Case Study: Heartvalve Inc.

1. What value-chain activities appear to underlie Heartvalve’s competitive advantage?

To answer this question, we have to keep in mind that Heartvalve is an expert medical equipment designer and manufacturer. Value-chain activities that would underlie Heartvalves competitive advantages must be based on their research and design to ensure the best quality that can be offered to the customers. Quality assurance is the basic because their niche i.e. replacement heart valves, needs specialized effort on the part of the designer and manufacturer. They cannot afford any compromise on quality of the replacement valves as the lives of their customers depend on it.  A fundamental aspect of the provision of artificial valves is the limited time that Heartvalve get to supply their products. As it is stated in the case study that the transportation of the valve has to be made to the heart center in hours, and even within minutes. But over time, they have specialized in the field and created and effective supply chain. Though they might need to increase their supply of valves so that the heart centers already demand are met on time.

2. Why might an outsourcing arrangement with EdFex be attractive to Heartvalve?

The case study discusses the financial constraints that the Heartvalve would end up in if they want to increase their production to remain competitive in their niche and at the same time control their R&D, manufacturing, inventory and delivery of its products. On the other EdFex is reported to be efficient in inventory management and the capacity to deliver within an hour in the major population center. The warehousing facilities are EdFex are high-tech. These facts about EdFex make it attractive to Heartvalve as the high tech warehousing for inventory placement and the attractive delivery time of within one hour at major population centers can be really helpful in reducing the delivery costs of Heartvalve and making the delivery system more efficient than they currently are by utilizing the distribution channels of EdFex.  It would help Heartvalve increase their market presence as well. They would get an opportunity to focus on their manufacturing and R&D processes and invest in them to grow at rate that could keep it competitive.

3. What are the implications of an EdFex outsourcing arrangement for the capabilities underlying Heartvalve’s competitive advantage?  

There are two main concerns regarding EdFex outsourcing arrangements for the capabilities underlying Heartvalve’s competitive advantage.

First is that it may increase the upfront costs of Heartvalves as they have to pay EdFex upfront. The replacement heart valve sale is not considered complete till it is used in the heart centers.

Second implication is that Heartvalves has to hope that EdFex is always efficient and complete their last minute deliveries. EdFex has many more customers to serve and there is always a slight possibility that Heartvalve is not their first priority at all times.