Page 33 - E2 Integrated Workbook STUDENT 2018

Alternative approaches to strategy development

4.2 Public sector and not-for-profit organisations

Public sector organisations such as schools and hospitals, charities and not-for-profit
organisations often have difficulty in developing strategy due to their difficulty in
setting objectives.

With such organisations a discussion of objectives is likely to be problematic for the
following reasons:

 Unlike most private sector organisations, profit is not their main objective

 They are more likely to have multiple objectives.

 It will be more difficult to measure objectives.

 There may be a more equal balance of power between stakeholders.

 The people receiving the service are not necessarily those paying for it.

4.3 The three Es approach

One way to address this problem is to use the 'three Es approach':

Effectiveness looks at the outputs

Efficiency looks at the link between outputs and inputs

Economy looks solely at the level of inputs

4.4 Value for money and public value

Value for money can be defined as 'the optimal use of resources to
achieve intended outcomes'. This can be measured using the 3Es.

Public value can be defined as 'the value that an organization
contributes to society'.

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