Evaluating Business Strategy - Jims Care Services - Case Study Example

Implementing a Strategic Plan Corey Sutton Dr. Kadrie Strategic Management 03/11/2014 Contents Evaluating business strategy 3 Internal and external barriers 5 Segmentation 6 Service strategy 6 Culture and structure 7 Effective utilization of resources 7 Strategic plan effectiveness 8 References 10 Evaluating business strategy Evaluation of organizational strategies is a crucial stage during the entire process. For proper and smooth implementation of any planning process, it is important to consider viability and ease of those processes as well as ability of human resource to carry out the plans. Richard Rumelt’s analysis is frequently used by various organizations for evaluating effectiveness of adaptive strategies used by firms (Rumelt, 1991). Rumelt has defined strategy as a set of policies, plans and objectives, which when clubbed together describe an organization’s scope as well as approach towards success and survival. Rumelt’s strategy for business evaluation will be used in the current proposed business strategy to evaluate appropriateness of Jim’s Care Services’ business objectives, major plans and policies. It will also analyze the critical assumptions on which the strategy is based. However, senior management of the care centre must understand that this evaluation might result is situations that can be unacceptable or unacceptable to employees, creating a conflict between employees and managers. An absolute test of any strategy is impossible. Nonetheless, critical flaws can be tested and corrected through Rumelt’s strategy. The various factors or variables used during this study are as follows; 1. Consistency: It is important that the strategy should be consistent with the policies and goals. One of the important functions of strategy is to provide framework for the firm, incorporating the values and objectives. The major objective of the care centre is to provide optimal health care services at an affordable cost. In order to reach the above objective, the firm will have to follow lean working methodologies. This includes increasing efficiency of operations through technological advancements as well as enhancing knowledge and skills of employees and other staffs. Many organizations face difficulties while choosing between customized high-end products and standardized low-end products so that they can be distributed at bigger volume. If the senior management fails to convey a consistent vision or outlook of the above issues to employees, frequent conflicts can appear between the design, sales, manufacturing and engineering functions (Richardson & Thompson, 1995). 2. Consonance: Consonance is examination of individual as well as organizational trends during strategy evaluation. Any change in external environment triggers an equal response within an organization and a good strategy must adapt those changes. It is very difficult to match the external and internal factors in a firm and subsequently formulate a strategy as majority of these factors tend to alter with the changing trends. For instance, as a result of rise in average educational level, increasing inflation and increasing number of working women, there was a sudden hike in day care demands. Rumelt has also pointed out that in general, forecasting techniques fail to expose potential changes that might occur in future. In case of Jim’s Care Services, the management should identify possible trends in technology as well as healthcare, which might influence the value-creation proposition of the firm. This might include diseases that are not frequent, but show symptoms of mass dissemination. 3. Advantage: an effective strategy should provide support for sustainability and creation of competitive advantage. An organization with a competitive advantage is able to capture economic values created by its management. In order to test the competitive advantage of Jim’s Care Services, the management will study the value created. Even so, this is a long process and will take place only when the organization is working with its full potential. Competitive strategy is the process of creating and exploiting available advantages that the care centre will need to identify as well as evaluate, so as to exploit the same in future (Barney, 2002). Most of the big organizations have gained positional advantages due to their large size, regardless of having average skill levels. For Jim’s Care Services, the major threat will come from big and established health care centers in the state. However, Jim’s advantage of a smaller care centre will be better attention to the patients, frequent skills training to the staffs as well as frequent procurement of upgraded and technologically advanced medical equipments. Thus, Jim is able to provide more economic worth compared to its competitors in long-term. 4. Feasibility: The feasibility guide of Rumelt states that any strategy or plan must not overburden the firm’s available resources. A strategy can be considered as feasible if it is able to achieve the objectives and policies through available resources. The management will have to evaluate the day care’s human, physical as well as financial resources and their worth, during effective implementation of the strategy. In order to render the strategy feasible, the management can take frequent audits so as to enhance competency levels of staffs and employees. Internal and external barriers Environmental analysis of Jim’s Care Services revealed important external and internal factors that could pose threat or barriers to overall success of the proposed strategies. The major external factor affecting the healthcare centre is the recent decline in coverage from providers of medical insurance; due to the current economic slump, healthcare reimbursements have reduced dramatically. Average citizens are worst impacted by the above occurrences as they are unable to avail the benefits of healthcare reimbursement, thereby forcing them to opt for cheaper medical facilities. As a result, there has been a decline in traffic across hospitals and people are opting for self-medication, unless the situation is critical. In order to ensure that the firm maintains its values and objectives by allowing low-income group patients as well as bring profitability to the organization, Jim’s Care Services can follow the 80:20 strategy. Here, the upper class patients will be provided with extra care and comfort facilities that will come with premium pricing. This will attract patients from that particular segment. However, the healthcare centre will also ensure that patients receiving normal services are optimally treated. The healthcare centre can also secure few seats for those patients who are extremely poor but cannot avail minimum services. This will not only enhance the brand value of the firm but will also open various sources of donations for the care centre (Barney, 1991). An important internal factor which could make or break the management’s strategies is the employees. Employees are the backbone of any organization and if employees do not back the organization in its goals and objectives, it becomes difficult for the firm to survive in future. Jim’s Care Services faces a similar challenge of building and maintaining relationships with its employees. Since it is a new service, pressure will be high during initial years and revenues will be low. As a result, salary and compensation will be an issue during the early developmental years. In order to create and maintain long lasting relationships with its employees the firm can take few strategic steps. The first is identification and recruitment of those staffs exhibiting required educational and technical skills plus soft skills such as patience, flexibility, calm temperament and caring attitude. Hiring educated and skilled staff will reduce various future problems such as high attrition and employee-employer conflicts. Apart from the above, the care services should be quick to recognize staffs attributing leadership skills and should engage them with proper benefits. If possible, the firm can also provide free medical reimbursement facilities to the staffs and their families, thereby strengthening the employee-employer bond. Segmentation The vision and objective of Jim’s Care Services is to provide timely and quality treatment with affordability and sympathy. Clearly, in terms of income range, the centre’s target segment will be both upper class patients as well as lower income group patients. For both the above segments, different but qualitative facilities and treatment services will be available. For instance, the centre will have no frills package with low cost but qualitative means and normal bedding charges. Upper class customers will be provided with extra facilities with affordable pricing. However, the centre has segmented their patients according to the type of services too. For instance, various emergency clinics have been established across the country to target patients requiring immediate services. Another target group of patients are the ones requiring frequent consultation but cannot afford to visit doctor’s clinic. For them, the firm can establish both online and offline consultation services. This will help in increasing the overall patient base of the care centre and at the same time provide additional revenues for the firm. Service strategy Each service strategy is crucial for the overall success and development of any firm. However, in a service industry, especially in case of hospitals and care centers, point of service will be the most effective strategy. As it can be seen that accidents and life-threatening attacks can happen anytime and anywhere, providing appropriate emergency services to the patients and needy can easily be considered as the most effective marketing approach. Also, treatment while patients are sick is also considered as point of service in hospitality sector. Both emergency and hospital care services are considered as major functions which make up for majority of revenues for hospitals and care services. For example, a strategic point of service step will be to provide quick paperwork, especially during emergency services. Point of service strategy also indicated providing maximum allowances or reimbursement facilities during frequent hospital visits in order to ensure loyalty and preference towards the care centre as well as increase revenue (Department of Managed Healthcare, 2014). Culture and structure Organizational culture includes behaviors and values contributing to the unique psychological and social environment of a firm. Organizational structure, on the other hand can be described as activities like supervision and coordination as well as task allocation and their level of direction. In most of the service sectors, a functional organizational structure is best for optimal utilization of resources. Jim’s Care Services can also adopt a functional organizational structure. For instance, segregating the departments according to various divisions and appointing a separate administrator for every division will help in emergency services and avoiding panic. Operational structure is a critical element in hospitals and in order to ensure maximum utilization, technically skilled staffs should be employed. Similarly, organizational culture can be enhanced by cultivating leadership as well as interest in giving qualitative service will help in enhancing the customer/patient experience as well as increase service loyalty (Manaf, 2006). Effective utilization of resources Finance: The major function of the finance department is to ensure proper accounting and effective utilization of budgets. In order to ensure maximum operational efficiency from the finance department, the care centre should first recruit qualified and skilled finance professionals with desired experience. The finance department should always be in constant communication with other department such as operations, IT and marketing so that proper amendments can be made whenever needed. Human resource: In service industry, especially hospital sector, human resources form the most critical and influences point of contact. Even if the hospital is equipped with state of the art facilities and technologically advanced medical equipments, absence of a qualitative and caring staffs can dampen the entire preference for the hospital or care centre. For example, giving focus to small but significant activities such as long waiting lines, patients standing while registration, pick-up and drop facilities and frequency of doctor and attendant’s visit while in hospital are critical factors which can enhance the overall value proposition of the care centre (Pickett, 2005). Facilities: Having state-of-the art facilities is a definite advantage for the day care. Being a late entrant in the hospital service provides an opportunity to examine competitors and establishing the best facilities and infrastructure gaining competitive advantage. Attractive facilities are also essential for overall brand valuation, increase in investor’s confidence as well as increase in stakeholder’s sentiments. Apart from the above, customer satisfactory is another achievement through equipped facilities and infrastructure. For example, care centers with better facilities such as 24x7 emergency ambulances, doctors as well as attendants will always be first preference for customers requiring immediate treatments (Grant, 2007). IT: IT department includes back-end operations and well as handling and maintenance of equipments and machineries. As it is known that hospital equipments are extremely expensive as well as complex, presence of an effective and knowledgeable IT department will boost the overall efficiency of the care centre. For instance, having advanced equipments such as MRI scanners, will aid in better treatment and enhance the base of patients, thereby generating extra revenues. It will also aid in establishing a competitive advantage in the industry the care centre in operating (Short, et al., 2007). Strategic plan effectiveness The mission of the Care Services is to ensure that every individual gets healthcare treatment with affordable pricing. The company also plans to continue offering medical consultation for various patients till full cure. The firm has a vision of making individuals across the globe free from ailments and diseases. This is done through qualitative as well as timely treatment, price affordability as well as sympathetic view. Few of the strategic plans of the care centre includes increasing the number of beds in various clinics, recruiting more physicians for ensuring proper care, installing modern equipments so that appropriate treatment can be provided, recruitment and retention of qualified and skilled staff so as to provide top class services. Additionally, the care centre will focus on hiring staffs that have caring nature and skills such as patience, ensuring proper as well as effective overall treatment of the patients. All of the above strategies go in line with the objective of Jim’s Care Services, it can be easily said that the strategic plan align with the goals and vision of the care centre. Tracking the effectiveness of strategic plan is critical for high success rate. The strategies which Jim’s Care Services can implement for effective strategic plan tracking are as follows; 1. Surprise audits are an excellent way to monitor the efficiency as well as effectiveness of the on-going strategic plan. For instance, frequent auditing from external consultants, trainers as well as equipment testers will ensure that all the medical instruments are properly working as well as the staffs and employees are equipped with technical knowledge and soft skills. However, the firm should make sure that these audits do not create pressure or stress among staffs and other hospital members. 2. For effective tracking of strategic plan it is important to create strategies which are measurable. For this, the day care centre should make sure that the strategies are realistic, can be converted into measurable data, time bound and can easily be understood and supported by tangible and intangible resources such as finance and human resource. Effective tracking of strategic plan can also include financial auditing such as evaluating proposed and actual budget spending, areas of over and under utilization of budgets as well as financial wastages (DIY Committee Guide, n.d.). 3. Another effective tracking method is measuring the variables while implementation of the strategies. This is possible only when a base value is established during the start of the strategy. This not only aids in better implementation but also ensures that the progress is tracked in measurable and readable variables. For instance, tracking the number of incoming patients from same family will help in evaluating the increase in brand value and loyalty. References Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 18, 99–120. Barney, J. B. (2002). Gaining and sustaining competitive advantage (2nd ed.). Upper Saddle River, NJ: Prentice Hall. Department of Managed Healthcare. (2014). PPO and POS Plans. Retrieved from http://www.dmhc.ca.gov/dmhc_consumer/hp/hp_ppos.aspx DIY Committee Guide. (n.d). Monitoring and evaluation. Retrieved from http://www.diycommitteeguide.org/article/monitoring-and-evaluation Grant, R. M. (2007). Contemporary strategy analysis (6th ed.). Malden, MA: Blackwell. Manaf, N.H.A. (2006). The effect of Organizational Structure on Quality Management in Public Hospitals in a Developing Nation: A Comparative Study between District, State and National Level Hospitals in Malaysia. Asian Journal on Quality, 7(1), 161 – 176. Pickett, L. (2005). Optimizing human capital: Measuring what really matters. Industrial and Commercial Training, 37(6), 299 – 303. Richardson, B. & Thompson, J., (1995). Strategy evaluation in powerful environments: a multi-competence approach. Leadership & Organization Development Journal, 16(4), 17 – 25. Rumelt, R. P. (1991). How much does industry matters? Strategic Management Journal, 12, 167–185. Short, J. C., Ketchen, D. J., Palmer, T. B., & Hult, G. T. M. (2007). Firm, strategic group, and industry influences on performance. Strategic Management Journal, 28, 147–167 Read More