CHAPTER 14 Strategic Issues in Not-for-Profit Organizations STRATEGIC MANAGEMENT & BUSINESS POLICY 11TH EDITION THOMAS L. WHEELEN J. DAVID HUNGER Prentice Hall, Inc. © 2008 Prentice Hall 2006

NFP – Private nonprofit corporations Not-for-Profits NFP – Private nonprofit corporations Public governmental units/agencies Prentice Hall, Inc. © 2008 Prentice Hall 2006

Public or collective goods – Not-for-Profits Public or collective goods – Certain goods and services that profit-making firms cannot or will not provide Prentice Hall, Inc. © 2008 Prentice Hall 2006

Importance of Revenue Source -- Not-for-Profits Importance of Revenue Source -- Depends on dues, assessments, donations, funding Prentice Hall, Inc. © 2008 Prentice Hall 2006

Not-for-Profits Prentice Hall, Inc. © 2008 Prentice Hall 2006

Institutional advantage -- Not-for-Profits Institutional advantage -- Performs its tasks more effectively than other comparable organizations Prentice Hall, Inc. © 2008 Prentice Hall 2006

Constraints on strategic management -- Not-for-Profits Constraints on strategic management -- Service is often intangible/hard to measure Client influence may be weak Strong employee commitments to professions Prentice Hall, Inc. © 2008 Prentice Hall 2006

Constraints on strategic management -- Not-for-Profits Constraints on strategic management -- Resource contributors intrude on internal management Restraints on use of rewards and punishments Prentice Hall, Inc. © 2008 Prentice Hall 2006

Complications to strategy formulation -- Not-for-Profits Complications to strategy formulation -- Goal conflicts interfere w/rational planning Integrated planning focus shifts Ambiguous operating objectives Simplifies detailed planning – adds rigidity Prentice Hall, Inc. © 2008 Prentice Hall 2006

Complications to evaluation & control- Not-for-Profits Complications to evaluation & control- Rewards/penalties No relationship to performance Inputs rather outputs Heavily controlled Prentice Hall, Inc. © 2008 Prentice Hall 2006

Not for Profit Strategies -- Strategic piggybacking Social entrepreneurship Mergers Strategic alliances Prentice Hall, Inc. © 2008 Prentice Hall 2006