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Transcript of Bergerac Systems
The Challenge of Backward
Business and Operational Challenges
Advices to Wyckoff
Overview Of the Company
The Company remained a small player in a very competitive market.
"Buy" Decision: Acquire Bergerac's supplier, GenieTech, for $5.75 mil
Gain 8 molding presses
Gain experienced labor
Lower costs by $.26/unit
Payback = 4.8 years
Intangible Costs of a "build" decision:
Inexperience may lead to a decrease in productivity
No access to specialized knowledge for better innovation
Capacity utilization may not be high enough or may be too low for efficient productivity
The time needed to learn the process and fix mistakes can be costly
Intangible Costs of a "buy" decision:
Interpersonal relationship problems between old and new staff may develop.
Although the acquisition would come with a supervisor, inexperienced oversight and management may deteriorate the value and productivity of the company
Ability to invest in other growth opportunities will decline since operating capital will be tied up in the production activity of the new company
Difficult to reverse
The major inconvenience for Bergerac was its poor control over its production and supply chain.
With the market growing rapidly its important to grab it quickly.
Have long term explicit contracts
Have Better inventory with a good forecast of demand
Implicit Contracts(relying on firm's reputation)
Thank you !!
Instead of going to full production start with 2 machines and implement all the precautions and see how it works out .
The veterinary customers of Bergerac were frustrated by temporary stock-out at their distributors. And this happened quite often.
Whether to buy or build injection-molded parts for its Cartridges
"Build" Decision: Make the plastic pieces at Bergerac's Parsippany plant
Only make the required 4 molding presses to satisfy current needs
Acquire newer machinery with shorter cycle time & more efficient use of raw materials
Lower costs by $.57/unit
Payback = 15 months
Manufacturer of Pet Diagnostics equipment.
Bergerac's main product is OmniVue.
Fast Growing company
A small player in a very competitive market.
To maintain Bergerac’s growth trajectory, it was imperative for potential customers to have full confidence in the company’s ability to deliver on its promises.
We will suggest to Wckoff that he accept MacCarthy's analysis. And build in-house capability to produce cartridges.
Asifuddin Khan Mohammad
Backward Integration Opportunity
Buy Or Build ???