Strategic Choice and Evaluation
L'Tanya M. Williams
STR/581
October 3, 2012
Pitchiah Balasubramanian
Strategic Choice and Evaluation
The paper will present potential alternatives Vanguard Health Systems (VHS) must consider to realize growth. It will also seek to identify the best value discipline, generic strategy, and grand strategy for the organization. Upon the investigation of the various alternatives, a recommendation of a strategy or a combination of strategies will be presented. A growing trend among many businesses is through mergers and acquisitions. No longer are the days when one business can to dominate totally an entire industry. The health care system is not exempt. External environment factors play a significant role on how
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They are not the followers, emulators, or imitators. This approach is the most competitive among the all the value discipline strategies and with it comes the advantages of knowing that it is one of the leading attributes needed in maintaining and gaining competitive advantages and future growth.
Generic Strategy The generic strategy approach may be applied to organizations of all sizes and is a one size fits all approach. It can be divided into three types of approaches may be applied as alternatives for a given organization or industry as an improvement for future growth. The cost leadership strategy seeks to improve profit margins by bringing down the costs of producing while enabling the organization to still charge market prices. They also focus on increasing the market shares through lower pricing, enabling the organization to continue to reach profits because of reduced costs. As with any organization the goal is to minimize cost directly to the organization providing the delivery of products or services. According to Barney (2007) low cost leadership strategy takes pride in initiating its costs advantage abilities to charge lower prices while reaping the rewards of higher profits. Differentiation approach refers to the organizations unique designing creations. These approaches appeal to the customers who prefer upscale and exquisite specialty products or services. These include
Target Corporation is one of the most major merchants store in the world. Target is recorded to be the sixth largest retailer within the United States. Founded by, George Dayton in the early 1900’s in Minneapolis, Minnesota. Target Corporation is a leading merchant store that supplies a variety of products, which includes everything from clothing to shoes, health and beauty, and even electronics. It is a corporation that remains on-top, and develops day-out. It is a brand that is well known and continues to raise the bar each year effectively. Target Corporation will need to grow the company approaches built on the quality of the rank, ethnicity, and
Art Kleimer (1996) claims that to foster a corporate culture that embraces change, you have to hire the right people; heretics, heroes, outlaws, and visionaries. The conservative bureaucrat that made such a good middle manager in yesterday 's hierarchical organizations is of little use today. A decade earlier Peters and Austin (1985) had stressed the importance of nurturing champions and heroes. They said we have a tendency to dismiss new ideas, so to overcome this, we should support those few people in the organization that have the courage to put their career and reputation on the line for an unproven idea.
Cost leadership (Johnson et al., 2013, p194) strategy involves becoming the lowest-cost organisation in a domain of activity. In this case, NiMH battery prices were reduced to remain competitive in the market considering the fact that NiMH batteries represented the Cash Cow of the company.
“Generic strategies” was first set out by Michael Porter in 1985 in his book “Competitive Advantage: Creating and Sustaining Superior Performance.” Academic work in the field of strategic management, Porter (1980, 1985) typology of general competitive strategies: cost leadership, differentiation and focus. The three virtually divided into two basic categories. Focus strategy requires a niche or narrow segment concentration. But Porter said, can cost leadership in the success of this strategy or differentiation to achieve. Therefore, cost leadership and differentiation are two basic strategies Porter 's typology. These two topics are discussed in this article.
A cost leadership strategy focuses primarily on “producing products and/or services that are the lowest in the industry” (Turban, Rainer, & Potter, 2003). This type of organization forms business alliances that support their inventory management through computers and computerized purchasing. A differentiation strategy focuses on being unique within the industry and provides high-quality products at a competitive price (Turban, Rainer, & Potter, 2003). These types of companies “provide their customers with a
delivering superior value to buyers and building competencies and resource strengths in performing value chain activities that rivals cannot readily match.
Healthcare systems in the United States function in an increasingly competitive and complex industry due to the nation’s ever-changing healthcare policies. The community-based and public service oriented not-for-profit hospitals are continually navigating these burdensome regulatory requirements and finding ways to align their strategies with the need to survive. With the goal to preserve and strengthen community services, augment financial sustainability, improve operational effectiveness, and expand sources of capital growth; one such strategy considered in this case study is the merger of two independent not-for-profit entities into a single, consolidated health system.
A number of competitive strategies have been stated by studies, such as the classification system created by Chrisman et al (1988). However, the generic strategies identified by Porter (1985) remain the most popular theory over the years (Allen et al, 2007).
Vanguard Health Systems is a leading operator of regionally-focused integrated health care delivery networks. The company has a significant presence in several large and attractive markets (Vanguard 2012 Annual Report). The company recorded $5.9 billion in revenues in 2012, up 29.8% from $4.5 billion the year previous. The 2012 net income of $57.3 million is a significant improvement over the $12 million loss the year previous. The company maintains that it is still on a growth trajectory, including via acquisition, and this is an important part of corporate strategy. This paper will analyze the different elements of the corporate strategy at Vanguard.
In cost leadership a firm will set out to become a low cost producer in its industry. A low cost producer must find and exploit all sources of cost advantage. If a firm can achieve and sustain overall cost leadership then it will become an above average performer within its industry. The sources of cost advantage are varied and depend upon the
Porter's generic strategies describe how a company pursues competitive advantage across its chosen market scope. There are three/four generic strategies, either lower cost, differentiated, or focus. A company chooses to pursue one of two types of competitive advantage, either via lower costs than its competition or by differentiating itself along dimensions valued by customers to command a higher price. A company
-The costs which can be borne, and the investment required to compete in the industry.
I. Introduction 1. There are several basic approaches to competing successfully and gaining a competitive advantage, but they all involve giving buyers what they perceive as superior value compared to the offerings of rival sellers. 2. This chapter describes the five basic competitive strategy option for building competitive advantage and delivering superior value to customers – which of the five to
A successful cost leadership strategy usually provides the entire firm with high efficiency, low overhead, limited perks, intolerance of waste, intensive screening of budget requests, and wide span of control efforts. However, some risks of pursuing this strategy are that competitors might imitate the strategy, thus, driving overall industry profits down; that technology breakthroughs in the industry may make the strategy ineffective; or that buyer’s interest may swing to other differentiating features besides price.
The generic strategy allows the firm to react to the five forces better than their competitors (Worthington & Britton, 2006). According to Porter (1985), an organization can enjoy competitive advantage by focusing on the generic competitive strategies. The organization could enjoy competitive edge by either offering the product at low cost or differentiating the product from the competitors or by focusing on a specific market. Porter (1985) emphasized that the generic strategies should be at the centre of the strategic plans.