Running head: STRATEGIC CHOICE AND EVALUATION

Strategic Choice and Evaluation Sonya Brantley STR/581 February 15, 2012 Dr. Debra Bacon

Running head: STRATEGIC CHOICE AND EVALUATION

Strategic Choice and Evaluation Strategic planning is a vital component for the success of an organization. Loving Hands Care Service, an elderly care service provider must implement an operational plan essential for the survival of a new organization. Increasing the profit margin for Loving Hands Care Service is challenge that must be addressed accordingly to ensure success and prosperity of the organization. Determining an effective discipline to increase the organizations competitive advantage requires the organization to explore the organizations competencies and resources. This paper will evaluate the alternatives for Loving Hands Care Service to realize growth through value discipline, generic strategy, and grand strategy. This paper will also recommend a strategy or a combination of strategies to increase the profit of Loving Hands Care Services. Value Discipline The value discipline model implements offering superior customer value through operational excellence, product leadership, and customer intimacy. According to Treacy and Wiersema, one of the three value disciplines has allowed companies that have taken leadership positions in their industries in the last decade typically have done so by narrowing their business focus, not broadening it (Treacy & Wiersema, 1993, p.84). An organization that concentrates on one of these disciplines while meeting the principles of the other two, allows the organization to achieve a viable lead in the industry. Operational excellence allows an organization to provide a reliable service at a competitive price. The objective of operational excellence is to lead the industry in price and accessibility. An organization implementing operational excellence is determined in seeking ways to minimize overhead cost, to eliminate intermediate production steps, to reduce transaction and

Running head: STRATEGIC CHOICE AND EVALUATION

other friction cost and to optimize business processes across functional and organizational boundaries (Treacy & Wiersema, 1993, p. 85). Product leadership involves offering customers leading-edge products and services that make rivals goods obsolete (Pearce & Robinson, 2011, p. 185). To implement product leadership, the organization must be creative, have the ability to commercialize their innovation, and effectively problem solves new products and techniques through continuous improvement. A product leader organization continuously seeks new services and products and capitalizes eagerly with innovation. A product leader organization avoids bureaucracy because it decreases the commercialization process. Customer intimacy allows an organization to modify a product or service to meet the customers necessities. An organization implementing customer intimacy combines customer knowledge with operational excellence. Customer intimacy can be expensive for the organization in short-term goals but can be beneficial for long-term goals. The organization seeking customer intimacy tends to look at the long-time value of the customer. Customer intimacy requires the organization to spend money to create customer loyalty. Generic Strategy Michael Porter implemented the concept of generic strategy to identify the primary approach to an organization strategic planning to improve its competitive advantage. The three generic strategies are low-cost leadership, differentiation, and focus. Each generic strategy is unique and achievable based upon the goals of the organization. Low-cost leadership strives to achieve and sustain low-cost through cost reductions and effectiveness. According to Pearce and Robinson, a low-cost producer can increase the organizations competitive position by becoming dominant in the market, increases the

Running head: STRATEGIC CHOICE AND EVALUATION

organizations capital, or having a secure supplier of raw material (Pearce & Robinson, 2011, p. 183). To reduce cost, an organization can implement cost-cutting technology, expand economies of scale, reduce overhead expenses, decrease administrative expenses, and increase capacity to sustain the organizations profit margin. An organization that implements the low-cost leadership strategy will stress cost reduction in every activity of a value chain. This can cause the organization to lose focus on the mission and goals of the organization. The differentiation strategy allows an organization to meet the needs of the customer. The organization can differentiate a product through desensitizing the product price and focus on value. Differentiation allows an organization to create customer loyalty. An organization that differentiates a product will incur other essential cost such as advertising to create a competitive advantage. According to Pearce and Robinson, because advertising plays a major role in a companys development and differentiation of its brand, many strategists use celebrity spokespeople to represent their companies (Pearce & Robinson, 2011, p. 184). A differentiated organization must offset advertising cost by increasing revenue by generating sales. Differentiation of a new organization, such as Loving Hands Care Service can be costly, however, beneficial. The final generic strategy focus requires an organization to concentrate on the needs of a specific target market. An organization implementing a focus strategy is willing to service isolated geographic areas; to satisfy the needs of customers with special financing, inventory, or servicing problems; or to tailor the product to the somewhat unique demands of the small- to medium-sized customer (Pearce & Robinson, 2011, p. 184). Loving Hands Care Service can increase profit through offering a unique service to potential customers. Customer intimacy requires the organization to be flexible.

Running head: STRATEGIC CHOICE AND EVALUATION

Grand strategy A grand strategy is a master long-term plan that provides basic direction for major actions directed toward achieving long-term business objectives (Pearce & Robinson, 2011, p. 187). There are 15 principles of grand strategy. They are market development, concentrated growth, innovation, product development, vertical integration, horizontal integration, concentric diversification, turnaround, conglomerate diversification, liquidation, divestiture, bankruptcy, consortia, joint ventures, and strategic alliances. Every one of these objectives can be implemented to achieve the long-term goals of an organization. Of these 15 principals, concentrated growth, market development, product development, innovation, and turnaround are essential for the survival of Loving Hands Care Services. Concentrated growth involves achieving superiority over competitors. Market development includes attracting the competitors customers. Product development includes modifying existing services to meet the needs of the customer. Innovation includes creating a new product or service and the acceptance of the service. Turnaround allows an organization to recover from declining profits. Each of these principles will allow Loving hands Care Services to meet the needs of the customer increasing the organizations rate of survival. Recommendation From the above information, it is recommended that Loving Hands Care Services adopt the focus generic strategy and the customer intimacy strategy. The focus strategy will allow Loving Hands Care Service to increase the profit by offering transportation services, spiritual services, meals, and healthcare services through a single organization. Many organizations offer these services; however, no single organization within the area offers all four services.

Running head: STRATEGIC CHOICE AND EVALUATION

The customer intimacy strategy will allow Loving Hands Care Service to create customer loyalty with a unique service. Because the organization will receive reimbursement through Medicare and Medicaid, Loving Hands Care Service can create security through providing extra services at no-cost. Extra services can include going to the store or delivering medicines. Loving Hands Care Services will offer additional hiring and training programs stress the creative decision-making skills required to meet individual customer needs (Pearce & Robinson, 2011, p. 186). CONCLUSION An organization must implement a strategic plan to ensure survival within a competitive environment. Loving Hands Care Service must implement an operational plan to ensure success and prosperity of the organization. Implementing an operational plan will require the organization to implement an effective discipline to increase the organizations competitive advantage.

Running head: STRATEGIC CHOICE AND EVALUATION

References Pearce, J.A. & Robinson, R. B. (2011). Strategic management: Formulation, implementation, and control (12th ed.). Boston, MA: McGraw-Hill/Irwin. Treacy, M. & Wiersema, F. (1993). Customer Intimacy and Other Value Disciplines. Harvard Business Review, 84-93.