PORTER Analysis

Porter’s Five Description Key factors for analysis Conclusion

Forces

Buyer Power Here we ask  long-term Moderate

how easy it is relations
bargaining power of
customers as
for buyers to  pricing patients do not like
drive prices to change doctors
down. If one too often.
deal with few,
powerful
buyers, then
they are often
able to dictate
terms to it.

Supplier Power Here we assess  Dependencies on supplies Moderate bargaining

how easy it is from large scale suppliers. power as individual
for suppliers to  Not easily suppliers may be
drive up prices. substituted influential in
suppliers. determining prices but
The fewer the
usually hospitals like
supplier
Apollo do not depend on
choices one
a single supplier
has, and the
more one need
suppliers' help,
the more
powerful one’s
suppliers are.

Existing What is  Stiff competition from Though Apollo is the

Competition important here foreign as well as most prominent name
is the number domestic competitors when it comes to
and capability hospitals in Asia, any
 low price
quality breaches will
of competitors. sensitivity
lead to loss of customers
If one has  In 2003-05 limited to competitors like
many number of Fortis, Wockhardt etc
competitors, competitors were
and it offer there due to first
equally mover advantage
attractive
products and
services, then it
will most
likely have
 little power in
the situation.

Threat to new Power is also  Entry/ Exit Hospital industry is a industry

entrants affected by the barriers and costs governed by various complex laws
ability of by the government and a new
 Huge capital player may not be interested to
people to
requirements enter.
enter our
 Other barriers
market. If it Huge investment needed also
costs little in lessens this threat
time or money

to enter
market and
compete
effectively, if
there are few
economies of
scale in place,
or if there
exists little
protection for
key
technologies,
then new
competitors
can quickly
enter our
market and
weaken our
position.

Threat to This is affected  No direct Low threat of substitutes as

substitutes by the ability substitutes there is no substitute to
of customers healthcare provided by a
to find a super-specialty hospital. In
different way the non-emergency
of doing what situations, homeopathic and
you do. If ayurvedic can be seen as
substitution is substitutes
easy and
substitution is
viable, then
this weakens
the power.
STRATEGIC GROUP MAPPING

A strategic group is a concept used in strategic management that groups companies within an industry that
have similar business models or similar combinations of strategies

Strategic Group Analysis is useful in several ways:

Helps identify who the most direct competitors are and on what basis they compete.
Raises the question of how likely or possible it is for another organization to move from one strategic group to
another. Strategic Group mapping might also be used to identify opportunities. Can also help identify strategic
problems.

For the graph we have taken the closest competitors of Apollo Hospitals and try to plot them in the same map.
The size of the bubble shows the number of hospitals in each chain.
Following data has been plotted:
1) Apollo- 44 Hospitals
2) Fortis – 36 Hospitals
3) Manipal – 16 Hospitals
4) Wockhardt – 3 Hospitals
(Data as per 2004)
Two main variables taken are:

1) Geographic Presence
2) Business span and breadth of services

Strategic Group Analysis Map

Competitive Landscape:

Value proposition:

Apollo hospitals are priced in the first-class segment. It ensures quality and trust through its brand connect, for
which consumers are willing to pay the premium. Having involved elite technology in its processes, high price
points are justified. Competitors of Apollo Hospitals like Fortis Healthcare are priced in the same segment. The
pricing strategy is of a premium product as it is almost the market leader in close toe with its competitors.
Therefore, Its lies in the niche category for the domestic audience.

Apollo Hospitals is present in most tier one and tier two cities. It has different types of models like Apollo Clinic,
Apollo Reach Hospitals, Apollo Cradle, etc. Apollo Reach Hospitals cater relatively backward places. Apollo
Cradle is for childcare. Such different models help Apollo Hospitals ensure its presence in all fields of medicine.

For the western patients Apollo hospital services are much cheaper in contrast to what they are getting in their
home country. So, it is a low-cost option for them.

Competitive Strength Assessment:

A competitive strength assessment is a weighted assessment of the strengths and weaknesses of an individual
or company and their current and potential competitors. The assessment can reveal whether an individual has a
competitive advantage or disadvantage over rivals on the basis of individual resources, capabilities, and
activities. That knowledge can then be applied to efforts of improving the individual’s weaknesses.

For competitive strength, we have taken two nearest competitors Manipal Hospitals and Wockhardt Hospitals.
The key success factors for any hospital can be broadly categorised into four pillars: Extent of services,
Geographical dispersion, Brand Equity and Customer service. We have tried to assess the strength of these
major hospital chains with respect to these parameters. The unweighted and weighted scores are hence
calculated.

Apollo Hospitals Manipal Hospitals Wockhardt Hospitals

Key Success Weight Strength Weighted Strength Weighted Strength Weighted

factor rating (1- score rating (1- score rating (1- score
10) 10) 10)
Extent of 0.25 7 1.75 7 1.75 6 1.5
service
Geographica 0.25 8 2 5 1.25 4 1
l Dispersion
Brand Equity 0.25 8 2 5 1.25 4 1

Customer 0.25 7 1.75 5 1.25 5 1.25

service

Total 1 30 7.5 22 5.5 19 4.75

Market Segmentation:

Segmentation helps in understanding characteristics of different groups of the population having similar
attributes. Apollo Hospital uses:

1) Demographic Segmentation: This segmentation is done with variables such as countries, region, place
etc
2) Psychographic Segmentation: This include strategies with variables such as age, gender, income, region,
and marital status.

Since the Apollo Hospital group have a presence in a broad range of offerings in the Healthcare market,
therefore, it uses differentiated targeting strategy.

In addition to this several segmentations are done with respect to the services offered by the group.

Key Products and/or Services Sub-Segment

Segmentation with respect to:

Orthopedic Surgery  Gender- Male/Female
 Age group
 Diabetic / Non-Diabetic
 Hypertension

Heart Transplant Segmentation with respect to:

 Gender- Male/Female
 Age group
 Diabetic / Non-Diabetic

Similarly, several sub segmentations can be done depending upon the services offered by the hospital.

1.1 Buying Criteria Analysis of the Industry

Parameter Details End-user Segments Significance

Attached (Low,
Medium, High)
Service Consumption It describes the Individual High
Pattern of the service use pattern of Customers
consumer consumers.
Consumption pattern SMEs Low
depends upon Corporate
proximity,
demographic and
psychography of the
user
It describes the
purchase policy of Hospital Low
Credit Policy of the customer. This
patient describes how
patient is paying for
 the service. Is he
using insurance or
paying hard cash?
Quality of the service It describes the Everyone Medium
quality of the product
and service provided
by the hospital to the
end user.

The impact of the buying criteria is graded on the basis of the intensity and duration of their impact on the
current market landscape. The magnitude of the impact has been categorized as described below:

 Low - Negligible or no impact on the market landscape

 Medium - Medium-level impact on the market
 High - Very high impact with radical influence on the growth of the market

1.2 Key trends and future developments

Key Trend Impact on Industry (Low, Certainty of Impact (Low

Medium, High) probability, medium
probability, high probability)
Competitive Price Medium High
Product line extension Medium Medium
Diversification Low High
Telemedicine Medium Medium
Robot/Laser surgery/AI High Medium

Impact- high analysis:

Replacing employees with robots is an inevitable choice for organizations in the service sector, more so in the
health care sector because of the challenging and sometimes unhealthy working environments, but, at the same
time, it is proposed that it should be done in a manner that helps in improving the employment and motivation
of employees in this sector.