Medtronic Plc is a medical company, providing health care and medical service. The Company generates most of its profits and sales from United States. It is headquartered in Republic of Ireland because of taxes. Medtronic has executive and operational headquarters is Minnesota in United States. The company has acquired the Irish-tax Covidien which is registered. This is the biggest corporate tax inversion in United States. As it enabled Medtronic in moving the legal registration to Ireland from United States. Medtronic is in this field from many years. The company is operating in more than 150 countries across the globe. more than 86,000 employees are serving to the company (Medtronic, 2019).
The medical field is competitive, it is necessary for the company to have the industrial analysis. It will help them in making strategic decision and will re-examine the strategies to avail the new opportunities. Porter five forces model help the companies in analyzing the external factors in detail. The five forces are; bargaining power of buyers and suppliers, threats from the substitute products and new entrants and Competition level in the industry. Here is the detailed Porter five forces analysis of Medtronic;
Bargaining Power of Buyers
The medical industry is getting advance and technologically sound day by day. Medical industry is directly related to the lives of people; hence the bargaining power of the buyers is low. The increase in the population and the society who do not consider proactive, and healthy living a necessity is increasing. The need for the medical and healthcare services increase. Medtronic provides the services and products affect the quality of life. People consider patients’ healthcare expense as priceless because life is more important. For Medtronic, consumers are high, products and services are differentiated. And People lives are improving (Manythemiles, 2014).
Bargaining Power of Suppliers
Suppliers in the industry are more than the companies operating in the medical industry. Hence, the bargaining power of the suppliers are moderate to high. Few companies in the industry means, suppliers have to sell their products to less people, thus limiting the profit. However, some of the raw materials required are specialized and are costly. In this case, suppliers have the high bargaining power. Medtronic maintains good relationship with its suppliers and involve them in medical programs. This helps the company in achieving some cost advantage (Maresova and Kuca, 2014).
Threats of New Entrants
Threat from the new entrants in the medical industry is moderate to high. This is mainly because of the high capitalization cost. The medical industry requires huge distribution networks and supply chain management to run the operations. New entrants have to face the tough competition from the existing competitors in the industry. Moreover, strong brand image, brand name, and brand reputation is important to build for attracting huge consumer base. this is tough for the new firms in the medical industry (Henry, 2018).
Threats from the Substitute Products
There are threats from the substitute products in the medical devices as if rival produces a product in less prices. This will attract many consumers. Moreover, when any company is near to the expiry of patents, other companies quickly grab the patent for the drug. This is a critical area in the medical field. However, threat from the substitute products is moderate in case of Medtronic. This is mainly because of the usage of the medical devices of Medtronic are used by many hospitals across the globe. Many of the hospitals found best diagnosis by using the company’s devices. This makes the company to gain competitive edge in the area (Maresova and Kuca, 2014).
Rivalry of Existing Players
The competition in the medical and health care industry is very high. The main competitors of Medtronic are Stryker Corporation, Abbott Laboratories, St Jude Medical Inc, etc. The market leaders in John & Johnson. All these companies are multinational. These competitors make the market small. The growth of the industry is high and strong. Companies compete on differentiated products. But for Medtronic, the competition level is moderate. This is mainly because of the high differentiated products. Moreover, the company has diversified itself geographically and expanded itself. It has huge loyal consumer base and strong brand image (Manythemiles, 2014).
References
Henry, Z. 2018. Medtronic Porter five forces analysis. [Online], Available at: https://www.case48.com/porter-analysis/13700-Medtronic, [Accessed on: 7th December, 2019].
Manythemiles, 2014. Medtronic and Porter’s 5 Forces Model. [Online], Available at: http://jed7160.blogspot.com/2014/09/medtronic-and-porters-5-forces-model.html, [Accessed on: 7th December, 2019]
Maresova, P. and Kuca, K. 2014. Porter´s Five Forces On Medical Device Industry in Europe. [Online], Available at: https://www.researchgate.net/publication/268149998_Porters_Five_Forces_On_Medical_Device_Industry_in_Europe, [Accessed on: 7th December, 2019].
Medtronic, 2019. Company overview. [Online], Available at: https://www.medtronic.com/us-en/about.html, [Accessed on: 7th December, 2019].