Dipti Bhende Ccilia De Rovere Aurlie Franois Sarah Huet Euzhan Mancee Ccile Nabias Bndicte Thry

MARKETING PLAN E-MERGENCY

Jean-Franois David

1 E-mergency Project

Abstract
We are a team of researchers and managers. We want to create a package of services to increase the efficiency of emergency services offered in France. Thanks to our experience in this domain (some of us are doctors), we are aware of the difficulties encountered by urgentists and would like to best respond to these problems with effective solutions. The solution we propose is a package deal. It includes the following services: A medical call-centre A software that enables to find the best diagnosis as fast as possible A possibility to access to the medical data of patients Telephony, and live video and image sharing The use of such a solution would provide better services to the patients, save time and money for the hospitals as well as improving the reputation of the hospital. Here is the principle of our package. OK

3- The medical agents dont know how to react 2- The medical agents go to the place 4- The agents call our callcenter and send live videos 1- Someone calls 15 or 18

DSS (Decision Support System )

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5- Our operators find the method to adopt thanks to the decision supports system and the emergency medical file. They can be helped by a doctor.

Table of Content
MARKETING PLAN....................................................................................................................................................1 E-MERGENCY..............................................................................................................................................................1 ABSTRACT....................................................................................................................................................................2 I. CONTEXT...................................................................................................................................................................4 III.1 METHODOLOGY................................................................................................................................................5 III.2 PROCESS..........................................................................................................................................................5 YES.......................................................................................................................................................................5 III.3 PLANNING........................................................................................................................................................6 IV.1 EXTERNAL ANALYSIS: THE COMPETITIVENESS OF THE MEDICAL ENVIRONMENT IN 2006 AND THE PREDICTED FUTURE CHANGES..................................................................................................................................................................7 IV.1.1 Analysis of the competitiveness of the medical environment..................................................................7 IV.1.2 Future environment changes predicted..................................................................................................8 IV.2 INTERNAL ANALYSIS: CRITICAL SUCCESS FACTORS WITHIN THE MEDICAL MARKET AND E-MERGENCYS POSITION AND CORE COMPETENCIES..........................................................................................................................................................9 IV.2.1 Critical success factors..........................................................................................................................9 IV.2.2 E-mergency position this chapter a bit too early in the presentation..............................................10 IV.2.3 Core competences................................................................................................................................12 IV.3 EXTERNAL AND INTERNAL ANALYSIS: SWOT.....................................................................................................12 OK, BUT A BIT TOO GENERAL................................................................................................................................12 IV.4 INNOVATIVE IDEA............................................................................................................................................13 IV.4.1 The whole package..............................................................................................................................13 IV.4.2 The call center.....................................................................................................................................14 IV.4.3 IP phone and webcam..........................................................................................................................16 IV.4.4 DSS (Decision support system)............................................................................................................17 IV.4.5 Emergency medical file.......................................................................................................................17 IV.5 OUR STRATEGY..............................................................................................................................................18 GOOD.................................................................................................................................................................18 IV.6 RECOMMENDATIONS........................................................................................................................................19 OK......................................................................................................................................................................22 IV.7 DISCUSSION...................................................................................................................................................23 REFERENCES.............................................................................................................................................................24 APPENDICES..............................................................................................................................................................25 APPENDIX A....................................................................................................................................................26 APPENDIX B.....................................................................................................................................................28 APPENDIX C.....................................................................................................................................................30

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I. Context
In France, for many years, the emergency services have been overbooked and the queues are endless. Out of 14 million of people who were brought to the emergency department, only 20% were hospitalized in 2003 in France (source: sant gouv.com). This underlines the importance of pre-hospitalization diagnosis in order to simplify this service. OK Moreover, research findings show that almost half of the diagnosis and medical procedures implemented (45% in the US - Academy of Sciences 2003) dont correspond to their scientific recommendations. OK Due to this they dont deliver awaited results. Certain medical errors committed lead to a huge number of deaths every year (about 20,000 each year in France - Wikipedia). If we could avoid such basic yet fatal errors we would save a lot of lives and even resources (These errors correspond to 30% of the medical expenditure in France). YES Thus, emergency services need new processes to improve their efficiency in terms of time and quality. To this purpose, we propose our own package of services called e-mergency. This entails a call center for the SAMU, the firemen and other physicians that would enable them to have immediate advice from specialized emergency doctors. Don't they already have? With this advice, they could decide at this preliminary stage itself whether patients need to be hospitalized or not. As these specialists are experts in their fields, it would further enable to reduce he number of medical errors caused during the pre-hospitalization diagnosis. Our firm would like to put in place a contract to sell these services to the Ministry of health. It is the ministry which will then further provide these services to the final users. However, our company has to first consider various aspects before making a conclusive decision. We have to answer several questions like: What is the market demand for this type of services? What kind of skills and competencies would we need to efficiently implement these services? What would be our best added-value? How would we successfully penetrate this market? OK

II. Objectives
The aim of this project is to show how the implementation of a new service on the French emergency scenario will help reduce costs and save time. Our main objectives are: Doing a market research to understand the emergency services market, its problems and its needs Proposing an added value service / product adapted to the market demand Putting in place a reasonable budget From a quantitative point of view: n (launch of the project) n+2 n+4 n+6 n+8 n+10

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Fall in the number of emergency patients (%) OK

10

16

23

30

III. Methodology / process / planning

III.1 Methodology
In order to achieve the objectives of our study, we followed the following methodology. We started with a collection of data on the emergency services industry in France (external analysis) and then we analyzed the strengths and weaknesses of our business (internal analysis). To have a clear and global view of our research we used the following tools: PESTEL analysis It helped us understand the general environment and the political, economical, social technological, environmental and legal barriers and opportunities to penetrate this market. PORTER 5 FORCES analysis It helped us analyze the competitiveness of the medical environment. The five forces are: the risk of new entry by potential competitors, the extent of rivalry among established firms, the bargaining power of buyers and suppliers, the threat of substitution products. SWOT analysis It helped us know where and how to reach our goal, and to adapt our strategy to our strengths and weaknesses. BCG matrix It helped us determine how we should prioritize our product portfolio. According to this matrix, the companys business units can be classified into four categories based on combinations of market growth and market share relative to the largest competitors. BOWMANS strategic routes They helped us analyze our company's competitive position in comparison to what the competitors offered. OK

III.2 Process
To manage our study, we gathered data from different sources: Internet, business articles and reviews (EBSCO HOST, Euromonitor Global Marketing, Diane) and interviews with members of the SAMU were very helpful to understand the French emergency services market. We first set up the project objectives in order to efficiently divide the tasks to be done amongst all team members. Then, we conducted a market research (external analysis) that showed us the lack of this kind of service on the emergency market. Our marketing plan (the mix) recommended that we implement this service. YES

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III.3 Planning
Milestones Launching of the project Planning 1er jet Market analysis Communication plan, budget, recommendations Final report Oral presentation (PowerPoint) Project presentation DELIVERY DATE 1st September 6th September 18th September 20th September risks, 20th September 22nd September 25th September 26th September

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IV. Results
IV.1 External analysis: the competitiveness of the medical environment in 2006 and the predicted future changes
IV.1.1 Analysis of the competitiveness of the medical environment. The model of the Five Competitive Forces was developed by Michael E. Porter and can be used to analyze visualize the competitiveness of the medical environment. The five forces are: the risk of new entry by potential competitors, the extent of rivalry among established firms, the bargaining power of buyers and suppliers, the threat of substitute products.

Private hospitals Imitation companies International companies

Threats of new entrants

Cost pressure

Price pressure

Bargaining power of suppliers

Services offered by the SAMU

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No threat of substitutes

Lease company Hard ware companies (Objin) Telephone Company Software development firm (Noesis) Medicine schools (part time students) Training firms (Minerve)

Bargaining power of customers

Main client: French Government Final users: Samu, Firemen, Paramedics, Emergency ambulance workers, Emergency Doctors, Physicians and emergency doctors

Competitors:

The Porter framework is important in order to see all the pressures and difficulties that emergency will have to deal with. In this Porter framework, we may presume that the strongest force that e-mergency will have to face is new entrants. They are numerous on the market and they can become a real threat to it. To attract the Government attention, e-mergency will have to take into account every critical success factor that final users seek. It is through specific core competencies that e-mergency will be able to achieve sustainable competitive advantage. OK IV.1.2 Future environment changes predicted To study the future changes for the medical industry, we need to focus on PESTELs analysis. The PESTEL framework categorizes influences into six main types: political, economic, social, technological, environmental and legal. Political context: The bird flu in 2005 and other such epidemics have made the government realize the importance of giving people access to more sophisticated medical care. The bird flu put in place various services like call centers. We want to extend this service to all sorts of illnesses. SARS earlier saw similar services opening up in other countries. Mdecins Sans Frontires were already allowed to perform similar work. The heat waves which have been hitting France over the past few years have also increased the importance of such services. Economical context: It is a new market which has not yet been exploited. The number of emergency phone calls is constantly increasing and has recently reached 11 million per year. The activity of SAMU has increased by 10% per year in case of emergency cases and calls. There is only one SAMU per department in France and 3-4 SMUR (SMUR deals with more complicated cases which sometimes bring in helicopters and other such emergency facilities). Social context: The emergency services in France are always full. 13 million people are brought into the emergency units but only 19% of them are hospitalized. This shows the need for a service which will render the emergency situation scenario more efficient. Moreover, the number of elderly people in France is increasing. They require a lot of emergency care. Here follows a table that shows this evolution:

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Evolution of the aged population in France, from the second world war till date: Year From 60 to 64 From 65 to 74 years old years old 1946 1 998 090 3 060 305 1985 2 914 316 3 591 793 2005 (p) 2 657 542 5 071 152 (p) : provisional data Source : Insee, bilan dmographique. Technological context: SAMU already has emergency free telephone lines in place. However, more and more sophisticated technologies are needed like webcams, location detectors, transfer of cardiograms via telephone and internet. Legal context: LNE in France is responsible for this sector. It sets the norms, rules and regulations for setting up any service in this sector. Conclusion The government is more and more concerned about public healthcare; however, the only actor on the market (SAMU) cannot respond well to the increasingly occurring emergency situations. On the other hand, new technologies have been developed that can help this service in terms of efficiency. OK, not so bad From 75 to 84 years old 1 218 095 2 775 768 3 790 848 85 years old and more 161 603 684 368 1 085 467

IV.2 Internal analysis: critical success factors within the medical market and emergencys position and core competencies
IV.2.1 Critical success factors According to Johnson and Scholes, Critical success factors are those product features that are particularly valued by a group of customers and, therefore, where the organisation must excel to outperform competition G. Johnson and K.Scholes (2002) Exploring Corporate Strategy Financial Times-Prentice Hall p: 151-152.

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On the medical markets, companies were trying to achieve the following specific critical success factors. High level of quality: Considering the market (health care) on which our service is positioned, optimal quality is highly important. The medical advice offered must be precise and provided by skillful people. The waiting time must be dramatically reduced and technology cannot present any defect. Easiness of use: The technology used for the service has to be simple in order to be used easily by a variety of different actors: emergency doctors, auxiliaries, physicians, firefighters Innovation: Health care actors need an innovative service that is able to better meet their specific needs in terms of emergency. They need to have personal support in order to handle difficult situations. Ok, a bit basic IV.2.2 E-mergency position this chapter a bit too early in the presentation. To study e-mergencys position, The Value Chain described by Michael Porter is helpful. It enables to identify a firms value activities. To diagnose competitive advantage, it is necessary to define a firms value chain for competing in a particular industry. Michael E. Porter (1985)s Competitive Advantage: Creating and Sustaining Superior Performance Free Press Chapter 2 p: 45 E-mergencys value chain illustrates the possibility to decentralize some of the activities to other partners. We will identify the way we go through in order to mobilize the required competencies and resources for the implementation of the service. Our sponsors The sponsors provide us the required financial resources for the development of our service in exchange for the promotion of their brands. Our sponsors are: Draeger (specialized in the manufacturing of ventilators), Ohmeda, Hewlett Packard, Philips, Datex, Abbott Medical, Gygon. Our Subcontractors A software house will help us develop the technology required for our service in terms of hardware (webcam and IP phones). We chose Objin, a French softawre house specialized in medical engineering. We will also subcontract the team responsible for the training of our workforce in the call centers. We chose Minerve, a company specialized in the training in the medical industry. ok

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 Our partner We will develop a partnership with Noesis, a company which has developed a free software known for its reliability for medical professionals, hospitals, health care centers and organizations.

Same remark. All that must be later, not far from implementation plan

Minerve

Draeger, Ohleta, Objin Hewlett Packard, Phillips, Datex, AbottNoesis Medical, Gygon

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IV.2.3 Core competences Core competencies are an essential part of a companys strategy. According to G. Johnson and K. Scholes, core competencies are activities or processes that critically underpin an organisations competitive advantage. G. Johnson and K. Scholes (2002) Exploring Corporate Strategy Financial Times-Prentice Hall Chapter 4 p: 156. Core competencies are also key in managing the linkages between all the elements of the value chain. E-mergencys core competencies are: Skilled workforce: Our well-trained team will provide excellent, rapid response and specialized service to end users. Innovative technology: Our specific packaged service uses the most reliable latest technologies and softwares. According to Porter, Differences among competitor value chains are a key source of competitive advantage Michael E. Porter (1985) Competitive Advantage: Creating and Sustaining Superior Performance Free Press Chapter 2 p: 36. Thats why e-mergency will be able , thanks to its particular value chain and specific core competencies, to compete and acquire a sustainable competitive advantage on its market.

IV.3 External and internal analysis: SWOT

STRENGTHS Skilled workforce Innovative technology Knowledge of the market (some of us are doctors) Sponsors and partners High quality services OPPORTUNITIES Governments increasing interest in healthcare topics No competitor offers our service Papy boom phenomenon (emergency care increasingly required) Increasing use of new technologies WEAKNESSES Financial resources Intensive labor

THREATS Numerous potential entrants

Ok, but a bit too general

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IV.4 Innovative idea

IV.4.1 The whole package Product

Our service consists in a call-centre, an IP phone and webcam, a DSS (Decision support system) and the emergency medical file. We can use the BCG matrix to define our product according to the market OK, needs a more in-depth description there

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MARKET GROWTH RATE

DILEMMA

Emergency medical file PACKAG E

STARS
Call cente r

DSS

DOGS

CASH COWS Phone and

webcam

Price The service provided by our company uses the latest technologies and its price is therefore very high. Place Our service will be sold to the French government which will put it in place in the regions. The technological device will be provided to firemen and SAMUs. Promotion Our service is aimed at being sold to the government and the promotion will therefore be directed toward that specific customer. To promote our service, we will contact the French Ministry of Health to agree on a date to present our service with our marketing plan. ok IV.4.2 The call center The regional SAMU (French mobile emergency medical service) of Lille already uses the collaboration of the following teams to ensure the medical regulation: a team of 4 regulating doctors on the set 24 hours a day, including one anaesthetist, 7 auxiliary operators with medical education (permanenciers) from 8 am to 8 pm, 5 other auxiliary operators from 8 pm to 8 am.

RE LA TI VE M A R K ET SH A RE
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The package includes a call centre reachable through a toll-free number. At the call centre, 12 auxiliary operators will be assisted in their decisions by a DSS and 5 doctors will be in charge of the medical regulation.

The regional SAMU of Lille is one of the most active in France. The call centre should to be able to receive many calls at a time: thats why we chose to use a PABX (Private Automatic Branch eXchange) and an ACD (Automatic Call Distribution) software. An ACD is essentially a telecommunications switch that routes calls, either inbound, outbound or both, between a caller and an agent. In this case, with the addition of a software package and additional hardware, the in-house telecommunications switch (PABX) will support a call centre and route traditional phone calls.

ok The call-centre will also include the Computer Telephony Integration (CTI). This technology allows interactions between a phone and a computer to be integrated or coordinated. It will allow Automatic Number Identification, so that the agents will be able to determine who is calling before they answer the call. This improvement will add to the quality of the service and will help decrease the duration of the conversation. The very high technology provided by our service suggests that we make an analysis of the risks that could be faced when using it. To ensure 24/7 reliability, our service provides: ok back-up power supply, telephone back-up systems, three off-site locations, duplicate computer systems, off-site data storage.

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IV.4.3 IP phone and webcam

The firemen and emergency doctors will have helmets with headsets and video incorporated. The helmets are linked to an IP network through Bluetooth and Wireless so that the doctor dealing online with the problem can have a live vision of the patient. Nice and funny. Describe a bit more.

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IV.4.4 DSS (Decision support system) E-mergency is an "expert system" class software to be used in emergency medicine. Its internal decision making 'thoughts' imitate those of experts in a case of emergency. From a list of over 10,000 symptoms, signs or labs, items are selected and become part of the inquiry. Using expert system techniques, the inquiry is matched against known medical conditions. A short list is produced. The ranking of the list corresponds to the emergency cases that are the most likely to be faced here by the doctor. The matching is performed using mathematical and computational techniques and, when available, established medical algorithms. Various options and settings can be used to focus such short lists. Clicking on an item on the short lists brings up the information available about the condition. GOOD E-mergency is also a medical database. It is easily understandable: treatment and diagnosis are part of the details. Information is from reputable emergency medical sources thanks to the partnership of Cochin hospital. Indeed, we needed the knowledge about the procedure to follow in case of emergency. Cochin hospital has this knowledge and allowed us to do this partnership. This agreement provides a good image to the hospital and explains why the hospital would agree to invest in the call center. More than one explanation is often provided. It is also a "knowledge" system, which allows the user to define meanings, equivalent or similar expressions, etc. E-mergency is also completely updateable to include pictures, treatment charts, and any information specific to local conditions. E-mergency is for emergency doctors, health professionals in any related field as well as people who will be trained to use it in the call centre. There are different levels of accessing data and knowledge. Everything depends of the educational degree of the person who uses the service: for instance, a doctor will be able to have access to more detailed process than a health professional. ok IV.4.5 Emergency medical file By 2007, general practitioners suggest that their patients have their own Computerized Medical File. It is a personal file in which the doctor gathers the relevant data about the health of a person. To extend this project to our service, we suggest that the gives its agreement to allow the doctor to select relevant information which will appear on a minimum medical file to be consulted in case of an emergency. The emergency services and medical intervention will have a permanent access to the medical file thanks to a PDA (Personal Digital Assistant). In order to guarantee continuity in the health care quality, the emergency doctor can give a feedback towards the medical file so as to inform the general practitioner.

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IV.5 Our Strategy

Companies have to think about a competitive strategy. Indeed, according to G. Johnson and K.Scholes, A competitive strategy is the bases on which a business unit might achieve competitive advantage in its market G. Johnson and K.Scholes (2002) Exploring Corporate Strategy Financial Times-Prentice Hall p: 319 We can use The Strategy Clock to study the strategy that applies to E-mergency. (see APPENDIX 3)

We want to provide a much differentiated product. Our package is an innovation on the market and offers a high quality of service. The solution will help manage the lack of medical agents and give access to a public service of high quality to everyone. We will offer a unique but expensive package solution with an indisputable added value. However, staff costs generally account for more than half the costs of running a call centre. Thats why we decided to minimize the number of people using the technology, as described in the presentation of the service.

GOOD

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IV.6 Recommendations
We made some hypothesis about the implementation scenario and here are our conclusions:

TASKS
al d ic Fil

) Me em n cy y st t s r ge p or me E ca m su p eb n d w r si o an eci n te e on S (D l ce l DS ph Ca n t io gr a e 0 Int

100

200

300

400

500 DAYS

600

We used the PBS (Product Breakdown Structure) method to divide the implementation into different modules. The modules are: Emergency Medical File DSS (Decision Support System) IP Phone and webcam Call center

Thanks to this decomposition, we will be able to do a parallel implementation of the tasks and to subcontract some of them. With this method, we could have a prototype in one year and the final product in two years. For the implementation, we propose to begin with a little town to perform tests and incremental adjustments. In five years, we could implement our package in every big city of France. In ten years we will be able to achieve our objective of decreasing the number of patients in emergency departments by 30%. Why not Our budget

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year 1 E-mergency expert system software Development Hardware server Call center hardware Call center team per year Total Salary per year Team Training per year Additional expenses per year Call center rent per year Maintenance for the software and call center Total 210 000 11616,00 1500 10116 975 660 966 000 9660 47616,00 36000 2467 1 244 892

year 2

year 3

year 4

year 5

975 660 975 660 966 000 966 000 9660 9660 47616 47616 36000 36000 2467 2467 1 023 276 1 023 276

975 660 966 000 9660 47616 36000 2467 1 023 276

975 660 966 000 9660 47616 36000 2467 1 023 276

E-mergency expert system software Development

We estimate that this type of software requires 3 developers in one year will be 600 man/day * 350 euros (= 210 000 euros) Hardware o Server It will be necessary to host the web server and our emergency data base on a server. This material does not need to be very powerful, because the number of simultaneous connections for this call center is estimated at less than 100 as the team is composed of 17 people. Only one server estimated at 1500 euros is enough in this case. o Call center hardware : 0,01 * (966 000 + 9660 + 36000) = 10116 euros OK Call center team for one year o Total Salary per year (12 auxiliary * 12000 euros + 5 doctors * 100 000 euros)*1.5 = 966 000 o Team Training per year 0,001 * 966 000 = 9660 euros OK Additional expenses

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o Call center rent per year 36000 o Maintenance for the software and call center 0.002 * total for the first year= 2467 euros

e-mergency can also execute interactive dialogues and medical algorithms. It is not just medical textbook information. Real cases are examined and symptoms/signs/lab patterns are put into the database. The database is continually updated thus each new customer receives the latest database. e-mergency is a software more commonly known as 'differential diagnosis software' - The system produces either a short list, in the order of the most likely, of the conditions which should be considered when a patient presents with certain symptoms and signs (and has specific test results if these available) or explains all the user needs to know in the one entry. It is flawless and precise and exact in its diagnosis but only when the definition of a disease in the "symptom/indicator" pattern and the occurrence is absolutely correct. e-mergency is also a 21 E-mergency Project

"database management expert system" - the user can copy, paste, classify and organize medical information.. There are two main editions (or variations of these).

OK

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IV.7 Discussion
Before launching this service, we would like to discuss the following topics: - Our customers - Our targeted market - Our service and its price - Our budget - Our incremental improvements - Our international expansion

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References
Michael E. Porter (1985) Competitive Advantage: Creating and Sustaining Superior Performance Free Press. Michael E. Porter (1980) Competitive Strategy: Techniques for Analyzing Industries and Competitors Free Press. D. Faulkner and C. Bowman (1995), The Essence of Competitive Strategy, Prentice Hall. G. Johnson and K. Scholes (2002) Exploring Corporate Strategy Financial Times-Prentice Hall. D. Collins and C. Montgomery (1995) Competing on Resources: strategy in the 1990s Harvard Business Review Jul-Aug, Vol. 73 Issue 4. Websites: http://s139506224.onlinehome.fr/sante-urgences/ http://www.m6.fr/html/emissions/mavieauxurgences/chiffre.shtml http://membres.lycos.fr/galiasp/lespompiers.htm http://www.sae-diffusion.sante.gouv.fr/dwd_dwsaff1.aspx Noesis: http://www.noesisvision.com/ Objin: http://www.objin.com/ Minerve : http://www.coursminerve.com/accueil.php

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Appendices

Appendix A: the Five Forces model Appendix B: the Value Chain Appendix C: Bowmans strategy clock

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APPENDIX A
The model of the Five Competitive Forces was developed by Michael E. Porter in his book Competitive Strategy: Techniques for analysing Industries and Competitors in 1980 has become an important tool for analysing an organization industry structure in strategic process Porters model is based on the insight that a corporate strategy should meet the opportunities and threats in the organizations external environment. Especially, competitive strategy should base on and understanding of industry structures and the way they change. Porter has identified five competitive forces that shape every industry and every market. These forces determine the intensity of competition and hence the profitability and attractiveness of an industry. The objective of corporate strategy should be to modify these competitive forces in a way that improves the position of the organization. The stronger each force is, the more competitive is the industry and the lower is the rate of return that can be earned. The five forces are: Bargaining Power of Suppliers The term suppliers comprises all sources for inputs that are needed in order to provide goods or services. In such situations, the buying industry often faces a high pressure on margins from their suppliers. The relationship to powerful suppliers can potentially reduce strategic options for the organization. Bargaining Power of Customers Similarly, the bargaining power of customers determines how much customers can impose pressure on margins and volumes. Threat of New Entrants The competition in an industry will be the higher; the easier it is for other companies to enter this industry. In such a situation, new entrants could change major determinants of the market environment (e.g. market shares, prices, customer loyalty) at any time. There is always a latent pressure for reaction and adjustment for existing players in this industry. The threat of new entries will depend on the extent to which there are barriers to entry. Threat of Substitutes A threat from substitutes exists if there are alternative products with lower prices of better performance parameters for the same purpose. They could potentially attract a significant proportion of market volume and hence reduce the potential sales volume for existing players. Competitive Rivalry between Existing Players This force describes the intensity of competition between existing players (companies) in an industry. High competitive pressure results in pressure on prices, margins, and hence, on profitability for every single company in the industry. 26 E-mergency Project

Source: Michael E. Porter (1980) Competitive Strategy: Techniques for Analyzing Industries and Competitors Free Press Chapter 1 p: 4 Figure 1-1

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APPENDIX B
The Value Chain was described by Michael Porter in 1985 in his book Competitive Advantage: Creating and Sustaining Superior Performance Free Press. The idea of the value chain is based on the process view of organisations, the idea of seeing a manufacturing (or service) organisation as a system, made up of subsystems each with inputs, transformation processes and outputs. Inputs, transformation processes, and outputs involve the acquisition and consumption of resources - money, labour, materials, equipment, buildings, land, administration and management. How value chain activities are carried out determines costs and affects profits. Most organisations engage in hundreds, even thousands, of activities in the process of converting inputs to outputs. These activities can be classified generally as either primary or support activities that all businesses must undertake in some form. According to Porter, the primary activities are: Inbound Logistics - involve relationships with suppliers and include all the activities required to receive, store, and disseminate inputs. Operations - are all the activities required to transform inputs into outputs (products and services). Outbound Logistics - include all the activities required to collect, store, and distribute the output. Marketing and Sales - activities inform buyers about products and services, induce buyers to purchase them, and facilitate their purchase. Service - includes all the activities required to keep the product or service working effectively for the buyer after it is sold and delivered. Secondary activities are: Procurement - is the acquisition of inputs, or resources, for the firm. Human Resource management - consists of all activities involved in recruiting, hiring, training, developing, compensating and (if necessary) dismissing or laying off personnel. Technological Development - pertains to the equipment, hardware, software, procedures and technical knowledge brought to bear in the firm's transformation of inputs into outputs.

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Infrastructure - serves the company's needs and ties its various parts together, it consists of functions or departments such as accounting, legal, finance, planning, public affairs, government relations, quality assurance and general management Source: Michael E. Porter (1985) Competitive Advantage: Creating and Sustaining Superior Performance Free Press Chapter 2 p: 37

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APPENDIX C
The Strategy Clock is adapted from the work of Cliff Bowman, see D. Faulkner and C. Bowman (1995), The Essence of Competitive Strategy, Prentice Hall. The Strategy Clock is a suitable way to analyze a company's competitive position in comparison to the offerings of competitors. As with Porter's Generic Strategies, Bowman considers competitive advantage in relation to cost advantage or differentiation advantage. There are six core strategic options: Option one - low price/low perceived added value: likely to be segment specific Option two - low price: risk of price war and low margins; need to be a cost leader. Option three Hybrid: low cost base and reinvestment in low price and differentiation Option four Differentiation: (a) without a price premium: perceived added value by user, yielding market share benefits (b) with a price premium: perceived added value sufficient to bear price premium Option five - Focused Differentiation: perceived added value to a particular segment warranting a premium price Option six - increased price/standard: higher margins if competitors do not value follow; risk of losing market share. Option seven - increased price/low values: only feasible in a monopoly situation Option eight - low value/standard price: loss of market share

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Source: D. Faulkner and C. Bowman (1995), The Essence of Competitive Strategy, Prentice Hall.

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