How Is Corporate Strategy Relevant To The Veterinary Industry?

Author: Christian Bamber
Posted: Monday 15th August, 2011. 10:59:03

strategy noun (strategies) 1 the process of, or skill in, planning and conducting a military campaign. 2 a long-term plan for future success or development. ETYMOLOGY: 17c: from French strategie, from Greek strategia, from stratos army + agein to lead. (Chambers 21st Century Dictionary)

This is a perfectly good general description of strategy and one that we are all probably familiar with. However, in the context of business, it is useful to split strategy further into two key concepts, corporate strategy and competitive strategy, so this week we will begin looking at corporate strategy.

Corporate strategy defines the scope of the organisation in terms of the industries and/or markets it operates in. More specifically, it covers major future decisions such as diversification, mergers and acquisitions, vertical integration, business portfolios, and the amount of resources allocated to each of these.

How is corporate strategy relevant to the veterinary industry?

Well, take the smallest veterinary practice – a practice run by a single vet, for example. If she were entertaining diversification, then the vet may be considering branching out into peripheral services and products in addition to the core veterinary work. So, perhaps they may be looking at providing a full range of pet accessories within their establishment, or perhaps the vet is entertaining the idea of setting up a 24-hour “live chat” veterinary advice webpage. Nothing new here, but these are examples of diversification.

The key point is that whatever you decide to diversify into, you should somehow be able to leverage upon your existing resources to create a powerful diversification strategy. This may be a physical resource such as a building or an intangible resource such as skills and knowledge. There would be no sense in our vet deciding to branch out into, say, mobile phone sales if they have neither the expertise nor resources. However, a 24-hour live chat veterinary advice webpage may be feasible if the vet possessed the programming skills required (or had easy access to them) and had some eager recruits to man the line as the veterinary knowledge base is already there.

In contrast, consider a rapidly growing national veterinary corporation - an increasingly popular move for those with the resources. A key component of its overall strategy is likely to be mergers and acquisitions. However, even identifying and mapping out such a strategy cannot guarantee “success”. Take Starbucks for example. Yes, of course, a very successful enterprise in the eyes of its shareholders, but what about its stakeholders? Howard Schultz, CEO of Starbucks, recently described the insidious impact of breakneck growth:

When you look at growth as a strategy, it becomes somewhat seductive, addictive. But growth should not be—and is not—a strategy; it’s a tactic…
the primary lesson I’ve learned over the years is that growth and success can cover up a lot of mistakes.

Shortly after a phase of extremely rapid growth, many stores were forced to close due to imprudent decision-making resulting from an effort to please shareholders in the short-term at the expense of staff and suppliers who had come to rely upon them.

What can we learn from this? Balance your strategy. Ensure you take into consideration the needs and impact of all stakeholders (even if you choose to ignore them!) and that decisions are not made simply for short-term gain. We’ll talk more about balance in designing strategy in a later article.

Another key aspect of corporate strategy is vertical integration. This means that the enterprise owns one or more vertically related activities. For example, a veterinary practice may decide to backwards integrate and purchase a key supplier of a product it uses, or forwards integrate and set-up a pet crematorium. There are plenty of examples of vertical integration out there: a practice which owns a lab could be considered as vertically integrated, so too a primary practice joined with a referral practice.

The concept is to integrate in such a way as to gain greater control and ownership over successive stages of the value chain, thereby having greater power to force costs down, increase quality or improve productivity.

So, all aspects of corporate strategy are potentially relevant to our own profession, even to the smallest practice. When designing our strategy, we must look at both the corporate and competitive aspects. I said last week that we would look at what we could also learn from Madonna and Toyota. However, I’m afraid that’s going to have to wait until next week when we talk about competitive strategy – apologies!

Christian Bamber is Principal Consultant and Director of Approach Strategy, a consulting firm specialising in strategy services to service industries and not-for-profit organisations. For more information, please contact Approach Strategy at christian@approachstrategy.co.uk. Tel: 01225 722 654 or visit their website www.approachstrategy.co.uk

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