Holding Fast

Prepared by Andrew Coatsworth

A. Executive Summary: Crescordia has positioned itself as a premier supplier of medical tools and devices ranging
from scalpels, artificial hips, and fixation devices. Through an education outreach program, Crescordia maintains
positive relationships with orthopedic surgeons. The surgeons are able to provide Crescordia with feedback on the
products, and as a result of these relationships, it is not uncommon for surgeons to exclusively use Crescordia
products. However, changing market demands has threatened to reduce Crescordias market share. Surgeons are
beginning to switch to resorbable fixation devices, screws, and plates that deteriorate in a patients body, thus saving
the patient a second surgery to remove the device. Additionally, Innostat, a competitor to Crescordia, has released
their own resorbable devices and has started to steal market share (Appendix B). Crescordia must now decide how
to release their resorbable products which have completed lab testing but still have a failure rate of 8%. The
executive team must decide how to regain market share without compromising on their reputation (Appendix C).
B. Industry Dynamics: As outlined in the case, the industry for medical tools and devices remains relatively small.
This industry contains only a handful of major companies. Additionally, as a result of their outreach to orthopedic
surgeons and commitment to quality products, Crescordia has positioned itself as a premier brand. Their stellar
reputation has led to high levels of customer loyalty many surgeons refuse to use other brands. However, surgeons
are beginning to demand resorbable plates and screws, an innovative line of products that could potentially have
significant benefits for patients. While the reliability of this technology remains questionable, firms are beginning to
release more resorbable products. Innostat, a key competitor to Crescordia and an early mover on resorbable
products, recently took over 3 of Crescordias major accounts. Despite the changing tastes, it is still unclear if the
resorbable market will fully develop. High R&D and production costs paired with questionable reliability may
impede market growth (Appendix B).
C. Situation Analysis Summary: Crescordia has access to the best scientists and R&D facilities. As a result of
their expertise, they sell only the highest quality of products. However, they must decide whether or not to release
their line of resorbable goods, a technology that currently has a failure rate of 8%. Although their resorbable
products are most likely superior to those of competitors, the company is hesitant to potentially compromise on its
stellar reputation. The Crescordia team must find a way to balance sales, reputation, and innovation (Appendix G).
At an executive board meeting, the team discussed various alternatives ranging from monitoring and waiting for the
market to develop to a full scale release (See Appendix D). Crescordia has exhausted its R&D process and must
now find a way to test the products in the field in order to keep up with its competition.
D. Opportunities and Threats: Crescordias largest opportunity is to capitalize on its excellent reputation and
relationship with surgeons in order to introduce its line of resorbable products into the market. The loyal surgeons
will be quick to put these new products into practice allowing Crescordia to recapture and grow its market share.
Additionally, the resorbable products already have a low failure rate which can be further improved through limited
field testing prior to a market wide release. Despite these opportunities, Crescordia faces increased competition
from competitors including Innostat which have already launched a resorbable line of products. Additionally,
Crescordia faces potential legal and regulatory consequences associated with medical malpractice and government
standards. These could prove to be detrimental to the company (Appendix A).
E. Evaluation Criteria and Definitions:
I. Reputation Crescordia prides itself on its great relationships with surgeons. They must maintain this
advantage
II. Satisfy demand Surgeons demand cutting edge technology to improve the overall patient experience.
III. Competitor response Competitors will attempt to introduce their own resorbable products
IV. Cost/profits R&D as well as production costs will require scaling and threaten margins
V. Long Term Sustainability Crescordia must keep up with changing market dynamics
VI. Short term Crescordia must recapture lost market share to Innostat
F. Alternatives: At their board meeting, the Crescordia executive team discussed various alternatives to the
changing market demands of the medical fixation device industry. As surgeons begin to demand resorbable fixation
devices, Crescordia must decide what action to take. Suggestions included: waiting for the the market to develop,
testing resorbables in either the pediatric or geriatric markets, and offering a full release of resorbable products.
Based on market analysis and changing demands, it is clear that Crescordia must enter the resorbable market

(Appendix J). However, the firm must choose how to best limit the potential consequences of releasing a product
with a failure rate of roughly 8%.
i. Delay the release of resorbable products and continue selling the current line of goods.
Pros: (a) Crescordia can continue to capitalize on its competitive advantages without threatening its stellar
reputation. (b) No additional costs associated with R&D and new production. (c) Overall low risk
(medical malpractice).
Cons: (a) Fails to expand market share and potentially continues to lose existing customers. (b) Allows
competitors to entrench themselves in a growing market. (c) Company fails to innovate and continue
growth.
ii. Release the resorbables in the pediatric market for field testing.
Pros: (a) Highest level of demand for resorbables in the pediatric market. (b) Highest potential benefits to
patients in the pediatric market. (c) Allows for company growth and potential to compete in growing
market. (d) Crescordias products are likely to be superior to the products of competitors.
Cons: (a) Potential to damage reputation. (b) Will not capitalize on economies of scale and could be very
costly. (c) May be slow to show results and potentially limit the ability for Crescordia to roll out a market
wide product. (d) High risk of legal/ethics violations that could be detrimental to the firm.
iii. Release the resorbables in the geriatric market for field testing.
Pros: (a) Lower risk than entering the pediatric market. (b) Allows for company growth and potential to
compete in growing market. (c) Crescordias products are likely to be superior to the products of
competitors.
Cons: (a) Potential to damage reputation. (b) Will not capitalize on economies of scale and could be very
costly. (c) May be slow to show results and potentially limit the ability for Crescordia to roll out a market
wide product. (d) High risk of legal/ethics violations that could be detrimental to the firm.
iv. Release the resorbable products in the sports medicine market for field testing (Appendix H & K).
Pros: (a) Lower risk than entering the pediatric market. (b) Allows for company growth and potential to
compete in growing market. (c) Crescordias products are likely to be superior to the products of
competitors. (d) Athletes will be more willing to try experimental medical procedures. (e) Athletes are
more likely to have access to world class surgeons than the general public.
Cons: (a) Potential to damage reputation. (b) Will not capitalize on economies of scale and could be very
costly. (c) May be slow to show results and potentially limit the ability for Crescordia to roll out a market
wide product. (d) High risk of legal/ethics violations that could be detrimental to the firm.
v. Full scale release of resorbable products.
Pros: (a) Crescordia will take advantage of scaling production to lower costs. (b) Crescordia will
immediately satisfy demand for resorbables. (c) Crescordia can quickly regain lost market share. (d)
Crescordia likely offers a superior product when compared to competitors.
Cons: (a) Potential to significantly damage Crescordias reputation. (b) Very risky with potential legal and
ethical violations. (c) Does not to utilize a test market, therefor, the product could fail.
G. Alternatives Evaluation Matrix Analysis:
Importance (05 Scale)

Rec 1: Hold
Fast No
product release

Rec 2: Release
resorbables in
pediatric MKT

Rec 3: Release
resorbables in
geriatric MKT

Reputation

Continue strong
reputation (+)

Unknown (0)

Unknown (0)

Rec 4: Release
resorbable in
sports medicine
MKT
Unknown (0)

Satisfy Demand

No market
expansion (0)

Expand Product
line (+)

Competitor
Response

Competitors can
get ahead (-)

Cost/Profits

Long TermSustainability

Smaller
demand in
sports MKT (0)
Crescordia will
likely offer
superior
product (0)
Very costly w/o
scaling (-)
Potential to tap
new market (+)

Short Term

No new costs
(0)
Reduced
company
growth (-)
No expansion

Crescordia will
likely offer
superior product
(0)
Very costly w/o
scaling (-)
Potential to tap
new market (+)

Smaller demand
in geriatric
MKT (0)
Crescordia will
likely offer
superior
product (0)
Very costly w/o
scaling (-)
Potential to tap
new market (+)

May be a slow

May be a slow

May be a slow

Rec 5: Full
scale release of
resorbables
Potential to
backfire
significantly (-)
Full scale
release (+)
Crescordia will
likely offer
superior
product (0)
Scaling (+)
Unknown w/o
test market (0)
Quickly regain

Regain MKT
Share
Risk
Total

(-)

process (0)

process (0)

process (0)

customers (+)

No new
additional risk
(0)
-4

Very risky
(ethics/liability) (-)

Less risky than

with children
(0)
1

Athletes will be
more likely to
accept risk (+)
5

Very risky (-)

H. Recommendations: Short Term: Coordinate with Crescordias most trusted clientele and the legal counsel to
develop medical trial contracts. These contracts will be targeted towards athletes (professional and college) who
choose to accept the higher level of risk associated with resorbable products to gain the potential advantage of
shorter recovery times. With the help of the legal counsel, Crescordia and the surgeons can work to mitigate the
legal and ethical risks of releasing the new product. After the contracts have been finalized, Crescordia can begin to
supply its most trusted surgeons with resorbable products to use in sports related injuries. Crescordia will also need
to supply the surgeons with the tools and training in order to use the new products. Although using college and
professional athletes as the test subjects does not completely mitigate potential legal repercussions, they will serve as
a willing population as the stakes for faster recovery times are raised when compared to the general public. As a
result of the higher status of athletes, they will also have better access to world class surgeons. The surgeons
expertise and experience will help to further mitigate the risks associated with releasing the products in trial runs.
Finally, athletes are frequently injured so Crescordia will have access to a large sample of patients.
Long Term: Monitor the results of the surgeries using resorbable hardware. These in field tests will provide
Crescordia with the feedback that they need in order to improve the product. Additionally, this will provide the
executive team with time to monitor the developing market for resorbables. If the products are deemed to be
successful in the medical trials and the market continues to develop, Crescordia can begin to offer the devices
market wide. However, if Crescordia finds that there are issues related to the product or the market does not
develop, they will have limited their exposure by starting with the trial run.
While this plan may be somewhat slow to implement as it will take time to monitor the surgeries and improve the
products, it allows Crescordia to maintain their superior reputation and limit risk. As stated in the case, Walsh
understands that the company should not be in a hurry to get their product to market as they cannot sacrifice their
quality. This recommendation allows that company to balance risk and reward (Appendix F).
I. Key Implementation Actions:
1. Work with the legal counsel and top surgeons to develop patient trial contracts (Appendix I)
2. Work with the finance and production teams in order to fund and produce the new devices in preparation
of the medical trials
3. Supply surgeons with resorbable hardware, required tools, and training for use in sports medicine
procedures
4. Monitor the results of the resorbable surgeries
5. Work with the R&D team as well as the surgeons in the field to improve the resorbable products
6. Monitor the resorbable market to determine if it is profitable and expanding
7. Prepare for a market wide rollout of resorbable products or abandon the new venture if it is determined
to be a failure
J. Impact to Competitive Advantages and Likely Competitor Response: Crescordias most important
competitive advantage is the companys reputations and relationship with surgeons. If the company decides to
release the resorbable products and they are unsuccessful, this could potentially be damaging to their reputation.
However, by starting in a test market, the company can successful limit this adverse impact. Additionally, the test
market will allow the company to improve their product and potentially emerge as the front runner in resorbable
technology. While the company will be forced to take on risk, they payoff could prove to be immense. If
Crescordia choses to follow through with the resorbable products, competitors will likely follow suit. While firms
such as Innostat have already released their resorbable products, the remainder of the competition would most likely
enter the field in response to Crescordias new resorbables. Additionally, if Crescordias resorbables are
unsuccessful, competition may be able to capitalize on this and continue to steal market share. However, if
Crescordia is successful in their release of resorbables, competitors may be forced to look for a new competitive
advantage such as reduced prices.
Appendix

Table of Contents:
A. Crescordia SWOT Analysis
B. Industry Dynamics and 5 Cs
C. Root Cause Analysis
D. Stakeholder Analysis
E. PESTEL Framework
F. Porters 5 Forces
G. IBISWorld Findings
H. Athletes and Medical Experimentation
I. Medical Trials
J. Resorbable Information
K. Frequency of Injuries in Sports
A. Crescordia SWOT Analysis
I. Strengths
Crescordia has a great relationship with orthopedic surgeons who use the companys products. These
relationships are facilitated through the training/lunch sessions.
Crescordias CEO, Peter Walsh, is very involved with the training sessions and enjoys meeting with the
surgeons to receive feedback.
According to Walsh, Crescordia has the best scientists and R&D facilities in the industry.
Growing market share and strengthening (already outstanding) reputation as competitor products fail in the
market.
Crescordia has developed strong customer loyalty with surgeons who refuse to use other brands.
Crescordia refuses to compromise on quality.
II. Weaknesses
Crescordia has exhausted all of the in house testing for its line of resorbable products. However, there is
significant liability associated with testing in the field.
The current product has a failure rate of 8%. Although this is superior to the products offered to
competition, Crescordia must uphold its stellar reputation.
The R&D process has taken a significant period of time with no true breakthroughs in the resorbable line of
products.
It may be difficult to have a profitable resorbable offering without a full scale release. This release will
require education for the surgeons as well as the development of power tools to attach the new implants.
Significant capital expense associated with developing resorbables with potentially slim margin
improvements.
III. Opportunities
With the current relationships with surgeons, Crescordia can introduce the new resorbable products and
immediately capture demand in the market
Crescordia has a product with a low failure rate, they simply need to choose a test market in order to
improve the product with field testing.
IV. Threats
Three of the companys top accounts placed substantial orders with a competitor, Innostat. Innostat offers
resorbable products. However, the orders also included products that Crescordia offers.
With rising demand for resorbables, competitors may take advantage of being a first mover and steal
market share from Crescordia.
Legal repercussions associated with medical malpractice. Crescordia could potentially be found liable if its
products fail.
Difficulties associated with government regulation (getting the resorbables approved by the FDA etc.)
B. Industry Dynamics and 5 Cs
Industry Dynamics
The medical hardware supply industry contains companies that produce tools and other medical devices for

surgeons. These products include artificial hips, scalpels, and fixation devices such as plates, nails, and screws.
Within the medical field, there has been an increase in demand for resorbable fixation devices that deteriorate
over time as a patients injury heals. The devices ideally prevent the need for surgery to remove the fixation
device. However, the development of resorbable products has been slow and the technology is considered to by
glitch. Despite the flaws, companies such as Innostat are beginning to introduce resorbable products into the
market and are capturing first mover advantages. Additionally, surgeons show high levels of loyalty towards
manufacturers as a result of product reliability.
5 Cs Analysis
Context

Competitors

Customers

Collaborators

Company

Crescordia has established itself as a premier supplier of medical goods and devices. They
have achieved this reputation through developing strong relationship with surgeons,
receiving feedback on their products, and only offering the highest quality of goods.
However, the demand for resorbable fixation devices in increasing and unlike some of the
competition, Crescordia has yet to introduce their own resorbable devices. Although they
have products that could immediately compete in the market, Crescordia is hesitant to
release this line as it currently has an 8% failure rate. This failure rate could potentially
hurt their reputation and lead to legal consequences. Crescordia is under pressure to
release a line of resorbable goods as they could potentially lose market share. The company
must decide if and where the product should be released as they have exhausted their lab
testing on the resorbable line.
Other companies such as Innostat are beginning to release resorbable products into the
market. Although the case states that Crescordia currently has resorbable products superior
in quality, the company is hesitant to release them. As a result of the decision not to release
the products, Crescordia is beginning to lose market share. Recently, Innostat took over
three of Crescordias top accounts in both the resorbable and traditional product lines. As
demand for resorbables increases, surgeons are beginning to look towards other companies
to purchase these goods.
Despite the existing customer loyalty with surgeons, surgeons are beginning to look
towards other companies in order to purchase resorbable products. The potential benefits
for patients, the end users of these fixation devices, make resorbables a highly intriguing
product. Also, as noted in the case, surgeons frequently trade stories with one another and
describe both the horrors and positives of surgery.
The main collaborators for Crescordia are surgeons and the R&D team. As a result of the
positive relationships that Crescordia has developed with surgeons, they are able to receive
significant feedback in order to improve their products. Additionally, Crescordia believes
that they have the best scientists and R&D facilities and are thus able to product superior
goods.
Crescordia has successfully developed a stellar reputation in the medical field by refusing
to compromise on their quality. As a result of this reputation, they have enjoyed high
levels of customer loyalty. However, their refusal to compromise on the reputation is
currently preventing them from competing in the resorbable goods market. They must
decide how willing they are to take on risk by offering potentially faulty resorbable
products. While the payoff could be immense, the risk associated could be detrimental to
the long run success of the firm.

Conclusion Crescordia must weigh the risk and reward of launching a new product. Although releasing resorbable
products in potentially risky, it has the ability, if done correctly, to boost Crescordias market share and help them
maintain their positive reputation.

C. Root Cause Analysis

Conclusion Crescordia is losing market share as they are hesitant to introduce their new product line while
competitors such as Innostat have already entered the market. Although Crescordia is correct to be cautious, it is
time that the company begins to test their product in the field.
Stakeholder
Peter Walsh CEO

Surgeons Customers

Gary Miskimen Head of

R&D

D. Stakeholder Analysis
Importance (0-10) Scale
Concerns
9
Long term company
success through balancing
profitability with
company reputation.
10
Providing patients with
the best possible care.
They must also have
access to cutting edge
technology.
8

Developing innovative
and reliable medical
technology.

Desired Benefits
Decide whether or not
resorbables will benefit
Crescordia. Walsh must
weigh risk and reward.
Have access to resorbable
devices to minimize the
number of required
surgeries and provide
patients with the best
possible care
Allow the company to
release superior products
that will improve the lives
of patients. Miskimen
believes that the line of
resorbable must now be

Jane LaMott VP of
Sales

Maintaining market share

and fending off
competitors.

Diane Robinson Chief

Marketer

Rob Bond COO

The potential loss of

market share as a result of
releasing a substandard
product.
Achieving profitability
through scaling
production.

Sam Maddox Legal

Counsel

Preventing Crescordia
from getting into legal
trouble.

Calvin Westbrook - CFO

Patients End User of

Goods

10

Lack of product
improvement over a 20year development period.
Also, capital expenditures
could potentially erode
marginal improvements in
margins.
Receiving the best
possible care with the
fasted recovery time.

Political

Economic

Sociocultural

Technological

field tested in order to

further improve the
product
Releasing resorbable
products in order to
recapture and maintain
market share.
Introduce the product in a
very limited way.
Release a complete line of
resorbable products
including education and
power tools.
Prevent Crescordia from
releasing a product that
could lead to legal
repercussions especially
in the pediatric market
Continue to let the market
develop as the company is
unsure if the products will
be profitable or if the
demand will continue to
rise.
Access to world class
surgeons and cutting edge
medical technology.

E. PESTEL Framework
Government regulation of medical industry. The new line of resorbables
will need to be approved by government organizations such as the FDA.
This could potentially slow or halt the release of the resorbables
Changes to the medical insurance industry could potentially have an impact
of the new line of resorbables
The government may incent companies to continue R&D on new product
lines such as resorbables. The could help reduce costs for Crescordia and
improve profitability
There are significant costs associated with research and development of the
new product line. Additionally, the improvements to the margins may be
minimal.
Surgeons and hospitals may be hesitant to purchase the new products if the
costs are significantly higher.
Younger patients including millennials may be more willing to try new
surgery procedures for potential health benefits/faster recovery times
Parents may be less willing to have unproven technology used on their
children due to the potential health consequences
The technology associated with resorbables is still unproven (8% failure
rate)
Crescordia would need to develop new tools for surgeons to implant the
resorbable devices

Other companies have already released resorbable products into the market
yet Crescordia still considers their products to be technological superior
Environmental
Potential consequences from producing/transporting this new technology.
However, based on the discussion in the case, this does not appear to high
risk
Legal
Releasing a substandard product could result in medical malpractice suits
and threaten the long term success of Crescordia. As noted in the case, Sam
Maddox, the legal counsel, is hesitant to suggest the release of the new
product.
Conclusion Crescordia must keep these factors in mind as they attempt to release their line of resorbables.
Although it is risky, if they pay close attention to and properly manage the PESTEL factors, these risks can be
mitigated
F. Porters 5 Forces

Conclusion Crescordia needs to leverage its existing competitive advantages in order to keep up with competition.
While the companys reputation is at stake, a trial release can help ensure that the product is ready for a wide scale
release in the near future.

G. IBISWorld Findings
(Source: http://clients1.ibisworld.com.offcampus.lib.washington.edu/reports/us/industry/operatingconditions.aspx?entid=881)

Revenue Breakdown for the medical instrument supply and manufacturing industry

Conclusion Surgical supplies and appliances make up a large majority of the industry revenue. This suggests that
there is significant demand for these goods. Crescordia needs to capitalize on this demand and enter the resorbable
competition
Importance of R&D in the the medical instrument supply and manufacturing industry

Conclusion R&D is a key reason why innovations are made in the medical field. As stated in the case, Crescordia
has the best scientists and R&D facilities. As a result of this advantage, chances are that their line of resorbables can
greatly benefit patients. They cannot let their R&D expenditures go to waste and the must begin to release their
resorbable products.
Changing Health Insurance Conditions

Conclusion An increase in private healthcare will increase the demand for medical goods. As more people get
coverage, they will be able to visit surgeons who carry Crescordias products.

Revenue Figures

Conclusion Although revenue growth has fluctuated in the past, it appears that it will continue to grow in the near
future. Because of this growth, Crescordia must continue to innovate and offer the best quality products in order to
capitalize on this market expansion

Competitive Advantages

Conclusion Crescordia enjoys all of these key success factors. Although they may not be able to utilize economies
of scale at first, this will follow once the line of resorbables has been improved and can be released on a larger scale.
G. Athletes and Medical Experimentation
(source: http://grantland.com/features/kobe-bryant-dr-chris-renna-regenokine-knee-treatment/)

(source: http://espn.go.com/mlb/playoffs2004/news/story?id=1906213)

Conclusion The two articles referenced above show that athletes will be more willing to take on experimental
medical procedures if there is a possibility that the procedure will get them back in the game faster. Although these
are just two examples, they help to show that athletes are an ideal target market to test these new medical devices on.

I. Medical Trial Information

(source: http://columbiasurgery.org/clinical-trials/clinical-trials-how-they-work-why-participate)

Conclusion Trial testing is incredibly important for the advancement of medical technology. Although there are
risks associated with this testing, specific requirements help to mitigate these risks. Additionally, in the case of
resorbables, the stakes are lowered as the worst case scenario is a second surgery to remove a faulty fixation device.
J. Resorbable Information
(source: http://www.sciencedirect.com/science/article/pii/S0142961200001010)

Conclusion The article cited above proves that there is demand for resorbable devices as well as significant
benefits. It is very important for Crescordia to continue to innovate in this product line.
K. Frequency of Injuries in Sports
(source: http://www.ncbi.nlm.nih.gov/pubmed/3359359)

(source: http://bjsm.bmj.com/content/37/5/384.full)

Conclusion The two sources above suggest that athletes are a population that is frequently injured. Although this
is a downside to being an athlete, it will make for a larger target audience for Crescordia to test resorbables on.