Professional Documents
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BellaHealthCare
ThiscasestudyisonBellaHealthcare(Leonard&Yong,2012),whichwas
originallysetupasamanufacturingfacilityinSt.Louis,Missouri,for
developingHoltermonitors.Itlaterexpandedtovariouscardiology
equipmentincludingEKGs.TheanalysisbelowfocusesonwhetherBella
Indiaisreadytoleadanewproductdevelopmentprojectforthelocal
market.
BellaIndiamovedfromlowvalueaddedactivitiestohighvaluecapabilities
likeproductdevelopment:BellaHealthcarestartedanothermanufacturing
locationinBangalore,India.Itsdecisionwasbasedonthefollowingfactors:
supportinginfrastructure,industrialcenter,andatrainedEnglishspeaking
laborforce.Bellasproductsarecommerciallyorientedandusually
improvisedversionsofexistingproducts.TheBangalorefacilitywas
focusedonmanufacturingandproduction.Theproductsatthisfacilitywere
lessexpensiveandofsuperiorquality.BellaIndiawasonlygiven
productionandmanufacturingresponsibilities.
Becauseofitssuccess,in2003BellaHealthcareIndiaformedajoint
productdevelopmentventurewithitsparentcompanyandestablishedits
firstR&DteamwiththehelpofJeremyManning.Mostmembersofthe
R&Dteamwereyounggraduateswithlittleexperienceinmedical
technologyproductdevelopment.TheteamwassenttotheUnitedStatesfor
training.TheIndiateamexcelledintechnicalknowledgebuthadtohone
theirinnovativeandcreativeskillsinamixedculturalenvironment.
ManningalsohadtolocalizehismanagementstyleinresponsetotheIndia
teamspropensitytowarduncertaintyavoidanceandriskaversion.Theteam
reliedheavilyonManning.
WiththesuccessoftheFiitproject,collaborationbetweentheSt.Louisand
Bangaloreteamsincreasedsignificantlyandreflectedjointeffortsinthe
initialproductdesign.In2005,ProjectBatonwasinitiatedtojointlydevelop
anewproductthathadatoughcompetitioninthelocalmarket.
Manufacturingcostshadtobelowtoachieveapriceadvantage.Awhole
newsystemhadtobedesignedwithverytightdeadlines.Thesuccessofthis
projectwasdependentontightcollaborationbetweentheIndiaandSt.Louis
teamsandleveragingbestofbothteams.
Causesoffailureinthejointproductdevelopmenteffortinthecrosscultural
team:
ProjectBatonfailedforthefollowingreasons:
1.Animportantmemberquittheteamunexpectedlyandresourceturnover
wasnotconsideredasacontingencywhentheteamestimatedthetight
schedulefortheproductrelease.
2.ComponentpartssourcedfromAsiaweredelayed.
3.Differencesincrossculturalcommunicationandworkingstylesoften
leadtofrustrations.IndiateammembersfelttheirU.S.managerswere
aggressiveandhadtrustissues.Similarly,theU.S.managersfeltthatthe
Indianteamwastoopassiveincommunicatingpotentialroadblocksahead
thatledtoslippeddeadlines.
4.OftentherewereconflictsduetotheSt.Louisbasedteamexcluding
boththemanufacturingteaminIndiaandthesupplierswhenmakingdesign
changes.Thedesignchangesmeantcreatinganumberofprototypesanda
dependencyonU.S.andAsiancomponents.
5.Althoughultimatelydeliveringonaggressivetimelines,Asiansuppliers
werenotcomfortablewithshortturnaroundtimes.Prototypetweaking
provedcostlytotheprojectdespitetheAsiansuppliersagreeingtoan
aggressiveschedule.
6.Thecostofmaintainingtwoprojectteamswashighercomparedtothe
benefitsitbrought.Beingoverseas,theteamswerefacedwiththechallenge
ofmaintainingalongdistancerelationshipwitheachotherandtheoffshore
suppliers.
ReasonswhyBellaIndiashouldtakeonProjectTKOforthelocal
market:
1.ThecausesofProjectBatonsfailureempoweredBellaIndiatolearnthe
challengesofprojectmanagement,identifythecriticalpath,andbuild
relationswiththesuppliers.BellaIndiawassellingproductssuitedforU.S.
andEuropeanhospitals.TherewasnoequipmentmadeforthelocalIndian
market.Bellasproductswerehighendandsoldmostlytotheprivate
hospitals.
2.TherearelowerqualityproductsintheIndianmarketfromdomestic,
ChineseandKoreanmanufacturers.Theseproductsarepoorerqualitywith
lowaccuracyratesandnowarrantiesoraftersalesservice.Researchalso
showsthattherewasgoingtobenobreakthroughinproductorservice
qualityinthenextfiveyears.Becauseofthechangesindiets,sedentary
lifestyle,stressandsmoking,Indiaisaprospectivemarketforcardiaccare.
Themajorforcesdrivingtheneedforbettercarearetheimprovedhealth
careinfrastructureandbetterinsurancecoverage.
3.IndiaisapotentialfuturemarketforEKGdevices.SuccessinIndia
wouldeventuallyopenupthepotentialinotherdevelopingcountriesaround
theworld.
4.GEHealthcareandothercompetitorsarealreadycateringtothelocal
needsoftheIndianmarket.However,therearenoportableEKGdevicesin
themarket.
5.SincetheU.S.teamwillhavethechallengeofknowingthelocalmarket,
BellaIndiaslocalteamisbettersuitedtomakedesigndecisionsbasedon
costchallengesandthelimitedcapabilitiesofruralpractitioners.TheIndia
teamcanworkcollaborativelywiththelocalsuppliersandanyproblems
couldbeeasiertoresolvebecauseoftheproximity.
6.Carewasmostlyavailableintheurbanareas;ruralareaslackedgood
equipment.Seeingalltheseopportunities,BellaIndiaproposedtocreatea
smallproductthatiseasytocarry.Becauseofthefrequentpowercutsin
ruralareas,thereisarequirementthatthedeviceworkonbattery.Since
mostofthephysiciansintheruralareashavelimitedtraining,theproduct
shouldbesimpletooperate.OneprominentfeaturethatcouldgiveBellaa
competitiveadvantagewasenablingtelemedicineinthisproduct.
Telemedicinecouldaidinremotediagnosisbytransmittingresultsviathe
cellularnetwork.Bellaplanstoincorporateallofthesefeaturesinaprice
rangethatcouldcompeteseriouslywithGEsexistingproductsinthe
market.
SinceBellasemergingmarketstrategyistoextendthefeaturesofan
existingproductthatissuitedforthelocalneedsandtoattractthecost
consciousconsumers,thiscouldgiveitanedgeandleveragetheseproducts
inthedevelopedmarketsforfutureinnovationsandgrowth.
Should Bella Healthcare India take on Project TKO and develop an EKG
specifically for the local market? Why or why not?
product TKO with four design principles; profitability, affordability, ease-of-use and
connectivity.
Many of the Indian families fall in low income categories and health insurance
facilities are not yet spread across the country, especially rural part of the country.
Because of these factors Indians are more inclined towards cheaper medical
facilities and so investors are inclined towards reasonable ROI. This justifies the
profitability and affordability criteria of Bellas TKO, which will help medical
professionals to set up good ROI on its investment while providing affordable
solution to the people.
Limited number of physicians and specialists in the country can limit the use of
TKO. Also concentration of population in small towns and villages, where
transport facilities are not up to the mark, creates need of portable devices. To
tackle these issues Bella has defined its third design principle of ease-to-use.
This will make TKO weight 2 Kg. or less and one touch operating device so that
physicians could handle it with minimum training. Indian villages still face
electricity issues and Bella is will provide solution to this problem by giving battery
operated device. Bella is addressing issue of unavailability of trained physicians
with its fourth design principle connectivity. This design feature will help
physician to transmit data wirelessly to cardiac speciality centres and work with
general practitioners to diagnose the issue. Thus these four design principles will
help Bella to address all the key issues of heart disease diagnosis equipments. In
addition to the new wireless data transfer feature, Bellas design team is exploring
the possibility of adding DICOM feature in TKO. Even though DICOM feature is
not critical in near future, it will help Bella to differentiate its product from GEs
similar product and will give upper hand in marketing the device.
Now, lets concentrate on internal factors. Bella healthcare India, part of global
organisation, has its own strengths, which will lead it to the successful handling of
TKO. First strength of the company is its India head Joseph Cherian, who has
handled initial set up of Bella India and successfully leaded the production of
many devices, and Design head Jeremy Manning, who came from US with 10
years of rich experience in medical devices development and manufacturing.
Cherian has his own proven, tough and no-nonsense management style and he
always keeps close eye on production schedules and product quality. These two
leaders worked together before with Bella India team for successful delivery of
Fiit X17 and so are aware of strengths, weaknesses and issues of Indian design
and production teams. This awareness will help them to identify and tackle
different issues. It will also help them to define strategy, which will suit to the
Indian organisation. Most important, both the leaders are very confident about
TKO and that will help them to lead the team to the success.
Second factor is easy and ample availability of Indian engineering talent at
affordable cost. This talent can be best utilised further with the product specific
trainings. This makes replacement and expansion of the work force easy in
difficult situations. Third factor, that makes Bella India more suitable for TKO, is its
cultural and location proximity to the Indian market. This helps team to
understand and address key needs of Indian market. Also, proximity will help to
find low cost component suppliers and deal with them effectively. These elements
will reduce cost of production, speed up the prototype and production process
and in turn will reduce time to market.
Fourth factor is already built and proven base of cost effective manufacturing of
Bella India. This shows the experience of the unit in cost reduction techniques.
This experience further will help to reduce TKO development and production cost.
This prediction of cost effectiveness can be substantiated by Exhibit 1, which
depicts that design and production in India will reduce the production cost to
approximately 55%. Also, even though TKO is new project for Bella India, its
parent company in US has a single channel EKG product already marketed. This
may help Indian team to get any last minute design assistance or make them
aware of common problems the product will face. This will speed up their design
and production process.
Last and foremost important internal factor is experience of the Bella Indias team
of many successful production deliveries and failure of project Baton. This not
only helped team to realise its strength but also helped to understand its
mistakes. Experience of Baton has already covered the learning curve of the
team and that is one of key speeding factor to TKO.
Bella Healthcare India will definitely face few issues during TKO production. One
of the key issues is time to market, especially when companies such as GE, BPL
are already in market. But the well equipped, talented, experienced team of Bella
with its four design principles will handle all the issues and lead to the success.
Looking at the features Bella is incorporating in TKO; it is not providing EGK
equipment but the complete solution for CAD diagnosis. If the team successfully
completes this project and captures even 10% of the market for TKO, it will
provide approximately $3 million business, over the period of approximately 7
years, to Bella Healthcare. If I move out of the boundaries of India and consider
other developing countries, then the prospects for business are even higher as
most of the developing countries have similar criteria for healthcare facilities and
equipments.