1- Summarize the ?ttached file (chapter 5), Which includes all the content, It is better to have clear points. Approximately 15 slides
2- Solve the questions in the file (case analysis form) from the file (a case report).
Chapter 5
Gathering and Analyzing
Data and Information
One underlying principle of credible and trustworthy strategic planning is that
decisions are not based on opinion or hearsay but rather on data and solid information.
In getting things in order for your upcoming strategic planning session, you must
give careful thought to:
• The nature and scope of the information and data your strategic planning session
requires.
• How you will obtain that information and data.
• How you will make the information and data available to the strategic planning
team so it is easily understood and used.
• How the planning team will prepare by analyzing the relevant data and
information.
THE NATURE AND SCOPE OF STRATEGIC PLANNING DATA
AND INFORMATION
The nature and scope of the information and data your strategic planning session
requires will depend on your industry, your profession, or the area in which your
organization specializes. When preparing to conduct your strategic planning session,
you will need to collect data on a variety of factors likely to impact your organization’s short- and long-term success. Internal factors impacting your organization’s
success include but are not limited to:
• The financial strength of your organization.
• The extent to which your organization has access to capital.
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• The knowledge, skills, and abilities of employees (at all levels).
• The leadership, managerial, and supervisory skills within your organization.
• Your organization’s capacity to develop and ship products and/or provide
services.
• Union issues and the relationship your management team has with union
leadership.
• Issues pertaining to—
° Safety.
° Legality.
° Warranty.
° Quality.
• Information technology, specifically—
° The availability and capability of technology.
° Knowledge management and knowledge sharing.
° Internet usage (e.g., when managing excess or deficient capacity).
• Your organization’s research and development efforts.
• Geographic location(s).
• The relationship your organization has with its suppliers.
• Distribution channels your organization has capitalized upon.
• The relationship your organization has with its distributors.
• Supplier relationships.
• Your organization’s pricing strategy.
Porter1 and David2 identify a multitude of external forces impacting your organization’s short- and long-term success, including but not limited to:
• Your competitors—
° The size of each competitor, in comparison to your organization.
° Your competitor’s capabilities and capacity.
° The reputation your competitor has within the marketplace.
° The manner in which your competitor is likely to “counter” your current and
emerging strategies.
• Market conditions—
° Market segment growth potential and rate.
° Threat of new competitors entering the target market.
° Current and emerging price pressures being exerted on the industry or
profession.
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91
• Labor market demographics.
• Government—
° Regulations.
° Rules.
° Incentives.
° Controls.
• Technology trends potentially influencing (1) your ability to produce products or
deliver services and (2) the needs and expectations of your customers and clients.
• Lifestyle trends potentially influencing (1) the availability and commitment of
employees and (2) the needs and expectations of your customers and clients.
• The impact of the economy on the buying patterns of your customers and clients.
• Your suppliers’ power (e.g., to withhold the material you need or raise the price
of your supplies).
• Buyers’ power (e.g., to purchase duplicate products or services elsewhere at a
comparable or more favorable cost).
While the above factors impact an organization’s short- and long-term success,
the nature and scope of the information and data your strategic planning session
requires will depend on your particular industry, profession, or area in which your
organization specializes. For example, when preparing to facilitate a regional strategic
planning session for a particular branch of the U.S. military, we collected information
and data relating specifically to that particular branch, its particular mission, and the
specific challenges and opportunities it had before it (see Figure 5.1).
Figure 5.1
Information and Data Used in Regional Strategic Planning
Internal Factors
External Factors
Business processes
Fishing industry trends
Systems
Foreign fishing vessels
Technology
Freight transport
Culture
Government and political trends
People
Migrant interdictions
Natural disasters
Offshore oil and gas trends
Passenger transport industry
Ports and waterways
Recreational boating
Tank, chemical, and gas vessels
Towing industry
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Table 5.1
Likely Sources of Internal Information and Data
Functional Area
Information and Data
Human resources
People, culture
Operations, manufacturing, or research and development
Business processes
Operations, manufacturing, research and development, or
information technology
Systems, technology
OBTAINING THE NEEDED INFORMATION AND DATA
Your organization’s various functional groups in all likelihood collect and
retain certain information and data that the strategic planning team will need to
consider during the planning session. I therefore recommend that you meet with
representatives from each of the functional areas to discuss the information and
data the strategic planning team will require and determine the nature and scope
of the information and data readily available. Although data sources may vary,
Table 5.1 lists likely sources of internal information and data.
Internal information and data you collect may include, but not be limited to,
the following:
• Management issues: whether your management team—
° Solicits and accepts the advice of others (e.g., accountants, attorneys, economists, etc.).
° Is willing and able to make decisions in a timely manner.
° Has the means of attaining, analyzing, and basing decisions on valid and credible
data and information.
° Makes management decisions and actions that are consistent with previous
decisions and actions.
° Has created and reinforces the appropriate balance between—
§ Responsibility and authority.
§ Autonomy and teamwork.
§ Controls and incentives.
° Has empowered employees (at all levels) to make prudent decisions and take
needed action.
• Financial issues: whether your organization—
° Has access to needed capital.
° Properly and appropriately spends money.
° Has enough money to—
§ Install, maintain, and/or update its systems, processes, and technology.
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§ Support the research, development, manufacturing, and sales to meet or
exceed revenue and profit margin requirements.
° Manages cash flow in an effective and efficient manner.
° Is generating enough revenue to repay its loans.
• Operations issues: whether your organization’s—
° Inputs (in terms of raw materials, supplies, equipment, and people) meet or
exceed manufacturing and/or sales requirements.
° Systems, processes, and technology are producing products and/or services in
an efficient and effective manner.
° Products and services match or exceed customer or client requirements.
• Human resources issues: whether your employees (at all levels)—
° Possess the needed knowledge, skills, and abilities.
° Possess and exhibit the needed levels of self-confidence and selfmotivation.
° Are sufficient in number to support needed growth and expansion.
° Understand your organization’s mission and vision.
° Strive to behave in a manner that is consistent with and supportive of your
organization’s core values.
° Are properly and appropriately—
§ Selected.
§ Assimilated into the organization.
§ Managed and supervised.
§ Evaluated.
§ Disciplined (as and when needed).
§ Compensated.
§ Recognized and rewarded.
§ Promoted.
° Remain with the organization, so they do not resign to join competitors or
become competitors.
Your organization’s functional groups in all likelihood also collect and retain
certain externally focused information and data that the strategic planning team
will need to consider during the planning session. Externally focused information
and data you collect may include, but not be limited to, the following:
• Market issues: whether marketplace—
° Size is increasing, decreasing, or remaining static.
° Demand is increasing, decreasing, or remaining static.
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° Demand is matching, exceeding, or lagging behind the quantity of product
you can produce or the service you can provide.
° Product or service needs and/or expectations are changing or remaining
static.
° Purchase decisions are based on cost, innovation, or customer service considerations and whether those considerations are changing or remaining
static.
° Price requirements are changing or remaining static.
• Competitive issues, pertaining to—
° Current and prospective competitors.
° Each competitor’s—
§ Business model and strategies.
§ Supply chain and distribution network.
§ Market share.
§ Customer base.
§ Market growth rate.
How
each competitor—
°
§ Seeks to enter the market or increase its market share.
§ Differentiates its products and services.
§ Has previously countered your organization’s strategies or how it might
counter your future strategies.
The
capacity and capabilities of each competitor.
°
Data and information relating to market and competitive issues will help you
analyze external factors impacting your current business, product portfolio, and/
or service offerings and increase the likelihood of your defeating your competitors.
However, building on what we learned from Kim and Mauborgne in Chapter 2, it
is important that you broaden your perspective to a much more strategic level, step
outside the competitor-competition arena, and collect data that will allow your
strategic planning team to:
• Study current and emerging trends and patterns to identify customer and client
needs and expectations yet to be investigated, understood, or addressed.
• Analyze advances in systems, processes, and technology to identify opportunities
to eliminate, create, or change the way you currently conduct business, provide
services, and develop, sell, and distribute products.
• Analyze the services and products that organizations, industries, or professions
similar to yours offer to explore implications for your organization’s purpose,
mission and vision, and the value your organization brings to its various stakeholder groups.
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• Explore the unknown, unrealized, and/or unrecognized needs and expectations
of your clients or customers to determine what else your organization might do
to meet or exceed those particular needs and expectations.
• Analyze all external factors impacting your organization’s ability to act on its
value proposition to ensure, for example, that manufacturing, transportation,
and distribution costs and the price of the services and products will allow
(1) your clients and customers to purchase them and (2) your organization to
realize needed profit margins.
KEY LEARNING POINT
The type and amount of information and data to collect for your strategic
planning session depend on the information your team needs to draw
conclusions and to make decisions that your various stakeholder groups
will consider valid and credible. Collecting more information and data than
that is inefficient and unnecessary; collecting less is inadequate and jeopardizes
optimal success.
While you will probably collect most of the information and data you need
from your various functional groups, you may (1) discover that you need to
augment existing information and data or (2) decide to further engage your
employees (at all levels) in the strategic planning endeavor by conducting an
employee opinion survey. Such a survey will produce information likely to prove
useful to the strategic planning team and will provide invaluable insight into the
perceptions of employees (at all levels) on a variety of topics as well as the extent
to which they buy into and commit to your organization’s strategic imperatives
and initiatives. More specifically, an employee opinion survey will allow you to
explore perceptions and attitudes in areas such as:
• Mission, vision, and values.
• Management capabilities, imperatives, and initiatives.
• Commitment, self-confidence, and self-motivation.
• Operations and performance.
• Organizational capabilities and capacity.
• Interpersonal and organizational communication.
• Quality assurance and improvement.
A properly structured and administered survey will—while maintaining the level
of anonymity required to ensure completion and submission—help you identify
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areas, levels, or positions that are helping drive or enable the organization’s imperatives and initiatives and those areas needing additional information, guidance, and/
or support. If you decide to use an employee opinion survey to obtain information,
I encourage you to ask individuals within your organization who have testing and
measurement expertise to help you design and conduct the survey or arrange for
an outside consultant or vendor to assist you in this matter. Whether using an internal or external resource, your employee survey will in all likelihood include these
steps:
• Define the overall purpose of the survey—the overarching topic, issue, or question
to be explored.
• Identify the target audience for the survey—who will be asked to complete and
submit the survey or be asked to participate in an interview.
• Determine how the survey will be administered—the survey can be conducted
using a paper or electronic questionnaire or using face-to-face (one-on-one or
group) interviews.
• Decide on questions to be asked—questions to be included in the interview
guide or questionnaire.
• Create a draft survey and test it using a sample audience; to the extent needed,
modify the survey—to ensure the survey is clear and concise, that recipients or
interviewees are likely to participate fully, and that the results are likely to prove
useful and beneficial.
• Prepare the audience for the survey—including needed information about the
purpose of the survey, the nature and scope of the information it will solicit, the
amount of time it will take, and how the results will be used.
• Administer the survey, and analyze and summarize the results—summarize the
results in a format that is likely to prove useful and beneficial to the strategic
planning team.
You may also need to conduct research outside your organization to collect
additional information and data on external trends impacting your organization’s
short- and long-term success. One essential but frequently overlooked data source
is your organization’s end-users, that is, current customers, clients, or individuals who
benefit from the products your organization produces or the services your organization provides. Consider conducting an end-user survey if you need to supplement
or augment the information your organization currently has on its customers or
clients. This survey will allow you to further develop or strengthen the relationship you have with your end-users and provide information likely to prove useful
to the strategic planning team. For example, an end-user survey will allow you to
find out:
• Why customers or clients buy your products; for example, is it because—
° Your products are innovative?
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° Your products meet or exceed the end-user’s specifications or requirements?
° Your products are of good quality?
° Your products are the least expensive to buy or use, operate, deploy, or
implement?
° Your products are simply not available elsewhere?
° The end-user receives a high level of service while shopping, buying, or
following up on a purchase?
• Why customers or clients procure your services; for example, is it because—
° Your organization or employees have a good reputation?
° Your employees possess good knowledge, skills, and abilities?
° Your employees exhibit high self-confidence or self-motivation?
° The services your organization provides are of good quality?
° The services you provide are the least expensive?
° Your services are simply not available elsewhere?
° The end-user receives a high level of service throughout the engagement
process?
• The opinion your customers or clients have of your products or services versus
the opinion they have of your competitors’ products or services.
• Other products your customers or clients are likely to purchase or other services
they are likely to procure.
• Other products your customers or clients would like you to produce or other
services they would like you to offer.
As with an internally focused survey, a properly structured and administered
end-user survey will help you identify the capabilities, imperatives, and initiatives that are helping drive or enable the organization’s short- and long-term
success and those factors that need to be emphasized, modified, or deemphasized. If you decide to use an end-user survey to obtain information, as with the
internally focused survey, I encourage you to seek the assistance of individuals
within your organization who have testing and measurement expertise or arrange
for an outside consultant or vendor to assist you in this matter. Whether using an
internal or external resource, your end-user survey will in all likelihood include
these steps:
• Define the overall purpose of the survey—the overarching topic, issue, or question
to be explored.
• Identify the target audience for the survey—who will be asked to complete and
submit the survey or be asked to participate in an interview.
• Determine how the survey will be administered—whether conducted using a
paper or electronic questionnaire or using face-to-face (one-on-one or group)
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interviews, note that meeting with customers or clients at their home or place of
business may provide additional insight regarding current and emerging needs
and expectations.
• Decide on questions to be asked—questions to be included in the interview
guide or questionnaire.
• Create a draft survey and test it using a sample audience; as needed, modify the
survey—to ensure the survey is clear and concise, that recipients or interviewees are likely to participate fully, and that the results are likely to prove useful
and beneficial.
• Properly introduce the survey and set the stage for an adequate and proper
response—including information about the purpose of the survey, the nature
and scope of the information it solicits, the amount of time it will take, and how
the results will be used.
• Administer the survey, analyze it, and then summarize the results in a format
that is likely to prove useful and beneficial to the strategic planning team.
There are countless other sources of external data and information; access the
ones most likely to provide the information and data you need and that your stakeholders are likely to consider credible. A visit to your local college, university,
or federal depository public library will reveal dozens of databases containing
information likely to prove useful and beneficial to your strategic planning effort,
including Bloomberg,3 ORBIS,4 Gartner,5 and Hoover’s.6
In conducting your research, I encourage you to rely on two other important
sources of information: the Internet and individuals you know and/or with whom you
work. The Internet might be an efficient and effective way to collect information and
data on your competitors. Enter any competitor’s Web site and you will likely find the
following data and information readily, legally, and ethically available to the public:
• Analyst reports.
• Financial statements and Securities and Exchange Commission (SEC) filings.
• Annual shareholder reports.
• Press releases.
Input from individuals you know and with whom you work in the following areas
will provide additional insight as to each competitor’s intent, capability, and
capacity:
• The personalities, biases, and blind spots of the competitor’s leaders and
executives.
• The competitor’s—
° Organizational structure, leadership, and governance.
° Growth strategy (e.g., organic or through mergers and acquisitions).
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° Marketing and sales strategies.
° Supplier and distributor networks.
• The emphasis the competitor places on cost, innovation, and customer
satisfaction.
• The breadth and depth of the competitor’s products and/or services.
• The effectiveness and efficiency of the competitor’s systems, processes, and
technology.
• The level of competency, self-confidence, and self-motivation the competitor’s
employees (at all levels) possess and exhibit.
• Research and development efforts and new products or services the competitor
is currently developing.
• Quality assurance and/or improvement systems or processes the competitor has
in place.
Although the above externally focused information will serve as a foundation
for your strategic planning team’s analysis, you in all likelihood will need to supplement it with additional environmental trend data and information. For example,
while we were preparing for the military’s regional strategic planning session,
meetings with key stakeholders revealed their need to focus on a slate of external
trends impacting the military’s short- and long-term success. To help guide our
external research focus and effort, we developed the trend data and information
matrix illustrated in Figure 5.2. Please note that the list presented in Figure 5.2 is
condensed and does not contain sensitive or confidential information.
The external sources of information and data your strategic planning team
requires will largely depend on your industry, your profession, or the area in
which your organization specializes. For example, we collected information and
data from more than three dozen external sources when preparing to facilitate the
military’s regional strategic planning session. A condensed list of data sources is
presented in Figure 5.3; please note that it does not contain sensitive or confidential
information.
When identifying external sources of information and data, I encourage you to
strive to collect information from and/or about leading performers in your industry or profession or in an industry or profession similar to yours. Information and
data from such “best-in-class” organizations can provide insight into how your
strategies, systems, processes, people, and culture compare to the best-in-class
organization’s strategies, systems, processes, people, and culture. The results of
this comparison may reveal:
• Biases that your organization’s leadership or planning team members have
that cause them to place too much emphasis on developing, maintaining, and/
or improving certain aspects, elements, or components of your organization’s
strategies, systems, processes, people, and culture.
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Figure 5.2 Trend Data and Information for Regional Strategic Planning
Research Area
Associated Trend Data and Information
Fishing
• Weather trends
• Number of fishing vessels
Freight vessels
• TEUs (20-foot-equivalent units) entering port
• Size of vessels
Government
• Impact of current legislation
• Possibility of new legislation
Natural disasters
• Nature and scope of interventions, based on previous
incidents
• Future predictions based on the magnitude, frequency, and
duration of previous natural disasters
Passenger ships
• Number of cruises and ferries
• Physical size of vessels
Ports and waterways
• Port development plans
• Channel development plans
Recreational boating
• Number of people participating
• Number of boats and watercraft
• Blind spots that your organization’s leadership or planning team members have
that cause them to neglect to develop, maintain, and/or improve certain aspects,
elements, or components of your organization’s strategies, systems, processes,
people, and culture.
• Strengths pertaining to your organization’s strategies, systems, processes, people,
and culture that should be leveraged or capitalized upon.
• Weaknesses or limitations pertaining to your organization’s strategies, systems,
processes, people, and culture that should be reduced, mitigated, or somehow
addressed.
Synthesizing, Consolidating, and Summarizing
Information and Data
Experience and observations reinforce the edict that people can only absorb and
apply a certain amount of information and data. It is therefore important that you
synthesize, consolidate, and summarize the results of your data-gathering activities.
Doing less may result in your strategic planning team getting bogged down in too
many details and potentially “freezing” rather than basing their conclusions and
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Figure 5.3
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External Sources of Information for a Strategic Planning Session
Agencies and Departments
• Scientific Committee on Oceanic Research (SCOR)
• National Oceanic and Atmospheric Administration (NOAA)
Societies and Associations
• Society of Naval Architects and Marine Engineers (SNAME)
• Navy League of the United States
Colleges and Universities
• U.S. Merchant Marine Academy
• U.S. Naval Academy
Institutes
• International Risk Management Institute (IRMI)
• Office of Research Services, National Institutes of Health
Periodicals
• American Shipbuilder
• Journal of Ship Production
Reports
• “Shipbuilding and Repair Industry Report”
• “Double Hull Tanker Legislation”
Individuals
• Director of Research and Scholarship, U.S. Naval Academy Research Center
• Deputy Director of Research and Scholarship, U.S. Naval Academy Research Center
decisions on valid and credible information and data. In deciding what information and data to emphasize or showcase and how much information and data to
share with the strategic planning team, I recommend that you take five factors into
consideration:
1. How information and data are generally shared within your organization.
2. The amount of information members of your organization typically require
when drawing conclusions or making decisions.
3. The kind of information members of your organization typically require when
drawing conclusions or making decisions.
4. The kind of information and data the members of your organization might
likely consider to be valid and credible.
5. The kind and amount of information and data that you feel a nonbiased third
party might expect a strategic planning team to use when drawing such conclusions and making such decisions.
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Consider synthesizing, combining, and summarizing some of the results of
your data-gathering activities and sharing them with several strategic planning
team members. Ask the team members to compare the abridged materials with the
complete information and data and to provide feedback regarding the adequacy of
the materials as well as suggestions and recommendations for improvement. Be
sure to retain the source materials as you merge, blend, combine, and otherwise
abridge the data and information. Have at least one copy of the source materials
at the strategic planning session so you can refer to or cite baseline information
or data if called upon to do so or if doing so will add clarity or credibility to the
process.
PACKAGING AND PRESENTING THE INFORMATION AND DATA
As the previous section suggests, it is important that you properly package
and present information and data to the planning team to ensure optimal understanding, interpretation, and utilization. This effort typically involves organizing,
sequencing, or arranging the information and data so that strategic planning team
members can easily access and refer to it throughout the session. If the information
and data are voluminous and/or complex, supplement text and numbers with
charts and graphs to emphasize key data, trends, and patterns and to help team
members compare changes and relationships.7
If your strategic planning team members are likely to expect a formal report
rather than or in addition to spreadsheets, raw data, charts, and/or graphs, I recommend that you create one following the protocol and/or style generally used in
your organization. Absent such a prevailing practice, consider creating a document
containing these elements:
• Cover page, including subject and date.
• Table of contents.
• Executive summary, if the length or complexity of the document suggests the
need for one.
• Clearly defined sections, including—
° Background or introduction, providing an overview and explaining the nature
and scope of the information and data presented in the document.
° Findings, providing detailed information and data on the factors or forces
being reported on.
° Conclusions, providing a summary of the main findings or emphasizing or
showcasing key points.
References,
providing information that will allow further exploration or
°
analysis.
° Appendices, providing data and information in the form of tables, graphs,
charts, figures, spreadsheets, and so on.
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MOVING FORWARD WITH INITIAL ANALYSES AND DECISIONS
You are now ready for the strategic planning team to come together to move
forward with the strategic planning agenda (which may or may not be similar to
the ones presented earlier in this chapter). Using the data and information you
have collected and organized, your strategic planning team will initially focus on
the organization’s value proposition as well as internal factors and external forces
likely to impact its short- and long-term success.
Deciding on a Decision-Making Process
Prior to beginning its review, analysis, and examination of the package(s) of
information and data, I recommend that your strategic planning team decide on
the decision-making process it will follow throughout the strategic planning
process. A quick assessment of previous meetings may reveal the various ways
your team arrives at a decision; for example, it might:
• Make a decision by—through mutual agreement or action—failing to make a
decision.
• Let the individual in charge of the session or the highest-ranking leader in attendance make the decision.
• Defer to the loudest voice or to the individual willing to advocate a particular
position or point for the longest period of time.
• Let the opinion or desire of the majority influence the decision through voting.
• Make the decision by allowing the team members to come to consensus.
It is important that your strategic planning team consider the advantages and
disadvantages of each approach and decide which approach is most appropriate,
given the purpose of the strategic planning session, the challenge the strategic
planning team has before it, and the culture of the organization. With those factors
in mind, I encourage you to strongly consider using consensus as your decisionmaking process. Given the goals (and the underlying importance) of your strategic
planning session, it will be important for the planning team to make valid and
credible decisions and for participants and key stakeholders to buy into and otherwise
support the resulting strategies, tactics, and actions. These desired outcomes spotlight
the need for adequate and proper analysis, discussion, negotiation, and consideration and for all planning team members to consent to “live with” a decision
even though they may not be in 100 percent agreement with every aspect of the
decision. Although voting may be more efficient, consensus allows the strategic
planning team to have the necessary dialogue and debate, draw needed conclusions,
make needed decisions, and move forward with the needed level of buy-in and
commitment.
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KEY LEARNING POINT
Your organization’s success hinges on the decisions your team makes
throughout the strategic planning session. It is important that your strategic
planning team select and apply the most appropriate decision-making technique, given the purpose of the strategic planning session, the challenge the
planning team has before it, and the culture of the organization.
The Organization’s Purpose and Value Proposition
You may wonder why the strategic planning team should begin its analysis by
reviewing the organization’s purpose and value proposition. Understanding, verifying, or confirming the organization’s purpose and value proposition is important
because it sets the context within which the planning team’s analysis and examination occur. For example, information and data pertaining to your customers or
competitors cannot be interpreted properly and/or is relatively meaningless unless
members of the strategic planning team understand and agree on:
• The purpose of the organization: what the organization is attempting to do.
• How the organization is attempting to benefit or bring value to the customer or
client.
• How the organization is attempting to differentiate itself from its competitors.
Organizations are not formed simply out of happenstance, nor do they function
haphazardly. Rather, they consist of individuals working together in a planned and
purposeful way to ensure that the organization’s predetermined purpose is accomplished. The purpose of your organization may be stated in a previously created
mission or vision statement. If such statements do not exist, the strategic planning
committee should consider reviewing information shared with stakeholders (such
as board members, investors, and prospective employees), regulatory filings, organizational charters, or partnership agreements. While such documents describe an
organization’s official purpose and what it is formally attempting to do, an analysis
of which expenditures are approved and how monies are allocated in quarterly
or annual financial reports—especially when money is scarce and programs,
imperatives, and initiatives must be prioritized—will reveal an organization’s
true purpose and what it is actually doing (versus what it is hoping, intending, or
attempting to do).
Organizations have limitations pertaining to finances, time, and resources. They
therefore cannot be all things to all people; they must decide how best to differentiate themselves from their competition and provide the services and/or products
most likely to prove useful and beneficial to their target client or customer. Your
organization’s purpose, along with the manner in which it differentiates itself
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from its competition and attempts to provide services and/or products to its target
clients and customers, will establish the overall context within which your strategic
planning team will assess the current state, envision the desired future state, and
identify and assess the means for accomplishing the current state (its mission) and
realizing the future (its vision).
Treacy and Wiersema created a framework that your strategic planning committee
might find useful in reviewing how your organization differentiates itself from
its competition and attempts to provide services and/or products to its clients and
customers. Their value disciplines model8 suggests that customers and clients
typically obtain products or services from an organization that emphasizes:
• Operational excellence. These organizations strive to conduct efficient operations
and provide services and products at a relatively low price. If your organization emphasizes operational excellence, the strategic planning committee
will focus on external forces and internal factors impacting your organization’s
ability to—
° Manage the quantity and quality (while controlling the cost) of the raw
materials entering the organization.
° Maximize the productivity of your organization’s employees (at all levels).
° Increase the speed of production while minimizing waste and the need for
rework.
• Product leadership. These organizations emphasize the design, development,
and marketing of innovative products and services. If your organization emphasizes product leadership, your strategic planning team will focus on external
forces and internal factors impacting your organization’s ability to—
° Research and develop products and services your target clients and customers
are likely to consider “cutting edge.”
° Manufacture products your target clients and customers are likely to consider
“cutting edge.”
° Provide services your target clients and customers are likely to consider
“cutting edge.”
• Customer intimacy. These organizations emphasize excellent customer service
throughout the sales process and strive to provide products and services likely
to meet or exceed the client or customer’s requirements or expectations. If your
organization emphasizes customer intimacy, your strategic planning team will
focus on external forces and internal factors impacting your organization’s
ability to—
° Understand and respond to the customer or client’s needs and expectations
before, during, and after the sale.
° Develop, maintain, and further develop the relationship it has with its target
clients or customers.
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Strategic Planning
° Create products and services likely to meet or exceed customer or client
expectations, requirements, or specifications.
° Deliver products and services in a way that exceeds the client or customer’s
needs and expectations.
Once the strategic planning team members agree on your organization’s purpose
and the manner in which it differentiates itself from its competition and attempts
to provide services and/or products to its target clients and customers, they can
begin to analyze data and information collected prior to the strategic planning
session.
Analyzing Research Data and Information
The strategic planning team should obtain and analyze data and information it
believes will allow it to understand, discuss, draw conclusions from, and make
decisions about the issues, topics, and questions your organization considers
to be of utmost importance. The strategic planning team members will have to
answer the questions of “what” data and information are right and “how much”
data and information are enough. To help the strategic team members answer
these two important questions, I encourage you to keep the following two points
in mind:
1. The strategic planning team’s conclusions and decisions must be valid and
credible. Planning team members must believe that the information and data
they consider are sufficient to support the conclusions they draw and the decisions
they make. To help ensure the availability and application of sufficient information and data, prior to proceeding forward from each decision point, the
planning team should verify that all team members are in general agreement
that the decision made is a valid and credible one and that the decision was
based on a sufficient amount of information and data.
2. The strategic planning team members must properly interpret the data and
information. This data and information must be shared with the team in a manner
that team members are likely to understand. To help ensure proper interpretation, planning team members should periodically “test” their individual
interpretations.
Data and information considered during a strategic planning session relate to
the topics being considered, the issues being addressed, and the questions needing
to be answered. For example, a group of investors recently explored whether
external conditions and internal factors were favorable for the establishment of a
new residential real estate management and sales organization. Given the tumultuous business environment and prevailing industry pressures, it was essential
that the investment group take broad-based and multifaceted information and data
into consideration. Figure 5.4 presents some of the key information and data the
Figure 5.4
Investment Group Information and Data Considerations
Background
The trend leading up to the 2008 subprime mortgage-driven housing crisis was as
staggering as the housing crisis itself: housing prices had risen on average about 45
percent from 2000 to 2007. By contrast, the median income for working-age households
(homes headed by someone under 65) plummeted 4 percent over that same period.
Market Analysis
This market analysis takes these factors into consideration:
• Market size.
• Market growth rate.
• Market profitability.
• Industry cost structure.
• Distribution channels.
• Market trends.
Market Size
Data reveal that 51.4 percent of the target market population is of the age considered
likely to rent, lease, or purchase a residential property and that the median age in the
target market is 35, in the age range likely to rent, lease, or purchase a residential
property. Home ownership rates in the region in which the target market is located
further verify the above data.
An analysis of the following geographically focused data also verifies the following:
• Percentage of residents living in same house in 1995 and 2000: 37.4.
• Number of housing units as of 2008: 1,065,197.
Target market data suggest a continued upward trend, with 2009 data revealing:
• Total housing units: 228,139.
• Occupied housing units: 204,688, or 89.7 percent.
• Median family income: $57,471.
• Per capita income: $24,887.
Our business model would be designed to provide the most value to prospective home
owners residing in the target market who still have the dream of one day owning a home.
Data sources suggest these statistics for our target market:
• 17.3 percent of ARMs resetting within the next 12 months.
• House vacancies stand at 6.7 percent.
Market Growth Rate
Our target market is one of the fastest-growing areas in the United States. Over a 10-year
period, the population increased 86.3 percent, while the U.S. population increased 13.3
percent. We predict a continued upward trend, with more than 2,000 people moving into
our target market each month.
(Continued )
Figure 5.4
(Continued)
Current trends are likely to continue unless significant changes occur in the housing
market or with the employment rate in our target market.
Although a potential decline in growth due to price pressure caused by competition
may eventually occur, the following entry barriers will likely delay or prohibit its
occurrence:
• Strategic network of professionals to implement the needed infrastructure and business
methodology.
• The implementation of the systems and policies to drive needed behaviors and
performance.
Market Profitability
These factors help ensure optimal market profitability:
• A price point likely to match what customers can afford.
• Services that meet or exceed customer expectations.
Industry Cost Structure
Over the past 12 months, 97 percent of the homes rented in our target market fell in
the $2,300/month or less monthly rental range, while 68 percent of the homes sold in the
market fell in the $125,000–$175,000 price range. The largest single cohort (39 percent)
of home buyers in the market purchased homes in the $150,000–$200,000 band, which
we presume supports a $2,300 or so monthly rental fee.
Research reveals that the following property management fee is to be expected within
the target market: an initial fee that equals 75 percent of the first month’s payment and
then a monthly fee that equals 18 percent of the monthly payment.
Distribution Channels
Existing Distribution Channels
• 250 local real estate companies.
• Three local real estate investment trust (REIT) companies.
Trends and Emerging Channels
The housing industry is experiencing a crisis of historic proportions. This crisis, coupled
with high unemployment rates, reduces the attractiveness (from our competitor’s point of
view) of the target market. Those external forces, along with our unique value
proposition and business model, give us a distinct competitive advantage.
Channel Power Structure
We have established a strategic alliance and through the enhancement of these trusting
relationships have captured “most preferred” billing rates and fee structures.
Market Trends
Our target market is one of the fastest growing in the United States. However, with
the current financial crisis and downward pressure on the housing market, our target
108
Figure 5.4
(Continued)
market now maintains a housing vacancy rate of 23 percent for rentals and 9 percent
for homes.
Current and Future Competitive Threats
• Companies competing in a related product or market:
° 250 local real estate companies.
° 44 local property managers.
• Companies using related technologies: 31 regional REIT companies.
• Companies targeting our market segment with related services: 32 institutional
investors.
Barriers to Entry
• The strategic network of professionals to create and implement the needed
infrastructure and business methodology.
• The reinforcement of business practices to drive needed results and outcomes.
Competitor Analysis
Taking our most likely competitor into consideration, the following analysis
demonstrates that the business we establish will be uniquely suited and positioned to
enter and control this industry or market. To determine the likelihood of entry into our
industry or target market, we:
• Defined the nature and scope of the industry.
• Determined the critical success factors for our industry.
• Identified our most likely competitors.
• Evaluated our organization and our most likely competitor against the critical success
factors to determine the relative strength of each organization.
• Used the results to determine the overall likelihood of competitor entry and to
identify the forces and factors that must be leveraged and/or reduced, mitigated,
or avoided.
This analysis reveals that the organization we create will be rated higher than our
leading competitor on the price point, product, and performance requirements, as well
as on our strategic alliances, infrastructure, value proposition, and investment sources.
Overall, our organization will be rated much higher than our leading competitor
(80 versus 65.5 raw score and 10.0 versus 8.1285 weighted score).
Competitive Risks
• Service features.
• Warranty and lease agreements.
Given the nature and scope of the industry and target market and the nature and scope of
the risks, we will identify countermeasures to nullify the risks and reduce the likelihood
of entry by our competitors.
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Strategic Planning
investment group considered in deciding whether to establish the new real estate
firm; please note that information and data were omitted and modified to protect
sensitive and/or confidential material.
Analyzing Employee Opinion Survey Information
Your strategic planning team may find it useful and beneficial to supplement
research results with information obtained through an employee opinion survey.
The individual, team, or vendor administering the survey will in all likelihood
summarize the results and showcase key employee perceptions as well as the
extent to which they buy into and commit to your organization’s strategic imperatives and initiatives.
Experience and observations suggest that your strategic planning team will find
such information invaluable in helping it explore perceptions and attitudes in the
areas of:
• Mission, vision, and values.
• Management capabilities, imperatives, and initiatives.
• Commitment, self-confidence, and self-motivation.
• Operations and performance issues.
• Organizational capabilities and capacity.
• Interpersonal and organizational communication.
• Quality assurance and improvement.
A leading medical center, when preparing to review and refine its strategic plan,
recognized the importance of engaging employees and obtaining their perceptions
of previous strategic management decisions and their suggestions for future organizational imperatives and initiatives. More specifically, the medical center’s executive
team decided to conduct an employee opinion survey to:
• Obtain feedback on the medical center’s organization, management, operation,
quality of patient care, and work environment.
• Ask questions about the level of buy-in, ownership, and commitment for key
strategic management imperatives and initiatives existing throughout the medical center.
• Ask questions about external forces and internal factors likely to impede the
medical center’s short- and long-term success.
• Gather information on ways the medical center might leverage or otherwise
take advantage of its strengths and how it might mitigate, reduce, or otherwise
address its weaknesses and limitations.
• Obtain suggestions and recommendations to apply toward the medical center’s
continuous quality improvement efforts.
Gathering and Analyzing Data and Information
111
• Obtain baseline information against which the effectiveness of future strategic
decisions and actions might be assessed.
All members of the medical center—from the individuals working in the
boiler room to individuals sitting in the boardroom—were asked to complete
the employee opinion survey. The team administering the survey analyzed and
summarized the results and shared participation statistics and survey results with
the strategic planning team.
The medical center survey administrators tracked response rates so that
(1) gaps in levels of understanding, buy-in, and commitment could be identified and addressed and (2) potential best practices could be identified, leveraged, and capitalized upon. For this employee opinion survey, respondents were
asked to provide information pertaining to a number of demographic variables,
including:
• Gender.
• Ethnic group status.
• Position held within the organization.
• Length of service with the medical center.
• Shift typically worked at the medical center.
• Division or department in which the respondent works.
Although the demographic information was designed to reveal gaps in levels
of understanding, buy-in, and commitment and/or a possible lack of thought
leaders and potential best practices, employees across all demographic categories
for the most part had consistent views of the organization; there were very few
differences in employee opinions across genders, ethnic groups, service lengths,
shifts worked, and divisions or departments. The strategic planning team felt that
this information reflected positively on the medical center’s communication
policies and practices. The lack of thought leaders and the absence of potential
best practices were also considered to be important data points, which the strategic
planning team committed to exploring further.
Given the important role that human resources plays in health care, it was essential
that the planning team take employee opinion survey results into consideration.
Figure 5.5 presents some of the key survey findings the planning team considered
as it reviewed and refined the medical center’s strategic plan. Please note that
some information was omitted from Figure 5.5 and that some of the information
presented was modified to protect sensitive and/or confidential material.
Analyzing End-User Survey Information
Your strategic planning team may also find it useful and beneficial to supplement research results with information obtained through an end-user survey.
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Strategic Planning
Figure 5.5
Results of Medical Center Employee Opinion Survey
Key Findings
1. A clear majority of employees at all levels feel that the medical center provides
high-quality services to its patients and the patients’ families.
2. A clear majority of employees at all levels feel that the medical center is a leader in
the national health care profession.
3. Most employees feel that the medical center has a positive reputation and that
patients recommend the medical center to their family and friends.
4. A clear majority of employees at all levels commit to personally contributing to the
medical center’s mission and vision.
5. Most employees understand the role they play in helping the medical center achieve
short- and long-term success.
6. A clear majority of employees feel that their colleagues understand, buy into, and
commit to personally supporting the medical center’s mission and vision.
7. Some employees feel that the medical center’s current communications policies and
practices interfere with or otherwise impede the flow of communication.
8. Some employees feel that the current performance management and employee evaluation
system is inconsistent with and does not support the medical center’s strategies.
9. Some employees feel that current technology and information systems are inadequate.
10. A majority of employees believe that management is trying to improve the current
quality of the technology and information systems.
The individual, team, or vendor administering the survey will in all likelihood summarize the results and showcase end-user perceptions as well as the extent to which
they buy into and otherwise support your organization’s value proposition.
Experience and observations suggest that your strategic planning team will find
such information invaluable in helping it explore:
• Why customers or clients buy your products.
• Why customers or clients procure your services.
• The opinion your customers or clients have of your products or services versus
the opinion they have of your competitors’ products or services.
• Other products your customers or clients are likely to purchase or other services
they are likely to procure.
• Other products your customers or clients would like you to produce or other
services they would like you to offer.
Most leading professional services firms recognize the importance of establishing, maintaining, and enhancing relationships with their clients. As part of
the relationship management process, many firms invest a great deal of time and
effort in obtaining data and information about their clients’ needs and expectations and the extent to which they address those needs and meet or exceed those
Gathering and Analyzing Data and Information
113
expectations. Firms typically conduct end-user surveys to obtain concrete feedback
from clients on their ability to:
1. Provide services and products that address the clients’ needs and meet or
exceed the clients’ expectations.
2. Provide services and products the clients consider to be worth the fees the
firm charges.
3. Recognize and help the clients respond to emerging challenges, impediments,
and obstacles within the clients’ industry and/or market.
4. Recognize and help the clients respond to emerging challenges, impediments,
and obstacles within the clients’ organization.
5. Inform the clients of current or emerging issues, challenges, opportunities,
and/or threats that must be considered and acted upon.
6. Manage turnover within the client engagement team to ensure continuity of
knowledge and service.
7. Offer creative and innovative solutions.
8. Deliver technical expertise that matches program requirements.
9. Work effectively and efficiently with the clients.
10. Provide suggestions and recommendations that prove to be useful and
beneficial.
All of a firm’s clients—regardless of the amount of revenue they bring to the
firm—are typically asked to complete an end-user survey at various times throughout
the year; although this may be rather time consuming, professional services firm
management teams recognize the importance of the resulting data and information.
Taking the time to solicit and analyze such information from small clients may
not seem to be cost-effective, but firm management teams typically adhere to the
adage that “a majority of the giants in industry were once small” and therefore
consider this to be a wise investment. A team (frequently consisting of internal
specialists and an external vendor) administering the end-user survey typically
analyzes and summarizes the results and then shares the results with the firm’s
strategic management team.
Strategic management teams for professional services firms typically meet
monthly or quarterly to discuss end-user survey results and factor that information into operational decisions; firm leadership also typically considers end-user
results during quarterly or annual strategy review sessions. While management
team members typically focus on high-level findings and associated implications,
they also periodically review responses to specific questions to obtain the detailed
information they need to formulate strategy, tactics, or countermeasures. Figure 5.6
presents questions that professional services firms typically include in their enduser surveys.
Figure 5.6
Survey Questions for Professional Services Firm End-Users
On providing services and products that address the client’s needs and meet or exceed the
client’s expectations:
• In general, do we understand your needs and expectations?
• What services and products do we offer that you find to be exceptionally useful and
beneficial?
• What specific needs or expectations do you have that we have not addressed?
• What would we need to do to exceed your expectations?
On providing services and products the client considers to be worth the fees the firm
charges:
• In general, do you feel that the services and products we provide match the fees we
charge?
• What would it take for you to feel that the services and products we provide are worth
the fees we charge?
• When it comes to providing services and products that match the fees we charge—
° What should we start doing?
° What should we stop doing?
° What should we continue doing?
On recognizing and helping the client respond to emerging challenges, impediments, and
obstacles within the client’s industry and/or market:
• In general, have we helped you recognize and respond to external challenges,
impediments, and obstacles?
• What external challenges, impediments, or obstacles—
° Did we fail to help you recognize?
° Should we have provided additional support or assistance for?
• What other steps should we take to help you identify and respond to external
challenges, impediments, or obstacles?
On recognizing and helping the client respond to emerging challenges, impediments, and
obstacles within the client’s organization:
• In general, have we helped you recognize and respond to internal challenges,
impediments, and obstacles?
• What internal challenges, impediments, or obstacles—
° Did we fail to help you recognize?
° Should we have provided additional support or assistance for?
• What other steps should we take to help you identify and respond to internal challenges,
impediments, or obstacles?
On offering creative and innovative solutions:
• In general, have we helped you address challenges and opportunities in a creative or
innovative way?
• What challenges or opportunities—
° Could we have helped you address in a more creative or innovative way?
° Do you typically encounter that are conducive to a creative or innovative solution?
Gathering and Analyzing Data and Information
115
Analysis of end-user survey results and revenue generation, write-offs, and
discounts can be quite revealing. For example, such an analysis might show
that:
• Client dissatisfaction in certain areas increases the likelihood of write-offs or
discounts.
• Satisfaction in a few “key” areas increases the likelihood of invoices being paid
“in full and on time.”
• Client satisfaction in certain areas increases the likelihood of retaining the client
over time and/or being able to extend the current contract or engagement.
• Improving client satisfaction in a few “key” areas will influence the client’s
overall satisfaction with the services and products you provide.
Using a SWOT Analysis to Showcase Key Data and Information
Your strategic planning team has reviewed and discussed information and data
coming from a variety of data sources (an environmental scan, employee opinion
survey, and end-user survey, to name just a few). Your team must now synthesize and consolidate this information and data and put it in a (more) useful form.
Your planning team may find a SWOT (strengths, weaknesses, opportunities,
and threats) analysis to be a useful way to summarize and display the key data
and information it will consider throughout the remainder of the strategic planning
session.
The SWOT analysis is both a technique and a tool: as a technique, it will help
your strategic planning team explore and identify forces and factors most likely to
impact your organization’s short- and long-term success; as a tool, it will help your
strategic planning team record the results of its review and analysis. The SWOT
analysis will help ensure that your strategic planning team takes multifaceted
variables into consideration; more specifically, it will help your team identify and
record key:
• Internal strengths: any existing or potential internal resource or capability that if
properly capitalized upon may provide an advantage to the organization.
• Internal weaknesses: any existing or potential internal force that if not properly
addressed may inhibit the organization’s success.
• External opportunities: any existing or emerging force in the external environment
that if properly exploited may provide an advantage to the organization.
• External threats: any existing or emerging force in the external environment that
if not properly addressed may inhibit the organization’s success.
The SWOT analysis will help your strategic planning team summarize,
note, and then subsequently consider a multitude of “key” external forces and
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Strategic Planning
internal factors impacting your organization’s short- and long-term success.
These forces and factors typically include, but are not limited to, those listed
in Figure 5.7.
Taking all information and data previously reviewed and discussed into consideration, your strategic planning team will list key strengths, weaknesses, opportunities,
and threats (SWOTs). It is important that the SWOT analysis be framed as the
team’s attempt to identify key forces and factors it must consider throughout the
remainder of the strategic planning session. Although there is in all likelihood a
multitude of variables impacting your organization’s short- and long-term success,
it is important that your strategic planning team members:
1. Review and discuss the information and data they have before them.
2. Identify and agree on the variables most likely to have the most impact or influence on your organization’s short- and long-term success.
3. Create a list of strengths, weaknesses, opportunities, and threats that is both
manageable and likely to prove useful throughout the remainder of the strategic
planning session.
Data and information your strategic planning team notes and subsequently
displays in its SWOT analysis should include external forces and internal factors
most likely to have the most impact or influence on your organization’s short- and
Figure 5.7
Internal Factors and External Forces
Internal Factors
External Forces
• Financial strength
• Access to capital
• Skills of employees
• Managerial or leadership skills
• Facility capacity
• Union issues
• Safety
• Legal issues
• Warranty and quality
• Customer satisfaction
• Information technology
• Internet usage
• Research and development
• Geographic location
• Distribution channels
• Supplier relationships
• Pricing
• Competition:
° Comparative size
° Strength
° Capacity
° Reputation
° Likelihood of retaliation
• Market conditions:
° Growth potential
° Growth rate
° Threat of new entrants
° Price pressures
• Labor market demographics
• Government regulations, rules, and controls
• Technology trends
• Lifestyle trends
• Impact of economy on buying patterns
• Supplier’s power
• Buyer’s power
Gathering and Analyzing Data and Information
117
long-term success. Your strategic planning team will refer to the SWOT analysis
and will take the data and information it contains into consideration as it covers
topics, addresses issues, and answers questions throughout the remainder of the
strategic planning session.
Each strategic planning team’s SWOT analysis will contain variables relating
specifically to (1) its organization, industry, market, and/or area of specialization
and (2) strategic topics being considered, strategic issues being addressed, and
strategic questions being answered throughout the strategic planning endeavor.
For example, the leadership team of a heavy machinery manufacturing company
recently explored external conditions and internal factors likely to impact their
organization’s short- and long-term success. The team had several volumes of
information and data to review and discuss throughout its strategic planning
session. To help manage the information and data and to make it more accessible,
useful, and applicable, the team synthesized and consolidated the information into
a SWOT analysis. While recognizing the large number of variables impacting and
influencing the organization’s success, the leadership team identified and agreed
on the key variables displayed in Figure 5.8. Please note that some information
Figure 5.8
Corporate SWOT Analysis
Strengths
• Passion for our business
• Genuine corporate values
• Long-term relationship with our customers
• Tendency to take action
• Disciplined growth
Weaknesses
• Weak coordination of product life-cycle management
• Reluctance to pursue joint ventures
• Poor product quality and process efficiency through the design-build cycle
• Poor portfolio mix
• Inadequate bench talent
Opportunities
• The downturn or down cycle
• Strong emerging markets for our products
• Expansion of nuclear power
• Low-cost engineering
• Currency shifts
Threats
• Disruptive technologies developed by our competitors
• Global recession
• Increased cost of commodities
• Increased regulatory requirements in certain markets
• Changing demographics
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Strategic Planning
Figure 5.9
Leadership Team’s Five Most Important SWOT Variables
Ranking
Area of Focus
S, W, O, or T
1
Forecasting
W
2
Brand, No. 1 position, market leader
O
3
Emerging competition
T
4
Corporate culture and focus
S
5
Taking full advantage of emerging markets
O
and data were omitted from Figure 5.8 and that some data and information were
modified to protect sensitive and/or confidential material.
The leadership team realized that it had identified a relatively large number of
external forces and internal factors. Concerned with not being able to focus on
such a large number of variables throughout the strategic planning session, the
team reviewed the results of the SWOT analysis and identified the five variables
most likely to impact the organization’s short- and long-term success (listed in
Figure 5.9).
Case Analysis
__________________________________________________________________________________
1.
Overview (Overview of pertinent history and facts)
Describe the background of the situation or business that is the subject of the case;
Provide information that creates the context for your analysis;
Incorporate relevant facts about the company or situation derived from research outside the case
you are analyzing; provide APA style citations for all sources of information.
2.
Problem/s (State the problem)
Identify a problem or key issue from the case that is relevant to course goals. Will an analysis of
this issue allow you to demonstrate your comprehension and synthesis of course concepts?
Clearly describe the problem or issue.
3.
Alternative Solutions (Offer alternative solutions and approaches to the problem)
Using information or data found in the case study, as well as from course materials and your own
research, offer two or more solutions or approaches to the problem.
4.
Evaluation of Alternatives (Evaluate each alternative)
Critically assess the alternatives defined in section 3. Describe the implications and key steps for
implementation of each alternative. Consider external and internal factors and other relevant
trends. Once again, utilize course texts and other resources to enhance your assessment.
5.
Recommendation/s (Offer your best recommendation)
Based on your analysis in section 4, recommend one alternative. Support and justify your
recommendation. Depending on the nature of the case, you may suggest management or
leadership styles or commitments, describe the organizational structure, policies and systems, or
outline changes to the business model needed to successfully implement this recommendation.
6.
Possible Results and Obstacles to Implementation
Summarize the likely result and/or obstacles that may play into the execution of your solution.
What outcomes might result from the implementation of the selected alternative? What internal
or external trends may enhance or obstruct successful implementation?
Page | 1
7.
Writing quality, clarity, & style and the organization of information
8.
What contribution does the study make to the advancement of knowledge, theory, or practice?
Page | 2
Journal of Management and Marketing Research
An application of the marketing concept in health-care
services planning: a case report
Donald W. Eckrich
Ithaca College
Warren Schlesinger
Ithaca College
ABSTRACT
In this report, efforts of one hospital to utilize market share estimates as market planning
parameters for their emergency room services are detailed to demonstrate (1) the difficulties and
shortcomings associated with the use of their traditionally used method, (2) the value of a transition
probability matrix defined empirical terms to help simulate future market positions, and (3) how the
perspective afforded by the marketing concept can revitalize an organization and help it to focus on its
primary target – the patient.
Keywords: marketing concept, health-care services, simulated transition probabilities
The marketing concept, Page 1
Journal of Management and Marketing Research
INTRODUCTION
Health-care services represent the biggest and fastest growing segment of the United
States’ economy. For some perspective, the U.S. spends about double that of other advanced
nations as a share of GDP (>10%) (Conrad, 2009) Nevertheless, our system is in a serious
financial crisis and “expected to get worse as the population ages and costs continue to
rise.”(Carter, 2007) The current health-care debate related to marketplace reform is only one
outgrowth (i.e. who will be covered and how will that coverage be subsidized?).
Contributing to the larger crisis is the ever-changing marketplace, from rapidly advancing
technology and medical science with its corresponding new treatment options, to the persistent
erosion of the tertiary–level hospital, to changing demography (aging “Boomers”). These and
other shifts have affected virtually every area of health-care delivery. The increasing stressors
will continue to challenge marketing planners and decision-makers who interface directly with
patients as service providers, as never before. The purpose of this paper is to share the
experience of one hospital’s efforts to enhance their marketing performance through their
continuing efforts to monitor their patient service area and deliver value consistent with their
continuing consumer-oriented research program (i.e. implementation of the marketing concept).
HOSPITAL MARKET PLANNING
Market planning in general refers to considering those marketing activities which serve to
identify and help develop specific courses of action necessary to achieve future marketing goals.
In terms of hospital market planning, a variety of organizational goals have traditionally been
involved such as achievement of a specific and/or stable census, or achieving prescribed
benchmarks on various financial metrics such as a specific ROI, or achieving external
recognitions resulting from performance effectiveness and associated rankings.
The problems with these types of goals is that they (1) tend to de-value the role of
individual patients and their impact on marketing-related goals (e.g. patient satisfaction (CRM),
long-term patient loyalty (LTV), capturing new and opportune market positions, and various
promotional outcomes such as name recognition, awareness of basic services, and points of
distinction, etc., and (2) they have given rise to the view of a highly fragmented healthcare
marketplace. For instance, among the competing “markets” typically associated with hospital
performance in addition to patients themselves, are physicians, community agencies, regulatory
bodies from various levels of government, third-party payers, philanthropists, and institutional
suppliers, and even Boards of Trustees. Unfortunately, current evidence supports the conclusion
that while more healthcare providers talk about the patient market as the most important primary
objective, few actively measure their success through patient satisfaction (Kurrasch, 2009;
Andrews, 2008; Zuckerman, 2006; White, et al, 2001; Arnold, et al, 1997).
THE MARKETING CONCEPT
Simply put, the marketing concept is the most widely endorsed, contemporary philosophy
for practicing marketing. As defined in most marketing texts, the basic notion is that an
organization will best achieve long-term marketing goals through an awareness of the specific
wants and needs of the parties with whom it exchanges value, and a dedication of the entire
organization’s efforts toward fulfilling those wants and needs better than competitors. Every
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Journal of Management and Marketing Research
opportunity for exchange must be carefully analyzed, understood, and managed to ensure each
party’s maximum satisfaction. Integrated marketing is typically used to describe the primary
organizational challenge of the marketing concept that every member of the organization, from
the CEO to the custodial staff must be authorized and expected to deliver maximum satisfaction
to meet specific needs in the right way, at the right price, in the right location. Wherever and
whenever the need arises relevant to the organization’s mission, the organization must be
prepared and equipped to turn the unmet need into a satisfying exchange of value for their
customer(s) and thereby achieve their own organizational goals. Research has shown in general
that a “one percent increase in satisfaction can produce up to a three percent increase in
capitalization” (Friar, 2001). Further, as healthcare providers rely more heavily on serving
patient’s expectations, the chances of achieving patient satisfaction also increases (Bedi, et al,
2004).
PATIENT SERVICE AREA
Brottman Hospital is located in a relatively insulated city with a population of
approximately 100,000. It is one of three, roughly equal-sized tertiary hospitals in the city which
have competed against one another for several years. Each is geographically located essentially
equidistant from one another and each has access to approximately equal population densities
within its immediate patient service areas. Thus, among their competitive advantages, each
claimed a geographic portion of the city as their own by virtue of their locations. Administrators
at all three typically viewed this separation as their competitive fait accompli, and their primary
market areas were fairly stable and rarely challenged. The typical operating assumptions and
often the primary impetus to market planning was the need/ability to successfully retain their
respective fair-share, one-third of the city-wide demand for hospital services. The competitive
atmosphere was often characterized as cooperative. Correspondingly, marketing planning
activities at Brottman often appeared half-hearted and generally unimportant.
THE SHAKE-UP
Despite the rather benign and harmonious competitive environment and apathy toward
planning, administrators at Brottman had nonetheless retained the services of a marketing
research consulting firm for many years. The firm was charged with delivering an annual report
on community-wide attitudes, opinions, and beliefs about the entire patient service area. From
an outsider’s perspective, it appeared to serve more as a report-card than a basis for diagnosing
key opportunities or threats. Every year, a telephone survey of 400-500 randomly-selected
households with numbers listed in the local phone directory was conducted resulting in usable
samples generally ranging between 300-350 usable responses. All respondents were asked to
confirm their addresses with the local directory. The questionnaire was suitable for telephone
delivery and asked several qualifying questions about each hospital. Brottman was never
disclosed as the sponsor. Profiles of city resident’s opinions and general attitudes of the
hospitals were compiled and compared longitudinally to previous studies. These profiles were
then distributed to key administrators, discussed in administrative meetings, and portions were
shared with employees through formal departmental meetings.
But as the role of the marketing concept in healthcare and hospital services grew in
popularity and more research highlighted the potential of marketing activities to improve the
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Journal of Management and Marketing Research
performance of the healthcare industry, administrators at Brottman began to turn their attention
toward their delivery of emergency services. The nearest trauma center was over 70 miles away,
and none of the three local hospitals was fully equipped to handle extensive, critical trauma,
services. In addition, Brottman increasingly recognized the E-R as a gateway for those all
important institutional first-impressions and the foundation for a lifetime of healthcare delivery
opportunities. They had long been aware that proximity to an E-R was the foremost decision
factor for most patients in a time of need.
Coincidentally, at about this same time, a major-name hospital from a neighboring, but
larger city, announced plans to develop a satellite, convenient and emergi-care clinic in the city.
The long-held assumption that proximity provided sanctuary, was about to be challenged as
never before. Thus, quickly rising on the list of their developing research priorities was the need
to identify consumer preferences for all the city’s emergency rooms, and to more fully assess the
potential of the E-R to provide competitive advantage against the invaders.
MARKET PLANNING
Among the many models available to aid in the diagnosis and measurement of impact of
changes in key marketing parameters, Markov analysis (MA) has proven useful in a variety of
applications (Garg & McClean, 2009; Bala & Mauskopf, 2006; Barton, et al 2004; Portela &
Simpson, 1996). It has its roots in basic probability theory and has been useful for projecting the
effect or impact of present policies on future market positions. By extrapolating current market
shares through the use of transition probabilities, estimates (or simulations) of equilibrium
market shares can be generated.
If a firm were to determine that its future market share was jeopardized by changing
consumer preferences, it could conceivably take counter-measures to correct the undesirable
trend. Similarly, if the opposite were true, it could engage reinforcing activity to enhance
favorable trends. MA not only has the potential to assist in the identification of tomorrow’s
outcomes from today’s marketing actions/inactions, but it also has the advantage of resembling
the basic tenets of unit analysis (Cravens, 1982), or the disaggregation of competitive data for
planning purposes. Since these units might generally represent distinctive sets of products,
market segments, or organizational centers, the changing E-R situation at Brottman seemed well
suited for a test of its applicability. Both the long-term assumptions about the stability of three
hospital’s market shares as well as the impending and dramatic competitive intrusion, added
further appeal for its application.
Two elements of the survey instrument which presented the opportunity to apply MA
were (1) a measure of the physical proximity of each respondent to their nearest E-R, and (2) a
measures of each respondent’s preference for an E-R in the city, in the event an emergency
situation occurred. Each respondent’s residence was identified on a city map and the distance to
the nearest hospital was determined based on straight-line measures. There were a few cases
where respondents were located equidistant from two hospitals and they were omitted from this
study.
Table 1 presents the results of categorizing respondents by virtue of their actual
proximities to the nearest hospital E-R and compares these market share estimates with the
historically popular assumption of equal shares based on geographic location. West Ridge was
shown to have a slight competitive advantage based on proximity, where 35% of the respondents
were located most closely to West Ridge. St. Johns was shown to have the fewest respondents
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Journal of Management and Marketing Research
located nearby with 30.3%. As expected, market shares based on physical proximity were
essentially equivalent, although no statistical test was performed to confirm this finding. Based
on this outcome it is reasonable to conclude that the market share estimates produced by the
historical assumptions model actually have some credibility.
Table 2 begins to illustrate a more complex and dynamic situation. Based on the stated
preference data, market share estimates shift dramatically. St. Johns and Brottman shares
jumped significantly while West Ridge appears to give up considerable shares to both. Where
West Ridge was shown to have the competitive advantage based on proximity, its market share
under the preference data model dropped to the lowest of all three at 23%. Alternatively, St
John’s and Brottman’s market shares jumped to 37% and 40% respectively.
Based on these disparate results from assumedly equivalent estimations of market share,
the next logical question was how to explain the shift in market share away from West Ridge
toward both St. John’s and Brottman in roughly equal magnitudes. Recognizing that each
hospital could be expected to gain and lose share to each other, the idea of incorporating a
transition probably matrix to portray these potential flows seemed a natural and logical
outgrowth. Absent the behavioral and longitudinal data necessary to provide literal
measurements of the various flows, the question was how to derive reasonable estimates? The
solution chosen and that drives the remainder of this paper was to cross-tabulate respondents by
the hospital they were physically most proximate to, by the hospital for which they had stated a
preference. Table 3 presents the “simulated” transition matrix resulting from this crosstabulation.
The transition matrix provides new planning insights for any of the three hospitals. The
“flows” of patients from geographic areas once considered stable and insulated from competitors
and the potential volumes of the flows provide a useful depiction of potential patient behaviors.
In this case, St John’s and Brottman would retain practically identical shares of their most
proximate patients, and lose almost identical shares to each other and to West Ridge. On the
other hand, West Ridge would lose considerable shares to the others while retaining less than
half its most proximate patients. Thus, the basic structure of MA permits a simulated portrayal of
the dynamic exchange of patients between these hospitals.
In addition, this matrix also permits the extrapolation of these flows into a future, albeit
hypothetical, equilibrium or steady-state depiction of market shares, provided the current
dynamics continue unabated. In other words, if the current patient trade-offs continued without
interruption, MA generates the corresponding market share estimates. The third column of Table
2 presents the steady state market shares for each hospital, where St. John’s obtains the single
largest share, but only slightly higher than Brottman’s. Meanwhile, West Ridge’s steady state
market share drops precipitously to 16.9%, or less than half of the available, most proximate
patients. For this demonstration, the current market shares were those traditionally assumed at
the outset – each had a captive 1/3rd of the city’s patients. Other possibilities could be substituted,
and for the sake of accuracy, the most recent actual market share data should be used.
The disparities in market share estimates generated by the four approaches highlights the
impending failure of West Ridge if remedial efforts are not forthcoming. That West Ridge’s
market share plunged precipitously when consumer preferences were considered (from 35% to
23%), and again when the trend was magnified by the passage of time (down to ~17%), is
evidence of MA’s capacity to generate managerial insights from the creative use of patient
feedback and simple proximity data. Consider the value to Brottman, for instance, of
envisioning the potential capture of a significant share of a traditional competitor’s market and
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Journal of Management and Marketing Research
its impact on future marketing planning. Once energized by this new perspective, and coupled
with a greater focus on patient’s needs, Brottman’s capacity to withstand the incursions from
neighboring hospitals would hopefully be greatly enhanced.
SUMMARY
Three independent bases for estimating E-R market share were shown to produce results
difficult for administrators at Brottman to reconcile. Each in the chronology offered, was
intended to demonstrate increasing value to hospital planners as the measures involved more
patient-specific and personal inputs. Starting with a historical and intuitive approach that merely
assumed traditional levels of market share, to ones that brought into consideration the patient’s
physical proximity to the hospital E-R and actual stated preference respectively, each shifted the
potential outcomes to demonstrate the competitive strengths of two of the three hospitals. The
fourth basis for estimating market share used the MA framework and combined the two previous
bases. The transition matrix permitted a view of the potential outcome of specific, albeit
simulated, switching behaviors. Interestingly, to some extent the results challenge previous
assumptions about the role of proximity in the selection of a hospital E-R.
Despite questions regarding the tenability of an equilibrium state or the assumption of
marketing activity status quo, MA provides future market share projections as probable
consequences of today’s marketing activities. At the very least, MA provides the means for
systematically anticipating potential consumer trends and requires hospital marketing planners to
consider multiple influences affecting tomorrow’s market positions.
Admittedly, the capacity of preference data to withstand the test of association with
actual choice-behavior was not investigated in this paper. It must be recognized as a necessary
pursuit for future research, as must the appropriateness of combining proximity and preference
data to generate realistic transition probabilities. Perhaps other surrogates can be incorporated
more effectively as share determinants, such as historical E-R choice behavior, and the scope of
future investigations should be expanded to include additional hospital units (e.g. ambulatory
care, orthopedics, etc.), and other health care scenarios.
Finally, although the case study which served as the backdrop for this paper may oversimplify the
challenges associated with hospital marketing planning and use of MA, the objective was to illustrate both
the success and the various approaches of one hospital’s efforts to integrate a much-needed marketing
concept into their planning activities. There can be little doubt that insights gained through their exposure
to the various estimates of market share, and most notably through the steady state scenario, Brottman’s
administration adopted a whole new perspective on the challenges they were facing.
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Journal of Management and Marketing Research
Table 1. Market Share Estimates: Historical Assumptions and Actual Proximity
Hospitals*
Market Share
Under Historical
Assumptions
Model
Market Share
Under
Actual Proximity
Model
St. John’s
~33%
30.3% (n=91)
Brottman’s
~33%
34.6% (n=104)
West Ridge
~33%
35.0% (n=105)
Table 2. Market Share Estimates: Preference Data and Steady-State
Hospitals*
Market Share
Under Preference
Data
Steady-State
Model
Market Shares
St. John’s
37.0% (n=111)
41.6%
Brottman’s
40.0% (n=120)
41.4%
West Ridge
23.0% (n=69)
16.9%
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Journal of Management and Marketing Research
Table 3. A Simulated Transition Matrix Via Crosstabulation
Stated Preference for an E-R
FROM / TO
Closest Proximity
St. John’s (n=111)
to E-R
Brottman (n=120)
West Ridge (n=69)
St John’s (n=91)
60.4% (n=55)
26.4% (n=24)
13.2% (n=12)
Brottman (n=104)
27.0% (n=28)
60.6% (n=63)
12.5% (n=13)
West Ridge
(n=105)
26.7% (n=28)
31.4% (n=33)
41.9% (n=44)
AUTHOR BIOGRAPHIES
Donald Eckrich is a Professor of Marketing and Director of Graduate Programs in the
School of Business at Ithaca College. His scholarly publications have appeared in the Journal of
Advertising, the Journal of Advertising Research, the Journal of Health Care Marketing,
Decision Sciences Journal of Innovative Education, the Journal of Applied Business Research,
and the Journal of Interactive Marketing, among several others.
Warren Schlesinger is an associate professor and chair of the accounting department at
Ithaca College and a lecturer at Cornell University in the Sloan graduate program where he
teaches a graduate course in Health Care Accounting. Professor Schlesinger has taught at Ithaca
College for thirty years, has started several new programs at Ithaca College and has numerous
articles most focusing on pedagogy in the business curriculum.
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Bala, M.V. & Mauskopf, J.A., (2006) “Optimal Assignment to Treatment States Using a Markov
Decision Model: An Introduction to Basic Concepts.” Pharmacoeconomics, 24 (4); 345354.
Barton, P., Bryan, S. & Robinson, S., (2004) “Modelling in the Economic Evaluation of Health
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Bedi, S. Arya, S. & Sarma, R. (2004) “Patient Expectation Survey – A Relevant Marketing Tool
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Conrad, B., Ed (2009), “Health Care is Killing America.” The Casey Report, InflationData.com
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The marketing concept, Page 9
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