Strategic Analysis of King's College Hospital NHS Trust - Example

Strategic Analysis of Kings College hospital NHS Trust Table of Contents Table of Contents 2 Answer 3 Strategic Analysis & Investigation Faced by King’s College Hospital 3 Value Chain Analysis 3 Competitive Advantage 6 Porter’s Five Force Model 6 VRIN Analysis 7 Legitimacy 10 Stakeholder Approach 10 Answer 2 11 Executive Summary 11 Identification of Issues 12 Recommendations 12 Conclusion 14 16 Reference List 16 Answer 1 Strategic Analysis & Investigation Faced by King’s College Hospital Strategic analysis is the understanding and careful analysis of the competent and available resources of the organization to effectively formulate and implement strategies for the achievement of the goals and organization. In this context, the strategic issues faced by the King’s College Hospital would be discussed through the industrial organizational approach suggested by the Michael Porter and Resource Based View (RBV). The approaches suggested by Michel Porter include the value chain and five forces analysis which is a combination of industry and organization analysis. The RBV view would encompass the VRIN analysis. Value Chain Analysis The value chain of the company is segregated into primary and supporting activities. Primary Activity The primary activities of the King’s College Hospital are to provide specialist and general health care services to the patients. The value chain analysis is important to lay down the business level strategies. The core activities of the hospital are providing medical treatment and emergency services to the admitted and regular patients. Inbound and Outbound Logistics The hospital works closely with various reputed companies for the supply of medical devices, supplements, medicines, injections, gloves and various other medical requirements (King’s College Hospital, 2013a). iSoft is responsible for the supply and delivery of advanced computer systems. Pregnacare is responsible for supplying medical requirements to the maternity department and Teleflex, Macmillan Cancer support is accountable for the timely supply of the medical devices and requirements to the various departments of the hospital (King’s College Hospital, 2013a). Operations The operational activities in King’s College Hospital include the hiring of the appropriate medical staff, establishing health guidelines within the hospital and maintenance of the staff along with patient records (King’s College Hospital, 2013b). Marketing and Sales King’s College Hospital is one of the most reputed and oldest hospitals in North and East London (King’s College Hospital, 2013c). The hospital hardly believes in aggressive promotion. However, print and social media service is used in promoting the latest technology or latest health service offering. Services Apart from providing regular and specialist health care services, the hospital also offers blood collection services, training to medical students, awareness program about various disease and several other health related services. Supporting Activity Support activities involve support assistance that is required for the primary activities. Procurement The hospital works closely with other organizations of repute like, Venture, BT, Cerner, 3M and other miscellaneous companies for the procurement of the medical devices and other requirements (King’s College Hospital, 2013d). It procures information technology and other communications services from BT, hardware and software services from Cerner and resorts to Liftec for acquiring elevator devices. Technology development The hospital is highly dependent on technology for performing its medical operations and surgery. Technology like, neurological image scaling and scanning system are highly used for the liver transplantation and cancer units (King’s College Hospital, 2013c). Human Resource Management King’s College Hospital has a qualified medical staff which comprises of educated doctors and nurses. The efficiency and the repute of the hospital are totally dependent on the skills of the medical staff and doctors (King’s College Hospital, 2013c). The emergency department of the hospital boasts of highly skilled doctors and nurses who have been able to handle various emergency cases effectively. Infrastructure The hospital has established several units in various regional areas of East and North London. The hospital has several research laboratories for liver transplantation and other cancerous diseases. Competitive Advantage It is the only hospital in the entire UK region which offers 8 week electives program for final year students those are interested in 4 to 8 week clinical placement at the Guys institute, Kings College and St Thomas medical institute (King’s College London, 2013). Porter’s Five Force Model This analysis will help in understanding the external forces which are affecting the UK hospitality industry and also, their impact on the economy. The foremost aspects of making decisions are procuring of advanced medical equipments, devices, hiring of educated medical staff and also, the training of medical staff and students. In this study, the strategic analysis of King’s College Hospital is done by using Porter’s five forces Model. Intensity of Degree of Rivalry: The UK hospital industry constitutes of governmental and non-governmental hospitals of repute which makes the rivalry among these companies more intense. Government hospitals like, Kingston and Royal London, are highly proficient in providing medical services to the local patients. There is also a stiff competition among non-governmental hospitals like, Royal National Orthopaedic Hospital, Royal Brompton & Harefield, NHS Trust and Royal National Throat, Nose and Ear Hospital. The intensity of competition is very high in the UK hospital industry. The Threat of Entry: The economic slowdown in UK hospital industry had led to the emergence of very few novice medical dispensaries and hospitals. During the tenure of 2011 to 2013, the industry has witnessed very few emergences of new hospitals due to the slow growth of this sector. The Threat of Substitutes: The alternate to the medical services provided by the hospitals are health offerings by medical dispensaries. The medical services and offerings by the dispensaries are popular in UK because of its high quality services and the low cost associated with it. With the rise in the prices of the medical offerings of the hospitals, the common people are opting for the health care services offered by the dispensaries. Therefore, the threat of substitutes is very high in this industry. Bargaining Power of Buyer: The UK common people do not compromise on their health and want to avail the best medical services offered by the hospitals. The medical services which are offered by these hospitals are very expensive due to the high cost involvement in the maintenance and up gradation of the medical devices and equipments. Bargaining Power of Supplier: Suppliers form an integral part of the hospital industry because of their timely and accurate supply of medical devices. Apart from the medical supplies, the hospitals are highly dependent on the supply of various other electronic goods. The hospital industry also has to depend on the high supply of the medicines and henceforth, the bargaining power of suppliers is very high in the industry. VRIN Analysis The Value Rarity Imitability Non Substitutable (VRIN) framework was developed by Barney and Hesterley, which is instrumental in examining the internal environment of the company (Chapman, 2011) .The VRIN framework basically, lays emphasis on four important areas: Value, Rarity, Imitability and Non Substitutable. Resource or Capability Valuable ( that helps in exploiting of opportunities) Rare (possessed by few firms ) Imitable (expensive to imitate) Non-substitutable (No equivalent resource that can be used as threat ) Core Competency Technology &Medical Equipments Yes - it is beneficial in the neurological, radiology and liver cure department for its successful surgeries. Yes - Neuro Imaging scanning for liver units can be adopted by very few hospitals. Yes- the technology used by the hospital is very expensive to imitate by the other hospitals. This is because the invested amount in these medical equipments can only be afforded by big hospitals. No – there is zero substitute of this machine which offers liver scanning and mapping facility. No - reputed and big hospitals of London may have the ability to imitate and procure the technology. Support Services Yes - bio engineering, radiation protection and vascular investigations. No - the other UK hospitals may have the ability to adopt these technological solutions for the enhancement of their health services. No - The technological devices are easy to procure and implement within the hospital. Yes - the engineering support, radiation protection and vascular machines can be upgraded with advanced technology which can perform similar functions for the betterment of the patients. Yes - if the hospital purchases the advanced version of the devices, then it would be easier for them to cure patients. Distribution of medical facilities Yes - certain medical services like, blood, stool collection sample and liver scanning facility centre have been established at various regions of UK. Yes - Most of the hospitals have blood or stool collection centers but not the liver scanning facility centre which is established in various areas of North and East London Yes- This process is imitable and most of these hospitals provide blood collection samples and the liver scanning facility centre can be opened when the machines are procured. No - This process is not substitutable. No – This is so because most of the hospitals and health service providers have similar medical distribution provider. Legitimacy Legitimacy is defined as the perceived validity regarding the claim to the stake by the stakeholders. In order to decide the legitimacy of King’s College Hospital, stakeholder approach is used. Stakeholder Approach The comprehensive view of the capital implies that the business should be accountable to the entire society. A business can avoid giving responses to the claims of the society. In order to achieve this objectives the organization segments society into groups that are more relevant to the organization as compared to others. Stakeholder theory can be traced from this sorting, which suggests the firm should serve the interest of the stakeholders. Thus, the organization considers the stakeholders the most relevant group. The stakeholder theory has two aspects the managerial and the ethical. The ethical aspect provides a theoretical description regarding who are the stakeholders of the organization and how they should be treated. On the other hand, the managerial aspect is concerned about managing the stakeholders. The higher the social legitimacy the group possesses higher is the power relative to other stakeholders group (Panwar, 2008). The potential stakeholders for the King’s College Hospitals are the patients, partner organizations, staff and member of the public, who are engaged in shaping the local health services. The Kings’ as the foundation trust has a council of Governors, who insures that proper legitimacy is maintained with the stakeholders, which in turn will help them in attaining the objectives. Collective they cater to the interest of about more than 20,000 patient, public and staff members, who in turn provides valuable perspective and insight. The governor community in order to facilitate the legitimacy with the stakeholders of the organization has formed different committees and working groups. As a part of this process in the quarterly Council meeting, the governor meets the committees into small groups and conducts a detail review of certain issues. The Patient Experience and Safety Committee listen to the feedback of the patients and try to solve them and ensure safety. Strategy Committee is engaged into reviewing the strategies and plans for the future of the hospital and also representing the ideas of the local communities and members. Membership and Community Engagement Committee aims to develop the members and encourage communication between the local community, members and governors. Transport Feeder Group works with the local stakeholders in order to influence decision making and contribute towards improving transport infrastructure (King’s College Hospital, 2013e). Answer 2 Executive Summary In this, the strategic recommendations for the identified key strategic issues would be provided for King’s College Hospital along with their methods of their implementation. It has been observed that the slow growth rate in UK hospital industry is one of the major concerns of King’s College Hospital. Apart from the slow growth rate in the hospital industry, the hospital is facing several issues like, ineffective implementation of strategic models, specialization and recognition only in the liver transplantation units and other miscellaneous factors. In this context, recommendations would be provided through agency theory, shareholder value and stakeholder approach. These models will help in the sorting out of several strategic issues faced by the company and also, lead to the removal of several complexities within the hospital. Identification of Issues The UK hospital industry has been facing slow growth and this has affected King’s College Hospital as well. The liver transplantation units and the stroke section are more popular than any other health department. The slow growth rate has led to the incurring of losses for King’s College Hospital. This has in turn affected King’s College Hospital to a large extent because the financial shortage has led to the non-implementation of the various strategic models within the systems. Recommendations Although, the management of the King’s College Hospital cannot control the external forces like, slow growth rate and political situation, it needs to implement policies which can curb down the complexities of these forces. The shareholder’s approach would be instrumental in the improvement of the relationship between the shareholders and the management. This would lead to the brainstorming sessions and also, acknowledging of the effective ideas (Mallin, 2007). Agency theory is defined as the relationship between the principal and agent. There are various potential conflicts between two parties due to non-co-operation and the difference in opinions (Mallin, 2007). This theory cites and highlights the relationship between shareholders and managers and also, is applicable to highlight the relationship between the creditors and managers. There is a definite separation between the concept of ownership and control. This paradigm was cited by theorist, Adam Smith in the year 1838. According to this theory, the managers operate the company with their shareholders’ money and since they are not owners of the company, the difference between two would be highlighted. In the past few years, additional pressure on the shareholders had increased considerably and such can be due to shareholders losing their investment money, overpayment to the director for poor performance and other miscellaneous factors. This decision has made considerable impact on the economy and the entire organization. The Agency theory would serve as a purposeful guide for the management of King’s College Hospital to remove the strains in the relationship which could indirectly affect the accomplishment of goals and objectives of the hospital. The liver transplantation units are more recognized than the other medical service departments. This is because the hospital has invested considerable amount of money in these departments specifically. The stakeholder approach would be apt for this situation as each component of stakeholder theory would be instrumental for the overall success of the hospital (Clarke, 2004). The purpose of this entire stakeholder theory would be to formulate strategies for each of the component of stakeholders and implement them effectively (Copnell, 2010). It helps in corporate planning which would be beneficial for the entire hospital. With the effect of corporate planning, each component of stakeholders would be effective in the accomplishment of goals and objectives of the organization. For example, the introduction of the brainstorming sessions would help the employees to rake several ideas which could be related to hygiene, cleanliness, record maintenance and various other factors. In the past few years, there has been non-implementation of the strategic models in King’s College Hospital due to financial and non-financial limitations. The shareholder theory would be acting as catalyst for the implementation of strategic models (Friedman and Miles, 2006). Decisions taken by the shareholders of the hospital would have a positive impact on the organization as well as the economy (Pitt, 2011). This is because shareholders have to comply with the corporate governance codes and there exists a significant amount of transparency between the investors and shareholders. The investors are much more informed about the present financial condition of the company and this has led to the reduction of the malpractices conducted by the management of the hospital. Both of these parties favor different corporate governance structures (Mallin, 2007). Conclusion Thus, it is observed with the help of various strategic analysis tools that the company would be able to implement and follow the strategies. The strategies would help the King’s College Hospital to overcome various obstacles and also, accomplish the desired goals and objectives. The recommended strategies would help in the overall betterment of the medical processes and systems. The managerial decision making would be facilitated by the employing of the strategic analysis tools like, VRIN, value chain and Porter’s five forces model. Even the implementation would be effective and within stipulated time frame. Reference List Clarke, T., 2004. Theories of corporate governance: The philosophical foundations of corporate governance. London: Routledge. Copnell, T., 2010. A tale of two approaches. International accountant, 5, pp.4-5. Friedman, A.L. and Miles, S., 2006. Stakeholders: Theory and practice. Oxford: Oxford University Press. King’s College Hospital, 2013a. Healthcare Messaging Partners. [online] Available at: [Accessed 13 November 2013]. King’s College Hospital, 2013b. Support Services. [online] Available at: [Accessed 13 November 2013]. King’s College Hospital, 2013c. About Us. [online] Available at: [Accessed 13 November 2013]. King’s College Hospital, 2013d. Visitors. [online] Available at: [Accessed 13 November 2013]. King’s College Hospital, 2013e. Council of Governors [online] Available at < http://www.kch.nhs.uk/about/organisation/council-of-governors> [Accessed 16 November 2013]. King’s College London, 2013. Electives for Visiting Students. [online] Available at: [Accessed 13 November 2013]. Mallin, C.A., 2007. Corporate governance. 2nd ed. Oxford: Oxford University Press. Panwar, R., 2008. Corporate social responsibility in the forest products industry: An issues management approach. Ann arbor: ProQuest. Pitt, K.F., 2011. The assumption of agency theory. Adingdon: Taylor & Francis. Read More