Group 6 Fujiwara, Shisei Arosteguy, Maria Togni, Ana Paula Chai, Chia-Feng (Jay) Cho, Hyune Jik (Ken)

1. Wheelchair Products Group 6 Fujiwara, Shisei Arosteguy, Maria Togni, Ana Paula Chai, Chia-Feng (Jay) Cho, Hyune Jik (Ken)

2. Porter’s five force model Company History Companies Performance Company Structure Changes Current Product lines Competitors Updates Conclusions

3. Industry 5 forces analysis Suppliers • The inputs are not differentiated and the switching cost of finding a new supplier is low. Entry Barriers Substitutes • Low capital requirements in machinery: 1 mil. • Low advertising costs: $100,000 • FDA regulations • Fluid access to distribution channels. • No Significant Patents • It depends on the patient. Some can use crutches or scooters but many are unable to choose any other way of transportation. • Even the medicine has not found a cure for some disease. Rivalry • The industry of wheelchair manufacturing has a high concentration • High prices rivalry and discounts for the distributors Buyers • Distribution Channel • Consumers: high switching cost, some buyers cannot choose something else to mobilize. LowBargaining power of suppliers LowEntry Barriers LowThreat of Substitutes Moderate Bargaining power of buyers Index

4. Distribution Channel • Specialized in ultralight, power and pediatric wheelchairs. • Close relationship with physical therapist: customers oriented. • Storefront operations for experienced users. • A dozen large chains accounted for 50% of the channel’s volume. • 20 major distributors to the nation’s hospitals and nursing homes. • The six largest accounted 80% of the revenues. Rehab Suppliers: General Home Medical Equipment dealers: Medical / Surgical distributors: Low Bargain Power Moderate Bargain Power High Bargain Power

5. Industry Concentration Source Harvard’s case

6. Company History 1983 Company was founded by Richard Chandler Starts Acquisitions – Guardian was acquired International Business – European Market Company goes public – Begins to trade in the Nasdaq 1986 Starts working with Wheelchairs - Motion Designs is acquired by Sunrise and renamed to Quickie 1990 Quickie launched its first U.S. made power wheelchair 1993 Guardian introduced the lightweight standard wheelchair Invacare matched Guardian’s price. The product failed 1999 Richard H. Chandler resigns 2000 Company became private by a $250million deal Michael N. Hammes was appointed as new CEO

7. Sunrise Overview Goal Market • To improve the lives of the people who use our products. • Sunrise has manufacturing facilities in the US, Mexico, United Kingdom, Germany, and Spain and distribute products to suppliers in over 90 countries The company has about 4,400 employees. Business • Sunrise Medical is one of the world’s largest Manufactures of homecare and extended care products.

8. Social Commitment Winners on Wheel (WOW) Foundation Official Sponsor of Paralympic Games Chris Waddell is a top mono-skier and wheelchairracer * Sunrise sponsors 82 athletes in many sports * Partnerships : National Sports Center for the Disabled The Peter Alliss Masters Golf Charity Index

9. Companies Performance (till 1993) Invacare induced the lightweight standard Strong financial structure Base of the M&A

10. Companies Performance (till 2000) Reason 1-Merger with Sentient system 2-Acquisition of three European-based division Reason 1-Re-engineering Net loss: 12M Reason 1- pre-tax charge from unusual expense (65.2M) 2- severe pricing pressure

11. Stock price of Sunrise Medical

12. Financial Strategy (till 2000) • Expand market segments through M&A - Strategy of CEO (Dick Chandler) • Use the interest rate exchange agreement - As a policy, Sunrise does not use interest rate swap or any other derivatives • Use foreign-denominated borrowings from its multi-currency credit facility • 1999, went to the NYSE Index

13. Organizational Structure Change • Restructuring in response to increasing costs 1996 1997 2000 Index

14. FY1996: “Re-engineering Program” began • Consolidation of US sales forces • Integration of smaller divisions • Establishment of profit improvement program at all divisions • Sale of unprofitable business • Unusual expenses: $65M

15. FY 1996 FY 1997 Quickie Designs • Home Healthcare Group • Headquarters: - Sales, Marketing, Finance, H/R, ... • R&D • - Mobility Products Division • - Personal Care Products Division • -Respiratory Products Division Jay Medical Guardian Products DeVilbiss Health Care, Inc. (Two other Groups in different businesses omitted) (Other divisions in different businesses omitted) FY1997: Abandoned De-centralized Structure • Many divisions consolidated into one business unit to increase efficiency

16. FY 2000: “Re-Alignment of Operations” • CEO Chandler resigned due to the red in 4Q99 • Began another move to reduce costs Home Healthcare Group North American Operating Group - Sales & Mfg Sunrise Medical Europe European Operating Group - Sales & Mfg Continuing Care Group Global Business Group - Product development & management

17. Current Wheelchair Brand • Value-oriented products. For public use, aged people • Guardian ®-standard wheelchair • Hoyer series -economical choice • Offering the most innovative products in the marketplace. • New and younger user ,Active patients. • Quickie® - Lightweight, ultra light, power and sport wheelchairs, include Kit-Kart. • Zippie® -Pediatric Wheelchairs • Breezy ® - Lightweight wheelchair • Building only the most superior support surfaces. • Wheelchair seating products

18. Wheelchairs Product Line Quickie • Adult Manual Folding $1,300 - 2,850 • Power Wheelchairs $4,283 - 13,280 • Adult Manual Rigid $1,395 - 3,400 • Adult Manual Positioning $2,345 - 3,770 • Sports Products $1,150 - 3,299 Zippie • Pediatric Wheelchairs $2,150 – 2,650 Guardian, Breezy • Standard Wheelchairs $340 – 1,150

19. Products Price Range Comparison Sunrise Invacare E & J Growth rate 10% Commodity, growth rate 5% Adult Manual Folding Pediatric Adult Manual Rigid Adult Positioning Sports Products Standard Wheelchair Power Wheelchairs $0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 Price Data from Sunrise, Invacare and Everest & Jennings website

20. Competitors Update • Produce Standard, Lightweight standard, Power Wheelchairs. • 1996- merges with Graham-Field Health Products, Inc. • December 27, 1999- commenced a voluntary proceeding pursuant to the Bankruptcy Code • Compete in all products with Sunrise, plus 3 and 4 wheels scooters • Has lower per unit costs of most other rivals Source: Forbes 1997 Whole industry growth rate 7% Price decrease because of the reimbursement of medical care insurance reduce

21. Conclusions • Charisma Chandler set up the company to realize his dream • Rapid sales growth through diverse M&A strategy without finding enough profitability unlike its competitor Invacare. • Disappointing results led further restructuring and finally made the company private • Chandler is still pursuing his dream in another company Integration of smaller divisions

22. QUESTIONS???