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Competition in the Health Care Marketplace

Competition in health care markets benefits consumers because it helps contain costs, improve quality, and encourage innovation. The Federal Trade Commission’s job as a law enforcer is to stop firms from engaging in anticompetitive conduct that harms consumers. The agency also provides guidance to market participants — including physicians and other health professionals, hospitals and other institutional providers, pharmaceutical companies and other sellers of health care products, and insurers — to help them comply with the nation’s antitrust laws.

Additionally, the Commission and its staff undertake a variety of other activities to promote competition in health care. One key area is research and reports on competition issues in health care and, in the past, has included such matters as: empirical studies of generic drug entry, contact lens sales, and mail order pharmacies; economic analyses of the effects of mergers involving non-profit hospitals and of state “any willing provider” laws; and a series of public hearings in 2003 on a wide range of issues in health care.

Another broad area of activity is competition advocacy. Aside from speeches to market participants, the FTC and its staff advise federal and state governmental bodies on competition issues in health care, in an effort to provide policymakers with a sound basis for assessing the implications for competition and consumers of proposed legislative or regulatory actions.

This web site provides information about the full range of FTC activities to protect and promote competition in health care markets.

Core Health Care Competition Documents

·         Statements of Antitrust Enforcement Policy in Health Care [PDF]

·         Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations

·         Pharmaceutical Agreement Filing Requirements

·         Frequently Asked Questions About Filing Pharmaceutical Agreements [PDF]

·         Overview of FTC Actions in Health Care Services and Products [PDF]

·         Overview of FTC Actions in Pharmaceutical Products and Distribution [PDF]

·         Topic and Yearly Indices of Health Care Antitrust Advisory Opinions by Commission and Staff [PDF]

Health Care Initiatives

·         Improving Health Care:  A Dose of Competition (2003 Hearings and July 2004 Report)

·         Accountable Care Organizations

·         Pharmaceutical Agreement Filings

·         Advisory Opinion Process (Health Care) [PDF] 

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Introduction

Apple Inc. is multinational company headquartered at Cupertino, California. It was founded by Steve Jobs, Steve Wozniak, and Ronald Wayne in 1976. They are into the business of designing, developing and selling the             computers, electronics, software and online services. The computers product line consists of Mac, iPod, iPhone and iPad etc. Online services are iCloud, App Store and iTunes store. Software line of the company is iOS Operating Systems, iTunes, iLife, Safari etc. The idea of the company came into being in 1974 but they sold their first computer in 1976.

Apple has generated revenue of $74,599Mn in Q1, 2015. The highest revenue is generated through the sales of iPhone with the 74,468 thousand units. The year/year change in revenue is 57% and sequential change is 116%.

Product Strategy of Apple

Product Strategy is an envisioned future for the product of the company. It determines the trajectory of the product, where it will end up. It basically focuses on the pricing and aesthetics of the product along with the value that customer is going to derive after using it. It also includes the target market and distribution tactics. Apple has been using differentiation strategy since a long time. They believe in offering an extra mile to their customers. They are innovative in their approach. This product strategy of Apple makes it different and provides an extra edge to it over its competitors.

A brief analysis of Michael Porter’s 5 Force Model (Michael Porter) for Apple:

1.      Threat of new entrants is Low for Apple as it offers differentiated products mainly targeting the high net worth customers against Samsung that targets the whole market and produces variants in all the range. It has got economies of scale and has developed a strong brand name over the years.

2.      Bargaining Power of Supplier is Moderate for Apple as it is a bulk buyer and possess strong vertical integration against Samsung that depends on third party suppliers.

3.      Bargaining Power of Buyers is Low as customers place high value to apple products and thus are very loyal. Switching cost for them is too high and they are even willing to pay higher prices for quality offered by Apple. Samsung on the other hand faces low loyalty and low switching cost of its customers. The same level product variants produced by Samsung are available under other local brand names also. Thus customer can easily switch.

4.      Threat of Substitutes is Moderate as the product of Apple is result of hard R&D which can’t be easily substituted. Its products are its own substitutes.

5.      Rivalry among Competitors is Moderate as Apple focuses on niche market and is established as an innovator. As compared to Samsung that gives too many choices to customers, Apple offers limited product choices and thus drive higher revenues.

Thus, it can be said that the company should not change their product strategy. The current product strategies pursued by company are high customer service, prestige, premium price, unique features and innovation. These strategies are discussed below:

1.      Creating new customer segment: It’s been observed that with each launch of the new product of Apple, they reduce the price of the existing product which matches to the new segment. In this way the new segment is created for their old product too. The effect of new product is not seen on the sales of the older product. This strategy help them in be in the market with the new as well as old product capturing the new customer segment.

2.      Targeting Future Prospects: Before launching any new product in the market, the market eagerly waits for its launch. Anticipation has been created before the product launch. This is due to the innovative product line company having. The products are promoted before launch as “Next Big Thing”. Apple is still way ahead of his competitors like Samsung, Amazon etc. in the market share of tablets.

3.      Customer Demand: Apple is not coming up with the new product with the drastic innovative changes from the last one they launched. But, the strategy is that the new product should address all the issues or opinions given by the customers at the launch of the previous one. At the launch of the new product these opinions are highlighted and issues addressed while promoting the new. The competitor companies are innovative in their products but not addressing customer issues do not attract the confidence of customers in their products.

4.    Apple as a company has a very complex but very strategic product strategy. It is one of the best in today’s industry given their sales and revenue records. I do not think that Apple should change its current product strategy at all. First, it is a well-known fact that Apple has continued to provide some of the best technological devices that consumers have ever experienced. Apple’s business strategy is to “bring the best personal computing, portable digital music and mobile communication experience to consumers, students, educators, businesses, and government agencies through innovative hardware, software, peripherals, services, and Internet offerings.” (Apple Inc. Annual Report, 2008). The company has a well know and well proven good track record in its products and the functionality of each. Their strategy seems to be in line with not only what is popular in the tech world but what the everyday consumer needs to survive. 

5.      There is no denying, however, that the best product strategy that Apple employs is coming up with very good products. They call it the “great product” strategy. By continuing to hold on to high standards of quality, Apple refuses to get on the bandwagon that most other device makers are using, where they pack their products chock-full of features that, while they may be impressively advanced, actually end up making operating the device actually more complicated and not at all user-friendly.

6.      Changing the current strategy could affect the success rate in the future.  In a situation as such the best approach to take is the concept of if it is not broken do not attempt to fix or correct anything related. One must think first is changing the strategy worth the risk? If leaders were to change the strategy thinking and approach to the technology world, would it make a positive difference in the end or will it cause a negative disruption in the business? Given that the company has grown to become such a global favorite, it would be best for Apple’s leaders to maintain the strategies that are currently in place. I would not be surprised if Mr. Steve Jobs left a blueprint for his vision for the company for the future.  The success rate of Apple is so high currently that other technology companies are constantly trying to reach.

Conclusion

7.      Apple’s innovation is based on the customer’s need. It is not dependent upon what their competitors are doing. It’s all about doing everything for the customers only, from launching new product or technology to creating new customer segment. With customer focus Apple is first choice of each customer segment.

Thus it should pursue its current strategy with full commitment to remain the market leader.  

References

1.      Apple Inc, Q1 2015 Unaudited Summary Data, Extracted from https://      Karl Stark and Bill Stewart, 2012, extracted from http://       Michael E. Porter. “The Five Competitive Forces that Shape Strategy”,