Nonprofit organizations refer to those businesses which operate under strict rules that restrict distribution of profit to its shareholders (Modia & Mishraa 2010). According to this organization, the term profit refers to any excess of revenues over the expenditure (Ramírez 2010). Businesses which belong to nonprofit organizations are organized into corporations or even associations. Most of them are guided by rules of corporations which are defined by the state. Depending g on the country or the state which the organization is operating in, there are some provisions which are allowed such as trusts or even unincorporated associations (Rosenblattb & Hertz-Lazarowitz 2009).
With many organizations increasing their value to stakeholders and customers, non-profit organizations have found ways in which to build competitive advantage. These organizations’ operations are divided into various functions. This research paper discusses how differentiation helps non-profit organizations in their strategic management. It also describes every step, and its effectiveness in a nonprofit organization. It further addresses the operation of differentiation in human resource and management.
The main functions of non-profit organizations includes: management and programs implementation. The role of management in this kind of organization is to provide direction, guide and control it. Their programs are defined in such a way that the goal, mission and purpose of the organizations are identified. The management of such organizations is unique in that, the managers are supposed to have skills which can be categorized depending on the organizational functions. These management skills are planning, organizing, preparation, providing leadership and harmonization (Rosenblattb & Hertz-Lazarowitz 2009). In a nonprofit organization, strategic management is valued very much because it’s dynamic and continuous (Rosenblattb & Hertz-Lazarowitz 2009).
Strategic Management and Corporate Branding
Many firms would like to be among the top ten in terms of success. Most nonprofit firms have adopted the process of strategic management, where they communicate periodically and make sure their strategies are implemented. The communication part of the process helps build brand identity with the stakeholders. The process of strategic management in big corporations is aimed at managing a number of businesses. For example, the strategy at corporate level has several purposes such as carrying out decisions in a business unit for it to expand, allocation of resources among several business units, the rest being merger and acquisition (Courtney 2002). The process of strategic management in non profit organizations is carried out in stages. These include; mission, objectives, situation analysis, strategy formulation, implementation, control, and control.
For a firm to continue with its existence, it has to realize the reason for its formation. The modern non-profit organizations have known the value of brand as an asset that can take it a head of the pack. Every nonprofit organization has a mission statement, where the mission of the organization is stated. In this mission statement the purpose of the employees is stated together with the projects undertaken by the organization which are portrayed to the customers. Communication through mission statement supports the strategic message that builds brand equity. It’s thus through mission statement that the organization is able to integrate various aspects of its goals in the mission statement that would ensure its name is placed above the rest in the market place. The aim of mission statement in nonprofit organization is to set the direction of the company.
The tendency of a firm to focus on its present situation in line with its plans established, which assists the organization in achieving its objectives. In case there is any change in the external organization of the firm, there are various opportunities which are presented that assist in achieving these objectives. The capabilities and constraints of the firm must be recognized for it to pick the opportunities which can lead the nonprofit organization to greater heights in market presence. The external environment involves two aspects i.e. macro environment which affect all firms; and micro environment which affect only one firm in a specific industry (Courtney 2002). Nonprofit organizations must analyze the external environment in terms of political, economic, social and technological factors (Courtney 2002).
The industry in question plays a significant role in the process of analyzing micro-environment aspects of business. For a nonprofit organization, there are forces of framework which are helpful for industry analysis. These are; entry, customers, suppliers, substitute products, and competition among firms (Ferrell & Hartline 2008).
The situation within the firm is taken into consideration for example, its culture, image, organizational structure, key staff, position of experience curve, operation efficiency, brand awareness, and market share (Peter 2002). Situation analysis can at times give a number of information. This information is what is used to build brand equity, thus image.
Positioning and competitive advantage
Nonprofit organizations do have specific of competing in terms of the type of products they provide in their respective programs. They also have criteria for measuring quality of support programs they receive, hence the ability to measure the impact they create with their respective programs. Management strategies in a non profit firm can be articulated in high level theoretical terms and priorities (Helen 2000). There has to be effective implementation which requires a detailed translation of policies which can be understood at the functional level of the organization (Keegan & Mark 2002). The translation of the strategies should include specific policies for operational areas for example, marketing, research, procurement, human resource, and information system (Benevene & Cortini 2010). In a nonprofit organization, the availability of resources is an important factor. Therefore, this stage requires an organization to identify the available resources and then bring them together for organizational changes (Keegan &Mark 2002).
It’s thus through product and service development that these organizations position themselves in the competitive market. After implementation, the results achieved should be measured and evaluated. The required changes are made so that the plan is kept on track (Helen 2000). This stage involves measuring of the actual standards and appropriate action taken to ensure that success is achieved (Helen 2000).
Differentiation and charity in nonprofit organization
In nonprofit organization, the surplus funds obtained are not distributed to the shareholders rather they are used in pursuing the goals of the firm which most of them are charity work (Alp & Petty 2010). The quantitative difference between profit and nonprofit organization is its ownership. In profit making organizations, the ownership may be privately owned of which they are involved in distribution of taxable wealth to both employees and shareholders (Alp & Petty 2010). It’s the role of board members to control the organization they have been entitled to manage, with no option of them selling the shares. They cannot also benefit from such initiatives.
Differentiation and its operation
Differentiation is used in various aspects such as marketing and human resource. The concept of differentiation makes a product more unique from others in the market. This uniqueness should lead firms to achieving profit margins which are much advanced than the industry standard. In differentiation there are some factors which should be considered and are meant to boost it. Some of them are ability to market, efficient product engineering, creative employees, and the ability to conduct efficient market research (Glachant & Fleckingera 2009). Many entrepreneurs use this method in making their businesses successful. The most common examples of product differentiation include size, speed, color, the content, and combination (Glachant & Fleckingera, Sep 2009).
According to business experts differentiation is one of the most effective strategies which is used by small firms and entrepreneurs due to its flexibility, and low implementation cost (Ferrell & Hartline 2008). In marketing, differentiation is the most effective aspect because those businesses which sell the same product or service face a big challenge while competing with one another (Ferrell & Hartline 2008). The manner in which an organization perceives its market operation can lift or break an entrepreneur (Helen 2000). On the issue of marketing entrepreneurs make sure that differentiation of features, functionality, pricing, options and the benefits are considered in the product offered (Glachant & Fleckingera 2009). In the concept of differentiation, a clear path is established for the customer experience to the awareness of the product offered in the market. Differentiation in human resource focuses on resources at managerial level, which is a strategy for human resource management.
Strategic management is very essential in every organization, be it profit or nonprofit organization. Strategic planning is more suitable for firms in a stable environment (Beardwell &Claydon 2007). The limitation of this plan is that it’s not responsive enough for a dynamic competitive environment. Also the aspect of differentiation is very essential to nonprofit firms because they offer quality products to its clients.
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