Strategic Analysis Report: Quest Diagnostics' Business Strategy

This report provides a comprehensive strategic analysis of Quest Diagnostics, a leading provider of diagnostic services in the United States. It begins with an introduction to the company, its vision, goals, and service offerings, followed by an in-depth external analysis using Porter's Five Forces and PESTLE analysis to assess the competitive landscape and external influences. The internal analysis employs Porter's Value Chain to evaluate the company's activities and Porter's Generic Strategies to determine its competitive approach. The report also identifies Quest Diagnostic's core competencies and discusses its competitive advantages. The analysis highlights key aspects of the company's operations, including its market position, competitive strategies, and the factors that contribute to its success in the diagnostic services industry. The report concludes with a summary of the findings and recommendations for future strategic directions.

Strategic Management – Quest Diagnostics
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Table of Contents
Introduction.................................................................................................................................................2
External Analysis........................................................................................................................................2
Porter’s 5 Forces......................................................................................................................................2
PESTLE Analysis....................................................................................................................................3
Internal Analysis..........................................................................................................................................5
Porter’s Value Chain...............................................................................................................................5
Porters Generic Strategy..........................................................................................................................7
Core Competencies..................................................................................................................................8
Asimov....................................................................................................................................................9
Conclusion.................................................................................................................................................10
References.................................................................................................................................................11
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Introduction
Quest Diagnostic is the leading provider of the diagnostics services as well as the solution in the
United States. The organization was founded in the year 1967 with the name of Metropolitan
Pathology Laboratory, but in the year 1996 it became public and was renamed Quest Diagnostic.
The vision of the firm is to empower better health along with the diagnostic insight. The
organization also have three goals, and they are; help in the creation of the healthier world, the
creation of the inspiring work and building the values. The new strategy of the firm is to give
excellence in work every day. The organization generally offer 3000 diagnostic tests which range
from a simple blood test to the gene-based as well as molecular testing. The organization also
offer the one-stop shop for the diagnostic test at the minimum price. The human resources of the
firm are almost 43,000 people, and 74% of these employees are frontline workers. The purpose
of the paper is to analyze the external and internal working function of the firm. The detail
discussion on Porter’s five forces, pestle, and porter’s value chain, Porter's generic strategy, core
competencies and Asimov analysis will be provided within the paper.
External Analysis
Porter’s 5 Forces
Porter's five forces are the simple but the powerful tool that helps in understanding the
competitiveness of the business environment. In this five industry forces is being utilized for the
determination of profitability level as well as competition within the market.
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Figure 1: Porter’s 5 Forces Model
A threat of new entrants
The threats of new entrants in the field of medical laboratories as well as research help to bring
innovation to the market (Hamdan, 2017). The organization LabCorp with their suitable pricing
strategy and their innovative value proposition to the customers create the threat of new entrants
to Quest Diagnostics.
Supplier power
Quest Diagnostic have numerous suppliers, and for that, they do not possess the power of
supplier for their profitability ratio (Kay, Porter, Youtie, Newman, and Ràfols, 2017). This is the
basic facts that the supplier could not increase their price and the raw materials collected by the
firm are of best quality with suitable cost.
Buyer power
Buyers have the considerable power to impact the cost strategy of the firm as they have the
option to get the services from other medical laboratories. In this case, the biggest competitors of
Quest Diagnostics that is LabCorp is the primary reason that causes huge buyer power for the
firm within the market.
Threats of substitutes
The threat of substitute within the market is also high as LabCorp also provides the same type of
medical test and services to the customers. People have the suitable and effective option to get
their service from a different organization which ever suits them according to their choice
(Jenkins, and Taylor, 2017).
Competitive rivalry
The primary competitor of the firm is LabCorp who have won over the United Healthcare
Insurance who is the key customers of Quest Diagnostics. The organization has 39 laboratories
as well as 1750 centers of patient service in 60 counties.
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PESTLE Analysis
Pestle analysis is the analytical tool that is used for strategic business planning, and also it helps
to understand the external influences within the business (Weber et al., 2017). This model helps
to understand the various external factor within the market that create a huge impact for the firm
to maintain their business.
Political factor
US is the second largest democracy all over the world and also they have stable political
environment. The political system of the country is having the most effective and suitable
infrastructure for the development of suitable organizations (Bock et al., 2017). Quest Diagnostic
effectively maintain their business within the suitable political system that allows in the
development of the business.
Economic factor
United State is the largest economy in the term of nominal GDP (Clarke, Holmquist, Lee, and
Reitz, 2018). The country is also having the availability of cheap labor within the market for the
development of business. It is one of the most suitable factors which helps the firm to maintain
their position in the market and also provide the best economic condition for the medical
services.
Social factor
United State is the third largest population country in the entire world and their total population
is almost 326 million. The country is also having the high quality of labor force, and for that, it
became much easier for Quest Diagnostics to maintain their service in the market of United State
that will affect their business.
Technological factor
United State is the global leader in the science as well as technology which allow Quest
Diagnostics to perform their various test regarding medical treatment. The technology that is
being utilized by the organization helps them to provide the most suitable and effective working
function for the patients (Sahiti, and Smith, 2017). Various kind of medical test is also possible
due to the usage of advanced technology.
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Legal factor
The legal system of the country is also suitable for the medical laboratories and research. The
organization needs to follow the legal system which enables them to maintain their business and
their employees within the market. This is done with the help of effective healthcare law and the
labor law within the country.
Environmental factor
The country has the most effective and suitable environmental system which help to maintain the
business and the waste products (Blaskovich, Butler, and Cooper, 2017). For the medical test and
the specimens to keep protected the suitable environment is highly required. The basic working
function of the firm Quest Diagnostic directly depends on the effective environment within the
market.
Internal Analysis
Porter’s Value Chain
Porter’s value chain analysis is the collection of the activities which is being performed by the
organization for the creation of value for the customers. The value creation helps to create the
added value that is helpful to lead the competitive advantages of the firm.
Figure 2: Porter’s Value Chain Model
Primary activities
Inbound logistics
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The organization effective distribute the raw material and the specimens to the suitable
department for performing effective result regarding the test (Chae et al., 2017). There are 3000
kinds of test and for that suitable sorting as well as distribution is maintained.
Operations
The operation of Quest Diagnostic is to provide a various test on the collected specimens. For
this, the operation team of the firm includes almost 650 medical doctors as well as PhDs. The
organization has two kind of operation that is Diagnostics information service as well as
Diagnostics solutions.
Outbound logistics
The organization is having almost 3400 vehicles as well as 26 planes to provide the most suitable
and effective experience of outbound logistics to their customers. The logistics capability of the
firm is to make almost 80,000 stops daily.
Marketing and sales
The diagnostic information service of the firm has the unified commercial organization that
focuses on the sales of various services. The organization maintain a suitable connection with the
hospitals as well as clinical franchises and also specialized physicians to attract the customers.
Service
Quest Diagnostics provides effective service to their client which involves the lab result, along
with the online availability, personal notification of the lab result with full priority, Care 360
then the QuestConnect and so on for the customers.
Support activities
Procurement
The organization Quest Diagnostic centralize their procurement as well as began the
standardizing patient services, logistics along with the specimen processing within the laboratory
(Tangenes, and Steen, 2017). The organization has the most suitable procurement excellence in
the market. The organization has got their information technology from the vendor.
Human resource management
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The organization mostly recruit the doctors, physicians, supervisor, and customer care executives
and so on. The primary motive of the firm is to provide effective service to the customers and for
that that follow the most suitable recruitment process where most of the doctors and physicians
are experienced (Bhise et al., 2017).
Technological development
The technological development of the organization effectively helps to maintain various medical
test within the firm. With the help of advanced technology, the most appropriate and the accurate
result of the various test can be obtained.
Infrastructure
The organization has the most suitable and effective infrastructure system that help them to
develop their business and their operation in the daily activity. The wide support of the firm
gains more capabilities as well as value.
Porters Generic Strategy
The Porter’s generic strategy is used to determine the strategy of the firm. The relative position
of the firm within the industry generally determines the profitability of the organization (Allen,
2017). The generic strategy allows the firm to understand their competitive advantages with the
help of cost leadership and differentiation.
Figure 3: Porter's Generic Strategy Model
Cost leadership
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The organization targets the huge market where they have the facility to provide suitable and
effective medical test services to the customers that also at the lowest price (Erickson, and
Rothberg, 2017). The organization provides the minimal cost to the customers with the excellent
operational services. From the cost excellence program, the firm has saved almost 200 million
dollars in the year 2015.
Differentiation
The organization with their suitable and effective strategy of the simple organization along with
diagnostics information service it can be seen that their differentiation is to provide the most
simple and suitable operational function to the customers with the help of advanced technology
(Rizany, Hariyati, and Handayani, 2018).
Cost focus
The organization selected the target group to provide the most effective business operation and
their strategy of restoring growth help to maintain their position within the market. It can be seen
that Quest Diagnostic has effectively boost up their share in the market.
Differentiation focus
The organization provides the most valuable service to the customers with the accurate result for
the medical treatment. The organizational strategy is effectively providing their best within the
market to maintain their position and their suitable working function within the market.
Core Competencies
Core competencies are a unique capability which the organization develops that cannot be
imitated. This is the process which helps to provide the competitive advantages for the firm and
also increase their value within the market. The core competencies of the firm help to determine
the strength as well as the business growth in the market (Strom et al., 2017). The organization
Quest Diagnostic have the most suitable and effective competitive advantages that allow their
business to flourish within the market. It can be seen that the depth, as well as the breadth of the
information when combined with the powerful analytical abilities, enable the firm to take
effective advantages on the diagnostic process (Raschke et al., 2017). This is one of the basic
competitive advantages of the firm for maintaining their activity within the field. They also
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provide the most attractive service offering within the industry that involves the comprehensive
test menu, innovative test, and the customer's feedback.
The operation of the firm also contains effective experts in medicine and science. Also, they
maintain strong quality, unparalleled distribution along with the integrated technology within the
business for providing the most effective and suitable operational function (Kaufman et al.,
2018). This is another competitive advantages of the firm to maintain their position within the
market. The organization also provide the most effective diagnostic information service to the
market. The entire working function of the firm is to provide the best and the effective quality of
services. It can be seen that the workers of the firm required the most suitable and effective
working function to provide the best result for the medical test (McClure, Niles, Kaufman, and
Gudin, 2017). The organization provides the best competitive working function within the
market to maintain their activity and their business in the most suitable form within the market.
They also maintain the patient insurance coverage system in their test and their payment option
for the effective diagnostic centers.
Asimov
The organization is having the most suitable and the effective strategy that helps them to
maintain their position within the market. It can be seen that the company has effectively
maintained the strategy for the growth of 1-2% per year with the help of accretive as well as
strategic acquisition. The organization also have visualized the strategic and effective acquisition
for their firm to maintain effective working function within the market. The organization has
effectively acquired the outreach laboratory testing business that also in the Pacific Northwest of
the organization Peace Health Laboratories (Ayad, and Sbeiti, 2017). The Lewisville laboratory
system is also acquired by the organization that forms the basis of the first national center of
excellence for the firm in the market in the area of diagnostics for oncology. Due to this
acquisition, it can be seen that the organization became the most preferred provider of advanced
oncology diagnosis for the patients. This acquisition consists of more than 1400 community-
based doctors as well as independent doctors to provide the effective service for almost 12
hospitals of the Baylor Scott as well as White Health in North Texas. The organizatio0n is
having the most suitable strategy for their acquisition to grow their business.
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The organization has also acquired the Shiel Medical Laboratory business which is present in the
greater New York City area. The strategy of merger and acquisition eventually help the
organization to develop their market and their position most effectively and suitably that will
allow their firm to maintain their position (Wang et al., 2017). The acquisition is also for the
certain assets of the California Laboratory associates which is the clinical lab that serves the
patient. The working function and the operational activity of the firm are quite effective, and this
could be developed with the help of an effective acquisition strategy to maintain their growth in
the market. The organization also acquired with the Cleveland Heartlab which is the leader for
providing the innovative diagnostic service to the patient of cardiovascular disease. With the
merge of this organization, Quest Diagnostic can effectively maintain their position and also
their competitive advantages within the market. This is one of the best ways to provide the most
suitable and effective business for the firm within the market. They also continued to provide the
most innovative test for the various patient all over the country to grab their attention to the
growth of the firm.
Conclusion
The paper eventually concludes the facts that the firm with the help of their strategic value and
their development process can effectively maintain their competitive advantages and provide the
best operational function to the customers. The entire business process of the firm is to develop
the working function and the valuable strategy as well as the organizational value for the firm.
The paper also concludes the fact that the acquisition of the firm helps them to maintain their
business position as well as their strategic growth within the market. The fact is clear that the
organization can effectively develop their business process and their working function most
effectively and suitably. The entire business of the firm is to provide the best medical service to
the patients and that also with the minimum cost. It can be evaluated that the organization has
created the one-stop shop where the customers can get various type of test. The biggest
competitor of the firm is LabCorp, but then also the firm is in the most suitable and effective
business process that allows maintaining the best position within the market.
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