Strategy, Innovation and Sustainable Global Enterprise - Research Paper Example

Strategy, Innovation and Sustainable Global Enterprise Aravind Eye Care System is an ophthalmological hospital setting with a number of subsidiary locations in India. The organisation was founded by Dr. Ravilla Govindappa Venkataswamy in 1976. The organisation aims to support the government’s efforts for meeting eye care needs in the country. Aravind has received a number of international awards including the Conrad N. Hilton Humanitarian Prize for 2010. Better Place is a California based American-Israeli company that operates to develop and promote transport infrastructure for supporting electric vehicles. The company was founded in 2007 by Shai Agassi with intent to promote the use of electric vehicles and thereby maintain a green planet. While comparing these two companies, it is precise that the Aravind has been positioned better in terms of strategy, innovation, and sustainability. Introduction Aravind Eye Care System and Better Place are the two organisations selected for this study. The Aravind operates under eye care industry whereas the Better Place works in transport sector. This paper will be helpful to analyse two companies in terms of their sustainability and identify various factors influencing a company’s long term survival. This paper is of great importance in the context of the global economic recession and a series of bank failures and corporate scandals over the last few years. While analysing the eye care industry, it seems that social media and public do not give much emphasis on eye safety. Even though visual media try to promote better health practices among the general public, they hardly pay attention to the health of eyes. Majority people do not consult an eye specialist if they experience visual disturbances. In addition, the vast majority of the people are reluctant to use spectacles or contact lenses as they may cause some inconveniences to the users. It seems that people are not willing to donate their eyes after death despite a series or eye donation campaigns. This situation restricts the scope of eye care industry in giving vision to the blind. At the same time, an aging population raises some potential social challenges to the transport industry because elderly people are less likely to drive vehicles. Many people believe that rail travel and air travel would provide them with more comfort. Finally, people also try to avoid road transport to escape from terrible traffic jams. Comparing to other healthcare settings, eye care industry does not heavily contribute to environmental safety issues. However, it has been identified that some eye care hospitals dump their waste materials such as syringes and needles. Disposal of medical wastes may contribute not only to environmental issues but also to health issues. In contrast, the transport sector significantly adds value to environmental problems. The transport infrastructure development process would often result in harmful emissions and disposal of toxic wastes. Some recent studies point that majority of the transport related constructions add to the issue of global warming. Eye care industry also faces some technological challenges. Even though a number of improved technologies including laser treatment have been developed in the eye care industry, it still lacks technologies to carry out some complex eye surgeries. In addition, many of the eye care equipments are highly expensive and hence are not affordable to every hospital. Likewise, technological deficiency forces transport sector to invest periodically in maintenance works and this situation in turn would impose addition financial burden on construction companies. When transport facilities are closed for maintenance works, this situation would result in inconvenience to vehicles and general public. Geographically, the Aravind and Better place situate at different regions of the globe. The Better Place is located in North America whereas the Aravind Eye Care System is in the Asian continent. The geographical differences greatly influence the market operations of both the companies. While scrutinizing the Aravind’s market operations, it is obvious that the company’s long market experience and its high reputation have shaped its current positioning with regards to sustainability. In contrast, the Better Place is a new comer in the transport industry. However, the organization’s ‘green’ business concept has played a key role in shaping its current sustainability position. This paper will deeply analyze and compare between the Aravind and the Better Place in terms of their business strategy, innovation, and sustainable operations. Analysis of the companies While closely examining the corporate strategies of Better Place, it seems that the company strives to be a social enterprise. A social enterprise can be a for-profit or non-profit organisation that deploys commercial strategies to promote human welfare and environmental safety, rather than creating profits for company shareholders. In the United States, the concept social enterprise reflects the idea of ‘doing charity by doing trade’. In modern days, fuel combustion in vehicles heavily contributes to CO2 emissions and which in turn add to global warming. In this situation, the Better Place tries to develop transport infrastructure that would promote the use of electric vehicles. It is precise, the electric vehicles do not require internal fuel combustion and therefore they do no emit greenhouse gases like CO2. Hence, the Better Place’s business significantly adds value to environmental wellbeing. The company believes that such environmental contributions would assist it to easily raise funds in times of contingencies, get easier access to publicity, and obtain labours at a fairly low cost. Similarly, the Aravind periodically conducts camps and free screening programs for Indian people and freely perform surgeries for poor patients. According to a report prepared by the Indian Institute of Management Bangalore, “Aravind treated over 2.5 million out-patients and performed over 300,000 surgeries for poor Indians” in between the period April 2009 and March 2010 (Swami & Shah, 2008). Like the Better Place, Aravind holds the view that those socially responsible programmes may assist the organisation to attain market stature and thereby popularise its services. In short, the advantages of acting as a social enterprise have influenced both Aravind and Better Place in structuring their core activities. On comparing the market operations of Aravind and Better Place, it is clear that the former is a well established company (founded in 1976) and has long years’ market experience whereas the latter is a start up (founded in 2007). Aravind Eye Care System has a large number of subsidiaries throughout many major cities of the India and hence their services are well known among the Indian population. In contrast, Better Place is currently at its initial stages of business establishment and none of their announced programmes has been implemented yet. Hence, Better Place’s services are not well recognised in the market. The Aravind’s vision is to respond to unmet eye care needs of people and provide all assistances to people with avoidable blindness. The organisation works to ensure that no one suffers from blindness due to lack of finance. In the words of Aravind’s founder Dr. G. Venkataswamy, “intelligence and capability are not enough; there must also be the joy of doing something beautiful”. It believes that government alone cannot meet eye care needs of people in a developing country like India. Hence, the Aravind tries to give a hand to the government’s efforts of improving eye care facilities in the country. The Better Place’s vision is to reduce toxic gas emissions and thereby manage threatening environmental issues including global warming and climate change. The company’s founder was inspired by a question: “How do you make the world a better place by 2010?” The organisation has the view that maintenance of a ‘green planet’ would contribute to business sustainability and social welfare. The Better Place also believes that its business model may be assistable for the Federal Government to cut down public sector spending and improve its budget deficit. The major purpose of the company is to develop a network of improved transport infrastructures that are effective to promote the use of electric vehicles. While thoroughly analysing the business strategies of the Aravind, it seems that the company follows a continuous improvement approach. A continual improvement process or simply continuous improvement refers to an organisation’s ongoing efforts to improve its products, services, operations, and various other processes. These efforts may be aimed at the achievement of either gradual improvement over time or a breakthrough improvement immediately. Under the continuous improvement strategy, product or service delivery processes are constantly assessed and improved in terms of efficiency and flexibility. The Aravind’s management team constantly evaluates its service delivery activities and collects customer feedbacks to identity the areas of improvement. Such practices assist the organisation to resolve its operational pitfalls and thereby improve the efficiency of value chain management. As part of the continuous improvement strategy, the Aravind timely make technological as well as strategic innovations to prepare the business to adapt to changing market conditions. As we discussed earlier, the Better Place is a start-up and hence it is difficult to analyse what strategy is being used by the company. However, it is widely considered that the organisation is planning to practice the creative destruction strategy. According to Schumpeter, creative destruction “is a process of industrial mutation that incessantly revolutionises the economic structure from within, incessantly destroying the old one, incessantly creating a new one” (as cited in Keklik, p.11). In simple words, creative destruction occurs when a new idea or innovation replaces the existing one. While considering Better Place’s business model, development and sale of eco-friendly transport infrastructure seem to be an innovative concept and it is likely to replace conventional transport infrastructural facilities in the near future. However, the potentiality of this concept is still unknown and therefore it is needed to wait a few more years more to identify the extent to which the Better Place’s innovation can kill the existing one. The Aravind Eye Care System is a domestic player in India and it does not have any branches outside the country. The company has its subsidiaries in almost all major Indian cities and it serves every market segment without any disparity on the basis of age, sex, religion, or politics. Today, Aravind is not a mere eye hospital; rather, it is a social enterprise working with the aim of elimination of avoidable blindness through well developed eye care programmes. Even though majority of the Aravind hospitals are located in developed market areas, the concern serves the needs of underdeveloped and emerging markets too. For this purpose, the company organises eye checking camps at rural villages and other developing regions. Through such camps, the organisation offers free consultation facilities to all people and suggests patients with effective treatment solutions. The organisation will take care of poor people who cannot afford to expensive surgeries or treatments that are necessary to cure their visual disturbances. In short, it can be stated the company gives more focus on emerging and underdeveloped market segments. In contrast to the Aravind’s business model, Better Place operates internationally and aims to serve developed market segments initially. To illustrate, the company management announced the development of electric vehicle networks in countries like regions including Denmark, Hawaii, and Israel (The New York Times). In addition, the Better Place had talks with over 25 other regions around the globe. California, Ontario, Oregon, and Australia have already announced that they would cooperate with the deployment of the organisation’s electric car networks. It clearly indicates that the Better Place has specifically focused on developed market segments as emerging and traditional market segments are not likely to suit the company’s business concept. However, majority of the Better Place’s proposed programmes have not progressed beyond the planning stage. The Aravind’s business model gives focus on both free and paid services. The organisation charges for 35% of the patient care and the remaining 65 is delivered at free or subsidised cost. The company has developed separate facilities and procedures for paying and free services and this policy provides patients with greater convenience (Taking Eye care to the Door Step: Aravind Experience, n. d). High quality eye care is the most potential feature of the Aravind Eye Care System. Another fascinating feature of the organisation is that it gives clients the opportunity to choose where to get their care (ibid). Despite paid or free nature of service, the organisation delivers the same quality care to its clients. However, the quality of facilities provided may vary based on the pricing. The company still follows its traditional business model. The Aravind eye care began its community outreach programmes in order to eliminate crucial issues related with inaccessibility, poverty, and under utilisation of eye care facilities (ibid). This initiative has greatly assisted the organisation to extend its eye care services to remote villages and other poorly developed regions (ibid). In addition, the Aravind management gives great emphasis on research and development programmes because they hold the view that technological innovations are vital to improve the quality of eye care services provided. The company heavily depends on information technology to reach rural population and provide them with improved eye care services at an affordable cost. In addition, the innovativeness enabled the company to take advantages of mobile screening vans and other ultra modern eye care facilities. In short, the Aravind eye care has a proved business model in terms of innovation and positioning. Similarly, Better Place plans to execute a business model wherein customers would purchase driving distance contractually. This business model is very similar to mobile network industry where customers have a contractual obligation to pay for minutes of airtime. The purchase of the electric vehicle may be subsidised on the strength of the driving distance contract. Slome reports that the company aims to make electric cars available in market for $5,000, which is less than a gasoline car’s average price in the US market. The company has also made arrangements with battery manufactures to offer instalment payment facilities to customers. The firm’s management believes that these policies would assist the company to get an edge over its competitors. Through the per-distance fees, the company covers costs related with infrastructure, purchase of sustainable electricity, and battery pack leasing. Since the proposed business model requires high technological support, the company pays specific attention to technological innovations. To illustrate, the company officials say that transport infrastructure network will be supported by software, which is being developed by Microsoft and Intel Atom processors. This software is unique and world’s first of its kind; it may assist the company to effectively and simultaneously meet charging needs of electric cars despite peak hour rushes (Better Place). In addition to this software, the organisation has demonstrated a range of its technological developments to convince customers and governments about the feasibility of the proposed project. The company tries to develop competing networks across its target markets so as to trim down operating costs. Therefore, it can be concluded that the Better Place has a stronger business model in terms of innovation and positioning. The sustainable value portfolio is a better tool to analyse a firm’s potential for long term sustainability. While scrutinising the Aravind eye care using this framework, the company can be rated high in terms of long term sustainability. Currently, the organisation does not much contribute to environmental pollution and has an efficient level of product stewardship. Hence, it directly indicates that the company has a potential market position today. Similarly, the organisation’s competition strategies do not limit its sustainability and the Aravind has the potential to improve its business more through introduction of new disruptive technology. Wellbeing of the humankind is the company’s corporate vision and it would motivate the company to seek solutions for environmental problems. Furthermore, Aravind’s corporate vision would influence the company to focus more on unmet needs of the poor population. In short, according to the sustainable value portfolio, the company has future growth potential and which in turn adds value to Aravind’s long term sustainability. Like Aravind, the Better Place is also efficient in pollution prevention. However, the Better Place does not have a good level of product stewardship because the company could not yet exercise full control over its resources. This situation reflects that the company has some operational pitfalls today. Even though none of the company’s operational strategies do not restrict its future technological developments, it fails to target underdeveloped segments of the society. Since the company is struggling to convince customers and governments about the project feasibility, currently it cannot focus on the unmet needs of the poor people. Therefore, the sustainability of Better Place is highly uncertain. The Better place tries to operate globally regardless of its small size, whereas Aravind Eye Care System remains to be a domestic player even though it has enough potential for international expansion. Conclusions From the above discussion, it is clear that the Aravind eye care has a stronger market position than Better Place in terms of long term business sustainability. Undoubtedly, the long years’ market experience and a well public stature are the major strengths of the Aravind eye care while technological efficiency and a potential eco-friendly business concept constitute the core strengths of the Better Place. Even though the Better Place’s business concept is potential enough to capture market concentration, the company management is seemed to be inefficient in implementing the announced programmes. When the Aravind’s charity activities contribute to societal welfare, the Better Place’s business concept itself adds value to environmental sustainability and thereby to human wellbeing. From the above sessions, it is clear that business approaches/strategies and innovations play a key role in developing a sustainable global enterprise. Neither a potential business approach nor an innovative capability alone would not contribute to business sustainability; in contrast, a combination of both these aspects is necessary to promote a sustainable global enterprise. In case of Better Place, time delay in implementing the announced programmes seems to be the greatest challenge affecting its sustainability. Since the company is still at its initial stages of establishment, such time delays in project executions would cause to create a negative image of the company in the minds of customers. Therefore, it is strongly suggestible for the company to give first priority to timely execution of its announced programmes. This policy may assist the company to enhance sustainability management and value creation. Even though the Aravind eye care is outstandingly performing today, it does not try to expand its business internationally. If the company continues this trend, other global players may spread their business to India and thereby raise potential challenges to the Aravind. Therefore, it is recommendable for the organisation to spread its business to other foreign markets in order to be an exemplary case in sustainability management and value creation. References Better Place. [online] Available at: [Accessed 30 April 2012]. Keklik, M. 2003. Schumpeter, Innovation and Growth: Long-Cycle Dynamics in the Post-Wwii American Manufacturing Industries. Ashgate Publishing, Ltd. Swami, S & Shah, J. 2008. Improving quality of development: Perspectives from operations management. Indian Institute of Management Bangalore. [online] Available at:< www.iimb.ernet.in/research//filefield/.../SCMC-IIMB%20WP-349.pdf> [Accessed 30 April 2012]. Slome, W. 2010. Are electric cars about to deliver electrifying profits? Wall ST. Cheat Sheet. [online] Available at: < http://wallstcheatsheet.com/trading/are-electric-cars-about-to-deliver-electrifying-profits-2.html/> [Accessed 30 April 2012]. Thompson, C. 2009. Batteris not included. The New York Times. [online] Available at: [Accessed 30 April 2012]. Taking Eye care to the Door Step: Aravind Experience. Aravind eye care system. [online] Available at: [Accessed 30 April 2012]. Venkataswamy, G. Aravind eye care system. WHO Collaborating Centre for Prevention of Blindness. [online] Available at: [Accessed 30 April 2012]. Read More