Alcoa Case Study

The prosthetic industry is on the verge of a growth phase

In 2012 the prosthetic industry was valued at $15.3 billion and by the year 2017 this industry is estimated to be worth $23.3 billion. According to the Amputee Coalition, almost 185,000 amputations take place in the U.S. every year. About 54% of these are attributed to vascular problems and 45% to accidents, a variety that ensures there will be a constant demand for prosthetics in years to come. The growing age of the baby boomer generation and increased medical care in developing nations has also increased the demand for prosthetics worldwide.

In addition to an aging population, in recent years there has been a noticeable increase in sports injuries. Foot and ankle prosthetics are

There is currently a lot of labor-intensive manufacturing and assembly. Furthermore, prosthetic manufacturers have to buy raw materials from suppliers. These factors ultimately raise the price of the final product. Alcoa can solve this problem with additive manufacturing and vertical integration. These will lead to a superior product at a lower cost.

Alcoa must overcome obstacles to enter the market

FDA approval and prosthetic patents discourage smaller players from effectively breaking into the prosthetic market. The FDA must approve new prosthetic limbs before they are sold. This can be a lengthy and expensive process. Additionally, many larger companies patent their prosthetic designs. Because of the existing patents, Alcoa can’t simply begin producing prosthetics. The company will need to conduct research and development to design its own devices before production can

Currently resources as simple as an Xbox and 3D printer can create semi-functional plastic prosthetics at a much cheaper costs than the current market rate. Compared to prices upwards of $40,000 for new prosthetics, Alcoa can produce cheap, mass-produced prosthetics at costs around $50. This simplified process will allow the products to be delivered to developing countries in need. Alcoa’s advantages of cheaper material costs and economies of scale will ultimately allow the company to undertake such a campaign.

Alcoa cannot pass up on the opportunity to be a first mover in a growing industry

By 2017, the prosthetics industry is estimated to grow to $23.3 billion. Failing to enter this growing industry could lead to an immense opportunity cost. Alcoa already has the mining operations and raw materials to be a leader within the prosthetics industry. In addition, Alcoa has already made efforts in attempting to incorporate additive manufacturing within its current operations. Alcoa’s current core competences complement their ability to enter this profitable