Strategic Management for Medical Equipment Company
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The assignment requires the student to develop a strategic plan for a medical equipment company, incorporating diversification in product lines, promotion through direct selling and traditional advertising, and building a brand image as an innovative organization. The student must consider the company's strengths and weaknesses, opportunities, and threats in the market, and propose actionable steps to achieve long-term success.
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Running head: STRATEGIC MANUFACTURING
Strategic Manufacturing
Name of the Student
Name of the University
Author Note
Strategic Manufacturing
Name of the Student
Name of the University
Author Note
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1
STRATEGIC MANUFACTURING
1.
Aurora is a small producer of implantable cardio version defibrillation (ICD) - the
ACCUTRON.
Competitive Rivalry
The company is having its competitors inBiotronik; Boston Scientific; Medtronic; Ela
Medical. The competitors are available with the devices with variety of approaches and many of
its competitors are settled with merging and acquisition approach. The competitors are
differentiated based on their products and the size of the product, implantation process,
programming, product life and the varied software and hardware process.
Threat of New Entrants
The threat of the new entrants can be fulfilled by the price strategy, which can discourage
the entry of the entrants and the expensive investment that is required to manage the production
of the product. Arelation is needed to be builtwith the suppliers in order to access the product
design and material. The process of meeting the strict standards of the governments including the
testing and quality standards can stand out to be a threat for the new entrants and for Aurora.
Threat of Substitutes
Along with the threat of the competitor’s product which affect the sales of Aurora, the
substitutes which are available for the same treatment are transcutaneous pacing anti-arrhythmic
drugs which are preferred by the patients to take medication in place of doing implantation. The
technological conventions such as the ICD, which are generated due to the changes in the
culture, have also brought about changes and variedness in the customer preferences. The
STRATEGIC MANUFACTURING
1.
Aurora is a small producer of implantable cardio version defibrillation (ICD) - the
ACCUTRON.
Competitive Rivalry
The company is having its competitors inBiotronik; Boston Scientific; Medtronic; Ela
Medical. The competitors are available with the devices with variety of approaches and many of
its competitors are settled with merging and acquisition approach. The competitors are
differentiated based on their products and the size of the product, implantation process,
programming, product life and the varied software and hardware process.
Threat of New Entrants
The threat of the new entrants can be fulfilled by the price strategy, which can discourage
the entry of the entrants and the expensive investment that is required to manage the production
of the product. Arelation is needed to be builtwith the suppliers in order to access the product
design and material. The process of meeting the strict standards of the governments including the
testing and quality standards can stand out to be a threat for the new entrants and for Aurora.
Threat of Substitutes
Along with the threat of the competitor’s product which affect the sales of Aurora, the
substitutes which are available for the same treatment are transcutaneous pacing anti-arrhythmic
drugs which are preferred by the patients to take medication in place of doing implantation. The
technological conventions such as the ICD, which are generated due to the changes in the
culture, have also brought about changes and variedness in the customer preferences. The
2
STRATEGIC MANUFACTURING
company reports the sales of its product per unit is $18750 which is relatively less as compared
to its competitors.
Bargaining Power of Buyers
The buyers serve with the power of bargaining are highly affecting for the industry and
the company as well. The choice of therapeutic approach depends completely over the patients
and the physician’s preference that will be providing with the treatment. Consumers are price
focused along with the quality, size and company reputation. The option is upto the customers to
decide that they need implantation or medication (Burton et al. 2015).
Bargaining Power of Suppliers
The company had less number of suppliers with respect to its core components supplies
such as titanium, battery, cardio version. Small number of specialist companies designs these
core components. Overall, the suppliers are common for all the products. Due to less suppliers in
2016 Aurora faced shortages of micro controller which is used in ACCUTRON, when the
tsunami destroyed the Freescale production factory which was responsible to supply materials
for devices. After building and designing, the products are undergone by the designing, testing
and quality standards that are regulated by the government.
2.
The product is introduced to the market for the patients of ECG and is programmed
accordingly to analyse various arrhythmias. The company focuses towards achieving overall
cost leadership in the industry by producing low cost product with high availability of its product
in the market. As compared to its competitors mainly the government companies, who sell the
STRATEGIC MANUFACTURING
company reports the sales of its product per unit is $18750 which is relatively less as compared
to its competitors.
Bargaining Power of Buyers
The buyers serve with the power of bargaining are highly affecting for the industry and
the company as well. The choice of therapeutic approach depends completely over the patients
and the physician’s preference that will be providing with the treatment. Consumers are price
focused along with the quality, size and company reputation. The option is upto the customers to
decide that they need implantation or medication (Burton et al. 2015).
Bargaining Power of Suppliers
The company had less number of suppliers with respect to its core components supplies
such as titanium, battery, cardio version. Small number of specialist companies designs these
core components. Overall, the suppliers are common for all the products. Due to less suppliers in
2016 Aurora faced shortages of micro controller which is used in ACCUTRON, when the
tsunami destroyed the Freescale production factory which was responsible to supply materials
for devices. After building and designing, the products are undergone by the designing, testing
and quality standards that are regulated by the government.
2.
The product is introduced to the market for the patients of ECG and is programmed
accordingly to analyse various arrhythmias. The company focuses towards achieving overall
cost leadership in the industry by producing low cost product with high availability of its product
in the market. As compared to its competitors mainly the government companies, who sell the
3
STRATEGIC MANUFACTURING
product at a range starting from $12000,the ACCUTRON is sold at $18750 per unit. The
company built its devices in a complete clean room environment under microscope. These
devices are handmade and are made by the help of trained facility. Among the private
companies, it provides its product with less price and best offered quality. The workers who are
trained make the products and development programmes for 6 months. The price is relatively
low as compared to its competitors because of the researches that are taken place within the
organization’s production process. The investing amount for Aurora is over USD 650 million
just for the training and development programmes. This stands out as the manufacturing price of
per unit product as $7685.
The company must ensure that product differentiation and brand loyalty had to be
secured in order to gain competitive advantage as the consumers are primarily focused on the
price, quality and reputation of the company product (Meihamiand Meihami2014). The company
Aurora needs to primarily focus on its technological interventions and be reliant on its suppliers
to increase the production and maintain the production of ACCUTRON smoothly, as it cannot
affect the production per unit. The supplier, if changed, can be an issue as it changes the overall
process of the product as such, revalidation, reprogramming and regulatory review of the new
devices.
STRATEGIC MANUFACTURING
product at a range starting from $12000,the ACCUTRON is sold at $18750 per unit. The
company built its devices in a complete clean room environment under microscope. These
devices are handmade and are made by the help of trained facility. Among the private
companies, it provides its product with less price and best offered quality. The workers who are
trained make the products and development programmes for 6 months. The price is relatively
low as compared to its competitors because of the researches that are taken place within the
organization’s production process. The investing amount for Aurora is over USD 650 million
just for the training and development programmes. This stands out as the manufacturing price of
per unit product as $7685.
The company must ensure that product differentiation and brand loyalty had to be
secured in order to gain competitive advantage as the consumers are primarily focused on the
price, quality and reputation of the company product (Meihamiand Meihami2014). The company
Aurora needs to primarily focus on its technological interventions and be reliant on its suppliers
to increase the production and maintain the production of ACCUTRON smoothly, as it cannot
affect the production per unit. The supplier, if changed, can be an issue as it changes the overall
process of the product as such, revalidation, reprogramming and regulatory review of the new
devices.
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4
STRATEGIC MANUFACTURING
Figure: Life cycle
Source: Author’s creation
The Accturon is in the growth phase of its market life cycle as the demand of the product
is gradually increasing in the market. The constant rise in the development of the product as a
trusted one and the gradual rise in the number of patients preferring the pacemaker to the
medicinal substitutes and the treatment of the disease. The manufacturing company of Aurora
has boasted of a constant increase in the sales of the product since its introduction to the market.
The various aspect further boosting the sales of the ICD in Australia is the gradual increase in the
number of the people with cardiac condition. It is estimated that that the number of the cardiac
patients in the country will continue to rise leading to the increase in the sale of the ICD devices
in the country (Dennekampet al. 2015). Majority of the people suffering heart conditions tend to
STRATEGIC MANUFACTURING
Figure: Life cycle
Source: Author’s creation
The Accturon is in the growth phase of its market life cycle as the demand of the product
is gradually increasing in the market. The constant rise in the development of the product as a
trusted one and the gradual rise in the number of patients preferring the pacemaker to the
medicinal substitutes and the treatment of the disease. The manufacturing company of Aurora
has boasted of a constant increase in the sales of the product since its introduction to the market.
The various aspect further boosting the sales of the ICD in Australia is the gradual increase in the
number of the people with cardiac condition. It is estimated that that the number of the cardiac
patients in the country will continue to rise leading to the increase in the sale of the ICD devices
in the country (Dennekampet al. 2015). Majority of the people suffering heart conditions tend to
5
STRATEGIC MANUFACTURING
prefer pacemakers to antiarrhythmic drugs as they have a large number of side effects including
the worsening of their cardiac condition. The ICD on the contrary eases the process and it can be
controlled remotely if it is causing any trouble to the patient. One of the major reasons of the
success of the product is its pricing in the market. There are a number of factors affecting the
market when the consumers decide to buy an important product such as the pacemaker, and their
lives depend on it (Mond and Crozier 2015). The major reason for its success is the fact that the
patients trust the brand and it’s price is competitive against the wide array of the other products
available. The different aspects relating to the marketing issues related to the company include
the production capacity of the organization.
It is seen that the product sold extensively since its advent into the market till 2015 and
there was a gradual decline in the books of sales for the following two years. Contrary to the
popular belief the cause of the decline in the sales was not the lack of the popularity of the
product but the lack of the raw materials to assemble the products. The product was dependent
on the Japanese company Freescale to manufacture a number of microcontrollers that were to be
used in the device. The destruction of the company due to the tsunami stopped the supply of the
microcontrollers which were necessary for the manufacture of the ICD devices. This loss forced
Aurora to include a number of different changes in the devices which included a number of
programming and the structural changes. The programming and the structural changes made the
production process to lag behind and the sales fell. The sales therefore do not show the true
demand of the product in the market as the factory was lacking the production to meet the market
demand. The company is therefore placed in the growing sector of the different companies
manufacturing the ICDs. The various types of the pacemaker available in the market are
differently priced and based on the pricing and the build quality Aurora provides an affordable
STRATEGIC MANUFACTURING
prefer pacemakers to antiarrhythmic drugs as they have a large number of side effects including
the worsening of their cardiac condition. The ICD on the contrary eases the process and it can be
controlled remotely if it is causing any trouble to the patient. One of the major reasons of the
success of the product is its pricing in the market. There are a number of factors affecting the
market when the consumers decide to buy an important product such as the pacemaker, and their
lives depend on it (Mond and Crozier 2015). The major reason for its success is the fact that the
patients trust the brand and it’s price is competitive against the wide array of the other products
available. The different aspects relating to the marketing issues related to the company include
the production capacity of the organization.
It is seen that the product sold extensively since its advent into the market till 2015 and
there was a gradual decline in the books of sales for the following two years. Contrary to the
popular belief the cause of the decline in the sales was not the lack of the popularity of the
product but the lack of the raw materials to assemble the products. The product was dependent
on the Japanese company Freescale to manufacture a number of microcontrollers that were to be
used in the device. The destruction of the company due to the tsunami stopped the supply of the
microcontrollers which were necessary for the manufacture of the ICD devices. This loss forced
Aurora to include a number of different changes in the devices which included a number of
programming and the structural changes. The programming and the structural changes made the
production process to lag behind and the sales fell. The sales therefore do not show the true
demand of the product in the market as the factory was lacking the production to meet the market
demand. The company is therefore placed in the growing sector of the different companies
manufacturing the ICDs. The various types of the pacemaker available in the market are
differently priced and based on the pricing and the build quality Aurora provides an affordable
6
STRATEGIC MANUFACTURING
option with all the major technological hardware and the latest facilities. The pricing is one of
the major reasons whythe product is quite successful.
The cost of production shows that the company gains a fair share of the selling price as
their profit. The overall growth of the market share of the organization along with the increasing
number of patients opting for the affordable option for the long-term medication of the cardiac
disorders has led to the success of this company and its growth.
4.
Strategic management in a business unit is the policies and decisions that are taken by the
company in order to organize the planning and the operations of the business. The product that
Aurora has to offer is an ICD instrument (Hill et al. 2014). Following are a few points that the
management of the Aurora should consider while making policies:
Research and Development Boost: As the product that the company have is based on
technology and is for a patient who is under life threatening condition, focus should be on
improving the product so that the cost of product can be reduced at the same time per unit cost of
the item will also reduce this will allow the company to cater to a larger customer group.
Though the insurance coverage of the public includes the cost of the process. The focus of the
company should be in the short run on research investment and on manufacturing investment.
CSR- Every organization is focused on sustainable development and Aurora is a company that
deals with sensitive cases for their business prospect. To balance the situation the company
should include corporate social responsibility as a part of their business model to help people
who will not be able to recover even with the help of the equipment. The company can come up
with strategies in order to help the people and to help the society (Stead and Stead 2017).
STRATEGIC MANUFACTURING
option with all the major technological hardware and the latest facilities. The pricing is one of
the major reasons whythe product is quite successful.
The cost of production shows that the company gains a fair share of the selling price as
their profit. The overall growth of the market share of the organization along with the increasing
number of patients opting for the affordable option for the long-term medication of the cardiac
disorders has led to the success of this company and its growth.
4.
Strategic management in a business unit is the policies and decisions that are taken by the
company in order to organize the planning and the operations of the business. The product that
Aurora has to offer is an ICD instrument (Hill et al. 2014). Following are a few points that the
management of the Aurora should consider while making policies:
Research and Development Boost: As the product that the company have is based on
technology and is for a patient who is under life threatening condition, focus should be on
improving the product so that the cost of product can be reduced at the same time per unit cost of
the item will also reduce this will allow the company to cater to a larger customer group.
Though the insurance coverage of the public includes the cost of the process. The focus of the
company should be in the short run on research investment and on manufacturing investment.
CSR- Every organization is focused on sustainable development and Aurora is a company that
deals with sensitive cases for their business prospect. To balance the situation the company
should include corporate social responsibility as a part of their business model to help people
who will not be able to recover even with the help of the equipment. The company can come up
with strategies in order to help the people and to help the society (Stead and Stead 2017).
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STRATEGIC MANUFACTURING
Reduction of Manufacturing Cost: the manufacturing process of the equipment is high as the
materials that are used in manufacturing are also expensive hence the company should focus in
reduction of the labor cost by setting up units in countries where the cost of labor is low. This
will help the company in reducing the price of the equipment even further. Though the company
has advantage in the price category but this will also help the company in the future prospects.
Diversification in the Product Line: there are other instruments that are used in the recovery of
a patient these are some of the diversification option for the company. For example:
manufacturing of mechanical limbs for the ones who require amputation. There are also many
equipments that are required in the medical field the company should slowly proceed to expand
the product line of the company. This can be a long term strategy of the organization and the
process can be achieved with the help of recruiting scientists and more employees to support the
diversification process. The management must come up with small goals and take calculative
steps in diversification (Rothaermel 2015).
Promotion and Sales: The Company can incorporate the process of direct selling with the help
of representative like the medicine companies, the organization can have representative talk to
the surgeons and the physicians talk about the design and the unique features of the products.
There can be traditional advertisements in the hospitals and medical magazines. This will help
the company build a brand value and will help in securing their place in the market. The
company can request and present the qualities of the product with the researcher who are
working in this field to include the name of the product in their paper which may have the
potential to be published in medical journals (Huang andSarigöllü 2014).
Brand Image: The company has to work upon building a brand image so that they have a recall
value as they do not sell items directly to the user it is difficult to establish an image like any
STRATEGIC MANUFACTURING
Reduction of Manufacturing Cost: the manufacturing process of the equipment is high as the
materials that are used in manufacturing are also expensive hence the company should focus in
reduction of the labor cost by setting up units in countries where the cost of labor is low. This
will help the company in reducing the price of the equipment even further. Though the company
has advantage in the price category but this will also help the company in the future prospects.
Diversification in the Product Line: there are other instruments that are used in the recovery of
a patient these are some of the diversification option for the company. For example:
manufacturing of mechanical limbs for the ones who require amputation. There are also many
equipments that are required in the medical field the company should slowly proceed to expand
the product line of the company. This can be a long term strategy of the organization and the
process can be achieved with the help of recruiting scientists and more employees to support the
diversification process. The management must come up with small goals and take calculative
steps in diversification (Rothaermel 2015).
Promotion and Sales: The Company can incorporate the process of direct selling with the help
of representative like the medicine companies, the organization can have representative talk to
the surgeons and the physicians talk about the design and the unique features of the products.
There can be traditional advertisements in the hospitals and medical magazines. This will help
the company build a brand value and will help in securing their place in the market. The
company can request and present the qualities of the product with the researcher who are
working in this field to include the name of the product in their paper which may have the
potential to be published in medical journals (Huang andSarigöllü 2014).
Brand Image: The company has to work upon building a brand image so that they have a recall
value as they do not sell items directly to the user it is difficult to establish an image like any
8
STRATEGIC MANUFACTURING
other companies do but with the help of strategic communication and promotional process the
organization should work towards building an image of an innovative organization that care’s for
the patients (Wheelenet al. 2017).
STRATEGIC MANUFACTURING
other companies do but with the help of strategic communication and promotional process the
organization should work towards building an image of an innovative organization that care’s for
the patients (Wheelenet al. 2017).
9
STRATEGIC MANUFACTURING
Reference
Burton, S.A., Amir, N., Asbury, A., Lange, A. and Hardinger, K.L., 2015. Treatment of
antibody‐mediated rejection in renal transplant patients: a clinical practice survey. Clinical
transplantation, 29(2), pp.118-123.
Dennekamp, M., Straney, L.D., Erbas, B., Abramson, M.J., Keywood, M., Smith, K., Sim, M.R.,
Glass, D.C., Del Monaco, A., Haikerwal, A. and Tonkin, A.M., 2015. Forest fire smoke
exposures and out-of-hospital cardiac arrests in Melbourne, Australia: a case-crossover
study. Environmental health perspectives, 123(10), p.959.
Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated
approach. Cengage Learning.
Huang, R. and Sarigöllü, E., 2014. How brand awareness relates to market outcome, brand
equity, and the marketing mix. In Fashion Branding and Consumer Behaviors (pp. 113-132).
Springer, New York, NY.
Meihami, B. and Meihami, H., 2014. Knowledge Management a way to gain a competitive
advantage in firms (evidence of manufacturing companies). International letters of social and
humanistic sciences, 3, pp.80-91.
Mond, H.G. and Crozier, I., 2015. The Australian and New Zealand cardiac pacemaker and
implantable cardioverter-defibrillator survey: calendar year 2013. Heart, Lung and
Circulation, 24(3), pp.291-297.
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.
Stead, J.G. and Stead, W.E., 2017. Sustainable strategic management. Routledge.
STRATEGIC MANUFACTURING
Reference
Burton, S.A., Amir, N., Asbury, A., Lange, A. and Hardinger, K.L., 2015. Treatment of
antibody‐mediated rejection in renal transplant patients: a clinical practice survey. Clinical
transplantation, 29(2), pp.118-123.
Dennekamp, M., Straney, L.D., Erbas, B., Abramson, M.J., Keywood, M., Smith, K., Sim, M.R.,
Glass, D.C., Del Monaco, A., Haikerwal, A. and Tonkin, A.M., 2015. Forest fire smoke
exposures and out-of-hospital cardiac arrests in Melbourne, Australia: a case-crossover
study. Environmental health perspectives, 123(10), p.959.
Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated
approach. Cengage Learning.
Huang, R. and Sarigöllü, E., 2014. How brand awareness relates to market outcome, brand
equity, and the marketing mix. In Fashion Branding and Consumer Behaviors (pp. 113-132).
Springer, New York, NY.
Meihami, B. and Meihami, H., 2014. Knowledge Management a way to gain a competitive
advantage in firms (evidence of manufacturing companies). International letters of social and
humanistic sciences, 3, pp.80-91.
Mond, H.G. and Crozier, I., 2015. The Australian and New Zealand cardiac pacemaker and
implantable cardioverter-defibrillator survey: calendar year 2013. Heart, Lung and
Circulation, 24(3), pp.291-297.
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.
Stead, J.G. and Stead, W.E., 2017. Sustainable strategic management. Routledge.
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10
STRATEGIC MANUFACTURING
Wheelen, T.L., Hunger, J.D., Hoffman, A.N. and Bamford, C.E., 2017. Strategic management
and business policy. pearson.
STRATEGIC MANUFACTURING
Wheelen, T.L., Hunger, J.D., Hoffman, A.N. and Bamford, C.E., 2017. Strategic management
and business policy. pearson.
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