At a Crossroads: The Strategic Dilemma at PENPOL Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

PENPOL, an India-based medical devices firm, started to manufacture hematology products with the launching of its unique blood bag product in 1987, under the leadership of its CEO, Vasudev Nair. The blood bag unit of the company marked the growth after extension in bags and blood bag equipments. In 1993 PENPOL expanded into the urology business with the introduction of urine bags and within four years this business entered the stone management devices, leg bags, and foley catheters. However, the growth in the urology business was not expected thus by 1998 the company had exited all but the urine bag product line. PENPOL faced many unsuccessful launching products that caused significant inventories of unsold goods and problems getting payment from stockists (distributors) that were the major reason in company’s increasing debts and cash issues. Now Vasudev was confronting with a financial crisis in presence of increasing debts and cash flow problems, thus he required to devise a strategy that could sustain his company’s future. Along with these problems, the Urology Division’s flagship product, the urine bag, confronted with a huge competition in price. This increasing competition in the Indian market was also a major problem for the company. In order to come out of the situation, Vasudev figured out several options. He was aware of the limited or no access to debt financing, thus he shifted towards the possibility of securing private equity or to acquire the funds from several co-owners of the company. Whether he could be able to sustain his division of Blood Bag and Urology from this source of funds? To generate funds for the blood bag business, would it be better to divest or sell the Urology Division? While divesting this unit would definitely have a significant impact on the company and would lose its key product, the urine bag that was now becoming popular now in the market. However, one of the competitors had shown his interest, but now Vasudev considering developing a joint venture with the competitor.