Netcare Case Study

Netcare Case Study

Case Summary

The case includes a detailed review of Netcare’s expansion to foreign markets. The company’s growth began after it established a good image in South Africa for offering various services such as trauma and private hospital services through equity interests in various hospital and retail pharmacies, hospitals, operating theaters, emergency services, and ancillary healthcare services. The company’s expansion journey began in 1997 when it began operating in the United Kingdom. The expansion was successful due to limited competition because private healthcare providers had not penetrated the United Kingdom healthcare sector. The aging population in the United Kingdom also presented an advantage for Netcare because of the increased demand for healthcare services among the aging population. The company also used acquisitions to increase its customer base in the United Kingdom.

However, acquiring GHG raised concerns because it implied that Netcare prioritized offering high-quality healthcare to the people of the United States and neglected its commitment to offering quality healthcare services in South Africa. The company responded by assuring South Africans that it was only pursuing expansion opportunities and would continue offering healthcare services in South Africa to achieve access and equity in healthcare. After the successful expansion into the United Kingdom, the company began expanding to other countries such as Rwanda, Kenya, Brazil, and Tanzania. However, the acquisitions were not successful. Although the company had attained significant growth by 2007, the main question was whether the South African market would support its future expansion or would be a barrier. There was also the question of the main areas it needed to concentrate on to continue growing. Future expansion became uncertain because there was no clear idea of what the company would do going forward.

Critical Aspects in The Case

One of the critical aspects identified in the case was the company’s dependence on doctors who had fled Rwanda as the main source of doctors for its facilities in Rwanda. However, there was a high demand for doctors because they were highly experienced and skilled, thus creating a gap because all vacant positions could not be filled. The company resolved to fly in and employ South African doctors. The second critical aspect was the company’s lack of appreciation and understanding of the magnitude of the cultural and social trauma that Rwanda had undergone due to the Genocide. This created employee conflict because Hutus were unwilling to work with Tutsis. The third aspect was the mismanagement of the financial aid granted by various agencies and the United Nations to provide infrastructure and health. The fourth concept is the incompatibility of the South African model with the healthcare systems in other countries.

The main critical aspects that I perceived to be vital were Netcare’s lack of planning when expanding to Rwanda, Kenya, Tanzania, and Brazil and the overconfidence that it would expand its operations into many countries because of its successful expansion in the United Kingdom. In my opinion, Netcare’s lack of planning was the main cause of failure in Rwanda. Some of the barriers to the company’s expansion in Rwanda, such as the unavailability of skilled and experienced doctors due to the high demand for doctors who had fled Rwanda and the magnitude of the hatred the Hutus and Tutsis had towards each other, could have been eliminated if the company had identified them before expansion. For example, it could have increased the salaries offered to doctors to attract and retain the highly experienced and skilled doctors who had fled from Rwanda.

How I Was Able to Make the Assessments of Selecting the Critical Aspects

I was able to make the assessments of selecting the critical aspects by focusing on the main challenges that the company experienced in its operations. I began by establishing Netcare’s expansion into the global market as the main topic of discussion in the case study. I then summarized the key points in the company’s expansion strategies in the United Kingdom and other countries to identify the main arguments on the reasons for successful expansion, the controversies raised, the challenges encountered, and the company’s response to challenges and issues raised. I also applied critical thinking to determine the most important aspects affecting the company based on the magnitude of their impact on the company. According to Elder (2022), critical thinking includes examining and evaluating ideas to make an informed decision.

I applied the steps of critical thinking proposed by Hayes & Magana (2019). The first step is to identify the problem. I identified the problem as Netcare’s failure to successfully expand into Kenya, Tanzania, Brazil, and Rwanda. The second step is research. I reviewed the information presented in the case study when researching before proceeding to the third step, which is determining the relevance of the data gathered in the research. The fourth step is asking questions. In this step, I asked myself whether I was making any assumptions about the information gathered and decided to base my arguments on the facts presented in the case. I concluded the critical thinking process by analyzing my decision on the critical aspects based on their impact on the company. I also ensured that every critical aspect was directly linked to the company’s expansion into other countries because I had established that as the main topic in the case study.

Outcomes and Solutions

One of the outcomes I extrapolated from the case was the failure of future expansions in other countries. I think the company had become too overconfident in its expansion strategies because it had successfully expanded into the United Kingdom. The overconfidence led to poor preparation and ignoring some crucial details that could be used to decide on the expansion strategy and determine whether the timing for the expansion was right or not. For instance, in Rwanda, the timing for the expansion was not right because the company was recovering from Genocide. Therefore, although the demand for healthcare services in the country may have been high, the labor supply would have been less because many people were fleeing the country, and there was tension between the Hutus and Tutsis, thus implying that the company could only hire people from one tribe.

Another outcome is the loss of customers in South Africa. The company’s expansion to other countries had already begun raising concerns among South Africans due to the fear that it prioritized growth rather than remaining committed to the people in need of its services in South Africa. This could lead to losing customers who prefer to promote local healthcare providers showing commitment to serving South Africans. The main resolution I extrapolated is conducting a PESTEL analysis on every country the company intends to expand its operations. According to Madsen & Grønseth (2022), a PESTEL analysis assesses the economic, political, technological, social, legal, and environmental factors. A PESTEL analysis can prepare the company for any challenges encountered in its expansion, thus enhancing success rates. For example, a PESTEL analysis could have helped the company identify the challenges it would have encountered in Rwanda.

Reflection

One of the things I have learned about global leadership is that it requires a proper understanding of the strategies that work for a specific country and those that may not work based on the prevailing conditions in a country, such as the political environment and policies regulating business operations. For example, in the case of Netcare, the leaders may have taken time to understand the political and social environment and its impact on the company, thus designing the right leadership approach. I have also learned that global leadership requires ensuring that stakeholders’ interests in every country are met. For example, in Netcare’s case, the acquisition of GHG raised concerns because the stakeholders in South Africa feared that their interests would not be met. A global leader is responsible for assuring all stakeholders that the company’s expansion into other countries does not affect their interests.

I have also learned that a global leader should be able to develop and maintain relationships. According to Shaburishvili (2017), success in the global environment requires establishing relationships that facilitate growth. For example, Netcare established a relationship with other healthcare organizations to facilitate successful acquisitions that supported its expansion. A global leader also requires negotiation skills to secure partnerships that facilitate growth. I have also learned that global leadership requires strategic thinking to plan and determine the best move a company should take to deal with the uncertainties in the global environment. Global leaders also need to understand the framework of their organization’s industry. According to Khalil (2012), understanding an organization’s market or industry is essential in designing growth strategies and creating a competitive advantage. For example, a leader may review an industry or market to identify opportunities that can be leveraged.

References

Elder, L. (2022). Critical thinking. Critical Thinking. https://doi.org/10.4324/9781138609877-ree215-1

Hayes, C., & Magana, P. (2019). Critical thinking unleashed: How to improve and refine your thinking process to think more effectively.

Khalil, S. (2012). International business environment analysis. Business Review, 7(1), 28-42. https://doi.org/10.54784/1990-6587.1299

Madsen, D. Ø., & Grønseth, B. O. (2022). PESTEL analysis. Encyclopedia of Tourism Management and Marketing. https://doi.org/10.4337/9781800377486.pestel.analysis

Shaburishvili, S. (2017). The peculiarities of inclusive business development under globalization. Globalization and Business, 71-75. https://doi.org/10.35945/gb.2017.03.011

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Write a brief Overview/Summary of the case in your own words, describing the nature and/or background information pertaining to the case. (Minimum 1/2 -1 page)

In your opinion, what were some Critical Aspects in the case that were identified? What were some Critical Aspects that you perceived to be very vital? (Minimum 1 page)

How were you able to make those Assessments of selecting the critical aspects or components for the case author/writer and for yourself? (Minimum 1 page)

Identify and/or list some of the Outcomes, Solutions, and/or Resolutions you extrapolated from the case. (Minimum 1 page)

Write a Reflection on what you learned from the case pertaining to global leadership. (Minimum 1 page)