Question

Using the healthcare industry and the Five Forces Framework give a specific example (can be hypothetical or real) with a brief explanation of how each of the five forces might impact this industry/firm.

Answer 1

Due to coronavirus outbreak a new testing kit is introduced in the market, called ABC.

5-forces are as below:

Challenge from new entrants: The pandemic is killing lives and there is no as such good testing kit in the market. Therefore, an immediate entry in the market by competitors may not be possible. ABC can do business now without any challenge.

Substitute goods or services: There is no substitute as such. The society and healthcare industry were desperately looking for such kit.

Suppliers’ perspective: The supplier of ABC keeps its price low so that it is affordable to all. The purpose of such kit is not to make profit only but to make social welfare also.   

Buyers’ perspective: There is huge demand of such kit, since more and more testing are required now. The supplier may have to face challenge to fulfil all the demands initially.

Industry competition: By the time of pandemic is over in future, this kit may not be so demanded. This is the only challenge for suppliers. This could be minimized if the testing kit is universal for all sorts testing. The healthcare industry with other testing kits may create competition then.