A Case Study on

Named after

Sri Aurobindo Ghosh,

his teachings form the

basis for Aravind’s

work

‘Spirituality allows the divine force to work through each of us for a greater good’- Sri Aurobindo

OverviewIt was in the year 1976 that late

Dr. G. Venkataswamy established an 11-bedded Aravind Eye Hospital in a small rented house in Madurai

He created a system for sight-saving

cataract surgeries that produces enviable

medical outcomes in one of the poorest regions

of the globe.

• At one point of time, he was affected by rheumatoid arthritis, but through his hard work and determination he overcame his disability and earned his masters in Ophthalmology from Madurai Medical College.

• Dr. V was honoured with the Padmashree award in 1973

• Late Dr GovindappaVenkataswamy or 'Dr V' as he was affectionately called was the founder chairman of ACES.

Vision:

-Offer quality eye care at reasonable cost

-Provide services to rich and poor alike

-To Mass Market Cataract Surgery on a Global perspective

Mission:

-“Eradication of Needless Blindness” by creating a private, non profit eye hospital that would provide quality eye care.

Values Providing compassionate and high quality eye care for

all.

Extending the reach of quality eye care to the poor and needy.

Active community involvement, screening camps, and IT enabled Vision Centers in rural areas.

Developing ophthalmic human resource.

Today, Aravind has ten branches of Eye Hospitals, with a combined strength of more than 4000 beds a network of outreach centers in the state of Tamil Nadu

•Madurai

•Theni

•Tirunelveli

•Coimbatore

•Pondicherry

•Dindigul

•Tirupur

•Salem

•Tuticorin

•Udumalaipet

In the year ending March 2013, over 3.1 million outpatients were treated and over 370,000 surgeries were performed, making Aravind one of the world‘s largest eye care systems catering largely to the poor population.

Growth

1977- First 30 Bed Hospital opened at Madurai, the third largest city in Tamil Nadu, later extended to 250 beds.

1984- A new 350-bed hospital opened exclusively for free patients in Madurai.

1985- 100-bed hospital at Theni

1988- 400-bed hospital at Tirunelveli

1997- 874-bed hospital at Coimbatore

2003- 750-bed hospital at Pondicherry

2010- Hospital at Tirupur and Dindugal

2011- 150-bed hospital at Salem

2012-62-bed hospital at Udumailaipet

AttractivenessRemarks

1 2 3 4 5

No. of Competitors Large * Small

Industrial Growth Slow * Fast

http://www.ibef.org/industry/healthcare-

india.aspx

Fixed Cost High * Low

Differentiation Low * High

Switching Cost Low * High

Openness Terms of Sales Secret * Open

Excess Capacity Large * Small

Strategic Stakes High * Low

Rivalry among Competitors:

Barriers to Exit:Attractiveness

Remarks

1 2 3 4 5

Asset Specialisation High * Small

Cost of Exit High * Small

Government Restrictions

High * Small

http://finmin.nic.in/workingpaper/policy%20Paper%20on%20Services%20

Sector.pdf

Barriers to Entry:Attractiveness

Remarks1 2 3 4 5

Economies of Scale Small * Large

Product Differentiation Low * High

Brand Identity Low * High

Switching Cost Low * High

Access to Channels of distribution

Easy * Limited

Capital Requirement Small * Large

Access to technology Easy * Restricted

Access to raw materials Easy * Restricted

Government Protection None * Substantial

Threat from Substitutes:Attractiveness

Remarks

1 2 3 4 5

Availability of close

substitutesHigh * Low

Switching Cost Low * High

Substitute’s price-

valueBetter * Worse

Profitability of the

producers of

substitutes

High * Low

Bargaining Power of Buyers:Attractiveness

Remarks

1 2 3 4 5

Number of Buyers Small * Large

Availability of substitutes Many * Few

Switching Cost Low * High

Buyer’s threat of

backward integrationHigh * Low

Industry’s threat of

forward integrationLow * High

Contribution of quality Low * High

Contribution of cost High * Low

Buyer's profitability Low * High

Bargaining Power of Suppliers:Attractiveness

Remarks

1 2 3 4 5

Number of suppliers Small * Large

Availability of substitutes Few * Many

Switching Cost High * Low

Supplier’s threat of forward

integrationHigh * Low

Industry’s threat of

backward integrationLow * High

Contribution to quality High * Low

Contribution to cost High * Low

Industry's importance to

supplierLow * High

Government Action:

Attractiveness

Remarks

1 2 3 4 5

Industry protection Low * High

Industry regulation (Pollution, etc.,)

High * Low

Customs and tariff restrictions abroad

High * Low

Overall Attractiveness of the Industry:Attractiveness

RemarksLow High

1 2 3 4 5

Barriers to entry *

Rivalry among competitors *

Barriers to exit *

Power of buyers *

Power of suppliers *

Threat of substitutes *

Government action *

Overall attractiveness *

Service for all

Rip the price tag off a sight restoring surgery

Design for dignity

Let patients decide whether to pay or not

High quality for free

Doctors rotate through free and paid service

Broaden the pie

Prioritize marketing to people who cant pay

Own the Barriers

Take service to people who cannot get to you

Model after McDonalds

Standardized, easy access, affordable

Be Self Reliant

Intraocular Lens

Train your Competition

View rivals as Mission partners

Strength Low cost Surgeries

(Aurolab, the manufacturing division of Aravind Eye Hospital)

Vision centers and community eye clinics

Organizational Transparency and International Reputation

Highly trained medical personnel

Mission-oriented Culture Deeply Rooted in AECS Staff

Geographic locations

Weakness Lack of financial resources(less than market price)

Lack of Decentralized Decision Making Authority, Autonomy

Irregular Patient Inflow

Transportation

Opportunities

New business initiatives available

30 million people in India are classified as blind and 2-3 million is added annually

Collaborations with different healthcare organizations

Market Potential for Specialty Products and Services

Threats Demand for expensive medical technology

India’s political risk is high and there is always a chance of government intervention

Competitors expanding

Other natural treatments, Ayurveda

Losing Status as Employer of Choice

Space Graph:

Competitive

AggressiveConservative

Defensive

INTERNAL/EXTERNAL

STRENGHTS WEAKNESSES

• Low cost Surgeries • Lack of funds

• Aurolab • Decentralized decision making

•Vision centers and community eye clinics • Irregular Patient Inflow

•Geographic locations •

OPPORTUNITIES S-O STRATEGIES W-O STRATEGIES

• 30 million people in India are classsified as blind

Using low cost strategy AECS can expand its business

By expanding its business globally it can fund itself for mobile clinics

•New business initiatives available

Special products from Aurolab will give huge return as there is high demand for them forecasted.

Developing of infrastructure can provide room for large numebr of people

•Market Potential for Specialty Products and Services

THREATS S-T STRATEGIES W-T STRATEGIES

Demand for expensive medical technology

Quality treatements can eliminate customers to shift to ayurveda treatments

Poor patient inflow control can becompetitor's advantage

Natural treatments like ayurveda

Economies of scale help AECS to overcome expenses in medical technology

Political risk

Competitors expanding

1

2

3

4

1234 IFE Score

EFE Score

Grow and Build• Market Development• Horizontal Integration

Global Expansion StrategyMarket penetration

strategy

Key external factors: Weight AS TAS Weight AS TAS

Opportunities

New business initiatives 0.12 4 0.48 0.12 4 0.48

collaborations 0.15 3 0.45 0.15 4 0.6

Rural patients 0.13 3 0.39 0.13 4 0.52

Expansion across India 0.08 3 0.24 0.08 4 0.32

Special products 0.08 2 0.16 0.08 2 0.16

Threats

Political risk 0.07 2 0.14 0.07 4 0.28

Other alternatives (Ayurveda) 0.15 3 0.45 0.15 3 0.45

Expensive medical advancements 0.1 4 0.4 0.1 2 0.2

Wrong perception towards low cost service 0.12 2 0.24 0.12 2 0.24

Total Weighted Scores 1 2.95 1 3.25

QSPM Contd…Global Expansion Strategy Market penetration strategy

Strengths

Low cost Surgeries 0.15 4 0.6 0.15 3 0.45

Organizational Transparency 0.08 2 0.16 0.08 3 0.24

Service oriented 0.10 2 0.2 0.1 2 0.2

Mission-oriented Culture 0.13 4 0.52 0.13 4 0.52

Aurolab 0.09 3 0.27 0.09 3 0.27

Vision centers and community eye clinics 0.09 2 0.18 0.09 3 0.27

Demand Generation 0.13 4 0.52 0.13 3 0.39

Geographic locations 0.04 1 0.04 0.04 2 0.08

Weakness

Lack of funds 0.04 4 0.16 0.04 3 0.12

Lack of Decentralized Decision Making Authority 0.08 3 0.24 0.08 2 0.16

Lacks of sponsors for mobile clinics 0.02 1 0.02 0.02 1 0.02

Irregular Patient Inflow 0.05 4 0.2 0.05 3 0.15

Total Weighted Scores 1 3.11 1 2.87

Reference

http://www.v2020eresource.org/sitenews/news102011/pdf/ensuring_financial_sustainability.pdf

http://www.aravind.org/Downloads/Sharpening.pdf

http://www.aravind.org/Downloads/draravindinterview.pdf

http://www.aravind.org/downloads/InfiniteVisionTIMES.pdf

http://www.aravind.org/downloads/LAICO_Consultancy_Brochure.pdf

https://www.youtube.com/watch?v=1O7Ac83XFu0

https://www.youtube.com/watch?v=aPRIo6S41A8

https://books.google.co.in/books?id=aoHRAwAAQBAJ&pg=PA309&lpg=PA309http://en.wikipedia.org/wiki/Aravind_Eye_Hospital

http://www.aravind.org/Aurolab.aspx