Paper Sample on Yes or No: External Environment's Impact on Capital Allocation

Yes or No. Your answer reflects your organization’s perspective. For “yes” answers, please provide a specific example.

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1. Does the external environment influence capital allocation and decision-making processes?

Yes

The external environment determines the allocation of capital as well as the effectiveness of decision-making. Some factors of the environment will determine how an organization allocates its resources. The external context of the organization affects and constraints the allocation of capital within a firm (Sengul et al., 2019, p.43). Political factors like political stability and tax policies will determine if an organization will increase the allocation of capital or not. Economic factors like budgetary restrictions and people's income will affect how the Erlanger Health System allocates its resources and the decision-making processes.

1.2. Have previous strategic plans been scrapped because of unexpected changes in the environment?

No

1.3. Has there been an unpleasant surprise in the external environment?

Yes

Erlanger's external environment has experienced an unpleasant surprise. When coronavirus struck, it jeopardized the global economy including the economy of the United States. Therefore, Erlanger's economic environment has suffered due to COVID-19 pandemic. The pandemic has led to a loss of revenue for the hospital and therefore, the hospital had to reduce its expenses by suspending retirement contributions and vacation accruals, reducing overtime, cutting leadership pay, and furloughing some administrative workers (Fite, 2019, p.1).

1.4. Is competition growing in the industry?

Yes

Competition is growing in the health care industry since new hospitals keep on developing.

1.5. Is the organization becoming more marketing oriented?

Yes

Erlanger is becoming more marketing-oriented through strategies like building on strengths, making no-regret moves, and developing multiple access channels (Betbeze, 2018, p.1).

1.6. Do more and different kinds of external forces seem to be influencing decisions, and does there seen to be more interplay between them?

Yes

Different external forces have influenced decisions at Erlanger hospital. Erlanger has reduced its expenses due to the economic burden caused by the COVID-19 pandemic. The advancing technological environment has encouraged Erlanger leaders to implement EHR (electronic health records) to improve workflow efficiency and reduce provider frustration and administrative burden (AHA Physical Alliance, 2018, p.1).

1.7. Is management unhappy with past forecasting and planning efforts?

No

2. Health Care Organization Segments

Planning/Regulatory Organizations FDA (Food and Drug Administration

Primary Providers Erlanger’s physicians’ offices

Secondary Providers University of Tennessee Health Science Center

Organization that represents the primary and secondary providers AMA (American Medical Association)

Individuals and patients physicians

3. Professional Opinion

In 250 words or less, in your professional opinion supported by professional and scholarly sources, does your organization need to conduct an analysis of the general and health care environments? Why or why not?

Erlanger needs to analyze its health care and general environments. For an organization to be successful, it has to develop strategic plans through external analysis. Environmental analysis is relevant since it can influence the quality of medical services by pinpointing better strategies for quality health care after understanding of the factors (Mosadeghrad, 2014, p.210). Erlanger needs to analyze the general environment of secondary organizations to access the availability of resources. Secondary organizations include drug suppliers, medical schools and colleges, third party payers like government, and drug distributors. Erlanger should also analyze other firms and people in the health care sector like consumers (patients and individuals), secondary providers, primary providers, regulatory and planning organizations, and firms representing secondary and primary providers.

The health care environment and the general environment impact each other. The general environment consists of individual customers, research foundations, religious and educational institutions, business organizations, and government institutions. The health care environment consists of individual patients, provider representatives, secondary providers, and regulatory organizations. These environments impact Erlanger directly. These environmental analysis tools will help Erlanger to scan, monitor, forecast, and assess the external analysis and hence determine its success in the provision of quality health care.

The environmental analysis will validate the strategic assumptions by raising strategic thinking questions. These questions will help check the varying performance changed by ongoing environmental changes. The internal and external analysis provides a comprehensive and systematic reflection of the internal and external environment (Moro Visconti, 2016, p.1). Environmental analysis improves softening government concerns private-public partnering, and procurement choices (Moro Visconti, 2016, p.1). Therefore, Erlanger should conduct an environmental analysis.

References

AHA Physical Alliance (2018). Erlanger Health System Chattanooga, Tenn. Retrieved from: https://www.aha.org/system/files/2018-11/plf-case-study-erlanger.pdf

Betbeze, P. (2018). 3 Strategies That Built One Health System's Culture of Growth. Retrieved from: https://www.healthleadersmedia.com/strategy/3-strategies-built-one-health-systems-culture-growth

Fite, E. (2020). Erlanger furloughs staff as COVID-19 preparations cause 30 to 40% drop in revenue. Retrieved from: https://www.timesfreepress.com/news/local/story/2020/mar/30/erlanger-furloughs-staff-covid-19-preparations-cause-30-40-drop-revenue/519442/

Moro Visconti, R. (2016). Healthcare public-private partnerships in Italy: assessing risk sharing and governance issues with PESTLE and SWOT analysis. Corporate Ownership and Control, 13(4).

Mosadeghrad A. M. (2014). Factors Affecting Medical Service Quality. Iranian journal of public health, 43(2), 210–220.

Sengul, M., Costa, A. A., & Gimeno, J. (2019). The allocation of capital within firms. Academy of Management Annals, 13(1), 43-83.