Review on Three Chapters of Sharon M. Oster's Book Strategic Management for Nonprofit Organizations

Phyo Win Latt

Introduction
Indeed, the world has witnessed an influx of nonprofit organizations rising to prominence. Logically, these nonprofit organizations serve as the anti-thesis of companies that exist to rake the revenues that the market offers. The bandwagon has started years ago and has continued to flourish because of the apparent poverty and tendencies for financial incapacities. Although nonprofit organizations have been considered as low profiled, some have evolved with competence and reputability. The nature of nonprofit organizations suggests that flexibility and dynamism are inexistent. At present, however, nonprofit organizations have changed considerably and start to promote different perceptions and ideas.
For years, scholars have studied the manner in which nonprofit organizations are operated. Various books and journals have been published to facilitate the learning process and delivery of information among academes. Nonprofit organizations have emerged as an interesting topic among students exploring strategic management. The simplistic approaches in managing nonprofit organization have intrigued several individuals.

Sharon M. Oster, Frederic D. Wolfe Professor of Management and Entrepreneurship of Yale School of Management, is a specialist in competitive strategy, microeconomic theory, industrial organization, the economics of regulation and antitrust and nonprofit strategy. She has written extensively on the regulation of business and competitive strategy. Oster's book, Modern Competitive Analysis, used widely at management schools, integrates a broad range of views in its analysis of management strategy and emphasizes an economic approach to strategic planning. Her second book, Strategic Management for Nonprofit Organizations which was published as first edition from Oxford University Press in 1995, takes the same economic approach to managing nonprofit organizations. She has consulted widely to private, public, and nonprofit organizations including Microsoft and Boston Scientific. As a quality guide, her second book Strategic Management for Nonprofit Organization: Theory and Cases has become an after sought book. Readers have classified the book as extensively researched and comprehensive. In addition, the cases and discussions were helpful in revealing the essentialities of nonprofit organizations.
The following pages will tackle three important facets of nonprofit organizations. These discussions will include the mission of nonprofit organizations, the human resources management, and the overall managerial control.

Chapter 2: The Mission of the Non Profit Organization
In this chapter, the author starts with the information on the importance of nonprofit organizations. Accordingly nonprofit organizations primarily exist to provide services that are usually available from other avenues. The main difference of nonprofit organizations is that the cost of the services rendered or goods sold are cheaper than the products offered in the market. Others mistakenly interpret the role of nonprofit organizations as price stabilizes. Although competition is a given circumstance, nonprofit organizations remain truthful to their missions. Primarily, catering the needs of the unfortunate and the financially incapacitated are utmost priorities.
Also, the chapter discusses the essence of nonprofit organizations mission statement and its effect to the entire operations. For one, the mission statement serves as the embodiment of the institutions and becomes the imminent determinant of nonprofit organizations’ purposes. The mission statement communicates with the public and defines the delivery of services provided and the quality of goods produced by nonprofit organizations. Overall, the mission statement summarizes the whole nonprofit organization from the method of operations to the intangible aspects that govern within the institutions.
In addition, the chapter mentioned the methods of formulating the mission statement. Usually, the founders of the institutions take the lead in such endeavor. The mission statement consists of the general objectives and the specific manifestations of nonprofit organizations. The mission statement is guided by the attributes of the organizations. It is expected that facets that comprise organizations are included in the formulation and the inception of the mission statement.
In our region, Southeast Asia, the existence of nonprofit organizations is highly needed. Although the region is well off that other parts in the world, Southeast Asia has experience tremendous adversities. Specifically, the financial crisis that hit the region has left several companies bankrupt and others in the midst of corporate breakdown. After such monumental event, several families were left without income as layoffs and retrenchment continued in the employment sector. The results showed decline in demand as households were paralyzed by the lack of financial power. Basically, nonprofit organizations presented another alternative for individuals in need of services that are expensive. Moreover, governments in Southeast Asia have remained abysmal in providing ample social services. The rising prices of services and commodities coupled by the non-improvement in some Southeast Asian governments have made nonprofit organizations popular among the majority of the population.
The mission statement of nonprofit organizations based in Southeast Asia focuses on three important aspects. First, these institutions are challenged by the rising tendencies of poverty and the continuous ignorance of some governments. Although nonprofit organizations still require payments, the rate is relatively low. Second, the mission statement implies the quality of the services provided by the nonprofit organizations. It is imperative to emphasize on the similarities of product produced by top notch firms and nonprofit organizations. Third, the mission statement of nonprofit organizations values dedication. Despite the lack of financial capabilities, nonprofit institutions welcome individuals to avail the services and goods. Southeast Asia has been struggling to reform its markets and political environments. Yet, nonprofit organizations provide optimistic views and increase the possibilities of recovery.

Chapter 5: Human Resource Management
This chapter concentrates on the human resources management and the efforts of nonprofit organizations to create superior cast of employees. Essentially, several important elements of human resources were discussed in the chapter. Basically, the main objective of the human resources department in nonprofit organizations is to attract potential employees. Among all tasks, this is one of the hardest. Undeniably, nonprofit organizations inquire more cost that revenues. The deficit is subsidized by donations and other forms on income. Some institutions receive indirect funds from governments and are provided with privileges. Unfortunately, the funds allocated for personnel services are insufficient to attract the best applicants in the job market. Nonprofit organizations are in a dilemma whether to hire the best and reduce some services or to select average applicants and work on their development. Usually, nonprofit organizations prefer the later as cash strapped institutions are more obliged to service than hiring quality individuals. Indeed, several nonprofit organizations are forced to maximize on the available resources to tap willing and potential applicants.
Aside from selecting and motivating the staff, the human resources department has the preference on centralizing or decentralizing the workforce. Centralized workforce means that the employees are dependent of the top management. Decentralization provides more freedom and employee discretion. Each method has its flaws and benefits. The chapter explains that both have the capacity of improving the methods of maintaining human resources. Furthermore, the processes in managing volunteers were evaluated. Most nonprofit organizations have volunteers covering most of the tasks ands functions since the institutions lack the capacity to hire full-time employees.
As mentioned in the previous discussions, nonprofit organizations operating based on the necessity of majority of the population to acquire goods and services at cheaper process. Also, the lack of government initiatives becomes a contributing aspect to the emergence of non-government organizations. Describing the budget of institutions as measly is an understatement since most nonprofit organizations are obliged to perform some unadvised measures including borrowing. The bulk of workforce in nonprofit organizations is comprised of volunteers. These are willing individuals that provide services and are compensated only through allowances. In Southeast Asia region, the emphasis on attracting workers is on the possibility of development. New graduates try to seek volunteer work as the tough jobs improve most of their skills. Since experienced applicants have the edge over the inexperienced, it is likely that nonprofit organizations will get a boost. In addition, the unemployment in Southeast Asia has expanded the list of applicant willing to venture into volunteerism. Accordingly, it is advisable since volunteers are being productive while waiting for other opportunities.
Managing human resources is critical for several nonprofit organizations. Since these institutions are incapable of hiring quality applicants, volunteerism is highly suggested. Definitely, the stages of employee development have to include motivation enhancement among workers. Although firms lack the financial instruments to perform such task, there are several intangible schemes that are effective on instilling loyalty among workers. Generally, nonprofit organizations in Southeast Asia are highly decentralized. This allows more flexibility and independence among workers. The processes, however, are closely guided and evaluated by the principles that are seen in the mission statements of the institutions.

Chapter 9: Managerial Control
In the previous parts, the rationale of the creation of nonprofit organizations and the value of human resources were discussed. This section deals with the requirement of nonprofit organizations to maintain sound financial processes. This chapter discusses the need for nonprofit organizations to prepare financial statements and formulate budgeting strategies. For most institutions, being called as nonprofit is not an exemption for production of financial information. As always, all organizations that cater service and produce goods have to reveal their financial standings. It is expected that the manner in which nonprofit organizations make their financial statements are based on accounting standards prescribed by the government. Unless institutions make justifiable exclusions, then the procedures have to follow the universally implemented guidelines. In truth, most functions carried by nonprofit organizations are identified with the companies that generate income. The purpose seems to be different, but the flows of finances are similar.
Budget processes are also vital as it leads to effectiveness and efficiency. Unlike huge firms, nonprofit organizations are financially downgraded. Thus, the complete manifestations of their functions require clever and sound budgeting. Normally, the costs incurred by nonprofit organizations are classified as personnel services, maintenance, and operations. Quality budgeting is important because it will eventually decide the sector that takes the biggest share of the funds. Depending on the focus of a nonprofit organization, operation is usually allocated with the most amounts. The budget process that nonprofit organizations implement follows the prevailing market conditions and are pattered after successful schemes used by income generating companies.
Nonprofit organizations have been under the radar in Southeast Asia. Observations are apparent that these institutions have already assumed some functions of the government. Basically, it is imperative for nonprofit organizations to stay distinct and efficient. For these institutions, there are three considerations that guide the production of financial statements and the conduct of budgetary procedures. The first is the nature of nonprofit organizations. Although these entities function differently, the aspects that govern within are similar to that of income producing firms. Also, the external environments are the same with some minor variations. Ultimately, the method in which nonprofit organizations were created and operated becomes the primary reason for making financial information available to the public.
The second aspect that revolves around nonprofit organization is the issue on transparency and accountability. In Southeast Asia, some governments fund the operations of nonprofit organization. The additional budget serves as boost for the manifestation of organizational goals. Since taxpayers’ money is used, households will naturally seek for clarifications and explanations in the method of using the budget. Nonprofit organizations need to be transparent by keeping facts recorded and avoiding fabrication of information. Accountability makes these institutions responsible for the success and failures of the organization.
More important, budgetary processes are designed to improve the competency of firms. The final budget that nonprofit organizations submit serves as the financial support to all the annual activities. The soundness of the budget will allow the activities to be manifested with efficiency. It is often observed that the effectiveness of organizations is traced on the flexibility and quality of the budget procedures.

How the Book is Useful or Not
The book has its major benefits and these advantages are expected to aid students and researchers in development project management. Basically, the focus will be one the three chapters assessed and the effects of the aspects of the book in project management. First, the rationale for creating projects has to be established. As the book mentioned, the reason for creating nonprofit organizations are seen in the mission statements. In project management, mission statements are also important. These serve as the guide for future actions and decisions. The mission statement will become the primary cornerstone of project management and the implementation of project related tasks.
Second, the book analyzed the role of human resources in project development. In the same manner, the workforce in an important entity project development. Human resources in project development are vital as most of the activities in any project are manifested by the employees. The book is beneficial since it suggests ways on efficiently attracting quality applicants and motivating the employees to work productively. In addition, the author explained the difference of centralization and decentralization as concepts used in human resources management. In project development, these are critical aspects that have to be understood to be effective and efficient.
Third, the author made mention of the managerial control in the production of financial statements and formulation of budgetary processes. Performing the tasks in project management requires financial information and budget. Promoting quality project management entails the proper allocation of funds and the sound recording of transactions. The essentialities in the chapter are designed to be incorporated in the procedures to attain project management.

Overall Assessment
Overall, the book presented research based information and cases that truly define the present nonprofit organization situation. From the rationale of their creation to the manner of maintenance, Oster has critically appraised the fundamentals of nonprofit organizations. The three chapters discussed show the nature of nonprofit institutions as similar to private firms concentrating on profits. Among the aspects of nonprofit organizations, the mission statement, human resource management, and managerial operations serve the most importance. It is important to understand the aspects that make nonprofit organizations special.
Aside from the theoretical evaluation of Oster’s book, the discussion also considered the nonprofit organizations based in Southeast Asia. Since these institutions lack the financial capacity, most nonprofit organizations encourage volunteerism. Perhaps this is the most effective method of expanding the workforce and extending the services among the recipients. In Southeast Asia, nonprofit organizations exist because the delivery of service by government agencies have declined and prices of commodities have skyrocketed. The presence of nonprofit organization will provide an alternative to financially incapable households to avail their needs. Finally, the emphasis on accountability and competency has fueled the production of financial information and the sound formulation of the budgetary processes.
Overall, the book has its major advantages and some loopholes that have to be considered. This serves as a powerful tool for research and quality source of information. Sharon Oster has specifically discussed the primary importance of nonprofit organizations making these institutions vital mechanism of stability.