Full Draft - Grace Prosthetics Fabrication, Inc.

Strategic Analysis: Grace Prosthetics Fabrication, Inc.
Victoria Brennan, Margareta Grantze, Nadia Salem, Sabrina Schmidt, and Carl Thylen
The University of Tampa

Strategic Analysis: Grace Prosthetics Fabrication, Inc. 2
Table of Contents
EXTERNAL ANALYSIS ............................................................................................................. 4

Industry Dominant Economic Traits ........................................................................................... 4
Industry Size and Growth Rate ............................................................................................ 4
Scope of Rivalry and Number of Competitors .................................................................... 5
Variability of Customer ........................................................................................................ 6
Degree of Vertical Integration .............................................................................................. 7
Type of Distribution Channel ............................................................................................... 8
Economies of Scale................................................................................................................. 8
Speed of Technological Change ............................................................................................ 9
Barriers to Entry ................................................................................................................... 9
Five Forces Analysis ................................................................................................................. 10
Threat of New Entrants ...................................................................................................... 10
Threat of Substitutes ........................................................................................................... 12
Bargaining Power of Suppliers ........................................................................................... 14
Bargaining Power of Customers ........................................................................................ 15
Rivalry .................................................................................................................................. 16
Key Success Factors .................................................................................................................. 16
Responsiveness to Customer Preferences .......................................................................... 17
Trustworthiness (Certification and Warranties) .............................................................. 18
Experience ............................................................................................................................ 19
Partnerships with Hospitals, Clinics, and the Military .................................................... 19
Competitive Positions of Rivals - Strategic Group Map ........................................................... 20
Driving Forces Analysis ............................................................................................................ 25
Industry Foresight ............................................................................................................... 25
Driving Forces ...................................................................................................................... 25
Increase in the Prevalence of Diabetes in the United States ........................................ 26
Technological Innovation of Prostheses ......................................................................... 26
Medicare and Other Insurance Coverage of Prostheses Products .............................. 27
INTERNAL ANALYSIS ............................................................................................................ 28
Financial Analysis ..................................................................................................................... 29
Profitability Ratios .............................................................................................................. 29
Liquidity Ratios ................................................................................................................... 32
Activity Ratios ...................................................................................................................... 34
Leverage Ratios.................................................................................................................... 36
Value Chain Analysis ................................................................................................................ 39
Order Intake, Processing, and Materials Management ................................................... 40
Training, Manufacturing, Shipping, and Delivery ........................................................... 41
Clinics ................................................................................................................................... 42
Sales and Marketing ............................................................................................................ 42
Strengths of Value Chain Linkages and Relationships .................................................... 42

Weaknesses Within Value Chain Linkages and Relationships ................................................. 44
External Opportunities of Value Chain Linkages and Relationships ............................ 46
VRIO Analysis .......................................................................................................................... 47
Human Resources ................................................................................................................ 48
Physical Resources ............................................................................................................... 50
Organizational Resources ................................................................................................... 51
Financial Resources ............................................................................................................. 52
VRIO Recommendations .................................................................................................... 53
Organizational Structure Improvements ...................................................................... 53
Software Improvements .................................................................................................. 54
Liquidity Ratio Improvements ....................................................................................... 54
3-D Printing Improvements ............................................................................................ 55
RECOMMENDATIONS............................................................................................................ 56
Short-term Strategy ................................................................................................................... 56
Efficiency Strategy ............................................................................................................... 57
Securing Contracts .............................................................................................................. 60
Contracts with Clinics/ Hospitals/ Military ................................................................... 60
Contracts with Suppliers ................................................................................................. 61
Non-Compete Agreements for Employees ..................................................................... 64
Human Resource Utilization............................................................................................... 66
Financial Performance Strategy ......................................................................................... 70
Increasing Revenues ........................................................................................................ 70
Cash Flow Management .................................................................................................. 74
Medium-term Strategy .............................................................................................................. 76
Raising Capital..................................................................................................................... 77
Selling the Business.............................................................................................................. 81
REFERENCES ............................................................................................................................ 83
APPENDIX A .............................................................................................................................. 96
EXTERNAL ANALYSIS
In order to evaluate the competitive position and performance of a company, the broader
industry in which the company competes needs to be analyzed. This paper will thoroughly examine
the Prosthetics and Parts industry as defined by Standard & Poor as a whole. An external analysis
takes a very broad view that includes all the forces within and outside of an industry that affect the
way in which firms in the industry operate and compete.
Industry Dominant Economic Traits

The following research addresses the varying factors that impact the prosthetics and parts
industry. These include industry growth rate and size, scope of rivalry and number of competitors,
variability of customers, degree of vertical integration, types of distribution channels, economies
or diseconomies of scale, speed of technological change, and barriers to entry. Each will be
defined and explained below.
Industry Size and Growth Rate

The industry relevant to this external analysis is the prosthetics and parts industry as
defined by Standard & Poor (Prosthetics and Parts: Industry Profile, 2018). The total industry
revenue is estimated at $3.18 billion, derived through totaling all the revenue of all the major
constituents found in Standard & Poor’s database. The industry growth rate in revenue for 2017
was found to be 7.8% (Prosthetics and Parts: Industry Profile, 2018).
Furthermore, according to Gale Business Insights the prosthetics and parts industry is
expected to grow dramatically during the next decades. Around 2000, prosthetic appliances
“experienced an increase in sales not seen since its inception during the civil war” (Prosthetics and
Orthotics, 2018). This drastic change, together with the expected growth of prosthetic appliance
users by 2050, can be seen in Graph 1 below.

Graph 1 - Graph Displaying the Current and Expected Increase in the Number of Prosthetic
Appliance Users (Prosthetics and Orthotics, 2018)
This industry can thus be classified as a high growth rate industry, which is likely to attract
investors increasing the likelihood of entrants (Tompson, 2015).
Scope of Rivalry and Number of Competitors

The top 4 largest companies in the prosthetics and parts industry are Centerpulse Ltd.,
Össur, Orthofix Medical Inc., and Cyrus Group Limited (in descending order of size). Combined,
these 4 players alone comprise 88% of industry revenues (Prosthetics and Parts: Industry Profile,
2018). As such, this industry is highly consolidated and is expected to display significant
oligopolistic tendencies. Furthermore, these major players operate in and originate from foreign
markets, thus making the competitive scope within this industry broad. With widespread global
competition present, the industry is projected to be more competitive and dynamic in nature.
(Prosthetics and Parts: Industry Profile, 2018; Tompson, 2015).

Variability of Customer
Some prosthetic manufacturers are in the business-to-business (B2B) market. Such
prosthetic manufacturers largely sell to specialized workshops and labs where a certified
prosthetist will fill a prostheses prescription from a physician. Based on the individual need of the
patient the prosthetist will customize and adjust as necessary (Prosthetics and Orthotics, 2018). An
increasing number of prosthetic manufacturers are in the business-to-consumer (B2C) market. This
is due to a strong trend of forward vertical integration where the manufacturer in the prosthetics
and parts industry begins operating specialized workshops and clinics, thereby entering the B2C
market. A prosthetic appliance is often a necessity for the end consumer, where each individual
customer has demand for a uniquely fitted prosthetic comprising of similar base components.
Amputees encompass the largest market of prosthetic appliance users, followed by individuals
born with birth defects to extremities (Prosthetics and Orthotics, 2018). Based on data from the
Amputee Coalition, approximately two million Americans are affected by the loss of a limb.
Contrary to popular belief vascular disease, rather than war, is the primary source contributing to
loss of limbs (Prosthetics and Orthotics, 2018). The aging North American population thus
represents a critical portion of customers (Prosthetics and Orthotics, 2018).
The variability in the cause of an amputation can affect the type of prosthetic that users
require to fit their needs. An aging amputee suffering from a vascular disorder will be less likely
to demand a higher-mobility athletic prosthetic, as their general health would interfere with their
ability to participate in sports. Therefore, a vascular disease amputee is likely to demand a more
conventional prosthetic over a higher-mobility product. Consumers that became amputees due to
birth defects or war may retain the fitness level necessary for athletic involvement and could thus
be more interested in higher-mobility niche products depending on the degree of their disability
(Prosthetics and Orthotics, 2018).

Degree of Vertical Integration

Players in the prosthetics and parts industry use computer-aided design (CAD)/ computer-
aided manufacturing (CAM) software combined with traditional plaster casts to form the plastic
parts required and/ or three-dimensional printing to create the socket. The strut is predominantly
made from metal, while the outer covering involves a variety of silicone compounds (Prosthetics
and Orthotics; Personal Interview, September 7, 2018). Backward vertical integration would thus
largely involve raw material industries such as plastic, metal, and rubber manufacturing. However,
not just any plastic or metal on the market can be used. The regulatory environment requires that
prosthetics companies use specific FDA approved inputs (Angrish, 2014). Backward vertical
integration is uncommon in the prosthetics and parts industry as it would be difficult to backward
vertically integrate. Hence, players buy inputs on the open market and may suffer from price
markups, shortages, and quality control issues (Personal Interview, September 7, 2018).
However, it should be noted that clinics engage in backward vertical integration where they
have begun manufacturing prosthetics in-house. Hanger, Inc., which is the largest North American
owner and operator of orthotic and prosthetic patient care centers, is a good example of such a
backward vertically integrated player that wholly owns manufacturing facilities, clinics, and
distribution centers (Prosthetics and Orthotics, 2018).
Forward vertical integration largely includes medical supplies wholesaling, specialist
doctors, and hospitals. This is far more common than backward vertical integration in the
prosthetics and parts industry. Specialist doctors and workshops with certified prosthetists would
be the most commonly observed form of vertical integration that is present among small and large
companies alike, primarily giving them the advantage of better quality control (Prosthetics and
Orthotics, 2018; Personal Interview, September 7, 2018).

Type of Distribution Channel

With a low degree of backward vertical integration, relationship management and
negotiations play an important role in dealing with raw material suppliers (Tompson, 2015;
Personal Interview, September 7, 2018). Products in the prosthetics and parts industry can move
in a variety of ways from the manufacturer to the end consumer. The product can move from the
manufacturer and directly to the retailer. It can move from the manufacturer to a distributor, and
then to a retailer. The product can also be made in-house by the retailer (Personal Interview,
September 7, 2018). There are many clinics that have in-house manufacturing facilities, and clinics
represent the retail segment of the distribution channel where products are provided to the end
consumer. As a high degree of forward vertical integration is witnessed in the prosthetics and parts
industry, competitors have direct control over what products reach the end consumer. Mid- to
large-sized companies that own a lot of clinics can exert a lot of control over manufacturers that
rely on these competitors to sell their products (Personal Interview September 7, 2018).
Furthermore, a company as large and as highly forward vertically integrated as Hanger, Inc. exerts
control over distribution as well as retailing. Maintaining relationships with a powerful player such
as Hanger, Inc. can be crucial to a less forward vertically integrated manufacturer (Prosthetics and
Orthotics, 2018).
Economies of Scale
Prosthetic appliance manufacturers can normally presently not engage in bulk production
to attain economies of scale as each product is largely non-standardized (Personal Interview,
September 7, 2018; Tompson, 2015). Prosthetic devices are customized, which means companies
cannot mass-produce these items and lower the per-unit cost (Angrish, 2014). Companies attempt
to take an approach called “few-models-fit-all,” which is where they have a few different models
and mass produce templates that get customized for the individual at a later time (Angrish, 2014).
A shift is occurring with the emergence of three-dimensional (3-D) printing, which is creating
larger economies of scale. However, the implementation of 3-D printing is currently only being
used experimentally (Angrish, 2014; Personal Interview, September 7, 2018). Rivals in the
industry attaining lower unit cost through this medium is thus not of major concern at the moment
(Tompson, 2015).
Speed of Technological Change

The prosthetic appliances industry has in later years been propelled toward the usage of
three-dimensional (3-D) printers. As a three-dimensional scan of an individual´s cut limb can
create the input data for a nearly perfect-fitting socket, mass customization through three-
dimensional manufacturing has the potential to be attained (Prosthetics and Orthotics, 2018).
Advancements in prosthetic appliance manufacturing are largely driven by technological
breakthroughs such as 3-D printing and robotic prosthetics involving microprocessors (Prosthetics
and Orthotics, 2018). As advancements are heavily technology-driven, investments in research and
development (R&D) has the possibility to boost company growth (Tompson, 2015).
Barriers to Entry
There are several barriers to entry present in the prosthetics and parts industry. As the
industry presents weak scale economies, it is a low barrier to entry. However, high capital costs,
limited distribution channels, and government regulation present high barriers to entry. As with
many manufacturing industries, there are high capital costs associated with entering the industry.
New entrants would need to purchase the specialized machinery needed to manufacture prosthetic
components (Angrish, 2014). Furthermore, the FDA regulates the prosthetics industry. This means
that companies looking to enter the industry would have to be well versed within the requirements
set by the FDA and strictly apply them to their manufacturing operations (Angrish, 2014). Lastly,
access to distribution channels is restricted as many clinics are backwardly integrated and direct
competitors of manufacturers. Additionally, larger companies wholly own distributors, meaning
that new entrants would need to go directly through their competitors to reach the end consumer
(Personal Interview, September 7, 2018).
Five Forces Analysis

As defined previously, the industry being analyzed is the prosthetics and parts industry.
The following analysis includes an extensive look at the five forces that shape industry
competition. They include threat of new entrants, threat of substitutes, bargaining power of
suppliers, bargaining power of customers, and the overall competitive rivalry (Tompson, 2015).
Threat of New Entrants

The threat of new entrants is determined by the barriers to entry in an industry. There are
multiple barriers that can exist and they all need to be considered when concluding how high the
threat of new entrants is in the industry (Tompson, 2015). According to Med Device Online, the
materials, labor and regulatory-related expenses can be quite expensive to obtain, meaning that it
is quite expensive to manufacture prosthetic and orthotic devices (Angrish, 2014). As mentioned
above, the industry as a whole does not have high economies of scale. However, we do witness a
shift occurring with the rise of 3-D printing (Angrish, 2014). 3-D printing is beginning to change
the industry by lowering the manufacturing costs, which could lead to possible threats wanting to
enter the industry utilizing only 3-D printing (Angrish, 2014). While the industry does not display
strong scale economies, lowering a barrier to entry, the high cost of raw materials and capital
requirements make the threat of new entrant’s land on the lower end of the spectrum.
Two other aspects to look at when analyzing the threat of new entrants would be the
distribution channels and government regulation. The industry has limited distribution channels,
which is essentially only to healthcare providers and wholesalers as well as clinics (Quigley MJ,
2018). Generally, the healthcare providers submit the orders for the devices, and then the prosthetic
companies build the device (Quigley MJ, 2018). Once built, the prosthetics companies send it to
the healthcare provider to do the fittings with the patients (Quigley MJ, 2018). Having limited
distribution channels is unappealing to new entrants, so this will also keep the threat of new
entrants low (Tompson, 2015). The main characteristic that will keep the threat of new entrants
low is the government regulation surrounding the industry (Quigley MJ, 2018). Med Device
Online mentioned that there are very high costs associated with FDA approvals as well as with the
patents the companies hold (Angrish, 2014). In order to have a competitive advantage, it is
imperative for companies to create products that are unique so that they can patent them and be
the only company with the rights to produce that specific product. The costs a company incurs
from obtaining a patent are high. There are the costs of the patent itself, as well as the attorney fees
associated with submitting the patent application (Angrish, 2014). Companies can also incur high
costs when it comes to regulation from the FDA (Angrish, 2014). The FDA heavily monitors the
healthcare industry, which in turn means the prosthetics and parts industry is heavily monitored.
According to FDA.gov, there are multiple ways the FDA keeps the public safe by monitoring the
industry, including but not limited to: R&D methods, inspections, and samplings (FDA, 2018). If
a company violates any FDA regulations or are not up to FDA standards, it can result in warnings,
recalls, seizure, injunctions and even criminal prosecution (FDA, 2018).

As mentioned above, there are quite a few barriers to entry when it comes to the prosthetics
and parts industry. After identifying and analyzing each barrier, it is easy to conclude that the threat
of new entrants is fairly low. Therefore, the threat of new entrants would be rated at a 2/10.
Threat of Substitutes
For this analysis, substitutes are defined as a product that meets the same need, but comes
from a different industry (Tompson, 2015). First, it is necessary to identify what need is being met
with products from this industry. In this case, the customer’s need is being defined as improving
individual mobility, meaning the customers can move or be moved freely or easily.
The first substitute found is one that could be a substitute for all devices needed; the
robotics prosthetic industry. Some argue that this technically falls under prosthetics and parts,
however, robotics prosthetics are not covered by health insurance. According to marketwatch.com,
the global prosthetics market is forecasted to grow at 9.5% annually and involves different
manufacturing technologies and methods as well as competencies only possessed by high
technology companies (Robotics prosthetics market, 2018). The demand for robotics prosthetics
is due to an increasingly large number of prosthetics consumers wanting a more high-tech
prosthetic which equates to greater increased mobility (Robotics prosthetics market, 2018).
Robotics prosthetics can also meet another need of the customer, which would be the “showing
prestige” need (Tompson, 2015). This substitute not only meets the need of having an artificial
limb, but also fulfills the prestige need that most individuals have. Everyone likes to have the latest
and greatest when it comes to products. The quality of this substitute is high, as the products are
higher tech and more innovative than conventional prosthetics (Robotics prosthetics market,
2018). With higher mobility and technological capabilities comes fairly high switching costs.
When it comes to obtaining a conventional prosthetic, insurance companies will cover a lot of the
costs, but customers may get a very basic prosthetic (Amputee Coalition of America, 2018). Most
insurance companies will not cover the costs of robotics prosthetics, mostly because they are not
considered a necessity (Amputee Coalition of America, 2018). The customers end up covering the
costs for the robotic prosthetics on their own, which can be very expensive (Robotics prosthetics
market, 2018). Another cost for the customers is the learning curve from learning the technology
involved with the robotics prosthetics. Overall, this substitute is relatively strong because the
quality is high due to the technology involved. The major drawback is that switching costs can be
high for customers.
Another substitute would be the personal mobility devices industry, which includes
products such as wheelchairs and crutches. This market is growing at 9.2% annually, according to
Grandview research (Grandview, 2017). When analyzing the quality of this substitute, it is
somewhere in the middle, meaning it is not the best alternative but also not the worst. It is not the
best because it would not be a viable substitute for all prosthetic devices, mostly only lower
extremities (Grandview, 2017). This would furthermore not be a high-quality substitute because
customers would not be able to walk or move fully on their own. For example, if a customer used
a wheelchair instead of a prosthetic leg, the user is dependent on the wheelchair to move around
and cannot walk on their own like they could with a prosthetic leg. Additionally, there are no
options in this industry for those that would need an upper extremity prosthetic (Grandview, 2017).
The switching costs would be low for customers because devices like wheelchairs are much more
inexpensive compared to prosthetics (Grandview, 2017). This industry would only meet the need
at a very basic level for specific customers only. Therefore, this industry is not a great substitute
for the prosthetics and parts industry.

Other than those two substitutes, there does not appear to be any strong substitute industries
that would meet the need of improving individual mobility. Another aspect to look at when
analyzing the quality of substitutes is the concept of price ceilings. There is a maximum price the
customer would pay for a certain product (Tompson, 2015). If the price of conventional prosthetics
drastically increase and people can no longer afford them, they would be more inclined to utilize
other devices like crutches or wheelchairs. Overall, the robotics prosthetic industry is a high-
quality substitute with a high switching cost and the personal mobility devices industry is a low-
quality substitute with a low switching cost. Therefore, the threat of substitutes is 3/10.
Bargaining Power of Suppliers

The bargaining power of suppliers can become burdensome for the industry if suppliers
get too much power. When analyzing supplier power, it is important to look at the size of suppliers,
the number of suppliers used, as well as the importance of the supplied inputs (Tompson, 2015).
According to the Orthotics and Prosthetics Library, some prosthetic manufacturers use pre-
fabricated parts, meaning they are purchasing these parts from suppliers (Quigley MJ, 2018). Also,
due to the heavy government regulation there tend to be fewer suppliers for this industry, with a
few suppliers dominating (Young, 2011). According to Med Device Online there are “a consistent
number of suppliers in the industry” (Angrish, 2014). There are only 7 main suppliers that ship
90% of the inputs supplied for the industry (Young, 2011). Since there are only a handful of large
suppliers that dominate the prosthetics and parts industry, they have more power (Tompson 2015).
The other thing to consider is the importance of inputs being supplied. The reason why
these inputs are important is simply because there are not any viable substitutes for these inputs.
The prosthetics companies need specific FDA approved inputs; they cannot just use any metal or
plastic on the market (Angrish, 2014). With the amount of regulation in the industry there will not
be a lot of new suppliers emerging, which leads to the conclusion that the suppliers do hold
bargaining power due to the regulatory environment as well. There are very few, very large,
suppliers that are producing important inputs. As such, we conclude that the supplier power is
8/10.
Bargaining Power of Customers

It is important to analyze different aspects regarding customers which include the
proportion of output the customer buys, the size of the customer, and the buyer’s ability to
backward vertically integrate (Tompson, 2015). The customers in this industry are healthcare
providers, as they are the ones placing the orders for their patients. According to Med Device
Online, the “typical” process is that the healthcare providers will place the order for the prosthetic,
which goes to the insurance company for approval, and then it goes to the prosthetic and orthotics
companies to build (Angrish, 2014). This also means that the prosthetic and orthotics companies
are essentially at the mercy of the insurance providers when it comes to the prices they can charge
for the devices (Young, 2011). When it comes to the size of the customer, it really would depend
on the individual companies and their contracts with certain healthcare providers and/ or hospital
systems. There are so many healthcare providers available hence prosthetics companies do not
have their revenue coming only from one big customer, according to the O & P Library (Angrish,
2014). The biggest portion that provides the customers a large amount of bargaining power is the
ability to backward integrate, and the industry is already seeing it happen with large hospital
systems (Angrish, 2014). Based on these facts, it can be concluded that there is a medium customer
bargaining power in the prosthetics and parts industry, resulting in a score of 5/10.
Rivalry
The last of the five forces is the competitive rivalry in the industry, which is influenced by
the other four forces mentioned above (Tompson, 2015). The stronger the forces above; the higher
the rivalry (Tompson, 2015). It is also important to consider the industry growth rate, industry
structure, and if there are any exit barriers (Tompson, 2015). It is important to consider the growth
rate when analyzing the rivalry as the growth rate can help determine what kind of environment
the industry is currently in (Tompson, 2015). According to Standard and Poor, the growth rate for
the industry is 7.8%, which is a steady growth rate and it is expected to continue to grow due to
increasing health issues seen domestically and internationally (S&P, 2018). This means that
companies will be focused on creating brand loyalty and building their resources to keep up with
the continued growth (Tompson, 2015). From the four forces discussed above, it was learned that
only four large companies bring in 88% of the revenue in the industry (S&P, 2018). This means
that the industry is essentially an oligopoly with consolidated tendencies because few firms control
much of the market. It is important for companies in this industry to obtain a competitive advantage
and set themselves apart from their competition. Looking at exit barriers in the industry, there
does not appear to be very high exit barriers. If a firm wanted to exit the industry they could do so
easily. Overall, the competition is low being that it is a consolidated industry. The overall rivalry
is about a 5/10.
Key Success Factors

Key success factors are important for a firm to recognize in order for it to maintain a
competitive advantage in its respective industry. KSF’s can arise from the creation of regulations,
change in customer preference, change in technology, or from activities that industry rivals
implement. Additionally, KSF’s can be classified as “behaviors, competencies, or characteristics”

(Tompson, 2015). Also, important to note, is that KSF’s are due to external changes that affect the
entire industry and are not company specific. Once they are identified, KSF’s will serve as
excellent benchmarks to which the company can compare itself.
Responsiveness to Customer Preferences

Manufacturers need to be equipped to handle customizable limbs in respect to design,
color, texture, and flexibility since amputees strive for lifelike features (Personal Interview,
September 7, 2018). An example of a cosmetic enhancement would be that individuals prefer to
have their prosthetics spray painted to match their respective skin tone. Moreover, a functional
adjustment would be if a track athlete were to require a leg prosthetic, it would need to have blades
made of a light-weight material; such as carbon fiber or graphite (Personal Interview, September
7, 2018). The blades would then need to be customized according to the customer’s weight and
height. Manufacturers should be able to support and execute requests of this sort. Furthermore, it
is important to remember that the amputation site continues to shrink over time. It may also
develop swelling due to overheating or an increase in weight. These effects cause chafing and the
need for a replacement to occur (Personal Interview, September 7, 2018). And when you factor in
the age of the individual, the requirements will vary from children to adults, because children are
continuously growing and will need to replace their parts more frequently (Personal Interview,
September 7, 2018). Athletes will also need to replace their devices more frequently due to wear
and tear. So, by accommodating these various requests the manufacturer will be in an optimal
position to serve his customers and their needs. Therefore, to be competitive in this industry it is
necessary to be responsive, versatile, and inventive.

Trustworthiness (Certification and Warranties)

To thrive in the industry, a manufacturer needs to maintain a high level of trust and a strong
reputation. Consumers purchasing prosthetics and orthotics place a lot of confidence in the
manufacturer because they are expecting to be guided through a pain-free process that provides
the optimal fit that is tailored to their individual need. To elicit trust the manufacturers should
ensure they are “compassionate, innovative, and patient (Campbell NearSay, 2017).” One way of
demonstrating how trustworthy a manufacturer is would be through obtaining industry respected
certifications. For instance, the ABC certification, which stands for the American Board for
Certification in Orthotics and Prosthetics, is extremely valued and is the gold standard in this
industry. Their mission is to “establish and advocate for the highest patient care and organizational
standards in the provision of safe and effective orthotic, prosthetic, and pedorthic services
(Prosthetics and Orthotics, 2018). Moreover, ABC has ensured the quality and effectiveness of
prosthetic care by way of accreditation of patient care facilities since the 1990s. Another aspect of
ensuring quality would be the use of warranties (Prosthetics and Orthotics, 2018). Warranties
provide reassurance to the consumer that the product will perform as promised and that the
company will stand behind its product. In fact, the majority of the manufacturers in the prosthetics
and parts industry have, at minimum, a 60-day performance guarantee policy (Personal Interview,
September 7, 2018). By having this in place, it shows a sense of pride and certainty that this product
will meet the consumer’s needs, or that the business will make adjustments if necessary. Therefore,
warranties further allow the industry to strive for excellence and to maintain a competitive
environment.
Experience
Manufacturing prosthetics is not something that can easily be taught in a short amount of
time. This process requires a technician or other professional that has a tight grasp on anatomy,
physiology and the mechanics of the body. These professionals should also have a degree of
craftsmanship and artistic ability. Therefore, dealing with an untrained professional will
compromise the manufacturing process and result in ongoing complications. For this specific
reason, extensive expertise is precious when it comes to fabricating parts for the human body. The
technician must be skilled because “great care must be taken to avoid nerves and tender areas that
are not tolerant of pressure” (3-D Printing, 2017). To achieve this level of skill, the technician must
“understand the pathology of a stump, which differs for each person” (3-D Printing, 2017). Above
all, it is the repetitive fabrication that will mold the technicians into expert craftsmen. For this
reason, many consumers look at the number of years of experience that a manufacturer has
accumulated. Being in business for many years illustrates that the manufacturer is doing things
correctly, have expert craftsmen on staff, and are a reliable source.
Partnerships with Hospitals, Clinics, and the Military

The industry as a whole widely collaborates with hospital, clinics, and other medical
facilities through the use of partnerships. For example, the most substantial buyers of prosthetics
are the VA hospital and the U.S. military. In just one year alone, the military purchased $1.1
million worth of prosthetic equipment (Latsko, 2007). This is just one example of a client that will
need a continuous supply of devices. Hence, it is advantageous for manufactures to enter into
exclusive contracts with hospitals to be their sole supplier of all orthotics and prosthetics. This
agreement is a win-win situation for both parties because the hospitals receive a volume discount
and the manufacturer has a steady stream of orders and subsequently increased income. As one
author states “if you are the vendor who has the contract with the hospital, this could be an
excellent business opportunity depending on the pricing, volume, and residual benefits (Latsko,
2007).” Other business opportunities can come from partnering with the various military branches
and veteran or children´s hospitals.
Competitive Positions of Rivals - Strategic Group Map

A strategic group map is a visualization of the companies competing in a specific industry.
Based on two distinct variables that help define a company’s strategy and competitive position,
the companies in the industry are assigned a place on the strategic map that represents its status in
relation to the selected variables (Tompson, 2015). In the following strategic group map,
companies within Standard and Poor’s Prosthetics and Parts industry will be placed according to
their degree of vertical integration as well as their use of advanced technology in their products.
By placing companies according to the selected variables, groupings of companies can be
identified as strategic groups. Companies in the same strategic group employ a similar strategy in
relation to the selected variables and are competing more directly with the other members of their
group. Empty areas on a strategic group map could indicate an opportunity for a firm that chooses
to alter its strategy in such a way that would allow it to move its position on the map to fill this
empty area. Moving into this empty space could allow a firm to temporarily isolate itself from
competition. However, it should be noted that some spaces on a strategic group map are empty for
a reason. A particular combination of the chosen variables could result in an undesirable or
unsustainable strategy, leading to a space that should remain empty on a strategic group map
(Tompson, 2015).
Table 1 – Degree of vertical integration, use of advanced technology, and number of locations for
six companies present in the prosthetics and parts industry.
Use of Advanced Number of
Degree of Vertical
Companies Technology (Scale 1-5, low- Locations
Integration
tech - highly advanced) (US)
Westcoast Brace Clinic,

3 5
and Limb manufacturing
Copeland
Clinic,
Research and 2 1
manufacturing
Prosthetics
Orthotic and Clinic,

4 27
Prosthetics Center manufacturing
Clinic,
Hanger, Inc. manufacturing, 5 640
distribution
Grace Prosthetic
Manufacturing 2 1
Fabrication
Manufacturing,
Össur education, 5 7
distribution
Degree of vertical integration is defined as how many parts of the supply chain are wholly
owned and operated by a single firm. For example, if a prosthetic manufacturer also operates a
clinic and owns a distribution center, then that firm would be highly vertically integrated
(Tompson, 2015). Degree of vertical integration was selected because most providers of
prosthetics are forwardly integrated to include patient care facilities alongside their manufacturing
operations. It should be noted that many competitors are primarily patient care services that have
backward integrated to include an in-house manufacturing facility (Westcoast Brace & Limb,
2016; Orthotics and Prosthetics Clinics; CP Clinics). Most competitors follow the latter model,
with the exception of Grace Prosthetic Fabrication, Inc., which is solely a manufacturer, and Össur,
which is primarily a manufacturer that has opened a distribution center and a prosthetic provider
education and public relations facility (Össur, 2018).
The second variable, use of advanced technology, refers to the level of advanced
technology used in a company’s products. For example, both Hanger, Inc. and Össur produce and
sell a range of prosthetics from conventional prosthetics that have no electrical components to
prosthetics that include microprocessors and sensors to allow for a greater degree of mobility.
Therefore, these two companies receive the highest rating of 5 for use of advanced technology as
they not only sell high mobility products with electrical components, but also offer a whole host
of patented technological products that enhance the mobility of prosthetics users (Össur, 2018;
Hanger Clinic, 2018). Westcoast Brace and Limb and Orthotic and Prosthetics Center (OPC) sell
only a limited range of high mobility products that include electronic components and therefore
receive a rating of 3 and 4 respectively, with OPC providing a broader range of high mobility
prosthetics (Westcoast Brace & Limb, 2016; Orthotics and Prosthetics Clinics). Grace Prosthetic
Fabrication, Inc. and Copeland Research receive a 2 for use of advanced technology because they
offer exclusively conventional orthotics without electrical components as well as a limited range
of athletic prosthetics that offer a comparatively higher degree of mobility (GPFINC, 2018; CP
Clinics).
In order to create a more relevant strategic group map, mapping will take a closer look at
small prosthetics manufacturers. Furthermore, the number of locations a company wholly owns
and operates will serve as a proxy for market share instead of revenue or profit since all of the
smaller companies that are included in the mapping are private and there is no way to access their
financial information.
Graph 2 – Strategic Group Map of the Prosthetics and Parts Industry.
Graph 2 displays the strategic group map and reveals two significant strategic groups,
namely the Goliath group and the Full-Service Chains group. The Goliath group includes the
massive multinational competitors that produce and sell cutting-edge high mobility products that
are beyond the technical capabilities and resources of smaller companies. The Goliath group
companies typically display a high degree of vertical integration with wholly owned distributors
and Hanger, Inc. which notably owns distribution facilities, manufacturing facilities, and over 600
patient care clinics throughout most of the United States (Hanger Clinic, 2018, Össur, 2018).
The second strategic group is the Patient Care and Manufacturing group which consists of
Westcoast Brace and Limb and Orthotic and Prosthetics Center. These companies own multiple
facilities that both provide patient care services as well as an in-house manufacturing facility
(Westcoast Brace & Limb, 2016; Orthotics and Prosthetics Clinics). These two companies also
provide high mobility electronic prosthetics, with OPC providing a larger range of such products.
The stragglers not belonging to a strategic group are Copeland Research and Prosthetics
and Grace Prosthetics Fabrication, Inc. These two companies own and operate only a single
manufacturing facility and produce only prosthetics without electrical components. These
stragglers could be seen as struggling and operating without a clear strategy in mind. Potentially,
these companies could attempt to move along either axis of the strategic map in order to create a
niche strategy that could isolate them from competition.
The empty area surrounded by a blue square border represents a potential blue ocean
opportunity. Companies within this portion of the map could potentially employ a strategy of
providing exclusively affordable prosthetics that do not include any electrical components. This
strategy would be a niche option that would avoid competition with far larger competitors that
have the resources to spend on the production of technologically advanced prosthetics. Instead
companies in this area focus on customer segments consisting of amputees who cannot afford
expensive microprocessor knees or are otherwise uninterested in complicated and difficult to use
high mobility prosthetics. Furthermore, the blue ocean opportunity could include having a
somewhat higher level of vertical integration. This would mean that a manufacturer could open a
clinic to have more control over their own distribution instead of having to go through their
competitors. However, in order to keep costs down, avoiding vertical integration is also an option
for low cost providers in this blue ocean area. Additionally, medical insurance companies set caps
on the costs they will cover for a patient’s prosthetics. They also set limits on how advanced a
prosthetic product needs to be in order to restore “normal” function and will not cover prosthetics
that exceed these limits (Resnik et al., 2012). This suggests that there are significant limits on how
affordable high-tech products such as microprocessor prosthetics will ever become. The need for
affordable prosthetics thereby makes the lower-technology region of the strategic group map more
strategically desirable due to the projected increase in prosthetics users combined with the
restrictions that medical insurance companies place on the costs and features of prosthetics
(Prosthetics and Orthotics, 2018).
Driving Forces Analysis
Industry Foresight
It is projected that the number of people living with the loss of a limb will more than double
by the year 2050 to 3.6 million (Ziegler-Graham et al., 2008). This increase in the limb loss
community will increase the number of prosthetics patients. The increase in the quantity of patients
will be coupled by an increase in the scope of prosthetics products offered, which will feature high
tech and high-quality offerings. The capabilities of these products will include increased mobility
to patients who will operate and navigate through their daily lives just as their non-limb loss
counterparts. Additionally, physicians and clinicians will be able to work with their patients to
order 3-D printed parts that will be more cost effective such that their insurance will cover the full
cost of the prosthetic, parts, and repair.
Driving Forces
After review of various scientific studies and journals, the following have been identified
as the driving forces behind change in the prosthetics and parts industry:
• Increase in the prevalence of diabetes in the United States
• Technological innovation of prostheses
• Medicare and other insurance coverage of prostheses products
The following driving forces will be explained below.

Increase in the Prevalence of Diabetes in the United States

In recent years, the prevalence of diabetes in the United States has almost doubled. The
population afflicted with this disease increased from 7.7% in 2000 to 13.3% in 2016 (Fang, 2018).
This rate of occurrence has been attributed to the aging population as well as an increase in obesity
rates in the U.S. population. Diabetes is a disease that has been documented as contributing to limb
loss due to an alteration in skin tissue. Ziegler-Graham, MacKenzie, Ephraim, Travison, and
Brookmeyer conducted a study to estimate the prevalence of limb loss from 2005 to 2050. It was
stated that in 2005, over 1.6 million Americans were living with limb loss (Ziegler-Graham et al.,
2008). Future estimates were based on the assumption that the incidence rates of amputation would
remain constant for age, race, and gender specificity. It was concluded that there needed to be more
effective programs and policies that guaranteed access to prosthetic and assistive devices to those
living with limb loss. Overall, the aging population and rising obesity rates have continued to
increase the prevalence of diabetes in the U.S. population leading to an increase in the limb loss
community. This has led to an increase in the necessity for assistive devices such as prosthetic
limbs. With the estimates moving toward millions for the limb loss community, it can be expected
that there will be increased industry growth with a higher demand for prostheses.
Technological Innovation of Prostheses

The past decade has brought advanced technological development in the medical device
industry. Specifically, among prostheses there have a been varying innovations aimed at improving
the mobility and quality of life for those with disabilities and limb loss. While these innovations
are revolutionary for the limb loss community, a notable observation by Cowan, Fregly, Boninger,
Chan, Rodgers, and Reinkensmeyer was that none of the technology used in advanced prostheses
were necessarily new technologies, but instead represented improvements to existing technology
(2012). Such advancements include the development in devices that involve 3-D printing, more
sensitive limbs, and brain-controlled prosthetics. These devices were created with the goal to
improve mobility tasks such as balance, posture, and locomotion (Cowan et al., 2012). The
improved integration of these technologies between the user and the prostheses has been
emphasized with each new development in the industry. While all innovations aim to improve
quality of mobility of the disabled to match that of their non-disabled counterparts, they range in
cost and availability. For example, the development of more sensitive limbs and brain-controlled
prosthetics involves large capital expenditure as these devices can range from $25,000 to $75,000
(Jelle ten Kate, Smit, & Breedveld, 2017). Cost aside, the development of prosthetics that allow
for sensory integration via tactile feedback has led to the alleviation in phantom limb pain which
affects 80% of amputees in the U.S. (Anikeeva and Koppes, 2015). 3-D printed devices are notably
more cost efficient with a production cost of $500. They also offer more design freedom, seamless
customization, rapid design improvement, and little to no assembly as devices are printed from
one piece of material (Jelle ten Kate, Smit, & Breedveld, 2017). The cost efficiency of 3-D printed
prostheses, as well as the advantages, has caused fabricators to invest in the purchase of these
printers. However, developers remain uncertain of the mechanic properties such as durability and
strength of such devices. Additionally, the size of the prosthetic is limited by the size of the printer.
Most 3-D printers on the market are unable to print large prostheses. If the industry can move the
3-D printed devices from experimental to functional, there is reason to believe that the cost-
effective alternative will begin to dominate the market. As it stands, the insurance companies,
including Medicare, do not cover the more expensive devices, thus patients are forced to settle for
more conventional, less advanced products (Personal Interview, September 7, 2018).
Medicare and Other Insurance Coverage of Prostheses Products

Coverage restrictions from Medicare and private insurance companies has hindered the
limb loss community from obtaining the prosthetics and their related expenses at an affordable
rate. A survey of 20 major insurers concluded that all providers had financial caps on prosthetic
coverage (Resnik et al., 2012). In addition to caps on the initial purchase of a prosthetic, insurers
have service caps for repair and maintenance of these devices and some even restrict coverage to
only one device per year which can severely impact the affordability for double amputees.
Lifetime costs of prosthetic care can range from 100,000 dollars to almost 2 million dollars
(Resnik et al, 2012). Some insurers will also limit the amount of patient visits and amount
allotted to physical therapy and rehabilitation associated with the prosthetic. While Medicare
covers approximately 80% of the cost of prosthetics with a 20% copay, it has reduced the
amount of spending on prosthetics despite the demonstrated increased demand for them, which
may be correlated to what they deem necessary and reasonable to restore “normal” function
(Resnik et al., 2012). A study from the American Orthotic and Prosthetic Association found that
Medicare spent 15% less in 2014 than in 2010 on prosthetics (AOPA, 2016). The study also
showed that while overall spending had decreased, the spending on advanced prosthetics
decreased by 41%, while the spending on older technologies rose by almost 50% (AOPA, 2016).
The continued decrease in spending by Medicare and selective coverage by other major insurers
will cause the industry to become compressed, as healthcare providers are held to using
prosthetic manufacturers that offer prosthetics that are covered by the insurance companies of
patients.
INTERNAL ANALYSIS
The purpose of the external analysis was to become familiar with the prosthetics and parts
industry, because without knowing the industry, a company cannot implement a successful
strategy (Tompson, 2015). With the external analysis complete, it is important to conduct an
internal analysis on Grace Prosthetics Fabrication Inc. (Grace), so that a better understanding of
how the company is currently performing can be gained (Tompson, 2015). From the internal
analysis, the company can learn what is and what is not working from the current strategy, which
will help the leaders of the organization make changes and improvements in future strategy
(Tompson, 2015). For the internal analysis, the following will be conducted and discussed below:
Financial Analysis, Value Chain Analysis, and VRIO Analysis.
Financial Analysis
One of the most important things someone in business needs to know is how to read and
understand financial statements. As a leader of a company, one needs to have a good understanding
of where the company is financially so that an effective strategy can be implemented (Tompson,
2015). When conducting the financial analysis, it is important to understand how to calculate and
analyze basic financial ratios. Once the ratios are calculated they can be compared to the industry
averages, which ultimately provide a picture of where the company stands in the industry
(Tompson, 2015). It is also crucial to compare the ratios historically to see how the company is
performing year-over-year (Tompson, 2015). The most commonly utilized ratios used in a
financial analysis are typically broken up into four categories: profitability, liquidity, efficiency,
and leverage (Tompson, 2015). For this analysis, a historical financial comparison will be
conducted on Grace for the last four years, as well as a comparison of the company to the industry
averages found in the Standard & Poor database (S&P, 2018).
Profitability Ratios
The profitability ratios that will be looked at are Return on Assets (ROA), Return on Equity
(ROE), and Net Profit Margin (NPM). Profitability ratios are some of the most commonly
recognized and utilized ratios, because these ratios demonstrate the company’s ability to generate
profits from its revenues (Tompson, 2015). ROA illustrates how much the company is earning on
every dollar that is invested in assets (Tompson, 2015). The ratio that investors are typically most
eager to learn about is the company’s ROE, which helps show how effective the company is at
turning investments into more profit and growth (Investopedia, 2018). Net profit margin “is the
‘bottom line’ profit margin” of the company (Tompson, 2015). This ratio shows the overall
profitability of the company and is one of the most commonly used ratios when analyzing the
profitability of a company (Tompson, 2015). The tables below outline the three profitability raios
calculated for Grace Prosthetics compared to the industry averages for years 2014, 2015, 2016,
and 2017.
Looking at Table 2, it appears as if return on equity for Grace looks decent compared to
the industry averages.
Table 2 - Shows the Return on Equity Ratio for the Years 2014 to 2017 for Grace and the
Prosthetics and Parts Industry (Personal Interview, October 8, 2018; Prosthetics and Parts)
Grace Industry
2017 369.4% 1.4%
2016 406.4% 0.8%
2015 336.6% 2.1%
2014 734.4% 2.4%
Looking at ROE for 2017, the percentage of 369% means that for every dollar invested, it is
earning $3.69 in profits. This is a number that any investor would be happy to hear, especially
compared to the industry average of earning $0.14 in profit for every dollar invested. The downside
is that the numbers are showing a decline nearly every year with some declining drastically.
Comparing the ROE for Grace and the industry between 2016 and 2017, it should be noted that
the industry sees a positive percentage change of 75.0% whereas Grace saw a -9.1% change.
Another note to make is the company does not have a lot of equity, specifically on the 2017 balance
sheet with only $10,029 in equity. If compared to the total liabilities of $330,958 on the 2017
balance sheet, it is not very appealing for investors. This needs to be a focus if Grace is planning
to attract investors in the future.
Looking at Table 3, Grace and the industry both show a steady decline in ROA between
2014 and 2017. Looking at ROA and the percentage change between 2016 and 2017, Grace saw a
-73.8% change, while the industry only experienced a -3.6% change.
Table 3 – Shows the Return on Asset Ratio for the Years 2014 to 2017 for Grace and the
Grace Industry
2017 10.9% 2.8%
2016 41.5% 2.9%
2015 63.1% 3.1%
2014 82.1% 4.2%
Looking at Table 4, Grace’s net profit margins look adequate in comparison to the industry.
The industry has been experiencing negative net profit margins for the last few years, thus having
a positive net profit margin is a positive sign for Grace.
Table 4 - Shows the Net Profit Margin Ratio for the Years 2014 to 2017 for Grace and the
Grace Industry
2017 3.0% (51.2%)
2016 11.6% (87.2%)
2015 19.7% (0.05%)
2014 22.5% (10.6%)

It appears as if the negative net profit margins in the industry are due to investing in new
prosthetic technology that has not been approved by insurance yet and therefore cannot be sold to
customers at an affordable and profitable price (Medicrea, 2017). The industry has seen very high
selling and marketing expenses as well, as many prosthetics manufacturers need to devote a large
amount of resources towards trying to get their products accepted in the market and approved by
the insurance companies (Medicrea, 2017). Hospital and insurance companies need a lot of
convincing when it comes to adopting new prosthetics technologies, therefore manufacturers must
convince the intended market to adopt its new technology, which can only be achieved through
heavy investment in informative marketing (Medicrea, 2017).
Overall, it does appear these ratios are acceptable compared to the industry averages.
However, it is extremely concerning that revenues are declining each year. Specifically, taking a
look at the decline between 2016 and 2017 in Grace’s NPM, which declined 74.3%, in only one
year. In fact, Grace’s profit margin has been decreasing considerably since 2014. The decrease in
profits is linked to a significant decrease in revenue, as expenses have either decreased or remained
the same between 2014 and 2017. The declining profitability ratios and sales need to be a priority
area for improvement. With the current state of the US economy, it is especially concerning that
revenues are declining every year.
Liquidity Ratios
Liquidity ratios are analyzed to determine if the company can cover its short-term debt and
pay its bills (Tompson, 2015). These are important to analyze because a company can have a lot
of capital in its long-term assets, but not enough cash to keep the lights on. A company needs to
be able to find the balance between short-term and long-term liquidity goals; it needs to think about
holding long-term assets, as well as be able to pay its bills in the short term (Tompson, 2015). The
two ratios used in the following analyses are the current ratio and the quick ratio. Both ratios are
used to test the liquidity of the company, comparing the assets and liabilities, with the difference
being that the quick ratio excludes inventory from assets (Tompson, 2015).
For the current ratio, it is important to note that typically anything above 2 is considered
good (Tompson, 2015). Looking at Table 5, Grace’s current ratios look reasonable as they are all
over 2. They are also above the industry average, with the exception of 2014.
Table 5 - Shows the Current Ratio for the Years 2014 to 2017 for Grace and the Prosthetics and
Parts Industry (Personal Interview, October 8, 2018; Prosthetics and Parts)
Grace Industry
2017 2.9 1.9
2016 4.1 1.6
2015 4.0 1.7
2014 2.3 2.9
Grace has enough liquidity to cover its short-term liabilities. Looking at the quick ratio in Table 6,
one comes to the same conclusion. The ratios demonstrate sufficient liquidity.
Table 6 - Shows the Quick Ratio for the Years 2014 to 2017 for Grace and the Prosthetics and
Parts Industry (Personal Interview, October 8, 2018; Prosthetics and Parts)
Grace Industry
2017 1.9 1.7
2016 2.8 1.7
2015 3.1 1.7
2014 1.8 1.8
Even when inventory is excluded, Grace still has enough liquidity to pay its bills and its
ratios are higher than the industry average. The one thing to keep an eye on would be the decline
of these ratios in recent years. The liquidity ratios for Grace appear to be on the decline since 2015,
which is concerning since the quick ratio fell below 2.0 for 2017. If this ratio continues to decline,
then it is likely that Grace will start to have trouble covering its short-term liabilities.
Activity Ratios
The next category of ratios is the activity ratios, which determines how efficient the
company’s operations are and if it is effectively utilizing its resources (Tompson, 2015). These are
important not only for a company to keep its costs down, but also because the more efficient the
company runs, the more money it makes, making them more competitive (Tompson, 2015). The
activity ratio analysis will include inventory turnover, asset turnover, and average collection period
(in days).
The inventory turnover values presented in Table 7 should be read per year. For example,
the inventory turnover for Grace in 2017 was 16.9 times during that year. This means that the
company sold out its entire inventory 16.9 times in 2017.
Table 7 - Shows the Inventory Turnover Ratio for the Years 2014 to 2017 for Grace and the
Grace Industry
2017 16.9 1.8
2016 18.5 1.9
2015 8.7 2.0
2014 19.1 2.1
The industry average inventory turnover falls between 1-2 times a year. Thus, Grace’s ratio is well
above the industry average.
Asset turnover presented in Table 8 is important to look at because this demonstrates how
much revenue the assets are generating (Tompson, 2015).

Table 8 - Shows the Asset Turnover Ratio for the Years 2014 to 2017 for Grace and the
Grace Industry
2017 3.7 0.8
2016 3.6 0.8
2015 3.2 0.8
2014 3.7 0.8
Grace’s asset turnover looks strong, with every year falling between 3.2 and 3.7, meaning that for
every dollar in assets it has, the assets are generating at least $3.20 in revenue. Grace’s asset
turnover value is also greater than the industry average, which has been at a constant 0.8 since
2014. Asset turnover is typically a number that a company would want to see increasing over time
(Tompson, 2015). However, after comparing to the industry averages in the Standard & Poor
database, it appears it may be an industry standard to remain constant year after year.
The average collection period is analyzed to get an idea of how long it takes for a company
to collect credit payments (Tompson, 2015). This ratio is important to look at if a company sells
products on credit (Tompson, 2015).
Table 9 - Shows the Average Collection Period in Days for the Years 2014 to 2017 for Grace
and the Prosthetics and Parts Industry (Personal Interview, October 8, 2018; Prosthetics and
Parts)
Grace Industry
2017 19.1 55.7
2016 29.7 55.3
2015 42.0 55.6
2014 36.3 59.2

Again, these values look good. The numbers are much lower than the industry average, which is
constant at about 55 days and Grace’s was down at 19 days in 2017. It is also a good sign that this
number is decreasing, meaning that Grace is receiving payments quicker than it has historically.
Overall, the activity ratios are encouraging. The asset turnover and average collection
period values are both good and heading in the right direction. It does appear that the company is
running fairly efficiently after analyzing these two ratios. However, it should be noted that the
declining revenues need to also be considered when looking at these ratios. If revenues continue
to decline every year, these ratios will become fairly obsolete, because it will not matter how
efficiently a company is running if you cannot increase revenues.
Leverage Ratios
The final category to be analyzed is the leverage ratios. These ratios are meant to illuminate
what the capital structure of the company looks like by looking at the balance between debt and
equity (Tompson, 2015). It is important to understand the capital structure of the firm as a company
needs to have a healthy balance of debt and equity (Tompson, 2015). The three ratios used in this
analysis are debt to assets, debt to equity, and the capitalization ratio. These ratios are the most
important to pay attention to because the ratios are quite high and increasing year after year. It is
important to realize that it can be effective for a company to finance growth with debt. However,
the company wants to make sure it does not become overleveraged (Tompson, 2015).
The debt to assets ratio presented in Table 10 shows how much a company’s assets are
financed by debt (Investopedia, 2018).
Table 10 - Shows the Debt to Assets Ratio for the Years 2014 to 2017 for Grace and the
Grace Industry
2017 76.6 % 42.5 %
2016 67.8 % 44.8 %
2015 64.4 % 43.5 %
2014 59.4 % 35.1 %
The industry average falls between 35-45% over the last four years. A typical “good”
target, depending on the industry, is somewhere around 40% or lower (Investopedia, 2018). When
companies go over 60%, this is when it becomes at risk of being overleveraged (Investopedia,
2018). Grace’s debt to asset ratios are concerning as they are not only above the industry average
every year by at least 20% but are also increasing every year. From this, one can conclude that
much of Grace’s assets are financed by debt and its debt continues to increase every year.
The debt to equity ratio presented in Table 11 demonstrates a similar scenario with the
comparison of the debt and equity that is on the balance sheet (Tompson, 2015).
Table 11 - Shows the Debt to Equity Ratio for the Years 2014 to 2017 for Grace and the
Grace Industry
2017 2577.0 % 40.8 %
2016 664.0 % 45.0 %
2015 343.2 % 36.5 %
2014 531.0 % 24.8 %
The industry average has increased since 2014 but has been in a good range between 24.8%
and 45.0%. Grace’s values appear high and have increased considerably. Between 2016 and 2017,
the company has seen a 287.9% increase. This leads to the conclusion that Grace has a lot more
debt than it has equity. The severe increase from 2016 is very concerning as it indicates that Grace
has taken on a very large portion of debt over a short period of time.
The last ratio used in this analysis is the capitalization ratio. This ratio shows the overall
financial leverage of the firm and is important because a company needs to figure out how to best
finance its operations using debt and equity (Investopedia, 2018).
Table 12 - Shows the Capitalization Ratio for the Years 2014 to 2017 for Grace and the
Grace Industry
2017 96.2 % 29.0 %
2016 86.9 % 31.0 %
2015 77.4 % 26.8 %
2014 84.1 % 19.9 %
The higher this ratio, the riskier the business’ use of financing tends to be as a higher ratio indicates
that debt is the primary source of financing (Investopedia, 2018). The industry average is
increasing almost every year, peaking at 31.0% in 2016. Grace’s capitalization ratio is consistently
high but reached its peak in 2017 at 96.2%. This is alarming because it indicates that Grace is
almost entirely financed by debt, which increases the risk of bankruptcy significantly
(Investopedia, 2018). As the industry is at 29.0% in 2017, Grace is taking on a considerably riskier
method of financing than the majority of its industry competitors.
Overall, it appears as if Grace Prosthetics is overleveraged, which is a big concern. One of
the concerns stemming from the fact that debt is decreasing on the balance sheet, yet the leverage
ratios are growing every year. Grace’s current financial situation needs to be addressed. The fact
that the economy is healthy, and the industry is expected to grow drastically over the years, it is
crucial to increase revenues. It is not sustainable to continue operations with declining sales in the
current environment. After speaking with the owners of Grace, it was learned that the increase in
sales in prior years was due to the prevalence of the Iraq War. During this time, Grace was making
new braces for Walter Reed Medical Center. New sales have slowed down due to the receding of
this war, and Grace is currently servicing a lot of existing and previous clients. Grace will need to
focus on obtaining new clients to increase its sales revenues and cannot be dependent on only
existing clients. The goal needs to be to increase equity and decrease debt which will help bring
these leverage ratios down. While Grace’s ROA appears strong compared to the industry, the
company has seen a decline historically. Grace’s ROA has decreased by 73.8% between 2016 and
2017. Grace also saw a large decrease of 74.3% in its NPM in 2017. The decreases in profitability
are directly tied to a decrease in revenue. Grace needs to reverse this decline through focusing on
revenue increasing measures.
Value Chain Analysis

The value chain is a consecutive representation of the primary and supporting activities
that a company employs to create value and earn a profit (Tompson, 2015). The concept of the
value chain is to visualize the value added from each activity that the firm performs (Tompson,
2015). While not all activities are linked directly to the product or consumer, each should
contribute to value creation that feeds into the overall company strategy (Tompson, 2015).
Depicted below is the value chain for Grace Prosthetic Fabrication, Inc. (Grace). Activities that
the company is actively engaged in are indicated by blue shading. The activities in which Grace
outsources part of the process are indicated by partial shading. Support activities to the company,
such as employee training, are indicated by green shading.

Figure 1 – The Value Chain of Grace Prosthetic Fabrication, Inc.
Order Intake, Processing, and Materials Management

Once Grace has acquired its raw inputs, it must process inbound requests from its
customers consisting of mostly clinics and a few hospitals including Shriners Hospitals for
Children. The customer completes an order request and ships the measurements of the patient. The
order forms are currently being received via fax, email, or call in. The recent update of the website
made way for the addition of an online order form available for customer use as well (Personal
Interview, October 8, 2018). The specifications of the order are used to determine parts and
supplies that are necessary for completion. Grace has implemented a just-in-time inventory system
in which it has two bins of each part stocked. As soon as one bin is emptied, the second is moved
up on the shelf and an order is put in for more stock. This contributes to the ability for a quick
turnaround time (Personal Interview, October 8, 2018). The more complicated the fabrication, the
longer the process may take, especially if highly customized parts are required. Grace orders
almost all its prosthetic inputs and parts from Southern Prosthetic Supply (SPS), Inc. Other
suppliers include Cascade and PEL (Personal Interview, October 8, 2018). Products ordered from
these suppliers include stock resins, nylons, metallic components, textiles, leather, among others.
Due to purchase agreements, Grace enjoys free UPS Ground service from SPS. Grace maintains a
unique supplier relationship with these companies as each raw material supplier is in turn a
customer and distributor of Grace Plates. Grace Plates is a trademarked prosthetics component by
Grace that is manufactured by a third party (Personal Interview, October 8, 2018). Once the order
for a prosthetic is received it undergoes a manual write up and is then assigned to the appropriate
technician in which it is manually posted on his or her work station (Personal Interview, October
8, 2018).
Training, Manufacturing, Shipping, and Delivery

Training consists of a 3-month cross-training rotation for new employees so that they learn
each step of the fabrication process at Grace (Personal Interview, October 8, 2018). Depending on
the customization of the order, the standard manufacturing turnaround time is 3-4 days. After a
technician is assigned to the job, the central fabrication process begins with computer-aided design
(CAD)/ computer-aided manufacturing (CAM) of a foam mold. The use of CAD/CAM means that
a technician can both design a product and control the manufacturing process. The process may
also begin with a plaster pour of a mold that has already been taken of a patient. Then the mold is
laminated or pulled with plastic. Depending on the specifications, it may be sprayed to match for
skin tone. Otherwise, the components are gathered and assembled to produce a complete prosthetic
(Personal Interview, October 8, 2018). Upon completion of assembly, the prosthetic undergoes a
quality assurance check. After a prosthetic has passed inspection, it is then shipped back to the
clinic or hospital that requested the order. The prosthetics and parts are packed in company branded
boxes and shipped via UPS Ground, FedEx Ground, or FedEx Express (Personal Interview,
October 8, 2018).
Clinics
When the practitioner has received the completed prosthetic, they are endowed with a 90-
day warranty for work completed by Grace. This allows for the practitioner to request rework at
no cost if the prosthetic is flawed due to fabrication reasons. Grace will occasionally split the cost
of customer errors dependent on the severity (Personal Interview, October 8, 2018).
Sales and Marketing

As can be seen in Figure 1, the primary activity of sales and marketing is deprioritized by
Grace and has therefore been sidelined in the value chain diagram. Grace currently utilizes the
Vice President and Sales Manager, Tony Culver, as well as a third-party sales representative to
market its products and services. Culver attends trade shows on behalf of the company promoting
its products and securing clinic clientele for future business opportunities. The recent adoption of
a third-party sales representative has allowed the company to promote its products in over 20
different states on the east coast. The sales manager and the independent sales representative sell
products to clinics and communicate the clinic orders to order intake. In conjunction with the newly
acquired sales representative, Grace has hired on a graphic designer and a marketing consulting
team (Personal Interview, October 8, 2018). The graphic designer and the consulting team are
working in tandem to develop new and improved sales and marketing efforts (Personal Interview,
October 8, 2018).
Strengths of Value Chain Linkages and Relationships

The strengths found within the value chain above include the relationships that Grace has
with third parties and how these relationships increase the efficiency of internal processes
(Tompson, 2015). The first relationship of significant value is Grace’s relationship with its
shipping companies, more specifically with UPS. Grace uses UPS’s services for receiving order
forms as well as products in need of maintenance and repair. UPS is also used for shipping
completed orders. By frequently using UPS, Grace maximizes the value that incorporating a highly
efficient company like UPS adds to its value chain. UPS’s statistics for on-time deliveries range
from 98-99% of packages arriving on time, which is a success rate that a small company with few
resources would be unlikely to achieve should Grace handle its shipping internally (Phillips &
Smith, 2016). The use of a third-party shipping firm with such a high level of reliability enhances
the linkage between the main activities of raw materials and order intake as well as order intake
and order processing by increasing the speed in which order forms and materials arrive via
shipping. This allows work orders to be created more quickly since there is no delay in order forms
arriving at Grace’s facility. Furthermore, this linkage enhancement trickles down the rest of the
value chain as the following main activity, namely manufacturing, becomes more efficient as when
order forms and materials arrive promptly there is less likelihood of idle manufacturing capacity
due to the delayed receipt of these items. The use of UPS also enhances the linkage between
shipping/ delivery and clinics, as a higher on time percentage will lead to Grace’s customers being
more satisfied with Grace and its performance.
Another relationship that strengthens Grace’s value chain is its relationship with Southern
Prosthetic Supply, or SPS. SPS is a large materials supplier with distribution centers in 5 states
that ship throughout the United States (SPS Co., 2018). As Grace uses SPS as its main distributor
of Grace Plates, it allows the product to reach the national market in a much more expedited
manner. This is because SPS has a strong national presence that Grace simply does not have the
resources to attain. Furthermore, Grace’s relationship with SPS allows its products to reach other
prosthetics manufacturers, as the Grace Plate is a component used in the general assembly of some
prosthetics. Since SPS has formal relationships with large companies such as Össur, WillowWood,
and Ottobock, this forms a connection between Grace and these companies through which larger
companies can purchase and use Grace Plates in their products (SPS Co., 2018).
Weaknesses Within Value Chain Linkages and Relationships

Many of the weaknesses within Grace’s value chain stem from the lack of departments that
perform support activities vital to a company’s long-term success (Tompson, 2015). While many
of these departments are missing due to Grace being a small company with few resources, the
absences of these departments negatively impact Grace’s overall performance and should be
addressed incrementally over the long-term. One such missing department is a financial
management department (Personal Interview, October 8, 2018). While it is not uncommon for
small companies to diminish the level of importance of financial management as a component of
its value adding activities, a poor understanding of a company’s financial performance can lead to
very severe problems that threaten the long-term survival of the company. Failure to exercise
proactive financial control and discipline is the most obvious cause of the poor financial results
detailed earlier in this analysis. While the wife of the Vice President performs accounting related
tasks, no time is devoted towards examining and understanding the financial data that she compiles
(Personal Interview, October 8, 2018). Such a support activity as a financial department would
continuously support the primary activities of the value chain. Support activities are vital and can
be the reason behind success as well as failure of a company (Tompson, 2015).
Another support activity that is not yet part of Grace’s value chain is human resources.
Once again, an HR department is something that small companies likely exclude from their value
chain due to a lack of resources. However, HR departments serve key functions in companies that
should not and cannot be ignored. Firstly, they serve as an internal watchdog against workplace
discrimination and harassment by proactively addressing legal concerns through making sure a
company is in compliance with all applicable laws. No company, from the largest corporation to
the smallest family owned business is immune to the financial risks that inevitably follow when
employment law is ignored. An example of an HR risk would be the concerns that were raised by
an employee at Grace about various sexually explicit images being present on the walls in offices
and in multiple locations throughout Grace’s facilities (Personal Interview, October 8, 2018). The
circumstances described by the employee could easily be argued to constitute a hostile work
environment as the presence of offensive images or objects are clearly defined examples of what
can create a hostile work environment (EEOC, n.d). Situations like these are exactly why HR
departments exist, namely to protect a company from the legal and monetary risks that behavior
that breaches employment laws and regulations exposes it to. Punitive damages in sexual
harassment cases have totaled upwards of $20 million within the state of Florida in the past, which
is an expense that no company as small as Grace could ever hope to survive (Tillman, 2013).
Additional core functions served by an HR department involves hiring and training. At the
moment, hiring and training is done by the vice president of the company with input from two
other high-ranking employees that have many other responsibilities beyond hiring (Personal
Interview, October 8, 2018). HR departments do not only provide the act of hiring, but rather
devote time to identifying which potential hires will make the best employees. From a value chain
perspective, having employees well suited for their positions allows each segment of the value
chain to maximize its contribution. In fact, quality employees are one of the core drivers of value
in an organization (Anderson, 2013). Therefore, an HR department can become a support activity
of Grace’s value chain that enhances the value-added activities operated wholly or in part by Grace
throughout the rest of the value chain. As Grace is a small company, simply having one employee
thoroughly educated within HR in a position of authority would be a viable alternative to an HR
department.
Through further analysis of Grace’s value chain, an issue arises when examining customer
service. This issue involves the fact that there are not any employees devoted specifically to
receiving inbound calls from customers looking to place an order, add details to orders that have
been received via mail or online, or have an issue with a past order (Personal Interview, October
8, 2018). Having employees that are specialized and trained to handle incoming queries from
customers would allow Grace to maximize the value derived from these contact points with
customers. Trained personnel would potentially be able to sell additional products to customers
placing orders as well as improving efficiency by being able to focus solely on inbound sales
instead of having to be diverted from assigned tasks to respond to customers. Implementing such
a support activity could therefore produce ample value for the value chain.
External Opportunities of Value Chain Linkages and Relationships

When performing a value chain analysis, it is important to examine the activities at the
beginning and at the end of a company’s value chain as well as looking towards improved
relationships outside of the activities performed by the company itself (Tompson, 2015). Vendor
relationship management is a function that could improve the linkages between Grace and its third-
party value chain contributors. Focusing company resources on developing stronger ties with
suppliers moves a company further towards the concept of “interprise,” where a company works
together with its suppliers to facilitate a cooperative relationship as opposed to approaching
relationships in an adversarial manner (Tompson, 2015). A relationship that could be enhanced to
benefit value creation for Grace is the company’s relationship with its distributor SPS. Currently,
SPS only distributes Grace Plates. However, should Grace be able to strengthen its relationship
with SPS and convince them to stock products other than Grace Plates, then Grace would be able
to take advantage of SPS’s much larger distribution network and national presence (SPS Co.,
2018).
VRIO Analysis
The following section will present a VRIO analysis, which is a resource-based view of the
firm. This approach delves into the resources that Grace owns or controls that are foundational to
the company’s strategy (Tompson, 2015). According to Barney’s VRIO, resources fall into four
main categories: financial, physical, human, and organizational (Tompson, 2015). By further
analyzing these resources that are foundational to Grace’s strategy, it can then be determined
whether the company’s position can be sustained in the long-term. The criteria used to evaluate
the resources in each category follow the abbreviation VRIO: valuable, rare, inimitable, and
organized to be fully exploited by the organization (Tompson, 2015). A resource is considered
valuable if it will help the company respond to unexpected events. Valuable resources help the
firm overcome threats or exploit opportunities (Tompson, 2015). Rarity is determined if it is
uncommon in the industry. An inimitable resource is one which may be protected by intellectual
property laws or for which other companies face a cost disadvantage in acquiring or developing.
Additionally, an inimitable resource is difficult to imitate if it is socially complex, meaning a part
of the culture of an organization (Tompson, 2015). Lastly, the company must have systems in
place to exploit the full competitive potential of its resources and capabilities. To meet this
criterion, there must be evidence that Grace’s “systems, communication, incentive structure, and
corporate culture are designed so that it can make use of the resources that are valuable, rare, and
difficult to imitate” (Tompson, 2015). If, for any given resource, it is considered valuable, rare,
inimitable, and the firm is organized to capture the potential advantages the resource has to offer,
then the firm has achieved a sustained competitive advantage. This is the ultimate goal (Tompson,
2015). Table 13 displays a summary of the VRIO analysis for Grace.
Human Resources
In terms of human resources, one key resource is Vice President and Sales Manager, Tony
Culver. Culver is considered the face of the company as he is the individual who travels to trade
shows and conferences on behalf of Grace. He has cultivated most of the relationships that the
company currently has with its suppliers and distributors. According to Culver and his employees,
Grace would not be able to secure the negotiated discounts that it currently enjoys with some of
these companies if they were to meet with an alternative employee from Grace (Personal Interview,
October 8, 2018). Through his unique negotiation skills and charismatic personality, Culver
receives substantial purchase discounts from major suppliers such as SPS. This allows Grace to
retain profits and reduce costs in acquiring materials. The unique relationship that Culver
maintains with these suppliers and distributors is based on socially complex factors such as
familiarity and personality.
Culver is a valuable resource that allows the firm to take advantage of new partnership
opportunities and overcome the threat of price wars. He is also considered a rare resource as there
is only one ‘Tony Culver’. The socially complex nature of his personality and charisma causes
him to also be deemed a difficult to imitate resource. However, because Culver is involved in
various other aspects of the business including hiring and training, he is stretched thin and cannot
physically take advantage of every opportunity that arises without sacrificing performance in
another area. While Culver can be considered a competitive advantage for the company, Grace is
not organized to exploit his abilities to its fullest potential.

The American Board for Certification in Orthotics, Prosthetics & Pedorthics, Inc.
maintains a facility accreditation that allows central fabricators to become ABC accredited, which
is a highly regarded accreditation. ABC central fabrication accreditation standards create
expectations for the physical environment and organizational function of orthotic, prosthetic and
pedorthic central fabrication facilities (ABC, 2018). It also requires that the facility maintains at
least one ABC certified technician on staff. However, all twelve of Grace’s technicians have
managed to satisfy the eligibility requirements and pass the examination to be considered ABC
certified technicians. An ABC Certified Orthotic and/or Prosthetic Technician is a healthcare
professional who has demonstrated their qualifications and competency through a thorough and
detailed examination process. This individual has been specifically educated and/or trained to
provide support to the ABC Certified Orthotist and/or Prosthetist (ABC, 2018). Grace’s certified
technicians are valuable as ABC certification is recognized by various state agencies and third-
party payers for insurance reimbursements and is considered the gold standard among orthotic and
prosthetic professionals, both nationally and internationally (ABC, 2018). Additionally, Grace is
anticipating the future threat of the certification and training of technicians becoming an industry
requirement for central fabricators. Currently, it is only required by practitioners and clinicians.
Additionally, the central fabrication certification is relatively new to the industry in the respect
that Grace became only the 7th fabrication facility in the country to pass the inspection and review,
earning it a perfect score on December 17, 2015 (Grace, 2018). This makes it a rare resource as
very few central fabricators have the certified technicians on staff. While the resource may be
valuable and rare, the training and the certification can be imitated by other central fabricators.
The monetary requirements to apply are low, with the certification application exam costing $300
per technician together with a $90 annual fee to maintain the certification (ABC, 2018). Further,
Grace is not currently set up to take advantage of this recognition. The company is not using their
certified technicians to generate any major contracts (Personal Interview, October 8, 2018). Thus,
Grace is only holding a temporary competitive advantage with this resource.
Physical Resources
In an industry where 3-D printing is gearing up to become an everyday use technology,
Grace has been an early adopter of this technology. Such a printer provides the capability to
reproduce carbon copies of an original production. This allows for the elimination of human error.
Instead of recreating it by hand resulting in imprecise dimensions, the printer can offer a perfect
fit every time (Personal Interview, October 8, 2018). The company can further use the printer to
increase customizability of many factors, such as color, texture, and design. This is a valuable
resource that Grace has because it is neutralizing the threat of falling behind in an industry rapidly
adopting this technology and exploits the opportunity of mass customization. However, even
though 3-D printing is not yet widely used in fabrication, it would not be considered rare as many
companies own 3-D printing devices. Currently, 3-D printers can be acquired at a moderate cost
according to Culver who purchased 3 units for Grace (Personal Interview, October 8, 2018). The
moderate pricing allows other companies to easily enjoy the benefits of the technology making it
easy to imitate. Furthermore, due to the highly experimental nature of the technology, Grace
currently only uses the printers to produce check sockets (Mengis & Viankin, 2018). Thus, without
further research and development, in which the company is not currently engaged in according to
its financial statements, Grace cannot begin to utilize the full potential of the technology. This
results in competitive parity.

Organizational Resources
Systems and software allow for companies such as Grace to run more efficiently. Currently,
Grace only uses one type of software which is an accounting and payroll software called BLA, or
Bottom Line Accounting (Personal Interview, October 8, 2018). This software is basic and is only
utilized for documenting accounting transactions and conducting payroll. Therefore, the software
is not meeting all current company needs and is not designed to do so in the long-term due to its
limitations. This resource is not valuable because of its lack of functionality and inability to allow
Grace to exploit opportunities that would arise from a system that would otherwise be fully
integrated. It is also not rare, as payroll and accounting software is integral in almost every
company within the industry. Likewise, the software is one that is, or can be, easily imitated by
other companies. The company is by no means able to gain an efficient outcome with the limited
software available. The organization does not have someone currently willing and able to
implement a more integrated software system with additional capabilities such as CRM. This
resource thus leaves Grace at a competitive disadvantage.
Another organizational resource the company has is its culture of being family owned and
operated. Culver and his employees are proclaimed to be a tight knit group (Personal Interview,
October 8, 2018). The family-oriented culture increases the camaraderie, strengthens
communication between employees, and leads to a one-team mentality. According to Culver, each
technician is more than happy to train a new employee and to keep him or her up to date with any
new company or industry specific policies (Personal Interview, October 8, 2018). By having a
strong sense of teamwork hardwired into the organizational culture, they eliminate the animosity
or competitive aspects of most workplaces. Teamwork is a difficult aspect to replicate in any firm.
In the same fashion, each employee is very motivated and skilled in his or her craft. They have
the drive for innovation and are rewarded for any new improvement or discovery that he or she
produces. Moreover, another aspect of Grace’s family culture is the monthly events that the owner
provides for his employees. For instance, Culver celebrates each employee’s birthday, caters
Thanksgiving dinner, and regularly holds barbeques for the entire company. This is his way of
showing gratitude towards them (Personal Interview, October 8, 2018). Keeping family at the
forefront, the company is closed on all legal holidays and shuts down for an entire week to observe
Christmas. Grace also supports and donates to local and global charities. Recently, Grace donated
parts and materials to Haiti following the devastation of natural disasters (Personal Interview,
October 8, 2018). For Grace, giving its employees an effort like Haiti relief brings the organization
and its employees closer together and produces goodwill. Grace being a family owned company
makes its culture valuable because it is able to exploit the “increased consumer population demand
for more personalized products and services that are causing mom-and-pop businesses to gain
popularity” (Investopedia, 2018). Grace is also rare in the sense that there are very few firms that
are family owned in the prosthetics and orthotics industry. Most of its competitors are larger
corporate conglomerates. Further, mom-and-pop business owners, such as Grace, are known for
service that is highly interactive and personalized. “This personalized service is often difficult for
large corporations to replicate” (Investopedia, 2018). Several family members are working
together at Grace, and they have spread the culture of family within the organization. However,
the structure is not currently set up to capitalize on opportunities within the community to promote
the “family-owned” culture. This results in a competitive advantage.
Financial Resources
The liquidity of a company determines how easily it can convert its assets into cash.
Liquidity, specifically that which is measured by the quick ratio, is a great indicator of whether the
firm is able to meet its short-term obligations (Tompson, 2015). Grace’s 2017 quick ratio was 1.9
which is slightly higher than the industry average of 1.7. This means that the company is in a good
position to pay its short-term obligations with its most liquid assets. In addition, the quick ratio is
preferred over the current ratio because it subtracts inventory from the numerator. This is important
to know because inventory is the least liquid of all current assets. Thus, removing it shows a better
picture of how capable Grace is in paying its short-term debts (Tompson, 2015). Liquidity is
valuable for Grace because it allows the company to continue its short-term operations by meeting
its obligatory requirements. However, liquidity is not a rarity and is not difficult to imitate as they
are almost on a par with the industry average of 1.7. Although Grace appears to be in a position to
pay off short-term obligations with their most liquid assets, the company is carrying a lot of long-
term debt, leaving Grace with competitive parity.
VRIO Recommendations
In order for Grace to increase its competitive position in the industry, it should implement
the following changes in an effort to increase the elements of the above VRIO that prevent the
company from reaching a sustained competitive advantage.
Organizational Structure Improvements

To gain an improved competitive position with Tony Culver, ABC certified technicians,
and the family owned corporate culture, Grace should reevaluate its organizational structure to
maximize efficiency and utilize potential talent. First, Culver should focus on one or two roles
which emphasize his charismatic personality. For example, he should continue to attend trade
shows as the face of the company and promoting Grace as the Sales Manager. Additionally, Ed
Grace should take control of the day-to-day operations management and consider hiring an
additional employee such as an administrative assistant to handle clerical duties, inbound order
requests, and job write ups. Finally, the certified technicians should become a larger selling point
of the company by having them attend select trade shows with Culver. The technicians can bring
along their personal creations and mockups for display and demonstrate their passion for the
manufacturing process with potential clients. This will also assist in promoting the culture that has
been cultivated by the family owned and operated business. Through clearly defined roles and
exploiting the talent that Grace already possesses, these resources could come closer to yielding
sustained competitive advantage.
Software Improvements
The competitive disadvantage that Grace has with its software resource can be moved
closer to a sustained competitive advantage by implementing an enterprise resource planning
system into business operations. At present, Grace does not have any software dedicated to
customer relationship management (CRM), inventory management, or human resource
management. The aspect of manually tracking customers, inventory, and employees is a non-
sustainable practice for continued operations and can cause many human errors. Hence, an
integrated software system is necessary. As previously stated, there are many affordable cloud-
based ERP systems that small businesses have access to that would satisfy the business needs of
Grace. A fully integrated system would allow for easy sharing of inventory levels, new and old
customers, as well as store employee data all in one place.
Liquidity Ratio Improvements

A step that can be taken towards moving closer to a sustained competitive advantage is by
making their liquidity fully exploited by the organization. Grace’s quick ratio is above the industry
average at present. Grace should begin by attempting to implement a facet of the organizational
culture that values the information that financial ratio analysis has to offer. Through implementing
monthly financial meetings, Grace will be able to communicate this information to senior
management as well as technicians on a regular basis. This will increasingly center communication
on the importance of maintaining healthy liquidity. An improved software system for financial
ratio analysis will further aid in tracking liquidity (Tompson, 2015).
3-D Printing Improvements

Moving Grace closer to a sustained competitive advantage can be achieved by first making
the company more organized to take advantage of this technology. As 3-D printing is a cost saving
alternative to many forms of regular manufacturing, it stands to reason that Grace can begin to
reposition itself as a provider of lower cost prosthetics by using 3-D printing more prevalently in
their fabrication. By applying management towards creating processes that incorporate 3-D
printing in a cost saving manner, and by focusing marketing and sales efforts on the resulting low-
cost prosthetics, Grace can organize itself and position itself in a more competitively advantageous
position. Furthermore, while 3-D printers are widely owned by manufacturers, it was mentioned
earlier that few manufacturers incorporate 3-D printing into their daily manufacturing. If Grace
begins to exploit 3-D printing to a significantly larger degree than its competitors, then its use of
this resource will become somewhat rarer even if the resource itself is not necessarily rare. Lastly,
if Grace begins to organize itself around 3-D printing and customize its marketing, sales, and
manufacturing processes around 3-D printed products, the way in which Grace utilizes this
resource will become harder for competitors to imitate as doing so will be more complicated than
just using their 3-D printers more often.
Table 13 – Summary of the VRIO Analysis for Grace Prosthetics Fabrication, Inc.
Grace Prosthetic Fabrication Inc. Framework
Valuable Rare Inimitable Organized Competitive

Resource
Implication
Human (Tony Culver) Yes Yes Yes No Competitive Advantage
Human (ABC Certified Yes Yes No No Temporary Competitive

Technicians) Advantage
Physical (3-D Printer) Yes No No No Competitive Parity
No No No No Competitive
Organizational (Software)
Disadvantage
Organizational (Corporate Yes Yes Yes No Competitive Advantage

Culture)
Financial (Liquidity - Quick) Yes No No No Competitive Parity
RECOMMENDATIONS
Now that an external and internal analysis is completed, recommendations and an
implementation plan for Grace Prosthetics can be issued. As was discussed previously, Grace does
not currently have any competitive advantage over its rivals and the company’s financial situation
is not sustainable. The overall recommendation for Grace Prosthetics is to implement a turnaround
strategy and get the company back on the right track. The turnaround strategy that is recommended
has two main parts: a short-term strategy and a medium-term strategy. The short-term strategy
includes recommendations that are targeted toward solutions that can be implemented
immediately, or within a years’ time. The medium-term strategy provides solutions that will be
implemented over a period of 1 to 3 years.
Short-term Strategy
The short-term strategy that will be discussed below includes recommendations toward
developing efficiency via a blue ocean strategy, improving the company’s financial situation,
implementing contracts and non-compete agreements, and effectively utilizing human capital.
These recommendations are the first part of the turnaround strategy that is suggested for Grace.
Efficiency Strategy
The main recommendation informed by the results found in the external analysis portion
of this report entails moving Grace towards the blue ocean revealed by the strategic group map.
This blue ocean opportunity entails producing low-tech prosthetics that do not include any higher
mobility technology such as microprocessor knees or other technologically advanced components.
This is because the larger competitors in the marketplace are better suited for producing these
products and competing with companies that have far more resources than Grace is a losing
strategy. To move Grace towards a more advantageous competitive position in the marketplace,
meticulous analysis of the products that Grace receives orders for and produces needs to be
undertaken. This analysis will focus on identifying the most efficient products that Grace produces
as well as identifying and eliminating products that are a drain on its resources. This way, Grace
can undertake an efficiency strategy that is likely to improve its competitive performance over the
long-term.
It is therefore recommended that during the course of one month, an employee familiar
with the financial transactions taking place in the workplace needs to record the number of orders
that are placed and fulfilled for each type of product that Grace produces. Type refers to the specific
sort of prosthetic that the product falls under, namely above the knee, below the knee, or any other
bodily area. The types of materials needed to produce the product will also inform how the product
is categorized, such as the type of metal, plastic, or other material needed to create the product.
The product categories found on the Grace website would be a straightforward way of categorizing
each product.
Once the product categories have been established, the specific costs of the materials used
in the production of each individual product needs to be recorded. If the product is manufactured
by an employee paid an hourly wage, then the amount of time spent by that employee on creating
the product needs to be recorded along with the hourly wage the employee is paid. By combining
the hourly wage of the employee and the amount of time spent on manufacturing that product, the
variable labor cost of the product is obtained. Then the costs of the product need to be totaled and
subtracted from the price for which the individual product was sold. This way, the contribution
margin of that specific item is obtained. Each item produced and sold during the month needs to
be recorded in this manner.
Once the total number of orders for each product category have been recorded along with
the contribution margin of the products, low volume and low contribution margin items can be
identified. Products that are ordered in small quantities should be eliminated from Grace’s product
offerings, as they do not represent a significant portion of its revenue. Any procedures or materials
associated with low volume products should be eliminated, since stocking materials for products
that are ordered infrequently and maintaining equipment used in their production is a waste of
resources. Once low volume orders have been eliminated, contribution margins should be analyzed
next. Any products producing a negative contribution margin should be eliminated immediately,
as these products result in a net loss for the company. Low contribution margin products should
also be considered for elimination from Grace’s product offerings. However, it should be noted
that low contribution margin products that are sold at high volumes are considered viable for
companies pursuing a low-cost strategy and should continue to be produced and sold by Grace
(Tompson, 2015).
High contribution margin products should receive the majority of attention when it comes
to Grace’s marketing efforts. Promotions or recommendations should focus on high contribution
margin products as these products have the most positive impact on Grace’s profits on a per-unit
basis. However, remember that high contribution margin products that are sold at a low volume
should have been eliminated at an earlier stage of this analysis and are as such not subject to
increased marketing efforts.
The next stage in the efficiency strategy involves the management of labor costs. This
process is straightforward in that it focuses on eliminating costs associated with idle employees
and production capacity. Simply put, employees responsible for manufacturing prosthetics should
only be on the clock and compensated for time spent actually engaged in manufacturing. This
entails moving all manufacturing employees towards hourly compensation. Furthermore, a strict
manufacturing schedule needs to be implemented. This means that manufacturing employees have
their schedules and hours set based on the orders they are tasked with completing. When orders
are received, management needs to estimate the time needed to complete the order and assign
employees to the time slots during which the product is to be manufactured. In this way, employees
that are not actively engaged in manufacturing a product will not be compensated for the time they
are idle. Furthermore, management needs to closely monitor employees to make sure that the
estimated production times are accurate and that employees are working at full capacity during
their assigned hours. This will reduce unnecessary and unproductive labor expenses and make
Grace more efficient through the elimination of waste.
Performing the steps detailed above will move Grace towards the blue ocean strategy of
producing low-tech prosthetics. This will take advantage of the external factor consisting of the
increase in demand for prosthetics as well as the decrease in spending on higher technology
prosthetics by health insurance companies. This is because the increase in demand for prosthetics
will need to be filled by prosthetics covered by health insurance, namely low-tech products
(Prosthetics and Orthotics, 2018; Resnik et al., 2012).

Securing Contracts
Contracts with Clinics/ Hospitals/ Military

Obtaining formal contracts with large providers such as local hospitals and clinics can
provide a major advantage in the prosthetics and parts industry. Specifically, if Grace could obtain
a contract with the Veterans Affairs (VA) hospital, it would generate an increase in sales and
develop more brand equity for the company. To get a contract with this provider, Grace must be
aware of the hospital’s contract policies and should designate contractual responsibilities to the
employee in charge of sales. The VA states on its webpage that it allocates 40% of funds to
purchasing “surgical appliance and supplies manufacturing” products from small business
providers (VA OSDBU, 2015). This means that the VA supports and encourages small business
contracts. Also mentioned is its Procurement Readiness program, which “provides small and
Veteran businesses with guidance and resources to become procurement-ready to do business with
the Department of Veteran Affairs (VA) and other federal agencies” (VA OSDBU, 2015).
Furthermore, of the contracting opportunities available through the VA, it would be advantageous
if Grace could become one of the VA’s long-term contract providers. To achieve this, Grace needs
to adhere to the criteria provided on the hospital’s website. Some of the listed standards include: a
capability statement, a current company website, former client testimonials, certifications, and
credentials (VA OSDBU, 2015). For full details, see Appendix A. Engaging in these activities will
increase the likelihood of being accepted as a contractor for the hospital.
Capturing a contract with a nearby clinic that does not operate an in-house fabrication lab
is another great way to gain exposure, display Grace’s abilities, and maintain continuous business.
However, it is important to note that to get these contracts Grace needs to maintain its ABC
certification, through participating in “Mandatory Continuing Education (MCE)” classes and
prove it is financially fit (ABC, 2018). To be considered financially fit, Grace must have an
adequate credit file, as many “corporations check a businesses’ credit file before deciding whether
or not to bring it into the supply chain” (Dun and Bradstreet, 2018). Also, with written contracts,
Grace can benefit from the buyer’s reputation because it will become associated with their
reputable image and can feed off their branding. Moreover, set prices and purchase quantities can
be solidified because written contracts are more concrete and harder to breach, as opposed to verbal
contracts. In fact, “the sales of goods with a price of $500 or more must be in writing” (Vredenburg,
2015).
Finally, MacDill Airforce Base is another viable partner for Grace Prosthetics. Since both
entities are located in the Tampa Bay area, it makes it easier for communications and negotiations
to occur. Ultimately, Grace’s name can become associated with the air force base. The association
with MacDill could lead to widespread reach and massive exposure locally and nationally.
Contracts with Suppliers

Efficient procurement of materials should always be a part of a company’s strategic plan.
Therefore, building strong relationships with suppliers, mainly Southern Prosthetic Supply that is
Grace’s largest supplier, will allow for a mutually beneficial arrangement to be created for both
parties. One easy method of initiating this bond would be to engage in written contracts between
the firm and its suppliers. This will create an enforceable and transparent agreement that will clear
up misconceptions and will allow for loyalty to be established. Grace currently only has verbal
contracts with its suppliers and the agreements are only valid for the co-owner Tony Culver.
Essentially, if the co-owner is not present, the remaining employees will not be able to garner the
same prices and volume discounts that Culver is able to get. This is important for company
valuation because if “someone purchases the business, they want to know that they will get what
they pay for… if they believe key employees with access to customers and relationships may not
stay on board after a merger or acquisition, they may balk at the price or even walk away” (Greco,
2012). Therefore, Tony Culver should work towards establishing written contracts with the
suppliers of Grace. Further, if a disagreement arises over any issue and the firm does not have a
legal contract in place, it will not be able to defend its position as easily as it would have been had
a contract been present and would consequently lose out on any rights it may have had to seek
damages. Above all, contracts help to ensure that a certain standard of quality is met and that orders
meet the firm’s expectations in terms of accuracy and delivery. When suppliers are pleased with
the company, they will do almost anything to keep the company as a customer. This can mean
having quick turnaround times for supplies, fulfilling orders even when the supplier is
experiencing high demand, and replacing items that did not meet expectations. Turnaround times
can be improved by offering the supplier a “tiered bonus if they complete your order on time or
ahead of schedule” (MCL, 2017). Additionally, if Grace has proven itself loyal and meets its
monetary obligations, the supplier may be able to provide “additional financing once it hits growth
mode - or if it runs into a cash crunch” (Reiss, 2010). For instance, expanding into more territories,
hiring additional employees, or receiving multiple large contracts would classify as growth mode.
Moreover, contracts provide a steady stream of income. Without the written arrangements, the
suppliers can at any time stop servicing this firm or switch their loyalty to another company that
will pay them more or offer better perks. Undoubtedly, as Vredenburg states, “the benefits of a
detailed, unambiguous and well-written contract are immense…and it should be a best business
practice to enter into written agreements with parties you do business with including customers,
suppliers, and contractors” (Vredenburg, 2015). Thus, it is easy to see that contractual agreements
bind both parties together and enhance the business relationship for both sides.
Grace Plate Manufacturing Contract

Grace Plates are a trademarked product of the business. As discussed in the internal
analysis, the manufacturing of these plates is outsourced to a third party who then ships them to
Grace or its customers when orders are placed. Currently, there are no formal contracts or terms
for the manufacturing of these plates and products (Personal Interview, November 7, 2018). While
these plates are trademarked, they are not unique in design as other suppliers also provide similar
plate options. It is crucial that Grace develop and implement a formal written contract with the
manufacturer guaranteeing set terms and agreements regarding production of Grace Plates. It is
suggested that co-owner Culver make initial contact regarding the negotiation of formal terms.
Grace needs to solidify a manufacturing contract that covers materials, pricing, quality control,
and intellectual property (INTRAN, 2017). Language in the materials portion of the contract
should dictate the exact raw materials required to manufacture the Grace Plates and additional
parts such as the Grace Plate Screws. This is important for quality purposes because durable
prostheses are contingent upon the materials used in production. The pricing, as well as any
discounts for volume orders, should also be specified within the contract. While a pricing sheet
currently exists, only the co-owner Culver is privy to these current prices. These prices are subject
to change without a contract holding the third-party manufacturer to a legally binding agreement
(Personal Interview, November 7, 2018). Quality control standards need to be outlined for the
third-party manufacturer and include quality control procedures, product and packaging
specifications, and warranties against product defects (INTRAN, 2017). The product and
packaging specifications should identify the use of Grace branded shipping materials, which
matches those already used by the business when shipping prosthetic orders. The product
warranties in the contract will help insulate Grace from incurring additional product costs of
replacing a defective plate in a prosthetic. Finally, there needs to be a clause surrounding the
protection of intellectual property as the plates are trademarked. The third-party manufacturer
should adhere to all US intellectual property laws. They should also agree to not use nor distribute
the Grace Plate trademark to anyone outside of those signed to the contract. The inclusion of the
above components in a formal written agreement will protect Grace from costly errors and ensure
that the company maintains a good relationship with the third-party manufacturer (INTRAN,
2017).
Non-Compete Agreements for Employees

Requiring employees to sign a non-compete agreement is crucial for any business, let alone
a small business (Heller, 2012). By formulating this agreement, the owners can protect themselves
from various issues such as protection and maintenance of client relationships, securing the firm’s
stake in personal training, safeguarding intellectual property, and preventing the competition from
poaching employees. For starters, small businesses have limited clientele in comparison to larger
companies, thus retention is important to the firm’s continued success. If for any reason an
employee parts with the company, he or she may have valuable personal customer information
that he or she may transmit to their new employer or use for unethical purposes. Thus, NDAs and
non-compete agreements “help protect client information” (Zhang, 2018). Moreover, it is said that
“installing customer confidence is important to nearly any business…and that non-competes can
help protect restricted client data” (Zhang, 2018). Therefore, by way of this agreement, customers
are reassured that their private information is guarded. Also, because Grace only has 12 employees,
the preservation of strong customer-employee relationships becomes diminished if the employee
chooses to walk away. The reasoning behind this is that when consumers patronize a small family
owned business they become attached to the familiar faces and want to continue working with
those specific people. Thus, if an employee leaves it will in turn lead to a lack of trust and a drop-
in customer loyalty, and often times the client may do business with the employee at their new
establishment (Greco, 2012). In addition, it is in the best interest of Grace to protect its investment
in employee training and development. For instance, the time and money spent on the ABC
certification of that particular employee would go to waste if the employee decided to leave. The
employee would now have a wider skill set and become more marketable in the eyes of the
competition. Additionally, all the downtime spent on training the new employees, when the
trainers could have been working, would be for nothing. Currently, Grace engages in a 3-month
cross-training rotation that demands that all new employees learn about each step in the fabrication
process. They must also complete the ABC certification within a few months of employment
(Personal Interview, September 7, 2018). By implementing non-compete agreements, Grace can
fully leverage its investment in ABC certifications for employees. Although Grace does not have
any current intellectual property other than its trademarked Grace Plates, it would still be wise to
get employees to sign an NDA and a non-compete contract considering that in the future it might
prevent trade secrets from being released to the competitors. This will allow Grace to maintain any
competitive advantage that it may develop down the road. Lastly, the agreement will impose
restrictive standards that the departing employee must adhere to. In other words, the non-compete
will make it difficult for the employee to find another employer in this industry that operates in
the designated vicinity. For instance, the agreement might stipulate terms such as: an employee
may not directly or indirectly work for a competitor within a 100-mile radius of the previous firms’
establishment during a time span of two years (Greco, 2012). Also, “companies can use non-
compete agreements to limit the type of services offered by former employees who have specific
knowledge about the company’s specialized business services” (Vitez, 2018).
For all the contracts previously mentioned, Grace will also require a contract attorney’s
services. This attorney will be able to draft legally binding documents specifically outlining non-
compete agreements, supplier contracts, and partnership agreements. Each contract will provide
different verbiage and specifications tailored to the respective agreement. The owners, Tony
Culver or Ed Grace, will need to contact a contract attorney to get the process started. From there,
the time will vary depending on how long it takes to seek out a partner and to conduct negotiations.
The resources that will need to be allocated to implement these changes will be the attorney fees,
the owner’s dedicated time, and costs associated with obtaining a partnership. Typically, “the cost
to have an attorney draft a partnership agreement can vary between $500 and $2,000 depending
on the complexity of the partnership arrangement and the experience and location of the attorney”
(Spadaccini, 2005). Additionally, for non-compete agreements the owners will need the
employee’s consent and willingness for them to sign the newly drafted document. When dealing
with suppliers, it is necessary to conduct research to get to the supplier’s background, such as terms
and conditions, payment options, shipping charges, and variety of materials (Department of
Industry, 2018). Once understood, these details should be included in a formal contract.
Furthermore, in terms of obtaining a contract with the VA, the owners will need to follow the
guidelines in Appendix A and submit the proper paperwork to receive a formal decision. If deemed
acceptable by the VA, then a lawyer can intervene and provide a formal agreement between the
two parties. Finally, the owners will need to make an appointment to speak directly with a
representative from MacDill to seek out partnership opportunities.
Human Resource Utilization

As mentioned in the internal analysis section of this report, a Human Resource (HR)
department is a valuable resource that can enhance many activities throughout a company’s value
chain as well as protect the company from legal risks associated with labor laws. As Grace is a
small company with limited resources, establishing an entire HR department is not likely to be
worth the investment. However, Grace can employ the concept of an “HR department of one,”
which simply entails having a single employee certified in HR on staff that takes care of all the
HR related duties for a small company. This approach, while not ideal for growing small
companies in the long-term, is a viable alternative for companies with limited resources (Nagele-
Piazza, 2018). Furthermore, this approach does not need to involve the expense of hiring a new
employee. This recommendation takes a conservative approach that involves fully utilizing the
resources that Grace already has at its disposal. In other words, it is recommended that one of
Grace’s existing employees attend an HR certification program to learn all the essentials of HR
management. While any Grace employee is technically eligible to become HR certified, it is
recommended that someone with an administrative role is selected. Additionally, it would be
beneficial if employees would voluntarily take on the role, as it does require the employee to be
committed to thoroughly and successfully completing the HR certification program. To incentivize
employees to volunteer for the program, attaching a one-time $2,000 end-of-year bonus to the
position is advisable. It would also be beneficial for management at Grace to clarify that the HR
training is an opportunity for an employee to gain a valuable skillset paid for by the company.
Detailing what the program entails beforehand and posting a job description listing the post-
certification responsibilities is advised. The responsibilities would include: making sure that Grace
is in compliance with all relevant labor laws, advising management on hiring and firing decisions,
designing and implementing a performance appraisal system, and overseeing employee training.
It is key that management at Grace interviews employees that are interested in the position and
select the employee demonstrating the highest level of enthusiasm and preparation for taking on
the role.
In many cases, an HR certification program does not require a previous college degree. In
fact, all that is required in many instances is a high school degree (Corporate Training and
Professional Development, 2018). As such, HR training can begin immediately for the selected
employee. An example of such a certification program is the Human Resource Management
Certificate at the University of South Florida. This program consists of 10 individual courses that
can be taken in any order that is convenient. Certificate holders will be educated within valuable
areas of HR, ranging from compensation to Equal Employment Opportunity law (Corporate
Training and Professional Development, 2018). The certificate also offers education within talent
acquisition, which is the practice of attracting and retaining the best employees that the market has
to offer. Furthermore, the certificate program includes courses on maximizing the potential of a
company’s compensation system to best incentivize current employees to be more productive and
add as much value to the company as they are able (Corporate Training and Professional
Development, 2018). Among the most important skills that the certificate provides is learning how
to plan and actualize an effective performance appraisal system. A performance appraisal is a one-
on-one meeting between the employee and management that gives critical feedback on the
employee’s performance in the workplace. Conducting performance appraisals can improve
employee performance, which will in turn improve the effectiveness of the firm (Performance
Management, n.d.).
Each class takes roughly three weeks to complete and are priced at $425 per course. In
total, this program would take an estimated seven to eight months to complete at a combined cost
of $4,250. Additionally, the selected employee would need to have a clause added to their non-
compete agreement specifying that the employee will have to stay with the company for a
minimum of two years upon completion of the HR training. This needs to be implemented in order
for Grace to take full advantage of the employee’s newly acquired skills. Arguably, this is a
reasonable investment for Grace, as hiring an HR employee with a bachelor’s degree would
amount to a salary expense of $65,000 a year (Human Resources Salaries, 2018).
It is also recommended that Grace takes steps to develop its internal leadership abilities.
As Grace has seen a 94.09% drop in income from $626,466 in 2013 to $37,047 in 2017, it finds
itself in very dire times indeed. In dire times, solid leadership is essential. In order to become a
stronger leader, leadership development is needed. The University of South Florida also offers a
course in leadership development that can help the leadership at Grace to learn how to best lead
their employees through trying times. More specifically, the program helps leaders to enhance
their project management skills, build high-performance teams, and hone their negotiation skills
(Professional Development, 2018). The program is focused on leadership development instead of
leadership training. Leadership training involves an approach focused on operational details that
are found in the day-to-day activities of a business. Leadership development focuses on pro-active
and forward-looking skills, such as setting bigger-picture guiding goals that serve to inspire leaders
and employees alike (Hawkins, 2016).
The program at USF takes two months to complete and is priced at $425 per session at a
total of six courses needed for completion of the program. This results in a total cost of $2,550 per
participant. It is recommended that all employees in a leadership position at Grace complete the
program so that management will be working with the same set of knowledge and skills.
As was brought up in the value chain analysis of this report, Grace has a need for an
employee that is devoted to customer service. The primary duties of this employee would be
responding to customers that contact Grace via phone or email. The importance of having a single
employee devoted to dealing with incoming queries from customers derives from specialization,
namely having employees devoted to specific tasks so that they can focus on completing those
tasks more efficiently. An employee that is familiar with the products offered by Grace, as well as
the time needed to produce each product, should be assigned to this role. This knowledge would
make the employee more likely to be able to answer the questions of customers without having to
consult others, leading to responses being timelier and more accurate. However, if a customer is
asking for a complex refund or has an issue associated with product warranties, this employee
would need to elevate the inquiry to involve Grace’s sales manager who has the authority to deal
with these types of issues.
Financial Performance Strategy

As discussed in the internal analysis, Grace’s current financial situation is not sustainable.
In order to improve its financial outlook, Grace needs to focus on reversing the downward trend
in revenue and develop stricter cash flow management. If revenue increases, this will improve a
lot of the ratios that were discussed in the internal analysis. Specifically, ROA, asset turnover, debt
to assets, debt to equity, capitalization ratio, and net profit margin. Additionally, the company
should not take on any more debt in its current situation. Grace can improve its capitalization ratio,
debt to assets, and debt to equity, simply by reducing debt. Further, its financial performance can
be improved through the implementation of stricter cash flow management within the business.
The following sections detail how Grace can increase revenues and maintain healthy cashflows.
Increasing Revenues
Grace has experienced a decrease in sales over the last five years, which has been internally
attributed to the ending of the war in Iraq (Personal Interview, October 8, 2018). During the Iraq
war Grace was manufacturing a lot of Ideo braces for veterans at the Walter Reed Medical Center,
which contributed to higher sales in those years (Personal Interview, October 8, 2018). Now that
the war is ramping down Grace is no longer making as many Ideo braces for veterans, which has
caused a decline in sales. Grace is currently only serving existing patients and gaining very few
new patients (Personal Interview, October 8, 2018). Through establishing new patient contracts
with providers of prosthetics, Grace may be able to reverse this trend. The specific manner in
which Grace can go about obtaining new contracts has been detailed earlier in this report.
Grace is in need of taking additional steps to address the downward trend observed in
company revenues. The following section outlines the sales strategy that Grace needs to implement
to increase sales, thereby increasing total revenue. There are four steps that a company needs to
take when creating a plan to increase revenue (Keenan, 2014).
The first step entails constructing a comprehensive sales strategy for the company (Keenan,
2014). Grace does not currently have a distinct sales strategy. The present sales efforts include the
use of an independent sales representative who markets and sells Grace Plates throughout 20
different states on the east coast of the US. The advantage of utilizing this representative is that
Grace receives additional product exposure throughout other states outside of Florida. The
disadvantage is that the representative is not solely marketing and selling Grace Plates, but also
divides his or her efforts to selling additional products from other manufacturers as well (Personal
Interview, September 7, 2018). Tony Culver, Grace’s co-owner and sales manager, is considered
the focus of Grace’s current selling approach. Culver attends trade shows and conferences on
behalf of the company to promote and sell Grace Plates as well as Grace’s central fabrication
products and services (Personal Interview, September 7, 2018). One of the advantages of having
Culver involved with sales is that the company’s culture of a family-owned business is presented
directly to potential consumers. Additionally, Culver has a working knowledge of each aspect of
the fabrication process, which is important to understand when explaining to potential customers
the benefits of utilizing Grace over its competitors. The disadvantage of utilizing Culver in this
manner is that he is also the Vice President of Grace. This means that his time and talents are being
split between the two responsibilities. For this reason, Grace needs to implement specialization
into its sales strategy by devoting Culver to the sales manager position full-time. This will allow
Culver to focus his talents on acquiring customers and selling Grace’s products and services.
Culver’s responsibilities as a full-time sales manager will include negotiating prices and other sales
terms as well as preparing sales contracts (ONET, 2018). Culver will be tasked with working
directly with the VA, MacDill Air Force Base, and other clinics to establish the contracts
mentioned above. He will be responsible for maintaining these agreements and keeping them up
to date. Additionally, he will be responsible for maintaining records of customer accounts,
gathering customer or product information to determine customer needs, and contacting current or
potential customers to promote products or services (ONET, 2018). A spreadsheet of all current
and potential customers should be compiled and maintained. This spreadsheet needs to include
information such as customer name, type (hospital/ clinic/ private practice/ government facility),
purchase order details, and sales totals. Collecting this type of information and understanding the
products and services ordered by these customers will assist Grace in determining customer needs,
which will in turn lead to a higher level of service and an increase in sales. With his expert
knowledge of sales and the business, Culver will oversee answering customer questions about
goods or services and explaining technical product or service information to customers (ONET,
2018). As previously mentioned, Culver currently attends trade shows and conferences on behalf
of Grace. It is recommended that he continue to attend these types of events where he will be
expected to sell products or services, process sales, estimate costs or terms of sales, and field
potential questions about the products and services offered by Grace (ONET, 2018). This strategy
aims to capitalize on a novel resource that Grace already possesses, namely Tony Culver, and
exploit his talents and abilities to increase the sales of the company.
The second step that needs to be taken in the plan to increase revenue is ensuring that the
company has the structure to support its strategy (Keenan, 2014). Grace needs to look at its
structure and ensure it is set up to achieve the goals outlined in the strategy. If the company’s
structure is not set up in a manner that can support the strategy, then the company needs to either
reevaluate the strategy or fix its structure (Keenan, 2014). While specialization will ensure that
Grace has a dedicated sales manager, it is also recognized that this strategy leaves a vacancy in the
Vice President position of the company. This can be solved by moving another one of the current
employees into this role. When hiring it is recommended to consider an employee with industry
knowledge, a background in business, and one who is able to handle customer returns and financial
decisions for the company. A current employee that fits these characteristics is Melissa Culver.
Additionally, Tony Culver’s previous responsibility of hiring and firing Grace employees would
shift to the HR certified employee discussed above, thereby allowing for further specialization.
Once the position of Vice President is filled and transitioned, as well as the hiring and firing
decisions shifted to the new HR employee, Tony Culver needs to focus all efforts on being the
sales manager for Grace in order to benefit from specialization.
The third step in the plan to increase revenue is making sure the company has the right
people. “People are the most important aspect of driving revenue and often the most forgotten”
(Keenan, 2014). It is imperative that the company has the right people in the right roles, as well as
making sure everyone is properly trained and prepared for those roles (Keenan, 2014). As
mentioned above, hiring and firing decisions will move to the employee trained and certified in
HR processes and procedures. This person will need to work closely with management to develop
application and interview techniques that aid in recruiting the right people for the business.
Behavioral based interview questions are one way that Grace can ensure it is recruiting employees
that align with the values of the organization. These questions focus on how a person has handled
various work situations in the past. Their response will reveal their skills, abilities, and personality,
which assist in determining if they are indeed the right person for the job and the company culture
(Doyle, 2018).
The fourth and final step in creating a plan to increase revenue is process improvement
(Keenan, 2014). Grace needs to analyze the current processes and whether they are successful.
Having bad or inefficient processes can cost the company a lot of wasted time and money (Keenan,
2014). This concept is evaluated in the discussion above regarding the suggested efficiency
strategy. The products that are low contribution margin items will be eliminated and no longer
marketed or sold by the sales manager. Additionally, any promotions or recommendations given
by Tony Culver will focus on high contribution margin products, which will aid in increasing sales.
Installing Tony Culver as the full-time sales manager will create a streamlined sales process with
one touch point. This structure simplifies the value chain and creates efficiency within the sales
process.
Keenan outlines four steps that a company needs to take when creating a plan to increase
revenue. Through implementing the abovementioned four steps guided by Keenan’s principles,
Grace will be able to increase sales and revenue. Establishing new patient contracts with providers
of prosthetics will likewise help further this goal.
Cash Flow Management

Grace also needs to focus on having stricter cash flow management. A certified public
accountant should have the responsibility of implementing more rigid cash flow management that
disallows taking on more debt. Grace currently has an accountant on staff who manages the
invoices and payables for the company. The person in this position must implement the following
steps to improve Grace’s cash flow management.
The first step is to maximize each dollar in the company’s cash flow, which can be
accomplished by paying bills on their due date and not before the due date (Bizfilings, 2018). It
was learned that when it came to paying bills Grace pays the bills as soon as they are received
(Personal Interview, October 8, 2018). If the company paid the bills right before or on the due date,
this would help with keeping cash in their accounts longer. A key element of improving the
company’s cash flows is to delay cash outflows as long as possible (Bizfilings, 2018). To
accomplish this, while still ensuring bills are being paid on time, it is important to be organized.
In order to maintain proper organization of bills, the company must sort through the mail
as it comes in and place all the bills in the same location (McCormick, 2018). It is advised to set
aside time on a weekly basis to review the bills, organize them by due dates, and schedule the bill
payments (McCormick, 2018). A best practice for ensuring that the bills are paid on time, while
delaying cash outflows, is to set up payments online and schedule them for each respective due
date (McCormick, 2018). Concur conducted a study on small business budget planning and found
that small businesses typically received duplicate invoices, with the average falling around six
duplicates (White, 2017). If a company is not organized, it will over pay its bills by paying
duplicate invoices (White, 2017). Therefore, improved organization of the process by which the
company pays its bills is key to managing cash flow.
Another step in maintaining strict cash flow is to ensure the company has set a realistic
budget and sticks to the budget (Krause, 2018). Management needs to work with Grace’s in-house
accountant to develop an annual, quarterly, and monthly budget. The budget should include an
estimate of the cost of direct materials, direct labor, and manufacturing overhead for the number
of units predicted to be produced (MyAccountingCourse, 2018). Once set, the budget needs to be
reviewed monthly with all Grace employees including office personnel and technicians. It is
important for a company to share with its employees that sticking to the budget and cutting
expenses is a priority for the company (White, 2017). If the company and team are kept in the dark
about the company’s financial situation, it is hard to prevent mismanagement of funds and
unnecessary expenses (White, 2017).
To maintain day-to-day operations, Grace must improve their financial situation. The most
important aspect of this recommendation is to increase sales. The second part of this
recommendation is to create a stricter cash flow management. Once Grace improves the financial
situation, the company will be in a better position to attract investors or sell.
Medium-term Strategy
The short-term strategy mentioned above encompasses all the ways in which Grace can
mitigate its immediate issues regarding the financial status of the company, creating efficiency,
resolving resource allocation, and obtaining necessary contracts. In conjunction with these
recommendations, Grace should also consider the implementation of the following as part of a
medium-term strategy: raising capital for further growth or selling the business. Each of these
medium-term decisions is detailed below as alternative paths for the future of Grace. If possible,
raising capital would allow the company to persist in the medium-term and generate enough
funding to assist in resolving short- and medium-term debt issues. Alternatively, if Grace proceeds
to implement the previous short-term strategies, this would allow Grace and its owners to consider
selling the business at maximum value. Selling is considered a medium-term strategy as the
company would still need to undergo the above financial restructuring and secure certain contracts
to be marketable to potential buyers and receive a decent valuation of the business. Ney Grant in
his book about selling mid-size businesses states that, “a stable financial performance is the most
basic component and the foundation of a valuation” (2013).
In the medium-term, the primary target for the owners should be to raise capital to change
the debt to equity structure of the business. Should Grace fail to successfully implement the
turnaround strategy and reverse the negative trend in revenue, then an alternative consideration
would be to sell the company in the state it is in. Due to the significance of the decision-making
involved in raising capital or selling the business co-owners Ed Grace and Tony Culver need to be
the ones to collaborate and carry out the actions detailed below.
Raising Capital
From the internal analysis it was concluded that Grace has been taking on too much debt.
Debt is not inherently a bad sign for a company, but with too much of it the business may have a
hard time meeting its outstanding obligations. Due to this fact, it is suggested that Grace turn to an
alternative method of financing, which is raising capital. As was demonstrated in the financial
analysis of the company, Grace is considered to be underperforming. There are two ways in which
underperforming companies can raise capital. First, the company needs to take an internal look to
evaluate where costs can be cut and money can be saved. Such cost-cutting measures, like the ones
mentioned above in the efficiency strategy, can increase the available capital of the business. After
internal savings are determined, Grace can look to external sources of capital, which includes
garnering investor support. Before Grace can begin raising capital via internal or external methods
it must first become “capital ready” (Anastasia, 2018).
The most important step in raising capital is called becoming “capital ready” (Anastasia,
2018). To become capital ready, the first step is to write a one- to three-year business plan that
outlines the business goals of the company (Grant, 2018). For Grace, business goals include
developing efficiency, improving the financial status of the company, obtaining crucial contracts,
and effectively utilizing human capital. Next, the business goals must be quantified to determine
how much capital needs to be raised. The amount of capital needed is an important figure because
Grace should know exactly how much it needs to raise to maintain operations and pay off its
outstanding debt. To calculate the capital needed to implement a turnaround, a projection of profits
and expenses needs to be completed for the length of time identified in the business plan. The
projection should identify the profits made from sale of Grace Plates and prosthetic order invoices
as well as expenses incurred for labor, materials, and manufacturing overhead. Additionally, any
savings or costs incurred by the goals defined in the business plan should be included in the
estimate of capital needed. The final estimate of capital also needs to consider the savings from
the efficiency strategy. Costs incurred from hiring or training personnel should also be added. This
includes costs incurred from ABC certifying technicians and certifying an employee in HR policies
and procedures. Further, it is important to assess the legal fees associated with hiring attorneys to
draft and negotiate contracts. Once the business plan is finalized, and the amount of capital
necessary to operate and pay off the outstanding debt is determined, Grace will then be capital
ready.
Raising capital for Grace begins with looking at internal factors that could equate to
savings. It is suggested that Grace considers debt restructuring in which lower interest rates are
negotiated on outstanding obligations (Anastasia, 2018). Grace would need to discuss the terms of
the loan agreements with its lenders to negotiate a lower rate. Selling or divesting idle assets is
another way to raise capital from inside the business (Anastasia, 2018). As mentioned above in the
efficiency strategy, getting rid of low contribution margin offerings is one such way of divesting
certain assets. Additionally, Grace should inventory its warehouse to determine if there are idle
workstations or machinery. If there are workstations that are not being used in production, then
materials from these stations should be scrapped or sold. Further, if there is idle machinery or
equipment, meaning that there is more than what is needed for the current and projected volumes
of production, then these should be considered for sale as well. Additionally, Grace previously
purchased another plot of land next to its current fabrication warehouse in hopes of expanding and
opening a patient clinic (Personal Interview, November 7, 2018). The idea was to diversify the
business so that Grace would be involved in every step of the prosthetic lifecycle from patient
consult to final fitting. This land was purchased in 2012 for $30,000 in cash (Personal Interview,
November 7, 2018). With the current financial state of Grace, it does not seem viable that the
company will have the ability to expand in the next five years. Thus, Grace should sell the property
to raise additional capital. Grace can use the cash from selling the land to pay down some debt,
which will help its overall financial situation.
After all internal efforts to raise capital have been expended, and if the capital goal has not
yet been reached, it is suggested that Grace explore external sources of capital in the form of equity.
Identification of the aspects of the business that would be appealing to investors is most important
(Anastasia, 2018). While there are people who make a living off of actively seeking
underperforming companies and investing in them, it is still important to have a redeeming quality
that these investors can see as having turnaround potential (Anastasia, 2018). It is suggested that
Grace solidify its blue ocean strategy and develop a pitch to investors focusing on why the business
deserves their investment. The pitch needs to begin with the purpose of the company, which is to
provide “quality prosthetic and orthotic central fabrication at fair prices” (Grace Prosthetics
Fabrication Inc., 2018). Then it should detail the current status and operational procedures of the
company including the components of financial distress. Disclosing the financial issues is
important because transparency is key in developing successful relationships and will aid in
developing a good investor relationship. The above action plans from the short-term strategy need
to be shown to investors to demonstrate that Grace is actively seeking to improve the company
and promote its growth. As part of the pitch, Grace should be ready to explain exactly how the
money will be used and how much capital it is looking to raise. It is crucial to not get too greedy
and only ask for what is needed (Anastasia, 2018). The pitch should end where it began by restating
the purpose of the company to remind investors what the business is all about. Then it will be up
to the investors as to whether to take on the risk associated with an underperforming company such
as Grace.
Investors who seek out underperforming companies generally explore two avenues of
investment: equity or buyout (Anastasia, 2018). Equity investing involves taking part ownership
in the company. For these specific types of investors, this also includes sending in a turnaround
professional who would perform their own analysis and provide further recommendations for
improving the business (Anastasia, 2018). Then this person would monitor the implementation of
all strategies and action plans to ensure that Grace was improving efficiency, reaching financial
stability, maintaining legal agreements, and effectively utilizing its human capital. The second
form of investment is a complete buyout in which the investor takes full ownership of the business
and sends in their own personnel to turn the business around (Anastasia, 2018). This would mean
that the owners would sell the company and relinquish all control. Equity investments are ideal for
Grace as the owners would still have majority share and control of the business while also
obtaining the necessary funding to make the business improvements and continue operations.
However, the owners would have to abide by an agreement between themselves and the investors
to allow the turnaround professional to implement the necessary strategies to improve the business.
A complete buyout would ensure that a dedicated team would be working to rebuild the business.
However, this would mean that Grace’s owners would no longer have any control over the
business. This includes decisions made regarding suppliers, vendors, and the hiring or firing of
current or future employees.
It is highly suggested that Grace attempt to raise capital through the various internal savings
strategies and through equity financing before considering a buyout. This is because raising capital
and reinvesting it into the business will allow Grace to improve and grow over the long-term.
However, it is advised that if Grace’s owners cannot raise enough capital via the methods
mentioned above, then they likely need to sell the business.
Selling the Business

Selling a business can be a lengthy and stressful process for business owners. In the case
of Grace, which is a family owned company, there are many emotional ties. Selling should not be
seen as the end of the business, but as a way to ensure the continuation of a great idea. If the owners
care for the future of the business but were not able to obtain enough capital to fund the business
to the next level after implementing a turnaround, then selling needs to be the final strategy
(Samuelson, 2017). Individuals who are interested in buying manufacturing companies are first-
time business owners, entrepreneurs, competitors, and private equity firms (Reymond, 2018). The
following are a few recommendations for planning and preparing the business, and the owners, for
selling.
1. Square away all loose ends such as any compliance or outstanding HR legal threats that
may be lingering in the business. “A risky business is a cheap business” (Grant, 2013).
These issues can cause the business to be valued at a lower price.

2. Verify that all the financial statements have been cleaned up and that the books are in order.
This includes any debt restructuring or payment of outstanding debt. This can be
accomplished with an accounting checkup from either the internal accounting personnel or
a contracted third party (Grant, 2013).
3. Utilize the contracts mentioned above to ensure diversification of vendors and customers
so that no one person or entity holds too much power, thereby reducing the threat of buyer
or consumer power.
4. Make sure that all business improvements are implemented before selling. Stating to a
buyer that the business is worth X because if they just implement Y then the business will
grow to Z is not adequate (Grant, 2013). Grace must improve the business to be worth the
value it needs to net. These improvements include following all the previously mentioned
short-term strategies such as securing vendor and customer contracts and hiring or training
personnel to handle accounting and HR.
5. Finally, get a financial planner. This person can assist in ensuring that Grace is making the
best deal possible and getting the best possible value for the business. This person will also
be able to calculate exactly what Grace needs to net for the deal to be considered successful
(Grant, 2013).
The above-mentioned recommendations for preparing the business and the owners for selling are
just the beginning of the process. It is suggested that the owners read Ney Grant’s How to sell your
mid-size business: Maximize price with marketing and bidding to gain a full understanding of each
step of the selling process through completion (2013). This will ensure that the owners have a clear
idea of the necessary procedures that will aid in their selling journey. Selling the business would
not be the end of Grace, but a chance for new beginnings.

REFERENCES
3 Important Factors to Consider When Choosing a Prosthetics Supplier - National Prosthetics &
Orthotics - Cold Spring. (2017, July 20). Retrieved from
https://nearsay.com/c/316369/114319/3-important-factors-to-consider-when-choosing-a-
prosthetics-supplier.
American Board for Certification in Orthotics, Prosthetics & Pedorthics. (2018). O&P
Technician. Retrieved from https://www.abcop.org/individual-certification/Pages/oandp-
technician.aspx
American Board for Certification in Orthotics, Prosthetics & Pedorthics. (2018). General Info.
Retrieved from https://www.abcop.org/facility-accreditation/cfab/Pages/general.aspx
Amputee Coalition of America. Prosthetic coverage: Saving money and saving lives. Retrieved
from http://www.hangerclinic.com/new-patient/Documents/prosthetic-coverage-saving-
lives.pdf.
Anastasia. (2018, February 06). Raising Capital for an Under-Performing Business. Retrieved
from https://www.cleverism.com/raising-capital-underperforming-business/
Anderson, A. R. (2013, August 13). Great Employees Are Not Replaceable. Retrieved from
https://www.forbes.com/sites/amyanderson/2013/02/13/great-employees-are-not-
replaceable/#7e265b935403
Angrish A. The role of 3D printing in the design and manufacture of prosthetic devices.
Retrieved from https://www.meddeviceonline.com/doc/the-role-of-d-printing-in-the-
design-and-manufacture-of-prosthetic-devices-0001.
Anikeeva, P., & Koppes, R. A. (2015). Restoring the sense of touch. Science, 350(6258), 274-
275.
Bailey, A. (2016, November 09). What Are the Different Types of Prosthetics? Retrieved from
https://livehealthy.chron.com/different-types-prosthetics-1244.html.
Belicove, M. E. (2013, September 27). Understanding Goals, Strategy, Objectives And Tactics
In The Age Of Social. Retrieved from
https://www.forbes.com/sites/mikalbelicove/2013/09/27/understanding-goals-strategies-
objectives-and-tactics-in-the-age-of-social/
Birrell, I. (2017, February 19). 3D-printed prosthetic limbs: The next revolution in medicine.
Retrieved from https://www.theguardian.com/technology/2017/feb/19/3d-printed-
prosthetic-limbs-revolution-in-medicine
Bizfilings. Managing cash outflows to maximize your financial position. 2018. Retrieved from:
https://www.bizfilings.com/toolkit/research-topics/finance/managing-cash-
flow/managing-cash-outflows-to-maximize-your-financial-position.
Bradford, T and McGimpsey, G. (n.d.) Limb Prosthetics Services and Devices. Critical Unmet
Need: Market Analysis. Retrieved from
https://www.nist.gov/sites/default/files/documents/2017/04/28/239_limb_prosthetics_ser
vices_devices.pdf
Center for Devices and Radiological Health. (n.d.). Implants and Prosthetics. Retrieved from
https://www.fda.gov/medicaldevices/productsandmedicalprocedures/implantsandprosthet
ics/.
Clarke TC, Norris T, Schiller JS. Early release of selected estimates based on data from 2016
National Health Interview Survey. National Center for Health Statistics. May 2017.
Retrieved from: http://www.cdc.gov/nchs/nhis.htm.
Corporate Training and Professional Education. (2018, July 2). University of South Florida.
Retrieved from https://www.usf.edu/continuing-education/programs/professional-
development/organization-development-leadership.aspx
Cowan, R. E., Fregly, B. J., Boninger, M. L., Chan, L., Rodgers, M. M., & Reinkensmeyer, D. J.
(2012). Recent trends in assistive technology for mobility. Journal of neuroengineering
and rehabilitation, 9(1), 20.
CP Clinics. Copeland Prosthetics. http://www.copelandprosthetics.com/
Department of Industry (2018, August 15). Taking on a new supplier. Retrieved from
https://www.business.gov.au/products-and-services/suppliers/taking-on-a-new-supplier
Doyle, A. (2018, October 31). Sample Behavioral Job Interview Questions and Tips for
Answering. Retrieved from https://www.thebalancecareers.com/behavioral-job-interview-
questions-2059620
Fairley, Miki (2018, August). 3D Printing Gains Momentum in Clinical O&P. Retrieved from
https://opedge.com/Articles/ViewArticle/2018-08-01/3d-printing-gains-momentum-in-
clinical-op
Fang, M. (2018). Trends in the Prevalence of Diabetes Among US Adults: 1999–2016. American
journal of preventive medicine, 55(4), 497-505.
FDA compliance & enforcement. Retrieved from
https://www.fda.gov/Food/ComplianceEnforcement/default.htm. Updated 2018.
Future Engineers Get Hands-On Experience With Prosthetics. (2018, January 22). Retrieved
from https://med.ucf.edu/news/future-engineers-get-hands-on-experience-with-on-
prosthetics/.
GPFINC. (2018). Grace Prosthetic Fabrication. Retrieved from https://www.gpfinc.com/.
Grace Prosthetics Fabrication Inc. (2018). Grace Prosthetic Fabrication INC. | Fabrication
Process | Tampa, FL. Retrieved from https://www.gpfinc.com/fabrication-process
Grandview Research. Personal Mobility Devices Market Size, Share & Trends Analysis Report
By Product. 2017. Retrieved from https://www.grandviewresearch.com/industry-
analysis/personal-mobility-devices-market.
Grant, N. (2013). How to sell your mid-size business: Maximize price with marketing and
bidding. Kentucky: Ney Grant.
Greco, M. (2012, May 31). Fisher Phillips: Fisher Phillips Eight Reasons Small Businesses
Should Use Non-Compete Agreements. Retrieved from

https://www.fisherphillips.com/Non-Compete-and-Trade-Secrets/Eight-Reasons-Small-
Businesses-Should-Use-Non-Compete-Agreements
Hanger Clinic. (2018). Hanger Clinic, Empowering Human Potential. Retrieved from
http://www.hangerclinic.com/.
Hawkins, John. (2016, August 9). Making Your Business More Successful with a Leadership
Development Program. Forbes Media LLC. Retrieved from
https://www.forbes.com/sites/forbescoachescouncil/2016/08/09/making-your-business-
more-successful-with-a-leadership-development-program/#3272c87317bd
Heller, G. M. (2012, September 03). Non-Compete Agreements: When Do Companies Need
Them? Retrieved from https://www.industryweek.com/leadership/non-compete-
agreements-when-do-companies-need-them
Human Resources Salaries. (2018, November 15). Glassdoor, Inc. Retrieved from
https://www.glassdoor.com/Salaries/human-resources-salary-SRCH_KO0,15.htm
INTRAN. (2017, November 10). 5 Key Parts to Cover in Your Next Manufacturing Contract |
Intran Blog. Retrieved from https://www.intran.mx/key-manufacturing-contract-content/
Investopedia. (2018). Financial Analysis Key Terms. Retrieved from
https://www.investopedia.com.
Investopedia. (2018, August 03). Mom-and-Pop. Retrieved from
https://www.investopedia.com/terms/m/momandpop.asp
Jelle ten Kate, Gerwin Smit & Paul Breedveld (2017) 3D-printed upper limb prostheses: a
review, Disability and Rehabilitation: Assistive Technology, 12:3, 300-314
Kappel M. Small business strategies to increase sales. 2017. Retrieved from:
https://www.forbes.com/sites/mikekappel/2017/01/25/small-business-strategies-to-
increase-sales/#6d3f89cc5b1b.
Keenan. The four key areas for increasing sales revenue. 2014. Retrieved from:
https://www.forbes.com/sites/jimkeenan/2014/06/02/the-four-key-areas-for-increasing-
sales-revenue/#56aa36be265a.
Krause C. 10 strategies to improve cash flow. 2018. Retrieved from:
https://www.merchantmaverick.com/10-strategies-to-improve-cash-flow/.
Latsko, J. (2007, November). Hospitals Look to Exclusive Arrangements. Retrieved from
https://opedge.com/Articles/ViewArticle/2007-11_10.
Lewis M. 7 cash flow management tips for small businesses. 2018. Retrieved from:
https://www.bill.com/blog/cash-flow/7-cash-flow-management-tips-for-small-business-
owners/.
Marks, L. J., & Michael, J. W. (2001, September 29). Artificial Limbs. Retrieved from
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1121287/.
McCormick M. How do I organize and pay bills? 2018. Retrieved from:
https://smallbusiness.chron.com/organize-pay-bills-3504.html.
McGimpsey, G., & Bradford, T. C. (2008). Limb prosthetics services and devices.
Bioengineering Institute Center for Neuroprosthetics Worcester Polytechnic Institution.
MCL. (2017, July 26). 8 Ways to Reduce Supply Chain Lead Times. Retrieved from
https://www.mcl.bz/blog/ways-to-reduce-supply-chain-lead-times
Medicrea annual report. (2017). Medicrea. Retrieved from
https://investors.medicrea.com/~/media/Files/M/Medicrea-IR/financial-
information/english/2018/2017%20Annual%20report%20MEDICREA.pdf.
Mengis, N., & Viankin, A. (2018). AO Good-Clinical-Practice-Kurs 08./09.12.2017. Op-Journal,
34(01), 79-80. doi:10.1055/a-0592-1999
Most Important Things to Consider When Choosing a Prosthesis. (n.d.). Retrieved from
https://www.georgiaprosthetics.com/most-important-things-to-consider-when-choosing-
a-prosthesis/.
MyAccountingCourse.com. (2018). What is a Manufacturing Budget? - Definition | Meaning |
Example. Retrieved from https://www.myaccountingcourse.com/accounting-
dictionary/manufacturing-budget
Nagele-Piazza, Lisa. (2018, June 18). Top 5 Priorities for the HR Department of One. Society for
Human Resource Management. Retrieved from https://www.shrm.org/hr-today/news/hr-
news/conference-today/pages/2018/top-5-priorities-for-the-hr-department-of-one.aspx
Office of Procurement, U., & Acquisition. (2015, December). Office of Procurement, Preparing
To Do Business with VA. Retrieved from
https://www.va.gov/osdbu/docs/procurementReadiness_FULL.pdf
Office of Procurement, U., & Acquisition. (2015, May). Office of Procurement, Preparing To Do
Business with VA. Retrieved from
https://www.va.gov/osdbu/docs/DoingBusinessWithVA_ReferenceGuide.pdf
ONET. (2018). 41-4011.00 - Sales Representatives, Wholesale and Manufacturing, Technical and
Scientific Products. Retrieved from https://www.onetonline.org/link/summary/41-4011.00
Orthotics and Prosthetics Clinics. OP Center. Retrieved from https://www.opcenters.com/.
Össur. (2018). At Össur, Life Without Limitations is more than just a slogan; it has been a
passion for decades. Retrieved from https://www.ossur.com/corporate/
PDR. Prosthetic Design and Research. Retrieved from https://www.prostheticdr.com/.
Performance Management. (n.d.). U.S. Office of Professional Management. Retrieved from
https://www.opm.gov/policy-data-oversight/performance-management/performance-
management-cycle/monitoring/feedback-is-critical-to-improving-performance/
Personal Interview. November 7th, 2018.
Personal Interview. October 8th, 2018.
Personal Interview. September 7th, 2018.

Phillips, E. E., & Smith, J. (2016, December 13). UPS, FedEx Struggle to Keep Up With Surge
in Holiday Orders. Retrieved from https://www.wsj.com/articles/ups-fedex-struggle-to-
keep-up-with-surge-in-holiday-orders-1481630401
Professional Development. (2018, July 2). University of South Florida. Retrieved from
https://www.usf.edu/continuing-education/programs/professional-development/hr-
management-certificate.aspx
Prosthetics and Orthotics. (2018). Encyclopedia of Emerging Industries. Business Insights:
Essentials. Retrieved from https://bi-galegroup-
com.ezproxy1.hcplc.org/essentials/article/GALE%7CKMZALD521300404/440e39b6cef
b6ef9313e545a71494a0a?u=21667_hbplc.
Prosthetics and Orthotics: Industry Snapshot. Gale Business Insights: Essentials. Retrieved from
http://bi.galegroup.com.esearch.ut.edu/.
Prosthetics and Parts: Industry Profile. Standard and Poor. Retrieved from https://www-capitaliq-
com.esearch.ut.edu/.
Quigley MJ. Prosthetic Management: Overview, Methods, and Materials. Retrieved from
http://www.oandplibrary.org/alp/chap04-01.asp.
Reiss, B. (2010, April 06). Build a Good Relationship With Suppliers. Retrieved from
https://www.entrepreneur.com/article/205868
Resnik, L., Meucci, M. R., Lieberman-Klinger, S., Fantini, C., Kelty, D. L., Disla, R., & Sasson,
N. (2012). Advanced upper limb prosthetic devices: implications for upper limb
prosthetic rehabilitation. Archives of physical medicine and rehabilitation, 93(4), 710-
717.
Reymond, K. (2018, October 12). How To Sell Your Manufacturing Business For The Best Price
(in 2018). Retrieved from https://digitalexits.com/how-to-sell-your-manufacturing-
business-for-maximum-value/
Robotics prosthetics market 2018-2027 global forecasts analysis. (2018, March 28). Retrieved
from https://www.marketwatch.com/press-release/robotics-prosthetics-market-2018-
2027-global-forecasts-analysis-company-profiles-competitive-landscape-and-key-
regions-available-at-market-research-future-2018-05-28.
Samuelson, C. (2017, February 14). 8 Golden Tips For Selling Your Small and Medium Sized
Business. Retrieved from http://www.lawrencetam.net/8-golden-tips-for-selling-your-
small-and-medium-sized-business/
Second sight medical products annual report. (2016). Investors Second Sight. Retrieved from
http://investors.secondsight.com/static-files/d080d63a-7255-4787-b532-841d79f2d0cb.
Sheu, Y., Chen, L. H., & Hedegaard, H. (2016). Sports-and Recreation-related Injury Episodes in
the United States, 2011-2014. National health statistics reports, (99), 1-12.
Smith, S. (2016, June 28). Orthopaedic Prosthetics Market: Global Industry Analysis and
Opportunity Assessment, 2016-2026. Retrieved from
https://www.prnewswire.com/news-releases/orthopaedic-prosthetics-market-global-
industry-analysis-and-opportunity-assessment-2016-2026-300291508.html
Sofia, R. (2015, October 20). How Small Businesses Can Win Big Contracts. Retrieved from
https://www.forbes.com/sites/theyec/2015/09/01/how-small-businesses-can-win-big-
contracts/#5824ffa32cc4
Spadaccini, M. (2005, June 02). The Legal Ins and Outs of Forming a Partnership. Retrieved
from https://www.entrepreneur.com/article/77980
SPS Co. (2018). Locations: Distribution Centers. Retrieved from https://www.spsco.com/about-
us/locations/
SPS Co. (2018). Suppliers. Retrieved from https://www.spsco.com/suppliers
The American Orthotic and Prosthetic Association. (2016, February 25). What has Happened
with Medicare Amputee Services Since 2010? Retrieved from
http://www.aopanet.org/2016/02/what-has-happened-with-medicare-amputee-services-
since-2010/.
Tillman, J. (2013, May 02). Jury rules against Largo company in sexual harassment case.
Retrieved from https://www.tampabay.com/news/courts/civil/jury-rules-against-largo-
company-in-sexual-harassment-case/2118607
Tompson, G. How strategy works. USA. 2015:61-93.
Unknown. (2018). Maintain Certification. Retrieved from https://www.abcop.org/maintain-
certification/Pages/default.aspx
Unknown. (n.d.). Guide to Contracting. Retrieved from https://b2b.dnb.com/business-
credit/contracts/
US Equal Employment Opportunity Commission. (n.d.). Retrieved from
https://www.eeoc.gov/laws/types/harassment.cfm
Vitez, O. (2018, June 30). What is the Importance of Contracts to a Business? Retrieved from
https://smallbusiness.chron.com/importance-contracts-business-906.html
Vredenburg, A. (2015, October 13). Get it in Writing: The Importance of Written Agreements in
Business. Retrieved from https://www.fosterswift.com/communications-Written-
Business-Agreements.html
Westcoast Brace & Limb. (2016). Westcoast Brace and Limb. Retrieved from
http://www.wcbl.com/.
What Happened to Medicare Spending 2010-2014. AOPA. Retrieved from
http://www.aopanet.org/.
White J. 25 ways to improve cash flow management. 2017. Retrieved from:
https://fitsmallbusiness.com/cash-flow-management/.
Woods, R. A. (2017). Sports and Exercise. Retrieved from
https://opedge.com/Articles/ViewArticle/2007-11_10.
Young R. Orthopedic Industry Consolidation. 2011. Retrieved from
https://ryortho.com/2011/01/orthopedic-industry-consolidation-really/.
Zevala, C. (2017, January 4). Trends in Prosthetic Limb Technology. Retrieved from
http://www.rehabpub.com/2017/01/trends-prosthetic-limb-technology/.
Zhang, H. (2018). Non-Compete Facts for Employers & Employees. Retrieved from
https://www.rocketlawyer.com/form/noncompete-agreement.rl#/
Ziegler-Graham, K., MacKenzie, E. J., Ephraim, P. L., Travison, T. G., & Brookmeyer, R.
(2008). Estimating the prevalence of limb loss in the United States: 2005 to 2050.
Archives of physical medicine and rehabilitation, 89(3), 422-429.

APPENDIX A
See page (5-11) on “Procurement Ready” PDF (VA OSDBU, 2015):
“Part I: Procurement Readiness Basics Obtaining registrations is one of the first steps toward
procurement readiness for small businesses. The following registrations are required to participate
in government contracting. Small Business Registration All businesses must be registered as a
legal entity — such as a sole proprietorship, limited liability company (or LLC), or corporation
among others — with the corporation commission in the appropriate state.
• Businesses must be in compliance with local, state, and federal laws; this includes obtaining
licenses and other requirements. Size standards vary depending on the industry and the state where
the contracting opportunity is located. Businesses should be in compliance with regulatory bodies,
industry standards, and certifications, if applicable to the markets where they want to do business.
To help small businesses navigate these compliance processes, OSDBU recommends using SBA's
Business Licenses and Permits listing.
• Each entity (company) must have a corresponding taxpayer identification number (TIN) or
employer identification number (EIN). A TIN is an identification number used by the Internal
Revenue Service (IRS) in the administration of tax laws. An EIN is also known as a federal tax
identification number and is used to identify a business entity. Visit the IRS Small Business and
Self-Employed Tax Center to learn more about these numbers. System for Award Management
Registration Established small businesses wanting to do business in the federal marketplace must
register with the federally mandated System for Award Management (SAM). SAM is the official
U.S. Government system that consolidates the capabilities of the Central Contractor Registration
(CCR) system, Federal Contractor Registry (FedReg), the Online Representations and
Certifications Application (ORCA), and the Excluded Parties List System (EPLS). Small and
Veteran businesses need a Dun & Bradstreet Data Universal Numbering System (D-U-N-S)
Number to register in SAM. Similar to a Social Security number, the D-U-N-S Number is a 9-digit
number used to verify the existence of a business entity globally. Dun & Bradstreet assigns D-U-
N-S Numbers for each physical location of a business. SAM registration involves creating an
account and providing information that defines and identifies the small business concern. The
following SAM registration identifiers are required:
• Business legal name (as registered with the state corporation commission)
• Business start date (company registration date)
• Business contact information (legal name, address, and phone number)

• TIN or EIN
• D-U-N-S Number
• North American Industrial Classification System (NAICS) Codes (replaces Standard Industrial
Classification Codes, used to classify businesses to determine their eligibility to bid on certain
contracts)
• Business bank account (account number and routing number for electronic funds transfer)
• Automated Clearing House (ACH) account (GSA SmartPay for credit cards)
• Small business certifications (as categorized by SBA) 6 The following identifiers are optional:
• Product Service Codes (PSCs) or Federal Supply Codes (FSCs) are used interchangeably. Learn
more about PSCs/FSCs at http://www.fpds-ng.com or
https://www.acquisition.gov/?q=Acquisition_Systems.
• SBA Dynamic Small Business Search (DSBS) is used by the Government to search for
procurement information. Businesses can be searched by location, ownership data, federal
certifications, NAICS, and business type, among other criteria. Once small businesses complete
the SAM registration application and submit it for processing, the Defense Logistics Agency
(DLA) receives this information automatically. DLA then issues each business a Commercial and
Government Entity (CAGE) Code, a 5-character identification number used for each small
business. The code may be used for a facility clearance or pre-award survey and will be
automatically entered into the SAM account. Small businesses can update their SAM registration
at any time to include new information, such as SBA small business certification. Once
certification selection is submitted, you will receive a link to register. Important elements small
businesses should know:
• Ensure that SAM registration is fully completed and approved for public viewing.
• Ensure that performance history is up-to-date.
• Keep SAM account information updated, especially business contact information.
• Register in DSBS through SAM, only if the small business certification portion has been
completed.
Part II: Procurement Readiness Recommendations These recommendations are marketing actions
small businesses can take that may increase their probability of successfully participating in the
government marketplace. These actions include registering with federal websites and ensuring that
the company website and capabilities statement are current and inviting to procurement decision
makers (PDMs). Capability Statement A capability statement is a business resume that identifies
the business’ capabilities. This statement is the PDM’s first impression of a small or Veteran
business and allows the PDM to differentiate the business from its competition. The capability
statement is usually no more than two pages and reflects the company’s succinct and persuasive
sales pitch. Capability statements should include the following:
• Company overview
• CAGE Code (identifies SAM registration)
• Vets First Verification Program logo (if applicable)
• Contact information
• Core capabilities
• NAICS Codes and list of product/service offerings
• Past performance project descriptions
• Certifications/credentials
• Current and previous business partners/clients
• Company web address
• Socioeconomic information
• Testimonials (optional)
• National Institute of Governmental Purchasing (NIGP) Codes (used for state and local
government contracting opportunities)
• Awards and recognition (optional)
• Performance history evaluations (optional)
• Contract vehicles (such as Federal Supply Schedule, Blanket Purchase Agreement, and Indefinite
Delivery/Indefinite Quantity.)
Local PTACs offer courses on how to create effective capability statements. Company Website A
company website is another key component to increasing the small or Veteran business’ visibility.
A website allows PDMs to learn more about the small business, its capabilities, and its
performance history. Update the website frequently so that the content reflects accurate capabilities
and past performance relating to procurement opportunities the business is seeking. Make it easy
for PDMs to find, navigate, and understand the business information. Business-related Emails
should be sent and received from company Email addresses that include employee names and the
company website domain, such as your.name@businessname.com. (Refrain from using free, web-
based Email accounts like Gmail or Hotmail). Key Elements of a Website There are many online
tutorials and tips that can help in developing the company website. Consider the following key
elements (which may differ slightly depending on the function of the website):
1. Plan the website goal. Know what the website should do. Should it market one or more products
directly or indirectly to customers? Will it sell one or more services to customers directly or
indirectly? Should it advertise the company’s product(s) and/or service(s)? The goal should be to
get the visitor to do something, that is, to learn more about the company and make contact to
discuss a need.
2. Register the domain name. Choose a domain name that resembles the company name to help
build the company’s credibility. This domain name will also be referenced in the company Email
addresses, creating a professional means to communicate electronically with potential customers.
For example, the use of john.doe@businessname.com eliminates the need for third-party Email
addresses often created and used through a free web-based service, such as Gmail.
3. Choose a reputable hosting company. After choosing and registering a domain name, secure a
reputable hosting company that can host the domain once the website is built. With proper hosting,
the company can create, access, and use professional Email addresses that reference the company
domain (even without a website).
4. Build a visually appealing website. A website should be visually appealing clearly define the
small business’ capabilities and past performance. Each section should be easy to read. Important
information relevant to PDMs should be easy to remember. Use meaningful visual imagery to
emphasize important information. Create a distinctive and aesthetically pleasing. Choose fonts that
are easy to read across various browsers and mobile devices.
5. Choose relevant website content. Content is probably the single most important element of a
website. Content should be short, well-organized, and current. Relevant information should be
easy to find and read. For example, when a PDM wants to learn about a small business wanting to
do business within the federal government, the PDM would most likely visit the website to access
the small business’ capabilities and other information in a timely manner.
6. Ensure that content is relevant and credible. Make sure that the content presented to visitors –
especially PDMs – is credible and can be defended. Misspelled words and inflated capabilities can
affect how potential customers perceive the business. Present relevant, objective, and accurate
information.
7. Test the website functionality. Functionality can refer to the purpose of the website. Ensure that
the website accomplishes the goal predetermined during the planning phase. Functionality can also
refer to the ease of navigating the website. Ensure that menu bars, links to pages, and interactive
widgets function properly.
8. Test Browser/Mobile Device Adaptability. With a variety of browsers (including Microsoft
Internet Explorer, Mozilla Firefox, Google Chrome, and Apple Safari) and the increased use of
mobile devices (such as smartphones, phablets, and tablets), potential customers can search for
businesses and preview website at any time. Test the website and ensure that it is responsive,
adapting to the user’s platform.
9. Test the website navigation. Keep it simple. A website visitor should be able to move through
content – from one section to another or from one page to another – as easily and as quickly as
possible. Hyperlinks accessed through vertical or horizontal menu bars (or menu bars embedded
in content) should be easy to see and use. Test these menus to ensure that they lead potential
customers to relevant information.
10. Review, refresh, and revise. Once your website is live for public viewing, check it regularly to
ensure that content is up-to-date. Ensure that the website is optimized for search engines and that
social media options are available. Social media functionality provides readers with options to
share your content with others and fosters two-way communication between potential customers
and your company. Resources Related to Performance History Contractor Performance
Assessment Reporting System (CPARS) is the federal reporting system contracting officers use to
track small business performance on awarded contracts.
Contracting officers see the information entered, positive or negative, when viewing a small
business’ entity record in SAM. Objective facts and supported program and contract management
data is reviewed when determining a small business’ ability to perform work, based on – but not
limited to – the following factors:
• Cost performance reports
• Customer comments
• Quality reviews
• Technical interchange meeting assessments
• Financial solvency assessments

• Construction/production management reviews
• Contractor operations reviews
• Functional performance evaluations
• Earned contract incentives Information that federal contracting officers enter into CPARS
automatically posts to the small business’ entity record in SAM.
Part III: Not Procurement Ready? Some businesses may still need more assistance to become ready
to do business with the federal government. This section covers additional resources and
contracting avenues that can help small businesses become procurement ready. How to Get Started
APTAC can help small businesses that are new to the federal marketplace gain valuable guidance
and support. ATPAC comprises 98 local Procurement Technical Acquisition Centers (PTACs)
consisting of 300 local offices nationwide. •Subcontracting: As a subcontractor, a small business
is contracted to work on a specified federal opportunity through the prime contract awardee.
Through great performance on a subcontract, small businesses can build on their past performance
and increase their experience, which is critical during the small business evaluation required to
become a prime for future contracting opportunities. Use SBA SUB-Net to find subcontracting
solicitations and opportunities posted by prime contractors that have been awarded a contract.
When bidding for contracts exceeding $650,000 ($1.5 million for construction projects), potential
prime contractors must include a subcontracting plan as part of their bid proposals. Subcontracting
plans include all socioeconomic small business categories.
• Partner with other business: FAR Subpart 9.6: Contractor Team Arrangements explains
arrangements in which “two or more companies form a partnership or joint venture to act as a
potential prime contractor; or a potential prime contractor agrees with one or more other companies
to have them act as its subcontractors under a specified Government contract or acquisition
program.” Types of partnering options include the following: Teaming agreements are composed
of a prime contractor (that completes 51 percent of the contracts) and one or more subcontractors
that will propose to meet the government’s need. Prime contractors could be either large or small
businesses. Though subcontracting agreements are an option for small businesses, specifications
vary by industry. 11
• Contractor Team Arrangements (CTAs) are formal agreements provided by the U.S. General
Services Administration (GSA). GSA awards contracts to multiple companies supplying
comparable products or services. Learn more about GSA schedule solicitations. By forming a
CTA, GSA Schedule contractors can do the following: Compete for schedule orders for which
they would not otherwise qualify. Take advantage of streamlined acquisition procedures. Increase
market share and become more competitive. Reduce risk by sharing responsibilities with other
team members. Focus on the supplies (products) and services that best match the company’s
resources and strengths.
• The Federal Supply Service Center for Acquisition Excellence offers an online, self-paced
training course called ‘How to Become a Contractor.’
• Joint Ventures allow two or more small businesses the option to combine their expertise in an
effort to successfully respond to federal contracting opportunities. When creating a joint venture,
small businesses are creating a new legal entity, either temporary or permanent. The new entity
requires its own D-U-N-S number and tax identification number, among other items newly formed
companies’ require. The value in a joint venture is that both prime companies receive the benefit
of past performance history. Small businesses should understand that when forming a joint venture,
product and/or service expertise is combined in addition to assets, liabilities, financials, and size
standards – among other variables. A joint venture is not necessarily a permanent option, but it can
be if the small businesses agree to use the joint venture on an as-needed basis. Small and Veteran
businesses should remain poised to take advantage of procurement options that may better position
them for supporting more complex contracting opportunities in the future. Stay prepared by doing
the following:
• Gain knowledge through education. Stay up-to-date with government contracting rules and
regulations. Attending procurement events and workshops (such as ‘How to do Business with the
Federal Government’), small business summits, and national procurement conferences will
provide small businesses with opportunities to connect with PDMs.
• Validate your experience. Be able to provide documentation that supports the business’
capabilities and accomplishments. A current capabilities statement and past performance
references will assist in validating the company’s experience. For small businesses new to federal
contracting, non-government past performance may illustrate experience relevant to government
contracts. Some small businesses share the common objective of receiving federal procurement
opportunities. Attend federal procurement events to network and learn about the federal
contracting process” (VA OSDBU, 2015).

Full Draft - Grace Prosthetics Fabrication, Inc.

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Full Draft - Grace Prosthetics Fabrication, Inc.

Uploaded by

Copyright:

Available Formats

Strategic Analysis: Grace Prosthetics Fabrication, Inc.

The University of Tampa

EXTERNAL ANALYSIS ............................................................................................................. 4

Strengths of Value Chain Linkages and Relationships .................................................... 42

way in which firms in the industry operate and compete.

Industry Dominant Economic Traits

variability of customers, degree of vertical integration, types of distribution channels, economies

defined and explained below.

Industry Size and Growth Rate

was found to be 7.8% (Prosthetics and Parts: Industry Profile, 2018).

users by 2050, can be seen in Graph 1 below.

investors increasing the likelihood of entrants (Tompson, 2015).

Scope of Rivalry and Number of Competitors

(Prosthetics and Parts: Industry Profile, 2018; Tompson, 2015).

represents a critical portion of customers (Prosthetics and Orthotics, 2018).

(Prosthetics and Orthotics, 2018).

Degree of Vertical Integration

distribution centers (Prosthetics and Orthotics, 2018).

Forward vertical integration largely includes medical supplies wholesaling, specialist

Orthotics, 2018; Personal Interview, September 7, 2018).

Type of Distribution Channel

to attain economies of scale as each product is largely non-standardized (Personal Interview,

Speed of Technological Change

three-dimensional (3-D) printers. As a three-dimensional scan of an individual´s cut limb can

Advancements in prosthetic appliance manufacturing are largely driven by technological

competitors of manufacturers. Additionally, larger companies wholly own distributors, meaning

(Personal Interview, September 7, 2018).

Five Forces Analysis

Threat of New Entrants

recalls, seizure, injunctions and even criminal prosecution (FDA, 2018).

manufacturing technologies and methods as well as competencies only possessed by high

is due to an increasingly large number of prosthetics consumers wanting a more high-tech

high for customers.

for the prosthetics and parts industry.

Bargaining Power of Suppliers

Bargaining Power of Customers

Key Success Factors

implement. Additionally, KSF’s can be classified as “behaviors, competencies, or characteristics”

excellent benchmarks to which the company can compare itself.

Responsiveness to Customer Preferences

September 7, 2018). An example of a cosmetic enhancement would be that individuals prefer to

necessary to be responsive, versatile, and inventive.

Trustworthiness (Certification and Warranties)

demonstrating how trustworthy a manufacturer is would be through obtaining industry respected

correctly, have expert craftsmen on staff, and are a reliable source.

Partnerships with Hospitals, Clinics, and the Military

and veteran or children´s hospitals.

Competitive Positions of Rivals - Strategic Group Map

By placing companies according to the selected variables, groupings of companies can be

a reason. A particular combination of the chosen variables could result in an undesirable or

Westcoast Brace Clinic,

Orthotic and Clinic,

education and public relations facility (Össur, 2018).

Graph 2 – Strategic Group Map of the Prosthetics and Parts Industry.

niche strategy that could isolate them from competition.

(Prosthetics and Orthotics, 2018).

Driving Forces Analysis

cost of the prosthetic, parts, and repair.

• Increase in the prevalence of diabetes in the United States

• Technological innovation of prostheses

• Medicare and other insurance coverage of prostheses products

The following driving forces will be explained below.

Increase in the Prevalence of Diabetes in the United States