Discussion 4: SWOT BLOCKS

crtshhill58

Chapter10.pptx

Home >Nursing homework help >Discussion 4: SWOT BLOCKS

Strategic Analysis for Healthcare

Chapter 10

Health Administration Press

External Factor Evaluation

An external factor evaluation (EFE) organizes and evaluates the OT section—opportunities and threats—of SWOT.

The EFE produces a numeric score that reflects the gravity of each issue combined with management’s current response to it.

The resulting score will correspond to certain standard strategies that will be discussed in Chapter 19.

As a starting point, consider that not every item you identified in the OT section of your SWOT analysis is of equal threat or has equal opportunity value.

Some distinction needs to be made between the “great” opportunities and the “could be” opportunities.

To help make these distinctions, review a list of each opportunity and threat.

Health Administration Press

External Factor Evaluation

The strategist evaluates each opportunity and threat and applies a weighting system.

The total weight is 1.00 when all of the weights have been applied and added.

Each individual factor, therefore, receives some portion of 1.00.

The size of that portion reflects the strategist’s subjective evaluation of how important each external factor is to successful competition within the industry.

The more important the factor, the higher is the weight assigned.

The total of 1.00 is the sum of the whole column, including both opportunities and threats.

Health Administration Press

External Factor Evaluation

Opportunities		Weight
1	Expansion of Existing Services	0.050
2	Additional Locations	0.100
3	Greater Exposure and Branding	0.050
4	Addition of Trauma Center	0.025
5	Purchasing Additional Practices	0.025
6	Expand into Surrounding Counties	0.075
7	Government Contracts	0.025
8	Residency Programs/Teaching	0.025
9	Expansion of Ancillary Services	0.050
10	Demographic Changes	0.050
Threats
1	Multiple Competitors	0.100
2	ED Over-crowding	0.100
3	Power of Suppliers	0.025
4	Recent Lawsuits	0.025
5	Low SES	0.050
6	Transient Market	0.075
7	Dependence on Suppliers	0.025
8	Difficulty Recruiting Providers	0.075
9	Changes in Reimbursement	0.025
10	Decrease in Population	0.025
	Total Weight:	1.00

Health Administration Press

External Factor Evaluation

The table shows that the threat related to emergency department overcrowding is important; it has been deemed by the strategist to be much more significant than the threat posed by recent lawsuits or the opportunity of obtaining more government contracts.

Note that there is no one “correct” weight for any factor.

The accuracy of the analysis rests squarely on the shoulders of the strategist.

For that reason, significant research and a clear understanding of the company and industry are vital to the process.

Health Administration Press

External Factor Evaluation

Once weights have been assigned to the importance of each factor, the strategist now focuses on management’s current response to the issue.

The relevant question is, “How well does management currently respond to this factor?”

The focus is on management’s current response, not on its potential future responses or how well it responded in the past.

Management’s response is rated on a scale of 1-4 as follows:

Health Administration Press

External Factor Evaluation

4 = Current response is superior.

3 = Current response is above average.

2 = Current response is average.

1 = Current response is poor.

Health Administration Press

External Factor Evaluation

The rating for management’s response to each factor is once again subjective on the part of the strategist, and once again it should be based on research.

These ratings are not added up, so there are no constraints on how the numbers may be distributed.

Once the current response ratings have been applied, the rating for each particular factor is multiplied by that factor’s weight; the resulting number is a weighted score for the factor.

Health Administration Press

External Factor Evaluation

Opportunities		Weight	Rating	Score
1	Expansion of Existing Services	0.050	4	0.2
2	Additional Locations	0.100	2	0.2
3	Greater Exposure and Branding	0.050	2	0.1
4	Addition of Trauma Center	0.025	1	0.025
5	Purchasing Additional Practices	0.025	2	0.05
6	Expand into Surrounding Counties	0.075	2	0.15
7	Government Contracts	0.025	3	0.075
8	Residency Programs/Teaching	0.025	2	0.05
9	Expansion of Ancillary Services	0.050	2	0.1
10	Demographic Changes	0.050	2	0.1
Threats
1	Multiple Competitors	0.100	2	0.2
2	ED Over-crowding	0.100	3	0.3
3	Power of Suppliers	0.025	2	0.05
4	Recent Lawsuits	0.025	2	0.05
5	Low SES	0.050	3	0.15
6	Transient Market	0.075	1	0.075
7	Dependence on Suppliers	0.025	3	0.075
8	Difficulty Recruiting Providers	0.075	3	0.225
9	Changes in Reimbursement	0.025	2	0.05
10	Decrease in Population	0.025	2	0.05
	Total Weight:	1.00	Total Score:	2.275

Health Administration Press

External Factor Evaluation

Note that the weight is industry specific.

The rating is organization specific.

Health Administration Press

External Factor Evaluation

The EFE analysis yields a total score when the “score” column is summed.

This score is used to complete the I/E matrix, which is then compared to a standard table of strategies that correlates certain strategic responses with particular I/E scores.

For now, we will not concern ourselves with the general strategies, but we will return to the subject and to the EFE rating score later.

We will address the SW factors of SWOT and the I/E matrix in later chapters as well.

Health Administration Press

Exercise

Break into groups and complete an EFE chart in the space provided on page 69 of your book.

You will need the OT portion of SWOT that you completed in the last chapter.

Health Administration Press