Deck 11: Strategic Planning Options: Internal Expansion

Question 1

Describe how a strategy of growth through internal expansion works.

Answer 1

$\bullet$ The organization expends its own time, money, imagination, and initiative, relying on all its functional areas (finance, operations, human resources, marketing), to essentially build new business on the periphery of its existing business. It goes beyond existing market segments to enter new market segments. It goes beyond existing product/service lines to offer new product/service lines. It goes beyond existing uses and features of current products to add new uses and features. It goes beyond existing distribution channels to add new distribution channels. It goes beyond existing marketing techniques to employ new marketing techniques. Through these activities, it expands the scope of what it is doing now, with the intention of increasing market share, revenues, and profits.

Question 2

What are the advantages of an internal expansion strategy over any external strategic option (strategic alliance, merger, acquisition)

Answer 2

$\bullet$ The advantage of this strategy is that the organization can choose exactly where and how it will grow-which market segments, which products or services, which product features, and which distribution channels. It can proceed at the pace that is most comfortable to it. As the strategy unfolds, the organization can decide to accelerate or slow down, inject more resources, or redirect the strategy. Or cancel it entirely.

Question 3

List three generic forms of internal expansion.

Answer 3

$\bullet$ Market penetration
$\bullet$ Market development
$\bullet$ New distribution channels
$\bullet$ Product development
$\bullet$ New products for new customers

Question 4

An internal expansion strategy can take the form of three types of initiatives. One is a "feature" initiative. What are the other two initiatives?

Question 5

Give five examples of features that could be added to existing products or services offered by a health care organization as part of a feature initiative under an internal expansion strategy.

Question 6

Briefly describe three specific cost savings opportunities in a hospital, health system, or medical center in pursuit of a cost initiative under an internal expansion strategy.

Question 7

Identify the three traditional definitions of health care "quality".