Explain the linkage between internal environmental analysis and the value adding service
Assignment:
Exercises:
- Explain the linkage between internal environmental analysis and the value adding service delivery and support strategies. How are the value adding strategies linked with action plans?
- How does the marketing of a service differ from the marketing of a physical product (good)?
Professional Development:
Case Study #15: “So, Doctor, can you fix this?” A case involving a medical spa.
- Perform an internal analysis of the medical spa to determine key challenges faced by the organization. Based on that information, create a “Strategic Thinking Map” for value-adding support strategies (Exhibit 8-9, p. 336).
- Evaluate the effectiveness of service delivery strategies by answering the questions posed in Exhibit 8-10 (p. 338)
The Professional Development assignment should be between 1500 and 2000 words in length and contain at least two scholarly sources, in addition to the textbook and provided material. Please submit your assignment in one APA formatted document.
Expert Answer and Explanation
Value-Adding Support Strategies
Exercise
Internal environmental analysis is an important aspect in the development of strategies that lead to organizational growth. When considering internal analysis, attributes that are inherent to the organization that either promote or hinder quality service provision are evaluated. Value addition, on the other hand, is usually controlled by components that are internal to the organization.
Therefore, an internal environmental analysis will assist the organization to understand the areas that can be enhanced within the organization, to improve the value of services delivered to clients (Ginter et al., 2013). By developing effective value-adding strategies, one can then evaluate how they ought to improve their services; who those strategies are aimed at; or who needs to act; where resources need to be placed to achieve better service delivery, all of which can then be condensed into implementable action plans.
There are several differences between marketing a product and marketing a service. Given that products are tangible, in most cases, they are marketed based on their value, whereby, the customer has to evaluate the value and match it with the price offered for the product to make the purchase. However, for services, marketing is done based on relationships, this includes the interaction between the service delivery personnel and the client (Rather, 2019).
While most of the products offered to the market are fixed, the services given to a client may vary from person to person and is therefore important to ensure that the level of quality of service provision is maintained at a constant or better still improved. Therefore, based on these aspects, service marketing can be seen to be more complex as compared to marketing a product That can also explain the difference in marketing mix between products and services with services having more elements attached to the mix (Isa et al., 2020).
Professional Development
Internal organization analysis is an important step in developing strategic plans that can assist the organization to navigate through the various market challenges and gain a competitive edge. This section of the paper will conduct an internal analysis of a medical spa, and provide value-adding strategies that can assist the organization.
Internal Analysis
Strengths
From the case of Dr. Goyzueta’s spa, various attributes can be observed after conducting an internal analysis. Starting with the strengths of the business, it can be seen that Dr. Goyzueta has been a medical practitioner for a long time and his professional history is one of the aspects that made him more appealing as compared to non-medical spa operators. Like most medical spas run by doctors, the “halo effect” which clients had about a doctor’s reputation, made them even more willing to receive most of their cosmetic services in medical spas as compared to non-medical spas (Young & Chen, 2020).
However, his medical background was in a different field and not cosmetics, which was also one of the issues that proved to be a weakness to the reputation of his spa.Another strength was that the spa industry had high reimbursement rates, with most of the clients coming to receive the services having the ability to pay upfront. In most cases, the clients had to pay out of pocket or using credit cards, with very few, if any insurance companies covering for procedures done in the spa. The medical spa industry had relatively cheap malpractice insurance, which also made the cost of operations slightly lower in comparison to other medical practices.
Still, on strengths, the market base in the spa business has also been rapidly growing from one million in 1997 to over nine million in 2006 for non-surgical cosmetic procedures. This means that the cosmetic industry was still in its thriving stage and with the promise of better profit margins. The advertising efforts made on products offered in medical spas increased the demand for those services. Another aspect that made Dr. Goyzueta’s spa to have an edge is the fact that he was appealing to the Latino community where he comes from. The fact that he is bilingual also made him appealing to the English-speaking clients too.
Weaknesses
Some of the weaknesses faced by Dr. Goyzueta’s spa include lack of insurance coverage for most of the services offered in the spa. While most of the clients were able to fork out the incurred expenses out of their pockets, there was still a large chunk of the population who wanted but could not afford the facilities offered by the spa. Therefore, having insurance coverage could potentially open up a wide market that was currently locked out from accessing procedures offered in the medical spa (Sandberg, 2017).
Another weakness that was apparent to the spa was its location. The fact that it was affected by flooding makes it to be susceptible to such events in case they happen again in the future and may pose a threat, including damage to property if a solution is not found.Starting a medical spa was also very expensive given the cost of high-end technology required to perform some of the procedures. This makes it difficult to recoup investments, especially if the market fails to respond or in the event, they are damaged, for example, due to floods as was experienced.
Another weakness was the fact that the spa was still modeled like a physician’s office thereby, lacking the ambiance similar to those of spas. This is a weakness that affects most of the medical spas, whereby, they fail to balance or consider the challenges faced by both medical spas and beauty salons. Clients in medical spas needed to be pampered in a friendly manner which is not the same in a usual medical office
Opportunities
Other than the apparent weaknesses, there are several opportunities that are apparent to Dr. Goyzueta’s spa. The first is that there are various options for market differentiation in the medical spa industry which could be capitalized, for example, Dr. Goyzueta can opt to provide services specifically targeted at the Latino community. There is also an opportunity to venture into the middle class and high-end market since the income levels of residents living in the neighborhood have also been increasing. There is also the opportunity of venturing into partnerships with other physicians, organizations, and even learning institutions to further enhance the services provided by the spa.
Threats
Some of the impending threats apparent to Dr. Goyzueta’s spa include a bad reputation created by unqualified personnel operating medical spas, which spoils the image of the entire industry, including those spas with a good reputation. Another threat is the changing government regulations, some of which may be detrimental to the performance of the business. There is also the threat of new entrants, including from physicians who are not in the same field for example gynecologists, dentists, urologists, to list a few.
The numerous numbers of new entrants can be linked to ease of market penetration and the apparent attraction of market lucrativeness. Another threat is the provision of numerous complex procedures, which may be difficult for only one person to manage without some form of partnership or employing other skilled personnel conversant with those procedures.
Strategic Thinking Map
| Value-Adding Service Delivery Strategies | Results of Internal Analysis | Requirements of Selected Strategies | Comparison of Strategy Requirements and Internal Analysis | Maintain or Change |
| Pre-service · Market/marketing research · Target market · Branding · Pricing · Promotion | Poor marketing research on client needs specific to the medical spa industry. · Branding was found to be lackluster in comparison to other spas and more like other medical offices. · The target market was mainly focused on clients who could afford those services out of pocket with the low-end market being left out · Ineffective promotion efforts which have not translated to new clients
| · Increased market research efforts · Change in communication strategies · Redesigning of the facility and brand · Price adjustments · Enhancing the promotional efforts | More market research needs to be undertaken to understand the needs of the target clients (Ginter et al., 2014) · Communication through different advertising strategies to increase client awareness on what the facility offers · Redesign the facility to create an ambient spa-like environment · Price adjustments and discounts will attract different market niches, including low-end clients. · Enhancing the promotional efforts to promote the brand of the spa and attract more new clients | Change |
| Point-of-service · Clinical operations · Marketing | · The personnel working in the organization were not adequately trained to provide quality customer care services and market the product offered · The facility did not have an elaborate evaluation tool to assess the quality of services rendered
| · Introducing a training program that will enhance the skills of the service delivery personnel, especially skills on customer engagement · Instituting a quality improvement initiative that will enhance the quality of services offered
| · The introduction of training will be effective in that it will enhance the skills of the service delivery personnel, especially skill on how to properly engage with the clients and how to promote the products offered by the facility (Ginter et al., 2014). · Quality improvement initiatives will assist the facility to always be at the forefront in providing topnotch quality services to its clients. | Change |
| After-service · Follow-up activities · Billing · Follow-on activities | · The facility lacked an effective referral network that could lead to the recruitment of new clients. | · Development of vibrant referral system with clients and other affiliate organizations | · By developing a vibrant referral system, more clients will be attracted and recruited to the organization. | Change |
Effectiveness of Service Delivery Strategies
Increased market research will mean that the services provided will be specifically aimed to meet the needs of the market. Similarly, offering discounts and price adjustments for different market niches will ensure that the services provided by the spa taps into a wider pool of clients. Introducing quality improvement initiatives, including training, will further enhance the quality and efficiency of services offered and will ensure a system of continuous improvement that will respond to the changing consumer needs (Ginter et al., 2013).
The introduction of an elaborate follow-up and referral system involving both clients and other affiliate organizations will be an ideal way of attracting new clientele to the spa. This will be a cost-effective method as compared to other promotional initiatives, given that it will mainly entail word-of-mouth (Taheri et al., 2020). Therefore, the strategies selected will be effective in improving the number of clients visiting Dr. Goyzueta’s spa.
Conclusion
The paper has conducted an internal environment analysis on Dr. Goyzueta’s spa and elaborate value-adding strategies established, which could see the business gain a competitive edge. The strategies require a change of internal structures that will assist in enhancing the efficiency and effectiveness of services rendered to clients and at the same time attracting new customers to the spa.
References
Ginter, P. M., Duncan, W. J., & Swayne, L. E. (2013). Strategic Management of Health Care Organizations (7th ed.). San Francisco: Jossey-Bass.
Isa, S. M., Kelly, L., & Kiumarsi, S. (2020). Brand switching through marketing mix: the role of brand effect on smartphone users. International Journal of Process Management and Benchmarking, 10(3), 419-438. https://doi.org/10.1504/IJPMB.2020.107940
Rather, R. A. (2019). Consequences of consumer engagement in service marketing: An empirical exploration. Journal of Global Marketing, 32(2), 116-135. https://doi.org/10.1080/08911762.2018.1454995
Sandberg, D. S. (2017). Medical tourism: An emerging global healthcare industry. International Journal of Healthcare Management, 10(4), 281-288. https://doi.org/10.1080/20479700.2017.1296213
Taheri, B., Chalmers, D., Wilson, J., & Arshed, N. (2020). Would you really recommend it? Antecedents of word-of-mouth in medical tourism. Tourism Management, 83, 104209. https://doi.org/10.1016/j.tourman.2020.104209
Young, C., & Chen, X. (2020). Patients as consumers in the market for medicine: the halo effect of hospitality. Social Forces. https://doi.org/10.1093/sf/soaa007
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What is internal environment analysis in strategic management?
Internal environment analysis in strategic management is the process of evaluating and understanding the internal factors and capabilities within an organization that can affect its strategic decisions and performance.
This analysis is a crucial component of the broader strategic planning process, helping organizations identify their strengths and weaknesses and make informed decisions about how to best position themselves in the competitive landscape.
Key components of internal environment analysis include:
- Organizational Structure:
Examining the formal structure of the organization, including its hierarchy, reporting relationships, and divisions. Understanding how the organization is organized can provide insights into its communication channels, decision-making processes, and overall efficiency.
2. Organizational Culture:
Assessing the values, beliefs, and norms that shape the behavior of individuals within the organization. A positive and aligned organizational culture can contribute to employee motivation, engagement, and overall performance.
3. Resources and Capabilities:
Identifying and evaluating the tangible and intangible assets that the organization possesses, such as financial resources, technology, human capital, and intellectual property. Understanding core competencies and unique capabilities can provide a competitive advantage.
4. Financial Performance:
Analyzing the financial health of the organization through key financial statements such as the income statement, balance sheet, and cash flow statement. Financial analysis helps assess the profitability, liquidity, and overall stability of the organization.
5. Operational Efficiency:
Evaluating the efficiency and effectiveness of the organization’s processes and operations. This includes assessing supply chain management, production processes, and overall operational performance.
6. Human Resources:
Assessing the skills, knowledge, and expertise of the workforce. Human resources analysis involves understanding employee capabilities, training programs, talent management, and overall workforce satisfaction.
7. Innovation and Technology:
Examining the organization’s approach to innovation and its use of technology. Understanding how technology is leveraged can be critical in staying competitive and adapting to changes in the business environment.
8. Brand and Reputation:
Assessing the organization’s brand image and reputation in the market. A positive brand and reputation can contribute to customer loyalty and trust.
By conducting a thorough internal environment analysis, organizations can gain insights into their internal strengths and weaknesses, enabling them to make informed strategic decisions. This analysis also helps in aligning internal capabilities with external opportunities and threats in the broader business environment.
Why environmental analysis is important activity for the strategy formulation process of an organization?
Environmental analysis is an important activity in the strategy formulation process of an organization because of several reasons and they include the following:
- Identifying Opportunities and Threats:
Environmental analysis helps organizations identify external factors, opportunities, and threats in the business environment. By understanding market trends, competitor actions, and potential changes in regulations, organizations can proactively respond to opportunities and mitigate potential threats.
2. Adapting to Change:
The business environment is dynamic and constantly evolving. Environmental analysis allows organizations to stay abreast of changes in customer preferences, technological advancements, economic conditions, and other external factors. This adaptability is crucial for long-term success and sustainability.
3. Informing Strategic Decisions:
A thorough understanding of the external environment enables informed strategic decision-making. Organizations can align their strategies with external opportunities and build defenses against potential threats. This ensures that strategic initiatives are more likely to succeed and contribute to the overall goals of the organization.
4. Risk Management:
Environmental analysis helps organizations identify and assess risks associated with external factors. By anticipating potential challenges, organizations can develop risk mitigation strategies and contingency plans. This proactive approach minimizes the impact of unforeseen events on the organization’s performance.
5. Competitive Advantage:
A comprehensive environmental analysis enables organizations to identify their strengths and weaknesses relative to competitors. By leveraging strengths and addressing weaknesses, organizations can develop a sustainable competitive advantage in the marketplace.
6. Resource Allocation:
Strategic decisions often involve the allocation of resources such as capital, manpower, and technology. Environmental analysis provides insights into which areas of the business are most promising and which may require additional attention or investment. This helps optimize resource allocation for maximum effectiveness.
7. Customer Satisfaction:
Understanding the external environment, including customer needs and preferences, allows organizations to tailor their products and services to meet customer expectations. This customer-centric approach enhances satisfaction and loyalty, contributing to long-term business success.
8. Regulatory Compliance:
Changes in laws and regulations can significantly impact business operations. Environmental analysis helps organizations stay compliant with evolving regulatory requirements, reducing legal risks and ensuring ethical business practices.
In summary, environmental analysis is crucial for the strategy formulation process because it provides the necessary information and insights for organizations to navigate a complex and dynamic business environment. It empowers decision-makers to make informed choices, anticipate changes, and position the organization for long-term success.
What is the difference between a service product and a physical product?
The primary difference between a service product and a physical product is in the nature of what is offered to consumers. Here are the key distinctions between the two:
- Nature of Offering:
- Physical Product: This refers to a tangible, material item that can be touched, seen, and physically possessed. Examples include electronics, clothing, furniture, and automobiles.
- Service Product: This pertains to an intangible offering that involves a performance, an action, or a service that is provided to the consumer. Services are not physical objects and include activities like consulting, education, healthcare, and financial advice.
- Tangibility:
- Physical Product: Tangible and can be perceived through the senses. Consumers can touch, feel, and see the product.
- Service Product: Intangible and lacks physical substance. Services are experienced rather than possessed.
- Production and Consumption:
- Physical Product: Typically, the production and consumption of physical products are separate processes. Products are manufactured, stored, and then sold to consumers.
- Service Product: Production and consumption often occur simultaneously. Services are often created and consumed in real-time.
- Ownership:
- Physical Product: Consumers purchase and own physical products. Ownership implies the right to use, transfer, or dispose of the product.
- Service Product: Consumers do not own the service but rather experience it. The service provider may grant the consumer the right to use the service for a specific duration.
- Perishability:
- Physical Product: Most physical products are not perishable and can be stored for an extended period without losing their utility.
- Service Product: Many services are perishable and cannot be stored for future use. The time and expertise of service providers are often limited and must be utilized when offered.
- Customization:
- Physical Product: Customization may be possible, but it is often constrained by the mass production nature of physical goods.
- Service Product: Services can be highly customizable to meet the specific needs and preferences of individual customers.
- Quality Assessment:
- Physical Product: Quality can be assessed through tangible features such as durability, materials, and workmanship.
- Service Product: Quality is often assessed based on the outcome, customer satisfaction, and the delivery process. It may be more subjective than the assessment of physical products.
Understanding these distinctions is crucial for businesses as they design, market, and deliver products to meet the unique characteristics and challenges associated with either physical or service offerings. In many cases, businesses may offer a combination of both products and services to meet the diverse needs of consumers.
Service marketing examples
Service marketing is the process of promoting and selling intangible services rather than physical products. Here are some examples of service marketing:
- Hospitality Industry:
- Example: Hotels and resorts market their accommodation services, emphasizing features such as luxury, comfort, and personalized experiences. They may promote amenities like spa services, concierge assistance, and fine dining.
- Financial Services:
- Example: Banks and financial institutions market services such as savings accounts, loans, investment advisory, and online banking. They focus on factors like interest rates, convenience, and financial planning assistance.
- Healthcare Services:
- Example: Hospitals and healthcare providers market medical services, emphasizing specialties, advanced technology, and patient care. Marketing efforts may highlight preventive care, wellness programs, and the expertise of medical professionals.
- Consulting Services:
- Example: Management consulting firms market their expertise in solving business challenges. They may highlight successful case studies, industry knowledge, and the qualifications of their consultants.
- Education Services:
- Example: Educational institutions market academic programs, emphasizing the quality of education, faculty expertise, and career opportunities. They may also promote campus facilities and extracurricular activities.
- Telecommunication Services:
- Example: Telecom companies market services like mobile plans, internet connectivity, and digital TV. Marketing efforts often focus on network reliability, data speed, and special promotions.
- Travel and Tourism:
- Example: Travel agencies market services such as vacation packages, cruise bookings, and travel insurance. They highlight destinations, travel experiences, and the convenience of booking through their services.
- Legal Services:
- Example: Law firms market legal services, emphasizing expertise in specific areas of law, successful case outcomes, and client testimonials. They may also offer free consultations to attract potential clients.
- Fitness and Wellness Services:
- Example: Gyms and fitness centers market services like personal training, group classes, and wellness programs. They focus on health benefits, expert trainers, and modern workout facilities.
- Software as a Service (SaaS):
- Example: Companies offering cloud-based software services market their products based on features, scalability, ease of use, and cost-effectiveness. They may provide free trials and highlight customer success stories.
- Event Planning Services:
- Example: Event planning companies market services for organizing weddings, conferences, and other events. They emphasize creativity, attention to detail, and the seamless execution of events.
- Real Estate Services:
- Example: Real estate agencies market property buying, selling, and rental services. They highlight property features, neighborhood advantages, and assistance throughout the real estate transaction process.
7 Ps of service marketing
The 7 Ps of service marketing is an extension of the traditional marketing mix and is especially relevant for service-based businesses. The additional Ps focus on elements that are specific to services. Here are the 7 Ps of service marketing:
- Product:
- In the context of services, the “product” refers to the service itself. This includes the core service offering, any supplementary services, and features that distinguish the service from competitors.
- Price:
- Pricing strategies for services are often more complex than for physical products. Factors to consider include the perceived value of the service, competitive pricing, and any additional fees or charges. Pricing may also be influenced by the intangible nature of services.
- Place:
- The “place” element in service marketing focuses on the channels through which the service is delivered. This includes physical locations, online platforms, distribution channels, and any intermediaries involved in delivering the service.
- Promotion:
- Service promotion involves communicating the value and benefits of the service to the target audience. This includes advertising, public relations, digital marketing, social media, and other promotional activities. The challenge is often in conveying the intangible aspects of the service.
- People:
- People are a crucial component in service marketing. This includes the employees who deliver the service as well as customer interactions with service personnel. The competence, attitude, and behavior of employees significantly impact the customer’s perception of the service.
- Process:
- The “process” refers to the systems, procedures, and steps involved in delivering the service. A smooth and efficient process enhances customer satisfaction. This includes everything from the initial customer contact to the completion of the service.
- Physical Evidence:
- Physical evidence involves the tangible elements that support the delivery of the service. It provides visible cues that help customers evaluate the service quality. Examples include the physical environment (e.g., facilities, equipment), documentation, and any tangible artifacts associated with the service.
