Maintenance of Scope

Enhancement

When management believes that the organization is progressing toward its vision and goals but needs to “do things better,” an enhancement strategy may be used. Neither expansion nor contraction of operations is appropriate but “something needs to be done.” Enhancement strategies include quality programs, such as continuous quality improvement (CQI) and total quality management (TQM), directed toward improving organizational processes, cost reduction programs designed to render the organization more efficient, or innovative management processes designed to speed the delivery of the products or services to the customer and add flexibility to the design of the products or services (marketwide customization). For example, a Milwaukee hospital made a commitment to total quality management by having physician directors lead colleagues and department managers through, TQM process, using various tools to make improvements throughout the organization.

After an expansion strategy, an organization often engages in maintenance enhancement strategies. Typically, after an acquisition, organizations initiate enhancement strategies directed toward upgrading facilities, reducing purchasing costs, installing new computer systems, enhancing information systems, improving the ability to evaluate clinical outcomes, reducing overhead costs, or improving quality.

Status Quo

Based on the assumption that the market has matured and periods of high growth are over, an acceptable market share must be defended against competitors. In a status quo strategy, the goal is to maintain market share—not necessarily an easy goal to achieve in the turbulent health care environment. Additional resources may be required as management attempts to prolong the life of the product or service for as long as possible. Other competitors may be fighting for survival, requiring an organization to invest significant management time, financial resources, and marketing expertise to maintain market share. An example of this strategy would be a full-service hospital investing heavily in marketing to prevent market share erosion for inpatient services.

To better utilize limited resources, organizations attempt a status quo strategy in some areas while engaging in market development, product development, or penetration strategies in other areas. For instance, a hospital may attempt to hold its market share (status quo) in slow-growth markets such as cardiac and pediatric services and attempt market development in higher-growth services such as renal dialysis or intravenous therapy.

In mature markets, consolidation occurs as organizations attempt to add volume and reduce costs. Therefore, [Page 336]managers must be wary of the emergence of a single dominant competitor that has achieved a significant cost differential. A status quo strategy is appropriate when there are two or three dominant providers in a stable market segment, because in this situation market development or product development may be quite difficult and extremely expensive.