CyberDyne Case Study Solution
Porters Five Forces Model:
Bargaining power of the customers
The market to which HAL was targeting usually consisted of population of more than 40 years of age or those who developed an injury at an early stage. The younger population usually availed private insurances or were not able to afford a treatment that was currently available in the market. Other than the younger population, mostly old people in the US market were facing strokes and their treatment was also very expensive which was covered through Medicare or Medicaid insurance policies. Such a population did not had any bargaining power in the market and were resorted to whatever treatments were available in the market.
Bargaining power of the suppliers
Since Hal was technological equipment therefore there were not many suppliers for it in the market nor did they possess any such bargaining power in the market. These devices were manufactured by Cyberdyne in their own company and had the control over the materials of its equipment.
Threat of Substitute:
There were no substitutes available in the market since HAL was one of its kinds and was a technological break-through. None other devices were able to treat the kind of problem HAL could cure therefore not a single substitute to this product existed in the market.
Competitive Rivalries:
Considering the current state of the market, there are no rivals for the company in this sector since conventional ways of therapies and treatments are provided to the patients.
Threat of New Entry:
This market is open to new entrants as the barriers to the entry are not very high. Any company who could launch a new breakthrough equipment could demonstrate its use and obtain approvals from FDA for using the equipment although the time required to introduce the equipment in the market would be long.
VRIO Analysis:
Value
The value that HAL produces can be ascertained from the previous demonstrations which helped patients to recover substantially as compared to alternative solutions available in the market therefore the value that can be realised through the use of HAL equipment is very unique. Also the amount required for the treatment is substantially lower in the market as well. Therefore the value that HAL cannot be provided by any other alternative treatment.
Rarity:
The kind of treatment provided through HAL is very rare in the market. Other alternatives are also available but that treatment are not valuable or does not provide desired results. Only HAL equipment is providing rare experiences to the patients as proved through the previous studies and demonstrations.
Imitability:
The equipment can be imitated but not easily since it requires acute knowledge about how to connect the signals received through the brain therefore it will require a lot of time for different companies who are targeting this segment, to produce such a product.
Organization:
Cyberdyne has the capability to capture the value from the market due to its HAL equipment although in order to fully realise the value from the product, company needs to organize its operations and strategies properly since it has weak operations due to which it is incurring losses.
Alternatives:
Alternate-1:
The company can start social media marketing to promote its product over a national and international scale since it is the least expensive way of promoting the product. The company can upload its studies online at You-tube showing the incredible results of HAL equipment in curing the patients. Young generation is already into using technological gadgets these days therefore their exposure is very high over the social and online media. Also the ratio of SCI patients comprises mostly of younger population.
Pros:
- Wide reach to international markets.
- Cost effective.
- Growing fan base.
Cons:
- Not very effective due to nature of the solution.
- Targeting specific age group and neglecting older age patients who suffer from stroke.
Alternate-2:
Cyberdyne should hire medical sales representatives to market its product since they have strong relationships with the hospitals, therapists and other related agents. They will help to promote the medical equipment directly to the doctors who in-turn will use it to cure their patients, since there is no alternative available in the market.
Pros:
- Targeted reach to an authentic network
- Targeting specifically niche market.
- Very effective due to nature of the solution
Cons:
- Expensive solution
- Not reaching to a wider market.
Recommendation:
Considering the alternatives that the company can pursue, alternate-2 seems to be a more feasible option since in this scenario company is not investing in its own sales force but hiring medical sales representatives to market their product directly to the targeted market which will allow the company to mitigate their sales and salaries and training costs of their sales staff. Rather than training and then paying own sales team, it is more feasible for the company to pay commission to the outside sales representatives who already have good relationships in the market. Although, it won’t be reaching a wider market but hiring these sales representatives in different regions will help to gradually penetrate different segments of the market. As it is one of the most cost efficient methods available in the market yet very effective therefore probability for the doctors and hospitals is high to accept this solution as their preferred choice.
Conclusion:
The market shows positive signs for the company as the outlook of the market shows that the market really needs some genuine solutions for the problem as the current conventional ways of treating SCI patients are very ineffective and yet market needs a valid solution which HAL can provide. Also, it is very unlikely in the near future that any new company might imitate the product and launch it in the market. Such initiative would require a lot of time and approvals from the FDA to grab a share of the market. Also, the strategies followed by the company are not very strong therefore they need to consider their prices strategies since they are highly competitive while considering the breakthrough technology, Cyberdyne should charge more than what they are currently charging to improve their position and decrease their losses...........
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