ESCUELA SUPERIOR POLITECNICA DEL LITORAL

CASE ANALYSIS
DRKOOP.COM

MEMBERS: Katherine Ricardo Jos Murillo Alejandro Ponce Evelyn Vlez

CASE ANALYSIS TOOLS COMPONENTS OF A CASE ANALYSIS REPORT CURRENT SITUATION

The emergence of medical Web sites has fundamentally changed the health care industry. Dr. Koop came into existence and how the Web has started a movement. Drkoop.com web site was launched on July 20, 1998, which was focused on providing health care information. Dr. Koop is an icon well known in U.S because his tenure as surgeon general so cofounder Dennis Upah believed Dr. Koop name was an incredible assets. Empower Health partnered with USWeb Corporation to innovate banner advertising and media placement of ads, search engine optimization, and online public relations and promotions. In November 1999, Media Metrix ranked the site as the number one health Web site. By January 2000, the company had 1 million registered users. In order to expand its business model and growth its viewing base, DrKoop partnered with eight organizations and over one dozen agreements to be the exclusive provider of health care information for particular Web sites. To build brand recognition, the company spent a $10-$15 million advertising campaign, in 1999. The big revenue generator was selling Web sites ads. The site served as a content and community portal where membership could access interactive tools, community bulletin boards, and chat rooms. Drkoop.com had a database and directory of health resources in local communities but they were limited. In October 199, PC Data ranked drkoop.com as the member one dedicated health care site. The success of drkoop.com in terms of traffic of visitors and potential future profits has led to an explosion of medical Web sites in the 1997-99 periods. Competition among the sites were stronger and getting stronger so the potential conflicts of interest and potential liability in providing inaccurate information. Dr. Koop developed an ethical code of conduct addressed to medical information providers; the same contain recommendation policies and practices for advertising, privacy and content.

 EXTERNAL ENVIRONMENT
SOCIETAL OVERALL PEST ANALYSIS

P OLITICAL / LEGAL
Potential conflicts of interests and potential liability in providing inaccurate information, diagnosis, and prescribing drugs online. Introduction of an ethical code of conduct addressed to medical information providers; the same contain recommendation policies and practices for advertising, privacy and content.

E CONOMICAL
Health care was the largest segment of the U.S economy in the late 1990s. Health and medical information was one of the fastest-growing areas of interest on the Internet. Adults in the US spend approximately $150 billion for all types of health-related products and services offline.

S OCIO-CULTURAL
The average person can now enter an internet sites so knowing more than the doctor about the ailment in question, treatment options for the ailment, and potential problems posed by the ailment. Approximately 17 million adults in U.S. searched online for health and medical information. The focus for most internet company was on marketing health insurance and/or over-the-counter drug products. Most of the company built software to automate tasks as data retrieval, claims processing, and chat with professional.

T ECHNOLOGICAL
Internet is a technological tool very useful for people at the moment of making their researches. In this case, entrepreneurs seized on the potential for providing medical information via the Internet by the development of useful

tools and programs. It is considered as a viable tool for educating the public and an ease access to consumers requirements in the health field. INDUSTRY OVERALL PORTER ANALYSIS BARGAINING POWER OF BUYERS The power of buyers is high. There are many web sites that offer similar products and services as drkoop.com. So, consumers can change their preferences toward other web sites due to additional features offered by the competition. BARGAINING POWER OF SUPPLIERS The power of suppliers is moderate. The information required for this type of services is principally obtained from books and articles by well-known physicians, journals reporting medical research, latest studies, among others. Some of them are easy to obtain and sometimes for free but others require a special pay to obtain them. THREAT OF NEW ENTRANTS The threat of new entrants is low. Internet gives the companies the opportunity to make businesses online. New entrants can create web sites to offer its products and services at low prices adding value and satisfaction to consumers. THREAT OF SUBSTITUTES The threat of substitute is high. In the market, there are many substitutes specially doctors and others such as books, magazines, health food advisories, organizations, pharmaceutical firms among others. RIVALRY BETWEEN COMPETITORS The rivalry between competitors is high. Due to the ease of entry of new companies into the e-commerce business, there are a lot of medical information providers making competition stronger each day, offering products and services with value content as drkoop website.

 INTERNAL ENVIRONMENT
SWOT ANALYSIS

TRENGHTS

Well-known as the largest web-based health information service. Strong reputation: Dr. Koop is a well-known public figure considered as the most trusted man in the health care. So, its reputation makes that the web site content is considered reliable and credible. A wide array of high-quality healthcare content and tools for users. High number of visitors and registered users. Quickly and efficient search system in the web site. Winner of many recognitions such as: o Gold medal in the category Best site for women. o Gold medal as the Best interactive assessment tool thanks of DrugChecker tool. (eHealthcare World) o Silver medal as the Best managed care site. (eHealthcare World) o Two gold and two silver awards, in recognition of its trusted content and health care information for consumers. Development of unique tools such as DrugChecker. (tool that ensure that medications did not interact with each other or with food to cause adverse reactions). Strategic partnerships: Drkoop.com has a wide variety of strategic partnerships such as eight organizations and one dozen agreements to be the exclusive or preferred provider of health care information for particular web sites.

EAKENESSES

Lack of market strategy. Low revenues compared to the necessary one to make the company profitable. Revenues are based just on advertising. Limited number of sponsorship (only one sponsor: DrugEmporium). Minimum number of drkoop.com ads. Expansion into international markets. Companys financial position.

O PPORTUNITIES

US potential market growth. Expansion internationally. Development of customized services for an aging population and other targets demographically by age. Strategic partnership. Wide variety of clients with different necessities. Rapid access of healthcare information by different mediums.

HREATS

Strong competition. Entrance of new companies. Lack of knowledge of usage of Internet tools by some consumers. Real substitutes services like Doctors. Apparition of new diseases and lack the information in the web site.

TOWS
S-O STRATEGIES To use their reputation to expand nationally. To expand the web site internationally, they should learn on the quality of its services and easy access to it. To take important data from visitors not registered and think in new services for them in order to incentive them to join in the website. W-O STRATEGIES: To find new sponsors by strategic partnerships. To find new sponsors in every new international market they get immersed. S-T STRATEGIES: To constantly verify and refresh information about new diseases, by looking on visitors search record. To look partnerships with representative hospitals, giving information about them. W-T STRATEGIES: To make strategic alliances with pharmaceutical firms in order to increase revenues, they can recommend certain products. To promote DrKoop website in other portals related to medicine or healthcare.

 IFE MATRIX

KEY INTERNAL FACTOR STRENGHTS Well-known as the largest web-based health information service. Strong reputation. A wide array of high-quality healthcare content and tools for users. High number of visitors and registered users. Quickly and efficient search system in the web site. Winner of many recognitions. Development of unique tools such as DrugChecker. Strategic partnerships. WEAKNESSES Lack of market strategy. Low revenues compared to the necessary one to make the company profitable. Revenues are based just on adverstising. Limited number of sponsorship (only one sponsor: DrugEmporium). Minimum number of drkoop.com ads. Expansion into international markets. Companys financial position. TOTAL

WEIGHT 0.07 0.07 0.08 0.06 0.05 0.04 0.07 0.10 0.06 0.09 0.09 0.06 0.08 0.08 1.00

RATING 4 4 4 4 4 4 4 4 2 2 2 2 2 1

SCORE 0.28 0.28 0.32 0.24 0.20 0.16 0.28 0.40 0.12 0.18 0.18 0.12 0.16 0.08 3.00

EFE MATRIX
KEY EXTERNAL FACTOR OPPORTUNITIES US potential market growth. Expansion internationally. Development of customized services for an aging population and other targets demographically by age. Strategic partnership. Wide variety of clients with different necessities. Rapid access of healthcare information by different mediums. WEIGHT 0.09 0.10 0.11 0.10 0.08 0.09 RATING 4 2 4 4 3 4 SCORE 0.36 0.20 0.44 0.40 0.24 0.36

THREATS Strong competition through partnerships with hospitals and media organizations. Entrance of new companies. Lack of knowledge of usage of Internet tools by some consumers. Real substitutes services like Doctors. Apparition of new diseases and lack the information in the web site. TOTAL

0.09 0.09 0.07 0.08 0.10 1

3 3 2 2 3

0.27 0.27 0.14 0.16 0.30 3.14

THE INTERNAL EXTERNAL MATRIX

Strong 3.0 I Grow IV Hold VII Harvest Average 2.0 II And V And VIII Or Weak 1.0 III Build VI Maintain IX Divest

EXT/INT High 3.0 to 4.0 Med 2.0 to 2.99 Low 1.0 to 1.99

4.0 3.0 2.0 1.0

According to the results of the IFE & EFE Matrix, 3.00 and 3.14, we have to establish growth strategies for this case.

SPACE MATRIX
INTERNAL STRATEGIC POSITION Financial (FS) +6 best, +1 worst Y A X I S (+ 2) ROA (+ 2) ROE (+ 4) Leverage (+ 3) Liquidity (+ 2) Cash Flow (+ 4) Ease of Exit (+ 4) Risk Avg. = 3.00 EXTERNAL STRATEGIC POSITION Environmental (ES) -1 Best, -6 Worst (- 2) Technology (- 3) Inflation (- 2) Demand Variability (- 2) Barriers to entry (- 3) Price elasticity of D (- 3) Competition products Avg. = -2,50

Competitive Advantage (CA) -1 best, -6 worst X A X I S (- 2) Market Share (- 2) Product quality (- 3) Life cycle (- 3) Customer loyalty (- 2) Capacity utilization (- 3) Tech know-how (- 2) Marketing, advertising Avg. = -2,42

Industry Strength (IS) +6 best, +1 worst (+ 5) Growth potential (+ 5) Profit potential (+ 4) Financial Stability (+ 4) Tech know-how (+ 4) Resource utilization (+ 4) Ease of entry (+ 5) Productivity Avg. = 4,42

6 Conservative Aggressive

0.50 -6 2.00 6

Defensive

Competitive

Yaxis = FS+ES = 3.00 2.50 = 0.50 Xaxis = CA+IS = -2,42 + 4.42 = 2.00 The Company should pursue aggressive strategies.

FINANCIAL RATIOS
In millions of dollars the amounts of operations.

ROA= -94,9/ 39.9= -2.37 ROE= -94.9/ 31.2= -3.04 CASH FLOW= -0.6 LIQUIDITY= 31.5/ 8.7= 3.62 LEVERAGE= (8.7/ 31.2) x 100= 27.88

 STRATEGIC ALTERNATIVES
o To develop a marketing strategy. With the implementation of an excellent marketing strategy DrKoop.com will have more visits to its website. The website should change its aspect to a friendly one, without missing its primary responsibility which is to provide a health service. o To manage sponsorships attention. It is very important to be sponsored. Middle and long term agreements are vital in order to obtain resources for the website. Sponsors are another useful tool to guarantee the seriousness of HealthCentral.com. The website has to be globally known and with the correct sponsoring, it will become a reachable goal. o Website re-engineering The website should have to be presented in a way that anyone can surf on it; fresh visitors need a reason to visit the page more than one time. There has to be links for new visitors, doctors, medical practices, etc. Also, it should contain a Facebook fan page and a Twitter profile.

STRATEGIC RECOMMENDATION
The most important strategy of us is: recommendations are: o Box of Suggestions The website can manage an e-mail, so the visitors can make suggestions about something that the webpage is missing. The researchers opinion is an important support, the designers can manage the suggestions in such a way that the person can notice if his/her idea was take in count. o New Academic Links The website can include links for the students who are in medicine schools, the goal is to reach not only people who want assistance or help in health topics (this has already been achieved) but students who want to become real doctors and give an optimal service to the society. o To increase the trustworthiness and credibility of its medical content This goal will be reached only with the collaboration of doctors and specialists worldwide; we are talking about named people that have transcend by their labor Website Re-Engineering. The

as doctors in their countries and also doctors that have cross local frontiers. These doctors are going to help by publish papers in our website.

STRATEGIC IMPLEMENTATION
o To create a suggestion e-mail As we said before people can suggest anything that they didnt agree with in the website. By creating the suggestion e-mail we are going to guarantee them that their ideas are valuable and we will respond the valuable mails. In some cases we will make public a determinate mail by replying it on our website, with this people will know that we are alert of any ideas that could come from them, our visitors. o To apply benchmarking strategies DrKoop.com (HealthCentral.com) should make a study of the competitors webpages. The site has to be more attractive for people, maybe by improving some of the already existing ideas. DrKoop.com website could give that plus; that differentiation factor is necessary to persist in the internet business. o Accurate Prescriptions Sometimes doctors are not really trusted because at the end people think that there are not really cured from the disease that they could have. We are going to take advantage from this factor by giving the most accurate prescription according of the symptoms that the person has.