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ENTP 6378 Managing the Emerging Enterprise

Feb 11, 2014


Active Coatings, Inc.
1.

Evaluate ACIs identified venture opportunities using Bhides ideas from How Entrepreneurs Craft Strategies
That Work and Moores ideas about the ecology of competition in Predators and Prey. How do these approaches
compare with the market evaluation criteria ACIs consultant used? Did you reach a similar or a different
conclusion?
a. Evaluating the case against Bhides ideas:
i. Screening out Losers: PARTIALLY ALIGNED. Although ACIs consultants ran through the
different proposals of ideas, they were not fully analyzed to weed out losers. A significant effort
was invested in digging deep into every opportunity. This is partially due to the lack of a clear
objective by ACI i.e., they were looking for something that will work.
ii. Gauging Attractiveness: ALIGNED. Health Advances extensive research of all opportunities
helped cover the attractiveness of each opportunity from different fronts. The End Consumers
requirements were collected as well as the financial viabilities/costs were discovered.
iii. Parsimonious Planning and Analysis: NOT ALIGNED. There was not evidence of ACI being
frugal in their planning at least not by intention. The frugality was driven more by their financial
situation.
i. Integrating Action and Analysis: PARTIALLY ALIGNED. ACIs actions were based on the
analysis of data collected by Health Advances, but not completely. While they spent time on

evaluating the medical effectiveness other concerns like Recommended Use, Hours of Efficacy,
etc. were not analyzed.
b. Comparing the approach to Moores Ecology of Competition: Not Aligned.
i. ACIs consultant was not thinking of any radical or revolutionary position for the product. It was
looking to position the product as an incremental product. This conservative approach was
primarily due to FDA approval process.
ii. The strategy here was to work with partners, not to compete against them.
iii. Customer value proposition was one area where some research effort was invested, but the
2.

analysis was scoped within the constraints of existing products.


Use the ideas from Business Marketing: Understand What Customers Value, the criteria summarized in Figure 1
and the data presented in Exhibits 2 and 3 of the case to develop a weighted criterion decision matrix (see
Teaching Note for an example). Explain your choice of criteria and weighting. Based on your analysis, why do
you think ACI chose burn wound dressings as the lead application? Do you agree with their choice?

Criterion

Sutures and
Staples

Criterion
Weight
(W)
Criterion
Value
Score
(S)

Market
size

Market
Concentrat
ion

Infection
Rate

Morbidit
y&
Mortalit
y

$1.9 B

85%

Moderate

High

Low

Moderate

High

10

10

10

Medical
Regulato
Manufacturabi
Consens
ry
lity
us
Hurdles

Over
ll
Rati
g

Central
Catheters

Adhesive
Bandages

Burn Wound
Dressing

Foley Catheters

Weighte
d Score
(W X S)
Criterion
Value
Score
(S)
Weighte
d Score
(W X S)
Criterion
Value
Score
(S)
Weighte
d Score
(W X S)
Criterion
Value
Score
(S)
Weighte
d Score
(W X S)
Criterion
Value
Score
(S)
Weighte
d Score
(W X S)

80

40

25

30

35

$1 B

50%

Low

High

High

Moderate

Moderat
e

10

10

64

16

30

60

35

40

$730 M

85%

Low

Low

Low

High

Low

10

10

10

48

40

70

80

$220 M

50%

High

High

High

High

Low

10

10

10

10

10

16

16

50

30

60

70

80

$155 M

80%

High

Low

Moderat
e

Low

Moderat
e

10

32

50

30

40

224

250

252

322

170

a. Based on the above data, Burn Wound Dressing is the best lead application. We agree with consultants
choice.
b. The primary reason for choosing this would be the relatively low FDA approval hurdles and high ranking
3.

on consumer value items.


If burn wound dressings were taken off the table, which of the potential applications would be your second
choice? Explain your choice in terms of the matrix developed above.
a. If Burn Wound Dressing is taken off the table, Adhesive Bandages would be the best second choice.
b. Based on the data above, Adhesive bandage has the next best rating.
c. Although close to Central Catheters, the relatively low FDA approval requirements would tip it in its
favor. Low FDA requirements means less time spent waiting for product commercialization i.e., quicker

4.

revenue.
The founders of ACI face a difficult choice at the end of the case. Which of the strategic alternatives would you
recommend? Why? Are there other strategic options available?
a. The strategic alternative that ACI has is to diversify. Since multiple applications have similar
requirements, we dont see any limitation with respect to investing on the top three applications.
b. The other strategic direction would be positioning. At the end of the case, ACI is still not sure how to
position their product. As a revolutionary new product or an incremental design. They can start off as
an incremental design, but based on their learning upgrade and position their next product (or another
application) as a revolutionary design to gain market share.
c. The last strategic option is to invest in competitive approach. Based on the case, they can either
work with competitors and position their application as a complementary product, or compete with

other products in a standalone basis. ACIs approach is not clear since they work with the product as a
5.

standalone, but are looking for partnership opportunities.


What lessons can be learned from the test failure? In hindsight, should ACI have placed all their eggs in this
one basket?
a. In hindsight, ACI should have diversified.
b. ACI should have clearly defined their end objectives. Starting off with a new product is ne thing,
but the founders seem to lack the clear vision for their product.
c. ACI should have invested more effort into researching on the scientific reasoning behind their
products success. This lacking is very big impairment for the success of the product. Its missing the
proprietary advantage.