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Strategic management oversees the formulation, im- plementation, and monitoring of strategy and, as

such, involves both internal and external management functions. First, it is intensely internal in its
orienta- tion. Effective strategic management requires the ex- tensive participation of an organization's
leaders. Top management typically play key roles in conceptualiz- ing and interelating strategy with
organizational goa!s, missions, and visions, as well as implementing and evaluating strategy. They
integrate strategy with internal support functions, the organization's culture, and the motivations of key
personnel.

Strategy and Environmental Turbulence With health care markets currently undergoing major change, it
is difficult to predict exactly what kinds of organizations wil! remain after market restructuring has run its
course. Despite this uncertainty, individual organizations must find ways to compete. But what strategies
they should pursue will depend on evalua- tions of their own and competitor strengths and tweaknesses.
It will also depend on careful assess- ments of their market environments. It is comimon to conceive of
two types of external en- ironments-those that are relatively predictable and those that are fraught with
lurbulence (Ansoff, 1988; Drucker, 1980). In the more predictable environments, approaches to
formulating strategy will tend to be lin- car. They will likely focus more on the maintenance and fine-
tuning of existing, successful strategies, than on the remaking of strategies. In addition, they tend to
emphasize the "control" of strategy. Centralized efforts will be made to assure the proper functioning of
those organizational subsystems that are involved in the im- plementation of established strategies
(Hayes, Pisano, & Upton, 1996; Lorange, Morton, & Ghoshal, 1986). In predictable environments, the
more mechanistic and analytical approaches will tend to be the most applica- ble. Such was the case
during the 1960s, when the health care industry experienced increased funding and growing prosperity.
In such environments, it may be sufficient to take a planning approach, combined with the analytics of
the positioning school.

Strategy-Integrating an Organization's Vision/Mission Strategy, properly formulated, should provide the


central rallying point around which an organization- members can unite to ensure that it survives and
thrives over the long term. To achieve its potential as a unifying force, however, any strategy should be
consistent with the organization's mission and vision. which themselves embody an organization's values
and aspirations (Quigley, 1993). The organization's mission

nd vision frame the strategic options from which one ould choose and, presumably, marshal the
resources needed for strategic action to be taken. Once embraced by an organization's members, vi-
sions/missions often take on an almost evangelical aura, replete with all the symbolism of inspired
thought. In their book on leadership, Kouzes and Pos- ner (1995, pp. 10–11) discuss the visionary role of
strategic ideas:
A Typology of Market Structures Of a number of structural features of markets, three are among the
most important: • Market concentration-the degree to which a small number of competitors dominate a
market. Entry barriers-the difficulties encountered by po- tential new competitors as they consider
entering a market.

Product differentiation-the degree to which indi- vidual competitors are able to distinguish them- selves
from one another in ways that are valued by consumers.

MARKET STRUCTURE Understanding the externa! environment is critical the formulation and
management of strategy. The in- dustrial organization framework, offers valuable insight in the analysis
of the environment and, more particularly, the markets (Bain, 1956, 1972; Bain & Qualls, 1987; Caves,
1982; Mason, 1939; Sherer & Ross, 1990). We build upon this framework to clarify market structures,
firm conduct. and their relationship to strategy. As indicated, the per- formance of firms depends upon:
(1) the organizationof "economically significant features" of markets- market structure-and (2) the "acts,
practices, and pol- itics" firms pursue as they strive for profits-firm con- duct. More importantly for
purposes of this chapter, the framework recognizes the direct effect of market structure on conduct,
which encompasses the strategic behaviors of individual firms.

Stages of Market Growth In addition to the more traditional structural determi- nants, a market's growth
or decline can alter compet- itive advantage significantly. Markets are always ex- panding, declining, or
flattening out in their rates of growth. Sometimes this is attributable to short-term or cyclical patterns
and at other times, to longer-term causes. It is the latter, of course, that are important from the
perspective of assessing markets and strat- egy. There are a number of reasons why the rates of growth
in markets shift over time, including changes in buyer preferences, technology, entry barriers, the
viability' of substitute products, and the numbers and

Interdependencies between Market Concentration and Stage of Growth It is important to recognize that
structural factors of- ten combine to affect strategy. To illustrate how this is so, we introduce two of the
dimensions of market structure discussed earlier and within each of these, three market models. These
two dimensions and their three respective models are (1) degree of con- centration (models: atomistic,
oligopolistic, and mo- nopolistic) and stage of market growth (models: emerging, mature, and decline).
The cross-classifica- tion of márket concentration and market stage yields nine market types. The types
are along with the sources of competitive advantage

Health Services Policy and Management Research Health services research has come of age and clearly
has made major contributions to the policy issues fac- ing the health services system. Moreover, it is
likely that the synthesis and dissemination of health serv- ices research will play a continuing role in the
process of formulating policy, albeit within an environment characterized by political controversy. Future
consid- erations, however, need to be given to the interdisci-plinary nature of health services research
and the uti- lization of research by managers.