STRATEGIC MANAGEMENT IN PUBLIC & NON-PROFIT ORGANISATIONS

BY ADE AKANBI

LESSON OUTCOMESAIM•To raise learners knowledge of strategic decision making•To raise learners awareness of key tensions within strategic managementOBJECTIVES•Evaluate the impact of organisational culture on strategic decisions •Investigate / identify key tensions including national / local pressures, different political imperatives, issues of collaboration / competition •Evaluate the impact of these tensions on the development of organisational culture and organisational strategy

BY ADE AKANBI

RECAPWhat is strategic Management?

Strategic management can be described as the identification of the purpose of the organisation and the plans and actions to achieve a goal which involves utilization of resources to enhance performance of organisation in their external environment.

BY ADE AKANBI

RECAPStrategic management involves looking out, looking in and looking ahead. Balancing strategic management’s outward-, inward-, and forward-looking functions helps you develop a vision and a strategy for where and how to move health sector reform forward.Balancing these different perspectives is the essence of managing strategically (Brinkerhoff 1991).Strategic management comprises five key facets: goal-setting, analysis, strategy formation, strategy implementation, and strategy monitoring

•Difference Between Public & Non-profit Organisations•Public is owned by the state and concerned with the distribution of public value in the sense of delivering equitably to all citizen but the later is not.•Public organisation source of fund is from taxes of all citizens while non profit organisation is from a variety of private, voluntary and variable sources

BY ADE AKANBI

RECAP

•Techniques To Explore External Environment•Identifying Strategic Capability I.E Swot Analysis, basic ,Goal Based, align based, scenario Techniques•Discussed External Environment Of Organisation & Impact On Strategy.

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STRATEGIC MANAGEMENT PROCESS

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STRATEGIC DECISION MAKING

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STRATEGIC DECISION MAKING

Key issues affecting organisational strategy• Publicness• Strategic purpose• Corporate governance• Culture and strategic drift

BY ADE AKANBI

STRATEGIC PURPOSEFor effective mgt, the purpose of the strategy must be followed. This is delivered by identifying and defining the mission and objectives of the organisation. However, this is influenced/shaped by stakeholders expectations, social responsibilities and ethics as well as governance structure.Stakeholders are those individuals or groups who depend on an organisation to fulfil their own goals and who in turn the organisation depends on.Corporate governance is concerned with the structure and systems of control by which managers are held accountable to those who have legitimate stake in the organisation. This has become a key issue over the past few years because of new stricter rules and legislations after the failure of few companies in this area(ISSUES AROUND SEPARATION OF OWNERSHIP FROM MANAGEMENT,INCREASE ACCOUNTABILITY TO WIDER STAKEHOLDER INTERESETS).Ethics examines the way the organisation sets its standards and conduct in the society. Corporate social responsibility defines the policies that the organisation adopts on such matters as poverty, green issues and working conditions.

BY ADE AKANBI

IMPLICATION OF CORPORATE GOVERNANCE ON STRATEGY

DiscussionStrategy is only a means to an end that being the purpose of the

organisation. It is impossible to develop strategy if the purpose remain unclear.

If so should the response to a particular stakeholder determine strategic purpose or brother stakeholder interest-at the extreme of society or social good.

Let consider this questions?• What is the are of activity and what should it be• What kind of organisation do we whish to be• What is the relative importance of stakeholders• Do we want to grow the organisation• What is the relationship with our immediate environment and

society in general• How do we bring all this consideration togetherBY ADE AKANBI

IMPLICATION OF CORPORATE GOVERNANCE ON STRATEGY

Another way of viewing purpose is through statements of corporate values(underlying principles,vision,mission and objectives.For example emergency services such as ambulance and fire brigades have an overriding commitment to saving life that employees are committed to the extent that they will break strike action or risk their own lives to attend to emergencies when life is threatened.

From the reading given, what is the implication of the different views for manager development of organisational strategy?

BY ADE AKANBI

RELATIONSHIP BETWEEN CULTURE AND STRATEGY

Another key issues affecting development of organisational strategy is history and culture of an organisation. This may contribute to its strategic capabilities but may also give rise to strategic drift as strategy develops incrementally on the basics of such influences and fail to keep pace with the changing environment. But the question is how long and to what extent can managers rely on incremental change building on the past being sufficient?However,if drift continues, there will be symptoms that become evident: downturn in financial performance, loss of market share to competitors, decline in share price, transformation change or death.

BY ADE AKANBI

In other words cultural and institutional influences inform and constraint strategic development of organisation. Culture is the basic assumptions and beliefs that are shared by members of the organisation that operate unconsciously and define in a basic taken for granted fashion of an organisation view of itself and environment.Organisational culture has four layers: values, beliefs, behaviour and paradigm(taken for granted assumptions). The taken for granted nature of culture makes it centrally important in relation to strategy because it is difficult to manage(difficult to observe, identify and manage what is taken for granted).Secondly , it is a driver of strategy

BY ADE AKANBI

CULTURAL WEBThis shows the behaviour, physical and symbolic manifestations of a culture that inform and are informed by taken for granted asassumptions or paradigm.Routines: are the way we do things around here on day to day basisRituals: are activities that emphasise what is important in cultureSymbols: acts or events that convey meaning over and above their functional purposeControl system: measurement and reward systems that emphasise what is important to monitor in an organisationStructure: likely to reflect power and show important roles and relationship.

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KEY TENSIONS

• Maintaining competitive advantage. For public and non-profit organisation, the bases on which the organisation chooses to achieve superior quality of services in competition for funding, that is how it provides best value. Porter proposes three different strategies to achieve competitive advantage: overall cost leadership, differentiation and focus.

• Competition and collaboration : this may be a way of achieving advantage and avoiding competition . In public sector, gaining more leverage from public investment may require collaboration to raise overall standards of the sector.(public/private collaboration)

• It is important to note that collaboration with competitors is not as easy as it sounds.

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KEY TENSIONSLocal pressuresHome demand factors: The

nature of domestic customers

Factor conditions: refers to factors of production(land, labour, raw materials)

Firm strategy, industry structure and rivalry:The conditions in a country that determine how companies are established, are organized and are managed, and that determine the characteristics of domestic competition

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KEY TENSIONS

National pressures• Market drivers: similar customer needs, global customers,

transferable marketing.• Government drivers: trade policies, technical standards, host

government policies• Cost drivers: scale economies, country specific differences,

logistics• Competitive drivers: interdependence between countries,

competitors global strategies

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INDICATIVE READING

• Barney, J. and Hesterly, W (2010) Strategic Management and Competitive Advantage: Concepts and Cases.3rd Edition .London: Prentice Hall.

• Campbell, D., Stonehouse,G. and Houston,B.(2001) Business Strategy: An Introduction. Oxford: Butterworth Heinemann

• Clarke-Hill, C and Glaister, K.(1995) Cases in Strategic Management.2nd Edition. London: Pitman Publishing

• Johnson, G., Scholes, K and Whittington,R.(2008) Exploring Corporate Strategy.8th Edition. England:Prentice Hall

BY ADE AKANBI