Beruflich Dokumente
Kultur Dokumente
XIMB
Strategic Management
Assignment
Industry Health Care, Medical Equipment
Company Boston Scientific
Submitted by, Anirudh Kandrika (U113147)
The objective of the report is to study, analyze & understand the business model,
vision, mission, corporate goals of Boston Scientific and prepare the activity map,
conduct an industry environment analysis for the same whilst comparing the same with
other major international / domestic players
in the same industry.
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Disease Burden
-Growing incidences
-High mortality
-Complex diagnosis
Unmet need
-Absence of therapy
-Limitations in efficiency
-Difficulty in use of
equipment
-Device discomfort
-High complication risk
Unmet need
-Absence of therapy
-Limitations in efficiency
-Difficulty in use of
equipment
-Device discomfort
-High complication risk
Clinical Value
-Innovative product
-Substantially effective
-Long term safety
-Improve ease of use
Clinical Value
-Innovative product
-Substantially effective
-Long term safety
-Improve ease of use
Economic value
Economic value
-Price reflects value
-Price reflects value
-Low budget impact
-Low budget impact
-Cost savings
-Cost savings
-Cost effectiveness vs other -Cost effectiveness vs other
options
options
-Hospital resource
-Hospital resource
reductions
reductions
Quality
-International standards
-Consistency in products
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Quality
-International standards
-Consistency in products
across geographies
Profit
Formula
across geographies
Revenue Generation:
Revenue Generation:
-Manufacture & Sale of
-Manufacture & Sale of
medical equipment
medical equipment
-Through development &
-Through development &
sale of Drug-eluting
sale of Drug-eluting
slunts.
slunts.
-Income through licensing of -Income through licensing of
patents developed.
patents developed.
-Manufacture & sale of
pharmaceutical products
Cost Structure:
-Manufacture
& sale of
-Fixed costs: Salaries, R&D
packaged consumer
expenses, work space
goods like band aids, skin
rents etc.
care products, etc.
-Variable costs: Inventory
holding costs, raw
Cost Structure:
material procurement
-Fixed costs: Salaries, R&D
costs, transportation
expenses, work space
costs, sales distribution
rents etc.
network associated costs,
-Variable
costs: Inventory
etc.
holding costs, raw
material procurement
Profit margins:
costs, transportation
-Dependant on achieving a
costs, sales distribution
significant market share,
network associated costs,
developing new products
etc.
through innovations and
R&D.
-Market share increase
through expanding to
new geographies /
launching new products
in existing matrix.
-An analysis of the BCG
matrix here would be of
great help in
understanding the profit
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Profit margins:
-Dependant on achieving a
significant market share,
developing new products
through innovations and
R&D.
-Product portfolio highly
diverse and into many
additional industries such
as packaged consumer
products has given J&J a
distinct competitive
advantage and deep
pockets.
-Market share increase
through expanding to
new geographies /
launching new products
in existing matrix.
An analysis of the BCG
matrix here would be of
great help in understanding
the profit centers for
Johnson & Johnson.
HEMC
Disease Burden
-Growing incidences
-High mortality
-Complex diagnosis
Unmet need
-Absence of therapy
-Limitations in efficiency
-Difficulty in use of
equipment
-Device discomfort
-High complication risk
Clinical Value
-Innovative product
-Substantially effective
-Long term safety
-Improve ease of use
Clinical Value
-Innovative product
-Substantially effective
-Long term safety
-Improve ease of use
Economic value
Economic value
-Price reflects value
-Price reflects value
-Low budget impact
-Local supplier providing a
-Cost savings
price advantage
-Cost effectiveness vs other -Low budget impact
options
-Cost savings
-Hospital resource
-Cost effectiveness vs other
reductions
options
-Hospital resource
reductions
Quality
-International standards
-Consistency in products
across geographies
Profit
Formula
Quality
-International standards
-Consistency in products
across geographies
-Local supplier. Hence better
after sales service and
cheaper spares
Revenue Generation:
Revenue Generation:
-Manufacture & Sale of
-Manufacture & Sale of
medical equipment
medical equipment & lab
-Through development &
equipment.
sale of Drug-eluting
-Income through licensing of
slunts.
patents developed
-Income through licensing of -Note that operations of
patents developed.
HEMC are predominantly
limited to India and a
Cost Structure:
major chunk of the
-Fixed costs: Salaries, R&D
revenue comes from
expenses, work space
India and Indian clients.
rents etc.
-Variable costs: Inventory
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Profit margins:
-Dependant on achieving a
significant market share,
developing new products
through innovations and
R&D.
Based on the above analysis and comparison in part 1(a) and 1(b), we can
conclude that all medical equipment manufacturers operate on a similar
business model having a similar kind of revenue generation model, cost
incurring model and profit generation model. In addition, the value propositions
offered are also highly similar.
However, few distinct differences between the global and local manufacturers
is that local suppliers could have a significant advantage in terms of more
economical sourcing of raw materials, easier availability of spares and cheaper
after sales service, easier installation assistance and an overall stronger supply
chain network locally. These differences could be offset by better use of
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Identify mis-fits. What do you do that undermines any part of your activity
map?
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We can hereby observe that while the strategic goals for a diversified company
is more towards customer service and better products, the strategic goals for a
small low cost company like Narang Medical, the strategic goals are to increase
market share through expansion either by increasing local market share or by
expanding to other geographies whilst keeping a low cost product.
3. Identify the leading Organizations Low Cost Providers (HEML) as well
as the leading Organizations with Diversified Product/ Service
Providers (Johnson & Johnson) for India and for the 5 Continents (Asia,
Europe, Africa, North America and South America). Document the
Vision, Mission, and Objectives of these companies (ex: airline
companies) and identify the key attributes of success for each of
these organizations/ industries (ex: International Carriers). Is it in line
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with the various readings shared with you? Evaluate the Mission
statement as per the suggestions given in the website
(http://www.strategicmanagementinsight.com/missionstatements/microsoft-mission-statement.html). Prepare the Strategy
Statements in line with the article on 'Developing the Strategy Vision, Value Gaps, and Analysis' by Robert Kaplan, David Nortan, and
Edward Barrows and identify the Value Proposition and Strategy
Sweet Spots in line with the article on 'Can You Say What Your
Strategy Is' by David Collis and Michael Rukstad
The leading organizations with a diverse portfolio for India are:
1. HEMC
2. Narang Medical Ltd.
The leading organizations globally who compete in this space is:
1. Johnson & Johnson
2. Siemens AG
3. General Electric Co.
Mission statements for the companies:
The mission statement is a description of what an organization does, its
various stake holders and the obligations it holds towards them. It is the
statement that defines the basic reason for the companys existence. Mission
statements are generally of two kinds:
- Customer oriented
- Product oriented
Let us look into the mission statements of each of these companies and
evaluate them to try and understand how effective they are in including all
their stake holders in their business. Some people argue that constantly
modifying the mission statement and treating it as a live document have a
higher rate of success in conducting their businesses.
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Does it include?
Customers
Products/
Services
Markets
Citizenship
Teamwork
Yes
No
Yes
No
No
Technology
Concern for
survival
Philosophy
Excellence
Integrity
Yes
No
No
No
No
Self-concept
Concern for
public image
Employees
No
No
No
Result
Fair
Customer or product-oriented?
Customer-oriented
Does it include?
Customers
Products/
Services
Markets
Citizenship
Teamwork
No
Yes
No
No
No
Technology
Concern for
survival
Philosophy
Excellence
Integrity
Yes
No
No
No
No
Self-concept
Concern for
public image
Employees
No
Yes
No
Result
Fair
Customer or product-oriented?
Product-oriented
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needs. This is a source of pride. To our employees and customers, it defines GE.
Does it include?
Customers
Products/
Services
Markets
Citizenship
Teamwork
No
No
Yes
No
No
Technology
Concern for
survival
Philosophy
Excellence
Integrity
Yes
Yes
Yes
No
No
Self-concept
Concern for
public image
Employees
Yes
No
Yes
Result
Good
Customer or product-oriented?
Customer-oriented
Does it include?
Customers
Products/
Services
Markets
Citizenship
Teamwork
No
Yes
No
No
No
Technology
Concern for
survival
Philosophy
Excellence
Integrity
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Yes
No
No
Self-concept
Concern for
public image
Employees
No
Yes
No
No
No
Result
Fair
Customer or product-oriented?
Product-oriented
Economic
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recession
encouraging investment
Freedom of press
imports expensive
Tariffs
Competition regulation
and agreements
Social
Technological
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awareness
& development
health practices
Social classes
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Environmental (ecological)
Legal
everyone
++
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B
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P o
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T
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Tt
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b s
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S u
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p e t it
P o
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R iv a
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n e w
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A medical device is any health care product that achieves its primary intended
purpose not through chemical action or by being metabolized
Growth:
The Indian healthcare industry has progressed at an impressive pace over the past
few years. The private sector has emerged as a vibrant force in the industry,
accounting for almost 74 per cent of the countrys total healthcare expenditure.
The Medical Devices and Equipment industry, valued at US$ 2.5 billion contributes
only 6% of Indias US$ 40 billion healthcare sector. Moreover, it is growing at a
faster annual rate of 15% than 10-12% growth seen in the Healthcare sector in its
entirety. A rise in the number of hospitals and the increased requirement for
healthcare facilities creates a need for sophisticated devices and equipment, which
can provide accurate treatment to individuals. The Medical Electronics segment of
this industry incorporates control, conversion, sensing, processing, storage,
display, and transfer of information on anatomy and physiology by making use of
the Electronics and Communication Technologies. The Medical Equipment industry
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is quite wide with > 14,000 different products types, as per the Global Medical
Device Nomenclature (GMDN). The products range from wound closure pads to
stents and IVD machines of medical devices. Further, it can be reasonably said that
Medical Electronics is an area, where Electronics and Information Communication
Technology play a decisive role.
Healthcare sector is expected to record a compound annual growth rate (CAGR) of
15.0 per cent during FY0817.
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Road Ahead
The country's healthcare system is developing rapidly and it continues to expand
its coverage, services and spending in both the public as well as private sectors.
This is creating a large market for hospital information systems and other
healthcare-related IT solutions.
b) Size of the Industry across the world and the country where the
organization is operating
Overall Market Segments in Health Care:
Of total healthcare revenues in the country hospitals account for 71 per cent.
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Market Size
The healthcare industry in India is experiencing gradual transition from paper files
to electronic mediums. The Indian healthcare assisted by IT market has been
growing tremendously over the past few years. It is expected to grow at a CAGR of
around 22.7 per cent during the period 2013-2015.
The hospital and diagnostics centre in India received foreign direct investment
(FDI) worth US$ 1,914.28 million, while drugs & pharmaceutical and medical &
surgical appliances industry registered FDI worth US$ 11,318.32 million and US$
653.45 million, respectively during April 2000 to June 2013, according to data
provided by Department of Industrial Policy and Promotion (DIPP).
More so, the other related segments like genetic testing market is expected to
grow at a CAGR of around 9 per cent during 2012-2017 and that of the diagnostic
services market in India at a CAGR of around 26 per cent during 2012-2015. All the
growth is based on the foundation on huge investments, fast expansion into tier II
& III cities, and strong government support to strengthen the healthcare
infrastructure in the country.
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62.5
Medical Equipment
112.5
Medical disposables
Implants
62.5
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Regional Share
6%
18%
North America
44%
Europe
Asia Pacific
Rest of World
32%
Few major issues and challenges that the medical equipment industry faces
are:
Indias dependency on imports for supply of medical devices
The regulatory environment needs to be reliable & consistent
The prevailing low level of medical insurance
The low level of healthcare facilities and awareness, especially in the
rural areas
Coming to the performance of Boston Scientific on the above mentioned
criteria, it is to be observed that Boston Scientific has addressed most of the
factors required for success and also the issues & challenges at hand. This
can be better understood by performing a SWOT analysis of Boston
Scientific so that we can appreciate how the company has handled the
various internal & external business environments.
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S
WW
O
T
From the SWOT analysis we can observe that Boston Scientific banks on its core
competency of manufacturing quality medical products has helped it acquire a
huge global market share especially in hospitals that are visited by the urban
middle class and above. It has also managed to grab the pvt. hospital sector
aiming to attract medical tourists.
However, Boston Scientific has to work in improving its share in the local market
through some fruitful JVs and tapping the experience of local companies.
It would also be advisable to wait sometime in the medical disposable segment
as the sector is highly unorganized now and investing there would not yield any
results immediately.
We understand that Boston Scientifics India operations are in a question mark
quadrant of the BCG matrix where the growth of the sector is high but market
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share is low. Hence, it is a great opportunity and needs to be funded from other
profit centers to improve business here.
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