Strategic Management Case Study Of Biocon India Group.

Mission, vision and Objectives of Biocon Limited

Describe about the Strategic Management for the Case Study Of Biocon India Group.

Strategic management avails a business organisation opportunity to form and achieve specific goals through logical and steps. Indian pharmaceutical sector has grown over past few years to become one of the best-organised sectors. The industry is responsible for the development and sustenance of global medicine industry. Biocon Limited is a major part of this industry, and in this study, strategic opportunities of this organisation in the above-mentioned market have been evaluated and development strategies have been suggested based on the evaluation.

Biocon Limited is a biopharmaceutical company from India. This company has brought bio-revolution in India. The founder of this company was Kiran Mazumdar Shaw. This company evolved with time from the field of enzyme manufacturing to bio-pharmaceutical. Biocon limited was established in the year 1978. It was a joint venture of Biocon India with Ireland. In the year 1998, Biocon India took over Unilever's part of the company (Bioconfoundation.org, 2016). Biocon Limited produces generic active ingredients and sells them in developed European market. Current revenue of this company is 22.40 billion INR.

Vision:

The organisation's main vision is to increase global healthcare to innovate and affordable biopharmaceuticals for all.

Mission:

The organisation wants to create intellectual asset through the process of discovery, development and research.

The organisation wants to provide internationally benchmarked quality products.

Biocon wants to focus on customer relationship with outstanding products. Training, empowering and monitoring are some of the techniques that the company wants to make for developing human resource development within the organisation.

Objectives:

The main objective of this company is to decrease the vulnerability to health associated problems to malnourished and poor people.

It intends to raise aware in making the significance of the preventive health. In assistance of communities for providing health, measures are another important mission of Biocon Limited.

In India, providing sanitation and public health is another vital objective of this organisation.

The organisation wants in initiating education and screening for infectious diseases for preventing the diseases. In order to optimise the management of diseases, the organisation has been trying to manifest significant measures.

Biocon Limited believes in the expansion of repertoire of the social protection, such as Arogya Raksha Yojana, Health micro-insurance for the most unprivileged section.

Resources and capabilities can be treated as the competitive advantage of the company. An organisation can have physical resources, legal resources, informational resources, relational resources and human resources.

Resources and Core-Capabilities of company

Biocon Limited has a well-managed human resource team. Current revenue of this company is 22.40 billion INR. Net income of the company at present is 3.61 billion INR (Bioconfoundation.org, 2016). This company is present in stock market. The organisation has been securing well growth with sustainable financial performance.

Capabilities of the company depend on product management, pricing management, channel management and customer relation management. This company has been working in the field
since 1978 with good reputation. Biocon Limited tries to improve the unmet needs of the patients. This company is the largest company in insulin making. This organisation is fully integrated company in biopharmaceutical focusing to reduce the costs in therapy. It is one of the leading companies in oncology department. This organisation has leading scientists for developing the affordable and efficacious products for all. They are working on development of the new solution in small molecules. This organisation engages scientists for technical and knowledge creation.

SWOT

The Indian pharmaceutical market is considered almost US $10.76 billion (Berman and Evans, 2013, p.1). The annual growth is almost 9.9% and is fast developing and creating new positions in the field of medicine through research and innovation.

Table 1: SWOT Analysis

(Source: Jayakumar, 2010, p.12)

The cost of production is low and hence gets enough boosts to enhance its growth. The GDP is increasing giving more liquid money in hands of common people (Grundy et al. 2011, p.214). They are able to invest in the healthcare sector and to indirectly help the company. People are becoming more aware of their physical illness and they are heading towards treatment.

New improved techniques are required to compete with the quality of products of the international market (Kor and Mesko, 2013, p.233). The equipment and machinery that Biocon India requires are quite costly and they are unable to avail all machinery (for further details refer to appendix 1).

The success of a company is very much dependent on internal and external macro and microenvironments. Both the internal and the external factors should be taken into consideration when the estimation of profit is done on the part of the management of the company.

Table 2: PESTLE for the external environment of Biocon India Group

(Source: Lavie et al. 2012, p.1479)

The Indian Patent Act, which has been introduced by the Indian government, has created a great problem (Grace, 2014, p.55) (refer to appendix 2).

Environmental Analysis- Pros and Cons

As opined by Casadesus-Masanell and Zhu (2013, p.466), technological advancement should be taken into consideration as it is one of the most crucial factors, which help in development of this sector.

The legal procedure of the land, has taken control over the price making decision on the medicine produced by the company. The Drug Price Control Order 1970, has taken control on the pricing capability of the company. According to the law, the government has set a price for the medicines and the companies cannot cross the limit. This has created a negative impact as they have to control the price by cutting the coast in the other sections of the functioning of the organisation.

Environment has been greatly affected by the industries. Hence, there are different regulations laid down by government so that the environment can be protected. The company Biocon has to limit its production and restrict its waste products. For this purpose, they had to take certain precautions like recycling the waste products and filtering the air.      

There are four stages in the life cycle of the product. At first, the product is introduced in the market.  Then the growth of the product takes place (Darroch, 2014, p.44). Then the growth level transform to the maturity level (Chen et al. 2016, p.2145). After the maturity level comes the decline stage. When at first, Biocon introduced their enzymes in the market, it was well accepted by the population and revenues started to roll in. Slowly, the enzymes were recognised in the market and it led to the popularity of the enzyme. With the popularity of the enzymes, the product reached its maximum point where it was earning huge profit. This profit led to the formation of Syngene another organisation under Biocon. Over the years, it has been seen that the popularity of enzymes fell from heights and paved for the other innovative products.

Competitor analysis

With the help of the competitor analysis, Biocon has been able to identify the marketing strategy with which it would evaluate the uniqueness of the product and attract the market where they want to enter or increase their sales. Currently Biocon is facing competition from companies like Alkem Lab, Ajanta Pharma, Ranbaxy Labs and many others from the size of their market and their competition. There are other small companies like Surya pharma and Ortin Labs that pose threat to Biocon. Though they are small in size, yet they are innovative in their products, they are slowly capturing the market.

SWOT

Market insight observes that Contract Research Organisation in India has various challenges as well as it is an emerging market in India. The market of CRO did not observe boom as this slow growth in this sector took the business in present time to the emerging markets, like Indonesia and China (Cheng et al. 2014, p.22). The market values cannot be denied for the large population, attractive investment and cost-effective market.

In recent time, the business environment has gone to extremely competitive. Each market has perfect competition. In perfect competition, no company can be price-taker (Henisz et al. 2014, p.1728). The companies are trying to create competitive advantage. Porter’s Five Forces model analyses the competitive advantages of a market. Contract research organisations are the pharmaceutical services providers that generally receive outsourcing from the large pharmaceutical as well as biotechs to conduct clinical trials and some of the other related services.

Industry competition: In generic pharmaceuticals, it is a highly competitive market. It is important to innovate every moment to be in the field. Manty overseas companies have been doing great works in generic pharmaceuticals (Dezso and Ross, 2012, p.1078). At first, the drugs need to test and then, it can be produced in bulk. In order to be in the market, the price of the products needs to be competitive. Clinical research in India is to begin to take off and it could flourish in next few years.

Figure 1: Porter’s Five Forces

(Source: Grundy, 2011, p.2014)

The threat of new entrants: For an entrepreneur, biopharmaceutical can be an option. Capital requirement of this industry is low. It is easy to create a network for distribution is easy. The government has put hindrance in the entry of this market. Having new patent is not easy (Rondaâ€ÂPupo et al. 2012, p.162). The market for the generics is potential and huge. The pharmaceutical environment is dynamic. Development and new drugs play a significant role. Pharmaceuticals companies can take to direct to consumers approach to selling their products.

The threat of substitutes: When the industry thrives, the demand for the specific drugs goes high. Pharmaceuticals industry has bright future, the threat of subsidiaries and biotechnology are high for the advancement of technology and researchers. Competitiveness is high and threats too (Peteraf et al. 2013, p.1389). The presence of strong multinational competitors in the market and the government's restrictions on the patent concerning the edible goods that require chemical for manufacture has increased the threat of substitute product in the market (Fjeldstad et al. 2012, p.735)(Refer to appendix 3).

PESTLE

Value chain analysis

Major factors in the value chain analysis are presented in the following figure.

Figure 2: Value Chain analysis

(Source: Bowersox et al. 2012, p.55)

The activities of the business organisations concerning all the above-mentioned aspects determine the factors that might lead to success for the organisation. For example, the operational factors such as quality of the product and the expectations of the market determine if the company would be able to generate preference among the consumers concerning the products of the organisation.  The research and development activities that Biocon India Group undertakes, distinct it from the other organisations that compete to acquire the preferences of consumers in the same market. (For further details, refer to appendix 4). In the following section the manner in which Biocon India Group generates competitive advantage for itself concerning, the above-mentioned factors have been discussed:

Value analysis

The voluminous target molecular reagents and customised molecules of Syngene paved the way for the early development and creation of the skills and infrastructural discovery of molecules (Kalegaonkar et al. 2012, p.65). The creation and initiation of Clingene, resulted in the loss of power and control by Biocon India Group, along with the entrapment of the central organisational culture. In the process of this creation, collaborative attempts were made to take into consideration safe and lower value business services for Clinigene, until it is capable of self-testing of the molecules and running free clinical (Walls et al. 2012, p.913). The distraction and deviation exposed by Clinigene regarding its consideration of the firm, that is, Biocon India Group, acted as a loss for the company, compelling the management to initiate the process of creation and development of the business all over again (Neffke and Henning, 2013, p.300).

Planning and evaluation

In order to achieve an overall growth, Biocon India Group certainly needs to expand its market share.  In order to alleviate this situation, a simple yet expensive approach could be the initiation of a prospective Clinical Research Organisation (CRO). This will result in the escalation of the expertise and maintenance of stability within the relationship between the company its clients within the organisational culture (Easterbrook et al. 2011, p.869). The assistance and assurance from the Quality Assurance Company, regarding the quality of the Biocon products, encouraged and motivated the company to start their business a fresh, in spite of the deviation from Clingene. This is owing to the sharing of corporate values and trust among the employees and the other staffs (Kapferer, 2012, p.89). 

The high potential growth of the CRO might prove to be beneficial for Biocon, providing the scope and opportunity to Clingene regarding the careful and conscious reading and positioning within the CRO market.

Ansoff Matrix

Ansoff matrix provides a business attempts for tracking the dependency of new and existing products in the market. In case of the existing market, the organisation needs to analyse the market penetration and product development. In new market, the organisation needs to analyse, market development and diversification (Darroch, 2014, p.35).

Table 3: Application of Ansoff Matrix

(Source: Created by author)

Deliberate Strategy: Plan for market expansion

The management of Biocon India Groups can organise for a meeting to develop and create appropriate strategies for the expansion of the market share through the product and services (Refer to appendix 5).

Table 3: SMART Analysis

(Source: Created by Author)

Emergent strategy:  Hiring of qualified workers for international market expansion

In order to hire qualified workers for the market expansion, the management authorities of Biocon can organise meetings regarding the recruitment of qualified workers (Ward and Peppard, 2016, p.65). Consequently, an effective organisational culture will be established where there is an existence of coordination, cooperation, stability and trust among the employees and the managerial staffs.

Table 4: SMART Analysis

(Source: Created by Author)

Some strategies will emerge upon the implementation of the proposed strategies by the employees. In the process of this implementation, the creativity and productivity of the employees will be enhanced. They will gain much experience from the exposure of their skills, expertise and knowledge on a regular basis. As a consideration of the internal and the external factors, strategies for the expansion of Biocon market will enhance the reflex capability of the employees. This will provide the scope for the undertaking of actions according to the emergence of the business situations (Zhou and Li, 2012, p.1090).

Evaluation of the strategic options presented above has enabled the researcher to identify that the internationalisation of the company might be essential yet it needs long-term stratification. For the immediate improvement of the organisational position in the market, the organisation needs to acquire employees that are more skilled and improve its product and service quality (Zhu and Iansiti, 2012, p.88).

Conclusion

After concluding the assignment, it can be clearly stated that the management of Biocon should take into consideration the Indian market. With the help of the SWOT analysis and the Pest analysis, the potential disadvantages and advantages of operating in the Indian market can be analysed. To judge the competitive advantage of the market, PORTER's theory has been used. There is huge competition in the international and national market. The recommendation is provided so that the company can improve their present condition and achieve their targets with huge success.

References

Books

Berman, B.R. and Evans, J.R., (2013). Retail management: a strategic approach. United Kingdom:Pearson Higher Ed

Darroch, J., (2014). Ansoff’s Growth Matrix—In Detail. In Why Marketing to Women Doesn’t Work. UK: Palgrave Macmillan

Hill, C.W. and Jones, G.R., (2013). Strategic management theory. South-Western/Cengage Learning

Kapferer, J.N., (2012). The new strategic brand management: Advanced insights and strategic thinking. Kogan page publishers

Ward, J. and Peppard, J., (2016). The Strategic Management of Information Systems: Building a Digital Strategy. John Wiley & Sons

Bowersox, D.J., Closs, D.J. and Cooper, M.B., 2002. Supply chain logistics management (Vol. 2). New York, NY: McGraw-Hill.

Journals

Casadesus-Masanell, R. and Zhu, F., (2013). Business model innovation and competitive imitation: The case of sponsorâ€Âbased business models.Strategic management journal, 34(4), pp.464-482

Rondaâ€ÂPupo, G.A. and Guerrasâ€ÂMartin, L.Á., (2012). Dynamics of the evolution of the strategy concept 1962–2008: a coâ€Âword analysis. Strategic Management Journal, 33(2), pp.162-188.

Cheng, B., Ioannou, I. and Serafeim, G., (2014). Corporate social responsibility and access to finance. Strategic Management Journal, 35(1), pp.1-23

Dezsö, C.L. and Ross, D.G., (2012). Does female representation in top management improve firm performance? A panel data investigation.Strategic Management Journal, 33(9), pp.1072-1089

Easterbrook, P.J., Gopalan, R., Berlin, J.A. and Matthews, D.R., 1991. Publication bias in clinical research. The Lancet, 337(8746), pp.867-872

Fjeldstad, D., Snow, C.C., Miles, R.E. and Lettl, C., (2012). The architecture of collaboration. Strategic Management Journal, 33(6), pp.734-750

Grace, C., (2014). The effect of changing intellectual property on pharmaceutical industry prospects in India and China. DFID Health Systems Resource Centre, pp.1-68

Grundy, T., (2011). Rethinking and reinventing Michael Porter's five forces model. Strategic Change, 15(5), pp.213-229

Gulati, R., Puranam, P. and Tushman, M., (2012). Metaâ€Âorganization design: Rethinking design in interorganizational and community contexts. Strategic Management Journal, 33(6), pp.571-586

Henisz, W.J., Dorobantu, S. and Nartey, L.J., (2014). Spinning gold: The financial returns to stakeholder engagement. Strategic Management Journal,35(12), pp.1727-1748

Jayakumar, B.P., (2010). Indian Pharma on sterod-like growth. Business Standard. 1(2), pp.12-15

Kor, Y.Y. and Mesko, A., (2013). Dynamic managerial capabilities: Configuration and orchestration of top executives' capabilities and the firm's dominant logic. Strategic Management Journal, 34(2), pp.233-244

Lavie, D., Haunschild, P.R. and Khanna, P., (2012). Organizational differences, relational mechanisms, and alliance performance. Strategic Management Journal, 33(13), pp.1453-1479

Neffke, F. and Henning, M., (2013). Skill relatedness and firm diversification.Strategic Management Journal, 34(3), pp.297-316

Peteraf, M., Di Stefano, G. and Verona, G., (2013). The elephant in the room of dynamic capabilities: Bringing two diverging conversations together.Strategic Management Journal, 34(12), pp.1389-1410

Walls, J.L., Berrone, P. and Phan, P.H., (2012). Corporate governance and environmental performance: is there really a link?. Strategic Management Journal, 33(8), pp.885-913

Zhou, K.Z. and Li, C.B., (2012). How knowledge affects radical innovation: Knowledge base, market knowledge acquisition, and internal knowledge sharing. Strategic Management Journal, 33(9), pp.1090-1102

Zhu, F. and Iansiti, M., (2012). Entry into platformâ€Âbased markets. Strategic Management Journal, 33(1), pp.88-106

Chen, Y.M., Liu, H.H. and Wu, H.Y.,(2016). Reputation for toughness and anti-dumping rebuttals: Competitive rivalry, perceived benefits, and stage of the product life cycle. Journal of Business Research, 69(6), pp.2145-2150.

Websites

Bioconfoundation.org. (2016). Biocon Foundation - Promote social and economic inclusion by ensuring that marginalized communities have equal access to healthcare services and educational opportunities. Available at: https://www.bioconfoundation.org/ [Accessed on: 10 Jul. 2016]