Etude de cas BioImage

Business Performance Management – BioImage Case

1. Description of the case

This case revolves around the firm called BioImage and its six divisions, including three most relevant to the case: ECD, Heidelberg and ISD. BioImage is a company that produces medical imagind systems, equipment and instruments. Here is a diagram highlighting the internal structure of BioImage and its main people from the three divisions:

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BioImage

Rolf Fettinger

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                   ECD                  Heidelberg                                  ISD                               Other 

       Christian Schönberg               Paul Halperin                  Conrac Bauer             divisions        

ISD sells ultrasound imaging systems, sometimes purchasing materials internally from Heidelberg. Heidelberg sells monitors, graphics controllers and display systems. ECD sells integrated circuits and subassemblies, sometimes supplying Heidelberg internally.

At BioImage, management is decentralized, and as long as teams meet sales and ROIC targets (or exceed them), they are given a lot of operational freedom (for instance when it comes to choosing to source internally or externally).

1. Analysis of the issue

In 2018, Heidelberg assisted ISD during the conception of a new ultrasound imaging system, X73, very fast and sophisticated. The division was compensated for its service. In order to produce the new equipment, ISD was looking to purchase displays from a supplier, but hadn’t made a decision yet on whether it would source within BioImage or from another firm. ISD received the three following bids :

• 140,000 € from Heidelberg,
• 120,500 € from Bogardus NV, a company which had worked with BioImage before,
• 100,500 € from Display Technologies PLC, a new company offering very low prices in order to gain market share.

After ISD announced it would go with the most attractive offer, from Display Technologies, conflict appeared within BioImage, as Paul Halperin, manager at Heidelberg, complained to Conrac Bauer from ISD. However, according to Bauer, Heidelberg’s prices were simply too high and ISD could not afford to pay so much and remain competitive. Bauer argued that all he was doing was working in his division’s best interest.

On the other hand, Halperin stated that cutting prices as aggressively as outside firms were doing would make it impossible to meet ROIC targets, effectively running Heidelberg out of business. Moreover, he argued that the engineering help Heidelberg had provided during the conception phase of the X73 system had been done with no mark-up provided, thus the division deserved payback. In Halperin’s opinion, working internally also could strengthen the relationship between the divisions, which would help BioImage in the long run.

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