Suppose, you are the CEO of a company doing business in pharmaceuticals/RMG/Fast Food/Leather Goods/IT etc. you wish to run your enterprise strategically. Now you are required to decide upon the following: 1. Make a “Mission” and “Vision” statement of your enterprise what should be your major goods for the next 5(Five) years. 2. Put in brief your plan of action regarding: A) SWOT Analysis B) The Five Forces Model C) Implementing Total Quality Management (TQM) D). Binding relationship between the stakeholder & the enterprise E). Ensuring Distinctive competences in business 3. In the business Level which strategy, cost leadership/Differentiation/focuses you would like to follow? Why? 4. Find out the roots of your competitive advantage and show them with the help of a diagram. 5. Is there any scope of vertical integration? If “yes” what advantage you may have out of it? 6. A). Can you think of creating any Diversification of a vertical integration strategy-Evaluate through diversification? Explain. B). Should you consider about strategic alliance or outsourcing? 7. A). If you consider your position to be in the ‘Shakeout” Stage in the industry LCM (Life Cycle Model)-How would like to reach the mature stage Shakeout. B). If you are interested to do business Globally, What strategy and Entry Mode would you like to follow?
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Suppose, you are the CEO of a company doing business in pharmaceuticals/RMG/Fast
Food/Leather Goods/IT etc. you wish to run your enterprise strategically. Now you are
required to decide upon the following:
1. Make a “Mission” and “Vision” statement of your enterprise what should be your major
goods for the next 5(Five) years.
2. Put in brief your plan of action regarding:
A) SWOT Analysis
B) The Five Forces Model
C) Implementing Total Quality Management (TQM)
D). Binding relationship between the stakeholder & the enterprise
E). Ensuring Distinctive competences in business
3. In the business Level which strategy, cost leadership/Differentiation/focuses you would
like to follow? Why?
4. Find out the roots of your competitive advantage and show them with the help of a
diagram.
5. Is there any scope of vertical integration? If “yes” what advantage you may have out of
it?
6.
A). Can you think of creating any Diversification of a vertical integration strategy-Evaluate
through diversification? Explain.
B). Should you consider about strategic alliance or outsourcing?
7.
A). If you consider your position to be in the ‘Shakeout” Stage in the industry LCM (Life
Cycle Model)-How would like to reach the mature stage Shakeout.
B). If you are interested to do business Globally, What strategy and Entry Mode would you
like to follow?
1. Make a “Mission” and “Vision” statement of your enterprise what should be your
major goods for the next 5 (Five) years.
The first component of the strategic management process is crafting the organization’s
mission statement, which provides the framework or context within which strategies are
formulated.
A sentence describing a company's function, markets and competitive advantages; a short
written statement of your business goals and philosophies. A mission statement defines what
an organization is, why it exists, its reason for being.
Mission Statement A formal commitment to stakeholders that the firm’s strategy
incorporates and recognizes their claims on the organization.
A mission statement has four main components
A statement of the raison deter of a company or organization (which is normally referred to
as the mission) A statement of some desired future state (usually referred to as the vision)
A statement of the key values (organization is committed)
A statement of major goals.
For example, the mission of Beximco Pharmaceuticals Ltd.,
Mission We are committed to enhancing human health and well-being by
providing contemporary and affordable medicines, manufactured in full compliance with
global quality standards. We continually strive to improve our core capabilities to address the
unmet medical needs of the patients and to deliver outstanding results for our shareholders.
Vision statement-is a declaration of an organization's objectives, ideally based on economic
foresight, intended to guide its internal decision-making.
Vision The vision of a company lays out some desired future state; it articulates, often in bold
terms, what the company would like to achieve.
vision We will be one of the most trusted, admired and successful
pharmaceutical companies in the region with a focus on strengthening research and
development capabilities, creating partnerships and building presence across the globe.
Major Goals-having stated the mission, vision, and key values, strategic managers can take
the next step in the formulation of a mission statement: establishing major goals. A goal is a
precise and measurable desired future state that a company attempts to realize. In this context,
the purpose of goals is to specify with precision what must be done if the company is to attain
its mission or vision.
Well-constructed goals have four main characteristics:
They are precise and measurable. Measurable goals give managers a yardstick or
standard against which they can judge their performance.
They address crucial issues. To maintain focus, managers should select a limited
number of major goals to assess the performance of the company. The goals that are
selected should be crucial or important ones.
They are challenging but realistic. They give all employees an incentive to look for
ways of improving the operations of an organization. If a goal is unrealistic in the
challenges it poses, employees may give up; a goal that is too easy may fail to
motivate managers and other employees.
They specify a time period in which the goals should be achieved, when that is
appropriate. Time constraints tell employees that success requires a goal to be attained
by a given date, not after that date. Deadlines can inject a sense of urgency into goal
attainment and act as a motivator. However, not all goals require time constraints.
Well-constructed goals also provide a means by which the performance of managers can be
evaluated.
Major Goals of
Core Values
Our core values define who we are; they guide us to take decisions and help realize
our individual and corporate aspirations.
Commitment to quality
We adopt industry best practices in all our operations to ensure highest quality
standards of our products.
Customer satisfaction
We are committed to satisfying the needs of our customers, both internal and external.
People focus
We give high priority on building capabilities of our employees and empower them to
realize their full potential.
Accountability
We encourage transparency in everything we do and strictly adhere to the highest
ethical standards. We are accountable for our own actions and responsible for
sustaining corporate reputation.
Corporate Social Responsibility
We actively take part in initiatives that benefit our society and contribute to the
welfare of our people. We take great care in managing our operations with high
concern for safety and environment.
2. Put in brief your plan of action regarding:
A) SWOT Analysis
This are most important component of strategic thinking requires the generation of a series of
strategic alternatives, or choices of future strategies to pursue, given the company’s internal
strengths and weaknesses and its external opportunities and threats. The comparison of
strengths, weaknesses, opportunities, and threats is normally referred to as a SWOT analysis.
The central purpose is to identify the strategies to exploit external opportunities, counter
threats, build on and protect company strengths, and eradicates weaknesses.
For Example the SWOT Analysis of
This SWOT analysis of Beximco pharmaceuticals elaborates the strength & weakness of,
opportunities & threats for Beximco pharmaceuticals Company. It will provide a visual
overview that will prompt discussion around the company’s strategy and situation. This
SWOT analysis of Beximco pharmaceuticals can be used to evaluate the position of their
business. This can be utilized to guide business strategy session of Beximco pharmaceuticals.
SWOT analysis of Beximco Pharmaceuticals
Strength: In the first part of SWOT analysis of Beximco Pharmaceuticals Ltd, Strength
of Beximco Pharmaceuticals Ltd is analyzed.
(Internal Strategic Analysis)
1. Largest exporter in the country: – in the pharmaceuticals sector beximco is the largest
exporter in Bangladesh. It earns 55% of its revenue from exporting.
2. Strong brand image: – it has consistently been improving its products and so the brand
image.
3. Bigger market share: – In Bangladesh it possesses the bigger market share than many
other giant medication providers. It offers more than 400 products.
4. Product diversity: – it produces more than 200 generic which are available in more
than 400 different forms, and many of them are leaders among others.
5. Foreign market share: – As the most of the revenue comes from exporting, it
possesses large market share in the foreign markets.
6. Unique product: – it is the first company in Bangladesh to produce ARV drugs for
AIDS/HIV cases.
7. Corporate social responsibility: – it always has been working for social
improvements. It is connected with many social welfare organization
8. Public health checking point: – it has its own health checking point where they can
directly communicate with people and gather information. They have pharmacies
almost every division in Bangladesh.
9. Expert employees: – Beximco Pharma has many experts like chemists, pharmacists,
doctors, MBAs, microbiologists, and engineers who are highly educated. It makes the
company gather more strength in the similar industrial sector.
10. Certified by Global regulatory bodies – The global regulatory bodies of European
Union, Brazil, Australia, Gulf nations, among others certified Beximco Pharma’s
state-of-the-art manufacturing facilities.
11. Strong R&D: – Beximco Pharmat is continuously searching for the next treatment
advancements. The portfolio of Beximco features a list of high-quality, effective
products which gave it an advantage to be staying in the top leading company list in
the similar sector.
Weakness: In the second part of SWOT analysis of Beximco Pharmaceuticals Ltd,
Strength of Beximco Pharmaceuticals Ltd is analyzed.
(Internal Strategic Analysis)
1. Inconsistent in supplying product: Sometimes they are not able to produce specific
products efficiently; as a result they cannot supply those products to retailers timely.
2. Dependency on foreign products: – Beximco has to import Capsule Cap from other
countries. It’s a big advantage for them to acquire larger market. It also imports dry-
aluminum hydro-oxide , Dry magnesium hydro-oxide, and Lutin from abroad.
3. Strong competitor: – Square pharma has larger market share than Beximco in
Bangladesh, and the difference is stable.
4. Use of cash for promotional purposes: – they donate money for promoting their
products to the doctors, and distributors. Beximco already has a large market share. If
they do not stop this behavior right now, they may lose market share in future.
5. Loan defaulter: – one of the owners of Beximco Pharma did take a loan from Sonali
Bank, and did not pay it back yet. It may harm the company image in long term.
6. Environmental pollution: – for producing purpose, they are polluting water, and soil
in the area where they setup their factories
Opportunities: In the third part of SWOT analysis of Beximco Pharmaceuticals
Ltd,
Strength of Beximco Pharmaceuticals Ltd is analyzed.
(External Strategic Analysis)
1. Enormous Growth – with an employee’s range of more than 2700, the company is growing day by day which is capable for growing market as well.
2. Advantage as a globally certified company – it has been certified by different
countries as a reputed medicine manufacturer. It can use this opportunity to enter
other countries.
3. Building Stonger Brand – as it fulfills social responsibilities, there is a huge
possibility of getting more market share in future.
Threats: In the fourth part of SWOT analysis of Beximco Pharmaceuticals Ltd,
Strength
of Beximco Pharmaceuticals Ltd is analyzed.
(External Strategic Analysis)
1. Threat to environment – as it pollutes environmental elements, if the Bangladeshi
regulatory body takes any steps against it, that may create problem for its growing.
2. Huge competition – first level companies like Square Pharmaceuticals and Incepta
Pharmaceuticals are doing well, and gradually they are gaining more market shares
which is another barrier for Beximco pharmacuticals.
3. New Entrants in the market – as the whole country is doing well in the pharmaceutical
sector, the number of new comers are increasing more than ever. This may result in
declining market shares.
Outcomes of SWOT Analysis of Beximco pharmaceuticals Ltd
If we closely look at the SWOT Analysis of Beximco pharmaceuticals, we can see that there
are more competitive advantages than the disadvantages. The strategic operations are highly
functional. If weak points are not overlooked, and proper steps are taken, this company will
be able to be staying in leading position consistently.
B) The Five Forces Model
An important and sometimes overlooked factor that distinguishes one company from another
in the pharmaceutical industry is strategic planning. This article aims to provide information
to assist managers during their business planning sessions and is based on research
undertaken by Michael Porter of Harvard University. He has analyzed companies across a
range of industries, so the principles are also applicable to our industry, pharmaceuticals.
Porter’s model looks at the competitive arena in which businesses operate and describes five
basic competitive forces that directly impact on how successfully a business unit operates. By
understanding and knowing what these competitive forces are and how they impact on the
business, managers are better equipped to prepare their plans. They are also more able to
focus on those aspects that have the greatest impact on their business and can, if necessary,
realign their resources to ensure the best outcome.
Figure-Five Forces Model
1. Threats of entry posed by new or potential competitor (LOW)
High entry barriers due to costs associated with research & development of new drugs (i.e. years of investment in R&D for a drug that may/may not work)
Government regulation (i.e. FDA)
The threat of entry posed by new or potential competitor is a LOW competitive force
due to the above entry barriers & regulatory constraints.
2. Degree of rivalry among existing firms (HIGH)
High rivalry among main companies in the industry. For example the current rivalry
in the erectile dysfunction space where Bayer & GlaxoSmithKline claim that Levitra
works faster or Eli Lilly & ICOS claim that Cialis works longer than Pfizer’s Viagra.
The degree of rivalry among existing firms is a HIGH competitive force
3. Bargaining power of buyers (MEDIUM)
Hospitals & other health care organizations buy in bulk quantities and exert pressure
on pharmaceutical companies to keep prices in check
Regular patients have lost bargaining power due to price increases in generic drugs
The bargaining power of buyers is a MEDIUM competitive force.
4. Bargaining power of suppliers (LOW)
Sales for the pharmaceutical industry concentrate in a handful of large players and
that has decreased the bargaining power of suppliers.
The bargaining power of suppliers is a LOW competitive force.
5. Closeness of substitute products (HIGH)
Demand for generic versus brand name drugs has increased because of the costs
Generic drug companies do not have the high costs associated with the research &
development of new drugs and that allows them to sell at cheaper prices
The closeness of substitute products is a HIGH competitive force
Overall and based on the above analysis of Porter’s Five Forces, we can conclude that the
pharmaceutical industry is not attractive for new entrants.
C) Implementing Total Quality Management (TQM)
A philosophy that involves everyone in an organization in a continual effort to
improve quality and achieve customer satisfaction.
Total Quality Management (TQM) in Pharmaceutical Industries
The pharmaceutical industry is a vital segment of health care system which is regulated
heavily because; any mistake in product design or production can severe, even fetal. The poor
qualities of drug are not only a health hazard but also a waste of money for both government
and individual consumers. So, the maintenance of the quality with continuous improvement is
very important for pharmaceutical industries. From this concept Total Quality Management
(TQM) was established. The aim of TQM is prevention of defects rather than detection of
defects. So TQM is very important for pharmaceutical industries to produce the better
product and ensure the maximum safety of healthcare system and also protect waste of
money for both government & individual consumers.
TQM stand as….
Total: Made up of the whole.
Quality: Degree of excellence of a product or service provides
Management: Act/Art, Manner of handling, controlling& directing it.
Fig-TQM
Objective of TQM
Continuous improvement.
Involvement of everyone in the organization.
goal of customer satisfaction
Five Approaches of Defining TQM
what customers want Ex. surveys, focus groups, interviews etc.
Design a product or service.
Design processes-Known as mistake-proof/Fail-safing.
Keep track of results and never stop trying to improve.
Extend these concepts throughout the supply chain
Elements of TQM
Basic/Foundation
Ethics-Discipline Concerned
Integrity–Honesty, Morals, Values, Fairness etc.
Trust –Trust is a by-product of integrity and ethical conduct
Continuous Improvement
Competitive Benchmarking
Employee Empowerment
Team Approach
Decisions based on facts rather than opinions-Gathers & Analyzes Data
Knowledge of Tools
Champion
Supplier Quality
Quality at the Source
Suppliers
Flexible production
Process improvements
Process measuring
Scale For TQM Measurement
Six Sigma
Lean/Six Sigma
Advantage of TQM:
Improves reputation- faults and problems are spotted and sorted quicker.
Higher employee morale- workers motivated by extra responsibility, team work and
involvement indecisions of TQM
Lower cost decrease waste as fewer defective products and no need for separate.
Quality control inspector
Disadvantage of TQM:
Initial introduction cost.
Benefits may not be seen for several years.
Workers may be resistant to change.
D). Binding relationship between the stakeholder & the enterprise
Stakeholders and the Enterprise
A stakeholder is a party that has an interest in an enterprise or project. The primary
stakeholders in a typical corporation are its investors, employees, customers and suppliers.
However, modern theory goes beyond this conventional notion to embrace additional
stakeholders such as the community, government and trade associations.
The term "enterprise" has two common meanings.
Firstly, an enterprise is simply another name for a business. You will often come across the
use of the word when reading about start-ups and other businesses…"Simon Cowell's
enterprise" or "Michelle set up her successful enterprise after leaving teaching".
Secondly, and perhaps more importantly, the word enterprise describes the actions of
someone who shows some initiative by taking a risk by setting up, investing in and running
a business.
Relationship between Stakeholders and the Enterprise
Contributions
Contributions
Inducements/incentives
Inducements
E). Ensuring Distinctive competences in business
A distinctive competency is often defined as a unique competency or capability that your
competitors do not share a distinction that separates you from the pack. The problem with
that definition is that the word unique means no one else has that particular competency.
Distinctive competence of a firm refers to a set of activities or capabilities that a company is
able to perform better than its competitors and which gives it an advantage over them.
Distinctive competence can lie in different area such as technology, marketing activities, or
management capability.
Distinctive competencies are the combination of the best practices and technical skills that
increase the competitiveness of an organization.
The idea of core competencies is to create unique and creative product that will be impossible
for competitors to copy.
Distinctive competencies are the main source for organizations to grow and survive, and
that’s precisely what differentiates the brand from competitors.
Evaluating both internal and external business environments is crucial to determine core
competencies. Furthermore, distinctive competencies may be related to different areas.
For example, technology, marketing, or management.
Characteristics:
Skills in effectively coordinating and managing resources for productive use.
Unique resources and capabilities, or
Common resources and
unique capabilities.
Importance of Competencies
Effective Human Resource Management
Training Programs
SWOT Analysis
Outsourcing Options
The Vision of the Company
Innovation is Essential
Pros of Distinctive Competencies
Distinctive Competencies Lead to Competitive Advantage – Distinctive competencies may
lead to determining the most effective and efficient business development strategies.
For instance, after Kodak understood that its core competence is imagining, their company
gained an edge over the competition.
Distinctive Competencies Bring Firm Sustainability – If an organization is not focused on
offering certain products or services, and its goal is to gain sustainable advantage, it’ll result
in solving new problems, rather than resolving the same over and over again.
Learning Faster Than Your Competitors – One of the best perks of distinctive competencies
is learning and adapting to new requirements faster than your competitors.
Identifying and Establishing Core Competencies
Analyzing the capabilities of new products that aim to cover a large number of potential
consumers, will result in developing perfect competencies that are impossible to imitate,
which will eventually lead to gaining competitive advantage.
In order to perfect a strategy that will unleash the full potential of the distinctive
competencies, firstly, they must be defined.
Applying the method stated above will provide value to your consumers.
How to Differentiate From Competitors
Assuming that your market research is done, it’s essential to consider that other organization
may declare being professionals in your field of competence.
So, finding a way to stand out from your competitors is a must.
Your first priority must be creating a strategy that effectively communicates your core
competencies.
Take the Helm
Focus on Market
Set Specific Objectives
Think in Multiple Dimensions
3. In the business Level which strategy, cost leadership/Differentiation/focuses you
would like to follow? Why?
A plan of action to use the firm’s resources and distinctive competencies to gain competitive
advantage.
Abell’s “Business Definition” process based on What, Who & How..