Editing Assignments
| Strategic Management | Assignment | | Louis | [Pick the date] |
|
A.1
In this scenario, it has been assumed that I am employed in health care industry (hospital), so the strategic plan and business report will be according to the framework of healthcare industry.
One of the dominant features of the hospital industry is that it has very higher entry barriers that protect incumbent companies from the increased competition and thus create opportunities for above-normal profits. Similarly, low exit barriers allow the firms to leave easily without any heavy financial risks. Thus such a competitive environment, high entry barriers and low exit barriers allows members to have consolidation among current members in industry in their drive to gain from achieving economies of scale.
This means that continuous healthy investments are required to enter and sustain the industry.
A.2 As mentioned that the health care industry has high entry barriers and low exit barriers, this provides the overall industry players with above-normal profitability and this element of high entry barriers and low exit barriers is a significant force that mainly affects the profitability of the industry. As we have mentioned earlier that companies can have consolidation to achieve economies of scale, then this can also enhance their pricing power by reducing the number of competitors in the industry. The dynamics of profitability of industry are also influenced by the relative bargaining power of suppliers and customers. The diagram below is a simplified presentation of the framework:
b
A.2.I
According to the research, the nature of the competition in the industry is oligopolistic competition. It has been identified by the research that instead of the individual companies in most cases. The total volume of purchase of entire industry in 1999 was between $148 to $165 billion and it rose to $ 257 to $ 287 in 2009. The industry is operated by the top 16 GPOs
|
A.1
In this scenario, it has been assumed that I am employed in health care industry (hospital), so the strategic plan and business report will be according to the framework of healthcare industry.
One of the dominant features of the hospital industry is that it has very higher entry barriers that protect incumbent companies from the increased competition and thus create opportunities for above-normal profits. Similarly, low exit barriers allow the firms to leave easily without any heavy financial risks. Thus such a competitive environment, high entry barriers and low exit barriers allows members to have consolidation among current members in industry in their drive to gain from achieving economies of scale.
This means that continuous healthy investments are required to enter and sustain the industry.
A.2 As mentioned that the health care industry has high entry barriers and low exit barriers, this provides the overall industry players with above-normal profitability and this element of high entry barriers and low exit barriers is a significant force that mainly affects the profitability of the industry. As we have mentioned earlier that companies can have consolidation to achieve economies of scale, then this can also enhance their pricing power by reducing the number of competitors in the industry. The dynamics of profitability of industry are also influenced by the relative bargaining power of suppliers and customers. The diagram below is a simplified presentation of the framework:
b
A.2.I
According to the research, the nature of the competition in the industry is oligopolistic competition. It has been identified by the research that instead of the individual companies in most cases. The total volume of purchase of entire industry in 1999 was between $148 to $165 billion and it rose to $ 257 to $ 287 in 2009. The industry is operated by the top 16 GPOs
References: Micheal E. Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors (New York: Free Press,1980): Chapter 1. Pp:74.