Mgmt 30013 – Analysis of Cochlear Ltd: Internal and External Analysis
MGMT30013Strategic ManagementAssignment 1 – Group AssignmentFilippo Fabbroni     812882Johnson Fang          694069Kuang Jin, Wong     618451Tutorial: Monday, 2:15 PM. Parkville, John Medley, 532.Tutor: Eugene Healey19th April 2016Strategic analysis report of Cochlear Ltd. and the Hearing Implant IndustryExecutive SummaryThis report provides an in depth analysis of Cochlear Ltd and the hearing implant industry.Beginning with external analysis, the report identifies key macroeconomic trends and the resulting opportunities and threats, followed by an investigation of Cochlears operating environment through Porter’s Five Force model. Drawing upon analytical findings, the report provides a diagnosis of the industrys profitability implications and Cochlear’s positioning within these forces. The results establish evidence of opportunities for economical growth, despite of increased low cost competition.
Key drivers for increased future sales are the aging population and the high incidence of hearing loss in developing countries; both implying sustained long-term growth for the implant industry. Moreover, with headquarters and manufacturing operations extensively based within Australia, Cochlear is reaping the rewards of a weak Australian dollar against US dollar, given that almost half of sale revenues comes from America, but are then translated into Australian dollars. According to Porter’s framework, low threats of substitutes and low bargaining power of buyers define the implant industry as highly attractive and profitable. However, due to the attractive nature of industry, many firms could act upon the opportunity, increasing the level of competition. In addition, the industry is characterized by considerable bargaining powers of few suppliers, which stems from the lack of supplying alternatives within the implant industry. Furthermore, barriers to entry are high, as large financial requirements and extensive knowledge bank are needed to enter the hearing implant industry. Finally, the external analysis suggests that the future of the implant industry continues to be enriched with potential for sustained growth and profitability.  The report then switches its focus to the internal analysis, composed of a value chain analysis, which examines all the activities and the services employed by Cochlear to add value during the transformation of inputs into output. Lastly, firm-specific distinctive and significant resources and capabilities are analyzed.The results from the internal analysis suggest that Cochlear has solid foundations that truly distinguish the company from its competitors. These strong roots have allowed Cochlear to maintain its almost monopolistic market share, due to its efficiency in operations and the unparalleled quality of its implants.