Contents

Aravind Business Model ......................................................................................................................................... 2

Value for customers ........................................................................................................................................... 2
Market segments ............................................................................................................................................... 2
Operation ........................................................................................................................................................... 2
Delivery .............................................................................................................................................................. 3
McDonalds Business Model ................................................................................................................................... 4
 Franchise Model......................................................................................................................................... 4
 Product Consistency................................................................................................................................... 4
 Customer perception and expectation ..................................................................................................... 4
Assembly line Technique ....................................................................................................................................... 5
Creativity/ Innovation in the Business ................................................................................................................... 6
Personal Views ....................................................................................................................................................... 7
References ......................................................................................................................................................... 8
Paper VI.4.3 Innovation Management Submitted By:
Parul Madaan
Dated: 23 January, 2014
Assignment 1: Case Study
McDonalds of Healthcare: Aravind Eye Clinic

1Aravind Business Model

Value for customers
 Result
The best quality eye care!
 Process
Treatment is done within three days. Being assisted by kind and helpful people, patients feel
safe and at ease.
 Price
Patient is allowed to determine what he can afford to pay.
 Effort
Patients do not need to do any effort. He will be transported to the hospital from his village.
Market segments
 Position
The best and most humane eye hospital for everyone
 Target group
Anyone suffering from avoidable blindness
 Customer insights
People want to regain their sight, but are frightened by the prospect of going to such a hospital
on their own. They want to be taken by the hand and accompanied by people they know so
they feel safe.
Operation
 Production & Technology
• Continuous measurement and corrective adjustments to improve performance and
efficiency
• State-of-the-art robotically-assisted surgery ensures high efficiency and production.
• Doctors only diagnose and operate. Everything else is done by nurses and assistants.
• Recruitment and selection are based on cultural values.
• The hospitals run their own training programmes.
 Suppliers:
• The hospitals make their own intraocular lenses, which are approximately thirty times
cheaper.

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http://www.wikibusinessmodels.com/node/41
 • Aravind does not seek financial backers (no fundraising) because it wants to retain
control. However it does work with local sponsors when setting up the eye camps.
Delivery
 Sales & Marketing:
Aravind goes to the villages and sets up eye camps to screen new patients.

 Customer contact:
• Aravind runs its hospitals itself. To maintain its culture and vision, Aravind chooses not to
work with franchisees.
• Patients are assisted by compassionate nurses who make them feel at ease throughout.
• Aravind has also established several Vision Centres that perform simple medical
procedures. They also have a telemedicine facility, which enables face-to-face contact
with eye-surgeons via a webcam.

Figure 1 Aravind Business Model

McDonalds Business Model
 Franchise Model
• Only 15% of the total numbers of restaurants are owned by the Company.
• The remaining 85% is operated by franchises.
• The company follows a comprehensive framework of training and monitoring of its
franchises to ensure that they adhere to the Quality, Service, Cleanliness and Value
propositions offered by the company to its customers and quality across geographies.

 Product Consistency
• By developing a sophisticated supplier networked operation and distribution system,
the company has been able to achieve consistent product taste and quality across
geographies.
• Act like a retailer and think like a brand
• McDonald’s focuses not only on delivering sales for the immediate present, but also
protecting its long term brand reputation

 Customer perception and expectation

Customer perception is a key factor affecting a product’s success. McDonalds being an

internationally renowned brand brings with it certain expectations for the customers.

Target Segment What is McDonald’s for me?

A family with A treat to children, a fun place to be for the children
children
Urban customers Great taste, quick service without affecting the work schedule.
Teenager Hanging-out joint with friends, keeping it affordable
Assembly line Technique

What is assembly line technique?

2
An assembly line is a manufacturing process (most of the time called a progressive assembly) in which
parts (usually interchangeable parts) are added as the semi-finished assembly moves from work station
to work station where the parts are added in sequence until the final assembly is produced.

By mechanically moving the parts to the assembly work and moving the semi-finished assembly from
work station to work station, a finished product can be assembled much faster and with much less
labor than by having workers carry parts to a stationary piece for assembly.

How Aravind eye care clinic got inspired from McDonalds’ business model?

Dr. V. looked long and hard at other fields where the same challenge of carrying out activities
systematically, reproducibly and to a high quality standard – but at low cost – and eventually
developed a new approach to the eye care problem. He found inspiration in McDonalds, the fast food
company which has managed to spread its golden-arched empire across the planet based on
systematic, high volume production of a range of meals offered at low cost. Central to their success is
the idea of reproducibility – despite huge variations in the context in which they are located, all
McDonald outlets operate on the same model, and staff is trained in a core set of skills which are
common to all its operations.

McDonalds has mastered the assembly line techniques in its business. They can serve high volumes of
customers with consistent quality product at a low cost. Dr. V was greatly influenced by the McDonalds
business model. A chain business that provides the same quality & product no matter which restaurant
you go to. He wanted to apply the same methodologies and processes to eye care. So he adopted the
chain concept (Assembly line technique) in his model as well. He reasoned that if McDonalds could sell
billions of low cost burgers, he could also sell low cost sight restoring operations.

It’s a model which the Croc brothers developed back in the 1950s - but one that was borrowed from an
earlier exponent, Henry Ford. When he and his team of skilled engineers were setting up the business
back in the early 1900s they faced the same challenge – how to make a complex product (the Model T
Ford) systematically and reliably but at a low enough price that it could become ‘a car for Everyman’?
Their solution was to design a system which standardized as much of the process as possible and
reduce the key skills and discretionary elements to a minimum – and then apply this across a high
volume of production.

They have represented a powerful model which Dr. V. was able to adapt and implement successfully.

2
http://en.wikipedia.org/wiki/Assembly_line
Creativity/ Innovation in the Business
The biggest innovation challenge for the Aravind care centre was significant – how to carry out a high
quality process at low cost?

Along with following the assembly line technique, Aravind does a few interesting things that work due
to which the company is profitable and serving hundreds of thousands of poor patients.

For example, an average ophthalmologist operates on 250 to 400 patients a year. An Aravind
ophthalmologist using McDonald’s assembly line technique operates 2000 patients a year. At Aravind,
in one operation theatre there are 4 operating tables laid side by side and 2 surgeons handle these 4
tables. And 4 nurses assist the doctors so that other work of doctor’s released and doctors can
concentrate more on surgeries.

Some of the other innovative ideas that Dr. V has used in its model are:

• First, it never refuses a patient. Poor people pay what they can. Sometimes people even pay
using alternative currency, such as a chicken. If someone can’t pay before the surgery, perhaps
they can pay after the surgery, once they become a productive member of the economy again
and start to get back on their feet.
• Second, wealthy people are expected to contribute more – a two tiered pricing structure. For
every one surgery done on a wealthy person, the hospital can afford to do many free surgeries.
Wealthy people fly in from all over the place because Aravind is the best eye hospital in the
region.
• The hospital staff is specialized and each person has a role to perform to take the huge amount
of daily input (hundreds of people walking in the front door each day) and convert it to output
(newly seeing outpatients).
• In addition, the surgery techniques have been refined to handle high volume without sacrificing
quality.
• Instead of forcing blind people to come from hundreds of miles away, often accompanied by a
family member (who loses a day of work and has to pay the bus fare of two people rather than
one) to guide them, the clinic provides buses that pick up many people at once early in the
morning and drive them back to their local community once the day is done.
Personal Views

Dr V. had an extra ordinary dream, a deep desire to serve humanity and to do something to help India
and its blind population. Despite his physical handicap, his age and various other limiting factors he
persevered and achieved what he set out to do. What one could infer from the case study that creative
thinking can make impossible business models possible: 53% of the patients pay nothing or almost
nothing yet a combination of human kindness, volume, top quality and efficiency mean that the
hospital still has a 40% profit margin. It is possible for a company built on maximum efficiency to have
real soul based on a shared and deeply supported vision, a distinct culture and leadership that sets an
example. Be prepared to make difficult choices and change track if particular approach is not working.
References

[1] http://www.aravind.org/
[2] http://www.scribemedia.org/2006/11/06/aravind-eye-clinic/