Strategic Planning, Financial Performance, and Performance Management Models for Expansion
Assignment Brief
HRM5002D Performance Improvement and Management in Health & Social Care
As part of the formal assessment for the programme you are required to submit a Performance Improvement and Management in Health & Social Care assessment. Please refer to your Student Handbook for full details of the programme assessment scheme and general information on preparing and submitting assignments
Learning outcomes:
- Analyse, evaluate and apply a range of strategic planning models.
- Calculate, interpret and critique a range of financial strategic performance measures such as Return on Investment (ROI) Residual Income (RI) and Economic Value Added (EVA).
- Evaluate the use of problem solving and investment appraisal models.
- Critically evaluate the use of non-financial and multidimensional models of performance management.
As a manager of BME Luxury Care Home - a registered business operating in England, the directors have asked you to consider the viability of investing in a privately owned and managed nursing home. This is of course led by an ever-increasing demand for such services among an aging population in England. The mission statement is: “a commitment to excellence in long-term support and care”. The plan is to, expand over time, to a network of at least five luxury facilities in London. The vision of the directors is to achieve the highest possible level of person-centred care in a home-like environment. Long-term care includes medical and non-medical care for individuals who need support with their activities of daily living. Many of the service users would be self-funding but some would be eligible for social care funding. Users may have a range of complex needs and/or disability that may challenge their ability to carry out certain activities of daily living.
Prepare a 1500-word internal memorandum for the directors of the care home, critically discussing the advantages and disadvantages of at least two strategic planning models appropriate to the care sector in England. The directors expect a recommendation as to which model you propose for business growth and why?
Briefly discuss the usefulness of a Du Pont analysis to shareholders and then apply it to BME Luxury Care Home using the financial statements above as a basis for your calculations. You must discuss the purpose of each formula, and each step in your calculations to make sure you have not made any errors. Discuss your findings in the context of the following industry averages:
Calculate and interpret the following ratios. You must explain the purpose of each formula, and each step in each calculation. Discuss your findings in the context of the following industry averages
Task 3:
Critically evaluate the use of non-financial and multidimensional models of performance management in preparation for a discussion with your management team. Choose the Balanced Scorecard or the Performance Pyramid as a basis for your discussion.
Sample Answer
Internal Memorandum
Strategic Planning, Financial Performance, and Performance Management Models for Expansion
Introduction
The purpose of this memorandum is to provide a critical analysis of how BME Luxury Care Home can plan for future growth within the nursing and residential care sector in England. With the increasing demand for high-quality long-term care, it is vital that our organisation evaluates strategic planning options, financial performance measures, and multidimensional approaches to performance management. This analysis will consider two widely used strategic planning models, assess financial viability using Du Pont analysis and ratio calculations, and explore the benefits of applying a non-financial model such as the Balanced Scorecard. Based on this evidence, I will make a recommendation on the most appropriate approach to guide our expansion into a network of five luxury care facilities in London.
Strategic Planning Models in the Care Sector
The Ansoff Matrix
The Ansoff Matrix is a strategic planning model that considers four growth strategies: market penetration, product development, market development, and diversification. For BME Luxury Care Home, market penetration would involve increasing our presence within the existing care market in London by competing on service quality, brand reputation, and customer satisfaction. Market development could be achieved by targeting new geographic areas of London or expanding services into other regions of England. Product development would involve introducing additional premium services, such as dementia-friendly suites or wellness programmes, while diversification could involve entering related industries such as home care or rehabilitation services.
The advantage of the Ansoff Matrix is that it provides a clear, simple framework to consider different growth options. It is particularly useful for directors who need to evaluate risk levels of each strategy before committing resources. However, its disadvantage is that it does not account for external regulatory or policy factors, which are highly influential in the health and social care sector. For example, changes in Care Quality Commission (CQC) regulations or funding policies could affect the feasibility of expansion strategies, yet the Ansoff Matrix does not directly address such external risks.
Porter’s Five Forces
Porter’s Five Forces model analyses industry competition by evaluating supplier power, buyer power, threat of new entrants, threat of substitutes, and industry rivalry. In the care home sector, supplier power is significant because of workforce shortages; nurses and care staff are in high demand, leading to rising recruitment costs. Buyer power is also high, as self-funding residents and their families often compare multiple providers before choosing a facility. The threat of new entrants is moderate, as barriers to entry include high capital investment, CQC regulations, and location challenges. Substitutes exist in the form of domiciliary care and assisted living schemes, which some service users may prefer over residential care. Finally, industry rivalry in London is intense, with many providers competing on quality, reputation, and price.
The advantage of Porter’s Five Forces is that it gives a realistic picture of the competitive pressures that will shape our expansion strategy. It also highlights the importance of workforce strategy, which is crucial for a luxury care provider. However, one disadvantage is that it focuses heavily on competition and does not consider internal strengths, culture, or mission. For BME Luxury Care Home, whose mission emphasises excellence in person-centred care, it is equally important to evaluate internal capacity to deliver high standards consistently.
Recommended Strategic Model
While both models are useful, I recommend using Porter’s Five Forces as the primary model for our business growth strategy. The main reason is that expansion into the luxury care home market in London requires a deep understanding of competitive dynamics, workforce availability, and the risks posed by substitutes such as home-based care. By combining the insights from Porter’s analysis with our mission of excellence in care, we will be better positioned to make evidence-based decisions on where and how to expand.
Financial Performance Analysis
Usefulness of Du Pont Analysis to Shareholders
The Du Pont model breaks Return on Equity (ROE) into three components: net profit margin, asset turnover, and financial leverage. This helps shareholders understand whether performance is driven by profitability, efficiency, or debt. For BME Luxury Care Home, this is important as investors will want to know if returns come from genuine service quality and efficiency rather than excessive borrowing.
Continued...
