Business w/healthcare DQ 475 words w 3 references apa
vwccspt12
chapter7.ppt
STRATEGIC MANAGEMENT OF
HEALTH CARE ORGANIZATIONS 7TH EDITION
*
Evaluation of Alternatives and Strategic Choice
Chapter 7
*
Chapter 7 Learning Objectives
- Understand the rationale underlying the various strategic thinking maps used to evaluate strategic alternatives.
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Chapter 7 Learning Objectives
- Understand the rationale underlying the various strategic thinking maps used to evaluate strategic alternatives.
- Discuss, evaluate, and select appropriate adaptive strategic alternatives for a health care organization.
*
Chapter 7 Learning Objectives
- Understand the rationale underlying the various strategic thinking maps used to evaluate strategic alternatives.
- Discuss, evaluate, and select appropriate adaptive strategic alternatives for a health care organization.
- Discuss, evaluate, and select appropriate market entry strategic alternatives.
*
Chapter 7 Learning Objectives
Discuss, evaluate, and select appropriate strategic posture and generic positioning alternatives.
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Chapter 7 Learning Objectives
Discuss, evaluate, and select appropriate strategic posture and generic positioning alternatives.
Determine whether selected strategies are consistent, coordinated, and fit the situation.
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Chapter 7 Learning Objectives
Discuss, evaluate, and select appropriate strategic posture and generic positioning alternatives.
Determine whether selected strategies are consistent, coordinated, and fit the situation.
Understand the role of the service delivery and support strategies.
*
Strategic Thinking Map
Hierarchy of Strategic Decisions and Alternatives
Directional Strategies
- Mission
- Vision
- Values
- Goals
Implementation Strategies
Service Delivery
- Pre-service
- Point-of-service
- After-service
Support
- Culture
- Structure
- Strategic resources
Unit Action Plans
- Objectives
- Actions
- Timelines
- Responsibilities
Competitive Strategies
Strategic Posture
- Defender
- Prospector
- Analyzer
- (Reactor)
Positioning
Market-wide
- Cost leadership
- Differentiation
Market Segment
- Focus/Cost
leadership
- Focus/
differentiation
Market Entry Strategies
Purchase
- Acquisition
- Licensing
- Venture capital
investment
Cooperation
- Merger
- Alliance
- Joint venture
Development
- Internal
development
- Internal
venture
Adaptive Strategies
Expansion of Scope
- Diversification
- Vertical Integration
- Market Development
- Product Development
- Penetration
Contraction of Scope
- Divestiture
- Liquidation
- Harvesting
- Retrenchment
Maintenance of Scope
- Enhancement
- Status Quo
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Evaluation of Alternatives
External/Internal Strategy Matrix
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Evaluation of Alternatives
External/Internal Strategy Matrix
Product life cycle analysis
*
Evaluation of Alternatives
External/Internal Strategy Matrix
Product life cycle analysis
BCG portfolio analysis
(Extended portfolio analysis)
*
Evaluation of Alternatives
External/Internal Strategy Matrix
Product life cycle analysis
BCG portfolio analysis
(Extended portfolio analysis)
Strategic Position and ACtion Evaluation (SPACE)
*
Evaluation of Alternatives
External/Internal Strategy Matrix
Product life cycle analysis
BCG portfolio analysis
(Extended portfolio analysis)
Strategic Position and ACtion Evaluation (SPACE)
Program evaluation
*
Evaluation of Alternatives
External/Internal Strategy Matrix
Product life cycle analysis
BCG portfolio analysis
(Extended portfolio analysis)
Strategic Position and ACtion Evaluation (SPACE)
Program evaluation
*
External/Internal Strategy Matrix
Long-Term
Competitive
Advantages
Internal Advantages
& Disadvantages
General Environment
Issues
1.
2.
3.
Short-Term
Competitive
Advantages
1.
2.
3.
Short-Term
Competitive
Disadvantages
1.
2.
3.
Long-Term
Competitive
Disadvantages
1.
2.
3.
1.
2.
3.
Health Care
Environment Issues
1.
2.
3.
Service Area &
Competitive Issues
1.
2.
3.
Strategies
1.
2.
3.
Strategies
1.
2.
3.
Strategies
1.
2.
3.
Strategies
1.
2.
3.
Strategies
1.
2.
3.
Strategies
1.
2.
3.
Strategies
1.
2.
3.
Strategies
1.
2.
3.
Strategies
1.
2.
3.
Strategies
1.
2.
3.
Strategies
1.
2.
3.
Strategies
1.
2.
3.
External Issues
*
Evaluation of Alternatives
External/Internal Strategy Matrix
Product life cycle analysis
BCG portfolio analysis
(Extended portfolio analysis)
Strategic Position and ACtion Evaluation (SPACE)
Program evaluation
*
The Product Life Cycle (PLC)
Dollars
0
Time
Stage 1
Introduction
*
The Product Life Cycle (PLC)
Dollars
0
Time
Stage 1 Stage 2
Introduction Growth
*
The Product Life Cycle (PLC)
Dollars
0
Time
Stage 1 Stage 2 Stage 3 Introduction Growth Maturity
*
The Product Life Cycle (PLC)
Dollars
0
Time
Stage 1 Stage 2 Stage 3 Stage 4
Introduction Growth Maturity Decline
*
The Product Life Cycle (PLC)
Dollars
0
Time
Stage 1 Stage 2 Stage 3 Stage 4
Introduction Growth Maturity Decline
Sales/Revenue
Profit
*
PLC Stage Characteristics
| Characteristic | Introduction |
| Sales/Revenue | Low |
| Profits | Negative |
| Competitors | Few |
| Cost/Customer | High |
| Capital/Access | Venture |
*
PLC Stage Characteristics
| Characteristic | Introduction | Growth |
| Sales/Revenue | Low | Rapid growth |
| Profits | Negative | Peak Levels |
| Competitors | Few | Growing |
| Cost/Customer | High | Average |
| Capital/Access | Venture | Equity/debt |
*
PLC Stage Characteristics
| Characteristic | Introduction | Growth | Maturity |
| Sales/Revenue | Low | Rapid growth | Slow growth |
| Profits | Negative | Peak Levels | High |
| Competitors | Few | Growing | Many |
| Cost/Customer | High | Average | Low |
| Capital/Access | Venture | Equity/debt | Debt/internal |
*
PLC Stage Characteristics
| Characteristic | Introduction | Growth | Maturity | Decline |
| Sales/revenue | Low | Rapid growth | Slow growth | Declining |
| Profits | Negative | Peak Levels | High | Low |
| Competitors | Few | Growing | Many | Declining |
| Cost/customer | High | Average | Low | Low |
| Capital/access | Venture | Equity/debt | Debt/internal | Minimal |
*
Strategic Choices for Stages of the PLC
| Stage 1 Introduction |
| Market Development Product Development |
*
Strategic Choices for Stages of the PLC
| Stage 1 Introduction | Stage 2 Growth |
| Market Development Product Development | Market Development Product Development Penetration Vertical Integration Related Diversification |
*
Strategic Choices for Stages of the PLC
| Stage 1 Introduction | Stage 2 Growth | Stage 3 Maturity |
| Market Development Product Development | Market Development Product Development Penetration Vertical Integration Related Diversification | Market Development Product Development Penetration Enhancement Status Quo Retrenchment Divestiture Unrelated Diversification |
*
Strategic Choices for Stages of the PLC
| Stage 1 Introduction | Stage 2 Growth | Stage 3 Maturity | Stage 4 Decline |
| Market Development Product Development | Market Development Product Development Penetration Vertical Integration Related Diversification | Market Development Product Development Penetration Enhancement Status Quo Retrenchment Divestiture Unrelated Diversification | Divestiture Liquidation Harvesting Unrelated Diversification |
*
Evaluation of Alternatives
External/Internal Strategy Matrix
Product life cycle analysis
BCG portfolio analysis
(Extended portfolio analysis)
Strategic Position and ACtion Evaluation (SPACE)
Program evaluation
*
BCG Portfolio Analysis
Stars
Problem
Children
Cash
Cows
Dogs
Relative Market Share Position
High Medium Low
High
Medium
Low
Market
Growth
Rate
*
BCG Portfolio Analysis
Stars
Problem
Children
Cash
Cows
Dogs
Relative Market Share Position
High Medium Low
High
Medium
Low
Market
Growth
Rate
*
BCG Portfolio Analysis
Stars
Problem
Children
Cash
Cows
Dogs
Relative Market Share Position
High Medium Low
High
Medium
Low
Market
Growth
Rate
Strategies
Market Development
Product Development
Penetration
Vertical Integration
Related Diversification
*
BCG Portfolio Analysis
Stars
Problem
Children
Cash
Cows
Dogs
Relative Market Share Position
High Medium Low
High
Medium
Low
Market
Growth
Rate
*
BCG Portfolio Analysis
Stars
Problem
Children
Strong
Cash
Cows
Dogs
Relative Market Share Position
High Medium Low
High
Medium
Low
Market
Growth
Rate
Strategies
Status Quo
Enhancement
Penetration
Related Diversification
*
BCG Portfolio Analysis
Stars
Problem
Children
Weak
Cash
Cows
Dogs
Relative Market Share Position
High Medium Low
High
Medium
Low
Market
Growth
Rate
Strategies
Retrenchment
Harvesting
Divestiture
Liquidation
*
BCG Portfolio Analysis
Stars
Problem
Children
Cash
Cows
Dogs
Relative Market Share Position
High Medium Low
High
Medium
Low
Market
Growth
Rate
*
BCG Portfolio Analysis
Stars
Strong
Problem
Children
Cash
Cows
Dogs
Relative Market Share Position
High Medium Low
High
Medium
Low
Market
Growth
Rate
Strategies
Market Development
Product Development
*
BCG Portfolio Analysis
Stars
Weak
Problem
Children
Cash
Cows
Dogs
Relative Market Share Position
High Medium Low
High
Medium
Low
Market
Growth
Rate
Strategies
Harvesting
Divestiture
Liquidation
*
BCG Portfolio Analysis
Stars
Problem
Children
Cash
Cows
Dogs
Relative Market Share Position
High Medium Low
High
Medium
Low
Market
Growth
Rate
*
BCG Portfolio Analysis
Stars
Problem
Children
Cash
Cows
Dogs
Relative Market Share Position
High Medium Low
High
Medium
Low
Market
Growth
Rate
Strategies
Liquidation
Divestiture
Retrenchment
*
BCG Portfolio Analysis
Stars
Problem
Children
Cash
Cows
Dogs
Relative Market Share Position
High Medium Low
High
Medium
Low
Market
Growth
Rate
*
Evaluation of Alternatives
External/Internal Strategy Matrix
Product life cycle analysis
BCG portfolio analysis
(Extended portfolio analysis)
Strategic Position and ACtion Evaluation (SPACE)
Program evaluation
*
Expanded Product Portfolio Matrix
Market Share
High Low
High
Market
Growth
Rate
Low
High Low
Market Share
High
Market
Growth
Rate
Low
Problem
Child
Mangy
Dog
Cash
Pig
Black
Hole
Cash
Cow
Faithful
Dog
Healthy
Child
Shining
Star
Profit
High Low
*
Expanded Product Portfolio Matrix
Market Share
High Low
High
Market
Growth
Rate
Low
High Low
Market Share
High
Market
Growth
Rate
Low
Problem
Child
Mangy
Dog
Cash
Pig
Black
Hole
Cash
Cow
Faithful
Dog
Healthy
Child
Shining
Star
Profit
High Low
Strategies
Enhancement
Product Development
Market development
Penetration
Vertical Integration
Related Diversification
*
Expanded Product Portfolio Matrix
Market Share
High Low
High
Market
Growth
Rate
Low
High Low
Market Share
High
Market
Growth
Rate
Low
Problem
Child
Mangy
Dog
Cash
Pig
Black
Hole
Cash
Cow
Faithful
Dog
Healthy
Child
Shining
Star
Profit
High Low
Strategies
Enhancement
Vertical Integration
Related Diversification
*
Expanded Product Portfolio Matrix
Market Share
High Low
High
Market
Growth
Rate
Low
High Low
Market Share
High
Market
Growth
Rate
Low
Problem
Child
Mangy
Dog
Cash
Pig
Black
Hole
Cash
Cow
Faithful
Dog
Healthy
Child
Shining
Star
Profit
High Low
Strategies
Product Development
Market development
Penetration
Vertical Integration
*
Expanded Product Portfolio Matrix
Market Share
High Low
High
Market
Growth
Rate
Low
High Low
Market Share
High
Market
Growth
Rate
Low
Problem
Child
Mangy
Dog
Cash
Pig
Black
Hole
Cash
Cow
Faithful
Dog
Healthy
Child
Shining
Star
Profit
High Low
Strategies
Status Quo
Retrenchment
Harvesting
Divestiture
*
Expanded Product Portfolio Matrix
Market Share
High Low
High
Market
Growth
Rate
Low
High Low
Market Share
High
Market
Growth
Rate
Low
Problem
Child
Mangy
Dog
Cash
Pig
Black
Hole
Cash
Cow
Faithful
Dog
Healthy
Child
Shining
Star
Profit
High Low
Strategies
Enhancement
Retrenchment
*
Expanded Product Portfolio Matrix
Market Share
High Low
High
Market
Growth
Rate
Low
High Low
Market Share
High
Market
Growth
Rate
Low
Problem
Child
Mangy
Dog
Cash
Pig
Black
Hole
Cash
Cow
Faithful
Dog
Healthy
Child
Shining
Star
Profit
High Low
Strategies
Market Development
Or
Divestiture
Liquidation
*
Expanded Product Portfolio Matrix
Market Share
High Low
High
Market
Growth
Rate
Low
High Low
Market Share
High
Market
Growth
Rate
Low
Problem
Child
Mangy
Dog
Cash
Pig
Black
Hole
Cash
Cow
Faithful
Dog
Healthy
Child
Shining
Star
Profit
High Low
Strategies
Retrenchment
Market Development
*
Expanded Product Portfolio Matrix
Market Share
High Low
High
Market
Growth
Rate
Low
High Low
Market Share
High
Market
Growth
Rate
Low
Problem
Child
Mangy
Dog
Cash
Pig
Black
Hole
Cash
Cow
Faithful
Dog
Healthy
Child
Shining
Star
Profit
High Low
Strategies
Liquidation
Divestiture
*
Expanded Product Portfolio Matrix
Market Share
High Low
High
Market
Growth
Rate
Low
High Low
Market Share
High
Market
Growth
Rate
Low
Problem
Child
Mangy
Dog
Cash
Pig
Black
Hole
Cash
Cow
Faithful
Dog
Healthy
Child
Shining
Star
Profit
High Low
*
Evaluation of Alternatives
External/Internal Strategy Matrix
Product life cycle analysis
BCG portfolio analysis
(Extended portfolio analysis)
Strategic Position and ACtion Evaluation (SPACE)
Program evaluation
*
SPACE Matrix
6
5
4
3
2
1
-1
-2
-3
-4
-5
-6
-6 -5 -4 -3 -2 -1
1 2 3 4 5 6
Conservative Aggressive
Defensive Competitive
Financial Strength
Environmental Stability
Competitive
Advantage
Service Category
Strength
*
Strategic Position and Action Evaluation Factors
Environmental Stability
- Critical Factors
Fairly turbulent environment; strong competition; many technological changes.
- Comments
Necessary to maintain financial stability because of turbulence in the environment; demand in market segments relatively stable; protect market niche against competition.
*
Strategic Position and Action Evaluation Factors
Service Category Strength
- Critical Factors
Good growth and profit potential; strong competition.
- Comments
Very attractive service category, but strong competition; degree of capital intensity increasing.
*
Strategic Position and Action Evaluation Factors
Competitive Advantage
- Critical Factors
Market share low; product/service quality very good.
- Comments
The organization still enjoys slight competitive advantage because of quality and customer loyalty; can be expected to diminish, however, because of improving performance of competitive organizations.
*
Strategic Position and Action Evaluation Factors
Financial Strength
- Critical Factors
Very little liquidity; too much debt.
- Comments
Financial position very weak; each inflow has to be increased in order to improve liquidity; outside financing difficult because of high leverage.
*
SPACE Matrix
6
5
4
3
2
1
-1
-2
-3
-4
-5
-6
-6 -5 -4 -3 -2 -1
1 2 3 4 5 6
Conservative Aggressive
Defensive Competitive
Financial Strength
Environmental Stability
Competitive
Advantage
Service Category
Strength
1.6
3.7
-3.7
-2.4
*
SPACE Matrix
6
5
4
3
2
1
-1
-2
-3
-4
-5
-6
-6 -5 -4 -3 -2 -1
1 2 3 4 5 6
Conservative Aggressive
Defensive Competitive
Financial Strength
Environmental Stability
Competitive
Advantage
Service Category
Strength
*
SPACE Quadrants Strategic Alternatives
6
5
4
3
2
1
-1
-2
-3
-4
-5
-6
-6 -5 -4 -3 -2 -1
1 2 3 4 5 6
Financial Strength
Environmental Stability
Competitive
Advantage
Service Category
Strength
Aggressive Profiles
Strategies
- Related Diversification
- Market Development
- Product Development
- Vertical Integration
*
SPACE Matrix
6
5
4
3
2
1
-1
-2
-3
-4
-5
-6
-6 -5 -4 -3 -2 -1
1 2 3 4 5 6
Conservative Aggressive
Defensive Competitive
Financial Strength
Environmental Stability
Competitive
Advantage
Service Category
Strength
*
SPACE Quadrants Strategic Alternatives
6
5
4
3
2
1
-1
-2
-3
-4
-5
-6
-6 -5 -4 -3 -2 -1
1 2 3 4 5 6
Financial Strength
Environmental Stability
Competitive
Advantage
Service Category
Strength
Conservative Profiles
Strategies
- Status Quo
- Unrelated Diversification
- Harvesting
*
SPACE Matrix
6
5
4
3
2
1
-1
-2
-3
-4
-5
-6
-6 -5 -4 -3 -2 -1
1 2 3 4 5 6
Conservative Aggressive
Defensive Competitive
Financial Strength
Environmental Stability
Competitive
Advantage
Service Category
Strength
*
SPACE Quadrants Strategic Alternatives
6
5
4
3
2
1
-1
-2
-3
-4
-5
-6
-6 -5 -4 -3 -2 -1
1 2 3 4 5 6
Financial Strength
Environmental Stability
Competitive
Advantage
Service Category
Strength
Competitive Profiles
Strategies
- Penetration
- Enhancement
- Product Development
- Market Development
- Status Quo
*
SPACE Matrix
6
5
4
3
2
1
-1
-2
-3
-4
-5
-6
-6 -5 -4 -3 -2 -1
1 2 3 4 5 6
Conservative Aggressive
Defensive Competitive
Financial Strength
Environmental Stability
Competitive
Advantage
Service Category
Strength
*
SPACE Quadrants Strategic Alternatives
6
5
4
3
2
1
-1
-2
-3
-4
-5
-6
-6 -5 -4 -3 -2 -1
1 2 3 4 5 6
Financial Strength
Environmental Stability
Competitive
Advantage
Service Category
Strength
Defensive Profiles
Strategies
- Divestiture
- Liquidation
- Retrenchment
*
SPACE Quadrants Strategic Alternatives
6
5
4
3
2
1
-1
-2
-3
-4
-5
-6
-6 -5 -4 -3 -2 -1
1 2 3 4 5 6
Financial Strength
Environmental Stability
Competitive
Advantage
Service Category
Strength
Aggressive
- Related Diversification
- Market Development
- Product Development
- Vertical Integration
Competitive
- Penetration
- Enhancement
- Product Development
- Market Development
- Status Quo
Defensive
- Divestiture
- Liquidation
- Retrenchment
Conservative
- Status Quo
- Unrelated Diversification
- Harvesting
*
Evaluation of Alternatives
External/Internal Strategy Matrix
Product life cycle analysis
BCG portfolio analysis
(Extended portfolio analysis)
Strategic Position and ACtion Evaluation (SPACE)
Program evaluation
*
Program Evaluation
Needs/Capacity Assessment
Program Priority Setting
*
Needs/Capacity Assessment
Community need is a function of (1) clear community requirements (environmental, sanitation, disease control, and so on) and personal health care (primary care) gaps, (2) the degree to which other institutions (private and public) fill the identified health care gaps, and (3) public/community health objectives.
*
Needs/Capacity Assessment
Organizational capacity is the organization’s ability to initiate, maintain, and enhance its set of adaptive strategy programs. Organizational capacity is composed of (1) funding to support programs, (2) other organizational resources and skills, and (3) the program’s fit with the mission and vision of the organization.
*
Needs/Capacity Assessment
High
Community
Need
Low
Organizational Capacity
High Low
Expansion of Scope
- Vertical Integration
- Related Diversification
- Product Development
- Market Development
- Penetration
*
Needs/Capacity Assessment
High
Community
Need
Low
Organizational Capacity
High Low
Expansion of Scope
- Vertical Integration
- Related Diversification
- Product Development
- Market Development
- Penetration
Maintenance/
Contraction of Scope
- Enhancement
- Status Quo
- Retrenchment
- Harvesting
*
Needs/Capacity Assessment
High
Community
Need
Low
Organizational Capacity
High Low
Expansion of Scope
- Vertical Integration
- Related Diversification
- Product Development
- Market Development
- Penetration
Maintenance/
Contraction of Scope
- Enhancement
- Status Quo
- Retrenchment
- Harvesting
Contraction/
Maintenance of Scope
- Related Diversification
- Retrenchment
- Harvesting
- Status Quo
*
Needs/Capacity Assessment
High
Community
Need
Low
Organizational Capacity
High Low
Expansion of Scope
- Vertical Integration
- Related Diversification
- Product Development
- Market Development
- Penetration
Maintenance/
Contraction of Scope
- Enhancement
- Status Quo
- Retrenchment
- Harvesting
Contraction/
Maintenance of Scope
- Related Diversification
- Retrenchment
- Harvesting
- Status Quo
Contraction of Scope
- Liquidation
- Harvesting
- Divestiture
- Retrenchment
*
Program Evaluation
Needs/Capacity Assessment
Program Priority Setting
*
Program Priority Setting
Invariably more programs have high community need than resources are available. Therefore, the most important programs (and perhaps those with categorical funding) may be expanded or maintained. The organization must have an understanding of which programs are the most important, which should be provided incremental funding, and which should be the first to be scaled back if funding is reduced or eliminated.
*
Q-Sort Method
The Q-sort method provides a more formal method of differentiating the importance of programs and setting priorities.
Q-sort is a ranking procedure that forces choices along a continuum in situations where the difference between the choices may be quite small.
By ranking the choices using a Q-sort procedure, participants see where there is wide consensus.
*
Q-Sort Method
The Q-sort method provides a more formal method of differentiating the importance of programs and setting priorities.
Q-sort is a ranking procedure that forces choices along a continuum in situations where the difference between the choices may be quite small.
By ranking the choices using a Q-sort procedure, participants see where there is wide consensus.
*
Q-Sort Prioritization
Most Next Next Next Next Next Next Next Next
Important Most Most Most Most Most Most Most Most
Important Important Important Important Important Important Important Important
5%
5%
7.5%
7.5%
12.5%
12.5%
15%
15%
20%
*
Q-Sort Prioritization
Most Next Next Next Next Next Next Next Next
Important Most Most Most Most Most Most Most Most
Important Important Important Important Important Important Important Important
5%
5%
7.5%
7.5%
12.5%
12.5%
15%
15%
20%
Expansion
of Scope
Maintenance
of Scope
Contraction
of Scope
*
Strategic Thinking Map
Hierarchy of Strategic Decisions and Alternatives
Directional Strategies
- Mission
- Vision
- Values
- Goals
Implementation Strategies
Service Delivery
- Pre-service
- Point-of-service
- After-service
Support
- Culture
- Structure
- Strategic resources
Unit Action Plans
- Objectives
- Actions
- Timelines
- Responsibilities
Competitive Strategies
Strategic Posture
- Defender
- Prospector
- Analyzer
- (Reactor)
Positioning
Market-wide
- Cost leadership
- Differentiation
Market Segment
- Focus/Cost
leadership
- Focus/
differentiation
Market Entry Strategies
Purchase
- Acquisition
- Licensing
- Venture capital
investment
Cooperation
- Merger
- Alliance
- Joint venture
Development
- Internal
development
- Internal
venture
Adaptive Strategies
Expansion of Scope
- Diversification
- Vertical Integration
- Market Development
- Product Development
- Penetration
Contraction of Scope
- Divestiture
- Liquidation
- Harvesting
- Retrenchment
Maintenance of Scope
- Enhancement
- Status Quo
*
External Conditions for Market
Entry Strategies
| Strategy | Appropriate External Conditions |
| Acquisition | Growing market Early stage of the product life cycle or long maturity stage Attractive acquisition candidate High volume economies of scale (horizontal integration) Distribution economies of scale (vertical integration) |
*
External Conditions for Market
Entry Strategies
| Strategy | Appropriate External Conditions |
| Acquisition | Growing market Early stage of the product life cycle or long maturity stage Attractive acquisition candidate High volume economies of scale (horizontal integration) Distribution economies of scale (vertical integration) |
| Licensing | High capital investment to enter market High immediate demand for product/service Early stages of the product life cycle |
*
External Conditions for Market
Entry Strategies
| Strategy | Appropriate External Conditions |
| Acquisition | Growing market Early stage of the product life cycle or long maturity stage Attractive acquisition candidate High volume economies of scale (horizontal integration) Distribution economies of scale (vertical integration) |
| Licensing | High capital investment to enter market High immediate demand for product/service Early stages of the product life cycle |
| Venture Capital Investment | Rapidly changing technology Product/service in the early development stage |
*
External Conditions for Market
Entry Strategies
| Strategy | Appropriate External Conditions |
| Acquisition | Growing market Early stage of the product life cycle or long maturity stage Attractive acquisition candidate High volume economies of scale (horizontal integration) Distribution economies of scale (vertical integration) |
| Licensing | High capital investment to enter market High immediate demand for product/service Early stages of the product life cycle |
| Venture Capital Investment | Rapidly changing technology Product/service in the early development stage |
| Merger | Attractive merger candidate (synergistic effect) High level of resource required to compete |
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External Conditions for Market
Entry Strategies
| Strategy | Appropriate External Conditions |
| Alliance | Alliance partner has complementary resources, competencies, capabilities Alliance partner has similar status Market demands complete line of products/services Market is weak and continuum of services is desirable Mature stage of product life cycle |
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External Conditions for Market
Entry Strategies
| Strategy | Appropriate External Conditions |
| Alliance | Alliance partner has complementary resources, competencies, capabilities Alliance partner has similar status Market demands complete line of products/services Market is weak and continuum of services is desirable Mature stage of product life cycle |
| Joint Venture | High capital requirements to obtain necessary skills/expertise Long learning curve in obtaining necessary expertise |
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External Conditions for Market
Entry Strategies
| Strategy | Appropriate External Conditions |
| Alliance | Alliance partner has complementary resources, competencies, capabilities Alliance partner has similar status Market demands complete line of products/services Market is weak and continuum of services is desirable Mature stage of product life cycle |
| Joint Venture | High capital requirements to obtain necessary skills/expertise Long learning curve in obtaining necessary expertise |
| Internal Development | High level of product control (quality) required Early stages of the product life cycle |
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External Conditions for Market
Entry Strategies
| Strategy | Appropriate External Conditions |
| Alliance | Alliance partner has complementary resources, competencies, capabilities Alliance partner has similar status Market demands complete line of products/services Market is weak and continuum of services is desirable Mature stage of product life cycle |
| Joint Venture | High capital requirements to obtain necessary skills/expertise Long learning curve in obtaining necessary expertise |
| Internal Development | High level of product control (quality) required Early stages of the product life cycle |
| Internal Venture | Product/service development stage Rapid development/market entry required New technical, marketing, production approach required |
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External Conditions for Market
Entry Strategies
| Strategy | Appropriate External Conditions |
| Alliance | Alliance partner has complementary resources, competencies, capabilities Alliance partner has similar status Market demands complete line of products/services Market is weak and continuum of services is desirable Mature stage of product life cycle |
| Joint Venture | High capital requirements to obtain necessary skills/expertise Long learning curve in obtaining necessary expertise |
| Internal Development | High level of product control (quality) required Early stages of the product life cycle |
| Internal Venture | Product/service development stage Rapid development/market entry required New technical, marketing, production approach required |
| Reconfiguring the Value Chain | Competition dominated by a few traditional providers Specialized market niche identified New technology, marketing, production approach required |
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Resources, Competencies, and Capabilities for Market Entry Strategies
| Strategy | Appropriate Resources, Competencies and Capabilities |
| Acquisition | Financial resources Ability to manage new products and markets Ability to merge organizational cultures and organizational structures Rightsizing capability for combined organization |
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Resources, Competencies, and Capabilities for Market Entry Strategies
| Strategy | Appropriate Resources, Competencies and Capabilities |
| Acquisition | Financial resources Ability to manage new products and markets Ability to merge organizational cultures and organizational structures Rightsizing capability for combined organization |
| Licensing | Financial resources (licensing fees) Support organization to carry out license Ability to integrate new product/market into present organization |
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Resources, Competencies, and Capabilities for Market Entry Strategies
| Strategy | Appropriate Resources, Competencies and Capabilities |
| Acquisition | Financial resources Ability to manage new products and markets Ability to merge organizational cultures and organizational structures Rightsizing capability for combined organization |
| Licensing | Financial resources (licensing fees) Support organization to carry out license Ability to integrate new product/market into present organization |
| Venture Capital Investment | Capital to invest in speculative projects Ability to evaluate and select opportunities with a high degree of success |
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Resources, Competencies, and Capabilities for Market Entry Strategies
| Strategy | Appropriate Resources, Competencies and Capabilities |
| Acquisition | Financial resources Ability to manage new products and markets Ability to merge organizational cultures and organizational structures Rightsizing capability for combined organization |
| Licensing | Financial resources (licensing fees) Support organization to carry out license Ability to integrate new product/market into present organization |
| Venture Capital Investment | Capital to invest in speculative projects Ability to evaluate and select opportunities with a high degree of success |
| Merger | Management willing to relinquish or share control Rightsizing capacity Agreement to merge management Ability to merge organizational cultures and organizational structures |
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Resources, Competencies, and Capabilities for Market Entry Strategies
| Strategy | Appropriate Resources, Competencies and Capabilities |
| Alliance | Lack of competitive skills/facilities/expertise Desire to create vertically integrated system Need to control patient flow Coordinate board/skills Willing to relinquish share control |
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Resources, Competencies, and Capabilities for Market Entry Strategies
| Strategy | Appropriate Resources, Competencies and Capabilities |
| Alliance | Lack of competitive skills/facilities/expertise Desire to create vertically integrated system Need to control patient flow Coordinate board/skills Willing to relinquish share control |
| Joint Venture | Lack of a distinctive competency Additional resources/capabilities are required Not enough time to develop internal resources, capabilities, or competencies Venture is removed from core competency Lack required skills and expertise |
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Resources, Competencies, and Capabilities for Market Entry Strategies
| Strategy | Appropriate Resources, Competencies and Capabilities |
| Alliance | Lack of competitive skills/facilities/expertise Desire to create vertically integrated system Need to control patient flow Coordinate board/skills Willing to relinquish share control |
| Joint Venture | Lack of a distinctive competency Additional resources/capabilities are required Not enough time to develop internal resources, capabilities, or competencies Venture is removed from core competency Lack required skills and expertise |
| Internal Development | Technical expertise Marketing competency Operational capacity Research and development capability Strong functional organization Product/service management expertise |
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Resources, Competencies, and Capabilities for Market Entry Strategies
| Strategy | Appropriate Resources, Competencies and Capabilities |
| Internal Venture | Entrepreneur Entrepreneurial organization Ability to isolate venture from the rest of the organization Technical expertise Marketing competency Operational capacity |
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Resources, Competencies, and Capabilities for Market Entry Strategies
| Strategy | Appropriate Resources, Competencies and Capabilities |
| Internal Venture | Entrepreneur Entrepreneurial organization Ability to isolate venture from the rest of the organization Technical expertise Marketing competency Operational capacity |
| Reconfiguring the Value Chain | New technology available Entrepreneurial Organization Ability to rearrange value chain Ability to adapt business model |
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Market Entry Strategies and Goals
Rapid Market Entry
Slow Market Entry
Low
Initial Control
Over Design,
Production,
Market
High
Initial Control
Over Design,
Production,
Market
Internal
Development
Internal
Venture
Reconfigure Value Chain
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Market Entry Strategies and Goals
Rapid Market Entry
Slow Market Entry
Low
Initial Control
Over Design,
Production,
Market
High
Initial Control
Over Design,
Production,
Market
Internal
Development
Internal
Venture
Venture
Capital
Merger
Licensing
Acquisition
Reconfigure Value Chain
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Market Entry Strategies and Goals
Rapid Market Entry
Slow Market Entry
Low
Initial Control
Over Design,
Production,
Market
High
Initial Control
Over Design,
Production,
Market
Internal
Development
Internal
Venture
Venture
Capital
Alliance
Joint Venture
Merger
Licensing
Acquisition
Reconfigure Value Chain
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Strategic Thinking Map
Hierarchy of Strategic Decisions and Alternatives
Directional Strategies
- Mission
- Vision
- Values
- Goals
Implementation Strategies
Service Delivery
- Pre-service
- Point-of-service
- After-service
Support
- Culture
- Structure
- Strategic resources
Unit Action Plans
- Objectives
- Actions
- Timelines
- Responsibilities
Competitive Strategies
Strategic Posture
- Defender
- Prospector
- Analyzer
- (Reactor)
Positioning
Market-wide
- Cost leadership
- Differentiation
Market Segment
- Focus/Cost
leadership
- Focus/
differentiation
Market Entry Strategies
Purchase
- Acquisition
- Licensing
- Venture capital
investment
Cooperation
- Merger
- Alliance
- Joint venture
Development
- Internal
development
- Internal
venture
Adaptive Strategies
Expansion of Scope
- Diversification
- Vertical Integration
- Market Development
- Product Development
- Penetration
Contraction of Scope
- Divestiture
- Liquidation
- Harvesting
- Retrenchment
Maintenance of Scope
- Enhancement
- Status Quo
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Appropriate External Conditions for Strategic Postures
| Defender |
| Stable external environment Predictable political/regulatory change Slow technological and competitive change Products or services in mature stage of PLC Relatively long PLCs High barriers to entry |
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Appropriate External Conditions for Strategic Postures
| Prospector |
| Turbulent environment Rapid technological, political/regulatory, economic change Introduction and early growth stages of PLC Technology may be employed across markets Low intensity of competitive rivalry Numerous market and product opportunities Fairly low barriers to market entry |
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Appropriate External Conditions for Strategic Postures
| Analyzer |
| Moderately changing environment Technological, regulatory, economic, social, and competitive change open new opportunities Some competitive rivalry in old and new markets Some stable products and markets Some new market and product opportunities Growth and mature stage of PLC for existing products Growth stage of PLC for new products |
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Appropriate Internal Conditions for Strategic Postures
| Defender |
| Ability to develop a single core technology Ability to be very cost efficient Ability to protect market from competitors Capacity to engage in vertical integration strategy Management emphasis on centralized control/stability Structure characterized by division of labor Well-defined hierarchical communications channels Cost control expertise Well-defined procedures and methods High degree of formalization, centralization |
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Appropriate Internal Conditions for Strategic Postures
| Prospector |
| Ability to adjust organization to a variety of external forces Technological and administrative flexibility Ability to develop and use new technologies Ability to deploy and coordinate resources among numerous decentralized units Decentralized planning and control Flexible structure Marketing plus research and development expertise Low degree of formalization (few well-defined procedures and methods) |
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Appropriate Internal Conditions for Strategic Postures
| Analyzer |
| Ability to mix high levels of standardization and routinization of core products and markets with flexibility and adaptation for new products and markets Structure accommodates both stable and dynamic areas of operation Effective lateral and vertical communication channels Many different management skills required Effective strategy and planning team |
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External Risks of Positioning Strategies
| Cost Leadership |
| Technological change that nullifies past investments or learning Low-cost learning by industry newcomers or followers, through imitation or through their ability to invest in state-of-the-art facilities Inability to see required product or marketing change because of the attention placed on cost Inflation in costs that narrow the organization’s ability to maintain sufficient price differential to offset competitors’ brand images or other approaches to differentiation |
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External Risks of Positioning Strategies
| Cost Leadership |
| Technological change that nullifies past investments or learning Low-cost learning by industry newcomers or followers, through imitation or through their ability to invest in state-of-the-art facilities Inability to see required product or marketing change because of the attention placed on cost Inflation in costs that narrow the organization’s ability to maintain sufficient price differential to offset competitors’ brand images or other approaches to differentiation |
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External Risks of Positioning Strategies
| Differentiation |
| The cost differential between low-cost competitors and the differentiated firm is too great for differentiation to hold brand loyalty; buyers therefore sacrifice some of the features, services, or image possessed by the differentiated organization for large cost savings Buyers’ need for the differentiating factor diminishes, which can occur as buyers become more sophisticated Imitation narrows perceived differentiation, a common occurrence as the industry matures |
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External Risks of Positioning Strategies
| Focus |
| Cost differential between broad-range competitors and the focused organization widens to eliminate the cost advantages of serving a narrow target or to offset the differentiation achieved by focus Differences in desired products or services between the strategic target and the market as a whole narrows Competitors find submarkets within the strategic target and outfocus the focuser Focuser grows the market to a sufficient size that it becomes attractive to competitors that previously ignored it |
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Resources, Competencies and Capabilities for Positioning Strategies
| Generic Strategy | Resources and Competencies | Organizational Capabilities |
| Cost Leadership | Sustained capital investment and access to capital Process engineering skills Intense supervision of labor Products and services that are simple to produce in volume Low-cost delivery system | Tight cost control Frequent, detailed control reports Structured organization and responsibilities Incentives based on meeting strict quantitative targets |
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Resources, Competencies and Capabilities for Positioning Strategies
| Generic Strategy | Resources and Competencies | Organizational Capabilities |
| Cost Leadership | Sustained capital investment and access to capital Process engineering skills Intense supervision of labor Products and services that are simple to produce in volume Low-cost delivery system | Tight cost control Frequent, detailed control reports Structured organization and responsibilities Incentives based on meeting strict quantitative targets |
| Differentiation | Strong marketing abilities Product/service engineering Creative flair Strong capability in basic research Reputation for quality or technological leadership Long tradition in the industry or unique combination of skills Strong cooperation from channels | Strong coordination among functions in R&D, product/service development, and marketing Subjective measurement and incentives instead of quantitative measures Amenities to attract highly skilled labor, scientists, or creative people |
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Resources, Competencies and Capabilities for Positioning Strategies
| Generic Strategy | Resources and Competencies | Organizational Capabilities |
| Cost Leadership | Sustained capital investment and access to capital Process engineering skills Intense supervision of labor Products and services that are simple to produce in volume Low-cost delivery system | Tight cost control Frequent, detailed control reports Structured organization and responsibilities Incentives based on meeting strict quantitative targets |
| Differentiation | Strong marketing abilities Product/service engineering Creative flair Strong capability in basic research Reputation for quality or technological leadership Long tradition in the industry or unique combination of skills Strong cooperation from channels | Strong coordination among functions in R&D, product/service development, and marketing Subjective measurement and incentives instead of quantitative measures Amenities to attract highly skilled labor, scientists, or creative people |
| Focus | Combination of the preceding skills and resources directed at a particular strategic target | Combination of the preceding organizational requirements directed at a particular strategic target |
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Mapping Strategies
Adaptive
Strategies
Expansion of Scope
Vertical Integration
Product Development
Market Development
Penetration
Maintenance of Scope
Enhancement
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Mapping Strategies
Adaptive
Strategies
Expansion of Scope
Vertical Integration
Product Development
Market Development
Penetration
Maintenance of Scope
Enhancement
Market Entry
Strategies
Cooperation
Alliance
Joint Venture
Development
Internal
Development
Hospital Alliance
Independent
Living
Information System
Advertising
Medicare
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Mapping Strategies
Adaptive
Strategies
Expansion of Scope
Vertical Integration
Product Development
Market Development
Penetration
Maintenance of Scope
Enhancement
Market Entry
Strategies
Cooperation
Alliance
Joint Venture
Development
Internal
Development
Competitive
Strategies
Strategic Posture
Analyzer
Positioning
Marketwide
Differentiation
Quality
Service
Caring
Hospital Alliance
Independent
Living
Information System
Advertising
Medicare
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Managing Strategic Momentum
Adaptive Strategies
- Are all the important assumptions on which the strategy is based realistic (external environment, competitive environment, internal environment)?
- Has the strategy been tested with appropriate strategic thinking tools?
- Have the major stakeholders, inside and outside the organization, that will be most influential in ensuring the success of the strategy been identified and evaluated?
- If the adaptive strategy is to fill a currently unfilled niche in the market, has the organization investigated whether the niche will remain open long enough to return the capital investment?
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Managing Strategic Momentum
Adaptive Strategies
Has the adaptive strategy been tested with appropriate analysis, such as return on investment and the organization’s ability and willingness to bear the risks?
Is the payback period acceptable in light of potential environmental change? Does the strategy take the organization too far from its current products and markets?
Is the adaptive strategy appropriate for the organization’s present and prospective position in the market?
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Managing Strategic Momentum
Market Entry Strategies
- Is the market entry strategy the most appropriate way to achieve the mission, vision, and goals of the organization?
- Is the market entry strategy consonant with the values of the organization?
- Is the market entry strategy the best way to accomplish the adaptive strategy?
- Is the market entry strategy compatible with the adaptive strategy?
- Does management understand the unique requirements of the market entry strategy (purchase, cooperation, development)?
- Does management understand the important market forces?
- Have adequate financial resources been allocated to enter the market?
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Managing Strategic Momentum
Market Entry Strategies
- Does the selection of the market entry strategy affect the ability of the organization to effectively position its products/services in the market?
- Is the market entry strategy compatible with the competitive strategies?
- Does the market entry strategy place unusual strains on any of the functional areas?
- Have new stakeholder relationships developed as a result of the market entry strategy (customers, vendors, channel institutions, and so on)?
- Has the relationship between the desire and need for rapid market entry been properly analyzed?
- Has the relationship between the desire and need for control over the products and services been achieved?
- Have the trade-offs between costs and control been properly analyzed?
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Managing Strategic Momentum
Competitive Strategies – Strategic Posture
- Is the strategic posture sustainable?
- Have there been external developments (technological, social, regulatory, economic, or competitive) that have shortened product life cycles?
- Are there new market opportunities that suggest the organization should move more toward a prospector posture? Analyzer strategy? Defender strategy?
- Has the organization developed the right mix of centralization and decentralization for the selected strategic posture?
- Is the level of standardization and administrative flexibility appropriate to the strategic posture?
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Managing Strategic Momentum
Competitive Strategies – Strategic Posture
- Is the level and type of communication appropriate for the strategic posture?
- Is the strategic posture appropriate given the barriers to market entry?
- Has the level of vertical integration been appropriate for the strategic posture?
- Has the organization been caught by surprise too often?
- Are the overall strategy, strategic posture, and value adding strategies compatible?
- Does the organization need to evolve its strategic posture?
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Managing Strategic Momentum
Competitive Strategies – Positioning
Is the product or service positioned appropriately in the market?
Can the organization use one of the other generic positioning strategies?
Is the positioning strategy appropriate considering the external opportunities and threats?
Will market forces allow the selected positioning?
Is the positioning strategy best suited to capitalize on the organization’s strengths and minimize its weaknesses?
Is the positioning of the organization’s products and services unique in the marketplace?
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Managing Strategic Momentum
Competitive Strategies – Positioning
- Is the positioning strategy defensible against new players trying to position themselves in a similar fashion?
- Is the positioning strategy compatible with the market entry strategy?
- Does the positioning strategy provide the appropriate image for the organization?
- Is the positioning strategy sustainable?
- Is the appropriate distribution channel being used?
- Is the current promotional strategy appropriate?
- Is the pricing strategy appropriate?
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Chapter 7 Conclusions
After reading Chapter 7, you should be able to define the following terms:
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