British Heart Foundation Internal and External Environment - Case Study Example

Environmental Report for the British Heart Foundation Table of contents Introduction The British Heart Foundation (BHF) is a UK charity organisation established in 1961 by medical professionals who were concerned about the increasing heart diseases and high death rates resulting from heart diseases. They then decided to fund extra research into the causes of heart diseases, teach the public on preventive measures to avoid developing such diseases, and provide free diagnosis and treatment. The organisation has been funding various activities including education, care and cardiovascular research. BHF relies mostly on voluntary donations to meet its goals, though part of its income is obtained from investments. It also collaborates with other organisations in combating disabilities and premature deaths resulting from cardiovascular disease, which helps it to attract income from other sources such as government grants and contracts (BHF, 2012). BHF internal and external environment BHF has a chain of charity shops throughout the UK as well as in Scotland and Wales. According to Retail Technology Review (2011), the organisation had established over 600 retail shops and over 80 furniture and electrical shops by 2010. On average, the retail shops have been making approximately 13 percent of the organisation’s annual income in recent years (Retail Technology Review, 2011). These shops are staffed predominantly by slightly more than 10,000 volunteers. Each of them has a manager, a shop assistant and in some cases, a retail assistant, all of whom are paid. According to BHF (2012), the organisation focuses on five major goals in addressing the issue of cardiovascular health. First, BHF is involved in continuous research into the causes of heart-related diseases and has more than 260 nurses providing free care services for individuals with cardiac diseases across the UK. Secondly, it provides vital information related to the causes of heart diseases and efficient prevention methods in order to help people to reduce risks of developing heart diseases (Jowett, et al, 2007, p. 8). For instance, the organisation has established over 1,620 Heartstart schemes in the UK to educate people on the causes of heart diseases and the preventive measures they need to undertake (BHF, 2012). The schemes also alert people on how they should respond to all emergency situations, including those not related to cardiac problems. The Heartstart programme also engages in direct training and by 2010, it had trained more than 1.2 million people in schools and communities in the UK (BHF, 2012). The charity organisation is also involved in massive campaigns meant to push the government to develop policies that will help to minimise chances of people developing heart and circulatory diseases. It stresses the need for health organisations to attain the highest possible standards of care and support for individuals who have already developed heart diseases (Jowett, et al, 2007, p. 8). In addition, BHF is well known for pushing health organisations and other private and public institutions to collaborate in reducing inequalities in the treatment of individuals with heart diseases across the UK. BHF funding largely focuses on research, care and prevention. In 2010 for instance, the organisation spent £48.4 million on research, which accounted for 57% of its income (BHF, 2012). A significant portion of the income (41 percent) was allocated for care and prevention activities such as ongoing activities in healthcare centres, placing of defibrillators and producing heart health resources for individuals of all ages. Part of the income is sometimes used in the establishment of new programmes and facilities as well as in the organisation’s Heart Information Series. BHF also engages in sponsoring of television programmes to spread information relating to heart diseases. For example, it has been sponsoring two television programmes known as Kid's Fit Squad and Kitchen Detective, which are produced by Twofor (BHF, 2012). The informative programmes encourage people to adopt health eating habits and to do regular exercises, and also provide specific advice for people from different age groups. As noted earlier, the organisation collaborates with other non-governmental organisations such as Cancer Research UK to campaign against habits that increase chances of developing heart diseases such as the use of tobacco. SWOT analysis SWOT analysis refers to the process of analysing an organization’s strengths, weaknesses, opportunities and threats (Henry, 2008, p. 68). The strengths and weaknesses pertain to an organisation’s internal environment while opportunities and threats are factors relating to the organisation’s external environment. The following are the strengths, weaknesses, opportunities and threats as far as BHF is concerned. Strengths BHF, like other charity organisations in the UK is tax-exempt. As such, it has been possible for the organisation to offer products in the retail shops at a discount price since there are no tax expenses (BHF, 2012). BHF has volunteer staff in the numerous retail shops. The volunteer staff enable the organisation to make a lot of savings, which is particularly important for efficient running of the organisation’s activities. The board of directors of BHF is composed of volunteers, which gives an added advantage to the charity (BHF, 2012). BHF has well trained and experienced members of the board of directors compared to most of its competitors in the UK (British Heart Foundation, 2012). This charity organisation has grown to attain high levels of public awareness, more than most competitors. It is thus easier for BHF to attract donor funding than most of its competitors. BHF has strong organisational beliefs and values which support constant innovation and development. BHF receives very little support from the government, which helps it to retain the authority of independence (American Heart Association, 2007, p. 90). Weaknesses As noted earlier, the largest portion of BHF’s income is derived from legacies and wills. These sources are increasingly becoming unpredictable and sometimes, the organisation’s total income is less than its expenses, making it difficult to fund some of its vital activities (BHF, 2012). The budget problem sometimes extends to limited ability to pay competitive salaries to the organisation’s workers, making it difficult to attract some of the most trained and experienced personnel in the UK (BHF, 2012). In charity organisations, professionals typically focus on job satisfaction as compensation. However, some professionals working with BHF have been found to focus on salary as a major source of compensation. Such persons may end up providing low quality services especially when they are dissatisfied with payment (BHF, 2012). Opportunities BHF defines its opportunities as the grants to which the organisation is eligible. BHF has been attracting a huge amount of funding from legacies and wills. In 2010 for instance, the amount collected from legacies and wills was more than £40 million (BHF, 2012). The organisation also attracts sizeable support from volunteers. The amount of funding from volunteers accounted for 32 percent of the organisation’s income in 2010. Additionally, the various retail shops owned by BHF make a lot of profit which greatly adds to support the activities of the organisation. For instance, in 2010 the retail shops made £16 million. BHF makes considerable returns from other investments. In 2010, they accounted for 5 percent of the organisation’s total income (British Heart Foundation, 2012). Threats The biggest threat facing BHF emanates from the use of animals for testing. BHF conducts research using animals and according to Civil Society (2011), it is subject to a national boycott campaign organised by Animal Aid. Animal Aid has been planning to urge the public through the media to stop supporting BHF unless it stops using animals for testing. For instance, protests took place in November 2011 calling for BHF and the University of Leeds to refrain from using dogs in their co-funded experiments. The protesters claimed that more than 100 dogs had died during experiments since 1988. Heavy reliance on legacies and wills makes BHF to be quite vulnerable to economic crises. Usually, when an economic crisis sets in, most donors are adversely affected and they cut back on charitable giving (Saxton & Guild, 2010, p. 46). Being a charity organisation, BHF is held to a higher standard than just to make profits. Since it depends on contributions, the organisation is constantly faced with the threat of creating an impression of impropriety. Quite a small scandal can be fairly damaging for the organisation (American Heart Association, 2007, p. 90). Another possible threat is the presence of government regulations that sometimes undermine the effective performance of charities. BHF’s areas of competitive advantage BHF has several areas of competitive advantage. First, the organisation has an ability to demonstrate its success and achievements compared to its competitors (BHF, 2012). Secondly, the purposes and activities of BHF are unique and the organisation is perceived to focus on sensitive needs and interests of a huge number of people. BHF invests in a highly skilled workforce compared to most competitors, enabling it to produce exceptional results in its activities. The charity has established good relations with all stakeholders by keeping close to their needs. It has a large database of loyal supporters who provide huge amounts of donations in form of legacies and wills (BHF, 2012). BHF gap analysis Gap analysis refers to determining the difference between the desired and actual performance of an organisation (Berke, et al, 2008, p. 43). The prime objective of BHF is to play a leading role in the fight against heart and circulatory diseases and hence and reduce the number of people developing such diseases as well as deaths resulting from such diseases (BHF, 2012). It thus requires a lot of funding to support it to achieve this objective. The organisation largely applies an externally driven strategy in its management (Saxton & Guild, 2010, p. 38). An externally driven strategy involves raising funds through sources such as legacy, wills and government grants and contracts. As mentioned earlier, the biggest proportion of BHF income comes from legacies and wills. BHF thus lacks a proper marketing programme and applies very little incentives which resemble fundraising. Reliance on such sources of income is highly likely to be unsustainable as donors may hold back on their donations during periods of economic crisis (Saxton & Guild, 2010, p. 47). Secondly, legacies may leak away to other organisations as they get better and better in marketing. Saxton and Guild (2010, p. 46) point out that income from wills is increasingly becoming unpredictable and insufficient. These challenges are likely to adversely affect the performance of BHF and its competitive edge. Strategic recommendations There are several strategies open for BHF to adopt as it seeks to improve its performance and gain a competitive edge. Currently, the organisation relies on an externally driven strategy, largely depending on funding sources such as legacy and will. Three other strategies which can be applied in isolation or in combination can help BHF to effectively adjust to the changing competitive environment. First, the organisation can adopt a differentiation strategy and focus on defining the organisation by products, audiences or specific belief (Saxton & Guild, 2010, p. 45). It can also apply the niche strategy which focuses on increasing market share through either geographic area or a specific issue. Finally, BHF can adopt the awareness strategy which focuses on maintaining high levels of public awareness. Generally, the organisation needs to apply the most suitable strategy or combination of strategies and establish a strong brand and corporate positioning. Likely competitor reactions If the use of any or all of the above strategies proves to be quite effective for BHF, it is highly possible that its competitors are going to adopt similar strategies. This is likely going to result into increased competition over sources of funds, government grants and contracts as well as share of mind volunteers, donors and commissioning officers (American Heart Association, 2007, p. 89). Assumptions about the future of the marketplace The market place for charity organisations will most definitely change in future as organisations adopt new and most suitable strategies. Currently, just like in BHF, most charities in the UK are created on a niche strategy and proceed in this line indefinitely (Saxton & Guild, 2010, p. 46). In the future, it is likely that the biggest number of charities in the UK will move from niche strategies to differentiation. As well, there is a high possibility that a sizeable number of charities will progress directly from niche to awareness. References American Heart Association 2007, “Financing Cardiology Research: The British Heart Foundation,” Journal of American Heart Association, vol. 115, pp. 85-90, accessed 25 February 2011 from http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&sqi=2&ved=0CCMQFjAA&url=http%3A%2F%2Fcirc.ahajournals.org%2Fcontent%2F115%2F18%2Ff85.full.pdf&ei=iDtLT7eZIqbI0QXVk4H-DQ&usg=AFQjCNEpF3a9NTreeBrvsXAAQ6JKqeI3ww&sig2=QeHhFBwpwzDEscq51K2Nbw Berke, D, Kossler, M E & Wakefield, M 2008, Developing Leadership Talent, John Wiley & Sons, London. British Heart Foundation 2012, “About BHF,” accessed 25 February 2011 from http://www.bhf.org.uk/about-us/what-we-do.aspx Civil Society 2011, “Animal Aid calls for donation boycott of top medical charities,” accessed 25 February 2011 from http://www.civilsociety.co.uk/fundraising/news/content/9869/animal_aid_calls_for_donation_boycott_of_top_medical_charities Henry, A 2008, Understanding Strategic Management, Oxford University Press. Jowett, N, Thompson, D R & Boyle, R 2007, Comprehensive Coronary Care, Elsevier Health Sciences, London. Retail Technology Review 2011, “British Heart Foundation finds that The Retail Suite from Itim is the key to growth,” accessed 25 February 2011 from http://www.retailtechnologyreview.com/absolutenm/templates/retail_supply_chain.aspx?articleid=1516&zoneid=1 Saxton, J & Guild, M 2010, “It’s competition, but not as we know it,” accessed 25 February 2011 from http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CCMQFjAA&url=http%3A%2F%2Fwww.nfpsynergy.net%2Fincludes%2Fdocuments%2Fcm_docs%2F2010%2Fi%2Fits_competition_2nd_edition_october_2010.pdf&ei=dZxKT_HSPJDY8gOz-u2qDg&usg=AFQjCNEEZ-a_Ma6xroihyXAx6J8fJMZZMA&sig2=-pSc1fz4x9OTMC8rHkuxSA Read More