Project 5 International Business Plan

International Business Plan

MediCorp

General Partnership with ADAVIUM Medical.

Automated Hospital Beds Market: Brazil December 15, 2020

Table of Contents

TABLE OF CONTENTS...............................................................................................................2

EXECUTIVE SUMMARY...........................................................................................................3

INTRODUCTION.........................................................................................................................4

MARKETING STRATEGY.........................................................................................................5

MARKET ANALYSIS...........................................................................................................................5

CHARACTERISTICS OF POTENTIAL CUSTOMERS IN NEW ZEALAND.................................................7

USE OF WEB NETWORKS AND SOCIAL MEDIA................................................................................8

MARKETING MIX..............................................................................................................................9

Product Strategy..............................................................................................................................9

Distribution Strategy.....................................................................................................................10

Pricing Strategy.............................................................................................................................10

Promotion Strategy........................................................................................................................11

E-MARKETING................................................................................................................................11

BRANDING STRATEGY....................................................................................................................12

GOVERNANCE AND CSR........................................................................................................12

FINANCIAL PROJECTIONS...................................................................................................13

STRATEGY IMPLEMENTATION...........................................................................................14

SUMMARY OF RECOMMENDATIONS AND RATIONALE..............................................14

International Business Plan

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Purpose of Report

Executive Summary

Business Plan for MediCorp to enter Brazilian $3.9 billion market for hospital beds through a General Partnership with ADAVIUM Medical. Medical devices are any devices used to treat, diagnose, and monitor medical issues (Medgadget, 2018). MediCorp is set to use a local niche cost leader strategy. We forecast to have made 30% sales to the 4000 hospitals in Brazil in year 1 and hopefully increase the amount sold by 3% in subsequent years.

Methods

In conducting our analysis, the following steps were performed:

· Assessed the characteristics of MediCorp’s potential customers in Brazil

· Identified main competitors in medical device industry supplying beds in Brazil

· Assessed market segment and growth to determine mode of entry

· Researched the impact of Brazilian legal, ethical, and cultural standards on operations

· Projected financial estimates

Findings and Conclusions

While conducting the various research, it was noted that Brazil is one of the developing countries suffering from inadequate hospital beds. 4.2% of Brazilian Adults aged >20 years are turned away due to inadequate hospital beds. More than 95% of Brazilian population depend on the country’s healthcare system to take care of their health. The Brazilian health care equipment & supplies market is forecast to have a value of $70,226.5 million in 2023.

Recommendations

Recommendations include:

· Complete joint venture with ADAVIUM Medical. For the expansion of automated hospital beds.

· Hold periodic customer satisfaction surveys

· Train and develop employees for tenure

· Possess an active social media presence to advertise device and gain customers

Introduction

Brazilian citizens are suffering due to inadequate hospital beds. The reason is that these patients are being forced to share beds while others sleep on the floor. Nevertheless, MediCorp has invented automated bed that is supposed to save the lives of Brazilian citizens. The purpose of this report is to introduce and market automated hospital beds in Brazil. These automated hospital beds can offer comfort and well-being to the sick, and convenience to

their care givers (Medgadget, 2018). The primary features of these beds are that they have adjustable side rails, their heights are automatically adjustable including the feet and head and have electronic buttons that are easy to operate both on the equipment and other electronic devices. This report will access the Brazilian market, analyze customers in Brazil, conduct a marketing strategy, look at the country’s governance and CRS, come up with financial projections, implementation strategy. Besides, MediCorp is a U.S. based company dealing in medical devices. The firm want to introduce a new device that is supposed to benefit patients and hospitals.

Assessment of the Market

Over the past years, Brazil has achieved an extraordinary performance when it comes to the health sector. MediCorp’s decision to expand its influence in Brazil has made it possible with the company’s mission to provide the best technology possible that would help its customers manage certain types of condition. Automated hospital beds are essential to serve all patients in the health care sector (Medgadget, 2018). The reason is that during

Covid-19 in Brazil many hospitals in this country had raised issues regarded the inadequate hospital beds to serve all patients. MediCorp will be supplying automated hospital beds that would cater for all patients without considering their conditions in Brazil. This automated

hospital bed that would be able to gauge the patient’s conditions, record them. It will alert the healthcare practitioner in charge on the condition of the patient through their smart phone and give them advice the next steps to follow on assisting the patient (Medgadget, 2018). This automated hospital bed will help in the future on offering the best care to patients and provide a better way in treating patient to save people’s lives.

The North American Industry Classification System was developed in 1997 and is used to classify businesses by type, so that data for businesses in North America (i.e., the United States, Mexico, and Canada) can be presented and analyzed in a uniform manner (UMUC, n.d). The automated hospital bed has an NAICS code of 423450 and was classified as “Medical, Dental, and Hospital Equipment and Supplies Merchant Wholesalers” (Census.gov, n.d). MediCorp followed this system to ensure that its products are easily verified and determine the trends within its sector in the market. For that reason, this company is ready to introduce a product that will change the way patients are treated and served within a hospital sector.

Customers in Brazil

The past 30 years have witnessed significant increase in the number of patients being admitted and deaths with regards to nurses and doctors not attending on them on time. For that reason, it is essential for hospitals to acquire this modern technology that would assist them to take care of their patients and ease work for health care workers. These automated hospital beds can offer comfort and well-being of the sick and convenience to their care givers (Medgadget, 2018). The primary features of these beds are that they have adjustable side rails, their heights are automatically adjustable including the feet and head and have electronic buttons that are easy to operate both on the equipment and other electronic

devices.. The increasing demand of automatic hospital beds, growing geriatric population, the

rise of technological advancements, and inflow of patients in the healthcare sector in Brazil has led to the high demand of these beds in the Brazilian market. The figures outline that about 20% of lives are lost in Brazilian hospitals due to the lack of automated beds. The reason is that most of the outlined patients have access of the normal hospital beds.

Based on the survey that was done in Brazil by the Ministry of Health in 2017-2018, the researchers outlined that about 10% of patients admitted in Brazilian hospitals are lost due to the lack of enough automated hospital beds in the country. The researches took into account factors such as gender, age, rural and urban distributions and regional differences. In fact, many health care facilities lack any automated hospital beds (Medgadget, 2018). Due to high turnout of patients, some patients are forced to sleep on the flow will other share beds because they are inadequate. Nevertheless, introducing automated hospital beds especially in

ER would be essential in that patients would get the best services and healthcare practitioners will not be overworked.

MediCorp is proud to introduce automated hospital beds that would better serve patients irrespective of their conditions. There are a lot of companies in Brazil that produces hospital beds, but the price is not fit to the customers budget. There are others who choose to stick to the regular hospital beds, but these products cannot satisfy customers (UMGC, 2020a). To promote the product, the automated hospital bed will offer comfort and well-being of the sick and convenience to their care givers. This product will offer comfort to patients, lessen work to care givers, improve quality services, and life expectancy to the patients. The promotional strategies are important concept of this product to better connect with our customers in

Brazil. Portuguese is the national language in Brazil (UMGC, 2020a). It has a significant number of differences in written and spoken forms, including number of tones in their dialects. MediCorp will be aware of these differences and will provide an advertisement translated to this language and introduce to its perspective customers.

Brazilian demand for medical equipment has grown at the fastest pace in the past

decade. In 2010, total imports of medical devices were $3.667 billion and in 2010

there was increase of 31.8% in the demand which has continually increased to

47% as of 2019. Brazil is an immense, constantly changing market with vast opportunities for expansion in the area of medical devices. With the increasing number of populations, many individuals became sick and visit various hospitals in the country (UMGC, 2020a). Thus, the demand for automated bed is high. There are roughly 2,000 medical device distributors in Brazil, however, not many offer automated hospital beds. MediCorp is delighted to introduce “Hot Bed” to the Brazilian market, to assist individuals in monitoring their health and tracking their daily peak flow readings. Similar devices are on the market but are not equipped with the advanced technology our product comes with. To promote Hot

Bed, the device will feature adjustable side rails, their heights are automatically adjustable including the feet and head and have electronic buttons that are easy to operate both on the equipment and other electronic devices. With these high quality features, there will be high demand and the local niche cost leader strategy is going to apply in that, with massive units of production, the cost of production is reduced and hence the set prices can be lower than those of the competitors for a competitive advantage and consequently more profit.

For promotional purposes, the company understands the impact of international cultural differences and the role it plays on our strategy and production within a company. Brazil has many traditions and societal norms that differ from any other country. In order to connect with customers in Brazil, MediCorp will add a Samba touch to the business. MediCorp’s will instill a proper Brazilian brand name parallel with the original product name as well as a corporate brochure and website in Portuguese (UMGC, 2020a). Adding the Portuguese element to our product will grab the attention of consumers. MediCorp will also be mindful various Brazilian culture in regards to production. For instance, the colors used in correlation

with the product will be thought out, as colors such as black or green have a negative impact on Brazilians. The Uncertainty avoidance cultural dimension will be factored in marketing where ambiguity and vagueness will be avoided on the advertisements. Moreover, the indulgent nature of the Brazilian people will also be considered where comfortability of the beds will be emphasized in marketing. Thus, it is best for the company to understand the culture and align as best as possible for new entry.

A market penetration pricing strategy would allow MediCorp’s to rapidly enter the competitive community and medical device market where cost is a major factor due to increasing health care. Pricing is complex, and any price changes require extensive research on competitors and market trends before they can be implemented (Pricing Strategy, n.d.). MediCorp’s will price the product at $85 for standard automated hospital beds which is lower as compared to St. Jude Medical Inc’s at $120, Siemens AG’s at $118, Koninklijke Philips Electronics NV’s at $126. St. Jude Medical Inc’s at $143. The high end and more advanced automated hospital beds will be priced at $400 as compared to its competitors whose prices range between $600-$800. It is important to note that prices tend to fluctuate over the course of time. This is due to competition, changes in customer preferences, or the appearance of

new and better products (Pricing Strategy, n.d.). The company will place an emphasis on branding and marketing phases of the hot bed product to ensure our product is at the forefront of the market and priced competitively. We will perform our own test of production with a subset of individuals and medical retailers before the launch of our official product. Branding is essential in this process, which is why the product is named hot bed. MediCorp plans to differentiate the product from other competitors by implementing the slogan “Whatever pace you live your life at, hot bed will be with you all the way”. This along with incorporating Brazilian elements into corporate brochures and other media platforms would further strengthen the brands image.

Market Strategy

MediCorp aimed to provide the most accurate performance of a non-invasive device technology for comfort and well-being of the sick and convenience to their care givers. “hot bed” is going to change the way hospitals manage their patients (Pricing Strategy, n.d.). The firm used local niche cost leader like the one covered in Project three to venture in the new health care market in Brazil. This action would depend of using limited resources to increase the company’s outcome. The company must prioritize improving the quality of services offered to patients by offering automated hospital beds that would improve their comfort and service delivery (UMGC, 2020b).

MediCorps’ main competitors in Brazil are St. Jude Medical Inc., Siemens AG, Koninklijke Philips Electronics NV. St. Jude Medical Inc is one of the largest health care equipment companies in Brazil. The company offers a broad range of products such as diagnostic, vascular and pharmaceutical products and is focused on research and development (R&D) activities to launch new products. Siemens AG is a business unit of General Electric Company, a global medical device provider that designs, develops, manufactures and distributes diagnostic imaging and clinical systems. Siemens AG focuses on a strategy of initiating strategic collaborations in order to improve market share (MarketLine, 2019). Koninklijke Philips Electronics NV is a manufacturer and seller of medical equipment and R&D products. The company employs a strategy of acquisition to stimulate growth and aims to develop innovative products, to enhance its revenue and brand image (MarketLine, 2019). Koninklijke Philips Electronics NV also develops, designs and manufactures a wide range of diagnostic devices to healthcare providers worldwide. The company is focused on strategic initiatives aimed at driving growth (MarketLine, 2019). While these companies are at the forefront of the market with their medical devices, MediCorp will strategically enter the market focusing on delivering a complete product at a premium price.

Despite the increasing health care costs in recent years, Brazil is developing to become one of the world’s most promising markets for medical devices. Over the next three years, the medical device market in Brazil is expected to see exponential growth (MarketLine, 2019). In

2021, the Brazilian hospital beds is forecast to have a value of $5.7 million, an increase of

41.8% since 2016. See the table and graph below for a market forecast from 2016-2021. This growth is expected as the population in Brazil continues to increase. Along with the increase in population, many more factories are being built in Brazil, which produces air pollutants that can lead to health issues for Brazilian citizens.

Table 1: Brazil health care equipment & supplies market value forecast

Note. This table describes the projected market value for hospital beds in Brazil from 2016 –

2021.

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In an effort to add value as a way of gaining a competitive edge, MediCorp will do the following: (1) Offer the Hot bed product at a discounted price to hospitals located in rural areas; (2) Offer the product at a premium price to medical providers and hospitals located in cities; (3) Focus on an integrated marketing communications strategy to advertise Hot bed. Essentially, MediCorp will employ the local niche cost leader strategy in which competitive advantage is gained by distinguishing products with excellent design, high awareness, and easy accessibility (UMGC, 2020b). MediCorp will attract customers in the market by using the “one look” approach where marketing communications utilize the same logos, colors and

graphics (UMGC, 2020a). This will help with brand recognition needed for growth in the market. The one look approach in combination with our slogan “Whatever pace you live your life at, hot bed will is with you all the way” will be incorporated on all advertising and public relations. We will utilize social media ads to appropriately align with the technological advances of individuals in Brazil. This marketing communications strategy is set to provide

an element that other medical devices do not employ, visibility. The strategy will create a positive brand perception for MediCorp that will boost the company ahead of its competitors.

MediCorp will take a more aggressive approach and enter the market through a joint venture with ADAVIUM Medical. ADAVIUM Medical is a whole distributor, testing and manufacturing of medical diagnostic products company. The company operates on $1.01 billion in revenue. Many of the largest medical device firms in Brazil have done so through acquiring or partnering with other businesses (UMGC, 2020b). The strategic alliance with companies alike limits the amount the competition within the industry and enables a company to be more flexible in terms of price and the individuals they choose to target. Strategic alliances and joint ventures allow companies to share risks and resources required to enter international markets (UMGC, 2020c). MediCorp already has a brand name within the medical industry market and will introduce the new product with an equal partnership with ADAVIUM Medical. This mode of partnership will enhance equal ownership rights and easy withdrawal after acquisition a larger and stable market share. This alliance is strategic for MediCorp due to the risks and regulations in the mainland of China preventing international business from entering the company.

Governance and CSR

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As noted, Brazil has a population of 209.5 million individuals. The population in Brazil continues to grow daily. In fact, under leadership in 1990, Brazil came up with birth control

policy for families. Even with this measure, the population continues to grow. With Brazil being an industrialized country, there are also many health risks for many of its citizens. According to the World Health Organizations (WHO), more than 20% of deaths in Brazil are attributable to inadequate hospital beds (UMGC, 2020b). With that, the need for automated hospital beds has substantially increased.

When entering a new market such as Brazil, MediCorp is expected to face certain challenges when conducting operations due to the country’s legal, ethical and cultural standards. Much like that of the United States, Brazilian’s Food and Drug Administration (BFDA) has the authority to oversee medical devices and ensure their safety and effectiveness, and protect human health and life (UMGC, 2020a). Medical devices are classified into three classifications: Class I, Class II and Class III. MediCorp Hot bed product will fall into the Class I category as it does not need clinical trials or any special controls.

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Brazil is effectively a multi-party country. The Brazilian government has complete control of the country. Foreign enterprises continue to report that Brazilian government officials may condition approvals on a foreign enterprise’s agreement to transfer technology, conduct research, and development in Brazil, satisfy performance requirements relating to exportation or the use of local content, or make valuable, deal-specific commercial concessions (Market Challenges, n.d.). This action makes more sense why foreign companies should enter the market through an alliance or acquisition of another company. Brazil has strategically implemented procedures to make the process of obtaining permits and licensing easier to allow American businesses to enter the market. As noted, MediCorp will enjoy this opportunity by forming an alliance with ADAVIUM Medical. who can provide essential knowledge and contacts that is needed for success.

Financial Projections

Understanding that the medical device industry in Brazil is a billion-dollar industry, MediCorp has projected the following financials to gain a fair share of the market within the first 3 years. MediCorp will be a new entrant into the market in 2020, so it is not expected for our product to generate massive revenues in the first 3 years. The first 3 years of a company are truly devoted to research and development and the outcomes determine if the company can continue as a going concern.

A forecasted analysis was performed to determine how many devices MediCorp needs to sell in order to generate a profit in the long run. The forecasted total number of units sold is based on 4000 hospitals within Brazil. We want to target at least 30% of that population in year 1 and hopefully increase the amount sold by 3% in subsequent years. The team

estimated total fixed cost for production of $2 million. That amount is fixed and not dependent on any underlying variables. Those costs will generally be selling, general and administrative expenses. Forecasted average variable costs are estimated at $30 a device. We project the amount to manufacture and produce 1 device to be $30.

The plan is to sell 100,000 devices in year 1, forecasted average unit price sold of $110 which will equate to $11 million in sales. MediCorp’s must aggressively market the product

in the early stages as well as generate new capital in the form of issuing stock to shareholders to gather cash for production.

Strategy Implementation

A balanced scorecard demands that the strategy implementation be done in four main segments. From a financial perspective, MediCorp will increase the shareholder value by

20% annually. It will utilize two methods to achieve this. First, it will increase fixed cost utilization, and second, it will lower the price by 5-10% to gain a competitive advantage over the competitors. MediCorp will evaluate its financial state performance quarterly and adjust accordingly.

From the customer perspective, MediCorp must strive to provide a new customer experience. While the hospitals will be the customers for the automated hospital beds, the consumers will the patients and the caregivers (including the nurses). The hospital beds must provide a new experience that will give the patients a new level of comfort. The caregivers must find it so convenient that they will recommend the MediCorp beds to other hospitals. The metrics for this experience will be customer ratings and caregiver recommendations (Alharthy et al., 2017). This will also be done quarterly.

From a business perspective, we will assess whether we have managed to create a quality perspective. We will use the post service rating to evaluate how the consumers feel about the beds. Secondly, MediCorp will measure its performance on the introduction of a new product (the automated bed). This will be measured using the customer retention rate. This is the number of customers that stay with MediCorp after a given period. This will be evaluated annually.

From the learning and growth perspective, MediCorp will improve employee’s quality by training them on how to make automated beds. The quality of employees will be rated on their ability to be smart (through learning) (Mišanková & Kočišová, 2014). Medicorp will

also keep its turnover below 10% annually.

Finally, to ensure that everything is going on as according to plan, leaders would be meeting for at least an hour monthly to discuss how each KPI is being fairing. From the meeting, the leadership will discuss the progress and adjust. Employees involved will also be included in the monthly meetings.

Conclusion

MediCorp’s should expand into Brazil for the development of the new automated hospital beds. It is expected for the medical device market in Brazil to experience billions of dollars in sales/revenue for the coming years. As of 2019, Brazil has a population of roughly

1.4 billion people. Of that amount, 45000 hospitals in Brazil lack automated beds and this number is projected to rise with the industrialization in the country. It is recommended for MediCorp to enter the market through a strategic alliance with ADAVIUM Medical. and acquire other companies to maximize profits. MediCorp should adequately train its employees for the expansion to Brazil. While conducting the various research, it was noted that Brazil is one of the developing countries suffering from inadequate hospital beds. 4.2% of Brazilian Adults aged >20 years are turned away due to inadequate hospital beds. More than 95% of Brazilian population depend on the country’s healthcare system to take care of their health. The Brazilian health care equipment & supplies market is forecast to have a value of $70,226.5 million in 2023.

References

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