Analysis of Porter's Five Forces in Strategic Management Report

This report provides an analysis of Porter's Five Forces model within the context of strategic management, specifically focusing on its application within the healthcare industry. The report begins with an executive summary that highlights the importance of strategic management in achieving business goals and introduces Porter's Five Forces as a tool for analyzing competition and market dynamics. Section 1 delves into the specifics of the five forces – threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitutes, and rivalry among existing competitors – and their impact on organizations, particularly in the healthcare sector. The report discusses how these forces affect profitability, market share, and the competitive landscape. Section 2 explores the historical development of Porter's Five Forces, tracing its origins and evolution. Section 3 examines how the model fits with other concepts of strategic management, including its strengths, weaknesses, and relevance in today's business environment, considering factors like globalization and digitalization. The report concludes by emphasizing the model's usefulness in understanding market values and competition, while acknowledging the need for adaptation to contemporary business challenges. The report includes references to support the analysis.

STRATEGIC
MANAGEMENT

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................1
MAIN REPORT...............................................................................................................................1
Porter's Five Models........................................................................................................................1
2. Present History of Porters’ Forces:.....................................................................................3
3. Concept fits today with other concepts of strategic management......................................4
PART 2............................................................................................................................................1
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

EXECUTIVE SUMMARY
Strategic management is a major part in each and every business or organisation as it
support in developing effective strategies for the business and achieve their goals or targets for
business purpose. The strategic management provide the overall business direction in specifying
the objective of healthcare industry. These strategies are designing different planning, policies
and new idea for growth and development. The Porter's Five Forces Model can be used to
analyse the competition level of business and its functionality. These model is described the
decision making at the time of business operations. In this report, the history of Porter's model
and it is development will be discussed. Section 1 will discuss how the five Porter's forces
affecting organizations and where the model is applicable in organization. Specifically, in which
it is observed very tough for new competitor to increase their business in existing marketplace. In
this way, the entry barriers can be low and face so many new threats (Bryce, 2017).

MAIN REPORT
Section 1
Porter's Five Models
The Five Porters force is very important for development of business it identifies the
actual profitability of company for long period and can analyse the actual requirement of
company (Alkhafaji and Nelson, 2013). This model is useful for planning new strategies for
development. This model is used for long term strategies that is helpful for business or
organisation. It will simply understand as the tool of business strategy and it helps in analyse the
economic condition in this industry. It also identifies company's role and their profitability
within a market. These forces affects the competitive position of a company in the business
environment at global level. These forces are giving a new idea for business development and it
will analyse the structure of business operations.
There are five types of forces applicable on business activities
Threat of New Entrants- Within the healthcare sector, initially some companies invest
money for research and develop a new department such as drug medicine. As a result, such
companies should be dealing with new policy's formulation. They should follow some rules and
regulations for growth and development as new competitors who are coming in market and then
they have their own capabilities to gain profit and try to increase their business in all over the
world. Sometimes, it is very difficult to create profit in marketplace and immediately earn lot of
money because there are already many competitors are available.
Different barriers that should be taken into consideration for any new competitors entering the
market:
Scale of economy, requirement of capital income, product identification, size of company,
government rules and regulation as this is very important part of business that provide benefits to
company (Rahm and Riha, 2012). This industry is not only focusing on the existing market but is
applicable for new industries. Peoples will attract to the new organization and it can influence the
company to change the pattern of business process.
Bargaining Power of Suppliers- the bargaining power of supplier is very high as
healthcare industry depends on their suppliers to provide essential supplies such as medical
devices and drugs. The Healthcare organizations have high bargaining power because it has
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specialist doctors to build their working system in a proper manner. This factor is directly
affected to the cost of goods and services. In this way, the cost of product is increasing in market
on the other hand companies are reducing their product quality. This will minimize their services
and the supplier will change their strategy and provide the best quality of services. Supplier will
change the product according to customer requirement (Eden and Ackermann, 2013). Most of
the companies are depending on the suppliers because they are dominating their company and
increasing their cost of resources supplied by them. Supplier will not sell the same product in
market and effective competitors are against the other party. It can provide the best raw material
and then provided an effective quality of product. It can maintain the relationship between the
customer and supplier. The strong supplier are increasing their product cost and affecting the
sales value in market. Buyer has power to negotiate with the customer and it provides the best
services to customer.
Bargaining Power of Buyers- The private Healthcare aim to provide the best services to
people with more benefits to customers. Customers are attracted to the lower price for products
and services while the buyer take advantages to earn a lot of profit. Buyer can be attracted by a
good position in market while the supplier is dependent on buyer (Foss and Knudsen, eds.,
2013). The price of product is less in market so that the customer will pay less money because
they are only focusing on a single vendor. It is very powerful scheme to increasing their demand
and taking so many advantages. Buyer has skill to negotiate their price so that customer will
easily purchase in very efficient ways. Buyer can be earning profit and they are supply an
effective product in market and in this way, it determines that supplier will earn a lot of profit.
Threat of Substitutes- The organizations is more affected from the substitutes when the
drug is expired. This hospital provides the opportunity in making new drugs, it is that when the
product is available in market and customers are directly purchasing it from industry because the
rate is cheaper and they offer more benefits for the consumer. As a result of this, the threat of
substitutes are very high and they earn less profit in market because they are increasing the price
of product. They offer attractive products and services at a lower cost. They can affect the
competition level of industry; it can be directly affecting their profitability because the customers
are purchasing the product in industry. The substitutes are affecting the organization’s ability to
fix the price for product.
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Rivalry among existing competitor- In this factor, the high rivalry can affect the
competitive environment and it will be a major challenge for old firms who were established
previously. There is a major challenge to increase their profits when it faces so many challenges
in market and the growth of business is also low. Rivalry can damage the market share value of
that firm. It can affect the company through increasing their innovation ideas, increasing digital
marketing, improving their product quality etc. (Frynas and Mellahi, 2015). The monopoly create
company's different structure to earning a more profit in this way, it increases the competition
level of old company.
There are many firms under this industry and it can be increasing their competition level
that is helpful for the customer and product resources. In this way, the company are fast growing
so that they earn lot of profit in market and it is increasing the rate of production in which it will
expand their business in all over the world. On the other hand, the organization is growing
slowly and then it can earn minimum profit in market. Nowadays, the competition level is high
due to many entrants within healthcare industry. In industries, they are fixed amount of every
company is high.
According to Gammenthaler and Lehmann, (2018) this theory is important for analysing
the whole business requirement effectively and efficiently. There is no limit to analyse and
generating a different value in market. Nowadays, the five forces are outdated and other tools are
helpful for development (like what??). Five forces are designed for business purpose but
currently, most of the businesses are using the digital technology for solving problems and issues
(again like what). One could say that as the five forces were designed in 1980 and were more
applicable for business at that time but currently it is not considered a successful tool due to
Globalization, digitalization, deregulation etc (Nouriand Soltani, 2017).
2. Present History of Porters’ Forces:
These Five forces are developed by Michael A. Porter in 1979. This model would be used
for the business planning It will manage the whole external factor of organization. These forces
are very challenging for Michael A (Godoy and Naidich, 2012). Porter’s forces analyse
competitors, buyers, and supplier in which they are interacted to each other.
These main innovative ideas came from five forces that would be provided by Andrew
Grove, the CEO of Intel organization. In 1993, these five forces are developed by Martyn Jones
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and they provide an actual frame work of this model. The five models can be helpful for
identifying the structure of business and underlying main point of firm. Most of the companies
are using this model for development because this model provides perfect frame work for
corporate planning and strategies (Gregorini, 2012). They are provided a perfect framework and
follow some different steps to increasing services. In this model, the competition level is
increased in industry and it will improve business activity. The objective is to develop a new
strategy that is to help for business planning.
Porter has been worked on this field. It is a widely used method for the analysis the
external environment of an organisation. It is applicable for business competition level and
increasing their profitability in market. (Hill, Jones and Schilling, 2014). These five forces
identify the actual business power and determine critical situation for enterprise aspects. These
five forces are derived for business process to maintain economy level.
According to Napshin and Marchisio, (2017), it is concluded that there are various
limitation in this forces so that many authors give their own opinions such as selection of
information is important part of each and every business and project. The key ratio of data is
reduces at the time of planning and it is necessary part that affect the business strategies.
According to Nouriand Soltani, (2017), it reduces the performance of company; it analysis the
leverage ratio, efficiency ratio, Stability ratio that has reducing the level in the business process.
There are other tools very efficient to work on digitalization to promote and market the products
effectively. For example – Melbourne Private hospital uses various social media platforms for
promoting their healthcare services.
3. Concept fits today with other concepts of strategic management
This concept includes both strength and weakness in creating a plan according to the
requirement. In these forces, the industry is holding a strong position in market. It focuses on the
growth of organization and determine market rate. These forces do not have any actual
justifications that are useful for market and their environment. These forces are static in nature
and cannot take so much time. (Hitt, Ireland and Hoskisson, 2012) Sometimes, it is very difficult
to understand the market values and competition level because the market values have been
changing according to the innovation. The customer demand has been changed and they are not
steady so that they will create a new model and approaches. Industry can use this model to
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increase their business performance by 20% market share and development(Gregorini, 2012)
Nowadays, the main goal is to maintain the innovation skill that would be increasing their ideas.
Many modern technologies and other information are available on internet that will be helpful
for the business operations. They can develop a new concept through Digitalization,
Deregulation, and Globalization. They analysis the overall profit and their capabilities, the
business structure has been changed so that it will increase their significance of digitalization.
This is affecting the competition level in which it will gain more profit and increasing their
importance in all over market. Most of the organizations build their business in other country
while it can be improving their communication with other company because the technology has
been spreading all around the world. It can build an effective relationship with other company
(Keupp, Palmié and Gassmann, 2012). It will affect the globalization in each and every area of
company. Deregulation in Melbourne Private hospital is that they are innovating a new idea for
development such as expensive machines, effective staff, offering many facilities to the patients
such as special rooms and amenities and they are using it in different ways for business
development. On other hand, new organization is entered in existing market and applied new
concept for business.
Impact of Globalization in organization-
In today's scenario, the organization is mainly focused on globalization and that is not
helpful for export and import business. They are increasing progress rate in market because the
communication and technology factor affect the business. It is very easy to collaborate to any
product and services through modern technology (Keupp, Palmié and Gassmann, 2012). It is
beneficial for customer to compare the price of particular product in any e-commerce site. It is
very easier to purchase a product in very effectively. It is a very fast process to collaborate with
other product so that it is required for organization to increase their strategies and concern about
the price, and quality of product. The main objective is to provide the best quality of services
and they are loyal to their customer. Globalization is important process to increase their impact
on a business process. There are some factors to manage the whole business process and it is an
important driver of globalization is: Information and communication technology, low
communication cost and low transportation cost. This driver is directly affecting the business
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process when it has large number of clients involved so that it can grow their business in all over
the world.
Impact of Digitalization in organization-
It is main aspects of business that are not included in the Five Porter's because this is used
when the technology are spread in all over the world. The structure of company has been
changed because of the usage of the new digital technology. This digital concept can be
transforming the business needs and requirements (Lasserre, 2017). Many companies use digital
technology because it is very helpful in identifying new approaches of launching a new product
in market. For example - the private hospitals can promote their services with the helps of
internet.
It is the best medium for companies to explore their business through digital technology
and with the help of digitalization, they can provide information through website and offer many
unique advantages for customers and provide an effective service. Nowadays, digital technology
is used in everywhere so every organisation uses it for better work (Poister, 2010). Most of the
companies are participating in main role to meet the requirement of customers and give the best
quality of services.
Strategic management is a process of planning innovative new ideas in the business. .
Most of organization uses this modern technology to plan a new strategy. Most of the companies
are using foreign business method to expand their enterprise in all over the world (McKiernan,
ed., 2017). The Melbourne Private hospital is using a modern technology like World Wide Web
because all the details are available on internet. As customers are using different types of
technology and surfing internet for new product and price comparison, this forces most
companies to embrace technology because it will be used as a mean to increase their selling and
purchasing a product.
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PART 2
Melbourne Private hospital Australia -
It is a healthcare organization which leads hospitals and medical facility in Australia. In
Australia, there are mixed system in health care which contains two major things that are
universal health care and private providers. The Melbourne Private hospital is one of private
providers. This hospital currently leading all facility related to surgical and medical. It provides a
range of highly acute surgical and medical healthcare services for over 20 years. This hospital
has 124 beds and co-located with Royal Melbourne Hospital in Parkville. The hospital core work
is mainly related to heart, lung and bone marrow transplantation. By time, this hospital became a
large hospital which closely linked with Mercy Hospital, Melbourne. It is affiliated with
University of Melbourne. In Melbourne Private hospital there are various medical and surgical
wards and it also provides psychiatric unit and an emergency department.
This company is situated at royal parade, Parkville VIC 3052, Australia. This hospital
provides many services like Neurosurgery, Cardiology, Medical & Surgical, Infusion and
Oncology. These services are provided by a specialized team of doctors and specialists. It has
many competitors that are hugely affecting their business such as Bethesda Hospital, Royal
Adelaide hospital, st. Vincent Hospital Melbourne and many more.
Issue faced by Melbourne Private hospital
Private sector is one of the best sectors in healthcare industry but it is not provided better
emergency services and acute care facility. People found it very stressful environment in private
hospitals and their nursing staff not worked well, consequently people cannot give their
preference to private hospitals. They have more conscious about their care. In addition, the
public hospitals have the best specialist and doctors for providing better services. Due to which
the patients visiting Melbourne private hospitals were gradually diminishing. The competitors
are providing efficient and quality services to their patients and better choice is they provide
these services at very cheap rate. In this context, the Porter five force frameworks will be applied
which helps in analysing the competition of Melbourne private hospital.
The recommendation for this hospital that they should provide better services from their
competitors and these services should be given at the lower rates. If they follow such strategy the
organisation can generates competitive advantages in their target market.