Estia Health Aged Care: Internal And External Environmental Factors Essay.

Question:

Discuss abouts the Strategic Analysis of Estia Health Aged Care.

In the current scenario, residential aged care is the most crucial and sensitive business sector, especially for aged people. Population ageing is a natural phenomenon that is rapidly increasing with particular intensity in the recent times. In Australia, the issue is alarming as a result the need for elderly health care is continuously increasing (Brownie and Nancarrow 2013). Traditionally, the care of the aged people belonged to their family. However, for various reasons an increasing number of families are unable to provide care to elderly and fulfill their roles. Various organizations have started residential care service for aged people within the Australian market. Estia health aged care is one such organization that provides services to aged people and seniors through maintaining independent living. The report will therefore identify the internal and external environmental factors faced by the organization Moreover, recommendation for overcoming the challenges and threats to Estia health will also be ascertained.

Estia health age care held a proud heritage of serving the elderly across Australia for almost 50 years. It provides high quality and best healthcare services for the elderly people. Personalized healthcare facilities are served in a homely atmosphere. Recently, Estia Health is the largest residential care for aged people in Australia with more than 68 facilities, over 7000 employees and operating at 5910 places across South Australia, Queensland, Victoria and New South Wales (EstiaHealth.com. 2018). The organization aims in providing their customers with increased standards of aged care facilities in supporting, caring and innovative environment. Moreover, Estia has experienced management team and executive, underpinned with skilled and committed workforce.

The main vision is to create one family while serving the aged people by having the expertise and holistic service offering in this sector. Besides obtaining a nutritious and happy life, the aged people also obtain effective healthcare. International market is yet to be captured but Estia health has been able to lead the aged healthcare segment business all over Australia (Francis and Ponnuswami 2014).

Though PESTEL analysis, the positive and negative factor can easily be ascertained. Estia gains positive impression by providing residential services to the aged people. Moreover, Estia does not have any branches overseas therefore it does not have to tackle the challenges of diverse market environment globally. The negative factors can be ascertained through various changes in the legal and political scenario within the nation.

PESTEL Analysis

Political factors:

The political condition of Australia is stable which results in less complication in the health care sector. Estia health aged care enjoys favorable position in the market. Taxations rates are also quiet favorable as the health care sector attracts very low rate of taxes (Burkhauser, Hahn and Wilkins 2015). However, interference of government generate barrier in making decision for the health care agencies. Moreover, corruptions in the procedures and regulation of health care services are also a bigger challenged by the health care services.

Economic Factors:

Australia is a developed economy with a positive growth in all the sectors and business environment. It would be advantageous for Estia health to design and regulate its policies as per the market trend. Therefore the potential target consumers of Estia are rapidly increasing for availing the services. On the other hand, new entrant in the market is gradually increasing thereby raising the competition in the market besides decreasing the organization profitability (Glavas and Mish 2015). Moreover, recruitment of talented and skilled is also quiet difficult. It further leads to low customer base for Estia. Unemployment rate is increasing and reducing the purchasing power of the people (Indexmundi.com. 2018).

Social factors:

In the recent times, due to the busy professional life of the people the need for aged care facilities are highly increasing in the current times. As per the reports, Australia aged population rate is constantly increasing. This creates a favorable customer base to attract the potential individuals for Estia health (Frishammar et al. 2015). More people are provoked to opt for better health care services. The organization is able to attract more patients with its distinctive services as compared to different conventional health care agencies. Estia health provides better homely atmosphere and personalized home services in respect to others aged health agencies.

Technological factors:

Technological development has been rapidly increasing in the current times. With the advent of latest and updated technologies business is growing in every sectors of the economy. Updated and improved technologies will help in providing more efficient and effective facilities to the consumers (Musacchio, Lazzarini and Aguilera 2015). Moreover, the target segments compatibility with the latest technology is also very crucial. As Estia’s target segment is aged people and the best choices should be provided to them. The cost structure of the organization may be negatively affected due to high expense in technology.

Legal Factors:

Porter's Five Forces Analysis

Australia has several lawful obligations related to healthcare facilities. Employee’s welfare law should also be practiced by the organizations (Išorait? 2018). Therefore, it is significant for Estia Health to comply with these laws. Moreover, modifications of the current or existing law would create negative impact on the operational activities of the business. Estia Aged health care thus has to overcome while dealing with the changed organizational policies.

Environmental Factors:

Environmental sustainability should be kept in mind by the organizations in Australia. One of the major environmental factors is the management of wastes that is currently faced by the organizations. Proper waste management program is initiated for better living environment. Recycling process is now practiced by the entities to reduce the amount of waste regeneration (Windfeld and Brooks 2015). Moreover, Estia has planted trees surrounding the home care to create greenery and fresh environment for the senior citizens.

By conducting Porter’s five force analysis, the major factors that affects Estia health centre can be evaluated.

Bargaining power of suppliers:

Health care industry is completely dependent on the suppliers because of their services. Limited resources of skilled employees create difficulty for the growth of the organization. This led to increase in the suppliers bargaining power to provide employees for old aged facilities (Dobbs 2014). Despite the increase the healthcare cost, fulfilling the requirements for aged people is necessary in the current times. The Australian residents and government is greatly concerned about the people’s life. The quality of life provided to the senior citizen is what that matters the most.

Bargaining power of buyers:

Adequate price is required to obtain effective healthcare services. The major objective of Estia healthcare is to give best and effective quality care to its customers. This should be made by ensuring maximum margin through value based competition and low price. In Australia, there are many options for consumer to choose the services of age care (Tucker et al. 2015). The aged and sick people would always like to get treated in an effective manner irrespective of the country’s economic scenario.

Threat of new entrants:

The startup cost required for setting the healthcare services is generally very high. Therefore the threat or possibility of new entrants is very relatively low. For aged care services, skilled labor forces and adequate training is important to provide services as the main aim is to save people lives. License approval is necessary for setting healthcare facilities that is to be granted by the Government (Uy, Yi and Zhang 2013). In addition to this, the duration also required to set the franchise agreement could further increase up to 10 years and people avoid signing such long-term contracts.

Value Chain Approach

Competitive rivalry

The competition among aged health care centre is relatively less as there are limited choices and options for services being provided to the senior citizens. Though the intensity of competition and rivalry is huge for healthcare services still old aged care agencies are safe.  The old care centre also gains maximum advantages due to the high switching costs. If the health services policies are signed by the patients they cannot easily switch their interest for other health care facilities.

Threat of substitutes:

The threats of substitutes in the health care segments are generally very low. In the recent times, the aged people prefers to being served at home rather than residing and obtaining services in an old age care (Kulik et al. 2014). The people nowadays are more prone to digital technologies and adopt latest technology to stay connected. Several healthcare facilities are installed in the home itself. In addition to this, the creation s of robotics and electronic gadgets for assisting the senior people has also made their life simpler and easier.          

In Estia’s residential care Industry, value chain approach has been proved useful to ascertain the various activities. It is used in mapping to figure out the improvement in quality through adequate delivering of services to the patients. In Australia, residential care Industry systems are rapidly changing to combat the ageing population, uneven service distributions and efficiency problems. The balance of customers has now shifted and focuses on cost-efficient service delivery ascertain through the residential care industry value chain. Estia is highly affected by the political scenario due to the changes in political regulatory. New strategies through transparent pricing policies can benefit profitability and wider demographics. In the recent times Australia is now at the crucial stage of the adoption of technology curve for residential services. The residential care Industry, reimbursements and payment are highly linked to better outcomes and quality of care. These are generally tracked through cost effectiveness assessment tools and therapeutic value ratings.

Business Infrastructure ·         Strong financial position ·         Emphasis on  sustainability and CSR

Human resource management ·         Strong Management Team ·         Connected employee infrastructure ·         Learning relationship environment

Technology development ·         Innovative residential facilities

Procurement ·         Progressive and sustainable relationship with suppliers

Inbound logistics ·         Inventory control ·         Specialized services

Operations ·         Technological innovation ·         Research and development

Outbound logistics ·         Strong control over service distribution ·         Perfect delivery of services

Marketing and Sales ·         Strong reputation in the community ·         Innovative role in residential facilities ·         Value based pricing

Services ·         Extensive customer care. ·         High- quality residential facilities ·         Innovative care facilities.

Primary activities

VRIO Analysis:

Through conducting VIRO framework, competitive advantage and its sources for Estia’s health will be ascertained. Few of the vital elements identified are brand value, market coverage, properties and human resources. The following segment will describe the competitiveness of Estia Health in the business market.

Source: (Hilmi and Emenyeonu 2014)

Valuable:

Valuable is known as the limit to which valuation is been included by a specified elements on the various offerings of the organizations. More is the valuation for the services towards the consumer; it will lead to increase in the competitiveness for the services. Skilled workforce is the key competitive factor of residential aged Industry in the business environment. The employees are highly trained and works according to the need of the customers satisfying them (Porter and Heppelmann 2014). Due to the internal stakeholders such an effective and homely environment is created for the aged people.

Technology Curve and Residential Services

Estia health’s properties all over Australia are made in such way to appeal and retain its target customers and meet their expectations. All the properties are made by keeping in mind the safety and well being of the senior citizens (Hilmi and Emenyeonu 2014). This also helps in adding value in their offering by creating a positive brand value. Estia health centre also have better market penetration comparatively to its competitors in the market. The business market of the health care is spread throughout Australia, by providing with various options to offer their customers with various amenities and facilities.

Rarity:

Resources rarity is generally regarded as the resources distinctiveness that makes it more unique from other organization. The resources possess by Estia’s makes it more distinct from other organizations are its internal stakeholders. The skills and talents possessed by all of its employees and workers make its more unique as their expertise skills lead to the growth of the organizations (Kulkarni 2013). This leads to maximum customer satisfactions through their distinctive services being provided to its customers. It becomes quite difficult for its competitors to match the organizations skills. Estia created its goodwill in the market in various years through huge capital investments and persistence.

Inimitability of the resources:

Estia health employees are skilled and through proper guidance and training their skills are also enhanced. This increases the productivity of both the internal stakeholders and the organizations. The work forces are different for various organizations as the skills are inimitable by the various organizations. In addition to this, the brand value of the organization cannot be easily imitated by other firms. Though various residential centers for aged people tries to imitate Estia’s health brands value but the competitors are unable to achieve their market valuation. It is impossible to imitate such skills by other organizations (Montgomery and Oladapo 2014).

Organizational capability:

Estia’s residential service is regarded as the leading centre for aged people throughout Australia. The employees are provided effective training and development program to provide quality services to its potential customers (Zhu et al. 2014). This further helps in maximizing the satisfaction level of its customer. The skilled employees with their innovative expertise helped in the growth of the agency over all these years (Li et al. 2014). The organization is capable enough to determine the need of its target consumers besides adopting itself to the necessary changes that occurs in the business market.

Business Infrastructure and Human Resource Management

As the aging population is increasing in the country, the residential care industry seems very significant for growth. Estia serves the aged people and senior citizen through independent living and maintaining their well being in a cozy atmosphere. The organization gains competitive advantage in the current market scenario by making profit. However, weakness also threatens the success and growth of the organization. Estia healthcare strength, weaknesses, opportunity and threats can be known by conducting SWOT analysis.

SWOT MODEL

Source: (XIA et al. 2015)

Strengths

Estia residential care facilitiies provides inclusive and caring experiences to its people through quality aged care services. Estia’s main objective is to create the Family Code that is developed to generate happiness and healthy lifestyle for the aged and senior citizens. Moreover, specialized and intensive care is offered to those people with Alzheimer disease, memory loss and dementia (Naujokas et al. 2013). The demands are fulfilled of the aged people through modern facilities and well- designed equipments. Estia tries to focuses on all such little details so that it can reassure the well being of the senior patients to their adult children’s. Estia health care believes in providing support, comfort and caring to its patients in all aspects (Unuvar, Kaya and Bilge 2017).

Weaknesses:

Generating an old age care agency requires a lot of money as it is highly expensive. The growths of Estia’s residential care can be restraint due to limited financial capital. Expense such as liability insurance can drain the profit and revenue of Estia’s health care centre. On the other hand, absence of skilled and trained workers can turn to be a major setback and limiting the growth of the organization (Mulligan 2018). When the skilled workforce is limited in the organization, it leads to increase in expenditure by importing the workers from elsewhere and train them. Moreover, this creates communication barriers by creating a negative impact on the customer’s experiences.

Opportunities:

Economic forces in the recent times affect the residential care Industry in a very strong position within the business environment. As the population is aging more quickly, the demand for the aged home care facility is more than its supply. The market risks faced by the residential  segments are also comparatively less than to the other industries (Išorait? 2018). Moreover, targeted and organized market campaign also would help in raising the awareness for Estia’s latest facilities and services. It would also be lead to growth of the organization by promoting it through events and programs.

Threats:

In the ever increasing growth of the social media, any stories related with various healthcare facilities can threaten the business. Unethical and dangerous situations concerning old people put an adverse impact on the daycare facilities. Therefore it really becomes difficult to retain the trust and loyalty of potential customers. Moreover, economic downturn could create negative impact on the Estia’s market condition (XIA et al. 2015)

Conclusion:

From the aforesaid discussion, it can be brought to conclusion that Estia’s health care is a primary agency in the Australian market dealing with appropriate treatment can taking care of senior citizens. In the current scenario, health care dexterity and facilities can vary remarkably in its safety quality, effectiveness and cost. Estia health care is briskly converting and transforming into homes because of the increase in the number of senior citizens in Australia. The caretakers provided should be immensely budding in their skills, experience, abilities and attitudes to take care and handle the old age patients. Entering foreign markets will help Estia in reducing the impact of rivalry in Australian market. Moreover, as they enter the global platform, the market scope will increase alongside the steep boost in brand value.

Internal analysis of the health care organization is also made to examine the weakness and strength, threats and opportunities of the organization. VRIO framework has also been used to evaluate the strategic position of Estia Healthcare in the business environment. Estia also encourages local communities and families to attend and join activities through meetings and show their interest. Hence, it can be concluded that Estia aged residential care is the best service provider for senior citizens and old age people in Australia after analyzing its position in the Australian market.

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