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Tactical Decision Making On Sonic Healthcare Essay

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1.1 Background
Every business, including those in healthcare industry, has goals and objectives. The main objective is to become sustainable by having stable revenue through fulfilling the needs of customer. However, business has limited resource; as a result, it should manage its resource effectively and efficiently to meet its main objective. The management department within the company should manage and handle the data of revenue and cost efficiently that will be useful in the decision-making process. Generally, there are three decision-making within the business, strategic decision-making, tactical decision-making and operational decision-making. All of these types of decision-making are useful for organization depending on their time range, and if any one of them is weakened, it has a negative impact on the other types of decision as well.

Tactical decision-making, the short-term decision-making, has the responsibility to make sure that the current operation is in control and to ensure that operation are designed efficiently to optimize the performance of the business. In the case of healthcare laboratory, tactical decision-making will ensure that the business remain profitable and to make sure that the business still able to compete with the other competitor in providing the best quality service to the customer since quality is the core component in this industry. In the tactical-decision making process, it is also important to consider the relevant cost and the benefit received from each alternatives; thus, the cost management and operational budgeting which are analyzed in the previous integrated case will affect the tactical decision making process since both of them are the core component in making consideration for each alternatives. This report will focus on analyzing the tactical decision-making process in Sonic Healthcare, one of the largest medical laboratories in the world.

1.2 Problem Identification
1. What are short-term imminent problems present in Sonic Healthcare? 2. What are the feasible alternatives possible to solve those problems? 3. What are the qualitative and quantitative considerations in choosing the alternatives to solve each of those problems?

1.3 Objective
The objective of making this report is to enable the author to analyze the tactical decision-making process in Sonic Healthcare by identifying imminent problem present then choosing the feasible alternatives possible, taking into considerations of both the quantitative and qualitative factor to solve the problem effectively.

1.4 Company Profile
Sonic Healthcare is one of the largest medical diagnostics corporations in the world that provides laboratory and radiology services to medical practitioners, hospitals, community health services, and their collective patient. Sonic Healthcare revenue stream mainly contributed by its laboratory medicine/pathology and radiology services. The other revenue stream came from its complementary services such as medical centers/primary care, occupational and general medicine, clinical trials, also food and water testing. These are the details of each service provided by Sonic Healthcare: 1. Laboratory medicine/pathology- Sonic Healthcare employs over 500 specialists in pathology, thousands of medical scientists and technicians, backed by specialized IT systems that ensure the on time delivery of result in a variety of different format. Generally, Sonic provides customer with diagnosis of disease through examination of organs, tissues, cells and bodily fluids. 2. Radiology- Sonic is execute more than 2.3 million examination per year through its 160 specialist radiologists and nuclear physicians which are supported by Sonic Healthcare highly trained and experienced technical and practical staff. 3. Medical centers/ primary care- Sonic Healthcare manages the IPN that establish a partnership with 1700 doctor at over 200 clinics across Australia. 4. Occupational and general medicine- Sonic Healthcare provides professional, reliable and best-practice medical services through a national network of clinics and onsite operations. Its services include specialized medical assessment, drug and alcohol testing, onsite medical services and innovative and targeted health and wellness programs. 5. Clinical Trials-Sonic Healthcare provides comprehensive clinical trials support to the pharmaceutical and biotechnology industries. Sonic Healthcare offers biochemistry test, molecular test, cytopathology test, hispatology test, prenatal testing, toxicology test, haematology test, immunoserology test, microbiology test and genetics test 6. Food and water testing-Food and water testing in Sonic Healthcare is available for a wide range of bacteria, yeast and mould appropriate for these samples. Sonic Food and Water Testing is an Australian Quarantine and Inspection Service (AQIS) appointed analyst for food testing for exporters and importers Each clinical tests and services that Sonic Healthcare performed to its patients will based on the procedure that is specifically designed for each tests. Generally, the laboratory process begin when the patient visit the doctor, then the doctor order pathology tests to confirm diagnosis and monitor treatment. After that, the trained collection staff in Sonic will collect the specimen as quick and pain-free as possible. Once collected, the specimens are transported to Sonic’s state-of-art laboratory and that information will be collected in the patient database. Every specimen will be examined by Sonic’s scientist using the advanced technology; after that, it will be interpreted by specialist pathologist who provide diagnostic comments. Finally, the result will be delivered by secure electronic transfer/printed and delivered by the courier.


Decision making can be generally described as the process of choosing a specific course of action among the possible alternatives. It requires the best judgement from the managers since it is directly related to the well-being of the company. Basically, decision making is the process of how managers respond to the imminent problems by selecting the best solutions or actions that will bring benefits to the organization or company. Therefore the objecties of decision making concept is to solve the problem and achieve the desired goals. In the decision making concept, there are basically three types. The decision that the managers make, can be in few ranges depending the needs of the organization. Some of the decisions might be only for short-term problems, others might be for long-term period. Based on those factors, the decision can be classified to three categories 1. Strategic decisions, related to the long-term objectives that the company wants to achieve. Usually they deal with the uncertain factors in the future, thus need a good judgement from the managers. 2. Tactical decisions, related towards the short-term objectives or goals of the company. They are mostly related to how to use acquire and use the resources effectively and efficiently to bring short-term profits. 3. Operational decisions, related to the day-to-day operations of the company. They might need to be undertaken and monitored continously. For this second integrated case paper, the only one to be discussed is the tactical decision-making or short-run decision making. SHORT- RUN DECISION MAKING

In management accounting studies, decision making usually involves the best decision that gives the most revenue and least amount of costs, thus maximising the overall profit generated by the company.The process of decision maing usually incolve at least these steps : 1. Identify or recognize the problem.

2. Identify the alternatives as possible solutions that address the problems. 3. Identify the costs and benefits associated with each of the alternatives. 4. Use the necessary data to estimate the relevant costs and benefits for each alternatives 5. Not only analyzing the quantitative factors, but qualitative factors should also be included 6. Make the best decision based on the previous analysis that will bring the greatest benefits for the company, then implement it and monitor it agains the desired results IDENTIFY THE PROBLEMS

The first step in the tactical decision making is basically to identify the relevant problems that the managers want to address. Problem is basically the differences between actual and desired situation. The problems themselves can be categorized into two types. Structured problems, which are the problems that may have been occured before. Usually they involved the goals that are clear, and can be easily defined since the necessary information for the problems are immediately available. On the other hand, unstructured problems can be difficult for the company to address. They are mostly mostly and unusual, since the goals are unclear and the information required are unavailable. Overall, the problems can be in the example of, the numbers of workers and raw materials needed to complete the projects, their reasons and how to acquire those resources. Therefore, the problems should be clearly defined in order for the managers to be able to come with the best possible alternatives. IDENTIFY THE POSSIBLE ALTERNATIVES

The second step for the tactical decision making is basically to list and consider the possible alternatives. The alternative siltuions can be acquired through several things : brain-storming, talk to the employees, asking for feedbacks from the customers, researching the market, and even encouraging the staff members to participate in the decision making process. In this step, only the feasible and reachable alternatives should be considered, thus eliminate the alternatives that are not feasible. For instance, alternatives should be rejected if it carries too much risk for the company, it is incompatible with the market environment, it is very costly for the company, etc. Therefore the alternatives should be in the range of the costs and risk constraints stated by the company. IDENTIFY THE COSTS AND BENEFITS ASSOCIATED

The third step of the tactical decision making is to identify the costs and benefits associated with the feasible alternatives. In this step, the managers should list and identify all possible costs and benefis related to the proposed alternatives. The costs, should especially be categorized as relevant and irrelevant costs. Only the relevant costs, that are directly related to the decision, should be included in the calculation, thus eliminate the irrelevant costs during the process. For instance, for the costs, it can include the operational costs, sales and administrative expenses, overhead costs. In other words, managers can list up all the related costs, both the direct and indirect costs, as well as, variable and fixed costs. However, then again, only the relevant ones included in calculation, since irrelevant costs does not affect the results in the decision made. ESTIMATE RELEVANT COSTS AND BENEFITS

The fourth step of the tactical decision making is to estimate all the relevant costs and benefits resulted from the decision made. To know the relevant costs is a really important factor. Relevant costs basically have two general characteristics :1) they are future costs; 2) they differ accross alternatives. Only the future costs that are relevant with the decisions made. The future costs and benefits should not be the same for each alternatives, otherwise they would be considered as irrelevant. The relevant costs usually include direct material costs, direct labor costs, variable overhead cost, transportation costs, etc. Even opportunity costs, which are related to the costs of what might happen in the future, can be considered as relevant costs, though it isn’t an accounting cost. However, it is equally important for the company to consider the future opportunity costs associated with the decision made, as qualitative measures. QUALITATIVE FACTORS

Only calculating the costs and revenue quantitatively are not enough when making the best tactical decision to accomplish the desired objectives. Qualitative factors can sometimes affect significantly towards the decision made. Some of them might include the political interests, or even the product safety and quality. For the political interests, include the possibile occurence of riots or strikes when the number of labors reduced, the pressure from new government regulations affecting the production process, etc. Furthermore, the product safety can be the key qualita...

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