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Unformatted text preview: 48 section I OPERATIONS STRATEGY AND MANAGING CHANGE would be standardized, from the decor of the waiting rooms to the approach in which patients were counseled and corneas were lasered. This was the only way large volumes of patients could be treated with a high level of care. The medical doctors responded to the challenge by devising a hiring and training system that Sutton and the other doctors felt would enable reliable quality across the company. All this development and expansion took place while trouble was brewing between the doctors and Henderson over financial and managerial improprieties. Henderson was aggressively skimming profits off the company for himself. The last straw came in the spring in 2000 when PriceWaterhouseCoopers, while auditing Lasik’s financial statements, grew concerned about Henderson’s “unfettered” activities. Thus, in June 2000, Henderson was fired from the company. Henderson subsequently sued Lasik Vision and Sutton for neg- ligence during an eye surgery performed on his eyes in March 1998, which he claims damaged his vision. Reinstein admits that Henderson had a complication. Henderson’s problem, Reinstein insists, is that he does not understand the difference between com- plication and negligence. “Well, maybe you shouldn’t expect him to,” he sniffs. “He is not a doctor.” Still, you have to hand it to him, says Reinstein, “He is an amazing guy. I did learn a lot about doing business from him.” By 2001 the industry was mired in the ugly price war initiated by Lasik Vision (not to mention an advertising war with many com- panies spending 10 to 13 percent of revenue on advertising—TLC even signed professional golfer Tiger Woods to a multiyear contract to endorse his surgery at TLC). Lasik’s own stock slid from $6 in April 1999 to about a tenth that amount by December 2000. As a result of all this, a consolidation spree ensued. The January 31, 2001, edition of Toronto’s Globe and Mail reported that Lasik Vision was acquired by another discounter, Icon Laser Eye Centers. At that time Lasik called itself the Dell Computer of laser vision correction: “We offer a high-quality prod— uct direct to customers and we cut distribution costs without com- promising patient care.” However, TLC disagreed: “Clearly it’s the utter failure of both their business and clinical models that has forced them into such dire financial circumstances and their mar— riage of desperation in the first place.” At about the same time, Aris Vision of Los Angeles acquired control of Gimbel Vision International of Calgary. The August 28, 2001, issue of the the Toronto Globe reported that the number 1 and number 2 laser eye surgery companies, TLC Laser Centers and St. Louis—based Laser Vision Centers Inc., were merging. It also mentioned that these two companies had refused to participate in the price war initiated by Lasik Vision, which ironi- cally had resulted in both Lasik Vision and its acquirer, Icon, going bankrupt. QUESTIONS 1 What was Lasik Vision’s competitive priority? 2 Is it an appropriate approach in this industry? What repercussions, actual or perceived, might occur with this priority? 3 Given that a company has chosen this priority, what would it have to do to achieve success? SOURCE: TI-IIs CASE WAS ADAPTED BY IAYDEEP BALAKRISHNAN FROM AN ARTIQE WRnTEN BY TREVOR COLE IN ROB MAGAZINE, JANUARY 2001, AND Is FOR DISCUSSION PURPOSES ONLY. IT IS NOT INTENDED ro ILLUSTRATE THE PROPER OR IMPROPER MANAGEMENT OF A SITUATION. “ SELECTED BIBLIOGRAPHY Chase, R. B., and D. A. Garvin. “The Service Factory.” Harvard Business Review, July—August 1989, pp. 61—69. Hopp, W., and M. Speannan. Factory Physics: A New Approach to Manufacturing Management. Burr Ridge, IL: Irwin/McGraw-Hill, 2000. Hayes, R, H., and G. P. Pisano. “Beyond World Class: The New Manufacturing Strategy.” Harvard Business January—February 1994, pp. 77—86. Review, Kaplan, Robert S., and David P. Norton. The Strategy Focused Organization. Cambridge, MA: Harvard Business School Press. 2001. Hayes, Robert; Gary Pisano; David Upton; and Steven Wheelwright. Operations, Strategy, and Technology: Pursuing the Competitive Edge. New York: John Wiley & Sons, 2004. Hill, T. J. Manufacturing Strategy—Text and Cases. Burr Ridge; IL: Irwin/McGraw-Hill, 2000. FOOTNOTES Skinner, W. (ed.). “Special Issue on Manufacturing Strategy.” Production and Operations Management 5, no. 1 (Spring 1996). Slack, N., and M. Lewis. Operations Strategy. Harlow, England, and New York: Prentice Hall, 2002. 1 C. W. Skinner, “The Focused Factory,” Harvard Business Review, May—June 1974, pp. 113—22. 2 See M. E. Porter, “What Is Strategy?" Harvard Business Review, November—December 1996, p. 68. 3 T. Hill, Manufacturing Strategy—Text and Cases, 3rd ed. (Burr Ridge, IL: Irwin/McGraw—Hill, 2000). ...
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