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Intuitive Surgical Group Case Study

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Kim Lindquist

on 19 June 2013

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Transcript of Intuitive Surgical Group Case Study

Intuitive Surgical Group, Inc.
A Case Study Presented by:
Brittany Brink
Martha Davis
Kim Lindquist
Lashun Stadom
Agenda
Part I: Summary of the Case and Problem Identification

Part II: Solution and Implementation

Part III: Company Research and Current Information
Intuitive Surgical Group, Inc. (ISRG) was founded in 1995.

ISRG is headquartered in Sunnyvale, CA with 850 employees.

There are 19 active training centers in the United States and two in Europe.

They market their products through sales representatives and distributors.

ISRG went public in 2000.

About Intuitive Surgical Group
About Intuitive Surgical Group
The Da Vinci System
ISRG focuses on non-cardiac thoracoscopic, prostatectomy, cardiotomy, cardiac revascularization, urologic, and pediatric procedures.

The system retails for $700,000 to $2.3 million. As of March 31, 2009, there have been 1,171 unit shipments worldwide with sales of 863 in North America, 211 in Europe, and 97 elsewhere.

ISRG was sued for patent infringement by Computer Motion, Inc., its chief rival at the time. After years of litigation, Computer Motion agreed to a merger in 2003. The new company favored the da Vinci system, and ZEUS was phased out.
Key Issues
Technological Innovation. ISRG has a disruptive technology, which is the first of its kind in the market.

System Expense. The da Vinci system is very expensive with 3,000 unique parts. Ongoing maintenance is also very expensive.

Increasing Market Barriers. ISRG operates within a market with increasing barriers to entry.

Opportunity and Desire to Expand. In the United States, ISRG requires FDA approval for its products. However, the process in international markets is less cumbersome for entry.

Monopoly At Risk. ISRG has a monopoly on the market for both products and services, but their last patent is expiring in 2016.

Major Problems
Avoiding "Polaroid Syndrome"

Patent Expiration

Addressing Service Quality

Sales Impact with Recession

Competitors' Product Development
Solutions and Justification
Avoiding "Polaroid Syndrome"

1. Continue investing in research and development.

2. Do not underestimate competitors and innovative technologies. The market is still developing and has not reached shakeout.
Patent Expiration

1. Look for new patents and new technology.
Addressing Service Quality

1. Intuitive Surgical must be tirelessly diligent about quality and testing at all times.

2. Hire quality engineers.

3. Continue to educate end users in ISRG's training centers.
Solutions and Justification
Sales Impact with Recession
Competitors' Products

1. Look for cost savings while still maintaining quality in system construction.

2. Reduce maintenance costs.

3. Expand in international markets.


1. Because ISRG focuses on da Vinci, competitors have the opportunity to patent new and innovative technology.

2. ISRG’s R&D should not just focus on da Vinci, but should also perform environmental analysis consistently for opportunities in new and emerging robotic technologies.


Company Research
Part I
Part II
Part III
The company's mission is to extend the benefits of minimally invasive surgery to the broadest possible base of patients. At Intuitive Surgical, our priority is to achieve optimal customer satisfaction through superior product design, reliability and quality. With equal commitment, the company works to be recognized for the responsiveness and integrity of its customer service. Throughout our organization, we emphasize personal responsibility for creating value. This ensures that customer needs are everyone's focus.
Mission:
Closing Remarks
SWOT Analysis
SWOT Analysis
Strengths
Weaknesses
Opportunities
Threats
Strong Financial Results and Profitable Company
Unique Technology
Niche Market Leader
Product Expense
Expensive Company Valuation
FDA Complaints on the da Vinci System
Continuous Focus Needed on Market Technology
Competitors' Technology
Third Party Reimbursement (Health Insurance)
Delivering New Products to Surgeons
Growth in Gynecology and Urology Worldwide
Increase Surgeon Training
Generic Strategy - Product Differentiation/Focus

Focus on Key Procedures
Focus on Key Institutions


Grand Strategy - Concentrated Growth and Horizontal Integration

Maintain Market Leadership
Increase Patient Awareness
Focus on Leading Surgeons to Drive Rapid and Broad Adoption
Merged with Computer Motion and Phased Out Competing ZEUS System

Strategy from Case:
Company Research
Through dedication, collaboration and innovation, our employees strive to create better lives for current and future patients around the world. This philosophy means we do everything we can to produce products that provide the best possible outcomes for patients. We firmly believe that by maintaining this focus success will continue to follow. Therefore, the success of Intuitive Surgical is due to its technology, its vision, its staff and foremost, its focus on patients first.
Company Research
Current Financial Position:
Company Research
Current Financial Position:
2012 Financial Highlights

Total revenue increased 24% to $2,178.8 million during the year ended December 31, 2012 from $1,757.3 million during the year ended December 31, 2011.

Approximately 450,000 da Vinci procedures were performed during the year ended December 31, 2012, up approximately 25% from the year ended December 31, 2011.

Instruments and accessories revenue increased 29% to $903.3 million during the year ended December 31, 2012 from $701.1 million during the year ended December 31, 2011.

http://www.advfn.com/p.php?pid=financials&symbol=NASDAQ%3AISRG

Changes in Solution
Patent Expiration
Addressing Service Quality
Avoiding "Polaroid Syndrome"
Sales Impact from Recession
Competitors' Products
Our recommendation does not change.
Our recommendation does not change.
Our recommendation changes. The service schedule needs to be modified to prevent further litigation. Based on SWOT, it is clear that some of the equipment has defects that are not being addressed before an impact to the patient.
Our recommendation changes. Quality needs to be focused on more than market expansion.
Our recommendation does not change.
Company Research
Recommended Strategy:
Generic Strategy - Product Differentiation

A low cost strategy is inappropriate for the target market.
Product differentiation is still appropriate given ISRG's products and services.


Grand Strategy - Product Development and Innovation

Develop new products outside of the da Vinci system.
Make similar competitor products obsolete through research and development.

Are there any questions?
Full transcript