Gamma Company, a distributor of medical supplies to over 1,200 hospitals and clinics historically had been able to offer its customers the lowest prices, but was finding that increasingly aggressive price competition was proving an unsustainable approach to the market. New competitors were using predatory pricing tactics to win away Gamma’s customers. Medical facilities themselves had developed the ability to negotiate directly with product manufacturers such as Johnson & Johnson, reducing the value Gamma was perceived to provide. To combat client attrition and generate new revenue, Gamma sought to offer new value-added services to its clients, but was challenged by a lack of a clear strategic direction for integrating the new services into its existing product and service base. Compounding the problem were the differing views of the company mission between the field sales offices and corporate headquarters. The field offices believed their mission was to provide clients the lowest possible price on a large number of individual transactions while corporate wanted to take a more holistic, service-based approach to reducing overall expenses across the organization.
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