MGT 471 Strategic Management-Appendix B TEAM THREE

External Environment (OTs) Worksheets

A. Application of PEST
Note this form may be copied in electronic form to add lines or enlarge the lines in order to include different dimensions of
the industry that is being analyzed.

1. 2. Curre 3. 4. 5. 6.
Cate nt situation Trend Imp Evaluatio Action
gories/ s (future) lications n /
Dimensions Recommend
ations

External Facts, [Be sure to (i.e., What O* T Importa (What does

Environment Information, separate the would * ** nce*** (do) the firm(s)
(Factors/Vari Data (From research (facts) happen if need to do
ables/ the case, from predictions firm(s) differently? Add
Dimensions) industry and inferences--- continue(s) lines for each
yours & others.]
note, or as currently factor/variable/
team’s occurring dimension as
research*) w/o needed.)
changes?)

General
(External)
Environme
nt

Political: With the switch Depending on Regulations - High Regulations want

of presidential how the 2018 will continue to to be cut by the
administrations, elections go will be increase the + -- new administration.
you are seeing the outcome of price of + I think there should
that the what the premiums as be reform on the
Affordable Care healthcare system the new age of regulations such as
Act will look like. kids grow up. Title 1 where you
(ObamaCare) is Regulations want The age group are seeing a 45-
trying to be cut to be cut by the of <35 will see 68% hike in
by the current new administration the worst premiums alone.
administration As the federal premium hikes (Heritage.org)
that wants to government has no with it Regulations need
make some laws in place to averaging from to be stricter to also
changes the regulate how 19-35%. protect the
healthcare assisted living The residents of these
system. facilities will be nonexistent facilities. Quality
ObamaCare is run, this will attract regulation of will go down
considered the potential investors, these facilities because there are
highest making it a viable opens the flood little to no rules on
expansion of market to invest gates to elder how sanitary and
coverage and heavily in abuse and clean these places
regulations investors have to be.
since the taking
creation of advantage of
Medicare and the growing
Medicaid in demand to
1965. provide
According to the facilities that
government aim at making
accountability a larger profit
office, The than taking
federal care of its
government residents
doesn’t have
 information
about the quality
of assisted living
services
provided to low-
income people
on Medicaid
(Pear)
“Cannot ensure
states are
meeting their
commitments to
protect health
and welfare of
Medicaid
beneficiaries”
(Pear)

Economic: Senior assisted As the demand Salaries are - High Government

living and senior drives up, one of the regulation is key in
care centers are sustainability is a largest costs -- this area. The
an example of key goal to associated with statistics show this
an inelastic continue the industry, industry isn’t going
service. There operations. and when anywhere, and with
are little to no However, paired with so much regulation
substitutes and problems such as fraud, in the forms of
most consumers rising minimum sustainability medicaid and
will pay the price wage salaries and can be a medicare, these
to fill their own medicare and challenge.In barriers can really
needs. medicaid fraud some cases, pose a problem to
Demand will challenge the over 10.3 those needing to
continue to grow industry even billion dollars use the facilities.
strongly, by further. Also tying had been An action that can
2050 the elderly into the political recovered in a be taken is to
will make up discussions talked fraud case in provide some
21% of the total above, economic the Health legislation to make
population (up principles show Care Fraud sure that these
from 13% in that when Prevention and facilities are an
2010). something has low Enforcement option for everyone
Companies barriers to entry Action team (much like public
such as Beehive such as nursing from its schools) but at an
Homes and and assisted living inspection in affordable cost.
Country Place facilities, investors 2009.The Again, more
Living take up will surely pour repeal of the regulation on the
roughly 10% of money into the affordable care entire spectrum is
the entire facilities to open up act adds more key to this area as
market share, some of their own barriers for well as political.
netting 241 as a business sustainability
Million in venture. as well.Another
revenue with implication is
24.2 million in creating a
profits. They can more
franchise out competitive
their facilities as market. The
well. Everything more facilities
surrounding that come up,
these assisted the more each
living facilities have to fight for
shows that they customers.
are indeed Therefore,
businesses price
looking to make competition
a profit. Hospice and facility
care as well is quality could
 perceived by the be something
public as a each
business that competitor
serves the foucses on.
community,
when indeed it
first serves
itself.

Social/Demo Adult care, More of a variety of In home health + - High Improving the
Adult ethnic groups have care, more reputation of the
graphic (or supervision, emerged in our family taking facilities is a must
cultural): Extend life world and have care of the for this area of
expecty. Life different views as ancestors. This improvement. It
expectancy in our society could be do to could also help with
the Unied States evolves. Some money issues the revenue as
has increased choose to keep or a distrust in well. The more
30 years during their parents at the cleanliness people are
the Twentieth home while others of the facilites, positively
Centruy. In cannot wait to get or even a influenced by these
2015, the rid of them. Better respect for facilities rather than
expectation was medications for their negatively
that one out of patients to make a parents/relative influenced, lots of
four people who decision as to and want them untapped markets
lived to age 65 whether their to remain with could be tapped.
would live to be elderly family the family. An Increase the
at least 90. member would be implication of capacity for
Some facilities better to survive at this is a patients. Follow the
do not have all home or in a growing trend of better
the needs an facility., Better data negative technology.
individual need? and databases can impact on the Increase
Some inform consumers industry. With satisfaction rates.
religious/cultural as to what the best little to no
beliefs choice for their regulation,
encourage family is. family
children to take memebrs are
in their parents forced to come
into their homes, to terms with
putting a even
negative target unexpected
on these and
facilities. The unexplained
demand for deaths of
these facilities is family
growing and members living
could provide in these
more jobs as facilities.
more facilities (Glekman)
open up.

Technologic The industry is There are If the - Hi All the facilities

starting to expected sales of healthcare involved in the
al: embrace 32.5k robots in the facilities do not + - healthcare industry
technology at a near future. adapt to the + need to embrace
moderate rate Robots are technological + technology. Techn
on three fronts. expected to help change, they ology that includes
The facilities are with running will cease to timekeeping,
using electronic errands, facilitate exist. The payroll, and
monitoring in the communication businesses will charting for the
form of and provide suffer and the employees. That
 intelligent companionship. T patient also. also includes
design sensors. elemedicine is also Technology is robots,
They are also on the horizon in meant to help telemedicine, and
embracing the healthcare the facility cut remote diagnostic
automation such industry. costs and services for the
as the robotic Telemedicine is makes it easier patients. The
assistants and not only cheaper to treat their facilities can
the delivery of but healthier for patients evaluate what
remote medical the facility. technology they
diagnostic would like based on
services. The the budget, the
sensor systems level of help
could provide needed.
early warning
signs for falls or
risks of strokes.

Environment Medical waste The trend here Can lead to Promoting practices
resulting from has increased contaminated that reduce the
al (as these facilities is since 1998 so the drinking water, amount of waste
appropriate): contributing to a increase of release created
negative impact medical waste will chemical Favouring the safe
on our global likely continue substances and
environment. into the environmentally
Out of all the environment, sound treatment of
disposal from and attribute to hazardous health
health care the care wastes
organizations, demolishing Selecting safe and
15% is ozone layer environmentally
considered friendly options of
extremely disposal (World
toxic/infections/r Health
adioactive Organization)

Legal (as President The government The company -- aa H The company

Lyndon B. began to exercise would face should put extreme
appropriate): Johnson signed tighter controls and unnecessary caution in
the bill that scrutiny. Some lawsuit on the proceeding patients’
made Medicare health cares issue of case and treatment
law on July 30, fraud was easy to treatment and plans associated
1965. However, identify but suspicious with legal issues.
by the mid- l distinguishing frauds which Also, the company
990s between fraud and could end up must ask clients to
widespread the medical with enormous fill in legal
fraud became a profession's amount of court responsibility waiver
significant earnest efforts that fines or even form in order to
concern. The resulted imprison of avoid certain
government in overtreatment stakeholders. amount of risk.
initiated efforts was often very
to attempt to difficult
curb the abuses.
By 2017 the
MFSF had
offices in nine
cities across the
U.S.169 From
its inception in
March 2007 to
2017,
MFSF charged
over 3,500
defendants for
allegedly
fraudulent
 Medicare
billings of over $
I 2.5 billion.
(Case: Appendix
F)

+ Global (if Alzheimer’s is The number of With the rise in 0 High Care facilities must
on a steady rise those suffering alzheimer’s ++ ensure they have
needed) worldwide, alzheimer's is sufferers care + the resources and
being described expected to rise in facilities may labor to care for
as the “epidemic the coming expect are rise those with
of our decades. As the in demand to alzheimer’s as the
generation.” number is care for these disease grows and
There’s an expected to reach sufferers and expands. This may
estimated 50 82 million by 2030 must, if also require more
million sufferers and 152 million by necessary, training for
of Alzheimer's 2050, the total cost prepare for the employees to
with the total of care worldwide possible rise in ensure everyone
cost of care is expected to demand for can meet the needs
expected to increase as well. care facilities of those with
reach $1 trillion. alzheimer’s
efficiently.

* Be sure to use references to demonstrate the source of your data/facts/information. The credibility
of a source contributes to the validity and reliability of the data.
**Use a system for evaluating the strength, e.g., Os could be evaluated as +++, ++, + ; Ts as ---, --, -;
and Neutral as 0. Evaluation is a result of your assessment of a) current situation, b) trends, and c)
implications.
***Suggestion: Use importance rating of Hi, Medium, or Lo (essentially a prioritization of action).

B. Application of Porter’s Five Forces Model

Note this form may be copied in electronic form to add lines or enlarge the lines in order to include different dimensions of
the industry that is being analyzed.

1. Catego 2. Curr 3. 4. 5. Evaluation 6. Action/

ries/ ent Tr Implic Recommendat
Dimensions situation ends ations ions
(future)

External Facts, [Be sure to (i.e., What O* T* Importanc (What does the
Environment Informatio separate would happen * * e*** firm need to do
(Factors/Varia n, Data the if firm(s) differently? Be
bles/ (From the research continue(s) as sure to fill in for
Dimensions) case, (facts) from currently each factor/
industry predictions occurring w/o variable/dimensi
note, or and changes?) on.)
team’s inferences-
research*) yours &
others.]

Competitive
(or Specific)
Environment
Power of Medicare is The power of Medicare, + -- Med Cutting regulation
very suppliers Medicaid, and on a diminishing field
Suppliers: important for continues to Social Security are - will help the
those who diminish with in a huge threat of companies reach
are seniors, the talks of running out of their full potential.
disabled and cutting some money. Ultimately, However, while this
people with of the the suppliers have benefits the facilities,
low-income. programs most of the power it raises huge
People such as here.The federal barriers of entry from
cannot afford Medicare. and state a consumer
most Depending if governments can perspective and
healthcare the GOP or choose to support takes away much
without these Democrats or not support the buyer power, which
systems in does well in facilities. If the ultimately is the goal
place the 2018 government for these facilties.
because it is elections will chooses not to
expensive. be the future support, venture
of the the capitalists will
systems. surely come and
dominate the
market thanks to
the ever-growing
demand.

Power of Able to Need adult In house adult Med Stay technology

choose what care for elder care. Family savvy, Meet patents
Buyers:
adult care or family member taking accommodations. Th
home they member. As care of elder ese two
want to be in. stated above, themself. While recommendations
In the note, it as the these two options are what the facilities
is detailed population are also need to do to stay
that certain grows of substitutes to competitive. As for
facilities have elderly, the facilities, buyers looking to get
a greater demand for sometimes they do more power when
market share facilities will not suffice the selecting a facility for
over the skyrocket. The family’s needs. An a patient, there isn’t a
other. In this buyers will implication that is whole lot of options.
topic of elder have even certain to happen Certainly, trying to
living less power is buyers lose eliminate the facilities
facilities, the than before even more power. all together would
buyer doesn’t and the sellers give a cost of zero to
have much can charge paying for facilities,
power. next to but can create a
Switching whatever they burden on other
costs are high want since the members of the
based on buyers will be patient's family.
accessibility forced in
to each many cases to
facility and purchase their
buyers facilities
cannot easily services.
backward
integrate.
Their is no
room for price
negotiation
and while
their are
many
facilities
available for
use, many
are out of
 reach for the
patients
need, forcing
those who
need the
facilities to
use the one
closests to
their needs.

Threat of There are Because of There may not be ++ -- Low Current care
generally few few new enough care facilities may want to
Potential New new entrant’s entrants, the facilities to look into expanding
Entrants: due to low rate of adequately their facilities to
investments demand may accommodate the accommodate the
into the exceed the growing aging increase in demand.
market. rate of supply. population in the This would enable
Despite this, An advantage U.S. That, coupled care facilities to be
in 2017, the to this with an increase in able to expand the
senior however is Alzheimer’s reach in the market
housing that with an sufferers, care though it would
market was increase in facilities may not create more
seen as a demand is the be prepared to competition.
strong possibility of meet the growing
inveswas having a demand and
seen as a bigger share diversity of elders’
strong of the market. needs.
investment
opportunity.
This is
supported by
the growing
revenue of
the in-home
senior care
industry
which was
$2.3 billion
and this is
expected to
grow from
2017-2022 at
a rate of
7.7%.

Threat of While A big factor Implications of Mid An action that

Hospice, here is cost. substitutes vary assisted living
Substitutes: +
assisted When an directly with the centers should plan
living, and elderly person inelastic demand + for working with
nursing in in need of a for assisted living hospitals to market
homes all service, a centers. To their product to
serve substitute is determine these current patients,
different only thought implications, we therefore when
purposes, of when cost have to remember someone gets sick in
they can all is an issue, that these are still the hospital, they
be grouped mainly when businesses that consider their
together as Medicare/med wish to be institution as a
they all face icaid won’t profitable. As the possibility. In addition
 the same cover the cost. demand grows, the to this, these facilities
threat of These nursing homes will have the bargaining
substitutes. companies charge a higher power that
Currently, the that provide price that people substitutes don’t
main caregivers will surely pay. have. For example, if
substitutes have a niche However, those the institution brings
are home at providing who cannot afford out a service in which
caregivers, care in the it will turn to they send a nurse to
living with patient’s own substitutes, driving visit a patient in their
friends/family, home for a the profit up for all own home, they can
or do nothing cheaper price. substitutes as well. undercut the
at all. competition while
bringing revenue
back to their home
institute, creating
jobs in the process.
While they are
copying the
competition, its and
additional service
that fits well with the
main service.

Degree of The degree Regulations If the facilities do -- Hi The best course of

of rivalry for facilities not acknowledge action for the
Rivalry among + -
among are already their competitors facilities is to keep an
Competitors: competitors is being and how they + eye on the
very tightened due operate, the competitors. The
high. There to the facilities will facilities can beat
is a lot of unavoidable struggle to survive their competition by
competition in deaths that in the differentiating
the nursing have industry. Facilities themselves in every
home occurred. The need to learn way. Facilities can
industry due tighter the about their achieve that goal by
to the number regulations, competitors so providing high quality
of the fewer the they can be able to care, employing high
facilities. The competitors differentiate quality individuals
re are also a will be in the themselves and and embracing
lot of industry. gain new business. technology. The
substitutes They will also lose facilities can also go
such as home funding for their an extra mile in
care agencies medicaid patients following regulations
and private if they cannot that are designed to
care. Most improve to better keep their patients
facilities fight serve their safe and healthy.
for the patients.
Medicare
patient’s due
to amount of
funding they
receive. Most
facilities try to
differentiate
themselves
by providing
different
services such
as rehab,
long term
care,
activities,
facility
amenities,
 and care
provided.

* Be sure to use references to demonstrate the source of your data/facts/information. The credibility
of a source contributes to the validity and reliability of the data.
**Use a system for evaluating the strength, e.g., Os could be evaluated as +++, ++, + ; Ts as ---, --, -;
and Neutral as 0. Evaluation is a result of your assessment of a) current situation, b) trends, and c)
implications.
*** Suggestion: Use importance rating of Hi, Medium, or Lo (essentially a prioritization of action).
 Works Cited

Health-care waste. (n.d.). Retrieved from http://www.who.int/news-room/fact-sheets/detail/health-

care-waste

Pear, R. (2018, February 03). U.S. Pays Billions for 'Assisted Living,' but What Does It Get?

Retrieved from https://www.nytimes.com/2018/02/03/us/politics/assisted-living-gaps.html

Ribbe, M. W., Ljunggren, G., Steel, K., Topinková, E., Hawes, C., Ikegami, N., . . . Jónnson, P. V.

(1997, September). Nursing homes in 10 nations: A comparison between countries and settings.

Retrieved from https://www.ncbi.nlm.nih.gov/pubmed/9464548