Case Study 2: Stopping Outshopping
Based on Timothy's philosophy of excellence, Scarlet Hospital was prepared to compete with the establishment in Salem. This is because, even before the establishment, the hospital has been patient-centered-meaning that it has been providing quality care in a meaningful and valuable way. I believe that the strategy of delivering the best and maintaining standards of excellence is the best strategy in that when new rivalry will entre in the healthcare industry, the hospital will have the ability to compete quickly (Fortenberry, 2011). Secondly, the hospital was prepared in that when the CEO learned that the highway will be constructed, he came up with short-term goals that would help the hospital achieve long-term goals. For example, he said that to prevent the healthcare consumers from moving to the external markets, there should be deployment and employees should do competitive research to identify the rival organizations, and ensure that they do not bring threats to their institution's well-being (Fortenberry, 2011). The CEO also increased advertising efforts. Therefore, this defensive plan together with its commitment to excellent quality shows that the hospital was prepared and these strategies would address the threats that the hospital was to encounter.
The 'Stopping Outshopping' case teaches the health care executives important lessons about complacency. First, it is important to note that the CEO was aware that outshopping will occur, and consumers will move to the external markets to fulfill their wants and needs. The CEO advises the employees to stop outshopping or in other words to ensure that it does not affect the Scarlet hospital (Fortenberry, 2011). On that note, the case study teaches the health care executives that complacency or self-satisfaction is bad and it can ruin the health care organization (Pratt, 2003). Note that due to the infrastructure development, there will be intense competition and rivalry, and probably the consumers will seek health services from other health care service providers. For this reason, health care executives should learn that change is inevitable and they should not feel contented with their way of doing things but they should focus on continuous improvement, and focus on high-performance standards. They should act as motivators and mentors to reduce complacency and this will help the organization address the significant threat (Pratt, 2003). Mr Timothy is a good example of a CEO who is responsible and accountable and who prevents the organization from complacency. For example, he is committed to management and he always reminds the employees to provide quality services.
Both Michael Porter's Five Forces analysis and SWOT analysis will help the Scarlet Hospital make strategic decisions and protect its market share. First, Porter's Five Force is applicable in this case in that first, there are potential new entrants in the healthcare industry. The threat of new entrants is intense due to the construction of the two-lane highway. Therefore, Salem, which is a large metropolitan area will attract customers due to the improvements in accessibility (Niles, 2013). Since the hospitals in Salem will pose threat, the Scarlet Hospital should continue to offer better quality to its loyal customers and this strategy will block the competition from the new rivals. Secondly, the power of suppliers is high since the hospital has diligent workers who will strive to overcome the competition. On the power of buyers, buyers have more power in that the two-lane highway will motivate the buyers to move to hospitals in Salem to satisfy their needs and wants. Therefore, the Scarlet hospital should keep their customers happy by reducing the costs of services, and provide high-quality services (Niles, 2013). Finally, in making decisions, the Scarlet hospital should understand that there will be no competitive rivalry and, and substitutes. This is because the Scarlet hospital and the hospitals in Salem will work in conformity and therefore less competitive rivalry (Niles, 2013). Also, customers will only visit hospitals to seek for services since there are no other substitutes.
The SWOT analysis will also help the Scarlet hospital make effective decisions. First, the Scarlet hospital should evaluate its strengths and weaknesses, and then evaluate the opportunities and threats. From the case study, the hospital has strengths in that it can offer quality services, it has loyal staff, it is a not-for-profit hospital, it is the largest care provider meaning it has a high revenue, and other strengths. The hospital should rely on these strengths and improve them to stay ahead of other competitors. It should also work on its major weakness of failing to venture into other locations to open new markets (Niles, 2013). It should address the weakness and focus on growth and expansion by establishing other branches. The SWOT analysis will also help the Scarlet Hospital realize the growing opportunities in that the constructed highway will influence many customers to visit different hospitals to compare the quality of services (Niles, 2013). This is an opportunity and to take advantage of this opportunity, the hospital should expand its services and offer quality services to attract more customers. It should also realize that the hospitals in Salem can pose threats. Therefore, the hospital should improve the services, adjust pricing, and other strategies to overcome the competitive threat.
The Balanced Scorecard will help the Scarlet hospital balance the strategy with reality. This model will allow the organization to measure itself in terms of finance, customer satisfaction and other issues, employees' training and other activities, internal business processes, future performance, among other things that will assist in implementing the strategy (Niven, 2008). The health care executives will use the Balanced Scorecard to communicate to employees in the process of making a defensive marketing strategy.
An offensive marketing strategy will help the Scarlet hospital focus on the weaknesses of the competition and avoid falling in the trap to achieve a competitive advantage. Offensive marketing means that the organization should be market-focused and customer-focused. In other words, it should focus on communication, branding, and innovation to stay ahead in the competitive market (Davidson, 2012). First, communication is an important factor that the hospital should consider. Communication is broader or it covers visual, word-of-mouth, direct marketing, and other forms. Scarlet should select the best media to communicate to its audiences and to promote its services. Good communication models such as messages or phone calls will boost the competitive advantage (Davidson, 2012). The hospital should also ensure that branding attracts customers. It should come up with a unique approach so that the customers may develop a distinctive attitude toward healthcare services. For example, the hospital should offer the lowest price and maintain a standard of quality, it should communicate a high-value message, it should provide highly personalized services, and ensure that customers view the hospital as the center of excellence. In general, the hospital should meet the customers' tastes and expectations and ensure that customers value Scarlet products against those of competitors (Davidson, 2012). Finally, Scarlet Hospital should focus on innovation or in other words it should ensure that it is technologically competitive to attract more customers.
References
Davidson Hugh. (2012). Offensive Marketing. Routledge
Fortenberry, J. L. (2011). Cases in health care marketing. Jones and Bartlett Publishers
Niles, N. J. (2013). Basic concepts of health care human resource management. Burlington,
Mass: Jones & Bartlett Learning.
Niven, P. R. (2008). Balanced scorecard step-by-step for government and nonprofit agencies.
Hoboken, N.J: J. Wiley & Sons.
Pratt, L. L. (2003). Reforming healthcare: What the public needs to know. London:
iUniverse.com.
