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Supporting the 3D Printing Revolution

“3D printing potentially brought amazing value to the market” (p2), however, companies providing 3D printing equipment and services also face potential risks. Discuss four possible risks.

The various firms dealing with the provision of 3D printing equipment and services are, just like other companies in the economy, facing different types of business risks (Mayer Brown, 2013). In addition, the 3D firms are also confronted with other risks which normally are not common for other companies in the market (Mayer Brown, 2013). Among the reasons for the above is that the 3D firms manufacture products or provide services that are customised and are required to address some particular needs of the clients (Stahl, 2013). Given the above, the following are the four possible risks that 3D firms can face:

Intellectual property risks

The risks are associated with patents and copyrights for the different innovations a firm came up with (The Travelers Indemnity Company, 2017). The understanding is that every company manufactures its unique products which it, the firm, only has the right to reproduce the design or similar products. In the 3D industry, the various additive manufacturing companies are faced with the risk of other companies imitating their product designs. The risks could further result in litigation cases which might lead to firms spending a lot of funds in courts (Mayer Brown, 2013). As noted from the case study, Materialise had at one time sued Nobel Biocare for rapidly copying the former’s (Materialise) systems (IMD, 2014). The fact that Materialise sued Nobel Biocare for patent infringement, it implies that 3D printing equipment manufacturing and service firms are most likely to face intellectual property risks.

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Product liability risks

It is evident from the case study that Materialise is involved in additive manufacturing where the company designs, builds and manufactures various products, particularly in the medical field which are highly customised. The implication here is that the products, for example, implants, are expected to work appropriately to solve the problem faced by the client (IMD, 2014). It is possible that these products might not function as expected, by Materialise, and could lead to damages, for both the client and the final consumer (Nadeau, 2015). In case the above happens, the company, Materialise, will be liable for the damages as it was the original designer and manufacturer of the implant. The implications of the above are that the additive manufacturing firms are possibly facing high risks of product liability.

Competitive risks

For any business, the competitive risk is possible whereby the actions of a competing company limits the business in making profits in a particular market. The 3D printing industry is young, but this does not make us forget the fact that there are big players in the industry which have a competitive advantage over the start-ups. Taking the example of Materialise, it is evident that, as the firm started operations in additive manufacturing, it was small to survive and could not compete on its own. The implications of the above are that the additive manufacturing firms also face competitive risks. The above is among the reasons whyMaterialise Dentsply acquired Materialise Dental in the year 2011 (IMD, 2014). The strategy by Dentsply was, among others, to reduce the competitive risk it faced as a result of Materialise Dental (IMD, 2014).

Financial risks

All of the three previous possible risks that are facing or could face an additive manufacturing firm can bring about the financial risks (Mayer Brown, 2013). In the context of this paper, the financial risk is taken to mean the possibility of shareholders and other investors in a firm to lose their wealth because of financial losses. A company faced with legal risks (intellectual property and product liability risks) as well as the competitive risk is likely to suffer a loss of funds or decline in profits. The loss of money or decline in profits are factors leading to financial risks. An example in the case study is where Materialise sued Nobel Biocare because of patent infringement (a legal risk) and litigation charges almost caused the company, Materialise, to go under (IMD, 2014). The above further implies that the financial risks could even be possible for firms while fighting for their intellectual property rights.

C2. “It [3D printing industry] was young and far from maturity, so a wait-and see attitude may have been the norm” (p.9). Though the 3D printing industry is developing quickly, it still hasn’t ‘crossed the chasm’. Discuss what strategies Materialise could use in order to do that.

When a technology company has crossed the chasm, it implies that the corporation has been able to move its products through to the early majority directly after selling to the early adopters (Trevor Lohrbeer, 2013). Geoffrey A. Moore, the author of a book titled “Crossing the Chasm,” states that the early adopters and early majority (pragmatists) are consumers with different expectations about a particular innovation (Trevor Lohrbeer, 2013). The early adopters readily accept new innovations with the expectations that they will solve their current problems. On the contrary, the early majority will embrace/use the new innovations when everyone is using them and that they are proven to be fine. Given the above, there exists a wide gap between the early adopters and the early majority which is referred to as the chasm. Materialise could use a number of strategies, which are a step-by-step process, to ensure that it crosses the gap successfully. First, the company should take a centralised approach to investing in a particular market. The strategy is to focus on a specific niche in the market and concentrate on solving a specific problem being faced by people in the niche. Materialise can, therefore, focus its products on a particular niche, which has other neighboring niches that could be reached after solving problems in the first niche. The strategy needs to be executed in a manner that the excellent results (market problems solved) in the first niche create ripple effects in other niches (Hogan, 2016). Therefore, the company should consider a niche that is like a bowling pin where, after successfully solving the niche’s problem (toggling off the bowling pin) its effects result in the entrance of the firm to other neighbouring niches (other pins fall after the first bowling pin has fallen). With a similar strategy, the company could focus its efforts on a particular niche and then expand to neighbouring niches and finally enter the mass market where it serves a much wider market than before. The results of the strategy are that the focus on fewer people would make it easy and quick for Materialise to generate the critical mass of social proof needed by the early majority (Trevor Lohrbeer, 2013). Also, to easily and quickly cross the chasm, Materialise could focus its current attention on customer performance. That is, the company should concentrate on improving the performance of its customers (early adopters) by providing them with quality products. Where the said performance is improved, the early majority will get the concrete proof they need (that the company’s products/services are excellent) to accept and start using Materialise's products. Here, the early majority can now be easily persuaded to purchase Materialise’s products/services (Hogan, 2016).

C3. “The entry of system manufacturers into the market puts pressure on service bureaus by driving prices down thanks to better materials, equipment, and lower maintenance costs.” (p.10). In your opinion, does it mean that for the competitors of Materialise there are no barriers to entry left?

Even though the equipment and maintenance costs have been driven down, according to my opinion, still there exist barriers to entry for Materialise competitors. The barriers to entry left for the competition are technological barriers and the current big players (other competitors) in the industry. The high technology barriers are concerned with the capacity of competitors to be innovative and produce products that could match the quality of the goods offered by Materialise (IMD, 2014). The above brings about customer-related barriers whereby the connection the company has established with its loyal clients cannot be easily broken. Materialise currently serves a large part of the additive manufacturing market, evidenced by the eight business units operated by the company. Therefore, it implies that entrants in the industry would most likely end up wanting to serve a part of the sector where Materialise is already offering its services and products. Because of customers’ loyalty to the company, the competitors will find it difficult to sell to the customers. The implications are that the lack of clients will force the competitors to spend most of their funds in advertising. Therefore, where the vast expenditure fails to bring value by increasing their market share, the competitors will be forced to exit the market. Potential entrants, after doing the above analysis, would most likely find it difficult to enter the 3D printing industry in the first place. Given the above, it is also possible that some financial barriers are still left because of the massive expenditure needed for product promotion and advertisements to try to compete with Materialise effectively (Geroski, 2013).

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Lastly, the current competitors to Materialise, who wish to enter the company's market would still face competition from the current competitors to Materialise, which are currently operating in the 3D printing industry. Examples of the current competitors include Nobel Biocare, Stratasys, 3D Systems, and EOS among others. The high competitive rivalry in the industry as a result of the operations of the mentioned firms is also a possible barrier to entry for the new (Materialise competitors) potential entrants. Given the above, Materialise competitors would still find it difficult to enter the 3D printing industry even though service bureaus have been forced to drive prices down (Geroski, 2013).

References

Geroski, P. G., 2013. Barriers to Entry and Strategic Competition. s.l.:Taylor & Francis. Hogan, C., 2016. The SaaS Startup Guide To Crossing The Chasm. [Online] Available at: http://www.insightsquared.com/2016/01/the-saas-startup-guide-to-crossing-the-chasm/ [Accessed 12 March 2017].

IMD, 2014. Materialise: Supporting the 3D Printing Revolution, North America: The Case Centre.

Mayer Brown, 2013. How to Explore the Potential and Avoid the Risks of Additive Manufacturing, London: The Mayer Brown Practices.

Nadeau, M., 2015. Enx magazine. [Online] Available at: http://www.enxmag.com/twii/market-intelligence/2015/08/legal-risks-in-the-3d-printing-market-nothing-new-to-hardcopy-world/ [Accessed 13 March 2017].

Stahl, H., 2013. 3D Printing – Risks and Opportunities, Darmstadt: Institute for Applied Ecology.

The Travelers Indemnity Company, 2017. Preparing for the Risks of 3D Printing in Manufacturing. [Online] Available at: https://www.travelers.com/business-insights/industries/technology/preparing-for-risks-of-3d-printing-in-manufacturing [Accessed 12 March 2017].

Trevor Lohrbeer, 2013. Crossing the Chasm Revisited. [Online] Available at: http://blog.fastfedora.com/2013/05/crossing-the-chasm-revisited.html [Accessed 12 March 2017].


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