Boc Ohmeda

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Ohmeda’s current distribution system and sales organization is not well suited to implement Rountree’s new business strategy. The new corporate strategy calls for growth in high technology product lines and the current dealership channel is more suited to goods that require less education and information. In summary, the market trends combined with our changing corporate strategy will require Ohmeda to change the distribution channel and structure of the sales force. In the short run, this will require a transition period and an investment to reorganize Ohmeda’s sales force for long term growth. In the long run, we believe this consolidating market will be heavily specialist orientated. Due to these facts we recommend a dedicated…show more content…
This is where the money is and the growth is. Their consolidation will in essence allow us to lessen the breadth of our dealer coverage and allow us to focus our sales effort in this high growth area.

Restructuring Recommendation and Evaluation
In the short term we calculate that the change to a specialist model will likely result in upfront costs in the form of training and hiring new reps. This will be a transition period that will ultimately lead to our long term vision: Ohmeda’s sales specialist selling to medical specialist in the high technology segment.

We are not recommending that Ohmeda discontinue relationships with all dealers. We recommend that Ohmeda should keep some dealers to operate in the low technology suction market. This is a $24M market and we have a 60% market share. This $14.3M in sales represents 15% of our 1985 medical equipment sales. We project this to grow 3.27% per year. This market appears to be a cash cow segment where having dealer intensity is important. Over the past few years, a competing company focused on price has made some in-roads in this market and Ohmeda fears that terminating the dealers will harm this segment. Given that this is a price sensitive, low technology market we think the dealer network will be able to help fend off the competitor. History has proven this to be the case.

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