Introduction
In this paper, Wristop Technologies will be analyzed. The Finland-based company produces wrist computers for customers in the medical device manufacturing industry. The first part of the analysis will focus on the company’s innovation and its source. The benefits of the innovation to the customers will also be analyzed. The second part of the paper will evaluate the suitability of the market that was chosen by the company. The last part of the paper will shed light on the role of a venture capitalist (VC) in the operations of Wristop Technologies. Moreover, the importance of intellectual property rights to the company will be discussed.
The Innovation and its Source
The company’s innovation was the production of wireless medical wrist computers. Before the inception of the company, wrist computers had been developed and introduced in the market. However, most of them were used for non-medical purposes such as sports. Thus, the company’s innovation involved introducing the use of wrist computers to manage diabetes. This involved developing computers that could continuously monitor blood glucose levels.
Since devices that could monitor blood glucose were already available, the innovation achieved by the company involved designing computers that could also collect more information about the patient’s health. As a result, the computer was better than existing devices since it was able to help patients to prevent the medical complications associated with diabetes.
Incongruity is the main source of the company’s innovation. In particular, the idea of developing the medical wrist computers arose from the realization that existing devices for managing diabetes were not functioning as they were supposed to. For instance, the existing insulin pumps were cumbersome to use because of their large size. In addition, their use was limited to monitoring blood glucose rather than a variety of health indicators to enable patients to manage their conditions in a better way. In this respect, Wristop Technologies decided to innovate by addressing the weaknesses of existing products rather than inventing a new one. The company’s innovation is considered radical because the benefits associated with the medical wrist computers will significantly change the way diabetes in managed.
Benefits of the Innovation
The medical wrist computers provide the following benefits to the customers (users). First, the devices are user-friendly due to their small size. The devices can be used as implants, thereby improving the user’s comfort. This means that more people will be able to manage diabetes by using devices that do not interfere with their lifestyles or activities.
Second, diabetics will be able to avoid rapid deterioration of their health conditions by using the wrist computers. In particular, the device is capable of collecting addition information about the patient’s health. This enables the doctor to gain deep insights into the patient’s condition in order to prescribe the right treatment in time. Undoubtedly, timely treatment will reduce the unnecessary plain and deaths caused by diabetes.
Third, the medical wrist computers facilitate remote monitoring of the health of diabetics. This benefit arises from the fact that the device uses mobile technology to monitor health indicators such as blood glucose. In this case, doctors can easily assess the conditions of their patients from remote locations. As a result, patients benefit from the convenience of accessing medical services or advice without visiting hospitals. In addition, it gives parents of diabetic children the freedom to attend to their duties outside their homes while monitoring their children’s health conditions.
Assessment of the Company’s Choice of Market
Advantages
The market chosen by the company presents the following benefits. First, the market is dominated by several large companies that operate in all parts of the world. The companies present a great sales opportunity because of their ability to make huge purchases. In addition, their global presence is likely to reduce Wristop Technologies’ distribution costs. Large orders coupled with low distribution cost will enable the company to increase its profit margins.
Second, the threat of substitution in the market is low because the features of existing devices for managing diabetes are inferior to those of the medical wrist computers. In addition, the market presents a huge growth opportunity due to the minimal use of advanced technologies in the medical device manufacturing industry. This means that sales are likely to increase as more companies embark on using new technologies such as wrist computers to manufacturer medical devices.
Finally, the prevalence of diabetes is expected to increase significantly in future. For instance, nearly 70% of Americans born in or after 2020 are likely to suffer from the disease. Thus, the demand for devices that can manage diabetes effectively will increase as the government tries to reduce the cost of treating the disease.
Disadvantages
First, the market is highly concentrated since only a few companies control the medical device manufacturing industry. The dominant manufacturers of medical devices are likely to have high bargaining power, which they can use to exploit Wristop Technologies through low prices. Second, the market is associated with complicated regulations in countries such as the US. Generally, restrictive regulations are barriers to market entry since complying with them requires a lot of time and financial resources. Third, the culture in the medical device manufacturing industry promotes the use of old treatment methods and technologies. Thus, resistance to new technologies is likely to limit the company’s sales.
Role of the Venture Capitalist (VC)
VCs consider the following factors when making an investment. First, they consider the level of risk involved in the investment. A VC is likely to invest little or no funds in a venture that is associated with high risks and vice versa. Second, VCs consider the size of the market that is to be served by the proposed venture. If the market is large, the VC is likely to invest in order to take advantage of the expected high profits. Third, VCs often evaluate the quality or features of the products that they intend to finance. In this case, innovative products are likely to be funded by VCs because of their ability to overcome competition in the market.
Businesses, on the other hand, collaborate with VCs to access the funds that they cannot obtain from lending institutions such as banks. Obtaining funds from VCs is easy because they do not require collateral. In addition, they do not impose rigid repayment terms and conditions. Businesses also look for expertise and industry connections when searching for a VC. Start-ups whose owners have little management experience and knowledge of a particular industry can benefit from the expertise of their VC partners. For instance, the VC can appoint a board member to assist with the management of the company.
In the case of Wristop Technologies, the role of the VC was to provide the initial capital that was required to start the company. Collaborating with the VC was necessary since the company could not obtain a bank loan. The VC also played a critical role in managing risks in the company by influencing decisions concerning its future activities. Nonetheless, the VC’s ability to influence decisions had a negative effect on the company’s growth prospects since it was required to serve only the medical device manufacturing industry.
Importance of Intellectual Property Rights (IPRs)
First, IPRs enable small companies to have exclusive ownership or rights over their products. For instance, it enabled Wristop Technologies to have exclusive control over its innovation. Thus, the company was able to prevent its competitors from imitating its product. Second, IPRs enable companies to receive high returns on their investments. For instance, patenting the medical wrist computers was expected to limit the number of companies that could produce similar products.
The resulting reduction in competition was expected to increase Wristop Technologies’ sales and profits. Finally, IPRs enable small businesses to access capital from financiers such as VCs. In this case, IPRs reduce the risks that VCs will be exposed to if the company they invest in loses exclusive rights over its products. Undoubtedly, patenting the medical wrist computers is one of the factors that enabled Wristop Technologies to obtain funding from the VC.
Conclusion
Wristop Technologies’ innovation was the production of medical wrist computers that can manager diabetes. The main benefit of the innovation is that it can prevent the medical complications associated with diabetes. The company’s product was to be sold to manufacturers of medical devices. The advantage of this market is that it is large. Thus, the company can realize high profits by serving it. However, the market is also characterized by large companies (customers) that have high bargaining power. In addition, the companies that manufacture medical devices are reluctant to adopt new technologies. Consequently, Wristop Technologies should focus on addressing these challenges in order to succeed in the market.