International Trade and Kinetic Concepts Inc. (KCI) International
This report will focus on San Antonio, Texas-based Kinetic Concepts, Incorporated (KCI) and how they have successfully moved into the international medical technology market through their second largest business unit KCI International (KCII). In this extremely competitive global economy, medical technology manufactures and service providers have been continually searching for new opportunities that could lead to a reduction in overall production costs while at the same time providing viable opportunities to increase revenues and profits. Reducing the labor force was the trend of choice in the 1990’s. This labor reduction trend entailed major layoffs, downsizing and corporate re-structuring methodologies, plant output reduction or complete facility closings. In other words, these methodologies meant that a company would implement a process that strategically reduced production costs by cutting labor only and therefore boosting the company’s common stock through a ‘smoke and mirror’ profit increase. With Medicare and Medicaid each registering all new restrictions and moving closer to the HMO philosophy on reimbursements, the United States medical technology markets are getting tougher to ball in. Organizations can no longer take advantage of the luxury techniques of cutting jobs or just charging Medicare more without inadvertently jeopardizing the overall medical system as a whole. Kinetic Concepts, Incorporated has used another approach – they have increased their income opportunities by going global.
As the world continues to become a smaller place through new technologies such as computerization and the internet, corporations like Kinetic Concepts have been focusing their energies on the global arena. With globalization, organizations today have to expect competition from both within and from without of their boarders. “With respect to surface products, the Company’s primary competition within the U.S. is the Hill-Rom Company, a subsidiary of Hillenbrand Industries, Inc. The Company also competes on a regional, local and market segment level with a number of smaller companies. The Company’s competition in the international marketplace varies by country. Kinetic Concepts, Incorporated’s primary international competitors, however, are Hill-Rom, Huntleigh and Pegasus.” (Kinetic Concepts Annual Report, 2002) Globalization has dramatically influenced a number of organizations like Kinetic Concepts, Incorporated to implement all new research & development, marketing, distribution, manufacturing and sales strategies. Add in with these staples the additional stresses and complications of foreign wars and skirmishes, foreign financial stability and the problem of the constant terrorism threat; one gets a more realistic picture of what it takes to be a top performer in the global medical technology industry and international trade.
Kinetic Concepts, Inc. main objective is to provide the world’s medical technology market advanced wound care and therapeutic surfaces solutions so desperately needed. The company has been designing, manufacturing, marketing and even servicing their own proprietary products that are known for improving clinical outcomes and maybe more importantly reducing patient care costs by speeding the healing process and also reducing the number of wound care related complications.
Kinetic Concepts, Inc. has created several advanced wound care systems and has recently introduced a new technology called ‘Vacuum Assisted Closure (VAC) technology.’ The VAC technology has withstood the rigors of clinical testing and has been shown to successfully promote open wound healing. Wound care in itself is an expensive process cycle for hospitals and medical facilities whether they are in Cleveland or Munich. Therefore, when decubitus or pressure ulcers or other serious wounds heal without incident, medical facilities have the luxury of reduced costs and happier patients. Kinetic Concepts, Inc. utilizes their expertise in wound care to manufacture multiple wound care related products that reduce the number of total wounds through innovation “The Company’s therapeutic surfaces, including specialty hospital beds, mattress replacement systems and overlays, are designed to address complications associated with immobility and obesity, such as pressure sores and pneumonia.” (Yahoo Finance, 2004)
KINETIC CONCEPTS (NYSE:KCI) Quote data by Reuters
1y Target Est:
52 wk Range:
Avg Vol (3m):
Div & Yield:
1d http://finance.yahoo.com/q/bc?s=KCI&t=5d” 5d
Real-time charts for KCI. Free Trial (Yahoo Finance, 2004)
To stay a competitive entity, Kinetic Concepts, Inc. must and does take advantage of the vast opportunities offered by our new global economy. Kinetic Concepts does its international work through a subsidiary, Kinetic Concepts, Inc. International (KCII). Kinetic Concepts International has an outstanding and long history of being a leading provider of services and therapeutic therapies in the ever growing international health care industry. Kinetic Concepts International is renowned for delivering both healing therapies and reliable medical equipment worldwide.
International marketing can be defined as the performance of a business’s activities that basically direct the flow of a company’s goods or services to consumers or users in more than one particular nation for profit. Kinetic Concepts International has outposts in fifteen countries ranging through the alphabet from Algeria to Yugoslavia. “During 2001, KCI International had direct operations in 14 foreign countries including Germany, Austria, the United Kingdom, Canada, France, the Netherlands, Switzerland, Australia, Italy, Denmark, Sweden, Ireland, South Africa, Spain and the U.S. commonwealth of Puerto Rico. In addition, KCI International serves the demands of a growing global market through relationships with approximately 50 active independent distributors in Latin America, the Middle East, Asia and Eastern Europe. KCI International accounted for approximately 22%, 27% and 27% of the Company’s total revenue in the years ended December 31, 2001, 2000 and 1999, respectively.” (Kinetic Concepts Annual Report, 2002)
The company also prides itself on a great many top notch contracted distributors in other select markets that Kinetic Concepts International is not in-country first hand. Use of contracted distributors in other select markets provides Kinetic Concepts International with obvious opportunities to reach markets and obtain resources and ideas from outside of their boarders. In regard to marketing their products, these resources and ideas have led to a new optimistic global outlook and constructive opportunities to provide standardized marketing strategies that have a more local approach and feel. The new strategic approach definitely helps the production process to gather all of the necessary medical technology components and parts from outside a manufacture’s boarders.
In conclusion, this report focused on the San Antonio, Texas-based Kinetic Concepts, Incorporated (KCI). The Company has successfully migrated into the international medical technology market through their second largest business unit KCI International (KCII). The world has become extremely competitive and the new global economy has medical technology manufactures regularly searching for new opportunities with the objective of reducing costs and increasing revenues and profits. The quick fix of reducing the labor force is no longer a viable option in most cases so corporations have turned to new sources of income from the global economy. Global economics takes precedence and therefore new global marketing strategies will continually need to be applied that can help an organization increase productivity while simultaneously improving customer, supplier and community relations. Kinetic Concepts, Incorporated has this type of plan in action and can honestly say they have successfully gone global.
Kinetic Concepts, Inc. Home Page. (2004, April 12). Kinetic Concepts, Inc. Retrieved April 12, 2004, at http://www.kci1.com/
Kinetic Concepts, Inc. Annual Report (2002). SEC Version. 2002 10 K. Annual Report.
Yahoo Finance. (2004, April 12). Kinetic Concepts Inc. (KCI). Retrieved April 12, 04, at http://finance.yahoo.com/q?s=KCI&d=t