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Essay: Medtronic analysis inc. PESTEL

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  • Medtronic analysis inc. PESTEL
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Business Context – Company Background

“FROM A REPAIR SHOP TO A GLOBAL MEDICAL TECHNOLOGY LEADER”, Medtronic was established in 1949 as a restorative gear fix shop by Earl Bakken and his brother-in-law, Palmer Hermundslie. The first extraordinary treatment — a wearable, battery-fueled heart pacemaker — was the establishment for some more Medtronic treatments that utilize the electrical incitement mastery to enhance the lives of a huge number of individuals. Medtronic, PLC., recently known as Medtronic Inc., it is the world’s largest medical device company that creates the dominant part of its deals and benefits from the U.S. medicinal services industry, however, is headquartered on the island of Ireland. Medtronic has an operational and official central station in Fridley, Minnesota in the U.S. In 2015, Medtronic procured Irish– impose enlisted Covidien (the U.S. impose reversal to Ireland from 2007), in the biggest U.S. corporate expense reversal ever, which empowered Medtronic to move its lawful enrollment from the U.S. to Ireland. Medtronic works in 140 nations and utilizes more than 86,000 individuals.

The organization participates in the advancement of the assembly and promotes a variety of therapeutic and administrative devices used in the treatment of coronary heart disease, spinal diseases, neurological diseases, neurological diseases, vascular diseases and diabetes. The list of organizations includes a list of vascular and peripheral, vascular and cardiovascular items, vascular, innovative surgical products and general surgical items, medical supplies, respiratory treatment and deal management, venous management, neuromodulation and neurovascular, orthopaedic and spine items and surgical advancements.

Medtronic’s vision, mission and slogan as follows:

Vision:

“To contribute to human welfare through the application of biomedical engineering, To alleviate pain, restore health, and extend life” (Medtronic, 2018).

Medtronic Mission Statement:

To add to human welfare by use of the biomedical building in the examination, plan, produce, and closeout of instruments or apparatuses that ease torment, reestablish wellbeing and broaden life.

To coordinate our development in the territories of biomedical designing where we show the greatest quality and capacity; to accumulate individuals and offices that will, in general, expand these regions; to constantly expand on these regions through training and learning absorption; to stay away from cooperation in regions where we can’t make extraordinary and commendable commitments.

To endeavour without saving for the best conceivable unwavering quality and quality in our items; to be the incredible standard of correlation and to be perceived as an organization of devotion, genuineness, honesty, and administration.

To influence a reasonable benefit on current activities to meet our commitments, to support our development, and achieve our objectives.

To perceive the individual worth of representatives by giving a business structure that permits individual fulfilment in work achieved, security, progression opportunity, and intends to partake in the organization’s prosperity.

To keep up great citizenship as an organization.

Medtronic Slogan:

“Transforming technology to change lives.” (“About Medtronic”, 2019)

Key Customers

Refer to the Market in Thailand, The key customers of Medtronic can be divided into 3 groups

  • Medical Schools/ Hospitals
  • Government Hospitals
  • Private Hospitals

Competitors

Majority competitors of Medtronic are Johnson & Johnson, Synthes, Neurometrix and St. Jude. All of the companies above, they are an American medical devices company, that sells the most similar products or some part of product portfolios of Medtronic that likely to focus on the same target markets and key customers as Medtronic.

The main Claim

Medtronic that would differentiate themselves from their competitors is they have provided with a wide range of medical devices that can be covered most of the surgical procedures by FDA approved standard and also their own training and education training centres that will help support the healthcare professionals to be confident and familiar with their products. Moreover, R&D department that never stops creating and researching the new innovative products with a safety concern that align with the mission statement of the firm. The collaboration with Harvard business school to run value-based healthcare around the world which will improve and support the patients and company to get connected is one of the outstanding projects that Medtronic come across their competitors.

Market Analysis

Changing of the vast scale factors can directly affect the Medtronic plc as well as can affect different players in the Medical Appliances and Equipment. The full-scale condition factors can impact the Porter Five Forces that build framework and powerful scene. They can manipulate a particular affiliation’s high value or as a rule of benefits measurement of the Healthcare business. A PESTEL separation is a truncation for a gadget used to recognize the Macro Environment (External) factors going up against a firm. The letters speak to Political, Economic, Social, Technological, Environmental and Legal. Dependent upon a firm which it will, in general, be reduced to PEST (Porta, M., and Last, J.,2018). In advancing, before any kind of technique or vital plan can be executed, it is fundamental to coordinate a situational examination. Affiliations that successfully screen and respond to changes in the substantial scale condition can isolate from the test and make a high ground.

PESTEL

Political

The political issue will anticipate the massive moves that can control Medtronic’s primary benefits either in the USA or other territories. Medtronic is a medical that run the business in many countries where there will be the different political risks. The priority goal for Medtronic of doing business in many countries is to eliminate the limited threats of political restrictions. Medtronic can isolate existing factors into their country itself or region of their corporation market. For instance;

  • The different government policies in each country that Medtronic has to deal with and adapt it to fit in their policy.
  • Trade barriers policy, both tax and non-tax could be variance and effect to run the business.
  • The political stability.
  • Obligatory consultant advantages.
  • Mechanical Quality controls inside the healthcare phase.
  • Government type; Democracy or Communist
  • Funding budgets and grants

Economic

Macroeconomic factors are the first important factor that Medtronic has to analyse while doing their business, especially a global company that deals with the countries around the world. Significantly financial and the economic trend with the Medtronic should be considered in PESTEL;

  • The foreign currency exchange rate
  • Interest rate
  • Employment rate/unemployment rate in the US and other countries
  • Income of the population in the country
  • GDP / GNP
  • Economic growth rate
  • Production costs such as labour costs, raw material prices
  • Inflation
  • Loan Fees

Social

The way of lifestyles and techniques of doing matters of society have an influence on the manner of lifestyles in relationships inside the region. With regard to the social and cultural life of the people in that country. The social factors are important that reflects consumer behaviour in the market, however, which Medtronic have to consider for the PESTEL can be analyzed by;

  • Culture
  • Values, attitudes, traditions
  • Consumer behaviour in purchasing products
  • Living in the community
  • Infrastructure such as medical treatment

Technological

Technological is an external factor that Medtronic shall analyze as each country will have a different standard of technology and a diversified advancement. This could include the transportation, social media and communication system. The criteria that mostly look into the details when discussing technology are;

  • The impact of new technologies
  • The impact of Internet system and wireless communication systems; the communication with the headquarters.
  • Research and development activities and funds
  • The impact of technology transfer
  • The basic technology of that country
  • Innovation affects advertising and marketing of products

Environmental

Environmental factors relating to the environment of human livelihood, both direct and indirect, which will affect all human activities. In different markets have completely different norms or environmental standards which will cause the effect on the firm’s profitability in those markets. Each country with completely vary in environmental laws and liability laws, for example within the USA- New York and Los Angeles, there are completely different debt issues within the healthcare insurance or environmental issue or an analogous environmental disaster in several countries. Moreover, the rules in Europe in the term of environmental would be different from in the US or in Asia, Medtronic ought to fastidiously measure the environmental standards for the operations in those markets. Some environmental factors that a firm ought to contemplate beforehand are –

  • Weather and temperature change; is it going to be a disadvantage or advantage to invest money in those areas?
  • Environmental Pollution management Law.
  • Energy waste which might affect the distribution costs.
  • Recycle and waste control within the healthcare quarter; should it use disposable devices when concerning the medical device products or reusable?
  • Attitude toward “inexperienced” product or ecosystems.
  • Endangered species.
  • Attitude and support for renewable energy.

Legal

The framework and legal establishments will be unfamiliar in various countries and regions. The corporate need to rigorously judge before coming into the market as a result of it is going to result in the larceny of the organization’s package, with the overall competitive advantage. Some legal factors that Medtronic should consider about whereas coming into new markets are –

  • Discrimination regulation.
  • Copyright patent / retaining law.
  • Patron safety and e-trade.
  • Employment regulation and Labor law
  • Health and protection legal guidelines.
  • Facts safety; this is should consider as a confidential database
  • Consumer protection laws such as FDA and instruction label.
  • Business regulations
  • Other laws affecting business

2. Scenario Planning

How much their choices succeed or come up short relies upon how compatible their psychological model of the world is with unfurling reality. Two citations stress this point; the first, by Schwartz (1991), is, “The reason for situations is to enable yourself to change your perspective of the real world—to coordinate it up more intimately with reality for what it’s worth, and reality as it will be”. In confronting future advancements in Healthcare businesses, scenario planning offers a corresponding way to deal with customary vital arranging (Enzmann, D., Beauchamp, N., & Norbash, A., 2011).

Scenario 1: Expansion to emerging market and developing economies

How the firm can grow bigger and stay being the largest leader in a medical industry business in term of finding a new opportunity e.g. new customer segment and a new channel to expand market, Medtronic has to foresee and estimate the future pathway and execute the strategies to find their ways in term of building gross revenues and overcome the competitors in the market. Hence, understanding and analysing the key trends to align with the business. Due to the trend of the world economy, the potential targets that many kinds of business most likely to focus and keen to invest their funds to run the business will be the emerging market and developing economies, as these areas will be able to support the high growth rate of the firm, referring to the GDP growth of the emerging market and developing economies tend to increase every year positively compare with the other area in the world such as USA, UK and EU areas where the economic and GDP growth will slow down and only slightly increase since 2017 and is forecasted to get a bit lower from 2019 onwards, as a result of the GDP trends information, the benefits and advantages from expanding the business there, can guarantee the long term results and outcomes of the firm regarding increase the sales revenue, the business growth rates. Moreover, discussing the advance technologies that seem to be an important part of this world, with Medtronic innovations and their technologies will be able to draw the attention from these markets which the superior benefits from using an advanced technology will help them shorten stay in the hospital, speedy recovery, less pain and support them to do any activities that they have done before the illness or it can be called “A product service solution development for people”. Nevertheless, it is not only about the technologies but also about the populations in these countries who have high demands and potentials to choose the best choices to improve their quality of lives for both of themselves and their families when it comes to the best choice which makes their lives easier. However, what Medtronic has to concern is about the reimbursement issue which might affect to the beginning of running a business in these target areas and also about the acknowledges different user preferences for technologies and solutions from the key customers that the firm will have to approach them to be their key opinion leaders, starting with the right person will create a positive impact among the medical industry users but with the wrong person, things will take a longer time before earning the sales revenue and hit the market. Overall, with the right strategic plannings to follow the obdurate external forces will surely help the business growth of Medtronic such as advanced technology which Medtronic is one of the companies with highly advanced technology products and innovations and an economic growth which is the targeted area of business expansion that Medtronic will focus on running the business in the emerging market and developing countries.

Scenario 2: Facing the decrease in Market share and growth due to me too products

It is possible that Medtronic will get the side effect from the economy slowed down around the world which the sales revenues, market growth of the firm and market share in the market will slightly decrease compared with the previous financial years’ result. Regarding the policy of the government in each country might be varied which one of the impacts on the healthcare business would be the hospitality budget has been cut off or a new reimbursement or regulation rules from the government to force the public hospitals or medical schools to use a cheaper product that has similar features as Medtronic products, shall call this as a me-too products. Me-too products can be the same type, same features but the price will be cheaper than the original ones, most me-too products who expect to be direct competitors are from China or India and so on. With this driven trends in the healthcare market, it will affect directly to Medtronic if at least 20-30% of the customers has been changed to use a me-too product, sales revenue drop, losing market share and market growth, especially in China or India market which huge and potential countries and one-third of the company sales revenue should come from those 2 countries. Nevertheless, if a me-too company want to penetrate their products into private hospitals with the advantages of increasing the sales margin to the hospital. The breaking down switching costs by me-too competitors can occur and definitely affect to Medtronic not only short-term but also can cause a long-term side effect as well. Essentially, the me-too products would create the price war strategy to gain and share the market share from Medtronic and this should be the attractive point to earn their attention and change their mind to try and start using their products.

3. Critical Success Factors

Company: Medtronic Plc.

Vision: “To contribute to human welfare through the application of biomedical engineering, To alleviate pain, restore health, and extend life”

Mission: “Transforming technology to change lives.”

Key Results Areas

“Developing a new market into emerging market and developing economies and gain at least 20% sales revenue from this market”

Aims/Goals

“To be able to expand Medtronic products into the emerging market and developing economies e.g. China, India, Latin America”

Objectives

“To increase market share of overall Medtronic products by 30% in FY2019”

Key Measures

  • Market size and market share
  • Sales growth, The growth rate of overall products
  • Sales Volume
  • Sales revenue

Possible CSF’s

Critical (evaluation – Y/N)

Remarks

Implementing market research and surveys in emerging market and developing economy countries

Yes

Set up market research and survey teams to find out information and key points to develop the market.

Plan to launch the products that have a high number of procedures in each country

Yes

Prepare a marketing activity such as a scientific conference, luncheon symposium.

Provide enough sales and marketing teams to support the customers

Yes

A clarify of territory area for sales to cover a target area and manage the timetable for the marketing team to meet up the customers

Training and Education programs for the Marketing and Sales team

Yes

Intensive training course for both marketing and sales team to have strong knowledge of products

Master class training and workshop for key opinion leaders

Yes

Excellence training centre for advanced surgical procedures

Bundling surgical package campaigns for the customers

Yes

The feedback from the customers and the sales rate of buying this campaign from the customers

Partnership with the medical schools

Yes

Have a signed contract and agreement with the medical schools

Developing newly advanced technology product to increase a surgical accuracy by AI technology or Robotic surgery in the R&D department

Yes

Research and develop the new technology for product models and have a clinical trial to see the clinical outcome

Distinguishing proof and situating to satisfy client needs

Yes

Positive customer feedbacks and customer satisfaction

Solid brand picture and mindfulness

Yes

The customers perceive a value of Medtronic products and being loyal to a firm

Comprehension of contenders’ capacities and choice principles

Yes

Market and competitor analysis

% of Market share

Rockart (1979, p.85) stated that Critical Success Factors, for any business, the predetermined number of zones in which results, on the off chance that they are attractive, will guarantee effective focused execution for the firm. They are the few key zones where things must go ideal for the business to prosper. In the event that outcomes in these territories are not satisfactory, the association’s endeavours for the period will be not exactly characterized (p. 85). Regarding Hofer and Schendel (1983, p.77), critical success factors are those factors which the executives can impact through its choices that can influence fundamentally the in general aggressive places of the different firms in an industry. These variables for the most part change from industry to industry. Inside a specific industry, in any case, they are gotten from the association of two arrangements of factors, to be specific the financial and mechanical attributes of the business included and the aggressive weapons on which the different firms in the business have constructed their methodologies.

According to that, how Medtronic can achieve the objectives, the critical success factors should be determined and execute prior running any activities in the market. Firstly, doing market research and survey of the targeted area could help Medtronic has more understanding about the market, which hospitals should focus and start the business and also earn information about the surgical procedures that mostly done in the hospitals after that the marketing team can plan the right strategy and implement the product launch by running a scientific conference, luncheon symposium by a powerful guest speakers including a hands-on workshop for the customers to try and practice. Moreover, preparing the product training and education for both marketers and salespersons before they represent to the customers would be an advantage for the company, plus presenting expertise in Medtronic products would make customers admire. Preparing enough salesperson to cover all the focus territories will be able to serve the customers at the right time and increase the customer satisfaction, also gaining the brand image and awareness from them. Nevertheless, to increase sales volume and market share, offering a bundling surgical products campaign to the customers can attract their attention and protecting the penetration of the competitors to share the market as well. In term of keeping the key customers to stay loyal with Medtronic, supporting them for a Master class training and workshop by other expertise or professional would create a long-term relationship with them and make them realise how Medtronic see them as an important person.

Lastly, for the retention business in the long run by being a partnership with the Medical schools, can build up trust and positive image and reputation for a firm as well.

18.1.2019

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