GENICON: Surgical Strike into Emerging Markets Harvard Case Solution & Analysis

Problem Statement:

The GENICON is currently facing a problem in deciding which international emerging market it should enter to expand its business and due to limited resources it is hard to decide; which country to invest in. GENICON knows that in order to grow and diversify; new markets will have to be identified, evaluated and developed.


China had the fastest growing economy in the world. Its medical device market in 2008 was $12.64 billion, which was expected to reach $23.25 billion by 2013. China’s medical device sector was expected to show growth during 2008 to 2013 on yearly basis. The medical device market share of China in 2008 was 6.80% of the overall health care market; which was expected to 5.48% by 2013. In China, the growing commoditization of health care would result in increase demand of foreign players to enter its market. The increase of private insurance and privately-owned health care facilities was the main player of medical equipment market success in China.

The Brazil had one of the largest economy in the world. Its medical device market in 2008 was $ 3 billion, which was expected to reach $5.7 billion by 2013. The medical device market share of Brazil in 2008 was 2.1% of the overall health care market; which was expected to increase to 2.4% by 2013. This shows an increase on a yearly basis in the growth of Brazil’s medical device sector. A compound annual growth rate of 13.8% was expected by 2013. The medical device sector of Brazil offered the strong opportunities for foreign device maker. The nominal GDP was expected to grow at the average rate of 6.6% annually by 2013 and long-term medical device market growth prospects were positive in Brazil.

India had a rapidly growing economy but still it remained a very poor country. Its medical device market in 2008 was $ 2.35 billion, which was expected to reach $ 4.01billion by 2013. The medical device market share of India in 2008 was 4.43% of the overall health care market; which was expected to be 3.64 % by 2013. It was also forecasted that India would have 11.3 % year to year growth through 2013. Although, the forecasted sales for medical equipment in India indicates a gradual increase for the period 2009-2013 but India would continue to struggle to provide adequate health care services to its rapidly growing services.

The economy of Russia was in the state of transition. Its medical device market in 2008 had worth of $1.89 billion, which was expected to reach $ 2.88 billion by 2013. This shows that Russia’s medical equipment sector during the five year period from 2009 to 2013 would have slow and constant growth. The medical device market share of Russia in 2008 was 3.08% of the overall health care market; which was expected to be 3.32 % by 2013; hence showing no significant improvement from the beginning of the Russian medical device market. The total spending of private and public health was expected to reach $97.4 billon, which indicates greater healthcare expenditure.

On the basis of quantitative analysis, China has the best opportunity market for GENICON because the expected increase in the sales of medical device on a yearly basis for the 5 year period was more than that of India, Brazil and Russia. Secondly, the medical device market from the overall healthcare market was estimated 5.48% in 2013; whereas market shares of India was 3.64%, Brazil was 2.4% and Russia was 3.32% in overall healthcare market; therefore, showing that China has high expected market share as compared to India, Brazil and Russia.

The variables which are important in making decision includes number of health care centers and hospitals, corruption, exchanges rate, taxes, political risk, opportunity cost for new business development, the capital investment and risk associated with entering into the new markets. The time between initial investment and the first time revenue realized is another factor. Population of the country is also an important variable that helps in deciding, which market to enter as growing population provides opportunities to invest in the market.

Discussion of Alternatives

The population of India is growing rapidly, which provides huge market potential for foreigners to invest; on the other side India is a very poor country which gives negative sign to the investors. There is an increase in demand for new goods and services by the emerging middle class of India. It is not easy for international firms to get an approval in India from the regulatory authority. There is a high political risk in India as it was held back by the entrenched bureaucracy. In India there are more transparent regulations, a reduction in levie and a flux of foreign firms.

China is the fast growing and the most attractive market for medical devices, which shows the greater market potential for investors; the regulatory....................................

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The critical question facing the company's ability to develop its business internationally, where it should go next. One company is facing the decision was GENICON, the American firm that manufactured and distributed medical instruments for laparoscopic surgery. Although the minimally invasive surgical market in the United States has long been the world's largest international markets expected to grow at a much faster pace than the U.S. market in the foreseeable future. GENICON already in more than 40 international markets and was looking in particular for emerging markets - Brazil, Russia, India and China - as potential new growth opportunities. This case is suitable for use in international business course to enter the market strategy of choice. It can also be used in the session for international marketing, entrepreneurship and business strategy. "Hide
by Allen H. Merchant, Adam P. Tindall, Gary Haberland Source: Richard Ivey School of Business Foundation 13 pages. Publication Date: 05 May 2010. Prod. #: 910M41-PDF-ENG

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