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Investment Analysis for Homeopathy in Germany and the United States

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Term Paper


Business Administration>General




Term Paper: SWOT Analysis will then analyze the advantages, disadvantages, opportunities and threats of homeopathy in the US market to help draw conclusions later. Advantages include several different areas. One important aspect is the ability to sell products online, which is not possible for FDA-approved drugs. Due to its special regulations on production and safety and the amount of capital required to build production facilities and supply and distribution lines, the homeopathic market has high barriers to entry for competitors. It also contains only limited initial risk, which is another advantage of homeopathy. The risk of loss of invested capital is really low. Last but not least, its high gross profit margin is very attractive to investors because it can be produced relatively cheaply and sold at a good profit. The cost of starting a homeopathic production line is limited. However, compared with large industries such as technology, this is a big weakness, because competitors can provide similar products to customers very easily and quickly. Due to the large number of competitors, the pricing flexibility of homeopathic medicines is not large and is dominated by the market. The fourth weakness of homeopathy is that due to the wide variety of products, transportation costs are particularly high, especially in large counties like the United States. The ability to sell homeopathic medicines online is not only an advantage, but also an opportunity, because it is easy to expand sales online, so it is easy to increase the source of income without the cost of a physical store. The development of proprietary products is also an opportunity market, and patents can ensure a sustainable competitive advantage for the company. The ability or necessity to establish wholesale and open additional stores creates another opportunity for the industry, where products can be sold directly to customers. However, homeopathy faces a powerful threat. Regulations that occur in Germany may also occur elsewhere. The new regulations will be able to immediately change the American landscape or homeopathic medicine. This includes doctors' education and insurance, who make up most of their income by approving homeopathy. Most of the products sold are also sold by competitors, which poses the threat of being overtaken or destroyed by them. In short, for SWOT, it can be said that the current upward trend of homeopathy is greater than the downward trend, but trends like Germany are posing a serious threat to the statement and the market. 3.2 PESTEL In this part, PESTLE analysis will be performed, which will analyze homeopathy at different stages of analysis. Politically, as stated in the previous definition, homeopathic medicines are related to FDA-related medicines, so they belong to the medical jurisdiction. With the development of economic standards, the income of homeopathic medicines has increased year by year. According to the "transparent market research", it will start from 2015 The 3.8 billion U.S. dollars in 2010 will increase to 17.4 billion U.S. dollars in 2024. This is an increase of 458%. In society, homeopathic medicines are widely accepted because of their small amount of chemicals. Therefore, it is in an advantageous position in this regard. From a technical point of view, homeopathy has no proven scientific effect and only uses a placebo effect. Homeopathic medicine is very environmentally friendly because it only requires very small ingredients and does not produce non-material waste. renewable resource. This is good for their image and therefore can strengthen consumer relations. Legally speaking, as mentioned earlier, the laws regarding homeopathic medicines vary from state to state, but they can be sold freely within the United States, but under different conditions. 3.3 Porter’s five forces summary analysis will use the Porter’s five forces, namely the buyer’s bargaining power, the supplier’s bargaining power, the threat of substitutes, the threat of entry, and competition among competitors. Suppliers have very low bargaining power in this regard, because there are many different suppliers purchasing from all over the world, and the ingredients required for different drugs are not uncommon, resulting in low prices. On the other hand, the proportion of buyers with bargaining power is very high, which hinders high-priced products because buyers can easily turn to competitors. Although the competitors are small but large in scale, and the quotations in the product range are very similar, this has led to overall competition in the number of competitors, but the competition in pricing is very fierce. The replacement threat of CAMs is always a huge threat because customers can switch to classic medicines at any time, thereby taking business away from the homeopathy department. Since homeopathy relies on economies of scale, the threat of entry is relatively low, because first, supply and distribution channels must be established, and production facilities must be established in a central location to ensure smooth supply and distribution. In summary, it can be said that homeopathy is a very predictable field from the perspective of Porter's Five Forces, because the possibility of new entry and price changes is small, making it a safe market. Its potential is also limited, because the price and the upper limit of the number of customers are relatively low, thus narrowing its possible income. Read Less