Case: Lasik Vision Corporation

Information given for the Company:

In 1998, Lasik Vision Corporation was the first laser vision correction provider in North

America to offer “affordable, value-pricing” and to promote it with direct-to-consumer

advertising. At the time, this was a new approach for a medical services company and

allowed it to capitalize on a larger mass appeal for the procedure. Dr. Wallerstein was the

National Medical Director of LASIK Vision Corporation and oversaw medical standardization,

and Dr. Cohen was the National Director of Professional Affairs and oversaw physician

recruitment and training. By 2000, Lasik Vision Corporation, a publicly traded corporation,

became the largest laser vision company in the world, as measured by procedure volume. In

2001, Cohen and Wallerstein left LASIK Vision to implement a similar medical model in a

group of privately-owned facilities. These centers operate under the name LASIK MD. LASIK

MD subsequently acquired the majority of the former Lasik Vision facilities in Canada.

(Wikipedia)

1. What was Lasik Vision’s competitive priority?

The aim of Lasik Vision was to gain competitive advantage in the eye surgery industry by

offering the lowest price on the market and making profits through economies of scale i.e.

high volume of operations and reducing costs. Furthermore they executed a very aggressive

advertising campaign which accounted for 10-15 percent of profit. The initial price tag of

$5000 for an eye surgery was brought down to $1598 for both eyes.

The main driver for this change was Henderson who believed that mass volume with low

margins is the only way to make high profit in this industry. He focused on efficiency,

productivity and growth in his strategies. To achieve his goals, he pushed for the

reengineering of the traditional model of the refractive surgery and cut costs. This was done

by reducing the number of employees, not using expensive equipment if possible, cutting

out the optometrists from the process and standardizing the delivery process. Massive

expansion, introduced by Henderson, by opening one new site per week in March 2000, was

only for one reason, to target a large volume of clients and thus increase revenues.

2. Is it an appropriate approach in this industry? What repercussions,

actual or perceived, might occur with this priority?

Reducing price is a feasible strategy to attract more customers and overthrow the

competition but only if the quality of the product or service is not sacrificed especially in this

type of industry. Sadly, the efforts of Lasik Vision to increase efficiency and to provide the

lowest price possible forced them to cut down on essential manpower and needed

expensive equipment that compromised patient care. This strategy did cost them their

existents in the long run. As also stated by TLC regarding Lasik’s ruin, their failure to provide both solid business and clinical models are the main reasons for putting themselves at such a

financial disadvantage.

Notwithstanding the fact that Lasik’s priority to reengineer the traditional model of the

refractive surgery process to cut costs and to widen customer base through expansion have

given them financial success in the short run, but it also led to an increase of failed surgeries