The aim of industry environment analysis is to determine the amount of competition an organization is likely to experience in the future. This is done using Porter’s five forces model (Grant, 2005). This includes: Bargaining power of the customers;- The Healthways’ customers have a wide variety of companies to choose from since the healthcare sector in U. S has recently become crowded with very many health plan providers offering a variety of services. This has increased the competition and the company has to strive hard in order to maintain its customers as well as try to acquire new customers from the highly competitive market.
Threat of new entrants into the market;- Many entities whose financial, marketing, research and technological resources far exceeds those of Healthways, Inc who have recently introduced healthcare services are a source of stiff competition for this company due to the quality and efficiency of the services they are providing. Example of these entities include companies dealing with disease management, some large pharmaceutical companies, other healthcare companies and health plan providers among others.
Bargaining power of suppliers;- There are very many suppliers in this market as compared to the number of people seeking their services. For this reason, the factor of price and quality has become very important in order for Healthways to remain relevant in this industry. Threat from substitute services available in the market;- Healthcare services have become increasingly available from private companies, pharmaceutical companies, hospitals, pharmacy-benefit companies among other institutions at even cheaper prices and this has greatly reduced the market for companies such as Healthways, Inc.
Rivalry among existing firms;- Companies such as APS which have a wider variety of services at even lower costs are a major source of competition fro Healthways, Inc company. Direct rival: APS Healthcare, Inc. The health-care industry is highly competitive and the major rival of Healthways, Inc is the APS Health care, Inc which is a private health care company established in 1992. This company offers customized integrated health-care solutions mainly through care management and changing the behavior of its customers to be more health-friendly.
The company also has health programs which help to promote good physical and mental health. The use of integrated programs has made APS one of the leading health-care service providers in the U. S thus making it the greatest competitor against Healthways, Inc. In addition, being the only health-care company which offers behavioral health-care, EAP programs and quality review programs gives it a higher competitive advantage than the rest of the health-care companies.
To overcome such competition, the Healthways, Inc has a state-of-the-art center of technology which enhances care management and is linked to the company’s medical IT, models for disease prediction, techniques for behavioral change, recruitment of highly qualified staff, quality training for all its medical staff, constant review of the products offered at the center and maintenance of the good reputation. Although this gives the company an added advantage over its competitors, it does not give it the assurance that it will be able to compete effectively with APS and other healthcare companies in the future.
Conclusion. From the eternal analysis of Healthways, inc company, it is clear that the company is facing very high competition and thus, its management must come up with a strategy geared towards improving the quality and delivery of its services in order to help it to overcome the stiff competition. From the macro environment analysis, the company has an opportunity to grow and expand due to the favorable political, technological and social-cultural trends. However, the company must seek ways to overcome their financial difficulties as well as legal matters in the future.
References
APS Company Overview (2008). Retrieved on 08/09/08. From: <<http://www. apshealthcare. com/about/CompanyOverview. htm>> Grant, R. M. (2005). Contemporary Strategy Analysis. Oxford (U. K): Blackwell Publishing. Healthway’s company Information (2008). Retrieved on 08/09/08. From: <<http://www. healthways. com/>> Healthway’s Annual Report (2006). Retrieved on 08/09/08. From: <<http://www. secinfo. com/dwFSg. v33. html#_a2>> Royer, S. (2005). Strategic Management: Creating Competitive Advantage. London: Routledge.