Advantages and Disadvantages of Conducting an External Analysis
External analysis helps to identify important opportunities and threats, including a comprehensive competitor analysis of service area of Beta Pham skilled nursing facility (Swayne, Duncan & Ginter, 2006). External analysis will help Beta Pham to reduce competitive disadvantages and keep the facility within parameters of its mission and values. It will help align Beta Pham’s activities with its vision and make progress towards achieving one or more of organization’s strategic goals.
External analysis will help Beta Pham to realize opportunities and threats to uncover its strategic options (Pahl & Richter, 2009). External analysis shows how Beta Pham can use its strengths in environmentally friendly operations to capitalize on opportunities, while at the same time while trying to secure future opportunities by fending off threats in the form of pro-environment regulation (Swayne, Duncan & Ginter, 2006).
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Through external analysis Beta Pham will clearly understand societal segments represented by its clients, its constituents, its volunteers, and its stakeholders. The disadvantage of conducting external analysis is that the management will be able to analyze the impact of globalization on competition within the industry, which may instill fear within the management of the facility, especially in relation to the intensity of competition.
External Analysis of the Service Area
Political forces involve all aspects associated with the legal and political framework of the environment. Fortenberry (2010) says that political environment significantly impacts the healthcare industry. Increased political attention is caused by the unique role of healthcare institutions in a society. Health care is very expensive and, therefore, draws government’s scrutiny, especially given the fact that US government pays a significant portion of national healthcare expenditures (Fortenberry, 2010). Beta Pham skilled nursing facility deals with life and death issues and must be monitored, and in some cases regulated, by the government to protect the public. Fortenberry (2010) noted that Beta Pham will be influenced by Medicare and Medicaid insurance programs and the regulatory oversight by the Food and Drug Administration. The skilled nursing facility will be influenced by state licensure boards and other entities, which serve as examples of political and politically driven forces impacting the healthcare marketplace.
Beta Pham skilled nursing facility will be affected by contracting issues between nursing facility and regulators, including legal provisions and their underlying reasons (Kongstvedt, 2001). Beta Pham will face legal liability that nursing facilities face as a result of medical management activities and how those liabilities may be attenuated. Skilled nursing is one of the most heavily regulated industries in the country. Kongstvedt (2001) says that political pressure as well as unique issues present in the state result in variations in state regulation. Beta Pham skilled nursing facility must comply with standards set by state and federal regulatory agencies if the facility participates in Medicare or Medicaid programs. The facility must comply with a rigid set of standards such as the Quality Improvement System for Managed Care (QISMC).
Technological forces will influence Beta Pham skilled nursing facility. Fortenberry (2010) says that Beta Pham skilled nursing facility and individuals it serves will greatly benefit from technological innovations, which have become frequent and expected in society. Non-invasive medical technology, advanced surgical techniques and procedures, and therapeutic and curative pharmaceuticals represent only a few of Beta Pham innovations that significantly improve the health of its clients (Fortenberry, 2010). Studies indicate that as more healthcare innovations are introduced in the market, the demand undoubtedly increases, positively impacting the health condition of society.
Economic forces involve all aspects associated with the economy of a society, notably including factors related to economic health. Fortenberry (2010) says that the economic climate has a powerful influence on both Beta Pham and individuals. In weak economies, healthcare entities might scale back or even eliminate product offering. Fortenberry (2010) indicates that rising costs might deter Beta Pham skilled nursing facility from introducing new services or upgrading technologies. Depression of the country’s economy might even result in the closure of Beta Pham. Declining income levels can destroy demand for managed care and other medical procedures. Furthermore, individuals often bypass even necessary medical services when they have been negatively impacted by economic downturns. Fortenberry (2010) says that strong economies can stimulate consumption of healthcare offerings and positively impact the quality and spectrum of goods and services offered by Beta Pham skilled nursing facility.
According to Fortenberry (2010), the social climate of a society impacts virtually every organization operating within the particular environment. Social forces include such aspects as the demographic composition, system of values and beliefs of a society. Fortenberry (2010) says that demographic factors such as age, gender, race, family size, and education will heavily influence Beta Pham skilled nursing facility. The aging population, for example, will likely increase the demand for long-term care services, while, on the other hand, a youthful population composed of women of childbearing age will likely drive the demand for labor and delivery services in the facility (Fortenberry, 2010). Lifestyle factors can influence the health status of a society positively and negatively. In this context, healthy eating habits positively impact the health status of a population, because these practices contribute to an improved community health and wellness.
Swayne, Duncan & Ginter (2006) say that Beta Pham nursing facility must focus on service area competitors. The authors also noted that “focusing on competitor analysis helps in the identification of new business opportunities, the clarification of emerging ideas, improved ability to anticipate surprises and the development of market penetration and market share growth strategies” (p. 102). For Beta Pham, the task of understanding competitors is a challenge, because consumers will travel great distances to get specific kinds of care. During the past decade efforts to reduce costs and increase efficiency as well as increased presence of for-profit nursing facilities in every segment of the industry has made it highly competitive. This happened because of fundamental changes within the industry brought about by influences of managed care.
Overall Assessment of the Organization’s Threats and Opportunities
The assessment of Beta Pham threats and opportunities gives management an improved opportunity to achieve growth and prosperity. Opportunities that unfold from the assessment include newly discovered services and product uses, substantial market growth, newly developed technologies, and anticipated favorable government legislation. Fortenberry (2010) says that through the assessment Beta Pham must vigorously pursue and capitalize on opportunities to increase the likelihood of facility’s survival, growth, and prosperity. Opportunities provide methods for entry to the market. Threats include new competitors within the area, market attrition, changing customer preferences, and competitors equipped with superior technologies. Because of the above threats, Beta Pham must endeavor to develop strategies and tactics that will reduce or eliminate the potentially detrimental impact of these threats. Beta Pham will be successful based on the assessment of the threats and opportunities. This is because Beta Pham skilled nursing facility opportunities outweigh the threats that organization might face.