STRATEGIC ISSUES FOR NON PROFIT ORG

8/7/2019 STRATEGIC ISSUES FOR NON PROFIT ORG

http://slidepdf.com/reader/full/strategic-issues-for-non-profit-org 1/3

STRATEGIC ISSUES FOR NON PROFIT ORG:

Not-for-Profit (NFP): An organization that provides some service or good with no intention of earning a profit. NFP includes Private nonprofit corporations (such as hospitals, institutes,private colleges, and organized charities) as well as Public governmental units/agencies (such as

welfare departments, prisons and state universities)

Types of Not-for-Profit Organizations

Importance of Revenue Source: NFPs are dependant on dues, assessments or donations for their revenue sources. In NFP organizations there is likely to be a very different sort of relationship between the organisations providing and the person receiving the service. Becausethe recipient of the service typically does not pay the entire cost of the service, outside sponsorsare required.

Pattern of Influence on Strategic Decision Making: Pattern of influence is derived from itssource of revenues. Those who fund the NFP are likely to have significant influence on itsoperations

Usefulness of Strategic Management and Techniques: some strategic management conceptscan be equally applied to business and not for profit organizations whereas others cannot. Theconcept of competitive advantage is less useful to the typical not-for-profit organizations than therelated concept of Institutional advantage. A NFP organisation is said to have institutionaladvantage when it performs its tasks more effectively than other comparable organizations.



Portfolio analysis may be more difficult to apply to NFPs. Situation (SWOT) analysis; missionstatements, stakeholder analysis, and corporate governance are all relevant to the strategicassessment of NFPs as they are to a profit making organizations

Strategic management is difficult to apply where the output of an NFP is difficult to measure.

Thus it is very likely that most of the NFPs have not used strategic management because itsconcepts, techniques and prescription does not lend themselves to situations where sponsors,rather than the market place determine the value. However the situation is changing nowadays.

Impact of Constraints on strategic management: Several characteristics peculiar to the not for profit organisation constrain its behavior and affects it strategic management. The constraints areas follows:

y

Service is often intangible/hard to measure

y

C lient influence may be weak

y

Strong employee commitments to professions

y

R

esource contributors intrude on internal managementy

R estraints on use of rewards and punishments

Impact on Strategy Formulation:

y

Goal conflicts with rational planning: because NFPs typically lacks a single clear cutperformance criterion, divergent goals and objectives are likely, especially with multiplesponsors.

y

An integrated planning process tends to shift from results to resources: becauseNFPs tend to provide services that are hard to measure planning becomes moreconcerned with resource inputs, which can be easily measured than with service which

cannot.y

Ambiguous objectives create opportunities for internal politics and goaldisplacement: the combination of vague objectives and heavy concerns with resourcesallows managers a considerable scope in their activities. Such attitude createdopportunities for politics.

y

Professionalization simplifies detailed planning but adds rigidity : In NFPsprofessional values and traditions can prevent the organizations from changing itsconventional behviour patterns to fit new service mission tuned to changing social needs.Goals of the professionals and their representative bodies may not align with

organizational goals

Impact on Implementation

y

Decentralization is complicated: the difficulty of setting objectives for an intangibleservice complicates the decision making authority.

y

Increased requirement for an environmental buffer role: because of the heavydependence on outside sponsors a special need arises for people in buffer roles to relateto both inside and outside organizations. The job of a ³dean for external affairs´ for example consists primarily of working with the school alumnae and raising funds.



y

J ob enlargement and executive development can be restrained by professionalism:in organisations that employ large number of professionals, managers must design jobsthat appeal to prevailing professional norms.

Impact on Evaluation & Control

y

Rewards & penalties have little or no relation to performance: when results are vagueand the judgement of success is subjective, predictable and impersonal feedback cannotbe established.

y

Inputs rather than outputs are heavily controlled: because its inputs can be mneasuredmuch more easily than outputs, the not for profit organisation tends to focus more on theresources going into performance than on the performance itself.

Popular Not for Profit Strategies

y

Strategic piggybacking: Strategic piggybacking refers to he development of a new

activity for the not-for-profit organization that would generate funds needed to make upthe difference between revenues and expenses. Its purpose is to help subsidize theprimary service programs. It appears to be a form of concentric diversification but it isengaged in only for its money generating value

y

Mergers: M erging with an organization with a similar mission can help to reduceadministration costs.

y

Strategic alliances: D eveloping cooperative ties with other NFPs. This will enhance their capacity to serve clients or to acquire resources while enabling them to keep their identity.

Documents

STRATEGIC ISSUES FOR NON PROFIT ORG