Arcade Medical Diagnostic Center, Inc.

• Main Author: Abastillas, Jennifer C.
• Format: text
• Language: English
• Published: Animo Repository 2000
• Subjects: Medical care > Philippines; Arcade Medical Diagnostic Center; Inc.
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/3941
• Institution: De La Salle University

This strategic management report presents recommended strategies for Arcade Medical Diagnostic Center, a diagnostic center on East Service Road, Paranaque. Recommendations are derived through an assessment of the company's existing strategies based on a general strategic framework, current industry and company conditions, and trends and economic/market developments. Limitations Certain limitations need to be defined prior to the presentation of analysis and recommendations. Some information such as the registered diagnostic centers in Paranaque and companies in the FTI industrial complex in Taguig were not presented because of difficulty in getting records from the municipal offices. The history of players in the health care industry such as hospitals, and diagnostic centers was not mentioned due to lack of data. The diagnostic center industry in the Philippines has yet to develop and integrate its data collection. A reliable source or facility where accurate, complete and detailed data can be gathered and consolidated has yet to be established. As a result, focus of discussion was on the health care industry instead of the diagnostic center industry. The report was prepared during the last quarter of year 2000. Changes that transpired after this period were not included. Analysis Based on a General Strategic Framework An organization decides what strategy to adopt. Arcade's strategy is differentiation, which seeks to distinguish its products or service from competitors. Arcade has a transvaginal ultrasound machine costing over a million pesos unlike most diagnostic centers that use the regular type that is about half the price. Management is being technology-oriented by positioning itself as an outpatient care center capable of giving better prognosis with its equipment compared especially to its main competitors except South Superhighway Medical Center. However, this differentiating factor is not that difficult or expensive for competitors to duplicate. A company has sustainable advantage if it has an edge over competitors in attracting customers and defending against competitive forces. Having a transvaginal ultrasound equipment unlike most diagnostic centers is not a source of sustainable competitive advantage. If a competitor would purchase a transvaginal equipment like the one being used by Arcade, the latter would not have the financial means to acquire a more sophisticated equipment. Arcade is not able to meet all of the characteristics for a successful differentiation. The company has not achieved customer loyalty and uniqueness that would hinder the entry of newcomers. The bargaining power of buyers is not lessened since services offered in diagnostic centers are standardized making it easy to switch. However, there are no threats from substitutes at all due to the standardized services. Based on Current Industry and Company Conditions The health care industry is considered fragmented because the low entry barriers allow firms to enter quickly and cheaply, and the absence of large-scale production economies permits small companies to compete on an equal footing with larger firms. This results in increased competition. Thus, Arcade's differentiation strategy, which seeks to distinguish itself from others in the industry is viable. However, the differentiating factor, which is technology, has not reduced rivalry by creating loyalty to Arcade. Even if Arcade's differentiation strategy is applicable to the fragmented industry, it lacks the financial resources to pursue a differentiation approach that would result in sustainable competitive advantage. In a fragmented industry such as health care, with low entry barriers resulting in increased competition, it is better to combine resources to attain a stronger position. Based on the company's current conditions, Arcade's lack of financial stability prevents the attainment of sustainable competitive advantage to pursue a differentiation approach. Arcade has been experiencing a contraction of operations. Some services specifically lying-in, pre-employment, and annual check-up did not push through. The X-ray and ECG services previously offered have been shelved to give way to Tenement Medical Diagnostic Center, which has higher earnings from the said services. It is approximately 1 kilometer away from Arcade, and is also owned by the latter's incorporators. To earn additional income, a portion of Arcade's commercial space is being rented out to a grocery store. Since the beginning, the company has been incurring losses. It has been able to sustain operations due to advances from shareholders. Based on Trends and Economic/Market Developments Based on trends and economic/market developments, Arcade will be able to face the challenges of urbanization and migration, and industrialization that lead to an increase in demand. However, the company will experience difficulty in handling the peso depreciation, and increase in interest rates brought about by the crisis, and the social needs of people in receiving health care that is not impersonal. The peso depreciation results in high importation cost of medical equipment. The increase in interest rates is risky for Arcade due to its loan exposure making it more difficult to have excess funds to purchase new equipment. Like other health institutions, Arcade's services are not personalized. It fails to address the needs of people for compassionate health care services. Thus, Arcade's use of technological superiority as its differentiating factor is not practical considering the economic/market developments. Recommendations Arcade should continue pursuing its differentiation strategy. The differentiating factor should be excellent service that is compassionate, friendly, and personalized without compromising affordability. The strategy is summarized in the phrase extraordinary care for ordinary people. The proposed corporate strategies are the following: (1) Effect a consolidation by organizing a corporation, Abastillas Diagnostic Care Center to acquire the assets and assume the liabilities of Arcade Medical Diagnostic Center, and Tenement Medical Diagnostic Center (2) Increase number of services to be rendered in a friendly and personalized manner.