A strategic analysis and reorganizational approach due to the changing market conditions for Biotek Medikal

Abstract

Biotek Medikal is operating in the service industry since 1986. It became a leading firm in importing and selling bio-medical instruments and disposables (single use); particularly for cardiovascular surgery (CVS) and cardiology. (CRD) In 1989, due to sales expansion, need for assistance in sales activities forced the company to expand the existing sales force. Branch offices in Istanbul and Izmir were opened in that period. Until then, service to other parts o f Turkey has been handled from the Ankara office. In 1990, a drop was recorded in sales. Unplanned expansion, lack of coordination in sales, the general manager's concentration on administrative issues rather than sales were the major causes of the drop in sales that year. The Gulf Crisis made the situation even worse by delays in shipments from suppliers and changing policies in payment schedules by reimbursement agencies. When the crisis started, the Health Budget funds were transferred to probable emergency cases in the Southeast. For the first time, Biotek experienced serious payment problems with its suppliers due to late collection o f its receivables . The biggest devaluation in the republic's history in April 1994 led to a further crisis in the medical sector due to import dominant structure. Shortly after this devaluation all health care reimbursement entities ran into financing problems which had an impact on local distributors and suppliers as well. This was a fast growing market and most of the other competing firms were also enjoying the market conditions before the reshaping of the relations o f hospitals with reimbursement agencies. Biotek is now facing the challenge of organizing its structure to adapt to the rapid growth of the firm and the changes in the industry. In addition, Biotek has to struggle with the government regulations dictating the policy change in payments of the state owned enterprises. Page 2 of 48 In terms of the basic elements of the strategic management process, the thesis focuses only on environmental scanning and strategy formulation. Reference 1 In the environmental scanning, the thesis analyses the opportunities and threats that Biotek Medikal faces in the medikal market. Here the task environment of Biotek Medikal is clarified by reference to the bargaining power of buyers and suppliers and the competition among the competitors. The environmental scanning analysis also addresses the internal environment of Biotek Medikal in which the strengths and weaknesses of the company and its competitors are examined through technical capacities, human resources, market relations etc. Reference 2 Based on the findings of the earlier chapters, the final chapter tries to formulate strategies for Biotek Medikal designed to improve the competitive position of the company's products within the medical disposable market. Here particularly the following points are questioned; Should Biotek compete on the basis of low cost or should it differentiate its products on some basis other than cost such as focusing on the most profitable product lines or, if present, finding market niches. In conclusion different alternative strategy formulations are evaluated in terms of Porter's competitive strategy i.e., cost focus, cost leadership.