The Prominent Dr

The Prominent Dr. Rombach

John had settled comfortably into the soft, leather passenger seat. The big, black Mercedes slipped silently onto the autobahn on the outskirts of Munich. In a few moments the driver, Klaus Ehrwald, was expertly guiding the car at over 120 miles per hour. They were heading for Salzburg, Austria, for a meeting with Dr. Hans Rombach, a prominent cardiovascular surgeon. At this speed it wouldnt take them long to get there.

John Cannon was an American expatriate managing the German subsidiary of International Medical Laboratories (IML), a large American biomedical equipment company specializing in expensive, high-quality heart / lung machines used in open heart surgery. John was a graduate of a prestigious American west coast university where he majored in international business and had been a very successful biotechnology market analyst early in his career. When he joined IML as their marketing product line manager for cardiovascular instrumentation, he was charged with the responsibility of taking the system into the international market. He immediately targeted Western Europe.

The system proved to be an instant success, with Germany as the strongest market. It wasnt long until John was appointed the subsidiary manager for Germany and became a quick learner of local business practices. He was determined to successfully promote the IML system to surgeons in all the clinics and hospitals in the German sales region. He had been living in Munich for over year now.

He spoke casually about the upcoming meeting with Dr. Rombach to Klaus, his general sales manager. Klaus was a Bavarian native and understood the Teutonic character very well.

John: Ive been wanting to meet Dr. Rombach for a long time, Klaus. He has quite a reputation among his peers. What sort of a man is he?

Klaus: Pretty typical of a successful European surgeon: arrogant, confident, and with a very great opinion of himself. He did one of the very first heart transplants in Austria, and now people come from everywhere to him for routine cardiovascular surgery. He does four or five surgeries a week and makes a fortune. He has really pioneered some new, successful procedures and publishes the results of his work in the very best medical journals. He has an international reputation as both a brilliant surgeon and a very successful entrepreneur at his private clinic.

John: What kind of equipment is he using now?

Klaus: Hes using the Freznus system, German of course. Its not as good as ours, but the company has been around for a long time and hes been using their equipment for years. Like most surgeons, he doesnt like to change equipment once he gets used to it.

John: As I recall, we can be very price-competitive with Freznus. Our system sells for about $25,000, and theirs typically sells for over $30,000 when you compare all the same features. Besides, we have a much more stable temperature control system (for controlling blood temperatures during bypass surgery) plus the very latest technology in the new pump systems. Our overall system is based on U.S. technology and one of the main sub-systems now includes new Swiss-designed pumps which are generally thought to be the most reliable in the world.Klaus: Tell it to Dr. Rombach. Ive been trying to sell him on our system for a long time, but he continuous to use the German system in spite of the price difference and the high-tech image of our equipment. Hes very concerned about quality and reliability. I guess he regards the German equipment as being more reliable, or maybe hes he is just nationalistic.

As they moved smoothly and swiftly along the autobahn, John thought about the nationalism issue for a while. It was true that many citizens of Europe actively sought out nationally produced products the French, Germans, and the British in particular. In some cases it was a subconscious sort of thing. In other cases it was very specific. In order to sell capital equipment to the public hospitals and clinics in France, for example, you had to be named on the French-approved supplier list. The only companies which appeared on this list were French companies or perhaps a few foreign firms that had no French competitor.

The Austrians were not quite so tough on foreigners, but they typically favored the German products. John hoped that the current attempt to unify Europe would help to remove some of the traditional barriers to foreign products. He thought carefully about how to approach this issue with Dr. Rombach and decided to let the product speak for itself. After all, the IML system was in use in the most prestigious heart hospitals in the United States, and that fact would not be lost on the prominent doctor.

After a brief conversation with Klaus on sales strategy and a technical comparison of the competing systems, they exited the autobahn onto a long sweeping curve, gearing down smoothly, and soon arrived at the outskirts of Salzburg. Dr. Rombachs clinic was only a few kilometers from the exit. As they approached the clinic, John could not help but admire the gracious old building with its Greek columns. Upon entering, they were struck by the transition from the dusty marble entryway with its classic style of architecture to a modern, gleaming, state-of-the-art medical facility. There was no mistaking the detailed attention to high quality everywhere. Dr. Rombachs office was on the third floor, overlooking the river and the woods beyond. The secretary greeted them efficiently and confirmed their appointment. Yes the doctor was in and expecting them. As they were being ushered into the office, Dr. Rombach swiveled around in his huge chair and rose to welcome them.

Klaus: Good morning Dr. Rombach. Id like to introduce my colleague, Herr Cannon.

Dr. Rombach: Ah, good morning Herr Ehrwald and Herr Cannon. I suppose you have come to tell me of your new and wonderful American Equipment.

Klaus: Of course. As always, we wish you to have the very best equipment for your work.

Dr. Rombach: Fine, fine. Let us have some coffee while we chat, and then I shall take you for a tour of our facility and show you our new operating theaters and recovery wing, just finished last month.

As they began to make conversation, both John and Klaus were careful to avoid any direct mention of their purpose for the visit. All parties knew that they were there to talk about the American equipment, but it could wait until the proper moment. The tour was impressive, state-of-the-art equipment was everywhere; the facilities and laboratories were the most modern John had ever seen. He had recently been in Los Angeles, Houston, and Minneapolis to see the best of the U.S. facilities, as well as the new hospital in Rotterdam, but this clinic was truly incredible. He noted the Freznus equipment in the operating theaters. It seemed oddly dated among all the other high tech equipment.

Dr. Rombach: We have been able to reduce the stay in our clinic to only four or five days following open heart surgery. Most of the best hospitals around the world require two or three weeks. Its due to our new surgical techniques and post-operative care. We have the highest success rate and the best recovery time in the world. Ive just published on article in the European Medical Review describing our successful program.

John: This is really incredible, Dr. Rombach. To what do you owe your success?

Dr. Rombach: Good people, good technology, and good care. Theres nothing mystical about good machine. The technology helps you make good diagnoses and safe surgeries. The people provide the skill, the support, and the care necessary for success. We have also developed some new low-trauma techniques that seem to work very well.

Johns mind was racing. If they could convince Dr. Rombach to use their equipment, they could be a part of every medical advance he reported. Everyone would want to use the same equipment and follow the same techniques pioneered here. John quietly wondered why Klaus had not yet been able to sell him on the IML system. They returned to Dr. Rombachs office for some earnest conversation.

John: I know your very busy, Dr. Rombach, so I wont waste your time with a lengthy sales pitch about the IML system. But I did want to be sure that you knew about our recent advances in temperature controls and our new pumping system that uses the Friedreich pumps from Switzerland.

Dr. Rombach: Yes, yes. I know all about them. I was in the Friedreich factory in Zurich just a few months ago. You see, Karl Friedreich is an old friend of mine. I even gave him some ideas on the best way to design the perfusionists cart.John: Then you know that the IML system has the most reliable pumps in the world.

Dr. Rombach: Of course. Thats why Im willing to talk to you about your system.

John: I guess you also know that Drs. Shumway, Bernard and DeBaky also use the IML system. (John was banking on the use of these prominent surgeons name to impress Dr. Rombach. While they had not specifically endorsed IML, they did indeed use the system).

Dr. Rombach: I spoke with DeBaky in Houston last year. He seemed satisfied enough with the system. But, hes sort of retired now and is not as active as he once was.

John: We would very much like to see you using the IML system, too. Its really more cost-effective than your present Freznus system, and with the Friedreich pumps, perhaps even more reliable.

Dr. Rombach: Perhaps, I am impressed with your system and may be willing to give it a try: especially if it can help my research. You know, conducting our research is very expensive. Our research methods must use real patients to be of any practical value to other surgeons. This means not only developing new techniques but advertising patients, obtaining consents; explaining methods, publishing results, etc. Would your company, IML, be willing to make a contribution to my research fund? This would make my decision to purchase your equipment much easier.

John: Um Contribution to your research fund? Well, I dont know. How much did you have in mind?

Dr. Rombach: Well any amount would be helpful, but $25,000 or so would be particularly helpful.

Johns memory flashed to a recent meeting at corporate headquarters. The subject was the various forms of international bribery and the interpretation of the Foreign Corrupt Practices Act as passed by Congress after the Lockheed scandal in Japan. The company was very specific about adherence to the letter of the law of this act and maintained a corporate position of steadfastly refusing to participate in any questionable actions, no matter how they might be presented. Being a leader in the life-saving medical equipment business meant that the company should also be perceived as a leader in maintaining absolute trust in the public eye and unquestionable ethical behavior. Their reputation meant everything, and even the appearance of inappropriate behavior could be disastrous. They had included in their corporate mission the statement The Company does not engage in any sort of activity which might be construed as unethical. Their consistent advice was to just say no to any questionable request. But still, John hesitated. Was this really a request for a bribe? After all, Dr. Rombach was the most prominent cardiovascular surgeon in Europe. Everyone knew him he certainly published a lot of his research. Surely a $25,000 contribution could be made up in future sales of the IML system once the medical community knew that Dr. Rombach was using the IML system in his work. After all, the system produced a 10-percent pre-tax margin so they would only have to sell an extra ten systems to break even, Rombach might even buy three or four himself!John: Well, I guess Ill have to think about that. Perhaps I can discuss this with our management and we can get back to you.

Dr. Rombach: Of course. My secretary will show you out. Have a safe trip back to Munich.Having said that, Dr. Rombach smiled, punched a button on his telephone, and turned his attention to his work on the desk. His secretary appeared immediately and courteously showed them the way to their car.

As Klaus eased the Mercedes back onto the autobahn, John thought about the possibilities. He knew that if he contacted the corporate management, they would never approve such expenditure. In fact, it might be risky to even ask. They might see him as a questionable representative of IML with regard to ethical issues. He knew that several other Austrian Cardiovascular surgeons had purchased the IML system without any requests for research funds. Still, John was sure that it made some good business sense to consider. There was almost $100,000 available in the budget for discretionary spending. It was supposed to be used to promote IML products in whatever way he thought was most effective. He knew he would receive lots of recognition if he could get Dr. Rombach as an IML system customer. He also knew everyone would want to know exactly how he had pulled off such a coup.

John: Klaus, do you think Freznus makes contributions to Dr. Rombachs research fund?

Klaus: Well, I suspect they might. What do you think?

John: I dont know what to think. What should we do?

Morris, Tom. June 1996. University of San Diego. Originally presented at a meeting of the World Association for Case Method Research & Application. Case Problems in Management.