Key planning lessons for large medical firms from ART, Amedo’s downfall

Cargo piles up at a KRA yard in Mombasa: The regional cargo tracking system will enable the three countries to seamlessly monitor cargo from Mombasa to Kigali and eventually Juba. PHOTO | FILE 

By EDWARD OMETE

In Summary

• At their height Amedo and ART had many branches spread countrywide even to rural townships. This coupled with a huge sales workforce led to their market dominance.

In the mid 90’s retailer Amedo Centre was one of two leading local firms in the electronics, kitchenware and home items field.

The other was the African retail Trade or ART and the two had a long duopoly accounting for a big chunk of the household goods market.

As pioneers in the higher purchase model or “kukopesha” as was then dubbed these were path-breaking business enterprises. At their height Amedo and ART had many branches spread countrywide even to rural townships. This coupled with a huge sales workforce led to their market dominance.

One of their selling point was the successful implementation of the hire purchase model to civil servants. By then most civil servants were earning very little pay and could not afford outright purchases of electronics like fridges, television sets and sewing machines that were popular with mothers.

Fast forward 20 years on and the then giants are now a pale shadow of their former selves. An analysis of the firms offers important lessons to large health enterprises with a countrywide presence and franchise clinics.

As an entrepreneur with a vision for long term business, constant evaluation of the shifting market dynamics and trends in your sector is important for strategic planning.

In the above cases two events signalled the death knell for the firms. The first was the liberalisation of the market that opened up the scene to several players.

Secondly, erstwhile non-competitors like supermarkets also started selling household goods diluting the field.

The study offers vital lessons to health enterprises selling medical equipment and pharmaceutical distributors in particular.

The conventional client-vendor relationships will definitely shift and innovative strategies have to be sought to counter that.
The market liberalisation challenge first offers a valuable lesson to medical equipment vendors and distributors: monopolies or duopolies are not competitive business advantages in themselves.

Secondly a firm cannot sell the same items or deal in one product forever. At some point vertical or horizontal integration along the product’s food chain has to occur as the business grows.

As far as the integration process is concerned, one must analyse how they will best counter threats, whether through a vertical integration or a horizontal approach. In this case should a laboratory equipment distributor persist in selling the same equipment or do they also start offering laboratory services?

This is so because their customers are also thinking of improving their businesses. Laboratories who are users of medical diagnostic equipment and thus clients may decide to become vendors of the same products becoming competitors.

Another question they could ask is if they should diversify into pharmaceutical distribution or provision of medical services adding value to their products downstream. These are some of the critical questions that have to be faced.

For the two retail chains highlighted above a walk into any of them today reveals what happens when strategies are not adopted in good time; the fall will be imminent and almost permanent. They reacted by persisting in selling the same product lines to the same target groups in a saturated market.

Diversification in itself is however not a solution in entirety, many will argue that loss of focus may lead to service or product line depreciation