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Strategic Management: HFL Strategic Report Analysis
1. Introduction:
The importance of drawing a strategic plan is vital to determine the success of a Company, ‘Where do you want to play and how are you going to win?’
Equally important, to develop a business strategy a company needs a good understating of what it is and what it represents. (Vision, Mission Statement and Values). Once achieved a deep understanding of the company’s vision, mission and values then it will be helpful to start thinking about the strategic analysis process.
From the scenario, we can see that HFL seems to be a company with a well-defined strategic process.
An environmental analysis of its current strategies it is important to make them aware of their operational inefficiencies, financial issues constrain and employee motivation. On the other hand, we have the external environment considerations that include the analysis of the change in customer tastes, political trends and economic shifts.
2. Industry Overview and Analysis:
As we can see from the scenario HFL operates and competes in the manufacture and whole of the gymnastics of high quality handmade gymnastics wear and associated products.
On the other hand, the company selling figures is divided Between UK sports retailers (60%), exports to the USA (35%) and Canada (15%) by using channels such as their websites.
The Industry of sports manufacture is constantly changing being influenced by many different trends. Under these circumstances the market environment evolving sports manufacturing brands are facing a lot of challenges to keep their position in the market, especially sports apparel/accessories which is demanding more technical clothes.
3. Porter´s Five Forces- Industry Analysis.
a. Barriers to Entry
Moderate
The demand for sports clothes is growing and requires a lot of capital requirements, distribution channels such as online sales and small shops. As mentioned above the differentiation of products it’s important especially in areas like branding, design, and branding.
Equally important manufacturing and sourcing costs tend to decrease which encourages larger firms to enter the market.
Besides, the legal barriers are moderate however many brands have patents for their unique manufacture purposed materials which is not a significant barrier.
b. Competitive Rivalry
High
HFL is competing with 6 other companies, where product differentiation is of high importance in the ‘quality of handmade gymnastics wear and associated products’.
Therefore competitive rivalry is high in the sports clothing and accessories industry. It is certain that there is a strong competition concerning, technological fabrics, pricing, design, branding, and features that can be exposed and affected by rapid changes in buyer preferences and product innovation called technological improvement.
To get advantage HFL invests in producing materials based on their quality and handmade products that tend to last longer. Consequently, that helps to build a strong brand image and a good reputation to avoid the customers to change to the competitor.
c. Bargain powers of buyers
High
Since there is a low cost in changing to the different alternatives the bargaining of power tends to be high. All the manufacturers are facing difficulties as the pricing system is very competitive to avoid losing the customer to the competition. Presently customers are more conscious of what they are buying as they read and inform themselves online before making a purchase and always attentive to the quality standards, in fact, the most important in the manufacturing of sports clothing is a strong brand image to protect the brand loyalty.
d. Bargain of Power suppliers
Low
Nowadays there is a fairly large pool of suppliers, in the case of HFL they have the ‘capacity and can sell all they can produce’. Obviously since the can produce it gives them the power to control prices, quality, and quantity. Besides that, it helps them give more pressure on their competition making the industry more competitive and decreasing profit potential for the buyer.
e. Threat of Substitutes
Moderate
Gymnastics clothes are unique, the threat of substitute is moderate, and ‘the global gymnastic market can be segmented on the basis of a variety of textile, style, sleeve length, size, demographics, sales channel, buyer type, gender and regions’, based on the quality and handmade process of HFL, specialized clothing has an advantage when it comes the make a decision from the customers point of view. Quality helps people to keep their trust in the brand.
f. Pestel Analysis
The Pestle analysis helps to evaluate the macro environment to which HFL is exposed, it helps the determine external factors that can influence the company`s performance in the manufacture of sports clothing global market.
g. Political Environment
Political factors can decide the survivability of an organization.
As a company manufactures its goods, HFL will always be subject to changes in tax and manufacturing laws the UK government suggested to increase the VAT on sporting goods to 22% to raise additional tax receipts, which can affect the sportswear market to shrink by 5%.
The decision to leaving the EU can increase their sales in the UK and decrease outside, however, the exportation to countries like the USA is ‘expected to rise’.
h. Economic
Since HFL is part of the 6 biggest companies in the market, a market collapse could bring bad news to HFL. The impact could make consumers choose/ switch to a different competitor, cheap products and leave quality to the end of their priorities.
i. Social
Social Status means brings more modernity and healthy consciousness in the industry, therefore will buyers buy more and more. HFL’s new initiatives on custom design can improve their social aspect which will make customers loyal to the brand.
j. Technological
Technology is transforming and forcing the industry to constant change, it gives companies the ability to innovate from different angles.
In Spite of being traditional, the HFL idea of a costume design website that allows customers to create and draw according to their needs and the automation of their cutting process it shows that technology provides values to organizations like HFL. In other words, it helps them to optimize targeting, production and maximize revenue.
k. Legal
From the legal point is important that keep a clean sheet if VAT goes to the sales increase if the UK leaves the UE it important to follow the legal rules according to the changes.
HFL, being part of the 6 companies that produce quality products, should meet all the legal criteria’s that can cause a lack of loyalty from their customers.
l. Environmental
Positive environmental factors are becoming are gaining more acceptance by the customers and the government, not referred on the case it is important to HFL to invest in ‘Green products’ which will attain more market share in the sports manufacturing industry.
4. Scenario 2
a. Porter’s five forces
In this case, porter’s five forces have been used to identify the main factors that have a potential impact on the SCH and to understand the strategy used for their behaviour in the health Sector.
b. Competitive Rivalry
Private health care rivalry manifests itself in many ways, especially in the context of public health care. The barriers to entry in the market are very high due to the high standards keep within the industry. In addition, government legislation also limits competition in the health care industry.
As we can see SCH receives most of the customers that are recommended by local hospitals and doctors and this is due to the service quality and quantity provided by them comparing to the public sector.
Therefore comparing with the SCH only loosed to the public sector in pricing.
c. Bargaining Power of suppliers
SCH has diversified their services and a small central team who are the key point of the patients and nursing staff. Also counts 150 employees who provide service to around 800 patients
d. Bargaining Power of Consumers:
Most healthcare treatment is paid by insurance, that can be paid privately or by the government. In the case of SCH the prices are higher compared to the prince in the public sector, however, SHC has the advantage of offering higher services than the local hospitals and doctors.
e. The threat of New Entrants
Private care organizations can be seen as a new market entrant or as the reorganization of existing providers that will allow a better completion amongst them.
As we can see in the case there is a franchise company that is willing to enter into the market in South East London, which can end up affecting SCH.
f. The Threat of Substitutes:
Generally there always a competition between traditional and non-traditional private care providers and services. Technologies are vital to keeping up with the threat of substitutes in products and services, therefore it is important to SCH to invest in new technologies. (In the case it is stated the need for investing in portable medical equipment and probably in the future remote patient monitoring.
g. Key Strategies challenges:
‘The model of Healthcare Business has to rely on the value for the patient by creating competition concerning the results at medical condition level’ ( J MED Life, 20008).
Some of the key challenges for the SCH will be:
Competition Requirements in Terms of value offered to health care consumer, the main goal of a health care service is to deliver the service to the patients, it is important to know, who the client, what does he needs, is how can we create value and how do we need to organize ourselves. One of the important points is how do we respond when they are contacted, how can we meet their needs. Equally important never reduce client satisfaction, compromise quality, and limited coverage.
Maintain SCH high-performance standards of their own caring services delivery, focus on patient and employee satisfaction as it reflects also on the relationship with the patient, especially with elderly people.
5. SWOT Analysis
· Strengths
The costs of operating in private health care are low, being the UK one the countries with a large number of 65 or older people, therefore the demanding of the private health services increase substantially. As we can see from the scenario the costs from the private sector are higher than the public, however, the service provides from the private are with better quality and personalized. In addition the advantage of getting recommended by local hospitals and doctors. Previous studies state the barrier to entry into this market is moderate ‘given the licensure requirements for these businesses.’
· Weaknesses
Comparing to public health care organizations, a private system in much expensive there it can limit some of the people as they don’t have the capacity to pay unless they have help from insurance companies or government funding. The constant rise in costs can result in the closure of private care companies.
· Opportunities
SCH has the opportunity to expand their business when it comes to getting routine treatments after a GP surgery since they have qualified nurses that can apply the same procedures that are used in the public sector. The service for a short term required and the investment in portable equipment that can provide a better customer experience leaving the patients in their comfort zone.
· Threats
A large number amount of business enters on this market, as we can see a local newspaper has reported: ‘that a new franchised home care operator is intending to offer services in the south East’. Consequently, it can be a barrier to SCH to grow in Southeast London.
6. The four strategies of the Ansoff Matrix are:
a. Market Penetration
SHC should identify the right markets and regions to invest in with the right potential and growth potential; establish connections and partnerships with domestic and local companies through mergers and acquisitions so as to strengthen and improve the service quality
b. Product Development: It focuses on introducing new products to an existing market.
It is important to maintain the quality standards provided by SHC, establish a good private care plan so that product requirements can be transformed into actions; determine the private care market. Execute the product development plan
c. Market Development: it is based on the strategy to enter into a new market with existent products
As per the case of SHC there is a need to enter into the business of providing short term services to families since in private care some families have the need to have 24-hour service.
d. Diversification: It focuses on entering a new market with the introduction of new products.
Since the demanding from the patients is to get private care without moving from their homes, SCH needs to invest in portable equipment and training to nursing staff will be the introduction so the patients can get treated with their families by their side.
e. Suitability
Suitability Internal development is a good way for SCH to enter a new market, the opportunity of offering a better service compared to public care shows that SHC strong position in the market. Their position in the southeast London with highly trained and motivated staff helps them to deliver a high-quality service based on their statement ‘We treat our customer with respect and dignity and provide highly personalized and tailored home care services’.
f. Acceptability
SCH seems to behave their system in place to achieve maximum success. The fact that they are receiving a recommendation from doctors and local hospitals will help to expand their business and enter into new markets. Continued market development is also recommended for SHC enabling it to tap into new markets enhancing its growth, ensuring its sustainability and contribution to the enhancement of shareholder value.
g. Feasibility
‘Capacity of the organization to implement the strategy, especially focusing on the availability of resources’ (Thompson, et al., 2008).
One of the most SHC priorities should be diversification, the market is asking for private care as the public is losing the capacity to provide high-quality services. The investment in portable medical equipment will allow the company to keep a strong strategic position in the healthcare care market and achieve the necessary growth in the future. The need to pursue appropriate strategies is important to the growth and keep up with the rapid changes.
h. Strategic Recommendation/Conclusions
Based on the analysis of the scenario, SCH the consistency in the quality of the service by having patients who are increasingly better informed, aware of their rights, capacity to keep choosing SCH as their private care provider, a decision that can have a positive impact on the company`s financials.
The focus passed from the product or service to the patient, in other words, a great customer experience.
On the other hand the increasingly professional and skilled competitors, SCH needs to keep hiring qualified trained professionals and provided constant training to maintain their standards.
Equally important Measure Outcomes and Costs for Every Patient, as most of the health care system, are department-based and not patient-based, therefore good strategies here will design good strategies based on measuring the cost of care.
Meanwhile, one of the improvements SHC could be the integrated delivery systems by defining the scope of services and choosing the right location for each service line, like that it will be possible to improve SHC system of keeping everything close to the patients’ home or workplace.
Other points to implement strategies will be to expand geographic reach, it is important to SHC not to stay only in the South East London, as it is important to serve more patients on large scale by improving the value and not only volume.
Build an Enabling Information Technology Platform is also important is help SCH center on the patients, it uses common data definition, a medical record that can be accessed to all staff involved, the system can include expert systems for each medical condition and it is easy to extract information.
7. References:
- Healthcapital.com. (2016). Four Pillars of Healthcare Valuation: Competition. [Online] Available at https://www.healthcapital.com/researchmaterialdocuments/publishedarticles/3_NACVA_TVE_Competition_Article.pdf [Accessed 11 Jul. 2019].
- Popa, F., Purcărea, T., Purcărea, V.L. and Raţiu, M. (2008). Current challenges for healthcare services and the opportunities created by the marketing abilities. Journal of medicine and life, [online] 1(1), pp.16–22. Available at: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3018957/ [Accessed 11 Jul. 2019].
- Healthcapital.com. (2016). Four Pillars of Healthcare Valuation: Competition. [online] Available at https://www.healthcapital.com/researchmaterialdocuments/publishedarticles/3_NACVA_TVE_Competition_Article.pdf [Accessed 11 Jul. 2019].
- Harvard Business Review. (2019). The Strategy That Will Fix Health Care. [online] Available at https://hbr.org/2013/10/the-strategy-that-will-fix-health-care [Accessed 11 Jul. 2019].
- Oxford College of Marketing Blog. (2019). Using The SAF Strategy Model to Evaluate Strategic Options. [online] Available at https://blog.oxfordcollegeofmarketing.com/2018/02/25/evaluating-strategic-options-using-saf-strategy-model/ [Accessed 11 Jul. 2019].
- Anon, (2014). Strategic Management Report – A Strategic Pathfinder for STARBUCKS. [online] Available at https://www.academia.edu/9806255/Strategic_Management_Report_for_STARBUCKS [Accessed 11 Jul. 2019].
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