Introduction
Diversification is a great chance to improve the sales of the company. Equipment, appliances, or automated systems used in the preventive medicine, diagnostic test, or therapeutic interventions of illness, or for identifying, assessing, repairing, fixing, or adjusting the configuration or function of the human body for some health purpose, make up the medical technology sector (also known as clinical equipment). The medical technology sector is thus an excellent diversification for the company due to the increasing need f automated devices and machines (Russo-Spena, 2018). This paper will discuss diversifying the automotive industry by venturing into the medical types of equipment automotive business.
We need to have qualitative and quantitative information about the medical devices industry and determine whether our organization will venture into the business and diversify its markets given to the healthcare sectors. The qualitative data is research on the competitive advantage (Traub, 2017). Optoelectronics, communications, instrumentation, biology, and application development are all fields where our organization has a comparative benefit in the biomedical industry. We, therefore, have a competitive advantage and thus this information positive according to our company’s needs for diversification. Other qualitative data is information about the attitude of the healthcare provides and consumers, and other stakeholders about the project and the automated devices (Russo-Spena, 2018). The quantitative data needed is information about the rate of demand, the target number of institutions, the average cost of the projects and even the number of devices each institution may need.
The care sector is projected to be worth $2 trillion and is vulnerable to upheaval. It has shown a growing trend over the year. After a drop in demand caused by the coronavirus last year, auto sales in the United States have soared. Vehicle sales in the United States have increased year through the year already in 2021. The United States continues to be the world’s most significant medical equipment market, with $156 billion in sales (60 per cent of the global medical device market in 2020). It is estimated to reach $208 billion by 2023. The United States boasts one of the globes biggest automobile marketplaces. New vehicles sales in the United States hit 17.2 million shares for the fourth consecutive year exceeding 17 million for the first time. In terms of car value and volume, the United States is the world’s second-largest industry.
The medical equipment sector is expected to increase steadily, with worldwide annual sales rising by more than 5% per year to approximately US$900 billion by 2023. Most of the devices are electronic devices, and this is an excellent advancement than fuel devices making the medical centre advance and contribute to growth in the auto manufacturing industries. Thus it is a potential diversification of the sector considering its likely change with time (Traub, 2017).
Considering the five forces that shape competition, the industry is good to diversify and invest in and eventually increase the sales and revenue of the company. There is a minimum threat of new entrants due to the high capital requirements. This makes the medical device industry easy to invest in and maintain a competitive edge. Major factor reducing new entrance is supply sides economies of scale and unequal access to distribution channels. Since we are rooted in the industry, it is easy for our company to pass through these barriers, venture into the sector, and diversify our products to have a new market share. There is also a low threat of substitutes since the need for a specific machine cannot be changed since the function matters (Bing, 2021). There are no close substitutes, but we can differentiate our products to make them better, more accessible to operate and more advanced with high tech to overcome the substitution issue that may hinder us. The bargaining powers of customers is high since our company is known and rusted with other machines and engines. It will be easy for consumers to trust our medical-related programs. We will have affordable prices since customers are price sensitive and tailor the products to their preferences using our differential advantage (Traub, 2017). The market of the final product is available and thus a great chance and opportunity to diversify and expand our business to. The bargaining power of suppliers is low, and this is advantageous to or organization. We can access the input, raw material, expertise, and all components. Competition rivalry is a bit high in the industry, but with ave, good positioning and consumers recognize our brans and appreciate our products and thus it will be easy (Russo-Spena, 2018). There are no exits to barriers, many competitors are moderate, and there is high availability of information concerning the industry.
We will therefore have a greater chance of expansion in the medical device industry. To reduce threats of the new entrance, we will minimize efficient scales of operation, take advantage of our brand image, and tie up with distributors and suppliers (Bing, 2021). To reduce the competition, we can communicate and buy our competitors. We also will use strategies such as partnership, supply chain management and even provide incentives and value-added t reduce the bargaining power of the consumers (Russo-Spena, 2018). We will alliances o minimize the threat of substitution and increasing dependency and building supplier cost and methods knowledge to overcome the supplier bargaining power.
Conclusion
To sum up, the medical device industry is a great way to diversify, considering the growing rate of the industry and the need for changes over time. This industry has invested millions and billions of money and is elevating as time goes by. The competitive rivalry is not high, and the consumer and supplier bargaining power is average (Traub, 2017). Also, there is no or shallow threat of close substitutes, and thus, the medical device industry is easy and the best to invest in to increase sales.
References
Russo-Spena, T., Tregua, M., & De Chiara, A. (2018). Trends and drivers in CSR disclosure: A focus on reporting practices in the automotive industry. Journal of Business Ethics, 151(2), 563-578.
Traub, M., Maier, A., & Barbehön, K. L. (2017). Future automotive architecture and the impact of IT trends. IEEE Software, 34(3), 27-32.
Bing, Y. (2021). A framework for assessing the resilience of after-sales service supply chains in the medical equipment industry.
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