Essay: Beckton Dickson: Negotiation

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SAMPLE EXCERPT:

[. . .] The mixture of the superior quality of Beckton Dickson products, greater margins, lower prices, and the feeling of being shelved by Temuro could be enough to lure the major distributors to exclusively dispense Beckton Dickson products.

Further the researcher believes that Beckton Dickson would need to try to contest with the other players on the needle marketplace as they have been dropping marketplace share for the past few years. Our suggested solution can be abridged as the following: Focusing on association with key suppliers, open offensive on Terumo contracts, and raise rivalry in the needle market.

1. 1983 -- BDVS fought negotiation. Why?

Firs it is important to find out why the negotiation was fought in the first place. In 1983, APG required substantial price decreases from the BDVS. However, during that time BDVS was not willing to do these price decreases because of its superior excellence, service and range and service and fought against the negotiation with the APG HQ. The following are some of the key motives behind why BDVS resisted negotiations.

a. BDVS turned out to be a pioneer in altering the market of Blood Collection Products Market to Evacuated-Tube Blood collection method from Needle & Syringe method. BDVS had the broadest array of blood collection products and this was vital for the Hospitals, which are on this to run numerous diagnostic tests for hematology, chemistry, coagulation studies, special procedures and blood banking. Product variety / color coding schemes accessible by BDVS were favored by the customers (Baiada-hireche, 2012).

b. Blood collection products shaped merely 6% of the entire supplies bought by hospitals and the BDVS products were favored by the "bench individuals" in the laboratory (medical specialists in the lab) for its quality / range (Christopher A. Bartlett, 2012).

c. It was not required on the APG associate hospitals to purchase merely from the negotiated manufacturer for the creation. Founded on the partialities of the "bench individuals," they could purchase from a different salesperson as well (Currie, 2006). Taking benefit of this direction, BDVS sustained selling trustily to Individual hospitals by means of its well-progressive field sales force that conserved good associates with their customers that were current and was accomplished to resist the share of marketplace. Wherever expense had become it kept most of its industry with hospitals that were separate (that were connected with APG) by means of prices reduced, on a case-to-case foundation. So they did not have a convincing necessity to approach the negotiation bench (Zuzulock, 2006).

d. For the past few years, BDVS had put in place the "Z Contract" with its large and key Accounts after cooperation for quantities and price supplied to them through its official suppliers.

2. 1985 -- BDVS ready for negotiation. Why?

BDVS was ready for negotiation with APG due to the following particulars:-

Changing Market Trends:

1. In the United States, 1800 key hospitals had been accounted for 60% of the marketplace for equipment and medical supplies. Similarly 70% of most of the blood tests had been done inside of the Hospitals in the United States (Baiada-hireche, 2012).

2. In 1983, the United States government moved in new legislative for the re-expenditure of costs for Medicare patients originated on examination -- associated Groups (DRG) and not on prices for hospital. It was clear that the hospitals did pick to choice to control costs and look at things otherwise and henceforth the hospitals fortified individuals to choose for day care amenities rather than comply.

This had a dramatic effect in expressions of decrease in the hospital admittances by 5%, period of days had fallen by 5% and the amount of hospital beds as well were predicted to fall in the 1990 by 34%. All of this was saying that the marketplace was dwindling and that there is a necessity to defend this dwindling marketplace. The BDVS want to uphold its portion in this market, bearing in mind this future trend and APG was developing as one of the influential buying groups to calculate with. BDVS made the decision to negotiate with APG.

3. Because of the above DRG-based re-imbursements, there was cumulative cost repression stress on the hospitals to make sure that the cost was brought down cost of its purchases, administration and maintenance. This is another motive for the separate hospitals -- large or small -- to get connected to buying groups like APG in order to acquire a price advantage for integrated purchasing of merchandises.

Changing Buying Behavior:

1. now the buyer has altered from being the Lab personnel, and this was a person that was familiar with the company and also the product representative to the Purchasing Personnel that has come from various circumstances. These individuals required steady service nevertheless with lower prices.

2. Buying has begun from Corporate Purchasing from Hospital purchasing for huge national multi-chains of hospital. These either negotiated straight with Builders like BDVS or linked themselves to Purchasing Groups such as APG, which had better buying power because of high capacities.

Emergence of APG as a strong Purchasing Entity:

1. Increasing amount of hospitals were getting associated to APG. From 24 hospitals during the year of 1972, the current affiliation stood at 500 hospitals. A lot of the prestigious and large hospitals allied with medical schools were now APG associates.

2. APG's power was getting much bigger and also its purchasing power. APG was having national purchasing contracts with about 100 medical apparatus dealers and the numbers of such arrangements were progressively growing in the current years.

3. During the year of 1983, as BDVS were not yielding to APG for the reduction in price, APG decided to enter some kind of a national purchasing arrangement with Terumo, who is their competitor.

4. APG, after BDVS fought against negotiations in 1983, introduced a group of field personnel who were going to its member hospitals for operation of the agreements and they had went to marketing that was negative which ensued in pampering of association of BDVS with its clienteles. After BDVS had a get together with APG HQ affiliates after this incident, the relationship got much better at particular hospitals.

5. APG in 1985, had proclaimed its choice to start its own delivery system and throughout the year it had taken in its fold numerous regional and small distributors that were into medical products delivery to trucking/billing and warehouse operations to APG-associated Hospitals.

6. APG was advertising to its member hospitals that through its program hospital prices could be transported down by 5% to 14% on a lot of the supply items.

7. APG's Material Administration was belligerently marketing the distribution programs and private label. Those suppliers that did not contribute in these programs were not given any type of APG contracts.

8. During April 1985, Mr. Wilson, VP -- MM at APG made an announced that they were going to establish a new national buying contract for the blood collection merchandises. The Supplier that showed the will accept 90% of the order for such items that are from APG associated hospitals. Even though this was not accurate, as per the sales individual's field assessment, nonetheless considerable share of the industry with these hospitals was at danger.

9. APG was grim in regards to purchasing contract and did whatever they had to do in order to make sure this contract would be successful.

10. It is obvious that the stakes of BDVS were great as at the APG connected hospitals it had a portion of 80% of their intravenous blood collection tubes and 50% segment for the needles. In the end, it would sum up to U.S.$6 Million in sales to these hospitals in 1984.

11. APG was likewise negotiating with BDVS participants.

As mentioned from the above, BDVS supervision felt it sensible to not struggle against negotiation and made the decision to negotiate openly with PG HQ.

3. Aug 15, 1985 -- What should BDVS propose? Why?

Part of the plan is understanding what needs to be done in regards to BDVS. One thing to remember BDVS had sales of $ 90Mn in 1984 and each of its product group accounted for 33% of its operating income.

Out of this, as sales of $6Mn had come from APG affiliated hospitals last year and this is roughly 7% of its sales revenue. Its closest competitor Terumo is at its heels and had been pricing aggressively to gain market share. Hence, BDVS should not ignore this requirement from APG.

It could offer the following brush up proposal to APG:-

Pricing:

APG is exclusively going by the bottom value of the merchandise without bearing in mind its qualities which is not accurate. BDVS provides a wide kind of produces in the blood collection product market and is a recognized market leader that happens to be in its own right. Its quality is un-matched and hence it is not… [END OF PREVIEW]

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Beckton Dickson: Negotiation.  (2012, November 28).  Retrieved May 23, 2019, from https://www.essaytown.com/subjects/paper/beckton-dickson-case-study-negotiation/4341850

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"Beckton Dickson: Negotiation."  Essaytown.com.  November 28, 2012.  Accessed May 23, 2019.
https://www.essaytown.com/subjects/paper/beckton-dickson-case-study-negotiation/4341850.