Essay Sample on SWOT and PEST for Strategy Formulation in Healthcare Organizations

Introduction

Strategy formulation is one of the major important factors to consider in healthcare organizations. Strategic planning contributes to the quality and safe patient care as well as efficient management. SWOT and PEST are the most commonly used tools by healthcare facilities to develop strategies. The two mechanisms take different forms when used in strategy formulation. Managers of hospitals ought to have an understanding of how to appropriately apply SWOT and PEST in their strategy. Knowing the underlying strengths, challenges, and limitations in both SWOT and PEST lead to the achievement of strategic objectives. As seen in the discussion of this paper, SWOT and PEST are mostly used approaches by a healthcare organization in strategic planning; therefore, seeking to analyze their use, strength, challenges, and limitations is essential for safe and quality patient care as well as effective management.

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SWOT and PEST are closely associated techniques used in business analysis. First, SWOT refers to a situational assessment employed by organizations in analyzing the strengths, weaknesses, opportunities, and threats facing an organization (Shabanova, Ismagilova, Salimov, & Akhmadeev, 2015). Strengths checks on the core competencies of the company in giving it advantages over others. Weaknesses review internal deficiencies related to competition facing the business. Opportunities assess the emerging markets as well as untapped product and service diversification. Lastly, threats look at the potential harmful factors that may negatively influence the success of the firm (Han & Guangrui, 2018). Therefore, understanding SWOT as a mechanism of business assessment leads to optimization of strengths and opportunities while minimizing the negative effects of weaknesses and threats.

PEST, on the other hand, focuses on analyzing the external environmental factors affecting the business. PEST analyses factors that include political, economic, social, and technological environment affecting the business operations (Shabanova et al., 2015). The political environment is the assessment of the effect of politics on the company, for example, the impact of government regulations. Economic factor looks as outside economic matters and their role in the success of the company, for instance, inflation, interest rates, and credit. Conversely, the social environment examines the socio-economic condition and needs surrounding the business, for example, population, demographics, and age distribution of consumers. Lastly, the technological environment analyses the effect of technology in the operations of the organization (Han & Guangrui, 2018). Understanding external environmental conditions of the political, economic, social, and technology factors lead to the formulation of an effective strategic plan and the ultimate attainment of its goals.

SWOT and PEST are used in the formulation of strategy in healthcare organizations in various ways. First, SWOT analysis of the organization's strengths, weaknesses, opportunities, and threats help healthcare companies in strategic planning (Shabanova et al., 2015). Assessment of strengths aids in the maximization of the organization's potential against others. Some of the strengths that healthcare facilities can identify are the provision of high-quality services, decreased use of hospital services, satisfied beneficiaries, and experienced personnel. Secondly, the identification of weaknesses such as the shortage of equipment, personnel shortages, and weak management helps the managers in healthcare organization to strategically address such issues affecting the business operations. The analysis of opportunities in a healthcare organization is also ideal in the formulation of a strategy. The company maximally uses opportunities like new markets by expanding its activities and training of staff. Lastly, knowing the threats that derail the progress of the company is helpful in strategic planning by hospitals (Jamalinejad, Zangiabadi, & Varesi, 2014). Examples of threats that a healthcare organization can identify are inadequate funding and the increasing number of patients. Healthcare companies include strategies on how to solve factors threatening the success of their operations in its strategic plan.

Like SWOT, PEST analysis is also used by healthcare organizations in the formulation of strategies. The analysis of the political, economic, social, and technological factors helps in coming up with strategies on how to effectively manage healthcare organizations (Han & Guangrui, 2018). The analysis of the political environment leads to the implementation of activities that comply with the set regulations by the government, a situation that reduces conflicts with the governing authorities. The examination of the economic environment is used by managers in healthcare companies to operate within the business status without making losses. Organizations consider issues like interest rates, credit, and GDP in the formulation of a strategic plan. On the other hand, the information gained after the assessment of social factors assists healthcare companies to appropriately offer services as per the demands of clients as per their age, gender, beliefs, values, and distribution. Lastly, reviewing the technological factors is also used in the formulation of strategy in healthcare organizations. Companies strategically implement the use of modern technologies in the diagnosis, and treatment of patients (Sternick & Curran, 2016). There is also the adoption of technologies like e-healthcare for home care programs.

The use of SWOT and PEST in the analysis of business operation has some strengths and limitations. First, the use of SWOT has the strength of examining both the external and internal factors affecting the organization (Shabanova et al., 2015). By using SWOT assessment, the company is able to understand factors affecting it both internally and externally. In spite of having strength, SWOT analysis has a limitation of bias because of the use of subjective analysis. The results are prone to bias basing on the interests and objectives of individuals collecting and analyzing data. PEST, on the other hand, has strengths and limitation. PEST has the strength of offering a deeper understanding of external environments affecting the organization both directly and indirectly. Like SWOT analysis, PEST also has a limitation. PEST has a limitation of inability to analyze internal factors affecting the business (Han & Guangrui, 2018). Reliance on PEST analysis leaves the organization at the risk of not understanding internal factors influencing the company.

Conclusion

Conclusively, strategy formulation is one of the main important factors to consider in healthcare organization for effective management and quality and safe patient care. SWOT and PEST are the most commonly used tools by healthcare organizations to formulate strategies. SWOT refers to a situational assessment employed by organizations in analyzing the strengths, weaknesses, opportunities, and threats facing an organization. Conversely, PEST focuses on analyzing the external environmental factors affecting business. SWOT and PEST are used in the formulation of strategy in healthcare organizations in various ways. Also, the use of SWOT and PEST in the analysis of business operation has some strengths and limitations.

References

Han, W., & Guangrui, T. (2018). The SWOT-PEST Analysis of the Construction of Incentive System for State-owned Enterprises' Scientific Researchers. IOP Conference Series: Materials Science And Engineering, 439, 032032. doi: 10.1088/1757-899x/439/3/032032

Jamalinejad, M., Zangiabadi, A., & Varesi, H. (2017). Strategic planning for national knowledge-based development using the SWOT strategic model. Management Science Letters, 4(6), 1085-1098. doi: 10.5267/j.msl.2014.5.024

Shabanova, L., Ismagilova, G., Salimov, L., & Akhmadeev, M. (2015). PEST - Analysis and SWOT - Analysis as the Most Important Tools to Strengthen the Competitive Advantages of Commercial Enterprises. Mediterranean Journal Of Social Sciences. doi: 10.5901/mjss.2015.v6n3p705

Sternick, E., & Curran, B. (2016). SU-FF-P-01: Conducting a SWOT Analysis - A Useful Framework for Medical Physics Strategic Planning. Medical Physics, 36(6Part2), 2433-2433. doi: 10.1118/1.3181117