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Case seven. Managing mature operations in a competitive environment.
Case Studies in Health Administration
|December 10, 1989
Summary
Memorial Medical Center used the Product Life Cycle (PLC) curve to evaluate services. Many services were mature, facing competition that reduced profits, prompting a strategic shift.
Area of Science:
- Healthcare Management
- Strategic Planning
- Service Marketing
Background:
- Medical centers face increasing competition impacting service profitability.
- Understanding the Product Life Cycle (PLC) is crucial for strategic service evaluation.
- Memorial Medical Center (MMC) experienced market share challenges due to competitor entry.
Purpose of the Study:
- To evaluate MMC's services using the Product Life Cycle (PLC) curve.
- To align strategic growth and action orientations with service lifecycle stages.
- To adapt organizational strategies in response to competitive pressures and declining profits.
Main Methods:
- Applying the Product Life Cycle (PLC) framework to analyze healthcare services.
- Assessing the competitive landscape and market share dynamics.
- Evaluating organizational competence to inform strategic adjustments.
Main Results:
- Many MMC services were identified as mature or transitioning to maturity on the PLC curve.
- Intensified competition on performance and price negatively impacted profits of mature services.
- MMC recognized the need to modify its action orientation based on service lifecycle stage and market conditions.
Conclusions:
- The Product Life Cycle (PLC) model provides valuable insights for healthcare service management.
- Strategic adaptation is essential for medical centers facing mature service markets and competitive threats.
- Understanding organizational competence is key to modifying strategies for sustained success.