Business Plan: Senior Living/Assisted Living Company Harvard Case Solution & Analysis

Business Plan: Senior Living/Assisted Living Company Case Solution

  • Differentiation strategy is more suitable for the success of business
  • Cost adjustment would be made according to the user's demand (Low-cost material in decoration)

External Analysis

 The external analysis of the business consists of different models and frameworks. Moreover, the analyst has analyzed the industry using the porter's five forces model while the other external factors have been analyzed by PEST analysis.

Porter's Five Forces

Porter's five forces are the five competitive forces, which decide the profitability, growth, and future of the industry. Moreover, these factors and their analyses are very important before launching any business since without getting proper knowledge about these factors, competitive and business strategy cannot be implemented effectively. These factors include (Tools, Porter five forces, 2016)

Barriers to Entry

Threat of Substitute

Bargaining Power of Buyer

Barriers to Entry or Threat of New Entrant

 There are several factors, which increase the threat of new entrants since the capital requirement is moderate, as there is not a huge capital required in order to enter this industry. However, the fund can also be obtained from financial institutions and loan providers. Therefore, capital requirement is not an issue. However, there is a factor, which hinders the new entrant to enter the arena, as specialized knowledge and skills  are a prerequisite in order to enter the same type of business.

 Furthermore, the most unfavorable factor for the industry is that there are no economies of scale required as a preliminary tool to enter the industry. While the players who are operating their businesses in this industry have, a significant learning and experience curve, which again discourages the new entrant. Moreover, no specialized assets are required in order to run the business since there are very few assets, which can be sufficient to provide assisted living services; these assets included apartments and rental spaces that can be easily acquired by a new entrant and no patents or intellectual property rights have been taken by existing industry members.

 Finally, by the analysis above, it can be seen that there are some factors that encourage new entrants. while some factors hinder them from entering in to this industry. Therefore, it can be concluded that the threat of new entrant towards the industry is moderate or high, which is unfavorable for the industry.

Power of Supplier

 The power of supplier in this industry is said to be high since a significant role of the supplier exists in this industry. Furthermore, the business is servicing and hospitality; therefore, goods are not required to the industry members. While the suppliers for this arena will be a wheel chair, medical assistance, age old tools, apartments and other necessary equipment suppliers. However, there are a moderate number of suppliers available in the market, which increases their power of bargain over their customers. Furthermore, these suppliers do not have a similar same size of resources and therefore, not every supplier can be selected as the primary vendor.

 Moreover, the products of all the suppliers are not same and therefore, not anyone can be given the order as per the industry requirements. While the switching cost of these suppliers is moderate since there are no strategic alliances or partnerships that have been found among the buyers and suppliers, which significantly decreases the bargaining power of these suppliers over the industry members.

 Conclusively, it can be said that the power of bargain of suppliers of this industry is quite high, which decreases the bargaining power of the industry members in order to accommodate their needs and wants according to their cost and requirement structure..................

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