Dollinger index

be to keep the design of the software and

architecture of the system in-house, but to

outsource its development, manufacturing,

and sales. The relevant risk associated with

this core competence is failing to bring the

right people on board. Getting the right kind

and caliber of professionals into the organiza-

tion will be important for bringing the idea

to life. MedTrack must employ people with

significant hospital management experience

who are software design professionals as well

as astute business managers.

Making the right partnerships will be

another important success factor. Regardless

of how well designed the product is, its exe-

cution will depend entirely on other compa-

nies’ abilities. The product can fail due to

badly written software, defective hardware,

or inept distribution efforts. To control any

of the numerous risks, MedTrack must have a

stringent supplier selection process and such

selection criteria that will ensure the firm’s

partners are of the highest quality and repu-

tation.

While getting the product right will be

important, there will be the risk of waiting

too long before its release to such an extent

that rival companies will have already made a

significant head start in filling market

demand. Even though the specific hospital

market is still wide open, MedTrack should

work on a tight schedule in the development

and release of its first system in order to take

advantage of the opportunity. Seizing oppor-

tunities in its market should become another

competence for MedTrack. As its rivals mul-

tiply and become stronger and more focused,

the only way for MedTrack to stay ahead will

be by taking its offering one step further

through innovation.

Research suggests that a significant por-

tion of enterprise-wide ERP implementa-

tions fail because of mistakes such as delay in

implementation, cost overruns, or both.

MedTrack’s implementations carry the same

kinds of risks as ERP implementations. A

disappointing implementation will incur

additional costs and damage its fragile repu-

tation in its initial development stages.

Hiring experienced implementation project

managers as well as focusing on quality will

minimize those risks.

Discussion. This schedule is aggressive.

Prior to the legal start of MedTrack, the

founding partners will be engaged in identi-

fying key staff members and beginning the

marketing that will result in the launch hos-

pital.

Many operational elements will overlap to

provide the launch system on a compressed

time scale:

• Based on MedTrack marketing knowl-
  edge, we will develop most of the soft-
  ware prior to securing the first con-
  tract. After the launch contract is com-
  plete, software customization can be
  completed as needed.


• MedTrack will procure limited materi-
  als prior to contract completion. Some
  risk attaches here.

440 ENTREPRENEURSHIP CASE

Investment

Cumulative cash flow

Terminal Value

Net cash flow

Source of Investment

Founders’ savings

Venture Capitalist(s)/ Banks

Remaining

Year 0

($6,000)

($6,000)

($1,000)

(5,000)

$ 0

Year 1

$1,970

$1,970

$1,712

258

$ 0

Year 2

($3,319)

($3,319)

($2,884)

( 435)

$ 0

Year 3

$2,929

$2,929

$2,544

384

$ 0

Year 4

$9,802

$9,802

$8,517

1,286

$ 0

Year 5

$ 17,020

170,204

$187,224

$162,670

24,554

$ 0

EXHIBIT 10. Deal Structure (U.S. $000s)