I've been wanting to post this to have something written down that recalls these critical events, at least in my head, and really not events at all. Just a sad situation, that most, if not all would scoff at, and look the other way. Still to the weak, there are many injustices. But this isn't a world meant for the weak, or the loving. And that in lies the problem.
Help, and love, are sparing in a world committed to self and not to God. Even at least, sets of moral values. Not just ones own belief and interpretation of rules, values, and ethical practices. An established set of guidelines and norms to follow; like myself, and I would pray all else I can come in contact with and spread the name of Jesus to(even though I lack in the evangelical part, but desire a larger role, God willing and given), have Christ to follow as example. None will live up to that mark, but if they try, then we have a world I would be proud of, an unselfish pride for.
I stray from the mark, but would hope that those in this world could create for themselves accountability and selflessness, or at least attempt.
Well, obviously that hope is short lived.
Onto the real problem; my brother has no worry in the world. In his mid to late twenties, lives at home and does not have any substantial assets to claim. This carefree attitude has bled into how he handles his finances.
That's where I come in. After hearing of growing overdraft charges and more and more bank mailings, I should have seen it a while ago, years even, that I needed to step in.
My findings were that in the 12 month span I looked at, he made around 17-18K cash, and over 4 thousand dollars of that was paid to overdraft charges.
This is terrible, appalling, and downright unforgivable.
But at which end do we all sit; a third party might conclude, 'His own fault. What an idiot.' But all, and even skeptics, should realize and be certain that companies and society would help one in need.
I should know from my own experience this is not the case. I pay my bills on time and occurred an overdraft charge one time in the past 5 years. For which I ran to the bank and tried to dispute; unsuccessfully, but I hope you see the point. I meticulously manage my finances. If I didn't they would spin so far out of control, not even Bill Gates would be able to dig me from that hole. Well, the hole before that one is the one where I sit.
100kplus isn't just a title.
Its the damn truth, and nothing but it. As that number rises from 100K to over 120K as I pursue my masters.
But such is life.
My brother on the other hand, has let his finances go. And for that, I have taken over power of attorney to his accounts, as I'd rather he pay me 4K(I'd feel rich if I had that extra a year), than some institution.
I was able to have almost $400 reversed but the over 4K was a net figure after that. I just do not understand, or fathom, how an organization is allowed to go about letting someone so errantly overdraw their account, re-imburse it again, and continuing going through this pattern, for what I assume forever.
So, while most may say they would not help a friend, or in my case a brother, in need, I must for fear that I feel like I lost out on the deal. Yet a corporation, who to all the noise I hear outside of my small world, is complaining as an industry that fees must go up and there should be more charges for account activity.
Well, if these same banks have a person like my brother, they made out on the deal, behind our backs.
My brother had almost 25% of his money in a year span taken away from him, granted due to his own neglect, but at what point does an organization actually step in and take control, or at least attempt to. I remember when, at least in my narrow perception, American business was customer oriented. These days, if you get the job done with the least complaints you're hired. Just make money; the value of the rest of an ethical organization is diminished by the dollar.
This kid works a pay check to pay check job like most I know. And is lucky to have a job. But, how can someone, who has obviously mental or emotional or whatever problems, be taken advantage of with such astronomical rates. I work at a bank, not a retail one, but an asset and custody organization and we charge Fed plus 2.5%. Can I get some of that action? Yet, he was continually charged.
I ask people what I would give of myself in that situation, which isn't much. But business these days is a sad picture. If customers complain, eventually action will be had. But where are the proactive organizations that focus on strength and out performance in all areas. Even in social assistance.
Tuesday, May 1, 2012
Sunday, February 5, 2012
Case Analysis: The Pennsylvania State University
Below is a (small)organizational case analysis on Penn State I wrote for the first semester of my MBA, which so interestingly coincided with the major scandal within the organization. I am attempting in the most unbiased manner I can write with, which is an almost impossible thing if you speak to anyone who attended the university, to asses the institution as a whole. This is not a paper centered around the football program, and to my dismay, I was unable to put much about the program into the paper at all. My focus was the organization as a whole, which contrary to the popular opinion, or at least as ESPN would spin it, is centered and solely around education.
Case Analysis: The Pennsylvania State University
Strategic Profile and Case Analysis Purpose
Despite their current negative media reputation and apparent lack of institutional control, one would assume the Pennsylvania State University, Penn State, is in a positive financial position and has the ability to, as an institution of people, to correct and move forward from any situation, even the very worst, which they are left with. Focusing on Penn State as purely an academic institution, not primarily on the athletics, namely the football team, which can be seen as the reason for the current issues, but also as a large, very profitable division of the institution. This organizational analysis will aim to show whether the actions, and inactions, of several, powerful individuals, encompass an organization in its entirety. Articles such as "Educating for Democracy: Penn State and Division l Education(Shatzky, 2011)" and "At Penn State, football is more important than morality and the law(Riden, 2011)" both aim to discredit the organization and state in basic terms, football is more important than education. Are they reporting the correct state of the university? On the inverse, a recent publication of the Sporting News stated that Penn State was tops in the graduation rates of the students that comprise the football team as compared to all Top 25 football programs with a rate of 87%, which also ties for 10th in all 120 FBS schools ("Penn State, Stanford", 2011). While athletics, and the football program will not specifically be discussed in detail as this only comprises a small part of the larger educational institution, the educational system and culture will be analyzed. Is the Pennsylvania State University an educational institution that meets its organizational mission statement or is this another institution that forgoes ethics and ignores academia and its purpose as a system of secondary education?
This analysis will determine the organizational position of this educational system as compared to the Penn State mission statement. Their mission statement, from 2006, states 'Penn State is a multicampus public research university that educates students from Pennsylvania, the nation and the world, and improves the well being and health of individuals and communities through integrated programs of teaching, research, and service.' This very basic goal of education is the top organizational goal, which would be the assumption of any university or educational institution; this goal is incorporated in the programs offered, including 'undergraduate, graduate, professional, and continuing education' which are programs that 'are enriched by the cutting edge knowledge, diversity, and creativity of our faculty, students, and staff '(Penn State's Mission, 2006).
Situation Analysis
General Environment Analysis
The general environment that Penn State operates in is very diverse and spans across the globe. Internal stakeholders include faculty and current students, while external stakeholders include the local and national government, the companies and organizations with financial and organizational ties to the university, and even, prospective students. This analysis of the general environment will start with the effects of globalization, which are very evident when speaking of a prominent educational system. The effects of technology and how this technology is utilized by the university will be discussed, along with demographic trends surround the Pennsylvania State University. Finally, overall economic trends and the political and legal environment will be the focus as both of these are integrally tied to the university as it is a public institution.
Globalization is very visible in the educational system at Penn State in its educational programs and classes offered and the international student presence. The number of international students that attend the Pennsylvania State University has risen by over 1,000 students in just 4 years; in 2006, there was an annual enrollment of 3,482 international students throughout all Penn State campuses, while in 2010 that number had risen to 4,985 students(Riden, 2011). This very visible statistic shows that Penn State is creating an international presence as a prestigious educational institution. This statistic also shows that globalization has opened a new market for prospective students along with a world-wide respect for the university and the degrees offered. At Global Penn State, the university's guide to global programs and initiatives, they state that this division of the university is there to promote 'Global Citizenship and Global Leadership'. The university acknowledges the globalization trend, and 'is committed to partnering with institutions around the world to help find answers to major global challenges such as poverty, environmental sustainability, food security, health, climate change, energy security, and social justice '. (Global Penn State, 2011)
The effects of technology and globalization go hand in hand as the university now has access to a wide range of resources to draw course material from, along with academia to collaborate with in all fields. Online programs and distance education are becoming the norm in secondary education. According to "Going the Distance: Online Education in the United States, 2011", 6.1 million students are taking at least one online course. The graph below from this study shows the increase in student enrollment for online courses and the exponential rise in the necessity of educational programs to include these courses that utilize the technological landscape . Their study also indicated that there has been a significant increase in the institutional strategy of learning organizations and their outlook on the necessity of online education. This has increased from under 50% of institutions believed in this necessary strategy in 2002, while currently, over 65% of learning institutions agree for the necessity of online education. In addition to organizations recognizing this new trend, student enrollment has also recognized this; there has been a 10% growth in online enrollment, while there has only a been a 1% growth in enrollment of higher education. (Allen & Seaman, 2011)
Penn State's online program, Penn State World Campus, is one such program which has recognized this need and has far reaching capabilities to all student's desiring to earn a Penn State degree. This program, which was the number 1 in the 'Top 25 Online College and University' according to Best Colleges offers the same degree as on campus students would pursue("Penn State University World Campus", 2011). Penn State also has a lesser known affiliate, which operates as a technical school, another increasing trend in the educational structure; the Pennsylvania College of Technology, founded in 1989, applies technology to the workforce as is any technical school's goal. This direct application of technology and the need for skilled workers has grown into the second largest enrollment of any Penn State campus and shows the increased technological landscape of the general environment the university operates in. (Pennsylvania College of Technology, 2011)
As stated previously from the study of online education, the demographic trend of student's shows a 1% increase in the enrollment of higher educational programs. Also stated previously, a demographic trend is being seen in the rising number of international students. The overall demographic in our society is also becoming more and more diverse, along with international students, students of all races comprise those in need for secondary education. In a report by the University Budget Office, just over 90% of all students in 1990 throughout all Penn State locations were white, as opposed to today's 74%. This shows a significant increase in the diversity of the Penn State population and confirms the ongoing trend that education is available to a larger audience due to an increase in technology and necessity for secondary education in today's economy. Diversity is a direct indication of the lessening of the technology gap in this world, along with a significant enrollment in overall student population. Also, from the University Budget Office's statistics on the current student population, student enrollment has increased by almost 25% throughout all Penn State programs in the last 10 years; in 2000, the enrollment was 81,270 as opposed to today's enrollment of 96,519 students. This significant increase is due to all the factors above and shows a demographic trend that education is necessary for success in a very competitive workforce.(Penn State University Budget Office, 2011)
The economic, political, and legal environment creates many challenges for all secondary education systems, including the Pennsylvania State University. Since the economy is slowly still recovering from a recession, the economic, political and legal environment that Penn State operates in as a public university has seen increased regulation and decreased funding. 'Devastating appropriation cut advanced for Penn State', an article from the Penn State affiliated site, Penn State Live, states that 'Penn State and other Pennsylvania public universities are slated for the most dramatic appropriation cut in the history of American higher education '(Powers, 2011). This reduction in state funding is evident of the poor economic conditions and continuing political budget cuts seen throughout all industries. The graph below from the University Budget Office shows the significant decrease in state funding for what is considered a "state" school. Also illustrated is the significant rise in tuition and fees due to an increase in expenditures and student populations, which rise annually.
(Penn State University Budget Office, 2011)
Industry Analysis
The service industry that is secondary education, and the other educational and research oriented services provided by Penn State diversely encompass all fields of study . Analyzing the wider range of educational organizations that comprise the industry can be done in a similar manner that one would analyze a typical manufacturing industry where products are bought and sold. However, analysis of a service industry with a very technical and vast environment is a much longer and arduous process. The industry analysis will focus on Porter's five force model: supplier power, buyer power, potential entrants, substitute products, and rivalry among competitors.
In terms of education, supplier power is not the most obvious force to recognize, especially when compared to the manufacturing/retail industry. The suppliers can be considered the materials and resources of scholars worldwide, the students themselves, as they are also the most visible end product as well, and the general standards and guidelines created by governments and other regulatory agencies. Since all of these are at an all time high due to demand for a quality education and increase in the technological environment, the suppliers to secondary educational systems have a competitive, yet fruitful environment. It should also be noted that there is a large reputational risk within supplier and buyer power. In an event similar to that of Penn State's current situation, this negative reputational risk will cause the supplier and buyer power to fall, creating a less efficient organization. The loss in reputation will cause student's, the supplier and product, to create less of a demand for the product that is a Penn State degree.
The next 3 forces in this model are potential entrants, substitute products, and rivalry among competitors. Potential entrants are innumerable, including other schools, online and physical. There are numerous substitute products for education, as most education is to find employment; there are trade unions, blue collar positions that do not require an education, and even self study, which has no cost to the consumer. Finally, rivalry among competitors can be seen throughout the industry as education is a profitable, necessary, and growing business; the most competitive educational institutes are those that have the best reputation and rank highest in all levels of accreditation and industry surveys, including the Best Colleges survey previously discussed.
Competitive Environmental Analysis
The competitive environment has expanded exponentially since Penn State's founding in 1855 as there are numerous universities and colleges in the northeastern United States, which can be considered the university's target market. However, with the inception of programs like the Penn State World Campus, this market has expanded worldwide and creates many more competitors to a Penn State education. Since education is a very broad but basic product, competitor's all have similar strategies, strategic intent, and strategic missions. Strategic capabilities, core competencies, and competitive responses are all based on the size of the organization, as seen in Penn State, which operates as a large, competitive university in many categories.
Internal Analysis
An internal analysis of The Pennsylvania State University would include analyzing the internal operations of all departments, the educational faculty, the administrative faculty, the athletic department, and the Board of Trustees and President of the University. A very extensive case analysis should examine all areas for strengths and weaknesses and key areas to improve, however this organizational and internal analysis will be very broad due to the nature and size of Penn State. There have been many facts previously stated about the Pennsylvania State University that have shown some key strengths and weaknesses of the school. To briefly analyze the University, an analysis of how the organization compares to the industry and the specific environment along with current financials and how they have grown and fallen.
The Pennsylvania State University operates as a public research university as it is funded, what used to be a much larger percentage, by the Pennsylvania government; the research end refers to the continuing research done by faculty and students alike. The below financials will outline that a majority of expenditures are placed within agricultural and medical research. A leader in research and education, the University Park campus is a top 15 public universities (US News: Top Public Schools, 2011) and also one of America's top Public Ivy universities, which are non-Ivy league schools that operate with the same prestige and educational level as an Ivy league school (Wikipedia, 2011). Penn State's main programs include business and engineering; specifically the Supply Chain Management program ranks 3rd nationally and the undergraduate engineering programs is tied for 17th nationally(Where We Stand: Current Rankings, 2011).
Identification of Environmental Opportunities and Threats and Firm Strengths and Weaknesses
A significant strength within the organization is application of technology within its structure; this growing area of opportunity in the environment must continually be emphasized within their organizational goals. Another strength is their educational product in key areas of business and engineering; the Smeal College of Business ranks 25th among Undergraduate business programs(Lavelle, 2011), and respectively, the College of Engineering ranks 25th among engineering schools(US News: Best Engineering Schools, 2011). This along with many other of their over 160 majors, according to the Office of the University Registrar, show a strong sense of academics as a key strength(Office of the University Registrar, 2011).
Currently, what was once considered a core strength within the organization can now be considered one of the significant weaknesses. Their current reputation due to the recent sex scandal has the potential of lowering student attendance and reducing organizational profitability. However, there does not appear to be a lack of interest in the university as a respected educational institution. According to a New Jersey article, a state that provides the most out of state students to Penn State, applications are up, at a current level of over 5,600 students. Anne Louise Rohrbach, director of undergraduate admissions states that in response to the demand of admissions and their standards, 'The applicant pool is strong. We're not going to lower our profile at University Park just to fill our spaces'(O'Brien, 2011). This article also states that the demand is such that only 55% of students are accepted into the university(O'Brien, 2011). So, one would assume this may not affect the university from a reputational standpoint as far as admissions, but should be something that the university addresses and works to resolve any gaps in organizational culture and infrastructure.
This loss of reputational status also presents another current weakness within the program. There was an apparent lack of organizational control which needs to be evaluated as just several months ago, the president of the program, Graham Spanier was replaced Rodney Erickson, along with several other key leaders within the institution. Such an abrupt change of leadership, without knowledge of the current case, shows there was certainly lack or organizational control. The leadership of an organization should represent the values and standards of the mission of that organization. The president should steer the organization on its planned course and advert any organizational disasters in an ethical and lawful manner.
A final major weakness can be seen in the funding of the university; since this is a public university, a portion of the budget depends on the state's ability to fund educational systems. Specifically, Penn State's operating budget supported by government appropriations is 6.6% of the total university's budget in 2011-12, while only 9 years ago, in 2002-03 these funds were almost 3 times the percentage of the university's budget. When shown as a percentage of only the Penn State University, excluding Penn College and the College of Medicine and the Medical Center, and also the university's law school in the 02-03 numbers, the significant impact of reductions is seen more clearly. On the 2002-03 budget, state appropriation was over 28% of the budget with a significant decrease to just over 14% of the current budget(Penn State University Budget Office, 2011). The graphs below illustrate this weakness in the organization, which creates uncertainty from year to year whether Penn State will be able to support its budget.
Strategy Formulation
Strategic Alternatives
To determine the alternative that would provide the most benefit to the university, very detailed studies must be done and plans must be formulated in a meticulous manner to successfully enhance the university's competitiveness. The 3 alternatives will be based on the 3 weaknesses listed in the brief SWOT analysis: reputational risk, lack of organizational control, and under-funding. To negate reputational loss Penn State should continue to operate in a ethical manner and evaluate the areas that have not acted ethically. They should also create positive reputational gain through philanthropic endeavors such as their commitment of $1.5 million of their share of their share of Big Ten bowl proceeds to charities that work to eliminate sexual violence(Boren, 2011).
To mitigate operational risk from the leaders of the university at all levels, the current systems should be evaluated and modified to ensure there are minimal risks allowed within the organizational structure. Also, strong leadership is necessary to move ahead in such a large case of how the lack of organizational control can hurt an organization that is as large as Penn State. The final alternative would be to create a successful budget that ensures the operational success of the university given decreases in state funding. Alternative sources of funding can be researched, including alumni, corporate sponsorship, and federally funded programs.
Alternative Evaluation
Eliminating reputational risk is a difficult task as this is externally controlled, however, if the ethical framework is in place within the university, the positive feedback will be given by the public. The university will be able to maneuver from any negative reputational loss in that the overall goals and culture of the school will still be in place. Any instances that would create a reputational risk will be dealt with in a determined manner that is within the legal guidelines in place. These instances will show any gaps in organizational control, which is the next alternative, and plans and procedures to move ahead and to close these gaps will be enacted. Lack of organizational control can be controlled and decreased by strong leadership along with a strong system of regulations and guidelines that give the most effective system of internal controls. Finally, underfunding can be mitigated by the plan above and is necessary to evaluate as the college has significant expenditures and must meet all debts in the time manner they have been allotted.
Alternative Choice
Since all 3 plans deal with 3 separate issues, the choice on selecting one should be based on the alternative that would show the most immediate and overall gain. The second alternative to evaluate the lack or organizational control would be the most effective, since the framework of this mechanistic organization operates around the top-down hierarchy of the President of the University and Board of Trustees. If a solid structure and strong leadership, that is held ethically accountable, were put into place, the reputation of the university would be restored and the most operationally effective budget would be utilized. Correcting the lack of control within Penn State, and enacting strong leadership, would have far reaching benefits that include managing these 3 weaknesses, but many other weaknesses in the organization as well.
Strategic Alternative Implementation
Action Items
The action items in the case of organizational control would be first, enacting new, effective leadership, which the university immediately responded to by hiring interim President Rodney Erickson. The next necessary action item would be evaluating the internal controls surrounding the office of the president and those of other leaders in the university.
Action Plan
Since Penn State is a very complex, established organization, they have already recognized the need for this action plan in their organization if they wish to remain a respected part of the educational and athletic community. The action plan outlined below, from President of the University, Rodney Erickson's website, is his promise to the Penn State Community:
1. I will reinforce to the entire Penn State community the moral imperative of doing the right thing – the first time, every time.
o We will revisit all standards, policies, and programs to ensure they meet not only the law, but Penn State’s standard. To oversee this effort, I will appoint an Ethics Officer who will report directly to me.
o I ask for the support of the entire Penn State community to work together to reorient our culture. Never again should anyone at Penn State feel scared to do the right thing. My door will always be open.
2. As I lead by example, I will expect no less of others.
o I will ensure proper governance and oversight exists across the entire University, including Intercollegiate Athletics.
3. Penn State is committed to transparency to the fullest extent possible, given the ongoing investigations.
o I encourage dialog with students, faculty, alumni, and other members of the Penn State community.
4. We will be respectful and sensitive to the victims and their families. We will seek appropriate ways to foster healing and raise broader awareness of the issue of sexual abuse.
5. My administration will provide whatever resources, access, and information that are needed to support the Special Committee’s investigation. I pledge to take immediate action based on its findings.
(Erickson, 2011)
Bibliography
Allen, E., & Seaman, J. (2011, November). Going the distance: Online education in the United States. Retrieved from http://www.onlinelearningsurvey.com/reports/goingthedistance.pdf
Boren, C. (2011,December 1). Penn State pledges $1.5M in bowl revenue to advocacy groups. Retrieved from http://www.washingtonpost.com/blogs/early-lead/post/penn-state-pledges-15-in-bowl-revenue-to-advocacy-groups/2011/12/01/gIQAL73dHO_blog.html
Erickson, R. (2011) President Erickson’s Promise to the Penn State Community. Retrieved from http://president.psu.edu/promise.html
Global Penn State. (2011). Retrieved from http://global.psu.edu/global/
Heller, K. (2011, November 9). At Penn State, football is more important than morality and the law. Retrieved from http://articles.philly.com/2011-11-09/news/30378141_1_joe-paterno-tim-curley-jerry-sandusky
Lavelle, L.(2011, February 27).Best Undergraduate Business Schools, 2011. Retrieved from http://images.businessweek.com/slideshows/20110227/best-undergraduate-business-schools-2011/
O'Brien, K. (2011, December 13). College applicants look past scandal at Penn State. Retrieved from http://www.nj.com/news/index.ssf/2011/12/applicants_look_past_scandal_a.html
Office of the University Registrar: Programs and Majors.(2011, November 1). Retrieved from http://www.registrar.psu.edu/programs_majors/programs_majors_index.cfm
Penn State's Mission and Public Character. (2006). Retrieved from http://www.psu.edu/ur/about/mission.html
Penn State, Stanford lead top 25 programs in graduation rate. (2011, November 3). Retrieved from http://aol.sportingnews.com/ncaa-football/story/2011-11-03/penn-state-stanford-lead-top-25-programs-in-graduation-rate
Penn State University World Campus. (2011). Retrieved from http://www.thebestcolleges.org/schools/online/penn-state-university-world-campus/
Penn State University Budget Office. (2011). Retrieved from http://www.budget.psu.edu
Pennsylvania College of Technology: About Us. (2011). Retrieved from http://www.pct.edu/about/
Powers, L. (2011, March 8). Devastating appropriation cut advanced for Penn State. Retrieved from http://live.psu.edu/story/51840
Riden, E . (2011 September 22). Number of international students attending Penn State on the rise. Retrieved from http://www.collegian.psu.edu/archive/2011/09/22/Increased_international_ students.aspx
Shatzky, J. (2011, November 28). Educating for democracy: Penn State and Division l education . Retrieved from http://www.huffingtonpost.com/joel-shatzky/educating-for-democracy-p_2_b_1109188.html
US News: Top Public Schools.(2011). Retrieved from http://colleges.usnews.rankingsandreviews.com/best-colleges/rankings/national-universities/top-public
US News: Best Engineering Schools.(2011). Retrieved from http://grad-schools.usnews.rankingsandreviews.com/best-graduate-schools/top-engineering-schools/eng-rankings
Where We Stand: Current Rankings.(2011, September). Retrieved from http://www.psu.edu/ur/rankings/index.html
Wikipedia. (2011, December 8). Retrieved from http://en.wikipedia.org/wiki/Penn_State
Case Analysis: The Pennsylvania State University
Strategic Profile and Case Analysis Purpose
Despite their current negative media reputation and apparent lack of institutional control, one would assume the Pennsylvania State University, Penn State, is in a positive financial position and has the ability to, as an institution of people, to correct and move forward from any situation, even the very worst, which they are left with. Focusing on Penn State as purely an academic institution, not primarily on the athletics, namely the football team, which can be seen as the reason for the current issues, but also as a large, very profitable division of the institution. This organizational analysis will aim to show whether the actions, and inactions, of several, powerful individuals, encompass an organization in its entirety. Articles such as "Educating for Democracy: Penn State and Division l Education(Shatzky, 2011)" and "At Penn State, football is more important than morality and the law(Riden, 2011)" both aim to discredit the organization and state in basic terms, football is more important than education. Are they reporting the correct state of the university? On the inverse, a recent publication of the Sporting News stated that Penn State was tops in the graduation rates of the students that comprise the football team as compared to all Top 25 football programs with a rate of 87%, which also ties for 10th in all 120 FBS schools ("Penn State, Stanford", 2011). While athletics, and the football program will not specifically be discussed in detail as this only comprises a small part of the larger educational institution, the educational system and culture will be analyzed. Is the Pennsylvania State University an educational institution that meets its organizational mission statement or is this another institution that forgoes ethics and ignores academia and its purpose as a system of secondary education?
This analysis will determine the organizational position of this educational system as compared to the Penn State mission statement. Their mission statement, from 2006, states 'Penn State is a multicampus public research university that educates students from Pennsylvania, the nation and the world, and improves the well being and health of individuals and communities through integrated programs of teaching, research, and service.' This very basic goal of education is the top organizational goal, which would be the assumption of any university or educational institution; this goal is incorporated in the programs offered, including 'undergraduate, graduate, professional, and continuing education' which are programs that 'are enriched by the cutting edge knowledge, diversity, and creativity of our faculty, students, and staff '(Penn State's Mission, 2006).
Situation Analysis
General Environment Analysis
The general environment that Penn State operates in is very diverse and spans across the globe. Internal stakeholders include faculty and current students, while external stakeholders include the local and national government, the companies and organizations with financial and organizational ties to the university, and even, prospective students. This analysis of the general environment will start with the effects of globalization, which are very evident when speaking of a prominent educational system. The effects of technology and how this technology is utilized by the university will be discussed, along with demographic trends surround the Pennsylvania State University. Finally, overall economic trends and the political and legal environment will be the focus as both of these are integrally tied to the university as it is a public institution.
Globalization is very visible in the educational system at Penn State in its educational programs and classes offered and the international student presence. The number of international students that attend the Pennsylvania State University has risen by over 1,000 students in just 4 years; in 2006, there was an annual enrollment of 3,482 international students throughout all Penn State campuses, while in 2010 that number had risen to 4,985 students(Riden, 2011). This very visible statistic shows that Penn State is creating an international presence as a prestigious educational institution. This statistic also shows that globalization has opened a new market for prospective students along with a world-wide respect for the university and the degrees offered. At Global Penn State, the university's guide to global programs and initiatives, they state that this division of the university is there to promote 'Global Citizenship and Global Leadership'. The university acknowledges the globalization trend, and 'is committed to partnering with institutions around the world to help find answers to major global challenges such as poverty, environmental sustainability, food security, health, climate change, energy security, and social justice '. (Global Penn State, 2011)
The effects of technology and globalization go hand in hand as the university now has access to a wide range of resources to draw course material from, along with academia to collaborate with in all fields. Online programs and distance education are becoming the norm in secondary education. According to "Going the Distance: Online Education in the United States, 2011", 6.1 million students are taking at least one online course. The graph below from this study shows the increase in student enrollment for online courses and the exponential rise in the necessity of educational programs to include these courses that utilize the technological landscape . Their study also indicated that there has been a significant increase in the institutional strategy of learning organizations and their outlook on the necessity of online education. This has increased from under 50% of institutions believed in this necessary strategy in 2002, while currently, over 65% of learning institutions agree for the necessity of online education. In addition to organizations recognizing this new trend, student enrollment has also recognized this; there has been a 10% growth in online enrollment, while there has only a been a 1% growth in enrollment of higher education. (Allen & Seaman, 2011)
Penn State's online program, Penn State World Campus, is one such program which has recognized this need and has far reaching capabilities to all student's desiring to earn a Penn State degree. This program, which was the number 1 in the 'Top 25 Online College and University' according to Best Colleges offers the same degree as on campus students would pursue("Penn State University World Campus", 2011). Penn State also has a lesser known affiliate, which operates as a technical school, another increasing trend in the educational structure; the Pennsylvania College of Technology, founded in 1989, applies technology to the workforce as is any technical school's goal. This direct application of technology and the need for skilled workers has grown into the second largest enrollment of any Penn State campus and shows the increased technological landscape of the general environment the university operates in. (Pennsylvania College of Technology, 2011)
As stated previously from the study of online education, the demographic trend of student's shows a 1% increase in the enrollment of higher educational programs. Also stated previously, a demographic trend is being seen in the rising number of international students. The overall demographic in our society is also becoming more and more diverse, along with international students, students of all races comprise those in need for secondary education. In a report by the University Budget Office, just over 90% of all students in 1990 throughout all Penn State locations were white, as opposed to today's 74%. This shows a significant increase in the diversity of the Penn State population and confirms the ongoing trend that education is available to a larger audience due to an increase in technology and necessity for secondary education in today's economy. Diversity is a direct indication of the lessening of the technology gap in this world, along with a significant enrollment in overall student population. Also, from the University Budget Office's statistics on the current student population, student enrollment has increased by almost 25% throughout all Penn State programs in the last 10 years; in 2000, the enrollment was 81,270 as opposed to today's enrollment of 96,519 students. This significant increase is due to all the factors above and shows a demographic trend that education is necessary for success in a very competitive workforce.(Penn State University Budget Office, 2011)
The economic, political, and legal environment creates many challenges for all secondary education systems, including the Pennsylvania State University. Since the economy is slowly still recovering from a recession, the economic, political and legal environment that Penn State operates in as a public university has seen increased regulation and decreased funding. 'Devastating appropriation cut advanced for Penn State', an article from the Penn State affiliated site, Penn State Live, states that 'Penn State and other Pennsylvania public universities are slated for the most dramatic appropriation cut in the history of American higher education '(Powers, 2011). This reduction in state funding is evident of the poor economic conditions and continuing political budget cuts seen throughout all industries. The graph below from the University Budget Office shows the significant decrease in state funding for what is considered a "state" school. Also illustrated is the significant rise in tuition and fees due to an increase in expenditures and student populations, which rise annually.
(Penn State University Budget Office, 2011)
Industry Analysis
The service industry that is secondary education, and the other educational and research oriented services provided by Penn State diversely encompass all fields of study . Analyzing the wider range of educational organizations that comprise the industry can be done in a similar manner that one would analyze a typical manufacturing industry where products are bought and sold. However, analysis of a service industry with a very technical and vast environment is a much longer and arduous process. The industry analysis will focus on Porter's five force model: supplier power, buyer power, potential entrants, substitute products, and rivalry among competitors.
In terms of education, supplier power is not the most obvious force to recognize, especially when compared to the manufacturing/retail industry. The suppliers can be considered the materials and resources of scholars worldwide, the students themselves, as they are also the most visible end product as well, and the general standards and guidelines created by governments and other regulatory agencies. Since all of these are at an all time high due to demand for a quality education and increase in the technological environment, the suppliers to secondary educational systems have a competitive, yet fruitful environment. It should also be noted that there is a large reputational risk within supplier and buyer power. In an event similar to that of Penn State's current situation, this negative reputational risk will cause the supplier and buyer power to fall, creating a less efficient organization. The loss in reputation will cause student's, the supplier and product, to create less of a demand for the product that is a Penn State degree.
The next 3 forces in this model are potential entrants, substitute products, and rivalry among competitors. Potential entrants are innumerable, including other schools, online and physical. There are numerous substitute products for education, as most education is to find employment; there are trade unions, blue collar positions that do not require an education, and even self study, which has no cost to the consumer. Finally, rivalry among competitors can be seen throughout the industry as education is a profitable, necessary, and growing business; the most competitive educational institutes are those that have the best reputation and rank highest in all levels of accreditation and industry surveys, including the Best Colleges survey previously discussed.
Competitive Environmental Analysis
The competitive environment has expanded exponentially since Penn State's founding in 1855 as there are numerous universities and colleges in the northeastern United States, which can be considered the university's target market. However, with the inception of programs like the Penn State World Campus, this market has expanded worldwide and creates many more competitors to a Penn State education. Since education is a very broad but basic product, competitor's all have similar strategies, strategic intent, and strategic missions. Strategic capabilities, core competencies, and competitive responses are all based on the size of the organization, as seen in Penn State, which operates as a large, competitive university in many categories.
Internal Analysis
An internal analysis of The Pennsylvania State University would include analyzing the internal operations of all departments, the educational faculty, the administrative faculty, the athletic department, and the Board of Trustees and President of the University. A very extensive case analysis should examine all areas for strengths and weaknesses and key areas to improve, however this organizational and internal analysis will be very broad due to the nature and size of Penn State. There have been many facts previously stated about the Pennsylvania State University that have shown some key strengths and weaknesses of the school. To briefly analyze the University, an analysis of how the organization compares to the industry and the specific environment along with current financials and how they have grown and fallen.
The Pennsylvania State University operates as a public research university as it is funded, what used to be a much larger percentage, by the Pennsylvania government; the research end refers to the continuing research done by faculty and students alike. The below financials will outline that a majority of expenditures are placed within agricultural and medical research. A leader in research and education, the University Park campus is a top 15 public universities (US News: Top Public Schools, 2011) and also one of America's top Public Ivy universities, which are non-Ivy league schools that operate with the same prestige and educational level as an Ivy league school (Wikipedia, 2011). Penn State's main programs include business and engineering; specifically the Supply Chain Management program ranks 3rd nationally and the undergraduate engineering programs is tied for 17th nationally(Where We Stand: Current Rankings, 2011).
Identification of Environmental Opportunities and Threats and Firm Strengths and Weaknesses
A significant strength within the organization is application of technology within its structure; this growing area of opportunity in the environment must continually be emphasized within their organizational goals. Another strength is their educational product in key areas of business and engineering; the Smeal College of Business ranks 25th among Undergraduate business programs(Lavelle, 2011), and respectively, the College of Engineering ranks 25th among engineering schools(US News: Best Engineering Schools, 2011). This along with many other of their over 160 majors, according to the Office of the University Registrar, show a strong sense of academics as a key strength(Office of the University Registrar, 2011).
Currently, what was once considered a core strength within the organization can now be considered one of the significant weaknesses. Their current reputation due to the recent sex scandal has the potential of lowering student attendance and reducing organizational profitability. However, there does not appear to be a lack of interest in the university as a respected educational institution. According to a New Jersey article, a state that provides the most out of state students to Penn State, applications are up, at a current level of over 5,600 students. Anne Louise Rohrbach, director of undergraduate admissions states that in response to the demand of admissions and their standards, 'The applicant pool is strong. We're not going to lower our profile at University Park just to fill our spaces'(O'Brien, 2011). This article also states that the demand is such that only 55% of students are accepted into the university(O'Brien, 2011). So, one would assume this may not affect the university from a reputational standpoint as far as admissions, but should be something that the university addresses and works to resolve any gaps in organizational culture and infrastructure.
This loss of reputational status also presents another current weakness within the program. There was an apparent lack of organizational control which needs to be evaluated as just several months ago, the president of the program, Graham Spanier was replaced Rodney Erickson, along with several other key leaders within the institution. Such an abrupt change of leadership, without knowledge of the current case, shows there was certainly lack or organizational control. The leadership of an organization should represent the values and standards of the mission of that organization. The president should steer the organization on its planned course and advert any organizational disasters in an ethical and lawful manner.
A final major weakness can be seen in the funding of the university; since this is a public university, a portion of the budget depends on the state's ability to fund educational systems. Specifically, Penn State's operating budget supported by government appropriations is 6.6% of the total university's budget in 2011-12, while only 9 years ago, in 2002-03 these funds were almost 3 times the percentage of the university's budget. When shown as a percentage of only the Penn State University, excluding Penn College and the College of Medicine and the Medical Center, and also the university's law school in the 02-03 numbers, the significant impact of reductions is seen more clearly. On the 2002-03 budget, state appropriation was over 28% of the budget with a significant decrease to just over 14% of the current budget(Penn State University Budget Office, 2011). The graphs below illustrate this weakness in the organization, which creates uncertainty from year to year whether Penn State will be able to support its budget.
Strategy Formulation
Strategic Alternatives
To determine the alternative that would provide the most benefit to the university, very detailed studies must be done and plans must be formulated in a meticulous manner to successfully enhance the university's competitiveness. The 3 alternatives will be based on the 3 weaknesses listed in the brief SWOT analysis: reputational risk, lack of organizational control, and under-funding. To negate reputational loss Penn State should continue to operate in a ethical manner and evaluate the areas that have not acted ethically. They should also create positive reputational gain through philanthropic endeavors such as their commitment of $1.5 million of their share of their share of Big Ten bowl proceeds to charities that work to eliminate sexual violence(Boren, 2011).
To mitigate operational risk from the leaders of the university at all levels, the current systems should be evaluated and modified to ensure there are minimal risks allowed within the organizational structure. Also, strong leadership is necessary to move ahead in such a large case of how the lack of organizational control can hurt an organization that is as large as Penn State. The final alternative would be to create a successful budget that ensures the operational success of the university given decreases in state funding. Alternative sources of funding can be researched, including alumni, corporate sponsorship, and federally funded programs.
Alternative Evaluation
Eliminating reputational risk is a difficult task as this is externally controlled, however, if the ethical framework is in place within the university, the positive feedback will be given by the public. The university will be able to maneuver from any negative reputational loss in that the overall goals and culture of the school will still be in place. Any instances that would create a reputational risk will be dealt with in a determined manner that is within the legal guidelines in place. These instances will show any gaps in organizational control, which is the next alternative, and plans and procedures to move ahead and to close these gaps will be enacted. Lack of organizational control can be controlled and decreased by strong leadership along with a strong system of regulations and guidelines that give the most effective system of internal controls. Finally, underfunding can be mitigated by the plan above and is necessary to evaluate as the college has significant expenditures and must meet all debts in the time manner they have been allotted.
Alternative Choice
Since all 3 plans deal with 3 separate issues, the choice on selecting one should be based on the alternative that would show the most immediate and overall gain. The second alternative to evaluate the lack or organizational control would be the most effective, since the framework of this mechanistic organization operates around the top-down hierarchy of the President of the University and Board of Trustees. If a solid structure and strong leadership, that is held ethically accountable, were put into place, the reputation of the university would be restored and the most operationally effective budget would be utilized. Correcting the lack of control within Penn State, and enacting strong leadership, would have far reaching benefits that include managing these 3 weaknesses, but many other weaknesses in the organization as well.
Strategic Alternative Implementation
Action Items
The action items in the case of organizational control would be first, enacting new, effective leadership, which the university immediately responded to by hiring interim President Rodney Erickson. The next necessary action item would be evaluating the internal controls surrounding the office of the president and those of other leaders in the university.
Action Plan
Since Penn State is a very complex, established organization, they have already recognized the need for this action plan in their organization if they wish to remain a respected part of the educational and athletic community. The action plan outlined below, from President of the University, Rodney Erickson's website, is his promise to the Penn State Community:
1. I will reinforce to the entire Penn State community the moral imperative of doing the right thing – the first time, every time.
o We will revisit all standards, policies, and programs to ensure they meet not only the law, but Penn State’s standard. To oversee this effort, I will appoint an Ethics Officer who will report directly to me.
o I ask for the support of the entire Penn State community to work together to reorient our culture. Never again should anyone at Penn State feel scared to do the right thing. My door will always be open.
2. As I lead by example, I will expect no less of others.
o I will ensure proper governance and oversight exists across the entire University, including Intercollegiate Athletics.
3. Penn State is committed to transparency to the fullest extent possible, given the ongoing investigations.
o I encourage dialog with students, faculty, alumni, and other members of the Penn State community.
4. We will be respectful and sensitive to the victims and their families. We will seek appropriate ways to foster healing and raise broader awareness of the issue of sexual abuse.
5. My administration will provide whatever resources, access, and information that are needed to support the Special Committee’s investigation. I pledge to take immediate action based on its findings.
(Erickson, 2011)
Bibliography
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Boren, C. (2011,December 1). Penn State pledges $1.5M in bowl revenue to advocacy groups. Retrieved from http://www.washingtonpost.com/blogs/early-lead/post/penn-state-pledges-15-in-bowl-revenue-to-advocacy-groups/2011/12/01/gIQAL73dHO_blog.html
Erickson, R. (2011) President Erickson’s Promise to the Penn State Community. Retrieved from http://president.psu.edu/promise.html
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