The Wheelchair Market Through M. Porter 's The Five Forces That Shape Competitive Strategy

1219 Words Aug 30th, 2015 5 Pages
The Wheelchair industry is relatively small in U.S. market. However, within a short period American manufacturers became trendsetters comparing to European companies, which usually presented new technologies years after they were implemented in the United States (pg.1). In 1993 industry’s approximate sales were about $400 million. With the Medicare participation in reimbursement program and recognition of lightweight model as a distinct standard, the growth rate was expected to increase about 5% -15%. (pg.2). In order analyze the attractiveness of wheelchair industry and predict future profitability, it would be beneficial to study the wheelchair market through M. Porter’s “The Five forces that shape competitive strategy” framework.
The buyers’ power of the wheelchair industry is strong. There are three channels of distribution that handle up to 75% of sales: Rehab suppliers, General home medical equipment (HME) and Med/Surg distributors. Rehab suppliers specialized in ultralight, power, and pediatric wheelchairs. HME dealers mostly sell the standard line of wheelchairs, while Med/Surg distributors sell the product that “require less service than those sold through other channels” (pg. 4). These three types of retailers have strong negotiation power over producers. The common industry practice stated that dealers paid about 60% of manufacturing retail price and also were able to demand up to 15% price discount between 1991 and 1993 (pg. 3-4).
The suppliers’ power of the…
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