Strategic Planning for Nonprofit Organizations - Article Example

Running Head: Problem Solving Each and every organisation goes through organisational problems which affect its performance. Depending on the problem solving techniques that they employ, some effectively overcome these problems while others flounder. This explains the existence of the success gap between multinational organisations and small business enterprises. According to Paradies and Unger (2002), organisational problem solving techniques should embrace more rather than just implement decision making strategies. Problem solving techniques should integrate all the internal and external factors that influence the performance of an organisation as they depict the business environment. This is because there is no definite solution to a problem as all solutions lead to development of new problems and solutions. Problem solving techniques are on-going processes needed for the survival of an organisation. Halpern (2002) explains that problem solving techniques should be able to find and formulate the problem that affects the progress of an organisation, implement a decision, audit the results obtained from the decision made and review the obtained results to determine if they are appropriate. More effort, energy, time and money should be spent on the prior stages of problem solving techniques rather than on the later stages. However, most executives ignore this fact as they aim at acting quickly and decisively thereby creating a type III error (working on the wrong problem) (Paradies & Unger, 2002). Therefore, this report will discuss problems that curb the development of organisations and appropriate problem solving techniques that are used to eliminate this paradigm. This report will also analyse features of these problem solving techniques and the issues faced while applying them to the problems. Most organisations especially new business enterprises are faced with strategic planning problems. Such organisations are unable to appropriately define the strategy and direction of their firms. They are unable to formulate efficient decisions in distribution of the organisational resources such as capital and labour, a fact that affects their capability to strive in the stiff market competition (Bradford & Duncan, 2000). Most researches, studies and surveys that have been conducted show that most successful organisations implement the SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis into the culture of the organisation to strategically plan for the operations, decision making and resource distribution tactics. According to Lorenzen (2006), SWOT analysis comprises of the identification of organisation's objectives to determine internal and external factors which may enable or prevent the achievement of these objectives. The SWOT analysis was formulated by Albert Humphrey with the aim of helping business ventures to effectively identify areas for development by matching the strengths of the organisations to available opportunities and the weaknesses to potential threats that the organisation may face. This enabled organisations to attain competitive advantages over their counterpart business enterprises. In other words the SWOT analysis enables organisations to detect the threats and weaknesses of the organisation and convert them to strengths and opportunities that the organisation can utilise to increase its performance. Also organisations are able to effectively overcome these threats and weaknesses thereby attaining appropriate market control due to implementation of strategic plans into the culture of the organisation (Tracy, 2000). The internal factors comprise of the strengths and weaknesses that determine the accomplishment of objectives of an organisation for example the 4Ps, manufacturing capabilities and personnel among others. On the other hand the external factors comprise of opportunities and threats that an organisation faces such as technological changes, socio-cultural changes and the competitive position of the organisation (Bradford, Duncan & Tracy, 2000). The study of these factors results to the creation of a SWOT matrix which enables organisations to effectively match their capabilities and resources to the competitive environment in which they operate. Appropriate SWOT matrices include the S-O, W-O, S-T and W-T strategies which enable organisations to undertake opportunities that emulate the strength of the organisation, curb weaknesses by pursuing available opportunities, use the organisation's strengths to avoid the external threats that the organisation may face and prevent the organisation from succumbing to its weaknesses and potential threats respectively (Cowan, 2004). SWOT analysis is also conducive as it is applicable in different types of organisations for instance non-profit organisations, private enterprises and governmental units. However, SWOT analysis has the tendency of encouraging organisations to develop lists instead of studying the actual factors that will enable the achievement of the organisation objectives. The SWOT analysis may at times present uncritical results which make organisations to act without prioritising their decisions. This is because organisations need to be realistic and specific when conducting a SWOT analysis to be able to differentiate between the current and future position. Therefore, the analysis should be short, precise and subjective (Allison & Kaye, 2005). It is also quite evident that most of the organisations are curbed with management problems as they fail to implement strategic management into their structure, culture and leadership. According to Haberberg & Rieple (2001), such organisations fail to evaluate their cross-functional decisions. Therefore, they are not able to achieve the long term goals that they have stipulated. They explain that strategic management enables organisations to specify their objectives, mission, goals and visions thereby developing policies and plans that will enable them to achieve their goals, and thus improve their performance to strive in the stiff market competition. The operations of an organisation steadily develop because they become consistent with the expectations of the management (Hamel, 2002). Organisations implement the PEST (Political, Economic, Social and Technological) analysis into their culture to overcome this problem. PEST analysis enables organisations to study and predict the business environment thereby implementing appropriate strategic management tactics into the operations of the organisation. The political factors reflect the extent in which the government controls the economy through imposition of taxes, tariffs, trade restrictions, labour and environmental laws. Organisations are therefore able to determine the goods and services that the government is willing to provide and purchase. The economic factors comprise of economic growth, inflation, exchange and interest rates. These factors depict the growth rate and operations of an organisation therefore enabling organisations to predict their position in the business environment (Ghemawat et al., 2001). Social factors comprise cultural aspects, population growth rate, age distribution and career attitudes among others. This enables organisations to plan their supply effectively thereby fulfilling the demands of the market. On the other hand technological factors comprises of environmental and ecological aspects which influence the quality of products, their costs and the degree of innovation that can be adopted by an organisation. This further enables organisations to make appropriate outsourcing decisions (Wolpert, 2002). Therefore, organisations are able to measure the position and direction of their firms by relating it to the growth or decline of the market. Moreover, PEST analysis encourages proactive thinking rather than using instinctive or habitual reactions to make decisions. Furthermore, PEST analysis enables organisations to identify SWOT factors which help them to strategically plan their operations. However, before implementing the PEST analysis into the culture of an organisation, executives are supposed to determine the type of business they are running because not all businesses utilise all the PEST factors. For instance, a defence contractor will be affected by the political factors while a food and beverage company will be affected by the social factors (Laermer & Simmons, 2007). Due to globalisation and technological advancement many organisations that provide the same products into the market have been established. Therefore, organisations need to define their scope of market and gain market control to survive the stiff competition. Many fail to extend their scope of market because of utilising poor marketing strategies. According to Scrizzi (2007), such organisations are unable to concentrate their limited resources on the available opportunities to increase their sales thereby attaining sustainable competitive advantage. Effective marketing strategies enable organisations to identify their marketing goals thus meeting the demands and needs of customers. To curb the problem of strategic marketing organisations use the porter five forces analysis (Scrizzi, 2007). The Porter's five forces analysis was formulated by Michael E. Porter in 1979 with the aim of increasing the intensity of market attractiveness (Porter, 2007). The Porters five forces are thus used to analyse the operations of an industry in relation to the market demands. These forces include existence of other companies providing similar products into the market, new companies that exhibit the potential of controlling the marketing environment, goods and services that act as substitutes of the products produced by organisations, available suppliers and customers. They present the bargaining powers of buyers and suppliers, the threats presented by new entrants and product substitutes and the competitive rivalry that exists between similar business ventures. Competitive rivalry enables an organisation to determine the extent the value it creates will be dissipated in the head to head competition that exists between the organisation and its counterpart business enterprises (Messerschmitt & Szyperski, 2004). The threat presented by new entrants into the market enable organisations to determine market entry barriers such as economies of scale, cost of entry, government legislations, distribution channels, brand differentiation and cost advantages therefore formulating strategies that will prevent the new entrant and existing companies from replicating and overpowering its position (O'Shaughnessy, 2001). The threat created by substitute products enables organisations to determine the ratio that exists between the prices of the commodities provided by the organisation and its performance. On the other hand the buyer power enables the organisation to determine the value it creates in the market environment. The organisation is also able to determine the size and concentration of its customer's scope. The suppliers' power helps organisations to determine the relative size and concentration of suppliers in the market thus reflecting these findings into the production rate of an organisation (Krantz, 1997). Fensel (2000) explains that Porter's five forces formulate the business environment therefore, effectively studying the dynamics and structure that exists between these forces results to development of appropriate strategic marketing mechanisms. However, Porter's five forces make organisations to concentrate on the strategies used by their competitors in order to profit. While in actual fact there are other factors that can be used by organisations to profit by extending their scope of market. Porter's five forces analysis also adopts a static market structure which does not comply with today's market forces for instance the sophisticated demands that have taken toll of the market environment. It is also difficult to incorporate new innovation into the Porter's five forces model. Therefore, to gain maximum benefit from the Porter's five forces model it should be used hand in hand with the SWOT and PEST analysis (Engel, 1998). Another prominent problem that affects the success and performance of an organisation is lack of risk management. Many organisations that fail to attain their goals and objectives are unable to identify factors that may jeopardize the operations and performance of the organisation. Rasiel and Friga (2001) explain that, use of risk analysis techniques identifies preventive measures that will minimise the probability of risks and business operation constraints from occurring. By implementing this problem solving technique, organisations are able to determine the most probable threats that might affect the operations and performance of the organisation. They are also able to analyse the vulnerabilities that subject the organisation to these threats (Vrakas & Vlahavas, 2008). According to Whimbey and Lochhead (1999), risk assessment techniques enable organisations to develop a good foundation for implementing a recovery plan which will protect the organisation from these threats. Organisations not only study internal risks that may affect the success of the organisation but are also able to identify external risks by implementing risk analysis techniques into the culture of the organisation. Examples of risks that may affect the progress of an organisation include human, technical and natural disasters among others (Riviere, 2009). Therefore, when organisations implement risk assessment techniques into their culture they should ensure these techniques also weigh the potential impact that may be caused in the event of risk occurrence. Occurrence of such disasters is highly uncertain, a fact that makes most organisations not to pay great attention to this problem solving technique. In the end organisations are unable to incorporate an appropriate recovery mechanism in case of occurrence of any disaster (Clegg & Birch, 2007). From the above it is quite evident that problem solving techniques if appropriately employed and incorporated into the culture of an organisation help business ventures to continue surviving especially in the stiff market competition. Organisations are also able to avoid type III errors which can adversely affect their performance, profitability and success. It is also advisable to incorporate most of the problem solving techniques into the culture of the organisation as they do not solve similar problems thereby increasing the potential of an organisation, its market scope and its profit margin. This is because most successful organisations have implemented the SWOT analysis problem solving technique to run concurrent with the PEST and Porter's five forces analysis. Therefore, organisations are able to attain market control and prominence thereby effectively surviving in the stiff market competition. It is also quite evident that today's business environment requires an integration of more than one problem solving technique into its culture as this enables organisations to meet all the new market demands, comply effectively with the market forces and adequately avoid potential risks that have increased due to globalisation and technological advancement. References Allison, M. & Kaye, J. (2005). Strategic Planning for Nonprofit Organisations. 2nd Ed. Hoboken, New Jersey: John Wiley and Sons. Bradford, T. & Duncan, W. (2000). Simplified Strategic Planning. Wakefield Street, London: Chandler House. Bradford, R. W., Duncan, P. J. & Tarcy, B. (2000). Simplified Strategic Planning: A No- Nonsense Guide for Busy People Who Want Results Fast!. Wakefield Street, London: Chandler House Press. Clegg, B. & Birch, P. (2007). 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