vi. How Aravind Fits in Porter’s Strategy Framework
Porter’s strategy for competitive advantage supports the notion that there are two ways in which a firm can compete to be a leader in its industry: cost or product uniqueness. To compete in cost leadership, a firm must not only be a low cost producer in the industry, but must be able to sustain that position. A company that is seeking to gain their competitive edge through product differentiation must possess a unique product or service that is high in demand in which a premium price can be charged. In conjunction with costs and product uniqueness, a firm should determine their focus as it relates to brand identity. As Aravind has matured into a multifaceted organization, it does not fit perfectly…show more content… However, through outreach initiatives such as the eye camps,
Aravind tapped into a narrow market that was not being served. In both markets, Aravind competes based on product price while staying true to the belief in “high volume, high quality and affordable costs” (Mehta and Shenoy, 15).
Of the 12 million blind in India, 60 percent can be attributed to cataract. It is, in fact, the leading cause of blindness in developing countries. Aravind sought to go after the broad market of specializing in cataract surgery by competing in cost leadership. In a country where a majority of its citizens live on less than $2 a day (Mehta and Shenoy, 3), Dr. V did the unthinkable by constructing an eye clinic that provided high-quality eye care at a cost as low as
$0. Customers that elected to pay for their surgeries would select from a tiered pricing package which was still more affordable than other institutions. The premise behind this cost-payment structure was that the rich people indirectly paid for the poor people to receive surgery.
Regardless of one’s socio-economic status, a patient would receive the best care from the highest
quality of surgeons and nurses. In keeping up with the high volume, Aravind adopted…show more content… The development of Aurolab enabled Aravind to move even further into a broad market by manufacturing intraocular lenses (IOL) below the market rate. The demand for IOL was rapidly increasing as it yielded greater benefits as opposed to the aphakic surgery. With IOL, cataract surgery could be performed at an earlier stage rather than waiting for both eyes to be almost completely blind, healing time was exponentially quicker and postoperative results were far superior (Mehta and Shenoy, 148). While the cost of a single implant in the United States was priced at $200, Aurolab enabled IOL surgery to be performed as low as $11 (Mehta and Shenoy,
149, 156). Aurolab appealed to a market that was seeking IOL’s at a lower price point. In doing so, Aurolab dominated the market by being able to offer high-quality lens implants at a subsidized rate to customers such as charitable and nonprofit organizations and government agencies. As a result of Aurolab’s IOL’s, cataract surgery surged from 69% to 162% (Mehta and
Shenoy, 159) once again giving Aravind a competitive market advantage. Aurolab