How the Ecton machine differs from the existing equipment on the market Essay Example

which allowed users to display the power of the returning Doppler signal in addition to the blood cell velocities. Several companies were working on a new method for imaging contrast agents called “Second Harmonic Imaging.”

Where is Ecton positioning itself in the current ultrasound imaging marketplace? Is it a sustaining or disruptive technology? Explain.

Market Overview: Market Amount Estimation: $2.1 billion in 1997 Price level of the Instruments: From about $80,000 for lower-quality machines to $300,000 for high end. Target Market: Cardiac Ultrasound.

Market Position: Ecton’s Price: $38,000, less than half the price of the low end full scale machines than on the market. Ecton’s Role: New entrants of the cardiac ultrasound market. From Cannon’s view: Additional value would potentially added by positioning Ecton for acquisition. Check on “The Chasm”: It remained “early adopters phrase” and was facing the chasm. After the three round of financing, the Ecton had gone across the innovator's phrase and was experiencing the chasm.

Disruptive Innovation: Ecton created a small, independent division and invest into a start-up to explore the new opportunity, so it was a disruptive innovation. On the other aspect, it reduced the modalities and made it easy to use, then it focused on the other different markets which were not same with that of conventional machines: it tried to look for new market opportunities in ICUs, surgery departments, emergency rooms, physician offices, and other places that would not typically approve the capital expenditure for a conventional echo machine. As mentioned by Michael Cannon, it was involved in delivering a new dimension of cardiac diagnosis to the market. Hence, it was a disruptive innovation.

Compared to the conventional technology as mentioned on the last question, it had a lower position under the performance demanded line at the low end of the market and just began to continue to change, so it was a disruptive innovation.

 Ecton machine met the expectations. Discussion on the 4 different innovation models and disruptive innovation: Ecton did not overturn the core concepts and just make it more flexible so in core concepts part it was reinforced. For another aspect the linkage between the components and the core concepts changed because the size and the service object changed. Based on the analysis above, this disruptive innovation is one of the Architectural innovation .

Is Ecton’s sell-out strategy the right one? Please explain? I think it is the right one. Here are my reasons: Based on the movement of S-cure, Ecton’s Technology is at the beginning of the learning curve and facing the rapid growth on the horizon and they really need the market resources to support the effort to enhance the development of Ecton’s technology.

Echon’s situation Based on the introduction of Ecton’s founders (Exhibit 4 in the case), it is clear that Ecton’s core group was not strong in sales, marketing or production. Considering market as the specialized complementary assets, it was suggested to be integrated (See Fig.7). Appendix 1 is the analysis.

Remain Independent Acquired by a larger firm Strength Remaining independent would allow engineers to focus on the development of this particular unit without other distractions. Small company size with lower overhead would allow Ecton to pursue the emerging markets larger competitors feel are not as profitable. Independence

would allow Ecton’s innovative culture to remain intact. Integration of Ecton’s imaging unit into an established company would be a more efficient way of distributing the technology to physicians who would use the machine.

A larger firm could provide the resources and expertise for marketing and production. Greater access to additional capital to continue development and enhancement of the unit. Would allow the Ecton team of founders and investors to liquidate some of their equity in the company. The acquisition would bring in established organizational processes and procedures. An established company would allow more open doors due to existing business contacts.

Weakness

Minimal capital has been raised. Marketing, sales, and production infrastructure is almost non-existent. With changes in hospital structures, unsure of the type of customer it should target. Only have one product to sell. Competing against large entrenched companies. The financial structure of Ecton was based on the assumption of being acquired. Company expertise in mainly in engineering. Lack of prior marketing and sales might limit leverage in negotiating process. Ecton’s innovative culture may be a risk. Concerns the product development process may suffer in a larger company. The very market Ecton is targeting may be considered too small (and not profitable enough) by larger competitors. Time spent focusing on potential acquirers could be used to develop marketing and production capabilities.

 Recommendations Ecton should proceed with plans on finding an acquisition partner. The major constraint facing Ecton is the lack of the necessary infrastructure in sales, marketing, and production. The founders’ original goal was to develop a technology that could be used as a screening and monitoring tool and included

the intention of selling the business once the product was developed. Ecton has developed a product that challenges higher-priced units in the quality of contrast imaging and provides performance in other areas high enough to satisfy users in alternative markets. This was accomplished by focusing on design and engineering. However, without strong sales, marketing, and production resources, the company will not be able to secure these alternative markets. Since the product is nearly completed, Ecton should stay with their original plan.

This would allow Ecton to take advantage of its position as the first to market when negotiating with a potential buyer. By selling the business now, Ecton could avoid the necessity of giving up additional equity to secure additional funding. This would give the original investors (which include the founders) the greatest return on their investment. Michael Cannon has already developed an exit strategy in his Phase III plan. This plan should be followed through. Since Ecton is close to perfecting its product the time is right to make the best deal possible for an acquisition.

Some Advice:

• Continue onsite test of the Ecton imaging system.
• Begin working on product advances and enhancements.
• Identify and make contact with potential acquirers.
• Begin to develop market segments for future sales.
• Evaluate fit with potential acquirers.
• Make contacts for additional financing in the event finding an acquirer takes longer than anticipated.