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35 Cards in this Set
- Front
- Back
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Goal
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where the managers of the firm want to be (Guide action, motivate and claim competitive space in the market)
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DR Systems' goal
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a. Expand installed customer base with low cost approach
b. Transition industry to filmless image management system (larger facilities to be early adopters) c. Retain 20% of market share by the end of the decade- sell over 500 units- hold on to a profitable niche d. Create a network of physicians nationwide through referrals and to eventually achieve a status where the product could “sell itself” e. Want to be acquired by larger rival, Zuckerman want controlling interest f. Obtain financing for ST survival and LT growth to a critical size g. Increase sales effort by employing a professional sales organization and streamline and formalize the currently informal organization structure. h. Target large facilities, prestigious hospitals and military hospitals as first movers |
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Scope
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What kinds of products, activities will carry out internally? Who are targeting product, services, markets, geographies, technologies, processes, what it should not undertake
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DR Systems' scope
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i. Build system to provide computerized storage, transmission and processing of medical imaging → cost rationalization in the healthcare industry
ii. Capture medical images, store electronically, display on full-res system, archive it or print to non-film paper printer, or transmit online, cbs chalkboard (pg 4) iii. Components/ Modules: Catapult captures image (20,000), Dominator stored processed and displayed image (over 90,000). iv. Storage base |
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3. Competitive Advantage
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How does firm intend to achieve long-term goals within chosen scope?
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position based
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ability to earn more because firm’s identity (who/where, what firm is) -- distribution channels, geography, government support, protection, brand, customer relationships
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capabilities based
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(what the firm does- perform better)
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DR Systems' position advantage
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i. Distribution channels: G.E. Medical Systems and Merry X;Ray achieve a wider reach (pg 9)
ii. First mover advantage creates an attractive industry structure because there is not a lot of competition yet iii. Network of relationships - referrals 1. Founded by two well-respected radiologists (Dr. Reicher and Dr. Fram), Leo Zuckerman - founder of Merry X-Ray- credible reputation, key contacts 2. Infinisys/ MicroAge- system integration and production was executed iv. Don’t have brand but they have a reputation v. Government regulation: Patents on propriety systems to protect key elements and FDA clearance vi. Threat: Arrival of large multinational medical equipment providers with growing economies of scale and globalization could erode DR Systems’ position as the market leader |
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DR Systems' capabilities advantage
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i. User-friendly and customer oriented
1. 30 minute training session 2. Follow up support ii. Low cost, high margins structure iii. Use off the shelf hardware (low cost) and can custom client needs iv. Flexible system and software engineering capabilities v. Quicker and more efficient storage vi. Quick transfer of information vii. Reliability of locating files viii. Tacit knowledge - intrinsic knowledge |
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c. Logic
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why will the strategy, product scope and competitive advantage work for this firm in this industry?
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DR Systems' logic
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i. First mover advantage- try to sustain by building an installed customer base before competitors enter
ii. Industry works on referrals, try to get leading medical facilities to use DR Systems’ to build a reputation iii. Understanding of how doctors will use this system |
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How did the industry evolve? What is creating demand?
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• Increasingly cost-conscious medical facility industry
• Difficult, inefficient time consuming, lose files |
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Incentive Problem: Getting employees to use the road
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• External financing → friction amongst owners, Zuckerman want increase stake in co not dilute it with more investors (preper debt financing- expected to oppose further equity offerings) p. 10
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architecture
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how the org units fit: reporting structure, how firm is organized, compensation (financial rewards)
-Coordination: functional (tightly coupled interdependence of units) versus divisional/ specialization versus integration forms, information flow, horizontal linkages (tight or loose), more decentralized= less coordination needed. -Incentive: compensation policies, financial incentives- motivate employees goals with firm goals. |
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DR systems' architechture
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• Loosely organized around a functional structure (specialization)
o Hired few programmers to work full time to dvp software capability o Maier- CEO • 10 employees • Ambiguous, informal, amorphous structure • Relied on large, established medical prod vendors to distribute (p.9) • CEO and VP separated geographically→ miscommunications • Transition from relying on founders to professional direct sales org |
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routines
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Routines- ways of doing things, daily activities
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DR systems' routines
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• linkages around innovation
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culture
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Culture- shared beliefs, values, norms
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DR Systems' culture
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• Committed to working with clients to deliver customized option best for them?
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Porter’s Five Forces:-
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-Risk of entry by potential competitors
-Bargaining power of suppliers -Bargaining power of buyers -Threat of substitutes -Rivalry among established firms -Industry Analysis |
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Porter’s Five Forces:
-Risk of entry by potential competitors |
- By 1994, less than 1% of institutions owned a digital image management system.
- The new platform of MDI requires well-known reputations of the companies or creators in order to be adopted or bought by medical facilities. - It is a new industry so there are no incumbent firms. However, Kodak makes most of the old film technology and GE and Siemens are large medical device and software manufacturers. - Customer switching costs for hospitals to go digital is high, although probably inevitable. - Large medical device and software companies may have an easier time getting approval from government agencies like the FDA. |
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Porter’s Five Forces:
-Bargaining power of suppliers |
- Suppliers have power because their products have few substitutes. However, they have to prove their MDI is important to buyers.
- The industry of MDI makers is more concentrated than the hospital industry. o However, as a new industry, they have to prove their worth. |
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Porter’s Five Forces:
-Bargaining power of buyers |
- The prestigious medical institutions and military hospitals are more powerful because there are few of them and they are the most sought after buyers.
- Buyers cannot switch suppliers at low cost. o However because it is a new product and new industry of product, buyers can choose who their new supplier will be with relative ease and no extra cost. |
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Porter’s Five Forces:
-Threat of substitutes |
- Old way of manually storing and film images
---look at exhibit |
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Porter’s Five Forces
-Rivalry among established firms: |
- By 1994, the MDI industry consolidated into a few broad based multinational electronic companies.
o GE, Siemens. o Growing economies of scale and globalization led to the decline of many incumbents. - DR Systems is working to try and be in a niche market. There is a new industry of MDIs. There is a number of different firms with slight product differentiation, and DR Systems is trying to target prestigious hospitals and military hospitals. |
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Industry analysis??
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- MDI is a high tech industry, which makes it attractive but slightly unstable.
- Government agencies like the FDA have to approve technologies. |
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Explorers
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- DR Systems started the entire MDI industry.
o First mover into the medical diagnostics imaging field. o Search for new ways of storing medical information - Explorers & ARC o Architecture • Gadi Maier, CEO, has a high tolerance for ambiguity. He has to lead the company towards the uncertain future. • As the first movers, DR Systems has the innovative “cool” factor that can draw customers to its product. o Culture • The company prides itself on defying the outdated manual management systems and building its own platform. • The two founders risked hundreds of thousands of dollars of their own personal wealth to build an innovative system. • Gadi Maier joined DR Systems because he felt that Oracle lacked the entrepreneurial spirit that he loved. o Routines • Consistent product and software creations like The Catapult and The Dominator. |
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Explorers
-architechture |
• Gadi Maier, CEO, has a high tolerance for ambiguity. He has to lead the company towards the uncertain future.
• As the first movers, DR Systems has the innovative “cool” factor that can draw customers to its product. - amorphous structure |
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Explorers
-routine |
• Consistent product and software creations like The Catapult and The Dominator.
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Explorers
-culture |
• The company prides itself on defying the outdated manual management systems and building its own platform.
• The two founders risked hundreds of thousands of dollars of their own personal wealth to build an innovative system. • Gadi Maier joined DR Systems because he felt that Oracle lacked the entrepreneurial spirit that he loved. |
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Exploiters
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- Clear, linear goals of reaching 20% market share in the MDI business.
- New CEO creates a more centralized coordination than the original founders. - Exploiters & Arc |
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Exploiters
-architechture |
• Changing company to become more organized structure - hiring a with a CEO with a business background
• Maier placed the company in the hands of professional managers • Hired a sales team (more effective than doctors selling) - not just referalls • More hierarchical than It was before and hired for specific jobs • 10 employees organized loosely around a functional structure |
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Exploiters
-routines |
• Tried to execute sales more effectively
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Exploiters
-culture |
• Not much monitoring
• Few long standing routines because the company is so new. |
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Structure of competitive advantage
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-based on industry environment). -Organizational design solves coordination (“build a better road” ) and incentive (“get employees to use that road”) problems.
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