Essay Example. Burjeel Hospital: Service Area Structure Analysis Using Porter's Framework

The phrase service area competitor analysis characterizes the process through which an entity attempts to define further and comprehend its industry better (Ginter, 2013). This is through identifying its competitors, determining both their strengths and weaknesses as well as anticipating their moves. In the business settings, a service area competitor analysis is an imperative component of its marketing plan (Fleisher & Bensoussan, 2003). This is because the analysis helps the business owners to understand how its customers rate the competitor business (Bensoussan & Fleisher, 2008). It is also employed in the development of competitive strategies for the targeted market. On the other hand, a business internal environment analysis refers to the identification of a business resources and capabilities able to provide a means to overcome the identified weaknesses in the entity. This essay offers a discussion of Burjeel Hospitals service area competitor analysis as well as an analysis of the business internal environment.

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Part A: Service Area Competitor Analysis

Service Category

The service to be discussed in the competitor analysis procedure is the magnetic resonance imaging (MRI) service. In the Burjeel Hospital, MRI services are offered to patients in the Department of Radiology and Imaging. The MRI is a technique of scanning a human body through the use of magnetic fields as well as radio waves meant to create a detailed depiction of a patient's body tissues (Kahn & Busse, 2012). The method works by realigning the hydrogen atoms in a person's body (Kahn & Busse, 2012). It is a highly complex methodology of human body imaging, which is remarkably useful in detecting any structural abnormalities of a person's body organs. An MRI can also be employed to check a patient's inflammation of tissue as well as tears in the body ligaments (Kahn & Busse, 2012).

The cost of acquiring an MRI machine is very expensive. Purchasing a new MRI machine is a capital intensive project. It would mandate a health care institution to raise a substantial amount of capital through financial institutions or a hospital's shareholders in order to purchase the MRI equipment. The Burjeel Hospital, just like most of its competitors, have been forced to work with outmoded MRI equipment to perform radiology services to patients. Also, due to the high demand for MRI services by patients in the UAE, most hospitals including the Burjeel Hospital are mandated to charge steep prices for the MRI services. Ultimately, this has resulted in an elevated level of competition today, among most hospitals in UAE in a bid to acquire the most modern, state of the art MRI equipment.

The cost of acquiring a new MRI equipment is very expensive, and the Burjeel Hospital cannot afford it at the moment. This is because the cost of purchasing the MRI equipment would take a substantial amount of the institutions operating capital. The most expensive MRI machines are inclusive of the Siemens Espree, Philips 1.2T Ingelia as well as Siemens 3T Verio (Rentz, 2016). The three are valued over $400,000 (Rentz, 2016). The least expensive MRI machine costs between $150,000 to $300,00 and they include the GE Ovation, Hitachi Airis II, and Siemens Magnetom among others (Rentz, 2016). The existence of an ultramodern $400,000 MRI equipment in rival hospitals has made a significant number of the Burjeel Hospital's patients to shift their radiology services to the competitor hospitals.

Service Areas

The MRI equipment in the Burjeel Hospital will be employed for a wide range of services. Such services will include checking patients lymph nodes and examining health organs such as the bladder and reproductive organs of both genders. It will also be employed for analyzing blood vessels, which is also referred to as MR Angiography. Also, the MRI will be used to check the chest and abdomen organs such as the heart, spleen, liver, pancreas, kidneys, adrenal glands, and biliary tract. The physicians at Burjeel Hospital will also use the MRI to examine and monitor the treatment of various conditions such as the congenital heart diseases, tumors, diseases of the liver, vasculitis and fetus development in the womb.

Service Area Structure Analysis Using Porter's Framework

This is a framework that seeks to analyze the level of competition in a given industry as well as the viability of the development of a business strategy. The framework relies on the industrial organization (IO) economics so as to derive the five forces, which evaluate the competitive intensity as well as the attractiveness of an industry. The theory aids in the understanding of the overall industry structure as well as competitive forces in the market. The two are essential to a business manager as they enable him/her in strategic decision-making. The Porters five forces are inclusive of competitive rivalry, bargaining power of suppliers, bargaining power of customers, the threat of new entrants as well as the threat of substitute products.

Competitive Rivalry

Burjeel Hospital's performance can be analyzed by evaluating the competitive rivalry between itself and other hospitals in offering the MRI services to patients. This is a force that examines the level of competition intensity in the marketplace (Magretta, 2012). This determined by the number of competitors in the market as well as their capabilities in trading operations. Rivalry competition is normally high when there are only a few entities selling almost identical products or services. In such a case, consumers can easily switch to buying the products of a competitor retailed at a lower price. Also, the rivalry competition could be high when there are advertising and price wars among competing industries. In the MRI services market, the Burjeel Hospital competes with three other hospitals situated in the region. The hospitals will include Cleveland Clinic, LLC Hospital Mussafah, and Ahalia Hospital.

Two of the competing hospitals, LLC Hospital Mussafah and Ahalia Hospital, retail the MRI services at a price slightly lower than the Burjeel Hospital. The Cleveland Clinic offers the MRI services at a price similar to the prices offered in the Burjeel Hospital. Nevertheless, Cleveland Clinic has acquired an ultramodern MRI machine, which is capable of offering MRI services to patients at a reduced period per session. As such, MRI patients no longer cue for long waiting for their turn to have the MRI services performed. As such, a significant number of customers who previously have been attending MRI sessions at the Burjeel Hospital have migrated to Cleveland Clinic due to its fast and efficient rate of service delivery. The Burjeel Hospital is also facing intense competition from LLC Hospital Mussafah and Ahalia Hospital due to their prices for the MRI services. As a result, some patients have been attracted by the reduced prices and shifted from the Burjeel Hospitals radiology department.

Bargaining Power of Suppliers

This is a Porter force that evaluates the power of competitors to supply the market, and also their level of control of the market (Porter, 2008). Such an analysis occurs through evaluating the potential of the competing firms in raising the prices of products and services. A significant rise in the prices could cause a reduction in the profitability of selling a product or service. In reference to the bargaining power of suppliers, the fewer they are in the market, the more power they have in influencing the prices of products and services in the market. The Burjeel Hospital faces the threat of a negative outcome due to the intense bargaining power of suppliers from the three competing hospitals. This is because there are only a few more hospitals in Abu Dhabi that offer highly modernized MRI services to patients. As such, the few competitors are capable of influencing the prices of the MRI services in the market. In the event that the LLC Hospital Mussafah and Ahalia Hospital decide to lower the cost of their MRI services further, it would adversely affect the MRI business profitability of the Burjeel Hospital.

Bargaining Power of Customers

This is Porter's force that analyzes the capability of buyers in the market to affect the prices of goods and services (Analoui & Karami, 2003). Normally, consumers have power when they are not very many in the market saturated with potential sellers. In such an event, the customers can easily switch from one seller to another in a bid to find the most affordable price of a product or service. On the other hand, the buying power of consumers is considered to be low when they only buy goods in small quantities. It is also low when the sellers products are very different from the products offered by competitor entities. In reference to the Burjeel Hospital, the bargaining power of customers is very low.

This is because there are hundreds of persons who need the MRI services from the hospitals on an annual basis. On the other hand, there are only a few hospitals, including the Burjeel Hospital, which offers the MRI services to the public. As such, it is not possible for patients to be in a position to influence the prices of the MRI services, in either the Burjeel Hospital or its competitors. Instead, the hospitals define their own prices for the MRI services. Also, the consumers cannot influence the prices of the MRI services because the service is similar to both the Burjeel Hospital and its competitors. The only difference is the MRI service delivery in all the hospitals is in the type and value of the MRI machine employed to assist the patients.

Threat of New Entrants

This is a Porter's force that analyzes how easy or difficult it is for competitor businesses to joined the market in a given industry. The easier it is for a competitor to join the market, the easier it is for an existing business to lose its market share. Some of the major barriers to entry that faces numerous new entrants include absolute cost advantages, intense competition from well-organized brands as well as the ability of the current firms to profit from the economies of scale (Basu, 2016). The threat of new ventures entering the market to the Burjeel Hospital is very low. This is because the cost of entry into the MRI services market is immensely high since the MRI equipment are extremely expensive to acquire in the market. Also, they are expensive to maintain and require a highly specialized team of professionals who are capable of performing and interpreting the MRI results. Such professionals are expensive, in reference to their wages and salaries. As such, the initial capital to start an MRI center is very high, and most entrants may not have sufficient capital resources to venture into the business.

The Threat of Substitute Products or Services

This is a Porter's force that analyzes how easy it is for consumers in the market, to switch from one entity's product or service to competitors products or services (Rainer & Cegielski, 2010). It analyses the number of competitors in the market, their prices, and quality of the goods and services and then compares them to the prices and quality of the business being evaluated. This force also analyzes how much profit the competitor business makes since this can determine whether such businesses has the capability to lower the cost of the products further. Normally, the threat of substitutes in the market is inform...