In order to understand if it’s advantageous to purchase a smaller company, Porter’s five forces have to be not only explained, but also related to the acquisition of a new, yet smaller business.
Potential threat of new entrants:
This is avoided by changing costs, limiting distribution channels. Another way this is decided is by “economies of scale” ES is achieved when more units or service can be produced on a grand scale yet the average/less production costs (Economies of Scale, 2015). When referring to the rural Illinois market, the potential threat of a new entrant is great. The only company available providing home health care is the local county hospital.
Bargaining power of buyers:
Buyers need to have the option of getting a lower …show more content…
It is considered a suppliers market. The suppliers control the cost of the good or service. For example, in rural Illinois, there is only one major “market” pharmacy and two little mom and pop type pharmacies. So the question for the doctors and patients when getting medications do they go to a bigger town 20 to 30 miles away where there are more nationally known pharmacies, stay with Walmart pharmacy in town, or the final choice is to just go to one of the locally owned “mom and pop” pharmacies? Since there are a low number of suppliers of medications in rural areas, the supplier really holds the “upper hand”. This example is still relevant because it shows how little resources there are for people in rural counties in southern IL. Not only that some would argue there is no comparing a person’s quality of life from being in a nursing home to being at home around familiar surroundings. This is why in the rural area of IL, and many other places in the USA? People have to go from home directly into a nursing home because the person is unable to receive assistance at home. Sometimes the assistance is something as simple as cooking a meal, running errands with the person, it’s not always the hands on skilled care that people get when they are in the nursing …show more content…
This is especially true when it comes to medications. The price for a name brand medication can be 450 a month for a 30 day supply, or another supplier may produce the same medication and it only is 45 a month for a 30 day supply. This is extremely true when it comes to medications, insurance companies always want to pay the least amount for a medication that may or may not work as well as the one a doctor has prescribed (martin, 2014). The only major threat of substitute products would be the individual who decides to hire a private homemaker on their own to keep their loved one out of the
Potential threat of new entrants:
This is avoided by changing costs, limiting distribution channels. Another way this is decided is by “economies of scale” ES is achieved when more units or service can be produced on a grand scale yet the average/less production costs (Economies of Scale, 2015). When referring to the rural Illinois market, the potential threat of a new entrant is great. The only company available providing home health care is the local county hospital.
Bargaining power of buyers:
Buyers need to have the option of getting a lower …show more content…
It is considered a suppliers market. The suppliers control the cost of the good or service. For example, in rural Illinois, there is only one major “market” pharmacy and two little mom and pop type pharmacies. So the question for the doctors and patients when getting medications do they go to a bigger town 20 to 30 miles away where there are more nationally known pharmacies, stay with Walmart pharmacy in town, or the final choice is to just go to one of the locally owned “mom and pop” pharmacies? Since there are a low number of suppliers of medications in rural areas, the supplier really holds the “upper hand”. This example is still relevant because it shows how little resources there are for people in rural counties in southern IL. Not only that some would argue there is no comparing a person’s quality of life from being in a nursing home to being at home around familiar surroundings. This is why in the rural area of IL, and many other places in the USA? People have to go from home directly into a nursing home because the person is unable to receive assistance at home. Sometimes the assistance is something as simple as cooking a meal, running errands with the person, it’s not always the hands on skilled care that people get when they are in the nursing …show more content…
This is especially true when it comes to medications. The price for a name brand medication can be 450 a month for a 30 day supply, or another supplier may produce the same medication and it only is 45 a month for a 30 day supply. This is extremely true when it comes to medications, insurance companies always want to pay the least amount for a medication that may or may not work as well as the one a doctor has prescribed (martin, 2014). The only major threat of substitute products would be the individual who decides to hire a private homemaker on their own to keep their loved one out of the