importance of understanding organizational differences

  1. Discuss the resource-based view of competitive advantage. Why is
    it important to understand organizational differences to use this
    approach?
  2. Briefly define what is meant by competitive advantage. Are
    competitive advantage and sustained competitive advantage identical
    concepts? Compare and contrast the two concepts.

Professional Development

Case Study #12: AIDSCAP Nepal

  • Conduct an internal environmental analysis, identifying the
    value-creating strengths and weaknesses for each value chain component.
    Model your response after Exhibit 4-4 (p. 144) “Value Creating Strengths
    and Value Reducing Weaknesses.”
  • For each strength, assess the competitive relevance, using Exhibit 4-6 (p. 149) as an example.
  • Exhibit 4–4: Value Creating Strengths and Value Reducing Weaknesses for American Healthways, Inc.
  • Value Chain Component
  • Service Delivery, Pre-Service
  • Service Delivery, Point-ofService
  • Service Delivery, AfterService
  • Support Activities, Culture
  • Support Activities, Strategic Resources
  • Value Reducing Weakness
  • • Limited brand identity • Disease management and care enhancement
    contracts require extensive selling because of lack of knowledge of key
    benefits • Revenues subject to seasonal pressures from enrollment
    processes of contracted health plans
  • • Company/employees have less experience in care enhancement
    programs in expanded product line areas such as end-state renal disease,
    fibromyalgia, etc. • A majority of company’s revenues accounted for by
    three health plans
  • • Incomplete or inaccurate data could render independent evaluation of clinical interventions useless
  • • Acquisition of StatusOne Health System with different culture •
    Company’s reluctance to declare cash dividend may discourage some
    classes of investors
  • • Hospital contracts decreasing • Cost to maintain IT for
    compliance with federal and state regulations • High labor costs from
    competition for staff • Volatility of stock price and trading volume
  • Value Creating Strength
  • • Customer benefit: care enhancement/disease management concept
    (attractive to health plans, hospitals, physicians, patients) • Customer
    benefit developed: geographical coverage (attractive to large health
    plans) • Six care enhancement centers
  • • Successful management of diseases leading to reduced costs and
    increased customer satisfaction • Company employees highly experienced
    in implementing care enhancement programs in certain areas, such as
    diabetes • Integrated care product line attracts broad range of patients
    • Number of covered lives increasing making economies of scale possible
  • • Alliance with Johns Hopkins Health System to independently evaluate effectiveness of clinical interventions
  • • First disease management and care enhancement provider in nation
    accredited by all three accrediting agencies • Highly professionalized
    culture • Experienced management team of individuals with extensive
    health care experience and longevity with the company • Conservative
    fiscal management philosophy: retain earnings for future growth and
    development • Company has state-of-the-art medical information
    technology • Company has sound financial position: cash, working capital,
    stockholder equity increasing over past year • Earnings per share of
    common stock has increased despite 3:2 stock split in 2001 and 2:1 stock
    split in 2003.

Exhibit 4–6: Strategic Thinking Map of Competitive Advantages Relative to Strengths in General

Is the Value of the Strength High or Low? (High/Low?)

H

H

H

H

H

H

H

H

Is the Strength Rare? (Yes/No)

N

N

N

N

Y

Y

Y

Y

Is the Strength Easy or Difficult to Imitate? (Easy/Difficult)

E

E

D

D

E

E

D

D

Can the Strength Be Sustained? (Yes/No)

Y

N

Y

N

Y

N

Y

N

Implications

No competitive advantage. Most competitors have the strength and
those that do not can develop it easily. All can sustain it. Maintenance
strategy.

No competitive advantage. All competitors have the strength which is
easy to develop. Strength is not sustainable so it represents only a
short-term advantage.

No competitive advantage. Many competitors possess the strength but
it is difficult to develop, so care should be taken to maintain this
strength.

No competitive advantage. Many competitors possess the strength but
it is difficult to develop, and those who do possess it will not be able
to sustain the strength. Only a short-term advantage.

Not a source of long-term competitive advantage. Because it is
valuable and rare, competitors will do what is necessary to develop this
easy-to-imitate strength. Short-term advantage. Should not base
strategy on this type of strength but should obtain benefits of
short-term advantage.

Not a source of competitive advantage. The strength is easy to
imitate and cannot be sustained. Short-term advantage. Do not base
strategy on this type of strength but obtain benefits of short-term
advantage.

Source of long-term competitive advantage. If value is very high, it may be worth “betting the organization” on this strength.

Possible source of short-term competitive advantage but not a strength that can be sustained over the long run.

Ginter, P. M., Duncan, W. J., & Swayne, L. E. (2013). Strategic Management of Health Care Organizations (7th ed.). San Francisco: Jossey-Bass.

 

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