Introduction
Respironics limited was started as a sole proprietorship business in 1976 at Murrysville, Pennsylvania, USA. The company started as a surgical masks manufacturer for the delivery of anesthesia but currently, it is a market leader, a designer and a manufacturer of medical tools. It relies on market foresight, teaming and learning agility for the achievement of its vision.
Company strategies
Under sleep and respiratory products, first, the company relies on research and development for innovative products like diagnostic tools for problem sleepers, pill dislikers and solution seekers. Moreover, the firm has also increased its footage on mergers, takeovers and diversification strategies to increase its product range.
Secondly, under respiratory drug delivery, Respironics has relied on technological partnerships and diversification to distribute and market its products like Aerogens. The company has also increased its licensing agreement with same level businesses to widen its product range and improve service provision.
Thirdly, under children’s medical products, the company has increased its acquisitions of target firms like Healthdyne; Novametrix and Omni Therm Inc. Also, the company is offering simulation exercises for hospital workers to increase their knowledge and experience about neonatal intensive care unit. In addition, the company has introduced colouring and activities book to enhance training of medical practitioners on the effective use of its nebulizer product.
Finally, on international markets, the company has increased its presence within Denmark, Norway, China, and Japan which has the potential of increasing its revenue base. Specifically in Japanese, the company has opened sleep and respiratory therapy centre to perfect training of physicians in order to enhance correct diagnosis and treatment.
Significant Problems of Respironics
First, the company faces numerous internal financial difficulties. This has lowered its research and development initiatives in this technology demanding field. In fact, this has resulted in reduction of its share prices to U.S. $32.66 per share in 2006 representing 23.96 percent decrease from 2005 values. This decrease might lower the company borrowing plans.
Second limitation is the continuous patent and legal battles. For instance, in 1997, Respironics was involved in legal tussles with its bitter rival ResMed limited over patent infringement. Also in 1999, the company filed a patent infringement case against Invacare concerning SoftX technology which they claimed was a copyright of its C-Flex technology. Again, in 2005, the company recalled almost172,000 Humidifiers valued at U.S. $ 5 million. This was likely to result in legal battles with the quality conscious customers’ thereby huge loss.
Third, there exists stiff competition within the industry. The main rivals being ResMed Inc. (California); Fisher & Paykel Healthcare Corp. Ltd (New Zealand)): and Tyco health care group. Due to this, the company has witnessed a declining sales trend. On the international arena and especially Japan, the company faced stiff competition from Tanita Corporation in the manufacture of airflow generators and oxygen concentrators.
Fourth, the company might suffer from complex international taxation policies, exchange rate fluctuations and diverse labour laws. The operations of Respironics in many countries with different tax compliance issues and labour laws might affect the company profitability levels. The exchange rate volatility might also lower its profitability further especially in sourcing of its main raw materials.
Fifth, constraint was its long supply chains and diverse location of its manufacturing sites. The company quickly relocated to china immediately after a fire accident. Even though China was considered labour abundant country, only a small percentage uses Respironics products.
This relocation increased the distance to its main client’s resulting in poor customer service delivery. Additionally, due to this long distance, when stocks were limited, the major company suppliers only sold to toy and electronic manufacturers. Also its main distributor Apria Health care was forced to reduce Respironics products market share which resulted into major revenue loss. Finally, these long chains resulted in procurement difficulties in sourcing IR, flow sensors and relays.
Sixth is the duplication of duties and slow communication process. As the company increased in size through acquisitions, the communication difficulty was likely to arise. Moreover, its organization structure also resulted in duplication of duties. Miclot accepted that the structure has created small business enterprises under the main organization.
Finally, there exists partial decentralization especially within the finance sector. This resulted in bureaucratic execution of orders and even the establishment of excellence centers at each manufacturing plant was not a brilliant idea at all.
Seventh, the company overreliance on thin product line is a cause of concern. Specifically, the major revenue earner of this company was based on sleep therapy devices without much sales activation to other products. However, should market dynamics change; the overall risk of this firm failing was very high. In fact, Prof. White acknowledged the need for more product development.
Finally, the company insistence on flat and bureaucratic takeovers of companies with huge debts was a course of alarm to board members. For instance, the company undertook Healthdyne with a total debt of U.S. $ 38 million based on excellent fit assumption.
This takeover culminated into internal business stresses which added to its already declining share prices resulted in firing of the company chief executive officer- Meteny in 1999. However, according to Bevevino (Chief Finance Officer), the companies to be acquired should demonstrate strong profitability and relevant leadership before start of negotiation.
Financial information
Operating expenses included: selling, general and administration; R and D; Donations to foundations; Restructuring and or acquisition; amortization of acquired intangible assets. Revenue sources included: net revenues from continual operations; interest and other net incomes; cost of goods sold
Analysis and evaluation
Respironics measured success, first, through its acquisition of the existing firms with unique ideas and technologies. Second, through increased level of diversification and licensing agreements of organic growth and strategic alliances and finally, through pursuing of effective treatments, medical services, surgical procedures and pharmaceutical products.
Recommendation
To start with, the company should purchase more international property rights in order to reduce the costly legal battles with competitors. Secondly, the company should widen its capital base through increased lending. Third, the company should buy major rivals like ResMed to diversify its sleep and therapy markets. Finally, more in country sales activations and branding are required especially for its portable sleep therapeutic tools.
Environmental analysis and future growth
Environmental analysis is a procedure of identifying environmental factors, assessing their nature and to find their implications on a given business. Such analysis enhances a manager’s ability to grasp the coming threats and opportunities which might influence the business thereby supporting future prediction opportunities.
Importance of analyzing organizational internal analysis
It offers more awareness and comments on the potential and critical issues influencing proper functioning of an organization. Secondly, it creates a level ground for competing by identifying weak areas that need further strengthening. Thirdly, internal analysis provides excellent structure for short term review which supports managers’ decision making and finally, it supports a company recommendation for preventive measures if taken immediately after a survey.
Organizational dynamics
Organizational dynamics describes the functioning of employees within a firm in accomplishing a given task. It is influenced by the number of employees, firm’s location, leadership and management style, employable population residing within the locality and the type of business ownership whether family or publicly owned.
It focuses on the problematic behaviours, internal and external conflicts, communication and finally leadership and staff matters affecting individual worker’s productivity. Nevertheless, if the functioning of employees is not well coordinated, the vision and mission achievement of the firm cannot be realized.
Organizational politics
It is a means of identifying and reconciling of the opposing interests within a given firm. It may be considered as a means of creating democratic work place environment. It is important to note that individual workers usually introduce personal interests within the organization which usually conflict with the organization’s goals.
Therefore, political image of a firm gives more support to the understanding of power relationships within its daily activities and relations. Secondly, the use of system to rule not only creates but also maintains order within the company membership. Finally, politics directly influences organization dynamics through its identification and reconciliation of opposing interests which might negatively affect the achievement of objectives.