Hospitals in the German health care system are confronted with increasing economic competition due to paradigm shifts in funding inpatient treatment. Major hospitals, such as university hospitals, will be under significantly greater pressure to keep up the ability to compete by uniform per case payment. The new hospital funding system based on a Diagnosis Related Group (DRG) system and the economic competition involved require analyses of organisational and locational factors. Cooperativeness and efficient utilisation of resources, properties and staff will be determining factors to secure existence. Adequate responses and strategies are essential to cope with the growing operating requirements. Carrying out an analysis identifying one's own strengths and weaknesses, opportunities and threats will help to focus activities and sustainable strategies into areas where the strengths and the greatest opportunities lie. An example of the process of strategic planning and positioning is shown for a university department of dermatology.