Question Details

(Solved) Bookmark Strategic Case Analysis ALLIED MEDICAL WASTE TRANSPORT:


Bookmark

Strategic Case Analysis

ALLIED MEDICAL WASTE TRANSPORT: VETERINARIAN DIVISION

Kathy West, Vice President of Marketing at Allied Medical Waste Transport of Oklahoma, sat at her desk reading her boss’s request for a strategic marketing plan for the next three years including pro forma income statements for the newly started veterinary division of the company. She had thought about this project off and on for the past couple of months and now faced the daunting task of actually creating the overall strategy and the mix of personal selling and advertising. The home office expected substantial growth from the veterinary operation and Ms. West searched for growth options to meet the desired sales/profit levels.

Background

Medical waste first came to the attention of the general public several years ago when it washed up on New Jersey beaches. Because of the media exposure of this event and others pertaining to undesirable disposal practices as well as fear of AIDS, public hysteria resulted and pressure was put upon regulatory officials to develop comprehensive regulations to prohibit such occurrences. HR3515 (The Medical Waste Tracking Act of 1988) was passed requiring the federal Environmental Protection Agency (EPA) to begin an investigation to determine whether federal legislation was necessary. The EPA provided their findings in 1991 that led to federal regulations on medical waste disposal.

Also, the Occupational Safety and Health Administration, OSHA, has begun to fine waste generators for improper disposal practices within their facilities and most states have adopted some type of regula­tion pertaining to infectious waste disposal requirements. The concern was not just for human medical waste but also animal medical waste since farmers and ranchers inoculated animals including beef, pork, and poultry.

The MWTA initially applied to facilities in Connecticut, New Jersey, and New York. Illinois, Indiana, Michigan, Minnesota, Ohio, Pennsylvania, and Wisconsin also were included within the original scope of the MWTA but were permitted to, and each elected to, opt out of coverage. The federal government permitted other states to opt into coverage under the MWTA, but only Rhode Island and Puerto Rico elected coverage. The MWTA only covered medical waste generated in one of the covered states. Conversely, the MWTA did not cover medical waste transported from a non-covered state to a covered state for treatment and/or disposal.

The EPA issued regulations (MWTA regulations) under the MWTA listing applicable generators, identifying the wastes that had to be tracked and outlining standards for separating, packaging, and labeling medical waste. Facilities producing less than fifty pounds of waste per month are exempt from the tracking requirements of the MWTA. The MWTA Regulations impose record-keeping requirements on all generators, transporters, and destination facilities and require each to maintain all tracking records for three years. The program requires the use of a specified uniform tracking form. Additional requirements and operating procedures are applicable to transporters and treatment, storage and disposal facilities. Generators exporting medical waste to a foreign country for treatment, destruction, or disposal must receive written confirmation of receipt within forty-five days, otherwise, an Exception Report must be filed by the forty-sixth day.

While the act was focused on human medical waste, there was also concern for animal medical waste and some sections of the law could be applied to animal waste. The following abstract echoes the concern of the veterinary medical professionals regarding medical waste and refers to a model plan developed by the American Veterinary Medical Association:

Lawmakers have enacted a variety of laws and regulations to ensure proper disposal of certain potentially infectious or otherwise objectionable waste. The veterinary medical profession supports scientifically based regulations that benefit public health. In 1988, Congress passed the Medical Waste Tracking Act, a federal program that mandates tracking certain regulated waste. Several types of waste generated in the typical clinical veterinary medical practice are considered regulated veterinary medical waste. Discarded needles, syringes, and other sharps; vaccines and vials that contained certain live or attenuated vaccines; cultures and stocks of infectious agents and culture plates; research animals that were exposed to agents that are infectious to human beings and their associated waste; and other animal waste that is known to be potentially harmful to human beings should be handled as regulated veterinary medical waste. Regulated veterinary medical waste should be handled with care. It should be decontaminated prior to disposal. The most popular, effective methods of decontamination are steam sterilization (autoclaving) and incineration. Chemical decontamination is appropriate for certain liquid waste. Waste should be packaged so that it does not spill. Sharps require rigid puncture- and leak-resistant containers that can be permanently sealed. Regulated veterinary medical waste that has not been decontaminated should be labeled with the universal biohazard symbol. Generators retain liability for waste throughout the entire disposal process. Therefore, it is essential to ensure that waste transporters and disposal facilities comply with state and federal requirements. Veterinary practices should maintain a written waste management program and accurate records of regulated veterinary medical waste disposal. Contingency planning and staff training are other important elements of a veterinary medical waste management program. The guide includes a model veterinary medical waste management program; however, it does not address all the variations in state and local regulations. Veterinarians should obtain copies of state and local laws and regulations and modify AVMA's model plan to create an individualized practice plan that complies with federal, state, and local laws and regulations. State and local veterinary medical organizations should monitor state and local regulation to influence decisions that affect veterinarians and to keep their members informed of changing requirements. Veterinarians and veterinary medical organizations must stay involved so that regulations do not unfairly burden the veterinary medical profession.(J Am Vet Med Assoc 1989 Oct 15;195(8):1130.)

Company History

Allied Medical Waste Transportation, Inc. (AMWT) emerged in late 1988 in response to concerns expressed by federal, state and local regulators regarding biomedical waste disposal practices and the impact upon human health and the environment if improperly managed. At that point in time, in most market areas, only BFI and/or Waste Management offered biomedical waste management services; and, as a result, those companies enjoyed a near monopoly in the marketplace, which reflected itself in the prices charged by those companies.

AMWT, since signing its very first account in March 1989, has grown to be one the largest provider of biomedical waste management services in the state of Oklahoma with over 400 clients in Oklahoma and currently manages 450,000 pounds of biomedical waste per month generated within the state.

AMWT opened a subsidiary office in Denton, Texas in early 1990 and enjoyed significant success throughout the Dallas­-Ft. Worth market area. This branch presently contracts with 23 hospitals that generate a total of 150,000 pounds of biomedical waste each month. The Dallas-Ft. Worth Hospital Council recently endorsed AMWT as the preferred provider of biomedical waste management services to its member hospitals. This endorsement should lead to greater presence in the market.

In addition to serving Oklahoma and Northern Texas, AMWT also presently services numerous medical facilities located in Kansas, Missouri, Arkansas, Colorado and Wyoming. AMWT received endorsement from Voluntary Hospitals of America (VHA) for its biomedical waste disposal service to VHA member facilities in the areas serviced by AMWT.

A major factor in the success of AMWT in addition to its quality of service and competitive pricing is the exclusive use of a newly constructed fully permitted incinerator with a capacity of 100 tons per day. This incinerator was designed specifically for biomedical waste (including antineoplastic/chemotherapy wastes) and is located in Oklahoma. AMWT routinely arranges for potential clients to tour this facility. It is impressive and instills confidence regarding the disposition of the biomedical wastes it processes.

All AMWT employees directly involved in the hands-on management of biomedical wastes receive training in the proper use of personal protective equipment and appropriate corrective actions relating to spills, including decontamination techniques and procedures. All AMWT employees, including drivers, submit to AMWT's proactive substance abuse program, that includes drug testing upon employment and randomly thereafter. All AMWT drivers must also meet U. S. Department of Transportation driver qualification standards, including physical exams and an annual review of their driving records. In addition, AMWT employs a team of emergency responders who completed a forty (40) hour emergency response course conducted by the Oklahoma State University.

AMWT's corporate management includes an environmental attorney licensed by the State of California and whose other credentials include a Masters level certification in hazardous materials management from the National Institute of Hazardous Materials Management. He also serves as an adjunct extension program faculty member in environmental management at the Oklahoma State University.

AMWT is permitted to manage biomedical materials that are to be discarded and that are infectious wastes (those wastes capable of producing an infectious disease) and chemical wastes (such as pharmaceutical wastes) laboratory wastes, antineoplastic drugs and other chemicals, and that are not regulated as hazardous wastes, such as the following:

Infectious wastes include:

Cultures and stocks of infectious agents and associated biologicals.

Human blood and blood products

Pathological wastes

Contaminated sharps

Contaminated animal carcasses, body parts and bedding

Wastes from surgery, autopsy and other medical procedures

Laboratory wastes

Dialysis unit wastes

Isolation wastes unless determined to be non-infectious by the infection control committee at the health care facility

Any other material and contaminated equipment that, in the determination of the   

Facility's infection control staff, presents a significant danger of infection because it is         

contaminated with, or may reasonably be expected to be contaminated with etiologic  

agents. Etiologic agent means a type of microorganism, helminth or virus that causes, or significantly contributes to the cause of, increased morbidity or mortality of humans.

Chemical wastes include:

1. Pharmaceutical wastes

2. Laboratory reagents contaminated with infectious body fluids

3. All the disposable materials that have come in contact with cytotoxic/antineoplastic

     agents during the prepara­tion, handling and administration of such agents. Such waste  

     includes, but is not limited to, masks, gloves, gowns, empty IV tubing bags and vials,  

     and other contami­nated materials.

Other chemicals that may be contaminated by infectious agents as designated by experts at the point of genera­tion of the waste.

The Veterinary Division

AMWT realized that no major competitors had focused on veterinary waste and saw this as an opportunity to be one of the first providers of this service in the states they were already operating in and possible expansion into other states as demand increased. Rick Stewart and Joan Craig were to manage this division. Rick was to be the division’s sales representative and Joan was to be in charge of operations. Rick was an experienced salesman who had worked for the company since its inception in a sales capacity and his specialty was opening new accounts. Joan was formerly employed by a large waste management company, where she helped set up their medical waste program and ranked first in sales and service throughout that company in their biomedical waste operations. Her background and training enabled her to assist medical facilities in their efforts to properly manage biomedical wastes in a safe and economical manner consistent with all regulations and Joint Commission guidelines. Their first task was to provide input into the strategic marketing plan being prepared by Kathy West. In their initial meeting with West, Rick and Joan stated that the initial operation of the division should be in Oklahoma. The start up model was to “start small, learn the business, and then expand”

Both Rick and Joan had made exploratory calls on veterinary clinics in the Tulsa area to talk to vets and get a better idea of the types and quantities of medical waste generated by a clinic. This information would help determine the waste management containers needed and how frequently waste should be picked up. AMWT would offer its clients a comprehensive medical waste management program and assists them in a consultative role. This includes assessment of their current system and recommendations for improvement or if a program does not exist, to help to develop one. This process can take several hours for a large clinic or a less than an hour for smaller clinics. Once service begins, AMWT adds the clients onto a pick-up route that allows AMWT to conform to a schedule and gives the client assurance of timely service. AMWT provides all clients with containers into which the waste will be deposited and also documentation affirming pick-up of their waste and providing the client with an actual date of incineration of waste. AMWT currently uses a twenty (20) foot bob truck, that collects the waste at the generator's site.   A trained technician, at the end of a route, transports the waste to AMWT's transfer facility and there off-loads it into a fifty-three (53) foot trailer.   When full, AMWT transports the trailer to the incinerator in Oklahoma. It is essential that long haul transportation costs stay at a minimum to allow AMWT to be competitive. AMWT currently uses a nationwide transportation company who provides all trailers and transport to Oklahoma within a forty-eight (48) hour period from pick-up. These drivers must complete a special spill-response training course.

Oklahoma does not presently require animal waste generators to have a comprehensive infectious waste management plan in place and does not requires documentati­on of proper disposal, written standard operating procedures and regular monitoring of the disposal practice. However,   a bill is currently before state legislators to enact such a law.

There are 1839 licensed veterinarians in Oklahoma with about 90% being in private practice. Each would generate approximately 3 pounds of infectious waste per day. That would mean a total of about 150,000 lbs. a month (1839 X .9 X 3 X 30) or roughly 1.8 million pounds a year. A monthly fee of $30 per location plus a disposal rate of $.50 per pound would generate potential revenues of about $955,170 a year for Oklahoma.

Competition in the marketplace favors AMWT because of AMWT's strength in disposal capacity and capabilities, technology, service and track record as well as expertise. The major competitor in Oklahoma and well as others operating in the area all acknowledge major weaknesses since most of them have decided to autoclave rather than incinerate. Autoclaving involves steam sterilization of waste and disposal in a landfill.   AMWT, on the other hand, uses state of the art incineration in Oklahoma and has a staff of specialized industry experts.

Marketing Activities

Marketing activities in the new division were to mirror the activities used in other locations. AMWT focused on personal selling since an on-site inspection of a waste generator’s facility was required to determine whether the facility met current codes for handling waste and the volume of waste on a monthly basis.

AMWT also used direct mail pieces to help introduce the company to prospective clients and familiarize them with the companies operations. Sales people, (Rick Stewart) provided comprehensive waste stream assessments, comparative cost analyses and intensive staff training in servicing as well as ongoing consultation in regulatory compliance issues. Ms. West thought that sales calls as well as telemarketing support and a mail-­out campaign might be best to reach the potential clients. While the high level of interest encountered by Rick and Joan among Tulsa area veterinarians was encouraging, she knew it would take some time to reach full potential in Oklahoma. However, when analyzing the size of the market, she was rather disappointed with the overall low potential compared to the main division of the company and was wondering if this new division would be financially feasible.

Potential Financial Performance

The new division was expected to be financially independent by the end of the second year of operation and produce a net profit after taxes of 10% by the end of the third year. Kathy West had developed three proforma income statements for the first three years of operations based on three levels of market penetration-30, 40, and 50%. However, since there were no laws compelling veterinarians to develop waste disposal procedures, participation would be strictly voluntary and she wondered if the levels of penetration she used in the proformas were even reasonable. The projections are show in the accompanying table. The new division would have to be successful before the company would be willing to expand into other states and Kathy had no real assurances that they could achieve the success needed to meet top management’s expectations. On the positive side, the same trucks that picked up waste from other clients could pick up waste from the vets’ clinics meaning no additional investment in equipment was needed. Since the waste from each client had to be labeled separately for tracking purposes, the vets waste could be transported along with other waste generators. Although no new investment in plant and equipment was needed for the new division, at least $100,000 in working capital would be needed for the start up operations.

Exhibit 1

ALLIED MEDICAL WASTE TRANSPORTATION: VETERINARY DIVISION PRO FORMA BASED ON DIFFERENT LEVELS OF MARKET PENETRATION

       Year 1

         Year 2

       Year 3

Market penetration level

        30%

          40%

         50%

Estimated Sales Revenue

$   286,551.00

       $382,068.00

    $477,585.00

Variable Expenses:

         13,200.00

         13,200.00

         14,000.00

Utilities/Communications

           3,600.00

           4,000.00

           5,000.00

Office Expense

           2,500.00

           3,000.00

           4,000.00

Auto Expense

           1,200.00

           1,500.00

           2,000.00

Fuel

           8,700.00

         10,000.00

         15,000.00

Repairs and Maintenance

           2,000.00

           2,000.00

           5,000.00

Marketing/Advertising

           6,000.00

           6,000.00

           6,000.00

Accounting/Legal

           1,200.00

           1,500.00

           1,500.00

Miscellaneous

           1,200.00

           1,500.00

           2,000.00

Total Variable Expenses

        $39,600.00

         42,700.00

         54,500.00

Fixed Expenses:

Salaries

       130,000.00

       150,000.00

      150,000.00

Rent

        14,700.00

         14,700.00

         14,700.00

General Liability Insurance

         11,616.00

         13,000.00

         15,000.00

Medical/Life Insurance

           4,800.00

           6,000.00

         8,000.00

Unemployment, Federal/State

           3,000.00

           4,000.00

         5,000.00

Total Fixed Expenses

      $164,111.00

       $187,700.00

    $192,700.00

Estimated Net Income Before Taxes

       $82,83500

      $151,668.00

     $230,385.00

Estimated Income Taxes

       $24,850.50

       $45,500.40

     $69,115.50

Estimated Net Income After Taxes

       $57,984.50

     $106,167.60

     $161,269.50

After reading this case analysis statement, answer the following questions

1.         Major Problem or Issues

2.         Analysis

            This section of the report details the analysis related to the major problems and/or issues identified in 1 above. The thorough analysis of the company’s situation will lead to viable alternatives to solve the problem or deal with the issues

Analysis for single line of business organizations:

A.        Organizational vision/mission, objectives, current strategy

B.        SWOT analysis

C.        Competitive Analysis

D.        Financial Analysis

E.         Implementation Issues/Problems

F.Evaluation/Control Procedures

What are the strategic implications of the above analysis?

Analysis for multi-line of business organizations:

      Portfolio analysis

      Resource allocation/restructuring needs

What are the strategic implications of the multi-line of business analysis?

3.         Alternative Solutions to Problems/Issues

4.Recommended Course of ActionJustification

5.   Implementation Plan

 


Solution details:
STATUS
Answered
QUALITY
Approved
ANSWER RATING

This question was answered on: Sep 05, 2019

PRICE: $18

Solution~000200145813.zip (25.37 KB)

Buy this answer for only: $18

This attachment is locked

We have a ready expert answer for this paper which you can use for in-depth understanding, research editing or paraphrasing. You can buy it or order for a fresh, original and plagiarism-free solution (Deadline assured. Flexible pricing. TurnItIn Report provided)

Pay using PayPal (No PayPal account Required) or your credit card . All your purchases are securely protected by .
SiteLock

About this Question

STATUS

Answered

QUALITY

Approved

DATE ANSWERED

Sep 05, 2019

EXPERT

Tutor

ANSWER RATING

GET INSTANT HELP/h4>

We have top-notch tutors who can do your essay/homework for you at a reasonable cost and then you can simply use that essay as a template to build your own arguments.

You can also use these solutions:

  • As a reference for in-depth understanding of the subject.
  • As a source of ideas / reasoning for your own research (if properly referenced)
  • For editing and paraphrasing (check your institution's definition of plagiarism and recommended paraphrase).
This we believe is a better way of understanding a problem and makes use of the efficiency of time of the student.

NEW ASSIGNMENT HELP?

Order New Solution. Quick Turnaround

Click on the button below in order to Order for a New, Original and High-Quality Essay Solutions. New orders are original solutions and precise to your writing instruction requirements. Place a New Order using the button below.

WE GUARANTEE, THAT YOUR PAPER WILL BE WRITTEN FROM SCRATCH AND WITHIN YOUR SET DEADLINE.

Order Now