Optical Distortion Incorporated Hbs Case

Case One: Optical Distortion, Inc.

Optical Distortion Incorporated (ODI) holds a patent and license protection for contact lenses for chickens. ODI's primary challenge is its limited financial resources requiring a need to produce and sell its sole product quickly. ODI must address this problem by launching a successful roll out of the product in California, which is critical to the survival of the company.

Properly pricing the lenses, hiring additional staff, setting up a warehouse and regional office in California, as well as launching a national marketing campaign are urgent problems to be addressed. The staving off of competitors and resources for further research and development at ODI are also issues.

ODI wishes to capture 50% of the market within five years. The company has priced the lens pairs at .08 per unit. Variable costs are roughly .034 each; the profit margin is slightly less than .05 per pair. ODI's projected fixed costs of $923,333 annually require selling approximately 19,989,031 units per year to break even (see Appendix). Based on a total chicken population of approximately 81 million break-even sales would require ODI to capture roughly 24.7% of the total market.

ODI could invest all current resources into a national marketing campaign in order to gain company and product recognition and potentially obtain orders. With orders written, the company could then pay for manufacturing. Rather than setup an office in any one location, ODI could send sales and technical staff to fulfill the orders, do the lens insertion and, while in the area, market the product to other farms in the same geographic location. Instead of setting up ODI locations across the country, ODI could ship product to farms directly from New World Plastics. A sales person and contact insertion teams could meet the shipment and perform the insertion before moving on to the next sale.

It is highly recommended that ODI allocate funds for product trials at select farms in California, free of charge to the farmer. While the advantages of the lenses are impressive (and should be touted in all marketing communications )