In reviewing the financial performance of PetMed Express: The annual report of 2008 of the company describes that the company the company net income and profitability high. The revenue of the company was $10 million in 2001 and it has been reached at $108.4 million in 2005. That was a skyrocketed performance of the firm (PetMed Express (PETS), 2006). At the end of fiscal year 2008, net income of the company is $20,022,231 (PetMed Express: 2008 Annual Report, 2009). The accounting policies of the company are also critical and effective. This is the balancing loop of the organization, because it helps the management to make a balance among all the strategies and programs (PetMed Express: Our Company, 2009). Selecting this balancing feedback loop is to explain the effective strategies of the company to provide safe and quality services and products to the clients within reasonable cost. This feedback loop has been selected because it demonstrates the controlling or balancing action on the part of the organization.
Reinforcing feedback loops can be describes as those loops, which amplify the feedback of the organizational output to make the inputs stronger (Galbraith, 1999). The present structure of the pharmaceutical company, in which PetMed is operating, rest on the following feedback loops.
R&D investments are the main source of intellectual property and patents. Patents offer a legal barrier to entry to competition, which permits the firm to completely extract the high consumer surplus generated by the high willingness to pay (PetMed Express: 2008 Annual Report, 2009). In order to provide satisfactory and safe services and medication to the pet without nay prescription, the company has invested a huge budget in the R&D departments. As the patents and license are required to sale the non-prescribed health food and medication to the customers, there is a need of large investment in R&D (PetMed Express: 2008 Annual Report, 2009). Strong complementary assets development, such as a global sale & distribution network, an enormous clinical development capability and branding offer an opportunity for economies of scale and scope in the development and commercialization of new drugs (PetMed Express: Top Selling Dog Medication, 2009). This permits big firms to carry out those tasks at a lower cost in comparison to start-ups by biotechnology firms, providing large firms with a strong value proposal for commercializing their inventions (PetMed Express: 2008 Annual Report, 2009). This procedure assists the big firms to add new products to their portfolio, which results in the opportunities to strengthen the position of the organization. The online business procedure and facilities of the company also leads it success in the organization.
Feedback loop plays an important role in guiding the behavior of the individual in the organization to produce the required outcome. Efforts are required to improve the behavior so as to increase the performance and establish the market position. Therefore, the proper understanding of these feedbacks is required (Personalized Medicine and the Future of the Pharmaceutical Industry, 2005). These feedback loops play an important role in increasing the organizational effectiveness. All the feedback loops appraise the key inputs and outputs of the organization (Galbraith, 1999). These feedback loops have diversified characteristics, which are interrelated with each other to develop critical and successful organization (Patti, 2004). With the help of these feedback loops, the management can obtain all the outcomes and implement a variety of alternatives, so that the organization can lead to the better involvement of the complementary assets and production of better quality by utilizing available resources (PetMed Earnings Come Up Short, 2009).
In reinforcement loop, investments in R&D are responsible for the intellectual property and patents. Legal barrier offered by the Patents blocks the entry to competition, which permits the firm to completely extract the high consumer surplus generated by the high willingness to pay. In this, the direct cost of getting license and patents of the prescribed and non-prescribe drugs, medications, health and food products, etc. in linked with the R&D cost as the direct cost is relatively low; it allows large investments in R&D (PetMed Express: 2008 Annual Report, 2009). These feedback loops also lead to the increase in the market share, sales generation and also leads to the exploration of new opportunities. Hence, it contributes to an increase in the organization effectiveness (Galbraith, 1999).
Being one of the biggest online pharmaceutical firms PetMed should give prime considerations to the communication strategy and must focus on the target customers. Marketing plays an important role in giving a constructive impact, in order to have an access on new medicines. Proper allocation of funds must be done for the entire department ((PETS) PetMed Express In-Line with Consensus Estimates, 2009). Research teams play a vital role in the sustainability of the company. Therefore, company expenditure on the R&D is justified. The marketing activities generate the awareness among the customers. On the other hand, the advertising provides information about the quality of products to the target customers and also provides information related to the sale terms and product characteristics (PetMed Express: 2008 Annual Report, 2009).
References
Galbraith, J. (1999). Designing Complex Organization (eds.). Addison-Wesley Publishing Company.
Patti, R.J. (2004). The Handbook of Social Welfare Management (4th Edition). SAGE Publications.
Personalized Medicine and the Future of the Pharmaceutical Industry (2009). Retrieved
February 29, 2010 from: http://ocw.mit.edu/NR/rdonlyres/Sloan-School-of-
Management/15-912Spring-2005/A8CD6869-1CD9-4B60-856A-
62959E84D012/0/personaledmne_ch.pdf
PetMed Express: 2008 Annual Report (2009). Retrieved February 29, 2010 from: http://www.1800petmeds.com/images/aboutus/PetMedExpress2008AnnualReport.pdf (PETS) PetMed Express In-Line with Consensus Estimates (2009, October 21). Retrieved February 29, 2010 from http://www.stockbloghub.com/2009/10/21/pets-petmed-express-in-line- with-consensus-estimates/18375
PetMed Earnings Come Up Short (2009, October 19). Retrieved February 29, 2010 from: http://seekingalpha.com/article/167343-petmed-earnings-come-up-short
