Chapter 6 Work Assignment Noel Ruiz, DHSc

Name: Class: HSA 403 Spring Date:

Assignment: Chap 6 Questions: 1, 2, 4, 7, & 9
Question 1. What four types of strategies make up the strategy formulation process? Describe the role each
plays in developing a strategic plan.

Answer Insert your response here.

i. Directional strategies – this type of strategy comprises of a company’s mission, vision, values and
goals. Directional strategies contribute in the analysis of a firm’s current situation as well as set
the general direction an organization should undertake.
ii. Adaptive strategies – the adaptive strategies help a company to implement directional strategies
and also in the development of strategic plans to cater for new markets as well as the
enhancement of already existing products.
iii. Market entry strategies – this strategy is vital in that it helps the company determine suitable
strategic plans with regards to market entry related actives as well as market development
strategies.
iv. Competitive strategies – plays the role of assisting the company to position its goods
competitively against their competitors positioning strategies.

Question 2,

Why are the directional strategies both a part of situational analysis and a part of strategy formulation?
Answer Insert your response here.

The directional strategies are part of situational analysis because they describe the organization’s current
situation and embed its most basic beliefs and philosophies. They are also a part of strategy formulation
in that the company’s mission, vision, goals and values set its boundaries and give direction as to what
the firm’s purpose is.
Question 4. Name and describe the expansion, reduction, and maintenance of scope strategies,
Which of the adaptive strategies are corporate and which are division level? Under what
conditions may each be appropriate?
Answer Insert your response here.
EXPANSION
Corporate and division level strategies
STRATEGY
Unrelated
diversification(corporate)
Related
diversification(corporate)
Backward vertical
integration(corporate)
Forward vertical
integration(corporate)
Product development(division)
DEFINITION
Addition of goods and services
that are new and unrelated to
those already existing. This
strategy involves the formation
of a new division.
Addition of new goods and
services often related to existing
product categories. Most of the
times needs the creation of a
new department.
Addition of newer members
along a distribution line in the
earlier stages for existing goods
and services.
Involves the addition of new
members in the later along the
distribution line for existing
goods and services.
Involves improving of already
existing services and products
or the extension of the existing
product line.
APPROPRIATE CONDITIONS
 Markets that are
minimally regulated
 Rapidly growing
markets
 When current markets
are stagnated(not
growing)
 Rapidly growing
markets
 Markets that are less
regulated
 Cyclical or seasonal
disparities
 When the productive
can achieve synergy
with existing products
 When deliveries of
materials is unreliable
 Need to create a
network of care
 When the product life
cycle is long
 When there is need for
faster delivery
 When the product life
cycle is long
 When a high level of
coordination is required
in between the stages
 When there is need for
creation of a network of
care
 When the product line
is incomplete
 Technological
advancements
 Changes in tastes and
preferences

Market development(division)
Penetration (division)
REDUCTION
Corporate and division level strategies
Liquidation(corporate)
Divestiture(corporate)
Retrenchment(division)
Harvesting(division)
This strategy involves the
introduction of existing
products/services to new
segments within an existing
service area
Arises when a company is
seeking to increase its market
share in existing market for its
existing products and services
Means selling of part or all of
the company’s assets in order to
get cash.
Involves the sale of an operating
business unit to another
company.
Involves reduction in the scope
of operations
This involves withdrawing cash
 Differentiation
advantage
 Need to serve markets
efficiently
 When the company has
competitive advantage
 When the market is
growing
 Need to extend the
product life cycle of a
service/good
 When there is cost
differentiation
advantage
 When the market is
growing
 In the event of
bankruptcy
 Need to reduce assets
 When the firm can no
longer operate
 When there is need for
technological
advancement
 When the cost for new
investment is too high
 When the industry is in
long term decline
 When there is lack of
synergy with a
company’s core
operations.
 When regulation is too
much
 When the organization
is spread too thin
 When personnel costs is
too high
 When the market has
become too diverse
 When there are too
many products
 When there is need to
 from a business while still downsize
providing few resources in a  When the company has
market that is declining prospects for growth
 In the late stages of the
product life cycle.

MAINTENANCE
Corporate and division level strategies

Status quo(division) Is the need to maintain a state  When the product is in

Enhancement(division)
relative to other players in the its last stages in the
market product life cycle
 When the company
expects no major
changes in the market.
Involves seeking to improve  Inefficiencies
operations with existing  When the company
products through quality wants to improve
programs. internal processes
 When the company
needs to lower costs
 When there is need to
improve quality

Question 7 What is a market-driven of focused factory strategy? Identify some organizations that have
employed this type of market development strategy.
Answer Insert your response here.

A market-driven focused factory strategy involves specialization of a company in carrying out

a particular function that it performs excellently. The strategy involves providing services
across several markets for a specific illness for instance cancer treatment, diabetes, heart
surgery rehabilitation or dialysis. Such companies are extremely effective and efficient that
other providers seek out their services through outsourcing. The two organizations that have
used this strategy include HealthSouth that deals specifically with rehabilitation and
MedCath that specializes in heart surgery in their hospitals.

Question 9 Describe vertical integration in terms of patient flows?

Answer Insert your response here.

Vertical integration in terms of patient flows refers to the flow of patients from a unit to the next
whereby the upward streams are viewed as the feeder units to the downward units, those closer to
the consumer. Some examples of vertical integration include the manufacturer of drugs moving into
drug distribution or the management of a hospital chain acquiring one of its suppliers.