[University]
1. Why is the topic of “multidivisional marketing” attracting corporate attention at BD? Is it a good idea?
The ‘multi-divisional marketing’ strategy is an attempt of the company to consolidate and improve its seemingly cluttered organizational structure and supply chain management. The company’s multi-divisional marketing strategy focuses on four key areas; market segmentation, value-added services and programs, improvement of information systems and the reorganization of its sales and marketing structure. It should be noted that BD has a complicated organizational structure. Accordingly, the company is divided into 19 operating divisions; each with its own marketing, sales, distribution network, accounts program and customer service department. As a result, coordination is difficult to achieve. As observed by one of its executives, “interaction between divisions has, historically been minimal; and that has probably meant some inefficiencies and duplication”. Most often, issues about organization structures are difficult to identify but becomes apparent when urgent and critical decision making is necessary. By embarking on a multi-divisional approach, the company hopes to create three significant improvements to its supply chain management. One of the major advantages of the multi-divisional approach is it creates a strong image and emphasize the importance of the company as a whole and not just on the individualized product that each division carries. Another advantage of having a multi-divisional approach is it helps carry lesser known and poorly performing company products by promoting all its products under the well-known corporate brand. Also, the company’s multi-divisional approach maximizes the utilization of resources and provides value-added initiatives to its products. Based on the company’s complicated organizational structure and supply chain; it appears that BD badly needed this multi-divisional strategic concept.
2. More generally, under what circumstances would this kind of marketing strategy make sense/ do those circumstances apply at the HMC account? What are the pros and cons of each strategy?
Under the multi-divisional marketing strategy, the company’s market segmentation strategy will shift from categorizing customers based on products being bought to account size, location and type of funding. As a key account, HMC will benefit from this strategy as it will be recognized as one of the company’s biggest clients. On the other hand, this shift in market segmentation strategy would enable DB to identify its key accounts and focus its efforts on retaining them. In order to maintain competitive advantage, the company seeks to differentiate between basic services and value-added service. As a result, it maximizes the utilization of the company’s resources especially on its promotional expenditures. Another key aspect of its multi-divisional marketing is the development of its information systems. The company identified I.T. as one of its area of opportunities. Apparently, due to the company’s global operations, IT is indeed needed to facilitate interaction and communication between its departments and units. The company’s sales and marketing structure will also experience an overhaul. Traditionally, sales and marketing efforts are conducted on divisional levels. Although this approach gives increase accountability and personalized service to the company’s accounts, there is also a big possibility that marketing and sales efforts might be inadequate especially on key or large accounts. The new approach in sales and marketing would enable division and corporate to act as one unit when dealing with key accounts such as with HMC. By then, it would be easier to make a centralized decision whenever issues in marketing and sales emerge.
3. What is at stake at the HMC account: for BD? For Becton Dickinson Division (BDD) for other divisions? Who are the key players that must be considered in responding to the competitive threat at this account?
In accordance with Porter’s Five Forces, BD in general, is experiencing increased pressure because HMC projects a huge bargaining power as a buyer. On the other hand, its contract with Allied Purchasing Group, the company’s Group Purchasing Organization (GPO), did not help advance the company’s interest. In a way, these contracts only gave GPOs the bargaining power as bulk buyers eventually allowing them to be increasingly influenced by these middle companies. In order to address the competitive threat posed by its leading competitor, Terumo, it is important that BD express its intention to retain HMC. Being a key account, addressing the threat must come from a centralized approach. This means that the company’s sales president as well as its key executives meets with HMC’s decision makers to discuss the matter at hand and arrive at a mutually beneficial solution.
4. What should Mr. Jones, VP Sales, do with regard to the HMC account? Specifically, should he pursue a multidivisional approach in this situation, a price decrease, or another option? How should any actions concerning HMC be implemented?
The situation with HMC is a great opportunity for Mr. Jones and the company to initiate its multidivisional marketing strategy. Apparently, a price decrease would only be a temporary solution to the long-term problem. It is likely that HMC is only a start of a growing sales and marketing issue that has accumulated over the years that the company is doing its conventional marketing and supply chain management strategies. The HMC situation should serve as the turning point for the company to embark on its planned multi-divisional approach. So that the company would not be criticized of being easily swayed by consumer power such as the one being welded by HMC, the implementation of the multi-divisional strategy should appear as a general overhaul of the company’s policies. This means that the strategy should be employed on all of the company’s accounts and not only with HMC.
References
Cespedes, F., & Goode, L. (1994). Becton Dickinson and Company: Multidivisional Marketing Programs. Harvard Business School, 1-21.
Porter, M. (2008). The Five Competitive Forces that Shape Strategy. Harvard Business Review, 1 - 18.
