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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 this industry operates as with most large businesses. These include remote, industry and operating environments that help to influence the activities that an organization will take in an effort to remain competitive according to (Pearce & Robinson, 2011). Vanguard Health System continues to monitor and evaluate these causative factors the paper will assist in evaluating how the better determine alternatives for the company’s future growth. Alternative Strategies Vanguard Health System continues to be among the leading operating health care network in many large markets.
It operates 28 hospitals, which strategically- align with outpatient facilities and other business entities and provides a total range of services within each community that they serve. They have earned a reputation for delivering high quality care with a focus on helping the communities. As an enhancement to the existing successful organization, alternative strategies will be presented as additional growth opportunities to create an even greater competitive advantage.
The Value Disciplines According to (Pearce & Robinson, 2011) the introduction of the value iscipline, initiated by consultants Michael Treacy and Fred Wiersema provided another alternative strategical approach to the existing ones.
The value discipline approach that is customer focused and centered in what customers’ value most. They have further divided the value disciplines into three distinctive strategic approaches, they include the following: Operational Excellence approach is the first of the three sub-approaches and it focuses on superior customer service, allowing for convenient, timely delivery of products or services that promote competitive market pricing.
This approach also succeeds in minimizing costs by using lean methods of eliminating waste, thus reducing overhead spending, production cost, unnecessary personnel, and services as it relates to (VHS) and monitoring of all spending activities and inventories with the latest technological tracking devices. Customer Intimacy approach is the second sub-approach under values disciplines that seeks to develop long-term relationships between the customer and the business by creating product or service loyalty.
This approach practices the made to fit, special request, special order, and mail to order scenario. Its focus is on pure customer satisfaction and it is willing to spend more time or money in providing exactly what will appeal to the customer to maintain their trust and continued spending. The company’s that choose to use this approach genuinely serve a more refined group of returning customers and can afford to allow specialized individual treatments and products to their customers because in the end the customers know that they can rely on quality and commitment.
Product Leadership approach is another value discipline which seeks to be the pioneers of innovation, thus producing and creating a non-stop stream of upscale quality products that appeals to the consumers in the competitive market. They also choose to promote, and market their own products before all others in the same industry to take the lead and the credit for the creativities to product leadership. This approach requires that the invented products be ahead of all other competitors.
They also seek to pursue to be the first to resolve critical issues, making them the ultimate problem solvers. 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 brand names and moves away from what the average person may afford.
It focuses on its loyal customers and tends market to a specific group, where money is not limited. The expectations are of the highest quality and the differentiation approach caters to those needs. A good example would be a customer that prefers to shop at a Mercedes Dealership who wants additional features that are not standard on the specific vehicle. The differentiation approach would be inclined to ensure that the special request is provided because the customer will ultimately return again for other products or services.
This type of approach tends to focus on specific detailed needs of the customer and gains a competitive advantage for its exceptional customer satisfaction. Grand Strategy The grand strategy approach serves as a guide for all strategic activities. According to (Pearce & Robinson, 2011) they provide a roadmap to enable an organization or industry to follow in an effort to sustainable long-term business relationships towards creating competitive growth. There are 15 grand strategy approaches that may be adopted as a means to alternatives for achieving optimal success.
The 15 principle strategies are concentrated growth, which is focuses its resources on a market for profitability, market development, which serves to modify existing products, product development, that performs extreme modifications to existing products, innovation, an entirely new product created and presented to the customer to seek approval and profits, vertical integration, attained through acquisition with raw materials, new customers, and finished products, horizontal integration, benefiting through acquisition of organizations with similar types of operations and products to market, concentric diversification, the other entities benefit from the organizations parent company, conglomerate diversification, the largest portion of an acquisition that provides a forecast for future potential investment opportunities, turnaround, the ability of the organization to recoup and recover from past profit losses, and divestiture strategy, selling and removing a portion of the organization that is not showing growth potential.
Recommendations for Vanguard Health System Vanguard Health System is a particularly large organization within the United States, which includes hospitals and facilities located in Arizona, Illinois, Massachusetts, Texas, and Michigan. It operates as the parent company to the Detroit Medical Center, that includes eight hospitals. Because their mission, vision, and values center around its commitment to the well being of the surrounding communities it is recommended that they adopt the generic strategy approach that promotes low-cost leadership because of the diversity of the areas in which many of the healthcare facilities are located and the current economic situations that involve many changes to the manner in which healthcare will be provided.
Many of the hospital settings are in underserved areas as is the case of the downtown, Detroit communities. Low-cost leadership strategies require unique preparation in order to use low-cost advantages. When these strategies are handle in an effective manner they are better able to charge lower prices to and gain an increase in their profit margins, thus creating barriers for their perspective competitors. Conclusion The paper has evaluated and identified the various strategic approaches for alternatives for the Vanguard Health System. It has also presented a recommendation of low-cost leadership as its strategic alternative to remain at a competitive advantage over its rivals and to remain profitable in the future.
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