Possible Solutions to the Case

¶ … solutions that would have helped Kurt Thaldorff convince Lohmann Hospital to buy the CT scanner from Mediquip, we need to be able to make some pertinents observations on the product, observations that would help determine why Sigma was in the end picked.

In my opinion, the most relevant and, at the same time, difficult question, is r4elted to the person who has the final word on decisions at Lohmann Hospital. As we have seen from the case study, this is certainly not Professor Steinborn, head of the radiology department, although he has something to say on the qualitative evaluation of the product. However, considering that the two main vectors in any acquisition are quality and price, he has no saying on the price, he is not able to negotiate it or even be aware of the price level.

This seems to be Dr. Hartmann's job, who may be considered an administrator for the hospital. Indeed, he is the one who receives the price offers, including the final, formal offer in September. It is obvious that Dr. Hartmann is concerned because the price Mediquip initially offers is some 34% higher than any of the competitors' offers. Additionally, even the last bid is 10% higher.

In my opinion, this is perhaps the most important weaknesses of the CT scanner provided by Mediquip: price. Throughout the case, there seems to be no objections from the radiologists, physicists or administrators in terms of the product's quality or technical requirements, but they always seem to bring the question of price and how Mediquip's differs from all the others.

As such, as the most important solution for Karl, I find it a necessity to be able to emphasize the product's numerous superior qualities and to describe to the purchasers the reasons for which the product is indeed the most expensive in its product sector. Indeed, if we make a parallel and refer to cars, for example, you are keen to buy a Mercedes and not a Renault, even if it is five times more expansive, because it has additional safety features, you are more likely to be able to use it for a larger period of time, etc. It is the same here.

In this sense, inviting one or more people from the University Hospital to the company's headquarters operations near Paris appears not only a desirability, but a necessity. I would include here Professor Steinborn, who, as chief of the radiologists board would be able to understand some of the pluses for the product and what it would bring extra from all its competitors, but also Dr. Hartmann, who seems to have the final decision on whether to buy from Mediquip or choose one of the other companies.

The visit itself would first of all show and physically prove why Mediquip's CT scanner is the best in the business. From the case study, we understand that all contact between the buyers and the scanner is made through technical brochures and requirements. We are not even sure that they have actually seen the product they will be buying. The visit itself would have the "drive test" role: the buyers will be able to properly test the product and later convince the board why it is better to chose a more expensive, but better product.

There is another aspect Kurt should have insisted on. One of the reason the Mediquip scanner is more expensive is also related to the fact that the product is less likely to grow obsolete in a short period of time. This and the fact that the product is properly designed to accept any new software in the future should have been compared to the actual extra price that the customers have to pay for it.

This could have been visually presented in stacked or normal bar charts and may have convinced the decision factors that it is worth paying 10% more now and having the equipment for the next 20 years than paying less and having to change the product in the short run.

Finally, there seems to be a problem with the delivery time. Even if this aspect was not actually discussed in any formal meeting, the fact that Professor Steinborn has made no remark when he found out that the product is delivered in six months may be relevant. This seems to be another weak point for Mediquip. In this case, Kurt should have simply passed over the subject or should have mentioned a more idealistic timeframe.