Bergerac Systems: The Challenges

of Backward Integration
Group 8:
Chinmay Bajaj 180103068
Keshav Singh Bhadoria 180101129
Shreyash Gyan 180103207
Parthsarthy Sinha Choudhary 180101061
Vishvendra Singh 180101122
Akshaya Bhuvaneswaran 180102011
 Introduction
• Bergerac Systems was founded in 2001 and was based in
Parsippany, New Jersey
• Developed, Manufactured, Marketed in-house diagnostic
equipment
• First Product - HemaVue, an automated cell counter
• Next Product - OmniVue, a diagnostic instrument
 OmniVue
• Used at the point-of-care in veterinary clinic to run a wide
range of tests
• Delivered highly accurate test results and was simple to use
• Had small physical footprint
• Had competitive pricing of both instruments and cartridges
• Above two factors made it very attractive w.r.t. small and
medium sized veterinary practices
 Challenges
• Operational Challenges
 Veterinary customers were frustrated by the recent stock-out of OmniVue
Cartridges
 Stock-out lead to delay in pet care or loss of potential customer for the
veterinaries
 High inventory of some parts while stock-out of other parts

• Business Challenges
 Shortage of cartridge
 Deliveries are not on time
 Company has to make an immediate Buy or Build decision
 Quantitative Comparison (Exhibit-4)
In the given analysis, we figured out a major error
• The total number of cartridges which would be produced is
taken as same for both in-house production and Genie tech
acquisition
• Acquiring Genie tech would mean the company would have 8
moulds
• Since only 50% of Genie tech’s production was being served to
Bergerac, the rest 50% can be sold to other companies
• Hence in total, Bergerac can produce almost twice the no. of
cartridges as given in the analysis in the option in which they
acquire Genie tech
Quantitative Comparison (Exhibit-4)
 Acquisition
• Advantages
 Consistent quality
 Trained professionals
 Additional revenue source for the company
 More space for growth

• Disadvantages
 Capacity is being unused
 Fluctuations in demand
 Developing In-House Capabilities
• Advantages
 Flexible capacity
 Faster delivery
 Better inventory management
 New machinery => Better technology

• Disadvantages
 Extra revenue opportunity can be missed
 Quality maintenance can be an issue
 Recommendations
• The company should acquire Genie tech as the as
profit per unit is same but the payback period (1.08
years) of acquiring Genie tech is less as compared to
second option (1.35 years) of developing in-house
capabilities
• Also we have 8 moulds in the first option, so the
company can manage future demand more
efficiently
THANK YOU