Resmed Strategic Management

Competitive Environment

ResMed’s competitive environment is analysed with Porter’s five-forces model, which includes buyer power, supplier power, threat of new entrant, threat of substitutes and rivalry among competitors to deduce the profitability of the organisation.

        The threat of entrants is low due to the highly-complex barriers of entry. R&D expense is high as firms are expected to manufacture innovative and functional products and purchase efficient machinery to remain competitive in the industry. Governments have also implemented various regulations for the manufacture and distribution of healthcare equipment, thus new entrants are unable to comply due to lack of experience. Additionally, brand reputation is significant as representation of the high quality healthcare products and services ; undeniable than brand value is essential when consumers purchase healthcare equipment. This increases new entrants’ expenses to build customer loyalty. (Porter, 1979). To remain competitive, firms focus on price, reliability and quality of products, customer support and efficient distribution channels. (ResMed Inc, 2016).

The threat of substitutes is low, as ResMed produces sophisticated healthcare equipment. The market for healthcare equipment is niche, due to its products speicifications and functions.  Conversely, all dental equipment and surgical procedures functioned to treat SDB and other respiratory disorders are considered as substitutes. Due to the rapid development of technology in the healthcare industry, it is undeniable that ResMed’s product has a high risk of turning obsolete.

        ResMed has existing competitors like Philips and Cephalon have greater financial, research and manufacturing resources compared to ResMed. The intensity of rivalry is forecast to increase due to the fast growth of the industry and increment of chronic diseases. This motivates existing firms to enhance R&D to gain competitive advantage.

        The power of buyers is high due to the increased competitors in the industry. Due to globalization, consumers gain access to broad range healthcare products and services internationally, whereby consumes select products of optimum value. As switching cost is low, ResMed differentiates by constantly producing innovative and recent healthcare equipments.

        Suppliers do not posses a high bargaining power as raw materials are easily available. However, some of ResMed’s product materials are unique, thus obtained form single-source suppliers ; resulting in supplier’s power to increase knowing the extent ResMed is dependable on them. (ResMedInc, 2016).