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American Medical Response (AMR) is in business to provide pre-hospital services to private, public, county and municipal government entities. AMR was founded by Paul M. Verrochi an entrepreneur from Boston, MA. When Verrochi created AMR, he did not have any experience in the operation of an ambulance company. However, he was very successful in building companies into large organizations. Verrochi wanted to create the largest private ambulance provider, which he grew in to the first nationwide ambulance provider. In the 1990’s AMR’s growth strategy was to acquire the strongest, best-managed ambulance providers in “beachhead” markets and then expanding further to adjacent service areas by acquiring ambulance companies or by responding to request for proposals. Under this new strategy, AMR senior management would identify potential local targets for acquisition. The strategic method that an organization selects to operate determines the success of the organization. According to Favaro,Rangan,and Hirsh (2012) business strategy “isthe result of choices to maximize long-term value” (para. 1). This paper will evaluate the strategic alternatives available to AMR for future growth by identifying the best fitting generic strategy, and grand strategy for the organization. In addition, a series of recommend strategies will be outlined for AMR to potentially implement.
Michael Treacy and Fred Wiersema,” believe that strategies must center on delivering superior customer value through one of three value disciplines: operational excellence, customer intimacy, or product leadership” (Pearce & Robinson, 2013). Each of the value disciplines are detailed below.
The operational excellence methodology is the first of the value disciplines which focuses on organizations providing excellent customer service, timely delivery of services that encourage competitive market pricing. According to Pearce and Robinson (2013), “A company that follows this strategy attempts to lead its industry in price and convenience by pursuing a focus on lean and efficient operations” (p. 198). AMR can use this method to help in decreasing costs by using available lean methods designed for eliminating waste, further reducing overhead spending, service delivery improvements, staffing alignment with services, and services improvements as it relates to providing pre-hospital care. The method can also assist in monitoring of all spending activities and supplies that are used for patient care.
The customer intimacy approach is the second in the values disciplines method. This approach seeks to develop long-term relationships between the organization and their customers by creating service loyalty. AMR can use this approach create made to fit services that are dependent on the service area, special coverage for events that are coordinated by the customer and community programs that teach individuals about safe tips. According to Pearce and Robinson (2013), “Customer-intimate companies are willing to spend money now to build customer loyalty for the long term, considering each customer’s lifetime value to the company, not the profit of any single transaction” (p. 198). AMR’s use of this approach is in the tailoring of each the contracts to the individual customer’s needs. Every community is different and requires different services that are provided to their communities. For example, AMR formed a swift water rescue team in Golden, CO due the needs of their customer. In another community AMR provides transportation to patrons that are intoxicated in a specialized van, which will transport them safely to location to sober up, at fraction of the cost of an ambulance transport. The organization that decide to use this approach typically maintains a loyal customer following, with customer relationships that are productive and long standing. Customer that work with organizations using this approach also know that they can rely on the company to provide the best service.
The product leadership approach is the last of the three methods of value disciplines which seek for the organization to be the forerunners of service innovation, therefore producing and creating quality services that appeal to the customer in the competitive market. Organizations use this method to promote, and market their services before their competitors or other entering the industry attempt to the take the lead. AMR is the industry leader in several services that are focused on pre-hospital care. One of these services is community paramedicine, which is certified paramedics with advance training whom can provided acute care to patients in rural area in need of medical services, but have no other means of receiving this care. This approach is also considered the most competitive of the value discipline strategies however, it does comes with an advantage, and it is one of the leading elements needed in preserving and gaining a competitive advantages and sustaining future growth.
“Generic Strategy: a core idea about how a firm can best compete in the marketplace” (Pearce & Robinson, 2013, p.195). The benefit of the generic strategy approach is that can be applied to organizations of all types and sizes. Many organizations implement the generic strategy for long term planning for a competitive advantage by using one of the three strategies; low-cost leadership, differentiation, and focus to help drive growth.
Cost Leadership Strategy
The cost leadership strategy strives to improve profit margins by reducing the costs of services while allowing the organization to still charge market prices. This approach also focuses on increasing the market shares by lower pricing, further allowing the organization to continue to reach profits due to reduced costs. As with any business the goal is to minimize cost directly associated to the organization when providing the delivery of services.
“Strategies dependent on differentiation are designed to appeal to customers with a special sensitivity for a particular product attribute” (Pearce & Robinson, 2013, p.197). This approach appeals to customers who prefer premium services and are looking for a service that is not offered by a competitor. Differentiation strategies focuses on its loyal customers and to often markets to a specific group, where money is not in short supply. The customer and internal expectations are of the uppermost quality and the differentiation approach accommodates those needs.
“A focus strategy, whether anchored in a low-cost base or a differentiation base, attempts to attend to the needs of a particular market segment (Pearce & Robinson, 2013, p.197). Organization that have a focus strategy often serve an isolated market, serving customers who have difficulty receiving the services or are need of a particular service.
The grand strategy approach serves as a long-term guide for all strategic business objectives. According to Pearce and Robinson (2011) Grand strategies, sometimes called master or business strategies, provide basic direction for strategic actions (p.200). There are 15 principal grand strategy approaches that may be adopted as a means to alternatives for achieving optimal success. “The 15 principal grand strategies are concentrated growth, market development, product development, innovation, horizontal acquisition, vertical acquisition, concentric diversification, conglomerate diversification, turnaround, divestiture, liquidation, bankruptcy, joint ventures, strategic alliances, and consortia” (Pearce & Robinson, 2013, p. 200). Depending the on the long term strategy, any one the strategies listed could serve an organization in achieving their long-term goals. Each of the prinical grand strategies have their strengths and weakness for which the organization will have to the risk and reward balance when implementing.
Recommendations for America Medical Response
AMR is the largest private ambulance provider in the United States, which includes operations in 40 states, including the District of Columbia. The ambulance industry is extremely fragmented, with over 15,000 public, private and not-for-profit service providers in the United States. AMR’s vision is, “Our customers count on and appreciate our reliability, the quality of medical care we provide, our dedication to relationships that benefit all and the efficiency with which we operate” (American Medical Response, 2014). Because their vision their commitment to making a difference in the communities they serve, it is recommended that they implement the generic strategies that promotes low-cost leadership and service differentiation strategies. This recommendation is because of the differences in service areas AMR serves and the current health care economic outlook surrounding the Affordable Care Act. AMR operates in urban and rural settings, the low-cost leadership strategies will require unique preparation and planning in order to use low-cost advantages, especially in rural markets where health care is not readily available the community. The differentiation strategies will help AMR stand out from the more than 15,000 ambulance providers in the United States. Implementing these strategies will allow AMR effectively manage their services charge more competitive prices, increasing their profit margins and creating a competitive advantage over their competitors.
As identified in the paper an organization needs evaluate their strategies to further realize profitable growth. As each organization identifies their strategies, whether generic or grand, the process may need adjustments as they progress. The recommendations of low-cost leadership and service differentiation strategies to remain dominant private ambulance provider in the nation, with a competitive advantage over the competition and to maintain profitability in the future.
American Medical Response. (2014). American Medical Response, AMR - the nation’s leading medical transportation company. Index. Retrieved from http://www.amr.net
Favaro,K., Rangan,K., & Hirsh,E. (2012, May 29). Strategy: An Executive’s Definition. Retrieved from http://www.strategy-business.com/article/cs00002?gko=d59c2
Pearce, J. A. & Robinson, R. B. (2013). Strategic Management: Planning for Domestic and Global Competition (13th ed). New York, NY: McGraw Hill.