Estonia
Genicon is a medical equipment supplier that is seeking to gain a market presence in countries around the world. The company is looking at Estonia. A member of the European Union, Estonia is a middle income country with a GDP per capita in line with other Eastern and Southern EU members like Portugal, Greece and Poland (CIA World Factbook, 2014). Estonia has a market economy, but the health care system is entirely government run through the National Health Service. The government's fiscal position is sound.
Genicon has a number of strengths, including its technology and significant international experience in Western Europe, the Pacific Rim and the Middle East (Genicon, 2014). The company is privately held, which comes with some risks such as less access to capital but also less regulatory oversight (for better or worse). The company can also take a more long-term strategic view of its business since it does not need to meet the quarterly needs of shareholders. The company also benefits from strong political support as medical equipment is a target export for America,...
The limited access to capital is a relative weakness, but another is that the company does not have much history dealing with national health services, which offer a different competitive dynamic than private institutions.
There are still considerable opportunities available in global expansion. There are many major markets available for a high-end medical equipment supplier, so global growth is probably the biggest opportunity that the company faces. Another key opportunity is going
public, which would raise substantial funds to pursue more ambitious strategic objectives. A third key opportunity is to enter other major markets. Genicon at this point has a fairly small range of approved devices, and could benefit from having a broader portfolio. There are still threats, however, including regulatory changes that shift the purchasing patterns and
profitability of medical equipment suppliers -- they are likely to feel the squeeze from health providers as a result of the ACA, for example, shifting to a high-volume, low-margin model (Evans, 2013).
Five Forces
Porter's five forces discusses the attractiveness of an industry from a profit perspective. The five forces are the bargaining power of buyers, suppliers, threats of new entrants and of substitutes and the intensity of rivalry. In the Estonian context, the bargaining power of buyers is very high. There is only one buyer, the government-run health care system. Thus, Genicon is a price-taker, but if it wins a contract will likely supply the entire country. The bargaining power of suppliers is not specific to Estonia, and it is relatively low. The parts are generally commoditized -- Genicon's value derives from its
patents, not the plastics and metals in its equipment. Genicon therefore has high…
