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Week 4 - Conclusion

Medtronic has proven itself as being a powerful force in the medical device industry. Its roots began in 1949 when two men, Earl Bakken and Palmer Hermundslie, worked together to form a medical device repair company in a garage. The company took off in the 1950s after Bakken successfully invented the world’s first wearable, battery-powered pacemaker. Over the years, Medtronic has grown into a multibillion dollar company and has become one of the leading companies in the medical device industry. They develop products for cardiovascular treatments, invasive therapy treatments, patient monitoring, and diabetic treatments. It would not come as a surprise if the company decided to further diverse their product line with products for other healthcare subjects, like oncology (cancer) or hematology (blood).

Nowadays, Medtronic operates in over 120 countries with headquarters located in the United States, Canada, Switzerland, Japan, and Australia. With the vastness of the Asia Pacific region, it would be a wise move if Medtronic creates a new headquarters in India in order to have another location to oversee parts of Asia, which is one of the leading regions of the world in science and technology. However, expanding to other countries may pose a risk since countries often have their own laws and regulations. In addition, Medtronic risk the chance of working in the same region as competitors. And currently, Medtronic has three big competitors: Boston Scientific, Abbott Corporation (which bought out St. Jude Medical in January 2017), and Johnson & Johnson.

Each time Medtronic expands, it should pay more attention to its promotional events since it will offer great opportunities to recruit and widen the workforce. Furthermore, it would be a great opportunity for the company to expand its network in the region to where it has expanded. Once those networks have been made, the company should turn its attention to building enough revenue to match or exceed a projected revenue amount for the respective year. Currently, Medtronic has always made more of profit and revenue over the course of over 30 years. In 2017, it has made nearly $30 billion US dollars.

In the overall picture, Medtronic continues to be a powerful force in the medical device industry (operating in over 100 countries). Like many other companies, Medtronic has its shares of business drama, such product recall and late project rollouts. With the right talent, the company will be able to make it through rough patches. This multibillion dollar company currently revenues at around $30 billion for 2017, and it has been forecasted that the company’s revenue will continue to grow higher.

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Week 4 - Process Analysis

This flow diagram above illustrates the quality control and optimization that is proposed in the quality control solution. Due to the large size of Medtronic, it would be more prudent to illustrate a more relevant portion of the numerous processes that occur within the company. The new process allows for several checkpoints of design quality before the product design hits the factory floor for production. The quality engineers will determine the improvements based on past products and current issues that have yet to be resolved. That would act as the first checkpoint. The next checkpoint would occur during the meeting between the engineers and factory floor managers; quality engineers will make doubly sure that what they have determined exists within the realm of possibility. The third checkpoint would occur after the redesigns have be completed and before design presentations to managers and quality engineers. The last checkpoint would be the reviews and decisions made by the managers in collaborations with the quality engineers. These checkpoints provide Medtronic multiple stages to check for product issues and design flaws before the design gets sent to production. One of Deming’s 14 Points suggests a stop on quality inspection, and that would refer to post production at Medtronic.

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Week 4 - Six Sigma

Six Sigma states that engineers should be able to fit six standard deviations between the target measurement and specification limit. Medtronic currently applies a Lean Sigma model already. Their current model closely resembles the five fundamentals of the Six Sigma model. The Lean Sigma model firstly specifies customer value, which indicate the definition of processes in customer value. Secondly, Lean Sigma maps customer-value streams, which is a map that draws out the path from product conception to customer delivery. Thirdly, Lean Sigma removes waste and inefficiencies from the value stream. Fourthly, Lean Sigma sells to customer by allow the customer to take the products willingly as opposed to the company pressuring the customer. Lastly, Lean Sigma makes a continuous effort to seek out improvements. (Cveykus Carter, 2006)

Despite the current application of Lean Sigma (also known as Lean Six Sigma), Medtronic can still improve and apply an optimized Six Sigma model to their operations and processes when they measure product quality. A new model can work alongside the current model and focus primarily on quality control. Adjustments to assembly and part production should be sent and made as soon as they are determined. Furthermore, during routine maintenance new measurements should be taken to ensure that production still satisfies the Six Sigma model. By implementing Six Sigma, product issues will have a low chance of occurrence and that helps solves one of Medtronic’s biggest problems. Quality engineers and factory floor managers will have important roles in the implementation of the Six Sigma model. The following diagram illustrates the proposed Six Sigma road map for Medtronic.

Reference

Cveykus, R., & Carter, E. (2006, July). FIX THE PROCESS, NOT THE PEOPLE: Medtronic, Inc. successfully applied its unique Lean Sigma formula to global finance. In SF Magazine. Retrieved November 15, 2017, from http://sfmagazine.com/wp-content/uploads/sfarchive/2006/07/Fix-the-Process-Not-the-People.pdf

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Week 4 - Total Quality Control

The previous post about risk avoidance mentions that one of Medtronic’s issues has been quality of their products. In the past, Medtronic has gained a bit of infamy for product recalls. In 2007, Medtronic had to withdraw its cardiovascular products due to high levels of fractures in their product parts (Sprint Fidelis leads which are wires) that may cause more shocks than needed to the patients’ hearts. About 4000 to 5000 patients needed replacements on their pacemakers (Schmidt, 2007). Earlier this year (September 2017), Medtronic made a voluntary recall on their insulin pumps from their diabetic product line on the basis of over-delivery of insulin, which may lead to hypoglycemia in patients (Zacks, 2017). The figure below shows Medtronic’s decrease in growth (blue) in comparison to the rest of the medical device industry during the months of June 2017 and August 2017.

Graph reference – Zacks Equity Research

Due to the quality issues that the company faces, it would be wise that they consider improving the quality control in their workforce, and Deming’s 14 Points would be a good place to begin. Deming’s first point suggests creating new practices that address long-term improvement as opposed to short-term improvement. Medtronic currently faces a history of product issues and recalls with one dating back to merely a couple of months ago. Looking at employee reviews for Quality Engineer positions, a majority of the criticism target incompetent managers as well as the long work hours for a demanding job. Furthermore, compliance regulations also made it difficult for employees to work efficiently. The proposed solution has multiple parts to it. Firstly, there should exist employees who will routinely research and update their coworkers (especially in engineering and quality assurance) on any new regulations. Secondly, from time to time, quality engineers with higher talent should be dedicated to training current and new quality engineers, as well as other engineers. With the Agile methodology, already in effect at the company, SCRUM meetings should occur daily which present good opportunities for problem reports and status updates. Lastly, Medtronic should consider “quality circles”. Engineers should be divided into groups and each group should address an existing issue.

These three parts make up a proposed solution for improved quality control. The product issues appear to stem from accidental negligence and miscalculations. The fractures in the leads were expected to occur, but more fractures occurred than anticipated. This provides more reason that the proposed solution would be effective since, quality engineers would be working closer with other engineers to check the product parts all along the way. Furthermore, the training will act as conduit for sharing knowledge on regulations and current issues. SCRUM meetings usually last close to 15 minutes on average, which is not nearly enough time for quality engineers to convey information. They require a fair amount of dedicated time for them to stand in the spotlight and share their perspective on problems, as well as to collaborate with other engineers and the individuals research regulations. The following diagram visualizes the Total Quality Control (Management) (TQC/TQM) of the proposed solution.

The following is a diagram that visualizes Medtronic’s adoption and implementation of Deming’s 14 Points.

References

Schmidt, J. (2007, October 16). Medtronic Withdraws Leads for Heart Devices. In USA Today: 3B.

Zacks Equity Research. (2017, September 12). Medtronic (MDT) Begins Product Recall, Diabetes Group a Drag. In NASDAQ. Retrieved November 15, 2017, from http://www.nasdaq.com/article/medtronic-mdt-begins-product-recall-diabetes-group-a-drag-cm844432

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Week 4 - Risk Analysis

In a situation where Medtronic would fall behind on projects, it would be a good idea if the company better implemented a type of project management methodology. Currently, they already implement the Agile methodology (Weyrauch, 2005). The Agile methodology is a project management technique used by many companies—primarily, engineering companies, such as Medtronic. It implements project cycles referred to as “iterations” and daily SCRUM meetings. During iterations, engineers and other product developers should proceed with caution and provide project managers with an estimated time of completion with the current iteration or with the whole project. By doing so, project managers will have a better idea of what information to relay to clients and investors. Furthermore, it has been shown that 71% of companies that use the Agile methodology meets the scope of the projects, while 68% meet the quality standards for their industry (Bonnie, 2015). The following is a diagram showing the Agile iteration lifecycle.

Image reference – Garbar, D. (2017, May 31). Create constancy of purpose for improving products and services. Adopt the new philosophy. Cease dependence on inspection to achieve quality. End the practice of awarding business on price alone; inst. In Belitsoft. Retrieved November 14, 2017, from https://belitsoft.com/assets/images/blog/why-agile-is-good-belitsoft.png

As far as the product issues, if it continues then the company will likely see a major lost in client and investor business. The issues can be solved through recall and repair. However, taking preventative measures has more of a positive impact. Medtronic could double down on the quality assurance (QA). They should stress tests and run endurance tests on all of their products and design. Furthermore, individuals working on assembly should be more vigilant to product defects as they are being produced. That means management should assign more individuals to testing assembled products before packing and shipping.

Reference

Bonnie, E. (2015, July 7). Complete Collection of Project Management Statistics 2015. In Wrike. Retrieved November 14, 2017, from https://www.wrike.com/blog/complete-collection-project-management-statistics-2015/

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Week 4 - Forecast Analysis

In 1949 when Earl Bakken quit school where is studied to be an electrical engineer and his brother-in-law, Palmer Hermundslie, left his job so they could start a medical repair service that they called “Medtronic”. Like many companies, Medtronic suffered through its first year making only eight dollars. However, in 1957, the company began moving up. Bakken invited the world's first transistorized, battery-operated pacemaker that patients could wear. Before that, physicians would need to hook patients up to external machines to keep patients alive. The biggest downside of those machines were the burns they would leave on the patient’s skin as well as the large size of those devices. Bakken was acclaimed for his invention by the National Society of Professional Engineers and his work put Medtronic on the map. The company saw a rapid growth in the 1960s and began tapping into international sales. In the 1980s, the company began to see diversification when it expanded its product line to go beyond pacemakers.

Looking into a SWOT analysis of Medtronic, there exists several weaknesses. When compared to industry averages, they have low numbers across different margins (net, gross, and operating). They are missing stability in terms of company performance. Furthermore, they have a weak relationship with suppliers and other partnering companies (MBASkool, n.d.). They also have a history in product recalls that have smeared the company’s image. This year, Medtronic faces project delays, which have occurred beyond this year (Financhill, 2017). Being consistently late poses several problems. The main and heaviest problem would be losing clients and customers (as well as any contracts). The following graph shows a projected forecast from the years 2018 to 2020 of what would happen if Medtronic continues to face project delays (or continues to have more product recalls, as well). The loss of revenue will not come sudden, but will come in overtime.

Data reference – YCharts (Data location – NguyenDavid_Week4Data.xlsx, Sheet: RevenueAmount (1984-2017), A1:B169)

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Week 3 - Growth Analysis

Medtronic, being a large company, has already made expansions. It current operates in 120 countries and has headquarters in Canada, Japan, Switzerland, and Gladesville (Australia). This makes it difficult to expand any further since there has already been so much expansion completed already. In the event that an expansion opportunity arises, Medtronic should proceed with caution. Meaning that it should assess the area; determine whether there are competitors in the area and how much of area do they “own” (a battle for territory). Forbes recommends to do a SWOT analysis of the competition (Evans, 2015). It must also research the state of healthcare in the area; for some areas, there exists a high demand for medical devices and in other areas, the demand remains low. In areas of high demand, the company should consider which of their products are in high demand and expand their workforce accordingly.

If the company is new to the expansion location, then they should lease an existing building first. As time passes, they should proceed based on how well they operate in the new expansion location. The company should choose to move into a newly built building or lease a big facility because the workforce will likely increase due to outstanding operations and increased customer demand. If there are competitors already in the area, then they will likely increase their capacity to keep up or keep their lead. If competitors increase their capacity, then the demand from customers will decrease. This will shorten the amount of time that demands remains high—only if competitors are present. If there’s a scenario where Medtronic finds itself in a medical device monopoly in an expansion region, then the demand may likely stay up high for a long period of time since they are the only developers and producers in that region. If the customer demands are not met, then Medtronic could lose customers to other competitors (if they’re present), the engineers could face an increase in workflow (and may even face a pay cut due to the lack of revenue).

Data reference: CSI Market

Data location: NguyenDavid_Week3Data.xlsx, Sheet: GlobalRevenue, A1:I5

The donut chart shows that the revenue and capacity sold in the United States slowly decreased as an expansion was made globally. However, the majority of the capacities sold still remain within the United States.

Reference

Evans, M. (2015, March 4). 10 Key Steps To Expanding Your Business Globally. In Forbes. Retrieved November 8, 2017, from https://www.forbes.com/sites/allbusiness/2015/03/04/10-key-steps-to-expanding-your-business-globally/#1bc6ebbf3803

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Week 3 - Personnel Analysis

Medtronic has a long-term strategy that focuses primarily on its diabetes products. It expects there to be a significant drop in revenues in the first half of 2018, and then a growth in the second half of 2018. Margret Patrick on Market Realist writes “this drop is due to lower deferred revenues in 2Q18, as the majority of pump shipments associated with the priority access program were concluded in 1Q18. Furthermore, while the company will have an opportunity to offer MiniMed 670G to non-priority customers, it also requires a steady supply of sensors to the centers, as patients tend not to prefer pumps without sensors.” (Patrick, 2017, ¶ 1). Refer to the image below for more details on Medtronic’s strategy.

From a realistic point of view, layoffs should not be implemented since Medtronic has plans for further expansion. For example, they plan on taking up more market share in Japan. With them already having locations in Japan, they may have plans to expand in that country, which means more job and hiring opportunities (Patrick, 2017). Therefore, if the company does expand than they will need to hire more employees. The graph below shows the number of employees over the last 11 years.

Data reference: Statista

Data location: NguyenDavid_Week3Data.xlsx, Sheet: Employee, A1:B13

In 2017, they currently have 102,688 employees globally. To expand their workforce, Medtronic attends conventions and conferences to—in addition to advertising their products—promote their company and attract new talent into their company. Individuals within the company walls that perform outstandingly get to take managerial positions while their old positions are taken by new talent. On the other end of talent are the substandard individuals who do not meet administrations’ expectations are let go. Former employees on Indeed have often reported that Medtronic requires long work hours (60-70 hours, minimum per week) from their employees.

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Week 3 - Operation Analysis

According to reviews on Medtronic by current and former employees, the company is filled with management corruption. The company operates out of over 120 countries, and most of their locations are in the United States. Employees have stated that management expects employees to work long hours (60-70 hours per week), and even longer hours when near project deadlines. Furthermore, many have reported the lack of opportunities within the company for advancement. The figure below illustrates the ratings that employees provided to Indeed on their experience.

Image reference: Indeed.com

Many of these issues could be solved by common sense. Employees should be rewarded based on their work and not on their social skills. Management should not practice hypocrisy (i.e. arriving to work when they please and expecting punctuality from their subordinates). Will Sherwood on LinkedIn suggest to reach out to current and past customers and simply ask them about their experience with the company (Sherwood, 2015). Whether it may be customer support or working with a sales representative, a customer’s opinion matters, especially to administration, which should adjust and advise the workforce accordingly. Sherwood also recommends to look at ways to reduce costs (this is where data analysts may step in). The following is a process flow map of the workforce strategy that Medtronic implemented in 2016.

Data reference: Whitney Giga from Medtronic (Giga, 2016)

By knowing and familiarizing themselves with their competitors, Medtronic administration would be able to advise their subordinates in a way that the company can run in a lean-and-clean way.

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Week 3 - Cash Flow Analysis

Cash flow problems should be handled proactively and preventative measure should be implemented to prevent them from occurring. Preventative measures include using balance budgets to monitor company spending and revenue. Other solutions include negotiating with vendors and using trade credit (Murry, 2016). As of 2017, Medtronic does not seem to have cash flow problems, as the company’s revenue is higher than the amount of debt that it is in. Refer to the two figures below.

Data Location: NguyenDavid_Week3Data.xlsx, Page: BalanceSheet, I2:N18

The two figures above supplement each other. The values displayed in the table are visualized and plotted onto the scatter plot graph. Notice that the values in red are the amounts that company owes in debt. The values are within the million, whereas the company revenue for the year range within the billions.

It could be safely noted that early in the company’s life, Medtronic faced much financial struggles—as do most businesses. When a company does not face heavy cash flow problems should it consider financial backing, as that could put the company into deeper debt. However, it could go either way; the second way involves a gamble that can be leaned in favor of the company if the research and development gets completed correctly and carefully. Financial backing could be considered in the condition of heavy cash flow problems in order to sustain the company. All the backing should be invested in what the company does best in order to increase workflow and production. If done correctly and carefully, the company will have a greater chance of pulling itself out of a financial hole that they might find itself in.

Reference

Murry, J. (2016, November 12). Cash Flow Solutions for Businesses. In the balance. Retrieved November 10, 2017, from https://www.thebalance.com/cash-flow-solutions-for-businesses-397476

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Week 3 - Sales Analysis

Medtronic currently markets overseas; they operate in over 120 countries, including Canada and Japan, which one of the world’s leading research and developers in technology. Furthermore, medical devices (also known as invasive technology, due to their need for transplantation and integration into the body) are considered progressive technology, which means that the world will continue to demand them. It would not be wise for Medtronic to shy away from such big opportunities. The following bubble graph shows a projected growth of medical devices sales and market share, sorted by company, over the next five years. Abbott Laboratories is expected to have the greatest sales growth since in January 2017, it absorbed one of the medical device giants, St. Jude Medical.

Data reference: Emily Muir and Elizabeth Cairns, September 2017

Elizabeth Cairns from MedTech forecasts that Medtronic will lead the medical device market as the largest company by 2022 through $38 billion US dollars in sales (refer to the figure below).

Data reference: Emily Muir and Elizabeth Cairns, September 2017

Currently, Medtronic does operate on vertical integration. There are currently open positions for assemblers, which indicate that their products are assembled in-house. Vertical integration helps Medtronic cut costs by reduce transportation and turnaround time. In other words, it cuts out the middleman in production. In 2010, Medtronic bought Invatec and Cardiocom, which are companies that specialize in cardiovascular medical technology and patient monitoring systems, respectively (Dickerson, 2014). Not only does Medtronic control more of the market, it also owns the data that are retrieved from the two companies that it has absorbed.

Medtronic should also consider expanding to new areas of healthcare, and create medical devices for other areas of the body. They could look into osteology (bones), hematology (blood), etc. There are medical devices that filter blood, for example. They could also consider more widely known areas of healthcare like oncology (cancer and tumors). Any new area that Medtronic reaches to will open new opportunities for expansion and will provide new opportunities for workforce growth (new jobs).

References

Dickersonv, J. (2014, October 29). Medtronic and Vertical Innovation. In MGMT 7160: Innovating for Life. Retrieved November 10, 2017, from http://jed7160.blogspot.com/2014/10/medtronic-and-vertical-integration.html

Muir, E., & Cairns, E. (n.d.). EvaluateMedTech® World Preview 2017, Outlook to 2022. In EvaluateMedTech. Retrieved November 10, 2017, from http://info.evaluategroup.com/rs/607-YGS-364/images/MTWP2017.pdf

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Week 3 - Risk Analysis

As discussed in the Sales Analysis, there are many opportunities for expansion and growth for Medtronic through exploring other areas and studies in healthcare. By doing so, however, presents a risk in the form of new competition that may or may not know of the subject better. For instance, if the company decides to expand into oncology, then they must consider which companies already lead in the market for oncological medical devices. The following figure shows the expected growth of market shares and sales growth for the top areas of medical devices (sorted by category). Notice that in vitro devices (IV, for example) takes the lead with cardiology as a close second. Based on the bubble chart, it would make sense that Medtronic could look into orthopedics next, since it already develops devices for diagnostic imaging.

        Data reference: Emily Muir and Elizabeth Cairns, September 2017

Other risk opportunities are expansions to foreign regions. When considering an expansion into a new region, Medtronic should consider that numerous competitors could already be present in the area. Furthermore, they should consider the customer demand of that area. They risk settling in an area where customer demand could quickly dwindle if they are not considerate of projections and forecasts.

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Week 2 - Expansion Recommendation

Based on the test data and industry type, Medtronic should certainly expand to India and it already has expanded to that country. Hypothetically, if Medtronic hasn’t expanded to that location, then there are numerous reasons why they should expand to India. According the India Brand Equality Foundation (IBEF), India invested $71.48 billion (in US dollars) into research and development for science and technology in 2016—alone. Furthermore, Dr. Ashwini Aggarwal, Principal Consultant of Healthcare at PwC says that the healthcare industry in that country is a $110 billion-dollar (in US dollars) industry that is expected to grow 12-15 percent in the near future (Mathew, 2017).

With a powerful industry looming over a heavily populated country, Medtronic could certainly make big profits and revenues by expanding to India. Also, that country is also considered “the diabetes and coronary heart disease capital of the world” and will soon have the highest number of heart disease cases in the world (Mittal, 2017, ¶ 1). This gives more reason for Medtronic to expand to this country since it specializes in cardiac devices and technologies. In addition to their increase in profits and revenues, other medical device giants, like Boston Scientific and Johnson & Johnson have already made their place in India. Therefore, in order to stay even—or ahead—of the competition, Medtronic should expand to areas where the competition has already or has not set up shop.

References

Mathew, P. (2017, August 16). How India's healthcare industry got in good shape. In GetThat Reports. Retrieved November 2, 2017, from http://gulfnews.com/gn-focus/country-guides/reports/india/how-india-s-healthcare-industry-got-in-good-shape-1.2073779

Mittal, A. (2017, January 3). Increasing heart attacks in young Indians. In Times of India: Life. Retrieved November 2, 2017, from https://timesofindia.indiatimes.com/life-style/health-fitness/every-heart-counts/increasing-heart-attacks-in-young-indians/articleshow/56295257.cms

Science, Research, and Development. (2017, July). In India Brand Equality Foundation. Retrieved November 2, 2017, from https://www.ibef.org/download/Science-Research-and-Development-July-2017.pdf

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Week 2 - Bayesian Analysis

Bayes’ Theorem is as follows:

P(H|E) = (P(H|E) * P(H)) / P(E)

In the formula, “P” stands for the probability, “H” stands for the hypothesis, and “E” stands for the evidence. P(H|E) represents the probability of the given hypothesis being true considering the given evidence. (P(H|E) * P(H)) / P(E) represents the probability of getting the evidence if the hypothesis were true where P(E) represents the probability of “E” over all probability, and (P(H|E) * P(H)) / P(E) represents the probability of “H” being true before any evidence is gathered and used.

Suppose that administrators at Medtronic wanted to see the probability of their total sales in cardiac and vascular products meeting or exceeding $11.1 billion during the next fiscal year.

The sales for 2015 and 2016 will be considered as well. The following chart shows the sale forecast (completed via Microsoft Excel FORECAST formula) for 2018 (in billions of US dollars).

The sale differences shall be used in the Bayes’ Theorem (shown above).

According the calculations above, there is a 31% chance that the forecast is correct and that cardiac and vascular sales will meet or exceed $11.1 billion dollars. This calculation could also be applied to the other products as well.

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Week 2 - “Lottery” Analysis

Suppose Medtronic decides that they will randomly select a unit that they have sold in 2017 and ask the customer who bought that unit to participate in a customer satisfaction survey. There are four categories (five, if Neurology and Surgery are counted as separate). The following are the possibilities for each category to be selected for the survey:

Customers who bought units for diabetes would have at most a 30% chance of getting selected. Customers who bought units for cardiology would have at most a 27% chance of getting selected. Customers who bought units for hospital administration would have at most a 36% chance of getting selected. And customers who bought units for neurology and surgery would have at most a 7% chance of getting selected. Refer to the figure below for a visualization of probabilities.

Consider that Medtronic decided to expand their drawing to other years. Assume that the prices have remained the same for 2016 as it did in 2017. The estimated number of units sold for the year 2016 were:

• Diabetes = 3,587,229 • Cardiology = 3,211,991 • Hospital Administration = 5,883,555 • Neurology and Surgery = 581,936

The total units sold in 2016 would be 13,264,711. The total units sold between the two years would be 25,693,095 units (see the figure below).

Consider the sample data from 2016 and 2017, the chances of a client for cardiology from 2016 to win would be:

In order to ensure fairness in the drawing, it should be optional for each category to get reduced down to only individual companies, because many companies would have purchased multiple units as opposed to one unit. In other words, use the units sold to see which companies are the company clients, so that the drawing would be between companies, and not the units sold. Doing so, there will be an equal chance among companies. The following (but not limited to) companies are clients to Medtronic (Spiderbook, 2015):

• Activa Therapy • Alpine Biomed • Animas Corp • CMI • Covidiens (Medtronic’s biggest client) • LifeTech Scientific • Lombard Medical • Maximo • Roth Capital • RTI Biologics • Zarlink

References

Medtronic Customers. (n.d.). In Spiderbook. Retrieved November 1, 2017.

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Week 2 - Selected Sampling

The data presented in the Product Retail Pricing Averages was generated with the intentions of it being a sampling set of data. Medtronic sells many more products; however, a wide range of prices were selected to get a more accurate average. Outliers such as the MiniMed Paradigm Revel 523 Insulin Pump (in the diabetes category retail priced at $6195) were omitted to prevent data skewing. The averages of the prices were calculated and they resulted in the following amounts:

• Diabetes = $222.82, $278.96 • Cardiology = $3,175.60 • Hospital Administration = $1,631.67 • Neurology and Surgery = $6,436.25, $5,936.25

Following the average calculations, an estimated number of units sold for the year 2017 were calculated. The results are as follows:

• Diabetes = 3,786,520 • Cardiology = 3,306,462 • Hospital Administration = 4,535,240 • Neurology = 800,162

Since cardiology is Medtronic’s main product that they develop, it will be the centerpiece of this scenario and calculations. Therefore, suppose that a client/customer has expressed interest in knowing why there seems to be a less number of cardiac units sold than half of the other units (diabetes and hospital administration). They’re curious to know the probability of a randomly selected unit belongs to cardiology. The probability would be calculated below:

= P( C ) = 3,306,462 / 12,428,383 = 0.266

Therefore, there will be about a 27% chance that the randomly selected unit (from the data pool) belongs to cardiology.

Numerous factors might be the cause for discrepancies between the probabilities. First, the cardiac products are one of the more expensive products that the company sells. Notice the trend that the more expensive the product, the less units will be sold (other factors play into why less units are sold as well). The Micra™ TPS is a state-of-the-art pacemaker that is also the world’s smallest pacemaker. It sells upwards of $10,000 per unit. Second, there are more diabetic customers than customers who require cardiac units and devices. According to the American Diabetes Association, in 2015, there were 30.3 million Americans with diabetes (all types), and the CDC reports that there were 5.7 million Americans with some form of cardiac disease. Furthermore, there are also more demand for devices used by hospital administration. Lastly, despite being one of the largest medical device vendors, not all cardiac disease treatments require the products developed by Medtronic.

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Week 2 - Target Customers

Considering the nature of this industry that Medtronic works in, it should be fairly obvious that the target customer pool would be individuals working or associated with hospitals or other medical facilities. In addition to their primary product in cardiac-pacing technologies, Medtronic also develops technologies for individuals with diabetes. Unlike some of the other items, the company shall work directly with the patient as the customer when they are handling their products for diabetes. Other products such as pacemakers and spinal cord stimulators, Medtronic will work with individuals in healthcare facilities, such as cardiologists, hospital administrators, neurologists, and surgeons. Reaching each of the clients will involve attendance at healthcare conferences, seminars, and conventions. These big gatherings of companies will introduce great opportunities for Medtronic to meet with potential customers, because healthcare professionals often attend these events.

It should be considered that through the year, the company will likely attend multiple conventions, seminars, and conferences—not just one. With that in mind, it should be expected that the projected cost for marketing—in general—would be close to $1.5 billion. Mind that displays, giveaway items, flyers, brochures, travel, employee salaries, etc. must be calculated into the cost. If one promotional event—and only one—were to be considered, then the projected cost would be close to $25,000 to $50,000 depending on the location of the event. That amount to one person will look high, but in the perspective of a multi-billion-dollar medical company, that amount is merely a blip on their finances. Referring to the table below, the total revenue in the past three years have been climbing. Spending that small amount, will likely make an impact, especially if the convention, seminar, or conference is a popular event, like the Federation of International Medical Equipment Suppliers (FIME) annual meetings, which is the largest medical trade fair in the United States (Pelletier, 2014).

References

Pelletier, S. (2014, July 2). FIME Tops HCEA List of Largest Medical Meetings in 2013. In MeetingsNET. Retrieved October 31, 2017, from http://www.meetingsnet.com/medical-meetings-resources/fime-tops-hcea-list-largest-medical-meetings-2013