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In the medical field, organizations use various strategies to compete in the market. The best market structure in the industry is perfect competition, which operates differently from other types. It affects the healthcare organization positively since it leads to its profit maximization. Competitive strategies used in this field include pricing and focus approaches, and reducing the bargaining power of suppliers. The analysis of the market structure helps to evaluate the effectiveness of these competitive strategies.

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Perfect Competition

In the medical field, the market structure in which the organization competes is perfect competition. The characteristics that make it fit the industry are that there are many sellers and buyers. In this field, many medical facilities offer different healthcare services to a large number of customers, who can buy them at the certain price. Both customers and healthcare providers have absolute information about the prices of products and services offered. It helps them to make the right decision on which healthcare facility to attend. In the medical field, products and services are perfect substitutes for each other (Myers & Tauber, 2011). In most cases, the suppliers of products in medical facilities are the same, and even if supplies differ, qualities and properties do not vary.

In perfect competition, property rights are clearly defined, and it is critical in the medical field because they control the use of products by customers, their ownership, and the right to get income from products and services. In this market structure, there are no barriers to entrance for new firms or exit of the existing ones from the market. It leads to perfect competition improving the quality of services offered in healthcare facilities. Every healthcare provider is a price taker, and no participant can set prices since they have their own market power. In the medical field, every healthcare facility has market power and can raise or lower prices without losing customers to their competitors, as long as the quality of services is not compromised (Myers & Tauber, 2011).

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The level of competition the medical organization can face in case of the oligopoly market structure will be low because of the limited number of healthcare providers in the market. It will lead to the low quality of healthcare and higher prices set to customers. The differentiation of products will be an issue because few healthcare providers use different products in oligopoly, and there is a need to advertise increases in expenses lowering the profit the organization can get. There are barriers to entrance in the market, which lower competition and lead to the exploitation of customers because few facilities have market power (Kalecki, 2013). In case of the monopoly market structure, where there is only one firm in the market, the level of competition will be minimal, but the quality of services and products will be low. Thus, there will be no customer satisfaction and not all individuals will be able to access services and products due to higher prices. The facility gets maximum profit because it is a price maker, and there are not external forces to affect it.

In monopolistic competition, the medical organization will experience imperfect competition because many service providers offer services and products differentiated through branding, and it will lead to confusion among customers. Healthcare facilities in monopolistic competition can make decisions independently, and this gives them a chance to gain market power, affecting prices and the quality of products and services offered. Differentiated services in monopolistic competition are not perfect substitutes for each other. Thus, it is so imperfect to use them in the medical field. There is no reliable information about products and services in this market structure leading to imperfect competition because customers do not have knowledge about the market (Kalecki, 2013).

Competitive Strategies

The healthcare organization can use the following methods to maximize profit. First, the pricing strategy can help the healthcare facility to have competitive advantage because it allows to lower prices to expand the market share and afterwards increase prices to their usual level. Facilities can also use the price elasticity of demand for medical products and services to fix pricing policies. Price elasticity shows how sensitive customers are to changes in prices, which in turn affects the volume of sales and the supply of products. It also allows the organization to give additional benefits to customers and attract them, increasing the demand for services. In case of the market structure of perfect competition, gaining a large market share ensures maximizing profit. Pricing should be done under government regulations to ensure there is healthy competition in the market (Belleflamme & Peitz, 2015).

The second strategy is lowering the bargaining power of suppliers of medical products. It will help the healthcare facility acquire products at a lower cost, reducing the price of its services and attracting customers. The facility is in a position to increase the price and demand for its products and the services. Discovering the availability of substitutes will help the organization lower the bargaining power of suppliers.

Another competitive strategy is focus on providing quality services to a particular market segment making sure that there is no other providers. It helps to concentrate on researching expectations of customers in a particular field and giving them the best. As a result, the organization can acquire a large market share increasing the demand for services and profit (Belleflamme & Peitz, 2015).

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The pricing strategy shows that ethics is practiced in the medical field because it helps to offer quality services at lower prices. The low-pricing strategy complies with organization’s current values because it helps the healthcare facility to maximize its profits by lowering prices for medical products and services. It will increase the demand for the latter, which will in turn raise the sales volume ensuring high profit. This strategy aligns with my values since it helps in providing health care to individuals with low incomes. Healthcare facilities can consider controlling costs, which is a major step in minimizing losses. It can also help the organization to cope with a price decline in the market and any market expenses and retain profit (Myers & Tauber, 2011).

Reducing the bargaining power of suppliers aligns with the organization’s current values since it helps the healthcare facility to reduce the supply cost through buying products from vendors with discounts, which will help it offer services at a low cost and attract many customers. It will meet organization’s objectives of maximizing profits. Ethics is practiced in controlling prices since it does not interfere with the required standards of care. It also aligns with my values because it helps in providing quality services. Thus, the facility should consider implementing this approach.

The focus strategy aligns with organization’s values because it helps it to concentrate on a particular area, which leads to the maximization of profit. Moreover, this strategy aligns with my values since the organization is in a position to get good returns in addition to new service lines in its operation. Before the facility starts to practice in that line, ethics is considered by employing well-qualified specialists and concentrating on the organization’s values of maximizing profits (Belleflamme & Peitz, 2015).


The market structure where this healthcare organization competes is perfect competition, which fits its objectives and activities perfectly. However, government regulations are necessary to regulate healthcare facilities since there are no barriers to entry or exit. Furthermore, the information on healthcare organizations is critical to avoid the exploitation of customers and to ensure ethics is applied in their operations. The healthcare facility under analysis should use such competitive strategies as the focus approach, reduction of the bargaining power of suppliers, and the low-pricing strategy, which will help it to engage in healthy competition and maximize profit.

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