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HPI4008 Full literature summary of case in week 1: Strategic Management
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Full literature summary of case in week 1: Strategic Management
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Week 1: Strategic ManagementLearning goals (to be prepared before study team meeting 1)
1. What is:
a. Strategic management?
i. What are the core elements?
b. Strategy
i. What types of strategy can we distinguish?
c. What is competitive advantage?
i. How is it generated?
d. What is value?
i. For healthcare organizations?
For all concepts, ask yourself; what does this really mean (beyond a definition), why
is it important, and how does it relate to the other concepts?
2. How can organizations analyse their (internal and external) environment and why
should they?
a. Which models exist to analyse internal and external environment?
b. How do they relate to one another?
c. How are they useful?
3. What does the concept of dynamic capabilities mean for strategic management,
strategy, competitive advantage, and value?
a. What are dynamic capabilities and how do they relate to the internal and
external environment of (healthcare) organizations?
b. How are strategizing and dynamic capabilities similar and/or different?
c. What do dynamic capabilities teach us about health care management?
4. What is the role of leadership in all of this?
a. What is leadership and what leadership styles can leaders use?
b. Who are the strategic leaders within (healthcare) organizations and what role
does leadership play in an organization’s strategy, competitive advantage, and
value?
c. How is leadership related to an organization’s dynamic capabilities?
Obligatory Literature
Book Chapters
Strategic Thinking and Competitive Advantage (Chapter 10 in: Shortell and Kaluzny’s
healthcare management: Organization design & behaviour)
Strategic management
Strategic management involves the creatin implementation, and overall direction for a firm.
As such, it requires both external and internal management functions to facilitate
development, implementation and monitoring of strategy within an organization. Steps in the
process of strategic management may include:
1. Goal formulation
2. Environmental scanning
3. Strategy formulation
4. Strategy evaluation
5. Implementation
6. Strategic control
,Internally, strategic management involves the participation of everyone in the organization,
especially the leadership. Externally, strategic management enhances organizational success
by anticipating possible changes in the environment in which the organization operates, and
by enabling organizations to change and maintain their competitive advantage, the long-term
market position and uniqueness that is not easily duplicable by rivals.
Environment
No organization is immune to influences that come from its external environment (the
conditions, entities, and factors surrounding an organization that influence its activities and
choices), and strategic management is a process that helps organizations respond
appropriately to potential threats and opportunities.
One external factor that will have a direct impact on health care strategies is the
demographics (population size, age, structure, geographic distribution, racial/ethnic mix, and
income levels) of our communities. The increased diversity will drive greater variations in
strategies and force successful health care organizations to be agile and adapt to the cultural
and demographic needs of their constituents. Culture, race, ethnicity, and primary language
have been shown to be associated with access to care and compliance with prevention and
treatment among patients.
Patients have become increasingly more complex as many have multiple comorbidities due to
the prevalence of obesity and chronic conditions. Economically, escalating insurance
premiums and health care costs pose threats to the industry as these trends, if they continue,
are sustainable long term. Health care as well is one of the most technologically innovative
industries, but the technological advancement has also contributed to the escalating costs.
In all, the health care industry exists in a very large dynamic, complex and challenging
environment with many opportunities as well as threats. With an aging and diverse
population making up a changing customer base, increased competition, technological
innovations, and a changing political landscape, health care organizations must have a good
grasp of the relationship between the larger environment and its future.
What is strategy?
The formation of strategy is often not a rational process. Earlier decisions imprison
statesmen within the logic of their choices and finally impose policies and actions that these
leaders would have preferred to avoid.
Modifying the definition, strategy is identified as the development of a broad formula
prescribing a way in which a business competes and collaborates, sets goals, and establishes
policies to carry out these goals in order to achieve the organizational mission. Strategy has
been described as a plan or guide for future action, a pattern of past behaviors, the process of
launching products into a particular market, the fundamental way an organization operates, a
ploy or feint to outwit a competitor, etc.
Strategy has these characteristics, where it:
1. Concerns both organizations and the environment
2. Is complex
3. Affects the welfare of the organization
4. Involves issues of content and process
5. Is not purely deliberate
6. Exists on different levels
, 7. Involves various thought processes
8. Involves the allocation of resources
9. Should be mission based
Strategy ultimately is about making better decisions. Strategic planning consists of making
decisions that are concerned with positioning a firm relative to its competitors and the
allocation of assets for current and future activity. Strategy must be flexible enough to allow
for changing circumstances.
Strategy has two important functions:
- Good strategies should improve decisions about resource allocation to yield long-term
benefits for the organization
- Developing strategies should challenge existing assumptions and be open to new
possibilities
The Strategic Process
Successful strategies require direction, resources, and institutionalized processes. Strategic
thinking involves crafting direction that eventually evolves into goals and objectives.
Strategies require action, which involves assigning responsibilities, assignments, expected
outcomes, and follow-through. Many strategies fail as a result of improper or inattentive
implementation.
Within an organization, strategic priorities should be elaborated, and projects with goals and
objectives should be developed, implemented, and monitored for each area. Appropriate
individuals should be assigned responsibility and authority for achieving strategic goals, and
key performance indicators should be established to measure progress.
Strategic planning processes must involve the right people.
- The top executive should lead the strategic planning and exhibit his/her commitment
by the dedication of time, resources, and intellect
- Organizational boards, if appropriate, should also be involved in the strategic
planning process and its monitoring.
It is important to identify all stakeholders who should be involved and clearly define the
terms of their involvement and responsibilities.
, The plan should outline steps to be taken, establish the committees and meeting, and the time
frames involved should be explicit. The processes should be established to facilitate the
establishment or review of the organizational values, mission, and vision, to drive
development of strategic analyses and objectives. Finally, clear communication channels to
disseminate information and evaluation and feedback loops to continuously improve the
implementation process should exist.
The most difficult aspect of strategic action is the actual implementation of strategic plans.
To facilitate implementation, health care organizations should seek to:
- Establish the competencies, capabilities, and resources needed to achieve strategic
action. Firms should embed the organizational skills and allocate the manpower and
resources needed to engage in strategic action through specific goals, projects and
programs
- Identify responsibility and outcomes with definitive timelines and key performance
indicators. This should include managerial responsibility and related resources
necessary to accomplish the targeted strategic objectives.
- Develop and promote policies that facilitate strategic action. Organizations should
establish policies that encourage innovation and aid in change
- Appropriate use information and operating systems to drive the strategies. Health care
organizations generally have far too much data but lack good information to drive
strategic decisions. strategic thinking requires accurate, timely information delivered
to the decision maker.
- Tie rewards to the achievement of strategic action. Successful strategic-oriented firms
are results oriented and motivate and celebrate achievement of strategic outcomes.
Rewards and incentivs should be tied to the strategic outcomes.
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