Strategic Management
internal analysis is part of:
situational analysis
a way of thinking and approach for managing complex organizations
strategic management
_____________________ provides a sequential, step by step process for creating a strategy, involves periodic group strategic thinking sessions, requires data/info, but incorporates consensus and judgement, establishes organizational focus, facilitates consistent decision making, reaches consensus on how org fits within its industry , results in documented strategic plan
strategic planning
process of creating a plan using strategic thinking
strategic planning
service area includes:
competitors gov't services business orgs non-profits individual consumers demo/psychographics and health status
forecasting environmental change
if trends continue, what will issues/trends look like in the future? if issues accelerate, what will issues/trends look like in future? if this event occurs, what will issues/trends look like in future? *ID full range of possibilities
strategic planning process
conduct stakeholder analysis conduct SWOT analysis define mission, vision, values ID key perspectives develop goals, measures, targets develop initiatives
Whereas _____________ analysis asked "what should we do?", _____________ analysis addresses "what can we do?"
external; internal
strategic resources include:
financial human information tech
scope of this strategic activity is periodic group leadership and management process
strategic planning
The broadest strategies that set the fundamental direction of the organization by establishing a mission for the organization (Who are we?) and vision for the future (What should we be?). In addition, directional strategies specify the organization' s values and the strategic goals.
directional strategies
give an organization its identity. It represents "who we are," "where we are going," and "how we work." mission, vision, values
directional strategies
provide no answers in themselves, but are processes that help strategic managers ID and think through issues and reach conclusions
external analysis
general environment includes:
gov't institutions business orgs educational institutions religious institutions research orgs/foundations individual consumers
an intellectual orientation, a way of thinking or mindset
strategic thinking
3 components of the strategy of an org:
external environment directional strategies, leadership internal environment
3 parts of the strategy of the organization:
external environment, internal environment, directional strategies/leadership
__________________ do not assume that the organization will continue to do what it is presently doing, determine what the org should stop doing, determine what the org should start doing that it's not presently doing, change fundamental way of doing
strategic thinkers
service area competitor analysis 7 steps
complete situational analysis of general environment, healthcare market, and service area conduct service area structure analysis conduct competitor analysis analyze critical success factors map strategic goals assess likely competitor actions and responses synthesize analyses
A process that takes place when a business expands its activities into product lines that are similar to those it currently offers. For example, a manufacturer of computers might begin making calculators as a form of related diversification of its existing business.
related diversification
scanning the external environment
serve as the org's window process of viewing external orgs in search of current and emerging trends or issues data collected, organized, categorized, accumulated, evaluated
Creation of value that is directly involved in ensuring access to, provision of, and follow- up for health services
service delivery
3 parts of strategic planning:
situation analysis strategy formulation planning the implementation
the periodic process of creating organizational momentum (a strategy)
strategic planning
deciding what the organization should explicitly be doing
strategy formulation
situation analysis includes________________________ (3)
external analysis internal analysis directional strategies
Strategic Planning Process includes __________________ (3)
situation analysis strategy formulation planning the implementation
5 forces that indicate viability of product/service: (Porter's 5 forces)
suppliers (bargaining power) potential entrants (threat) buyers (bargaining power) substitutes rivalry (in center)
areas of the environment info categories
tech social/cultural demographic political/regulatory economic competitive customer
Delphi Method
use of field experts avoids intimidation problems eliminates manager's biases may take a long time to complete
•the ideals organizations and people stand for - the fundamental principles that, along with the mission, make an organization unique.
values
They will defend the company's existing market share, but won't try to introduce new products or locations. This strategy is also referred to as active waiting, because the owners try to maintain the status quo while waiting for an opportunity.
status quo strategy
provides a "road map" for all activities and decisions in the org; create org momentum and keeps everyone informed - HAVE A PLAN TO START THE JOURNEY managers must be ready to learn what isn't working and not working as plan unfolds, be ready to adjust
strategic management process
approach company leaders take in applying a business' strengths to the current and long-term needs of the marketplace. Formulating a strategic posture is part of the broader strategic planning process, when managers collaborate to develop the vision, goals and strategies for a business in the foreseeable future. By recognizing the nature of a strategic posture, you can lead your company more effectively
strategic posture
strategic management process
strategic thinking > strategic planning > strategic momentum
market exit strategies include
fast/slow partial/complete
assessing issues:
impact on the organization with probability of trend continuing
These strategies are the most specific strategies and are directed toward value added service delivery and the value added support areas. In addition, individual organizational units develop objectives and action plans that support market entry/exit strategies, competitive strategies, as well as the value- added service delivery and value- added support strategies
implementation strategies
Firm's policy or strategy guided by market trends and customer needs instead of the firm's productive capacity or current products." ... A market driven organization has a customer focus, together with awareness of competitors, and an understanding of the market."
market driven (counters focused factory)
These strategies provide the method of carrying out the adaptive strategies of expansion of scope and the maintenance of scope strategies through purchase, cooperation, or internal development and reduction of scope through market exit
market entry/exit strategies
It focuses on increasing sales of existing products to an existing market
market penetration
objective in monitoring the external environment:
accumulate a database around an identified issue investigate sources of info ID the orgs creating changes ID the sources reporting changes
market entry strategies include:
acquisition licensing venture capital investment joint venture merger alliance internal development internal venture
the only constant is ___________
change
strategic thinking framing states
creative thinking critical thinking divergent thinking innovative thinking transformative thinking systems thinking visionary thinking
components of value in after service activities
Follow- up Clinical Marketing Billing Follow- on Clinical Marketing
goals of environmental analysis
ID/analyze current important issues that affect the org detect/analyze early or weak signals of emerging issues and changes that affect the org speculate on likely future issues/changes classify/order issues and changes generated by outside orgs provide organized info for development of the internal analysis, mission, vision, values, goals, strategy of org foster further strategic thinking throughout the org
health environment includes:
planning/regulatory orgs primary providers secondary providers provider reps individual patients
Strategic Postures
Defender Prospector Analyzer (Reactor)
strategic thinking map of strengths; questions to ask
Is the Value of the Strength High or Low? Is the Strength Rare? Is the Strength Easy or Difficult to Imitate? Can the Strength be Sustained?
Dissemination of information to prospective patients and other stakeholders regarding the prices, range of products, and location of available services by an identified health care organization.
target market
all strategies are _____________
temporary
threats of substitute services:
•Many services available that perform about the same function •There are lower cost substitute services •Buyers of the service tend to experiment or substitute often •Buyers of the service have difficulty in telling the difference in the effectiveness of the alternatives
strategic management and leadership are/are not the same thing
are
components of value in POS delivery
Point- of- Service Activities Clinical Operations Quality Process Innovation Marketing Patient Satisfaction
Drucker: most important task of an org's leader is to:
anticipate a crisis
Components of value in support activities
organizational culture organizational structure strategic resources
process for external analysis
organize the process/create issue map template scan the general environment/healthcare system/service area monitor/confirm external issues forecast external issues assess external issues complete issue map
It focuses on introducing new products to an existing market
product development
_____________________ requires a mindset/way of thinking that acknowledges reality of change, questions current assumptions and activities, builds an understanding of systems, envisions possible futures, generates new ideas, considers context, organizational fit, and industry dynamics
strategic thinking
an expression of hope - a description of what the organization will be like when it is successfully fulfilling its purpose.
vision
•Inspiring •Challenging •About excellence •Empower employees first and customers second •Comes alive in the details not in the broad generalities •Memorable and provides guidance •Not limited by the present
vision
process of momentum creation
Setting goals Organizations, like individuals, that have too many goals lose their focus "One worthwhile task carried to a successful conclusion is better than half- a- hundred half- finished tasks" - B.C. Forbes (Founder, Forbes Magazine) For most organizations, 4-6 goals are the "sweet spot" Three types of goals: input, process, & output
Dialectic Inquiry
The generation of a plan (a thesis) and a counter-plan (an antithesis) that reflect plausible but conflicting courses of action.
nominal group technique
a decision-making method that begins and ends by having group members quietly write down and evaluate ideas to be shared with the group
These strategies are more specific than directional strategies and provide the primary methods for achieving the vision (adapting to the environment). These strategies determine the scope of the organization and specify how the organization will expand scope, reduce scope, or maintain scope.
adaptive strategies
issue map categories of issues:
economic social/demographic legislative/political technological competitive
factory that its creators have organized around a very specific set of resources. The focus of this type of factory is very narrow, i.e., it provides a narrow range of operations. The vast majority of focused factories are mass production facilities.
focused factory
issue map provides:
foundation for the analysis of competitors in the service area
determine the competitive advantages and competitive disadvantages for a health care organization via:
internal analysis
objective of assessing environmental change
interpret data based on perceptions, values, past experiences, and context a process largely non-quantifiable and judgemental
what strategic management is not:
not: quick fix technique/gimmick planning retreat regulatory document extension of last year's plan not just based on forecasts of current ops
strategic criteria for goals:
•Address an external issue, trend, or force •Concern a stakeholder •Help achieve a critical success factor •Draw on a strength or fix a weakness •Fit with the mission •Be consistent with the values •Move the organization toward the vision
internal environment =
what the firm CAN do
competitor analysis and strategic groups:
what are competitor strengths and weaknesses? can your competitors be mapped w/ regard to 2 dimensions?
goals statement criteria:
•Controllable by the organization •Measurable as possible •Able to be achieved in a reasonable timeframe •Have a reasonable level of stretch for the organization
directional strategies outcomes
•Reach consensus and document what the organization currently does •Reach consensus and document the collective hope for the future •Reach consensus and codify the fundamental values
if all 5 forces are favorable:
•Little or friendly competition •Difficult for new competitors to enter the business •Few or no good substitutes for the product or service Buyers will not control the price, quality, design, or volume Suppliers will not control the inputs to production
obstacles to effective service area competitor analysis
•Misjudging industry and service area boundaries •Poor identification of the competition •Overemphasis on competitors' visible competence •Overemphasis on where, rather than how, to compete •Faulty assumptions about the competition Paralysis by analysis
evolving product/service area viability:
•New Regulations or Political Changes •New Technologies or Services Improvement •Social or Demographic Changes •Economic Changes •Competitive Changes
questions to determine intensity of rivalry:
•Numerous or equally balanced competitors? •Slow market growth for these types of services? •High fixed costs (buildings, equipment)? •Competitors' products or services are pretty much the same? •Switching from one service provider to another is easy? •Difficult to leave the business once in it? •Competitors place great importance on achieving success?
Scenario writing:
A qualitative forecasting method that consists of developing a conceptual scenario of the future based on a well-defined set of assumptions.
competitive advantage and internal analysis:
Identify strengths (competitive advantages) and weaknesses (competitive disadvantages)
Questions for evaluating internal strategic assumptions:
1.Have the strengths and weaknesses been correctly identified? 2.Is there a clear basis on which to compete? 3.Does the strategy exploit the strengths and avoid the major weaknesses of the organization? 4.Are the competitive advantages related to the critical success factors in the service area? 5.Have we protected our short- and long- term competitive advantages? 6.Has the competition made strategic moves that have weakened our competitive advantages? 7.Are we creating new competitive advantages?
systems perspectives and critical thinking to examine changing issues; combining and assessing quantitative and qualitative data
Analysis
strategic thinking map of weaknesses; questions to ask
Is the weakness of High or Low Value? Is the Weakness Common (Not Rare) Among Competitors? Is the Weakness Easy or Difficult to Fix? Can Competitors Sustain Their Advantage?
steps of internal analysis
Review Results of External Analysis and Service Area Competitor Analysis Organize the Internal Analysis Process - Using the Value Chain Identify Organizational Strengths and Weaknesses Determine Competitive Advantages and Disadvantages Synthesize and Determine the Implications of the Competitive Advantages and Disadvantages
strategic thinking activities include:
awareness anticipation analysis interpretation synthesis reflection
Two types of strategies, one that determines an organization' s strategic posture and one that positions the organization vis- à- vis other organizations within the market. These strategies are market oriented and best articulate competitive advantage
competitive strategies
philosophy and process of continuously leading and managing an organization using strategic thinking and periodic strategic planning
managing strategic momentum
scope of this strategic activity is organizational management processes
managing strategic mometum
Its strategy focuses on entering a new market using existing products.
market development
what we want to do; broadly defined but relatively enduring statement of purpose that distinguishes our organization from others.
mission
components of value in service delivery
pre service activities market/marketing research target market services offered/branding pricing Distribution/Logistics Promotion
if all 5 forces are unfavorable:
•A great deal or very unfriendly competition •Easy for new competitors to enter the business Many good substitutes for the product or service •Buyers will control the price, quality, design, or volume Suppliers will control the inputs to production
focus of service area competitor analysis
•Avoid surprises in the marketplace. •Provide a forum for leaders to discuss and evaluate their assumptions about the organization's capabilities, market position, and competition. •Make everyone aware of significant and formidable competitors to •whom the organization must respond. •Help the organization learn from rivals through benchmarking (specific measures comparing the organization with its competitors on a set of key variables) •Build consensus among executives on the organization's goals and capabilities, thus increasing their commitment to the chosen strategy. •Foster strategic thinking throughout the organization. Identify market niches and discontinuities. •Select a viable strategy. •Contribute to the successful implementation of the strategy. •Anticipate competitors' moves. •Shorten the time required to respond (countermoves) to a competitor's moves.
bargaining power of buyers:
•Buyers of the service purchase in large volume or concentrates purchases •Purchases products that are standard •Buyers view all providers as having about the same service and quality •Buyers have low switching costs in changing to another provider •Buyers have low profitability or narrow margins •Pose a threat of backward integration •Buyers could begin providing the service themselves •Buyers has low quality requirements •Has enough information to gain bargaining leverage
barriers to entry:
•Existing organizations have economies of scale •High volume, lower costs. •Existing product or service differentiation •It costs a great deal (capital) to get into this type of business •Switching from one service provider to another is expensive •Exclusive access to distribution channels •Current service providers have developed cost advantages independent of scale •There are government or legal constraints
bargaining power of suppliers:
•Few suppliers (personnel, equipment, materials) •Few substitutes for the supplies •The supplier's products or services are unique •The product or service supplied is important to the buyer's business •Switching costs from one supplier to another are high •The buyer's industry is not considered an important customer •The suppliers pose a threat of forward integration
strategic thinking Q's validating the strategic assumptions:
•Is the strategy consonant or in harmony with the competitive environment? •Do we have an honest and accurate appraisal of the competition? •Have we underestimated the competition? •Has the rivalry in the service category/service area changed? •Have the barriers to entering the service category/service area changed? •Does the strategy leave us vulnerable to the power of a few major customers? •Has there been any change in the number or attractiveness of substitute products or services? •Is the strategy vulnerable to a successful strategic counterattack by competitors? •Does the strategy follow that of a strong competitor? •Does the strategy pit us against a powerful competitor? •Is our market share sufficient to be competitive and generate an acceptable profit?
characteristics of values
•Reflect the organization' s culture •Consistent with the desired image •Acceptable to stakeholders •Consistent with vision •Ethical •Represent a clear commitment