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Running Head: CAPSTONE STRATEGIC AUDIT 1

Capstone Strategic Audit

Tereza Stratilova

Argosy University

December 16, 2012

CAPSTONE STRATEGIC AUDIT 2

Abstract

This paper is focused on strategies of the Coaching and Learning Institute (C&LI). The

main goal is to analyze the company’s problem, threats, and improvements from various

perspectives. Among the researching analyses are strengths, weaknesses, opportunities, and

threats analysis (SWOT) and TWOS strategic metrix, Porter’s (2008) five-force analysis, cultural

assessment and value chain analysis. The research proved that C&LI’s strategy follows the

company mission and vision and did not find any major issues that would inhabit the current

strategy. However, some recommendations were drawn which can increase the efficiency of

C&LI’s operations and assist in achieving their goals. Recommendations are from different

business areas, which include marketing, expansion, service development, alliances, and

integration.


TABLE OF CONTENTS

EXECUTIVE SUMMARY 4

COACHING AND LEARNING INSTITUTE (C&LI) 5

STRATEGIC ISSUES 6

SWOT ANALYSIS 6

TWOS STRATEGIC MATRIX 10

EXTERNAL ENVIRONMENTAL SCAN 12

FIVE FORCES ANALYSIS 13

ORGANIZATIONAL ASSESSMENT 15

CULTURAL ASSESSMENT 15

VALUE CHAIN ANALYSIS 16

SUMMARY AND RECOMMENDATIONS 19

CONCLUSIONS 23

REFERENCES 25

APPENDIX 29


Executive Summary

This report focuses on a strategic audit of the Coaching and Learning Institute (C&LI).

The strategy is tested by multiple analyses, among which are SWOT and TWOS analyses,

external environment scan, five forces analysis, organizational culture assessment, and value

chain analysis. This research did not find any major misalignments between the stated goals of

the company and the actual procedures. However, minor recommendations were drawn in order

to increase operation and the company’s success on the market. Among those recommendations

are building new website, special offers for returning customer in order to increase the retention

rate, hiring more employees to broaden the market share, or to merge with larger corporation to

gain more resources. Among suggestions are cooperation with colleges and universities,

implementation of performance measures, lowering operational cost, and starting full scale online

education.


Capstone Strategic Audit for C&LI

Coaching and Learning Institute (C&LI)

C&LI is a small company focused on five customer areas including organizational

training, strategy development, organizational coaching, outdoor adventure programing, and

college programming. C&LI is located in Northwest suburbs of Chicago, IL. It has nearly 20

years of experience in the educational, coaching, and development field. There are between ten to

fifteen employees in C&LI. Based on the interviews, C&LI faces two main challenges: first,

being the down economy makes it harder to get new customers; secondly, there is intense

competition in the region. With the down economy small companies like C&LI lack new-coming

customers and have to work harder in order to obtain them (Interview 1, Nov. 9, 2012).

Interviews were conducted with three employees of the company TBA, SC and RS. TBA

is the executive partner of C&LI, who established C&LI 20 years ago. SC represents the second

executive partner of C&LI who joined the company 15 years ago. The last interviewee was RS,

the marketing director, who has been with the company for 4 years. All interviews were

conducted on Friday, November 9, 2012 during a visit of the company. The outline of the

interview follows Brodie’s (2008) 10 questions you must answer in developing your business

strategy.

C&LI is a cover name for the investigated company in this strategy audit and only initials

are shown for respondents to the interview. This prevents competition from getting C&LI “know-

how.” Information provided in the interviews are for educational use and cannot be shared.


Strategic Issues

This section introduces and integrates couple of analyses, which were used to determine

C&LI strategic issues. Strategic issues arise from a mismatch between internal capabilities and

external trends. Among those analyses are SWOT analysis, Five Forces analysis, organizational

assessment, and external environmental assessment. These analyses detect any important

opportunities, which are not being utilized, or major external threats that are overlooked.

SWOT Analysis1

SWOT or Strengths, Weakness, Opportunities, and Threats, analysis depicts the basics for

realization of the desired alignment of organizational variables or issues. SWOT analysis grid

helps to understand how strengths can be leveraged, to realize new opportunities, and understand

how weaknesses can slow progress, or magnify organizational threats. It is possible to postulate

ways to overcome threats and weaknesses, or build future strategies, based on properly designed

SWOT analysis (Helms & Nixon, 2010).

Strengths

The largest advantage of C&LI is the highly educated staff. Both of the executive partners

have doctorate degree in education, as well as the lecturers who are conducting the training and

development services. The flexible pricing could be considered the second biggest strength of

C&LI. Pricing is established “backwards”; first, the budget is given and the services are planned

in accordance to the amount. C&LI is already using one of the potential opportunities on the

market, the college cooperation. As Hoover’s (2012) noted, that education and training programs

1 For more details, refer to the Appendix: SWOT analysis.


represent major opportunity to high school students who are not interested in a traditional liberal

arts education.

C&LI has good referrals; although C&LI is not running any massive propagation

campaign, its customers can still find them and request their services. In a down economy, good

referrals are one of the strongest marketing advantages, because they are believable (Kotler &

Keller, 2000). Personal approach is the last strength of the company. Based on the interviews

(Nov. 9, 2012), it is obvious that more companies value thoughtful and experimental services,

over fancy, but rigid approach. Modern society is losing faith in old and standard procedures

(Kotler & Keller, 2000).

Weaknesses

The most pressing issue in the C&LI is the confusing website. Considering the fact that

the website of C&LI is the main communication with the customer; it needs to be organized and

easy to navigate. Customers who arrive on the website have to be able to find quickly what they

are looking for and eventually place an order for needed services. Another weakness is the budget

of C&LI. This budget issue prevents C&LI from promoting itself more effectively presents

problem when obtaining a new website. The third issue is represented by low customer retention.

Based on the interviews with executive managers, only about 25 percent of the customers are in

ongoing relationship with C&LI. The remaining are new customers, even though, the loyal

customer base is one of the most important assets of any company (Kotler & Keller, 2000).

No branding or alliance is another weakness for C&LI, because it allows stronger

competition to roll over the company. As stated in Hoover’s (2012) report the training and

development market is very fragmented and the recent trend is to ally together with bigger


companies on the market. This is beneficial in both directions. Small company acquire bigger

budget, big company gains larger market share (Garrison et al., 2012). Last problem in C&LI has

the limited number of employees. This is again tied into the limited budget. More employees

might be able to cover more business for C&LI; however, fewer employees can cover smaller

market.

Opportunities

There are over 6 million online students enrolled in variety of mostly undergraduate

courses. Career and technical education, however, is barely using the online market. This field

represents many new opportunities for educational and training services; it allows reaching more

students faster with fewer expenses. Online education is considered one of the strongest

opportunities for the industry (“Hoover’s”, 2012).

Big corporations, who are already known on the market and have the technical resources,

are acquiring smaller companies to grow their market share (“Hoover’s”, 2012). Since the

industry is fragmented, it is suggesting that merging and acquisition will take places soon. This

can be a good time for C&LI to communicate with any larger corporation, which could provide

needed resources.

Not only are schools in the US recruiting internationally and inviting students to the

United States; a new trend is to open schools abroad and offer educational services all around the

world. Fashion institutes, language instruction, cooking schools, and business programs are just

some of the programs already opened internationally using the tool. This opportunity would be

well used in combination with the new technologies and online education (“Hoover’s”, 2012).

Consolidation of operations allows educational companies to save money on fixed cost

and improve operational efficiency. Lowering fixed costs frees new resources, which can be used


in any other department and therefore raise the competitive advantage (Porter, 1996). This is a

key to profitability in the educational and training services sector (“Hoover’s”, 2012).

Career and technical educators can collaborate with high school and community colleges

in order to lower high school dropout rates. Those educators guide technically minded students to

fulfilling educational and specialized opportunities. Education and training programs can help

technically minded students to succeed in their field and on the job market (“Hoover’s”, 2012).

Threats

US government heavily regulates educational and training services, related to policies and

addressing financial aid programs, classroom funding, accreditation status, and standardized

testing. Those regulations can be changed at any time, since the political climate has been

fluctuating recently. Ever-changing regulations represent one of the most serious threats to the

educational and training services industry (“Hoover’s”, 2012).

Noncertified classes, focused mostly on art and sport, depend highly on customer’s

interests, as well as their budget. In the mean of the recession, many perspective customers save

money by cutting down leisure education. Economic downtime and high unemployment affects

hobby, arts, and sports education. Dependence on personal income is also considered serious

threat in this industry (“Hoover’s”, 2012).

Most of the “career and technical education” (CTE) programs are dependent on federal

loans for their enrolment. Cutbacks might have crucial impact on the profitability of educational

and training institutions. All educational institution has to deal with defaults on loan. According

to Hoover’s (2012) any school, which goes beyond a 25 percent default rate for three consecutive

years, risks losing eligibility to be a part of multiple federal grant programs. Lastly, due to

decentralized regulations in education, schools can get away with “instant” certifications and


degrees. This behavior of some private entities on the market recently harmed reputation of even

legitimate institutions and bring negative publicity (“Hoover’s”, 2012).

TWOS Strategic Matrix2

Weihrich (1982) redesigned the SWOT in order to generate strategies based on the

relationship between internal and external environmental factors. His model is called the TOWS

Strategic Matrix. The analysis starts with the external environment, which might be of immediate

importance to the organization.

The Weakness/Threat (WT) strategy pointed out couple of issues C&LI has to be aware

of, among those issues are preventing negative publicity by fixing the website (T5, W1), creating

low-cost education for people with low income (T2, T3, T4, W2), and making special offers for

returning customers in order to increase customers retention rate (T2, W3). New website is one of

the suggestions for change as it is a “front door” to the company; therefore, it has to be organized

and catchy. Well-designed website can prevent negative publicity. Low-cost education might

broaden the clientele of C&LI. C&LI is already working on this issue, by providing “flexible

budgeting” to any customer. Special offers might attract some of the previous customers and

make them to come back for more education. This is easy to do and might have tremendous

effect on customer retention rate.

The Weakness/Opportunity (WO) strategy reveled option of online (international)

education to save budget (O1, O3, W2), hiring more employees to expand further market (O3,

W5), and merge with bigger company to increase the budget and other resources (O2, W2). Little

budget limits C&LI operations; online education is an option which can overcome this. The

major savings coming from online educations are savings on travel expenses and facilities for

students. At the same time, C&LI would be able to expand and bring more clients in; however,

2 For more details, refer to the Appendix: TWOS Strategic Matrix.


this would need more employees to cover the demand. Hiring new employees would raise the

operational cost; yet, they would be able to generate more revenue for C&LI. Last option is to

merge with bigger company on the market, which would be able to facilitate C&LI’s needed and

provide resources.

The Strength/Threat (ST) strategy suggests options helping the usage of the company’s

strengths in the unstable external environment. Among those options are pricing based on

personal income (T2, S2), college cooperation fighting negative publicity (T5, S3), and good

referrals suppressing negative publicity (T5, S4). C&LI offers flexible pricing to different

companies. As mentioned in the original interviews (Interview 1, Nov. 9, 2012), the company

sets its prices “backwards”. First, it is interested in the budget any company is willing to spend on

the education; second, it creates the curriculum based on the budget. College cooperation might

prevent the negative publicity of private sector educational companies. C&LI can present its

offers in front of students, answer their question, and prove it is a trustworthy company.

When applying the Strength/Opportunity (SO) Strategy, the main outcomes are

international online education for colleges (O1, O3, S1, S3), international expansion through

referrals (O2, S4), online education by educated staff (O1, S1), and partnership with colleges and

universities, where staff got its education (O5, S1). International online education is a

combination of multiple opportunities and strengths. Based on Hoover’s (2012) online education

is one of the biggest opportunities in educational industry on the market right now. Combining

online education with global expansion is a low-cost solution, which can broaden C&LI clientele.

Expansion can be also achieved by utilizing the referrals, which are common in C&LI; however,

C&LI might need more employees to cover the demand (mentioned in WO strategy). The highly


educated staff C&LI could reach the main differentiation point in online education. Lastly, C&LI

may extend its customer base by cooperating with the universities the staff attended.

Once the main outline of the position of C&LI in SWOT and TWOS matrix is clear, the

suggestions for the further initiatives, can be drawn in the balance scorecard3. Those initiatives

are focused on C&LI future and need to be specific, measurable, achievable, realistic, and in

timely manner. Based on the suggested initiatives in C&LI balance card the next steps for C&LI

might include hiring of new employees; couple of educational events; creating new website and

special offers/deals, which can be propagated in new marketing campaign; designing evaluation

survey; and writing newsletter to inform employees about the changes. All those actions should

help C&LI to reach its objectives and ultimately to become more successful on the market.

External Environmental Scan4

Based on Hoover’s (2012) the US education and training services industry includes about

50,000 companies and many more self-employed individuals. The combined annual revenue of

the whole industry is more than $35 billion. Among key companies belongs Kaplan (Washington

Post Company subsidiary); Career Education Corporation (CEC); ITT Educational Services; and

Sylvan Learning (part of Educate); (“Hoover’s”, 2012).

Based on the questionnaire provided by C&LI (Questionnaire 1, Nov. 17, 2012), it is

obvious that the economic activity is still lower than it was before 2008. However, the revenue

seems to be going up recently. Although, the numbers are rising, the situation is not the same.

Most trainings and programs are modified and run in the “low-cost mode”. The clientele changed

as well; customers used to come from all different directions before 2008, now the training

3 For more details, refer to the Appendix: Balance Scorecard.

4 For more details, refer to the Appendix: External Environmental Scan.


focuses mostly on corporation level and bigger companies who have budget for education. The

business strategy for upcoming years is definitely conservative (Questionnaire 1, Nov. 17, 2012).

C&LI questionnaire (Nov. 17, 2012) supported the difficulty of obtaining certification and

accreditation. This might lead to further merges and acquisitions of small companies with bigger,

which can provide the accreditation. The fragmented environment is also suggesting this trend.

There will be many changes in the educational and training services industry in the upcoming

years.

Modern technology represents great opportunity to this industry. It can be used in in-class

setting, as well as during the virtual distance learning. C&LI finds the online learning experience

as one that increases learner’s autonomy. Training professionals are responding with new user-

friendly portals, which feature highly customized content.

Five Forces Analysis 5

Business strategy serves to understand company’s competition. Porter (2008) describes

five different sources of competition: customers, suppliers, potential entrants, substitute products,

and the rivalry among competitors. The extended rivalry results from all of those forces, and

defines an industry’s structure and shapes (Porter, 2008).

Since adult education is a specialty, which requires a lot of training, it is hard to imitate.

Still, customers who are interested in education can attempt self-education with use of modern

technologies. For most of the corporation; however, it is cheaper to outsource training than have a

permanent trainer. Based on the questionnaire (Nov. 17, 2012) the most common request is the

price adjustment. Buyers are aware of the slow economy and require lower prices or special

deals.

5 For more details, refer to the Appendix: Five Forces.


Education and training does not necessary require stable input of goods; therefore, C&LI

can choose from variety of supplier. This gives C&LI opportunity to overcome the supplier’s

bargaining power. Supplies that are more expensive are not ordered frequently and are probably

fulfilled by solid vendor.

Although the market for professional training and development is fragmented, the

competition is always an issue. Based on the responses from the questionnaire (Nov. 17, 2012),

C&LI is mostly dealing with bigger and longer established companies. With the economy

recession, new companies have hard time to establish themselves and penetrate the market.

The educational filed is deeply threatened by substitution. In the modern innovative world

with open informational access, everybody can educate himself/herself. Among substitutes for

corporate or person training can be online or blended courses, institutional education (education

offered by college or university), or self-education (with a textbook). The advantage of

professional training is that it is time efficient and requires less effort from the customer’s side.

Adult education industry, especially corporate learning, is highly fragmented in the

Midwest area. The competition is not so intense. Based on the questionnaire (Nov. 17, 2012) it

appears that small companies are helping each other. Despite, Ehmke’s (n.d.) proposal of rivalry

growth with slow economics, it seems hard times brought small businesses together.


Organizational Assessment

Cultural Assessment6

Organizational culture is an important factor determining productivity of the company; the

culture is mostly given by the organization’s architecture. The most prevalent C&LI unwritten

rules are: “Over-deliver even if it kills you, 15 minutes early is on time, and follow-up is a key”

(Interview 2, Dec. 1, 2012). This shows the importance of quick environment with emphases on

quality and customer service and resemble with the company mission and vision. Employees are

asked for autonomy, mastery in their field and are given feel of purpose in return. However, this

is an environment suitable only for certain type of personality. Person who needs to contemplate

on work issues might be unhappy and eventually leave. As described by Zuckerman (2002)

problem arising from unwritten rules and shared values might be considered as an inhibitor

within the organizational culture.

Based on the Interview 2 (Dec. 1, 2012), C&LI’s organizational culture falls under group

culture in Cameron and Quinn’s typology (Cameron & Quinn, 1999). Organizational structure is

sharing, but also dynamic, which goes back to the speed of the organization itself. The executive

partners are directive leaders; however, they listen to their employees and help them grow if

needed. The management theory prevailing in the C&LI is represented by “participation fosters

commitment”, but at the same time, C&LI seems to build a hybrid of couple of managerial

theories and worked out their own. The organizational glue is definitely employees’ loyalty and

sense of achievement that can be reached together. Criterion for effectiveness is measured by

6 For more details, refer to Appendix: Cultural Assessment.


income, which mostly resemble with the rational culture, but this is the only match with this

particular culture.

Each company has enablers that help the culture to excel, as well as blockers, which slows

the effectiveness of the organization (Zuckerman, 2002). Based on the diagnosis of

organizational culture C&LI understands is organizational culture, because the discrepancy

between existing culture and preferred culture is very little. The diagnosis also shows that C&LI

tends to have team oriented sharing culture with emphasis on achieving goals and innovative

approach. As mentioned above, the high speed of the organization and quite a lot of freedom

might not be suitable for all employees; therefore, those aspects might be consider cultural

blockers.

Value Chain Analysis7

Porter (1985) describes value chain as chain of activities, which lead into producing

certain product. The product gains value in every stage of the process; however, the complexity

of the chain determines the price of the final product (Porter, 1985).

Figure 1 describes how Porter’s value chain model applies to C&LI. Input into C&LI are

minimal, because of the type of service the company is producing. There is not one dominant

supplier, instead the company choses where to go based on the quality and prices of each supplier

(Interview 1, Nov. 9, 2012). C&LI considers customers’ needs already in this phase; this allows

the organization not to spend extra money on its supplies. The operation phase is characterized by

working on the curriculum for training programs for each individual customer. In this period all,

the services are tested. Aside from the curriculum preparation, part of the personnel focuses on

7 For more details, refer to the Appendix: Value Chain Analyses.


writing technical articles about new trends in training and development. This not only increases

credibility of the company, but can be also used as effective public relations. In outputs stage the

services are developed and training programs, which are ready for implementation, tested. At the

same time articles and books describing company’s services and trends in the field are published.

Sales and marketing are done mostly through the company website. Social media, blog and

company’s radio are utilized to propagate the company. Any further services, after the purchase,

are provided mostly to the clients, which are decided to long range cooperation with the company

(Interview 2, Dec. 1, 2012 & “Company Website,” 2012).

Figure 1: Porter's Value Chain for C&LI

Source: Assembled by author based on interviews and company website.

C&LI’s infrastructure is described in the introduction of this paper. Since C&LI is

training and development company, HR activities pervade through the whole company.

Organizational culture is very receptive and open, so employees can learn from each other. One

of the main goals of the company is to be innovative; this means to keep in touch with the

technology development. C&LI is using modern approaches as social media and blogging in


order to attract customers. Procurement in this kind of company is not that prevalent, because of

the few suppliers C&LI needs. However, the legal department should be up to date on any

educational issues and dealing with corporations (“Interviews 1, 2”, Nov. 9 and Dec. 2, 2012 &

“Company Website,” 2012).

There are few departments, where C&LI might be in competitive disadvantage. First and

most important, is the marketing phase. Since the website is the “front door” into the

organization, it needs to be more customers friendly. Further, C&LI does not brand or cooperate

with any other bigger company. Getting their brand “out there” would bring them more business.

Another disadvantage among primary activities might be in the service stage. Interview (Nov. 9,

2012) pointed out that only about 25 percent of the C&LI customers are long-time clients. This

might be given by lack of offers in the after-purchase service area (“Interviews 1, 2”, Nov. 9 and

Dec. 2, 2012 & “Company Website,” 2012).

When focusing on the supportive tasks, C&LI is limited by it infrastructure, because of its

little budget. Some steps need to be taken in order to save on fixed cost freeing up some money

for other operations. Last, but very important is the problem with HR. Because of the limited

budget, C&LI consists of up to 10 employees. With more employees, the company would be

able to reach broader markets, therefore increase its sales (Interviews & “Company Website,”

2012).


Summary and Recommendations

The goal of C&LI is to broaden its market share and go global; therefore, there are needs

for changes in the service portfolio. New website is number one issue. In order to claim more

market the company’s information has to be clear, ease to access and client should have an option

to place an order from the website. Attention to online education would help to broaden service

portfolio as well. Online education was pointed out as one of the biggest opportunities in the

educational industry nowadays. It cannot only spread around the whole world without any

boundaries, but it is cost effective.

From the structure point of view, C&LI is effective; however, downtime economy slows

most of their processes. There are to position C&LI can take in order to defend its position;

merge with larger company and use its resources, or hire more employee and widen its market

share on its own. Those strategies can also overlap.

Organizational culture is very strong in C&LI; yet, the company operates at a fast pace

and focuses on time over-deleverage, this suites only a certain type of people. Although, this is

issue is prevalent in the company, employees feel happy working in the company and with each

other (Interview 1, Nov. 9, 2012). Overall, the organizational culture is group oriented with

directive approach; however, coaching and further education is always available to those who

struggle (Interview 2, Dec. 1, 2012).

C&LI’s activities are colloquial and focused on the company’s mission and vision. Minor

issues in the value chain might be visible in the marketing and services stage. As pointed earlier,

the new website has to be created in order to make marketing more responsive. Another


suggestion is boosting service stage is development of special deals and offers, which would raise

the percentage of returning customers.

Performance in C&LI is measured by income. This works for meeting financial standards;

however, it does not say much about other factors of the overall strategy. New measurements

focusing on customers, internal processes, and learning and growth of employees should be

developed. This set of measures would represent the basic standard of the overall operations in

the company.

Recommendations

Recommendations for C&LI are from multiple areas; among those areas are marketing,

service development, integration, expansion, mergers/acquisitions, and alliances.

Marketing Recommendations

The first recommendation is the website. The interview (Nov. 9, 2012) pointed out that

the website is the “front store” of the whole company. This approach is becoming popular in

recent years; customers prefer to look up all information online anyway. However, competition

online is even more fierce than the one “on the street,” people can leave any website with one

click. This explains why effective and clear websites are so important (Kotler & Keller, 2000).

New website should be easy to use and customer should have an opportunity to order any service

online through the website.

The second recommendation is an increase of the loyal customer base. As Kotler and

Keller (2000) point out, loyal customers count for about 75 percent of the whole income of most

companies. Increasing the loyal customer base will, therefore, lead to increase in revenue.


Retention rate might be enhanced by offering special deals for loyal customers, which could be

send in monthly newsletter to all of the customers in the database.

Service Development Recommendations

Another often-discussed suggestion is an online education. C&LI already offer blended

learning; however, nothing fully online. Online education can be tied to the following

recommendation, which suggest attention to the operational cost. Online education saves time for

the trainer on commute, as well as money on transportation. This also applies for the C&LI’s

customers. Online education is saving money to everyone. Other advantage of this approach is

the wide range of broadcasting. One trainer with one computer can reach people all over the

world (Kotler & Keller, 2000). C&LI would have easy start with online education at universities

its employees attended.

Integration Recommendations

A performance measurement research pointed out that only financial measurements are

used when measuring the success of the company. However, in order for smooth operations,

C&LI should set some other standards, which would measure the customers, internal processes,

and employees learning and growth. Suggestions for those measurements are drawn in the

Balanced Scorecard (see appendix).

Attention to operational cost is another recommendation. Operation cost is a combination

of cost, where some of them have common characteristics and some of them are individual. Part

of the operational cost is fixed; therefore, it can be predicted. When focusing on lowering the

operational cost, the company has to work with the fixed part of the cost (Garrison, Noreen &

Brewer, 2012). Online education would lower operational cost, because it does not require the


whole school/training center to be heated up, lit, and run by “operational employees”. Another

way to save on operational cost is to prevent excessive waste with sources (paper, ink),

electricity, or water.

Expansion Recommendations

Expansion might be one of the strategies to fight downtime economy. This paper already

suggested that in order to achieve C&LI’s goals the company would have to hiring more

employees to expand its market share. Among those employees should be not only new trainers,

but also sales representatives.

Mergers/Acquisitions Recommendations

One of the strategies to obtain more resources is to merge with larger company to

increase. The fragmented market in educational and training services is suggestion that merges

are going to take place soon (“Hoover’s,” 2012).

Alliances Recommendations

Last recommendation is to connect with high schools and community colleges. Hoover’s

(2012) describes situation where not all students in high school are ready or planning on

attending university. C&LI could provide those students with certification in any field those

students might be interested in. Another option for C&LI and high school cooperation is testing

and profiling students for their future job placement.


Conclusion

C&LI’s strategy is aligned with the mission and vision of the company. The executive

partners as well as all the employees know, where is the company going and what is expected.

This keeps C&LI on the track and running even in the slow economy. However, the details

analysis of the organization pointed out minor issues, which could make the company even more

efficient and run smoothly.

SWOT and its complementing TWOS analyses are the cornerstone of the whole research.

Highly educated staff, flexible pricing, and college cooperation were considered the strongest

assets of the company; however, the busy website, little budget, and low customer retention were

considered a problem, or weaknesses. From the external environment, online education is the

number one opportunity right now, along with expansion, and partnership with other educational

institutions. Among the most dangerous threats are compliance with government policies,

dependence on personal income, and negative publicity about private sector education.

External environmental scan showed extreme fragmentation of the training and

educational services, which foretell the future merging and building alliances with larger

corporations. Downtown economy has negatively effected small leisure-time education and

training, because it solely depends on personal income (“Hoover’s,” 2012). C&LI focuses mostly

on corporate learning; therefore, the threat of the personal income is not so severe in its case.

Based on the interviews (Nov 9. & Dec. 1, 2012) C&LI has fast-paced culture, which

focuses on time and quality delivery of its product. The whole company is aware of C&LI’s

mission and vision and employees work together in order to achieve the company goal. Fast

speed might be problem for some individuals. One of the recommendations related to the


organizational culture is to expand it. Hiring more employees would allow C&LI to acquire

larger market share.

Value chain analysis showed minor problems in marketing and sales, and services stage.

Marketing of C&LI is overall successful. C&LI is using modern technology and social media,

communicate with its clients through blog and radio. However, the website has an old look and it

is quite busy. Therefore, the creation of a new website is the number one recommendation for

C&LI. The service stage of value chain analyses considered the fact that only about 25 percent

are long-time returning customers. Based on Kotler and Keller (2000), who claim that the loyal

base of the customers make about 75 percent of the all sales, another suggestion is to work on this

number and put more customers into this long-time loyal base. This could be done by special

offers for returning clients, or regular newsletter, which is sent to whole customer database of

C&LI.

Overall, C&LI is doing extremely well; considering the slow economy, the fact that it is a

small company, and intense competition in the Midwest region. However, minor changes could

make this company to be the number one small consultant groups in the world by helping clients

achieve their professional goals, which is the company’s vision.


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Personal Communication

Interview 1. (Nov. 9, 2012).

Questionnaire 1. (Nov. 17, 2012).

Interview 2. (Dec. 1, 2012).

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Appendix

TABLE OF CONTENTS

SWOT ANALYSIS 30

TWOS STRATEGIC MATRIX 32

BALANCED SCORECARD 35

EXTERNAL ENVIRONMENTAL SCAN 38

FIVE FORCES ANALYSIS 40

ORGANIZATIONAL ASSESSMENT 43

MARKET POSITION ANALYSIS 48

VAL UE PROPOSITION 51

MARKET POSITION 52

COMPETITIVE ADVANTAGE 52

INTERVIEW TRANSCRIPTS 54

QUESTIONNAIRE 69


SWOT Analysis for C&LI

Connotations attached to strategic issues are imposed by categories managers describe an

issue. Two categories are most likely applied to strategic issues, which are focused on threat or

opportunity. The opportunity category assumes a positive situation over which the company has a

fair amount of control. On the other hand, the threat category implies a negative situation in

which the company has relatively little control. However, both of those categories can advance

the company forward (Dutton & Jackson, 1987).

To build fit SWOT analysis for any organization researcher has to consider internal

strengths and weaknesses first. Focus needs to be given to inner structure, access to natural

resources, capacity and efficiency, and financial resources. Second step of the analysis takes

external opportunities and threats in an account. This includes customers, competitors, trends in

the market, partners and suppliers, social changes and new technology, and various

environmental economic, political and regulatory issues (Helms & Nixon, 2010).

Table 1: SWOT Analysis for C&LI

Strengths Weaknesses

Highly Educated Staff Confusing/Busy Websites

Flexible Pricing Little Budget

College Cooperation Low Customer Retention

Good Referrals No Branding or Alliances

Personal Approach Few Employees – Limited Reach

Opportunities Threats

Online Education Compliance with Government Policies


Acquisitions Dependence on Personal Income

International Expansion Vulnerability to Federal Funding

Increased Operational Efficiency Student Loan Defaults

Partnerships with High Schools, Community

Colleges

Negative Publicity


TOWS Strategic Metrix

Weihrich (1982) redesigned the SWOT in order to generate strategies based on the

relationship between internal and external environmental factors. His model is called the TOWS

Strategic Matrix. The analysis starts with the external environment by listing the threats (T),

which might be of immediate importance to the organization. Threats should be listed in box 'T'

as shown in Figure 1. Similarly, opportunities are positioned in box 'O'. The organizational

internal environment is evaluated for its strengths (S) and weaknesses (W). The TOWS Matrix,

(Figure 1), depicts four different alternative strategies (Weihrich, 1982).

1. The WT Strategy (mini-mini)

The goal of the WT strategy is to minimize both weaknesses and threats. A company

facing external threats and internal weaknesses may have to be in situation where it fights for its

survival or may even have to choose liquidation. Solution could be represented in merging with

bigger company, or by cuts in operations. The WT position is one that any company should try to

avoid.

2. The WO Strategy (mini-maxi)

The second strategy works on minimizing the weaknesses, but maximizing the

opportunities at the same time. A company can see opportunities outside of the organization;

however, its weaknesses prevent the company from taking advantage of it. One possible solution

is to cooperate with any company, which has competency in the field. Another strategy might be

to hire people with the required capabilities. The company also does not have to do anything, thus

leaving the opportunity to competitors.

3. The ST Strategy (maxi-mini)


This strategy consists of the organizational strengths, which can suppress the threats in the

external environment. Still, strengths must often be used with great restraint and discretion. The

main goal is to maximize what the company has; however, the organization always needs to keep

an eye on the threats possessed by others, no matter how small they might seem.

4. The SO Strategy (maxi-maxi)

This is a position where the company can maximize both, strengths and opportunities. The

strategy starts with strengths, utilizing resources to take advantage of the market. Any successful

organization will attempt to get into a situation where they can work from strengths to take

advantage of opportunities.

Figure 2: TOWS Matrix

Source: Weihrich, H. (1982). The TOWS matrix: a tool for situational analysis.


Table 2: TWOS Matrix of C&LI (assembled by author)

Strengths:

1. Highly Educated Staff

2. Flexible Pricing

3. College Cooperation

4. Good Referrals

5. Personal Approach

Weaknesses:

1. Confusing/Busy Websites

2. Little Budget

3. Low Customer Retention

4. No Branding or Alliances

5. Few Employees – Limited

Reach

Opportunities:

1. Online Education

2. Acquisitions

3. International Expansion

4. Increased Operational

Efficiency

5. Partnerships with High

Schools, Community

Colleges

SO (maxi-maxi)

1. International online

education for colleges

(O1, O3, S1, S3)

2. International expansion

through referrals (O2, S4)

3. Online education by

educated staff (O1, S1)

4. Partnership with colleges

and universities, where

staff got its education (O5,

S1)

WO (mini-maxi)

1. Online (international)

education to save budget

(O1, O3, W2)

2. Hiring more employees to

expand further (O3, W5)

3. Merge with bigger

company to increase the

budget (O2, W2)

Threats:

1. Compliance with

Government Policies

2. Dependence on Personal

Income

3. Vulnerability to Federal

Funding

4. Student Loan Defaults

5. Negative Publicity

ST (maxi-mini)

1. Pricing based on personal

income (T2, S2)

2. College cooperation fights

negative publicity (T5,

S3).

3. Good referrals suppress

negative publicity (T5, S4)

WT (mini-mini)

1. Prevent negative publicity

by fixing the website (T5,

W1)

2. Create low-cost education

for people with low income

(T2, T3, T4, W2)

3. Make special offers for

returning customers in

order to increase customers

retention rate (T2, W3)


Balance Scorecard

Lee and Ko (2000) claim that connecting the SWOT matrix with the balanced scorecard

creates a systematic strategic management system. SWOT analysis represents structural approach

in setting up the base for the balanced scorecard. The balanced scorecard is used to transform the

company’s mission and strategy into an array of performance measures and suggests the

framework for strategy evaluation (Kaplan & Norton, 2007).

The balanced scorecard is based on four key perspectives, which are financial goals,

customer perspective, internal processes, and learning and growth. Each of the perspective is

parceled into metrics, which can be easier measured. Those metrics are objectives (which the

company strives to achieve), measures (observable parameters), targets (specific values company

is trying to reach), and supporting initiatives (actions, which help the operation to meet the

objectives). The metrics have to fulfill the SMART requirements to be specific, measurable,

achievable, realistic and in timely manner. Perspectives in balance scorecard are intertwined and

improvements in just one area will not necessary bring success in the other areas (Kaplan &

Norton, 2007).

Balanced scorecard enabled companies to track financial results, monitoring progress in

building the capabilities and acquiring the intangible assets they would need for future growth.

Financial measures are one of the most common measurements of company’s success; however,

it is not a balanced view of the critical factors of any strategy. This is mostly, because financial

measurements tend to measure the past (Kaplan & Norton, 2007).


Table 3: Balanced Scorecard for C&LI

Objectives Measures Targets Initiatives

FIN

AN

CE

Revenue growth Sales growth by

division

10% annual growth

per division

Hiring new

employees

Cost reduction Cost reduction rate 5% annual cost

reduction

Educational event on

“How to save on

operations”

Asset utilization Output 15% annual increase

of outputs

Hiring new

employees

CU

ST

OM

ER

Customer retention Returning customers

Retain 15% of

customers for next

year

Special offers and

deals

Market share Percentage of

customers

10% annual growth

of customers Marketing campaign

Customer

Satisfaction

Customer

satisfaction

percentage

More than 75% of

customers will be

“somewhat” or

“very” satisfied next

year; based on

survey

Evaluation survey

has to be designed

INT

ER

NA

L P

RO

CE

SS

ES

Innovation – website Bounce rate Bounce rate below

25%

New website

propagation

Operations Labor efficiency

Labor will use 10%

less resources at

maintaining the

same level of

operations

Educational event on

“How not to waste

with resources”

Operations Process cost Process cost will

decrease by 10%

Starting online

education

Better outside

training scheduling

(so there is not so

much needs to

travel)

LE

AR

NI

NG

Employee

satisfaction

Overall satisfaction

with company

75% of all

employees are

satisfied working for

C&LI – based on

Evaluation survey

has to be designed


survey

Employee

productivity

Revenue per

employee

Revenue per

employee will grow

by 7% annually

Team competition

Employee

productivity

Training budget per

employee

Training budget

increases by 5%

annually

Newsletter telling

employees about the

increase suggesting

different educational

options


External environmental scan

The industry is extremely fragmented; about 50 largest companies represent 30% of total

revenue. This will probably lead into merging strategies in soon future. Merging of companies in

education will help them grow and compete with others quickly emerging markets from China

and India. Markets coming from outside of the country rely on online and distance education.

Among leading global companies, focusing on education and training services are New Oriental

Education & Technology Group of China, NIIT Limited of India, and Third Force of Ireland

(“Hoover’s”, 2012).

Hoover’s (2012) describe education and training service as a broad category that

encompasses job-specific certification, professional training, and classes emphasizing self-

fulfillment, leisure, and hobbies. Most of the industry’s programs belong under the category of

(CTE). High schools, community colleges, universities, and educational support services aren't

not considered as a part of this industry (“Hoover’s”, 2012).

Tuition or fees represent most or the revenue coming to the companies in the industry.

Qualified educational and training services can receive up to 90% of total revenue from the

federal government (the 90/10 rule). Gross margins for education and training services average

about 90%; however, net profit averages only 3%. According to Hoover’s (2012) the education

and training services industry could grow by 4.3% in 2013 compared to 2012, based on to the

latest industry forecast. Career technical education (CTE), the industry segment, should create

about 29 million middle-class jobs that require a two-year degree or less (“Hoover’s”, 2012)


Figure 3: Change in Consumer Prices - Bureau of Labor Statistics

Source: Hoover’s. (2012). Education & training services - industry report.

All of the educational and training services industry is highly regulated at both the state

and federal level. Schools are often audited and reviewed by the US Department of Education

(ED); the Office of Inspector General; and state, guaranty, and accrediting agencies. Only

accredited schools are eligible to receive government funds and participate in federal financial aid

programs. ED or state-certified agencies can grant accreditation to school or program based on

examination of school’s academic standards and quality. The FTC and the ED manage

complaints of false advertising, unethical recruiting, and misuse of federal funds (“Hoover’s”,

2012).

Hoover’s (2012) points out that modern technology is successfully applied thorough the

educational and training services industry. Virtual classes can be synchronous, where students

meet at certain time, or non-synchronous, which can be visited at any time, but some presence is

requested at least once a week. Private sector in education tends to respond to the innovation

faster than the public sector (“Hoover’s”, 2012).


Figure 4: Five Forces

Source: Porter, M. E. (2008). The five

competitive forces that shape strategy.

Five forces analysis

Many companies, do not take strategy seriously. In most of those organizations,

competition is defined too narrowly and describes only direct competitors. More intense forces

point to challenging business environment; on the other hand, week forces show fragmented and

not so cohesive business structure (Ehmke et al, n.d.).

Powerful customers, which are the

other side of powerful suppliers, can easily

bargain the price by demanding more value

for down prices, requiring better quality or

expecting more service. All those needs of

buyer drive the cost of the product up

(Porter, 2008). Customers have significant

power especially, when they are large and

purchase much of the company’s output.

The worst scenario is when company has

many suppliers, but only few buyers; or the products are expensive, but not original (Ehmke et al,

n.d.).

Based on Hoover’s the typical customers in education and training industry are

individuals who choose (or are required to by law or an employer) to take a class for career

advancement or self-fulfillment. Most of the companies offering educational services find their

customer online or via their social network. Prices of offered services vary based on the type of

the institution. Companies offering professional and management classes usually charge a


“corporate group rate”. Self-fulfillment classes for individuals usually charge monthly, hourly, or

per-session (“Hoover’s”, 2012).

Powerful suppliers can afford keep more value for them by charging higher prices,

limiting quality or services, or shifting costs to industry participants (Porter, 2008). Suppliers

have most of the bargaining power, when the inputs company requires are unique, expensive to

make, or are available only from limited number of supplier. If the input purchase does not

represent significant portion of suppliers business, or it is difficult to switch to another supplier,

the main supplier can dictate prices as well (Ehmke et al, n.d.).

Based on Hoover’s industry report (2012) large companies have significant advantage

compare to smaller companies, especially because they can afford marketing and offering a wide

range of classes and services. Small companies can succeed by offering effectively through

personalized service and customized instruction. Small organizations usually keep their operating

costs low and recruit perspective students. Average annual revenue per worker is about $70,000

(“Hoover’s”, 2012).

Threat of new competition is represented by the main question: How difficult is it for

business to enter market in given industry? Every new entrant takes away part of the market

share. This may force prices down; therefore, limit profit. When searching for the threat of new

entrants researcher has to consider the barriers to entry. Barriers to entry are usually the costs and

legal requirements required in order to enter a market. The threat of new entrants is higher in

certain situations. For example, when companies cannot be protected by patterns or regulations.

Alternatively, product the company is producing is not unique and can be easily imitated.

Companies, which have not established strong customers’ loyalty, might be in risk as well. Low

start-up cost also belongs among substantial threats (Ehmke et al, n.d.).


Porter (2012) describes substitutes as a product, which performs the same or a similar

function as an industry’s product, but by different means. The substitution can be even

downstream or indirect, when it, not willingly, replaces industry’s product. Substitutes are easy to

overlook, because they might seem very different to the producer. When looking for substitute

the company should ask what product, can our customer buy instead of ours? Products with the

highest threat of substitution are products that have no real purpose or benefit for a customer, or

customers can easily switch from one to another (groceries). Brands with low customers’ loyalty

are also in danger of substitution (Ehmke et al, n.d.).

Based on Porter (2008) rivalry among existing competitors can show in many familiar

forms, including price discounting, new product introductions, advertising campaigns, and

service improvements. High rivalry restricts the productivity of any company in given industry.

Rivalry is the most visible in the time of slow economic growth. One monopolistic corporation is

also extreme threat to small businesses. Other origins of high rivalry might be caused by high

fixed cost of production, when products are perishable and need to be sold quickly, or when

products can be easily imitated (Ehmke et al, n.d.).


Figure 5: CVF Model

Source: Cameron, Quinn. (1999). Diagnosing

and Changing Organizational Culture.

Organizational assessment

Culture Assessment

There are three levels of organizational culture: artifacts, the espoused values, and the

basic underlying assumptions. Artifacts refer to primarily visible, audible, and touchable

behaviors taking place in an organization. The espoused values are “ought to be” in the

organization whereas the artifacts are “what is” (Schein, 1992). Underlying assumptions are

unconscious ways of seeing the world, which are taken for granted. Strategies, goals, and

philosophies exemplify the espoused values; therefore, an effective strategy should be aligned to

the organizational culture (Roh at al., 2008).

Figure 2 presents Cameron and Quinn’s (1999) typology of the competing value

framework (CVF). It constitutes two-dimensional

space that reflects different value orientations. The

models uses two axes model, where one is the

flexibility-control axis describing the degree to

which the organization emphasizes change or

stability. The second axis is the internal-external

axis, which depicts the nature of business

strategic initiatives orientation (Cameron &

Quinn’s, 1999).

A flexibility orientation suggests adaptability and spontaneity, while a control orientation

indicates stability, control, and order. An internal orientation displays a focus on the sustenance

and enhancement of the existing organization, while an external orientation reflects an emphasis


on competition, interaction and growth with the external environment. The combination of these

two dimensions produces four types of culture: hierarchical, rational, group, and developmental.

Table 2 is a summary of those four patterns in organizational culture (Roh at al., 2008).

Table 2: Patterns of organizational culture

According to Zuckerman (2002) companies with the strongest cultures, where values and

norms are widely shared and strongly held, tend to outperform their peers. Any actions contrary

to behavioral norms can be easily identified and quickly corrected. Companies with highly

variable performance and cash flow usually focus less on worthwhile projects, blaming its low

results on a competitive disadvantage. Similarly, such companies tend to have fewer analysts,

lower bond ratings, and higher weighted average costs of capital than more successful

organizations (Zuckerman, 2002).

At the same time, firms with strong cultures can inherent critical limitations. Although

performance should be more reliable in such firms, positive effect of a strong culture could

disappear during times of industry volatility. A volatile business climate often requires that firms


develop entirely new procedures and embrace an innovative approach to survive. Firms with

strong cultures would have a harder time processing these types of activities precisely because of

the qualities that helped them excel previously. This makes them less likely to seek out

fundamentally new alternatives or even recognize the need for radical change. Moreover,

dissenting employees whose beliefs do contradict the company's dominant perspective are less

likely to remain, or much less likely be listened to (Zuckerman, 2002).

Value Chain Analysis

The effectiveness of any company depends on decisions generating value added through

efficient coordination among the supply chain agents to give what customers want, when they

want it, and at the least cost. Among the traditional strategies of creating value are lowering cost

or charging higher prices, developing niches products, and expanding markets (Porter, 1985).

As shown in the Figure 3, there are two types of activities when developing any product,

primary activities and support activities. Primary activities are responsible for creating the

product, its sales and after-sales. Support activities support primary activates by providing inputs,

human resources and procurement (Porter, 1985).

Figure 6: Porter's Value Chain Model

Source: Shahid, S. (2008) A Business-Driven Evaluation of Distributed-Computing

Models.


Inbound logistics consider all the processes related to receiving, storing, and distributing

inputs internally. The supplier is the key. Operations phase is where activities transform inputs

into outputs, which are further sold to customers. The operational systems create value in this

phase. Outbound logistics deliver the service to the customer. Marketing and sales are responsible

for persuading customers to purchase from the company instead of the competitors. The added

value is in the communication with the customers. Service stage consists of activities related to

maintaining the value of the service for the customers, once it has been purchased (Porter, 1985).

Although supporting activities might not seem relevant, they have high impact on any part

of the primary tasks. Procurement or purchasing is what the organization does to get the

resources it needs to operate, such of finding vendors or negotiating best prices. Human resource

management is responsible for recruiting, hiring, training, and many other activities related to the

company workers. People are a significant source of value in nowadays strategies. Technological

development relates to managing and processing information, as well as protecting a company's

knowledge base. Keeping the IT costs down, staying current on technological advances, and

being innovative are sources of value creation in this stage. Infrastructure is a company's support


systems, which allow it to maintain daily operations. Accounting, legal, administrative, and

general management are necessary to the infrastructure, and can be used to the company’s

advantage (Porter, 1985).


Market position analysis

Mission

Every organization needs to have a mission. Mission is the original purpose of being;

however, the mission can change overtime, to take advantage of new opportunities or respond to

new market conditions (Kotler & Keller, 2000). Peter Drucker (1973) establishes set of questions,

which help companies to stay on track; questions such: What is our business? Who is the

customer? What is of value to the customer? What will our business be? What should our

business be? Based on Kotler and Keller (2000) questions answering the purpose of the

company’s missions are the most difficult, but crucial to ask not only at the beginning of the

business, but also as the organization develops. Organizational mission is necessary for

company’s managers, employees and customers, because it provides a shared sense of purpose,

direction, and opportunity (Kotler & Keller, 2000).

C&LI’s mission is to provide effective training development and facilitation to clients

worldwide. Although, the company mostly operates in Midwest and New York regions, the

mission is stretching farther covering the whole world. This represents the urge of the company

to move forward and reach new markets.

Vision

Vision is the best when it sounds almost impossible or like a dream and provide direction

for next 10 to 20 years. Vision should describe the ideal future in regards of what the company

does. Vision is not as specific as mission, but they need to be consistent and reflect on each other

(Kotler & Keller, 2000).


C&LI vision is to be the most trusted small consultant groups in the world by helping

clients achieve their professional goals. This shows that mission and vision in C&LI are tied

closely together. The focus is on the market share and expansion of its horizons; however, C&LI

does not forget about the quality aspect. Vision is considering helping clients to achieve their

profession goals, which also demonstrates attention to customer.

Based on Drucker (1973) vision is important because it helps the organization to stay

single-minded and prevents confusion. If the vision is not clear, employees will each define

“results” in terms of their own specialty and impose its values on the organization.

Values

Key elements of an overall vision of the organization are core values measurement.

Values such as truth, trust, and respect define the moral tone of any company. However, values

and principle ought to govern organizational culture and behavior, not any personal style of

individuals (Manning, 2012)

Based on the interview, the core values of C&LI are focus on client, work as a team, keep

an eye on the future, first in wins (get to the new client before others do), over-deliver results, and

deliver on promise. Those values are known thought the whole company, because as SC

mentioned in her interview (Nov. 9, 2012): “Values are important not because we want to

persecute our employees when they are not following them, but because our employees are

encouraged to make decisions on their own. If they would not understand values of our

organization, they would not be able to make the proper decision in accordance with our

strategy.”


Both mission and vision were focused on increase in market share, customers and quality.

The same trend repeats in the company’s value proposition. See Table 1 for detailed description.

Table 1: Values of C&LI corresponding with mission and vision (assembled by author based on

the interview)

Mission & Vision Proposition Corresponding Core Value

Market Share Expansion

Keep your eye on the future

First in wins (get to a new client before

others do)

Customer Focus

Focus on the client

Over-deliver results

Deliver on promises

Provided Quality

Work as a team

Over-deliver results

Deliver on promises

Strategy Clarification

Based on Brian (2007) effective strategies offer value propositions that are designed to the

needs of each customer group. Weaker strategies make the same or similar offers to different

customer groups. In order to have competitive advantage organization has to consider its

customer prioritization and value propositions. Both have to be significantly different from those

made by competitors. Only weak strategies make similar offers to the same customers base

(Brian, 2007).

C&LI understand different needs of each customer. C&LI focused on five customer areas

including organizational training, strategy development, organizational coaching, outdoor


adventure programing, and college programming. Each of the training has different curriculum,

which is based on customers’ needs and requirements (“C&LI Website,” 2012). The interview

(Dec. 1, 2012) revealed that the values of the company are closely tied to the business strategy as

shown in Figure 1.

Value proposition

Companies address customer needs by putting forth a value proposition, which Kotler and

Keller (2000) describe as a set of benefits that satisfy customer’s needs. The intangible value

proposition is made physical by an offering products, services, information, or experiences. The

customers always choose the offer, which represents the most value to them. The value itself is

mostly combination of quality, price, and service, which Kotler and Keller (2000) call the

customer value triad.

C&LI see its value in offering different services based on the customers’ needs. From the

interview (Dec. 1, 2012), it is apparent that “by contracting with C&LI for training programs,

Figure 7: Company value in relation to the business strategy

Source: Assembled by author based on the interview


clients will achieve their short-term training goals. By contracting for development services

(strategic planning, teambuilding, culture assessment...), client will achieve short-mid-long range

objectives” (Interview 2, Dec. 1, 2012).

Market position

Strategic positions arise from three different sources, which can overlap. First, positioning

can be based on producing a subset of an industry's products or services. A second basis for

positioning is trying to satisfy the full needs of a particular group of customers. The third

positioning is segmenting customers who are accessible in different ways. Their needs might be

similar to those of other customers; however, there is a unique way in how to reach them.

Positioning of each company has to be unique or valuable otherwise, every other competitor

could meet those same needs (Porter, 1996).

C&LI has very broad range of services; therefore, is able to address a very diverse

audience. The main customer base would be composed of corporate level (C level) managers,

their assistants, and other decision makers in C level. All the services offered are focused on

training and development. However, based on the interview, it seems the understanding of the

market position in not exactly clear, and it might be something C&LI needs to address.

Competitive advantage

A competitive advantage comes from the way a company’s activities fit and reinforce one

another. In top companies, the strategy is to complement all activities, so it produces real

economic value. One activity's cost can be decreased because of the way other activities are

performed. Likewise, one activity's value to clients can be improved by a company's other

activity. This approach helps to create a competitive advantage and leads to higher profitability.


Mentioned complementarities are the most important for any business strategy. Some might fit

for all companies, some tend to be specific, because it develops positions exclusivity and

intensifies trade-offs (Porter, 1996).

Interview conducted on Nov. 9, 2012 showed thick competition in the field, especially

around Chicago area. C&LI tries to distinguish itself using couple of different strategies. The

company’s employees are known in the field, because they are published authors. Services

offered by C&LI are cost effective, because the company has already established training practice

and has about 20 years of experience in the field. Although, C&LI works in the corporate world,

the fact that it is small organization, therefore personal, can be considered as another advantage.

C&LI is overall agile company, which has strong competitive edge (Interview 1, Nov. 9, 2012).


Interview 1 – TBA

Interviewer(s): Tereza Stratilova (TS)

Interviewee(s): TAB

Date of interview: 11/9/2012

Section A – getting to know each other

1. What is your name (initials)?

TBA

2. What is your position in C&LI?

Partner

3. How long have you been working for C&LI?

I started it 20 years ago.

Section B1 - market position

4. Describe the targeted customer for your services.

It varies, usually based on service area:

HR, training and development, C level, C level assistants, managers, meeting

planners

5. Where do you operate/how big is your reach (Illinois, Midwest, whole United States)?

Midwest (80%), Global (20%)

6. What are your customers buying habits?

¾ Transactional, ¼ consultative


Section B2 - value proposition

7. What does your customer want?

Transactional – short term fix

Consultative – long term change

8. What does your customer need?

Transactional – the need to learn the importance of long-term change

Consultative - patience

9. Is there any gap in between services your offer and customers’ desires?

Depends on how they get to us. If they need technical work, we are not their source. But,

all our clients desire a fix

10. Is there any gap in between services your offer and customers’ needs?

If clients know our services, then they know how we can meet their needs

Section B3 - competitive advantage

11. Analyze your service’s position in relation to the competition (identify 3 main competitors).

1. Chicago Institute of Investment (CII)

2. Center for Creative Leadership (CCL)

3. Pryor and Associates

11b. Explain how your service differs in terms of:

Interviewee didn’t have time to fill out the table


CCI – event based learning

CCL – high-end leadership

Pryor – low cost training

12. Describe the source of competitive advantage for your service (name more than one).

1. Talented training and development

2. Price flexibility

3. Interaction with decision makers

4. High touch

13. Evaluate sustainability of each source of advantage.

All good

14. The 5th P of Marketing (elements of a marketing mix):

14a. What would you describe as a most successful product/service of CLI?

Personal profile assessment

14b. How do you price your products/services?

A bit higher than market price

14c. How do you get to your customers?

New – through internet

Repeats/others – thanks to previous success/references

14d. How do you propagate/market yourselves as a company?

- E-blasts, SEO, demonstration days, networking with resellers

14e. What is unique about your people/coworkers/team?


- can do attitude (we make it happen)

- experience, expertise, talent

- ability to relate to audience


Interview 1 – SC

Interviewer(s): TS

Interviewee(s): SC




SC


Partner


15 yrs.



We serve five customer areas –organizational training, strategy development,

organizational coaching, outdoor adventure programming and college programming.


We operate world-wide, focused on the US market.


This is a tight market, with training dollars very constricted at the moment. So our

customers are organizations that have enough finances to afford the above, that said,

training is the last priority on most people’s minds.




Effective, high impact services, on a budget, that provides a return on investment.


The same


If there is the time and effort needed to design and deliver an effective service and the

clients reluctance to pay for it.


Yes, it is a very different market I work in than the one pre-2008. I work three times as

hard to make a low budget program successful.



Well, we are a small company and the competition- are in different segments-is fierce. So

small and mid-size consulting firms like mine are all over the map. Here are three:

Mike Neiss and Associates

Crux Moves

Momentum, Inc.


Needs of the Rate Your Rate Services Rate Services Rate Services


Consumer Services

(as in school*)

For Competitor 1

(as in school*)

For Competitor 2

(as in school*)

For Competitor 3

(as in school*)

Quality 4 4 5 5

Price 3 2 4 5

Availability 5 4 4 5

Features 5 2 3 5

Functions 2 5 5 5

Brand Image 4 5 5 5

Total Score 4 4 3-4 5

Comments

Training – 4

Coaching – 3

Strategy – 3

College prgms. - 4

Adventure prgm - 2

- Excellent

consultants

- Good brand

- Well known

- Effective

consultants

X limited scope of

service

- Very good range

of services

- Expert consultants

* where: 1 = fully covering and satisfying services provided - 5 = not existing services


Doctoral level staff, years of experience, creative designers, research knowledge.


All 5s



- Training that incorporates experiential learning into the content


- Sliding scale.


- Ask client their budget, and “design backwards”, if not offered, a “shot in the dark

approach: which needs iterations of possible ideas.


- We have a “storefront” online and use our online website to drive business.


- Monthly eblast, Twitter, monthly radio show, Facebook, direct marketing.


- Right. We are different. Both doctoral partners are great sales people and great service

providers.


Interview 1 – RS

Interviewer(s): TS

Interviewee(s): RS




RS


Marketing Director


4 yrs.



C level companies with extra budget for training and development


Mostly Chicago-land, but we do global promotion as well


They want a lot of attention for a little bit of money, haha. Well, most of them are looking

for effective training for their employees or conflict/problem resolution. We can do all of

that.




Mostly effective training, coaching or help with their overall strategy.


Someone who will organize their workspace, make operations smoother and very ofter

resolve conflict or “stuck situations”


They would want more attention, but they are not ready to pay for it.


Not really, I believe, we do god job.



There is a bunch.

1. Center for Creative Leadership – they are big in Chicago area

2. Allen Communication – our next-door neighbor with bigger budget

3. Human Synergistics International - globally known, lot of referrals


Interviewee didn’t have time to fill out the table

We have incredible people here in C&LI, which have the best education (much better than

our competitors do). We offer special payment plan for our customers. And our training is

rated one of the best one out there.



As stated above. Experts in the company, pricing, and personal approach.


I think that all of them are quite sustainable.



Our training and development program, and one-on-one coaching.


As I said before, we have flexible pricing that allows as to assess our customer. We try to

work out their budget first.


That’s my job here. I prepare monthly online campaign. We do social media (Facabook

and Twitter) as well as SEO. We don’t waste much time on any other propagation beside

the online strategy, to me it’s hard to track and it’s usually very ineffective.

We also have good reputation and many of our customers are word of mouth customers.


Social media, SEO, monthly pay-per-click


We were talking about this as well. We have everybody educated and very hard working.

People here love what they do and trust each other. I enjoy going to work and that is what

makes this company unique and successful.


Interview 2 - SC

Interviewer(s): Tereza Stratilova (TS)

Interviewee(s): SC


Company’s mission:

To provide effective training development and facilitation to clients world-wide

Company’s vision:

To be the most trusted small consultant groups in the world by helping clients achieve

their professional goals

Company’s values:

Focus on the client Work as a team Keep your eye on the future

First in (get to a new client

before others do) Over-deliver results Deliver on promises

How do your company’s values relate to your business strategy?


What is your company’s value proposition?

By contracting with C&LI for training programs, clients will achieve their short-term

training goals. By contracting for development services (strategic planning, etc.), client will

achieve short-mid-long range objectives.

What is your company’s market position?

I’m not sure.

What is your company’s competitive advantage?

Published authors Agile company Cost effective

Established training practice Small/Personal

Cultural Assessment

What are the unwritten rules that govern behaviors in your organization?


Over-deliver even if it kills you.

15 minutes early is on time.

Follow-up is a key.

What are the shared values that shape your organization?

All stated above + need fair amount of autonomy, mastery, and purpose from owners and

stuff.

What are the main organizational characteristics (e.g. controlling, sharing, competitive,

dynamic)?

Dynamic and sharing

What are the leadership patterns in your organization (e.g. monitoring, mentoring,

producing, innovating)?

Co-leading/shared leadership

How do you assess effectiveness (e.g. timeliness, group cohesion, market share, cutting-edge

output)?

Measured by income

What is your organization’s main management theory (e.g. efficiency, commitment,

productivity, new resources)?

Efficiency High commitment

Innovation Dependable processes


How do you manage your employees (e.g. security, teamwork, competitiveness, freedom)?

Directive style; I tell them what they need to achieve; it is up to them how they are going

to do it. I coach them if needed.

What is your “organizational glue” (e.g. formal rules, mutual trust, goal accomplishment,

creativity)?

Sense of accomplishment

Value Chain Analysis:

Interview had to be finished early due to lack of time of my responded.

Identify the primary (direct) and support (indirect) activities that create and deliver your

product or service to your customers (where does your services start, how does it develop

and where it goes from there, please be specific).

Please, assess each activity’s contribution to competitive advantage through cost or

differentiation.

Are you aware of any areas where your business may be at a competitive disadvantage?


Questionnaire SC

Questionnaire prepared by: TS

Respondent: SC

Date of completion: 11/17/2012

1. Do you feel that new competition (just arriving on the market) might possess any threats

to your company? Please explain your response.

Well, at any time competition new or old is an issue. There are two types of corporate

training suppliers - large established firms and smaller independent training companies. The

technology in the landscape drives innovation that is unpredictable and disruptive. The

projections for 2013 call for slow growth in the training market. This market favors larger more

established organizations.

2. Is there any substitute service/product that could be possible threat to your company?

See above.

3. Do you feel like your customers have any bargaining power over your company? Please

explain your response.

Sure. They know this is a bear market and ask for price adjustments sometimes.

4. Do you feel like your suppliers have any bargaining power over your company? Please

explain your response.

Not really. We order materials and products from a selection of companies.


5. Is there intense rivalry among your competitors? Please explain your response.

Not in my world. My peers are fried and allies who talk and listen to each other.

6. Is there intense rivalry among your industry as a whole? Please explain your response.

I don’t know.

7. Please describe key factors and trends affecting your industry as follows:

Economic factors and trends

“Training Industry8 estimates the global market for training services to grow to $292

billion in 2012, of which U.S. companies will represent an estimated $132 billion, or 45%. Both

figures are still below 2008 pre-recession levels. The meager increase in training budgets

translates into a bearish outlook for job growth within the training profession. Training Industry

estimates that jobs for training professionals to increase by about 1% in 2012. The bulk of that

modest recovery will continue to be experienced by training suppliers as companies continue to

defray many of their variable costs by contracting certain training services such as content

development, back office administration and instruction. Indeed, that is a principal reason why

large and established training suppliers will again be the winners in 2012 while independent

trainers and consultants continue to persevere.”

“We all hope job growth beats those numbers, of course, and well it might. After all, the

training industry is a leading economic indicator in both bad times and good. However, because

of prevailing skepticism about the economy at the close of 2011, these estimates are necessarily

conservative. It is because of this skepticism, in fact, that businesses are spending more on

8 http://www.trainingindustry.com

http://www.trainingindustry.com/


outsourcing rather than hiring full-time staff. We are not yet witnessing a commitment to long-

term growth.”

Political factors and trends

Can’t respond. Not sure.

Regulatory and legal factors and trends

“2012 will continue to see consolidation among suppliers of training products and

services, a classic recession activity as larger companies seize opportunities to round out

portfolios and build market share. In the last couple of years, some of the largest acquisitions of

training suppliers have occurred that will forever change the landscape of training services.

Mostly driven by talent management companies, we have seen deals where smaller technology

companies were acquired to round out the larger companies portfolios. We fully expect this trend

to extend over the next few years. Our industry is an incredibly fragmented and diversified

market of training suppliers, which is always an indicator that mergers and acquisitions will be

the norm.”

Societal factors and trends

“With social learning, instructors are challenged to deliver and facilitate training in many

new ways, surely a challenge to trainers who are discovering that the potential of virtual is

everywhere, on all platforms and for all segments of training. Contrary to the myth that the

instructor is going away because of e-learning, the reality is the instructor is still with us, and they

are not going anywhere any time soon.”

Technological factors and trends

“As the training landscape shifts from a model in which the training organization defines

the learning experience to one of increased learner autonomy, training professionals are


responding with new user-friendly portals that feature highly customized content. Training

Industry refers to them as Personal Learning Environments (PLE). They represent the next

generation of learning management systems, and the profession’s effort to endorse learner

preferences while also fulfilling their duties to continue providing relevant and useful content.”

Geographic factors and trends

Not sure about this.

End

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