Creative Solutions for Gulf Medical Company's Profitability Growth

This case study analyzes the challenges faced by Gulf Medical Company, a leading medical device provider in the Gulf Region, in achieving profitable growth. Despite cost reduction efforts, sales growth has been negatively impacted. The assignment aims to find creative solutions to the profitable growth paradox, helping the company increase both sales volume and profit margins. The report recommends strategies such as velocity management, increasing the average unit of sale, cutting low-margin clients, retaining employees and customers, and minimizing waste. Each solution is evaluated based on parameters like anticipated positive impact, degree of risk, ease of implementation, implementation time, senior management support, financial burden, corporate strategy alignment, and strategic value. The analysis suggests that a combination of these strategies can help Gulf Medical Company achieve its long-term goals of profit maximization and sales increase. The evaluation of the solutions against predefined parameters like strategy alignment, Cost, Timing and other related aspects, it could be largely understood that, the given solution is a considerate one with respect to which the three out of the five steps were quite favorable with respect to all the given aspects. Additionally, there did exist certain steps which were not quite favorable in nature and involved a high degree of risk along with higher costs, but the business risk needs to be adopted at a certain time in a business if a business wants to ensure that, it is successfully able to reduce the costs of the business and improve the overall profitability of the organization as well. It is recommended that, Gulf Medicals undertakes the given steps and with respect to this, ensures that it is successfully able to achieve its long term goal of profit maximization along with sales increase.

Running head: CREATIVE SOLUTION
CREATIVE SOLUTION
Name of the Student
Name of the University
Author Note

Executive Summary
The business environment is highly competitive in nature and in order to ensure success in the
long run, it is crucial for the business to see to it that, they are able to utilize the different costs
efficiently. The given solution is based on the organization, Gulf Medical Company which has
been assigned with the goal of increasing their profit margins and at the same time working on
their revenue maximization. Hence, the given solution is based on the creative solutions which
can be provided for the betterment of the firm. The report follows a structured format with
respect to which, the introduction to the problem is followed by a discussion of the proposed
solution and the discussion on its execution based on well-defined criteria’s.

Table of Contents
Introduction......................................................................................................................................3
About the company..........................................................................................................................3
Aims.................................................................................................................................................4
Recommendations for the Creative Solution to help the company to grow its overall sales volume
hand-in-hand with growing its profit margins.................................................................................4
1. Velocity management:..........................................................................................................4
2. Increasing average unit of sale.............................................................................................5
3. Cutting out low margin clients.............................................................................................6
4. Retain employees and the customers....................................................................................7
5. Ignore scrap spoilage and wastage.......................................................................................7
Evaluating the solutions against parameters....................................................................................8
Conclusion.......................................................................................................................................9
References......................................................................................................................................11

Introduction
The business environment has become highly competitive in nature and with respect to
this, it becomes crucial for any firm to ensure that in order to attain success in the long run, the
company undergoes certain strategies and plans so as to ensure that it is successfully able to gain
a competitive edge and engage in the generation of profits and other related benefits1. The report
is based on the case of one such as the Gulf Medical Co. Limited. The company has been taking
considerable measures and steps in order to ensure that it is successfully able to improve its
profitability in the work place and reduce the costs, however, it has not been successful in doing
so. Hence, the report will be recommending certain ways in which the company can undertake
initiatives to work upon the same and additionally evaluate these measures under certain pre-set
criteria’s.
About the company
The Gulf Medical Company is a leading provider of the medical serves in the Gulf
Region and with respect to this, it is required to be understood that the company tends to supply
the different universities, hospitals and other such institutions with core medical services with the
highest quality of products as well as the leading technologies2. The primary aim of the company
is to provide a sense of art technology and other related solutions to the healthcare industry
which will be based in the Saudi Arabia and in the GCC. In addition to this, the company would
1 Ang, James S. "Small business uniqueness and the theory of financial management." Journal of small business
finance 1.1 (1991): 1-13.
2 Ansoff, Harry Igor, et al. Implanting strategic management. Springer, 2019.

be required to ensure that it builds a long lasting relationship with the different members of the
customers.
Aims
The primary aim or the primary objective of the company can be stated to be the finding
of a creative solution to the overall profitability growth paradox. This means that the goal of the
company is to grow its overall sales and ensure that it will be able to grow its profit margins as
well.
Recommendations for the Creative Solution to help the company to grow its overall sales
volume hand-in-hand with growing its profit margins
In order to ensure that the company is able to find overall success and growth, the
organization would be required to ensure that the firm is successfully able to adopt the following
initiatives so as to ensure that, it is able to grow the sales of the firm and also bring about a
growth in its profit margins. The given section has provided certain suggestions to the firm
which would assist the firm in improving upon the existing profitability paradox which tends to
exist. The `five step mantra ` is systematic and creative solution which will help the firm to
improve upon its overall resources. The recommendations have been given in the following
section:
1. Velocity management:
The gulf medical company will be required to improve upon its turnaround time which is
the time taken from the order to the delivery in order to ensure that it is successfully able to
lower the overhead cost of the products which is uncured. This in turn will ensure that the overall

profit margins of the firm improves considerably3. The Medical Company can refer back to the
main systems from the order to the delivery, in order to ensure that it is successfully able to
speed up the procedure of the turnaround time and ensure that all the automatic and related
template steps will be improved considerably. The faster the particular cycle becomes, the better
it is for the organization to reduce its turnaround time and in addition to this save the costs of the
firm.
2. Increasing average unit of sale
Another measure which can be adopted by the organization can be the increasing the
average unit of sale to a particular customer4. This refers to the increase of the quanitiy of goods
being sold to a single consumer. When each customer will purchase additional goods then the
organization will not be required to incur additional transportation costs, packaging and other
overhead costs with the help of which the organization will be able to achieve long term success
and reduce the costs. Hence, increasing the average unit of sales means increasing the quantity
sold to per customer. This means that, when the organization will be able to improve the overall
margin then they will be able to improve the velocity of the of the purchases and the sales being
made which will have a two way impact on the sales as well as the profits of the firm. In this
manner, the different customers can be provided with better offerings and selling of cross selling
complimentary products as well as services so as to ensure that the cost of marketing can be
amortized over a larger unit of sale which tends to dilute the marketing cost and ensures that the
3 Saunders, Anthony, Marcia Millon Cornett, and Patricia Anne McGraw. Financial institutions management: A
risk management approach. New York, NY, USA: McGraw-Hill, 2006.
4 Shapiro, Alan C. Multinational financial management. John Wiley & Sons, 2008.

profit margin tends to increase5. In a similar manner the firm will be able to ensure a growth for
the firm.
3. Cutting out low margin clients
The third measure which can be adopted by Gulf Medical Company is the cutting down of
the low margin clients, products or other related services which will go a long way in assisting
the firm to ensure that it is able to save the costs as well as money involved in the higher
producing parts of the business6. This assists in ensuring that the different clients are successfully
able to associate with the firm and they are provided with offerings which tend to meet their
needs and in addition to this, the services will help in improving the overall margins. Once all he
organizations would be successful in figuring out those clients with respect to which the scope of
the firm is minimum, only then would they be able to ensure that, they are required to sell to the
employees who are best for the organization and its requirements7.
4. Retain employees and the customers
The Human resource costs which are incurred by an organization can also be understood
to be an expensive set of costs which are generally the firm tends to spend a generous amount of
5 Hitt, Michael A., R. Duane Ireland, and Robert E. Hoskisson. Strategic management cases: competitiveness and
globalization. Cengage Learning, 2012.
6 Covin, Jeffrey G., and Dennis P. Slevin. "Strategic management of small firms in hostile and benign
environments." Strategic management journal 10.1 (1989): 75-87.
7 Pearce, John A., Richard Braden Robinson, and Ram Subramanian. Strategic management: Formulation,
implementation, and control. Columbus, OH: Irwin/McGraw-Hill, 2000.

money on such related costs8. In such a scenario, many employees often leave the job and hence,
the attrition costs of the firm tends to increase considerably which then adds up to the reduction
of the profit margin. In a similar manner, the attrition costs are a similar case for the different
clients of the firm whereby the firm must ensure that it is successful in retaining the different
clients and that no other client leaves the firm which might then cost the company an increase
sense of marketing costs and other attracting costs9. Hence, the client history must be checked
with and measures to bring an improvement in the same must be undertaken to ensure that the
firm is successfully able to make a timely con tact with the client and ensure that they are able to
make continuous purchases. When the clients are courted then the costs of the customer
elimination tends to reduce and the firm would not be required to invest in acquisition or
marketing costs. For this reason, in order to reduce the costs of the firm, the firm must take
initiatives to retain the employees and the customers so as to ensure that additional costs are not
incurred on gaining new customers and the employees.
5. Ignore scrap spoilage and wastage
The Gulf Medical Company is also required to undertake certain measures in lieu of this
which will guide the firm with respect to the manner in which it is required to minimize the
waste which exists in a firm and ensure that the spoilage and other scrap leakages are ignored10.
In this manner, the firm will be required to ensure that, it does not engage in repeated costs.
8 Freeman, R. Edward. Strategic management: A stakeholder approach. Cambridge university press, 2010
9 Teece, David J., Gary Pisano, and Amy Shuen. "Dynamic capabilities and strategic management." Strategic
management journal 18.7 (1997): 509-533.
10 Burgelman, Robert A., Modesto A. Maidique, and Steven C. Wheelwright. Strategic management of technology
and innovation. Vol. 2. Chicago, IL: Irwin, 1996.

Evaluating the solutions against parameters
Parameters Step 1 Step 2 Step 3 Step 4 Step
Anticipated
Positive Impact
High High Moderate High High
Degree of Risk Low High High Low Low
Ease of
Implementatio
n
High Very High Low High Moderate
Time needed Moderate Moderate Moderate Low Low
Senior
management
support
High High Moderate High High
Financial
burden
Low Low High Low Low
Strategic value High High Moderate High High
Corporate
strategy
alignment
Moderate High Moderate High High
Therefore, from the given analysis on the evaluation of the different solutions and
procedures against the predefined parameters like strategy alignment, Cost, Timing and other
related aspects, it could be largely understood that, the given solution is a considerate one with
respect to which the three out of the five steps were quite favorable with respect to all the given

aspects11. Additionally, there did exist certain steps which were not quite favorable in nature and
involved a high degree of risk along with higher costs, but the business risk needs to be adopted
at a certain time in a business if a business wants to ensure that, it is successfully able to reduce
the costs of the business and improve the overall profitability of the organization as well. It is
recommended that, Gulf Medicals undertakes the given steps and with respect to this, ensures
that it is successfully able to achieve its long term goal of profit maximization along with sales
increase12.
Conclusion
Therefore, from the given analysis it can be stated that, an organization in order to attain
success in the long run would be required to take some considerate steps and undertake certain
strategies which will go a long way in assisting the firm to ensure that, they are able to overcome
their shortcomings. The given report was based on the case study of the organization named Gulf
Medical Limited which was required to undertake profit maximizing steps. The
recommendations based on the same have been provided and in addition to this, their evaluation
based on certain parameters re also required to be done.
11 Brigham, Eugene F., and Joel F. Houston. Fundamentals of financial management. Cengage Learning, 2012.
12 Higgins, Robert C., and Marguerite Reimers. Analysis for financial management. No. s 53. Chicago: Irwin, 1995.

References
Ang, James S. "Small business uniqueness and the theory of financial management." Journal of
small business finance 1.1 (1991): 1-13.
Ansoff, Harry Igor, et al. Implanting strategic management. Springer, 2019.
Brigham, Eugene F., and Joel F. Houston. Fundamentals of financial management. Cengage
Learning, 2012.
Burgelman, Robert A., Modesto A. Maidique, and Steven C. Wheelwright. Strategic
management of technology and innovation. Vol. 2. Chicago, IL: Irwin, 1996.
Covin, Jeffrey G., and Dennis P. Slevin. "Strategic management of small firms in hostile and
benign environments." Strategic management journal 10.1 (1989): 75-87.
Freeman, R. Edward. Strategic management: A stakeholder approach. Cambridge university
press, 2010.
Higgins, Robert C., and Marguerite Reimers. Analysis for financial management. No. s 53.
Chicago: Irwin, 1995.
Hitt, Michael A., R. Duane Ireland, and Robert E. Hoskisson. Strategic management cases:
competitiveness and globalization. Cengage Learning, 2012.
Pearce, John A., Richard Braden Robinson, and Ram Subramanian. Strategic management:
Formulation, implementation, and control. Columbus, OH: Irwin/McGraw-Hill, 2000.
Saunders, Anthony, Marcia Millon Cornett, and Patricia Anne McGraw. Financial institutions
management: A risk management approach. New York, NY, USA: McGraw-Hill, 2006.

Shapiro, Alan C. Multinational financial management. John Wiley & Sons, 2008.
Teece, David J., Gary Pisano, and Amy Shuen. "Dynamic capabilities and strategic
management." Strategic management journal 18.7 (1997): 509-533.