Value: Do Medtronic’s
resources and capabilities enable the firm to respond to environmental threats
or opportunities?
Medtronic has a variety of successful product lines based
all over the world. It has exceptional resources in the financial, physical,
human and organizational categories. Financially, it has continually grown its
resources. In Medtronic’s most recent annual report, it shows that the stock
price has increased continually since 2009. Physically, it has acquired
numerous smaller firms, acquiring all of their research and product lines. In
addition, Medtronic has several regional offices all over the world. Its human
resources create the innovation and technology that has made them so successful.
Medtronic’s website says it has an “innovative culture where passionate people
are encouraged and flourish. If your job search ends at Medtronic, you'll find
yourself collaborating with some of the brightest minds in the healthcare
industry.” From an organization standpoint, Medtronic is doing well not only
coming up with the technology but capitalizing on it. Its growing stock success
can attest to that.
Rarity: How many
competing firms already possess particular valuable resources and capabilities?
According to MorningStar, there are 25 other firms in the
same industry as Medtronic. The top several firms are serious competitors, some
with interests in similar markets as Medtronic. Medtronic is not the only firm
in the business, so it does not have rarity as a competitive advantage.
However, even in the top competitors, there is only one who is directly in
Medtronic’s range. Abbott Laboratories and Medtronic have similar numbers
across the board. Is it the only firm in the business? No. Does it have more
resources and capabilities than the vast majority of competitors? Absolutely.
Imitability: Do firms
without a resource or capability face a cost disadvantage in obtaining it
compared to firms that already possess it?
Firms that do not already possess Medtronic’s research and
development and trade secrets of their products would have to spend lots of
money to create a rival product. Last year alone, Medtronic’s research and
development budget was $1.5 billion. Medtronic has bought up smaller companies
and high performing firms around the world. If another firm wanted to buy their
way into the market, they would have to beat Medtronic to the deal. The medical
device industry, in general, requires high capital investment. New firms face a
high barrier to entry and difficulty imitating Medtronic’s products.
Organization: Is a
firm organized to exploit the full competitive potential of its resources and
capabilities?
In addition to developing great technology, Medtronic has a
lot of other organizational advantages. First, Medtronic develops its leaders.
The company values innovative thinking and encourages leadership development
for the ultimate benefit of the company and the development of its technology.
Medtronic also has its businesses organized into three main departments that
have subdepartments—these groups work together, making the best use of
knowledge and resources. Their locations are divided by the best places for
manufacturing, research, and other departments to be. Most recently, Medtronic
has attempted to avoid millions of dollars in corporate taxation by moving its
headquarters to a newly acquired company in Ireland. The company is using all
of its resources, expertise and capabilities to fully exploit its
profitability.
