As mentioned in the reading, Siiquent and Teomik’s revenue models differed significantly. While Siiquent sells both test instruments and consumables (biological/chemical compounds, test kits, etc), Siiquent uses the “razor-blade” model, generating sustainable revenue primarily from selling consumables to hospitals and labs. Its strategy is to sell the consumables at competitive prices (under the reimbursement amount by NHS/insurance) with high-quality maintenance support, thereby gaining loyal customers (hospitals & labs) who are concerned with cost and reliability/support. This makes sense as its target market consists of hospitals and labs, which are most often concerned about cost and ease of usage, with limited concerns regarding the quality of the product beyond the baseline quality. Teomik also sells biological research equipment and associated materials, but they target the research market, where the customer needs for quality and reliability are higher than the cost. Therefore, Teomik’s primary revenue stream comes not from its materials/compounds (due to competitive prices) but from its high-quality research equipment purchased with extensive customer service.
If those two business units (BU) were to be merged, there would be pros and perils for both imposing a single revenue model and letting two revenue models co-exist. Imposing a single revenue model will enable the joint-business units to (1) more easily create cost synergy and (2) have a consistent strategy/goals/policies. However, keeping two revenue models would more easily allow the joint-BU to keep each of the business’s competitive edge. Siiquent’s competitive edge is on price (cheap “lifetime” cost) and support system, whereas Teomik’s competitive edge is on quality and support system. Due to these differences in competitive edge, having two revenue models that best-suit for each business segment could better maximize the profit.
If I were the PM to merge the two BUs with a single-unified revenue model, the focus would be on which competitive edge of each business do we protect, change, or leverage. I would seek to learn from both Isolde and Emanuel regarding what separates the business unit from its competitors. If the accessible price of consumables was a competitive advantage for Siiquent, I could encourage Isolde and Emanuel to discuss the possibility of lowering the costs / changing the price for consumables/materials produced by Teomik (to produce profit sustainably from consumables). If the level of quality of research equipment sets apart Teomik from others, I could encourage Isolde and Emanuel to discuss the possibility of using Teomik’s technology/patents to either (1) raise the quality of machines with small price increases or (2) maintain current level of quality with lower costs (to generate sustainable profit from machines) for Siiquent. Whatever the strategy may be, I will do my best to ensure that the current competitive edge of each business unit will continue to exist, which would better incentivize Isolde and Emmanuel for further changes or compromises to create a single-unified revenue model.
