- Discuss the resource-based view of competitive advantage. Why is it important to understand organizational differences to use this approach?
- Briefly define what is meant by competitive advantage. Are competitive advantage and sustained competitive advantage identical concepts? Compare and contrast the two concepts.
Case Study #12: AIDSCAP Nepal
- Conduct an internal environmental analysis, identifying the value-creating strengths and weaknesses for each value chain component. Model your response after Exhibit 4-4 (p. 144) “Value Creating Strengths and Value Reducing Weaknesses.”
- For each strength, assess the competitive relevance, using Exhibit 4-6 (p. 149) as an example.
- Exhibit 4–4: Value Creating Strengths and Value Reducing Weaknesses for American Healthways, Inc.
- Value Chain Component
- Service Delivery, Pre-Service
- Service Delivery, Point-ofService
- Service Delivery, AfterService
- Support Activities, Culture
- Support Activities, Strategic Resources
- Value Reducing Weakness
- • Limited brand identity • Disease management and care enhancement contracts require extensive selling because of lack of knowledge of key beneﬁts • Revenues subject to seasonal pressures from enrollment processes of contracted health plans
- • Company/employees have less experience in care enhancement programs in expanded product line areas such as end-state renal disease, ﬁbromyalgia, etc. • A majority of company’s revenues accounted for by three health plans
- • Incomplete or inaccurate data could render independent evaluation of clinical interventions useless
- • Acquisition of StatusOne Health System with different culture • Company’s reluctance to declare cash dividend may discourage some classes of investors
- • Hospital contracts decreasing • Cost to maintain IT for compliance with federal and state regulations • High labor costs from competition for staff • Volatility of stock price and trading volume
- Value Creating Strength
- • Customer beneﬁt: care enhancement/disease management concept (attractive to health plans, hospitals, physicians, patients) • Customer beneﬁt developed: geographical coverage (attractive to large health plans) • Six care enhancement centers
- • Successful management of diseases leading to reduced costs and increased customer satisfaction • Company employees highly experienced in implementing care enhancement programs in certain areas, such as diabetes • Integrated care product line attracts broad range of patients • Number of covered lives increasing making economies of scale possible
- • Alliance with Johns Hopkins Health System to independently evaluate effectiveness of clinical interventions
- • First disease management and care enhancement provider in nation accredited by all three accrediting agencies • Highly professionalized culture • Experienced management team of individuals with extensive health care experience and longevity with the company • Conservative ﬁscal management philosophy: retain earnings for future growth and development • Company has state-of-the-art medical information technology • Company has sound ﬁnancial position: cash, working capital, stockholder equity increasing over past year • Earnings per share of common stock has increased despite 3:2 stock split in 2001 and 2:1 stock split in 2003.
Exhibit 4–6: Strategic Thinking Map of Competitive Advantages Relative to Strengths in General
Is the Value of the Strength High or Low? (High/Low?)
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