Case Statement:
Your client is a global medical device manufacturing company. They are witnessing a decline in revenues for the past 3 years in their India Business unit. They want to understand the reason and want you to recommend a plan to stop the decline of the revenue.
C: Sounds an interesting problem, I would like to begin by understanding more about the company and its India Operations along with understanding the competitive landscape of medical device market.
I: Sure, in India, the firm uses Make in India approach. The make and assemble machines and machine parts in the country and provide products for global as well as domestic sales. They are among the top 3 players in the market, but due to declining revenues, which the other companies aren’t, they are at the risk of becoming a minor player in the market. They offer diagnostic & surgical equipment to hospitals and labs across India.
C: If competitors are not the decline in revenues, I can conclude that it is a firm-level problem and not market level problem. Also, what is the decline witnessed by the firm and in which products?
I: Yes, that is what seems to be happening. For the second part, they have seen revenues drop by 4-5% across all products.
C: Now I would like to proceed by analyzing the causes of decline for the India unit by breaking revenues into volumes of sales and average ticket price of sale. Where is the firm facing problem ?
I: The firm is seeing decline in volume of sales.
C: Understood. I would now like to find the cause in sales volume. For the same, I would be looking at issue through 2 views. First, whether the firm is able to supply the required demand and second, whether the demand for the product has dropped.
I: The only problem that we see is that the demand for the products has declined.
C: Now to understand the reason for decline in demand, I would like to focus my analysis on 4 factors which are, decline in awareness of the product, drop in the need of the product, degradation in quality of purchase and product and finally, the accessibility of the product to the end user. Any other factor which you would like me to consider ?
I: That is a comprehensive list; I would like you to focus on the need for the product that is going down.
C: Sure, since the need for the products, has declined, the drop can be attributed to multiple factors. To call the elements are technological factors that have rendered products obsolete. Secondly, alternate products can cut down the need for the product. Thirdly, competition could be a potential factor, and finally, regulatory changes might have mandated the change in market dynamics
I: It seems like a fair approach. I can tell you that the client has surveyed marketplaces and received a review that the competitors are providing technologically superior products. Also, the client’s firm has been unable to keep up with technological advancement. This might seem to be the cause of the decline. Can you recommend a plan for the client to cope with the issue?
C: Sure, I would like to recommend a two-fold plan—one for short-term tenure and one to sustain in the long term.
I: Sure, go ahead with it.
C: For the short term, since the Indian market has advanced technologically for the present products, we can scout for markets where our products are technologically advanced or fit to operate. Asian and South American growing needs can be a good idea for doing the same. To reduce costs in India, the clients can optimize resource allocation in areas with higher sales. In the long term, to stay relevant in the Indian market, the firm needs to invest in making technological progress to improve its product line
I: That seems to be a very comprehensive list of suggestions with a concrete plan. We can close the case here.
C: Thank you, Sir!
Background Information:
Geography: Global firm with India BU having problems
Consumers: Labs and hospitals which require surgical and diagnostic equipment.
Case recommendations:
The case required one to look at multiple avenues of the cause of decline in revenues. While recommending solution, firm’s global competencies can be leveraged to solve domestic issues.
