Outstanding Strategic Decision and Failed Strategic Decision - Term Paper Example

?I will attach pages 30 - 46 in the next page. thanks  In your professional judgment, what is an example of an outstanding strategic decision or whatis an example of a failed strategic decision? A number of business publications such as s Fortune, Forbes, Business Week, Inc. Magazine and Industry Week evaluate strategic decision-making on a regular basis.  Whichever approach you choose, draft a 1200 word initial contribution describing the circumstances of the strategic decision and, most importantly, why you consider this decision noteworthy as good or bad strategy. Include the source(s) of your information within your contribution in the sentences. Be very specific. Use single space block form for your contribution with double spacing between paragraphs.  In explaining the strategic approach that you consider a success or a failure, you should answer the following questions:  1. Which of the stages of strategic management in action (page 30 of Coulter) initiated the success or failure of the strategy? Was it a good/bad idea from the beginning?  2. What does the organization perceive as its competitive advantage (page 31 of Coulter)? How was this affected by the strategy in question?  3. What driving force or which driving forces of the new business environment (pages 36-44 of Coulter) assisted or helped defeat the strategy in question?  4. How did external opportunities and threats affect the success or failure of the strategy in question (Chapter 3 of Coulter)?  You may decide to choose a public organization (e.g. university such as Northwest or a public hospital center). Whether you choose a for-profit organization or a not-for-profit organization, explain the situation clearly and completely as possible. Refer to the Coulter text in your explanation.  This particular instance, the focus was on to find inquisitive insight about a strategy decision that a company had to implement in order to survive in the fast-paced environment of the corporate world. One of the interesting issues relating to this was the decision of Blue Cross Blue Shield demanding a hospital to cut its overhead cost. Without prior knowledge and being subjective, one would think that the insurance company is at fault. However, one cannot make that judgment without understanding the complexity of the issue at hand. Blue Cross Blue Shield was faced with a dilemma. As an insurance business, the company must made essential strategy decisions that impact its future growth. In this particular scenario, the company did benchmark testing and determined that the rate the hospital charges the company is too high within the hospitals at its region. Blue Cross determined that the hospital should cut its cost by 10% through any means possible. This is partly due to the fact that the company was losing money as it had an obligation to pay its patient’s premiums. Undoubtedly, the hospital responded by adequately cutting its costs. This was beneficial for both companies as it not only build a solid relationship and enabled the companies to diminish unnecessary costs. Moreover, it enabled Blue Cross Blue shield to give better discount rates to hospitals, doctor groups, members and enabled them to compete in a very competitive environment. If the company did not make the strategic decision, it would have given hospital the leverage to go in a market and attract another insurance company. Since Blue Cross Blue Shield targets large groups, it seemed sufficient for the company to challenge the traditional rates of the hospital. If it failed to do so, it would have lost a small majority of its members in the network which would have made the company suffer in overall long-term profits. Strategic decision making is defined as set of alternate decisions that affect key factors which impacts the success of an organization’s strategy. Strategic decisions differ from Tactical decisions because tactical decisions are based on day to day implementation which requires several steps to reach a particular strategy. Blue Cross Blue shield is a renowned insurance company that has been facing many challenges to either modify or remain steadfast in their strategic decisions. One of the major strategic decisions that blue cross blue shield had to make was an unconstrained burden that was imposed on them. The ultimate decision that Blue Cross implemented was to cut its reimbursement rates. Since Blue Cross insisted that the hospital was overstaffed and used this claim to reject the hospitals contact with the company itself. The hospital responded to this treat by identifying a key cost agent and then enabling the head managers of the department make those cuts. In essence, the focus was to reduce the labor cost in order to meet a budget. Clearly, the idea was a good one as it forced both parties to find effective methods to enhance cash flow and cut cost expenses. From the initiation phase, the strategy was strong as it was reduced the necessary cuts for both companies to survive. Competitive advantage is defined as an advantage over its competitors by providing consumers with better quality materials or reducing the price. Without a doubt, providing insurance is a risky business. One cannot diminish that in order to attract customer base; the company must make supreme effort to pay for the claims. However as a business, they key aspect regarding this issue is to reduce unnecessary costs. When Blue Cross was forced to compete with other companies, it did not expand its costs for its members. Instead, it urged the company to reduce its unnecessary overhead costs, which tremendously helped their strategy. One of the key external forces that entered and really impacted the era is the HIPPA law. Both the HIPPA and ACA are one of the most driving forces in the healthcare industry because they force insurance companies to completely define their strategic mission. HIPPA, is the health reform act that mandates and administers the standards for Electronic Data interchange transactions. Since HIPAA puts strict regulations in patient information, blue cross blue shield was force to renovate its strategy. Due to HIPAA and ACA, blue cross blue shield was forced to think of new strategies. For example, it used the benchmark principle to tell the hospitals to reduce its cost by 10%, which was indirect method. A more direct approach would be to tell the hospital to directly cut the staff. In this particular scenario, blue cross blue shield gave full control to the hospital to reduce its cost which could mean eliminating paper waste, cutting salaries, reducing leisure activities. Moreover, the company itself had to take initiative to invest in back up data management centers due to its being the 4th largest company nationwide. Both HIPAA and ACA influence insurance and hospitals to securely dispose medical information of patients. Furthermore, External threats that challenge the company itself has to be the existence of operating markets that continue to grow. Since employer groups have been rationalizing. Furthermore, the commercial markets have been highly competitive over the years. There have been instances where the company has lost bids to hospitals due to fierce competition. The key opportunities that are available with this strategy is to penetrate the company market segment.by providing low premiums to gain market niche. Moreover, the company has amazing opportunities to innovate better products for more individualistic needs. The question remains; how does HIPAA and ACA affect individuals that have insurance through Blue Cross and Blue Shield? First and foremost, the State Health Plan does not affect the coverage under the State Health Plan. However, it challenges hospitals to seek written authorization before seeking private information. In essence, companies have to verify and obtain identity before asking for any health related information. Clearly, the implementation of ACA and HIPAA has solidified the strategy decision of Blue Cross and be better prepared for future challenges. Works Cited "BlueCross BlueShield of Georgia." Georgia Health Insurance & Medical Insurance Plans – Blue Cross Blue Shield of Georgia. N.p., n.d. Web. 7 July 2011. . "David Belson: How to Reduce Hospital Health Care Costs." Breaking News and Opinion on The Huffington Post. N.p., n.d. Web. 8 July 2011. . Papadakis, Vassilis, and Patrick Barwise. Strategic decisions . Dordrecht: Kluwer Academic Publishers, 1998. Print. Randall, Tom. "Medco Loses $3 Billion Blue Cross Contract to CVS in 2012 - Businessweek." Businessweek - Business News, Stock Market & Financial Advice. N.p., n.d. Web. 8 July 2011. . Read More