Strategic Analysis Report on Estia Healthcare

Document Type:Research Paper

Subject Area:Management

Document 1

Its customers pay for these services. The Estia Healthcare service is one of the contributors to the national economy. Most of the countries struggle to ensure that most of its citizens are employed. Therefore Estia homes has absorbed in many people through employment. It has employed 4,488 people. They thus ensure that they have incorporated other activities like reading, watching movies, listening to music, cultural celebrations daytrips and art sessions among others which are necessary for their clients. There is clinical care that is also offered at Estia Healthcare aged home. They carry out regular medical reviews which include pain management, physiotherapy, podiatry, dental services and optometry. Table of Contents 1. 1 Overview of Estia Healthcare 1 1. 2 PORTERS 5 INDUSTRY ANALYSIS 11 2. 1 Threat of New Entrants 12 2. 2 Bargaining Power of Suppliers 12 2.

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3 Bargaining Power of Buyers 13 2. 4 Threat of Substitute 14 2. 1 Tows Matrix 21 4. 2 Strategy initiative evaluation using SAFe 21 5. STRATEGY IMPLEMENTATION PLAN 23 5. 1 Timeline 23 MEASURE OF STRATEGIC INITIATIVE 25 6. 1 Balanced Score Card 25 6. The profit from this period was 7. 75% per diluted share. The Company is expecting a capital expenditure of $220 million by the year 2020 (Bloomberg, np). This means that the Company is confident about its future performance. This means that if there is little change in regulations and market materials then there will greater growth of the Company in the future. Balanced Score card and Stakeholders mapping will be used to measure strategic initiatives of this initiative. EXTERNAL ANALYSIS Estia Health Limited is a public company that operates in Australia. They have homes in South Australia, Victoria, Queensland and New South Wales.

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This healthcare trades on Stock market as ASX: EHE. Its share prices have been evaluated as among the best in the region. It is a concept that is commonly used to track the macro environment that the environment is operating in. The analysis looks at how the government influences the business through the new tax. This is the political environment through the fiscal policy, trade tariffs and tax policies. Changes in Macro environment impact not only the Estia Health Company but also other players in the same industry. PESTLE analysis is important to Estia Company for it deals with the prevailing environmental condition in which the Company thrives. Therefore, funding by the government is an opportunity for the aged care providers to get manages their operation costs.

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There are also reforms advocated in the PC report. It called for changes in aged based sector. It suggested that the system should be market based and consumer driven. Some recommendations in the PC report 2011 advocated for the deregulation of health sector. This is according to the financial year 2017. In terms of the wealth distribution per adult, it is the second richest and wealthiest country. It comes after Switzerland. The economic situation of this country is an opportunity for the Estia Company to advance its growth. It means that more people are willing to pay for the aged services in the country. This is also an opportunity for the Estia and other players in the Company to reach out too many people in the country.

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This facilitates easy advertisement. Advertisement announcement can be made and spread easily through the social media (Estia Health Annual report, np). Most of the factors which determine performance of the economy are in return the same factors which affect Estia Company. These factors mostly have long term effects to the industry. By doing this it increases the revenue to the government through contributing to the taxes of the nation. It also employs many people who earn their living from the duties in this Company. 3 Social Social and cultural factors are also major contributor towards Estia Health Company. This is in terms of the demographic factors of the national population. Culture is also an important aspect that affects a Company from outside.

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The percentage is also estimated to increase to 23%. There is also a new cohort of people of more than 85 years. It is forecasted that this group will grow to 5% up from 2% now. This is an opportunity to Estia Health Company. it means increase in market. Technology is bringing in new revolution in almost all industries in the world. The healthcare industry is not left behind in this revolution. It is time that emphasis should be placed on sophistication of IT in aged care sector. The best way to use technology is incorporating it so that it is used in many areas that seem to be a burden in the future. It is important to note that technology is advancing with time and generations.

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4% of the GDP (Estia report, np). 5 Legal There are policies in Australia which are likely to affect this industry directly. The government is advocating for a market-based consumer care model to serve the aged. With this model, the preference of the consumer is going to dictate the type of the healthcare system that will be adopted by the members of this industry. With this new structure in place, consumers are likely to prefer to get services at home rather than at residential facilities owned by these aged care Companies. This is because the government has the changing in consumer preference. It has changed the healthcare provision ration. Initially the ratio of homecare to residential care funding was 2:12. The government has intervened to this parity and the current ratio is expected to change from 25:88 to 45:80 probably by the year 2022.

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This intervention is an opportunity for the Estia to adjust accordingly by customizing their services to cater for the need of the changing consumer behaviors. The financial sustainability was achieved through the reforms which were made in the payment of accommodation. The money raised from accommodation has also increased as a result of introducing Refundable Accommodation Deposits and also elimination of caps that was initially charged on daily rates. Now, the high-care residents are paying RADs. This has enabled the home cares to get money from such activities. Therefore, legislation has advantaged and disadvantaged the player in the industry at the same time. In addition to this, other Companies that are below standards are eliminated from the competition. It is also an opportunity for the Estia healthcare and other companies in to improve on the quality of their services.

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This is because people are demanding for better services in future. Another body is Australian Council of Social Services. It advocates the needs for the poor and those with low income in the society. These factors are threat of substitutes, bargaining power of suppliers, bargaining power of suppliers and threat of new entrant. A business exists in the market with other players who are also competing for the same market share (Estia Health, np). It is thus important to consider the forces that affect the business. However much the management tries to manage the business, it is always important to consider what other businesses are doing. They may be developing new products or even more players may be coming into the market to destabilize the market position of the existing Company.

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More money should also be set aside towards research. Unlike the new entrant who are unlikely to enter the dynamic industry, old players like Estia who are well established should strive to ensure that their standards are well defined so that they significantly reduce the opportunity of the new entrant to make extraordinary profits. This will greatly reduce chances of having new entrants in the market. 2 Bargaining Power of Suppliers All the Companies in the aged care system buy their products from suppliers. These products include raw materials and equipment. This is necessary when the prices go up, the business will get favor from these suppliers. This strategy has worked out for some Companies like Nike and Wal-Mart Companies which are using third party manufacturers.

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The third manufacturers have got less bargaining power as compared to their clients Nike and Wal-Mart. 3 Bargaining Power of Buyers Buyers always wish that they buy the best products in the market at the lowest prices possible. This puts pressure on the sellers because they fail to provide their products at the prices required by the customers. 4 Threat of Substitute A new product is a substitute if it offers more satisfaction than the existing Companies. Since the demand of the customers is continuously changing, a substitute is likely to win the customers more if it can achieve full satisfaction of their needs. For example, customers now require personalized services at their homestead. They prefer home services to moving to residential homes.

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Therefore, any Company which can uniquely satisfy this requirement is likely to substitute products being offered by existing market. The effect of these competitors is that they affect the long-term profits of Estia Company. Estia Company can respond to these forces through establishing products differentiation. It can also build scales which can make it to compete better. It can also collaborate with the same competitors so that it can enlarge the size of its market. After analyzing the five forces in the market referred to as Porters factors, Estia Company can have a picture of what normally affects the margins of its profits. It has superb performance when it comes to the new market. It has good record in entering new materials hence building revenue.

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The Company also has got strong financial cash flow. The suppliers are also reliable and strong dealer community. The culture of the consumers is favorable to the Company. This has opened up opportunity for the Estia to make procurement easily. There is new market that is arising. The new market is the online market. Many people are using online platforms. This is an opportunity that makes Estia to reach out to many people. The local distributors are posing a threat to the industry. The competition is creating a large margin in profits of the Companies. There is change of demand. The demand of the profitable products is fluctuating with the season. Lastly it is intense competition. It has different competences and different resources which affects it.

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These resources and competences are the ones that make it have different strategic capability. Strategic capability is what the Company does well or that which the Company does differently from the rest. When these strategies are so different that the competitors cannot copy, then we say that it has given the Company a competitive advantage over its competitors. When the strategic capabilities are established, they need be sustained. This is in Queensland. More expansion of bed capacity has taken place in New South Wales which has made bed capacity to reach to 549. These are all efforts to ensure that it achieve a total of 10,000 beds in the year 2020 (Australian Ageing Agenda, np). In order to see this through, Estia has appointed personnel to be in charge of strategy.

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Steven Boggiano was appointed as director of strategy. The Company’s expansion strategy is backed up by the fact there will be demographic changes in the country by the year 2020. Currently the customers of this industry are over 85 years representing 58% of their customers. Demographic forecasts reveal that this group is likely to double come 2032 and again double in the year 2046. The Australian Health department has predicted that 60,000 beds will be required by 2022 (Financial Review, np). Therefore, Estia having 10, 000 beds by that time it means that it will be serving more than a sixth of the customers. STRATEGIC INITIATIVE The industry has come up with innovative products. It has successfully launched new services and products as way of increasing its profits. Innovation can either be a process or a new product.

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This is towards giving the Company a competitive advantage over the other players. Estia has advanced its technological innovation. This is an automatic notification. The device is fitted with GPS installed in the application installed in the device. This enables communication with an outside world where by internet and search engines. When the elderly person wanders, the device sends the geographical coordinates of the elder to the central servers. The caregivers are then notified. 2 Strategy initiative evaluation using SAFe SAFe is a recommendation that is based on sustainability, acceptable, feasibility and evaluation. The risks from the Company are low since they are not likely to be rejected by the regulatory Authority. The government always wants Companies to embrace technology in their operations.

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This is one way of adopting technology. Therefore, the risks that are likely to be experienced in this project ranges from low to medium. Steven Boggiano has a wide range of knowledge given that he has worked with Barclays. He is therefore enough a vital resource to propel this task forward. In addition to him, there will be need to have other employees to be in charge of the entire system. There should be an addition of 12 more workers to manage this tracking system. Probably they should be assigned two workers per stations. These perspectives are looked at in terms of customer, financial, innovation and internal (Metilda et al, p69). 2 Stakeholders Mapping Stakeholders mapping is a mechanism that identifies interests of different stakeholders and compares this interests with the powers that the stakeholders have (Bourne et al, p113).

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It is an important tool when identifying political priorities of different stakeholders. The analysis of interest and powers in the analysis depends on the particular issue being handled. In Estia healthcare Company, there are various stakeholders. The level of power and interest of various stakeholders cannot be maintained, rather there must be shift in position of stakeholders with regards to the issue in conflict. The interest of one of the stakeholders can be prioritized. 3 Mendelow’s Matrix The two aspects of Interest and Power that have been looked at in the above discussion can still be extensively analyzed in Mendelow’s Matrix. Under the interest of the stakeholder, we assess if the stakeholder is interested to impress the expectations of the organization.

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We also look at the possibility of the same stakeholders to exercise their powers.  S1, 1997, pp. Australian ageing agenda. "News you might have missed. " Australian Ageing Agenda, 20 May 2015, www. australianageingagenda. bloomberg. com/research/stocks/private/snapshot. asp?privcapId=247590416. Bourne, Lynda and Patrick Weaver. "Mapping stakeholders. Estia health report.  Estia Health Aged Care: Australian Aged Care | Aged Care Facilities | Residential Aged Care Facilities | Nursing Homes, 2015, www. estiahealth. com. au/assets/media/files/Estia_FY2015_results%20180815(1). Financial Review. "Roll-up Strategy Sees Estia Health Shake off Weak Debut. " Financial Review, 2015, www. afr. com/markets/equity-markets/rollup-strategy-sees-estia-health-shake-off-weak-debut-20150730-ginwqt.  17, no.  3, 2016, pp. Morello, Renata T. , et al. "Strategies for improving patient safety culture in hospitals: a systematic review. , and Sheila Wright. "What's SWOT in strategic analysis?" Strategic Change, vol.

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