Emi Cat Scanner Case Write-Up

Case A: Should EMI enter the market alone, via a joint venture, or through licensing? What are the key competitive factors in the industry and how do you expect competition to evolve?

Market Entry Strategy

EMI should enter the market via a joint venture. Though, EMI was able to internally develop the scanner technology in-house, the firm lacked the complementary assets needed to monetize their technology in a sustainable way. EMI didn’t have manufacturing capacity to meet the product demand. At the time of the case, EMI’s management was targeting the US market yet the firm didn’t have the marketing capability to sell an electronic medical device in its market of choice. Moreover, at $400k ($2.12M in 2014 dollars) EMI’s CAT scanner was a big ticket item for any prospective buyer. Such large purchases often require significant after-market support from the manufacturer but EMI had limited service staff. Thus, if EMI enters the market alone, in addition to perfecting the technology, it would have to simultaneously build out three capabilities: 1) Production/Assembly 2) Sales and Marketing 3) Service Support. We believe, given time, EMI could gain some or all of these capabilities but entering the market with a JV partner who could provide complementary assets (know-how in manufacturing and marketing coupled with an existing sales support network) would tremendously speed up time to market and free up management time to focus on developing the core business. In addition and more importantly, a JV partner with the right assets would find tremendous value in the technology EMI has already developed.

Licensing is another avenue that is worth exploring. EMI could benefit from a licensing arrangement if it could align its incentives with the licensee firms. However, an incumbent firm’s incentives need not be fully aligned with that of EMI’s. For example, Siemens, who was a leader in various imaging technologies, might license EMI’s product but would not put the...