Boc Ohmeda

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Ohmeda’s current distribution system and sales organization is not well suited to implement Rountree’s new business strategy. The new corporate strategy calls for growth in high technology product lines and the current dealership channel is more suited to goods that require less education and information. In summary, the market trends combined with our changing corporate strategy will require Ohmeda to change the distribution channel and structure of the sales force. In the short run, this will require a transition period and an investment to reorganize Ohmeda’s sales force for long term growth. In the long run, we believe this consolidating market will be heavily specialist orientated. Due to these facts we recommend a dedicated sales force of specialists to address large accounts. The dealer network will be progressively scaled back to where their primary focus will be on the low technology markets where education is not important.

Current Structure
Sales people are given two weeks of training and few of the sales generalists have mastered the entire product line. This has led the salespeople to focus on the products that they did understand such as low technology, and the mature segments of the market. This is not the high technology segment of the market Ohmeda wants to focus on in the future. In fact, these are the areas where salespeople should not be spending much time due to the products being mature and generally understood by the marketplace. This is an extreme misalignment. Historically we had mixed products but limited focus on high technology due to misaligned incentives.

There are certain facts which show the need to change Ohmeda’s current sales force strategy. The first revealing trend appears to be in the anesthesia equipment market where Ohmeda has been the market leader with a share of greater than 65% historically. However, recently a West German medical maker has capitalized on selling the story of their technology to...
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