Harvard Case - AquaSafi Purification Systems: Changing the Operating Model
"AquaSafi Purification Systems: Changing the Operating Model" Harvard business case study is written by Elizabeth M.A. Grasby, Ryan Rego. It deals with the challenges in the field of Accounting. The case study is 7 page(s) long and it was first published on : Jun 8, 2017
At Fern Fort University, we recommend that AquaSafi implement a comprehensive strategy to address its challenges in the emerging markets. This strategy should focus on adapting its business model to the unique needs of these markets, leveraging technology for efficiency and scalability, and building a strong foundation for sustainable growth.
2. Background
AquaSafi Purification Systems is a company specializing in the production and distribution of water purification systems. They have a successful track record in developed markets but are facing challenges in expanding to emerging markets. The case study highlights the complexities of adapting their existing business model to new environments marked by diverse customer needs, infrastructure constraints, and competitive landscapes.
The main protagonists of the case study are:
- Rajiv Sharma: CEO of AquaSafi, responsible for leading the company's expansion into emerging markets.
- Anjali Singh: Head of Operations, tasked with implementing the new operating model in emerging markets.
- The AquaSafi Board: Responsible for overseeing the company's strategic direction and financial performance.
3. Analysis of the Case Study
This case study can be analyzed using a framework that encompasses the key aspects of AquaSafi's situation:
- Strategic Analysis: AquaSafi needs to develop a clear strategy for entering and succeeding in emerging markets. This includes identifying target markets, understanding customer needs, and assessing the competitive landscape.
- Financial Analysis: AquaSafi needs to carefully evaluate the financial implications of its expansion strategy. This includes assessing the potential profitability of new markets, managing cash flow, and ensuring financial sustainability.
- Operational Analysis: AquaSafi needs to adapt its existing operating model to the unique challenges of emerging markets. This includes optimizing manufacturing processes, establishing efficient distribution channels, and managing costs effectively.
- Organizational Analysis: AquaSafi needs to ensure its organizational structure and culture are aligned with its expansion strategy. This includes developing a clear leadership structure, empowering employees, and fostering a culture of innovation and adaptability.
Key Issues:
- Market Segmentation: AquaSafi needs to identify the specific needs of different customer segments in emerging markets and tailor its products and services accordingly.
- Cost Optimization: AquaSafi needs to find ways to reduce costs in emerging markets, considering factors like infrastructure limitations, labor costs, and supply chain complexities.
- Distribution Strategy: AquaSafi needs to develop an effective distribution strategy for reaching customers in emerging markets, potentially including partnerships with local distributors.
- Financial Sustainability: AquaSafi needs to ensure its financial model is sustainable in emerging markets, taking into account factors like currency fluctuations, local regulations, and potential risks.
- Organizational Adaptation: AquaSafi needs to adapt its organizational structure and culture to effectively manage its operations in emerging markets.
4. Recommendations
AquaSafi should implement the following recommendations to address its challenges in emerging markets:
1. Adapt Business Model:
- Market Segmentation: Implement a targeted approach, focusing on specific customer segments with distinct needs and purchasing power. This could involve developing different product lines or pricing strategies for different market segments.
- Product Customization: Adapt existing products or develop new ones to meet the specific needs of emerging markets, considering factors like water quality, local preferences, and affordability.
- Distribution Channels: Explore alternative distribution channels such as partnerships with local retailers, microfinance institutions, or community-based organizations to reach underserved populations.
2. Leverage Technology:
- Digital Marketing: Utilize digital marketing channels to reach potential customers in emerging markets, particularly those with limited access to traditional media.
- Mobile Payments: Integrate mobile payment solutions to facilitate transactions in markets where traditional banking infrastructure is limited.
- Data Analytics: Leverage data analytics to gain insights into customer behavior, optimize product offerings, and improve operational efficiency.
3. Build Sustainable Growth:
- Local Partnerships: Establish strategic partnerships with local businesses, NGOs, or government agencies to gain access to local expertise, distribution networks, and customer relationships.
- Social Responsibility: Integrate corporate social responsibility (CSR) initiatives into its operations, focusing on improving access to clean water, supporting local communities, and promoting environmental sustainability.
- Capacity Building: Invest in training and development programs for local employees to build skills and knowledge, enhancing their ability to contribute to the company's success.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core Competencies and Mission: AquaSafi's core competency lies in providing clean water solutions. The recommendations align with its mission by expanding its reach to underserved populations in emerging markets.
- External Customers and Internal Clients: The recommendations address the needs of both external customers in emerging markets and internal clients like employees and distributors by providing tailored solutions, efficient operations, and a supportive environment.
- Competitors: The recommendations consider the competitive landscape in emerging markets and aim to differentiate AquaSafi by offering unique value propositions, leveraging technology, and fostering local partnerships.
- Attractiveness: The recommendations are expected to enhance AquaSafi's profitability by expanding its customer base, optimizing operations, and building a sustainable business model.
6. Conclusion
AquaSafi has a significant opportunity to expand its business into emerging markets and make a positive impact on the lives of millions of people. By adapting its business model, leveraging technology, and building a strong foundation for sustainable growth, AquaSafi can achieve its expansion goals and contribute to a more equitable and sustainable world.
7. Discussion
Other alternatives not selected include:
- Acquiring Existing Businesses: AquaSafi could acquire existing water purification companies in emerging markets to gain immediate market access and leverage local expertise. However, this approach could be expensive and risky, requiring careful due diligence and integration.
- Joint Ventures: AquaSafi could form joint ventures with local partners to share resources, expertise, and risks. However, this approach could lead to challenges in coordinating operations and managing cultural differences.
Key Assumptions:
- The emerging markets AquaSafi targets have a growing demand for clean water solutions.
- AquaSafi can effectively adapt its products and services to meet the specific needs of these markets.
- AquaSafi can find reliable and cost-effective partners and suppliers in these markets.
Risks:
- Political Instability: Political instability in emerging markets could disrupt operations and create financial risks.
- Regulatory Challenges: Navigating complex regulations and obtaining necessary permits could delay expansion and increase costs.
- Competition: Existing local competitors could pose a significant challenge to AquaSafi's market share.
8. Next Steps
AquaSafi should implement the following steps to execute its expansion strategy:
- Phase 1 (Year 1): Conduct thorough market research and identify target markets. Develop a pilot program in one or two selected markets.
- Phase 2 (Year 2): Refine the business model based on learnings from the pilot program. Expand operations to additional markets, focusing on building local partnerships and leveraging technology.
- Phase 3 (Year 3): Scale up operations in existing markets and explore new market opportunities. Continuously monitor performance, adapt strategies, and ensure financial sustainability.
By taking these steps, AquaSafi can successfully navigate the challenges of emerging markets, achieve sustainable growth, and make a meaningful contribution to the global community.
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Case Description
AquaSafi Purification Systems Pvt. Ltd. (AquaSafi) was a social enterprise that aimed to provide clean water to people in the developing world. The organization assembled and sold its water purification technology, at cost, to villages and non-governmental organizations in rural India. Before deciding to change AquaSafi's current operating model, the executive director thought it would be useful to perform a cost/benefit analysis to see how the company's cash flow would differ at a new water filtration plant under the current and proposed operating models. He also wondered whether it made sense for AquaSafi to change its operating model as it expanded its operations, since the company's current operating model had been well received in the villages.
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