Problem Solving Case – Holding Fast
Situation Analysis Summary: CEO Peter Walsh has reservations with launching a promising new product of resorbable fixation devices into the orthopedic market. The dilemma is that the product has not tested to the quality standards of Crescordia. The market has been searching for such a product for 20 years, and a competitor has launched such a product that has failed in many circumstances. Though, they are still selling the product, and according to Jane LaMott VP of sales their competitor Innostat has begun to gain ground against Crescordia simply because we do not offer the resorbable product. Crescordia has name a name for itself in the Orthopedic market of having the highest quality standards. The launching of this unproven new product goes directly against one of Crescordia’s core competencies. (See 5 C’s Analysis Appendix A) B.
Importance of Decision: the decision of whether to launch the resorbables product or not is a huge decision. The reputation of Crescordia could be on the line. If the company chooses to launch the product, and it fails badly, the market reputation could be permanently damaged. On the other hand, Crescordia has the best R & D scientists in the business, and they state that the product is as ready as it will get for human testing. If you don’t launch the product, and a competitor does, you risk losing substantial market share in a very short period of time. This could also cost you your name in the industry. C.
Evaluation criteria and definitions:
1. Financial Short Term – will the alternative positively or negatively affect short term profits
2. Long Term Investment – will the alternative cause higher profits over the long-term
3. Quality of goods produced – will the alternative positively or negatively affect quality of goods
4. Risk of launching new product – will the alternative lower or raise risk to Crescordia
5. Market Risk – will the alternative positively or negatively affect our market risk?
Alternatives: The case describes three alternatives for Walsh to decide between: 1) Launch the resorbables full scale and enter the market, 2) Do not launch the resorbables line, and maintain status quo, 3) Launch the resorbables line partially in the pediatric arena where there seems to be the most need and demand for such a product. 1) Launch the resorbables product full-scale.
* May gain market share immediately as well as gain sales to customers currently serving. * Keep competitors from beating you to the punch with having a highly successful resorbables product. * Will please many customers that have been asking for a resorbables alternative for decades. Cons:
* This is a highly risky product to launch. Your name for quality in the industry is at stake, as well as, opening you up to law suits for failed products. * Large short-term investment in plant equipment for unproven product. 2) Do not launch resorbables line, but maintain status quo of high quality products in the industry. Pros:
* Maintain core competency of “high quality” products in the industry. * No large short-term expenditure for plant equipment and tooling. * With aging US market there is a growing need for fixation devices. Cons:
* Leaves door open for competitor to launch a successful product and take market share. * May upset some customers who want this product, and may buy it elsewhere. 3) Launch the resorbables line in the pediatric market only. Pros:
* Smaller short-term capital expenditure investment than launching the product to all markets, because we would need a smaller range of sizes. * Would allow for in-field testing that the product needs to move forward. * Will please customers that hate going in and performing surgery again on children to remove devices. * Keeps market share by staving off migration to companies that offer resorbable product. Cons:
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