Presentation on Embrace Baby Warmer by Ecole Hoteliere de Lausanne Students

1. S
Embrace-Building the
Business Model
8351-Performance Management in SME’s
Group 5
David Achard, Karim Chams, Remy Fiaux, Yasemin Kocarslan, Nils Polano, Tatjana
Schaufelberger, Htet Tayza

2. Honor Code
S EHL HONOR CODE
S As a student at the Ecole Hôtelière de Lausanne, I
uphold and defend academic integrity, academic rigour
and academic liberty as core values of higher learning. I
attest, on my word of honour, that work submitted in my
name is my own work, and that any ideas or materials
used in support of this work which are not originally my
own are cited and referenced accordingly.

3. Embrace: Spread the Warmth

4. Agenda
1. Part 1 – Company & Product Information
2. Part 2 – Environmental Analysis
3. Part 3 – Problem Description
4. Part 4 – Evaluation of Options
5. Part 5 – Business Model Example

5. S
Company & Product
Information

6. Company and Product
Information
S A need in developing countries – why?
S Objective of Embrace: By end of 2014, reach 150 000
babies and educate 10 000 mothers & health care
workers.
Source: www.Embraceglobal.org

7. What is the Infant Warmer?
S Objective: to function in rural
environments
S Components
(Plastic window; Lightweight and thin;
Adjustable straps; Open sides of hood,
BabyWrap)
S Features
(Accutemp Heater; WarmPark Pouch;
PCM )
S What else do they provide?
Source: Embraceglobal.com

8. S
Environmental Analysis
 Macro
 Sector
 Market
 SWOT

9. Macro Analysis
•High infant mortality rate
•High number of young mothers
•Target market – low disposable income, consumer spending,
inflation rates
•Tax policies
•Government issued safety regulations
•Availability of governmental contracts
•Clinical Studies
•Patent infringements
•Health & safety regulations & requirements
•Lack of medical care in developing countries (hospitals + lack of
pharmacies)
•Bad infrastructure (roads, highways)
•Difficulty in finding a manufacturer that meets their specific needs
Source: Euromonitor International

10. Sector Analysis
S Direct Threats
S Risk of patent infringement
S Financial risks
S Indirect Threats
S Price
S Accessibility to markets with poor infrastructure
S Pending patent
S Competition arising
S Substitute products
S Increase in costs

11. Market Analysis
S Competitors
S In-direct products existing in market offering the same function
S Distributors
S Finding the most efficient distribution model
S Pharmacies & hospitals
S NGO’s
S Clients
S Hospital
S Pharmacies & Clinics in low-income communities
S Parents at the bottom of the pyramid

12. SWOT Analysis
Strengths
•Strong need of product
•Highest quality ensured
•Tested by moms & doctors
•Increasing trend for social
entrepreneurship and consumers
care more about CSR.
•The product is a life necessity
product
•Innovative product
•Strong and well educated team
coming from various backgrounds
and experiences.
Weaknesses
•Product has to be produced cheaply
•Larger, faster,, and cheaper testing
method
•Reaching out to target market will
require a large amount of capital
Opportunities
•Gap in market / high demand
(especially in tier 2&3) ⇒ niche
market
•Potential partnerships and support
from NGOs (i.e. WHO)
•High infant mortality rates in targeted
markets
Threats
• Issues with IP control and patent still in
process in regards to if they should
outsource various parts of their
operation.
• Loss of appropriability
• Product may not be accepted in the
market
• Substitute products
•Might imply high investments that are not
paid back during the product life cycle
• financial risk
• political change could lead to new
regulations and standards in the market.
• Decrease in birth rate in the long run
• lack of health insurance

13. S
Problem Description
 Symptoms vs. Causes
 Problem Identification & Importance
 Analysis of Main Problem
 Decision Criteria

14. Symptoms vs. Causes
S Causes
S Underlying motivations for the founding
entrepreneurs
S Lack of a clear business model
S Lack of a consistent segmentation strategy
S Lack of control of the duration of patent
approval
S No clear budget for the project has been set
S Symptoms
S Indecision between vertically integrated business model
and a disintegrated one
S Indecision between an electric heating unit and a non-electric
one
S Indecision between an organic PCM or an inorganic one
S Founders have no clear target market
S Founders are hesitant about decisions due to fear
regarding patent approval
S No PCM manufacturers in India are capable of producing
PCMs that fit the company’s requirements
S Worry about profitability without a clear budget and target
segment

15. Identify Problems
S Decision between a vertically integrated or disintegrated business
model.
S Outsourcing Parts
S Loss of Quality Control
S Internal vs. External Sales force
S Choice of organic or non-organic materials in the blanket
S Government Regulations?
S The effect of the cost of the product?
S Electronic or non-electronic.
S Cost
S Pharmaceutical or medical product
S Cost involved
S Capital Restriction (Paris, Berne, etc.)

16. Ishikawa diagram

17. Urgency Matrix
Low Importance High Importance
Low Urgency
 Sales force
 Team Management
 Quality of Product
 Price of Product
 Strategic Planning
 Relationship building with
distributors
High Urgency
 Fulfilling legal requirements
 Consulting with Stanford
advisory
 Patent
 Target Market (choosing
between Tier 1, 2 & 3)
 Cutting costs and avoiding
burn rates

18. Analysis of the Main Problem
Causes
-Not clearly defined target
market (Tier 1 or Tier 2&3;
pharmaceutical or medical
product)
-Insecurity (design patent not
yet approved)
Main Problem
No Business Model in
place
No budget
No defined target market
Distributors
Value proposition
Etc.
Consequences
Not being able to chose
whether or not to outsource
production
Not being able to chose
which material to use for
production
Medical or pharmaceutical
product
Electronic or Non-Electronic
No Set Budget

19. Importance of having a coherent business model
• Lack of objectives
Lack of focus to achieve corporate goals and develop plans that will help the company move forwards. =
No vision?
Without clear objectives it will be difficult to develop a long-term growth and productivity plans for a
sustainable success of the company. Short term only?!
• Resources
Difficult to create budgets and understanding proper funding and personnel necessary for the launch of new
projects – Martha Lagace, Harvard Business School.
• Structure
No hierarchy for organization of establishing responsibilities for the success of each department. Difficult for
focused effort from employees and corporate development.
• Communication
No formal structure for communication can result in loss of information, loss of productivity, organization &
structure and in general the efficiency and performance of the new project/company.
Schwenk & Schrader (1993) - Strong
correlation between existence of
strategic planning and enterprise
financial success and long term growth.
Delmar & Shane (2003) - several
analysis showed new ventures
conducting strategic planning have
higher survival rates.

20. Decision Criteria Solution
S Quantitative
S Cost of the product needs to be affordable for
consumer hence inexpensively manufactured
S Co-ordination costs
S Sales costs
S Time required to release the product to the
market must be efficient in order to generate
revenues ASAP.
S Impact on Infant mortality rates: product must
be purposeful and make a real impact on the
reduction of neonatal deaths.
S Market Size
S Qualitative
S Target market must be large enough in order to sustain
long-term growth.
S Integrated vs. Disintegrated business model
S Patent Application
S Organic vs. Non-organic PCM in the WarmPak pouch
S Electric vs. Non-electric Embrace
S The design
S Availability of PCM manufacturers in India
S Distribution model capable of reaching thousands of rural
clinics in Tier 3 markets
S Sales model capable of marketing the infant warmer in
Tier 2 & Tier 3 markets

21. S
Evaluation of Options
 SMART Objectives
 Elaboration & Evaluation of Options
 Analysis of Options
 Matrix of Alternatives
 Planification & Implementation

22. SMART Objectives
 Within the next 2 months, setup a clear business
model with main focus on: Distribution,
Manufacturing & Design Specification; at the end
of which a clear budget for production will be
defined.
Specific
Measureable
Achievable
Realistic
Time-based

23. Elaboration & Evaluation
of Options
Options Possible Outcomes Organic/Inor
S Outsource components to quality controlled vendors for
manufacturing
S External sales force network – collaboration with larger companies
with established distribution & sales network which can provide
post-sales services
S Strategy to refine product inexpensively and rapidly: Engage
doctors & mothers to suggest workable prototypes and identify
improvements to the design
S Alliance with government, NGOs or a global health organization
(i.e. W.H.O.)
ganic;
Electric/Non
-Electric
Threats Target
Market
1. Outsource components Increase economies of
scale; improve
turnaround time (if using
manufacturing experts)
• Organic
• Non-electric
• Possible loss of IP
• No integration – learning by doing
(Rahul) desired will not occur
• Less control on quality
• T2&T3
• Pharma.
2. External sales force
network
Decrease networking
and distribution costs,
increasing customer
service. Chances of buy-out
in future
• Inorganic
• Non-electric
• Possible loss of IP
• Less quality control
• Lose control of companies core
values and identity
• T1
• Medical
3. Strategy to refine
product inexpensively and
rapidly
Involving the experts and
the target customers,
reducing labor force &
costs
• Inorganic
• Electric
• Might stagnate the advancement
• Can lead to loss of focus of the
core product
• Possible loss of IP
• T1
• Medical
4. Alliances Would decrease
distribution costs while
broadening distribution
network. Pay margins on
costs.
• Organic
• Non-electric
• Delay to market product
• Contradicts team0s personal
motive of being entrepreneurs
• T2&T3
• Both

24. Matrix of Alternatives
Options Cost Profit Long-term
Implementatio
n
(in Market)
Comp.
Advantage
Total
Outsource
components 5 4 5 1 4 19
External sales
force network 3 2 1 5 1 12
Strategy to refine
product
inexpensively
and rapidly
2 3 1 5 2 14
Alliances 4 4 5 3 5 21

25. Pacification and
Implementation
Research &
Identify
competitors &
threats
Devise a business
plan: Targeting
NGO’s
Decide on method
of manufacturing:
organic and
outsourced
Find Suitable
Distributors
Implement an
effective
distribution
strategy
Control ,react, &
adapt

26. S
Business Model
Example

27. Business Model Example
Revenue Streams
•NGOs
•Governments
•Regional clinics
• Parents
• Pharmacies
Cost Structure
•Outsourcing components to
external manufacturers
•In-house production of the PCM
up to our standards
•Salary expenses will be decided
upon after the release of the
product depending on profitability
Source: Strategyzer.com, Business Model Canvas
Key Partners
• NGO’s
•Government
• Expert
manufacturers
Key Activities
• Produce an alternative to
pricey incubators through
the “Embrace Baby
Warmer”
•Maintain a healthy profit
through the product sales
while working on reducing
neonatal mortality rates in
T23 regions
Key Resources
• 6 Founders
• Consumer base giving
feedback
• Funds
Value Proposition
• “We provide an
inexpensive alternative
to existing incubators
for undeveloped
communities with high
neonatal mortality
rates”
Customer
Relationships
• Post-sales
service: through
external sales
force with an
established
distribution &
sales network
Channels
• External sales force
through larger
companies with
established
networks
•NGOs
•Online Store
Customer Segments
•T2&3 regions in
Nepal and India
•Expansion plan to
extend to other
developing
countries with
limited resources

28. References
S (n.d.). Retrieved November 26, 2014, from http://www.gsb.stanford.edu/sites/default/files/documents/06.Business Model and
Risk_1.pdf
S (n.d.). Retrieved November 25, 2014, from http://auxilus.com/blog/wp-content/uploads/2009/09/fishbone.jpg
S (n.d.). Retrieved November 26, 2014, from http://embrace.advocatecreative.netdna-cdn.com/wp-content/
uploads/2014/03/2013_EmbraceAR.pdf
S 'Motherhood in childhood,' new UN report, spotlights adolescent pregnancy. (2013, October 30). Retrieved November 26, 2014,
from http://www.un.org/apps/news/story.asp?NewsID=46373#.VHRSAUuRNgM
S 5.3 Benefits of Innovation and Risks to overcome. (n.d.). Retrieved November 25, 2014, from http://www.econ-it2.eu/en/training/5-
innovation-management/5-3-benefits-of-innovation-and-risks-to-overcome/
S Adolescent pregnancy. (n.d.). Retrieved November 23, 2014, from http://www.who.int/mediacentre/factsheets/fs364/en/
S Cause and Effect Diagram Examples. (n.d.). Retrieved November 26, 2014, from http://www.smartdraw.com/software/cause-and-effect-
diagram-examples.htm
S Design for Extreme Affordability. (n.d.). Retrieved November 26, 2014, from http://extreme.stanford.edu/projects/embrace
S Embrace. (n.d.). Retrieved November 25, 2014, from http://www.embraceglobal.org
S New Business Models in Emerging Markets. (n.d.). Retrieved November 25, 2014, from https://hbr.org/2011/01/new-business-models-
in-emerging-markets
S The low cost tech that's saving babies. (n.d.). Retrieved November 26, 2014, from http://www.bbc.com/news/business-23817127
Book:
S Schwenk, C. R. and Shrader, C. B. (1993), Effects of formal Strategic Planning: Theory and Practice, no 17.
S Delmar, F and Shane, S. 2003. Does business planning facilitate the development of new ventures? Strategic Management Journal,
24: 1165-1185.