Financial Planning Essay
In any firm, there are three usually three types of decisions which are taken by the top management of the firm. They include strategic decisions, tactical decisions and operational decisions however the planning for making such decisions probably differ at each stage because the requirements to take such decisions are different. In order to make good strategic decisions, strategic planning is one of the tools to make such decisions. Strategic Planning is one of the highly complex and demanding jobs as organizations.
Whether they belong to health care services or any industry, require to act proactively in order to successfully meet external as well as internal risks. The uncertainty faced by the organizations therefore requires that a comprehensive process of planning shall be initiated so that organizations must prepare in advance. Strategic Planning, in health care industry is critical because the overall face of competition and doing business within the industry is changing. (Reiff, 1993).
Health service providers now need to take broader view of the competitive environment within which they operate because it has not only increased in its scope. The increase in number of competitors as well as increase in the number of service offered suggests that the firms in
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However, it is also important to understand that responsibility for making strategic plans and direct and indirect financial benefits shall be in lined with the broader strategic objectives of the firm. This paper will discuss the steps involved in formulating strategic plans, how strategic management can provide financial benefits besides discussing how scenario planning and scenario analysis can be different from the traditional means of strategic planning prevalent in health care organizations. Steps involved in Strategic Planning
Though Strategic planning and Strategic Management are often considered as similar however strategic planning is different due to the fact that it is the actual step towards creating the strategy. (Ginter, Swayne, & Duncan, 2006). In order to initiate a process of strategic planning, it is critical that a systems approach shall be taken because it aids and facilitate in considering the big picture rather than looking at the causes which are not directly related with the strategic problems faced by the organizations. A typical strategic planning process would require following steps to be completed:
Mission Statement Mission Statement of any health organization defines the overall purpose of the organization. Mission Statement therefore in fact defines why the organization exists and what it wants to achieve over the period of time. To start a sound strategic planning process, it is therefore critical that the planners must define the overall mission statement of the organization. Goals Once the overall mission of the health care organization is set, next step would involve the defining of goals which the organization must achieve in order to fulfill its mission.
It is also important to understand that the goals of the organization must also address the major issues faced by the organization. Further, goals set by the planners must also be realistic in nature. Identify Strategies Identification of strategies is the next step in the strategic management process because after setting the mission and defining the goals, the next step involves the identification of the particular set of approaches and strategies must be followed in order to achieve those goals.
Further it is also critical to understand that the process of identifying strategies must be based on thorough scanning of the internal and external environment of the organization and only after critically evaluating the environment, organization then set up its strategies to achieve the objectives. Action Plan After identifying what strategies are to be followed, the next step is to set up the action plan i. e. what specifically need to be done to achieve the organizational objective.
This stage is one of the critical in nature because it is where the small details of achieving the objectives are set and it is also the stage where the success and failure of the strategic process is defined. Planners in health care organizations must clearly define what actions need to be taken in order to materialize the strategy at this stage. Monitor The last stage is the monitoring stage where planners regular attempt to contemplate on the progress of the strategies i. e. whether the implemented strategies are achieving the organizational objectives or not.
If strategies are not getting the results than its time to rethink the strategy and redefine the whole process so that it they are better aligned towards the strategic objectives of the firm. It is also critical that at this stage, a complete independent review of the strategic planning process shall be conducted in order to evaluate whether strategies are getting results or not. Financial Planning The process of strategic planning helps health care organizations to prioritize their opportunities for optimum financial benefits especially their revenue generating capabilities.
(Zuckerman. , 2000). Considering the changing circumstances in the health care industry, it has now become important for the managers working in health care industry that they must align their financial planning process with their overall strategic management process. It is also critical to understand that the overall financial planning must corroborate the overall strategic process however similarly it must attempt to continue to add value for stakeholders.
Scenario Planning It has been argued that due to fast changing health care competitive environment, the traditional tools of planning are inadequate to accommodate the different and sometimes complex organizational needs. (Krentz & Gish, 2000). The increasing uncertainty of the organizational processes such as increasing ethical issues, employee benefits etc demand that a better proactive approach shall be adopted to achieve the organizational objectives.
Scenario planning is one such tool which can help overcome that weakness of the traditional planning tools and provide an opportunity to incorporate uncertainties in competitive environment by outlining the different sets of probable or possible events whose occurrence may have positive as well as negative influence over the organizational performance. Scenario planning and scenario analysis therefore differ from the traditional means of strategic planning because both of these approaches help health care organizations to take into account the environmental uncertainties.
Bibliography 1) Ginter, P. M. , Swayne, L. E. , & Duncan, W. J. (2006). Strategic Management of Health Care Organizations. New York: Blackwell Publishing. 2) Krentz, S. E. , & Gish, R. S. (2000). Using scenario analysis to determine managed care strategy. Healthcare Financial Management , 54 (9), 41. 3) Reiff, S. D. (1993). Financial planning: A necessity for the 90s. Computers in Healthcare , 14 (5), 20-24. 4) Zuckerman. , A. (2000). Leveraging strategic planning for improved financial performance. Healthcare Financial Management. , 54 (12), 54.