Business Diversification
Michael Martins dad fell off the roof of his home while clearing away snow. His dad tried calling 911 from his cellphone, but couldnt reach them. He had to lie in the driveway with a broken wrist and shattered hip for two hours before his wife arrived and called 911 from a landline.Michael saw that there was a clear opportunity to fill the need of connecting cellphone users with 911 more smoothly. The 911 system was developed in the late 1960s for landline phones and has not been updated for cellphones. Unlike landlines, cellphones dont provide accurate location information to 911 operators. As a result, 10,000 people are estimated to die each year.Michael created a new company, RapidSOS, and launched its 911 app, Haven, with co-founder Nick Horelik. Talking to public safety officials after the launch, Michael learned that a 911 app would be likely to experience problems. The 6,500 call centers that respond to 911 calls use different technologies and may have trouble receiving a call coming through the app.RapidSOS refocused its efforts. Instead of an app, they focused on developing technology that would allow cell phone locations to be transmitted to 911 call centers during a phone call. Once created, the next question for RapidSOS was how to bring their technology to market. Should they work on replacing existing emergency response systems? That would involve overhauling 911 call centers and how ambulances, police, and fire professionals are mobilized to emergencies. Or should they target specific communities and then expand further to others?To decide which strategy to use, RapidSOS considered what its mission was: to allow those with a high risk for emergencies to have better access to emergency services. They first gained the support of specific patient groups, like epilepsy and domestic violence. They continued gaining the support of other groups, such as diabetes patient groups. That gained the attention of Google and Apple. Google and Apple entered partnerships with RapidSOS that allowed life-saving 911 location information to be transmitted from cell phones. These partnerships allowed RapidSOS to be the first company to be able to transmit data directly into the existing 911 system. Its competitors relied on other approaches, such as connecting to a third-party call center.Case Questions?1.How does RapidSOS exemplify advantages and disadvantages of being a first mover?2.What type of growth strategy did RapidSOS implement (concentration, vertical integration, horizontal integration, or diversification)? Justify your answer.3.What could RapidSOS have done differently to have avoided the problems related to using an app to reach 911 operators?4.How has RapidSOSs actions decreased the threat of new entrants and threat of substitutes??
