Business Strategy – Porters Five Forces, Essay Example

Situational analysis is carried out to help managers make a decision. As Porter’s Five Forces Model states, companies and organizations are able to modify their entire strategy based on the forces of the external environment. The basic elements of strategic planning are the situational analysis, the formulation of the strategy, and its implementation. Directional strategies define the organization’s mission and vision, or in other words the organization’s purpose in the marketplace or industry. The directional strategy should cover growth, stability, and retrenchment. All the above strategies are focusing on outcomes that are measurable. As Porter stated in the YouTube video, in health care organizations, the main issue arises when managers focus on processes and costs, instead of outcomes.

Strategy formulation is related to situational analysis, as the direction of the company is defined by the internal and external environment. One can complete a company analysis based on Porter’s Five Forces Model, and determine the goals, objectives, mission, and vision of the organization. The situational analysis would help decision makers determine how to deal with internal and external challenges. For example, when the bargaining power of suppliers is high, the health care organization needs to address issues that are related to service levels. This can be done by analyzing how this impacts patient outcomes. Strategy formulation is the basis of decision making, and situational analysis can help gather relevant information and statistical date to create goals and missions that will define clear choices of strategy. Strategy formulation also uses situational knowledge, and is often completed to redesign the company’s value chain. This will help achieve the goals set by the management, related to desired outcomes, productivity, and implementing evidence-based practice.