

While the product (and


related services) supplied by Northum
bria University
is unique in the Thai
market at present, the institution is certainly not the sole provider of BA (Hons) Top Up courses
online in the UK

Bournemouth University (which offers an international Top Up BA) and


Birmingham City University being two other British universities (among others) offering similar
courses. While there may be some switching costs involved were BSM to switch from Northumbria
to another supplier, this would not necessarily be prohibitively high, basedn on the informatio
available.

As noted elsewhere in this report, BSMs offerings are rather unique


and offer a good deal of differentiation and competitive advantage (in
t
erms of price) when compared with rivalts,
produc
such as Webster
Universitys
courses. Students, potential students and, perhaps more
importantly, their parents are certainly powerful buyers in relation to
BSM. Ho wever, switching costs would be relative
ly high given the
fact
that BSM/Northumbriasfee schedule is very competitive
.

NEWS UPDATE
( Related Development
): For year one
and year two courses (including a diploma in Business Administration and a Higher Diploma, respectively), BSM h
using the Global Examinations Board of the University of East London
(UEL).
reported (on Sept 5 [2013])
that the subsidiary of UEL has been
The Times
Educational Supplement
wound up due to it incurring significant losses (324,000 [US$521,000] in one year, according to the article).
n at the
It time
is notofknow
submitting this report how this might
affect BSM, although it is likely that the company would have few problems in identifying an alternative exam board.

27

TABLE 3.1:
SWOT ANALYSIS
(BSM)

INTERN
AL S TRENGTHS

Stable cash flow

INTERNAL
W EAKNESSES

Very Bangkok
- centric?

Good network relationships

Poor response times (academic support) for


distance
learners?
Good connections with neighboring Asean
Internal
states (particularly Malaysia and Myanmar)

EXTERNAL
O PPORTUNITIES

Growing markets (regional)


Weak (or very limited) competition

E XTERNAL THREATS

Limited growth in current market


Weak barriers to entry

Positive +

Negative -

28

External Factors

TABLE 3.2: Bangkok School of Management (BSM): Vision, Mission & Core
Competences
Background
Operating since 1998 as a subsidiary of Ever Clever Co Ltd, Bangkok School of Management (BSM) runs courses and
programs leading to a wide range of foreign university bachelors degree qualifications.
BSM offers a Diploma in Business Administration and Higher Diploma in six specialization areas, which are accredited by
the University of East London Global Examinations Board (UELGB), England, under its quality mark standards recognition
program. BSM also offers a Year 3 Final Year Top-Up program in Business and Management of Leadership and
Management in tandem with Northumbria University (UK). The Year 3 program is also open to holders of a Diploma or
Higher Diploma from other recognized institutions worldwide.
Vision
Bangkok School of Management thrives to become a premier higher education institution that offers employment-oriented
Bachelor, Masters and Doctorate degree programs in collaboration with leading western universities, consequently
providing scholars with internationally recognized and globally marketable qualifications and knowledge/skill base.

Mission
The administration, faculty and staff at Bangkok School of Management place utmost importance on ensuring the
provision of meaningful, engaging and relevant learning experiences to post-secondary scholars. This is accomplished by
upholding and implementing the principles of adult learning in every aspect of management and operation of the college,
including acknowledging and encouraging life-long, self-directed learning, application of life experiences in the learning
process, providing opportunities to work on goal-oriented, context-specific and practically-based tasks, and most
importantly, giving scholars the respect they deserve to exercise independent thinking, within the framework of college
policy and vision.
Core Competencies
According to BSMs senior executives, BSM:

Puts service and customer care first


Makes learning meaningful
Is small and therefore more personal in its approach and service offerings

Is deliberate about everything it does there is a reason for doing what we do


Strives to continue to improve and is never satisfied with the way it is

Focuses on the big picture, the larger vision, the long-term goals

29

TABLE 3.3: RECOMMENDATIONS


Based on the external and internal analyses conducted as part of this
report, the author recommends BSM consider the following points:
Consider monitoring demographic trends relating to Thailand and
the region on a regular basis (annual), using existing reports and
by coordinating with organizations responsible for producing such
reports, such as UNFPA (United Nations Population Fund).
Consider establishing a liaison office (or liaison person) for Isan,
should the positive reports relating to the northeastern region
prove to be credible, based on BSMs existing expertise.
Establish a quality improvement program, which welcomes
anonymous contributions from staff members and/or includes
regular (monthly) meetings with staff and/or students.

30