Environment
Environmental complexity
There is a great deal of evidence suggesting that Medtronic faces a highly complex environment. Environmental complexity was defined as characterizing the number of environmental variables and their interdependence. Low organizational complexity indicates that only a few variables describe the environment while high complexity indicates that the environment has many important variables to consider.
The most complex sectors in Medtronic's environment are probably the governmental, technological, and international sectors.
Environmental uncertainty
In this context, "uncertainty" refers to the degree of knowledge the organization has about the level or "value" of environmental variables that are known to exist.
Medtronic has high levels of uncertainty concerning many variables in its environment:
- In the market sector , there is a high uncertainty associated with: the rate and timing of new product introductions, the product lines to expand or cut back, and the markets to enter or exit.
- In the government sector, there is uncertainty associated with: the timing and impact of proposed changes to FDA approval processes, and the success of the firm's lobbying efforts in Congress.
- In the technology sector , there is high uncertainty associated with: the protection of existing patents domestically and abroad, and the impact of technological advances on products. Products can be created, enhanced or obviated. The technological developments may be related (e.g., bio-medical, pharmaceutical) or unrelated (e.g., micro-electronics, information technology).
Environmental equivocality
The environment of Medtronic also has high levels of equivocality. While it exists to some degree in every environmental sector, it was perhaps highest in the Government sector for the six-year period under study. The major source of equivocality for Medtronic, and for the health care industry as a whole, was the Clinton Health Care Reform proposal, which failed to gain Congressional approval in 1994.
While many different versions of this plan were discussed during the 1992 Presidential campaign and during Clinton's first year in office, the centerpiece of the proposed legislation was to provide universal access to healthcare. The effects of adding up to 30 million previously uninsured Americans to the healthcare system, of limiting the options and coverage levels of many more, and, possibly, of making changes to reimbursement schedules were difficult, if not impossible, to anticipate. Medtronic, like many other firms in the healthcare industry, opposed this initiative and advocated private sector solutions instead.
Environmental hostility
The market for defribillators is described as a "hotly competitive" area where "hardball tactics" are employed. The CEO of Minntech Corp. of Minneapolis said "The attitude of the FDA is (so) anti-business and negative that any prudent CEO (in the medical equipment industry) has to be looking outside the U.S. for a safe haven.".
Other indications of hostility are patent infringement lawsuits that are used as a "strategic weapon" by some companies, and Medtronic's claims of "discrimination" against its products by the Japanese health insurance system. Medtronic and other firms have had to develop elaborate and sophisticated computer security measures to twart attacks from computer hackers.