Bella Heath Care India

1. What capabilities and resources does a company need to develop new products? Which of these capabilities and resources does Bella India have?There are 4 competencies that a manufacturing company needs to successfully penetrate the market with new products. 1) Market Research Ability: a company needs to know in details about the market. The details include from the demand for specific function in a product, demand for specific service related to the product, to information about suppliers in the market. 2) High Quality: a company needs to insure high quality of the product in order to succeed in the market. In order to guarantee the level of quality in manufacturing industry, high level of technology reflected in manufacturing facilities and high quality of labor force in order to operate the facilities are crucial. - Technology 

- Labor force3) Low Cost: a company needs ability to produce a new product with lower cost compared to its competitors. 4) Organizational Structure: a company requires right form of organizational structure depending on its industry and external environment. With an appropriate match between structure and environment, the company’s internal communication and decision making process would work effectively.

Among those 4 competencies, what Bella India has towards Indian market is as follows: 1) Market Research Ability, 2) High Quality, 3) Organizational Structure. 1) Market Research Ability: Bella Healthcare has extensive channel to access information of market in both the U.S. and India. This allowed Bella Healthcare to have plenty of information about suppliers in both the U.S. and India, and to point out the local demand towards A/S. 2) High Quality

- Technology: Since its inception in 1969, Bella Health Care has accumulated its technology reflected in its plant in St. Louis. Moreover, since 1990s, Bella Health Care India has also showed high level of technology proficiency.

- Labor...

Should Bella Healthcare India take on Project TKO and develop an EKG specifically for the local market?  Why or why not?TKO, “Technical Knockout”, is single channel EKG, Bella Healthcare India is planning to launch in Indian market. As per my opinion, Bella has many reasons to take up this opportunity. I will categorise these reasons in two broad categories, External and Internal factors.First external factor that affects decision of Bella to take TKO is large population of India with insufficient health care services. India’s population is large and growing but healthcare facilities are not growing with the same rate. Also most of the medical facilities of the country are concentrated in urban areas, leaving rural area with insufficient healthcare facilities. Unfortunately, most of the Indian population stays in small towns and villages. Another fact, in line with this, is availability of less no of physicians and specialists in the field of heart diseases. This has created room for medical services and devices sellers to expand their businesses in the country. The EKG global revenue chart shows that between 2010 and 2015, 9% – 12% of the global revenue will come from Asia-Pacific. As one of the second highest population country in Asia-Pacific, India will definitely contribute major portion of the revenue. The figures in the chart substantiate the fact that Bella has good scope to expand its services in the country. Second factor that helps Bella to take go ahead decision for TKO is increased rate of heart diseases in the country. As per different epidemiological and angiographic studies, Indians are showing heart disease symptoms at young age and there are approximately 30 million CAD patients in the country. This number is expected to double by 2015. These patients will definitely need more and more medical check up and diagnosis facilities, that are not available at this point of time. This will give scope to Bella to capture the growing market

Bella Health Care

This case study is on Bella Healthcare (Leonard & Yong, 2012), which was originally set up as a manufacturing facility in St. Louis, Missouri, for developing Holter monitors. It later expanded to various cardiology equipment including EKGs. The analysis below focuses on whether Bella India is ready to lead a new product development project for the local market.

Bella India moved from low value-added activities to high-value capabilities like product development: Bella Healthcare started another manufacturing location in Bangalore, India. Its decision was based on the following factors: supporting infrastructure, industrial center, and a trained English-speaking labor force. Bella’s products are commercially oriented and usually improvised versions of existing products. The Bangalore facility was focused on manufacturing and production. The products at this facility were less expensive and of superior quality. Bella India was only given production and manufacturing responsibilities.

Because of its success, in 2003 Bella Healthcare India formed a joint product development venture with its parent company and established its first R&D team with the help of Jeremy Manning. Most members of the R&D team were young graduates with little experience in medical technology product development. The team was sent to the United States for training. The India team excelled in technical knowledge but had to hone their innovative and creative skills in a mixed cultural environment. Manning also had to localize his management style in response to the India team’s propensity toward uncertainty avoidance and risk aversion. The team relied heavily on Manning.

With the success of the Fiit project, collaboration between the St. Louis and Bangalore teams increased significantly and reflected joint efforts in the initial product design. In 2005, Project Baton was initiated to jointly develop a new product that had a tough competition in the local market. Manufacturing costs had to be low to achieve a price advantage. A whole new system had to be designed with very tight deadlines. The success of this project was dependent on tight collaboration between the India and St. Louis teams and leveraging best of both teams.

Causes of failure in the joint product development effort in the cross-cultural team:

Project Baton failed for the following reasons:

  1. An important member quit the team unexpectedly and resource turnover was not considered as a contingency when the team estimated the tight schedule for the product release.

  2. Component parts sourced from Asia were delayed.

  3. Differences in cross cultural communication and working styles often lead to frustrations. India team members felt their U.S. managers were aggressive and had trust issues. Similarly, the U.S. managers felt that the Indian team was too passive in communicating potential roadblocks ahead that led to slipped deadlines.

  4. Often there were conflicts due to the St. Louis-based team excluding both the manufacturing team in India and the suppliers when making design changes. The design changes meant creating a number of prototypes and a dependency on U.S. and Asian components.

  5. Although ultimately delivering on aggressive timelines, Asian suppliers were not comfortable with short turnaround times. Prototype tweaking proved costly to the project despite the Asian suppliers agreeing to an aggressive schedule.

  6. The cost of maintaining two project teams was higher compared to the benefits it brought. Being overseas, the teams were faced with the challenge of maintaining a long-distance relationship with each other and the offshore suppliers.

      Reasons why Bella India should take on Project TKO for the local market:

  1. The causes of Project Baton’s failure empowered Bella India to learn the challenges of project management, identify the critical path, and build relations with the suppliers. Bella India was selling products suited for U.S. and European hospitals. There was no equipment made for the local Indian market. Bella’s products were high-end and sold mostly to the private hospitals.

  2. There are lower quality products in the Indian market from domestic, Chinese and Korean manufacturers. These products are poorer quality with low accuracy rates and no warranties or after-sales service. Research also shows that there was going to be no breakthrough in product or service quality in the next five years. Because of the changes in diets, sedentary lifestyle, stress and smoking, India is a prospective market for cardiac care. The major forces driving the need for better care are the improved health

care infrastructure and better insurance coverage.

  3. India is a potential future market for EKG devices. Success in India would eventually open up the potential in other developing countries around the world.

  4. GE Healthcare and other competitors are already catering to the local needs of the Indian market. However, there are no portable EKG devices in the market.

  5. Since the U.S. team will have the challenge of knowing the local market, Bella India’s local team is better suited to make design decisions based on cost challenges and the limited capabilities of rural practitioners. The India team can work collaboratively with the local suppliers and any problems could be easier to resolve because of the proximity.

  6. Care was mostly available in the urban areas; rural areas lacked good equipment. Seeing all these opportunities, Bella India proposed to create a small product that is easy to carry. Because of the frequent power cuts in rural areas, there is a requirement that the device work on battery. Since most of the physicians in the rural areas have limited training, the product should be simple to operate. One prominent feature that could give Bella a competitive advantage was enabling telemedicine in this product. Telemedicine could aid in remote diagnosis by transmitting results via the cellular network. Bella plans to incorporate all of these features in a price range that could compete seriously with GE’s existing products in the market.

  Since Bella’s emerging market strategy is to extend the features of an existing product that is suited for the local needs and to attract the cost-conscious consumers, this could give it an edge and leverage these products in the developed markets for future innovations and growth.

Should Bella Healthcare India take on Project TKO and develop an EKG

specifically for the local market?  Why or why not?

TKO, “Technical Knockout”, is single channel EKG, Bella Healthcare India is

planning to launch in Indian market. As per my opinion, Bella has many reasons

to take up this opportunity. I will categorise these reasons in two broad

categories, External and Internal factors.

First external factor that affects decision of Bella to take TKO is large population

of India with insufficient health care services. India’s population is large and

growing but healthcare facilities are not growing with the same rate. Also most of

the medical facilities of the country are concentrated in urban areas, leaving rural

area with insufficient healthcare facilities. Unfortunately, most of the Indian

population stays in small towns and villages. Another fact, in line with this, is

availability of less no of physicians and specialists in the field of heart diseases.

This has created room for medical services and devices sellers to expand their

businesses in the country. The EKG global revenue chart shows that between

2010 and 2015, 9% – 12% of the global revenue will come from Asia-Pacific. As

one of the second highest population country in Asia-Pacific, India will definitely

contribute major portion of the revenue. The figures in the chart substantiate the

fact that Bella has good scope to expand its services in the country.

Second factor that helps Bella to take go ahead decision for TKO is increased

rate of heart diseases in the country. As per different epidemiological and

angiographic studies, Indians are showing heart disease symptoms at young age

and there are approximately 30 million CAD patients in the country. This number

is expected to double by 2015. These patients will definitely need more and more

medical check up and diagnosis facilities, that are not available at this point of

time. This will give scope to Bella to capture the growing market. Third factor is

raising awareness towards health that in turn increasing willingness of Indians to

pay for medical services. Willingness is one of the critical factors in any market

and in this case this factor is already in favour of medical industry and so of Bella

healthcare.

These favouring factors come with the great challenges, which Bella has to

tackle. First challenge is competition with world class healthcare company GE,

local company BPL health and few more Chinese and Korean companies. These

companies have already captured considerable market. But not all of them are

providing complete solutions to suit Indian market. Primary need of the Indian

market is cost effective medical instruments. Few companies are providing

cheaper solutions but those solutions come without any warranty and post sale

customer service. Bella has identified the challenge and need of providing cost

effective complete solution to satisfy needs of Indian market and defined its

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 Bella’s 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, Bella’s 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 GE’s similar product and will give upper hand in marketing the device.

Now, let’s 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 India’s 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.