abhishreshthaa
Abhijeet S
Brookdale Senior Living (NYSE: BKD) is a company that operates senior's residences, established in 1978. It is a New York Stock Exchange listed company. Brookdale is the largest owner and operator of senior living communities throughout the United States", operating over 570 senior or retirement communities in the US. They have 35,000 staff and 55,000 residents.[1]
The company also offers Independent living, Personalized Assisted living, Alzheimer’s and dementia care, rehabilitation and skilled nursing. One whole-owned subsidiary company, Innovative Senior Care (ISC), offers rehabilitation, fitness and educational programming, and health services.
The Origins of Brookdale started in the late 1970s with the focus of Large Upscale Urban Retirement communities located in large cities Like Chicago, New York, and Miami. These early models replicated large full service Five Star hotels like the Hyatt, Marriott's and Hilton of the modern era. As the industry evolved into the late nineties and early 2000s, Brookdales major shareholder became Fortress Investments with approximately 51% holdings. Throughout the late nineties and early to mid 2000s Brookdale developed several more communities that resembled earlier models but also reflected the ever changing climate including Large Continuous Care Retirement Communities (CCRC) which house all brands of the aging process including Skilled Nursing, Assisted Living, Independent Living, and Memory Care facilities.
By early 2005 the company had grown to approximately 90 stand alone properties. During this times Fortress Investments had acquired the recently bankrupt Alterra Corporation (formerly Alternative Living Services) A Milwaukee WI based company who had developed and opened more than 500 stand alone Assisted Living and Memory Care properties throughout the USA between 1993 and 2003. At one Point Alterra was the largest provider of Assisted Living and Memory Care services within the United States catapulting ahead of the Industry Benchmark for Senior Living "Sunrise Senior Living of Virginia". Rapid growth proved costly and detrimental to the Alterra Corporation and that organization filed for chapter 11 bankruptcy protection in 2004. They managed to sell off a third of their assets and bring their facility total down to approximately 300.
During the bankruptcy Fortress purchased Alterra and pondered whether to sell the company to Emeritus Senior Living, which was hired on to manage Alterra through the bankruptcy phase. By the time the management agreement with Emeritus was about to expire the remaining Alterra portfolio was thriving due to an aggressive push by corporate and divisional leaders to prove the company was not "dead" and was a valuable asset. Fortress at the 11th hour put together a merger that would bring their Successful Brookdale Portfolio together with their now rising Alterra Portfolio. This was approved and completed in early 2005 bringing the Brookdale property total to 390. From late 2005 to early 2007 Fortress and Brookdale took advantage of a strong market and an abundance in company cash reserves to acquire several smaller senior living organizations within the United States.
These Included the April 2006 acquisition of Southern Assisted Living a Chapel Hill, North Carolina Based privately held company who managed approximately 45 properties in the Carolinas, predominantly North Carolina. Simultaneously the acquisitions of several smaller companies including Liberty Senior Services, Wellington Senior Living, and Southland properties brought Brookdale into the second spot on the leading providers list for Senior Care in the US right behind Sunrise. is based on the simple fact that each industry and market is influenced by several competitive forces namely: threat of entrance, bargaining power of suppliers and buyers, competitive rivalry and threat of substitutes. The intensity of competition and therefore an industry’s attractiveness and profitability will mostly depend on these external factors ( October 4th 2003]).
First of all, competition within the food retailing industry seems to be large as well as diversified. Asda, Tesco, Morrison (including Safeway) and Sainsbury’s need to be named as the major competitors, which have a tremendous range of resources at their disposal. Although, one may has to mention smaller retailers (Jacksons, Spar, Lateshops, etc.) which are present in regional areas, e.g. in Northern England and can therefore be seen as competitors, as well.
What is more, differentiation between the numerous players and their products is scarce. As expensive equipment, factories and estate are required in the food retailing industry, barriers to exit are quite high, too. Furthermore, the costs for customers to switch to rival brands are relatively low. All in all, rivalry may therefore be characterized as intense.
The group of buyers is formed by individual customers and restaurants. But as the individual customers represent the most important buyer and therefore, one could speak of a concentration of buyers. As for an almost endless range of products offered, switching costs to rival brands are low. Hence, the bargaining power of buyers is relatively high.
Producers of food and other goods as well as packaging manufacturers have to be seen as the major suppliers in this industry – i.e. they do represent a fragmented source of supply. Taking into account that the key players of this industry possess e.g. packaging factories, produce their own ‘branded’ products and that on the other hand switching costs from one supplier to another are low and do not involve high risk, the food retailing industry faces little pressure on margins from the suppliers.
Diversified products, the offer of different brands within each supermarket and the creation of supermarket own brands are examples of the wide range of substitutes for products within the food retailing industry. The almost “non-existence” of switching costs and the fact, of the intense offer of similar products, both contribute to a quite tremendous threat of substitutes. Even though these competitive pressures could be by-passed through building up high brand loyalty and close customer relationships as well as through offering high quality, better taste or innovative products.
Entry to the industry of food retailing seems to be quite difficult, as high initial investment will be required for building new stores, manufacturing plants, etc.
A relatively strong brand loyalty of customers also contributes to entry barriers. But as switching costs for buyers are low, the threat of new entrants could be characterized as moderate.
To start off, regarding the circumstances that the key players of the food retailing industry created their own supermarket brands and the offer of other products may also represent potential competition within the company itself.
It also needs to be considered that the more complicated an industry’s market structures are, the less applicable this model is. Furthermore Porter’s Five Forces Model does not take into account non-market forces such as public and stakeholders, which could be regarded as a “sixth force”. (This force will be briefly discussed at the end of this analysis.)
It is essential for any business to have an overview of the forces influencing a company’s competitiveness. As there is a wide range of environmental, competitive factors, this tool was regarded as offering a good basis for the location of direct competitors as well as further forces such as the powerful customers.
As an analysis of the competitive environment of individual SBUs within the companies has not been possible, it was carried out at a level of the whole business. So it needs to be beard in mind, that this analysis therefore, can only be considered as a “starting point in understanding the competitive forces (2002, pp. 112-113).”
The company also offers Independent living, Personalized Assisted living, Alzheimer’s and dementia care, rehabilitation and skilled nursing. One whole-owned subsidiary company, Innovative Senior Care (ISC), offers rehabilitation, fitness and educational programming, and health services.
The Origins of Brookdale started in the late 1970s with the focus of Large Upscale Urban Retirement communities located in large cities Like Chicago, New York, and Miami. These early models replicated large full service Five Star hotels like the Hyatt, Marriott's and Hilton of the modern era. As the industry evolved into the late nineties and early 2000s, Brookdales major shareholder became Fortress Investments with approximately 51% holdings. Throughout the late nineties and early to mid 2000s Brookdale developed several more communities that resembled earlier models but also reflected the ever changing climate including Large Continuous Care Retirement Communities (CCRC) which house all brands of the aging process including Skilled Nursing, Assisted Living, Independent Living, and Memory Care facilities.
By early 2005 the company had grown to approximately 90 stand alone properties. During this times Fortress Investments had acquired the recently bankrupt Alterra Corporation (formerly Alternative Living Services) A Milwaukee WI based company who had developed and opened more than 500 stand alone Assisted Living and Memory Care properties throughout the USA between 1993 and 2003. At one Point Alterra was the largest provider of Assisted Living and Memory Care services within the United States catapulting ahead of the Industry Benchmark for Senior Living "Sunrise Senior Living of Virginia". Rapid growth proved costly and detrimental to the Alterra Corporation and that organization filed for chapter 11 bankruptcy protection in 2004. They managed to sell off a third of their assets and bring their facility total down to approximately 300.
During the bankruptcy Fortress purchased Alterra and pondered whether to sell the company to Emeritus Senior Living, which was hired on to manage Alterra through the bankruptcy phase. By the time the management agreement with Emeritus was about to expire the remaining Alterra portfolio was thriving due to an aggressive push by corporate and divisional leaders to prove the company was not "dead" and was a valuable asset. Fortress at the 11th hour put together a merger that would bring their Successful Brookdale Portfolio together with their now rising Alterra Portfolio. This was approved and completed in early 2005 bringing the Brookdale property total to 390. From late 2005 to early 2007 Fortress and Brookdale took advantage of a strong market and an abundance in company cash reserves to acquire several smaller senior living organizations within the United States.
These Included the April 2006 acquisition of Southern Assisted Living a Chapel Hill, North Carolina Based privately held company who managed approximately 45 properties in the Carolinas, predominantly North Carolina. Simultaneously the acquisitions of several smaller companies including Liberty Senior Services, Wellington Senior Living, and Southland properties brought Brookdale into the second spot on the leading providers list for Senior Care in the US right behind Sunrise. is based on the simple fact that each industry and market is influenced by several competitive forces namely: threat of entrance, bargaining power of suppliers and buyers, competitive rivalry and threat of substitutes. The intensity of competition and therefore an industry’s attractiveness and profitability will mostly depend on these external factors ( October 4th 2003]).
First of all, competition within the food retailing industry seems to be large as well as diversified. Asda, Tesco, Morrison (including Safeway) and Sainsbury’s need to be named as the major competitors, which have a tremendous range of resources at their disposal. Although, one may has to mention smaller retailers (Jacksons, Spar, Lateshops, etc.) which are present in regional areas, e.g. in Northern England and can therefore be seen as competitors, as well.
What is more, differentiation between the numerous players and their products is scarce. As expensive equipment, factories and estate are required in the food retailing industry, barriers to exit are quite high, too. Furthermore, the costs for customers to switch to rival brands are relatively low. All in all, rivalry may therefore be characterized as intense.
The group of buyers is formed by individual customers and restaurants. But as the individual customers represent the most important buyer and therefore, one could speak of a concentration of buyers. As for an almost endless range of products offered, switching costs to rival brands are low. Hence, the bargaining power of buyers is relatively high.
Producers of food and other goods as well as packaging manufacturers have to be seen as the major suppliers in this industry – i.e. they do represent a fragmented source of supply. Taking into account that the key players of this industry possess e.g. packaging factories, produce their own ‘branded’ products and that on the other hand switching costs from one supplier to another are low and do not involve high risk, the food retailing industry faces little pressure on margins from the suppliers.
Diversified products, the offer of different brands within each supermarket and the creation of supermarket own brands are examples of the wide range of substitutes for products within the food retailing industry. The almost “non-existence” of switching costs and the fact, of the intense offer of similar products, both contribute to a quite tremendous threat of substitutes. Even though these competitive pressures could be by-passed through building up high brand loyalty and close customer relationships as well as through offering high quality, better taste or innovative products.
Entry to the industry of food retailing seems to be quite difficult, as high initial investment will be required for building new stores, manufacturing plants, etc.
A relatively strong brand loyalty of customers also contributes to entry barriers. But as switching costs for buyers are low, the threat of new entrants could be characterized as moderate.
To start off, regarding the circumstances that the key players of the food retailing industry created their own supermarket brands and the offer of other products may also represent potential competition within the company itself.
It also needs to be considered that the more complicated an industry’s market structures are, the less applicable this model is. Furthermore Porter’s Five Forces Model does not take into account non-market forces such as public and stakeholders, which could be regarded as a “sixth force”. (This force will be briefly discussed at the end of this analysis.)
It is essential for any business to have an overview of the forces influencing a company’s competitiveness. As there is a wide range of environmental, competitive factors, this tool was regarded as offering a good basis for the location of direct competitors as well as further forces such as the powerful customers.
As an analysis of the competitive environment of individual SBUs within the companies has not been possible, it was carried out at a level of the whole business. So it needs to be beard in mind, that this analysis therefore, can only be considered as a “starting point in understanding the competitive forces (2002, pp. 112-113).”