Kiwi Medical Device Ltd
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School
The University of Newcastle *
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Course
2003
Subject
Medicine
Date
Feb 20, 2024
Type
docx
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2
Uploaded by GeneralLemurMaster704
Kiwi Medical Device Ltd.
iwi Medical was born in the late 1960s. The offspring of Kiwi Electronics—an innovative maker of household appliances—Kiwi Medical came into existence as a hedge against a highly volatile appliance market. Kiwi Electronics had sought to find a counter-cyclical market where it could leverage its technological expertise. Heated humidification devices used in respiratory and sleep apnea applications seemed to offer a good fit from at least three perspectives. 1. The industry was underdeveloped and lacked established competitors. 2. Kiwi’s technology and R&D expertise gave it a strong foundation that could be used to transform the industry and establish Kiwi as a world leader. 3. The medical device industry had strong global growth potential. Following 30 years of solid
growth and good financial performance, Kiwi Medical was spun off as an independent company in 2001. Kiwi’s headquarters and manufacturing were in Auckland, New Zealand.
respiratory humidifiers
neonatal care products,
infant warmers and resuscitator, 28% with both product groups—respiratory (32%)
obstructive sleep apnea (OSA), OSA (25%) in 2009
airway pressure (CPAP) devices
Problem
s: Kiwi faced the problem of cost and delivery advantage in market.
Kiwi’s share of the respiratory market had decreased from almost 25% to 17.5% in the past four years. Kiwi’s market share was falling by 2% per year!
customers were asking for even faster delivery.
Transportation costs from New Zealand were rising faster than from North America or Europe
2. How much investment and risk was Kiwi willing to incur as it set up overseas operations? 3. How should Kiwi provide logistical support for its overseas operations?
1. Labor costs
2. Labor skill and experience
3. Transportation costs 4. Transportation lead times to/from the factory
5. Duty rates for incoming raw materials as well as export of finished product
6. Political stability/corruption 7. Local taxes 8. Unions, strike risk 9. Permits and factory setup cost
10. Management relocation expense, lifestyle, and safety.
Subcontracting
down side lose control over production and product reliability
several of the criteria were transport oriented
Analysis
: Limited operation base became liability
Kiwi’s five largest competitors had shifted production to low-cost sites in China, Vietnam, and Indonesia.
operating expenses by at least 3% per year over the next 5 years while offering better (faster, more consistent) delivery
Offshoring seemed to be the only possible response
China, Indonesia, Mexico, and Slovakia
between coastal/border investment zones and interior cities. The advantage of investment centers like China’s Guangdong province and Mexico’s border cities of Tijuana and Juarez was simplified setup and logistics. By contrast, interior cities like Chongching and Saltillo offered lower wage rates, a more-abundant and stable workforce, and better tax incentives
o outsource logistics support to a third-party logistics (3PL) company
Where was the right place to set up overseas manufacturing? ex-works (EXW) basis to customers outside New Zealand.
Response:
raise operating profit by 5-8% annually
subcontracting, shelter operations, and a wholly owned subsidiary
—DHL
, FedEx, and
UPS—had been selected as potential support team leaders
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