1. CASE STUDY:
APOLLO HOSPITALS OF
INDIA
PRESENTED BY:
SEBY AUGUSTINE(31)
SAURABH NINAMA(23)
VINOD VASAVA(37)
POOJA TANNA(35)

2. INDUSTRY ANALYSIS

3. About the Industry
 Health status varied
 Lag in availability of medical personnel &
facilities
Country Per 1,000,000 population
Doctor Nurse Hospital beds
India 407 214 1600
U.K 1615 7891 8000
U.S. 2380 3204 5900

4.  Health care provided by
 State Government
 National Government
 By 1995, existence of150 Corporate comprehensive
hospitals
 Estimation of 250 private hospitals by the year 2000
 Out-of-pocket payment by patients
 Emerging middle class
 Upcoming markets

5. Porter’s 5-force model
Threat of
Substitutes
Bargaining Bargaining
Forces of
power of Power of
competition
Suppliers Buyers
Threat of
New
Entrants

6. Threat of Substitutes- limited
 No substitute for medical care
 A basic requirement

7. Threat of New Entrants- High
 High capital costs
 Long gestation periods (2 to 4 years)
 Industry- an attractive proposition due to
 High growth potential of the sector
 Stimulation to private sector
 An estimation of having approx
 150 corporate hospitals by 1995
 250 private hospitals by 2000

8. Competition - Intense
 Large number of players in the industry
 Govt. Hospitals – A strong competition
 High exit barriers (due to high capital
investment)

9. Bargaining power of suppliers-
High
 Referral doctors served as a major source of
customer base.

10. Bargaining power of Buyers-
Limited
 No substitute

11. About the Company
 Founded in 1983 by Dr. Pratap C. Reddy
 First Corporate hospital in India
 Comprehensive
 For profit
 Grew out of Dr. Reddy’s own practice
 Obstacles
 Regulatory
 Financial
 Combination of professional management structure and
entrepreneurial approach

12.  Management Philosophy
 Clear Vision
 High quality medical care “With a human face”
 Had no models to emulate.
 Apollo hospital organized around 5 stars
 Medical Personnel
 Medical Technology
 Employees
 Hospitality
 Value

13. Critical Success Factors (CSFs)
 CSF, sometimes referred as to strategic
factors are those which are crucial for
organizational success.
 When strategists consciously look for such
factors and take them into consideration for
strategic management, they are likely to be
more successful while putting in relatively
lesser effort.

14. Probability of
Impact on business
Impact
High Medium Low
High Critical High Low
Medium High High Low
Low To be watched Low Low

15. CSFs for Apollo Hospitals
Probability of Impact on
Impact business
High Medium Low
Market, Quality,
High International -
Regulatory
Socio-cultural,
Medium - -
Economic
Low Technological - Political

16. ENVIRONMENTAL
THREATS AND
OPPORTUNITY PROFILE
(ETOP)

17. Market Environment
 Enormous , unmet demand for high quality health care among
Indians
 Hospital Sector
 Private Nursing Homes
 Government Hospitals
 Factors
 Rates
 No. of beds
 Services
 Technology & Settings, facilities

18. Technological Environment
 Expensive but no large scale sudden changes

19. Economic Environment
 Economic Development pursued by Indian
Government after independence
 Central planning
 Import substituting industrialization
 Liberal economic reforms in 1980

20. Regulatory Environment
 A new round of changes : Introduction of new industrial
policy by Prime Minister
 Dismantling of licensing requirement
 Elimination of Government monopolies, reduced
tariffs and liberalized foreign investment
 Stimulation of private sector growth
 Rao reforms leads to immense market excess

21. Political Environment
 Politics had no great role in the industry.
 Although lobbying could be used as an
influence
 Lobbying: Presenting the idea to Prime Minister
 Liberalization of hospital sector, allowing broad
access to financing and encouraging hospital
development.

22. Socio-cultural Environment
 World’s largest democracy
 Variety of
 Economic levels
 Social status
 Cultural Group
 Co-existence of poor and middle class

23. International Environment
 High quality medical care available
internationally as compared to India
 Brain Drain - A big issue

24. Environmental Sector Nature of Impact of Each Factor
Impact
Market Enormous , unmet demand for high
quality health care among Indians
Technological Expensive but no large scale sudden
changes
Economical Economic Development, Liberal economic
Reforms
Regulatory New Industrial Policy, Rao reforms,
Dismantling of licensing requirements
Political Politics had no great role in the industry
Socio-cultural World’s largest democracy, Co-existence
of poor and middle class
International High quality medical care available

25. STRATEGIC ADVANTAGE
PROFILE (SAP)

26. Financial capability factors
 Initial skepticism faced
 Convincing investors that a super- specialty hospital was viable in India
 A capital of $4.6 M issued through shares
 Colleagues contributed to 40% of stock
 By 1995, growth and potential of the company attracted foreign
institutional investors.
 Financial performance had not been affected by competition despite
the appearance of 5 other private hospitals in Madras
 Readiness of investor to invest

27. Apollo Hospitals Madras
Year 1985 1986 1987 1988 1989 1991 1992 1993 1994
Sharehold 39,13 45,91 48,732 52,181 54,098 54,178 54,178 54,178 106,319
ers’ 5 0
Equity
Apollo Hospitals Hyderabad
Year 1990 1991 1992 1993 1994
Shareholders’ Equity 78,476 83,082 83,310 83,650 153,731

28. Marketing Capability Factors
 Marketing capability factors could be
segregated into four basics categories:
 Product
 Promotion
 Price

29.  Product
 High quality services as compared to competitors
 Specialized services
 High success rate meeting the international
standards(88%)
 High sanitary standards
 Quick diagnosis
 Providing six categories of Rooms (Ranging from

30.  Promotion
 Creating awareness : An initial challenge
 Concern on ethical propriety
 Focused on encouraging awareness of preventive
health measures
 Goal of developing long term trusting relationship
with patients

31.  Promotion
 Aimed marketing effort at women
 Marketing programs
 Referrals
 Hospital capabilities
 Awareness programs
 Public
 Local schools

32.  Promotion
 ApolloHeartbeat : A quarterly news paper
 Low priced check- up packages
 Advertising of Special priced diagnostics
packages

33.  Price
 Higher prices in comparison to the competitors.

34. Operational Capability Factors
 Effective utilization of equipments
 Average stay of the patient is less in
comparison to competitors
 Apollo : 7 Days
 Other hospitals : 9 Days
 Govt. : 12 Days
Quick diagnosis & treatment

35.  High success rate
 A well maintained library provided access to
key medical journals & reference books from
around the world
 Online bibliography search system

36. Personnel Capability Factors
 Top caliber renowned doctors and surgeons
 120 doctors from U.K. and North America
 Employees: The “Middle Star” for Apollo
 Team spirit
 An understanding about “Apollo’s large
ambitions” in each employee
 Strong sense of Community

37.  Wages
 Apollo hospital : 10-20% higher than local private
hospitals
 Government Hospitals : Paid slightly higher than
Apollo
 Employee benefits
 Induction manual : Dr. Reddy’s view of
relationship with employee

38. Information capability Factors
 Recording of complaints in a computer
database that revealed the patterns by
 Location
 Type of Complaint

39. General Management Capability
Factors
 Clear vision of Dr. Reddy from the beginning
 Advanced medical care possible at high
quality and “With a human face”
 Apollo is organized around 5 stars
 Medical Personnel
 Medical Technology

40.  Employees
 Motivation
 Culture
 Compensation
 Hospitality
 Value
 Total opportunity cost
 Quality assurance
 CHANGE

41.  High standard and stress on hospitality
towards patient
 Emphasis on the fact that every employee
contributed materially to patients’ experience
at Apollo
 Team oriented culture
 Apollo’s operations geared towards providing
outstanding value to patients.

42. Capability factor Competitive Strength/Weakness
Financial capability Readiness of investors to invest, growth
potential of the company and the sector
Marketing capability High quality service, Effective Promotion
Program, High prices
Operational capability Effective utilization of equipments,
Lessened duration of average stay per
patient
Personnel capability Growth opportunities for employees,
Employee participation, Top caliber
medical personnel
Information Computerized database of complaints
Management with a efficient retrieval system
Capability
General Management Clear vision, Team oriented culture,
Capability Open and constructive organisational

43. STRENGTHS, WEAKNESS,
OPPORTUNITIES AND
THREATS
(SWOT ANALYSIS)

44. Strengths
 Professional and personal contacts of Dr Reddy
 Colleagues and technology- A central source of
satisfaction at Apollo
 Academic Support
 Consultants reputation
 Effective application of latest medical technology
 Perceived by consultants as a more attractive option
compared to the Govt. hospitals

45. Weaknesses
 No models to emulate
 Questions about quality control in non-medical
areas
 Quantitative measures of Quality were needed.
 Test results came slowly
 Cleanliness of cafeteria- A question?

46. Opportunities
 To spread the Apollo brand name across India
 To create joint ventures with international
medical centres
 To cater to the growing middle class market
 Venturing into diverse business like Insurance
and creating a hybrid of insurance and medical
care

47. Threats
 Competition for some skilled staff like nurses
 Emigration