Competitive advantage, as explained by Jay Barney, is the ability of a firm (Medtronic for the purposes of this blog) to create more economic value than rivals (including Stryker, Boston Scientific, etc.).
Medtronic, as a leader in the medical device industry, must find avenues to differentiate product lines and forecasting opportunities to differentiate from the competition. Hence, we will briefly discuss the competitive advantages Medtronic possesses in the market.
Medtronic has maintained a high level of competency in the market courtesy of their unique and aggressive growth strategies. The company is ushering in a new wave of value-based healthcare to create a more robust brand name; increased patient satisfaction and longevity of medical device are intensely sought after outcomes for Medtronic. Furthermore, with the how long Medtronic has been a player in the market, they hold a treasure trove of historical data allowing them to make balanced decisions about legacy or new products.
Another growth area is through the acquisition, but not of companies with products similar to Medtronic. The company seeks to identify leaders, big and small, in diversified markets like robot-assisted surgical equipment, and buy them out further increasing Medtronic's competitive advantage. The product diversification is bolstered through a practice of sustaining high-margin (hip systems) and low-margin products (surgical stents). Essentially, Medtronic has a financial backup when one sector of their portfolio is not bringing in expected profits.
A quintessential key to Medtronic's growth (and continued innovation) rests within the litany of patents the organization holds. The patents are essentially the keys to market dominance as they create barriers to entry for the competitors, even if ephemeral.
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| Attaining market competitive advantage through continued product diversification. |
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