Endius Case Study Solution

REPORT- ENDIUS INC. MANASA RAGHAVENDRA

4/11/13 NEW PRODUCT DEVELOPMENT

Introduction

Tom Davison, the company's new president and CEO, recognized that, although the prototype had served its basic purposes--proving the concept was technically viable and that surgeons were eager to use such an instrument for minimally invasive surgery--the prototype design was too costly for a commercially successful product in an era of managed care and other initiatives aimed at controlling health care costs. Because of limited cash and external resources and the need to enter the market as soon as possible with a viable product, Endius outsourced product development to Product Genesis, a product design consultancy. Now, Davison has

While they are concerned about the company's cash flow, they recognize the potential at Endius and, since they have a personal relationship with Davison, they are willing to extend generous terms to the company. In either case, cash flow will be a problem since neither employees nor contractors will be willing to work without some payment. Generally, however, the external threats to the organization are minimal at this time. Problem Definition At this point, the problem facing Endius is whether it should outsource the product development of its steerable forceps, or develop the product in-house. At Product Genesis, Endius is only one of many projects competing for resources. This group will oversee future products and will develop the necessary synergy to ensure that schedules and budgets are met. Recommendations It is recommended that Endius contract with Product Genesis to bring the steerable forceps to market, but that the company use the revenues generated from early sales of the forceps to build its own in-house development

This solution provides Endius with the lowest risk solution for bringing the forceps to market in the short-term, and helps build the long-term infrastructure to ensure the company's long-term success, as well. Strengths The primary strength of Endius is its management team. Davison has expressed a willingness to loan Endius the requisite cash to continue development, but his inclination is to work with Product Genesis since he knows their track record and is comfortable that they can complete the work on time. The cost is lower than that associated with an external product development team, which can be a key concern to a company with cash flow problems. The result is that patients recover faster and with less pain, and the procedure itself can also be less expensive than traditional approaches. Davison has already demonstrated this in that both venture capitalists and product development companies are willing to do business with Endius, despite its lack of cash, based on their relationships with him. Davison is vice-president of strategic applications and has strong relationships with venture capitalists as well as with product consultancy