Assignment 03: Benchmark: A Starting Point
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Chapter71.pptxStrategic Analysis for Healthcare
Chapter 7
Copyright © 2016 Foundation of the American College of Healthcare Executives. Not for sale.
Health Administration Press
1
PEST Analysis of the Environment
PEST is an acronym that stands for
Political
Economic
Social
Technical
Some authors have added the words environmental and legal to form the acronym PESTEL. For our purposes, however, environmental and legal matters fall under the political, because both areas tend to be politically charged and regulated within healthcare.
Copyright © 2016 Foundation of the American College of Healthcare Executives. Not for sale.
Health Administration Press
Health Administration Press
PEST Analysis
The timing and success of particular strategies can be influenced positively or negatively by political, economic, social, and technological factors.
The strategic analyst studies the macroenvironment both as an input to strategy and as a limiting factor on strategy.
Strategic inputs may involve issues identified in a PEST analysis that lead to opportunities for an organization.
Other findings may limit opportunities for an organization’s strategy.
Copyright © 2016 Foundation of the American College of Healthcare Executives. Not for sale.
Health Administration Press
Health Administration Press
PEST Analysis
To perform a PEST analysis, the analyst considers each PEST factor one at a time.
The analyst identifies what issues influence each particular factor, how each issue impacts the organization, and what strategic implications can be drawn from the issues.
Copyright © 2016 Foundation of the American College of Healthcare Executives. Not for sale.
Health Administration Press
Health Administration Press
PEST Analysis An Example
Copyright © 2016 Foundation of the American College of Healthcare Executives. Not for sale.
Health Administration Press
PEST Analysis
Note again that “Implication for Strategy” is different from “Strategy.”
An implication for strategy identifies a broad possibility and allows for future brainstorming of many strategies that could respond to that possibility.
By contrast, identifying a particular strategy here ends the discussion and shuts out other possible strategies.
Copyright © 2016 Foundation of the American College of Healthcare Executives. Not for sale.
Health Administration Press
Health Administration Press
Potential Questions to Consider in a PEST Analysis
Political
How stable is the political environment you are analyzing?
How will government policy influence your ability to do business?
How favorable are the existing tax laws regarding your industry and potentially your business?
What is the government’s position on financial reporting and corporate transparency?
What is the government’s economic policy?
Copyright © 2016 Foundation of the American College of Healthcare Executives. Not for sale.
Health Administration Press
Health Administration Press
Potential Questions to Consider in a PEST Analysis
Economic
What are the short-, middle-, and long-term prospects for the economy?
What is the average disposable income, and how is income distributed?
What are the interest rates?
What is the rate of inflation?
What employment trends have appeared in recent years?
Copyright © 2016 Foundation of the American College of Healthcare Executives. Not for sale.
Health Administration Press
Health Administration Press
Potential Questions to Consider in a PEST Analysis
Social
What are the cultural aspects of the area you are analyzing?
What are the roles of men and women in the society?
What are the demographic distributions of the population?
What are the population growth trends?
What is the influence of tradition, and who are the keepers of tradition?
Copyright © 2016 Foundation of the American College of Healthcare Executives. Not for sale.
Health Administration Press
Health Administration Press
Potential Questions to Consider in a PEST Analysis
Technological
Does the location have available technology infrastructure?
Does the location have available technological resources?
What is the area’s overall research and development investment rate?
Is technology available to produce high-quality products and services?
Do consumers and businesses take advantage of, and demand, technology?
Copyright © 2016 Foundation of the American College of Healthcare Executives. Not for sale.
Health Administration Press
Health Administration Press
Exercise
Break into groups and brainstorm political, economic, social, and technical issues that impact the industry you are studying.
Determine what impact each issue has on your organization.
Determine what implication each issue has on strategy for your organization.
Use the space provided at the end of Chapter 7.
Copyright © 2016 Foundation of the American College of Healthcare Executives. Not for sale.
Health Administration Press
Health Administration Press
PEST
Factor
IssueImpact on organizationImplication for strategy
SOCIAL
Extended families moving into
homes of younger family
members
Increased consumer demand
for healthcare services due to
growing number of older
patients
Opportunities to market to
the older generation as
extended families move in;
opportunities to penetrate
the geriatric market and
expand existing services for
older population
Sheet1
| PEST Factor | Issue | Impact on organization | Implication for strategy |
| SOCIAL | Extended families moving into homes of younger family members | Increased consumer demand for healthcare services due to growing number of older patients | Opportunities to market to the older generation as extended families move in; opportunities to penetrate the geriatric market and expand existing services for older population |
