Rev. October 16, 1995
Sunrise Medical, Inc.’s Wheelchair Products
In mid-August of 1993, Richard H. Chandler, chief executive officer of Sunrise Medical, Inc., reviewed his firm’s strategic plan in his office at corporate headquarters in Torrance, California, a few miles south of Los Angeles. Sunrise sold wheelchairs, crutches and other products used in the rehabilitation and recovery phases of patient care. In the 1993 fiscal year, the ten-year-old firm posted returns of 5.7% on sales of $319 million, and made Financial World’s list of the top 200 American growth companies for the third year in a row. Sunrise’s social responsibility programs also had been featured in a 1993 book entitled Companies With a Conscience. Strategic planning for 1994 uncovered a potential conflict between divisional objectives. Guardian Products, the division that sold crutches, walkers, and other patient aids, planned to introduce a lightweight standard wheelchair to complement its line. If it were introduced, Guardian’s new wheelchair would compete with an existing product offered by the largest and most profitable Sunrise division, Quickie Designs. In the early 1980s, Quickie attracted worldwide attention for its colorful ultralight wheelchairs, and in 1987, it introduced a lightweight standard model. Quickie sold only wheelchairs.
The Guardian prototype differed from the Quickie model in design and features but would be offered at almost the same retail price. Chandler had to decide whether to ask Guardian to modify its plans.
Historically, divisions had made operating decisions without interference from headquarters, but significant competition between them had never occurred. Chandler felt that the issue raised fundamental questions about Sunrise’s competitive position, especially with respect to its archrival, Invacare. Invacare sold many of the same lines as Guardian and Quickie through a single salesforce.
The Wheelchair Industry in 1993
In 1993, manufacturers’ sales of wheelchairs and parts were about $400 million in Europe and $400 million in the United States. American manufacturers alone sold about 300,000 wheelchairs. Trends in the industry usually originated in the United States, where the health care system encouraged patient mobility and self-sufficiency. European companies often copied innovations several years after they were introduced in the U.S. Competitors in other parts of the world did not manufacture state-of-the-art products.
Assistant Professor Anita M. McGahan prepared this case with research assistance from Sarah Mavrinac as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Copyright © 1993 by the President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685 or write Harvard Business School Publishing, Boston, MA 02163. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.
This document is authorized for use only in ISB-EY Programme in General Management_ [Term-6] by Professor Nagalakshmi Damaraju @ ISB at Indian School of Business from December 2012 to March 2013.
Sunrise Medical, Inc.'s Wheelchair Products
Wheelchairs were grouped by weight and features into four major categories. U.S. manufacturers’ sales in the oldest and largest category, standard wheelchairs, were about $130 million and were forecast to grow by 5% annually for the next several years. Made of steel with vinyl upholstery, standard wheelchairs weighed 36 to 50 pounds and folded to a thickness of 10 inches (Exhibit 1). The typical user was elderly. Suggested retail prices ranged from $400 to $850. Lightweight standard wheelchairs, the...