Bergerac Systems: The Challenge of Backward Integration
Veterinary expenditure has been on an increasing trend due to the increase in pet ownership in the United States. Bergerac is a company producing equipments used for testing pet patients in the veterinarian clinics. Omnivue is one of the most successful equipments produced by the company, which is priced at a competitive rate to attract lower and middle sized veterinarians. The production of Omnivue involves the use of plastics and chemical reagents supplied by two major suppliers, GenieTech and Elsinore. The management of Bergerac is planning to take control over its suppliers to reduce the production fluctuation and overhead costs of the firm. There are three strategic alternatives for the company to implement its future plans. It can opt for forward integration strategy by controlling its distribution channels; it can implement backward integration strategy through acquisition of building its own plant. Bergerac also have the option to operate the way it is currently operating to avoid risks arising from forward and backward integration. Introduction and Problem Identification
Bergerac systems, established in 2001, focused on developing latest medical assistance machines for pets. As the trend of pet keeping and caring was increasing, Company took advantage of the moment and started to invest in research and development for a better substitute to the normal blood testing machines at veterinary clinics. Pet healthcare industry grew at a rate of 7 to 8 percent due to an increase in the pet possession rate. A number of pet owners in the United States consider their pets to be a family member and spend a decent amount of their earnings on the pet healthcare. Veterinary doctors have been focusing on clinical diagnostic and are relying on the latest machines providing accurate and fast results. Omnivue was one of the latest additions to the pet healthcare industry. A tabletop sized machine...
Please join StudyMode to read the full document