1. Introduction
International Private Healthcare Berhad(IHH)Malaysia is the firm we choose
to investigate. IHH is one of Asia's largest private healthcare companies and the
country's leader in the healthcare services and infrastructure sectors. IHH has a large
geographical presence in nations including Singapore, Turkey, India, and Greater
China (include Hong Kong). IHH Healthcare Berhad, based in Kuala Lumpur,
Malaysia, was formed in 1974. Dato' Mohd Azlan bin Hashim is the chairman of IHH.
It has provided a wide range of integrated high class medical or healthcare services
including small ranges clinical services, hospitals, and highly specialized care that
treat variety of acute medical concerns. The number of the people employed in IHH is
approximately 65,000 units in over 80 hospitals which located in ten countries. IHH's
profitability and sales are continuing, according to the Main Board of Bursa Malaysia.
We will explore IHH in greater depth in this assignment, based on an analysis
of both the internal and external environments. We will describe the problems that
IHH is facing and examine the scenario using strategic management concept tools.
There are IFE and EFE Matrix, CPM, SWOT analysis, SPACE Matrix, I/E Matrix,
GSM, OSPM Matrix. From these consolidated analysis, we will conclude strategy
recommendation to IHH which are beneficial and more compatible to their business
model and operation.
Question 3: The External Environment
3. A General Environment
3A. 1 Demographics
Demographic factor is a social-scientific study of human populations in terms
of ages, gender, race/ethnicity, density, occupation, psychological behavior and others.
It is one of the external environmental factor that influence IHH Healthcare that give
arise to opportunities or threats for the company based on Malaysian population.
According to Malaysia's Department of Statistics' official webpage (Health
Statistics derived from Ministry of Health Malaysia(MOH)), the population's deaths
per 1000 Malaysians increased by 2.67 percent from 5.17 deaths per 1000 Malaysians
in 2019 to 5.308 deaths per 1000 Malaysians in 2020. Furthermore, from 16.643
births per 1000 Malaysians in 2019 to 16.451 births per 1000 Malaysians in 2020,
there is a 1.15 percent decline in (Natality rate) population births per 1000 Malaysians.
According to the Department of Statistics Malaysia Official Portal's revised
population projection for Malaysia from 2010 to 2040, the population age structure
has changed dramatically from 2010 (27.4 percent of 14-year-olds; 67.6 percent of
15-64-year-olds; 5.0 percent of 65-year-olds) to 2040 (27.4 percent of 14-year-olds;
67.6 percent of 15-64-year-olds; 5.0 percent of 65-year-olds) (18.6 percent of 14 years
old or below group; 66.9 percent of group between 15 to 64 years old; 14.5 percent of
65 years old or above group). Due to the increase in the total dependency ratio (the
proportions between working and non-working population) from 47.8 non-working
age people in 2010 to 49.5 non-working age people in 2040 per 100 people of
working age, the total dependency ratio has increased from 47.8 non-working age
people in 2010 to 49.5 non-working age people in 2040.
Based on the results of statistics, we can conclude that there are increases in
deaths of Malaysian due to accidents, diseases or even natural life cycle and decreases
in fertility rate of Malaysian due to possibly the stress from living, financial distress
from COVID pandemic and drops in level of working age populations. The increase
in death rate is an opportunity for IHH Healthcare to provide healthcare services
especially emergency ICU etc. The decrease in birth rate is a threat to IHH Healthcare
as there will be low services rendered by pediatric and maternity specialists to
Malaysian. The increase in total dependency ratio is a bad sign for IHH Healthcare
long term strategic planning. It is because the financial burden of working-age
populations will increase continuously till 2040 in order to compensate for the
medical expenditures applied by non-working age populations since they are the
income-generating population for household/ domestic units. Inversely, ageing
population increases from 2019 to 2020 that provide additional opportunity to IHH
Healthcare to provide more healthcare services to them since they are categorized as
high risk-age patients.
3A. 2 Economy
One of the important external environments that the company needs to
consider for the strategy management and risk assessments that is the economy
environment. Economy factor are the underlying market and economic statistics that
are taken into account when measuring an investment or business valuation. On the
other hand, when valuing an investment besides the inherent value of the asset, these
buyers and businesses have to pay attention to outside economy influences like
earnings, interest rates, political intervention, guidelines, legislation, tax rates and
jobless as well as including supply and demand, on the marketplace.
To begin with, Malaysia's average inflation rate has increased by 3.64 percent
(from 1.14 percent in 2019 to 2.5 percent in 2020). The impact of inflation on the
healthcare business might be severe. Inflation may worsen the pay disparity between
public and private sector physicians, forcing physicians to seek higher fees from
private sector customers and increase insurance premiums. Fewer payers would be
able to withstand increases in healthcare expenditures, resulting in a decrease in the
number of insured or underinsured individuals. As insurance companies attempt to
reduce provider payments, narrow their networks, or restrict patient access to medical
services as they acquire market dominance, This does not even take into account the
pressures that physicians and hospitals will face from both sides.
Besides, there is an increase of average price of medical treatments, supplies
and professionalism consultations due to the higher demand from COVID infected
populations and increased ageing population in 2019. According to Medical Cost
Trend Report 2020 by PwC Health Research Institute, COVID boost mental health
utilization which is a big opportunity that help IHH Healthcare to offer disease
management programmes that address stigmas and integrating mental healthcare into
primary care at worksite clinics or hospitals.The reason behind the increase in average
price of medical treatments, supplies and professionalism fees is that there is frequent
introduction of lockdown and labour shortages in healthcare industry. In 2021, the
COVID pandemic has dramatic impact on Malaysia’s workforce and production
especially healthcare service providers which require extensive highly qualified
professionals such as consultants/doctors,nurses, anesthesiologist / physician,
pharmacists, pharmaceutical scientist,nutritionists and so on. Healthcare companies
are always in short supply and subject to more competitive recruiting landscape as
compared to the unpredictable and fluctuating demand for treatment against COVID
and other emergent illness. Therefore, it is a threat for IHH Healthcare to put pressure
on their top management to set an appropriate pricing decision to cover input
cost(wages, medical supplies(vaccine),etc.) in order to maintain long term operational
continuity.
3A. 3 Political and Legal
There is a government grant or incentive that provides budgeting help to the
healthcare business, including IHH Healthcare, with a budget of RM 1.4 billion
allocated to the National Development Scheme. This programme helps to strengthen
the domestic supply chain and boosts the manufacturing of medical equipment made
in the United States. There are also RM 19 million in concessions for the privatisation
of medical laboratories and retailers. The Peka B40 project, which has a budget of $19
million, aims to meet the non-communicable disease (NCD) healthcare requirements
of the poorest 40% (B40) of families. A particular programme allocation for health
facilities and medical supplies is also included in the budget. The following items are
included in the budget's development segment: urban and rural healthcare services,
new hospitals, and research and development.
Pharmaceutical companies can now apply for pioneer status or an investment
tax deduction under the Promotion of Investments Act of 1986, as well as the
BioNexus status tax incentive. The government is attempting to market Malaysia as
an attractive investment site for pharmaceutical product producers in view of the
severe public health issues caused by the COVID-19 epidemic. To that purpose, the
government has proposed a new incentive for pharmaceutical product producers,
granting qualifying enterprises a preferred income tax rate of 0% to 10% for the first
ten years, followed by a preferential income tax rate of 10% for the next ten
years.Other grants, import duty and/or sales tax exemptions for machinery, equipment,
and raw materials may also be considered for such businesses. From November 7,
2020, until December 31, 2022, MIDA will accept applications for this incentive.
Companies that export private healthcare services are entitled for an income tax
exemption equal to 100% of the value of the increase in such services' exports, which
can be offset against 70% of the statutory income earned from such services, subject
to certain circumstances. The government has recommended that the aforementioned
tax exemption be extended for another two years, from YA 2020 to YA 2022, in order
to encourage Malaysia's health tourism business. IHH expects to alter its tax budget
policy in 2020 as a result of these new amendments.
3A. 4 Social cultural
For its patients, people, organisation, environment, and community as a whole,
IHH Healthcare offers a variety of sustainability features. IHH's patient satisfaction
management system includes measures such as patient surveys, feedback channels,
and complaint reports for engaging with patients. To measure the quality of our
services, certain performance metrics are submitted to the Group's Senior
Management. IHH Healthcare may also use this information to identify areas for
improvement and establish the appropriate remedial steps, resulting in increased trust
and improved patient care. This might result in a higher client retention rate and better
customer relationship management, resulting in long-term loyalty and trust. The
Group's overall workforce, as of 30 September 2020, consists of 52,261 individuals
spread throughout six home and growth regions. Turkey and Central and Eastern
Europe account up the majority, followed by India, Malaysia, Singapore, and Greater
China. IHH Healthcare believes that through embracing diversity, they would be able
to become the preferred healthcare employer in the nations where they operate. The
hiring methods are non-discriminatory, and equal opportunity is practised at work.
The Group-wide Workforce Diversity Policy, which strives to foster inclusion in the
workplace by embracing diversity and understanding and appreciating individual
differences, reinforces this. IHH Healthcare staff and employers do not discriminate
against diverse aspects of human forms. IHH's success as a top premium healthcare
provider is largely due to its clinical and non-clinical workforce. They offer a pleasant
working atmosphere, excellent perks, and advancement possibilities to its employees.
IHH Healthcare has a code of conduct that explains the company's beliefs and
gives direction on anticipated business standards and behaviours to all employees.
Next, the whistleblowing policy provides a conduit for workers to express their
concerns while also assuring them that they would be protected from retaliation if
they do so. In addition, IHH Healthcare promotes an Anti-Bribery and Corruption
Policy (ABC Policy) that expands on the core principles enshrined in the Group's
Code and encourages all employees to follow anti-corruption laws that apply to the
Group, including anti-corruption laws in all countries where the Group operates. As a
steward of the health-care system, Waste reduction techniques, such as 3R (Reduce,
Reuse, Recycle) activities, are implemented and raised awareness among staff at IHH
Healthcare. In the long run, they want to minimise our waste output even further and
lessen IHH's environmental impact. To avoid this, they strictly adhere to national
waste management standards and hire qualified contractors to dispose of clinical
waste properly.
IHH Healthcare Berhad (IHH) offers a comprehensive variety of medical
services, including clinics and hospitals, quaternary care (very specialised
pharmaceuticals and treatments), and medical education. The Khazanah IHH
Healthcare Fund (KIHHHF), a joint venture between IHH and Khazanah Nasional
Berhad, provides medical assistance and primary health care to rural populations in
Malaysia, Singapore, and Turkey. The KhazanahIHH Healthcare Fund's public
relations efforts are targeted at developing brand awareness, reaching out to an
underserved segment of the Malaysian community, and portraying the fund as a
critical CSR initiative that would meet their healthcare needs. I made an informed
guess. They were able to do this by sharing patient stories and findings with both
traditional and digital media outlets.
3A. 5 Technology
To adapt to the fast-changing industry in the technological environment, IHH
Healthcare must have the right decision in technology technique application to boost
its business and develop potential growth and maintain its competitive advantages as
a professional healthcare services provider.
IHH Healthcare is one of the world's first medical organisations to employ
artificial intelligence (AI) to forecast hospital costs. Predictive systems can help
Malaysian patients by offering more precise and individualised cost estimates and
allowing them to make more educated treatment decisions. More significantly, prior
to enrollment, patients have more control over their medical bills, allowing them to
focus on getting healthier. The tool improves inpatient invoice estimation accuracy
by 80%, boosting patient trust and, in the long run, improving the health curve.
Even in the event of a COVID pandemic in 2020, IHH Healthcare continues
to provide healthcare to the Internet of Things (IoT). Virtual consultations are now
available from all major nations especially in most of the countries in Asia such as
Malaysia, Singapore, India and others. Copyrights and patents worldwide now can
access to high quality medical services, ranging from consultations to medication
delivery, without leaving home. In addition, IHH Healthcare has integrated mobile
apps into inpatient services in a wide range of markets, so patients can quickly and
easily access booking services, medical data, and health information.
Global telemedicine service has been developed by IHH Healthcare. Parkway
Shenton provides a consulting service through the internet. Patients can use the
MyHealthConnect mobile app to speak with a general practitioner (GP), purchase
eMC and referral slips, and transport medications from the convenience of their own
homes or offices. Acibadem's online physician services enable patients to access
remote testing, diagnostics, and testing services from the convenience of their own
home or office via video chat sessions with doctors. Online physicians are available
at all 21 Asibadem hospitals in Turkey, Bulgaria and Netherlands. Microsoft Teams
is available for remote consultation at five Gleneagles Global Hospitals, Continental
Hospital, and 23 Fortis Hospital. The service has sparked a lot of curiosity among
patients since its inception in March and April of this year.
In Hong Kong, the Gleneagles Hospital owns remote consultation service that
is offered to current cancer, gastrointestinal, and hepatology patients. Following the
visit, a member of the hospital staff will call the patient to arrange for medication
delivery. As needed, pharmacist-led medication counselling will be offered. In the
future, the programme may expand to include more specialties and chronic illness
patients, such as those suffering from high blood pressure, diabetes, or respiratory
problems.The Cerebral Plus (C+) project between IHH Healthcare Malaysia and
Turkish enterprises was successfully launched after more than 62,000 hours of hard
work. Pantai Hospital Ipoh (PHIbespoke) launched its in-house hospital information
system on May 1st, and system updates have begun across the Malaysian network of
16 hospitals. As a consequence of this collaboration, the IHH Group will be able to
exchange, implement, and benefit from best practises, emphasising the synergistic
benefits of global operations. The new HIS-based C+ system at Asibadem Hospital is
more efficient.
3A. 6 Natural Environment
IHH Healthcare takes strict precautions to minimize its impact on the
environment by using natural resources efficiently and disposing of waste properly.
Treatment by-products such as used syringes and radioisotopes used for diagnostic
and therapeutic purposes are often dangerous. Improper disposal of these by-products
can adversely affect the environment and public health. Waste management is subject
to strict rules and regulations in the countries in which we operate. Our hospitals and
clinics are aware of the significant environmental and social risks of irresponsible
waste management. To avoid this, they adhere to national waste management
standards and employ qualified contractors to properly dispose of clinical waste.
Pharmaceutical waste treatment, cytotoxic waste treatment, expired drug treatment,
waste treatment, chemical safety, clinical waste treatment, household waste
management, confidential waste management are clinical and general waste.
Promote efficient use of resources and improve overall waste management.
IHH will continue to implement the recycling program launched in 2018 in 2020 to
raise awareness of the importance of recycling for hospital staff and improve
recycling activities within IHH. Employees are regularly informed about the recycling
program through appeal. This initiative, led by the Department of Environmental
Services, collects recyclable waste such as plastic, glass, aluminum and paper,
documents the weight of each category and tracks progress. This year, thanks to this
effort, 20.25 tonnes of harmless waste was diverted from landfills. Reducing the use
of disposable plastics and takeaway packages is one of their 3R goals. According to
the Food and Beverage Department, IHH staff should bring their own containers and
avoid using plastic straws in the hospital cafeteria. GHK's IT department has
implemented a computer recycling program in accordance with the Producer
Responsibility Scheme established by the Hong Kong Environmental Protection
Agency (EPD) (CRP). This initiative aims to reduce IHH emissions of potentially
dangerous e-waste by reusing, recycling and remanufacturing computer technology in
an environmentally friendly way.
3.B Competitive Forces/Industry - Porter Five Forces Model
3B. 1 Company’s Competitive Rivals/Competitors
The healthcare business in Malaysia, especially IHH Healthcare, is under
intense competition. The primary drivers are the market size and competitors’
capabilities. Numerous competitors who sell similar products will decrease the
attractiveness of IHH ’s appeal in market. In the industry in which IHH works, there
are a number of established rivals, including KPJ Healthcare Berhad and TMCLIFE
Healthcare Group.
One of the effects when the rivalry among competitor level is moderate to
high is higher exist barriers and high fixed cost. It is because investment in capital and
operational assets are extremely large especially investment in highly advanced
laboratory apparatus, surgical/laser treatment machines,heavy professionalism
remunerations, expensive pharmaceutical materials and other relevant cost to conduct
countless of complicated scientific-related operations.
IHH has low level of rivalry among competitors because the products and
services provided by IHH and their competitors’ one are highly differentiated from
each other. However, it has a high level of rivalry, which implies that rivals are
aggressively pursuing each other's markets (competing for the same people seeking
identical medical care and consultations) and aggressively pricing items (there are
many alternatives to medical services and products in the market with different brands
and functions). This poses a possible cost to all rivals. High intensity of competitive
competition leads to direct battle of a sector among other peer industries, minimize
the potential profit earned for current enterprise. Apart from that, IHH is the market
leader in the healthcare area, which reduces rivalry intensity.
Besides, the company with high level of customer brand royalty or high level
of customer switching cost will cause low level of rivalry too. This can be shown by
the cost of IHH for each brand are differentiated to each other with the same products
provided. Therefore, consumers may face difficulty to switch the brand from one to
others because they may sacrifice expensive costs of long-term medications
expenditures or for some patients who requires constant intensive medical care from
IHH(get used to the treatment methodology provided by IHH in order to maintain
health condition). In short, there are many high and low level of rivalry among
competitors that leads to overall moderate level of rivalry among competitors faced by
IHH Healthcare.
3B. 2 Potential New Market Entrants
IHH does not represent a serious threat to new healthcare entrants. This is
because new entrants require considerable initial investments or financial demand to
enter the market. These first investments in healthcare consultations are in funding,
resources, and technology. As a result, new entrants to the market are discouraged,
and the risk of new entrants inside the sector is lowered. Profitable markets attract
new participants, thereby reducing profitability. Competitors will not be able to make
money unless there are big and long term barrier to entry, like patents, economies of
scale, capital requirements or governmental regulations.
Shortage of healthcare professionals is another contributing factor to this high
entrance hurdles. When potential rivals arrive, they must ensure that they have
sufficient medical practitioners and professionals. This is because they may have
difficulty offering services to patients if they do not have all of those competent
people. Furthermore, potential customers will only pick a hospital that has specialists
in specific fields. As a result, the hospital will lose market share due to a dearth of
expert doctors. All new competitors will face difficulties in obtaining private
specialists, which will be a barrier to entrance. Because the supply of private
specialists is limited, hospital groups with a good reputation will have an advantage
over the new hospital in attracting potential specialists. Patient records are a vital asset
for the healthcare sector, but they may also be a barrier to entrance. KPJ has a
database of previous patients and keeps all of their medical details in one place. This
approach allows clinicians to learn about their patients' medical histories. Because all
of the patients' data are already in the hospital, people will have to repeat their
medical history to a new doctor, which will be cumbersome. As a result, competing
with the established healthcare business will be difficult for the newcomer.
Furthermore, government policy is the second factor that reduces the threat of
new entrants. The government has established the standards that new entrants must
meet in order to begin their operations in the industry (compliance with the Public and
Private Healthcare Facilities and Services Act, as well as MOH/MDA certificate
approval). Only competent Malaysian medical practitioners will be granted a licence
to operate. Foreign practitioners who desire to practise in Malaysia must first seek
clearance from the Malaysian Medical Council (MMC) (for full registration, yearly
practising, and temporary practising certificates) and the National Specialist Register
(NSR) (for specialist credentialing). In addition, after gaining certification from the
Malaysia Healthcare Travel Council (MHTC), new entrants must register with the
Malaysia Healthcare Travel Council (MHTC). For the application of registration as a
certified operational healthcare service provider in Malaysia, there are several
bureaucratic administrative procedures and demanding Malaysia eHousemen practical
training that might take years to complete. As a result, the danger of new entrants into
the business will be reduced. Furthermore, powerful brand names are the third factor
that reduces the danger of new entrants. If strong brands are required for competition
to succeed, new entrants will need to increase their market attractiveness. Strong
labels have a positive impact on IHH Healthcare. Aside from that, the entry barriers
are significant, making it difficult for new rivals to enter the industry.
3B. 3 Bargaining Power of Consumers
Bargaining power of consumers is one of the Porter Five Forces Model where
the consumers can exert that company to give low selling prices, excellent customer
services, and high-quality products (Buyer Bargaining Power Definition, 2021). The
consumers’ power is high when there are few consumers for the products or services,
low switching cost on the products or services, company products are undifferentiated
or inexpensive, decrease in prices of substitute products, and consumer buy in high
volume.
Bargaining power of consumers for IHH is considered as moderate. It is
because healthcare industry provides two major category of products or services
nature to its consumer that are complicated illness treatments for higher severity
condition of patients(chronic cases) and undifferentiated illness treatments for lower
severity condition of patients (common cases). Customer bargaining power of chronic
cases is low because they requires high switching cost/alternatives to change their
healthcare services in term of effectiveness(medical technology/medication),
timeliness(period of treatment)and trustworthiness(reputation of achievement by IHH
compared to other competitors). Therefore, the price for consumer to substitute
chronic healthcare services is high for consumers. Furthermore, customer bargaining
power of common cases is high because they requires low switching cost/alternatives
to change their healthcare services since most of the healthcare services required are
undifferentiated and easily to be achievable such as aesthetic treatment with beauty
purposes(have many brands and beauty care ranges), common diseases like flu and
sneezing and others that won’t cause detrimental effect even they delay or ignore the
treatments. Therefore, the price for consumer to substitute common healthcare
services is low for consumers. Furthermore, because customers are now aware of
alternative suppliers and healthcare information is openly available to the public, IHH
must pay attention to their performance as well as the quality of the services they
provide to patients. Patients will move to other healthcare providers who are more
reputable in terms of quality and performance once they realize IHH 's performance is
not excellent or the quality of services is low.
The income of the buyer is also one of the elements that influences the buyer's
bargaining power. If their income is poor, they are more likely to seek treatment in a
public hospital, which will be able to give treatments at a cheaper cost to them.
Customers with a greater income, on the other hand, are more price averse. Instead of
focusing on the cost, they would prioritize the greatest healthcare providers who can
supply them with superior services. When they are unhappy with the services offered,
this category of customers will transfer to another healthcare provider. IHH 's
reputation will be vital to examine because it provides healthcare to those who are
suffering from life-threatening illnesses. Furthermore, because customers are now
aware of alternative suppliers and healthcare information is openly available to the
public, IHH must pay attention to their performance as well as the quality of the
services they provide to patients. Patients will move to other healthcare providers who
are more reputable in terms of quality and performance once they realize IHH 's
performance is not excellent or the quality of services is low.
Interventions from international specialized medical institutions such as the
government and the World Health Organization (WHO) are also affecting buyers'
bargaining power. Strengthen its power by coordinating and supervising pricing
policies with other medical policies (health insurance, physician costs, hospital fees,
etc.) to meet national goals. B. Brand premium regulation to develop pricing
mechanisms to close the price gap between non-patented originators and generics.
IHH Pricing Consumer Health Services and Products Without Exceeding
Government-Set Highest Prices to Obtain Affordable Generic Drugs and Protect
Consumer Protection at Fair Prices It is illegal to do. Therefore, IHH has products
and products compared to competitors to provide consumers with reasonable /
acceptable value-based pricing in order to improve customer retention and gain
competitive advantage. You need to carefully plan your service pricing strategy.
3B. 4 Bargaining Power of Suppliers
A study of how easy it is for suppliers to increase their pricing This is
influenced by the number of suppliers of each critical input, the uniqueness of their
product or service, the supplier's relative size and strength, and the cost of switching
from one source to another. According to these arguments, each healthcare service
provider has its own individual operational systems, pharmaceutical formulations, and
proprietary technology for consultations and treatments, thus enhancing suppliers'
bargaining leverage with IHH Healthcare. As a result, IHH Healthcare faces
competition from the likes of Manipal Hospital, KPJ, Medanta, Apollo Hospital,
MAX Healthcare, Portea, Fortis, Global Hospital, and Mylabyogi. Suppliers improve
their market competitiveness by increasing pricing or decreasing the quality of their
goods and services. As a result of businesses not being able to recoup changes in their
own costs, the profitability of an industry would go down.
IHH works with a variety of suppliers, including biotechnology, drug
development, medical devices, and suppliers to support healthcare professionals. IHH
considers the vendors that supply medical devices to be the main suppliers. Medical
devices are essential because IHH uses a wide variety of medical devices in its daily
work. However, technological advances have brought about major changes in medical
devices. There are many new and updated medical devices on the market with
advanced features. All of these new devices help IHH increase efficiency and
effectiveness in completing day-to-day tasks. However, the number of suppliers that
can supply all of these medical devices is limited, limiting IHH's ability to purchase
them. All these medical devices have many buyers, but only a few large suppliers. As
a result, suppliers can afford to negotiate with IHH regarding prices and delivery
times. Suppliers can set higher prices, but IHH has little room to negotiate with them.
One of the vendors for IHH is a medical practitioner. To serve its patients,
IHH need trained nurses and specialists. As a result, medical practitioners have a lot
of bargaining leverage. IHH will acquire a competitive advantage over competitors by
having a group of competent personnel. In Malaysia, however, there is a scarcity of
expert doctors. As a result, hospitals will compete for talented specialists to hire. The
majority of hospitals will make every effort to reward specialists with increased
salaries and incentives. If IHH chooses not to compete with its competitors, medical
practitioners will look for jobs in other sectors of the healthcare business. As a result,
specialty doctors will have the finest bargaining position when it comes to working
conditions and compensation structures.
In terms of medication development, IHH relies on a small number of
suppliers to provide them with the specialized tools, materials, and equipment they
require to produce their medicines. Special instruments for medication development
will be extremely complex, and there will be no replacement items. This means that
moving to another provider will be expensive for IHH. IHH will have difficulty
progressing in their growth if suppliers quit providing. As a result, the supplier for all
of those specialized equipment and supplies will have more leverage in negotiating a
better pricing or delivery schedule. Overall, IHH 's supplier power is strong since they
rely on a few key suppliers to deliver the items they require on a regular basis.
3B. 5 Threat of Substitute Products
When a market has close substitution or replacement items, the chance of
customers to move to alternatives in reactions to the price changes increases. This will
decrease both suppliers’ power and market appeal for IHH. The primary sources of
healthcare services (treatment) substitutes are healthcare supplements, fitness or gym
goods and services, TCM (traditional Chinese medicine) and other traditional cures,
and others. There are various customer groups that generate various stereotypes and
contentions about alternative healthcare options and which products or services are
the best (with the fewest side effects and the greatest medical effectiveness).
Additionally, consumption of all of these healthcare service-related substitutes
is increasing. However, differentiation is required in terms of alternative efficacy, cost,
stereotype, and other considerations. For IHH healthcare products or services, they
provide the highest cost or expense due to the high cost of input materials in
comparison to other substitutes. However, it is claimed that western medication
treatment is the most effective (shortest time and highest recovery rate) alternative
based on feedback from consumers who attempt to substitute for different products or
services in healthcare activities. IHH Healthcare products or services are frequently
associated with numerous side effects, both short and long-term, due to the fact that
western medication is notorious for its side effects (active ingredient), whereas
healthcare supplements and traditional medicine are far superior in terms of side
effect minimization (they are derived from natural material input such as herbs,
natural food extracts, etc.).
Different demographic and psychological background of consumers will affect
their purchasing decision among different substitute alternatives for healthcare
products or services as well. For an instance, the past experiences of treatment, the
personal perception towards alternatives, the ethnicity of patients, the level of income
of consumers, and influences by external parties towards consumer(educational
background, family members and associations involved). The alternative product
threats are moderate in the short-term and medium term, but it might be higher in
longer terms since the majority of consumers are preferably choosing substitute
alternatives over IHH Healthcare since long-term healthcare maintenance and
treatment should be in natural way as it is most appropriate and scientifically
approved.
Reference Links:
1. https://www.macrotrends.net/countries/MYS/malaysia/death-rate
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4. https://www.ihhhealthcare.com/about-us/sustainability/sustainability-journey
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10. https://www.cleverism.com/bargaining-power-of-suppliers-porters-five-forces/