Introduction
Michael Porter’s technique for competitive advantage evaluates the five forces for competitive strengths and positions of a business in its environment. The five forces include supplier power which assesses the ease of merchants to drive prices down. Supplier power is determined by the uniqueness of products, relative size, and switching cost. Buyer power assesses the ease of buyers negotiating down prices based on their number and importance to the organization (Bruijl, 2018). Competitive rivalry assesses the attractiveness of the market by evaluating the number and capability of rivals. The threat of substation provides insights into the likelihood of customers switching to alternative products in response to price changes (Bruijl, 2018). The threat of new entry shows the profitability of a market by evaluating whether an industry has strong and durable barriers to entry.
One Factor for Each of Porter’s Five Forces that Would Apply to a Health Care Organization
The five forces factors analyze the profitability of the health sector by identifying areas of strength and strategies for improving weaknesses. The uniqueness of products by suppliers would make it easy for them to drive up prices and impact profitability (Bruijl, 2018). If the switching cost from one healthcare facility to another is low, buyers of the services will have a higher bargaining power to drive down the process. Likewise, if the market has various competitors offering undifferentiated services in the industry, the market’s attractiveness is reduced for a healthcare organization. Where closer substitutes exist, the healthcare market’s attractiveness is significantly reduced as customers can easily switch to alternative suppliers in response to price or quality changes. Factors such as economies of scale and patents in the industry apply to healthcare organizations by shaping the threats of new entrants.
Conclusion
Porter’s five forces would apply to Trinity’s rival, CommonSpirit Health, by determining the sector’s profitability based on the strength of the competition. CommonSpirit’s profitability would be impacted by the uniqueness of services that give suppliers bargaining power. Buyers in the industry can also drive down prices because they have a low switching cost and are increasingly essential to the organization. The existence of many healthcare organizations providing undifferentiated services in the industry increases competition for CommonSpirit healthcare. Threats of substitution in the industry impact CommonSpirit’s market share since customers are likely to switch to alternative providers. Nevertheless, entry into the healthcare industry has high capital requirements that limit the number of healthcare organizations venturing into the industry.
Reference
Bruijl, G. H. T. (2018). The relevance of Porter’s five forces in today’s innovative and changing business environment. SSRN Electronic Journal. Web.