Competitive Strategy
Competitive
strategy refers to the way a business strives within an industry and how it
achieves a unique competitive advantage against its rivals. It’s derived of a
combination of a target/market scope which is either be broad (industry wide)
or narrow/focus (market segment) and the competitive advantage/differentiation,
which is either low cost or product/service uniqueness.
Robert Wood Johnson University Hospital is distinguished from
its competitors by exuding excellence focusing on the quality of medical results
and services. The fact that the RWJUH is one of the 3 go to Level I Trauma
center in NJ makes it hard to compete against them. UMDNJ, Newark and Cooper
Hospital/University Medical Center in Camden are the other two level I Trauma Centers.
Although RWJUH is narrowly focused as far as competing, they have been recognized nationally as "America's Best Hospital for 6 Consecutive years" by U.S. News and World Reports. And has been rated one of the 50 most exceptional Hospital's in the U.S and ranked as a top 10 hospital for quality service in the nation.
Porter's Five
Forces Model Analysis
Porter’s 5-forces model is an industry structure framework developed by and named after Michael E. Porter. The model classifies and examines 5 competitive forces; Bargaining power of suppliers, Bargaining power of customers (buyers), Threat of new entrants, Threat of substitute products or services and Rivalry amongst existing competitors. These 5 forces are drawn from business-structured economics that develop the five forces in which determine the competitive force of an industry and the desirability of a market. The 5 forces shape every industry and also benefit the business to become aware of its strengths and weaknesses.
Bargaining Power of Buyers:
Bargaining Power of Suppliers:
Threat of New Entrants:
The threat of new entrants is the potential ease or difficulty that a new competitor faces when entering the market. For Robert Wood Johnson University Hospital, the threat of a new entrant is very low. Recently, area hospitals have been closing or have been bought out. Robert Wood Johnson University Hospital has been buying out some of these hospitals outright. The hospitals that they have been buying are in middle to upper middle class neighborhoods like Clark and Hamilton. (RWJUH-Rahway and RWJUH-Hamilton). Even if a new hospital emerged in New Jersey, they would have to compete with Robert Wood Johnson University Hospital's reputation for nursing and medical care and would most likely not have access to the amount of suppliers that Robert Wood Johnson University Hospital has. Since the cost to operate and run a hospital is immense, Robert Wood Johnson University Hospital does not have any new potential threats.
Threat of substitute products or services:
Threat of substitutes refers to alternative products or services that customers can purchase or use in place of a company’s products or services. It is not the same as services offered by an industry rival but more akin to an indirect competitor. For Robert Wood Johnson University Hospital, the threat of substitutes is also low. Robert Wood Johnson University Hospital is the only Level 1 Trauma center serving Central New Jersey. Level 1 trauma centers provide care to largely populated areas and provide specialized care not found in lower level trauma centers. Sub-acute clinics outside of Robert Wood Johnson University Hospital's healthcare system cannot truly substitute the care given at Robert Wood Johnson University Hospital because there are procedures and instruments that can only be done at Robert Wood Johnson University Hospital's facilities. Robert Wood Johnson University Hospital has also has low switching cost and the loyalty of their customers.
Rivalry amongst existing competitors:
Industry rivals are direct competitors that provide similar services to a company. Robert Wood Johnson University Hospital is innovative in regards to their technology and powerful competitive strategy. Industry rivals are direct competitors that provide similar services to a company. Robert Wood Johnson University Hospital has a high level of competition as there are many direct rivals in New Jersey alone that they compete with to provide healthcare not including New York City hospitals. Three of these rivals are located in Central New Jersey – JFK Medical Center in Edison, Raritan Bay Medical Center in Perth Amboy, and Saint Peter's University Hospital in New Brunswick, NJ (a mere two blocks away from RWJUH – New Brunswick).
The bargaining power of
buyers/customers is the influence that customers have over a company
or business. For Robert Wood Johnson University Hospital, patients
have a medium level of influence. Robert Wood Johnson University Hospital boasts excellence in nursing care in New Jersey as well as the medical expertise of many physicians. Many of Robert Wood Johnson University Hospital's own employees prefer the
level of care offered at Robert Wood Johnson University Hospital to many of the other area hospitals
and are reluctant to trust the care of their loved ones and
themselves to any other hospital.
Bargaining Power of Suppliers:
The bargaining power of suppliers is
the influence that suppliers have over a company or business. For
Robert Wood Johnson University Hospital, there are many different
suppliers, but the core suppliers have been identified: nurses,
doctors, pharmaceutical, and material (Medical Supplies).
-
The nurses have a fairly high
influence over Robert Wood Johnson University Hospital. As stated
previously, Robert Wood Johnson University Hospital prides itself on
the level of care that their nurses have given to their patients. The
nurses are unionized and their leaders are no strangers to
confronting upper management over controversial regulation towards
their profession. Robert Wood Johnson University Hospital has earned
the Magnet Designation for nursing excellence for a fourth
consecutive year. Nurses that have had extensive experience in Robert
Wood Johnson University Hospital are highly sought after in other
hospitals.
-
The doctors have a comparable level of
influence (high) over Robert Wood Johnson University Hospital.
Many doctors do rounds in other local area hospitals but entrust the
care of their patients to Robert Wood Johnson University Hospital's
staff. Some of Robert Wood Johnson University Hospital's more
prestigious doctors and surgeons have been offered higher salaries
from other hospitals in New York (Columbia University Medical Center
/ New York-Presbyterian) and Maryland (John Hopkins Hospital) to
practice there.
-
The pharmaceutical companies have a
very high level of influence over Robert Wood Johnson
University Hospital. These companies usually will give an incentive
or bonus to Robert Wood Johnson University Hospital's doctors to
perform procedures with their product or prescribe the medications
that they develop for healthcare. The current pharmaceutical
companies doing business with Robert Wood Johnson University Hospital
made deals with the hospital to have their medications or surgical
instruments used more than their rivals.
-
The material and medical suppliers
have a medium level of influence over Robert Wood Johnson
University Hospital. Robert Wood Johnson University Hospital does
have numerous deals with medical supply companies to minimize the
costs of acquiring supplies as well as a very amiable reputation to
earn discounts with many of their suppliers.
-
Overall, these four groups of
suppliers exert a high level
of influence over the operations at Robert Wood Johnson University
Hospital.
Threat of New Entrants:
The threat of new entrants is the potential ease or difficulty that a new competitor faces when entering the market. For Robert Wood Johnson University Hospital, the threat of a new entrant is very low. Recently, area hospitals have been closing or have been bought out. Robert Wood Johnson University Hospital has been buying out some of these hospitals outright. The hospitals that they have been buying are in middle to upper middle class neighborhoods like Clark and Hamilton. (RWJUH-Rahway and RWJUH-Hamilton). Even if a new hospital emerged in New Jersey, they would have to compete with Robert Wood Johnson University Hospital's reputation for nursing and medical care and would most likely not have access to the amount of suppliers that Robert Wood Johnson University Hospital has. Since the cost to operate and run a hospital is immense, Robert Wood Johnson University Hospital does not have any new potential threats.
Threat of substitute products or services:
Threat of substitutes refers to alternative products or services that customers can purchase or use in place of a company’s products or services. It is not the same as services offered by an industry rival but more akin to an indirect competitor. For Robert Wood Johnson University Hospital, the threat of substitutes is also low. Robert Wood Johnson University Hospital is the only Level 1 Trauma center serving Central New Jersey. Level 1 trauma centers provide care to largely populated areas and provide specialized care not found in lower level trauma centers. Sub-acute clinics outside of Robert Wood Johnson University Hospital's healthcare system cannot truly substitute the care given at Robert Wood Johnson University Hospital because there are procedures and instruments that can only be done at Robert Wood Johnson University Hospital's facilities. Robert Wood Johnson University Hospital has also has low switching cost and the loyalty of their customers.
Rivalry amongst existing competitors:
Industry rivals are direct competitors that provide similar services to a company. Robert Wood Johnson University Hospital is innovative in regards to their technology and powerful competitive strategy. Industry rivals are direct competitors that provide similar services to a company. Robert Wood Johnson University Hospital has a high level of competition as there are many direct rivals in New Jersey alone that they compete with to provide healthcare not including New York City hospitals. Three of these rivals are located in Central New Jersey – JFK Medical Center in Edison, Raritan Bay Medical Center in Perth Amboy, and Saint Peter's University Hospital in New Brunswick, NJ (a mere two blocks away from RWJUH – New Brunswick).
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