only the below sections of the project need to be completed. And the topic is Blue Cross and Blue Shield insurance to Tricare insurance.V.What is the new health care service your group has determined is needed and address these 6 questions? (Questions whose answers are considered basic in information gathering or problems solving: Who, What, When, Where, Why, How?)VI.Identify Service Category Critical Success Factors.VII.Identify and Map Strategic Groups. Make one strategic map for the service area and a second for the competitor analysis.
HCA 407
Healthcare Planning and
Evaluation
Week One Lecture
HCA 407 Healthcare Planning and Evaluation
Week One, Chapter Two
Chapter 2
External Analysis
External Analysis
The most important task of an organization’s leader is to anticipate a
crisis. Perhaps not to avert it, but to anticipate it …One has to make the
organization capable of anticipating the storm, weathering it, and in fact,
being ahead of it.
– Peter Drucker
The Strategic Planning Process
Strategic Planning
Situation Analysis
• External Analysis
• Internal Analysis
• Directional Strategies
Strategy Formulation
• Directional Strategies
• Adaptive Strategies
• Market Entry/Exit Strategies
• Competitive Strategies
Implementation Planning
• Service Delivery Strategies
• Support Strategies
• Action Plans
Situational Analysis
External
Environment
Should
Do
Strategy
of the Organization
Situational Analysis
External
Environment
Should
Do
Internal
Environment
Wants
To Do
Strategy
of the Organization
Can
Do
Situational Analysis
External
Environment
Should
Do
Directional
Strategies,
Leadership
Wants
To Do
Strategy
of the Organization
Internal
Environment
Can
Do
The Strategic Planning Process
Strategic Planning
Situation Analysis
• External Analysis
• Internal Analysis
• Directional Strategies
Strategy Formulation
• Directional Strategies
• Adaptive Strategies
• Market Entry/Exit Strategies
• Competitive Strategies
Implementation Planning
• Service Delivery Strategies
• Support Strategies
• Action Plans
Process for External Analysis
Step 1 – Organize the External Analysis Process and Create an Issue
Map Template
Step 2 – Scan the General Environment, Health Care System, and
Service Area
Step 3 – Monitor and Confirm External Issues
Step 4 – Forecast External Issues
Step 5 – Assess External Issues
Step 6 – Complete an Issue Map
Nest Environment of a Health Care Organization
General Environment
•
•
•
•
•
•
Government Institutions
Business Organizations
Educational Institutions
Religious Institutions
Research
Organizations/Foundations
Individuals/Consumers
Health Care System
•
•
•
•
•
Planning/Regulatory
Organizations
Primary Providers
Secondary Providers
Provider Associations
Individuals/Patients
Service Area
•
•
•
•
•
•
Competitors
Government Services
Business Organizations
Not- for- Profit Organizations
Other Local Organizations
Individuals/Consumers
Organization
The External Environment
The General Environment
•
Government Institutions
•
Business Organizations
•
Educational Institutions
•
Religious Institutions
•
Research
Organizations/Foundations
•
Individuals/Consumers
The External Environment
The General Environment
•
Government Institutions
•
Business Organizations
•
Educational Institutions
•
Religious Institutions
•
Research
Organizations/Foundations
•
Individuals/Consumers
Health Care System
•
Planning/Regulatory
Organizations
•
Primary Providers
•
Secondary Providers
•
Provider Associations
•
Individuals/Patients
The External Environment
The General Environment
•
Government Institutions
•
Business Organizations
•
Educational Institutions
•
Religious Institutions
•
Research
Organizations/Foundations
•
Individuals/Consumers
Health Care System
•
Planning/Regulatory
Organizations
•
Primary Providers
•
Secondary Providers
•
Provider Associations
•
Individuals/Patients
Service Area
•
Competitors
•
Government Services
•
Business Organizations
•
Not- for- Profit
Organizations
•
Other Local Organizations
•
Individuals/Consumers
The External Environment
The General Environment
•
Government Institutions
•
Business Organizations
•
Educational Institutions
•
Religious Institutions
•
Research
Organizations/Foundations
•
Individuals/Consumers
Impact Each Other
Service Area
•
Competitors
•
Government Services
•
Business Organizations
•
Not- for- Profit
Organizations
•
Other Local Organizations
•
Individuals/Consumers
Health Care System
•
Planning/Regulatory
Organizations
•
Primary Providers
•
Secondary Providers
•
Provider Associations
•
Individuals/Patients
The External Environment
The General Environment
•
Government Institutions
•
Business Organizations
•
Educational Institutions
•
Religious Institutions
•
Research
Organizations/Foundations
•
Individuals/Consumers
Impact Each Other
Service Area
•
Competitors
•
Government Services
•
Business Organizations
•
Not- for- Profit
Organizations
•
Other Local Organizations
•
Individuals/Consumers
Impact Organization
Health Care System
•
Planning/Regulatory
Organizations
•
Primary Providers
•
Secondary Providers
•
Provider Associations
•
Individuals/Patients
Issue Map
Categories of Issues
Economic
Social / Demographic
Legislative /
Political
Technological
Competitive
General Environment
Health Care System
Service Area
Scanning the External Environment
Serve as the organization’s “window” or “lens” on the external world.
“Areas “of the Environment Information Categories
Technological
Social / Cultural
Demographic
Political / Regulatory
Economic
Competitive
Customer
Scanning the External Environment
People
• Direct: Within organizations
• Indirect: Outside organizations
Publications
• Direct: Industry, technical reports, data bases
• Indirect: Newspaper, journals, the Internet, etc.
Monitoring the External Environment
• Accumulate a data base around an identified issue.
• Investigating the sources of the information.
• Identifying the organizations creating changes.
• Identifying the sources reporting changes.
Forecasting Environmental Change
If these trends continue, or if issues accelerate beyond their present rate,
or if this event occurs, what will the issues and trends ‘look like’ in the
future?
Assessing Environmental Change
Interpret the data based on perceptions, values, past experiences, and
context.
Assessing Issues
High
High Impact Low
Probability
High Impact High
Probability
Low Impact Low
Probability
Low Impact High
Probability
Impact
on the
Organization
Low
High
Probability of Trend Continuing
Assessing Issues
High
Critical Issues to the
right of the
line should be
addressed in the
strategic plan
High Impact Low
Probability
High Impact High
Probability
Impact
on the
Organization
Low Impact Low
Probability
Low Impact High
Probability
Low
Critical Issues to the
right of the line
should be
addressed in the
strategic plan
High
Probability of Trend Continuing
Environmental Analysis Tools and Techniques
Technique
Primary Focus
Issue Impact and
Probability
Prioritization
•
•
•
•
Scanning
Monitoring
Forecasting
Assessing
Advantage
Disadvantage
• Simple
• Logic
• Easy to communicate
• Need a good deal of
data in order to
extend trend
• Limited to existing
trends
• May not foster creative
thinking
Environmental Analysis Tools and Techniques
Technique
Primary Focus
Advantage
Disadvantage
Issue Impact and
Probability
Prioritization
•
•
•
•
Scanning
Monitoring
Forecasting
Assessing
• Simple
• Logic
• Easy to communicate
• Need a good deal of
data in order to
extend trend
• Limited to existing
trends
• May not foster
creative thinking
Delphi Method
•
•
•
•
Scanning
Monitoring
Forecasting
Assessing
• Use of field experts
• Avoids intimidation
• Members are physically
dispersed
• No direct interaction of
participants
• May take a long time
problems
• Eliminates
management’s
biases
to complete
Environmental Analysis Tools and Techniques
Technique
Primary Focus
Nominal Group
Technique
•
•
•
•
Scanning
Monitoring
Forecasting
Assessing
Advantage
Disadvantage
• Everyone has equal
status and power
• Wide participation
• Ensures
representation
• Eliminates
management’s biases
• Structure may limit
creativity
• Time consuming
Environmental Analysis Tools and Techniques
Technique
Primary Focus
Nominal Group
Technique
•
•
•
•
Brainstorming
Forecasting
Assessing
Scanning
Monitoring
Forecasting
Assessing
Advantage
Disadvantage
• Everyone has equal
status and power
• Wide participation
• Ensures
representation
• Eliminates
management’s biases
• Structure may limit
creativity
• Time consuming
• Fosters creativity
• Develops many ideas,
alternatives
• Encourages
communication
• No process for making
decisions
• Sometimes gets off
track
Environmental Analysis Tools and Techniques
Technique
Primary Focus
Advantage
Disadvantage
Focus Groups
• Forecasting
• Assessing
• Uses experts
• Management/expert
interaction
• New viewpoints
• Finding experts
• No specific structure for
reaching conclusions
Environmental Analysis Tools and Techniques
Technique
Primary Focus
Advantage
Disadvantage
Focus Groups
• Forecasting
• Assessing
• Uses experts
• Management/expert
interaction
• New viewpoints
• Finding experts
• Forecasting
• Assessing
• Surfaces many subissues and factors
• Conclusions are
reached on issues
• Based on analysis
• Does not provide a set
of procedures for
deciding what is
important
• Considers only a single
issue at a time
• Time consuming
Dialectic Inquiry
• No specific structure for
reaching conclusions
Environmental Analysis Tools and Techniques
Technique
Primary Focus
Advantage
Disadvantage
Stakeholder
Analysis
• Scanning
• Monitoring
• Considers major
independent groups
and individuals
• Ensures major needs
and wants of outside
organizations are
taken into account
• Emerging issues
generated by other
organizations may not
be considered
• Does not consider the
broader issues of the
general environment
Environmental Analysis Tools and Techniques
Technique
Primary Focus
Advantage
Disadvantage
Stakeholder
Analysis
• Scanning
• Monitoring
• Considers major
independent groups
and individuals
• Ensures major needs
and wants of outside
organizations are
taken into account
• Emerging issues
generated by other
organizations may not
be considered
• Does not consider the
broader issues of the
general environment
Scenario Writing
• Forecasting
• Assessing
• Portrays alternative
futures
• Considers
interrelated external
variables
• Gives a complete
picture of the future
• Requires generous
assumptions
• Always a question
as to what to include
• Difficult to write
Conclusion
Key Term
Key Term
Key Term
Assessing
Inevitable Surprise
Scanning
Brainstorming
Issue Map
Scenarios
Delphi Method
Issue Impact & Prioritization
Secondary Providers
Dialectic Inquiry
Medicaid
Sensemaking
Expert Opinion
Medicare
Service Area
External Analysis
Monitoring
Service Category
Focus Groups
Nested Systems
Stakeholders
Forecasting
Nominal Group Technique (NGT)
Stakeholder Analysis
General Environment
Predictable Surprise
Strategic Awareness
Gray Rhino Event
Primary Providers
Strategic Issues
Check Your Understanding
One of the ways to monitor external environment is to accumulate a data base
around an identified issue.
• True
• False
Check Your Understanding
One of the ways to monitor external environment is to accumulate a data base
around an identified issue.
• True
• False
You are done with Week One Interactive
Presentation.
Please proceed back to Week One in
Blackboard to finish the curriculum for
Week One.
HCA 407
Healthcare Planning and
Evaluation
Week One Lecture
HCA 407 Healthcare Planning and Evaluation
Week One, Chapter Three
Chapter 3
Service Area Competitor Analysis
The Strategic Planning Process
Strategic Planning
Situation Analysis
• External Analysis
• Internal Analysis
• Directional Strategies
Strategy Formulation
• Directional Strategies
• Adaptive Strategies
• Market Entry/Exit Strategies
• Competitive Strategies
Implementation Planning
• Service Delivery Strategies
• Support Strategies
• Action Plans
Focus of Service Area Competitor Analysis
• Foster strategic thinking throughout the organization.
• Identify market niches and discontinuities.
• Select a viable strategy.
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.
Process for External Analysis
Step 1 – Complete Situational Analysis of the General Environment,
Health Care Industry, and Service Area
Step 2 – Conduct Service Area Structure Analysis
Step 3 – Conduct Competitor Analysis
Step 4 – Analyze the Critical Success Factors
Step 5 – Map Strategic Groups
Step 6 – Assess Likely Competitor Actions or Responses
Step 7 – Synthesize Analyses
Services Analysis
Potential
Entrants
Threat of New
Entrants
Bargaining
Power of
Suppliers
Bargaining Power of
Buyers
Suppliers
Buyers
Rivalry
Rivalry
Among
Existing
Competitors
Substitutes
Threat of
Substitute
Products or
Services
Service Area Structural Analysis
Porter’s Five Forces
• Threat of new entrants to the market.
Barriers to Entry
• Existing organizations have economies of scale.
• It costs a great deal (capital) to get into this type of business.
• Switching from one service provider to another is expensive.
Service Area Structural Analysis
Porter’s Five Forces
Threat of new entrants to the market
Level of rivalry among existing organizations
Intensity of Rivalry
• Numerous or equally balanced competitors?
• Slow market growth for these types of services?
• High fixed costs (buildings, equipment)?
Intensity of Rivalry
Porter’s Five Forces
Threat of new entrants to the market
Level of rivalry among existing organizations
Threat of substitute products and services
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.
Service Area Structural Analysis
Porter’s Five Forces
• Threat of new entrants to the market.
• Level of rivalry among existing organizations.
• Threat of substitute products and services.
• Bargaining power of buyers (customers).
Bargaining Power of Buyers
Purchases products that are standard.
• Buyers view all providers as having about the same service and
quality?
Pose a threat of backward integration.
• Buyers could begin providing the service themselves?
Service Area Structural Analysis
Porter’s Five Forces
• Threat of new entrants to the market
• Level of rivalry among existing organizations
• Threat of substitute products and services
• Bargaining power of buyers (customers)
• Bargaining power of suppliers
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
Bargaining Power of Suppliers
Bargaining Power of Suppliers
If all five forces are favorable:
If all five forces are unfavorable:
• Little or friendly competition.
• A great deal or very unfriendly
• Difficult for new competitors to
enter the business.
competition.
• Easy for new competitors to enter
• Few or no good substitutes for the
product or service.
the business.
• Many good substitutes for the
• Buyers will not control the price,
product or service.
quality, design, or volume.
• Buyers will control the price,
• Suppliers will not control the
quality, design, or volume.
inputs to production.
•
Suppliers will control the inputs to
production.
Services Analysis
A “Three Star” Product or Service
Potential
Entrants
Threat of New
Entrants
Bargaining
Power of
Suppliers
Suppliers
Bargaining Power of
Buyers
Rivalry
Among
Existing
Competitors
Buyers
Rivalry
Substitutes
Threat of
Substitute
Products or
Services
Services Analysis
Evolving Products/Services Viability
Potential
Entrants
Threat of New
Entrants
Bargaining
Power of
Suppliers
Suppliers
Bargaining Power of
Buyers
Rivalry
Among
Existing
Competitors
Buyers
Rivalry
Substitutes
Threat of
Substitute
Products or
Services
Services Analysis
Evolving Products/Services Viability
Potential
Entrants
Threat of New
Entrants
Bargaining
Power of
Suppliers
Suppliers
Bargaining Power of
Buyers
Rivalry
Among
Existing
Competitors
Buyers
Rivalry
Substitutes
Threat of
Substitute
Products or
Services
Services Analysis
Evolving Products/Services Viability
• New Regulations or Political Changes.
• New Technologies or Services Improvement
• Social or Demographic Changes.
• Economic Changes.
• Competitive Changes.
Competitor Analysis & Strategic Groups
What are the strengths and weaknesses of your competitors?
Can your competitors be “mapped” with respect to two or more
dimensions?
Competitor Analysis and Mapping Strategic Groups
Competitor Strengths and Weaknesses
Service Category Critical Success Factor Analysis
Service Area Plastic Surgery Competitors (2012)
Service Area Plastic Surgery Competitors (2012)
*Range of services included skilled nursing, organized social activities, outings, physical therapy, education,
rehabilitation, speech therapy, Alzheimer’s care, nutritional services, infusion, pharmacy, homemaker services, liveins, companions, and so on.
Conclusion
Key Terms
Key Terms
Black Swan Event
Service Area
Competitive Advantage
Service Area Competitor Analysis
Competitor Analysis
Service Area Structural Analysis
Critical Success Factor Analysis
Strategic Groups
Mapping Competitors
Strategic Response
Check Your Understanding
One of Porter’s five forces are Threat of substitute products and services.
• True
• False
Check Your Understanding
One of Porter’s five forces are Threat of substitute products and services.
• True
• False
You are done with Week One Interactive
Presentation.
Please proceed back to Week One in
Blackboard to finish the curriculum for
Week One.

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