Astart-up company making diagnostic test kits is looking for ways to grow its business OTC Tech OTC Tech sells over-the-counter diagnosis process took three weeks. In the end, it just products. The company was set up four years ago seemed that life would be easier forall concerned n Copenhagen, Denmark, by Anders Larsen, an if patients had easier access to such tests. engineer witha passion forthe ‘mechanics’ of ‘The use of home pregnancy tests is now very the human body, and Ulla Hofmann, a research common, so why shouldn't other easy-to-use chemist with many years’ experience inthe diagnostic test kits for a wide range of conditions pharmaceutical industry be available for home use? OTC Tech was bom out ofa personal experience. There are many good reasons for people to take The need for a routine test entailed a week-long control of their own health, and OTC Tech can ‘alto see the family doctor, followed by a trip help by providing you with home-test kits. Our to the hospital fo the test, and finally the results ange of products includes a cholesterol test were received over the telephone. The whole diabetes tets and allergy testing. What problems do you think this new business might have selling its products? fo e +4) CD3.33 Listen to their conversation and make Growth at OTC Tech has been consistent over the petessen these points first couple of years, but a litte slow. The How effectively is OTC Tech matching its goods company directors recently hired a consultant to and services to customer needs? help them decide how to develop the business. What improvements are suggested? 3 Does the company have the right management team in place for growth?UNIT 11. »» NEW BUSINESS Assessing options You ate the directors of OTC Tech. Read the report below outlining the options for growth, and hold a meeting to consider the pros and cons of each, Which ones are low rsk and which ae high isk? Choose the two options you think are bes forthe company. Ways we can achieve growth at OTC 1 Tay to increase sales of existing products to our existing customer base. How ‘can we increase the frequency of purchase and maintain customer loyalty? 2 Diversify and start to sell new, related products that potential customers currently buy from our competitors, eg. home pregnancy tests. 3. Move into other areas of the industry, e.g. low-tech items, like blood- pressure monitors, or high-tech monitoring equipment. 4. Increase spending on R&D in order to develop and market new products. We could work on joint projects with a university or hospital research centre. 5 Find new distribution channels, Our products could be sold via new or ‘emerging channels which might boost sales, e.g. e-commerce. 6 Consider overseas expansion. Which markets would provide most opportunities? For instance, the US is the world’s largest market for medical products. 7 Outsource manufacturing to a country with lower labour and production costs, and focus the business on R&D, marketing and sales. 8 Form strategic partnerships, eg, with a company selling dietary products or herbal remedies. A radio report 49 03.34 Listen to a radio programme and meet again to decide how you want to change any parts of your growth strategy. Negotiation Amajor chain of pharmacy stores in the UK wants to negotiate a retail distribution agreement with OTC Tech. Workin pals and role-play the negotiation Student A: Read your information below, ‘Student B: Turn to page 156. Student A You represent OTC Tech. This distribution agreement could bring substantially enhanced sales for you. You want to: Watch the Case study + negate two year agreement citer company can giv ee | 60 days’ notice of termination to end the agreement; recelve payment within 60 days of the date of invoice; Wiiting be able to give 30 days’ notice of price rises in order to be able to Write an e-mail to your business pass on cost increases such as currency fluctuation and inflation; cosaltank sumidstisiag your split the cost of marketing in the UK 50/50 you'd like that to growth strategy for your company. include TV ads; Outline your plans for new products, sales growth, marketing ensure that your distributor is not selling or developing rival w and distribution plans. products to compete with yours Wing file page 145 a1