Strategic Management of StratSynth - Case Study Example

STRATEGIC MANAGEMENT OF STRATSYNTH By Name Course Instructor Institution City/State Date Strategic Management of StratSynth Introduction East African countries such as Kenya, Uganda, Somalia, Ethiopia, as well as Djibouti have most recently experienced drought that created an urgent need of humanitarian aid. As mentioned by Wainaina (2017) many areas across East Africa were in early 2017 affected by the worst drought in over 60 years. Besides that, drought has led to a food crisis in East Africa and over 11.5 million people are presently in urgent need of relief food in Ethiopia, Kenya, Djibouti, and Somalia. If action is not taken, the number is projected to rise. The food crisis is exacerbated by the fact that food production in East Africa has diminished for three consecutive years; thus, exhausting the capacity of the people to handle another shock. The drought has also been driven by conflict, especially in Somalia and South Sudan where millions of people have been displaced as a result of the conflict; thus, making cultivation harder and also hampers humanitarian access. 1.0 A Five Forces analysis of the likely competitors to StratSynth According to Schwenger et al. (2014), the not-for-profit organisations’ nature of competition can be understood effectively through the five competitive forces, which jointly demonstrate the competition intensity in the sector and create an initial point for formulating a strategy. The Power of Large Suppliers In the not-for-profit sector, the activities are primarily service-based rather than product-based. In addition, these services are characteristically social and rooted in particular skills instead of material resources. Therefore, this reduces the impact of supplier power. As mentioned by Cafferky (2005), the corporate funders and donor community in the NGO model are both customers and suppliers. They offer resources (funds) for the not-for-profit organisations to perform their mission but in return, they take credit of the positive social impact realised through the not-for-profit organisation’s activity. The power of large funders could influence the not-for-profit organisation by drawing it away from its core mission and vision into activities that bring forth scope-creep in all operation levels. Cafferky (2005) emphasises that the power of large funders demonstrates the unequal power balance that is tacitly accepted between not-for-profit organisations as well as donors; considering that this is a social development rather than a charity. Therefore, donors have high bargaining power in terms of their funding decisions. When purchasing products or services on behalf of the not-for-profit organisation they could demand service improvements or lower prices (Schwenger et al., 2014). Rivalry among Competitors As mentioned by Schwenger et al. (2014), rivalry amongst not-for-profit organisations normally happens when competitors try to improve their current position. Since not-for-profit organisations are primarily service providers, they normally face few exit barriers. The majority of not-for-profit organisations, according to Cafferky (2005, are normally reluctant to work with international not-for-profit organisations because they believe they are encroaching their area of operation. The not-for-profit sector’s competitive environment is steered by both the external forces existing in the environment and its own internal characteristics. The forces in the not-for-profit sector’s competitive environment have been divided by Ritchie and Weinberg (2000 as audience-based, social-based, product-based, and internal-based forces. StratSynth will experience strong competition from other not-for-profit sectors offering similar services such as UN’s Food and Agriculture Organisation (FAO), which normally offers assesses problems associated with global food supply. Other international competitors include Oxfam, ActionAid, the International Federation of Red Cross and Red Crescent Societies (IFRC), and World Food Programme (WFP), is the principle supplier of relief food aid. At the local level, StratSynth will face high competition from Catholic international development charity (CAFOD) which has for many years worked together with local partners in areas affected by drought, famine, floods and other disasters in countries like Kenya, Somalia, South Sudan, and Ethiopia (CAFOD, 2017). As mentioned by Arasa and Kioko (2014), rivalry amongst the existing competitors in the non-profit sector is attributed to the growing resources scarcity as well as the changing environment. Bargaining Power of Buyers According to Cafferky (2005), not-for-profits organisations’ products are considered as being undifferentiated or standard, the switching costs are exceedingly low, and the threat created by the buyers is creating their own substitutes or backward integration. Other influences from the buyers include opportunity costs whereby buyers move to another organisation that offer better services than the organisation. Furthermore, creating a relationship with one group of person could lead to sunk participation investments. Still, the buyers bargaining power is low. Threat of new entrants The barriers to entry into the not-for-profit sector are exceedingly low. Although new entrants could pose a serious threat to traditional non-profit organisations and could do better than them in terms of cost and efficiency, finding reliable donors is exceeding challenging. The entry barriers in the sector serves as competition-limiting force and allows organisations to place protective boundaries around the industry. The Threat of Substitute Products The threat of substitute products in the non-profit sector, the corporate social responsibility activities by multinational companies in terms of corporate donations could pose a major threat to the non-profit organisations. Furthermore, micro-loan providers, as well as social entrepreneurs, could offer new services which could substitute traditional services of non-profit organisations. 2.0 The business level resources and capabilities required for the StratSynth’s mission StratSynth should use focus strategy since it does not compete industry-wide but focus on specific segments and this can be achieved through differentiation strategy. Focus differentiation strategy would be suitable for StratSynth since it focuses on East Africa and a highly specific needs (food aid in flood, drought, and disease stricken areas). StratSynth can pursue differentiation strategy by emotionally involving donors. In this case, ethical resources allocation would be a major differentiation point; thus, donors would be contributing to differentiated causes (Rossig, 2016). In East Africa, drought is unquestionably not new; therefore, for StratSynth to successfully offer services to this region it must invest heavily in the projects that would support communities prior to the drought hits and which would help reduce the negative effects associated with poor rains.  This could be achieved by sustainable projects such as irrigation schemes and rainwater harvesting. This can be achieved by accessing complementary resources. The resource-based vie, as cited by Graf and Rothlauf (2011), maintain that organisations realise competitive advantage through accumulation and utilisation resources which are rare, cannot be imitated, as well as non-substitutable. Collaboration is a complementary resource that can lead to competitive advantage. Given that StratSynth miss correspondence between available and needed resources, it should enter into collaboration with various partners. The organisation can only be successful if it has adequate technological, financial, management, and physical resources. Collaboration with non-profit organisations would offer StratSynth access to other donors. As mentioned by O'Cass et al. (2015), market success can be achieved if the company maximise its ability by means of specific operational capabilities. The authors maintain that capabilities are more crucial as compared to having resources. Since having resources does not result in the realisation of certain marketplace objectives in devoid of the aligned capabilities. Therefore, accumulating and deploying marketing capabilities and resources would lead to the creation of the connection between the organisation and the consumers. Cash management and budgeting capabilities are extremely crucial resources for not-for-profit organisations. StratSynth would have to closely monitor whether it has adequate cash reserves to continue offering services. As mentioned by Blackbaud (2011), predicting cash flow is very difficult since the organisation depends on support from resource providers and donors. An increase in demand for the services offered by the not-for-profit organisation could result in management crisis. Given that forecasting donation revenue reliably is challenging, budgeting would come in handy. Wright et al. (2015) emphasise that financial sustainability is a major change driver; therefore, budgeting and cash management could help the organisation address short-term goals like the funders and donor needs, maintaining positive cash flow, and meeting annual budget targets. The fundamental capabilities that would distinguish StratSynth as a successful non-profit organisation include: survival capability by executing programs through quality systems, staff, and sustained funding. Other capabilities include the ability to be perceived as legitimate, remain politically neutral, being able to innovate under adversity, being ‘donor savvy ‘and mapping growth path (Banerjee, 2006). 3.0 Five Organisations with the Resources and Capabilities with Which StratSynth May Engage Using Corporate Level Strategies To succeed in East Africa, StratSynth should utilise diversification, which is a corporate-level strategy which involves growing the business into new business areas either similar or different to the current business. By transferring its core competencies, StratSynth would be able to link its different businesses activities through technological and managerial knowledge, expertise and experience. Giving Pledge will be the main funder of StratSynth not-for-profit activities. Basically, the Giving Pledge seek to address various pressing problems in the society by inviting the wealthiest families and individuals in the world to commit to offering over 50% of their wealth to charitable or philanthropy causes. Therefore, StratSynth will be financially stable. However, the competitive setting through which non-profit organisations find themselves today is encircled by two crucial forces: their greater social pressure and economic survival within the highly competitive context. According to Arenas et al. (2011), adoption of planning mechanisms together with effective management of internal processes can result in the establishment of the relational framework. Relations between corporations and StratSynth would be relational and strategic, incorporating forms of confrontation and collaboration. By identifying and articulating corporate and NGO interactions, a cooperative path can develop along (Hond et al., 2015). Organisations that would enable StratSynth to achieve its objectives include: Bank of America The Bank of America would offer StratSynth financial capability to fulfil its social responsibilities. By developing a strong partnership with Bank of America, StratSynth will be able to serve community needs by capitalising on the bank’s collective networks as well as expertise. The bank will help the organisation help the communities grow as well as thrive. To work effectively with Bank of America, StratSynth should use a joint venture to be able to access the expertise that the for-profit company has and capitalise on opportunities otherwise inaccessible to them.  American Airlines Partnering with American Airlines would enable StratSynth to improve lives of the people in East Africa affected by disasters. Through the airline’s AAdvantage, the members would be allowed to donate miles to StratSynth’s cause or earn miles by donating cash for that next trip. These contributions would enable StratSynth to make a difference into many lives in East Africa. The ancillary joint venture is a suitable way for StratSynth to partner with American Airlines, whereby StratSynth would contribute part of its assets into the joint venture. Given that StratSynth is a tax-exempt organisation, it will be able to get more revenue from the airline through ancillary joint ventures. American Airlines would also offer logistics capability. Wal-Mart Wal-Mart is recognised worldwide for its cash and food contributions to food banks (Strom, 2010). The company is one of the largest retailers in the world; therefore, would serve as suitable points for collecting donations on behalf of StratSynth. This would be achieved through non-equity strategic alliance whereby both Wal-Mart and StratSynth would pursue a set of agreed upon goals but would remain independent organisations. General Electric General Volunteers, which comprise of retirees, employees, friends, and Affinity Groups would offer crucial human resources needed by StratSynth to perform its services. By partnering with GE, StratSynth would be able to solve various human resources problems associated with dispatching relief food and services. The non-equity strategic alliance would enable StratSynth to realise these objectives, but both companies will remain independent players. USAID USAID would offer StratSynth the capability to leverage the strengths of for-profit and non-profit organisations to support country-driven strategies. USAID has financial, technological, and personnel capabilities that could help StratSynth serve people efficiently. In this case, forming a joint venture would be beneficial since both companies would share responsibilities and resources. 4.0 Melinda Gates' interests in the firms producing the Pouncer Drone, the Spider Light Strike Vehicle and the Rokon two wheels drive motorcycle The Pouncer Drone, the Rokon two-wheel drive motorcycle, and the Spider Light Strike Vehicle would facilitate StratSynth to delivery aid rapidly. According to Ring and Ven (1992), rapid technology changes, firm strategies, the competitive environment and other pressures have forced many non-profit companies to seek continuing cooperative relationships with other companies. Such joint efforts would be expeditious means for StratSynth to stay up-to-date, particularly when the firm is looking for pioneering as well as unique resources. O’Connor and Shumate (2014), non-profit organisations and corporations are creating cooperative relationships to solve pressing environmental and social issues. The Pouncer Drone would help StratSynth to deliver food aid in remote, broken, damaged and difficult infrastructures. The Spider Light Strike Vehicle is designed for off-road mobility and can be configured flexibly for various disaster relief missions such as medical evacuation, emergency rescue, as well as transporting essential supplies. The Rokon two wheels drive motorcycle would enable StratSynth workers to access inaccessible places. 5.0 Organisational structure for StratSynth Headquarters group Organisational structure provides a framework through which strategies are used. In this case, a functional structure has been utilized to implement focus differentiation strategy. Most functions have been decentralised, job descriptions are broad, and the structure includes development-oriented culture. Position Roles and Responsibilities Board Members Hiring and supervising the Executive Director Developing and approving budgets Champion the StratSynth’s cause Representing StratSynth to the larger community Raising funds for StratSynth projects Director Responsible for StratSynth’s overall direction Managing the day-to-day activities of the organisation Oversees the work of other personnel Operational planning as well as management Community relations/advocacy and risk management Program Manager Coordinating programme’s projects as well as managing their inter-dependencies Designing programmes and managing them proactively Defining the governance arrangements of the programme Facilitating the individuals appointment to project teams Administrative Officer Overseeing the human resource and administrative tasks in the head office Setting up as well as maintaining confidential employee contracts and files Establishing and sustaining office procedures with regard to staff benefits Procuring equipment supplies as well as other materials needed at the office Accounts Officer Preparing budgets Monitoring reports Preparing profit and loss statements Coordinate with the external and internal auditors Project Coordinator Developing as well as implementing programs for staff development Scheduling meetings with local non-profit organisations Creating new administrative procedures sets 6.0 A Vision, Mission Statement, and Positioning Statement for StratSynth  Mission Working with poor and excluded people in the East African Countries to reduce negative effects attributed to natural disasters. Vision A sustainable future where every person would enjoy the right to sustainable livelihood resources, basic social services and more importantly, life and security Positioning Statement StratSynth offer all people services ranging from food aid to irrigation schemes than all other non-profit organisations. This will be achieved by forming strategic partnerships with major corporations across the globe. Conclusion In East Africa, StratSynth will be working in areas affected by drought and other natural disasters. StratSynth will be offering food supplies for families and also meals for school-going children with the aim of helping them in education. The organisation will be been working with communities that have been affected by drought. The main focus will be reaching the vulnerable groups, especially children, women, disabled people, HIV/AIDS victims, and the elderly. The organisation’s rights-based and long-term approach intends to support the East African people to re-establish their lives and make them less vulnerable to future adversities. StratSynth will ensure aid gets to the East African people affected by famine, drought and other disasters. 7.0 References Arasa, R. & Kioko, M., 2014. An Examination of the NGO Sector Competitive Environment in Kenya. International Journal of Science and Research (IJSR), vol. 3, no. 6, pp.219-24. Arenas, D., Sánchez, P., Murphy, M. & Vives, J., 2011. Corporate relations with local communities and NGOs. Research Report. Pittsburgh, PA : Institute for Social Innovation. Banerjee, N., 2006. A note on capabilities that contribute to the success of non-governmental organisations. Discussion Paper. Maastricht, Netherlands: European Centre for Development Policy Management. Blackbaud, 2011. Financial Management of Not-for-Profit Organizations. White Paper. Charleston, SC: 2011. Cafferky, M.E., 2005. 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Wright, A., Seaton, S., Sparling, L. & Lenz, J., 2015. CHALLENGES IN ACHIEVING NON-PROFIT SUSTAINABILITY:A Study of Social Service Non-Profit Organizations in the Central Okanagan. Survey Report. Kelowna, British Columbia: Scotiabank Centre for Non-Profit Excellence. Read More