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.
- Labor force
3) 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:
- Market Research Ability,
- High Quality,
- 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 Force: A number of engineers are with full background technological knowledge, but at the same time requires much less wage.
3) Organizational Structure: Bella Health Care has independent structure. This enables Bella India to make important decisions by itself not being interfered by HQ in the US. Bella India has its own authority in project building, manufacturing, and staffing which makes the company react swiftly and localize easily. Also, Bella India has a flat culture so engineers can participate in decision making process. It has encouraged Bella India to be well-communicating organization with constant innovation. However, when it comes to projects that require intimate cooperation with HQ, such as Project Baton, this structure may hinder communication between the HQ and the division.
2. Why did Project Baton fail?
Project Baton, the first joint product development by St. Louis-based team and Bella India team, has cancelled. Below are 3 possible reasons of the failure of this project.
1) Communication Problems
Cultural difference: As the two teams had different cultural context, they misunderstand each other even though they have not had problems with their co-workers before. Even though they can speak in the same language (in this context, Bella India team would speak English), there is possibility that the words or phrases have different meaning. Also, the same behavior or attitude could be regard as suitable and polite in some cultural group, while it is rude in other group. For instance, in this case, a-few-minute late for a conference call or missing deadline could be trivial for Bella India team but it could be serious problem for the St. Louis supervisor because they are in different cultural context.
Far distance between two project teams made communication difficult Both team felt frustrated to have late-night conference calls and to go on a business trip because they need to do extra work. Sudden vacancy in project manager position in St. Louis. Unexpected Departure in this position lasts several weeks and it would make two project teams to communicate more slowly and less effectively. Conflicts in priority between design engineers and manufacturing Bella India team focused on designing for manufacturing most, while St. Louis-based team took care of developing the best, most commercially viable functionality. It seems they had difficulties in making settlement because they mostly care about their own responsibility, not about working closely.
2) Technical problems
Bella run into difficulty with operations making a new product. When they made prototype of project Baton, amplifier did not work well. Actually, Baton was not that high-tech project, because it was application of EKG with treadmill. Developers had a strength to make cost lower, but did not have ability making application within certain time deadline.
3) Sourcing issues.
Bella expected vital part such as microcontroller to be outsourced in Asia, but they had to brought it from US costly since Asian benders delayed the delivery. They failed cost control because of unqualified benders. Without second plan or diversified benders, new process can easily face such problem. At last, product which consumes 30% higher cost than initial expected value makes Bella give up the project Baton in 2007.
3. Should Bella India take on Project TKO and develop an Bella Healthcare specifically for the local market? Why or why not?
1) Internal aspects Bella healthcare has its’ own mission
Bella health care usually sells 12 channel devices which provide accurate diagnosis of disease. In developing countries, sometimes they face with resource constraints, such as power failure or lack of doctors. So Bella healthcare develop simplified version of device, TKO. Most of the techniques are already existed and used in Bella health care. They can get higher profit by using little bit modified devices They learn from last fail.
Using experience learned from ‘Project Bacon’, they can make a great success in this project. In Baton project, Bella health care in India and its’ headquarter develop a new product together. However they have a communication problem and it ruins the project. In TKO project, Mr. Manning made a task force team, so they can control the project by themselves. Also, they already experience a problem in outsourcing procedure, so they can handle potential problem more easily about outsourcing issue. And last, they have a technical ability to build the one motor model which was not done at the previous project.
2) External Aspects
India is big and continuously growing market India has large Population, and their economy is growing. Also the professional says that patients of CAD will increases in a large number. Asian smokes a lot, and they get stressed, so they are likely to get CAD. However the number of doctors and facilities are very small, and most of them are located in the city. Though by they need a device easy to control and diagnose market prospects has green color. Market size of single-channel is biggest among others market. According to the chart, sales amount of single-channel is 19,825. Considering total amounts of EKG market in India is about 31,000 units, single-channel has a value. Not big in this time, but strong competitors exist.
The second external issue is market share. In single-channel market, dominant company is BPL Health, local brand, who has 56% of market. Except BPL Health, there is no strong market leader. Most of them have only 5%, or lower than 5%. GE, most significant competitor, also shows only 4% in this market. Include BPL most of local companies and Asian companies are not a serious problem. Because they don’t catch market needs like aftersales service or product innovation, so they will wipe out natural. But GE is not, Golden lush to single-channel is just starting. Until now, GE focused on high channel market like 3-chaanel or 6-channel market, and ran in to single-channel market recently.
But GE has been worked faster than Bella Healthcare definitely. In contrast Bella Healthcare, Bella Healthcare just starts on preparing about single-channel market, GE already participates in these market. And the CEO of GE Healthcare in South Asia set a goal that is big growth in India market within next 2-3years. Other competitive companies like Medi Ved and Perfint Healthcare continuously produce a new model for India market. Although not involved yet, Philips is also a powerful potential rival. They have a 29% market share in 6/12-channel market already.
Most of internal and external environments shows positive situation, considering circumstances single-channel market is very attractive. But the issue about competition is the reason of hesitation. To solve this problem, they should propel Project TKO to make special product for India market. Then how they can be success in this harsh race? There are two tracks; the first one is be a market leader by their own special function. And the second one is be a fast follower. First strategy Estimated specifications of Bella Healthcare’s new product are not special compare with other competitors that, easy-to-use interface, low weight, high efficiency. But the one thing is different, mobile connectivity. India has a ridiculously little number of medical doctors and terrible accessibility on medical service. 6 physicians per 10,000 people exist.
This figure is lower than 1/20 number of UK and almost 1/100 number of USA. Mobile connectivity can help this problem. Through Bella Healthcare’s new product will be able to get a medical service to remote area. If it is possible that patient’s condition that diagnosis by machine, sends to physician and receive prescribed via mobile, relatively large number of patients can be provided medical service without seeing a specialist directly. But, it can be possible when 1) the technology that can be equipped with wireless capabilities should be exist, 2) they supported by the local telecommunications infrastructure, and 3) add wireless capabilities not make a result the loss of product competitive price. After reviewing the situation, if possible, to do this immediately to become the market leader, it is the first strategy. Second strateg
However, if the situation occur like add wireless capabilities is impossible, the lack of telecommunications infrastructure or add wireless capabilities lead to the loss of price competitiveness, the first strategy is to give up quickly. Instead, Bella Healthcare can take ‘Me too’ strategy by quickly chasing GE’s market-leading, and seek s getting a firm second rank in the market. Asian – Pacific market shows fast growth rate about 9-12% per year, because of that ‘Me too’ strategy will be enough to take profits. In addition, this strategy saves R&D expense lather then first strategy, so it can ensure price competition.