Evaluating Opportunities:
Medtronic is the largest medical technology company,
operating in 140 countries. It has seven different business divisions, all
located in different places. For Medtronic to have become so successful, it has
had to make strategic business decisions and adapt to the market, as well as
neutralize threats in order to keep competition low. Based on the products and
services Medtronic offers, the company is classified as a member of emerging
industries in a global market.
Emerging Industries:
Medtronic employs a technological leadership strategy in emerging industries
because it is always introducing new, innovative products into the market. With
a company based on ever-improving technology, Medtronic and the medical
technology industry can be classified as emerging, although it has been around
for more than 60 years. In addition to consistently adding new technology,
Medtronic is adding markets, and successfully. Last year alone, 13% of the
company’s total revenue came from emerging markets, where the demand for these
technologically advanced products is growing rapidly.
Global Market
Opportunities: Medtronic utilizes a global strategy. Rather than changing strategies for other
countries, Medtronic can focus on the same technology and advancements because
the product it sells does not change based on cultural preferences. Medical
technology is the same for people all over the world. In the FY14 annual
report, CEO Omar Ishrak discusses the acquisition of Covidien and the resulting
growth of their global strategy. This acquisition means existing research and
development and know-how and increases shareholder’s revenues.
Neutralizing Threats:
Threat of Entry:
Medtronic is in a position in the industry where it has erected barriers to
entry. With its large workforce and global strategy, it has exploited economies
of scale by acquiring and merging with other companies to become the largest
medical technology company. Its products are highly differentiated and its
research and development teams are constantly releasing new technology. In
addition to these barriers, it has also been able to reduce costs independent
of scale by moving its business office to Ireland to take advantage of a tax
shelter. This one act has saved Medtronic millions of dollars each year.
Threat of Rivalry:
Medtronic also competes with firms in the industry on dimensions other than
price. Its products are differentiated with advanced technology beyond that of
its competitors. In addition, the company’s products and services are
diversified, thriving with seven divisions that are all focused on different
types of medical technology. From Cardiac Rhythm and Heart Failure Management
to Diabetes Care, Medtronic has a division for multiple, unrelated yet common
health problem. Regardless of a competitor’s success in one market, Medtronic
still dominates the industry with types and performance of several
technologies.
Sources:
Medtronic FY 14 Annual Report:
Medtronic Investor Page:
No comments:
Post a Comment