Strategy processes in private sector organizations are similarto the strategy process in public sector organizations. Executive SummaryThis paper analyzes whether Strategy processes in private sector organizations are similar to the strategy process in public sector organizations, with three effective examples, namely two organizations from the private sector and one organization from the public sector. It analyzes the strategy process of Anheuser-Busch InBev, Virgin Airways and British Council through Porter’s Five Force Model and Balanced Scorecard. After thorough analysis and arguments, the paper concludes that there are many similarities in the strategy management processes between private and public sector organizations as both have the same goal or aim, which is customer satisfaction although the outcomes are different.
Public sector organizations have outcomes which include socio-economic change and societal betterment. Private sector organizations have customer satisfaction, gain in market share and revenue increase as the main outcome. Despite this, the fact remains that strategy processes are similar in both sectors as the aim or goal is common. Strategy Processes in Private Sector and Public Sector Organizations. Introduction“Strategic Management is the conduct of drafting, implementing and evaluating cross-functional decisions that will enable organizations to achieve its long-term objectives. ” (David, 1989).
The strategic management process varies widely from company to company. Public and Private sector managers function in different contexts which generate distinct constraints on their behaviours, choices and actions. Ring and Perry (1985) have identified five specific differences in strategic management between public and private sector. Firstly, policy ambiguity can be clearly seen in public sector organizations. Since the general management functions of the government are spread across constitutionally across federal, state and local branches with more than one legislative body, to prevent concentration of power, it often results in vagueness and ambiguity in policy and objectives of the company.
In contrast private sector organizations function within a framework of a relatively clear and stable set of goals such as growth, profits and market share. The second differentiating factor is the levels of openness. Policy making in the public sectors is a much more open process and is often subject to the eye of the media which plays a very vital role. Private sector organizations on the other hand are not exposed to scrutiny by the public as the media coverage of the same is limited.
Public sector managers and management not only face challenges because of its openness and levels of scrutiny from the media, it also faces challenges because of the paradoxical nature of public administration (Whorton and Worthley, 1981). Thirdly, public sector organizations have attentive public. The openness of public sector makes its imperative for managers and the management of public sectors to pay increased attention to the general public. Strategy management process in the public sector must consider a wider range of stakeholder interests.
In private sector organizations, the level of attentive public is much less when compared to the public sector. The fourth differentiating factor is the issue of time. Time constraints are present in any kind of organization. However, public sector organizations are subject to a higher level if time constraint due to the tenure of public officials and legislative time constraints imposed by courts, or any other political force. In private sector time constraints are brought about by the kind and rate of market changes and the natural interaction of market forces are not influenced by legislative orders or political influences.
The final differentiating factor as pointed out by Ring and Perry is the aspect of shaky, unstable coalitions. In public sector organizations, employees often have to form coalitions to get policies passed successfully. These coalitions are often unstable and tend to break up during the implementation process. These coalitions are practically non-existent in private sectors and if they exist are not unstable. Also, values and leadership play a vital role in the strategy formulation of public sector organizations due to their broad socio-economic objectives.
They also require a theoretical model that makes way for their special motivational characteristics. Hence leadership and values play an important role in the strategy process (Steane, 1997).