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01-04-2011, 12:56 PM
Post: #1
Dresding Medical Case

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Old Strategy:
 Cost: The importance of cost is low. Because of their technical excellence and their excellent research and development exercises the customer is willing to pay a higher price, which counterbalances the high cost.
 Dependability: Customers do not mind waiting for three months but they expect timely delivery. Therefore, DM needs to provide this level of reliability to the customers.
 Speed: Significance of speed is low. From the placement of order it takes up to 3 months to deliver the final product. The customer is ready to wait for 3 months for the product.
 Quality: Significant importance which they ensure through their strict quality assurance process.
 Flexibility: Need to focus on flexibility because there exists a high level of customisation. Around 70 per cent of all orders involved some form of customisation from standard ‘base models’.
New Strategy:
 Cost: Importance to cost is comparatively more since the customers are provided with standardized products which have close substitutes.
 Dependability: Customers are not ready to wait for delivery of standardized products.
 Speed: The speed to manufacture is required to be higher for standardize products. Customers are not ready to wait; hence speed should be given greater importance.
 Quality: DM lays emphasis on quality as it focuses on technical excellence and expresses concern about the quality of suppliers.
 Flexibility: There is a high level of standardization which leads to low importance of flexibility.
Dresding Medical should not subcontract the manufacture and delivery of products for the following reasons:
 By continuing with in-house manufacturing they can have strict quality control and also can go for tailor-made customisation.
 Bank on their core competencies of culture of technical excellence and willingness to modify equipment to individual customer needs.
 Through in-house manufacturing, they can maintain their superiority in leading-edge product technology and laboratory culture, which was their core strength.
 Even though the decision may prove to be expensive in the short run, it will save money in the long run.
 Help maintain control over production to ensure high quality and reliability.
 Their expertise was to understand the need of clinicians and then create products to suit that. By sub-contracting they might lose this expertise.
 By not sub-contracting they can focus on Operational Excellence of their manufacturing process.
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