Dental Associates of Northern Virginia (a)

Case Study 1

DENTAL ASSOCIATES OF NORTHERN VIRGINIA (A)

Submitted by: Min He

Date: Oct. 5, 2014

Course: Operation Management

Professor: Americo Cunha

Case background:

Dr. Steven Fox is not only a core dentist, but also a head administrator at the largest office called skyline in the group of Dental Associates. He is responsible for providing consultations concerning strategic decision such as new equipment purchased and general operations. Because he is very interested in dental innovation, and spends much time attending academic communication or local study groups in order to timely get the latest dental technology and trends. Therefore, Dr. B, Dr. Fox long-time colleague and partner as well as the group administrator, often phones Dr. Fox to get his suggestions or analysis on major decisions and acquisitions. On September 8, Dr. Steven Fox received an urgent call from Dr. B with consulting his opinion whether to expand their business operation to make porcelain crowns in-house by means of purchasing CEREC3 porcelain crown making machine instead of current approach of buying crowns from an outsourcer. If Dr. Fox favours the idea, Dr. B will initiate the purchase process.

Key issue:

The Dental Associates offices currently buy all-porcelain crowns from outside independent laboratory based on a discounted price with hard negotiations. Dr. Fox and his partners were aware that a new piece of technology called CEREC machine is on the market that allows dentists to make all-porcelain crowns in their own offices rather than purchasing them in some independent labs. They follow this robotic machine in years but realized that the first and second generations of this machine cannot produce high quality crowns and the cost per unit was not competitive. Therefore, Dental Associates did not purchase this new technology.

Dr. B, the group administrator, was approached by a salesperson from CEREC machine manufacturer,...