External Environment and Service Area Competitor Analysis PDF

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Running Heading: EXTERNAL ENVIRONMENTAL AND SERVICE AREA COMPETITOR ANALYSIS

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External Environment and Service Area Competitor Analysis

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External Environment and Service Area Competitor Analysis Introduction Health is a very vital component in any industry. It ensures there is uninterrupted work flow. Most people overlook health care, but in the end they might find themselves to blame for some of the issues that might arise. Cases are heard of employers overworking their staff or even the employees themselves overworking to attain a certain target set. Today, there are different players in the health sector that work to ensure that the well-being of workers and public in general is taken care of by provision of necessary products as well as advice on how to maintain the physical being of their bodies. Different factors come in when trying to analyze the importance of health. These may lie in the external environment surrounding a health service provider or even the competition the players in the industry face. This has led for a need to do a careful study that focusses on studying one such service category known as Merck & Co.

About Merck & Co This is an international pharmaceutical company that was founded in 1891 as a subsidiary of Merck which was formed in 1668. In Canada and the US it is known as Merck while known as MSD in other places. Its legal name though is Merck & Co., Inc. and is listed in the NYSE with the symbol MRK. The company is committed to provision of wellbeing around the world by being an innovative global healthcare leader. The major categories of products ranges from vaccines, diabetes, and cancer to clinic critical care. The company continues however to focus on modern day diseases like HPV, HIV, Alzheimer’s disease and among others. They also have

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extensive activities that deal in distribution of vaccines and medicines in areas where such are required (Jafar et al., 2003). Currently, the company is headed by Kenneth C. Frazier, in the capacity of both CEO and president.

General Issues that affect all Industries Common people (those who are not players in any industry) tend to view the success of mega establishments as luck or the ‘who knows who’ syndrome. Things are however different on the ground. Many industries, from food, healthcare, media, and transport among many have a lot of issues they go through just before giving out the final product or even reach the mega success we see today. Such factors lie in political, social, technological as well as demographic factors (Kochkina, 2019). Political or Legislative Issues The major effects that political factors may have on a business lies the economy, amendments in regulations, political stability and risk alleviation. Political systems differ in various ways from place to place. A democratic state allows citizens to elect leaders whereas such freedom is not enjoyed in an authoritarian country. Another factor presented is corruption. Some firms do grow massively by giving chunks of finances in form of bribes to ensure they enjoy certain rights deprived from competitors. Some of the political factors that affect business include data safeguarding and discrimination law, bureaucracy, tariffs, press freedom, environmental and health and safety laws, level of corruption, regulation of competition,

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regulation and deregulation, copyrights and patents and among many other more (Kochkina, 2019). Economic Factors Such factors may not be directly linked to a business but have impacts, positive or negative. They majorly affect the economy and lie in wages, set policies, state activities, tax rates and laws and interest rates. Some other economic factors that are key in a business are labor, inflation, recession, exchange rates and demand and supply. Economic factor are very key as they determine the pecuniary being of the business, which is the core factor of starting a business whatsoever (Kochkina, 2019). Demographic/Social Factors Such factors lie in the traits which are used to decide consumer purchase behavior and the preferences in products. Industries tend to identify with such behaviors hence having a target population in the making of their products. Such factors include level of income, mortality rate, age, sex, literacy levels, family size, average marriage age and marital status, religion, occupation and even birth rates (Kochkina, 2019). Technological Factors Such factors lie in the presence, development as well as convenience of modern technology. Today’s world is revolutionized in terms of computerization such that many business depend on digitized systems in their running of activities. Such factors range from computational supremacy to the efficiency of engines. Some general technological factors include automation, presence of 3D technology, wireless charging, connectivity to the internet, cryptography security,

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speed and power of computer calculation and engine efficiency. All these factors have a contribution to the way a system may work. If appropriately used, there is a higher probability of receiving high end results (Kochkina, 2019). Competitive Factors Common competitive factors are the bargaining power of purchasers and dealers, threats posed by new entrants in the game as well as contention faced from prevailing corporations. Some examples of competitive factors include changing products to fit customer needs, getting new suppliers who are easy to work with, development of more innovative goods and services and always checking on the behavior of competitors. If such factors are considerately taken into account, a business is likely to flourish amidst tight competition it may seem to appear to be in (Kochkina, 2019).

Competitor Analysis Competitor analysis involves identification of entrants in the game. This is followed by conducting an evaluation of the strategies they employ which helps in determining their métiers and flaws and are close to the products or services an industry under study offers. This is a vital part of marketing plan as it works to place the company on a forefront. Two major things required in such an analysis are service category as well as service area. This paper will take an instance of Merck & Co, basing the service area in the US and Canada.

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Delineation of the Service Area General The USA has gone through many changes in ensuring that they adopt a healthcare system that is not only cheap, but also benefitting to all citizens. One of the most debated system is the Obamacare, which has elucidated mixed reactions from the public. Many Americans have a health insurance cover through the Health Insurance Marketplace. In Canada however, things are a bit different. The government funds the national healthcare system that ensures provision of prepaid medical care and hospital care to both citizens of Canada and Permanent Residents. Major diseases felt in Canada are cancer (Malignant neoplasms), heart diseases, stroke or the cerebrovascular diseases, Diabetes mellitus as well as CLRDs, an abbreviation for chronic lower respiratory diseases. In the US, some major diseases include diabetes, unintentional injuries, Alzheimer’s, heart disease, cancer, CLRDs, stroke and cerebrovascular diseases, pneumonia and influenza and kidney disease. The situation in the two countries show that there is need for a healthcare provider to develop ways of curbing some of these diseases. This places Merck at a better position since some of the diseases mentioned above are what the company is working to treat and prevent, if not eradicate. Economic and Demographic Generally, as seen from the representation of the diseases, there is a wide range of people seeking medical attention in the two countries. This variance is in the sense of sex and age. While some diseases like Alzheimer’s are likely to affect elderly people, others cut across the age pyramid. People also will visit health facilities for testing and screening of diseases, like cancer.

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The next step after screening is people taking some drugs to prevent some diseases or to just maintain good health by boosting the immune system. This gives pharmaceutical companies as exemplified in Merck & Co. an initiative of ensuring there is enough medicine in the market. In terms of economy, we see that a good number, according to a survey in 2016, 91.2%, 67.5% being private and 37.3% government, are insured health wise. In Canada, health services are catered for by the government. This shows that the economic is status is not as bad, and therefore running of Merck will be profitable. Psychographic Factors and Health Status These are factors that related with interests, routines, values, approaches and qualities. Psychographic segmentation is key in determining or having an understanding of the way the outlined factors interact with customers. This is key for the people in deciding healthcare services as well as products that they need to use. Having spanned more than a century, Merck has definitely given people trust in her products and naturally, majority of them are likely to use products from the company. Engaging in research which helps treating some uncommon diseases makes people to also have a liking of the company in the capacity of pharmaceuticals. In terms of health status, most people tend to focus on products that are disease preventive more like vaccines hence there being a good number who subscribe to what Merck & Co has to offer.

Structure Analysis of the Service Area

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Threat of New Entrants and Intensity of Rivalry Having been in the business for long does not give Merck a monopoly in the pharmaceutical provision. There are definitely other companies that provide the same services and strive to ensure that their products and services are as well magnified to the people to receive maximum purchase. Such companies include Amgen founded in 1980 in Thousand Oaks, California. Abbvie started in 2012 found in North Chicago, Illinois. Other companies are Roche, Novartis, GSK, Pfizer, Lilly and Johnson-Johnson among many others. This has led to Merck acquainting some other companies in the game like Themis and Grail, only but to mention. This acquisitions were at great fortunes, meaning they have to be very valuable in terms of generating profits. All these companies pose great rivalry to Merck, despite having spanned more than ten decades. This is because they tend to produce more or less the same products at a possibly lower price which places Merck at a tricky position of having to work with hat the competitors decide, in order to maintain attractiveness to customers (Mann, 1966). Threat of new entrant may however be pumped up as well as cut down due to some factors. This is because Merck operates at a mammoth economy which only makes it easier for super-rich (not so many are) companies to run and discourage new entrants. Having to sell different product places Merck at a tight situation of having to recreate their products. Ease in setting up distribution channels helps new players market their goods. Strict government policies may make it hard for new entries though (Mann, 1966).

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Threat of Substitutes Some companies tend to produce substitute products to Merck’s at a subsidized rate. This means that there will not be a ceiling in which the maximum profits are earned in the industry Merck operates in. nonetheless, some of the substitutes provided might be higher in price hence giving Merck a competitive advantage. Merck has then the responsibility of provision of quality products at standardized prices that are not as biting. The company can also focus on product differentiation which gives buyers a wide variety to choose from (Dutta, 2019). Power of Consumers and Suppliers Being such a gigantic company,

Merck tends to have a lot of suppliers, meaning that

they have a little control over the price, since most of them (suppliers) fight for the opportunity. The products they give have a lower differentiation range as well as being averagely standardized. Lack of provision of credible threat in terms of forward integration to the industry weakens the power of suppliers. Supplier also do not content with other goods in the industry hence strengthening their power. This makes Merck to purchase products a t lower costs, have a wide range of suppliers and develop a close relationship with the contractors. In the case of buyers, most customers focus on quality of the product, notwithstanding the price. Some buyers have a lower income though making them go for lower prices. Having less players in the game reduces the options for buyers and will not have a control over the prices. Having a higher product differentiation gives buyers lesser options for choosing alternative firms giving same products. This helps Merck develop strong customer base. The company also needs to utilize her larger economy to create cost effective products that appeal to majority of buyers.

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Competitive Analysis Competitor Strengths and Weaknesses Major strengths that Merck’s competitors have lie in product differentiation. This makes buyers want to try new products that have not been in the market. Having been internationally based means that the company no longer holds a monopoly in the market. The companies also bear a wide technological base making them to operate on up to date machines and products. Some of the weaknesses some of the rivalries may face include capital. Having been in the industry for a very long time, Merck boasts a prosperous economy that some competitors may not live up to. This also extends to marketing and buyers trusting in the products. Critical Success Factors and Strategic Groups Some of the competencies of Merck are closeness to existence of businesses, focusing on specialty business, strength in innovation as well as the proximity to customers. The company seeks to progressively stretch and involve latest machineries and conglomerates. Acquisition of other companies has helped growing the company as a unit and development of products. Organizational repositioning has also helped realize even greater opportunities. This involved restructuring to healthcare, life science and performance materials, which also double as the strategic groups that make the larger Merck & Co Inc (Jafar, 2003).

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Conclusion Health is an important factor in any given industry. One such company focused on provision of health products and services is Merck & Co Inc., a company that has span a century. There are strategic factors the company has had in order to maintain popularity among the people and gain profits maximally. This paper has focused on looking at factors affecting industries generally as well as factoring down to competitive analysis of players in the same industry as Merck & Co Inc.

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References Dutta, C. (2019). The Generic Threat in Global Pharmaceuticals. Journal of Management in Practice (Online Only), 4(1). Jafar, T. H., Stark, P. C., Schmid, C. H., Landa, M., Maschio, G., De Jong, P. E., ... & Levey, A. S. (2003). Progression of chronic kidney disease: the role of blood pressure control, proteinuria, and angiotensin-converting enzyme inhibition: a patient-level metaanalysis. Annals of internal medicine, 139(4), 244-252. Kochkina, N. (2019). DYNAMICS OF PESTLE FACTORS OF UKRAINIAN MARKET ENVIRONMENT. Sustainable development under the conditions of European integration. Part I, 250. Mann, H. M. (1966). Seller concentration, barriers to entry, and rates of return in thirty industries, 1950-1960. The Review of Economics and Statistics, 296-307....