Any firm in the market needs to undergo expansion so as to keep up with the growing client base as well as competition. Internal expansion refers to the process where a company grows from within through the utilization of resources, either those found within the company or from acquiring them from outside. This is done in a bid to consequently improve the market penetration, increase the firm’s size generally, increase both financial and non-financial resources, and to elevate the scale of operations (Dringoli, 2011). This, in turn, results in both product and market expansions. Increase of sales of the already existing products in the market can be achieved through better marketing and promotional approaches or introduction of new products altogether. These approaches ensure that a firm is able to enjoy maximum economies of scale as a result of the expansion.
In recent times, mergers and acquisition have been embraced as an adequate business strategy of increasing growth in firms. This is especially convenient for those firms that are interested in expanding into new markets and new areas of business. As a result, these firms are able to gain a better competitive edge as well as acquiring new skill sets and technologies. This strategy is especially common in professional services such as hospitals and other healthcare providing institutions. Mergers can either be financial or strategic. A strategic acquisition or merger usually seeks to offer solutions to business problems which are not finance-related. On the other hand, financial mergers are formed to offer financial solutions to struggling firms (Dringoli, 2011).
Additionally, a strategic alliance is another approach used by firms to foster growth. It refers to a formal agreement between parties to focus on and pursue some set objectives and goals while at the same time remaining to be different independent organizations (Das, 2012). The most important factor about alliances is that there has to be a vested interest that aims at helping the parties to grow. Strategic alliances have proven to be beneficial to firms as they lead to business growth, offer a platform to share skills between the parties involved, enables the parties to have additional value for clients and increase revenue. Before forming an alliance, it’s important to research about the potential partner to confirm that the alliance will be mutually beneficial.
Unfortunately, mergers do not always work as planned which leads to dissolution (Lindberg, 2012). One such case is the merger dissolution between Geisinger Health System and Hershey Medical Center in November 1999. The merger failed because the cutting costs and consolidation did not effectively deal with the inevitable losers and winners. Additionally, the theoretical plan of cost saving did not translate into better services and enhanced operations after the merger. Furthermore, the two medical centers had different cultures and hence they did not blend in well as theoretically expected. There were also disagreements as both parties felt that the other party was not delivering as agreed. After combining all these factors, the merger ultimately failed and the agreement fell apart.
Das, T. K. (2012). Strategic alliances for value creation. Charlotte, NC: Information Age Pub
Dringoli, A. (2011). Corporate strategy and firm growth: Creating value for shareholders. Cheltenham: Edward Elgar
Lindberg, C., Hatch, M., Mohl, V., & Ciemins, E. (2012). Embracing Uncertainity: Complexity-Inspired Innovations at Billings Clinic. Handbook of Systems and Complexity in Health, 697-713.