Medtronic is made up of several business units, all under
the larger umbrella of medical technology. The different foci of the company
include Aortic and Peripheral Vascular, Cardiac Rhythm and Failure, Coronary
and Structural Heart, Diabetes, Neuromodulation, Spine and Surgical
Technologies. These business units are part of a related linked strategy. In
each of these units, the technology is very different. Some of Medtronic’s
products are machines like glucose monitoring insulin pumps or pacemakers,
while others are synthetic heart valves and artificial cervical discs. All of
these parts require vastly different manufacturing materials and processes;
however, some of the products are likely to share some common materials, such
as silicone or the inner workings of the medical machines. Therefore, some of
the business units may utilize the same suppliers.
In addition, because hospitals
have become corporate conglomerates of different types of practices, Medtronic
may be able to market these vastly different products to similar distribution
channels. After all, the same hospital that puts in pacemakers would also fit a
patient with an insulin pump. In addition, the businesses are linked through
common core competencies and a common mission, which is to “contribute to human
welfare by application of biomedical engineering in the research, design,
manufacture, and sale of instruments or appliances that alleviate pain, restore
health, and extend life.”
In previous chapters, we have already established that
Medtronic’s products are valuable, rare and costly-to-imitate, which is why it
operates all of its business units from within the boundaries of the firm.
Medtronic utilizes a hierarchical governance strategy in order to best develop
economies of scope.
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