The most dynamic and highest potential business models are ones that enable other enterprises to achieve extraordinary results by crossing the boundary from being an independent producer to becoming part of the company, whether through acquisition or joint ventures. Many specialized distribution businesses provide business models that make this possible. Study this subject well, because it is a secret of creating vastly more growth and more fundamental business model enhancements.
Let's take a look at Sybron Dental Specialties. The firm provides many innovative products used by dentists to serve their patients. Most of these products were added by acquisition. Often the new offerings were developed in start-up partnerships between innovative dentists and people with product development skills. Such start-up companies have low volume, and high distribution costs. Often, they were too small to be able to afford much marketing.
When Sybron discovers a promising new product being offered by such an uneconomically-sized firm, Sybron often purchases the company. Being part of Sybron gives the product more credibility, so sales increase. On the larger volume, production processes can be improved and scaled up.
Being part of Sybron's distribution network also reduces the costs of getting the product from the manufacturing facility to the dentist. As a result, Sybron can turn a marginally profitable, small market share product into an industry-leading product with vastly lower costs and prices within a short period of time.
Sybron's leaders know thousands of dentists on a first-name basis and spend lots of time sharing ideas with those dental professionals. That frequent and extensive contact increases the likelihood that the company will hear about more promising new companies and products and that Sybron can share helpful information about the improvements it makes to those offerings after acquiring them.
Beckman Coulter was formed by the merger of two companies with complementary product lines in the bio-medical testing industry. While many companies would have primarily examined the opportunity to reduce costs by consolidating headquarters, sales activities, and manufacturing, Beckman Coulter's CEO, Jack Wareham, saw those areas as only the beginning of the cost-reduction possibilities.
Mr. Wareham had headed Beckman Instruments, Inc. before the merger. That firm was well known for its expertise in simplifying and automating tests to make them more reliable and less costly. He dreamed of putting all of the Beckman and Coulter tests into the same automated processes.
Such automation equipment is now being offered, and provides the lab with broader testing capabilities in ways that reduce both Beckman Coulter's costs and the costs of the laboratory running the tests. At the same time, physicians and patients get their tests done faster and more reliably.
Not content with that cost improvement, Mr. Wareham focused the combined operations on creating a linked set of technologies and tests that begin with fundamental medical research and end up in patient diagnosis and treatment. By having the biological measurements be conducted by consistent processes and chemical reagents, diseases can be more easily and inexpensively studied, diagnosed, and treated.
An example comes in the company's technology for detecting prostate cancer (the PSA and free PSA test). Once a tedious manual test, the test is now automatically processed on the firm's analyzer in 15 minutes. As a result, many lives will be saved while medical costs drop. By expanding the company's line of testing through acquisition, Beckman Coulter is now in a position to provide these sorts of benefits as the new generations of genetic and protein-based tests are developed.
Author Resource:-
Donald Mitchell is an author of seven books including Adventures of an Optimist, The 2,000 Percent Squared Solution, The 2,000 Percent Solution, The 2,000 Percent Solution Workbook, The Irresistible Growth Enterprise, and The Ultimate Competitive Advantage. Read about creating breakthroughs through 2,000 percent solutions and receive tips by e-mail by registering for free at
http://www.2000percentsolution.com .
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