Chapter 9 Research Conclusion and Recommendations
9.2 Recommendations
Although Japanese elderly housing industry is still in development stage, numerous numbers of companies from different business backgrounds have started to operate the residential services with supportive living services in order to seize the industry’s great investment opportunity for the nation’s hyper-aging society in the near future. The customer group who acquire today’s elderly housing with supportive services has quite different types of demands toward the services and those demands became more diversified and fragmented.
Therefore, it is highly recommended to focus on niche market’s demands to develop unique services and products to satisfy them instead of focusing on mass-market and developing the services that have few distinctive characteristics to differentiate from others.
Each of the selected four case companies has different business background and serves for different customer segment and develop its unique business models to deliver the values to its customers. Each of four case companies generates revenues through offering what its target customer group requires to solve individual unique problems and demands toward their retirement living. Although aged-people and their family are sensitive to the credit and capability of operating company of elderly housing due to the mistreatment of aged-person and unfortunate accidents have frequently happened in Japanese elderly care service facilities over time, there should be large opportunities to gain success in the industry even for new market entrants if they could successfully find and cultivate the demands of today’s Japanese elderly people.
The industry should have many uncultivated potential markets and it should be a good business opportunities for both existing elderly housing business and the companies without managerial experience of residential services and care services for the elderly. Before participating into the industry, a company should understand industry’s external service may influence its business models and how its business model can generate values to the target customer segment through using the appropriate analysis models. The followings are the
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recommendations for today’s Japanese elderly housing business based on the usage of business model canvas analysis model:
1. Customer segment: Selecting one customer group that may appreciate a firm’s products, services, and resources. Since elderly people’s demands and problems become more fragmented and diversified than ever, it is important to segment the customer groups to know which customer group a company should approach. It is important to note that company’s customer segment can also be elderly people’s families.
In order to define target customer segments, service providers are required to analyze the variables of customer segmentation which includesgeographic (ex. region, city size, density), demographic (ex. age, income, gender, education, religion, social class),
psychographic (ex. lifestyle preference, personality, social skill), and behavioral (ex. user status, service usage frequency, corporate loyalty, desirable value propositions toward company) segmentations. Table 9.2 can be used as a reference to define segmentation of customers.
2. Value propositions: It is important to understand the chosen customer segment’s issues and demands in order to develop appropriate products and services or system that can solve those problems and demands. Service providers are required to develop their creative problem-solving skill and human-centered design thinking skill to develop their unique companies’ values.
To develop unique value propositions, Five-Stage Design Thinking approach proposed by the Hasso-Plattner Institute of Design at Stanford d.school is a useful design methodology that provides a solution-based approach to solving problems It is very useful in solving complex problems that are difficult to be defined or unknown, by understanding the human needs involved (“empathize”), by reframing the issue in human-centric ways
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(“define”), by creating numerous ideas in brainstorming sessions (“ideate”), and by adopting a hands-on approach in “prototyping” and “testing.”
3. Channels: Channels used for customer acquisition can be varied based on the target customer group’s characteristics which includes age, income level, health condition, and geographical location. Developing good relationships and partnerships with local facilities that aged people frequently visit would be effective and efficient sales and marketing strategy to reach customer groups instead of spending a lot of money to develop in-house marketing and sales channels.
4. Customer relationships: Developing a long-lasting relationship through personal
assistance and active communication would be effective to both retain them and boost the sales of optional supportive services, care services, and even lead to acquisition of new customers through satisfied customer’s world-of-mouth marketing.
5. Revenue streams: It is important to develop flexible and recurring revenue model that a customer segment easily accesses and continuously acquires. Revenue model which is over-dependent on public care compensation and subsidy programs will be more likely to be deteriorated under an assumption of decreases in public social welfare expenditures resulting from decreasing of tax payment by working population.
6. Key resources: Key resources can be the most important competitive advantages over competitors, and they are divided into physical, intellectual, and financial resources.
Among them, company’s intellectual resources are relatively more difficult to get copied or replaced by other business, so focusing on developing or using company’s unique
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resources to deliver values to the chosen customer segment would be more effective to take competitive advantages over others.
7. Key activities: Company’s key activity should contribute to value creation process for its customer segment and generating revenues. Although many elderly housings perceive its key activities as problem solving for their customers, there are numerous types of methods to conduct for achieving its organizational goals.
8. Key partnerships: Selecting appropriate partners for every business phase can result in an efficient business development as well as supplement of company’s services to deliver safe and secured long-term residential services.
9. Cost structures: Types of cost structure can be differed based on what types of customers that a company wishes to reach based on the consideration of developing appropriate value propositions to meet its customer’s demands.
Development of unique and innovative business model based on the combination of the stated nine building blocks and external factors will be more important in the future Japanese elderly housing industry, and the analysis models used in this research paper may help a company to reach its organizational goal in an effective manner.
9.2.1 Recommendations for Future Researches
Since this research analyzes today’s Japanese elderly housing industry and businesses from managerial perspectives, one of limitations in the study is the lack of adequate information to describe customer’s real-life situations and his/her demands toward service providers. Designing research methodology from the user’s perspective may be a
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useful reference for readers to develop innovative business models and value creation strategies.
Besides, future researches may also be able to seek the factors of effective business development strategies for potential new entrants through analyzing start-up businesses and rapidly growing businesses in today’s Japanese elderly housing industry. Financial analysis approach that studies how business raises capital, generates revenues, selects a type of investment strategy for its growth would be an interesting study subject for potential service providers.
9.2.2 Recommendations for Japanese Government
Although the number of elderly housing has increased since the new public policy started in 2011, current number of the housings is far below the government’s target number.
In order to stimulate the supply of elderly housing business, further public subsidies might be required to provide for service providers.
Since long-term care service infrastructure is important to support aged citizens and elderly housings, each area’s municipality and prefecture needs to provide further grants for developments of community care and welfare facilities that can back up and promote the business of elderly housing business. Development of community-based elder care system, that help elderly people live as independently as possible through offering variety of
supportive living services and healthcare options at home or at a location in the community, would be future Japanese social infrastructure for the elderly. In addition to the stated supportive living and healthcare services, municipalities and prefectures should develop the systems to promote social participation and social engagement of elderly people to enrich their living as well as creation of jobs in local community.
Current registration standard for elderly housing business does not include any regulations to prevent the Japanese social issues that frequently happened at nursing home
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and care facilities in the past such as abuse of elderly and forced healthcare treatments. In order to secure elderly citizens’ safe retirement living in elderly housing facility, the content of regulation standard should be modified and specify a code of conduct as well as moral principles. Besides, regular inspection by administrative officers should be taken place to inspect the works and services provided in each housing for provision of safe and secured elderly civilian’s living.
9.2.3 Recommendations for Service Providers
Although the registration standard for the business states, there is no requirement for provision of in-house healthcare services for elderly residents, it is highly recommended to develop healthcare service system through cooperating with local healthcare service facilities.
Provision of in-house healthcare service would boost the revenue of housing and attract more broad customer groups, however, service provider should not be overdependent on the
revenue from provision of healthcare service since it is expected to be decreased due to decrease of tax income of government and increase of elderly population which mostly use social welfare program.
Unlike property management business of ordinary housing, one of the biggest missions for today’s Japanese elderly housing would be solving aged-customer’s unique problems, such as provision of supportive services for handicapped residents and offering age-related disease prevention program for them. Since customer’s demands toward residential service for the elderly became more complex, development of service structure based the demands and characteristics of target customer segment would become more important than ever. Cooperating with local community’s businesses, social welfare
organizations, and educational institutions to develop social participation for the elderly may be a possible option that elderly people value.
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As a case study of Showa no Yashiro and Smart Community Inage shows, development of elderly housing can be an intermediary agent that helps to increase the revenue of other services provided within corporate groups. This strategy is beneficial for service providers since they can have stable revenue streams from the residents of elderly housing without spending much sales and marketing expenses.
As the industry gets competitive, development of unique, competitive building blocks to make company’s business model becomes more important. It is not necessary to possess all resources to provide services in-house in today’s elderly housing business. Rather, focusing on satisfying specific customer group utilizing company’s resources and outsource some services to reliable local vendors based on the analysis of economic factors and non-economic factors.
Finally, service providers have to understand their target customers might be young family members of elderly people. It is important to note that selling residential services to elderly people’s family members and developing relationship with them would also be an important tip to be successful in business in the industry.
9.2.4 Recommendations for Care Takers
Advancement of technology is highly likely to replace human caregivers. In order to correspond to the shortage of nursing care workers in Japan, development of caretaker robots and other technologies have been accelerating to perform future caregiving jobs. Japanese government also considers the development of robotics-based nursing-care equipment as a part of its national revitalization strategy. To avoid being replaced by machineries, caregivers should acquire professional skills that machineries cannot provide and focus on developing their human skill and customer relationship skill for patient’s emotional and psychological well beings that are less likely to be satisfied by robotic nurses.
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Due to the rapid increase in number of elderly housings from numerous industries, there are a lot of unskilled business enterprises and unethical service providers that only consider to seek a good investment opportunity or to get public subsidiaries in the industry. As forced healthcare treatments and inappropriate working conditions had been frequently seen in Japanese nursing homes and long-term healthcare service institutions, there are numerous unethical business organizations in this industry. Therefore, care takers should pay more attention to each service provider’s management philosophy, corporate missions, and its business structure in order to avoid the risks of havingan exploitative sweatshop-type employment system.
9.2.4 Recommendations for Customers
Today’s elderly housing industry is more decentralized than ever and there are numerous numbers of unethical, unskilled, and financially unsecured businesses. Customers must do preparatory research about each service provider’s business structure, residential and care service contents, management philosophy and missions, and so on. Among them,
economic security of a company needs to be paid a large attention since it is a good single indicator of its financial health and long-term viability of the business. If service provider’s financial information is not available, checking online evaluation toward the business or asking current and ex-users of housing’s service directly would be an effective method to choose an appropriate residential service that can solve individual unique problems in retirement living.
Regardless of on-site visit or review of online databank, information collection process should involve a person who is familiar with residential service and healthcare services for the elderly. As discussed in this study, there are numerous disputes between service providers of long-term residential care services and service users every year due to lack of understanding of contents of contract of residential services as well as unethical
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service systems provided by some business enterprises. In order to have secured residential living, customers are required to be sophisticated and familiar with the services provided in today’s elderly housing industry.
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