Strategic Management at Shouldice Hospital - Case Study Example

? Strategic management (Shouldice hospital) Contents Introduction 3 SWOT Analysis Model of Shouldice Hospital 4 Porter’s Five Forces Model of Shouldice Hospital 5 Competitive Position and Advantage of Shouldice Hospital 8 General Environment of Shouldice Hospital 9 Conclusions 11 References 13 Introduction Shouldice hospital renders effective services in the field of rendering medication in ailments like hernia. With the growth in demand in the external market for better health services at reduced cost for hernia operations the hospital organization rendered continued rendering increased support for the growth of research activities to help reduce the growth of hernia. The organization largely focused on enhancing the productivity of the organizational staff by rendering training activities and in encouraging the people to take further research work. These activities along with rendering more financial rewards to the hospital staffs in terms of bonuses and other financial gains helped in motivating the people to act more effectively while rendering required services to the employees. However the organization currently is focusing to increase the infrastructural facilities and in increasing the area of the concern to help draw more number of patients from large number of areas. Owing to the above activities the hospital organization helps in the growth of health tourism in the region. The managers of the health organization also worked to enhance the relationship with the trade union bodies which helped in the motivation of the employees in the organization. The focus on the customer profile helped the organization gain a larger market owing to the popularity enabled by the communication activities of the people. The patients having obtained better services from the health concern went on expanding their communication activities praising the activities of the concern. In this regard the paper focuses on analyzing the strategic position of the concern by the help of strategic models like SWOT Analysis, Porter Five Forces Model, the environmental and competitive position of the company. SWOT Analysis Model of Shouldice Hospital The SWOT Analysis Model is used to analyze the internal and external potential of the company based on mainly four parameters viz. strengths, weakness, opportunities and threats. Strengths of the company refer to the potential of the resource and policy guidelines of the company to capture large markets. Again a company can also suffer from the obsolete range of production and equipment standards which dampens the strength of the company to gain high productivity. The above points focus on the internal position of the company while the strengths and weakness focus on the external situation of the company. Opportunities focus on the advantages that the company gains in respect to the external marketing and social conditions while the act of the other competitors along with the scarcity of the resources results in increase in threat of the company (Hayward, 141). Based on the above discussion the analysis would be done on Shouldice hospital. The hospital organization reflects some potential strength like possessing a strong research team which helps render potential research activities in the field of hernia medication. Further the service rendered by the hospital also earns potential popularity among large number of patients in that it helps in rendering low cost medical and operational activities to them. Operational guidelines of the hospital also focused on rendering transparency of information by rendering brochures to the patients including all types of information concerning different types of packages for different types of hernia ailments. The hospital administration also helped the patients to walk around the premises and meet other patients round different corners. This fact further enriched the relation of the organization to its client base. Further strengths possessed by the hospital organization reflected on the large number of nursing staffs which were present in the concern in comparison to other organizations operating in the same field. However the hospital organization suffers from a potential weakness of having less number of surgeons who can help in reducing the pressure of operation. Another major weakness from which the organization suffers is the reduction in the infrastructural facilities and low expansionary motives. Owing to this fact the hospital organization fails to achieve growth both in terms of revenue and growth. The hospital organization also earns huge amount of opportunities from the external market through the growth of word-of-mouth activities. The patients who had earlier earned significant help from the hospital organization in terms of better services went on propagating the name of the concern. Shouldice hospital organization through considerable activities like training and rendering low cost medical services to the patients helps in countering increased competition from the external market. Moreover the hospital concern through active discussions with the trade union members focused on reducing the tension of increased conflicts. In another major external opportunity the hospital concern through its effective workforce focused to gain the advantage of the rise of hernia patients desiring special care. This Shouldice hospital reflects key internal strengths to avail the growth of opportunities and also focuses on countering increased external threats (Heskett & Hallowell, 1-8). Porter’s Five Forces Model of Shouldice Hospital The Five Forces Model was designed by Michel E. Porter which focuses on the strategic activities of the company in relation to its external environment consisting of key players like vendors or suppliers, consumers, the number of competitors measured both in the existing and new dimension and the threat emanating from the substitute products or services in the market. The following can be given as the diagrammatical presentation of the above discussion (Kurtz, MacKenzie and Snow, 56). Figure 1 (Source: Kurtz, MacKenzie and Snow, 56) The hospital organization to counter the bargaining activities of the buying profile acted on rendering low priced medical services to the large number of clients. The patients were rendered low cost operations which helped them get rid of the hernia ailment. Similarly the threat from potential competitors operating in the same field was countered by the hospital organization through large number of potential activities. The hospital organization focused on rendering large number of training activities to help enhance the productivity of the employees present in the organization. Moreover the organizational policies also focused in helping the organizational people gain better payments in terms of bonus and other financial rewards. Shouldice hospital also acted to enhance its terms with the union members to reduce the intensity of conflicts. Thus the union organizations acting as the supplier for the concern through effective policies of collective bargaining organized by the managers of the hospital organization worked to render more number of people or staffs to the concern. The supplier belt being strengthened helped the hospital organization to gain the advantage of large number of staffs in the several departments. Threat obtained from the entry of new firms is countered by the hospital organization is countered through considerable activities where the managerial team renders policies to help the clients get better quality services at highly reduced cost. Further the several amenities rendered by the hospital concern which in turn helps the clients feel a homely environment helps to render effective competition to the other new entrants which do not possess such expanded areas to help the patients roam about freely. The hospital organization to reduce the threat of substitution acts precisely to help increase the productivity of the existing staffs in rendering considerable research activities in the field of hernia research to help in the enhancement of the service portfolio. Moreover brochures are printed and handed over to the patients to help them get a total feel of the pattern of services rendered by the hospital organization. This also reduces the threat of substitution. The hospital organization helps in drawing large number of patients from different regions of the world through its increased activities on research and in delivering high class operations and medical services at reduced cost. These factors identified help in rendering potential barriers to the entry of foreign firms in this area. Again in having more number of staffs in spread along several departments and also in being able to render greater focus on the expansionary activities the hospital organization successfully helped to reduce the threat of external competition (Heskett & Hallowell, 1-8). Competitive Position and Advantage of Shouldice Hospital The Shouldice Hospital had gained immense reputation from the patients it had already treated. Moreover, there were numerous doctors who would recommend to patients the name of the hospital for treatment. In addition to this the name of the hospital also spread through the word of mouth process. Numerous patients who came for treatment in the hospital had been recommended by patients previously treated at the same place. The hospital had gained immense popularity among the masses, which is apparent from the fat that 10% of its patients came from places outside the province of Toronto and they were primarily from America. Thus the hospital has been effective in developing an international presence which has been effective in attracting patients from distant places and regions. The quality factor has been responsible for getting it a competitive edge over its competitors. Patient’s earlier experience with the organization paves the way to its future success and reputation. The reputation and goodwill earned by the hospital over the years accounts for strengthening the competitive position of the organization in the market. The hospital also had a competitive edge over its competitors in terms of providing the best hernia treatment to its patients. It was also estimated in the year 2000, that 1,000,000 of such operations had taken place in the United States. Thus it is apparent that the customer base undertaking this treatment was quite large and the customer base requiring the treatment was also large. The strong competitive position of the hospital is apparent from the fact that the number of patients visiting the hospital was greater than the capacity of the hospital to provide services. In spite of expanding its capacity as much as possible the hospital has not been able to cater to all the customers or patients. Every time the hospital has tried to expand its capacity, the backlog declined only for a small duration after it crept up again. At times the hospital even had to identify if their patients would be willing to have their local surgeons perform the operations. This would be effective in reducing the excess load on the hospital to an extent. The rapid rate with which the organization has been growing would also demonstrate its potential and strong position on the market. This is accompanied with the fact the hospital relies completely on word of mouth adverting and does not use any other modes of marketing. The growth of hospital without any expensive marketing strategy speaks volumes of its acceptance among its customers and also the people who have not yet availed the hospital’s services. Moreover, the rate at which the hospital provides its services is considerably low and it is also reasonable for patients from all sections of society. Low rate of service further provides for a strong competitive position for the hospital in comparison to other hospitals. A typical operation which requires a stay at the hospital for four days costs $320 each day, and the fee for the most common form of treatment of hernia costs $650. In cases of general anesthesia an additional fee of $300 in charged. These charges are considerably low in comparison to that charged by other hospitals where the average charge is $5240 for each surgery. General Environment of Shouldice Hospital Shouldice hospital had access to a large customer base, as the number of patients undertaking hernia treatment was considerably large in the country. Also a major portion of the hospitals patients came from outside Toronto and they were mostly from the United States of America. The success of the hospital depended significantly on the fact that it had a large customer base within its vicinity and also from outside Ontario. Hernia patients travel from more than 115 nations the globe to the innovative and unique facility that is offered by the hospital. People know that they can trust the services of the hospital because of their abilities to deliver the best level of medical treatment and patient care. Moreover the location of the hospital is also at 20 different beautifully landscaped regions, which are within very short distances from Toronto. The locations are chosen in such a way which provided a very relaxing and resort like settings which would help their patients to make a healthy recovery. The political condition in the country is also very stable and well suited for smooth operations of a hospital. Moreover, it also enjoys the support of the Ontario Ministry of Health and complies with the needs of the Local Health Integrated Network, in Ontario in Canada. The staff in the hospital are provided license by the Ontario College of Physicians and Surgeons, and some of them are even certified by the US board. The government’s support had played a crucial role for progress of the company towards its destination (Shouldice Hospital, 2011). The insurance companies in the country cover the semi private fee for accommodation for the hospital. For the patients coming from Canada to Shouldice, the costs for surgery and examinations are covered completely or partially by the provincial health plans in Canada. In fact the hospital is lent its support from a number of insurance companies in the world. Most of the companies pay the hospital directly for covering the Canadian patients. Some of them also reimburses the patients in the hospital. In the latter case patients has the choice of paying for their semi private accommodation either by cash or debit card or credit card or personal cheque. The hospital would then complete the required paper works and would have them ready for patients for submitting their insurance company after getting discharged from hospital. The international patients can also credit or cash or use bank notes and certified cheques for the services and accommodations. The future prospects of the hospital also look bright. This is because the health care sector in Canada accounts for the highest growing sector in the country. Also the numbers of nurses and surgeons have shown a gradual increase over the years. Thus the hospital would not confront with labour shortage. The labour market in the country has also been demonstrating fast growth. The expected growth in the number of nurses is to increase to 3.2 million by the year 2018. This would account for the creation of approximately 581,500 new jobs, as per the information provided by the Bureau of Labor Statistics. That is an increase from 2.6 million which represents the greatest overall projection of growth out of all the occupations in the economy of U.S. Americans who are aged 65 and above would constitute 19% of the entire population by 2030, which would be an increase from 12.4% in the year 2000. With the growth of the aged population and growth of the working age population, the demand for health care services is expected to rise simultaneously. In the earlier years, the home health care services industry had experienced growth of sales by 11.2%, which had made it the most rapid growing sector in the United States (Fayerman, “Guess what the fastest growing sector in Canada is. Hint: it's in health care”). Conclusions It is apparent from the project that Shouldice hospital has been able to grow rapidly and successfully because of a number of external and internal factors, the most important and crucial component in its growth path has been the development of an advanced research team. In addition to this, the hospital’s unique quality of treatments account for the most attractive factors which have pulled customers from distant places and regions. Also the low cost of treatments account for one of the major factors making it popular among people belonging to all sections of society. The hospital does not any marketing strategy for expanding its services; rather it operates through the word of mouth strategy by previous patients. Lastly among the most favourable external factors which provide growth impetus for the hospital is the support of the Canadian government and the health ministry. This is supplemented with a wide customer base in Ontario and other parts of America. The expansion strategies of the hospital are facilitated with the ever growing demand of the health services in Canada. Also the supply of labour in the country is also high because of which the hospital would not face any labour shortage or the dearth of skilled employees. References Fayerman, P. Guess what's the fastest growing sector in Canada. Hint: it's in health care. Medicine Matters. 2010. 07 June 2011 . Hayward, Peter. GCSE Leisure and Tourism for Edexcel. Heinemann, 2002. Hayden, J. Shouldice Hospital. (2010). The Centre of Excellence for Hernia Repair. June 07, 2011. < http://www.shouldice.com/at_a_glance.htm >. Heskett, James and Halowell, Roger. Shouldice Hospital Limited (Abridged). Harvard Business Review. January 21, 2005. Read More