For my strategic group map, we need 3 competitive groups:
2. People who are typically on the same as me.
3. Fast followers group
Put on the strategic map
Chapter 3 Assignment
This learning Module introduces the learner to the tools for external environmental analysis. Properly understanding a company’s external environment requires asking and answering the questions below. The tools of external analysis are required to answer these questions.
1. Does your career industry offer attractive opportunities for growth?
a. In which career industry do you or will you compete? I will compete in the industry of medical supplies and equipment sales and distribution.
b. Which macro-environmental factors pose the most strategically relevant influences on the effectiveness of your career strategy and why? (Macro-Environmental Analysis, pg 50-52 and Table 3.1) i. Demographics – Demographics is a very strategically relevant influence on my career strategy, because of the many US demographic birth cohorts. Examples of birth cohorts are the Depression cohort, Baby Boomer generation, Gen X, and Gen Y. The Baby Boomer generation is the largest in size in US history and several people from this generation are over the age of 65 or are near that age. This draws up great demand for medical equipment and supplies in medical facilities.
This is also relevant, because manufacturers are constantly developing newer and better technology to help save lives. ii. Social forces – This is another very important strategic influence for several reasons. 35.7% of American adults and approximately 17% of children and adolescents are obese. This is a major problem nationwide, as long as fast food and bad eating habits continue in this country, there will be very high demand for medical services which will require equipment and supplies. iii. Technological – Technological factors is possibly the most important influence on my career strategy. Nearly everyone is somewhat technologically savvy now, and new technologies are being produced and sold very often. New technology has produced better and more sustainable medical equipment and supplies over the decades. Possibly, one day new technology manufacturers will produce a product to cure cancer or other diseases.
c. What is the current market size of your career industry in units or sales? Visit Career Services or Sterne library and talk with Business librarian Jeff Graveline to find the best resource to determine the market size for your industry. The US healthcare market is the largest healthcare market in the world and should remain so for the next decade. The US serves as approximately 40% of the world market for medical devices and instruments. The global device industry is roughly a $350 billion industry. 40% of $350 billion is $140 billion.
d. What is the past, current and expected rate of growth for your career market/industry? Visit Career Services or Sterne library and talk with Business librarian Jeff Graveline to find the best resource to determine the expected growth rate for your industry. The global medical device industry is growing rapidly, with value expected to hit $228 billion by 2015, up from $164 billion in the year 2010, marking annual growth of nearly 7%, according to a recent industry research report.
2. What kinds of competitive forces are industry members facing, and how strong (strong, moderate, or weak) is each force? (Five Forces Analysis, pgs 54-71) a. Competition from rival sellers (Fg 3.4, pg 57) – Competition from rival sellers is a strong force. There are several competitors who all offer excellent products for saving lives and enhancing quality of life, but these products are all very similar. Since, this is such a growing industry, the field is very competitive.
b. Competition from potential new entrants (Fg. 3.5, pg 62) – Venture capital backed firms constitute 83% of employment in the medical device industry. This means that there are several new entrants into the industry and they are very competitive.
c. Competition from substitute products (Fg 3.6, pg 64) –. There is not much competition from substitute products. The majority of the equipment and devices purchased for hospital use are from the best and big named manufacturers.
d. Supplier bargaining power (Fg 3.7, pg 66) –. Suppliers do have high bargaining power. Cost of goods sold is very high for several products and not very many companies manufacture products with the highest quality that hospitals look for. There can be some substitutes, but hospitals and doctors want the best equipment to help save lives and take care of patients.
e. Customer bargaining power (Fg 3.8, pg 69) –. Customer buying power is relatively weak, because they do not pay for the equipment, they only pay for the services administered by the doctors. Often times, customers’ insurance policies will cover hospital stays and other medical services. The customers have no say-so in the purchase of the equipment and devices, they just expect to have the best available.
3. What factors are driving changes in your career industry, and what impact will these changes have on competitive intensity and industry profitability?
a. Identify the top 3 factors driving change in your career industry. (Table 3.3, pg 76) i. Changes in the long-term industry growth rate – The industry growth rate is very high for the next few decades and should continue. One piece of uncertainty is the possibility of globalized healthcare. Globalized healthcare can bring down the salary of doctors and therefore convince more students not to enter med school. This could drive down the demand for medical equipment and devices. ii. Emerging new Internet capabilities and applications– Emerging new internet capabilities and applications lead the way for several opportunities in the medical service market.
New capabilities of internet and computers systems offer ways to work more efficiently and also develop more efficient supply chains. iii. Changing societal concerns, attitudes, and lifestyles – There are several groups of people who are changing attitudes and lifestyles in the world that affect the medical service industry. On one hand, there are several people worldwide that are adapting more healthy lifestyles that consist of working out and eating better. On the other hand, there are several people that continue their bad eating habits and are very obese and heading down slippery paths. So, some people will be needing less and less medical services, while others will probably be needing more services.
b. Are these factors making your career industry more or less attractive by influencing competition and profitability? I think ultimately, the majority of these factors make the medical equipment industry more attractive, because the population of patients needing medical care is at an all time high and there is a large amount of technological advances available to this industry.
c. What career strategy adjustments will be needed to deal with the impacts of the changes in industry conditions? Judging the change in growth rate for the industry, industry professionals will need to adapt by producing more or less and how much to invest in new technology. For my career in distribution and sales, I will need to adapt to the changing demands in medical equipment and devices. If demand continues to rise, then I will look for long-term employment in the industry with an industry leading company. If demand falls too far, then I might want to look at exiting the industry and looking into other industries for employment.
4. What market positions do your rivals occupy—who is strongly positioned and who is not? (pg 77-81) My rivals who are already working in the industry as product managers and supplies and equipment sales representatives are strongly positioned and have probably already built strong relationships with their suppliers and buyers. Those rivals who are still in college may or may not be strongly positioned, but most will probably not be positioned strongly. Along with me, rivals who are in college still have a lot of work to do as far as networking and finding a way into the industry of sales and product distribution by learning as much as possible about the industry. .
5. What strategic moves are your rivals likely to make next? (competitive intelligence, pg 81) My rivals who are in college may have connections to work their way into the medical equipment and device sales industry immediately, which would set them up with a strong competitive advantage. However, most of the rivals in college, will take on entry level jobs with business organizations to get business experience and then try to move into the industry. 6. What are the key factors for competitive success in your career industry? (pg 82-83) There are several key factors for competitive success in the industry of medical equipment and devices distribution. The 3 main KSF’s I found are price, reputation of brands carried, reputation of service from distributor to customer.
7. Does your career industry offer good prospects for attractive profits? (Industry prospects, pg 84– this should be a brief summary of the analyses conducted above). Most importantly, economists have said that there is strong growth potential in this industry and the American Industry should remain the leader for at least another decade. New medical device innovations increase threat of entrants, which increases buyer power (more products to choose from, potentially lower prices) which might fragment the industry. Supplier power also increases if rivalry increases too much, and these two scenarios combined can cause profitability to decrease. The industry can still offer good prospects for attractive profits, because there is such high demand for medical devices and equipment and there are so many device innovations creating better equipment to be distributed.