By: Emily Grammer, Paul Roth, Marta Muncharaz, Mursaleen Ahmed MediSys Corp Case By: Emily Grammer, Paul Roth, Marta Muncharaz, Mursaleen Ahmed

Road Map: Recommendation Higher producer surplus and margin in modular market Best fits the culture of the company Factions II. Solutions to our problems III. Conclusion Recommendation Arguments defending our recommendation Higher producer surplus and margin in modular market Best fits the innovative and entrepreneurial culture of the company (strategy statement) Factions (we prefer dealing with … rather than ….) III. Solutions to our problems Increase communication Reallocation of decision rights Establish a common objective IV. Conclusion

Recommendation … THE MODULAR DESIGN

Reason 1: Higher producer surplus and margin Modular: -- higher min AVC: higher costs to produce the modular product. Expensive labor cost, -- Olygopoly: Some barriers to entry in the market: brand identity, customer loyalty (the firm has already launched 2 popular products) Some product differentiation: one of the first product in the market but there may be relatively close substitutes (other firms will offer the same product) -- Inelastic Supply: a change in price of our costs will have NO significant changes in our quantity SUPPLIED. If the price of a special piece we needed to produce our good increased significantly, we would NOT be able to go buy anywhere/to the next store. -- Inelastic Demand: customers are NOT price sensitive, a change in price will have a no change the quantity demanded by the customers. If our company were to increase the price of our devices, they will still buy it because is not like they can go next store buy another one (few products, few companies) HIGH MARGIN LOW VOLUME STRATEGY! Non modular: → Monopoly: Minimal barriers to entry in the market (because we will have already launched the product) High product differentiation: the first product in the market

Reason 2: Best fits the innovative and entrepreneurial culture of the company Strategy: We will become the best medical device manufacturer by developing high technology and innovative products in a competitive time while preserving the innovative and entrepreneurial culture of our company.

Reason 3: Factions Dealing with Bret O’Brien is a better option for you than dealing with potential problems from Valerie Merz Merz -- Merz feels like she has no authority and a lot of responsibilities -- No one communicates to Merz -- Merz is on the edge of leaving (quote last paragraph of case) Obrien -- O’Brien has the contact with all the engineers and producers -- He has adverse interests to do the modular device and it could cause a huge problem if he decides not to collaborate → We prefer dealing with O'brien and his adverse interests because we believe that We can convince him to collaborate by giving him incentives We will give him more time to decrease the pressure he has with the time We will show him the benefits that would come with the modular design Higher producer surplus and margin in modular market

How are we going to solve these problems? -Parallel system currently implemented is not working -No communication and trust, conflict among workers -Engineer problems in India (internal space problem for the product) -Lack of time → Workers are not looking at the bigger picture. Workers are focused on doing the right thing for their own department instead of the company. → Lack of clear priorities within the company

Reallocate Decision Rights Name Decision Rights Monitoring Incentives Valerie Merz Marketing for IntensCare product -Biweekly product check in -Jack reports to you all the information you need -Modular design (your preference) -Annual raise Bret O’Brien Engineering -GANTT Chart -6 more months for the expanded project design -All project workers in the US -Jack will tell O’Brien the decision Jack Fogel Production Manager & Project Leader -Biweekly check in with Art -Recognition -Completed project -Bonus Dipesh Mukerjee Software Design -Next project takes place in India Karen Baio Product Testing -Design that helps more people

By reallocating decision rights we will: Increase communication among workers Establish a common objective Increase the speed of the project Implement the parallel system started

Conclusion We believe that you should choose to produce the modular design There’s a large producer surplus and high margin This option best suits the culture of the company Factions By reallocating decision rights the main problems your company is facing will be solved.