Avid Medical, Inc

Abstract

This case describes the rapid growth of a start-up company which benefited from the identification of a specific market niche. The company, over a short time, became positive in EBITDA and then PAT. The case is rich in operational details regarding scheduling, inventories, workforce planning, capacity expansion, and customer service. The strategic issue in the case involves the looming decision to carry the company through its next stage of expansion.

Excerpt

UVA-OM-1021

AVID Medical, INC.

Introduction

It was April 2002 and times were busy for Mike Sahady, the founder and Chief Executive Officer of AVID Medical, Inc. (AVID Medical), and Rick Setian, the Chief Operating Officer. Mike and Rick were busy devising a strategy for AVID Medical to continue into its next stage of growth. AVID had grown from $ 8.8M in revenue in FY2000 to $ 29.5M in revenue for FY2002, and was the fifth largest provider of custom procedure trays (CPTs) in the United States. CPTs were used to bundle all of the disposable supplies required for a single surgical procedure.

The CPT industry presented both challenges and opportunities for AVID. AVID's suppliers and distributors were multi-billion dollar companies, and several of AVID's direct competitors had integrated up and down the supply-chain. AVID had managed to forge strategic partnerships that allowed it to grow rapidly as an assembler of CPTs. Now that AVID was a significant industry player, however, the larger competitors were taking notice, and it was time to prepare a strategy that would continue AVID's growth.

Custom Procedure Tray (CPT) Business

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Keywords: start-up, cash flow, general management, innovation management, venture capital, growth relationships