RMIT Strategic Analysis: Estia Health Aged Care Services Report

This report provides a strategic analysis of Estia Health Aged Care, utilizing models such as PESTLE, SWOT, VRIO, and Porter's Five Forces to evaluate the external and internal factors influencing the organization. It identifies both positive and negative factors affecting Estia's operations, including strengths such as a long heritage of service and specialized healthcare teams, and weaknesses like high operating costs and potential labor shortages. Opportunities include the growing demand for aged care services, while threats involve increasing regulations and economic downturns. The analysis also examines the competitive rivalry, the threat of new entrants and substitutes, and the bargaining power of buyers and suppliers within the Australian aged care market. The report concludes with recommendations aimed at addressing the identified challenges and enhancing Estia Health's strategic position. Desklib provides a platform to access this and other solved assignments for students.

Running head: STRATEGIC MANAGEMENT
Strategic management
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Executive summary
The aim of this report is to discuss about the external and internal factors being faced by Estia
aged care services. In due so, this report used the models such as PESTLE, SWOT, VRIO and
Porter five forces model. Various positive and negative factors are being identified in this report
of Estia aged care services. This report concludes that, the recommended steps discussed in this
report will help to overcome the issues identified in this report.

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Table of Contents
Introduction......................................................................................................................................3
Company profile..........................................................................................................................3
SWOT Analysis:..............................................................................................................................4
Porter’s five force model:................................................................................................................6
Analysis of the macro environment.................................................................................................8
Discussion..................................................................................................................................12
VRIO framework...........................................................................................................................13
Valuable.....................................................................................................................................13
Rarity of the resources...............................................................................................................14
Inimitability of the resources.....................................................................................................14
Organizational capability...........................................................................................................15
Recommendations..........................................................................................................................15
Conclusion:....................................................................................................................................16
Reference.......................................................................................................................................17

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Introduction
Health care is one of the most sensitive and potential business sectors in the current
business scenario. Moreover, in the current business state of affairs, health care for the aged
peoples are becoming more complex. This is due to the reason that, a major section of the elderly
people is dealing with loneliness and they are in the need of the personalized health care in the
homey atmosphere (Brownie and Nancarrow 2013). In accordance to these market requirements,
various organizations have started to offer residential aged care services. Estis health is one such
leading organization providing aged care services in the Australian market.
However, with the increase in the market size, the competition is also going higher due to
the entry of more number of competitors in this sector. In accordance to the increase in the
competition in the market, it is of urgent requirement for Estia health to come up with effective
business and marketing strategies. This report will identify the external and internal
environmental factors being faced by them in their business operation along with providing some
recommended steps to overcome the challenges.
Company profile
Estia health is one of the leading aged care service providers in the Australia regions.
They are founded in 2005 and are based in Melbourne, Australia. They offer quality aged acre
services for the elderly people in homely environment (Estia Health 2018). Apart from the
providence of health care services, they also look after the wellbeing of the residents by initiating
various activities in their daily life. According to their official website, their vision is to create
the concept of one family in serving the aged people.

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With having holistic service offerings and expertise in this sector, Estia health is going
ahead to be the market leader in this business segment. The service offerings of them are being
designed in such way that, the aged people will lead a happy and nutritious life apart from health
care. Their major offering is providing health care services to the aged people from their various
homes across Australia. Currently, they are having their homes in different locations around
Australia. They do not have their presence in the international market as of now.
SWOT Analysis:
Estia health aged care facilitates in providing services to the seniors and aged people by
maintaining independent living. The organization provides best healthcare facilities for the aged
people. With an increase in aging population n the country, this industry seems crucial for
growth. Estia health care facility can easily take advantage of the existing market condition by
making profit. On the other hand, weaknesses also tend to threaten the growth and success of the
entity. Conducting a SWOT analysis demonstrates the organization’s strength, weaknesses,
opportunities and threats (XIA et al. 2015).
 Strengths:
Estia’s has its proud heritage of serving its nation for almost 50 years. Specialized
healthcare teams, quality and innovation are the key strength of the organization. Estia provides
quality aged care facilities besides providing caring and inclusive experiences all across
Australia. The major purpose of the organization is to create their Family Code. The family code
is initiated to create happiness for the senior citizens. Specialized care is offered to those seniors
with dementia, memory loss and Alzheimer’s disease (Hilmi and Emenyeonu 2014). The health
care is well designed with modern facilities to meet the demands or needs of all the aged people.

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For example, walk- in closet besides implying luxury also becomes easier for the aged people to
ascertain what they happily want to wear (Tucker et al. 2015). Estia focuses on this little feature
as it reassures the adult children about the well-being of their aged parents. The organization
assures in providing comfort, support and caring of the aged people in all aspects.
 Weaknesses:
Developing an aged care living facility is expensive and costs money. These can
constraint growth of the company if there is low access to capital or limited financial capital.
Expenses like liability insurance can lead to drain the revenue of Estia’s health care centre.
Moreover, lack of trained and skilled workers in the healthcare agencies can also limit the
growth prospect of the organization. While operating in areas where trained workers are
unavailable can lead to increase in the expenditure by training and importing them the workers
from elsewhere (Unuvar, Kaya and Bilge 2017). This further creates communication barriers that
have an adverse affect on the customer experiences.
 Opportunities:
In the current scenario, economic forces leave health care centre in a strong position in
the business environment. Demand is growing at a rapid rate than supply as the population ages
more quickly than the availability of home care facilities being constructed. This shows that
expansion of healthcare industry faces less market risks as compared to other industries (Francis
and Ponnuswami 2014). A well organized and targeted marketing campaign that could increase
the awareness of Estia’s services and facilities. Moreover, adding services like extensive lineup
for medical personnel and on-site pharmacy. Allowing senior residents to share their voice in the

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programming events and enriching the aspects of user experiences would be a vital opportunity
for growth (Li et al. 2014).
 Threats:
Increase in regulations could raise the costs related with the Estia’s health care agency. In
the increasing trend of social media, if any stories associated with other healthcare agency about
dangerous or unethical issues related to aged people can create negative impact on the daycare.
As it become difficult to gain the trust of the potential customers and quiet impossible to retain
them. Furthermore, an economic downturn could also affect the healthcare market condition as
senior people and their families would re-evaluate the feasibility for lower-cost solutions.
Porter’s five force model:
Porter’s five forces framework would help in analyzing the major forces affecting Estia
aged health care centre in Australia (Dobbs 2014). The underlying demand driver in the health
services would be the ageing Australian population.
Competitive Rivalry:
The intensity of rivalry in the health care centre is huge though for aged health care
centre is relatively low as there is only limited level of options and choices regarding service
provider for aged people in Australia. The industry is also able to gain maximum benefit due to
increasing switching cost (Porter and Heppelmann 2014). If the policy for health services is
signed by an individual, he is unable to switch to other health care facilities.
Threats of new entrants:

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As the start up cost for setting the healthcare services for aged people is very high so the
threat of new entrant is relatively low. Moreover, the duration for setting up the franchise
agreement could increase up to 10 years. Generally people tend to avoid such long –term
contracts. Moreover, proper or adequate training and well-skilled labor forces is vital for
providing aged care services (Montgomery and Oladapo 2014). This kind of business deals with
the people’s life. Moreover, license approval is required from the government, which is lengthy
and difficult to enter into aged care service industry. Therefore high degree of entry barriers
results in low degree for the threat of new entrants.
Threat of substitutes:
The equipments and development of robotics that is used in assisting with aged and
health care is still developing as it faces huge price and cost barrier besides low social
acceptance. In the current scenario, the aged people prefer to receive services at home than being
served by residing in age care facilities (Išoraitė 2018). Therefore the threats of substitutes in this
healthcare segment can be considered very low. Moreover, in the digital age, people want to
adopt trends that would allow them to remain connected with the latest technology by keeping
most of the healthcare equipments at home.
Bargaining power of buyers:
To avail efficient healthcare services adequate price should also be paid. Value
generation is highly significant than the price. The ultimate goal is to provide high quality care
with low price to gain margin by value based competition. There is fair level of option and
choice regarding the age care service provider in Australia. There is generally very limited power

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exceeding demand. Moreover, the sick and old aged people will like to be treated in any
scenario, irrespective of the economical condition of the country.
Bargaining power of suppliers:
The issues related to limited skilled and trained workers limits the ability to recruit
potential individuals. This increases the bargaining power of supplier for providing workers for
aged care facilities. The labor cost represents the maximum fixed costs for associated age care
service providers. Health care segment is totally dependent on the service provided by its
suppliers (Montgomery and Oladapo 2014). Despite the growth in healthcare cost, the demand
for proper care of age old people does not stop as the government and residents of Australia is
highly concerned about the health and quality of life of senior citizens.
Analysis of the macro environment
Political  The political scenario is more or less favorable for Estia due to the
reason that, complications is less in health sector.
 However, challenges include corruption in the regulation of health care
services.
 Taxation rate is favorable for them in Australia due to the reason that,
health care services attract less rate of tax (Burkhauser, Hahn and
Wilkins 2015).
 Interference of the government in the health care services will pose as
potential challenge for Estia (Musacchio, Lazzarini and Aguilera 2015).
This is due to the reason that, it will create barriers in the decision

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making process of them.
Economical  Australia is having open market economy and thus it will be beneficial
for Estia to design their policies according to the market trend (Uy, Yi
and Zhang 2013).
 Australia is already a developed economy and their economy is
showing growth. Thus, the potential customers for availing the services
of Estia are increasing.
 However, entry of new players in the market is increasing the
competition in the market along with reducing the profitability.
 The rate of unemployment is going up and thus, the purchasing power
of the average population will get reduced, which will reduce the
customer base of Estia.
Figure: 1
Rate of unemployment in Australia

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Source: (Mulligan 2018)
Social  According to the reports, Australia is having good number of aged
population and thus, the potential customer base for Estia health is
favorable.
 Need for aged care services are increasing due to busy work schedule in
the current times.
 With the change in time, health concern among the average population
is increasing. It is provoking more people to opt for health care services
(Naujokas et al. 2013).
 Estia health with their distinctive services attracts more patients
compared to the conventional health care services.
 Social inclination for medical services on homely atmosphere is more
compare to other health services.
Figure: 2

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Demography of Australia
Source: (Indexmundi.com 2018)
Technological  In the current business scenario, technology is rapidly developing in
every business sector. Thus, it is important for Estia health also to have
updated technologies in place.
 However, huge capital investment is required to upgrade the existing
technology. This may have negative impact on the cost structure of
them.
 Technological development will help them to provide more effective
and efficient service to the patients (Frishammar et al. 2015). However,
the compatibility of the target segment with the latest technologies is
also important. This is due to the reason that, the target segment of
Estia is the aged people who will have fewer preferences for updated
technologies.
Legal  Australia is having various legal obligations related to the health
services. Thus, it is important for Estia to comply with these laws.
 Laws related to the employee welfare should also be complied by them.
This is due to the reason that, they are having more than 7000
employees in place (Zhu et al. 2014).
 However, modification of the existing laws will have adverse impact on
their business operation. This is due to the reason that, Estia will face
the difficulty in changing their existing organizational policies
frequently.

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Environmental  One of the key environmental factors being faced by Estia is the waste
management (Windfeld and Brooks 2015). This is due to the reason
that, hazardous waste is being generated from medical services such as
Estia.
 Recycling process is being initiated by them in order to reduce the
regeneration of waste.
 As per the information available in their official website, their
properties are being maintained in eco-friendly manner with having lots
of greenery.
Discussion
Thus, from the above analysis, there are various positive and negative points and factors
being identified. One of the key positive factors being identified is the social image of the health
care services. Estia being providing aged services, they are gaining positive impression in the
market (Kulik et al. 2014). Moreover, due to the fact that, they are not having any branches
overseas, Estia do not have to face the challenges of different and diverse business environment
in the global market. One of the key negative factors being identified is the change in the
political and legal scenario in the country. The more frequent will be the change, the more will
be the barriers in their business operation.
VRIO framework
VRIO framework will be used in order to identify the sources of competitive advantages
of Estia health. Some of the key sources of them being identified are the human resources,

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properties, brand value and market coverage. The following sections will discuss about the
competitiveness of these identified elements.
Valuable
Valuable refers to the extent of valuation being added by the particular elements on the
offerings of the organizations. The more will be the valuation of the products to the customers,
the more will be the competitiveness of the product (Lin et al. 2013). In the case of the Estia
health, human resources of them are one of the key competitive factors. This is due to the reason
that, the service being offered by them to the patients is helping to generate customer
satisfaction. The homely environment created by them is due to the effectiveness of their internal
stakeholders.
All of their properties across Australia are being made in view to the expectation and
requirement of the target customer segment. Their official website suggests the details about all
their properties and it shows that, all the properties are being made one of a kind. It helps in
enhancing the attractiveness in the market. Moreover, the aesthetic value is also being increased.
As discussed earlier, Estia health is one of the leading health organizations in the Australian
region. Thus, their positive brand value is adding valuation in their offerings. They are having
more market penetration compared to their competitors in the market.
As per the information on their official website, Estia health is having their properties in
all major cities around Australia. Thus, the market reach of them is wider and extensive. This is
helping them to offer more options for the customers with different facilities and amenities.

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Rarity of the resources
Rarity of the resources refers to the distinctiveness of the resources possessed by the
particular organization. In the case of Estia health age care, the skill set possessed by the internal
stakeholders is the rare resources for them. This is due to the reason that, every individual is
having unique skill and expertise and the skills possessed by the employees of Estia health care
is helping them to provide distinctive services to their customers (Kulkarni 2013). This skill will
not get accessed by their competitors. The brand value of them is another rare resource. This is
due to the reason that, it took years and huge capital investment to gain the current brand value.
Thus, it will be difficult for their competitors to achieve this valuation in the market.
Inimitability of the resources
The skill set of their internal stakeholders is inimitable due to the reason that, the skills of
their employees are being enhanced with the providence of proper training. These skill sets will
be different from the internal stakeholders of their competitors. In addition, these skills cannot
get imitated by others in the industry (Glavas and Mish 2015). The brand value of them is also
inimitable. This is due to the reason that, other players in the industry will try to achieve the
brand value of Estia health service. However, the similar set of brand value cannot be imitated.
Organizational capability
Estia aged care is known for the effective training and development program for their
employees. This helps them to offer quality customer service and enhancing the level of
satisfaction of the customers. Moreover, with the expertise being gained by them in all these
years, they are effective in determining the requirement of the target customers along with
effectively adopting the change in the market.

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Recommendations
 It is being recommended that, Estia should enter in the foreign markets in order to widen
their market area. This will help them in cutting off the impact of the competition in the
Australian market. Moreover, with the entrance in the global market, the market
opportunities will also get increased along with increase in the brand value.
 Diversification strategy will also be recommended for them. This is due to the reason
that, currently they are offering their services to the old age people only. In addition, if
they can diversify their services in offering services to the children also, then the business
opportunity will get further enhanced. Child care services are one of the promising
business sectors and venturing in them will help to increase the market share.
 The target customers of Estia are mostly the premium customers from the top of the
pyramid. Thus, it is recommended that, they should also provide this service to the mass
market also. This will help them to increase the volume of revenue generation along with
increase in the market share. On the other hand, offering the service to the mass market
will help them to effectively enter in the foreign market. This is due to the reason that,
middle class customers hold the major part for the global population.
Conclusion:
From the above discussion, it can be concluded that Estia’s health care centre is a leading
agency in Australia dealing with the proper treatment and caring of old age people. In the recent
times, health care facilities vary considerably in its effectiveness, safety quality and cost. The
Estia health care is rapidly transforming into home due to growth in the number of older adults in
Australia. The caregivers provided should be highly potential in their abilities, skills, experience
and attitudes to handle the age old patients. The healthcare home involves lifestyle coordinator to

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manage the entire social program prevalent in the home as well as help in supporting the
individual’s preferences.
Through Pestle analysis the external environment condition for the health care facility in
Australia is analyzed. Estia health care agency holds a strong position in the market by providing
quality service since last 50 years. The internal analysis of the organization is also made to
determine the strength, weakness, opportunities and threats of the entity. Estio’s encourages
families and local communities to join and attend activities through rotary meetings and support
their interest. Estia’s health care has proved to be a quality clinical healthcare due to the efficient
services, high level personal care and aged care management programs.

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