...CASE #1 – The Marketing ProcessYou are to write a 5-8 page report that answers the following: 1. An orthopedic group practice has decided to develop a pediatric sports medicine program. Describe at least three potential markets for this new service. 2. Describe the possible barriers to entry and exit for a physician wanting to establish a solo practice in internal medicine. 3. Describe the possible barriers to entry and exit for a company offering a health club facility in the same building where employees work. 4. Describe the possible barriers to entry and exit for a tertiary hospital developing a coronary bypass program. 5. Assume you are hired to design a managed care organization (MCO) plan targeted to baby boomers in San Antonio, Texas, a city with a large Hispanic population. Describe at least three ways that the MCO can make this service offering unique to respond to the major demographic trends of today.The format of the report is to be as follows: * Typed, double spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format. * Type the question followed by your answer to the question. * In addition to the 5-8 pages required, a title page is to be included. The title page is to contain the title of the assignment, your name, the instructor’s name, the course title, and the date.NOTE: You will be graded on the quality of your answers, the logic/organization of the report, your language skills, and your writing skills. | The assignment...
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...How do exit and entry barriers affect internal rivalry? a. Entry barriers: When new firms join an industry, it hurts the other firms that where there before by cutting into their market share and by intensifying internal rivalry, which ultimately leads to a decline in price cost margin. In essence, anytime a firm joins, the rest of them lose, to some degree, market share and revenue. The entry barrier becomes a factor that helps to understand how many firms are competing against each other. The lower the entry barrier, the more new firms present in the market and the more fronts of competition to attack (in order to gain market share and increase revenue). The higher the entry barrier, the less new firms present in the market, but still they are fronts to attack. b. Exit barriers: High exit barriers place a high cost on abandoning the product. This type of barrier causes a firm to remain in an industry, even when the venture is no longer profitable. If the industry’s fixed costs are high, competitive rivalry will be intense. A common exit barrier is asset specificity. When the plant and equipment required for manufacturing a product is highly specialized, these assets cannot easily be sold to other buyers in another industry. Low exit barriers would reduce the number of competitors a firm is competing against, which means that it increases the opportunity of gaining more market share and revenue, by capturing what others left when they exit the market. In conclusion...
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...Forces Model. This model, created by Michael E. Porter and described in the book “Competitive Strategy: Techniques for Analyzing Industries and Competitors,” has proven to be a useful tool for both business and marketing-based planning. Background The pure competition model does not present a viable tool to assess an industry. Porter’s Five Forces attempts to realistically assess potential levels of profitability, opportunity and risk based on five key factors within an industry. This model may be used as a tool to better develop a strategic advantage over competing firms within an industry in a competitive and healthy environment. It identifies five forces that determine the long-run profitability of a market or market segment. * Suppliers * Buyers * Entry/Exit Barriers * Substitutes * Rivalry Supplier power * Supplier concentration * Importance of volume to supplier * Differentiation of inputs * Impact of inputs on cost or differentiation * Switching costs of firms in the industry * Presence of substitute inputs * Threat of forward integration * Cost relative to total purchases in industry Buyer power * Bargaining leverage * Buyer volume * Buyer information * Brand identity * Price sensitivity * Threat of backward integration * Product differentiation * Buyer concentration vs. industry * Substitutes available * Buyers’ incentives...
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...Entry and Exit Entrants threaten incumbents in two ways: First, they take market share away from incumbents. Second, entry often intensifies competition, leading to lower prices. This is a natural consequence of the Cournot and differentiated Bertrand models in which more firms imply lower prices. Some Facts about Entry and Exit There are three important implications for strategy: 1. When planning for the future, the managers must account for entry. 2. Managers should expect most new ventures to fail quickly. 3. Managers should know the entry and exit conditions of their industry. Entry and Exit Decisions: Basic Concepts The entrant must sink some capital that cannot be fully recovered upon exit – it is this element of risk that makes the entry decision difficult. The entrant hopes that postentry profits exceed the sunk entry costs. There are many potential sunk costs to enter the market such as specialized capital equipment to government licenses. The potential entrant may use many different types of information about incumbents, including pricing practices, costs and capacity to assess why postentry competition may be like. Barriers to Entry Structural entry barriers exists when the incumbent has natural cost of marketing advantages, or when the incumbent benefits from favorable regulations. Strategic entry barriers result when the incumbent takes aggressive actions to deter entry. Bain’s Typology of Entry Conditions * Blockaded...
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...Running head: THE MARKETING PROCESS The Marketing Process Professor Whiter Health Services Administration-505 April 23, 2009 The Marketing Process An orthopedic group practice has decided to develop a pediatric sports medicine program. Describe at least three potential markets for this new service. The potential markets that a pediatric sports program could provide services for would ultimately determine how fast and how well they will reach their maximum potential. The first target market a pediatric sports program would be children between the ages 06-17 years old. Having this target market would consist of all school-age children, which are kids who normally seek out pediatricians for regular treatment. Another target market that would appeal to consumers of this service would be children who participate in any level or type of sports within a 90 mile radius. This market would ensure that patients who live in close proximity to the immediate error are serviced and have the pediatric medicine services available to them. Children that have been injured while playing recreational or school sports, is a target market that is easily accessible by pediatric sports medicine providers. Having a school or recreational department provide a list and referral of students who have been injured within the last 90 days and need appropriate treatment for an injury. Lastly, parents of children who make les than $60,000 per year or with adequate insurance...
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...Market structures are traditionally distinguished between four types i.e. perfect competition, monopoly, monopolistic competition and an oligopoly. They are determined on the basis of the number of firms in the market, the type of product, whether homogenous or differentiated and whether barriers to entry exist or not. Due to various specifications of all structures a “casual chain” is seen running from the market structure to the performance of that industry (Sloman, J. Hinde, K. pp 222) A monopoly involves one firm producing a good without close substitutes; that coincides with the firm. Barriers to entry exist thus making it difficult for new entrants to penetrate the industry and be a threat. The concept of the monopoly is relative since it crucially depends on how broadly or narrowly the product and the market are defined as. A monopoly firm can set the price as it is a price setter thus it has a certain degree of monopoly power that is determined by the difference between price charged and marginal cost expressed as a proportion of price. Monopolists can choose either the price or the level of output, but not both as it still faces a negatively sloped demand curve. Thus the monopoly firm does not have a supply curve. (Sloman, J. Hinde, K. 2007) For the monopoly firm to make supernormal profits it has to be a profit-maximizing firm. Therefore the firm shall not choose a rate of output Q that corresponds to the price inelastic segment of the demand curve. It will locate...
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...Perfect Competition Perfect competition industry/market has very large number of small firms because there are no barriers to entry and exit. As all the firms produce identical goods, the goods are perfect substitutes of each other. This causes the demand for the goods to be perfectly price elastic and the demand curve or average revenue curve to be almost horizontal. Consequently, the firms have are called price takers because they have no market power. Market power is defined as the ability of a firm to change the price of a particular good in the market by changing the quantity output of that particular good. There is also perfect information and perfect mobility of resources in the perfect competition market. Monopolistic Competition Monopolistic competition market/industry has large number of firms because there are no barriers to entry and exit. As the firms produce goods that are differentiated such as books, the goods are close substitutes to each other. This causes the demand for the goods to be price elastic. Consequently, the firms are called price setters because they have some market power. Oligopoly Oligopoly market/industry has small number of large firms because there are high barriers to entry and exit. As the firms produce goods that may be differentiated such as breakfast cereals or homogenous such as oil, the goods have few close substitutes. This causes the demand for the goods produced by the oligopoly firms to be price inelastic. Consequently, oligopoly...
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...An orthopedic group practice has decided to develop a pediatric sports medicine program. Describe at least three potential markets for this new service. Response: One potential market to develop a pediatric sports medicine program would be in a community that has a large concentration of inner city middle and high schools with several athletic programs. Often times when children have sports related injuries their parents or guardians resort to emergency rooms, urgent care facilities, or their regular pediatrician. These visits sometimes lead to a referral to an orthopedic specialist. Some times these groups are not easily accessible for families, especially those in the inner city. For instance, Campbell Clinic in Memphis, TN is a major orthopedic group. However, it is located in a sub-urban area and is not very close to the more urban areas of the city. Another target group to market would be the school boards in general. As it stands, within Shelby County as a whole there is a Memphis City School (MCS) Board and a Shelby County School Board. Incorporating a pediatric sports medicine program within the school systems could be a great idea. In speaking with a friend that is employed with MCS, the health field within the school board is expanding with hiring of school psychologists and school nurses. A third potential market could be a pediatric medical group that offers several specialties. An example could be the University of Tennessee Medical Group (UTMG), which offers...
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...compete as a new start-up firm. Also, it is a critical step because it helps you differentiate yourself better from others competing in the market with a similar set of products or services. Although the pure competition model is not a practical tool to assess an industry, Michael Porter’s Five Forces framework helps to truthfully measure all the potential profitability, risk and opportunity. With the help of these five forces, managers can develop and be in a strategic advantage compared to the other companies competing in the industry. The five forces framework: - Rivalry - Threat of entry/ Barriers to entry - Buyer Power - Supplier Power - Threat of substitutes Companies strive for a competitive advantage over their competitors. The amount of rivalry differs within every industry and these differences can be critical for developing a strategy. Concentrated industries usually present high levels of rivalry. Many companies are conscious about industry concentration and in order to measure it, they use the “concentration ratio” (CR). The CR which has been reported by SIC (Standard Industrial Classification code) shows the percentage of the market share seized by the top 4 companies in the industry. If the industry has a high concentration ratio, this means that these firms are controlling the market by holding a big percentage of the market share. With only a few firms holding large amounts of shares, the industry becomes less competitive and becomes more of a monopoly. On...
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...(Economics) RPVV, Surajmal Vihar Support Material For Teachers In Economics – Class XII Co-ordinators Dr. Seema Srivastava Ms. Meenakshi Yadav Contributors Dr. Seema Srivastava Ms. Meenakshi Yadav Mr.Bharat Thakur Technical Support Mr.V.K.Sodhi Ms.Sapna Yadav Ms.Radha Ms.Garima Ms.Ritu Class – XII Teaching -Learning Material for PGT (Economics) Based on “Week- Wise Distribution of Syllabus 2011 -2012” For the Month of July: Unit-IV (18.07.2011 – 25.07.2011) 7 days (25.07.2011-30.07.2011) 6days Abstract Present unit deals with the Concept of Market Structure which comprises of different market conditions under which the firms produce and sell products in the market. The unit also elaborates upon various Forms of Market Structure such as Perfect Market and * Imperfect Market (*Monopoly, Monopolistic Competition and Oligopoly). The conditions and determination of price under various Forms of Market Structure have been discussed. The content based classroom activity has been suggested at the end. It will help in developing Critical Thinking & Analytical ability among students which is the demand of this subject. Questions based on the content to check the progress have been included. Different types of Questions such as Very Short Answer Type, Short...
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...developed a framework that helps managers in this analysis. Porter’s framework, known as the five forces model focuses on five forces that shape competition within an industry: (1) the risk of new entry by potential competitors, (2) the degree of rivalry among established companies within an industry, (3) the bargaining power of buyers, (4) the bargaining power of suppliers, and (5) the closeness of substitutes to an industry’s products. A. Potential Competitors Established companies try to discourage potential competitors from entering, since the more companies enter an industry, the more difficult it becomes for established companies to hold their share of the marker and to generate profits. Thus a high risk of entry by potential competitors represents a threat to the profitability of established companies. On the other hand, if the risk of new entry is low, established companies can take advantage of this opportunity to rise prices and earn greater returns. The strength of the competitive force of potential rivals is largely a function of the height of barriers to entry. The concept of barriers to entry implies that there are significant costs to joining an industry. The greater the costs that potential competitors must bear, the greater are the barriers to entry. High entry barriers keep potential competitors out of an industry, even when industry returns are...
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...Differences in the Market Structures In economics there are four main market structures: perfect competition, monopoly, monopolistic competition, and oligopoly. Each of these market structures faces the common factor of competition. Various degrees of competition are what separate these market structures. Secondly, the commodity or product plays a huge role in these market structures because some products have substitutes or identical products. Lastly, we will observe the barriers to which a firms face when entering or exiting the market. This is a very important factor in the market structures because relative difficulty in entry and exit of the markets will determine what type of market structure we are examining. Market structures are based on two extremes known as perfect competition and monopoly. Oligopolies lie in the middle of this spectrum. A comparison and contrast of each market structure in short term and long term scenarios will be detailed in the following paper. Perfect competition and Monopoly In a Perfect competition there are four conditions that characterize the perfect competition structure: a large number of buyers & sellers, free entry & exit, product homogeneity, and perfect information. Each of these aspects is compared when examining the differences between monopoly and perfect competition. First in perfect competition there are a large number of small firms. Perfectly competitive firms’ demand curves are perfectly elastic while a monopoly’s...
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...Between Market Structures ECO 365 Vilma Vallillee There are different classifications of markets and the structure of a business determines which classification it will fall into. Markets are divided according to the composition of the business and what it provides to the specific market. Business composition is determined by the structure of market characteristics, and this helps determine level and area of competition. The characteristics in a market with the most concentration focus on number of purchasers and retailers, level in which a product has a substitute, price, entry and exit ease, and the level of mutual dependence. These structured variables are classified in the following market structures: perfectly competitive markets, monopolistically competitive markets, monopolies, and oligopolies (Colander, 2010). A perfectly competitive market exists when every contributor is considered a “price taker”, and none of the contributors influences the price of the product it sells or purchases. Two examples of a perfectly competitive market would be milk and gas. There could be many suppliers of both products, and if one supplier wants to raise their price higher than the price the market determines, consumers will go elsewhere to purchase the item in need. Other characteristics could include: zero entry and exit barriers, zero transaction costs, profit maximization, homogeneous products, and perfect factor mobility (Colander, 2010). In a competitive market price...
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...THE MARKETING PROCESS Introduction This document presents a response to the questions regarding the three potential markets that an orthopedic group could enter with its service of pediatric sports medicine The three markets that the orthopedic group could ender that will allow it to earn large profits is the education market, children social networking market such as the YMCA (Young Men’s Christian Association), and minor sporting teams. This paper also describes the barriers to enter and exit the internal medicine market for a physician wanting to establish a solo practice, a company offering a health club facility in the same building where employees work, and hospital wanting to develop a coronary bypass program. Lastly this paper will answer the hypothetical question on three ways to make services unique to the population of baby boomers in San Antonio, Texas. Three Potential Markets for a Pediatric Sports Medicine Program to Enter Three markets that the orthopedic group could enter with their service of pediatric sports medicine would be the Education Market (Elementary, Middle, and High School), the Children Social Networking Market such as the YMCA, and Minor League Sport Teams. According to Katherine Lee from about.com “kids between 5 and 14 years of age account for as much as 40% of all sports-related injuries”(Lee, 2003). With that fact being known, the orthopedic group could hire physicians to work with local schools to teach kids how to prevent sport related...
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...rivalry among existing firms, the lesser danger of potential entrants and higher barriers to entry, lesser substitutes for the firm’s products and a weaker bargaining power of the consumers and suppliers. Competitive incumbent firms or existing businesses in a particular market adopts strategic entry deterrence to discourage potential entrants from entering into competition in the market. These actions from the existing companies create and strengthen barriers to entry for the industry for new entrants. However, this course of action causes market to lose competition and some might even be illegal. Not all industries and not all companies respond in the same way, the strength and aggression of the response varies accordingly to the current market trends, conditions and consumer behaviour. In this essay, we will discuss on several strategic actions taken by the incumbent firms to create, maintain or increase deterrence on new and potential entrants and thereafter, analyzing the credibility of each action. There are many types of barriers to entry into a market, including factors like high capital costs, differentiated product, costs of switching, distribution network, economies of scale, suppliers, barriers to exit and legal and government created barriers. High capital cost: In an industry that demands a larger capital investment during the starting up process, it will act as a barrier to entry for most potential entrants unless those who have a competitively high initial...
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