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Strategic Briefing for Bergerac Systems Inc.

KING, James
LEI, Ronald
WANG, Brenda
WANG, Chuqiao
XIAO, Jasmine

October 29th, 2014

Digby 2014

Bergerac Systems Inc.

Focused on in house diagnostic equipment (instrument production and cartridge


manufacturing) for small / medium sized veterinarian practices
High Quality and Accurate
Compact, Lightweight Equipment
User Friendly

Emphasis on innovation and user experience

Core scope of activities revolve around cost-efficient but effective investments

Overview

Vision

Opps. &
Issue

Options
Analysis

Biases &
Assumptions

Recommendation

Vision

Corporate Level Strategy: secure supply chain by acquiring or building in-house.

Continuing growing brand of Bergerac by providing


high quality, user-friendly equipment to veterinarians,
so it is the chosen brand by customers.

Overview

Vision

Opps. &
Issue

Options
Analysis

Biases &
Assumptions

Recommendation

Opportunity / Problem

Growth of 8% in Veterinary Spending in the U.S.

Greater willingness to pay


Increased use of veterinary equipment

Cartridge Suppliers are Inconsistent

Vulnerable to oil prices


Highly competitive market
Economic environment affect prices

Overview

Vision

Opps. &
Issue

Options
Analysis

Biases &
Assumptions

Recommendation

Buy Opportunity

PROS

CONS
Overview

Vision

Opps. &
Issue

Quick acquisition (short time)


Extra capacity to sell to others
Existing capabilities and efficiencies
Existing streamlined with Bergerac
Able to meet future growth in demand
Cheaper and more trained labour
resources

Higher acquisition cost


Low-margin and competitive industry
Assumed longer payback period
Integration time and cost
New layer of operational complexity

Options
Analysis

Biases &
Assumptions

Recommendation

Build Opportunity

PROS

CONS
Overview

Vision

Opps. &
Issue

Better control over supply-demand


matching
Existing capabilities and efficiencies
Better integration with Bergerac
products
Able to meet current demand
Assumed lower set-up costs
Better margins

Longer time to build capabilities and


knowledge base
Limited capacity
Greater layer of operational complexity
Need to reduce resources allocated to
existing operations
Low-margin and competitive industry

Options
Analysis

Biases &
Assumptions

Recommendation

False Assumptions / Biases

Assumption of Equal Production: produces same amount of cartridges despite


GenieTechs higher capacity to sell to external parties
-

Additional sales and contribution resulting from extra capacity to decrease B/E volume (based
on existing long-term contracts)

Higher perceived cost structure, but production of GenieTech is 2X that of in-house

More volume increases variable costs, but fixed costs remain relatively unchanged

Negation of Salvage Value: ignores salvage value from selling GenieTech in the
future compared to non-existent salvage value of in-house supplier

Negation of Additional Capacity Expansion and Training Costs:


-

Will incur future costs if Bergerac wants to meet growth in demand

No indication of hiring and training labourers

Overview

Vision

Opps. &
Issue

Options
Analysis

Biases &
Assumptions

Recommendation

Recommendation

Overview

Re-adjust
Assumptions

Choose
GenieTech Option

Begin Acquisition
Negotiations with
GenieTech

Vision

Opps. &
Issue

Options
Analysis

Biases &
Assumptions

Recommendation

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