Malaysian Healthcare Industry Overview

Title: Factors influencing the successful implementation of a new digital Servitization strategy

Malaysian healthcare industry is one of the most booming industry, having contributed approximately RM 1bn (Malaysian Ringgit  one billion) to the national GDP (Gross Domestic Product) during  2016. In 2017 it’s impact on GDP is expected to increase by 33%. With its increasing importance in national economy the Malaysian government has chosen to prioritize the same and have injected RM 23bn (Malaysian Ringgit 23 billion) in 2016 which is approximately 10% of the National annual budget. (Macleod, 2017)

    The government is targeting to focus on private healthcare system as the government plans to make Malaysia as healthcare destination. With increasing importance of healthcare industry it is very essential to concentrate on enhancing the level of service provided by the private healthcare system in order to improve the service level and bring in differentiation (Macleod, 2017)

  Digital Servitization is the new buzz word in the market that has the potential to bring in the required differentiation in an organization. Servitization is actually the transformation journey of the organization to bring customer in focus and giving high level of integrated and bundled package of product and service to the customer. In service industry where the core offering of industry is not a physical product, there the company tries to bring in digital Servitization in order to improve the service level.

       Introducing new strategy to any industry is always a big task, as there are many factors which influence the smooth functioning of any strategy. This research proposal sought to study the factors which influence the successful implementation of the new Servitization strategy in the private healthcare sector in Malaysia and the  impact of those factors on successful implementation of new digital Servitization strategy in the private healthcare center of Malaysia, there are total 12 private healthcare centers in Malaysia to get the authentic result survey will be done on  all the managers of the  12 hospitals, data collection will be done through self-made questionnaire, data analysis will done through Structure Equation Modelling with the help of SPSS version 22. 

Public sector enterprises have limited budget in regards to new product and processes development. Faced with budgetary crunch they are more reluctant to adopt new features as Servitization, as their main endeavor remains focused on catering to broader spectrum of patients at cost affordable rates. Private sector on the other hand might face more time related constraints especially in regards to management decisions. Private sector however have more readiness to the concept of servitization. Servitization can lead to tremendous benefits for catering to quality services in health care. The scope of this study concerns implementation challenge in digital Servitization strategy. Digital Servitization can lead to enhancement of core competency with higher profitability trends. Malaysia depicts leading trend globally in servitization across its private sector. It has dynamically transformed ways in which patient care is provided. It can lead to creating sustainability for the future of healthcare organisations.

Importance of Private Healthcare System and Need for Differentiation

Various studies on Servitization, marketing strategies and its implication have been done but none of them has been done in regard to private health care sector of Malaysia, lack of such study provides motivation and scope for the present study.

• This study enables us to comprehend the significance of digital Servitization in the private health care sector of Malaysia.
• The results of the study will help the managers of private health care sector thus they will be able to have a better insight on the implication of strategy in their organization.

• The study will help in understanding the digital Servitization and factors affecting the successful implications of them in private healthcare sector of Malaysia.
• The study will contribute to the existing body of knowledge and provide new dimensions for further studies.

Hence, the proposed study would be a systematic attempt to analyze diverse dimensions of implications of digital Servitization in private healthcare sector of Malaysia. 

Present study is an attempt to understand the factors and its impact on successful implication of digital Servitization in private health care sector of Malaysia. This will help in understanding determinants that will lead to successful implication of digital Servitization in the healthcare industry and managers will be able to know which factor contributes more in successful implication of Servitization strategy in private health care sector in Malaysia.

To find out the influence of Mackinsey’s 7’S model on new digital Servitization strategy in private healthcare sector of Malaysia.

What are the factors which influence the implication of the new digital Servitization strategy and which factor influence the most in strategy implementation?

This part of proposal has been divided in three categories including research papers on Servitization, Strategy Implementation and Malaysian healthcare industry.

Servitization

According to Ahmad, Kamoshida & Inohara (2013), in his research paper sought to study the influence of the organizational factors in effective implementation of Servitization strategy, researcher has done his study on the 3 international electronic companies including Toshiba, Fujitsu and Hitachi. With the help of review of literature factors revealed were vision, organization, HRM, Marketing and leadership. Research proved that organizational forces do have positive influence on successful implementation of Servitization strategy in the organization and the study revealed that that vision, leadership and organization has the significant positive influence on the organization from all the other factors mentioned (Ahmad, Kamoshida & Inohara, 2013).

Public Sector healthcare organisations in Malaysia are lesser responsive to digitalisation and hence adopting trends related to servitization. These organisations are already facing challenges pertaining to handling of large number of patients. With steady inflow of large number of patients to cater to, there remains limited scope for application of issues realted to servitization. Private sector organisation on the other hand needs to adopt more servitization related aspects such that they are able to cater to highest possible quality in healthcare. This will create sustainability for the organisations with emergent scopes and will create extended benefits for the organisations.  

Corynen, Mathyssens, & Bookhaven (2017) in his research paper studied the introduction of digitization in offering service in the manufacturing industry, in order to reduce the errors in service offering and to enhance the core offering of the organization, study was done on Belgium’s manufacturing industries, researcher in their research study discussed Servitization pyramid by which managers of manufacturing unit of Belgium can analyze the service barriers coming, and researchers also investigated the digital application in both front and back end operations which  can help companies in addressing the problems arising in the service offering  at all the level of the organization. (Corynen, Mathyssens, & Bookhave, 2017)

Digital Servitization and Its Potential Benefits for Healthcare Industry

According to Rajeshkar (2014) In his research paper, studies the factors which affects the successful implementation of the strategy in the service industry, and the impact of those factors on effective implementation of the strategy in the electric distribution company in the Sultanate of Oman, and the study proposed seven factors that affects the implementation of strategy and the study also revealed that leadership is the most important factor which influence the successful implementation of strategy in service sector. (Rajeshkar 2014)

In the views of  Brinkschorder (2014) the challenges in the execution of strategy in the organization further and the factors responsible for the successful implementation of the organization, what challenges organization can face in execution of those strategies and what are the solution to overcome those challenges, researcher with the help review of literature introduced three key variables strategy, structure, and behavior interplay of which is necessary for the performance of strategy implementation challenges like challenges in strategy formulation and planning, challenges in consensus like improper understanding of strategy, lack of motivation in employees, resource allocation challenges in controlling the working of strategy , challenges of proper communication, challenges in behavior involves commitment, leadership and culture context. Researcher suggested strategy implementation is more complex then strategy planning ignoring any of the part in execution can lead to a problem in the organization. (Brinkschorder, 2014)

Mbaka & Mugambi (2014) studies the factors affecting the strategy implementation in water sector of Kenya and the study revealed that that employees in public sector lacks the skills, attitude and capabilities required, and another problem identified was lack of proper communication between strategy formulators and the key strategic resources of the organization i.e. employees of the organization as communication between management and employees, attitude, skills and capabilities of the employees are most important things to make strategy implication in the organization successfully, but all these were lacking in the sector under study which lead to the failure implication of strategy. (Mbaka & Mugambi, 2014)

Ravanfar (2014) in his study of analyzing organizational structure based on 7’S model of Mackinsey, attempted to analyze if 7’S model of Mackinsey is favorable for the Queshm free zone a company in Iran and the study revealed that it is not favourable in the organization in the study,as per the study all the levels of organization cannot work on same or common value. (Ravanfar, 2014)

Jafar, s et.al (2013) Malaysian health sector has experienced growth right from 90’s, and it is growing at the tremendous rate, Malaysian healthcare sector is divided into two sector public and private where public healthcare sector holds 70% share and remaining 30% is of private Malaysian government has a strong vision of making the Malaysian healthcare industry as the world famous health tourism destination and the same is growing at the rate of 25.3% P.A approximately. As per the government prediction government will be hosting one lac health travelers by 2020. (Jafar, S et.al, 2013)

Research Proposal: Factors Influencing Successful Implementation of Digital Servitization in Private Healthcare Sector of Malaysia

Queck (2014) in his research paper studied the Malaysian healthcare system , and he identified that Malaysian healthcare is two tired system with both public and private public healthcare system is very equipped runs on total government budget allocation public hospitals serve 65% of the population with low affordable fee but to serve them there are only 45% of medical officers, Private runs wholly from the fee received from service offered researcher suggested that two tier system cannot work efficiently in long run so he advised to have partnership of both public and private in order to cater population and tourist easily and more efficiently in cost effective way. (Queck, 2014)

The observation of the article reviewed shows that lot of studies are done on Servitization, digital Servitization and factors affecting the successful implementation of the strategy in the organization and private health care sector of Malaysia  but none of the study has been done on the effective strategy implementation of digital Servitization in healthcare sector of Malaysia. In this space of time when Malaysia health care sector is on its growing phase it becomes very essential to introduce such service model in them in order to bring competitive advantage. The scope of this study has included several journals, literatures and findings from various websites as well as company magazines. However, there is certain levels of accomplishments that needs to be determined in this analysis which has not been incorporated. The study has not been able to effectively cover scopes of public healthcare sectors. There is a large number of Malaysian public healthcare organisations that needs to adopt strategies related to Servitization which has been totally excluded from analysis. Secondly due to lack of time the scholar has not been able to conduct thorough research concerning primary levels of data hence, the scope of the study is limited.   

1. To understand the factors which influencethe successful implementation of strategy.
2. To examine the relationship between Strategy and New digital servitization strategy.
3. To examine the relationship between Structure and New digital servitization strategy.
4. To examine the relationship between Skill and New digital servitization strategy.
5. To examine the relationship between Style and New digital servitization strategy
6. To examine the relationship between Staff and New digital servitization strategy
7. To examine the relationship between shared values and New digital servitization strategy
8. To examine which factor influence the implementation of New digital servitization strategy most

This chapter deals in explanation of the research framework and research design to be used for the study

Research Framework

Figure Research Framework based on Mackinsey’s 7S Framework

Detailed hypothesis of the Study

With the help of detailed literature review, below mentioned factors were recognized which influence the successful implementation of strategy which will be used as independent variable of the study. 

1. H_o1: There is no significant positive influence of strategy on implementation of digital Servitization strategy

Above hypothesis is the null hypothesis which need to be analyzed and is based on 7s model of Mackinsey, here strategy means the specific plan to achieve a particular goal, thus this hypothesis aims to analyze the influence of strategy framed on the implication of strategy for particulars goals of the organization to be achieved.

1. H₀₂: There is no significant positive influence of structure on implementation of Servitization strategy.

Literature Review: Servitization, Strategy Implementation, and Malaysian Healthcare Industry

Structure here refers to the environment of the organization where all the action take place. Cross functional coordination refers to inter department coordination between different departments, as in order to execute any strategy, all the departments should work with each other instead of working against each other, and Control by Management refers to handling the responsibility of managing all the employees rightly. If the vision of doing any task is lost management should take charge to reallocate the things and guide employees properly. Another is communication which is the heart of successful working of the organization, proper communication should be between management and employees of all the levels so as to reach to assigned goals.

1. H_o3: There is no significant positive influence of Systems on implementation of Servitization strategy.

This hypothesis aims to examine the relationship of systems and implementation of strategy systems here refers to procedures of doing things in the organization.

1. H₀₄: There is no significant influence of Shared Values on implementation of new digital Servitization strategy.

This hypothesis aims to examine the relationship of shared values on implementation of new digital Servitization strategy, shared values here refers to the norms and standards in which the employees of the organization works. Shared values is a part of soft element of the 7’S framework of Mackinsey.

1. H_o5: There is no significant influence of Skills on implementation of new digital Servitization strategy

This hypothesis aims to study the relationship of skills and implementation of strategy, skill here refers to employee’s capability of doing things in the organization. Skill is the part of soft element of the 7’s framework of Mackinsey.

1. H_o6: There is no significant influence of Style on implementation of new digital Servitization strategy.

This hypothesis aims to study the relationship between style and implementation of the strategy, Style is the part of soft element of 7’s Mackinsey model style here refers to way in which management handles the organization

1. H₀₇: There is no significant influence of Staff on implementation of new digital Servitization strategy

This hypothesis aims to study the influence of staff on implementation on digital Servitization strategy, Staff here refers to the number of employees to be recruited, training and motivation for implementation of the organization’s goals.

Research Design

This section will describe the type of Research Methodology to be used, Sampling design, data collection to be used and tools of data analysis and data interpretation to be used.

Research Methodology: 

Exploratory cum descriptive research methodology will be used. Exploratory research methodology will help to understand the topic more clearly and to get the current findings on the same whereas in descriptive research methodology will help in hypothesis testing

Sampling design

Sampling procedure has been adopted for the purpose of the study as it is not possible for the scholar to collect large amounts of data. Random Stratified Sampling technique has been adopted for this study. A sampling group has been selected for the purpose of attaining to goals and objectives of the study.

Objectives and Methodology of Proposed Study

Universe: From the 12 states of Malaysia, one top hospital from each state will be selected 

Sampling Unit: it is the geographical area which will be covered in study, thus sampling unit for this study is Malaysia.

Sampling Frame: Actual respondents list on whom survey is to be done, in present study sampling frame includes the managers of the hospitals under study

Sampling Technique: Whole population is to be studied.

Sampling Size: 240 will be the sample size of the study including managers of all the hospitals included in the history

Data Collection Technique 

Data collection Instrument: Both primary and secondary method of data collection will be used in the study and for primary data collection self-made questionnaire will be used. 5 point likert scale technique will be used.

Statistical Techniques for Data Analysis 

Descriptive statistics – like mean and standard deviation were used to understand the data, Descriptive statistics helps in summarizing the data and is a discipline of describing the main features of a collection of information through quantitative methods.

Reliability– To check the internal consistency of the question Cronbach’s Alpha reliability test using SPSS software (Version 22) will be used.

Validity –To assess the validity of the questionnaire, the face validity method will be used.

Normality Test- To assess the normal distribution of the data collected Normality test will be used

Hypothesis Testing: for hypothesis testing SEM-Structure Equation Modelling will be used.

Limitations of the study 

Although every effort will be made to undertake a representative study, still the following problems could occur in the course of the study: There may be drop out error i.e. the respondents who are willing as well as able may not be contacted. There may be go error i.e. the respondents who are unable or unwilling may be included in the sample. However, the large sample base as well as the pre-testing will further reduce the chances of these errors. There may be chances of different perceptions on the wording of the questionnaire or scale. Hence, every effort will be made to personally interview. 

Delimitating Clause

The study has considered analysis from private healthcare organisations only and public healthcare organisations have been eliminated from analysis. Scope related to public sector organisations are huge as there remains large amounts of analysis that needs to be done. As public organisation needs to cater to large number of patients, data regarding the same will be huge hence it has been excluded from scopes of analysis.

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