Smith &amp Essay Example
Smith &amp Essay Example

Smith &amp Essay Example

Available Only on StudyHippo
  • Pages: 7 (1795 words)
  • Published: December 30, 2017
  • Type: Essay
View Entire Sample
Text preview

2.0 Introduction:
Smith & Nephew is a global company that focuses on the development, production, and marketing of medical devices in three areas: orthopaedics, endoscopy, and advanced wound management.

Smith & Nephew's focus is on creating products that offer tangible benefits to patients and clinicians, while also having favorable healthcare economics. Additionally, they provide a range of education and training programs tailored to healthcare professionals, supported by a highly skilled sales force that prioritizes service excellence.

3.0 What are the drivers for change? The drivers for change are the issues that Smith ; Nephew must address to deal with their external environment. An analysis must be used to illustrate the varying forces. The first driver is the PEST (LE) model adapted from Grant (2002). See Appendices I.

The PEST analysis evaluates the future effects of influences on Smith


; Nephew. It has been concluded that the marketplace is extremely dynamic and competitive, with various forces impacting the company. By investing a considerable amount (5% of annual turnover) and concentrating on product innovation, it will be possible to overcome challenges in the marketplace more successfully. Investing in these areas provides a unique competitive edge, particularly in a research-based marketplace.

The analysis of any industry extends beyond Porter's Five Forces model. Critical success factors in any industry recognize that competition is a battle for advantage. The goal is to identify potential advantage within this industry by determining the factors that contribute to a firm's survival and prosperity - these are its critical success factors (Grant, 1998).

Smith ; Nephew's success is determined by two key inquiries:

1) What are the desires and demands of our customers?

2) How can the company flourish i

View entire sample
Join StudyHippo to see entire essay

a competitive setting?

To address the initial query, it is essential to examine the customer base. This encompasses not only individuals and hospitals that procure products and services but also employees, stockholders, and other stakeholders who have a vested interest in the company. It is crucial to recognize that customers are paramount to the company's existence and primary source of profitability, rather than mere entities with bargaining power.

Smith and Nephew must analyze and comprehend their customer's needs, as well as the factors influencing their choice of product over competitors. These elements serve as the foundation for their decision-making process.

The second question the firm must address is the basis of competition in the industry. It needs to determine the level of competition, the key dimensions of competition, and how Smith & Nephew can achieve a stronger competitive position.

Smith & Nephew's critical success factors include a loyal customer base and strong relationships with suppliers. They have ample resources, a high turnover rate, and significant investment. Due to their innovative product range, there are limited substitutes available and they are not easily replicated.

5.0 Competitive Position and Strategy:
To determine Smith & Nephew's competitive position, a range of theories and analysis must be employed. These approaches serve multiple purposes, including the ability to forecast future strategies and decisions (Grant, 2002).

- The purpose is to forecast probable responses to a company's strategic actions.
- The aim is to identify methods of influencing behavior to make it more advantageous.

Understanding this is crucial for enhancing one's competitive moves and strategy.

The Five Forces Model by Michael Porter of the Harvard Business School is a main model used in competitor analysis. See Appendices I.

According to,

Smith & nephew faces competition from five major companies. These companies include Agfa-Gevaert Ltd, Becton Deickinson Ltd, Ge Medical System Australia Ltd, Medical Applications Ltd, and Paris Miki Aus Ltd.

Smith & Nephew's competitive position should be evaluated by comparing them with their perceived rivals and assessing how effectively they distinguish their products (Brassington ; Pettitt, 2001). To determine their current position, it is important to review their differentiating products and examine their financial performance in recent years.

The products offered by Agfa and Smith & Nephew differ significantly. Agfa specializes in films (camera) & processors, hardcopy systems, and computed radiology, while Smith & Nephew focuses on x-ray equipment for endoscopy and orthopaedics. If you want to visit Agfa's website, go to However, if you're looking for more detailed information about their products, check out Smith & Nephew's comprehensive website.

When it comes to financials, Smith & Nephew has consistently achieved a turnover of over i??1,000 million in recent years. According to their annual report available at, they recorded a turnover of i??1081.7 million in 2001 with an operating profit of i??174.6 million. They also increased their dividends per share from i??4.50 to i??4.65, indicating a strong market share and competitive position.

On the other hand, Agfa has a high gross profit level of 1972 Euros or approximately i??1,338.90. However, based on the consolidated income reports found on the Agfa website (, it seems that their stocks are not performing as well compared to Smith & Nephew. In 2002, the dividend per share was i??0.50 which is an increase from the previous year's figure of i??0.23On their company website, Smith & Nephew provides their

analysis-based strategy. The website can be accessed at

Smith ; Nephew aims to be the preferred choice for patients, suppliers, customers, and employees by developing sustainable products that enhance quality of life. Their strategy is divided into various areas: Environmental management, Performance Measurement, Product Innovation, Social recognition, Economic performance, and Health ; Safety. The company excels in the market and maintains strong financial performance. Appendix I offers additional information about their current strategy as a leading player.

7.0 Future Strategy and Recommendations:

In order to determine a future strategy, it is essential to assess the resources and capabilities of Smith & Nephew in relation to the external opportunities (Bonge, 1972). Grant (2002) suggests that Smith & Nephew should focus on investing in its current strengths, such as sales and product portfolio, while also considering additional areas for investment.

Smith ; Nephew recently underwent significant restructuring, putting their emphasis on advanced medical devices in high-growth sectors. They invested in two key drivers of growth: skilled and knowledgeable sales teams and a growing range of groundbreaking products.

Smith ; Nephew aims to achieve future growth by developing new products within its core business and tapping into the fast-growing market for less invasive therapies. The company predicts that the orthopaedic market will continue to expand due to demographic trends, particularly the increasing number of individuals aged 65 and older who are more likely to require joint replacement and orthopaedic treatments. To take advantage of this growing demand in the orthopaedic sector, Smith ; Nephew plans to invest heavily in the development of high-quality products.

The implementation of more advanced technology, particularly in the field of biotechnology, would greatly enhance the effectiveness of

disease testing. Considering the looming threat of biological and chemical warfare, this appears to be a strategic decision for Smith ; Nephew.

Over the next 3-5 year period, Smith ; Nephew is advised to consider forming a strategic alliance. This suggestion is mentioned in their annual report on their website, stating that such alliances or acquisitions could enhance their current business. Refer to Appendices III for a list of advantages and disadvantages. However, these transactions come with various risks, such as the successful integration of acquired businesses, which could potentially impact Smith ; Nephew's results negatively.

Implementing such a strategy would be advantageous for Smith & Nephew as it would facilitate the exchange and advancement of ideas and innovation at a faster pace. Additionally, by consolidating resources, costs are reduced, thereby enabling increased investment in research in the coming years. As a result, Smith & Nephew gains a clear advantage over their competitors.

8.0 Justification of Strategy:

The current focus is on how this strategy will benefit Smith & Nephew by giving them a competitive advantage. According to Grant (2002, p.227), a competitive advantage is achieved when a firm outperforms its rivals in the same market and consistently earns higher profits or has the potential to do so.

8.1 Suitability: Smith & Nephew needs to assess the viability of their strategy. By leveraging the demographic trend of the aging population, they can capitalize on their strong market share and boost treatment levels and product sales. This ensures that they mitigate the risk of any potential loss, as there will be a guaranteed demand for their services.

The possible acquisition or alliance offers various opportunities, such as resource sharing, increased

power, and cost reduction. These benefits would be advantageous for a large company with an already established sales team and high-quality product portfolio. Nevertheless, there are also associated risks, which are discussed in Appendices III.

8.2 Acceptability: Smith & Nephew should expect strong financial returns from the mentioned strategy. It is projected that turnover will surpass the i??1150m threshold, primarily due to focusing on the 'over 65' sector. The only concern with any alliance would be the potential loss of ideas if the alliance were to fail, resulting in years of experience being wasted.

The economic factors can potentially impact alliances, especially if the other party encounters legal expenses or fines. In such cases, Smith & Nephew's reputation may also be adversely affected. Consequently, this can impact customer relationships, supplier partnerships, and brand loyalty.

8.3 Feasibility: The strategy is viable on multiple levels. Smith ; Nephew possesses a robust brand that dominates the market in their industry. They have substantial resources, with a healthy profit margin and an impressive dividend per share ratio (as noted in the financial comparison). According to the annual report, Smith ; Nephew serves customers through various distribution channels across more than 90 countries globally, with the National Health Service in the United Kingdom being the largest single entity, accounting for 4% of the Group's total worldwide sales.

Combining forces with any alliance would strengthen this already solid foundation, and further enhance available resources in order to meet customer demands. This robust groundwork demonstrates that the strategy can be successfully executed with outstanding performance outcomes.

Looking at the role of the corporate parent, it is helpful for Smith & Nephew to stay focused

on their goals and aligned with their mission and strategy. This will be particularly beneficial in the coming years as they implement their new strategy. By benchmarking against competitors or themselves financially, as well as through product research and innovation, it becomes possible to measure the success of the strategy.

9.0 Conclusion:

What are the implications to Smith & Nephew?

The company is working with their resources and by using the future strategy are aiming to work towards a sustainable business. The aim of any company is to move towards sustainable product development (See Diagram below).

Smith & Nephew's focus on product differentiation provides significant benefits to the healthcare profession as a whole, not just their direct partners. By leveraging their market dominance and incorporating strategic theory into their product development, Smith ; Nephew is poised for a promising future.

Get an explanation on any task
Get unstuck with the help of our AI assistant in seconds