Lecture 4

Strategic management in
public organizations

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Strategy:
✓ It refers the long term plans that are set to achieve long term
objectives.
Strategic management:
✓ It refers to the set of decisions and actions that results in the
formulation and implementation of plans that are designed
to achieve the long term organizational objectives.
Note that:
✓ The objectives set by public organizations differ from the long
term objectives set by business organizations
✓ The long term objectives set by business organizations focus
on :
❖ Profit maximization
❖ Increasing the market share

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✓ The long term objectives set by public organizations focus on
achieving social good. E.g.,:
❖ Reducing the crime rate
❖ Increasing the graduation rate Economic development

What are the steps of strategic management?

There are six steps (dimensions) associated with strategic
management:
1. Identification of objectives
2. Identifying the planning horizon
3. Analyzing organizational capabilities
4. Assessing the external environment
5. Selecting a strategic plan to achieve the desired objective
6. Integrating the organizational effort s around the strategic
plan

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Identification of objectives:
✓ Objectives represent the desired outcome to achieve
✓ They represent the core of management thinking
✓ The public organizations were slower than the
private sector in applying the concept of strategic
management
✓ This is because: public administrators tended to
focus more on the functions and duties assigned to
them by law not on objectives
✓ Now public organizations focus on objectives more
than functions.

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What are the reasons behind the change of public
organizations from focusing on functions towards focusing on
objectives?
1- the popularity of the “management by objective” concept.
2- the change in the needs of citizens who require the public
products
3- the infusion of the concept of strategic management in the
private sector.
Management by objective:
❖ It refers to that mangers and employees work together to
agree on specific goals to achieve and to develop plans that
are required to achieve the selected goals.
❖ Management by objectives guarantees that all employees
agree on the goals and the plans, so they will be highly
committed towards goal acheivement.

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Identifying the planning horizon:
✓ It refers to setting a time limit for the strategic plan to
achieve.
There are some difficulties associated with setting a time
horizon for the strategic plans for public organizations:
1- the political nature of the goals of public organizations (short
time horizon that is related mainly to political elections)
2- public budgeting: due to its annual short term nature , it
forces public organizations to adopt short term thinking.
Analyzing organizational capabilities:
✓ Strategic management entails analyzing the internal
capabilities of the public organizations . Such capabilities
could be:
❖ Human
❖ Technical

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❖ Financial
❖ Informational
Assessing the external environment:
✓ It refers to assessing the public organizations’ present and
future external environment
✓ Forecasting the future demand of the needs for the public
product of the public organization
✓ SWOT analysis could be used in this respect after assessing
the internal and external environment s of the public
organization to identify :
• Internal strengths and weaknesses (as determined from
analyzing the internal environment of the organization)_
• External opportunities and threats (as determined from
analyzing the external environment of the business).

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Note that:
1. Internal strengths and weaknesses are factors that can be
controlled by the firm
❖ Identifying internal strengths is essential to sustain and
develop (e.g.: massive financial resources)
❖ Identifying internal weaknesses is essential to take corrective
actions to remedy (e.g.: over employment)
2- External opportunities and threats are factors beyond the
control of the public organization
❖ Identifying external opportunities is essential to seize (e.g.:
citizens willing to pay higher fees to get access to faster public
services)
❖ Identifying external threats is essential to develop plans to
overcome (e.g.: high population growth rate )

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Selecting a strategy to achieve the desired objective:
✓ Once objectives are set and the internal and external
environments of the public organizations are assessed, a plan
is developed to achieve the selected goal.
Integrating the organizational effort s around the strategic
plan:
✓ Setting steps to implement the plan
✓ Setting control mechanisms to measure the extent of
objective achievement and to take corrective actions when
necessary to ensure the achievement of the objective .
Note that:
The application of strategic management in public organizations
is dependent on a number of factors. These are:

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1. The extent to which the public organization has autonomy in
decision making
2. the extent to which the results of the public organization is
measurable
3. If income is raised directly by the public organization

Independency of funds acquisition

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