The Health Care Environment
The most important external environmental factor for Medtronic is government regulation. It is mandatory to comply with their regulations, and the government is involved in setting the quality standards and liability laws. The government in the US has increasingly become involved in health care since the creation of Medicaid and Medicaid in the 60s (Medtronic, 2013). Their implementation started a trend of increased medical spending with Medicare expanding the reimbursement for cardiac defibrillators. This has caused the system to move to a strategy of predict and manage from one of diagnose and treat under initiatives for health care expenditure control. Fortunately for the organization, there seems to have been little accomplishment with chronic diseases like diabetes and obesity increasing, whereas an aging population has ensured that there is a steady demand for their products like defibrillators and vascular tents, which Medtronic and their competitors manufacture (Medtronic, 2013).
Because of the government’s immense power, there is an active attempt to influence it with the American Medical Association having been the most powerful, although this is no longer the case (Medtronic, 2013). The entire health care system has come to be defined by special interests. The government also heavily regulates facility providers with some of Medtronic’s competitors closing down due to decreased profits. Because of this, health care facility organizations have been lobbying for improved reimbursement, as well as reimbursement of new research protocols and technology. Medtronic stands to benefit from both of them. In addition, Medtronic is also affected by accrediting bodies. They may have the ability to add facility management value through facilitation and demonstration of quality improvement (Medtronic, 2013). Managed care organizations and 3rd party payer organizations also have lobbying groups that all seek to lower prices offered by Medtronic. Internal Strengths and Weaknesses The greatest strength that Medtronic has historically possessed is strong leadership. The current CEO has been at the organization for 20 years with the average tenure of board members being ten years (The Associated Press, 2013). Medtronic has used this core of committed leaders to sustain industry leadership as the organization has navigated the ever-changing technological world, coupled to constrained health care budgets. Underlying strength for the company is a futuristic business plan that has been born out of a well-established and strong team of leaders. In addition, the company has accomplished the task through other strengths like disciplined approaches to marketing, as well as R&D. Through maintenance of a keen awareness of trends in healthcare and biotechnology, the company has capitalized on R&D from smaller firms via mergers and acquisitions. The company has also been able to establish a recognized brand name, which is essential since health providers normally utilize