Apollo Hospitals: A Porter Five (5) Forces Analysis

Apollo Hospitals: A Porter Five (5) Forces Analysis
Application of this model can help Apollo Hospitals of India to determine the industry attractiveness
and understand its competitive positioning in the market. The analysis can also be used to make
some strategically wise decisions that could improve the performance of Apollo Hospitals of India A
and ensure long-term survival.
Threats of new entrants

Threat of new entrants reflects how new market players impose threats to the existing market
players. If the industry will be profitable and barriers to enter the industry will be low, it will attract
more players and hence, the threat of new entrants will be high.
The threat of new entry is quite high: if anyone looks as if they’re making a sustained profit, new
competitors can come into the industry easily, reducing profits;
Ex.- Fortis, Max, Escort , WOCKHARDT and DUNCANS GLENEAGLES INTERNATIONAL
Threat of Substitute Products or services

The availability of substitute products or services makes the competitive environment challenging
for Apollo Hospitals of India A and other existing players. High substitute threat shows that
customers can use alternative products/services from other industries to meet their needs. Various
factors determine the intensity of this threat for Apollo Hospitals.
There is some threat of substitution.
Ex Telemedicine or shifting to other medicine like Ayurveda or natural care.
Rivalry among existing firms

The Rivalry among existing firms shows the number of competitors that give tough competition to
the Apollo Hospitals of India A High rivalry shows Apollo Hospitals of India A can face strong pressure
from the rival firms, which can limit each other’s growth potential. Profitability in such industries is
low as firms adopt aggressive targeting and pricing strategies against each other.
Competitive rivalry is extremely high: if someone raises prices, they’ll be quickly undercut. Intense
competition puts strong downward pressure on prices.
Bargaining Power of Suppliers

Bargaining power of suppliers in the Porter 5 force model reflects the pressure exerted by suppliers
on business organisations by adopting different tactics like reducing the product availability,
reducing the quality or increasing the prices. When suppliers have strong bargaining power, it costs
the buyers- (business organisations). Moreover, high supplier bargaining power can increase the
competition in the industry and lower the profit and growth potential for Apollo Hospitals of India A
Similarly, weak supplier power can make the industry more attractive due to high profitability and
growth potential.
Bargaining Power of Buyers.

Bargaining power of buyers indicates the pressure that customers exert on the business
organisations to get high quality products at affordable prices with excellent customer service. This
force directly influences the Apollo Hospitals of India A’s ability to accomplish the business
objectives. Strong bargaining power lowers profitability and makes the industry more competitive.
Whereas, when buyer power is weak, it makes the industry less competitive and increase the
profitability and growth opportunities for Apollo Hospitals
Buyer Power is strong, again implying strong downward pressure on prices.
PESTEL Analysis
1) Every government policy , will result in a significant impact on business rules Apollo
hospital , so politics is to increase the risk factor Apollo Hospital . Since India’s independence
in 1947 , the government established an Indian for all public health system .The Government
will not only help the public hospital , it can stabilize the operation , but also to encourage
the healthy development of private hospitals . This is the public, private hospitals
coexistence situation , so that the whole of India ‘s medical institutions ( including the Apollo
Hospital ) , to get a good space for development.
2) Economical:
 Social/Economic factor;
Due to lack of funds in India , public hospitals can not meet the needs of all Indians . In order
to maintain the public health system can effectively run , the Indian government increased
private funding of the hospital, so that private hospitals to get more profit in the case , the use
of their profits back to society, reduce the burden on public hospitals .This makes the Apollo
Hospitals have more money , equipment and optimization within the hospital environment ,
while better reputation, in order to attract more customers.
 Technology factor;
Apollo Hospitals not only has the world’s most advanced medical equipment , the world’s
leading medical technology, and every doctor of medicine are very skilled in many medical
fields have reached world-class level of treatment .With these excellent treatment conditions ,
can greatly enhance the therapeutic effect, while the low price makes the world come to
attract patients in treatment.Especially for Western people, these good and cheap Hospital ,
Western countries can not be given , so for the people of the West has great appeal .
 Environmental policies factor;
While India gives the impression that more is dirty , messy, poor conditions , but in the
overall health situation is not very ideal conditions, medical standards in India compared to
other developing countries is much better.Indian star standard management practice for
hospital and medical care for its health care standards and hardware facilities as standard,
divided Samsung, three four-star and five-star standards. Apollo hospital with its comfortable
environment , clean equipment , has won the praise given to patients with various countries .
 Globalization factor:
Forces of globalization also affects the Indian healthcare industry . Apollo Hospital active
medical outsourcing , the annual revenue for the UK to provide medical services to more than
$ 1 billion . This makes Britain the patient to see a doctor at the hospital queuing time is
much shorter . This shows that the forces of globalization for India ‘s economy because of the
rapid development of the medical industry , while the effects of globalization can be made
stronger so that Apollo Hospitals greater.
STRATEGIC GROUP MAPPING
Strategic Groups:
1) Large scale Pvt Hospitals
2) Private Hospitals with basic facilities
3) Govt. Hospitals with basic facilities
4) Specialised private and Govt Hospitals
5) Ayurveda, Unani, Siddha based Hospitals
6) Government General Hospitals eg. Sadar Hospitals, AIIMS etc
Two main variables taken are:
1) Extent of service
 Concentrated Treatments
 Basic
 Supplementary
2) Geographical Dispersion
Low
High
Strategic Group Analysis Map

Competitive Landscape
Value Proposition:
Value Chain
Value chain is divided into two types of basic activities and support activities, basic activities
included: production, marketing, transportation and after-sales support activities included: supplies,
technology, human resources or other support basic functions of production management activities
and so on.
The basic activities of Apollo hospital patient admission, hospitalization , the patient was discharged ,
hospital marketing, health checks composition, which is Apollo Hospitals profit most important part ;
and support activities are hospital infrastructure , hospital human resource management,
technology development and procurement management , which can reduce the cost of Apollo
hospital , in order to improve profits ; they are different from each other but they have each other
activity associated with it, constitutes a dynamic process of creating value , i.e. the value chain
Apollo hospital .
From the Apollo Hospital in the value chain, we find that not every aspect can create value. The
value created by Apollo, the most important is the value chain from a p0atient in hospital, so
patients hospitalized in the entire value chain “strategic sectors.” But this does not mean that other
aspects important in this value chain, all the links are indispensable.
Buying behavior analysis of consumer

Consumer Behavior in Healthcare Problem • Perceived Susceptibility • Perceived Severity
Information • Perceived Threat Evaluation • Perceived Benefits • Perceived Barriers Purchase •
Seeking Healthcare Services Post Purchase • Satisfaction or Dissatisfaction • Continue of Discontinue
67. HBM and Consumer Behavior
68. Conclusion Health strategies cannot be achieved without a deep knowledge of consumer
behavior towards health services and factors of its influence. Some of these factors related to policy
applied by health legislation, which limits consumer access to certain services and on the other
hand, there are a number of cultural factors, social, personal and psychological factors that
determine health care consumer behavior.
69. In addition, consumer behavior is the result of various stakeholders, such as doctors
recommending or prescribing consumption or use of services, opinion leaders, people who by their
social position, and influence the behavior of consumers, family members or groups who individual
belongs.
70. It is true, that health services consumers differ from consumers of other types of goods and
services, because of certain particularities arising from the specific character of the market, of the
supplier - consumer relations, of the manner how the health system is organized. Unlike other fields,
in which the number of consumers is usually limited, in the field of health services, in theory,
anybody can become a consumer at a particular moment, and consequently the potential market is
very large.
71. On the basis of the needs, healthcare-consumers can be divided into four categories: The first
category consists of persons who face severe health problems that require specialized staff and
equipment; the second category consists of persons who attend routine investigations, persons who
go to doctors' offices for treatment voluntarily; the third category consists of persons who need
optional services; the fourth category consists of persons who do not turn to medical services, who,
most of the times, treat themselves on their own.
72. Study on consumer behavior can identify those in need of care, bring them under service-care
through persuasion and ensure satisfaction of the consumers.
Key trends and future developments

Digitizing Apollo – Partnership with DxC Technology - “(re) Invent the health system of the future”
• Apollo Home Care
• Precision Medicine – A Genomic + Digital Revolution
• Trend of increasing Day Surgeries and Minimally Invasive Procedures, which involve lower ALOS is
expected to continue, enabled by advances in technology and treatment methods
• AHEL well-positioned to ride this trend, by continuing clinical superiority, technology investments
and hospital design changes to provide a unique patient experience (e.g. Radial Angio)
• These will be high-margin services, and will free up IP beds for complex care cases.
• Asset Light Expansion strategy
Competitive advantage
Competitive advantage in the Marketing strategy of Apollo Hospital –
Extensive reach across the country: With such wide presence in tier 1, tier-2 cities through primary
care, Speciality hospital care and in rural areas with “Apollo REACH” hospitals aimed at secondary
care facilities with 100-200 beds, it has penetrated to different strata of the market.
Integrated value Cain delivery model: In order to provide high-quality healthcare services it ensured
that patients receive complete packages of wellness and medical services such as consulting,
Dialysis, sample collection, liver and bone marrow transplants, spine and brain surgeries, vitro
fertilisation (IVF), joint replacement surgeries, heart, and cancer & kidney treatments etc.
Financially strong company: With a Market capitalization of Rs. 1,62,1102 million in FY 17 the Asia’s
largest and most trusted healthcare group has generated Revenue of Rs. 72,549 million in FY17 with
CAGR of 26%.
Segmentation
Segmentation helps in understanding characteristics of different groups of the population having

similar attributes. Apollo Hospital uses demographic and psychographic segmentation strategies
with variables such as age, gender, income, region, and marital status.
Since the Apollo Hospital group have a presence in a broad range of offerings in the Healthcare
market, therefore, it uses differentiated targeting strategy.

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Apollo Hospitals: A Porter Five (5) Forces Analysis

Threats of new entrants

Threat of Substitute Products or services

Rivalry among existing firms

Bargaining Power of Suppliers

Bargaining Power of Buyers.

 Environmental policies factor;

Two main variables taken are:

Strategic Group Analysis Map

Buying behavior analysis of consumer

Key trends and future developments

Segmentation helps in understanding characteristics of different groups of the population having

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