Business and Management
Submitted By khemy
Describe the Situation
Bella Healthcare was founded in 1960 as a manufacturing of Holter monitors. Due to the advent of transistors by early 1960’s, Bella Healthcare had become widely accepted for clinical use. Bella Healthcare India was originally established in Bangalore as a low-cost manufacturing facility for a U.S.-based cardiology equipment developer. The company was launched with The Bella brothers developed version of Holter that was more comfortable for patients and more reliable than competing device. As the year goes by the company expanded its offering to a range of cardiology equipment. Bella Healthcare wanted to establish an Asian Manufacturing location in addition to its facility outside St. Louis, after accessing several location there was a strong recommendation to select Bangalore. Bella had sales office in Europe and Asian Market but this would be the first manufacturing facility outside the US. Bella Healthcare India started operation in 1990s. Bella India is bent on achieving goals and innovation of health facilities. The Bangalore facility products were lower cost but also of high quality.
The establishment of an Asian manufacturing location in addition to Bella’s Facility outside US was succeeded by the Bella healthcare India. The immediate goal was to establish a lean low cost manufacturing facility in India.
In 1990 operation at Bella Healthcare India started with the assembly and testing of EKG electrodes and amplifies. The Strategic aim of Bella Healthcare India was to impress St, Louis Management team with what a strong Indian team could do. Bella India took the first step toward achieving this goal in early 1992 when the company introduced the Buhd 612.The extent of the manufacturing experience and expertise gained by the Bella India engineers was hugely clear to senior management in St. Louis. Bella India goal of impressing the headquarter had been achieved.
Bella India relied on lower labour cost and manufacturing overhead to achieve savings. They achieved this by taking on more challenging task of cos engineering. Bella India had no specific cost-saving target therefore, they wanted to see how low they could get. Bella India switched US suppliers for Asian suppliers because they confident it would get them immediate and significant saving.
By 2000 Bella India cost-cutting measures were beginning to pay off. Their manufacturing cost had reduced by nearly 35%. The Bella India team had delivered more than the St. Louis management team had hoped. In continuation of achieving their strategic aim Bella India decided to expand their scope by including some product development responsibilities.
Under country manager Joseph Cherian it evolved considerably, developing its own research and development capabilities. Strengthened by investment in technical training and a shift in culture and mindset, the India team developed and launched its first successful product in 2005 under the guidance of Cherian and American Jeremy Manning, the Bella India director of R&D. Their success led them to a joint product development venture with the parent company, but organizational, technical, and cultural issues resulted in its cancellation. After this disappointing failure, is Bella India ready to lead a new product development project? If so, is the new project proposed by Cherian the right one to recover with.
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.
Activities Involved in internationalization process
Internationalization is the process of increasing involvement of enterprises in international markets. Bella healthcare was initially established in the United States, afterwards they established other sales offices in Europe and other Asian market. The establishment of a manufacturing facility outside St. Louis was one of Bella Healthcare internationalization process. The selection of Bangalore, India was due to the fact that other multinational corporation had successfully established operations there.
Another internalization process was the decision of Bella Healthcare to shift the production of Raddit 601 from St. Louis to Bangalore as the manufacturing facilities in St. Louis were already operating near full capacity. The transition was smooth and successful. As a result of low cost of production in India, Bella Healthcare moved partial production of some of their popular portables to India.
The movement of Manning to Bangalore to help Cherian establish the R&D team was a process of increasing the involvement of India manufacturing facility. A great collaboration was encouraged between headquarters and Bella India by Bella senior team after seeing how effective Bella India’s cos-saving strategy was. The essence of this collaboration was for a successful execution of the Baton project. There was also a joint development by St. Louis and Bella India of an entire new product.
Internationalization has provided Bella Healthcare with specific competencies that were not available to the domestically operating firm. They have been able to increase their economies of scale both nationally and abroad. Develop economies of scope and more managerial perspectives. Rapid expansion of knowledge based services of both Bella India team and St. Louis team.
Targets were set for project Baton. The company aimed to beginning production and complete development significantly faster than comparable projects, while achieving a unit cost that would enable Bella to beat competitors in delivering the best value stress test system. All this target had to be done by an international team including ST. Louis and Bella India working closely together. The responsibilities of the target was divided between Bella India team and St. Louis team.
Nationality and background of the manager
Joseph Cherian is from Indian state of Kerala and had studied electrical engineering at Indian institute of Technology Bombay (Mumbai). He completed an MBA at Washington University St. Louis, after the completion of his MBA he stayed in the United States for 10 years to work for GE Healthcare. In order to be closer to his family, Cherian accepted the Bella India position and returned home. He was committed to demonstrating that India was a good place for multinational corporations to invest. Cherian was known for his tough and strict management style and kept a very close eye on production schedules and product quality. He was determined to impress senior management with what a strong Indian team could do. His goal was for create a great team that will take on a greater share of responsibility for Bella’s production.
Joseph Cherian is a goal oriented individual and one of his crucial goal had always been to develop products that serve emerging market and make Healthcare more accessible. He suggested the development of affordable EKG in India for, for Indian because Bella India has proven itself in manufacturing and cost engineering.
Jeremy Manning is from the United State, he is an electrical engineer with over 10 years’ experience in both product development and manufacturing. He moved to Bangalore to help Cherian establish the R&D team. Though he was hesitant about moving to Bangalore, he found himself impressed with the talent on the team and he was excited about the potential.
Manning found a really sharp, motivated team with tremendous latent talent. The Bella India team had proven themselves in manufacturing and cost- engineering. Compared to his past experience manning found the Indian engineers to be more conscious of hierarchy and more risk-averse in making proposal. It took Manning nearly a year to make a lot of the important stylistic and cultural adjustments.…...