Sunrise Medical, Inc.’S Wheelchair Products Harvard Case Solution & Analysis

Sunrise Medical, Inc.’S Wheelchair Products Case Solution

Opportunities for SMC

• International market

Sunrise Medical has the opportunity to expand or export its products in the global market, there are other untapped market that need the attention from sunrise. The new untapped markets will help the company to grow and avail the market share.

• Artificial intelligence

The Trends are changing and use of technology is also increasing, customers are also looking for products with technology advancement. Sunrise should explore the artificial intelligence options to integrate into the wheelchair. This will help to increase the customer demand.

Threats for SMC

• Digital market player

Due to technological advancement the trend of technological products is increasing and the companies like Amazon, google, are working on these type of products, and this can impact the sales of Sunrise medical.

• Delay in change

The current situation of the company clearly show the need of the change. If company did not focus on changing few aspects in the company then company can face tough time from competitors within the domestic market as well as in international market.

TOWS Framework

Industry or External Analysis

The wheelchair industry is quite young, as a result of which, the Sunrise Medical Company has achieved tremendous growth in its sales revenues within ten years of its operations. The company’s international sales approached to $800 million, by the end of the fiscal year 1992. These sales were mainly coming from the United States and America. The company’s financials reveal that the company was operating in its growth phase. It is because, the sales of the company was increasing continuously and the average sales growth ranged from 5%-16% annually.

The companies, operating in the wheelchair industry, were highly delighted as a result of the insurance program in the United States of America, which aimed at compensating the companies for wheelchairs with higher costs, which would enable the companies to increase sales level in the long run. But despite such positive industry aspects, the profit margins of the Sunrise Company were quite low, as a result of high costs i.e. 65%-75% of the total cost, associated with developing a product. In addition, the extra operating expenses amounted to 34% of the company’s sales approximately.

The wheelchair industrty was comprised of three major players i.e. Sunrise Medical, Invacare and Everest & jennings, which owned the 70% of the industrty’s total market share. Invacare, a key competitor of Sunrise Medical Company, was also earning huge profitability by generating teh positive cash flows through key strategies, including mergers & acquistions, innovative strategies and briniging up efficiency in the company’s production, ultimateky reducing the company’s cost of production, similar to Sunrise Medical. However, the industry’s third key player Everest & Jennings was facing negative cash flows and losses for four consecutive years. From such industry scenario, the other players including Sunrise Medical and Invacare, can increase their market share in the industry, if positive cash flows are generated and appropriate growth strategies are adopted. Though it seems obvious that teh two players had become teh industry’s market leader ina very short span of time, which means that new entrants would be able to imitate teh strategies and models of the two companies very easily. Its important for the major players to take further key initiatieve in order to maintain competitive position and market share.

Porter’s Five Forces

The industry’s competitiveness and attractiveness has been observed using the Porter’s five forces analysis. The five forces analysis helps the company in addressing or avoidingthe risks associated with maintaining the competitive position of the company and to maintain thecompany’s profitability and growth potentials. The Porters five force analysis is explained as below

1.Threat of new entrants

New entrants can easily enter the wheelchair industry, as there are no entry barriers from the existing industry players. Further, the strategies and the models of the dominant industry players can be easily imitated. The hurdles in entering the wheel chair industry was not much important, as the manufacturing has a huge reliance on labor and it only required an investment of $1 million in machinery or equipment. The prefabricated parts were available for the new entrants to acquire at only $300,000. Not only this, the industry players have not owned patents, as result of which imitation can be quite convenient for new industry entrants. Hence, it can be concluded that the threat of new entrants is high.

2.Threat of substitutes

The wheelchair comes with different varieties like from a traditional wheelchair to an electronic wheelchair, as result of which the cost of switching form one wheelchair to another is quite low. The wheelchair operators receive new wheelchair after every 2-5 years, from which it can be determined that threat of substitutes is moderate.

3.Bargaining power of customers

The bargaining power of customers is high, as the 75% of the industry’s wheelchairs were insured by the United States insurance program. These insurance programs with their Medicare limited repayments had the authority to control the prices of the light weight and the standard wheelchairs. In addition, the luxurious wheelchairs were not covered by the insurance program, which could ultimately impact the demand on the negative side. Hence, it is analyzed that the bargaining power of customers is high.

1.Bargaining power of suppliers

The manufacturing of wheelchairs require extensive raw materials, form which 60%-70%, were purchased through different suppliers. There are many suppliers available for providing the raw materials associated with the production of wheel chairs. The large number of suppliers indicate that the switching costs of shifting from one supplier to another is low. So, the bargaining power of suppliers is low..........................

This is just a sample partial case solution. Please place the order on the website to order your own originally done case solution.

Related Case Solutions & Analyses:

The Novartis Foundation for Sustainable Development: Tackling HIVAIDS and Poverty in South Africa (A) Restating Revenues and Earnings at INVESTools Inc. (B) Amy Baker Richard Oliva Note on the Initial Public Offering Process CIBC Corporate and Investment Banking (B)–1992-97 (Condensed) Genzyme Corp.: Henri Termeer President and CEO Video Consumer Awareness or Disease Mongering? GlaxoSmithKline and the Restless Legs Syndrome Zynga Poker AIC (Introduction of Netbook)