Porter's Five Forces: Relevance and Applications of Nonprofit Strategy
Concepts Applicable to the Nonprofit Setting and to Our Understanding of Strategic Nonprofit Leadership and Management
In the opening paragraph, Porter makes an important reference to the importance of not only a company’s position, but the position of the industry as well. He states, “A healthy industry structure should be as much a competitive concern to strategists as their company’s own position. Understanding industry structure is also essential to effective strategic positioning” (p. 80). I believe this is very relevant to the nonprofit sector especially because I believe the nonprofit industry is more connected and interdependent than for-profit companies. Strategic nonprofit leadership and management should definitely look to the positioning of the nonprofit sector in addition to individual nonprofits. When explaining the barriers to entry, Porter includes restrictive government policy and states, “Government policy can hinder or aid new entry directly, as well as amplify (or nullify) the other entry barriers. Government directly limits or even forecloses entry into industries…Of course, government policies may also make entry easier” (p.82). I believe this barrier to entry that Porter highlights in reference to companies is very true in the nonprofit sector. Government is the one that grants nonprofits the ability to enter the industry and monitors their activities yearly to ensure that they comply with policy. In addition to this, a large percentage of nonprofit organizations rely on government grants and funding that requires even more government policies for nonprofit organizations to comply with. At the same time, government policies are the ones that allow nonprofit organizations to function without worry of a large number of taxes, thereby enabling them to focus on their mission. I believe that strategic nonprofit leadership and management entails an understanding of government policies and the negative and positive implications that they have in a
In the opening paragraph, Porter makes an important reference to the importance of not only a company’s position, but the position of the industry as well. He states, “A healthy industry structure should be as much a competitive concern to strategists as their company’s own position. Understanding industry structure is also essential to effective strategic positioning” (p. 80). I believe this is very relevant to the nonprofit sector especially because I believe the nonprofit industry is more connected and interdependent than for-profit companies. Strategic nonprofit leadership and management should definitely look to the positioning of the nonprofit sector in addition to individual nonprofits. When explaining the barriers to entry, Porter includes restrictive government policy and states, “Government policy can hinder or aid new entry directly, as well as amplify (or nullify) the other entry barriers. Government directly limits or even forecloses entry into industries…Of course, government policies may also make entry easier” (p.82). I believe this barrier to entry that Porter highlights in reference to companies is very true in the nonprofit sector. Government is the one that grants nonprofits the ability to enter the industry and monitors their activities yearly to ensure that they comply with policy. In addition to this, a large percentage of nonprofit organizations rely on government grants and funding that requires even more government policies for nonprofit organizations to comply with. At the same time, government policies are the ones that allow nonprofit organizations to function without worry of a large number of taxes, thereby enabling them to focus on their mission. I believe that strategic nonprofit leadership and management entails an understanding of government policies and the negative and positive implications that they have in a