STARTING A BUSINESS

Starting a Business

Starting a Business

1. Product Development and Business

Expansion strategies seek to increase the size and scope of an organization (such as Dell Inc. in this case). If expansion is selected as the best way to perform the mission and realize the vision of the organization (such as Dell Inc. in this case), several alternatives are available (Parry, 2007). Expansion strategies include diversification, vertical integration, market development, product development, and penetration.

Diversification

At Dell Inc. diversification strategies are selected because opportunities have been identified outside of the organization (such as Dell Inc. in this case)'s core business that offers potential for growth. Often an organization (such as Dell Inc. in this case) that selects a diversification strategy is not achieving its revenue goals within its current service area or product offerings (Parry, 2007).

Diversification at Dell Inc. can be a risky alternative, because the organization (such as Dell Inc. in this case) is entering a relatively unfamiliar market or offering a product or service that is different from its current products or services. Organizations have found that the risk of diversification can be reduced if complementary markets and products are selected.

Market Development

Typically, at Dell Inc. market development is selected when the organization (such as Dell Inc. in this case) is fairly strong (often with a differentiated product), the product's demand is growing, and the prospects are good for long-term growth (Armstrong, 2008). A market development strategy requires strong support from the marketing, financial, information systems, and human resources functions. An example of a market development strategy would be a chain of outpatient clinics opening a new clinic in a new geographic area (present products and services in a new market) (Pettigrew, 2006).

Dell Inc uses horizontal integration to obtain growth across markets by acquiring or affiliating with direct competitors rather than using internal operational/functional strategies to take market share from competitors. Many hospitals and medical practices engaged in horizontal integration thus creating multihospital systems expecting to achieve increased access to capital, reduced duplication of services, larger economies of scale, improved productivity and operating efficiencies, improved patient access, better quality, and increased political power (Andrews, 2007). However, many of these benefits did not materialize; the growth of horizontal integration strategies slowed in the late 1990s.

Focused factories become so effective (high quality, convenience, and so on) and efficient (less costly) that other providers are “forced” to use their services. Providers obtain higher-quality services at less cost by outsourcing to the focused factory. In turn, the focused factory commands a place in the payment systems (Palich, 2007).

Product Development

Product development is the introduction of new products/services to present markets (geographic and customer segments). Typically, product development takes the form of product enhancements and product line extension (Parry, 2007). Another good example of product development is in the area of women's health. Many hospitals have opened clinics designed to serve the special needs of women in the present market area.

Penetration

For Dell, to increase volume and market share with the same products in the same markets, a market ...