Strategic Planning in Non-Profit Organisations

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Relevance and approaches to strategic planning in both for-profit and non-profit-making organisations. Strategic planning is critical to the progress of all organisations. Planning is a time-consuming exercise which also calls for the expenditure of resources of an institution. It plays a fundamental role in the leadership of an institution. However, it is a lengthy process with no guarantee of positive outcomes. Strategic planning entails a systematic plan of accomplishing stated objectives. It is not a new idea, but a widely used tool in many institutions. The strategic planning concept helps in realising an organisation’s financial sustainability and in the allocation of scarce resources to gain competitive advance in any area of operation. The paper in this context seeks to discuss the relevance and approaches of strategic planning in both for profit and not for profit organisations.

The relevance of strategic planning to non-profit organisations

Not-for-profit organisations are those institutions whose drive is not to make a profit, but for championing a social cause and are driven by the quest to better the welfare of the society (Allison and Kaye 2011, p. 23). Strategic planning is vital to these institutions because of the following reasons:

Strategic planning is an approach of positioning the objectives of a non-profit organisation in a better way. Planning is a critical element in both for-profit and non-profit organisations (Allison and Kaye 2011, p. 23). Strategic thoughts and actions are paramount to the future success of an institution. It is a blueprint which spells out the work plans of an entity, thus putting it in a better position of realizing its objectives. Additionally, strategic planning is beneficial to non-profit enterprises because it puts them in a better position to respond to continually changing environments and react effectively to the needs of its subjects (Allison and Kaye 2011, p. 23).

Strategic planning plays a critical role in determining the direction and planning needs and thus help in pushing forward the agenda of an enterprise. Public sector institutions have pre-meditated powers and levels of freedom, and their principal objective is to maximize output (Carney 2014, p. 14). Therefore, strategic planning is at the centre of realizing the goal of maximizing production and provide a higher value for financial resources put at their disposal. Strategic planning incorporates future approaches and decision making (Carney 2014, p. 14).

Strategic planning is a necessary element for the growth of non-profit enterprises. The need for planning is unavoidable because it helps in growth prospects. Proper planning is instrumental for the survival of the organisations because of the ever-growing competition in the market and essential in meeting demands of the society (Carney 2014, p. 14). Proper planning ensures that nonprofits improve their resources and increase their funds. Through strategic plans, not-for-profit organisations are capable of accomplishing their vision, mission, goals, and objectives (Carney 2014, p. 14).

Approaches to strategic planning in not-for-profit organisations

The decision-making process for non-profit making institutions may take the following steps into account:

Formulation of an initial agreement touching the strategic planning effort: the deal should take into account the objective of the efforts, the chosen stages in the process, the formation and timing of the reports, the responsibilities of the strategic planning committee, the role the strategic planning team will play, and commissioning of the necessary resources in executing the plan (Kanter and Summers 2016, p. 222).

Recognition and clarification of the mandate: the aim of this stage is to unearth and clarify the externally imposed formal and informal mandates bestowed on the organisation (Kanter and Summers 2016, p. 222).

Establishment and illumination of mission and values: it is at this step that the mission and values which the organization carries are clarified. The purpose of an institution plus its mandates offers the social need for its operation (Kong 2017, p. 722).

Assessment of the external environment: this step involves the evaluation of the external environment of an organisation. The external environmental factors include social, technological, economic, and political events which may need assessment (Kong 2017, p. 722).

Assessment of internal environment: this phase involves the evaluation of the organisation itself to determine its strengths and weaknesses. The evaluations, in this case, include present strategy, organisational resources, and performance (Kong 2017, p. 722).

Identification of the strategic issue: systematically, the first five steps leads to the sixth stage-identification of the vital concern (Loudon, Stevens, Migliore and Williamson 2013, p. 35).

Development of the strategy: at this point, plans are developed and put in place to deal with the issues which have been identified in the previous stage (Loudon, Stevens, Migliore and Williamson 2013, p. 35).

The depiction of the organisation in future: the step involves a description of the image of the organisation after implementation of the strategies and after the realization of its full potential (Loudon, Stevens, Migliore and Williamson 2013, p. 35).

The relevance of strategic planning for profit-seeking organisations

Strategic planning guides in defining the mission of an entity. Description of a purpose is essential to a business because it incorporates and distills the objectives of an entity and connects them with practical approaches, thus assisting the leadership and the employees align their actions with a well-defined vision and the direction which an enterprise seeks to follow. It helps in defining a mission broadly for proper guidance to management and staffs.

It is critical in setting the goals of the company. The foundation of strategic planning is well-defined and measurable goals. Measurable objectives are concrete and specific and are expressed in quantities and outlined in timelines. Strategic plans help in the formulation of quantifiable goals because they equip both employees and the administration in examining the progress and speed of development (Bryson 2018, p. 7).

Strategic planning is vital for the assessment of progress. Strategic goals are fundamentally based on the best information available and key in the realistic evaluation of what a business entity can achieve (Bryson 2018, p. 7). Strategic planning also takes into account the continuous assessment of goals after assessment of timelines and determines whether an entity is moving towards the desired direction or otherwise. When it happens that the achievements made as per specific deadlines are not adequate, then they should be redefined as provided by the strategic plan (Bryson 2018, p. 7).

Strategic planning approach in profit-seeking organisations

The approach for developing a strategic plan for profit-seeking organisations may include the following steps:

i. Determination of the current position of the company. This might prove difficult than it sounds. Some businesses rank themselves in a manner which is above their true nature (Whittington, Angwin and Regner 2013, p. 41). Most companies make this mistake which keeps them trapped for a long time. It is crucial that firms carry out internal and external audits to establish their accurate picture to capture their actual position in the market, the competitive environment, and its competencies (Whittington, Angwin and Regner 2013, p. 41).

ii. Clarification of what is more important. It is advisable that a firm focuses on where it wants to be in the long-term which allows to clarify the direction to take over time and describe its vision, mission, and core values (Whittington, Angwin and Regner 2013, p. 41). It is from this analysis that an enterprise can prioritise issues, especially the ones which are more critical and calls for immediate and full attention from the entire leadership and the workforce at large. These are the issues which the strategic plan must focus on (Whittington, Angwin and Regner 2013, p. 41).

iii. Definition of the achievements which must be made. This involves the description of objectives which clearly states what organisations have to achieve to meet their priority concerns (Whittington, Angwin and Regner 2013, p. 41).

iv. Allocation of responsibilities. It is through the assignment of duties and holding people responsible that a company gets forward. The budgets, action plans, and strategies are all elements in the process which communicates how the leadership allocates financial resources, human capital, and time to address issues of priority and achieve the set objectives (Freeman 2010, p. 62).

v. Carrying out consistent reviews. Firms must always execute regular evaluations of the processes To ensure that the plan works out as expected. A quarterly review is the best timeframe to accomplish the monitoring process (Hill, Jones, and Schilling, M.A., 2014, p. 32).

The Ansoff’s marketing/growth mix

Marketing involves a procedure which requires the identification, anticipation, and meeting of consumer needs while making a profit. A marketing strategy is necessary to achieve this milestone. Marketing strategies affects everything with an organisation. It entails the utilisation of all resources and all activities it does to create value which impacts on customers, shareholders, and all other stakeholders associated with a company. The purpose of the marketing strategy is to spell out the means of achieving set out marketing objectives. There are several marketing objectives, and they include management of costs, promotion of customer loyalty, fostering of brand strength, and increasing market share. The paper in this stance seeks to discuss Ansoff’s marketing/growth matrix as applied in the business world by using practical examples from the business world.

The Ansoff Matrix

Igor Ansoff developed the model and was first published in 1957 by the Harvard Business Review. It has been instrumental to different generations of marketers and corporate leaders because of its quick and straightforward approaches concerning the risks of growth. The model is sometimes called the Product/market expansion grid (Venkatraman and Camillus 2014, P. 513). The Ansoff Matrix explains four strategies which can be employed to grow a business. Further, it assists in examining the risks associated with each approach. The concept with this model is that every time one moves to another quadrant, the risks increase (Venkatraman and Camillus 2014, P. 513).

Market penetration provides the highest level of security among the four alternatives. In this case, you focus on expanding sales of the existing product in the present market. A business is aware that the product works, and understands all the dynamics of the market (Venkatraman and Camillus 2014, P. 513). The product development element is fairy riskier because it involves the launch of a new product into the current market. Market development is another facet of the Ansoff matrix, and it entails the introduction of a current product into a new market (Venkatraman and Camillus 2014, P. 513). Market development is achievable through finding a new way of using a product or by differentiating or adding new features into a product. Alternatively, market development can be realised by increasing the scope of usage of a product. Diversification is the fourth facet of the Ansoff matrix. It ranks as the riskiest option because it is about introducing new products into new markets which may not be fully understood even by the firm itself (Venkatraman and Camillus 2014, P. 513).

Application of the Ansoff matrix in the digital marketing approach

The case of market development: suppliers dealing with operations, repair and maintenance items can find a new online market if they consider marketing using digital platforms. This has the potential of raising the customer base by over 10% selling to individual consumers instead of handing customers using the traditional approach (Pleshko and Heiens 2008, p. 109). The company website can be utilised to offer additional services to customers by placing larger orders online. Easy Jet is a company which employs its website to serve customers (Pleshko and Heiens 2008, p. 109).

Product development: for instance, the online business magazine, ‘Construction Weekly’ expanded into a ‘B2B portal construction plus’ which created new revenue streams to the digital firm (Pleshko and Heiens 2008, p. 109). Besides, book publishing firms and music companies have found an avenue to deliver their products through the incorporation of new developments such as pay-per-use and subscription. Retailers can expand their product range to sell additional bundling options using online technology (Pleshko and Heiens 2008, p. 109).

Diversification:

Ryanair has perfected on this element by offering discounts to its customers when they book car hire with Herts, a firm which rents out automobile (Watts, Cope and Hulme 2008, p. 102).

The Ansoff Matrix and Coca-Cola Company

Coca-Cola is one of the global firms which has dramatically exploited the Ansoff matrix in its marketing operations in almost all facets.

Coca-Cola’s market penetration approach: Coca-Cola uses this strategy to expand its market share within its current market by selling more of its products to established outlets or by finding and lining up with new clients within its current market. This is specifically achieved by embracing the ‘promotion’ approach to the marketing mix (Morrison and Wensley 2011, p. 106). Because of Coca-Cola’s rich network, the entity has managed to penetrate new markets on a yearly basis by establishing a relationship between Co-Cola and Christmas, for instance in the famous Coca-Coca Christmas advertisement which assisted in fostering sales in the festive season (Morrison and Wensley 2011, p. 106).

Product development: Coca-Cola employs this element by creating new mechandise for the current market, by researching how new productions can satisfy customer needs in a better way and outperform its business rivals (Morrison and Wensley 2011, p. 106). The best example was the inception of the Cherry Coke which happened in 1985 when Coke first expanded out of its initial offerings. The plan was promoted by small rival firms who had recognized a lucrative venture in adding cherry-flavored syrup to Coke and then takes it to the market. Since then, Coca-Cola moved forward to fruitfully launch several flavoured tastes such as vanilla, lemon, and lime (Morrison and Wensley 2011, p. 106).

Market development: this element encompasses marketing to a new group of customers for present products. The best example is the introduction of Coke Zero in 2005. The idea was selling a product just similar to Coke Diet, the most popular brand of Coca-Cola, with no sugary content and low percentage of calories (Magrath 2016, 45). Coca-Cola introduced Coke Diet in over three decades ago and it was a drink famous among women and its association made young men shy away from it. However, through innovative branding and innovative marketing, the company managed to reverse the trend and raised the popularity of the drink amongst men (Magrath 2016, 45).

Related diversification: the approach entails the production of new products which compliments the current portfolio, to penetrate new, though related markets. It is on record that in 2007, Coke used $4.1 billion to purchase Glaceau, plus its preferred Vitaminwater water make (Magrath 2016, 45). With a consistent annual deterioration in the sales of carbonated beverages like Coca-Cola, the firm forecasts that the beverages market is heading the less-sugary way. Thus, Coca-Cola is working on this anticipation to manufacture less-sugary beverages which are considered healthy (Hofer 2015, p. 785).

Unrelated diversification: this strategy involves venturing into a new industry which lacks critical similarities with a firm’s existing market. Coca-Cola is known for avoiding getting into more risky ventures. Instead, it employs its strong brand name to continue expanding in the drinks sector. With that in mind, Coca-Cola provides official company merchandise from fridges, glasses, and pens to exploit its vast brand (Aaker 2014, p. 168).

Conclusion

The most apparent thing about the Ansoff Matrix is the incremental increase of the risks which comes with the four strategies espoused in the matrix, because of the growing costs which come with every plan past market entry and the uncertainty of running a business in unfamiliar industries and markets. Thus, looking at Coca-Cola, which focuses only on market penetration and other non-diversification approaches, one can conclude that it is a relatively risk-averse enterprise when compared with firms such as the virgin group. Therefore, there is no better strategy to choose a plan because each offers unique benefits in different circumstances. Generally, the Ansoff matrix describes a model of doing business at varying levels of risk depending on the approach employed. As a firm moves from one level to another, the higher the level of risk.

References

Aaker, D.A., 2014. How to select a business strategy. California management review, 26(3), pp.167-175.

Allison, M. and Kaye, J., 2011. Strategic planning for nonprofit organizations: A practical guide and workbook. John Wiley & Sons. Pp. 22-39.

Bryson, J.M., 2018. Strategic planning for public and nonprofit organizations: A guide to strengthening and sustaining organizational achievement. John Wiley & Sons. pp. 6-13

Carney, M., 2014. Middle manager involvement in strategy development in not‐for profit organizations: the director of nursing perspective–how organizational structure impacts on the role. Journal of nursing management, 12(1), pp.13-21.

Freeman, R.E., 2010. Strategic management: A stakeholder approach. Cambridge university press. pp. 60-67.

Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated approach. Cengage Learning. pp. 32.

Hofer, C.W., 2015. Toward a contingency theory of business strategy. Academy of Management journal, 18(4), pp.784-810.

Kanter, R.M. and Summers, D.V., 2016. Doing well while doing good: Dilemmas of performance measurement in nonprofit organizations and the need for a multiple-constituency approach. Public sector management: Theory, critique and practice, pp.220-236.

Kong, E., 2017. The strategic importance of intellectual capital in the non-profit sector. Journal of Intellectual capital, 8(4), pp.721-731.

Loudon, D.L., Stevens, R.E., Migliore, R.H. and Williamson, S.G., 2013. Strategic planning for not-for-profit organizations. Routledge. pp. 33-44.

Magrath, A.J., 2016. When marketing services, 4 Ps are not enough. Business Horizons, 29(3), pp.44-50.

Morrison, A. and Wensley, R., 2011. Boxing up or boxed in?: A short history of the Boston Consulting Group share/growth matrix. Journal of Marketing Management, 7(2), pp.105-129.

Watts, G., Cope, J. and Hulme, M., 2008. Ansoff’s matrix, pain and gain: Growth strategies and adaptive learning among small food producers. International Journal of Entrepreneurial Behavior & Research, 4(2), pp.101-111.

Pleshko, L.P. and Heiens, R.A., 2008. The contemporary product-market strategy grid and the link to market orientation and profitability. Journal of Targeting, Measurement and Analysis for Marketing, 16(2), pp.108-114.

Venkatraman, N. and Camillus, J.C., 2014. Exploring the concept of “fit” in strategic management. Academy of management review, 9(3), pp.513-525.

Whittington, R., Angwin, D. and Regner P., 2013.  Exploring strategy: Text and Cases, 10th

ed. Pearson publishers .Harlow. pp. 40-55.

January 19, 2024
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Business Economics

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Corporations Workforce

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Company Organization

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