What’s the threat of new businesses starting in this sector?

Based on the Five Forces Model, please answer these discussion questions based on the

following scenario:

Due to recent public policy, the demand for health insurance has significantly increased. You have decided to investigate coming to market with a new product. Prior to doing so, the following questions need to be answered:

1. What’s the threat of new businesses starting in this sector?

2. How easy is it to start up in this business?

3. What are the rules and regulations that need to be considered?

4. What finance would be needed to start-up?

5. Are there barriers to entry, which give you greater power?

Many forces can affect an industry powerfully enough to qualify as driving forces. Some are unique and specific to a particular industry situation, but most drivers of change fall into one of the following categories:

• The Internet and new e-commerce opportunities and threats it breeds in the industry
• Increasing globalization of the industry
• Changes in the long-run industry growth rate
• Changes in who buys the products and how they use it
• Product innovation
• Technological change
• Workforce availability
• Market innovation
• Entry or exit of major firms
• Diffusion of technical know-how across more companies and more countries
• Changes in cost and efficiency
• Growing buyer for preferences for differentiated products instead of a commodity product (or for a more standardized product instead of strongly differentiated products)
• Regulatory influences and government policy changes
• Changing societal concerns, attitudes, and lifestyles
• Reductions in uncertainty and business risk

Use these categories to help you form your answers.

6. Identify and analyze five forces common in health care. Provide examples for each force identified.

Forces in health care:

1.

2.

3.

4.

5.