HCS/567 Read Me First
Read Me First HCS/567
Week Four
Introduction
In Week Four, the focus is shifted from inside the firm or venture to external forces affecting the business. Key terms this week include industry analysis, target market, and intellectual property.
Industry analysis refers to the factors that drive the competitive intensity. Understanding these external forces provides insight into the strategic decisions concerning product or service positioning and the relative importance of protecting intellectual property as the decision is made to target a particular market.
Intellectual property, if a firm can obtain it, is a definite competitive advantage and an important aspect of health care entrepreneurial firms. Companies must decide if what they have is unique to protect via patent, trademark, or other mechanisms. The decision is usually based on the size of the potential market to protect and whether the firm believes it will litigate should infringement occur.
This week in relationship to the course and the program
Analyzing the industry and the competitors in a particular market segment of the industry is a key part of a business plan. Investors, and employers for that matter, want to know that management understands the competitive landscape so they can better exploit competitors’ weaknesses and more affectively blunt competitive strengths.
This type of analysis is a carryover in any field, particularly health care, even where competitive cooperation exists. For example, PharmaExec Direct e-mail news service announced on May 14, 2008 that pharmaceutical competitors Ranbaxy and Merck signed a deal between the two companies to codevelop anti-infective products, while continuing their competitive activities in other product categories. As these relationships become more common, understanding how to protect intellectual property while effectively positioning products becomes critically important to all businesses. This is especially true with entrepreneurial ventures that have limited resources and cannot afford mistakes.
Having a clear understanding of external forces, the competition, and the role of intellectual property is essential to entrepreneurship, as well as to the role of a health care leader and administrator. The health care industry is dynamic and ever changing, providing intense competition and new technologies and innovations on a consistent basis. As a health care administrator, you must understand the role that intellectual property plays in new and existing ventures.
Hints for a reading strategy of the assigned materials
This week, you should focus on fully understanding Porter’s Model describing the forces that drive competition. Once you have studied the model, match that model to the environmental factors influencing the industry segment with which you have the greatest familiarity (current or past positions you have held). This provides you a first hand perspective of what must be considered before attempting an entrepreneurial venture.
The barriers to entry in most segments of the health care industry are many and you should consider how those barriers might provide security to existing firms or entrepreneurs. For example, one of the most obvious barriers to entry for a physician is the educational process that limits the number of practitioners able to obtain a license to practice. You should also look to those barriers to determine if you know of organizations that are able to manage barriers effectively, thus creating a competitive advantage for specific businesses.
As you read about intellectual property, gain a general knowledge of its importance and purpose. It is not necessary to have a detailed understanding of all the different forms of intellectual property, but rather to be able to explain its importance and relationship to health care. Consider what assets, tangible and intangible, your firm has that should be protected. Additionally, consider what form of intellectual property the assets are and if they are key to a sustainable business strategy.
Some questions to ask as you hone your critical thinking
As you read the material, create why and what questions that sharpen your ability to apply these concepts. Ask yourself, “How do the competitive forces interrelate to affect a firm’s profitability?” “How does my firm address or respond to the competitive forces that shape our industry?” “How does a firm determine to enter a market that has an established set of competitors?” “Is a mature industry restricted to competing on a cost basis, independent of scale?”
Consider what industry analysis activities you must undertake for the company and market chosen for your Week Six Learning Team project to be sure it is perceived as well positioned. Consider the same thought as it relates to the need to protect intellectual property. Additionally, think about how important it is to understand the competitor’s strategy to develop your own strategy and implementation tactics. These questions should help you consider the industry analysis and its importance relative to creating a business plan and developing an implementation strategy for the plan.
Summary
Industry analysis builds and supports the environmental analysis. All of the elements discussed in the class thus far are interrelated, and many are interdependent. Successful entrepreneurs in the health care industry can put the tools and concepts discussed to work for their companies in such a way as to provide a sustainable advantage. Doing so is the very objective of a business.
Reference
PharmaExec Direct e-mail news service. (2008, May 14). Pharmaceutical Executive Magazine. Retrieved from http://pharmexec.findpharma.com/pharmexec.
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