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The Strategic Management Process in
Non Profit Organizations with Dynamic
Environments.
Group Members:Alishan Jaffer
Ajay Kumar
Abdul Majid
Zain Afridi
Research Article extracted from:
Journal of Managerial Issues
TEAM RED
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Objectives
Articles sets a benchmark as to how Non Profit Organizations
need to formulate Strategies
Differentiates For Profit Organizations against Non Profit
Organizations
Importance of a completely modified model for StrategicManagement in Non Profit Organizations
Describes the theory that supports the idea of bifurcates usual
Strategic management method for Profit & Non Profit
organizations Focuses highly on Stakeholders Value Analysis
Presents a completely modified model especially designed for
Non-Profit Organizations
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Theories
Strategic Management Process remains same for Profit & Non
profit organizations (Crittenden, 1986)
Current Model of Strategic Management may be applied to
Non Profit Organizations but needs Modifications (Nutt, 1984)
Strategic Management Organizations need to be classified bypurpose (Charitable, Social, Trade Association, Government &
Political) making their Stake holders & their evaluation easier
(Crittenden, 1988)
Wallender (1978), later identifies major Differences &Similarities in Profit & Non Profit Organizations; integrating
their differences & similarities for a new model.
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Arguments
Brysons Model (1988) defined a new model for Strategic
Management which focused mainly on
1) Identification of outside stakeholders & their role during
the entire strategic management process.
2) Strategic Management in Non Profit Organization has amajor chunk that revolves around Values & Views of Outside
Stakeholders
3) Stake Holders Values Analysis overshadows all other aspects
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Analysis of Brysons Model
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Modified Strategic Management
Model
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Stakeholder Value Analysis
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Style
Author has used a comparative style of writing in which hedifferentiate between profit and not for profit organization ateach step on strategic management
I.e Mission of profitable organization changes if the previousmission is no more profitable
Whereas mission of not for profit organization rarely changes butit increase its scope in vision
Goals and objective of profitable organization is to earn profit
Whereas goals of not for profit organization is to serve the needsof stakeholder at maximum operational efficiency and working in
budget constraint Not Technical
Descriptive and Exploratory style
Starts an argument and then supports it with relevant example atevery step.
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Method Employed & Evidence
of the strategys successfulness Measuring Performance of Organizations for the
implementation of the strategy
Identifying the Variance between an Organizations
performance earlier & after the exact implementation of the
Strategy for a period of 5 years A Survey on the organizations that implemented the strategy
and their analysis for next 5 years shows the inclination of the
Non Profit Organizations towards more Stakeholder focused
to promote inflows. (Digman, 1991)
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Central Concepts
Mission Statement
Goals & Objectives
Situational Analysis
Strategy Formulation
Policies & Procedures
Strategy Evaluation & Choice
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Contribution
Prepares new Strategic management model for Non-Profitorganization and describe how does the external stakeholdercan influence the process of strategic management
Mission Statement
Mission statement of profitable organization changes if oldmission is no more profitable
Mission statement of NGO does not changes but scope of themission increases. Saving polio, Decreasing child mortality
Goals and objectives
Primary Goals of profit making organization is to grow and earnmaximum profit whereas goals of not for profit organization is to workfor the needs of stakeholder in best way as well as to work in budgetconstraints
Both are conflicting either u can increase value or work in budget, it isup to the organization what option to choose
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Situation Analysis
The situation analysis of profit making is to conduct PEST andSWOT analysis whereas in NGO involves assessment of futureresource levels. In the nonprofit setting funding can come frommany different sources and can vary from year to year. For
instance, donations and volunteer interest might decrease for anygiven number of reasons all beyond the direct control of topmanagement.
Strategy Formulation
The key to effective strategy formulation involves finding the
major internal resource variables that the firm can manipulate toimprove its match with the environment.
Preferences of stakeholder should be prioritized. For example ifclients does not want an abortion room in hospital you can notbuild it for any purpose
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Policy and procedures Large contributors normally has major say in policy formation and procedures
even if they do not have expertise of that business
Strategy Evaluation and Choice Profitable organization may focus on the long term prospects of the business
and strategy while considering the which one should be implemented
NGOs may prefer to choose the one which has most early benefit and may beable to attract more contributors.
Implementation difficulties are compounded in nonprofit organizations. For instance, time is a
limited resource during any implementation process, but can be even morecrucial for nonprofit organizations where future sources of funding orvolunteer support may be contingent upon the success of newly developed
strategies. Thus, strategies in nonprofit organizations may need to beimplemented in ways such that initial results from the strategy are quick andfavorable, so that sufficient future resources can be secured to successfullycomplete the entire implementation process
Motivating Employees is very difficult as no monetary benefits can beattached
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Strategic Control or Evaluation
For profit organization performance of new strategy can be
evaluated in the financial statement by the bottom line like profit
and loss
Where as in not for profit it is not that easy as motive oforganization is not to earn profit
Stakeholder satisfaction level can be used as proxy for measuring
the performance of the strategy but it is not that easy as
measuring satisfaction is a very much subjective.
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Wider Literature
The Chronicle of Philanthropy (1993), focused on how Cash
inflows in the Non-Profit Organizations were influenced by
Brysons Model
Successful implementation attracts stakeholders for their
continuous support for the cause that Non profit Organizationpromotes (Oster, 2010)
Later studies in the genre focused on effective cash
management by Non-Profit Organization once they
successfully implement the Strategy to attract inflows
Non profit management clinic by Bradley (2004)
Competitiveness in Non profit sector is driven by the higher
value to outside stakeholders (Goetzmann, 2013)
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Conclusion
Are for-profit strategic management models applicable to non
profit organizations?
While the basic principles can be applied to both for profit and
non profit organizations the overall importance and execution
of each step varies The nature of the environment also plays a role in how the
models/processes are applied to non profit organizations.
Therefore a modified model was proposed which:
Places more emphasis on the importance of stakeholders Gives more importance to the implementation phase.
Recognizes how dynamic environment can affect the strategic
management process.