ECTON INC.

Ecton Inc.



Ecton Inc.

Q1.

Ecton has successfully brought to market a new concept in echocardiograph imaging systems. This concept challenges the conventional use of imaging systems by allowing the machine to move into new areas in the health care industry. You have done this by assembling a strong team focused on development. Now it is time to take the product from the development phase into the market place. However, this market is firmly entrenched with certain biases towards the use of echo machines. In order to successfully move this product into alternative markets, you must convince the customers of its value in these alternative areas. To do so will require similar strengths in marketing, sales and production as you have in engineering. Your original plan called for selling the business once a successful model was produced. By selling to a larger company, you would have access to their skills in sales and marketing and use of their established distribution channels. By arranging an acquisition now you can take advantage of your position as product leader to negotiate the best deal. This would give the original founders and investors the best return on their investment.

Q2.

Traditional Appropriability Strategy

Profiting from Innovation Involves Competing in

the Product Market

Traditional Theoretical Perspective is that Start-Ups Profit from Innovation through Competition in the Product Market… the Disk Drive Industry Seems to Display the “Gale of Creative Destruction”

Ecton Inc. is the leader in the emerging market of compact echocardiograph imaging systems. It was founded with the goal of developing a cardiac ultrasound machine that could be used as a screening and monitoring tool as opposed to being an expensive diagnostic laboratory method. A number of events in the mid-1990's occurred creating the opportunity for Ecton to challenge the few large entrenched companies in the echocardiography imaging market with a low cost, light weight model. Some of these events were a marked improvement of quality in overall performance of echo machines (as they were referred to in the business) as compared to magnetic resonance imaging (MRI) and the development of contrast echocardiography using “contrast echo agents” which reflect clearer images of blood flow. The echo machines being produced at the time of Ecton's inception, while moveable, were still quite large and more notably, very expensive costing from $80,000 to almost $300,000. The size and high price meant the machine was usually restricted to “cardio labs”. However, echo machines were beginning to be used outside the traditional cardio lab and for more uses than just diagnosis. While continual improvements were being made to the echo machines, they were being made at the high end of the market and existing manufacturers were not pursuing alternative avenues of application. Ecton recognized the opportunity for a lower cost, portable unit that, while it may not equal the capabilities of existing machines, would perform well enough in alternative settings where screening and monitoring were called for as opposed to just diagnosis. It is this opportunity that Ecton hopes to ...