Revolutionary Strategic Management Matrix: Cost Leadership Strategy And Marketing Initiative For Estia Health
About Estia Health Care and their Cost Leadership Strategy
Discuss About The Revolutionary Strategic Management Matrix.
Estia Health Care uses growth strategy along with the cost leadership strategy to help it achieve business and corporate objectives (Hill & Jones, 2010). Estia Health Aged care is a public listed company based in Australia. The company specializes in taking specialized care for the aged. Estia was formed in the year 2005 at presently,its one of the largest residential aged care providers in Australia. It has 68 facilities,and it operates in more than 5,900 places across Australia. The company has at least 7,000 employees who work at various facilities across the country. From the analysis of the strategic corporate strategy,it is clear that the company uses cost leadership strategy. Estia health outsources its manufacturing to ensure that the company minimizes cost. Outsourcing helps the company to focus on its core activities. Manufacturing would otherwise be so costly for the company because it means that the company would not enjoy economies of large-scale production (Geel, 2011). The objective of the strategy that it uses is to offer all customers affordable and specialized aged care which is tailor-made for their personal needs. This leadership strategy involves minimizing the cost of production or cost of providing goods and services. Estia Health Care uses the same. There are four types of generic strategies. They include cost leadership strategy, differentiation strategy, cost focus strategy and differentiation strategy. For a firm to compete effectively in the market, it is important that the organization chooses one of the above generic strategies. Using the strategies helps an organization to position itself in the industry which helps it to gain substantial market share. The cost leadership strategy was developed by Michael Porter. The strategy is all about ensuring that the company offers its goods and services at the lowest prices. An organization using cost leadership strategy offers goods and services at lower prices than those of competitors. The strategy is highly effective in gaining market share. The strategy is used as a marketing tool by most organizations but it ends up failing since maintaining low cost is a difficult task. The management team of the organization has to constantly work to ensure that the costs are low while at the same time ensuring that the products and services offered are of superior quality. Estia Health focuses on maintaining low costs for customers while at the same time offering specialized health care for the aged (Braithwaite, Makkai& Braithwaite, 2007). By managing its inbound logistics,the organization ensures efficiency in all its operations. The organization can be able to source for cheap and high-quality raw materials used in manufacturing. By managing inbound logistics,Estia Health ensures wastage of resources is minimized and hence helping the organization to maintain low costs. Supply is made more efficient and also the cost of storage of commodities remains low level ( Freeman, 2010). The organization has also invested in technology to keep costs of running the organization low. Cost leadership strategy helps an organization to attract many consumers who are price sensitive. It helps the company to gain a competitive advantage over its competitors and hence its ability to gain higher market share. Estia Health is also able to maintain low cost by marketing its products and services. It can, therefore, be able to balance its marketing expenses since it understands its own financial capabilities better (Hill& Jones,2012). The cost leadership strategy applied by Estia as well as consumer-focused goods and services has made the prices of the services low and hence has attracted many customers.
Understanding the Revolutionary Strategic Management Matrix
Despite the fact that this strategy is difficult to implement, it has various advantages such as higher profitability for the organization. Estia Health is an organization whose primary objective is to make profits while at the same time offering high quality aged care services. Since the organization attracts many customers, the revenues are higher, and hence the profits are better. The strategy is also more sustainable in the long run compared to other generic strategies used in strategic management.It is because an organization using the cost leadership strategy can survive tough economic times since they the organization is used to optimizing efficiency.
A strategic initiative is an endeavor that aims at achieving three interrelated outcomes. When deciding a strategic initiative for a business organization, it is important to understand the goals and objectives of that organization. It will help to choose a strategic initiative that suits the business best and that which will enable the organization to meet its end goal. The strategic initiative that Estia Health will use is the marketing initiative. The choice of the initiative is because it will enable the organization to attract a huge number of customers who are in need of aged care(Kossowski, 2007). By doing this,the organization will be able to increase its profit margin and hence run its operations smoothly. The marketing initiative will enable Estia Health brand to grow (Hubbard & Galvin, 2014).
Marketing is defined as the process of creating, communicating and delivering value to customers (Kachru, 2005). Marketing is one of the most important aspects of any business organization. It is a very wide field, and it plays a great role in determining the success of a business organization. Marketing is an activity that is consumer focused. An organization using strategic marketing initiative focuses on the needs of the customers and strives to fulfill their needs. It helps the organization to remain relevant in the industry and to gain a competitive advantage over its competitors.
Marketing strategic initiative is a good strategic choice for Estia Health. It is because most of the competitors in this industry do not pay good attention to marketing. The competitors invest very little money in marketing the aged healthcare organizations (Bhandari&Verma, 2013). Most of the competitors depend on word of mouth advertising. Most of the competitors are local, and they have operations in few regions. It means that these organizations do not need to invest much in marketing since the organization can easily market itself when it’s operating within a small geographical region(Zoephel, 2011). By marketing its products and services, ESTIA will become more popular, and most of the potential customers in need of aged care services will buy its services. Through marketing,Estia will educate customers on the variety of products it offers customers(IrudayaRajan,Risseeuw&Perera, 2011). It will give the organization a competitive advantage over its competitors since customers will be aware of what the organization offers and hence will buy its services.
The Benefits of Cost Leadership Strategy for Estia Health
Another reason why marketing is a strategic initiative for Estia is that the initiative will help the organization to interact better with customers(Prasad, 2015). Through this, Estia will get feedback which is very crucial in improving the services offered to customers.The company will be able to build upon its strengths and find ways of dealing with the weakness. It helps the company to become more solid and gain a loyal customer base.Marketing will also enable Estia to understand the specific needs of customers in each market segment. Through this, the organization can offer aged care services that suit the needs of the specific market segment as well as the needs of the individual consumer. Customers end up being highly satisfied and hence will recommend the organization to other potential customers ( Croft, 2012).In addition to this, the organization will have achieved one of its objectives; customer satisfaction is one of the major objectives of the organization.
Marketing as a strategic initiative helps Estia Health enjoy economies of scale in the long run. Marketing helps an organization to attract more customers and hence help the company to pool resources together(Buttigieg, Rathert&Eeif, 2015). It is very important in the service industry since the customers can utilize the facilities owned by the organization. The large pool of resources helps the company to minimize costs of caring for the aged and therefore helping the organization to gain a competitive advantage over its rivals. Marketing of Estia Health can also create a competitive advantage for the company by promoting the brand of the company. The brand name of Estia Health is very important in attracting new customers as well as ensuring sustainability in the long term (CHO & MOON, 2013) A strong brand ensures that customers have a positive and favorable attitude towards the company as well as the products offered by that organization.Therefore the company can maintain its market position. The value of the company also increases and hence benefiting the shareholders of the organization.
Marketing Estia will be a great source of competitive advantage for the company since the organization will be able to expand easily into new markets. Through marketing, more customers will be aware of the company and the products that it offers. The costs that the organization incurs in attracting new customers reduces. The organization will be able to expand into new geographical areas and therefore gain an additional market share. By expanding into new markets, the organization will be able to counter competition from other players in the aged care industry in Australia (Britnell, 2015). Expanding into new geographical areas ensures that the organization spreads risk. It means that in case one of the facilities makes losses or fails due to other reasons, the losses compensated by branches that make good profits. The risk of business failure is therefore effectively managed. Through marketing, Estia will be able to introduce a new product into the market with ease. The organization will do little advertisement to inform customers of the existence of the new product since there are already good marketing structures in place. The initiative helps to build the brand of the organization and as a result, increasing consumer base for the organization. The marketing initiative also ensures that the organization gets a competitive advantage by making it easy for the company to increase its geographical presence and hence helping the organization to reach more potential customers.
Estia Health’s Strategic Initiative: Marketing
Like any other business, ESTIA has various strengths and weaknesses. There are also opportunities and threats that exist in the operating environment of the company. These factors are very important in shaping strategy for the organization. ESTIA has highly skilled and experienced nursing staffs that help the organization to offer high-quality services to the aged and hence making it the company of choice for the customers (Kachru, 2005). The organization has also embraced technology and unique training systems in its various operations, and this has contributed towards increased efficiency. The wide geographical presence of the organization gives the organization a competitive advantage over its competitors (Rasche, 2008). Furthermore, it is a forefront in innovation in aged care. One of the major weaknesses of ESTIA is that the company lacks proper coordination and relationship with the suppliers. Their services in the non-urban areas are also poor. Strict laws governing centers for the aged are also a threat to the organization. The following is a combined SWOT analysis of ESTIA.
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