MDCM Inc - Medical Devices for a Worldwide Clientele - Case Study Example

MDCM Inc - Medical Devices for a Worldwide Clientele There are four quadrants in the Accenture IT management model describing four general types of organizations based on the rate of change of technological requirements and their source of competitive advantage. The four types are Efficient Predictable Operators, Responsive Solution Providers, Information Integrators, and New Capability Enablers. In order to determine the position of MCDM on the Accenture model it is important to determine the rate of change of the organization, and its source of competitive advantage. MDCM produces a wide array of medical devices for a worldwide clientele[Jef06]. The nature of the business is that before new devices come into the market, they must undergo rigorous testing and approvals from regulators. This makes the rate of change in the industry a bit slow. On the other hand, the demand for medical devices is on the rise as more and more countries seek to provide the best healthcare for their people. Regulators rather than innovation influence the rate of product development, which defines the rate of change in the industry. Based on this view, MDCM is a company that experiences a slow rate of change. On the other hand, the business model used by the company is not as easy to place on the model. This is because it exhibits both elements of cost competition and product offering competition. Perhaps it is better to say that some products made by MDCM fall under the cost competition section while others are under product offering competition. However, the company is losing ground to smaller and more efficient operators meaning that there is a certain amount of its competitive advantage coming from efficiency. The fact that many managers are complaining about the speed of information flow seems to prove that the company relies on efficiency to get business. Looking at the two parts together, the best classification for the company is Efficient Predictable Operator. Two strategic goals clearly visible from the MDCM case are consolidation of market share in the international market, and attaining efficient operations by a strategic deployment of IT capabilities. The company made many acquisitions from various continents in order to have a global presence. However, the company did not do enough to streamline the operations of its international subsidiaries hence it ended up in its current situation characterized by inefficient operations. This situation, coupled with increasing competition and dwindling margins, calls for the company to consolidate its overseas operations as a key priority. If it is able to consolidate its operations, it will be able to reduce and eliminate wasteful competition, and to develop a stronger market presence. The second strategic goal the company is pursuing is the streamlining of IT services. One of the reasons behind the inefficient operations at the company is its uncoordinated IT infrastructure. After acquiring the subsidiaries in other countries, there was no effort to standardize the IT infrastructure. The result is that all the IT systems in different countries vary to the point that it is difficult to develop standardized business processes to match the needs of the company. This is partly the reason why there is always an information backlog. The Porter’s five forces look at the environmental factors influencing the competitive advantage of the businesses. The forces include threat to entry, the power buyers have, the power suppliers have, the threat posed by substitute products, and the role of competitive rivalry. Threat to entry: There is a risk that new companies will enter the market if they can offer similar services to MDCM in a more efficient manner. This will give the new entrants an absolute cost advantage. The main barrier they have hindering access to markets is the regulatory requirements governing the manufacture of medical products. Its impact varies in different geographical locations. Access to markets is not difficult if they can demonstrate their capacity to manufacturer products cost effectively. The power of buyers: Buyers in the medical products market are becoming more powerful because they have access to many options when it comes to suppliers. They make buying decisions based on the best prices they can get per quality level. The power of suppliers: There is an increase in the number of suppliers available to MDCM because of the ability to procure raw materials from different places based in the local factors of productions. The increase in number of suppliers is eroding their power to set prices, MDCM can therefore bargain to get raw materials at the best prices. Threat of substitutes: There is an insignificant threat from substitutes to the services offered by MDCM. Buyers cannot decide simply to go alternate places to manufacture their medical devices. This is a specialized industry, which operates in a unique environment. There are no alternatives to medical devised manufacturers. However, there are industries, which can develop the capabilities required to make medical devices such as pharmaceutical companies seeking to manufacture the medical devices needed to support their product lines. Competitive Rivalry: MDCM has a number of competitors in most of its markets that are competing on efficiency and can usurp its market share. However, the industry concentration is comfortable enough because of the market entry barriers. The reduction in the profit levels of the company show that MDCM has been under pressure from competitors that have become more efficient at providing services. The most critical external strategic threat to MDCM is the competition from smaller competitors who have been able to develop better efficiencies compared to MDCM. The most significant internal threat to MDCM is its inefficient operations causing it to operate in near-crisis mode. In order to address the external threats, MDCM needs to focus its business strategy to take advantage of its international presence and its large scale of operations to increase the efficiency of company. The company can use approaches such as pooled procurement for all its subsidiaries to ensure that it gets the most competitive rates for its inputs. In the same way, using appropriate IT instruments, the company needs to leverage its potential to improve its internal processes to execute its business functions in a better way. The issue of counter-bidding by different subsidiaries of the company is a very inefficient deployment of marketing capabilities. Once the company identifies its long-term goals, it ought to develop matching IT capabilities to develop its internal processes to high efficiency levels. The first tactical measure the company needs to pursue is to have a meeting of its senior executives in order to clarify the company’s strategic objectives. This measure is very important because it will guide policy development in all functional areas including the deployment of IT resources. Secondly, the company needs to develop a process of consolidating IT capabilities to standardize IT resources in the entire company. The use of enterprise software for the entire company including its subsidiaries will increase the rate at which information flows. It will also give the company an extra lever for analyzing business performance. Thirdly, the company must develop a strategy for streamlining its supply chain because it competes on efficiency. This means that it needs to look at the processes currently in use to see where opportunities for streamlining the supply chain exist. It can consolidate its suppliers to take advantage of the best market prices while taking advantage of its buying power to bargain for the best prices. Finally, it is important for the company to develop a strategy for business process re-engineering to develop strong internal systems to meet its internal needs. This includes the development of a consistent marketing strategy, proper order processing system and business management practices. Works Cited Jef06: , (Jeffrey and Norton 3), Read More