IHC Case Study

IHC Case study

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SWOT Analysis

SWOT analysis is a very effective tool to measure internal strengths and weaknesses of the business organization and opportunities and threats that are associated with the external environment. It also helps business to find different strategies and grab business opportunities

(Gregory, 2018).

The SWOT analysis of IHC case is listed below.

Strength

· John has a business degree and knows very well how to run a business and Katie have a

degree in nursing and master in physical and occupational therapy so she knows how to do medical care very well.

· They have positive net income and enough equipment and assets to take care of their

business. With the positive net income, they can increase their business market and branch out to a different place where there are not too many competitors.

· They are showcased as a company of the month in Dallas and they have won organization

of the year twice with 92 percent retention rate. This has helped them build their credibility and reputation in the healthcare market.

Weakness

· Patients are not being cared properly. Employees are not trained well so they are getting several claims that patients are not being cared properly.

· The organization is not taking sexual harassment seriously. There have been numerous

complaints that employees are encountering sexual harassment in workplace environment and organization have not made any policy changes regarding this issue.

· Some wheelchair ramps within and outside of the facility are in need of repair. Even with

a good net income, the organization is not taking care of its asset and properties.

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Opportunities

· Employees and customer are increasing at an impressive rate. As the net income

increase, business grows bigger and more employees need to be hired for better service.

· Considering branching out to either Fort. Worth, Arlington, or both. Branching out to

a different city where there are not many competitors will help them increase their net income.

· Dallas economy is booming. As the economy of the city grows, population and their

spending capability grow and more people will be in need of the healthcare service.

Threats

· Several claims have been filed against IHC. Claims like sexual harassment and customer not being treated well can have a negative impact on business.

· Competitors are more efficient and have better service than IHC and rank higher than IHC. In order to sustain in the business market, it is always necessary to watch and learn from competitors. Competitors are always the biggest threat that could ruin the

business if not taken seriously.

· The Affordable Care Act (ACA) has created a lot of issues for the organization. ACA has cut down many medical benefits and people are losing interest in healthcare service.

The strategy of the organization

An organizational strategy is the sum of activities that an organization implement to achieve their long-term goals. Strategic plans are implemented to achieve the long-term goal of any organization (Johnson, 2018). There are basically three levels of strategies such as corporate,

business and functional (Markgraf, 2018). In case of IHC, their corporate strategies are to make their company bigger by opening more branches and hiring more people to work for them so they can serve more elderly and disabled people in the healthcare field and compete with their competitor in a longer run. In terms of their business strategies, they are trying to increase the number of the customer by providing better service and taking advantage of booming economy of Dallas. Their main strategy is to beat their competitor so they can gain trust and loyalty of more people and maintain their reputation so that they can increase their retention rate. In order to achieve their strategies, they are enhancing different business changes. They are increasing their business size by branching out to a different location. They are hiring more people and focusing on technologies like internet and cell phones so employees can work from home and work can be done faster and easier. These initiatives will help them gain a positive business outcome.

External/internal environment that benefits and harm

I think, having highly educated executives, who are knowledgeable in both business and healthcare service (nursing, physical and occupation therapy) has benefited the company in many positive ways. They were able to understand the business market and were able to provide the best nursing as well as physical and occupational therapy service. Their educations have helped them build a trust and loyalty from the customer. One of the factor that is hurting the organization most is having untrained employees. Most of the employees they hired, seem to be unprofessional or beginners. The organization should train their employees well which will help the employees to learn faster and provide the best service. Due to these untrained employees,

there have been several claims of not having proper customer care. Unprofessionalism is also a key cause of sexual harassment in the workplace.

Since they are highly educated, they should use their skills to increase their productivity

in their business. They should branch out to a different community where there are only a few competitors. Job training should be provided to all employees regardless of work experience in the past. Policies should be made against sexual harassment in workplace and violation of policy should be prosecuted according to law. If the state requires that the COTAs work directly under the supervision of an OTR and the PTAs should work under the direct supervisor of a PT, then they should make it organizational policy. They should analyze the market and see what another service they could add to their service to increase their revenue. This way they could increase the revenue of their business by capitalizing their education and resolving all claims that are negatively impacting their business.

Target Market

Every business has a target market since no one can afford to target everyone. It is very essential for a small business to have target market since it can compete with large companies by targeting a niche market. Target market doesn’t mean it is excluding people outside their criteria (Porta, 2018). In case of IHC, they are targeting people of a certain community in Dallas. Their target customers are mostly elderly and disable people who are unable to take care of themselves.

Mostly elder people of age 60 and above are their target market. Mostly, retired people on medical insurance or working class people with medical insurance are their target market. According to the case study, Affordable care act has negatively impacted their business due to numerous financial cuts the government has made to this medical field. So they are not targeting people with low income. Most of their target market consists of medium to high-income people with a higher degree of education and a stable job.

The organizations, mission and vision statement

According to David & David (2017), a Vision statement should be able to answer what do we want to become and it should be short and provides the foundation for developing a comprehensive mission statement. A good vision statement should reflect the type of business a firm engages in its aspirations for future. In case of IHC “Creating a better quality of life” is vague and doesn’t specify the type of business or firm they are engaging in. They should revise

their vision statement into

“To provide best healthcare service in your community and create a better quality of life.” This vision statement will reflect the type of business they are involved in and service they

provide.

Similarly, Mission statement is an enduring statement of purpose that distinguishes one organization from other similar enterprises. It should answer what is our business. A clear mission statement is essential for effectively establishing objectives and formulating strategies (David & David, 2017). A mission statement should be broad, inspiring and include firm’s social responsibility. It should be able to describe the purpose and targeted customer as well as the service they provide. I think their mission statement is very appropriate and doesn’t need to be revised. Their mission statement describes their target customers and the service they provide.

Their mission statement also defines their philosophy and their objective.

ROA and ROE

From the organizational financial statement Total Net Income = 8,000,000

Total Assets = 7,500,000

Total Stockholder’s Equity = 2,500,000

Total liability and stock holder equity = 7,500,000 Return of asset (ROA) = Net profit / Average total Asset

= 8000000 / 7500000

= 1.07

= 107%

Return of Equity (ROE) = Net profit / average stockholder equity

= 8000000/ 2500000

= 3.2

= 320%

ROE measures how well the company is using the shareholder equity while ROA measures how well the company is using the company’s asset (Merrit, 2018). In this case, ROA is 1.07 ie 107%; this data show that IHC is doing very well with their asset. For every dollar worth of asset, they’re making $1.07 in profit. Similarly, they are doing pretty well with stockholders equity too. With every dollar of stockholders equity, the company is generating 3.2 dollars that is 320% higher. This data suggest that the company is doing very well financially.

Reference

David, F., & David, F. (2017). Strategic management (16th ed.). London: Pearson Education Limited.

Gregory, A.(2018) How to conduct SWOT analysis. Retrieved from https://www.thebalancesmb.com/swot-analysis-for-small-business-2951706

Johnson, S.(2018) What is the meaning of organizational strategy. Retrieved from http://smallbusiness.chron.com/meaning-organizational-strategy-59427.html

Markgraf, B.(2018) Describe the Three Levels of Strategy for a Single-Business Company.

Retrieved from http://smallbusiness.chron.com/describe-three-levels-strategy-

singlebusiness-company-23508.html

Merrit, C. (2018) Should a Company's Return on Assets Be Greater Than Its Return on Equity? Retrieved from http://smallbusiness.chron.com/should-companys-return-assets-greater-

its-return-equity-60571.html

Porta, M.(2010) How to Define Your Target Market. Retrieved from https://www.inc.com/guides/2010/06/defining-your-target-market.html