Coursework

The Threat of Substitute of Products

By placing a ceiling on the prices it can charge, substitute products or services limit the potential of an industry. Unless, it can upgrade the quality of the product or differentiate it somehow, the industry will suffer in earnings and possibly in growth. There is less of a threat of the placing of substitute products in the health care industry. Natural therapies and other natural treatments are gaining popularly but not expected to be a competitor for the industry.

Intensity of Rivalry among competitors: Many industries in free market economies have a high level of competition, product differentiation and product innovation. It is important to realize that these forms of competition may occur at the same time. Intense rivalry is related to the presence of a number of factors.

(i)Equally balanced competitors: Well matched rivals pose intense competition in a situation that does not allow any particular firm to dominate. There are number of health care firms having equal strengths on various forms. This rivalry between various forms results in price cutting competition and putting pressure on profit margin.

(ii)Slow Growth industry: In slow growth markets, sales growth must come from taking marker share away from rivals, which induces retaliation and escalates rivalry. The Health care industry is growing as population is aging in European countries and the government is promising to spend more money on health care. But health care industry is feeling pressure in other markets where government has little money to spend on health care. It depends on the performance of the economy and how government is concerned about the health of old age people.

(iii)High fixed cost: As additional sales volume will help offset high fixed costs, competitors are willing to fight for any possible sales at any price and resulting in undercutting of prices. It also happens in health industry. But it largely depends on the capacity of the firm and demand for the product at a certain price range.

The Five Forces Analysis allows determining the attractiveness of an industry. It provides insights on profitability. Thus, it supports decisions about entry to or exit from and industry or a market segment. Moreover, the model can be used to compare the impact of competitive forces on the own organization with their impact on competitors. Competitors may have different options to react to changes in competitive forces from their different resources and competences. This may influence the structure of the whole industry. In combination with a PEST-Analysis, which reveals drivers for change in an industry, Five Forces Analysis can reveal insights about the potential future attractiveness of the industry. Expected political, economical, socio-demographical and technological changes can influence the five competitive forces and thus have impact on industry structures.

Recommendations

When examining the healthcare industry, several factors were identified as hindering the development of an effective supply chain and its ability to demonstrate relevance. The absence of a common understanding is to how interactions work across the healthcare supply chain. A key to progress is to engage in visualization and scenario building to develop mental and schematic models. The system will not be improved until we develop a common language and understanding.

Differentiation in Health Care industry

It is important to realize that Health care differs from other goods and services in important ways. The output of the health care industry is less well defined. It is unpredictable and imperfectly understood by producers, and stills less by consumers. Also, third-party payment and government intervention are pervasive. None of these characteristics is unique to health care, but their extent and their interaction are. However, health care markets obey the fundamental rules of economics, and economic analysis is essential in appraising public policy. The firm must formulate its strategy in such a way that it can differentiate itself from others by setting its own bench mark.

It may seem old-fashioned, but the human touch is a vitally important part of treatment that is increasingly scarce in today’s system of care. Mostly, it’s a matter of time. An overburdened health-care system facing exorbitant costs and shrinking reimbursements requires doctors and caregivers to see more patients in less time. It also emphasizes exams, procedures and prescriptions over conversation. Although a big part of a doctor’s daily work is about educating patients regarding their health (and vice versa) little time is allotted for it. Instead, a growing portion of a doctor’s day is spent dealing with paper rather than people.

This can lead to compromises in care, especially when it comes to chronic conditions or preventive care. The patient is a human being that needs extreme care during his trauma period and the firm must ensure that the customer (patient) is getting proper attention from the hospital though the cost may increase. It develops and ensures the credibility and service of the firm among the consumers.

Improving Productivity

It is well accepted that in every industry productivity is the only parameter to reduce cost. It means that each employee faces an increasing demand on their productivity.

The way differences are managed within a group has a direct impact on how well a team or an individual contributor functions, and ultimately, how faithful she or he is to the accomplishment of his or her performance objectives. Productivity depends, in part, on the quality of the work environment. Individuals who perceive they are not valued at an organization will simply not have the support systems they need to produce at ever higher levels for extended periods of time. If employees are not valued, supported, and given adequate rewards (including time off), they will burn out, or they will leave. Conversely, employees who are treated with respect, working in an inclusive and supportive environment, are able to maximize productivity.