Artificial Limbs Industry: About Production

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The main aim of involving in business is to make maximum profits as well as the stakeholder’s value. Any business requires appropriate planning before its starts its operations or introducing new product lines into a new or existing market. Like all other industries, the artificial limb industry is one that requires adequate preparedness before the venture. Moreover, most businesses require the porters five force analysis to evaluate the viability of the industry. These forces include; threat of entry of competitors, threat of substitutes, bargaining power of buyers, bargaining power of suppliers, and rivalry among the existing players. These forces give the business or investment a strategic business unit and help it to stand alone in the market or remain active and still make profits in a competitive status.

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The artificial limb industry is very unique and complicated because it involves dealing with the reconstruction of human parts and replacing missing extremity. The need for artificial limbs may be due to amputation of a limb either due to disease, accident, or congenital defects. The target market for artificial limbs would be areas of war and terrorism and industrial zones, in which case the Middle East countries e.g. Iraq, Israel, and Palestine will be preferred. Whichever type of artificial limb required (transtibial, transfemoral, transradial, and transhumeral); the business is to specialize in all the four types of artificial limbs. The most current technology of robot limbs is also involved. This business is a boom and the profits are huge since artificial limbs costs a fortune (Fortenberry, 2009).

The artificial limb company will be required, upon start, to meet opportunities and threats in the external environment by understanding the structure of the industry and the major changes necessary in coming up with best strategies to hold the business. These strategies will help have the unique way to run and survive in the industry when implemented by the management.

Production introduction

The start of this business will require adequate technology and a huge capital and asset base. The investment involves multimillions amounts to initiate; this, according to porter, limits other common investors from venturing into the markets. The difficulty in entry to the artificial limb industry makes the profits high. This investment will be made possible through the huge asset base of the company that will help the company venture in the trade of artificial limbs to hospitals in areas of terrorism attacks, war areas, and industrial zones in the Middle East countries.

Artificial limbs are in high demand in these areas since many people have been left limbless due to the terror attacks occurring daily injuring many. Areas of the Middle East like Afghanistan, Iraq, Palestine, and Israel are the main focus of the market since many people are left limbless due to frequent conflicts of suicide bombers, property bombers and explosions hence enough opportunities are available in the market. These markets are feared by many investors hence giving the business a chance of dominance. The supply of the artificial limbs will go beyond borders of the region with branches in each jurisdiction which will help in creasing the markets and establishing of a colony in the business.

The firm will be involved in keeping prices artificially low as a mechanism to prevent other entrants to the market. The firm will also seek to create barriers to entry through the government restricted entry which may include issuance of monopoly to the company or the regulation of the industry. In health matters, it is wise to advice the government to issue monopoly since the well being of the citizens depend on health. Health is one sector that needs critical assessment of the traders to prevent low standards and scrupulous dealers in the sector and prevent exploitation of the buyers. If the government issues a monopoly rights, then the business threats to new entrants will be eliminated (O’Shaughnessy 88).

The company will also hold patent and propriety knowledge of the manufacture of artificial limbs especially through the best technology and this will reduce new entrants in to the market. Moreover, the company will be producing in bulk hence enjoy economies of scale. This will ensure cost efficiency and minimum unit cost of production, thus keeping off other industries since the company can dictate the prices given higher economies of scale. The distribution channels will also be perfectly managed to allow for minimal middlemen who are otherwise notorious for increasing prices and counterfeiting brands and technology. This will help in differentiation since the artificial limbs technology cannot be copied. The company’s technology will be efficient and effective so as to produce high quality limbs which will lead to establishing a brand loyalty and customers’ confidence in the industry. Once the brand of the company has loyalty then customers will increase and the entry of new players in the industry will reduce as they will find themselves not competitive enough.

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The availability of a substitute makes demand of the product more elastic hence impacting negatively on the prices. Most threats of substitutes come from outside the industry thus even if there is regulation in the artificial limbs industry, a substitute may crop up. In the artificial limbs industry the occurrence of a substitute is high since many feel that the prices involved are high. The presence of a low quality substitute can be designed by competitors so that the industry shakes. The best chance of the business to survive the scare is to be consistent in high quality production of artificial limbs. This will give the company and brand loyalty as said earlier hence the masses remain loyal to the product. Although in the artificial limb sector substitutes may be limited, they should be regulated with care by the government to ensure fairness and high quality health (Fortenberry, 2009). The company will also be involved with upgrade of its technology since technology change can cause entry of substitute.

The investment is will also be affected by the buyers’ power especially considering that not all population of people is involved in the buying of artificial limbs but only the affected. The market may be concentrated by many buyers who must purchase the product while the suppliers may be few thus diluting the buyer’s power. A regulated market like the artificial limbs industry will tend to have a weak buyer relation since there will be few supplies and many buyers especially in the regions that the company targets to set the base. Market situation will eliminate the presence of powerful buyers or the presence of any monopsony (many supplies and one buyer). The company will enhance its distribution and retailing in the markets as well as supplying only the required portions of buyer’s need in order to control the buyer’s power.

The company will require raw materials e.g. thermo softening plastic, labor, and other components in order to produce the products (artificial limbs), thus the company will require supplies for these. The strength of a supplier can have adverse effects on the production process since when the supplier sells the supplies at a high cost; this is translated directly to increased costs of production, leading to reduced profits. Since the product brand of the artificial limbs is strong, it may make the supplier strong. Certain factors should be eliminated when starting the business such as; a credible forward integration of suppliers or the difficulty in switching to another supplier. This can be done by locating or controlling the supplies of the raw materials by the company directly. The company can look for alternatives in the market through innovation of other new technology and the establishment of “plan B” incases where there are strong or no reliable suppliers. The company will also take advantage of the fragmented consumers of the product who have less bargaining power.

There are already established companies in the production of the artificial limbs that bring rivalry to the company. This threat of rivalry is likely to increase if the entry to the market is high, when there is presence of a substitute and the buyers and supply powers are also high. With the proper establishment of the company, no amount of threats can be able to pull it from surviving in the market. The base establishment of the company described above gives it enough shock absorption strategies from rivalry as the company will be seeking to gain a competitive advantage over the competitors. The concentration ratio is a measure that economists use to determine whether rivalry in the industry is low or high. The factors that can cause intense rivalry are presence of many huge firms, slow market growth, high fixed costs, high production costs, low switching costs, low product differentiation, high strategic stakes, high barriers of exit, a range of rivals, and industry shake out (Cheverton 81). The firm will aim at having a competitive advantage over the rivals in changing prices temporarily, improving the differentiation of the product, implementing other creative convenient and cost effective distribution channel, and suppliers’ exploitation.


The artificial limbs market has currently not been ventured in by many businessmen. Those already in the market are reaping maximum profits in their investment despite the high initial capital involved which tends to discourage many investors. However, the venture is always viable through effective operations management and risk management especially considering that high risks give higher gains. The establishment of the new product line to this market will be a positive venture especially when the company is able to address all the five porter’s forces and strategize effectively.

Works Cited

Cheverton, Peter. Key marketing skills: strategies, tools, and techniques for marketing success. Kogan Page Publishers. 2004. Web..

Fortenberry, John L. Health Care Marketing: Tools and Techniques. Ontario, Jones & Bartlett Publishers. 2009. Web.

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O’Shaughnessy, John. Competitive marketing: a strategic approach. NJ, Routledge. 1995

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