2.3.2 Understanding Forces of Competition Outside Private Sector organisations.
Porter's five forces framework is clearly most applicable to private-sector organisations operating in free markets. However, elements of the model apply to all organisations; and the notion of strategy, as starting from an analysis of the near environment, is important in all sectors. For some organisations, an extension of the model may be useful. For example, in analysing the competitive environment faced by many organisations, it is important to understand the role played by government regulation. David McKevitt (2000) has suggested a model for analysing the environment of what he calls street-level public organisations (that is, public-sector organisations that interact directly with the public). This model is summarised in Figure 3.
Professional associations are important since they set standards and may provide career structures for the professionals involved in service delivery (for example nurses, doctors or social workers).
Related street-level organisations may be important either as substitutes (e.g. Citizens Advice Bureau in relation to social services organisations as sources of advice) or collaborators (for example community health organisations and hospitals).
Suppliers are important in the same way as in the private sector (although we should note that some suppliers will also be related street-level organisations).
The relationship with the client-citizen, however, is not the same as with buyers in the Porter model. Often the client is not paying for services and is a consumer rather than customer. However, in many cases there is some element of choice and their patronage is important to the organisation in securing resources.
In most cases, government is the funder (although the funding relationship can be at arm's length or close).
McKevitt points out that it is important to understand not only these separate aspects of the near environment, but also the tensions and relationships between them: for example, the frequent gaps between professional bodies’ view of appropriate standards and public opinion, or the relationship between government views and the media impact of client groups.