Carolina Heart care Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Carolina Heart care Case Solution

Economic Analysis of Carolina Heart Care

The case analyses the expected performance of Carolina Heart Care. The organization is transforming recreational vehicles into health labs. This would allow them to make certain profits by offering $99 for each heart patient through this scheme. However, this judgement was also followed by the risk of lowering profits due to high cost associated with the labs and an increasing competition among them.

Cost or Benefit position of CHC

If Carolina Heart Care would go for the health labs instead of recreational activities, then the main benefit would be the increase in interest of heart patients with regards to the latest technology, which improves results.

This would also increase the threat of other competitors under intense pressure to increase their activities in order to sustain the competition. The main source of advantage for CHC is the fixed charges within the policy terms, which help them to increase their patient level. According to the current situation, the cost would increase by the same level and if such labs would expand in future, then the profit as well as benefits would go down.

In order to develop a proper long-term strategy, CHC should choose the Bernard competition in order to decrease the marginal cost of its transformational activities. This would only be done if the certain prices would be fixed in relation to the selected competitor. It would be beneficial for the company to implement a cost strategy to decrease the marginal activity costs. A way to implement this strategy is through merger and acquisition with another company under a fixed agreement. This would allow CHC to reduce the additional cost and to increase the profits by fixing the prices with the acquirer.

Profit margins or market share

In order to be succeed from the prosposed project, the company should go for profit margins instead of looking for a market share because intense competition would affect its results if it enters into a rivalry with a hospital service.

The second disadvantage of going for market share would be that CHC’s health lab operation is small as compared to the major competitors. If CHC would opt for expanding its health labs, then the competition would grow and it would decrease the market interest due to low entry barriers in this technological era.

Therefore, CHC should go for profit maximization by fixing the prices of the lab’s operations for a selected period and apply a cost strategy to decrease marginal costs.

Choice of labs

CHC proposed choice of 6 labs to benefit and develop the company, the competition was at peak during the new technological era in biomedical industry. These new labs would encourage other rivals to respond to CHC’s technological advancement, which would eventually lead to a decrease in interest of health labs.. This would also hurt the competitive advantage, which CHC created through technological research to service heart patients.

Considering the current scenario, it has been identified that Bernard competition would occur in the coming period due to competition in the market on price. So according to the theory, it has been analysed that the firm would fix the prices in order to decrease the additional marginal costs associated with new labs. This would be done by fixing the agreement during the acquisition and by trying to increase the profits through less costly activities.

Outcome of the project

The expected results in the scenario of CHC shows that, if the hospital would not enter into the market competition, then better results can be achieved and more profit can be generated to ensure future growth.................

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