Strategic Management assignment on Paul Hartmann resources and capabilities

Question

Task: How to use Strategic Management assignment research methodology to assess Paul Hartmann resources and capabilities

Answer

Introduction
The Strategic Management assignment research shows that Business organizations rely on their resources and capabilities to gain competitive advantage and can also generate profit revenue based on them. As a result of this, conducting an analysis of resource and capabilities help organizations strategically drive their business and compete with business rivals through their products and offering for value creation of the customers. This can include tangible resources like physical or financial assets, intangible resources like brand name and reputation and human resources like pool of skilled employees (Helfat, 2017). On the other hand, organizational culture, operational processes and business routines can also be considered as capabilities helping with identifying target market segment and create customer value. The Strategic Management assignment uses a VRIO framework breakdown to assess the resources and capabilities of the medical and hygiene company Paul Hartmann AG in context of Sub-Saharan African (SSA) region and their subsequent competitive implications over other healthcare and medicine companies. In addition to this, the report also critically analyses the organizational culture at Hartmann to determine their strategic capability within the region. The cases study based on the proposal has been taken into account along with its ambitious innovation strategy and budget of R 500 million to expand the business operations all across the SSA region.

Company Background
Company Mission Statement: “Constantly look for ways to improve treatments, outcomes and healthcare experiences in both the professional sector and at home”.
Brand Promise: “Going further for health – for everyone, everywhere, at all times”.
The Strategic Management assignment research shows that Paul Hartmann AG popularly known as Hartmann is a German public company that engages in the production of medical and hygiene products. Established in 1818, the company has been challenging the healthcare conventions for the last 200 years and is continuing to aid hospital and their surgical teams through their product solutions. Currently headquartered in Heidenheim, Germany, the company has operational activity in more than 33 countries and employs around 10,519 staff members (pitchbook, 2022). Among the various healthcare segments in which it operates, the primary three areas are wound management, infection management and incontinence management. The various types of medical services provided by the company under these three service segments include compression therapy, first aid, wound dressing and treatment, incontinence hygiene, medical skin care, surgical draping systems, disposable surgical instruments and many more. There wound treatments and discreet solutions for people with incontinence not only provides health economic benefits but also makes the lives simple for both the patients and the caregivers.On this Strategic Management assignment the three core values towards which Hartmann has worked sincerely consist of its passion for its medical and healthcare activities, determination for building sustainable partnerships and dedication towards maintaining professionalism in its every operation (HARTMANN GROUP, 2022a). Apart from the resources and capabilities, Hartmann’s organizational culture is based on diversity of innovation, ideas and experiences which would help them expand in the multicultural environment of SSA.

Image 1: Selection of Wound Dressing
(Source: HARTMANN GROUP, 2022a)

Healthcare Industry in Sub-Saharan Africa (SSA)
With Hartmann’s established regional base in South Africa and operational presence in Algeria and Morocco, the company is eyeing to expand to Sub-Saharan Africa. Despite having considerable resources and capabilities, the externalities of the healthcare industry in the region should also be taken into account when developing the company’s strategic positioning and approach. There are about 48 countries in SSA that covers 11% of the world population accounting for more than billion people. This ensures a lucrative customer base as well as larger customer segments to target. In 2016, the SSA accounted for about 24% of all global diseases but had availability of only 3% of world’s doctors (Stevens, 2019). This makes it a potent opportunity for Hartmann to cater to public healthcare needs especially with the slow progress of healthcare quality in most countries. In addition to this, with the growing public knowledge about healthcare requirements and higher demand for healthcare governance, healthcare investment is one of the fastest growing sectors in SSA. Countries like Nigeria, Tanzania and Kenya are eager to advance their healthcare system and are open to investments from private healthcare companies with a scope of around $25-30 billion to meet the current needs. The Strategic Management assignment research also shows, Additionally, as of 2018, estimations indicate requirement of around $11.5 billion in the medical devices market that can be utilized by Hartmann in its favour.

Image 2: Medical Device Market
(Source: GlobeNewswire, 2020)

Resources and Capabilities of Hartmann and Their Competitive Implications
Paul Hartmann AG at the time of the case had operational presence in 33 countries but currently has expanded to more than 100 countries. In the African continent, South Africa was the regional headquarter with some degree of market presence in Morocco and Algeria which would provide considerable localized healthcare experience to expand to SSA. The three, core value of the company included their passion for their healthcare and medical services, building local partnership and maintain professionalism in every aspect of business operation. In order to prevent any bias or turn away from new and different solutions, the company has always encouraged diversity in terms ideas, innovation and experiences. The company’s innovative approach to healthcare solutions is backed by their inventive and cost-effective ways of sales promotion. The company has also adopted a lean-thinking philosophy that has proven to be transformative for their production facilities (Kovacevic et al., 2016). Implementation of the LACE framework principles have provided with effective leadership control and customer-centric services for the company and helped adhere to their ‘improve or nothing’ core belief for the decision-making process.

Strategic Management assignment -Resources and Capabilities
Resources:In 2016, the company experienced a steady growth of 3.2% in sales as compared to the previous year and achieved sales worth €1986.5. The profit earnings after tax deductions in the same year was around €90.1 million which provided for significant financial resources as compared to other healthcare companies in SSA. The company also achieved significant profit margin by acquiring 70% in share of its medical supplier and distributor Vitamed Pty (Ltd). Later the company established its wholly owned subsidiary in South Africa with four core departments of hospital, pharmacy, export and aged care (Ndomondo-Sigonda et al., 2017). In 2003, the company also had formed a strategic alliance with medical products company Hollister which enabled them to sell their respective healthcare products and services. Being a member of South African Medical Device Industry Association (SAMED), it also enabled Hartman to effectively acquire and renew manufacturing and distribution license for medical devices which was difficult for import-driven industries. In terms of non-tangible resources, the company had the reputation of an expert in wound management in South Africa and also specialized in personal healthcare, incontinence management, infection management and risk prevention.The Strategic Management assignment shows the trademark of the company reflected a source of trust for healthcare and medical services due to their simple and effective solutions and disposable products. Instead of adopting every emerging technology in wound care, the company relied on their two-mode hydrotherapy range that was able to treat up to 80% of chronic wounds making them simpler in terms of application and affordable (Atkin &Ousey, 2016). As for human resources, the company has massive talent pool in its 10,519 staff members who were guided by the effective leadership capacity and healthcare knowledge of newly reinstated CEO Joehle in 2013. The two major focuses when it came to its human resources were diversity and innovation that directed them towards change and improvement. The company maintained a multicultural environment even in South Africa to ensure seeing things from different perspectives while also challenging each other when addressing medical solutions. This also prevented the scope of being subject to a blind spot or biased and provided innovative solutions to the healthcare challenges.

Image 3: VRIO Analysis
(Source: getlucidity, 2022)

Capabilities:The organizational culture at Hartmann is based on embracing diversity and encourages innovation based on new ideas and experiences. This in essence, can be of major advantage to expand in SSA as a German company willing to adopt the ways of regional ethnicities. In addition to this, the company mission helps guide its operations for improving treatments, outcomes and healthcare experiences and simplify the lives of the patient and caregivers. Their focus on building sustainable partnerships through collaboration with suppliers and other healthcare companies and government agencies have facilitated quality healthcare services in South Africa, Algeria and Morocco. TheStrategic Management assignment lean thinking philosophy is part of their transformative work ethic ensures the company is able to offer customer-centric care services while upholding respect for all people. In order to expand their business processes, Hartmann has acquired multiple companies as subsidiaries which includes Kneipp, Sanimed, Karl Otto Braun, BODE Chemie, etc (mergr, 2022). This extent of collaboration has certainly helped the company expand its expertise in terms of products and services. Their network of distributors also enables them to distribute products to more than 100 nations making way for a viable B2B business model. The business routines that make Hartmann stand out among other companies is their consistent support of healthcare professionals and private pharmacists for managing healthcare and go beyond just making products. The company was also able to temporarily enter emerging markets in SSA by signing a three-year-partnership with international humanitarian aid organization CARE. The company also prioritizes cutting down on supply chain costs for which acquisition of transport service companies have also been performed by Hartmann. The software enabled and BI induced transport management optimize their logistics system while establishment of BODE Science Centre and Medical Innovation Centre helped with product innovation through state-of-the-art R&D (hartmann-science-center, 2022).

Strategic Management assignment VRIO Analysis
Based on the current resources and capabilities of Hartmann AG, identified on this Strategic Management assignment a VRIO framework has been developed to provide the strategic planning of the company for expanding to SSA. This would help identify the sustainable competitive advantage that company can capitalize for expanding their expertise and business operations.

(Created by Author)

Reflecting Organizational Culture as Strategic Capability in Context of Hartmann
The collective values, expectations, experiences and practices that guide and shape the actions of all team members can be referred to as organizational culture. For a great culture, it should contain a multitude of exemplary positive traits that would direct the company towards improved performance. On the other hand, strategic capability of an organization refers to its ability to harness skills, capabilities and resources to compete in the market against other businesses and is generally driven through effective leadership. Although, both of these concepts might seem unrelated in terms of strategic management but when looked through the underlying mechanisms at play can be seen integral to one another. The organizational culture is embedded in the very fabric of the company and determines aspects like decision-making or even reaction to feedback and the organization’s ability to learn and develop (mercer, 2022). For this reason, it can be stated that culture itself is an organizational capability and should be integrated to the corporate strategy to achieve real transformation. The Strategic Management assignment research also shows Business experts often argue that the strategic capability of an organization can assumed based on its organizational culture as the driving factors of the former is determined by the later to a large extent.

When it comes to attracting and retaining talent, company culture plays a crucial role and should be ingrained in the corporate strategy to make significant impact on the outcome. Human resources on the other hand are a key factor in the strategic capability as it contributes to their overall performance and productive outcome of the company. For this reason, organizational culture that treats employees with dignity, empathy and respect can help nurture a considerable talent pool capable of producing superior output that can ensure sustainable competitive advantage.In context of Paul Hartmann AG, the company has integrated the Leadership-Accountability-Commitment-Execution (LACE) framework with their strategic management which have aligned their actions with their values. Coupled with their organizational culture attribute of lean thinking, the company leaders and the employees are able to comply to the core beliefs of ‘customer is boss’, ‘respect for people’ and ‘improve or nothing’ (HARTMANN GROUP, 2022b). Also, the culture helps them go beyond producing healthcare tools and ensure working closely with private and public pharmacists at clinics and hospitals and manage healthcare in the community.

Image 4: Strategic Management assignment -Lean Thinking
(Source: Shinde, 2019)

Innovation and creativity are adopted by positive work culture and also nurtures their can-do attitude. When the company is able to encourage employees to go for the extra mile required for company success through their creative and innovative approaches, it leads to more profitability for the company. This is indeed a necessary ingredient for operating in competitive market and industries and achieve higher market share. Driven by the company mission of finding ways to improve treatments and healthcare experiences, innovation and change is at the centre of Hartmann’s corporate strategy. This was further reinforced by the establishment of two centres for healthcare solutions namely BODE Science Centre and Medical Innovation Centre. The BODE Science Centre expanded the company expertise in infection protection which was a global healthcare challenge and eventually led to culmination of infection management (bode-chemie, 2022). The company also provided state-of-the-art training to its staff members through the Medical Innovation Centre which facilitated interactive training sessions and workshops on the proper use of surgical procedure sets and even allow customers to watch.As per the research, the product innovation directed towards hydro-responsive wound dressing also helped the company consolidated sale and post-tax earnings of €1986.5 million and €90.1 million respectively despite a slow growth in global economy in 2016.

Organizational culture go hand in hand with the company values that unite the employees to work towards a common goal. This is further reinforced with the building and development of a diverse team in terms of gender, ethnicities and even professional backgrounds. As the development of a diverse team better reflect the users and customers of the company, the management is able to make more informed decisions and offer direction for the growth and go-to market. Having the right team facilitates the filling of gaps and differences providing for optimal solution to business challenges. The appointment of CEO Joehle in July 2013 with the Hartmann Group resulted in embracing diversity especially diversity in innovation that was achieved through a multicultural environment that enabled diversity of ideas and experiences. Instead of looking for far-fetched solutions, the company was able to come up with obvious solutions to challenges that have been staring in the face simply by changing the perspective from a diverse and capable team.

Conclusion
The strategic position for Paul Hartmann AG for expanding to Sub-Saharan African region have been conducted based on the given case study. The resources and capabilities of the German healthcare organization have been thoroughly evaluated to determine the competitive implications that can help the company compete with market externalities and rival companies. The VRIO analysis helps to point out the sustainable competitive advantages that the company can pursue based on their current available resources and capabilities. Additionally, the Strategic Management assignment research shows, the interrelationship between organizational culture and strategic capability has also been drawn in context of the Hartmann Group to reinforce their strategic choices needed for business expansion.

Reference List
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getlucidity.com. (2022). Introduction to the VRIO Framework | Resources | Get Lucidity. Getlucidity.com. https://getlucidity.com/strategy-resources/introduction-to-the-vrio-framework/
GlobeNewswire. (2020, October 27). Global Medical Device Market 2020. GlobeNewswire News Room. Strategic Management assignment https://www.globenewswire.com/news-release/2020/10/27/2114984/0/en/Global-Medical-Device-Market-2020-Size-To-Increase-Due-To-Rising-Infectious-And-Chronic-Disease-Cases-As-Per-The-Business-Research-Company-s-Medical-Devices-Global-Market-Opportuni.html
HARTMANN GROUP. (2022a). HARTMANN | We help, care, protect. HARTMANN GROUP. https://www.hartmann.info/en-corp/ HARTMANN GROUP. (2022b). Who we are | Mission, Vision, Values. HARTMANN GROUP. https://www.hartmann.info/en-us/whoweare/our-values
hartmann-science-center.com. (2022). About us | HARTMANN SCIENCE CENTER. Www.hartmann-Science-Center.com. https://www.hartmann-science-center.com/en/about-us
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mercer.com. (2022). Build culture as strategic capability | Mercer. Www.mercer.com. https://www.mercer.com/what-we-do/workforce-and-careers/culture-transformation.html
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