PEST Analysis of Cochlea Limited in United States
INTRODUCTION
Cochlear is an international biotechnology company that designs, manufactures and supplies the Nucleus cochlear implant, the Hybrid electro-acoustic implant and the Baha bone conduction implant which aid in hearing.( Lane,1993 p.279). The company is based in Sydney and was established in 1981 by the Australian government so as commercialize the implants founded by Dr Graeme Clark. (Grodin, 2007 p.239). Currently, Cochlea holds more than two-thirds of the global hearing implant market, with more than 250,000 people receiving one of Cochlear’s implants ever since its establishment. The company manufactures three principle implants for various medical circumstances. Cochlear designs Nucleus which is a system combining an electrical simulation device that is surgically implanted behind a patient’s ear, a processor that captures sounds, and an electrode array that relays the sounds to the brain.
The company manufactures primarily in Sweden and Australia, including at a purpose-built facility at Macquarie University in Sydney. Its products are supplied more than 100 states internationally, with annual sales of $297 million in the Americas, $285 million in Europe, the Middle East and Africa and $123 million in the Asia-Pacific as of 2012. Cochlear Limited offers implantable resolution to hearing. Its line of products ecompass the Cochlear Nucleus range of cochlear implant systems, the Cochlear Baha range of bone conduction systems, and the Cochlear Hybrid electro-acoustic hearing solution.
PEST analysis of cochlear limited in United States
Analysis of the macro environment of cochlear limited in United States will include nonspecific aspects in the organizations environment that have a potential impact on the marketing mix and business strategy of Cochlear Limited. Unlike the company’s task environment, the effect of macro environmental variables is slightly direct and the company has an increased limited influence to these factors of the external environment.
Variables on the cohclear’s external environment will include such things as socio-cultural, political-legal, economic and technological factors. The external environment in composed of forces that emerge from outside the organization and the organization does not have the capacity to alter any of these variables. This means that Cochlear as a firm can be influenced by these elements, but have no power to manipulate these factors inline with its marketing mix. Therefore, cochlear considers these elements as part of its environmental scanning so as to improved awareness about threats and opportunities that have been created by the elements and how it can change its strategy in order to obtain and maintain a competitive advantage.
Political analysis
The political-legal aspect of the common environment has a significant impact on the business strategy. The philosophy of the federal government in United States dictates business practices. The legal environment serves to delineate the do’s and dont’s of organizations at a given point in time.
One of the political-legal aspect in the United States Food and Drug Administration reports that cochlear implant recipients have a higher probability for meningitis (Reefhuis , et al, 2003 p.346). Consequently, in a previous study of American children who received implants between 1997 and 2002 found that recipient children were at a high of pneumococcal meningitis more than 30 times greater than that for children in the general population(Biernath et al, 2010 p.284) In regards to this data, both the Centers for Disease Control and Prevention and the Food and Drug Administration dictated that would-be implant recipients be vaccinated against meningitis before surgery (Blume, 2009 p 1100)This will eventually lead to increased cost of the implantation process and in the long run have a negative impact on the market of cochlea products since customer are market sensitive. On the other hand, the standard that had been set by CDC and FDA bodies has improved the affirmation of consumer of Cochlear’s products and will eventually lead to a larger pool of consumer who had fears thereby increasing profitability.
Economic analysis
Economic aspects are basically the characters and direction of the economic system under which the organization functions. Economic elements may be such thing as balance of payments, the state of the business cycle, the distribution of income within the population, and governmental monetary and fiscal policies (Pan, & Peter , 1999 p 369)In the United States, medical costs run from US$45,000 to US$125,000; this involves evaluation, the surgery itself, hardware (device), hospitalization and rehabilitation. Some or all of this may be covered by health insurance.
Johns Hopkins University conducted a study that found that for every three-year-old child that receives cochlear implants can save $30,000 to $50,000 in special-education costs for elementary and secondary schools as they are more likely to be mainstreamed in school and thus use fewer support services than similarly deaf children(Pan, & Peter , 1999 p 365) Therefore this attracts more market share for people who had other alternative since Cochlear’s implantation in a cost saving option.
Consequently, according the study conducted by University of Michigan, researchers found that about 100,000 individuals globally have been given cochlear implants; generally half are children and half are adults. The immense majority are in developed countries because of high cost of the device, surgery and post-implantation therapy. This means Cochlear products have limited market to low income earners or to people with economic constraints.
Socio-cultural analysis
The socio-cultural scope of macro-environment includes customs, Population demographics, lifestyles, and values that features of the society in which the organization functions. Socio-cultural components of the environment manipulate the capacity of the organization to attain resources and production process. These elements also include anything inside the context of society that has the possibility to affect an organization. The fall in the birthrate and improvement in health care have contributed to an increase in the average age of the population in the United States. Therefore, this situation favors cochlear since the high number of post-lingually deaf adults is one of the primary recipients of cochlear products. Increase in population of the older population will mean an increased number of clients in this age category and this translates to an increase in market. However, United States is experiencing a rapid advancement in population and this gives an opportunity for the organization to have an increased market in the region. Researcher have discovered that currently lifestyle of individuals in putting them at a higher risks of developing hearing diseases and this is particularly for loud music. Therefore, means that Cochlear has a chance to boost its profitability by meeting the needs of these individuals.
However, Cochlea has faced some social objection that places its marketing strategy at a risk. For instance a lot of objection to cochlear implants originates from the Deaf community, that largely include pre-lingually deaf individuals whose first language is a signed language (Grodin, 1997 p.246). This is because they view cochlear implants are a disrespect to their culture. This is an older crisis for the deaf community dating back 18th century with the dispute of manualism vs. oralism (Lawrence, et al. 2011 p. 82). However, the objection is lessening and Cochlear has a future opportunity to succeed in its marketing mix
Technological analysis
Technology is another important consideration in the macro-environment when Cochlear is developing strategic plans in the oversees market. The rapidly advancing technology may influence the demand for an orgnizations product and services, its production processes, and raw materials. Changes in technological can bring about new opportunities for an organization, or threaten the existence of a product, firm, or industry The advancement in technology has brought has established a competitive environment for Cochlear in United States since other companies have now be able to offer similar products and services. For instance, there other implant manufactures who include Advanced Bionics (USA, a division of Sonova), MED-EL (Austria), Neurelec (France, a division of William Demant). Every manufacturer has developed competitive innovations different from other competitors due to improved technology. However, Cochlear had developed a prototype “hi fi” cochlear implant featuring 50 electrodes. This will enhance the capability of users to perceive music and discern specific voices in noisy rooms. (Holmes, 2010 p.180). . This innovation is likely to boost the competitive advantage of the organization and enable it attain a large market share
CONCLUSION
Some impacts of implantation are irreversible although the device can offer new sound information to a recipient, the implantation procedure inevitably leads in shaving of the hair cells within the cochlea (Raghu & Peter, 2003 p.279-285) This may cause in a enduring loss of some or all residual natural hearing. Eventhough current advancement in implant technology, and implantation techniques, promise to reduce risks, degree of injury still varies. Conversely, although the devices may help recipients hear and understand sounds in their surroundings, it is not as good as the quality of sound processed by a natural cochlea. Cochlear limited needs to reinforce its input in research and development so as to improve the security of the implant processes. Through these the company may be able to attain a sound competitive advantage in the oversee market. Consequently, the company may option to differentiate itself by reducing const incurred in the implantation processes so as to increase its pool of market.
Reference
Biernath, K. R.; et al.2010. Bacterial Meningitis Among Children With Cochlear Implants Beyond 24 Months After Implantation – Biernath et al. 117 (2): 284 – Pediatrics
Blume, S. 2009. Technologic Assessmnet and Sociopolitics of Health technologies.Journal health politics policy and law. Volume 25, Number 6: 1083-1120
Grodin, M. 2007. Ethical Issues in Cochlear Implant Surgery: An Exploration into Disease, Disability, and the Best Interests of the Child. Kennedy Institute of Ethics Journal 7:231-251.
Holmes, P.2010.How place matters: unpacking technology and power in health and social care. Health & Social Care in the Community(13( 2), 170–180,
Lane, Harlan 1993, Cochlear Implants:Their Cultural and Historical Meaning. In ‘deaf History Unveiled’, ed. J.Van Cleve, 272-291. Washington, D.C. Gallaudet University Press.
Lawrence, P. T. et al. 2011. Spatial spread of neural excitation in cochlear implant recipients: comparison of improved ECAP method and psychophysical forward masking. Journal of Elsevier. 179(2). 72-87
Pan, Y. & Peter S.K.. 1999.Financial Performance and Survival of Multinational Corporations in China.” Strategic Management Journal 20 (8): 359-74.
Raghu, G. & Peter, K. 2003. Bricolage versus breakthrough: distributed and embedded agency in technology entrepreneurship. Journal of Elsevier 32(2)277-300
Reefhuis J, et al. (2003) Risk of Bacterial Meningitis in Children with Cochlear Implants, USA 1997-2002. New England Journal of Medicine,
