Identify the four primary functions of strategic planning.

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Chapter Objectives After reading this chapter, you should be able to

Identify the four primary functions of strategic planning.

Summarize how mission and vision statements are developed.

Outline the strategic planning phase of analysis and diagnosis in health care administration.

Identify the primary goals and corporate strategies available to health care organizations.

Describe the strategic planning process of implementing a strategy.

Chapter 1 described how directing health care organizations requires application of the five basic managerial functions: planning, organizing, staffing, directing, and controlling. This chapter delves more deeply into the strategic planning function. As the first step in the management process, effective planning is a key element of organizational success in health care.

Strategic Planning 3

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Top-level management can help identify, coordinate, and implement an organization’s overall strategy, which can include a direction for the services that the organization provides.

3.1 Overview of Strategic Planning

Strategic planning is the development of a plan that integrates all organizational activities into a coherent course of action. The many types of organizations that deliver health care vary in the exact natures of their management structures, but they all tend to pursue many similar activities. Top-level executives are responsible for the oversight of the entire organization. In profit-seeking organizations, the CEO has the primary responsibility of caring for the interests of stockholders and other investors, balancing profit goals with other strategic corporate objectives. CEOs in nonprofit organizations tend to issues such as financing; however, their primary objective is to sustain organizational services and operations, rather than seeking profits as the final outcome. In smaller organizations, the top-level executive might carry the title of president or chief administrator rather than CEO.

Strategic management is a top-level management function, overseeing both the short- and long-term organizational objectives and outcomes. This function integrates and coordinates all company activities. Strategic management helps executives steer and manage a company to achieve success over time—not just for the next quarter or year, but for the long term. It includes providing direction for the organization, detailing the goods and services the organization will provide, and determining how the organization will respond to competitors within the industry. It requires an understanding of the organization’s publics and what they want (Ginter, Duncan, & Swayne, 2018). Top executives are charged with four major tasks:

1. Develop the organization’s mission and vision statements. 2. Analyze and diagnose organizational strengths and weaknesses. 3. Decide upon an overall organizational strategy. 4. Oversee the implementation of the organizational strategy at the tactical and operational levels.

To complete these assignments, top managers continually assess and reassess elements of the organization’s operations and the external environment. Let’s look at each of these four functions and how they apply to health care administration. At the end of the chapter, use your understanding of these four tasks and their applications to evaluate Case: Proactive Prevention.

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3.2 Developing Mission and Vision Statements

Seeking a common purpose or goal is part of what defines the nature of an organization. The ultimate objective of any organization constitutes its mission. A mission statement expresses the primary reasons for the formation and operation of an organization. Mission statements can evolve over time, but it is important to remember that mission statements focus on the present, whereas vision statements (which we will discuss later) focus on the future of organizations. In essence, a mission statement should answer the question, “Why does this organization exist?” Beyond any simple answer such as “to make money,” the mission statement defines the essence of the organization and its purpose (Ward, 2018).

Mission statements normally incorporate a series of elements that includes identification of an organization’s markets. A mission statement might include statements about the organization’s overriding philosophy or its concern to maintain a certain type of image, including a notion of a self-concept. In some industries, mission statements identify the products and services to be delivered and the type of technology used to deliver them. According to David, David, and David (2014), mission statements should include nine elements: an organization’s customers; products/services; market; technology; concern for survival, growth, and profitability; philosophy; self-concept; concern for public image; and concern for employees. Ward (2018) stated that “mission statements broadly describe an organization’s present capabilities, customer focus, activities, and business makeup.” Several of the elements discussed here can be seen in the mission statements of health care organizations displayed in Table 3.1.