Strategic Management Aspects of Non-Profit Organization - Research Paper Example

Strategic Management Aspects of Non-Profit Organization - Qatar Foundation Abstract Development of human capital is essential for bringing about national development and a well-educated workforce is essential for nations wanting to compete effectively to maintain and enhance living standards. However, development of human capital is even more significant for Qatar because only a well-educated and skilled workforce can help provide a bright future for the nation after the depletion of the nation’s fossil fuel reserves. Qatar Foundation for Education, Science and Community Development, a non –profit foundation established in 1995 on the personal initiative of the Emir of Qatar Sheikh Hamad Al Thani, has presented a significant contribution towards stimulating education, learning, research and community development in Qatar and the region around Qatar. Qatar Foundation is leading Qatar’s drive to become an advanced knowledge-based society, like Taiwan, Singapore and Japan, to try to deliver a better future for Qatar after depletion of the nation’s proven natural resources. This discussion presents an examination of Qatar Foundation strategy, which unlike a for-profit organisation emphasises benefits rather than profits. Contents Introduction 1 Theories and Strategies Adopted by Qatar Foundation 5 An Analysis of Qatar Foundation Strategy 12 The Organisational Fit for Qatar Foundation Strategy 20 Choice of Strategy for Qatar Foundation 21 Conclusion 25 Bibliography/ References 27 List of Figures Figure 1: Strategy Dimensions for Non-Profits 4 Figure 2: Strategic Workforce Planning Processes that Use Input from all Qatar Industries and Public Sector Departments to Develop Qatar Foundation Strategy 24 List of Tables Table 1: Services provided by the Qatar Foundation Social Development Centre in the year 2008 – 200 8 Table 2: Research Grants approved by the Qatar National Research Fund for the Year 2007 – 2008 10 Introduction A non-profit organisation refers to an organisational form, which does not entitle its founders to a share in the profits generated by the organisation (Jegers, 2008, Pp. 7 – 8). However, it is important to understand that the term ‘non-profit’ does not necessarily refer to ‘no-profit’ (Schaefer, 2004, Pp. 269 – 270). All organisations, regardless of whether they are profit-oriented organisations or non-profit organisations need funds to operate and to realise their mission. This means that even the non-profit organisations are entitled to generate funds to help achieve their objectives and fulfil the reason for their existence, but the ‘non-distribution constraint’ prevents prohibits the distribution of periodical surpluses between members and the institution. Non-profit organisations retain accumulated wealth within the organisation to utilise any operating surpluses to further the mission of the non-profit organisation (Schaefer, 2004, Pp. 269 – 270). Thus, according to Schaefer (2009), although both for-profit and non-profit organisations pursue financial objectives, the non-profits are additionally motivated to promote the intangible objectives and values of their organisation. The voluntary non-profit sector is now an important part of the contemporary society, with the earned income from trading and non-voluntary sources of British charities reaching £ 13.3 billion in the year 2005, an increase of 46% from a decade ago (Chew, 2009, Pp. 2). The Foundation is a special case of a donative non-profit organisation, which utilises private capital for the general good (Jegers, 2008, Pp. 12). Jegers (2008) states that non-profit organisations now operate in the culture and recreation, education, health, social services, environment and development and housing sectors, etc. to promote the general good. Strategy and strategic planning are important for both profit and non-profit organisations, because it is important to decide how best to achieve the goals desired by an organisation (Allison, 2005, Pp. 1 – 14). Both profit and non-profit organisations conduct similar steps and activities to develop strategy, but for-profit organisations tend to focus more on activities to maximise profits while non-profits focus more on maximising good, delivering their services to benefit more, board development, fundraising and the management of volunteers (Courtney, 2002, Chapter 9). However, Courtney (2002) suggests that size is an important consideration in deciding about how organisations prepare their strategic plans, and it is important to note that strategic planning is far more entrenched in for-profit organisations compared to non-profit organisations. Qatar Foundation for Education, Science and Community Development, established in 1995 on the personal initiative of the Emir of Qatar Sheikh Hamad Al Thani (The Middle East, 2007, Pp. 30). This foundation is actively involved in trying to transform a small but wealthy state from carbon economy to a knowledge-based economy by unlocking the human potential and (Qatar Foundation International, 2010, “About QFI”). The trustees of the Qatar Foundation understand that Qatar must develop the skills and technical knowledge of its people to compete in the 21st century global economy. Thus, the Qatar Foundation has tried to bring higher education institutions of excellence to the region to establish prestigious teaching and fundamental research programmes (Oxford Business Group, 2009, Pp. 241). In addition, Qatar Foundation seeks to bring international companies and research institutions to Qatar to help with the establishment of high-tech industries and the application and commercialisation of research. The mission and vision of the Qatar Foundation extend further to stimulate development of education, scientific research and community development in Qatar and among its less fortunate Asian neighbours. Clearly, if Qatar Foundation is to achieve its vision and present an acceptable performance, a strategy for achieving the vision and for performance maximisation must exist. Figure 1, below, illustrates the strategy dimensions for non-profits, and it is important for Qatar Foundation to study it environment, its resources, the mission and performance to decide about strategy (Rhodes, 2005, Pp. 124). It is worth studying this strategy because the future of Qatar depends on its success, and the Qatar Foundation strategy not only teaches lessons but also practically assists many in the region by stimulating education, science and technology and community development. The previously mentioned issues of impetuous encourage this discussion, which focuses on the Qatar Foundation strategy. Figure 1: Strategy Dimensions for Non-Profits, from (Rhodes, 2005, Pp. 124) Theories and Strategies Adopted by Qatar Foundation The development of human capital is emphasised as being important for national development and education, health as well as the family and the community are important aspects of human capital development (Dutt, 2008, Chapter 24). Savings, investment and capital accumulation together with physical infrastructure development and development of entrepreneurship are also important, but it is essential to ensure that the previously mentioned factors act synergistically to present results. Thus, by stimulating and emphasising on education, developing physical infrastructure to sustain and to support health and education and by trying to attract technology companies and investment into Qatar, the Qatar Foundation has tried to present an appropriate strategy for the development and future prosperity of Qatar. Islam has emphasised acquisition of knowledge as being obligatory and according to the interpretation of the Koran by scholars of Islam, including Razi, knowledge is the highest good of man (Psaki, 2002, Pp. 89 – 90). According to Psaki (2002), while the other good things in this world are limited in degree, quality and quantity, knowledge is limitless. In addition, the Prophet of Islam wanted his caliphs to teach his traditions to the servants of God, over whom they ruled and to educate them. Psaki (2002) compares the darkness of ignorance to the darkness of hell and the sayings of the Prophet of Islam, the Hadith, declare the road to knowledge as the road to Paradise and nearness to prophets (Bah, 2003, Pp. 75 – 76). In addition, Bah (2003) states that Muslim traditions present news of special rewards to those who seek knowledge and disseminate it to others. Psaki (2002) states that according to the Prophet of Islam, the best action for a community of believers is to seek knowledge. In addition, according to (Sunni Forum, 2004), Islam considers spending money on seeking knowledge as fî sebîlillâh, or investment for reward from God, which is a good deed that receives an increase in reward by seven hundred times. Thus, according to the Islamic traditions, it was a duty of the ruler of Qatar to have tried to guide his people to the best possible path to receive a reward from God, and to reap a seven hundred-fold return on his investment in research and knowledge by investing in knowledge. The traditions of Islam suggest that by investing in knowledge, the infrastructure to support knowledge and the dissemination of knowledge, the ruler of Qatar and his people can expect to gain a future in this world, after the depletion of the natural resources of Qatar, and in the hereafter. Thus, there was no better investment available with a higher probability of generating terrific returns on investment to prepare for the future of Qatar and its people. The basic and the most important strategy adopted by Qatar Foundation is directed towards stimulating quality in education available to those who live in Qatar (Qatar Foundation, 2010, “Qatar Foundation Fact Sheet”). It is important to understand that in a highly competitive world, quality is most important and mass literacy programs that do not aim to present quality cannot bring the benefits that quality confers. If the future generations in Qatar are to compete with the best in the world to try to maintain the highest standards, they must have quality. This is why Qatar Foundation has tried to provide the best in education programmes by attracting the best universities to Qatar and invested in leading edge research centres. In addition, Qatar Foundation has tried to attract the best leading – edge technology companies in the world to Qatar. Qatar Foundation has tried to provide the infrastructure that will serve Qatar well for many years. Support for translation of leading scientific texts into Arabic provided by Qatar Foundation helps educate many within the region (Qatar Foundation, 2010, “Qatar Foundation Fact Sheet”). In the field of sports, the equestrian centre builds on the traditional strengths of the people of Qatar in breeding horses. The Qatar Foundation Radio and the community newspaper Qatar Foundation Telegraph help promote intellectual discussion of quality to benefit all in Qatar (Qatar Foundation, 2010, “Qatar Foundation Fact Sheet”). Table 1, below, presents a summary of efforts that Qatar Foundation Social Development Centre has made to try to help those facing difficulties in the community. The Qatar Foundation magazine helps to stimulate an interest in education, research, the arts, environment and much more to nurture a spirit of innovation and fondness for learning is in the community. Table 1: Services provided by the Qatar Foundation Social Development Centre in the year 2008 - 2009, from (Qatar Foundation, 2010, “Annual Report 2008 – 2009”) Investments in research centres of excellence in Qatar and collaborative ventures with leading knowledge players in other countries will help Qatar to remain connected to the knowledge world to attract knowledge industry to the country. It is important to understand that investments in education, knowledge and research are long-term investments that do reap a reward in complex ways. Thus, because the Qatar Foundation and those in Qatar had to start from scratch to attract the people of Qatar to education and learning, the Qatar Foundation strategy has been to try to quickly move the people of Qatar to excellence in learning and knowledge and then to move towards self-sustaining regeneration. Future returns will appear when efforts directed towards trying to gain more with sustained efforts by those who benefitted from the efforts of Qatar Foundation bear fruit and Qatar becomes self-regenerating in education and knowledge. Without the efforts of the Qatar Foundation, it is likely that the people of Qatar would not have turned towards education and learning and this would have meant that even a chance for future achievements would not have existed. The welfare of families, children and the community is essential for development of human capital because only healthy bodies and minds can deliver fruits of intellectual labour. The Qatar Foundation Research Division will try to groom promising scientists and researchers from Qatar and other countries to enhance further their expertise and to contribute to science, innovation, knowledge and the Qatari economy (Qatar Foundation, 2010, “Science and Research”). Table 2, below, presents a summary for research grants provided by Qatar Foundation. However, it is important to note that the activities of the Science and Research Division will require much patience to deliver. Table 2: Research Grants approved by the Qatar National Research Fund, which is a Member of Qatar Foundation in Priority Areas of Interest to Qatar for the Year 2007 – 2008, from (Qatar Foundation, 2010, “Overview of Qatar National Research Strategy”) In the light of the previous discussion, it is possible to say that the Qatar Foundation acts to stimulate education, learning, research, development of human capital and knowledge together with community enhancement in Qatar and other disadvantaged areas around Qatar. It is important to understand that the task that the government of Qatar and the Qatar Foundation were not easy because for centuries the main source of income for Qatar was fishing, pearling and trading (US Department of State, 2010, “Economy”). Prior to the year 1973, when oil production in Qatar increased substantially, this country was among the poorest in the world, and this meant that excellence in education or a capacity for trying to find another means of earning an income were limited. Thus, it was important try to convert the opportunity presented by a substantial increase in income from oil into that, which could help the people of Qatar to gain a permanent advantage. An excellent education was the only investment that could be useful for an uncertain future, but giving the people of Qatar an opportunity to gain from an excellent education meant that a need existed for huge investments. Extraordinary effort was required because the nation lacked a tradition of excellence in education, research and leading edge knowledge based industries. Other nations with mass literacy and established industries that maintain global competitiveness stimulate innovation, education and research similarly, but these nations did not have to start from scratch (Osman-Gani, 2004, Pp. 276 – 286). However, the success of Singapore and Taiwan suggests that the human capital development approaches can work if combined judiciously with strategies for boosting investment in manufacturing, financial services and entrepreneurship. Metcalfe (2005) suggests that talented human resources and a strong base of advanced knowledge and technology are the main sources of industrial competitiveness. Metcalfe (2005) also suggests that it is possible to overcome limitations of geography, economy of scale and a lack of material resources by securing a high quality workforce. An Analysis of Qatar Foundation Strategy Courtney (2002) suggests that it is possible for non-profits to benefit from application of business methods for strategy formulation and analysis, including SWOT analysis, Porter’s Five Forces Model, PESTEL, and Core Competency analysis, etc. Thus, it makes sense to try to apply a few business analysis tools to Qatar Foundation and the discussion that follows focuses on this. A Strength Weakness, Opportunity, Threat analysis for Qatar Foundation presents the following: Strengths: Qatar Foundation enjoys the support of the government and people of Qatar and has access to funds and goodwill. The aims of Qatar Foundation are meritorious, and it can count on the sustained support of the government of Qatar to remove any red tape or legislation that hampers its mission. Weakness: Because Qatar Foundation operates in a country, which was among the poorest in the world only twenty-five years ago, it has had to start from scratch. Highly skilled and educated experts in all fields were lacking in Qatar, and it is only now that skilled and educated Qatar nationals are available to serve the nation. It was necessary to construct the requisite infrastructure because nothing much existed. Thus, Qatar Foundation has had to construct the entire base for a knowledge society from virtually nothing and this has continued to require large investments that must now present returns. Thus, a pressure exists to make the Qatar Foundation and its investments more self-sustaining. Opportunity: With a lot of infrastructure in place, including research centres, educational establishments, an industry park and qualified workers, it is time to try to generate returns by attracting high technology firms to commence operations in Qatar. Thus, Qatar Foundation must now assist by trying to bring benefits from its investments. With proper incentives, perhaps semiconductor manufacturers, pharmaceutical companies and others can be attracted to Qatar. Threat: A threat exists that without proper management of commercialisation of the tangible and intangible investments made by Qatar Foundation, it will become expensive to sustain on-going efforts over the longer-term horizon. In addition, a threat exists because regional neighbours, including the UAE, are trying to pursue a similar strategy, even though real estate appears to focus more prominently in the UAE strategy and all nations around the world are in competition for knowledge industries. Thus, clearly, it is now important to try to focus on earning from fruits of all efforts made over many years, and it is important that educated Qatar nationals understand that after an education, they should put their education to use to deliver to the nation. Porter’s Five Forces Model presents additional insights into the dynamics and competitive position for an organisation. This model considers threats of new entrants, buyer power, substitutes, supplier power and existing competitors to decide about how well an organisation can retain its position where it serves. For Qatar Foundation, the following observations emerge: Existing Competitors: Although there are several charities that operate in Qatar to serve the local community and the needy overseas, none is active in the field of education, research and promotion of intellectual pursuits (QatarSites.com, 2010, “Qatar Social Organisations”). Private schools that serve segments of the community exist, but none can compete with Qatar Foundation in terms of sophistication, access to fund or scale of operations (British Council, 2010, “Qatar Market Introduction”). Thus, it is possible to say that Qatar Foundation enjoys a virtual monopoly in its field of activities. Threats of New Entrants: Although it is possible for organisations to try to promote cheaper, but lower quality educational programs from Asian countries, even this requires a substantial expenditure and the benefits from such efforts are likely to diminish because developing nations cannot provide leading edge knowledge collaborations that will benefit establishment of knowledge based industry. It is important to understand that those who invest in education want rewards and returns in investment in terms of jobs and income, which lower quality may not provide. Thus, it is safe to say that new entrants are unlikely to present serious competition. Substitute Products and Services: It is possible for an organisation in Qatar to compete with Qatar Foundation by establishing universities and research centres using academics and universities from the third world in an effort to present Qatar with graduates who can acquire degrees cheaper. However, without the best education, a capacity for leading edge thinking and quality is likely to remain lacking. It is unlikely that the affluent in the Middle East and the Arab world will invest in anything but the best and Qatar does not need a huge quantity of “educated” youth with degrees who cannot find jobs. Thus, a pressure does not exist to try to seek huge numbers of degree-educated people who will create social problems and it is more important to try to provide people with a vocation that earns to sustain their lifestyle. Because Qatar is affluent, it can pay for the most prestigious programmes for its most gifted. Buyer Power: Those who avail themselves of the services provided by Qatar Foundation are unlikely to try to refuse to avail superior offerings presented by Qatar Foundation and Qatar wants the best possible for its people. Thus, it is unlikely that those who avail themselves of the offerings of Qatar Foundation will want to shift away from Qatar Foundation, unless the economy deteriorates and a market emerges for lower priced education. Qatar University currently caters for those interested in a lower priced education and employers in Qatar do recognise degrees from Qatar University. Supplier Power: Suppliers have a considerable advantage and this advantage will only diminish when those who have benefitted from offerings presented by Qatar Foundation move on to serve Qatar, assume leadership positions and rejuvenate the investments that Qatar Foundation has made. Now, a lot depends on the will and the commitment of Qatar's nationals who have acquired education, training and research experience. They must now compete whole-heartedly and with a full commitment in the field of knowledge based industries. Knowledge based industry must be attracted to Qatar and this industry must sustain itself and compete globally to make economic sense for Qatar. It is clear from the discussion about Porter’s Five Forces Model that Qatar Foundation has tried to follow the example of several developed nations in its efforts to try to develop human resources in Qatar. In the United Kingdom, the government has stimulated human resource development by upgrading university courses, offering apprenticeship and training programmes, presenting research opportunities, upgrading skills for those in the workforce, and encouraging universities to deliver research that could present economic benefits (Lee, 2004, Pp. 334 – 345). The efforts in Taiwan to develop human resources for the Nanotechnology industry used US$551 million over a five year period from 2003 – 2005 to present better K-12 education, university courses, training materials and advanced publications together with international exchange and collaboration (Shieu, 2009, Slides 1 – 30). Observations from the real world suggest that those from the developing world that have received quality education often deliver nothing in terms of innovation and are content to sit in universities to make students rote learn, while highly skilled and trained people from the developed world deliver practical research and innovations to present economic benefits to the nation. Attitudes are important and a need exists to explain to the skilled and well educated from the developing world that they must make extraordinary efforts to deliver in the national interest instead of remaining contented to live out a risk free existence while thinking that their prestigious degrees alone will keep them well supplied. A need exists to inculcate a sense of duty, striving and humility amongst the educated because they could receive knowledge, instead of a bragging attitude about the degrees that they have bagged. Secondly, trained and highly skilled human resources must have opportunities to do something constructive with their skills and these are sorely lacking in the developing world. Without opportunities to deliver while meeting life needs, a higher level of waste persists in expenditure on human resource development. Thus, a need exists for further investment to support a development of knowledge industry, commercialisation of innovation, entrepreneurship, collaboration with global institution and multinationals. Investments in research to deliver economic benefits in the form of operations that deliver to earn are now important. In addition to spending to develop human resources for nanotechnology, Taiwan's government spent US$ 700 million on further efforts to develop nanotechnology (Taiwan Ministry of Economic Affairs Investment Services, 2008, Pp. 3 – 11). In addition to the expenditure by the government in Taiwan for development of nanotechnology, 175 private sector companies in Taiwan invested an additional US$119 million on developing practical applications that will help build products that sell in a global market worth US$ 178.6 billion annually. Industries in Taiwan headed by the best in the nation constantly keep upgrading the skills of their employees and innovating to maintain their competitive advantage (Taiwan Semiconductor Manufacturing Company Limited, 2010, “Employment”). It is also important to note that only the finest brains of a nation can provide leadership to sustain the future and only elite leaders in knowledge can deliver (Taiwan Semiconductor Manufacturing Company Limited, 2010, “Executives”). It is worth pondering on what is likely to happen if Taiwan was to squander its reserves without being able to compete in the global market. However, this has not happened and this suggests that a method exists for facilitating success in commercialisation of technology and research. Clearly, Qatar Foundation has a sound strategy, but a need exists for the elites to work now to deliver practical products, innovations and patents that will result in practical products and services that sell to earn. Thus, Qatar Foundation must now stimulate practical innovation because no one else will. The Organisational Fit for Qatar Foundation Strategy Organisation strategy fit refers to how well strategic goals of an organisation link with the overall goals and mission of an organisation. Qatar Foundation has a stated mission of assisting with development of education, science, research and community development in Qatar to help this nation become an advanced knowledge based society (Qatar Foundation, 2010, “What We Do”). Clearly, the strategy that Qatar Foundation has employed meets with its goals, mission and vision. Because of Qatar Foundation, knowledge, learning and arts as well as research flourish in Qatar. However, Qatar Foundation has tried to do more by realising that the natural resources of Qatar, and indeed the rest of the world, are finite and a need exists for trying to sustain future generations by providing them with skills and an industry that will sharply reduce dependence on petroleum exports to present a hedge against future uncertainties. Other nations, including Taiwan, Singapore and even Japan and Korea have demonstrated that it is possible to thrive without any natural resources and human will can prevail even against most challenging odds. It is important to understand that Qatar must try to survive as a nation when the oil wealth is gone and education remains with people, wherever they go. In addition, by attracting and developing knowledge elites, including persons, businesses and organisations, it is possible to take a gamble for the future of Qatar even though the risks are great. It is important to understand that the electronics industry in Taiwan takes huge risks every time it researches, develops and markets new products, but such risks deliver sustenance and even high standards of living. Achieving leadership requires extraordinary efforts, and it is important to sustain knowledge leadership. If Qatar wants to sustain its high standards of living and Qataris want to ensure that they can be welcomed around the world, even if their homeland cannot sustain them, they will have to accept the risks and the challenges. Thus, clearly, the Qatar Foundation strategy fits well with the overall mission and goals of this organisation in the broader interest of the nation. Choice of Strategy for Qatar Foundation As mentioned previously, Qatar Foundation had to start from scratch to try to achieve a future for Qatar by investing in human capital because there was no other alternative. Thus, the strategy that Qatar Foundation has pursued to date is a brilliant strategy, which could not have been possible in third world democracies, especially those near to Qatar, and the ruler of Qatar endured despite many uncertainties, risks and perhaps even criticism from those envious of Qatar. Pakistan is an example of a nation that persistently begs around the world because of the democracy presented to its backward people who do not even have ethics. Unfortunately, only the best and the finest in a nation can compete at the leading edge of knowledge to try to deliver and such individuals shoulder many responsibilities. Thus, it is not possible for the entire masses to have the same. However, it is now important to place an emphasis on trying to stimulate those who have benefitted from the efforts of Qatar Foundation to deliver and to attract international leaders in knowledge industries to invest in Qatar to help create a sustainable future for the nation. In addition to trying to nudge the elites of Qatar, who have had an expensive education due to the efforts of Qatar Foundation and trying to attract industry, it is important for Qatar Foundation to try to deliver on-going lifelong education to those who live in Qatar and work in the nation. Leading companies in Taiwan provide every employee with a development plan at the time of recruitment, just like in Japan, and the employee will follow this development plan to progress further (Taiwan Semiconductor Manufacturing Company Limited, 2010, “Employment”). Yes, the workplace and the industry is also a university! Thus, Qatar Foundation must also stimulate education and development for those who work so that they learn while working. Now, it is important to apply further effort to try to identify needs for skills in Qatar industry and government. Qatar must now set strategic direction for development based on investment interest expressed by those approached to establish operations in Qatar, and a need now exists to stimulate further training and development according to strategic needs (United States General Accounting Office, GAO 2003, Pp. 3) and United States General Accounting Office, GAO, 2000, Pp. 1 – 10). Figure 2, below, illustrates this concept. Figure 2: Strategic Workforce Planning Processes that Use Input from all Qatar Industries and Public Sector Departments to Develop Qatar Foundation Strategy, from (United States General Accounting Office, GAO 2003, Pp. 3). Conclusion It is clear from the discussion that Qatar Foundation has tied to take considerable risks, with great courage, to try to help provide a future for the people of Qatar and the nation. However, it is now important to encourage the new generation to try to take on the challenge and work to deliver returns on what God and their ruler gave to them. In addition, further efforts are necessary to try to attract global knowledge industry players to establish in Qatar and to emphasise lifelong learning, even on the job. 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