Respond to other student’s initial Discussion Questions (DQ) responses listed below according to these guidelines 

Substantive Posts must meet the following criteria: 

–          200-300 word count, excluding citations and references

–          Responses should draw from the assigned readings, outside research, and/or professional experience

–          Utilize in-text citations and references, as appropriate (optional)

(the initial DQ was In the event that your company had the opportunity to diversify into other products or businesses of your choosing, would you opt to pursue related diversification, unrelated diversification, or a combination of both? Explain why.)

1st response question

In case diversification is considered by the management of the courier company under consideration, the owners as well as the management is of the opinion that it will consider diversification into a product of business that compliments their current business model. The management has spent considerable time and monetary resources  to gain invaluable experience within the industry, which can be leveraged to produce attractive value propositions within a related business. Venturing into an unrelated business would require the company to understand the business dynamic, form a good team, spend a significant time on marketing and engaging customers. The management of the company has been occupied meeting the business needs of their courier company and expanding it to other regions therefore the management believes that a venture into unrelated business is not something the management would be able to successfully set up and run, in the short term at least. Hence related diversification is the only option that the management would consider. In this regard, the management has been discussing options of expanding product lines such as smart delivery systems, allowing customers to schedule deliveries on a later date so that the shipment reaches the receiver on a specified date. This could be really useful for occasions where someone could schedule a delivery later the same week in case the sender foresees increased work load or other responsibilities would create hindrances towards timely delivery. Moreover, partnering with a local gift shop or delicacies vendor and offering their products online would compliment both the businesses thereby opening an opportunity for online gift shop which would increase business for both the partners. Apart from this, the management is open to any other related business opportunity too.

2nd response

“Related businesses possess competitively valuable cross-business value chain and resource matchups while unrelated businesses have dissimilar value changes and resources requirements, with no competitively important cross-business value chain relationships” (Gamble, Thompson & Peteraf, 2015).  After the reading the sections on related businesses and unrelated businesses, I would opt to pursue related diversification and I believe my organization would only choose related businesses – healthcare in nature.  The economies of scope is an interesting concept and I think my organization obtained this with our recently purchased home health care company.  The purpose of the purchase was to have a better continuity of care with the patients.  The physical therapist would see the patients in the hospital then follow them home for continued care.  The nurses would have instant access to records of the care provided in the home and in the hospital.  The patients could be monitored more closely in the home, allowing for early treatment if the patient takes a turn for the worst.   This should prevent a readmission to the hospital and improve the quality of life for the patients.  This is a win win for the patient and organization. 

The textbook, The Strategic Management of Health Care Organizations, validates my opinion by stating “Research on diversification indicates that financial performance increases as organizations shift from single-business strategies to related diversification, but performance decreases as organizations change from related diversification to unrelated diversification.”  The text goes on and explains that organizations that use related diversification can capture economies of scope by decreasing idle capacity.  (Ginter, Duncan, & Swayne, 2013)

Addressing idle capacity is an ongoing issue in my organization.  Because my hospital is a small critical access hospital our patient census is often times less than four patients.  However, we must maintain a certain level of staffing even with this low census; for us, it is three nurses on duty at all times.  This leads to a tremendous amount of idle capacity.   Taking steps to manage this waste will help my organization’s financial picture and improve our chances of survival.