After reviewing chapter 15, discuss how the life cycle competition matrix applies to a healthcare organization. Use the internet to seek a healthcare organization that has either began or is in a revival phase. Have they gone through more than one revival phase?Use an outside resource for your initial post. Seek information through healthcare news articles and journals. Write in third person and do not use “I think or in my opinion”. Keep your information factual and follow APA standards on referencing.A minimum of 250 words is required for your initial post.
chapter_15__1_.pptx

Unformatted Attachment Preview

Health Administration Press
Strategic Analysis for Healthcare
Chapter 15
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Life Cycle Analysis
• Life cycle analysis assesses products,
organizations, or industries by analyzing the
current stage in their life cycle.
• Although numerous life cycle models exist,
researchers have generally identified five main
phases in a life cycle:





Birth
Growth
Maturity
Revival
Decline
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Life Cycle Analysis
Growth
Maturity
Revival
Size of organization
Birth
Time
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Decline
Health Administration Press
Life Cycle Analysis: Birth
• Organizations in the birth stage are attempting to establish for the
first time a viable product-market strategy.
• This is achieved mainly by trial and error as efforts are made to
change products and services in a manner that generates distinctive
competences.
• This generally involves major and frequent product or service
innovations and the conscious pursuit of a niche strategy.
• Because companies in the birth phase are small and have no
established reputation, they do not directly confront their more
powerful competitors.
• Instead, they find gaps, or niches, in the market that are not being
filled, and they fill and defend these niches by making innovations.
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Life Cycle Analysis: Birth
Phase
Situation
Organization
Innovation & Strategy
Birth Phase:
Small firm
Informal structure
Considerable innovation in product lines
Young
Undifferentiated
Niche Strategy
Dominated by owner/
manager
Power highly centralized
Substantial risk taking
Homogenous/ placid environment
Crude information processing &
decision making methods
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Life Cycle Analysis: Growth
• The emphasis of the growth phase is growth and early
diversification:
– Product lines are broadened.
– Efforts are also devoted to incrementally tailoring products to
new markets.
– Less stress is placed on major or dramatic product innovations.
• “Market segmentation begins to play a role, with managers
trying to identify specific subgroups of customers and to
make small product or service modifications in order to
better serve them.”
• “In other words, the niche strategy is often abandoned as
broader markets are addressed.”
(Miller and Friesen 1948)
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Life Cycle Analysis: Growth
• Organizations in the growth phase are bigger and
stronger than those in the birth phase, and they are
better able to lobby with various levels of government.
• They may also acquire subsidiaries in their efforts to
diversify.
– An acquisition of this nature “generally takes the form of
buying out much smaller competing enterprises in the same
industry rather than diversifying into new industries.”
– “The acquired firms are usually integrated into the
functionally-based structure rather than left as independent
divisions” (Miller and Friesen 1984).
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Life Cycle Analysis: Growth
Phase
Situation
Organization
Innovation & Strategy
Growth Phase:
Medium sized
Some formalization of structure
Older
Functional basis of organization
Broadening of product-market scope into closely
related areas
Incremental innovation in product lines
Multiple share holders
Moderate differentiation
Rapid growth
A more heterogeneous &
competitive environment
Somewhat less centralized
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Life Cycle Analysis: Maturity
• Firms in the maturity phase are conservative, “do not
perform many major innovations, engage in very few efforts
at diversification or acquisition, and fail even to make many
incremental changes to the products or services being
offered.”
• “The tendency, more than in any other phase, is to follow the
competition; to wait for competitors to lead the way in innovating
and, then, to imitate the innovations if they prove to be necessary”
(Miller and Friesen 1984).
• Markets in the maturity phase are slightly broader than in
the growth phase, and fewer firms opt for a niche strategy.
• Firms try to arrange for a stable, negotiated environment by
fixing prices and lobbying with the government.
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Life Cycle Analysis: Maturity
• The goal appears to be to improve the efficiency
and profitability of operations.
• This is achieved by
– avoiding costly changes in product lines,
– ensuring favorable prices via collusion, and
– lobbying for barriers to foreign competition.
• “A stable and circumscribed product line is sold in
traditional markets, the emphasis being upon economical
production and the preservation of sales volume” (Miller
and Friesen 1984).
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Life Cycle Analysis: Maturity
Phase
Situation
Organization
Innovation & Strategy
Maturity Phase:
Larger
Formal, bureaucratic structure
Consolidation of product- market strategy
Even older
Functional basis of organization
Dispersed ownership
Moderate differentiation
Focus on efficiently supplying a well defined
market
Conservatism
Heterogeneous & competitive
environment
Moderate centralization
Slow growth
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Life Cycle Analysis: Revival
• The revival phase is in many ways the most exciting of
the five.
• Changes begin to take place in the product-market
strategies being followed.
• “For example, there are more major and minor productline and service innovations than in any other period.”
• “New markets are entered for the first time as firms
become more diversified” (Miller and Friesen 1984).
• This diversification sometimes involves the acquisition
of firms in different industries.
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Life Cycle Analysis: Revival
• Market segmentation further defines discrete parts of the
environment, and firms differentiate product lines accordingly.
• “Essentially, firms experience dramatic diversification in their
products and markets. Their growth does not simply result in
an increase in size but an expansion of product-market scope.
There is a movement from one market to many, reversing the
stagnation of the maturity phase” (Miller and Friesen 1984).
• Because of their size, market power, visibility, and occasional
acquisitions, some firms in the revival phase lobby with the
government to avoid interference with expansion, to obtain
protection against imports, and to avoid antitrust lawsuits.
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Life Cycle Analysis: Revival
Phase
Situation
Organization
Innovation & Strategy
Revival Phase:
Very large
Divisional basis of organization
Very heterogeneous, competitive,
dynamic
High differentiation
Strategy of product- market diversification;
movement into some unrelated markets
High level of risk taking & planning
Sophisticated control, scanning, and
Substantial innovation
communications in info. processing;
more formal analysis in decision making
Rapid growth
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Life Cycle Analysis: Decline
• Firms in the decline stage react to adversity in
their markets by becoming stagnant.
• “They try to conserve resources depleted by poor
performance by abstaining from product or
service innovation. Product lines are rendered
antiquated so that it becomes necessary to cut
prices to maintain sales” (Miller and Friesen
1984).
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Life Cycle Analysis: Decline
• Firms seem to be caught in a vicious circle:
– “Their sales are poor because their product lines are
unappealing.
– This reduces profits and makes for scarcer financial
resources,
– which in turn cause any significant product line
changes to seem too expensive” (Miller and Friesen
1984).
• As a result, changes are avoided, and product
lines become even more outdated.
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Life Cycle Analysis: Decline
Phase
Situation
Organization
Innovation & Strategy
Decline Phase:
Market size
Formal, bureaucratic structure
Low level of innovation
Homogeneous and competitive
environment
Mostly functional basis of organization Price cutting
Moderate differentiation and
Consolidation of product- market
centralization
Less sophisticated info processing
Liquidation of subsidiaries
systems and decision making methods
Risk aversion & conservatism
Slow growth
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Life Cycle Analysis: Decline
• Reasons for Decline
– Too much debt 28%
– Inadequate leadership 17%
– Poor planning 14%
– Failure to change 11%
– Inexperienced management 9%
– Not enough revenue 8%
(Business Week 2003)
– What do these reasons have in common?
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Life Cycle / Competition Matrix
• Dodge, Fullerton, and Robbins (1994) suggest a
different way to consider the organizational life cycle.
• First, they group organizations into either early stages
of development or late stages of development.
• They then consider the level of competition the
organizations are experiencing.
• The resulting four-block matrix displays common
critical problems faced by companies in each block.
• Strategies can be developed to address the critical
problems.
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Life Cycle / Competition Matrix
LITTLE OR NO
COMPETITION
INTENSE
COMPETITION
EARLY STAGE
LATE STAGE
1. Lack of dependencies and
constraints in pursuing goals
2. Environment neither
threatening or constraining
Critical Problems:
a) Resources
b) marketing approach
c) Formalization of structure
d) marketing approach
Critical Problems:
a) Stabilizing firms position
b) Formalization & control
c) Stability
3. Turbulent environment- may
constrain or dictate actions
4. Muddling behavior, simply
reacting
Critical Problems:
a) Identify niches
b) Monitor competition
c) Realignment of the firm
vis-a-vis the competition
Critical Problems:
a) Maintain market position
b) Further image via focus &
differentiation strategies
c) Cost control
Source: Dodge, Fullerton & Robbins, Strategic Management Journal, Vol. 15, 121-134 (1994)
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Life Cycle / Competition Matrix
Maturity
Revival
Decline
TOYOTA
HINO
Growth
DAIAHATSU
Size of Company
Birth
TOYOTA MOTOR COMPANY
LEXUS
Example:
Overall Toyota is in “Late Stage” lifecycle
with “Intense Competition.” This suggests
“Critical Problems” of a) Maintain market
position, b) Furthering its image via focus &
differentiation strategies and c) Cost
control
Time
Exhibit 15.6
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Life Cycle / Competition Matrix
• Note that the life cycle chart reflects Toyota, the parent
company, and its divisions.
• Even though Toyota overall is in maturity, some of its
other divisions are still in the growth stage.
• Overlaying the life cycle / competition matrix to the life
cycle chart reveals that overall Toyota is in “late stage”
life cycle with “intense competition.” This suggests
“critical problems” of
(a) maintaining market position,
(b) furthering its image via focus & differentiation
strategies, and
(c) cost control.
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.
Health Administration Press
Exercise
• Divide up into groups and create a life cycle
chart for your project organization. Include the
parent company and any divisions (if there are
any).
• What are the implications for strategy?
Copyright © 2016 Foundation of the American
College of Healthcare Executives. Not for sale.

Purchase answer to see full
attachment