- Robert Garrison and Ronald Olson invented contact lenses in 1965 to mimic the effects of cataracts in chickens. They formed Optical Distortion Inc. (ODI) in 1966 to commercialize the product.
- ODI's main assets were a US patent on the ODI contact lens and an exclusive contract to purchase lenses from New World Plastics. Several technical issues with early prototypes were eventually resolved.
- Studies found that wearing ODI lenses reduced a chicken's depth perception and mortality rates compared to debeaking. It was estimated that installing and removing the lenses could be done faster than debeaking.
- For ODI to be profitable, it needed to sell lenses to large chicken farms with over
- Robert Garrison and Ronald Olson invented contact lenses in 1965 to mimic the effects of cataracts in chickens. They formed Optical Distortion Inc. (ODI) in 1966 to commercialize the product.
- ODI's main assets were a US patent on the ODI contact lens and an exclusive contract to purchase lenses from New World Plastics. Several technical issues with early prototypes were eventually resolved.
- Studies found that wearing ODI lenses reduced a chicken's depth perception and mortality rates compared to debeaking. It was estimated that installing and removing the lenses could be done faster than debeaking.
- For ODI to be profitable, it needed to sell lenses to large chicken farms with over
- Robert Garrison and Ronald Olson invented contact lenses in 1965 to mimic the effects of cataracts in chickens. They formed Optical Distortion Inc. (ODI) in 1966 to commercialize the product.
- ODI's main assets were a US patent on the ODI contact lens and an exclusive contract to purchase lenses from New World Plastics. Several technical issues with early prototypes were eventually resolved.
- Studies found that wearing ODI lenses reduced a chicken's depth perception and mortality rates compared to debeaking. It was estimated that installing and removing the lenses could be done faster than debeaking.
- For ODI to be profitable, it needed to sell lenses to large chicken farms with over
- Robert Garrison and Ronald Olson invented contact lenses in 1965 to mimic the effects of cataracts in chickens. They formed Optical Distortion Inc. (ODI) in 1966 to commercialize the product.
- ODI's main assets were a US patent on the ODI contact lens and an exclusive contract to purchase lenses from New World Plastics. Several technical issues with early prototypes were eventually resolved.
- Studies found that wearing ODI lenses reduced a chicken's depth perception and mortality rates compared to debeaking. It was estimated that installing and removing the lenses could be done faster than debeaking.
- For ODI to be profitable, it needed to sell lenses to large chicken farms with over
Download as DOCX, PDF, TXT or read online from Scribd
Download as docx, pdf, or txt
You are on page 1/ 3
Case Facts
Robert D. Garrison working with Ronald Olson invented in 1965 the ODI lens to mimic the effect of cataracts on chickens
The contact lens for use on chicken was originally designed by Robert Garrison and collaborations were made with Ronald Olson to test and refine the lenses
In 1966 an investor saw the project feasible and they had formed a corporation; Optical Distortion Inc.
The company was formed in response to huge opportunity lying due to inefficient practise of debeaking
The process of debeaking carried a host of problems such as trauma, temporary weight loss, and retardation of egg production.
The company had 2 most important assets:
United States product patent on the ODI contact lens
Companys contract with New World Plastics.
ODI agreed to pay New World $50000 & to purchase lens exclusively from New World
Several technical difficulties were there with the product:
Early prototypes did not always remain in the chickens eyes
Frequently caused severe irritation in the last month of chickens 12 month laying life
Retention problem was solved by modifying the size of the lens
New World sold lenses to ODI at a price of $0.032
Injection mold supplied by ODI to New World at a cost of $12000 each
California, North Carolina and, Georgia accounted for 25% of nations chickens The number of small farms has been declining at the rate of 25% per year
Hierarchical type of social order was established through fighting and pecking Cannibalism was a greater problem when birds were confined in cages
Replacing dead bird also disturbed the peck order
Debeaking reduced mortality rate from 25%(in case of full beak) to 9%
Debeaking led to loss of 1 egg/chicken per 5 months
A crew of 3 was used for debeaking at $2.50/hour for 220 chickens per hour
Chicken wearing ODI lens had its depth perception reduced to about 12 ODI lenses claimed to reduce mortality to an average of 4.5%
Trained crew could install the lenses in about 225 chicken per hour at $2.50/hour The lenses were harder to take out than to put in
Food disappearance per 100 birds per day was reduced from 24.46 pounds when the feed in trough was 2 deep to 23.68 at 1 deep Annual savings amounted to $158
Annual cost of west coast regional office and warehouse was $196000,40000 for salesperson and $35000 for technical representative
Monthly advertising cost in 8 leading poultry industry publication would cost
approximately $100,000 per year
Headquarter expenses would rise from 184,000 at 20 million pair to 614,000 at 60 million and 1.2 million at volume of 20 million pair
Salespersons were expected to cover at least 80 farms each
Investment of at least $250,000 per year in research and development was expected
Price per pair of lens was $0.08
Competition
Although ODI does not face any direct competition as of now but has its competitor as debeaking process; used to reduce cannibalization behaviour of chickens satisfying the same need.
Despite the fact that the debeaking process lowers chicken morality caused by cannibalism from 25% to 9%, there are heavy and drastic repercussions for the chickens and farmers, in terms of production and chicken morale.
Thus ODI can maintain its monopoly if it is able to capture the market by targeting and influencing the farmers in right direction.
Customer
The case says that its not profitable to sell to small farms having chicken count less than 10000. There are three segments based on size of farms:
Small Farms (10000 or fewer birds)
Medium Farms (10000-50000 birds)
Large Farms (over 50000 birds)
Recommendation Increasing the selling price above 15 has lesser impact on the reduction of required units for break even. So for the company it doesnt provide much incentive to raise the price from 15 to 20 as compared to raising the price from 10 to 15. Also, the decrease in the "net savings for farmers as a percentage of total profit" is more when price is increased from 15 to 20 than from 10 to 15. Hence the farmers would lose much more if price is increased from 15. Moreover, since it is a new technology, the farmers would be reluctant to buy the product if it is highly priced. Hence it is recommended to fix the selling price at 15.
