Isolde and Emanuel work in gene-based diagnosis technology; however, they primarily target different customer bases in the same market with varying approaches of revenue. Isolde marketed test instruments at low margins and profited from biological and chemical consumables, test kits, and other ‘stuff’. She leveraged her market needs to maximize the sale of these reagents by introducing payment based on the number of tests performed, and high-end maintenance support. Siiquent sold these consumables at a reasonable rate to hospitals and big diagnostic labs for gene-based diagnosis. In contrast to this approach, Emanuel earned high-profit margins by selling patent-protected instruments to labs and universities for gene-based studies. Teomik also reinforced customer satisfaction by PhD hotline for equipment failure and customized training. Both adopted a market-sensitive approach to generate revenue, address customers and deal with competitive threats.
Both Siiquent and Teomik were performing well in their niche markets. They flourished in different market segments with different strategies for profit and marketing edge. In fact, they handled their areas of losses and prioritized their selling points, which happens to be the opposite: Theomilk earned profits on ‘machines’ while Siiquent earned profits on ‘stuff’ required by the machines. Hence, from the outside view, it seems reasonable to have different flexible revenue models that cater to different customer requirements, discounting the secondary parts of their service. However, there are certain perils of this ad hoc revenue model. The customer margin has become fuzzy, and representatives of these companies tend to view each other as internal competitors and undercut their services to retain customers. Further, the patents are expiring, and competitors are targeting both units, aggressively selling products at lower margins. Hence, it is vital to have a united strategy and gauge the feasibility of having a lean product line and combined customer service.
Once the CEO has decided to merge the divisions, ensuring a fair merging process is very important. I would first delicately convey the decision to merge and how it is inevitable since it has been carefully decided in the board meeting. I would then highlight its implications on the vision, revenue strategy, employees, and market. Once the idea of merging has been processed and the units have enough time to formulate their expectations, we can move to the fine terms of the merging. I would conduct an analysis of the combined product lines and decide on sustainable market prices. I would then decide on the competitive edge and consequently form the selling strategy. Analysis of earlier market size and profits versus the possible market size of the combined front might help rivet the merger (since both the revenue models primarily targeted profits). Another tricky step is the determination of the sole chief of Siiquent-Teomik. Isolde and Emanuel seemed to be getting along during the meeting with Peter (although that could be because they had the same objective at that time). I would expect them to discuss the leader among themselves, or else the board of the Scherr could determine the leader. I believe it would be in the best interest to act supportive rather than discriminative during the merger.
