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What is Strategic Management?

Question:

Discuss about the Strategic Management In Non Profit Organization.

Strategic management is the process of identification and implementation of tactics by which managers of the organisation can achieve the aims and objectives. in order to reach the Strategic management is important especially for the non-profit organizations as it serves to satisfy the stakeholders including donors, volunteers, executive directors, clients and staffs who are important and essential part of the success of the non-profits (Bryce, 2017). The strategic  management in non-profit organizations helps in continuous planning, controlling, assessment and analysis of all that is important operations of the business for achieving organizational goals and objectives of the company (Hill & Jones, 2013).

The method theta has been implemented to carry out the process of research is based on the topic. As the research is based on the systematic literature review the data that is gathered to reach the conclusion and answer the research question is all taken by the process of secondary data collection. It is the process by which the previous work of other authors and scholars are used to come to a conclusion, in this process the researcher is not going to base the findings and the result of the research on any new information. Systematic review is focused on addressing the issue by identifying, critically evaluating and integrating the result of all related studies. Google Scholar is a great platform to carry out this study. This is a service provided by Google where academic journal articles are found in form of PDF files. With the help of Keywords the researcher can find the previous work that has been done by other authors. The number of articles that is going to be used in the literature is in between 20-25 and the time period that has been selected to review the work is in between 2010-2017. As the topic that has been chosen is more theoretical the researcher will focus more on journals that have qualitative research more than quantitative.

Definition of non-profit organisation

A non-profit organization (NPO) is a business entity whose aim and objective revolve around creating social value in the process of operation. The idea of NPOs is to develop and maintain a sustainable environment in the society by helping the people who are in need as well as focusing on the sections of the society that is being neglected (Weerawardena et al., 2010).

On the other hand, according to Tabaku & Mersini (2013), the nonprofit segment is usually addressed as the third sector, independent sector, voluntary sector, philanthropic sector, social sector, tax-exempt sector or the charitable sector.

Role and Importance of Strategic Management in Non-Profit Organizations

The similarities in between these definitions are that they both agree that the nonprofit is section that is focused on creation of value. The difference in the definition lies in the fact that the second definitions gives a more concrete idea about the sector and focuses on the aspects of the business.

Formulation of a plan is different form creating a strategy the planning process comes after the strategy has been laid down. In a non-profit seeking organisation the operations of the business has a very different tone, as it is driven by values the strategies that are implemented by the management are also focused on the value creation (Anheier, 2014). According to Bao, (2015), it can be defined as the dynamic process of planning, observation, inspection and evaluation of the factors that is important for a business organisation. The two definitions explain the role and importance of strategic management.

Developing a business model is regarded as one of the first step towards strategic management. According to Polonsky & Grau (2011), it is essential to understand and map the organisation to carry forward the process of business operation. Identification of the source of finance is one of the important aspects of a business model in the non-profit sector.  Resource allocation and persuasion are the next most important aspects that are focused by the non-profit seeking originations (Jungbok, 2015).

A company is impacted by the internal as well as the external business environment. The internal environment is in the control of the organisation, on the other hand the external environment is not under the control of the company hence the company should be aware of the factors and formulate the management strategies accordingly (Domanski, 2011).

Balanced Scorecard

According to Hartnett & Matan (2011), there can be a number of ways to evaluate the success the nonprofit as accomplishments of the organisation are focused from the perspective of the stakeholders. The tool that is used to measure the success is perspective with the help of BSC; the organisation can concentrate on determining and monitoring the cause and effect relationships between the important aims and have an accurate report on leading and lagging initiatives. This process will supply substantial evidence to form the decisions rather than guessing which fund raising campaigns, events and services are valuable to the stakeholders. Sundin et al., (2010), states that BSC has the ability to help the management of the companies with multiple objectives by applying systematic analysis of the objectives of the stakeholders and balancing it with the objective of the organisation by using the perceived cause and effect relationships between the aims and actions taken by a non-profit seeking organisation (Greiling, 2010).

Theories Applicable to Non-Profit Organizations

This theory states how external resources of an organisation impact the behavior of the organisation (Bryant & Davis, 2012). As funds rising are one of the most important aspect of a non-profit organization external resource dependency theory is appropriate for the application in strategic management of a NPO (Velayutham et al., 2012). The theory recommends that the behavior of the company is directly impacted by the management of the organisation this dependency on an external resource like donated funds and gifts in kind. Voluntary financial support is not only the biggest concern of small scale organisation but also it is a major issue for the company which operates on a much larger scale both nationally and internally. Scherhag & Boenigk (2013), conducted a study regarding the cultural treatment of a donor of the organisation with respect to communications in between the organizations and their donors or perspective people who could donate. The authors argue that the organizations in order to keep the funds following in the process of operation treat the wealthier and the most profitable donors in a superior manner so that they can build a strong value oriented relation and make the process of donation permanent.  The dependency of the resources of a non-profit organisation is large in terms of the stakeholders of the company as well because they are the ones who create the process of resource accumulation and resource allocation in order to receive optimal operation. In the study conducted by Akingbola (2013), the author states that all organizations are heavily dependent on the human resource associated with the company. In order to smoothly operate and develop companies need to bank on some of the other aspects as well. The importance or the significance of the resource to the organization is determined by the authority and influence the factor that represents the resource has on the organisation.  Influential and important stakeholders of the company are associated with the resources that are most important for the organisation. The significant factors based on this theory enjoy their influence based on a combination of factors regarding the resource they offer: the level of significance the resource provide for the organisation, the level of control the factor has on the distribution of the resource, and the level of switching cost of the resource (McDonald et al., 2015).

Communication is essential for any company operating in any industry in order to deliver the message the company have for the various stakeholders. Depending on the nature of the business and the purpose of the message companies come up with a strategic communication management plan so that the messages are delivered to the right target at the tight time (Wiggill, 2011).  The idea of strategic communication management is to align the communication process of the organization with the objectives and aims of the organisation. For a non-profit organisation one of the main aims is to develop a strong bond of mutual understanding with the stakeholders of the company who are responsible of the inflow of resources that in turn help in running the organisation. Wiggill (2011), argues that the lack of knowledge for an organisation is a bigger issue for a nonprofit organization when it comes to implementing the communication process. In order to effectively implement the communication strategies the company should be aware of the full potential of the company. According to Kong (2010), suggest that both informal and formal means have to be employed by a NOP so that the company can conduct a two-way communication between the stakeholders. The devices can include organizational culture, missions, values, employee satisfaction surveys, and newsletters etc.

Balanced Scorecard

The media that is chosen to communicate is dependent on the nature of the message and also on the direction of the message towards the particular stakeholder that that company is targeting to communicate with. If the selection of medium is wrong then the purpose or the meaning of the message has the chance to change Kong (2010). On the other hand, the authors Maxwell & Carboni (2014), state strategic communication not only differs with the stakeholders but also changes with the network the company is dealing with. As this would ensure that the relationship in between all the stakeholders of the organisation have a strong bond with the organisation, it will also help the company gain in terms of resource as many customers who have no history of donation may be transferred into a donator. Skill development and training is essential for this model to work successfully especially the human resource and the other internal fact (Modi & Mishra, 2010).

Marketing mix is a concept in strategic management which is essential for any organisation. It is a tool that is used by the companies to plan and organize the present and future policies and formulate decisions to achieve the goals of the organisation. Mano, (2010) state that marketing for a non-profit organisation to meet the demands of the environment to combat or decrease uncertainty and sustain organisational performance to excellence.

Because the performance measures of NPO may impact on the diverse nature of the judgment. Therefore, planning and organisation must be implemented to suggest the relationship in between the performance and effect on the multiple factors of the company. NPOs do not operate on the standard business model hence the standard business marketing strategies are not suited to the complex, dynamic, volunteer- and community-oriented, mission-driven nature of non-profit organisation (Mano, 2010). Tabaku et al. (2013), states that CRM or cause-related marketing is a suitable supply of proceeds for a not-for-profit organizations. The cause of an organisation is aligned with the marketing tactics of the company which ensures that the people associated with the marketing process are always aware of the cause for which the company operates.

Conclusion

The organizations that operate in the third-sector are the beacon of sustainability and ethics in the business sector. The above concepts and definitions that are reviewed in the literature state the compatibility of the concepts with the non-profit organizations and state the importance of strategic management of the sector. As these organizations operate on a value based, voluntary service the companies have to implement the process in a very tactful manner. The nature of the organizations is such that the standard business strategies do not apply to the efficiency of the organization which makes it imperative to strategies the management. The business model will help the company identify with the changes in the in the environment and map possibilities of growth in the future along with deal with present opportunities. The BSC and the resource development theory digs deep into the operations suggesting ways and means the organizations may implement to develop a strategic management.

External Resource Dependency Theory

References:

Akingbola, K. (2013). A model of strategic nonprofit human resource management. Voluntas: International Journal of Voluntary and Nonprofit Organizations, 24(1), 214-240.

Anheier, H. (2014). Nonprofit organizations: Theory, management, policy (2nd ed.). London: Routledge.

Bao, G. (2015). What theories are needed for strategic management? Nankai Business Review International, 6(4), 433-454. 

Bryant, P., & Davis, C. (2012). REGULATED CHANGE EFFECTS ON BOARDS OF DIRECTORS: A LOOK AT AGENCY THEORY AND RESOURCE DEPENDENCY THEORY.

Bryce, H. J. (2017). Financial and strategic management for nonprofit organizations. Walter de Gruyter GmbH & Co KG.

Domanski, J. (2011). The analysis and synthesis of strategic management research in the third sector from early 2000 through to mid-2009. Foundations of Management, 3(2), 27.

Greiling, D. (2010). Balanced scorecard implementation in german non-profit organization. International Journal of Productivity and Performance Management, 59(6), 534-554. 

Hartnett, B., & Matan, R. (2011). The Balanced Scorecard: A strategic tool for the nonprofit sector. Livingston, NJ: Sobel & Co.

Hill, C. W., & Jones, G. R. (2013). Strategic management theory. South-Western/Cengage Learning.

Jungbok, H. (2015). Marketing strategies for nonprofit organizations. Advances in Management, 8(10), 1-5.

Kong, E. (2010). Analyzing BSC and IC's usefulness in nonprofit organizations.

Mano, R. S. (2010). Marketing and performance evaluations in non-profit services.International Journal of Productivity and Performance Management, 59(6), 555-570. 

Maxwell, S. P., & Carboni, J. L. (2014). Stakeholder communication in service implementation networks: Expanding relationship management theory to the nonprofit sector through organizational network analysis.

McDonald, R. E., Weerawardena, J., Madhavaram, S., & Sullivan Mort, G. (2015). From "virtuous" to "pragmatic" pursuit of social mission. Management Research Review, 38(9), 970-991.

Modi, P., & Mishra, D. (2010). Conceptualising market orientation in non-profit organization : Definition, performance, and preliminary construction of a scale.Journal of Marketing Management, 26(5), 548.

Polonsky, M., & Grau, S. L. (2011). Assessing the social impact of charitable organizations—four alternative approaches. International journal of nonprofit and voluntary sector marketing, 16(2), 195-211.

Scherhag, C., & Boenigk, S. (2013). Different or equal treatment? Donor priority strategy and fundraising performance assessed by a propensity score matching study. Nonprofit Management and Leadership, 23(4), 443-472.

Sundin, H., Granlund, M., & Brown, D. A. (2010). Balancing multiple competing objectives with a balanced scorecard. European Accounting Review, 19(2), 203-246.

Tabaku, E., & Mersini (Zerellari), M. (2013). An overview of marketing means used by non-profit organizations: A detailed overview of NPOs operating in the district of elbasan. Journal of Marketing and Management, 4(2), 78-95. 

Velayutham, C. M., PalanivelRV, AnbarasanR, & SinthujaM. (2012). Human resource administration in relation to CEOs in not-for-profit organizations.

Weerawardena, J., McDonald, R. E., & Mort, G. S. (2010). Sustainability of nonprofit organizations: An empirical investigation. Journal of World Business, 45(4), 346-356.

Wiggill, M. N. (2011). Strategic communication management in the non-profit sector: A simplified model.

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