Final Exam Study Guide

HMP 4600

Developing Strategic Alternatives

Concepts to know and define:

Strategy formulation
o The deciding what the organization should explicitly be doing
o What the organization is NOW doing but should STOP doing?
o What is the organization NOT doing but should START doing?
o What the organization is currently doing that should be DONE DIFFERENTLY?
Linking strategy with situational analysis
o Addresses an External Issue?
o Draws on a Competitive Advantage or Fixes a Competitive Disadvantage?
o Fits with Mission, Values?
o Moves the Organization Toward the Vision?
o Achieves One or More Strategic Goals?
Five categories of strategies
o Directional Strategies
Broadest strategies
Set the fundamental direction of the organization by establishing a mission
for the organization, vision for the future and specify the organizations
values and strategic goals
o Adaptive strategies
More specific than directional strategies
Provide the primary methods for achieving the vision (adapting to the
environment)
Determine the scope of the organization; specify how the organization will
expand scope, reduce scope, or maintain scope
o Market Entry Strategies
Provide the method of carrying out the adaptive strategies (expansion of
scope and the maintenance of scope strategies) through purchase,
cooperation, or internal development
o Competitive strategies
2 types
One determine an organizations strategic posture
Second positions the organization vis--vis other organizations
within the market
o Implementation Strategies
Most specific strategies
Are directed toward value added service delivery and value added support
areas
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HMP 4600

Individual organizational units develop objectives and action plans that

carry out the value added service delivery and value added support
strategies
Ends-means chain (exhibit 6.2)

o
Expansion of scope strategies (diversification (related, unrelated, concentric), market
development, vertical integration, focused factory, product development, penetration
strategy)
o Diversification selected because markets have been identified outside of the
organizations core business that offer potential for substantial growth. Often seen
as risky. 2 types
Related (concentric) organization chooses to enter a market that is
similar or related to its present operations
Unrelated (conglomerate) organization enters a market that is unlike its
present operations
o Market Development a divisional strategy used to enter new markets with
present products or services. Designed to achieve greater volume through
geographic (service area) expansion or by targeting new market segments within
current service area
o Vertical integration a decision to grow along the channel of a distribution of the
core operations.
Backwards is when an organization grows along the channel distribution
toward its suppliers
Forward is when an organization grows towards its consumer or patient
o Product development the introduction of new products/services to present
markets (geographic and segments). Typically, product enhancements and product
line extension
o Penetration an attempt to better serve current markets with current products or
services through promotion, distribution, and pricing
Reduction of scope strategies (Divestiture, Liquidation, Harvesting, Retrenchment)
o Divestiture an operating strategic service unit is sold off as a result of a decision
to permanently and completely leave the market despite its current viability (and
will typically be operated by the organization that purchases it). Could be total or
partial
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HMP 4600

o Liquidation involves selling the assets of an organization because unit cant be

sold as viable operation. Could liquidate operations or assets
o Harvesting selected when the market has entered long-term decline. The
organization will ride the decline and allow the business to generate as much
cash as possible. Reaps maximum short-term benefits before product or service is
eliminated.
Could be fast or slow
o Retrenchment a response to a declining profitability. The market is still viewed
as viable but costs are rising as a percentage of revenue, placing pressure on
profits. Involves a redefinition of target market and selective cost elimination or
asset reduction
Maintenance of scope strategies (Enhancement) refer to Exhibit 6.9 for these definitions
o Enhancement seeking to improve operations within present product or service
categories through quality programs, increasing flexibility, increasing efficiency,
speed of delivery and so on
o Status quo seeking to maintain relative market share within a market (quality,
efficiency, innovation, speed, and flexibility)
Market entry strategies (definition) - the planned method of delivering goods or services
to a new target market and distributing them there
Purchase strategies (definition and Venture Capital investment)
o Allow an organization to use its financial resources to enter a market quickly.
o Venture capital investment - Financial investment in an organization in order to
participate in its growth or receipt of venture capital for startup or expansion
Advantages: Can provide window on new technology or market & Low
risk
Disadvantages: Alone, unlikely to be a major stimulus of growth &
Extended time to profitability
Development Strategies (internal development, internal ventures, reconfiguring the value
chain)
o Internal development products or services developed internally using the
organizations own resources
o Internal venture establishment of an independent entity within an organization
to develop products or services
o Reconfigure the value chain changing activities or sequence of activities in the
value chain and therefore change how value is delivered to the customer
Competitive strategies (exhibit 6.3) determining the strategic posture of the
organization and how the products and services will be positioned vis-a-vis those of
competitors.
Combination Strategies
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HMP 4600

o Merger - Combining two (or more) organizations through mutual agreement to

form a single new organization
o Alliance formation of a formal partnership
o Joint venture combination of the resources of two or more organizations to
accomplish a designated task
o Are often used, especially in larger complex organizations, because no single
strategy alone may be sufficient.
More detail on:
Strategic Thinking Map Hierarchy of Strategic Decisions and Alternatives (exhibit 6.4)

o
Adaptive strategies (exhibit 6.3, 6.5)
Vertical integration (forward and backward) - up above
Market entry strategies (exhibit 6.3, 6.10)
Purchase strategies (Acquisition vs licensing)
o Acquisition strategy to grow through the purchase of an existing organization,
unit of an organization, unit of an organization, or a product/service
o Licensing acquiring or providing an asset (technology, market, equipment, etc.)
through contract
Cooperation strategies (Mergers definition, motives, challenges; Alliances, Joint
ventures definition, organizational forms etc.)
o Merger combining two (or more) organizations through mutual agreement to
form a single new organization
Advantages
Uses existing resources
Retains existing markets and products
Reduces competition
Disadvantages
Takes a long time to merge cultures
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HMP 4600

Merger match often difficult to find

o Alliance formation of a formal partnership
Advantages
Fills in gaps in product line
Creates efficiencies (e.g., bargaining power)
Reduces competition in weak markets
Stabilizes referral base
Shared risk
Disadvantages
Potential for conflict between members
Limits potential markets/products
Difficult to align resources
Governance issues
o Joint venture combination of the resources or two or more organizations to
accomplish a designated task
Advantages
Technological/marketing joint ventures can exploit small/large
organizational synergies
Spreads distribution risks
Disadvantages
Potential for conflict between partners
Objectives of partners may not be compatible
Strategic Postures (exhibit 6.11)
o Defender focus on a narrow market with limited number of products or services
and aggressively defend this segment through pricing or differentiation
o Prospector continuously seek out new products and new markets
o Analyzer balance market defense in some markets with selectively entering a
limited number of markets or products
o Reactor reacts to the strategies of competitors
Positioning Strategies (exhibit 6.12, 6.13)
o Cost leadership low-cost/price strategy directed toward entire market
o Differentiation development of unique product/service features directed toward
entire market
o Focus cost leadership low-cost/price directed toward a particular market
segment
o Focus differentiation development of unique product/service features directed
toward a particular market segment

Practice Questions from the chapter: Q1, 4, 6, 7, 9, 10, 11, 14, 15

Final Exam Study Guide
HMP 4600

Evaluation of Alternatives & Strategic Choices

Concepts to know and define:

External / Internal Strategy Matrix (SWOT vs TOWS matrix; Exhibit 7.1)
o

o SWOT (strengths, weaknesses, opportunities, and threats) analysis has been

popular as a way to display pertinent external issues and internal strengths and
weaknesses. SWOT analysis involves listing the organizations strengths and
weaknesses as well as perceived external opportunities and threats.
o In TOWS the internal strengths and weaknesses are matched against external
environmental opportunities and threats to foster strategic thinking concerning
adaptive strategy alternatives
Extended Portfolio Analysis (only definitions of the various components)
o Portfolio analysis: The market position of the health care organization can be
examined in terms of its share of the market and the rate of service category
growth. The traditional BCG portfolio analysis matrix portrays differences among
the various products/services (stars, cash cows, problem children, and dogs) in
terms of relative market share and market growth rate.
Stars: high market growth and high market share
Cash cows: low market growth and high market share
Problem children: low market share and high market growth
Dogs: low to no market growth and low market share
o Extended portfolio analysis: includes a profitability dimension, which is measured
by high or low profitability according to positive or negative cash flow or return
on invested capital.
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HMP 4600

Shining stars: high market growth and high market share and high
profitability. Best situation for HCO
Cash cows: low market growth but high market share and high
profitability
Healthy children: high market growth, low market share and high
profitability.
Faithful dogs: low market growth and low market share but have been
profitable
Black holes: high growth and high market share but low profitability
Problem children: low share, high growth and low profitability
Cash pigs: high share, low growth and low profitability
Mangy dogs: low growth, low share, poor profitability
Strategic Position and Action Evaluation
o An extension of two-dimensional portfolio analysis (BCG) and is used to
determine the appropriate strategic posture of the organization. SPACE analysis
suggests the appropriateness of strategic alternatives based on factors relating to
four dimensions: service category strength, environmental stability, the
organizations relative competitive advantage and the organizations financial
strength.

o
Q-sort program
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HMP 4600

o Provides a more formal method of differentiating the importance of programs and

setting priorities. Ranking procedure that forces choices along a continuum in
situations where the difference between the choices may be quite small. Useful
when experts differ on what makes one choice preferable over the other
Evaluation of external conditions, resources, competencies and capabilities for market
entry strategy (basic and most important conditions - exhibit 7.15, 7.16 (primarily for
acquisition, licensing, merger, alliance and joint ventures))

o
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HMP 4600

o
Re-engineering a total redesign of a process
Evaluation of external conditions, resources, competencies and capabilities for strategic
postures (exhibit 7.18, 7.19)

o
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HMP 4600

o
o External conditions are very important in the selection of strategic posture.
Defender strategies tend to be successful when the external environment is
relatively stable (change is slow and reasonably predictable). Prospectors operate
well in rapidly changing, turbulent environments. Analyzers operate well in
environments where there is moderate change with some product categories that
are quite stable and some that are changing. For the defender posture the
organization must be able to develop a core technology and be very cost efficient.
Defender organizations try to drive costs down through vertical integration,
specialization of labor, a well-defined organization structure, centralized control
and standardization, and cost reduction while maintaining quality. Prospectors, on
the other hand, are continuously moving in and out of products and markets
looking for high growth. Therefore, they need organization structures, systems,
and procedures that are flexible. Prospectors rely on decentralized control. These
types of organizations do not concentrate on developing efficiency but, rather,
focus on the development and early adoption of new products and services.
Analyzers attempt to balance defender strategies in stable markets with some
prospecting in selected developing markets. Managing these organizations is often
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HMP 4600

difficult because they must mix high levels of standardization and routinization
with flexibility and adaptability.
Evaluation of external risks, resources, competencies and capabilities for positioning
strategies (exhibit 7.20, 7.21)

o
Benchmarking - specific measures comparing the organization with its competitors on a
set of key variables
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HMP 4600

More detail on:

Perspective 7.1 Creating a productive Culture
Product Life cycle and its various stages - characteristics and related strategies,
limitations (exhibit 7.2, 7.4)

o
BCG portfolio matrix (exhibit 7.5; can also refer Wayland Ch. 12)
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HMP 4600

o
Program Evaluation (definition, Needs/capacity assessment, community need,
organizational capacity, exhibit 7.13)
o Community need is a function of
clear community requirements (environmental, sanitation, disease control
etc.) and personal health care (primary care) gaps
degree to which other institutions (private and public) fill the identified
health care gaps
public/community health objectives
o Organizational capacity is the organizations ability to initiate, maintain, and
enhance its set of adaptive strategy programs. Organizational capacity is
composed of
funding to support programs
other organizational resources and skills
programs fit with the mission and vision of the organization

Practice Questions from the chapter: Q2, 4, 10, 13, 15

Final Exam Study Guide
HMP 4600

Value-Adding Service Delivery Activities

Concepts to know and define:

Value-adding delivery activities
o Pre-service, Point-of-service and After-Service
Planning logic for the Value-adding strategies (exhibit 8.2)

o
Pre-service activities and minimum conditions for maintaining / changing pre-service
activities
o Market and marketing research
o Identifying the target market
o Services offered
o Branding
o Pricing distribution/logistics
o Promotion
o Maintain pre-service activities
Engage in periodic customer focus groups and market research to
understand the wants, needs, and desires of the organizations target
markets and whether they are or are not being satisfied
Monitor the demographic, psychographic, and health status characteristics
of the service area (with particular attention to trends in the target markets)
Continually communicate to physicians, patients, third-party payers, and
others concerning the type and range of services offered, pricing, and
branding
Monitor promotional effectiveness and customer ease of system entry
(logistics)
o Change pre-service activities
Change the services attributes to better match the expectations of the
target market
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HMP 4600

Train employees to better provide the new services

Redefine the target market to match the changing demographic,
psychographic, and health status characteristics of the service area
Provide price discounts or price classes among members of the target
market
Change the balance among advertising, personal selling, and direct
marketing (one-to-one marketing)
Brand individual products (as opposed to the organizations name as the
brand)
Redesign parking lots, walkways, signage, and reception
Market research any data gathering about the market itself potential customers, their
wants, needs and habits in terms of health care, and the services an organization could
provide that would satisfy those wants and needs
Target market definition, ways of identifying target market
o Identify target market through marketing research
Brand and branding represents three things
o What an organization offers to the market, what an organization does, and what
an organization is
o How do customers choose one brand over another?
o How does your brand stack up against competition?
o What possibilities exist for potential brand growth and expansion
Point-of Service activities and Maintaining / changing point-of service activities
o Maintaining point of service activities
Monitor service quality through asking customers (physician, patient,
payor, other) if there is a way the experience could be improved as they
are the ones receiving the service
Monitor clinical (patient) and organizational (financial) outcomes
Institute quality programs in key service areas
Benchmark other organizations processes
Measure the organizations efficiency (personnel, assets, costs) against
peer organizations and industry standards
Revise rules and regulations that limit process innovation
Continue to communicate and emphasize the individuality of customers
o Changing point of service activities
Institute a CPI program for service delivery
Reengineer critical service delivery activities
Provide quality enhancement training for service delivery personnel
Institute a cost-cutting program
Provide incentives for efficiency suggestions
Reduce dramatically rules and regulations that limit innovation
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HMP 4600

Provide savings or revenue sharing with employees to encourage

innovations
Mass customization and pathways
o Accomplished by a series of modular approaches to prevention and care, highly
articulated and well supported by information technology
o Captures the customer-friendly benefits of long-term-physician-patient
relationships
Clinical Process Innovation the generation, acceptance, and implementation of new
ideas, tools, and/or support systems aimed at improving clinical processes and patient
care
After service activities and Maintaining / After service activities
o Maintain after-service activities
Emphasize and train employees on telephone and email communication
and etiquette
Emphasize patient satisfaction
Improve the readability of billing statements
Stress the importance of correct billing statements and ensure their
accuracy
Develop relationships in the referral network to facilitate follow-on
activities
o Changing after service activities
Make follow-up an explicit part of patient (customer) care
Keep a log of patient follow-up as a part of the patient/customer record
Train employees on telephone and email communication and etiquette
Emphasize customer satisfaction at staff meetings
Redesign the billing statement with the assistance of a variety of
stakeholders, including patients and include definitions of complicated
medical terms in the statement
Inform customers about billing procedures
Clear confusion about billing charges and which charges are to be paid by
insurance
Continue to improve relationships with payers
Develop more and better relationships with referral organizations
Develop a list of options for referral patients, explaining the characteristics
and pricing of each
Follow up activities:
o Patient satisfaction studies.
o Calling after hospital visits
Follow on activities
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HMP 4600

o Activities to see if the treatment/hospital visit was effective. Additional services

to make sure that the treatment was a success. Like having someone come back to
check if the infection really went away.
More detail on:
The value chain (exhibit 8.1)

o
Process of developing value-adding strategies (exhibit 8.3) -Process of a Service Area

Practice Questions from the chapter: Q2, 5, 8

Value-Adding Support Services

Concepts to know and define:

Value-adding support activities
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HMP 4600

o Organizational culture, organizational structure and strategic resources

Culture (definition, shared assumptions, shared values, behavioral norms, maintaining /
changing organizational culture)
o Shared assumptions include a common understanding of who we are (mission)
and what we are trying to accomplish (vision and strategic goals) and the belief
in the values of the organization. Shared values represent the understanding of
the way we do things and may or may not reflect the organizations stated
values it is the actual members values that create the organizations culture.
The behavioral expectations or behavioral norms that are common among the
members of a group are the visible consequences resulting from the informal
consciousness
o Maintaining Organizational Culture
Communicate often the mission, vision, values, and goals verbally and
in writing;
Behave in ways that are consistent with the values and vision first
through their personal behavior, and then through who they hire, who they
promote, and what they reward; and
Review and discuss the values and behavioral norms periodically.
o Changing Organizational Culture
Clarify the mission and vision and discuss the types of values and
behaviors that would best achieve the vision.
Discuss and codify the values and behavioral norms.
Live by the values from the very beginning.
Review and discuss the values and behavioral norms periodically.
Create an atmosphere of perceived crisis in the organization. Without
dissatisfaction with the current state, there is little incentive for managers
to change familiar patterns of behavior.
Clarify the vision and indicate what changes are necessary to achieve the
vision. People need a clear sense of where the organization is going and
where they should be headed.
Communicate the mission, vision, values, and goals widely and
repeatedly. Strategic managers should use simple, powerful, and
consistent language.
Model the kinds of behaviors and practices they want infused into the
organization through their own actions. Walking the talk gives
credibility to the words and provides examples to others in the
organization of what behavior is expected.
Empower other people to start acting in ways that are consistent with the
desired values, and to implement new behaviors and practices. Part of
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HMP 4600

empowering others is removing barriers within the organization that are in

the way of the desired behavior.
Look for some quick but sustainable successes. Short-term successes are
critical to provide the change effort with some credibility, keep people
motivated, and demonstrate positive results to the organization.
Demonstrate patience and persistence. Major culture change takes a long
time years not months and the willingness to persist in the face of
obstacles and setbacks is critical.
Organizational structure Functional, divisional, matrix, or combination
Collateral Organization (project and product teams, cross-functional task forces, venture
teams, re-engineering teams, executive and standing committees)
o A system of task forces, committees and ad hoc groups used to bring different
perspectives on issues to the table for discussion and resolution. Include the
following
o Project and product teams created to undertake well-focused projects (typically
short term) or to develop new products.
o Cross-functional task forces created to bring together specialists from several
functional areas and address threats or opportunities. Typically, task forces take
on a major project such as reorganization or the building of new facilities.
o Venture teams created outside the normal organizational structure, they are not
bound by the normal rules of the organization. Because they develop new
products or processes, the creation of venture teams is sometimes called
intrapreneuring.
o Re-engineering teams created to evaluate and reconfigure an organizational
process (such as service delivery). Such teams are asked to disregard the current
way of doing things and to redesign a process from scratch.
o Executive and standing committees created to make organization-wide
decisions. Executive and standing committees provide wide representation for key
decisions and facilitate communication of the organizations direction and
strategy implementation.
Strategic resources financial, human, information, strategic technologies
Financial resources pretty self-explanatory
Human resources skills and talents of the individuals
Information systems\Strategic information systems
o A strategic information system (SIS), sometimes referred to as a decision support
system, attempts to take vast quantities of unorganized data and turn them into
useful information to enable managers to make better decisions. Such information
systems involve organizing the data, selecting the models that will be used to
analyze the data, and interpreting the output; nevertheless, it is not sufficient
simply to provide the reports to the strategist.
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HMP 4600

Administrative information systems

o Administrative information systems support areas other than direct patient care
and include financial information systems, human resources systems, pay- roll,
billing, purchasing, materials and facilities management, outpatient clinic
scheduling, office automation, and so on
Clinical Information systems
o Clinical information systems support patient care and include computerized
patient records systems, automated medical instrumentation, patient monitoring
systems, nursing information systems, laboratory information systems, pharmacy
information systems, clinical decision support systems, and information systems
that support clinical research and education
Strategic technologies - concern the type of facilities, type and sophistication of
equipment, and management of technology employed within the organization.
Facilities - the broad term used to delineate the physical environment of the health care
organization
Equipment choice of equipment and technology
Clinical or biomedical engineering responsibilities include: applying engineering
technology to diagnostic and treatment devices used by health care facilities through
testing, maintaining, and repairing equipment; training; consultation with clinical staff
concerning the capabilities, efficiencies, and accuracy of the equipment; environmental
testing; and incident and recall investigations that involve diagnostic or treatment
equipment
More detail on:
Functional Structure (exhibit 9.2)
o Functional structures organize activities around the mission-critical activities or
processes of the organization and are the most prevalent structures for single
product/service and narrowly focused organizations. A functional structure might
include departments such as clinical operations, marketing, finance, information
systems, and so on.
Divisional structure (exhibit 9.3)
o Divisional structures are common in organizations that have grown through
diversification, vertical integration, and aggressive market or product
development. As organizations grow and become more diverse, divisional
organizational structures are used to break the organization down into more
manageable and focused parts. Therefore, a divisional structure creates several
smaller, more focused, semi-autonomous strategic business/service units
(SBUs/SSUs). Typical divisions might be based on geography (markets),
products/services, or customers. When organizations have multiple unique
products/ services, a divisional structure that places organizational emphasis on
these products/services may be most appropriate.
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HMP 4600

Matrix Structure (exhibit 9.4)

o A matrix structure may be most appropriate when organizations have numerous
products or projects that draw on common functional expertise. The fundamental
rationale underlying a matrix structure is to organize around problems to be
solved rather than functions or products or geography.
Maintaining / changing the structure
o Maintaining the Structure:
Evaluate the present level of communication and coordination and discuss
needed additional communication channels and coordinating mechanisms;
Evaluate the present structure to ensure there are opportunities for
innovation where appropriate;
Evaluate the management team to ensure that the leadership skills match
their positions; and
Inventory the present skills to ensure that they are matched to the structure
and strategy.
o Changing the Structure:
Develop a flow chart of the total process, including its interfaces with
other value chain activities;
Simplify first, eliminating tasks and steps where possible and analyzing
how to streamline the performance of what remains;
Determine which parts can be automated (usually those that are repetitive,
time consuming, and require little thought or decision);
Consider introducing advanced technologies that can be upgraded to
achieve next-generation capability and provide a basis for further
productivity gains in the future;
Evaluate each activity to determine whether it is strategy critical (strategy-
critical activities are candidates for benchmarking to achieve best-in-
industry performance status);
Weigh the pros and cons of outsourcing activities that are noncritical or
that contribute little to the organizational capabilities and core
competencies;
Compare the advantages and disadvantages of the organizational building
blocks regarding standardization and flexibility; and
Design a structure for performing the activities that remain, then
reorganize the personnel and groups who perform these activities into the
new structure.
Maintaining and changing strategic resources
o Maintaining Financial
Evaluate whether current financial resources are being used efficiently.
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Determine whether the liquidity is appropriate for meeting ongoing

expenses.
Seek ways to increase profitability without sacrificing other mission-
critical factors.
Assess the current level of leverage to determine if there is an appropriate
level of risk.
Determine whether asset activity can be improved.
Assess cash-flow management.
Consider investment opportunities for idle cash.
o Maintaining Human Resources
Develop training programs to maintain the current human expertise and
capabilities.
Develop a management succession plan.
Develop a job market network.
o Maintaining Information systems
Assess information systems growth needs.
Develop information systems plans for operations and upgrades.
Big deal (she talked about this a lot)
o Maintaining Technology
Make sure there is a plan for facilities and equipment maintenance.
Develop a facilities and equipment replacement schedule.
Periodically review the operating procedures, policies, and rules in order
to keep them lean.
Review environmental services activities and procedures.
Evaluate current security procedures.
Evaluate food service activities.
Evaluate operation and maintenance procedures
o Changing Financial
Assess whether the current revenue can finance the change.
Investigate the opportunities to finance the change through the issuance of
stock and the infusion of additional equity.
Investigate the opportunities to finance the change through bonds,
mortgages, bank loans, fund raising, or philanthropy.
o Changing Human Resources
Assess job markets to determine the availability of individuals possessing
the new required skills.
Begin recruiting for new skills.
Develop training programs to retrain individuals with skills no longer
needed.
o Changing information systems
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Consider outsourcing needed changes in information systems.

Assess the impact of needed changes on the current information systems.
Assess needs of information systems in pre-service, point-of-service, and
after-service activities.
o Changing technology
Identify the exact specifications of the need for facilities, equipment, or
processes.
Perform cost analysis on the required changes.
Develop timelines for changing the technologies.
Investigate the financing alternatives for the required changes.
Investigate any new required skills or experience to operate or maintain
the new facilities or equipment.
Specify any new required processes or ways of doing things.
Initiate the facilities, equipment, and technology management renewal.
Practice Questions from the chapter: Q3, 4

Communicating the Strategy & Developing Action Plans

Concepts to know and define:

Action plans (definition and levels)
o A proposed strategy or course of action.
o Levels
Corporate
Divisional
Organizational
Functional
Effective action plans (components)
o Objectives, actions, timelines, and responsibilities
Team responsible for action plans (pg. 388)
o Senior staff, top management, and leadership teams
Characteristics of implementation plans
o should reinforce organizational strategic goals related to mission-critical activities
o Should be measurable
o Should identify the timeframe for accomplishment
o Should be challenging but attainable
o Should be easy to understand
o Should be formulated with the assistance of the individuals who will be
responsible for accomplishing the work
Questions addressed by action plans
o What objectives should units establish?
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o What actions are required to accomplish unit objectives? In what sequence should
the actions be accomplished?
o Who will be responsible for accomplishing each action by the designated time?
o What organizational resources will be required to accomplish each action in a
timely manner?
o How will results be measured?
Budget requests make sure to have beginning and ending dates
o Identify actions to achieve objectives
o Develop timelines for actions
o Assign responsibility for actions
o Assign reporting responsibility
o The expected revenues as well as costs and other resources associated with
achieving each activity must be determined to estimate any additional resources
needed so they can be incorporated into the units budget requests
Seven deadly sins that doom effective strategy
o The strategy is lacking in terms of rigor, insight, vision, ambition, or practicality.
o People are not sure how the strategy is to be implemented.
o The strategy is communicated on a need to know basis rather than freely
throughout the organization
o No one is responsible for every aspect of strategy implementation.
o Leaders send mixed signals by dropping out of sight when implementation begins.
o Unforeseen obstacles to implementation will inevitably occur. The responsible
people should therefore be prepared for these barriers and be encouraged to
overcome them in creative and innovative ways
o Strategy becomes all-consuming and details of day to day operations are lost or
neglected. Strategy is important, but so are operations
Contingency planning definition and seven steps
o Contingency plans are alternative plans that are put into effect if the strategic
assumptions change quickly or dramatically, or if organizational performance is
lagging.
o Are tied to key issues or events occurring or not occurring.
o Seven steps
Identify both favorable and unfavorable events that could possibly derail
the strategy or strategies.
Specify trigger points. Calculate a likely timetable for contingent events to
occur.
Assess the impact of each contingent event by estimating the potential
benefit or harm.
Develop contingency plans. Be sure that contingency plans are compatible
with current strategies and are economically feasible.
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Assess the counter-impact of each contingency plan. Estimate how much

each contingency plan will capitalize on or cancel out its associated
contingent event. Doing so will quantify the potential value of each
contingency plan.
Determine early warning signals for key contingent events. Monitor the
early warning signals.
For contingent events with reliable early warning signals, develop
advance-action plans to take advantage of the available lead time.
More detail on:
Setting objectives
o should reinforce organizational strategic goals related to mission-critical activities
o Should be measurable
o Should identify the timeframe for accomplishment
o Should be challenging but attainable
o Should be easy to understand
o Should be formulated with the assistance of the individuals who will be
responsible for accomplishing the work
Balanced score card (perspective 10.2) detail and four processes to transform balanced
score cards
o Things that are measured are the things that are managed.
o The primary benefit of the Balanced Scorecard approach: focus the health care
organization on those aspects of its operations that most directly impact the
accomplishment of its strategies.
o Four processes for transforming the Balanced Scorecard into a strategic
management implementation system:
financial perspective
customer perspective
internal perspective
learning/growth perspective
o First, if the Balanced Scorecard is to be an effective strategic management system
it should be useful in translating the vision into an integrated set of objectives
that, when accomplished, contribute to long-term success. Second, successful
implementation relies on effective communication with, and linking to, the units
that comprise the larger organization. Third, action plans allow the integration of
strategic and financial plans. And finally, feedback and learning are developed
and nurtured such that consistent decisions are made throughout the organization
and resources are allocated in a logical and comprehendible manner.

Practice Questions from the chapter: Q2, 7