[Page 7]
Cathy was the CEO of Vitalia Franchising, the main body of the organization. The two other members of the executive team were the CFO and Procurement Manager, Jesús Tienda, an MBA graduate of IESE, and Cristina Gallego, Cathy’s deputy director and a psychologist who studied an executive management course at IESE Business School. They were both in their mid-thirties. The rest of the structure includes departments of HR, Quality and Health and Safety Training, Inspections, Management and Procurement, Marketing, Communication, Technology and Innovation.
Each Vitalia center (see Exhibit 7) had personnel for the following areas: management, medical and nursing services, rehabilitation services with occupational therapy and physiotherapy, psychology, clinical assistants, transportation service, podiatry, hairdressing, and showers. They made up a “small family” whose goal is the care of elderly people. To support this ethos, Vitalia provided social benefits for all its workers, starting their first day at work, including private health insurance, pension plans, dental care, and disability insurance.
The selection of personnel was a critical factor for Vitalia’s competitive advantage. They evaluated the franchisee to ensure that this person (or group) shared the philosophy of Vitalia and those who made up the company, and valued who those people were and what they offered. Candidates also had to demonstrate awareness of what it means to be an entrepreneur, to have your own business and shoulder the duties and responsibilities that this entails. As an example, a sound investor from a specific area of Spain was rejected because he seemed much more interested in profitability than the service. “Elderly people are not important; the main thing is how much money will I get from them.”
The second key role was the center director (sometimes the same person as the franchisee). This person was the image of the center, greeting clients and their relatives, and performing the tasks of management and billing. They must, therefore, have wide-ranging knowledge across several areas, but the most important were health, understanding the processes of aging and, of course, having a positive attitude toward, and empathy with, the elderly. The director received bonuses based on client satisfaction, client increases over budget, and cost efficiency. They ranged from 20% to 30% of their yearly salary. Although Vitalia did not offer any equity, some franchisees were considering this option. Vitalia recommended a range from 2% to 5% after their second year as center director.
The location of the center and its layout were critical, since these variables had a direct effect on the profitability of the business. Vitalia’s five-year strategic geographical expansion plan foresaw the presence of at least one day center in the capital city of the main Spanish provinces. The location must be in a commercial area with good visibility in the city, as well as a catchment area with the largest number of target users (i.e., over 65) possible. (This ensured that the population density within the local radius of the center -was high and optimized the franchisees’ search for clients.) The plan set a schedule of targeted cities based on the population, the percentage of that population over 65 years old, and income per capita.
Copyright © 2010, 2013, 2014, 2015 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu/educators. This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.
This online case study is authorized for use only in the HarvardX course "Innovating in Health Care," Spring 2015. Copyright 2015 by the President and Fellows of Harvard College. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means without the permission of Harvard Business School. This free online content will expire at the conclusion of the course. Course participants may procure PDF versions of this content as well as the entire required and optional reading list by purchasing a coursepack here: https://cb.hbsp.harvard.edu/cbmp/pages/content/harvardxbus51x.