Isolde targets the hospital and diagnostic lab markets, working on gene-based diagnostic products, while Emanuel targets the academic and research market, selling patented equipment. Isobel follows a razor-blade revenue model, where most of their profits come from consumables (test kits, reagents, etc.) and the actual diagnostic machines themselves have a low profit margin. The focus of Emanuel’s business model, however, is on the machines themselves, as in his case, they are high margin. He believes in pricing, accommodating for varying needs of different customers, but they don’t really profit from consumables like Isobel does.
The inconsistency between these two models ought to divide up resources and employees, affecting work efficiency in the company. A benefit of enforcing a single revenue model could be less inconsistency and confusion within the company, and therefore, increased operational efficiency. As doing so would make the internal process clearer, it is likely that it could also reduce confusion amongst the customers, helping make the branding clearer. However, it also could lead to less market flexibility as the company would need to hone its focus on one market and not the two they are currently operating in. Having multiple flexible models, exploring multiple markets would enable the company to cover more ground and respond more dynamically to the needs of each market. Still, this comes with the issues of brand inconsistency and operational complexity and inconsistency, as mentioned above.
I believe that here, the most important step to take for the leaders is to sit down and openly discuss goals, setting a clear roadmap and vision for what they want to achieve with the merger/their merged companies. This would ensure that both parties are clear and well-aligned with company objectives, reducing the brand inconsistencies and operational inefficiencies we mentioned before. At this stage, it would be helpful to conduct a deep market research and analysis to see which of the two markets targeted and two models used would yield the best results/profits. This would also inform the leaders whether a combination of the two models (a hybrid model) would be a good option or not. The brainstorming done using the information that will come out of this research/analysis will likely inform the best steps for the merged company.
