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its is a brief analysis of Align tech which covers its operational field
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WAC
Operation management
Submitted To:
Sir Irfan Mehmood
Submitted By:
Asad Raza (10108085)
Ahabeesh Rasool (10108086)
Ajmal Hussain (10108051)
Align Technology Inc,
Align technology company make Aligners (38 sets) per case in which they change malocclusion
or misalignment of teeth into strainers and good smiley teeth that is completely new products
which is differ from traditional brackets and wires , it is invisible during course (see exhibit 1).
Company facing many issues that are highlight below:
Issues:
1. Costs are too high and company did not making profitable business (Average selling
price 1600 $ but the total cost is $1800) that is big issue for the company.
2. Excess capacity. The company is making 20% excess to the demand. The company was
forecasting more sales of 10,000 cases per month but actually the cases per month were
2500. The demand for the product fell short of its manufacturing capacity.
3. The orthodontists were not adopting this new product because they were tending to use
the traditional technology and they were trained for traditional treatment. No orthodontist
would switch from metal braces to Align technology without quick response.
4. They were having problems in their marketing strategy. They were confused in using
push vs pull strategy.
5. The company was not focusing on general practitioner. They were only training the
orthodontist and general practitioners were totally neglected. As the total orthodontists in
North America were 8500 and general practitioners were 100000.
6. Lack of structure and operational strategy that how it could be run business.
7. Distributional channels of the align it mean that orthodontists did not benefits for the
company
8. Wrong Sales forecasting. That is not matching to the capacity.
Analysis:
Align company cannot doing profitable business due to Align company manufacturing cost
greater than his selling price that makes company deficit (loss) the cost of the company would be
greater in its manufacturing and total representative cost but the causes of the deficit balance
only due to the miss settlement in the selling price that is the big issue for the company that they
are not actually good in his price setting, reason of less price to the cost that is not ethical for
business which is actually greater then it cost (see the exhibit 2) but the actual ability of the
customer to spend on his treatment that is greater than $3500 which is traditional way of the
customer to spend through Brackets and wire but the company selling price that is $1600 which
is less from the traditional way but the company offering products that is innovative and invisible
it mean that company products is good from the traditional but the selling price of the company
is very low therefore company cannot reached at his target profit goals. Company still need to
differentiate his products to the traditional way and also need to set the selling price that should
be greater than company cost or getting his target profit margin. And company needed to
visualized and analysis the spending ability of the customer to spending on his teeth treatments
and then company should selecting the range of the selling price of his invisible that included
profit margin.
Second major problems for the company are orthodontists’ that were not adopting this new
product because they were tending to use the traditional technology and they were trained for
traditional treatment. No orthodontist would switch from metal braces to Align technology
without quick response. Orthodontists’ are not engaged or satisfied and taking responsibly of the
invisible products for the company and it growth they are only focused on the earning. Company
major distribution channel are the Orthodontists for this company selected well practice and
experience Orthodontist for his products treatment and his awareness to the customers but the
orthodontists were not efficiently doing work and adopting the invisible technology which is
created problems for the company , Company giving treatment to the Orthodontist by sales
representative that are giving training and awareness to the orthodontists about the products that
are 6400 orthodontists’ get train from the representative but the return of cases to the company
by the orthodontists were very less (See Exhibit 3) that 40% Orthodontist submitted at least one
case to the company other 60% orthodontists are not interested to the invisible products because
they are not taking any case for the enviable company. Therefore company needed to train and
engaged his orthodontists for his products distribution to the customers. In this case company
should used push marketing strategy by the orthodontists because without this (orthodontists)
company cannot make awareness to the customer and push customer to use this products that is
good for the traditional and beneficial for the customers.
Options:
And company also considered GP (general practicing) that were also make awareness for the
products and for its treatment which would be lead to the less cost and easily available for the
customer at any ware (See Exhibit 5) . In this way company can get high profit margin from the
GP because there fee or treatment cost are very low. And company can push his products to the
customer at cheaper rate with high profit margin as compare to the orthodontists. In Strategy
Company sales forecasting method also not well, because (see exhibit 4) company forecasting
method or forecast value is greater than it capacity which is irrelevant and wrong for the
company estimated value which is greatly insufficient and cannot match which the actual
capacity see 2000 year capacity that is 6466 case but the company forecasting that it would
reached at 8122 cases but the actual cases occur that are 3322 case which included huge different
between this forecast and capacity and actual sales, and how company forecasting his sales with
overtime (Wages) but the company actual capacity cannot covered or reached to the actual sales.
Align company have many alternative to recover his profit margin, company should minimized
his cost either it should reduced manufacturing cost it become through reduced his capacity to
the actual demand in this way extra charged and highly efficiency used of equipment but the
demand is low that could created problem for company cost to reduced this company can
recovered his profit margin, and other way is that if the company cannot decreased his capacity
according to the demand then company should sell his products after recovering total cost and
also included profit margin it could be possible that because traditional spending on teeth
treatment that were to high ranging from ( 3000 to 5000) it mean that it should be done.
Decisions& Recommendation:
Most efficacies in profit margin is that company should make or adjusted selling price which is
recovering profit because it would be done, people are able to pay extra or high price for the new
technology (invisible).
In orthodontists, alternative options are GP which can be penetrate our products to market and
also increased our sales with low price it mean that company should also need to train GP for his
products that could be benefits for the company major problems.
Exhibit 1:
Exhibit 2:
Total target market= 200 million
2000000 are those whose doing some treatment with his teeth
Aggregate spending on his teeth is 7 Billion
It means that actual spending on his teeth per person that is ranged from 3500 to 4000 dollars.
Exhibit 3:
Target train orthodontists =6000
But the Sales representative actually trading 6400 Orthodontists’
Case submissions by the arthodontist are only 2600 orthodontists
That is 40% return from the orthodontists that is very low.
Exhibits 4:
Forecast sales, and Capacity 2000 2001
Sales forecast 8133 13500
Actual sales 3322 7312
capacity 6466 10400
Exhibit 5:
Orthodontist result verses general practicing
Orthodontists GP
No Of practitioners 8500 100000
Income 300000 125000
Working hours in week 34 39
Care result Low high
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