Strategic Management: Evaluation and Control

Strategic Management in Non-Profit Organizations

• Non-profit organizations (NPOs) do not have commercial interests and aim to provide a service or program to meet a defined community need.
• Strategic planning is essential for NPOs to establish long-term and short-term goals, review effectiveness, and allocate resources.
• The goal of a non-profit organization is to achieve its mission and objectives, rather than to make a profit.

Definition of Non-Profit Organization

• A non-profit organization is an organization that does not aim to make a profit.
• Surplus revenues are used to further the organization's purpose or mission, rather than distributing them to shareholders.
• Non-profit organizations often have taxation implications, such as income tax exemption and charitable status.

Strategy and Planning

• Strategy is the determination of an organization's long-term goals and objectives, and the allocation of resources to achieve them.
• A strategic plan provides guidance for fulfilling a mission with maximum efficiency and impact.
• An operating plan is a coordinated set of tasks to carry out the goals of a strategic plan, with a shorter horizon of usually one fiscal year.
• A business plan is focused on generating income from a specific program or service, and includes information about products, competitive environment, and revenue assumptions.

Mission, Vision, Goals, and Objectives

• A mission statement is a brief expression of an organization's purpose, answering the question "Why do we exist?" and "What do we do?"
• A vision statement is a description of an organization's desired future state, answering the question "Where do we want to be?"
• Goals and objectives express desired outcomes and may be focused on discrete parts of an organization's programming or internal operations.
• Strategies and tactics consist of approaches or sets of activities needed to achieve goals and objectives.

Objectives and Goals of Non-Profit Organizations

• Non-profit organizations aim to provide value to the groups of people they serve, rather than accumulating wealth.
• Their objectives and goals may include providing services, advocating for a particular point of view, or furthering a social cause.

Functions of Non-Profit Organizations

• Non-profit organizations have a wide diversity of structures and purposes, and may operate as a charity, service organization, profit corporation, trust, cooperative, or informal organization.### Non-Governmental Organizations (NGOs)
• NGOs are the most common type of non-commercial organization in India, but they are not the only category.
• Memorial trusts, which honor renowned individuals through social work, may not be considered NGOs.
• In the Indian context, an NGO is considered an institution that carries human values and system values.

Formation and Structure of NGOs

• Management provisions, accountability and auditing provisions, provisions for amendment of statutes or articles of incorporation, and provisions for dissolution are essential for legal classification.
• NGOs can be formed as trusts, societies, or section 8 companies (old section 25 companies).
• Registration can be done with the Registrar of Companies (RoC) or the Registrar of Societies (RoS).

Types of Non-Profit Organizations

• Trusts: Public charitable trusts can be established for various purposes, including relief of poverty, education, and medical relief.
• Societies: Membership organizations registered for charitable purposes, governed by the Societies Registration Act 1860.
• Section 8 Companies: Companies with limited liability, formed for promoting commerce, art, science, religion, charity, or any other useful object.

Stakeholders of a Voluntary Non-Profit Organization

• Beneficiaries/service-users/clients
• Members
• Statutory funders
• Individual or corporate donors
• Staff
• Volunteers
• Board of management
• Agencies who refer clients or to whom the organization refers clients
• Regulatory bodies

Strategic Management in NGOs

• Mission, vision, values, and long-term aims are essential for strategic management.
• Strategic priorities, performance indicators, annual operational objectives, and resource requirements are necessary for effective planning.
• Monitoring and rolling operational planning arrangements and a timetable are crucial for success.

Strategic Planning Tools and Techniques

• PEST and PESTEL analysis: Analyze political, economic, social, and technological factors in the external environment.
• Ansoff's Matrix: A framework for devising strategies for future growth and creating a positional advantage.
• Mandate analysis: Examines written mandates from legislation, constitutions, trust deeds, and public policy documents.
• Stakeholder analysis: Identifies the expectations of beneficiaries, funders, volunteers, staff, and regulatory bodies.
• Identifying strategic issues: Focuses on urgent action required to meet the organization's aims.

Leadership as a Competitive Tool

• Effective leadership is essential for generating competitive advantage in NGOs.
• Enablers: Leadership, policy and strategy, people, and processes.
• Results: Customer results, people results, society results, and key performance results.

Strategic Issues in Small Business

• SMEs are key drivers of employment and economic growth.
• SMEs account for a significant proportion of economic activities in India's urban and rural areas.
• The growth of SMEs can be determined by their ability to integrate with the global economy, maintain sustainable government finances, and establish an institutional environment.

Potential of SMEs

• SMEs have addressed substantial growth in developing countries.
• Their growth can be determined by their ability to integrate with the global economy, maintain sustainable government finances, and establish an institutional environment.

Performance and Effectiveness in Small Firms

• Small businesses struggle with business constraints, especially finance, market, and human resource management.

• Constraints to business growth in SMEs include finance, market, and human resource problems.### Strategic Management in Small Businesses

• Small businesses may face growth challenges, including losing personalized touch with employees and customers, and inefficient systems and processes.

Performance Measurement in Small Businesses

• Small business performance encompasses three areas:
• Financial performance (profits, return on assets, return on investment, etc.)
• Product market performance (sales, market share, etc.)
• Shareholder return (total shareholder return, economic value added, etc.)
• Business outcomes include:
• Qualified labor
• Commitment of employees
• Job satisfaction of employees
• New product/service development capability
• Product/service quality
• Customer satisfaction
• Sales growth
• Market share growth
• Return on sales
• Return on assets
• Overall profitability

Importance of Strategic Management in Small Businesses

• Strategic management helps small businesses to:
• Arrange capital investment
• Grow faster than the increase in market size
• Face fewer failures

Organizational System in Small Businesses

• The whole organization system consists of five overlapping subsystems:
• Strategic subsystem
• Technological subsystem
• Human-cultural subsystem
• Structural subsystem
• Managerial subsystem
• Each subsystem functions interdependently and with the external environment.

Why Small Businesses Need Strategy

• Strategic management is a rational process that helps senior management identify courses of action and responses to complex and dynamic environmental forces.

Strategic Planning in Small Businesses

• Strategic planning involves:
• Determining strategies
• Blending core values with corporate structure
• Implementing survival strategies to reduce management inadequacies
• Key concerns of small business firms include:
• Growth of sales
• Cost-benefit analysis
• Healthy balance sheet and cash inflows

Strategic Management Models for Small Businesses

• Various strategic models and frameworks support small business planning and implementation.
• Examples include:
• Henderson's (1991) strategic planning model
• Van der Heijden's (1996) model for examining strategic planning paradigms
• Porter's (1991) and Ghemawat's (1991) models for competitive advantage and market profile.

Key Elements of SME Strategies

• The key elements of SME strategies include:
• Strategy and planning
• Execution and alignment
• Performance and reporting

Growth Strategies for Small Businesses

• Organic growth strategies involve:
• Investing in core competencies
• Differentiating and innovating in product or service lines
• Inorganic growth strategies involve:
• Mergers and acquisitions (M&A)
• Increasing output and business reach through acquiring new businesses.

Need for Industrial Support

• Small and medium enterprises (SMEs) require institutional support, including:
• Drafting a national strategy for SMEs
• Supplementing legislation
• Financial support
• Business advice
• Creating strategies and development programs
• Building a suitable environment for entrepreneurship and economic activities.