Role Of Porter's Five Forces Model

1060 Words 5 Pages
• Porter’s five-forces model helps an organization to attain a thorough comprehension of outside environmental factors and also gives a detailed scope on organization’s current and potential competitors which ultimately helps an organization in developing strategic planning.
• Let’s consider mobile and smartphone making industry.
• Porter’s five-forces model have following five main factors and plays significant role while working on strategic planning.
1) “Bargaining Power of Buyers”
2) “Bargaining power of suppliers”
3) “Threat of Substitutions”
4) “Risk of entry by potential competitors”
5) “Rivalry amongst current competitors”
• Risk of entry by potential competitors:
There is always a risk in a business by an unknown entity which
…show more content…
Sometimes, there are very few or limited number of suppliers available in the market and in such cases as there are very few suppliers available, company has to depend upon them and hence, suppliers becomes more powerful and can cause sever damage to company’s net profitability if not considered while working on strategic planning.HBR Case: “How U.S. Hospitals and Health Systems Can Reverse Their Sliding Financial Performance” - by Jeff Goldsmith

Now let’s consider above mention HBR case. In this case, the author Jeff Goldsmith has nicely and in detailed explained how the Hospitals and Health System in US facing the financial loss problem and the main causes behind it and measures and precautions to be taken to avoid it and regain the financial performance.
He mentioned that the root cause behind it is “twofold”. Which is nothing but a mismatch in between the organizations’ strategies, operational discipline and actual market
…show more content…
Hospitals and Health System industry has such rivalries which lead to have a significant decline in the financial performance in recent years.

• Bargaining power of Buyers: In some cases, Buyer’s has super power in Hospitals and Health System industry because of more than enough providers available in the market and with the same or low annual costs and better services. As per this HBR case, “Many hospital-sponsored plans have drowned rapidly in poor risks or failed to achieve their enrollment goals. (Goldsmith, 2017)”

• Threat of Substitutions: This is one of the most important factors contributing in the financial loss of the Hospitals and Health System as per the case study. Consumers are having easy access to make a switch in utilizing the health care services and service providers and also their physicians. As per different different insurance policy benefits, consumers can easily substitute their health care providers and physicians and causes great loss to the Health and Hospital System. As stated in this HBR case, many hospitals are losing around $200,000 per physician annually without any investment returns because of keeping Physician as their

Related Documents