Five Force Model

Topics: Rate of return, Profit, Investment Pages: 2 (362 words) Published: October 26, 2011
Brown’s Chiropractic and Wellness Center Feasibility Analysis

Five Force Matrix
Importance (1 to 5) Threat to Industry (1 to 5) Weighted Score (Importance X Threat) Rivalry among companies competing in the industry- 3*2=6
Bargaining power of suppliers in the industry- 1*2=2
Bargaining power of buyers- 3*2=6
Threat of new entrants to the industry- 2*4=8
Threat of substitute products- 4*4=16
6+2+6+8+16=38
With a score of 38, the market is very attractive to enter.

Brown’s Chiropractic and Wellness Center will purchase an existing practice for $150.00. This will include the practice, equipment, supplies and transition assistance. The average monthly overhead is approximately $9,500. Over the last 12 months, the practice has averaged 13 new patients per month and 520 monthly office visits. For the same 12 month period the practice averaged $13,226.00 in monthly collections. Return on investment (ROI)

$13,226.00 - $9,00.00 / $9,500.00 = 39% ROI

Are customers willing to purchase our goods and services? Brown’s Chiropractic and Wellness Center will provide competitive prices and better services then rival Chiropractors in the area. Since we are purchasing an existing practice, we already have clientele.

Can we provide the product or service to customers at a profit? Brown’s Chiropractic and Wellness Center can and will turn a profit on our services. We have developed a 3 year cash budget as well as income statement and balance sheets from previous owner.

 
Product Feasibility - §  We will test our products through several marketing strategies to prove that our product is feasible.  Some of the marketing strategies would be to form focus groups of friends, family, and neighbors Financial Feasibility  §  Capital Requirements:

§  Our estimated start-up cost is $250,000
o   Warehouse Space                   $25,000 o   Equipment                                  $75,000 o   Supplies/Inventory                 $75,000 o  ...
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