Medical Equipment (A)

In January 1977, Daniel Burns, the newly appointed Director of Gamma Corporation’s New Venture Division, was preparing for a meeting with Dr. Franz Korbin, the new business development manager. Burns had asked Korbin to come to the meeting with recommendations about what should be done with one of the ventures for which Korbin was responsible, the Medical Equipment Venture, and how to deal with the Medical Equipment’s entrepreneurial manager, Dr. Sherwood. (See Exhibit 1) The Medical Equipment project had experienced explosive growth during the last years, going from $700,000 sales in 1970 to $37 million by 1976. (See Exhibit 2) This rapid growth had not been achieved without some serious problems, and Burns recalled that during his conversations with Dr. Sherwood, he had told the Medical Equipment’s manager: “You guys are so different. The Corporation doesn’t understand you. You must involve us more in the business.” Now Burns was wondering what Korbin would recommend for the Medical Equipment venture and how he would react to Korbin’s suggestions.