Nishith P B45 C5 NS Week1 Assign3
1. 1982 to March 1985: Why did BDVS avoid negotiating with APG headquarters? What was the consequence?
Answer:
BDVS avoided negotiation with APG since 1982 till March 1985 for the following reasons:
1. APG had first sought to standardize its purchase of needles and tubes and had demanded substantial price reductions from BDVS. BDVS was not ready to reduce the price and continued dealing separately with individual hospitals. BDVS’s strategy was not Cost leadership but for product differentiation. It was selling its product based on the quality of the product.
2. The purchase decision making authority was still with individual hospitals and not centralized.
3. BDVS’s sales people were able to retain most of the sales of BDVS tubes at individual APG affiliated hospitals, in part by lowering prices when necessary on a hospital by hospital basis.
4. APG was not as strong in 1982 as it was in 1985 that BDVS would bend to the substantial price discount asked by APG.
5. BDVS had its own chain of distributors other that APG and may be were not much dependent on APG.
6. There was less competition pressure from Japanese company Terumo in 1982 to reduce price to maintain the market share. But in 1985, competitors started penetrating the market and BDVS has no other way but to tie up with APG, which was keen for reduced price, to maintain the market share.
Consequences of not entering the negotiation with APG:
1. There was an ill feeling between APG and BDVS subsequent to the rejection of negotiation.
2. APG became more aggressive and established a group of field personnel charged with promoting the importance of compliance with APG negotiated contracts at member hospitals. Basically APG started aggressive marketing to their member hospitals.
3.
2. April 1985 to July 1985- 4 meetings: How did the negotiations proceed?
Why?
3. August 01, 1985-5th meeting: How did the meeting go? Why?
4. August 15, 1985-6th meeting: What are the issues? What is your advice
Answer:
BDVS avoided negotiation with APG since 1982 till March 1985 for the following reasons:
1. APG had first sought to standardize its purchase of needles and tubes and had demanded substantial price reductions from BDVS. BDVS was not ready to reduce the price and continued dealing separately with individual hospitals. BDVS’s strategy was not Cost leadership but for product differentiation. It was selling its product based on the quality of the product.
2. The purchase decision making authority was still with individual hospitals and not centralized.
3. BDVS’s sales people were able to retain most of the sales of BDVS tubes at individual APG affiliated hospitals, in part by lowering prices when necessary on a hospital by hospital basis.
4. APG was not as strong in 1982 as it was in 1985 that BDVS would bend to the substantial price discount asked by APG.
5. BDVS had its own chain of distributors other that APG and may be were not much dependent on APG.
6. There was less competition pressure from Japanese company Terumo in 1982 to reduce price to maintain the market share. But in 1985, competitors started penetrating the market and BDVS has no other way but to tie up with APG, which was keen for reduced price, to maintain the market share.
Consequences of not entering the negotiation with APG:
1. There was an ill feeling between APG and BDVS subsequent to the rejection of negotiation.
2. APG became more aggressive and established a group of field personnel charged with promoting the importance of compliance with APG negotiated contracts at member hospitals. Basically APG started aggressive marketing to their member hospitals.
3.
2. April 1985 to July 1985- 4 meetings: How did the negotiations proceed?
Why?
3. August 01, 1985-5th meeting: How did the meeting go? Why?
4. August 15, 1985-6th meeting: What are the issues? What is your advice