market, competitors, and company's operating performance

Team Members:
Avinash Bansal
Beverly Menezes (154)
Lipika Roy (090)
What has to be true about the market, competitors, and company’s operating performance
for each to be successful?
1. Traditional Sales Model
Markets - Financial stability in the market would be required. Sequencers were prohibitively
expensive for nearly all except the best-funded research institutions, costing hundreds of
thousands of dollars on average. And even for well-funded research institutions, grants and
government funding could be unreliable.
Competitors - This model directly challenges incumbents. Life Technologies’ sequencers are
already similar to Genapsys’. The company would require a more sustainable competitive
advantage here apart from the 4 advantages mentioned in the case
Company’s Operating Performance - It is likely that competitors will undercut their prices in
order to compete with Genapsys’ low-cost pricing. In such a case, Genapsys will need to
optimize its manufacturing and distribution to allow for even further price cuts if required. The
FCF expenses should stick to the value of ($10,000) as mentioned in the model.
2. Razor & Razor Blade Model
Markets - Management’s forecast about pent up demand for affordable sequencers needs to be
true and should not result in small companies outsourcing this requirement.
Competitors - As Genapsys plans to expand the pie rather than taking a share of its competitors,
there should not be much concern here unless competitors decide to do the same.
Company’s Operating Performance - There already is high capital expenditure required for such
a model. The company should have sufficient working capital to manage daily operational
expenses especially before Genapysys is able to achieve high sales volumes.

3. Data Analytics
For Markets - Market conditions are ripe with massive potential; hospitals and government
institutions are a great source of high LTV customers, retail sales will also be possible with the
right technology. Network Effect will create even more opportunities for expansion.
Competitors - First mover advantage is extremely crucial in this space. There is tremendous
scope for growth and profits; competitors should not leverage their strengths and enter before us.
For Company’s Operating Performance - Operating Costs are 5% higher than the other models
throughout the project, with a very deep fall in FCF after the 5th year. A fortified partner with
deep pockets should be ready to support Genapsys throughout.
What are the major risks of each?
Traditional Strategy
● Strategic Tension
○ In the traditional strategy, GenapSys is planning to undercut the biggest players in
the market in terms of price and targeting the same customer segment as them. In
order to retain market share, the competitors will likely drop their own prices like
they had done earlier in a similar circumstance. Considering that Genap Sys is a
new company and does not have as deep pockets as already established players -
it may have to declare bankruptcy if it isn’t able to gain enough market share soon
as well as sustain its profits.
○ Many institutions who are their customers depend on grants and donations to fund
such purchases. These sources of funds are unreliable in terms of estimating
demand.
○ Here, Genap Sys is mostly dependent on One-Time purchase of the machines and
regular purchase of the cartridges by a small group of buyers. It does not have a
consistent and regular customer base who are loyal to them.
● Financial Tension
○ It has a lower NPV that Data analytics model but slightly higher NPV than Razor
and Razor blade strategy
○ It has a lower terminal value as compared to the other models
○ If the anticipated demand falls short then the company will struggle to scale

Razor and Razor Blade Strategy
● Strategic Tension
○ While this model aims to target customers other than the segment which its
competitors are targeting, the competitors may see it as a threat and may retaliate.
The company will not be financially strong enough to tackle such a case.
○ The company will need to scale and gain market share really fast before any other
new company enters the market with similar value proposition
○ Considering the high anticipated demand, the capital expenditure to meet prepare
for it is very high and if the demand does not meet expectations then it will
difficult to break even
● Financial Tension
○ It has the lowest NPV among the three models
○ It has negative 1-10 years FCF and hence it will be even harder to convince an
investor to invest
Data Analytics
● Strategic Tension
○ There are many compliance requirements while working with data. The company
will be required to get permission from the regulatory bodies as well as take
permission from individual customers and institutions for accessing, storing, and
processing the data collected
○ Data Analytics is not a core competency of Genap Sys and it will have to partner
with 3rd party companies like Google and Amazon to help with it. Considering
that the data will become the most valuable resource for Genap Sys, it will be
very important to protect that data from others at the same time
○ If the scale at which data is to be collected is not reached then the revenue model
will not work
● Financial Tension
○ It has a very high negative FCF in the 1st 10 years which will make it extremely
difficult to find an investor
○ It will require very high capital expenditure to set everything