Invacare Wheelchair Strategy Case
The wheelchair industry is currently (1992-1993) composed of three companies controlling 72% of the wheelchair market (including parts). Even though together they are a dominating force, the overall profitability of the industry is comparable to that of a not a very attractive one, with the top two players averaging a meager 5.7% Net Income and the third one (the former market leader) losing considerable money (see Exhibit A).
Player | Revenue | Net Income | Market Share | Invacare | $ 146.9 | 5.8% | 37% | Sunrise Medical | $ 79.4 | 5.7% | 20% | Everest & Jennings | $ 59.6 | (17.7%) | 15% | Others | $ 111.2 | N/A | 28% |
Player | Revenue | Net Income | Market Share | Invacare | $ 146.9 | 5.8% | 37% | Sunrise Medical | $ 79.4 | 5.7% | 20% | Everest & Jennings | $ 59.6 | (17.7%) | 15% | Others | $ 111.2 | N/A | 28% |
Exhibit A. Market* composition – 1992
*Sum of Standard, Lightweight Std, Ultralight and Power-Pediatric segments
The reason behind its little profitability could reside in that wheelchairs as products are quite non-differentiated; therefore, to help boost revenue, companies have resorted to creating wheelchair segments to better suit different customers’ needs, such as making them battery-powered or lighter, although, as stated before, in the end they are all pretty much chairs with wheels. Despite this issue, wheelchairs are a vital product in healthcare and have sustained continuous demand; the industry has grown from $75 million to $400 million USD in 15 years (see Exhibit 2 from the case) and all its segments are projected to grow 11.75% on average in 1993. (see Exhibit 1 in the case)
Adding to the factors of unattractiveness, this industry has limited distribution channels, which are also quite specialized and require different attack strategies because they deal with end-users (patients) and suppliers (such as Invacare and Sunrise)
Player | Revenue | Net Income | Market Share | Invacare | $ 146.9 | 5.8% | 37% | Sunrise Medical | $ 79.4 | 5.7% | 20% | Everest & Jennings | $ 59.6 | (17.7%) | 15% | Others | $ 111.2 | N/A | 28% |
Player | Revenue | Net Income | Market Share | Invacare | $ 146.9 | 5.8% | 37% | Sunrise Medical | $ 79.4 | 5.7% | 20% | Everest & Jennings | $ 59.6 | (17.7%) | 15% | Others | $ 111.2 | N/A | 28% |
Exhibit A. Market* composition – 1992
*Sum of Standard, Lightweight Std, Ultralight and Power-Pediatric segments
The reason behind its little profitability could reside in that wheelchairs as products are quite non-differentiated; therefore, to help boost revenue, companies have resorted to creating wheelchair segments to better suit different customers’ needs, such as making them battery-powered or lighter, although, as stated before, in the end they are all pretty much chairs with wheels. Despite this issue, wheelchairs are a vital product in healthcare and have sustained continuous demand; the industry has grown from $75 million to $400 million USD in 15 years (see Exhibit 2 from the case) and all its segments are projected to grow 11.75% on average in 1993. (see Exhibit 1 in the case)
Adding to the factors of unattractiveness, this industry has limited distribution channels, which are also quite specialized and require different attack strategies because they deal with end-users (patients) and suppliers (such as Invacare and Sunrise)