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RESEARCH

Insights on strategic management


practices in Nepal
Binod Krishna Shrestha

Strategic
management
practices
191

School of Management, Kathmandu University, Kathmandu, Nepal, and

Devi Ram Gnyawali


R.B. Pamplin College of Business,
Virginia Polytechnic Institute and State University (Virginia Tech),
Blacksburg, Virginia, USA

Received 14 March 2012


Revised 16 June 2012
11 September 2012
26 December 2012
Accepted 16 January 2013

Abstract
Purpose The purpose of this paper is to examine how managers in Nepalese business organizations
and non-profit non-government organizations understand and practice strategic management and to
what extent such understanding and practices differ from those in western countries.
Design/methodology/approach In-depth case studies of eight business organizations and nongovernment organizations (NGOs) were prepared based on multiple data collection such as interviews
and review of reports and the cases were analyzed to identify several themes for discussion of
similarities and differences in the views and practices of strategic management.
Findings Managers in Nepal have developed some shared understanding of key aspects of strategic
management and practice some important aspects of strategic management; much remains to be done
in order for them to develop a clear strategic focus so that they could develop their abilities to compete
with global players and to create competitive advantages.
Research limitations/implications This study suggested several avenues for future research for
more systematic and data-driven studies on the roles of international exposure on managers,
international partners, national culture and other macro environmental conditions on strategic
management practices in Nepal and South Asia.
Practical implications The research findings are useful for managers of business organizations
and non-government organizations to develop their strategies for superior performance in South Asian
countries characterized by volatile business environment and resource constraints.
Social implications NGOs which work for social development need to improve their strategic
management practices with more rigorous and resilient strategic implementation in Nepal.
Originality/value This research is unique in the context of Nepal and will be useful in similar contexts.
The findings contribute to understanding the strategic management practices in a unique culture.
Keywords Strategic management, Nepal, Business organization, Non-government organization
Paper type Research paper

Strategic management in Nepal: insights from business and non-government


organizations (NGOs)
Research in strategic management underscores the importance of developing an astute
and timely strategic game plan, revising strategies according to changes in the
environment, and implementing the strategies with proficiency (Kim and Mauborgne,
2002; Hambrick and Fredrickson, 2001; Porter, 1996). Strategic management is believed
to be one of the important tasks of senior managers as it deals with organization-wide
priorities and resource allocation decisions, provides an overall direction for the entire
organization, leads to coherence through the integration of various functional actions,
and relates to ultimate performance of the organization (Pearce and Robinson, 2005;
Rothaermel, 2013). Two distinct perspectives exist about how competitive advantages

South Asian Journal of Global


Business Research
Vol. 2 No. 2, 2013
pp. 191-210
r Emerald Group Publishing Limited
2045-4457
DOI 10.1108/SAJGBR-03-2012-0025

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could be achieved (Hoskisson et al., 1999): the industrial organization (IO) view which
stresses industry and competitor analysis as a primary basis for strategic positioning
and competitive advantage (e.g. Porter, 1996) and the resource-based view (RBV) that
emphasizes having and utilizing unique and valuable resources (Barney, 1991).
While the concepts and process of strategic management are generally understood and
practiced in the western world, their prevalence in organizations of developing countries,
particularly in South Asia, is rather unknown. As countries in South Asia have uncertain
business environments and distinct cultures (Khilji, 2012; Haley and Tan, 1999), it will be
interesting to explore the extent to which the understanding and practices of management
in South Asia are similar to those in the western world. As researchers have recently
suggested, an examination of business practices in South Asia provides a fresh
perspective and research in this context adds relevance and rigor to international business
theory (Khilji, 2012). With a focus on one particular aspect of management strategic
management and one country in South Asia Nepal this study intends to contribute to
our understanding of management practices in South Asia. The basics of strategic
management are the importance of internal and external analysis, articulation of longterm goals and priorities, and implementation of strategies which are applied generally in
business organizations and not-for-profit NGOs, but only limited research exists in such
management practices in Nepal (Pant, 2006). Therefore, we sought to explore the practices
in both types of organizations and compare and contrast them with a focus on strategic
management. We adopt an in-depth case study approach because little prior basis exists to
develop quantitative measures for large-scale survey studies. The following two research
questions guided this study:
(1)

How do managers in Nepal view and practice strategic management and to


what extent do those views and practices differ from those of the western
countries?

(2)

To what extent are the managers views and practices of strategic management
in business organizations and NGOs similar to and different from each other?

This paper is structured as follows: first, we discuss the key underpinning of strategic
management as discussed in the literature, which provides a basis for understanding
the approach to our study and methods we employ. We also briefly review the literature
on management and strategic management practices in Asian countries. We then
discuss our case study method followed by our approach to data collection. Next, we
discuss our findings that are derived from the case studies as they relate to the two
research questions. Finally, we discuss our findings and implications of our research
for future research and management practice.
Relevant literature and core conceptual underpinnings
Fundamentals of strategic management
Strategy is understood as a pattern of decisions, commitments, and actions undertaken
by an organization to improve its competitiveness and achieve superior performance
(Hambrick and Fredrickson, 2001; Kim and Mauborgne, 2002). Competitive advantage
arises with a unique strategy, i.e. doing different things than the competitors do (Porter,
1996). Operational effectiveness (doing the same things better) is not strategy because
it does not provide relative advantage over others, as the best practices are quickly
imitated. Strategic management is often seen as a process of performing an analysis
of the environment, identification and development of unique strategies, and

implementation of those strategies proficiently (Hoskisson et al., 1999) with a goal


of gaining and sustaining a competitive advantage (Rothaermel, 2013). Strategic
management is a top management task as it deals with organization-wide priorities
and resource allocation decisions, provides an overall direction for the entire
organization, and impacts the organization as a whole. An organizations realized
or actual strategy is often a combination of intended strategy (pursuing what was
planned) and emergent strategies (pursuing unforeseen opportunities and responding
to changes in the environment) (Mintzberg and Waters, 1985). An organizations
realized strategy is typically a blend of planned actions and reactions to new
developments in the competitive and market environments which pose unforeseen
opportunities and challenges. Strategic management is not necessarily a top-down
process as an organizations realized strategy is a result of both planned (generally a
top-down process) and emergent (generally a bottom-up process) strategies. This also
calls for organization-wide participation in the processes of making and implementing
strategies for the organization.
Two major perspectives or models exist to explain the core to the strategic
management process and ways of creating competitive advantages: the IO model and
the RBV. The IO model suggests that analysis of the external environment, especially
the industry and competitors, is the starting point to understand an industrys
potential. Based on the industry analysis, firms develop a unique strategic positioning
within the industry (Porter, 1980, 1996). Analysis of the environment is critical in order
to formulate and implement the best strategies in uncertain business environments
(Courtney et al., 1997). Therefore organizations need to develop competency in strategic
thinking in order for them to conceive and implement creative and coherent strategies
(Christensen, 1997). The IO model does not emphasize the role of organizational
competencies and resources, although early research in strategic management stressed
the importance of matching resources and capabilities to environmental opportunities
(Ansoff, 1965; Andrews, 1971; Rothaermel, 2013). Porter (1980, 1985) stressed that
the strategies developed through external analysis and able to deal effectively with the
competitive forces provide significant benefits to organizations.
In contrast, the RBV model suggests that the primary basis for strategy and
superior returns are the internal resources and capabilities of the organization (Barney,
1991; Wernerfelt, 1984). Grant (1991), and Craig and Grant (1993) noted that a firms
resources and distinctive capabilities are the foundation for its strategy. If a firms core
capabilities are valuable, scarce, and hard to imitate, they can form the basis for
sustainable competitive advantage and superior returns (Barney, 1991; Schoemaker,
1992; Hall, 1993; Peteraf, 1993). Mintzberg (1987), Prahalad and Hamel (1990),
Grant (1991), and Kay (1993) claim that a firm should develop its own resources, skills,
and strategy in order to sustain its competitive advantage over competitors.
Furthermore, the competitive advantage derived from unique and rare resources will
depend on the extent to which the resources help the firm reduce the cost structure
or help to produce differentiated products compared to the competitors. In recent years,
an organizations ability to learn in advance of its competitors and use its knowledge
in strategic decision making has been argued to be a very important source of
competitive advantage (Gnyawali and Stewart, 2003). The ability to learn and leverage
knowledge provides competitive advantages because knowledge is often complex,
tacit, and embedded in products and organizational practices, making it difficult for
competitors to copy. Resources and capabilities ought to be in line with dynamic
changes in the environment (Ronda-Pupo and Guerras-Martin, 2012).

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Both the externally driven or IO and the internally driven RBV perspectives on
strategic management suggest that firms must adapt strategies according to changes
in the environment. The current strategic management texts (e.g. Rothaermel, 2013)
accordingly emphasize analysis of the industry and competitor environment (external
analysis) and analysis of the firms resources and capabilities (internal analysis) as
the starting points for strategy formulation. It is not sufficient to formulate unique
strategies, it is also critical to implement those strategies with proficiency. Issues of
developing appropriate organization structure that matches with strategy, developing
leadership skills and talents of managers and other employees, developing human
resources (Rothwell and Kazanas, 1989), empowering people to learn and better
understand the changing environments (Gnyawali and Stewart, 2003), and maintaining
an appropriate organizational culture are important aspects of strategy implementation
(Hrebiniak, 2005). In other words, the various aspects of the organization have to be
matched with the strategies so that the strategies can be put in practice and pursued
effectively and efficiently.
While the core points discussed above are the cornerstones of current strategic
management teaching and practice in the western world (e.g. Rothaermel, 2013), it is
unclear how those core aspects are viewed and practiced by managers in a developing
country, Nepal. Before getting into the discussion of our research context, we briefly
outline below strategic management issues in not-for-profit settings and the South
Asian context.
Strategic management in not-for-profit organizations
We expect that the fundamentals of strategic management discussed above analysis
of external environment and internal resources and capabilities, development of unique
strategies, and implementation of those strategies would be relevant in the context of
not-for-profit organizations. Although not-for-profit organizations do not have profit
motive, the goals of survival and long-term growth are similar to those in business
organizations. They engage in an analysis of stakeholders (any individual or entity
that impacts or is impacted by what the organization does) needs and expectations and
set their goals and priorities accordingly. They face strong competition from various
agencies and have to address diverse needs of multiple stakeholders, so not-for-profit
organizations are likely to benefit from the application of strategic management
concepts. However, Bryson (1988) suggests that since the not-for-profit organizations
are different in their goals and mission, exact duplication of the private sector strategic
planning process would not be appropriate in such organizations. While presence of
numerous stakeholders, conflicting criteria for performance assessment, public
accountability, and the social service nature of non-profit organizations tend to make
such replication difficult (Chlala et al., 1995). In addition, pressure from external
sources (e.g. parent organization, major funding sources) would make adoption of
strategic management practices more critical (Webster and Wulie, 1988; Wolch and
Rocha, 1993). Nevertheless, Hatten (1982, p. 89) succinctly argued 20 years ago that
Not-for-profit managers can indeed benefit from the application of the strategic
management concepts originally developed for profit making corporations. Drucker
(1985, p. 177) argued that nonprofits need to be entrepreneurial and innovative fully
as much as any business does.
Although focus and priorities of non-profit organizations strategic management are
different from for-profit organizations, they resemble many common aspects while
achieving their goals and mission of serving their target stakeholders or beneficiaries.

Therefore, comparison of these two types of organizations would provide insights


about specific practices and learn from each other. Drucker (1989) states that for-profit
organizations should learn about strategic management for achieving organization
mission from non-profit organizations. In addition, many non-profits have started to
run commercial activities in order to achieve their objectives of social mission (Dees,
1998). However, it is important to exclude public sector non-profits such as government
organizations because they cannot be compared with for-profit organizations as that
comparison will be like apples and oranges (Guy and Hithcock, 2000). Therefore, this
study included NGOs only. For brevity, we use the abbreviation NGO to refer to nongovernmental or not-for-profit organizations.
Management in the South Asian context
In this section we briefly review the literature that relates to management in general
and strategic management in particular in the South Asian context. This review,
together with the review of the strategic management literature mentioned earlier,
provides a solid basis to understand the research focus and the methods of this study.
South Asian countries have unique historical and socio-cultural conditions, and
these conditions importantly influence management practices in these countries. Khilji
(2012) succinctly argues that countries in South Asia are under-researched, and an
examination of management issues and practices in these countries is likely to provide
unique insights and help advance international business theory and practice. Hussey
(1990) suggests that the complexity of a national culture plays a significant role in
strategic management practices in organizations. Haley and Tan (1996) support this
point of view and argue that strategic decision making in Asia is significantly different
from that in the west. Factors such as cultural differences in decision-making styles
(Hofstede, 1993) and personalities type of the decision makers (Haley and Stumpf,
1989) contribute to differences in management practices. Management practices in this
region are often characterized as ad hoc and reactive, personalized and idiosyncratic
leadership, and paternalistic (Haley and Tan, 1999). Forces such as increased
globalization of companies from this region and in-flow of multinational companies to
the region are likely to help spread management practices. As companies in Asia and
in Nepal increasingly get exposed to western practices and competitive pressures, it is
critical to understand how strategic management is viewed and practiced in these
countries.
Since India and Nepal are proximate both geographically and culturally, it is
expected that management practices in India would also influence those in Nepal.
Rao (2012) states that the Indian management model emphasizes investment in people
management, customer relationship, integration of social goals with corporate goals,
and improvization when faced with unpredictable business trends. Managers struggle
to develop effective strategies to attract and retain the best-qualified employees. While
they strive to innovate, they also struggle in the face of meager resources, law and
order concerns, government inefficiencies and inadequate infrastructure (Khilji, 2012).
In Nepal, while a few emerging business organizations and NGOs have been
practicing some aspects of strategic management, research suggests that most
organizations lack a strategic orientation (Pant, 2006). Somlai (1992) stated that
Nepalese management practices can be characterized by procrastination, sycophancy,
and dominance of power centers. The practice of sending formalized written memos
to the senior management for final approval is a clear indication of top-down
management. Practices such as recruitment, compensation, business information, and

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business relationship are rather underdeveloped and are within limited purview of
selected senior managers and influential family members as owners (Pant, 2010).
As noted earlier, almost no research-based insights exist about strategic management
practices in Nepal.
In summary, the review of the literature suggests that important insights could be
gained by examining whether and to what extent the core concepts of strategic
management as understood and practiced in the western world are practiced in the
developing country of Nepal. Further, literature suggests that not-for-profit
organizations are likely to adopt and benefit from strategic management practices
as they face increased pressure from competition and stakeholders just like business
organizations do. The unique context of South Asia and lack of research in management
practices in Nepal clearly suggest the need to understand strategic management
practices in Nepal. Accordingly, we sought to examine managers view and practice
strategic management across business organizations and not-for-profit organizations and
compare them with those of the western countries.
Methods
We used the case study method primarily because there is no systematic prior
research in Nepalese strategic management practices for us to use as a basis for
the development of survey instruments. Specifically, we set out to conduct in-depth
examination of multiple companies and compare results across the case (Yin, 1994) to
develop broader insights. The research setting was eight organizations four business
organizations, and four NGOs (Table I) based on theoretical sampling (Flick, 2006).
The primary theoretical consideration for their inclusion in our list of cases was that
these organizations had reported some practices of strategic management in the past
so that we could assess these practices, compare these practices across the cases, and
compare them with the practices in the western countries. The business organizations
we selected represent banking, airlines, and food industries which are among the
important and growing industries in Nepal. Among the NGOs selected for this study,
one is involved in commercial activities to serve its philanthropic objectives and the
rest are donor funded. These NGOs compete with similar NGOs and for-profit business
organizations in delivering their products and services. Further, because many NGOs
from developed countries exist in Nepal, it is likely that the NGOs operating in Nepal
would have adopted some western management practices.

Sl. No.

Table I.
Description of
participating
organizations

Organizations

Business organizations
1
Lalitpur Finance
2
Himalayan Snacks
3
Bank of Kathmandu
4
Buddha Air
Non-governmental organizations
5
Mahaguthi
6
Room to Read Nepal
7
Adventist Development and Relief Agency
(ADRA) Nepal
8
Plan Nepal

Products/services

Banking and finance


Instant noodles
Banking and finance
Airlines
Production and sale of handicraft products
Educational support services
Health services in rural areas
Care and community services for children

Data sources
The primary source of data was semi-structured interviews with executives. We
started off with a few open-ended questions in order to generate responses from the
managers: what does strategic management mean to you? To what extent are
the senior managers involved in strategic management? How much emphasis do you
put on various aspects of strategy formulation and implementation? To what extent are
planned strategies implemented? What are key opportunities and obstacles in adopting
strategic management in the organization? These questions helped us to collect
retrospective and real-time data which ensures external and internal validity of the
data (Bingham and Eisenhardt, 2011). At least three senior managers of each
organization were interviewed, and each interview lasted for about 30 minutes. Following
Flick (2006), we took detailed notes during the interviews; if things were not clear from
the interview responses, we did follow-up e-mails and telephone calls to further probe the
respondents. We also reviewed the organizations web sites and published reports to
generate additional insights relevant to strategic management practices. Use of multiple
cases and multiple sources of information on each case helped us to verify and
triangulate the data to increase validity of our findings (Flick, 2006).
Data analysis and results
We began by compiling the interview data and by synthesizing the results from the
various sources for each organization, leading to mini cases on strategic management
practices of the organizations studied. Because of rich and detailed interview
responses, we first sought to distill relevant information by identifying themes that
emerged from the data on various aspects of strategic management. The process of
identifying the themes was iterative: the theoretical definitions and concepts from the
literature helped to interpret the interview responses, and the interview responses
helped to provide greater clarity on the nature of the themes and the detailed contents
inside each theme.
Results on strategic management practices in Nepal
In this section, we discuss results related to the first research question: the managers
understanding of the strategic management concepts and extent to which they are
practiced in Nepal. We present these results in two parts. The first part summarizes the
overall themes generated from all the interviews. The second part of our discussion
takes these overall themes and provides detailed insights related to these themes
generated from the business organizations and NGOs.
As reported in Table II, 14 themes were generated from the analysis of the
interviews. One of the two authors developed the themes based on the case
stories and then the second author independently verified the themes. The two
coders agreed in most of the themes and categorization of the interview statements
by the themes. Some minor variations in the classification were handled through
discussions. As the first two columns in Table II indicate, we related each theme
to a particular core strategic management concept discussed above in the
literature review.
In order to further ensure that the themes were meaningful and categorization was
appropriate, we presented the themes to 15 second-year MBA students and asked them
to evaluate the themes and classification of the interview results. The MBA students
evaluation showed that the themes were meaningful to them and the categorization
of the interview statements by the themes was appropriate. The last two columns of

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Core strategic
management concepts

Themes from the


interviews

Strategy formulation
Strategy formulation
Strategy formulation
Strategic positioning
Strategy formulation

Goals setting and planning


Articulation of goals
Development of strategies
Sources of differentiation
Involvement of international
head office
Top managements
involvement
Participative decision making
Workshops and committees
Use of external facilitators to
prepare strategy
Proactive strategy formulation
Reactive strategy formulation
Strategy implementation
Obstacles in strategy
implementation
Benefits from strategic
management

Strategy formulation
Strategy formulation
Strategy formulation
Strategy formulation
Proactive process
Reactive process
Strategy implementation
Challenges

Table II.
Themes generated from
interviews and inter-coder Benefits
agreement

Inter-coder agreement
Business
Non-government
organizations (%)
organizations (%)
81.7
83.3
88.3
75.0

66.7
73.3
83.3

73.3

90

68.3

88.9

88.3
64.4
100

78.3
86.7
85.0
91.1
80.0

80
80
-

86.7
83.3

Table II present their degree of agreement. As noted in the table, the majority of the
themes have high inter-coder reliability.
Insights on strategic management in business organizations
Using the themes reported in Table II, we illustrate how interview findings from
business organizations relate to those themes. Table III presents such results, and a
detailed discussion of each theme follows.
Goal setting and planning. Managers view strategic management as a tool for
setting goals and plan. An executive stated strategy as a game plan to strengthen
companys competitive position, satisfy customers and achieve performance targets.
The game plan provides a direction toward goals and ensures correctness of the path
for superior performance. As another executive noted, It provides direction and
path to travel, helps to make sure the path the company is following is the correct one
and [y] mobilizes resources to achieve the goals.
Goals and strategies. The strategy was about delivering products and services in
different ways than competitors to fulfill market gaps. One manager stated that their
strategy serves the customers which have not been served by others by lowering
minimum balance for depositors, or we strongly emphasize customer services, the
product is reliable, it offers the best prices in the industry, and it has a strong emphasis
on safety in the airline market. In addition, management considered that development
of unique organizational set-up, hiring competent staffs, and improving technology are
critical for strategy. A manager of an airline company stated that We send pilots
periodically to training programs, and our employees understand that Buddha Air
stands for quality and superior service and they work hard to accomplish these goals,
and it is different in that it fleets Beech 1400D and Beech 1400Cs aircrafts which are
particularly well suited for the geographic conditions of Nepal. A bank manager said

Themes

Illustrative key findings

Goals setting and planning

A game plan for setting strategic goals and formulating coherent


strategic plans
Delivering products and services in different ways by addressing
un-served customers needs in order to improve competitive position,
customer satisfaction and profitability
Extensive involvement of top-level managers and use of regular
interactive sessions with other managers to share customers
grievances for strategy formulation, implementation, and monitoring
Plan for one year and continuous adaptations of strategies in line with
changes in government regulations and market competitions
Maintaining strong relationship with regulatory bodies, applications
of robust human resource management and management information
system, selection of strategic locations and adaptation of superior
technology
Frequent changes in government rules and regulations, staffs
resistance to changes and resource constraints
Improvements in market share, brand image, and profitability

Goals and strategies


Managers involvements
Proactive and reactive
strategies
Strategy implementation

Obstacles in strategy
implementation
Benefits from strategic
management

that we have geographic focus in the far western development region and branches in
all development regions [y] the only private bank to have such a focus. These
companies assessed and identified market gaps for developing strategies. We rescued
clientele not served by other banks i.e. clients with small saving deposits and we
constantly watch the competition and find out unfulfilled market niches. Overall the
managers understanding of strategy confirmed its definition as a pattern of actions to
improve their competitiveness and superior performance through differentiation
(Hambrick and Fredrickson, 2001). However, managers views and practices of
strategy seem to be focussed more on external conditions than internal resources. For
example, the concept of non-imitable resources (Barney, 1991) was not mentioned by
any of the managers.
Managers involvements. Top managements were involved in strategy formulation,
implementation, and evaluation. They were actively involved in strategic management,
for example, the strategies are developed by top management in consultations with all
departments and the senior managers use a strategic management perspective to
formulate strategies, prepare plans and carry out continuous monitoring and
evaluation in a participative manner. Managers of another company noted that
everything is done in a top down manner by the Managing Director as it is a family
business. However, managers involvement was noted by a manager: in order to
develop strategies the entire staff of the company meets regularly. Another manager
suggested the involvement of department heads and the focus of strategy on customer
and market: The department heads review both customer complaints and
compliments, and the marketing department plays a crucial role in coming up
with ideas to differentiate products and establish marketing strategies with the active
support of various departments.
Proactive and reactive strategic management. The companies used mainly reactive
strategies with a particular emphasis on reacting to changes in the environment. An
executive mentioned that we carry out extensive business analysis every year. The
managing director evaluates long term plans, and modifies these plans on the basis of

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Table III.
Key findings from
business organizations

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the environmental analyses. In addition, we need to rapidly change strategies/


approaches to comply with frequent changes in government regulations. This
approach was also obvious in the following statement, the external environment is
monitored continuously and attention is also paid to competitors moves, new
products, and emerging technologies.
Strategy implementation. The business organizations developed strong relationship
with regulatory bodies to develop and implement the strategies. We have
relationships with central bank employees and the company MD is in regular
contact with the Department of Civil Aviation and is informed of any changes in
government policies in advance.
Similarly, the organizations developed robust human resources management to
implement their strategies. An executive stated that the company informs its sales staff
about the differentiation and trains them to effectively communicate the differentiations
to the customers and hires fresh human resources because the young people are easily
assimilated into the organizational norms. In addition, the strategies were also
supported by Management Information System (MIS) that provides information
regarding competitors flights, operating costs among others which facilitate in easily
accessing opportunities of new markets. Some of the other implementation strategies
were selection of strategic locations and adaptation of superior technology.
Obstacles in strategic management. The business organizations said that they faced
hurdles in adopting the strategic management approach because of frequent changes
in government rules and regulations, internal staffs resistance to change, and resource
constraints. An executive mentioned that the staffs lack conviction in the usefulness
of their strategy given the need to comply with the guidelines issued by the central
bank. Similarly another executive mentioned the problems such as staffs resistance
to change is a problem and allocating resources required for implementing new
strategies. The internal obstacles relating to resource constraints and resistance
indicated poor implementations of strategies because the strategies were not aligned
with the structure and culture of the organizations (Gnyawali and Stewart, 2003).
Perceived benefits from strategic management. The executives of business
organizations explained about the benefits of practicing strategic management in
terms of increased market positions, brand image, customer satisfaction, and
profitability. The executives mentioned the following statements for improved market
position: the company provides the lowest interest rate in its deposit but still
commands a large portion of the market share and we surpassed the performance of
many competitors and we are the market leader. The benefits in terms of improved
brand image were indicated by the following statements: we increased its customer
base three-fold, achieved brand popularity, and do not have to spend much on
advertising, and it is the airline of choice in Nepal because of its reliability,
punctuality, and safety.
Competitive advantage gained was another point that was mentioned in a few
interviews. For example, we have a strong brand image [y] are the leader in most of
its markets and strategic initiatives are made to defend market share and capture
additional market opportunities whenever competitors challenge us. Managers also
believed that strategic management practices also contributed to increased
profitability, The bank has done very well in terms of profitability.
Strategic management in NGOs
Table IV summarizes key insights from our interviews of managers of NGOs.

Themes

Illustrative key findings

Goals setting and planning


Goals and strategies

An approach of setting goals and formulating coherent strategic plans


Delivering superior services or values to stakeholders and
beneficiaries, enhance community ownership, mobilize local resources,
and understand problems of needs of beneficiaries in order to bring
sustainability in the programs and bring positive impact in the society
Extensive involvement of head quarters located in the western
countries and extensive use of external facilitators to run interactive
sessions with stakeholders for strategy formulation but less
involvement of country managers
Proactive strategic plans for five to three years and country offices
implement them. Reactive strategies not observed
Not observed
Difficult to motivate staff to implement the strategies, resource
constraints, faulty strategies, poor monitoring system, and continuous
political unrests
Program expansions, increased funding, improved image, networking
with stakeholders, and overall organization and social development

Managers involvements

Proactive and reactive


strategies
Strategy implementation
Obstacles in strategy
implementation
Benefits from strategic
management

Goal setting and planning. NGOs considered strategic management as an approach


for goal setting and developing coherent plans. An executive stated the organizations
goals are bringing sustainability to the programs and producing positive impact in
the social development. Other executives stated that strategic management is about
setting strategic goals by prioritizing the needs and laying down strategies adaptable
to the changing environment to achieve the goals. Some considered it as an ongoing
system in which all the activities of the organization are interlinked with the vision,
mission and goals of the organization through performance planning, implementation
and evaluation.
Goals and strategies. An executive of Mahaguthi which markets handicraft products
stated that we provide superior services to producers and artisans; pay very fair
prices/wages to the crafts producers; and offer good quality products to customers. He
further said that we are different from similar competing organizations in various
ways and one of the differentiations is that we are fair trade organization. Other
executives mentioned about working modalities as strategies. We work closely with
communities to enhance the communities feelings of ownership of the projects by
making them equal partners, mobilizing local resources through the utilization of
voluntary contributions of labor, materials and money from the beneficiaries.
Managers involvements. The NGOs except in Mahaguthi reported that their
strategies were formulated by the head office which sets the vision, mission, objectives
and strategies common to all the organizations operating in different countries. Another
executive mentioned that after incorporating the comments of country staff, a copy of
proposed strategies is submitted to regional office in Asia and then to the international
headquarters for final approval. Based on the approved strategy paper country program
outline is developed as an operational document for this organization. The head office
also carries out evaluations of the programs to prepare future strategies.
Senior managers spend about two days in annual planning workshop, couple
of days for developing detail plan of actions and other couple of days in evaluation.
Less involvements of country senior managers was also obvious from a statement:
the senior managers spend about 5% of their time on strategic management tasks.

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Table IV.
Key findings from NGOs

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All the staff are informed and educated on the guiding principles called Blueprint
of Room to Read. The strategic planning was a long process which took about
15 months to complete. Workshops and committees were involved for generating
information during the strategy development process. A number of workshops at the
community and partner levels are conducted to validate the baseline survey and
evaluation findings and the representatives of different departments and producer
groups participate and share their knowledge and experiences in these workshops.
External facilitators were used for strategy development. Independent consulting
groups conduct baseline surveys about family situations including literacy, health, and
children as well as program evaluations. An executive supporting this fact mentioned
that the head office is proactive in utilizing its unique advantages and allocating its
resources to create new markets for growth and advancement in all the countries where
it works and the organization pays continuous attention to the donors commitment
in terms of funding and the security situation in the country while implementing the
programs. The following statement also supported the need of integrating donors
interest with strategies for programs: this organization pays continuous attention to
the external environment mainly for competing for donors funds at the international
level. The process of strategy formulation by headquarters resembles corporate
strategy of for-profit companies (Pearce and Robinson, 2005) in order to create superior
value by making country offices perform better under a headquarters umbrella.
The headquarters pay attention to the donor agencies interests, needs of the
beneficiaries, and competitors programs while developing strategies.
Strategy implementation and obstacles. The strategic implementations were weak in
the NGOs as it is difficult to motivate people to follow the strategies in a culture
where everything is expected to be initiated from the top due to insufficient skill
and knowledge to implement the strategic management plans. Similar was the view
of another executive, old and senior human resources are too inflexible towards
dynamism and changes. Some of the obstacles were related to inadequate resource
allocation such as, inadequate funding is another major constraint. These statements
indicated poor strategic alignment with human resources and organizational culture.
Other types of obstacles were related with external environment as explained by the
following statements such as unpredictable forces such as continuous strikes and
present conflict situation in the country.
Some obstacles for applications of strategic management in NGOs were related to
the process of strategic management itself. The executives mentioned about insufficient
environmental assessment during strategic planning and strategic plans are
implemented rigorously but monitoring has been difficult.
Perceived benefits from strategic management. Executives of NGOs perceived
benefits of strategic management in terms of improvements in their image, networking,
and product development, greater focus on the specific needs of beneficiaries, relationship
with stakeholders, and growth of services. An executive of Mahaguthi mentioned about
the benefits similar to private organizations, such organizational arrangements have
helped Mahaguthi to improve its image, networks, sales, marketing, and new product
development and our business has grown over the years. The managers of other
organizations believed that they had achieved superior results especially by creating
value to the donors and beneficiaries in a short period of time. The value creation helped
them expand their activities in new countries. This organization has received the social
entrepreneur organization award from the Fast Company magazine and the Hero of Asia
award from the Time Magazine. Another executive mentioned that application of

strategic management in the past contributed to the expansion of its programs into new
geographical areas, increased funding from new donors, increased government
cooperation in implementing programs, and increased capacity of local NGOs. It was
also helpful in achieving overall welfare such as applications of strategic management
have helped the organization to make its country programs focused on the specific needs
of its beneficiaries, to effectively negotiate and come up with beneficial agreements with
partner organizations in various communities, government and other development
organizations which ultimately enhanced donors supports, and employees motivation
and commitment. Finally, the strategies have helped in value creation in the society, in
terms of improvements in quality health services and increased sustainability of health
service delivery systems.
In summary, the results show that a few aspects of strategic management are
practiced in Nepal, and these practices exist in both business organizations and NGOs.
Managers believe that strategic management is important as it pushes them to be
more systematic in analyzing the environment, developing goals and strategies,
and implementing those strategies. Further, they believe that adoption of strategic
management practices help them in realizing better outcomes. The managers also see
tremendous obstacles in strategic management. While general concepts of goals, plans,
and priorities are understood and practiced reasonably well in Nepal, it is evident that
managers do not think systematically about competitor analysis, development of
unique strategic positioning, having and utilizing unique and valuable resources,
and creating competitive advantages.
Comparison of strategic management practices of business organizations and NGOs
This section focusses on a comparative analysis of strategic management practices
of business organizations and NGOs (research question 2). Table V provides a
comparative summary, and details results are discussed below.
Our comparative analysis of business organizations and NGOs shows several
differences. Business organizations consider strategic management as a tool for
gaining competitive advantages and customer satisfaction, but NGOs consider it
merely as a tool to attract more funds and to expand their programs. Compared to
business organizations, NGOs pursue a more formal and traditional strategic
planning process. Because NGOs have international linkages, they typically involve
external experts in the strategic planning process and collect a substantial amount of
information through surveys, workshops, and meetings. The strategic plan helps
them in increasing funding support from donors, expanding programs, increasing
cooperation with stakeholders, informing staff, and satisfying donors and beneficiaries.
These differences in process and focus of strategic management between business
organizations and NGOs indicated that the exact duplication of the for-profit sector
strategic planning process is not possible as suggested by Chlala et al. (1995).
It is obvious that the western style of strategic management has a strong influence on
NGO strategic management, apparently because they are guided by their headquarters
in the west.
Although senior executives of business organizations and NGOs understood
strategic management as strategy formulations, implementation, and monitoring,
the strategic goals were different. While business organizations seem to view
differentiation as being an important aspect of their strategy, NGOs strategies were
focussed on operational effectiveness in terms of producing greater social benefits
by improved service modalities. Our findings also show that NGOs are weaker in

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Themes

Business organizations

Goals setting and planning Considered as a game plan to


gain competitive advantages
Goals and strategies

204
Managers involvements
Proactive and reactive
strategies
Strategic implementation

Table V.
Differences in strategic
management practices
between business
organizations and NGOs

Obstacles in strategic
implementation
Benefits from strategic
management

Differentiation by serving un
served customers needs for
improved competitiveness and
profitability
Extensive involvement and
empowerments of all managers
Short-term orientation and
continuous adaptations of
strategies to meet uncertainties
Resilient implementation with
maintaining sound relationships
with regulatory bodies and
adjustments in organizational
resources
Fewer obstacles due to resilient
strategic management
Improvements in market position
and profitability

NGOs
Considered as an approach for
formulating coherent strategic
plans
Efficiency focused for improved
sustainability and social impact
Prepared by head quarters and
country mangers to implement
strategies
Long-term orientations and
inflexible to address uncertainties
Less resilient implementation and
difficulties to adapt with the
changes
More obstacles due to faulty and
inflexible strategic management
Improvement in funding and image

strategy implementation as they face constant threats from the external environment,
particularly political instability and conflicts prevailing in the country. NGOs are less
reactive and more proactive. NGOs also face internal obstacles, such as lack of
confidence of the staff in making and pursuing strategic plans.
In terms of obstacles and benefits, business organizations seemed to have fewer
obstacles in strategic management because they monitor the external environment
more regularly and tap into emergent opportunities. The NGOs seemed to have more
obstacles in spite of utilizing external analysis in the strategic planning process. Business
organizations perceived the benefits of strategic management in terms of market share,
competitive advantages, brand image, and profitability. NGOs perceptions of the benefits
were largely improvement in their beneficiaries social and economic conditions, funding
supports and networking with government and partner organizations. Business
organizations were more resilient to become competitive in the given political and
bureaucratic environment and resource constraints. NGOs appeared to have traditional
strategic management practices characterized by top-down approach, and are rather
inflexible and less resilient in strategy implementation. It appeared that NGOs may need
to be more resilient to achieve their mission and goals than business organizations in the
uncertain and volatile environment (Drucker, 1985) in Nepal.
Discussion and implications
Our in-depth case studies show that while managers in Nepalese organizations do
view strategic management as being critical in their organizations success, there
are variations in the specific aspects of strategic management in for-profit business
organizations vs not-for-profit NGOs. We also find that strategic management
practices in Nepal differ from those stated in the literature in the western context.

Discussion of findings
In the case of business organizations, managers view strategic management as preparing
long-term plans (vision, mission, and goals) and distributing/communicating them to
various departments and units within the organization. They place more emphasis on
preparing annual strategic plans in a participatory approach and monitoring them.
Strategic plans are prepared to gain competitive advantages and customer satisfaction.
However, managers seem rather unclear about how to be unique and truly differentiate
their products and services. Our findings thus indicate that Nepalese business managers
have not specifically thought of ways in which they could create and maintain
competitive advantages through pursuit of inimitable differentiation strategies.
Our findings also indicate that strategic management in Nepal is often focussed on
responding to changes in the environment and competition, and thus is rather reactive
and short-term focussed. The reasons may lie in the volatile environment in Nepal,
which makes it very difficult for managers to do a long-term forecast and plan for the
future. Frequent changes in government regulations and internal resource constraints
seem to be key obstacles in developing long-term plans and implementation of such
plans. Lack of reliable, timely, and comprehensive business information in Nepal also
impedes managers from doing adequate and accurate situational analysis following
the IO approach. Haley and Tan (1996) indicated the existence of different strategic
management styles in Asian firms. Most of the companies studied do not really
emphasize internal resources and capabilities as being key to strategic management,
suggesting the absence of internal analysis based on the RBV approach. The above
mentioned examples also revealed that the strategic plans are not followed by aligning
them with the structure, system, and culture of the organization.
While we found that the adoption of the core ideas of strategic management was not
complete among the companies studied, these firms are running successfully in Nepal.
This stands in contrast to the western view that the absence of strategic management
represents a weak management style, are prone to failure. Further research is needed
in order to develop a better and deeper understanding on these aspects. This study
reveals the prevalence of an Asian strategic management style characterized by trust,
loyalty, networking and relationship based, speedy, ad hoc, and reactive strategic
decision making (Ghosh and Chan, 1994; Haley and Tan, 1999). This study further
demonstrates the relationship between formalizations of the strategic planning process
and the size, age, and complexity of the environment of these organizations, because
there is wide variation among the business organizations in terms of their understanding
and adoption of strategic management. Buddha Air, for example, does not engage
employees in the process of strategic management as most of the companys decisions are
made by the MD and the lower level managers are asked to implement these decisions.
On the other hand, the rest of the respondent companies are more participatory in their
management approach.
The not-for-profit organizations or NGOs in Nepal seem to be influenced by the
strategic management practices of the western world, primarily through their
headquarters and international linkages. It appeared that they followed the IO
approach and performed an analysis of the environment. Yet, their strategic management
practice seems to be confined to setting long-term goals and direction, continuous
execution of the plan, and periodic monitoring and evaluation. Most of the sample
organizations get the strategic plans finalized by their parent organizations in western
countries without capitalizing diverse knowledge of Nepali culture. This could be a reason
why development interventions fail (Somlai, 1992). In addition, the resulted social impact

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was not spelt out as benefits. They prepare strategic plans and evaluate them every two
to five years. There was little understanding of and emphasis on the notion of uniqueness
and differentiation for gaining competitive advantages. Therefore, these organizations do
not seem to follow the RBV approach. They placed more emphasis on differentiating from
their past practices by improving the methods of services delivery for greater impacts.
Therefore, their focus is on improving operational effectiveness rather than being
different, which is a key to strategy (Porter, 1996). They have a more formalized strategic
planning process. However, they have a varied degree of staff involvement in the strategic
planning process in the country-level NGO. The headquarters strategic focus on fund
raising may make the organization pursue a differentiation strategy, but it was not clearly
evident in our study. We believe this is an important avenue that needs to be explored in
the future research.
Overall, it appears that strategic management in Nepali organizations is different
from those of the west. For-profit business organizations in Nepal are rather reactive
and ad hoc as characterized by earlier research in the South Asian context (Pant, 2010;
Haley and Tan, 1999). The rapidly changing environment and increased competition
demand that managers and strategic decision makers be more analytical and foresighted
rather than intuitive and reactive (Henderson, 1989). Yet, that does not appear to be
happing in Nepal. The political and economic uncertainty in Nepal makes it difficult
for organizations to forecast trends and make long-term plans. While NGOs are more
proactive and appear to be more long-term in setting their goals, they also do not seem to
be devoting their attention to developing unique resources and pursuing differentiation
strategies. Thus, strategic management practices in Nepal are very different from those in
the western contexts.
Directions for future research
This study examined strategic management practices in Nepalese organizations and
compared those with the core literature on strategic management as emphasized in
the western countries. Because this is an early attempt to understand strategic
management practices, we adopted an exploratory approach to research and conducted
in-depth case studies based on interviews of managers. The method was appropriate
given the lack of research on the topic, but has limitations in terms of generalizability.
We believe that our study provides valuable insights on strategic management
practices in Nepal and suggests several avenues for future research. We illustrate a few
interesting research avenues here. First, our review of the literature and development
of the strategic management themes based on the case studies has uncovered strategic
management concepts that are viewed as important by managers and are practiced in
Nepalese organizations. This filtering of relevant information has thus created a strong
foundation for future researchers for them to build on our themes and create survey
instruments for large-scale empirical studies to understand the degree to which these
practices exist in various types of organizations in Nepal. Second, our comparative
examination of the business organizations and NGOs, including the comparative
tables, would help to create target-group specific instruments and compare results
across different types of organizations. Studies with large samples and use of multiitem survey instruments would provide a strong basis for quantitative data analysis.
Third, it is likely that the adoption of strategic management practices in a particular
organization is influenced by the exposure of its managers to the western management
practices. Therefore, it will be interesting to develop measures of such exposure and
examine their effects on the adoption of strategic management practices. Indicators

such as educational background, international travel, foreign ownership, and foreign


nationals in board of directors and advisory board could be used in order to
examine this question. In a related manner, our findings indicate the influence of the
headquarters, and thus suggest the importance of examining the extent and nature of
headquarters involvement in strategy formulation and implementation of NGOs.
Fourth, our results generally suggest that while Nepalese organizations examine some
aspects of the external environment in strategy making, they do not think specifically
in terms of owning and utilizing valuable and rare resources and creating resourcebased competitive advantages. Future research could examine the nature and
degree of emphasis on external environment and internal firm conditions (such as
resources and capabilities) placed by managers and whether actual strategies are
really based on such analyses. This helps to see the extent to which strategies are
driven by a thorough situation analysis (as generally expected in the western world) or
are quick reactions to events. Fifth, our research suggests that strategy
implementation in NGOs is weaker than in business organizations. It is also
possible that international NGOs struggle in adapting their management practices
to local culture. Future research could more systematically examine the role of
culture and other macro environmental conditions in strategic management practices
in Nepal. Finally and more broadly, we believe that our research also provides a good
basis for future research in strategic management practices in other South Asian
countries. The research questions we suggested here about the role of international
exposure of managers, influence of international partners and headquarters, and
the role of national culture in strategic management practices are relevant to other
countries in the region.
In conclusion, given the increasing importance of the South Asian region to the
world economy, it is imperative that researchers explore and understand management
practices in the region. We believe that our study provides valuable insights to managers
and researchers about strategic management practices in Nepal. These insights and
findings serve as a strong starting point for more systematic and data-driven research on
strategic management practices in Nepal and other countries in the region.
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Corresponding author
Binod Krishna Shrestha can be contacted at: binod@kusom.edu.np

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