Restructuring Essay For ABC Company's Medical Device Distribution.

Challenges faced by ABC Company

Question:

Discuss about the the Health Care Industry of Singapore.

The health care system is mainly under the control of the Singapore government. The ministry of health takes care of necessary elements to ensure a cost effective and highly effective treatment. As per the ranking published by the Bloomberg, Singapore healthcare system was ranked to be the best in the world. ABC Company is one of the renowned companies operating in the field of health care system in Singapore. The company is specialized in manufacturing and licensing the technologies used for the purpose of making medicines (Abdelhak, Grostick and Hanken 2014). The company is itself specialized in developing medical devices. The company was listed in the Singapore Exchange (SGX) in the year 2005. The DES technology is the core sector and specialization, which is helping the company in earning a big amount. Ever since its inception, the Company is continually engaged in making high revenues; however, it witnessed a significant drop in the revenues structure in the recent past. According to the Mainboard reporting, the ABC Company reported to have a net loss of US$247 million in its participation in the fourth quarter of the year 2015. The company is continually having a huge loss from selling the medical devices, which has remained an integral asset for the Company for generating the revenues (Austin and Pinkleton 2015). In the coming years, the Company is expected to have stiff competition from the hiring prices of medicines and other competitors. The main purpose of the assignment is to provide a restructuring to the ABC Company for its distribution of medical devices. This is because of the fact that the Company is experiencing a huge loss for an incapable rotation of medical devices. The lack of innovation has had hampered their sales performance of the medical devices, despite of the fact that the development of medical devices is the area of expertise for the company (Borkowski 2015).

After following some of the financial performances of the organizations, it is evident from the fact that the organization requires a serious redesigning, which could again improve the performance of the company. The current business structure of the Company is more of geographic structure, which has numerous of its subsidiaries in and around the world. The reporting is addressed to the different regional headquarters. However, all the vice presidents in the entire subsidiaries of the Company tend to repost to the CEO of the company in Singapore. The regional vice presidents are also responsible for the accounting of sales and reporting the stats to the parent company, which is in Singapore. Each of the subsidiaries has their own manufacturing plants, sales department, marketing team, human resource department and the logistic operation (Bourke 2013).

The main objective behind the business performance of the Company is the enhancement of profit by expanding the business to most parts of the world. One of the main objectives of the ABC Company is to be cost effective manufacturer, which is also important for the incremental profit margin. It also lacks in innovative ideas. The main problem behind the rising issue and the lowering margin of profit is the existing structure of the Company, which has compelled the Company for following something that is less innovative (Buchbinder and Shanks 2016). The coordination between different of its subsidiaries is very poor. The regional offshore branches of the parent Company are not concerned about the overall company’s profit. They are rather more careful about their own profit and reliability. This is affecting the performance of the ABC Company in big amount. The lack of coordination with the parent company is also making this challenging to collect and consolidate the data from every centre. This is hampering the overall business of the parent company because it has become a challenge to sum up the entire revenues. The haphazard process of reporting and less capable coordination is resulting in poor analysis of the annual revenues (Burns 2012).

Proposed Solution: Product-Oriented Business Structure

 Another main problem is the manufacturing sites in all the Asian subsidiaries, which is costing the efficiency of the parent Company. Numerous of orders are coming from the America and the European art; the reason is quite obvious also as the cost of manufacturing in the Asian countries are relatively cheaper. However, the subsidiaries centers of the company are not responding to the created urgency. The subsidiaries centers do only know about their style of business. They do not care about the urgency, which is important for being the competitive in the market. The lower capacity of responding to the manufacturing requirements has given place to the poor performance as because of this the Company is missing on big projects. This is because of such reason that the Company is not capable of turning the table into its favor in the recent past (Eden and Ackermann 2013). Cost effective production is a valuable asset, which narrows the competitiveness in the market. This is the one point, which is hampering the business of the ABC Company. Other competitors are capable enough of producing cost effective and innovative medical devices. However, the ABC Company is now no longer capable of producing the same effect as that of some gone years. Apart from the manufacturing problem, innovative ideas are another problem, which is hampering the business of the ABC Company. The subsidiaries of the company are not innovative enough. They just want to stick to the one solution. They are not flexible enough with the changing demand of the market. The lack of innovation in the regional centers has significantly contributed in the poor performance of the ABC Company (Grol et al. 2013).

The restructuring proposal would be to change the geographical form of business to the product oriented. It means that the existing business system does facilitate the reporting of regional vice presidents to the CEO of the parent Company. This is because of such reasons that the ABC Company was not able to turn the table into its favor. The proposed structure would align separate vice presidents for the separate product line, which is perhaps the best possible structure to have a better control on the manufacturing. The ABC Company is specialized in making and developing innovative medical devices and medicines. The proposed business structure would then facilitate the reporting of product specific vice president to the CEO of the parent Company. This would provide a better control on the analysis of the business. This would also maximize the manufacturing efficiency because of the increased control on the manufacturing of particular product (Harrison and John 2013).

With this new business structure, the coordination problem would be removed. Moreover, it would also enhance the innovativeness of the subsidiaries branches. The production would improve as the product specific vice president would have shared values and the directional move, which was not possible with the existing business structure as one vice president was responsible for the entire operation. Manufacturing problem would also be resolved as they would now have better access to the most innovative manufacturing structures (Hill, Jones and Schilling 2014). The regional and respective country vice president roles would be removed from the business structure. Managers would now directly report to the product specific vice president. This is one of flatter kinds of structure, which establishes fast connectivity to the higher body. Moreover, this is important for responding quickly to the rising challenges of incremented demand of manufacturing. This would also reduce the operational costs for labor. The lower level structure of the business would remain the same because the operational change is targeted at the upper level of the management, which has highly contributed in the lowering business (Hitt, Ireland and Hoskisson 2012).

Benefits of the Proposed Solution

 Divisional structure, which has been postulates as the new business structure for the ABC Company has several affecting factors for the enhancement of business benefits. It is also important to know the level of efficiency, which the structure can bring to the Company. Speed in making decisions are often believed as a key aspect to respond to the rising challenges. The new business structure has all the capabilities to respond to the rising urgency at the business places with the usage of making speed decision (Huber 2013). On the other hand, it is worth mentioning that all the businesses that have divisional designing guarantees the desired success. Numerous of researches on the restructuring of businesses do reveal that the designing works better for the enhancement of business. It also states that the creation of a new business structure after studying the entire strategic faults in the operation is a healthy sign for the Company. It further says that the designing of a new business structure after carrying a deep research on the main problem is the best way to mitigate any risk after the implementation of the new business structure (Kapferer 2012). The quick responses to the urgency and the hiring demands are the best way to be competitive in the market.

Flatter structure of the business are time saving, which is also cost effective as it reduces the unnecessary expenses on the labors. The flatter structure does reduce the time by reducing the approaching medium to the higher management. The existing business structure of the ABC Company was geographical in nature, which facilitates the participation of regional vice presidents only. However, it was a slow process that was in responsive to the created urgency. In addition to this, the flatter structure does provide a less control on the manufacturing department because of the roles and responsibilities that are assigned to the vice president. The vice president only approaches the regional vice presidents for having some information on the revenue generation (Kavaler and Alexander 2012). However, the proposed business structure provides a firm control on the manufacturing process. It also narrows down the coordination gap, which was hampering the analysis of annual revenues of the ABC Company. The flatter structure is more specific to the functional alignment, which binds a strong relationship of the product specific vice president with the regional or country based manufacturing sites. Flatter structure can well reduce the coordination gap and respond to the rising urgency of manufacturing medical devices in high numbers. Medical devices are of high demands in the market and the requirement is crossing the all time high figure. This is because of such reasons it is more advisable for the company to have such a business structure that forms a quick and responsive relation to the entire operational sites. Moreover, flatter structure holds good in such regards and provides a quick solution to the instant problem (Kongstvedt 2012).

Flatter structure is also good in establishing a good flow of communication in between the employees and the managers and the higher management level that comprises of vice president and CEO in particular. However, to the ABC Company, the communication was missing in between the CEO and the different country based subsidiaries vice presidents. The flatter structure is more responsive and communication friendlier, which makes this possible to facilitate the desire of work in the different subsidiaries in different countries (Langabeer II and Helton 2015). The improved communication is thus helps facilitates and encourages the innovative ideas in the different managers at the different manufacturing sites of the subsidiaries. The lack of innovative ideas and a no to the aspiration of the same was one of the biggest problems of the ABC Company, which was holding their further growth. Being a developing company of medical devices, it is imperative to have sheer desire for the innovation as this helps in inventing many new technologies. Moreover, the invention of new technologies would further enhance the business expertise of the Company (LaTour, Eichenwald and Oachs 2013).

Conclusion

Decision making is another core characteristic of a flatter business structure that helps in making quick and responsive decisions. The flatter structure is more flexible than the lengthier business structure. This is because of the fact that this kind of business structure does facilitate a quick responsive nature in the managers and the higher management. This was one of the problems, which was making all sort of worries for the ABC Company. The lack of innovation and the adherence to the same business line was some of the problems that prevented the Company from making quick decisions. The regional vice presidents were not capable enough to look into the real problem of the subsidiaries manufacturing sites. The subsidiaries manufacturing sites were doing the business for their needs and desire only. They had no concerns for the parent Company and this is because of the fact that the ABC Company did suffer a huge loss in recent times (Lee 2014).

Performance oriented is the other core features of the flatter structure, which revolves around the performance. The initial business structure of the ABC Company was more of uncompetitive style. They had the tendency to remain in the state of inertia. The lack of desire for works and the less capable innovation have al resulted in incapable performance of the Company. However, the flatter structure is best for such kind of problems. This is because of the fact that the flatter structure offers competitive oriented atmosphere, which is very essential from the perspectives of business environment. The kind of structure tries to find competitive and qualified higher level management, which is important for redefining the definition of competition to the ABC Company. Moreover, the Company had already suffered a big loss in recent past. The search to find qualified and competent higher management is a good move for a Company, which has such a good product line. Moreover, the ABC Company would be highly benefitted from the flatter structure because of several reasons, which have already been mentioned in the above section (McGinnis et al. 2013).

Porter’s five forces would be very effective in measuring the external environment for the ABC Company is Singapore. The power of supplier in Singapore is perhaps low. This is because of the fact that in medical treatments, patients prefer buying to those medical devices and the medicines, which are highly effective. Therefore, it reduces the barging power of supplier as the buyer is supposed to pay a high amount of sum to purchase medicines of high quality, which could satisfy the needs and demands of patients and could raise the medical standards. Moreover, the Singapore government is very keen on incepting modern and innovative technologies to maintain their status as the best medical infrastructure in the world. These are some of the factors, which clearly illustrate the fact that the bargaining power of supplier in Singapore is low in the health care industry (Morden 2016).

The bargaining power of buyers is high because of the fact that patients want innovative and safest medicines, which could improve the medical facilities and take this to the new level. In Singapore, patients are more concerned about the quality of medicines than its pricing and this is because of such reasons, the bargaining power of buyers is high. Moreover, the buyers can go to any extent for purchasing the required materials as the demand is for the highly effective medicines (Oleske 2014).

Competitive rivalry is high in Singapore as the government rules are more in favor to the medical enhancement. This is because of the steps of the government, which has so far contributed hugely in the development of the medical facilities in the country. The cost effective medicines is the one initiative, which has positions the local government of Singapore to another level. The highly favoring nature to the medical enhancement and the inception of innovative ideas has broadened the internal competition in the country in between the different companies in the health care industry. The highly competitive nature of the medical industry in Singapore is a threat for such Company, which is less in innovation and the medical advancement (Osborne and Brown 2013).

Threat of entrants is higher in Singapore. The local government is more the favor of several new companies, which could prove their innovation in the field of healthcare industry. This is one of such problems, which is a threat to the health care companies. This is because of the fact that the entrance of more and more new companies would facilitate the enhancement of competition in between the different companies. The enhancement of competition in between different companies would certainly make way to the failure. The high range of competition in between different companies thus gives very minimal chances of recovery from any failure. The high range of competition and the increasing number of healthcare companies are not giving any significant space to the performance related failure (Rothaermel 2015).

Threat of substitutes is also high in Singapore in the health care industry. This is because of the fact that the health care industry in Singapore is continually engaged in inventing something new to address to more critical medical condition. This is because of such reasons that the threat of substitutes is high in Singapore. Some of the diseases have still no answers from the medical technologies. Those diseases are such as cancer and aids. To fight with such an epidemic ailment, it has become a challenge to the entire health care industry of the world. This is because of the fact that several research companies are always engaged in doing research works on some alternative ways to fight with the mentioned epidemic. The several research works are thus initiating the never dying competition for producing some sound alternatives to the existing medical facilities. Due to all such reasons, it is very challenging for the existing companies to maintain a healthy progress of their business. To be competitive in such scenarios, it is imperative to be highly innovative and responding to the created urgency. This is helpful in establishing and maintaining a reputation of the company. It is also helpful kin maintaining a good growth of business (Slack 2015).

Task environment factors are another very important process of measuring the challengers in the external environment for the ABC Company. The task environment sectors do include ten factors such as industry sector, raw material sector, human resource sector, market sector, financial resource sector, technology sector, economic conditions sector, government sector, socio-cultural sectors and international sector (Stead and Stead 2013). The industry sector is about the manufacturing trends in the costumers. In Singapore, the customers are highly inclined towards such medicines, which are effective. The initiative of the local government is to provide cost effective medicines and that of high quality. This is because of the fact that the industrial sector of the health care system in Singapore demands the cost effective production of medicines. The ABC Company would certainly meet up to the expectations. This is because of the fact that the ABC Company can now show multidimensional move towards the manufacturing of medicine and medical devices. They can now concentrate on the Asian countries for the manufacturing of their products. This is because of the fact that the manufacturing cost in America and Europe is comparatively higher than the Asian countries. This would help the ABC Company for producing the cost effective medicines and other medical products. The restructuring business would help in being flexible to the requirement (Swayne, Duncan and Ginter 2012).

Human resource sector is another very important part of the task environment factors. This plays a vital role in establishing a competitive environment of working inside the organization. The Singapore HRM is suffering of aging workforces, which is a strain on their shoulder to find the replacement as soon as possible. However, the restructuring of ABC Company would help them fight with this situation. This is because of the fact that the flatter structure requires more streamlined business, which requires the participation of competent employees and the higher management. Moreover, it would open up doors to the competent participants in the Company as the flatter structure requires only competent members. This would reduce the burden from the HR of the Company as they would not have any strain of recruiting bulk employees. They would rather focus on few but competent members (Tengblad 2012).

Raw material sectors are another important part to look out for the analysis of the ABC Company after restructuring the business. The bargaining power of supplier is low in the health care system in Singapore. This is because of the fact that the restructured business of the ABC Company would facilitate it for purchasing their required raw material from some other parts of world. Moreover, the ABC Company can focus on the Asian countries as the cost of manufacturing is coomapratively lower than the other parts of world (Valentijn et al. 2013).

The financial resource sector is very healthy in Singapore. This is because of the fact that the economy of the country is highly incrementing to a new height. The economy is one of the strongest in the world. Moreover, the government is very supportive to the health care system. This is because of the fact that the chances to capitalize on the provided area are higher to the restructured ABC Company. The restructured ABC Company is m ore flexible than ever before and this is one of such reasons, which is supporting the fact that the Company would have a healthy business (West et al. 2014).

The market sector is driven by many public and private companies, which are engaged in manufacturing medicines and medical devices. Public and private companies are very competitive in nature. However, the flatter structure of the ABC Company would provide a solid competitive advantage in the market. This is because of the fact that the Company now entertain more to them who are competent in nature. Moreover, this was never before the same scenario (Yoder-Wise

Technology sector is highly progressive in Singapore but the incapable business structure of the ABC Company had prevented it to be advanced in terms of manufacturing. This was one of such reasons also, which has hampered the advancement of technology in the manufacturing in the different regional subsidiaries. However, the restructured business of the ABC Company would certainly open up doors to the innovation, which is a healthy sign for a progressive business (Swayne, Duncan and Ginter 2012).

Government sector is very cooperative to the health care industry. The restructured business of the ABC Company would allow it to leverage on the maximum provided chances. The socio-cultural sector is another very vital factor for the prosperity of a health care business. The people of Singapore need effective medicines. They are ready to buy the medicines at any cost. This is because of the fact that the ABC Company has broader chance to purchase the raw materials from the Asian countries and produce a cost effective product. Moreover, the sale prices would provide a higher margin of profit, which is very useful and effective to lift the economy of the Company. The international trading would be extremely beneficial for the ABC Company. This is because of the fact that the Asian countries are comparatively cheaper in manufacturing costs, which makes this highly profitable for the restructured ABC Company. Moreover, the profit margin would be high because the manufacturing cost would be comparatively low and the selling price would be higher (Swayne, Duncan and Ginter 2012).

Conclusion

The ABC Company did suffer in business terms because of less capable business structure. The geographical business structure is less competitive because of loose control on communication, ineffective decision making and the low number of competent participants. However, the flatter structure would certainly enhance the competitiveness of the ABC Company, which was never the case in the recent past. The restructured business would show high penetration to the innovation, which is highly recommended for being competitive in the highly volatile market of health care sector. The flatter structure would also enhance the communication power in between the higher management, which is helpful for taking quick decisions.

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