External and Internal Environmental Analysis
“Environmental scanning is the internal communication of external information about issues that may potentially influence an organization's decision-making process” (Albright, 2004, p. 34). For organizations like Fresenius Medical Care, a worldwide company, the awareness of external environmental factors is vital to maintain competitive on the dialysis industry. Even though there are multiple external factors to analyze, in recent years the government works as an element of change on the medical industry with the biggest health reform in United States history. The health reform will affect the way Fresenius makes business because the company needs to adapt the new payments-per-service coverage and sustain quality of service as well as profitability. External Environmental Scan
“The remote environment comprises five factors that originate beyond, and usually irrespective of, any single firm’s operating situation: economic, social, political, technological, and ecological factors” (Pearce II & Robinson, 2012, p. 87). The organization has no control or regulation over these factors. The remotes environmental factors influence the way Fresenius Medical Care offers dialysis services, especially the economic and political factors. The economic factor describes the organization awareness of the “general availability of credit, the level of disposable income, and the propensity of people to spend” (Pearce II & Robinson, 2012, p. 87). Fresenius target market is end-stage-renal-disease patients with health care insurance. The economic factor will affect Fresenius target and the ability to pay for dialysis treatment and medications. The “political factors define the legal and regulatory parameters within which firms must operate” (Pearce II & Robinson, 2012, p. 90). A good example of political factor is the Obama Care Law or Patient Protection and Affordable Care Act. The president Barak Obama signs the law in 2010 with the purpose of providing accessibility to affordable medical care to the Americans and to reduce the government expenses. For-profits entities like Fresenius Medical Care have to adapt the new regulations and create a strategic plan to avoid the potential reduction on profit. Industry Environment
“Industry environment is the general conditions for competition that influence all businesses that provide similar products and services” (Pearce II & Robinson, 2012, p. 97). There are five forces that Michael E. Porter, a Harvard University professor, uses to describe the industry competition (Pearce II & Robinson, 2012). These forces are entry barriers, supplier power, buyer power, substitute availability, and competitive rivalry (Pearce II & Robinson, 2012). Fresenius Medical Care major competitor in the United States is Davita Dialysis Center. Fresenius recognizes and study the competitor’s strategies to strength the organization. The Obama Care law affects the dialysis industry by changing the medication coverage. Fresenius competitor owns pharmaceuticals with capability to serve the dialysis patients as soon the law becomes active in 2016. Fresenius identifies the threat of substitute of the competitor and create a program that provides medications to the patients and increase the company profitability even before the law is effective. The goal for Fresenius is to enroll a 100% of patients with Medicare in Fresenius Rx program by the end of 2013. So far Fresenius is at 20% of the goal in California.
The external operating environment seems to be closer to the firm than the remote and the industry environments. Operating environment includes the following factors: competitors, creditors, customers, labor, and supplier (Pearce II & Robinson, 2012). The proximity of these factors implies that the company may have more interaction and more awareness of the environmental changes. For example, Fresenius study the effect of the new...
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