Instructions
Case Discussion Questions:
1. How does an intermediary such as MD International create value for the manufacturers that use it to sell medical equipment in foreign markets? Why do they want to use MD International rather than export directly themselves?
2. Why did MD International focus on Latin America? What are the benefits of this regional approach? What are the potential drawbacks?
3. What would it take for MD International to start exporting to other regions such as Asia or Europe? Given this, would you advise A1 Merritt to continue his regional focus going forward or to add other regions?
4. How important has government assistance been MD International? Do you think helping firms such as MD International represents good use of taxpayer money?
Case Study Paper
MD International
MD International was established in the year 1987 by Al Merritt; he learnt his skills in a medical equipment company where he worked as a salesman. He saw an opportunity to link manufacturers of medical types of equipment and users comprising of medical practitioners and biomedical engineers. Because he had good experience from his previous work, he focused on Latin America and Caribbean regions. MD International benefited from falling trade barriers and government support and currently is a big company selling products from about 30 manufacturers to about 600 distributors in the region.
Importance of Intermediaries to Manufactures
MD International has a deep understanding of their markets in the Latin America and the Caribbean. This knowledge will be a good source of information for the manufacturers. MD International also work with a wide range of various parties including doctors, microbiologist, biomedical engineers and marketing managers who provides a wide market for manufacturers. Manufacturers cannot also venture into these markets as they are small, MD International have the advantage of gaining from small markets due to their large product portfolio. Products also come in large bulks that are not needed by the small market. Therefore, MD International break bulk and deliver the smaller quantities required by the end users. These products will sorted and stored by MD International, who is the intermediary, at favorable locations suiting the end user. These processes cannot be performed by the manufacturer. Manufacturers will also benefit from the reduction of costs associated with marketing such as taxes and market research which would be absorbed by intermediaries (Chandler, 2000).
Why Latin America
Al Merritt had a very good experience in the Latin America and Caribbean markets, this, therefore, allowed MD International to prosper. The Latin Government was also changing their terms into a more liberal economic platform reducing trade barriers; this favored the formation of MD International in Latin America region (Cultice, 2012). Increased Government spending on health care increased the demand for health equipment; Merritt, therefore, saw an opportunity to exploit this market.
The benefits gained by MD International includes the large knowledge base in the region; this has helped the company to be well familiar with the market characteristics and best means to curb the market challenges. The company also has a wide portfolio of products to supply; the company can thrive well in the volatile markets even if some products are not doing well. The U.S Government also has a huge involvement in the Latin region; their involvement has aided MD International to ease through some challenges facing them. All industries face challenges, MD International also face challenges that may include volatile markets, medical markets are not that predictable to allow for early planning (Bussey, 2005). The global financial markets also pose a challenge to the company as the company aims to go international. The local markets although favorable, do not provide adequate benefits as those of international markets that MD International could have gained.
Regional Expansion
MD International already has a stable local market. This market will give them a good foundation to try the global waters and shield against any setback experienced. The government support can also boost their exporting process (Bussey, 2005). Asia and Europe is a huge potential market, with stable and rising economies, but venturing would require a large capital base, MD International should, therefore, start with acquiring local representatives to guide as navigators before the full involvement of the company. MD International should venture into one region first, such as Asia on a small scale mainly through local representatives. The company should also maintain the local market as it will act as a pillar towards foreign investing.
Government Assistance
The Government has been of great assistance to MD International. In the early 2000s, the government ensured that the company’s products were delivered to their destination. The government also finances or helps MD International on matters concerning finances, MD International works with Export-Import Bank to finance its exports and supplies. EX-IM Bank collaborates with the government to facilitate international trade, they guarantee receipt of payments or lend to the foreign companies ensuring that that a trust is created between the local exporting companies and foreign importing ones (Cultice, 2012).
The government through these processes makes good use of the taxpayers’ money. The exporting companies will grow ensuring that the local population has employment. The lending also generates interest to the government which can be used to finance public development.
Conclusion
Intermediaries like MD International play a very big role in the economy of a country. They are also important to big manufacturing companies who find it hard to exploit small markets and niches (Chandler, 2000). Intermediaries are more suited and well equipped concerning knowledge and understanding of the local markets. Governments should assist small and growing companies by providing an enabling environment in the local markets to ensure that they prosper and generate optimum benefits to the locals (Cultice, 2012). They should also open international markets and facilitate the export process through financing to give these companies a boost in exploiting opportunities in foreign markets. Such process will not just be advantageous to the individual firms, but also the local population and the government itself.
References
Bussey J., (2005) Where Have All the Exporters Gone? Miami Herald.
Chandler M., (2000) Dade Firm Seeks to Remake Health Care, Miami Herald.
Cultice C., (2012) Exports with a Heart, U.S. Department of Commerce, export success stories. Retrieved from https://www.export.gov.html
