ARC Strategy Presentation Business Strategy Models Focus Strengths
ARC Strategy Presentation
Business Strategy Models Focus Strengths and Weaknesses
Focus: • External Demand: Customers, Competitors, “Market Niches” • Internal Capabilities: “Distinctive Competence” • “Fit” of External Demand to Internal Capabilities • Financial Sustainability/Profitability of Enterprise ********************* • Dynamic Focus on Threats and Opportunities
Strengths for NP Managers: • Focus on External “Demand” (Need? ) • “Fitting” Organizations to “Demand” (Need? ) • Raises Tough Questions about Financial Sustainability ***************** • Treat Environment as Dynamic • Foster Entrepreneurial Mindsets
Weaknesses for NP Managers : • Value They Seek to Produce Does Not Equal Financial Return • Payments from Clients Whom They Serve Do Not Cover Full Costs of Production • Critical Resources Provided by “Third-Party Payers” ********************* • Actual Creation of Public Value Does Not Necessarily Ensure Financial Sustainability • Financial Sustainability Does Not Necessarily Equal Value Creation
Understanding the Business Strategy Model A Closer Look
Basic Elements: Goal: Create shareholder wealth By: Making and selling products and services to willing customers
Business Strategy Model Financi al Return Distinctive Competence of Firm s Markets Customers Competitors Niches Products & Services
Basic Value Proposition • Increase productivity in current products – Reduce costs – Increase quantity – Increase quality
Basic Value Proposition • Find and exploit higher value uses of firm’s assets: – Allocate resources effectively across products – Develop new products – Exploit synergies
Business Strategy Model: Evaluating Current Portfolio of Products Market Growth Potential Low High Current Market Shares High Cash Cows Stars Low Dogs Potential Cows Source: BCG
Business Strategy Model: Considering Moves to New Products Market Old New Old Current State Improved Markets & Distribution New Product Innovation Innovative in Both Products & Markets Products Source: Mc. Kinsey
Business Strategy Model: Ethical Issues: Social Legitimacy of Enterprise • Customer satisfaction • Wealth creation for shareholders • Job creation ****************** • Good citizenship
Understanding Nonprofit Strategy Model Fundamental Differences from Business Strategy Model
Basic Elements Goal: Achieve social mission By: Attracting resources from varied sources & deploying them to achieve results
Basic Elements Goal: Achieve social mission By: Attracting resources from varied sources & deploying them to achieve results Key Calculation: How to best accomplish mission?
Non-profit Strategy Model Organizational Capabilities Mission
Business Strategy Model Distinctive Competence of Firm Markets Customers Competitors Niches
Nonprofit Strategy Model: Basic Diagram Organizational Capabilities Social Mission Activities Designed to Achieve Social mission
“The essence of a nonprofit organization is that it operates to produce some social value, for which it will not necessarily be paid by people who are clients and beneficiaries. ”
Strategic Triangle Third Party Payers Social Mission Organizational Capabilities
Sources of Legitimacy & Support • Financial/material support: – Donors – Volunteers – Government • Moral support/public legitimacy – Public values – Media support – Constituency support
Strategic Triangle Legitimacy & Support Social Mission Organizational Capabilities
Business Strategy Reconsidered Financial Markets Returns Customers Competitors Distinctive Niches Competence of Firm Products & Services
Business Strategy Reconsidered Social Legitimacy Financial Markets Returns Customers Competitors Distinctive Niches Competence of Firm Products & Services
Business Strategy Reconsidered Legitimacy & Support Public Suppor t Social Legitimacy Social Legitimac y Financial Markets Returns Customers Competitors Distinctive Niches Competence of Firm Products & Services
Business Strategy Reconsidered Key Differences Business Strategy Nonprofit Strategy (Customers) Customers Sources of Donors, Financial Support (Financial Markets) Volunteers, Government Sources of Public Legitimacy Customer Satisfaction Social Value Shareholder Wealth of Mission Jobs Public Support (Good Citizenship) of Mission
Nonprofit Strategy Linking Current Programs to Overall Strategy
Public Value Produced • • • Achieve Mission Meet Public Needs Satisfy Customers Meet Donor Aspirations Build “Social Capital
The Mission Statement • Defines Values, Purposes, Goals of Organization • Attracts External Support & Provides External Legitimacy For the Organization • Helps Define the Boundaries and Focus of the Organization
The Mission Statement Provides conceptual basis for: • Performance Measurement • Resource Allocation • Investment/Dis-Investment Decisions • Research and Development/New Product/Service Development
Nonprofit Strategy: Different Levels of Abstraction • Promote general welfare of mankind • Promote health in America • Promote health of children in Boston • Immunize kids in Dorchester
Nonprofit Strategy: Advantages Disadvantages Very Abstract Inspiring Mission Statements Uniting Inclusive Enduring Flexible Vague Unmeasurable Unnaccountable Unfocused Unclear Concrete Clear Mission Statement Accountable Focused Calculable Trivializes Fragments Freezes
Nonprofit Strategy: A Pyramid of Values, Goals and Objectives Values Goals Objectives Sub-objectives
Nonprofit Strategy: The Logic that Links Values to Sub-objectives Ends Long-term. Abstract idea Values Goals Objectives Sub-objectives Means Short-term Concrete definitions
Public Needs • Objective Calculation of Community Conditions • Wide Consultative Process • Representative Board ****************** • Subsidize Services that are Valued by Clients but Not Able to Pay
Customer Satisfaction • Customer = Those with whom we have individual transactions at boundary of organization • Customer = Client/Beneficiaries • Customer= Donors/Contributors
Customer/Beneficiaries of Interest to Nonprofit Org. • “Value” Something but Not Able to Pay • May “Deserve” Something but Not Able to Pay • Something that “We Would Like to Provide” for those That Cannot Pay
Donors/Contributors of Importance to ARC • • Volunteer Boards/Governors Volunteers in Operational Positions Blood Donors Financial Contributors
American Red Cross • Mission: – To provide relief to victims of disaster and to help people prevent, prepare for response to emergencies • Structure: – Local chapters/blood systems many locations & facilities • Primary Programs: – Disaster Relief, Bio- Medical, Health & Safety, Armed Forces Emergency, Community Service, and International
American Red Cross Pre-Eminent Humanitarian Organization Growth A Business of the Heart Trust Innovation A Great Place to Work Neighbors Helping Neighbors To provide relief to victims of disasters, and help people prevent, prepare for, and respond to emergencies
To provide relief to victims of disasters, and help pe prevent, prepare for, and respond to emergencies Kind of Disasters & Emergencies • Sudden Large Scale • International War Natural • Domestic War Natural Relief of Victims Prepare for Prevent International Prg Armed Forces Prg Disaster Relief • Slowly Accumulating Blood and Tissue Health & Safety Accidents Illness Economic/Social Community Service ?
American Red Cross Pre-Eminent Humanitarian Organization Growth A Business of the Heart Trust Innovation A Great Place to Work Neighbors Helping Neighbors To provide relief to victims of disasters, and help people prevent, prepare for, and respond to emergencies
American Red Cross • Mission: – To provide relief to victims of disaster and to help people prevent, prepare for response to emergencies • Structure: – Local chapters/blood systems many locations & facilities • Primary Programs: – Disaster Relief, Bio- Medical, Health & Safety, Armed Forces Emergency, Community Service, and International
To provide relief to victims of disasters, and help pe prevent, prepare for, and respond to emergencies Kind of Disasters & Emergencies • Sudden Large Scale • International War Natural • Domestic War Natural Relief of Victims Prepare for Prevent International Prg Armed Forces Prg Disaster Relief • Slowly Accumulating Blood and Tissue Health & Safety Accidents Illness Economic/Social Community Service ?
Solidarity in Responding to Physical Threat and Disaster
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