Strategic Management

Strategic Management

Belinda E. Puetz


Strategic management (Coulter, 2009; Dess et al., 2011; Pearce & Robinson, 2012; Sare & Ogilvie, 2009) involves conducting an environmental scan, knowing the competition, establishing goals, setting targets, developing an action plan, implementing the plan, and evaluating success. This approach has long been used in business to ensure a competitive advantage over similar enterprises. It has become imperative for health care organizations to function as businesses. Those that do not do so fail to remain viable for long.

Issues in the health care industry, including the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) and the Hospital Value-Based Purchasing Program, among others, require strategic management to obtain and maintain a competitive advantage. The success of an enterprise depends on its competitive advantage—that is, how well it does something compared with similar efforts and how well it is able to continuously achieve superior performance. Collins and Porràs (2004) and Peters and Waterman (2004) studied a number of best-run companies and identified strategic management approaches that these companies used that made them successful and allowed them to dominate the market. In 2011, Collins and Hansen described the principles that ensured the success of enterprises in an unpredictable, chaotic environment, such as health care.

Strategic management involves strategic planning and implementation. It provides a “blueprint” for operating a business, establishing a competitive position, ensuring customer satisfaction, and reaching strategic objectives or goals. Although most strategic management occurs at the “macro” level (i.e., the executive levels of the health care institution), it can benefit the “micro” level, such as the nursing division, department, or unit, as well. Strategic management prepares nurses to adapt to the current health care environment. Strategic management helps nurses achieve their goals, whether related to the workplace or to the profession.


Thinking and behaving strategically are prime methods for nurses to be proactive in a complex, fast-changing, rapid-cycle environment. The concept of strategic management includes strategic planning (The Association for Strategic Planning []), and also focuses on strategy implementation. The terms associated with an organization’s use of strategy include strategic management, organizational vision or mission, strategy, strategic plan, and objectives.Strategic management is defined as the management of an organization based on its vision or mission. Organizational vision or mission is a guiding framework that describes what the organization views as its business and future direction. Core values define the characteristics or values that underlie the organization’s activities. The core purpose is the reason the organization is in business. Strategy is a competitive move or business approach designed to produce a successful outcome. Tactics are operational choices for action that are made to implement a strategy. A strategic plan is a document that specifies a plan for actualizing the mission. A strategic plan may also involve a business plan or an action plan (either as part of the strategic plan or as an adjunct to it) that consists of the who, what, by when, where, and in general terms, the costs involved in implementing the activities identified as objectives in the strategic plan. Objectives are defined as the targets an organization wants to achieve. These can be financial or performance-based with short-range or long-range targets.


Strategic management generally begins with a strategic planning process, triggered by recognition of the need for an organization to establish its competitive position in the marketplace or to address some other believed need (e.g., seeking Magnet recognition from the American Nurses Credentialing Center Magnet Recognition Program®, [2008], applying for the Malcolm Baldrige National Quality Award, or simply to establish future directions). The following are questions to be answered in the strategic planning process:

The components of the nursing process—assessment, planning, implementation, and evaluation—are similar to those employed in strategic management, as follows:

The strategic plan provides a framework for strategic management, considering both external and internal environmental factors.

Developing a Mission and Vision

The first step of the strategic planning process is to identify the organization’s vision or mission. This requires a determination of what the organization is, what business it is in and for whom, and where the business seeks to be in the future. The mission statement reflects the vision of what the organization seeks to do and to become; it provides a clear view of what the organization is trying to accomplish, and it indicates its intent to carve out a particular position in the industry or field.

The core values of an organization and its core purpose inform its mission statement. The core values held by an organization are those that are held whether or not circumstances (either internal or external) change. These core values are so embodied in the culture of the organization that even if they were seen as a liability, they would not be abandoned. These core values do not change even if the industry in which the organization operates changes. Thus, in health care, the organization that has as its core values excellent customer service, integrity, and social responsibility would retain those core values despite internal changes (e.g., changes in chief executive officers [CEOs]) or external changes (e.g., reimbursement, the nursing shortage).

The organization’s core purpose is the reason the organization exists. The core purpose, like the core values, is relatively unchanging. The core purpose provides direction to the organization and contributes to the articulation and implementation of its mission.

In the strategic planning process, a facilitator or the planners themselves address questions that assist the planners to arrive at a specific vision and mission including the following:

It is assumed that the core values and the core purpose of the organization have been defined previously; but if not, planners should develop these using questions such as the following:

The core purpose can be explicated by asking and answering questions such as what business are we in and what business do we want to be in? The core purpose can be refined by asking “why,” so that the initial response, “We are in the business of health care,” may be further refined to “We want to contribute to the community in which we exist.” Thus asking “why” may result in the core value of social responsibility and the core purpose of providing needed health care services to the community in which the organization is located.

Generally, addressing the strategic planning process questions involves considering both external environmental factors (e.g., activities of regulatory bodies) and internal environmental factors (e.g., financial and human resources). The assessment of future environmental impact takes the form of assumptions. These assumptions encompass the sociodemographic, political, economic, and technological aspects of the external environment. Of course, these assumptions are merely “best guesses,” because it is impossible to predict the future with any certainty.

Responses to these questions by the principals involved in an organization (e.g., executive management, supervisory staff, department heads) will shape an organization’s strategic plan and, as a result, its strategic management. Involving individuals at all levels of the organization (e.g., staff nurses, clerical workers) in addition to those at the top of the hierarchy will ensure a variety of perspectives and more “buy-in” to the final product.

Crafting a vision with the input of many individuals has the advantage of being a result of many perspectives, and it also engages those individuals in helping make the vision a reality. When everyone involved in an institution shares the same vision, individuals know where the organization is going and can be instrumental in helping it get there through their daily activities. As the old saying goes, “If you don’t know where you’re going, then any path will take you there.” Conversely, if all of the individuals in the institution know where they are going, there is a greater likelihood they all will take the same path.

Setting Objectives

Once the organization’s mission and vision have been established, the next step in strategic planning is to develop the ways and means to get there. Thus strategic goals and objectives are crafted. These objectives generally define the “who,” “what,” and “where” of the strategies to be implemented. Focusing the objectives allows individuals to recognize where the organization currently is, where it wants to go, and how much time it will take to get there. Absence of strategic objectives results in individuals trying to move in too many directions without a coordinated plan or not moving at all because of confusion about the organization’s direction.

The strategic objectives provide a way of converting the rather abstract mission of an organization into concrete terms—targets of performance that, taken together, will achieve the mission. Objectives also offer a way of measuring progress toward achieving the organization’s mission. These objectives generally are written to reflect not what is but what should be— activities that encourage the individuals implementing them to be creative, to stretch beyond their current limits, and to challenge themselves to improve their performance. These objectives must be achievable, however, lest individuals lose faith that they can accomplish them. If the strategic objectives are challenging but achievable, they will prevent employees of an institution from becoming complacent or settling for the status quo.

Objectives generally are written in terms of financial outcomes that relate to improvements in an organization’s fiscal health and those that will result in a stronger position for the institution in the industry. For example, a for-profit hospital may set a financial objective to increase earnings growth by a specific percentage each year. A specific strategic objective might be to achieve lower overall costs than competitors or to attain technological advantage.

Developing an Implementation Strategy

The third step in the strategic planning process is to decide how to achieve the financial and strategic objectives that were established, how to obtain a competitive advantage over rivals in the field or industry, how to respond to changing conditions both externally and internally, how to defend against adverse conditions, and how to grow the business to increase market share. The strategies must be planned in advance and must also be adaptable to outside influences. Thus objectives are the targeted results and outcomes, and the strategy is how to achieve that outcome. The strategy must be deliberate and purposeful (planned and intentional) and also flexible enough to respond to events that are unanticipated when the strategy is developed. For example, new opportunities may arise that were unknown at the time a strategic objective was developed; these opportunities could greatly increase an organization’s competitive position. Changes in a product line or service provided by an organization may necessitate a change in a strategic objective.

Basically, an organization’s strategy consists of how it treats its customers and stakeholders; how it responds to changes in the industry and marketplace; how it capitalizes on new opportunities; how it manages its operations; how it grows and develops; and how it achieves its financial and strategic objectives. The challenge is to involve key people in the organization in developing this strategy so that these individuals can champion the implementation of the strategy. The desired outcome is to ensure that the strategy is timely, responsive, innovative, creative, and designed to take advantage of opportunities as they arise.

The benefits of strategic management cannot be overemphasized. In today’s business climate, particularly in the health care environment, survival is tenuous and success is fraught with difficulty. A good management strategy helps an organization remain strong enough to withstand competition, overcome obstacles, and achieve peak performance. The organization’s strategy must be flexible to respond appropriately to the following:

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Aug 7, 2016 | Posted by in NURSING | Comments Off on Strategic Management

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