Explain what you understand “strategic management” to be. In
other words, how would you explain the term “strategic management” to
someone who doesn’t know what the term means? (In your replies to
others, note if you agree or disagree with the explanation given and
why.)Next, look at Exhibit 1-1 on page 12 of the text (Strategic Thinking Map of Strategic Management). Make an argument for which stage of strategic management is most important:Strategic ThinkingStrategic PlanningManaging Strategic MomentumI recognize that this is subjective and they are all important, but your
task is to pick one and argue why it is the most important part of the
process. Defend your position as to why the part of the process you’ve
chosen is arguably the most important. In your replies explain why you
agree or disagree.
HCA 407
Healthcare Planning
and Evaluation
Week One Lecture
HCA 407 Healthcare Planning and Evaluation
Week One, Chapter One
Chapter 1
The Nature of Strategic Management
Strategic Management
What is it?
Why should we care?
What does it look like?
What is unique about health care
that could impact how strategic
management is used?
Quote
American Health Care is in a state of hyper- turbulence characterized
by accumulated waves of change in payment systems, delivery
systems, technology, professional relations, and societal expectations.
It can be likened to an earthquake in its relative unpredictability, lack
of a sense of control, and resulting anxiety
– S.A. Shortell, R.R. Gillies, and K.J. Devers
The Only Constant is Change
Legislative healthcare reform
Growth of outpatient care
Increasingly restrictive reimbursement envt
Growth of home health
Demographic shifts
Changes in managed care strategies
The baby boomers
Increase physicians in executive leadership
Shortages of providers
Emerging focus on prevention
High costs of new tech
Pressure to reduce overhead costs
Further consolidation within the industry
Foundations of Strategic Management
Greek word strat?g?s, meaning a general which in turn comes from roots meaning
army and lead.
Greek verb strat?g?? means to plan the destruction of ones enemies through
effective use of resources.
Development of Strategic Management
Long- Range Planning
Strategic Planning
Strategic Management
Strategic Management in the Health Care Industry
Whats the difference?
Strategic Management
Health Care Policy Planning
The Dimensions ofStrategic Management
Strategic thinkers draw upon the past, understand the present, and can
envision a better future.
The Map and the Compass
The Map
Analytical or Rational Approach
Logical Sequence of Steps
Specific Processes.
Better in Known Worlds.
The Compass
Emergent Approach
Relies on Learning
Leadership Sets Direction
Better in Uncharted Worlds
The Map and the Compass
The Map
Analytical or Rational Approach
Logical Sequence of Steps
Specific Processes.
Better in Known Worlds.
The Compass
Emergent Approach
Relies on Learning
Leadership Sets Direction
Better in Uncharted Worlds
Map and Compass
Map
Compass
Planned
Emergent
Rational
Non- rational
Sequential
Random
Performance
Learning
Consistency
Change
Logical
Illogical
Order
Discontinuity
Efficiency
Effectiveness
Prescriptive
Descriptive
Evolution
Revolution
Control
Risk
Present
Future
Management
Leadership
Analytic Approach
Emergent Approach
What determines what type of approach to use?
Non-realized
strategies
Realized Strategy
Emergent
strategies
Strategic Management Processes
Strategic Planning
Strategic Thinking
Awareness Anticipation
Analysis Interpretation
Synthesis Reflection
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
Managing
Strategic Momentum
Managerial Action Strategy
Evaluation Strategic Control
Emergent Learning Reinitiate Strategic Thinking
Leading Strategically
Strategic Thinking an intellectual orientation, a way of thinking or
mindset.
Strategic Planning the periodic process of creating organizational
momentum (a strategy).
Managing Strategic Momentum a philosophy and process of
continuously leading and managing an organization using strategic thinking
and periodic strategic planning.
Strategic Thinking Framing
What are we doing now that we should stop doing?
What ae we not doing now, but should start doing?
What are we doing now and should continue to do but perhaps alter in some
fundamental way?
Leading Strategically
Strategic Activity
Description
Orientation / Scope
Strategic Thinking
Fundamental Strategic Skill an
Intellectual Orientation, a Way of
Thinking or Mindset
Individual Leadership
Process
Strategic Planning
Process of Creating a Plan
Using Strategic Thinking
Periodic Group
Leadership and
Management Process
Managing Strategic
Momentum
Process of Leading and Managing the
Strategy using Thinking and Planning
Organizational
Management Processes
Strategic Thinkers
Do not assume that the organization will continue to do what it is presently
doing.
Determine what the organization should stop doing.
Determine what the organization should start doing that it is presently not
doing.
Determine what the organization should continue to do but perhaps in a
fundamentally different way.
Strategic Planning
Provides a sequential, step- by- step process for creating a strategy.
Involves periodic group strategic thinking sessions.
Requires data/information, but incorporates consensus and judgment.
Establishes organizational focus.
Facilitates consistent decision making.
Reaches consensus on how the organization fits within its industry .
Results in a documented strategic plan.
Linking Today and Tomorrow
plans
plans
plans
plans
budgets budgets
plans
budgets budgets
budgets
Profile of
Today
Mission
Strategy
budgets budgets
plans
plans
year
1
budgets
year
2
budgets
plans
year
3
budgets
plans
year
4
plans
year
5
Profile of
Tomorrow
Vision (hope
for the
future)
Managing Strategic Momentum
Addresses the management of the actual work to accomplish specific
objectives.
Concerns decision making process and their consequences.
Provides the style and culture.
Evaluates strategy performance.
Controls strategy implementation.
Is a learning process.
Relies on and initiates new strategic thinking and new periodic strategic
planning.
Benefits of Strategic Management
Ties the organization together with a common sense of purpose and shared values.
Improves financial performance in many cases.
Provides the organization with a clear self- concept, specific goals, and guidance as
well as consistency in decision making.
Helps managers understand the present, think about the future, and recognize the
signals that suggest change.
Requires managers to communicate both vertically and horizontally.
Improves overall coordination within the organization.
Encourages innovation and change within the organization to meet the needs of
dynamic situations.
What potential problems exist with
Strategic Management?
What are the dangers?
How can you avoid them as a leader?
Link Between Levels of Strategic Management
Ends Means
Hierarchy of Strategies
Organizational Levels
Strategic
Thinking
Corporate
Offices
Strategic
Planning
Strategic
Momentum
Strategic
Thinking
input
Outpatient
Facilities
Long-term
Care
Home Health
Hospital
Division
Divisional
Level
Hospital West
Hospital
Central
Hospital
Division
Organizational
Level
Strategic
Planning
Strategic
Momentum
Strategic
Thinking
input
Strategic
Planning
Strategic
Momentum
Strategic
Thinking
input
Surgery
Strategic
Momentum
Corporate
Level
Strategic
Planning
Orthopedics
Pharmacy
Unit
Level
Conclusion
Key Term
Key Term
Key Term
Analytical/Rational Approach
Leadership
Strategic Service Unit (SSU)
Compass
Long- Range Planning
Strategic Thinking
Complex Adaptive
System
Map
Strategic Thinking Map
Corporate- Level Strategy
Organizational- Level Strategy
Strategy
Directional Strategies
Realized Strategy
Strategy Formulation
Divisional- Level Strategy
Situational Analysis
System
Emergent Approach
Strategic Business Unit (SBU)
Systems Perspective
Conclusion
Key Term
Key Term
Key Term
Emergent Strategy
Strategic Management
Unit- Level Strategy
Health Policy
Strategic Momentum
Unrealized Strategy
Implementation Plan
Strategic Planning
Check Your Understanding
Strategic Thinking is an intellectual orientation, a way of thinking or mindset.
True
False
Check Your Understanding
Strategic Thinking is an intellectual orientation, a way of thinking or mindset.
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 Two
Chapter 2
External Analysis
External Analysis
The most important task of an organizations 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 organizations 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
managements
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
managements
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
managements
biases
Structure may limit
creativity
Time consuming
Fosters creativity
No process for
making decisions
Develops many ideas,
alternatives
Sometimes gets off
track
Encourages
communication
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
Porters 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
Porters 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
Porters 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
Porters 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
Porters 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 suppliers products or services are unique.
The product or service supplied is important to the buyers
business.
Switching costs from one supplier to another are high.
The buyers 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
Few or no good substitutes for
the product or service.
enter 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, Alzheimers care, nutritional services, infusion, pharmacy, homemaker services,
live- ins, 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 Porters five forces are Threat of substitute products and services.
True
False
Check Your Understanding
One of Porters 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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