Table of Contents
Re-focusing the C ompetitive System in a Public Utility Company:
a Feedback-Oriented A pproach
The case of AMIA
Gianliborio G. Marrone Giovan Battista Montemaggiore
M. Phil. Candidate M. Phil. Candidate
Department of Information Science Department of Information Science
University of Bergen - Norway University of Bergen - Norway
Email: gianliborio@ tin.it Email: g-b-m@libero it
Business Dynamics Business Dynamics
Web: www.businessdynamics.it Web: www.businessdynamics.it
Abstract
During the last decade, environmental issues have been taken into a serious consideration from both
public institutions and private organisations. Also in Italy, lawmakers have been addressing their
activities towards a more severe regulation of the urban waste sector, trying to create the structure
of a competitive market within which business organisations could compete to offer all the
environment-related services required. This reform was addressed to those organisations, whose
intemal culture was characterised by the tendency to survive mainly relying upon contributions
from the public administration.
This paper analyses the case of AMIA S.P.A., the municipal waste management company of
Palermo. Until 2001, AMIA was only managing the service in the area of Palermo as public agency.
Since 2001, it was tumed into a joint-stock company, and acquired a commercial structure in order
to compete in other markets. Now, the company aims to enlarge its existing market share and,
according to its mission, to increase the service level delivered to the customer community. Its
potential market could consist of the whole Sicilian region, however, the company’s managers
consider it more reasonable to narrow the focus on the western part of the island. In order to
increase company’s competitiveness, the managers judge it necessary to deepen their knowledge
about the structure of the potential markets. Five years ago, the company’s management introduced
a business accounting system to fulfil the information gap about the financial aspects of the intemal
processes. Currently, the company information system provides managers with detailed data on the
unit costs of business processes, which present an appreciable level of accuracy.
Although the managers seem to be confident on their knowledge about company’s intemal
processes, they are aware of their weakness in understanding the structure of their competitive
system, since the “municipality” way of thinking is still ingrained in the company’s culture.
A preliminary qualitative SD model was built in order to involve AMIA’s managers to critically
review the assumptions on the business competitive system and to gradually introduce the SD
approach in the company context.
With this purpose, the chief financial officer - who is also currently responsible of the commercial
structure - was involved in a feedback analysis, which focused on:
services offered by the company;
main policy levers;
competitors.
Therefore, our main goal was demonstrating how systems thinking principles and SD could support
AMIA’s managers in their leaming process oriented to the increase of company knowledge about the
structure of the new market segments the company will serve.
Through the elicitation of managers’ mental models and, then, their representation into causal loop
diagrams, a qualitative analysis of the system structure was carried out. The analysis was structured
in two levels of aggregation:
A general view of the whole company’s system;
A particular focus on differentiated waste collection sectors.
Some empirical findings coming from discussions with key-managers based on feedback loop
diagrams are presented. In particular, since company’s managers planned to use their service price
as means to increase their market share, we used a casual loop diagram to analyse, in qualitative
terms, how price could impact on the overall performance of the company and, hence to poin out
potential side-effects linked to this lever. Some results conceming the differentiated collection of
Urban Solid Waste (USW) are also presented. Basically, the SD approach allowed the chief
financial officer to broaden his view about the potential policies company could adopt in this field.
Critical policy levers have been identified in:
Price of the different services the company provides;
Level of the service in the differentiated USW collections;
Mix of services supplied by the company.
A qualitative analysis of the influence of such levers on the managing system has been reported and
illustrated.
A feedback perspective is likely to enhance a deeper understanding on:
Potential relationships between AMIA’s performances - both in financial and qualitative
terms - and the market structure;
Investment planning according to several potential scenarios;
Price setting under different market conditions.
Based on the preliminary qualitative SD model, a quantitative model will be built and validated in
order to enable AMIA’s key-managers to test their policies based on different possible scenarios.
Back to the Top
CC BY-NC-SA 4.0