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Strategic Management: Home Pharmaceuticals Case Study Add in library

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Question:

Describe about the Strategic Management: Home Pharmaceuticals Case Study?

 

 

Answer:

Home Pharmaceuticals Case Study

1.0 Gap Analysis I

1.1 Capability Gap Analysis Table

Functional Area

 

 

 

1

Capability

 

 

 

2

Home Pharmaceuticals

 

(Description of Home’s capability)

3

Average the Capabilities of Closest two (2) Competitors

(Describe capabilities)

4

 

 

 

Manufacturing

 

 

 

 

 

 

 

Technological superiority

 

 

The company had much stronger growth in its new innovations with increment on capital injections of US$ 30 million in OTC and US$ 40 million in 2014/2015.

 

 

 

 

 

Kotra Pharmaceuticals is Malaysia’s most trusted brands in sales of in vitamin’s and health supplement category.

 Hovid Berhad is Malaysia’s leading pharmaceuticals manufacturers of high quality and innovative medicinal preparations and health supplements in more than 50 countries globally.

 

 

 

 

 

 

Research and Development

 

 

 

 

 

Research intensive approach

In past few years Home pharmaceuticals has developed itself through its progress in research and development into new innovative products such as bio-medical and health food supplements (HSF). It has also had innovations in hearing devices (HD).

 

 

 

 

Kotra Pharma supports the state-of-the –art research facilities with their main focus on healthcare solutions in therapeutic areas.

 

CCM Duopharma since its establishment has developed and manufactured tablets, injections, haemodialysis and irrigation solutions. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and

distribution

 

 

 

 

 

 

 

 

 

 

Strong distribution system

 

Pharmaniaga Berhad is working through its subsidiaries; it manufactures markets and distributes pharmaceutical drugs and other medical products in government hospitals and private institutions.

 

Duopharma has exclusive distributorship deal signed for international products and joint ventures for bio-similar products.

 

 

 

 

 

 

 

 

 

Human Resource Management

 

 

 

 

 

 

Loyal employees

 The employees are committed, trained and highly skilled employees.  Sales staff of Home pharmaceuticals is actively engaged in selling the products of the company to its suppliers like doctors, retailers etc.

 

 

Pharmaniaga Berhad is working through many subsidiaries so it has a diversity cultures prevailing in the company and have employees from various cultural backgrounds.

 

Hovid Berhad a leading pharmaceutical’s company of Malaysia. It is operating in 50 countries globally with highly skilled staff for producing and distributing its 400 quality and innovative medicinal preparations and health supplements.

 

 

 

 

 

 

 

Advertising

 

 

For promoting it’s innovative and quality products.

The   company is spending much for advertising its products in the home market and for that purpose that have even made their products  more innovative  and highly advanced through continuous technological development.

Pharmaniaga Berhad is working for supplying the products to government hospitals and even private clinics on global front so it is essential for the company to spend a considerable amount of its revenue generated in the advertising schemes in all other countries in which they are operating.   

 

1.2 Rate each capability by resource:  


Tangible resources

e.g. Physical

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Over the counter drugs (OTC)

 

 

 

 

 

 

 

 

 

 

 

 

Employees.

Food health supplements.

Bio-medical products.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intangible resources

e.g. Brands

 

 

 

 

 

 

 

 

 

 

 

 

 √

 

Licenses

 

 

 

 

 

 

 

 

 

 

 

Market share

Intellectual property rights.

Advertising.

Sales and promotion

Marketing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Processes & systems

e.g. Decision tools

 

 

 

 

 

 

 

 

 

 

 

 

Efficient work culture

 

 

 

 

 

 

 

 

 √

 

 

 

 

Strong distribution channel

Efficient workforce

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Organisation culture

e.g. Attitudes/work ethic

Values

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Innovative culture

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 √

Workers with high commitment level and loyalty.

Global connectivity.

 

 

 

 

 

 

 

 

 

 

 

 

 

 √

 

 

 

1.3 Capability Narrative:

Capability 1. Manufacturing: Home Pharmaceuticals is doing well in its manufacturing of It’s products of varied quality such as OTC, Food health supplement etc. The other competitors are also working well on their own fronts as they are big players of the market and have strong finance background to support the various functioning of their companies.  

Capability 2. Research and development: Home Pharmaceuticals is working heavily in the development of the products to offer its customers nationally and even to expand its market share by diversifying its business by selling its innovative and technologically advanced products globally. The competitors of Home Pharmaceuticals are also spending on research and development as they also want to expand their market share as they even now are operating in many countries (Zutshi, 2005). So to cater the needs of different customers’ proper research has to be done to cover large market share and have competitive advantage over the other competitors.

Capability 3. Sales and distribution:  Home pharmaceuticals have a strong sales and distribution network but it is working within national boundaries. On the other hand the competitors are working globally so have a better state of working with competent sales and distribution network (Wheelen, 2011). For being competitive and even to attain huge share in the market the company has to take proactive steps to keep its working strong and even have to adopt newer means of being in touch with the customers like the other competitors are doing by providing online services for being in constant touch with the customers.

Capability 4. Human Resource management: Home Pharmaceuticals is having a loyal and committed staff that are willing to work but the general management staff of the company is not well versed with the global culture and lack experience on that front. Home pharmaceuticals had to develop its competency level so as to work globally (Hendry, 2004). The competitors are already working in various countries and are having competitive staff to work on global level. This is a threat situation for Home Pharmaceuticals and it should be taken care of to remain in competition in the market. 

Capability 5. Advertising:  Home pharmaceuticals are spending considerable amount on advertising for various products within the country and has strong prospects for the future.  All the competitors are also spending heavily on advertising as they are working in many countries and secondly government is also providing aids, support and relaxations from the government.

 

2.0 Gap Analysis II

2.1 Capability matching:

Key Success Factors

 

(from case study 1)

 

 

 

1

Capabilities

 

(Take the capabilities from S1.3 above. That is, your choice of 5-10 capabilities). Match each capability with each KSF in Column 1)

 

 

2

 

1.Research & Development

High rates of Research and Development and strong rates of commercialization are helping Home Pharmaceuticals in conducting its activities of innovative products production and offering it to the customers.  Even the subsidies provided by the government are of great help for the company as by that they are gaining much insight in the functioning of the pharmaceutical industry with less financial requirements (Mahoney, 1992).

 

2.  Manufacturing

 

Home pharmaceutical is working with high technological advanced techniques for providing its customers with quality products and even with the products which will form the need of tomorrow such as food-health supplements (Jennings, 2000).  Government is supporting those companies that are providing their considerable efforts on innovative biotechnology.

3.Adverising

 

Home pharmaceuticals is spending large amount on the advertising since its establishment but the as they are attaining market share the cost of advertising by the company is coming to a stability level. This shows that customers are well aware about the products offered by the company.

 

4. Human resource department

 

The employees of Home Pharmaceuticals are loyal, highly skilled and work in a committed manner for producing innovative products.  The capacity to work with industry stakeholders, capacity to develop a strong innovation culture and strong regulatory environment.

 

5. Sales and distribution.

 Government is providing funds for global partnerships for research. The international market of drugs is very huge and is constantly growing with majority of its sales made by top 10 global companies.

 

 

 

2.2 Capability Rating/Ranking

 

                              KSFs

 

Capabilities

 

(From Table 2.1 above)

 

 

1

 

 

 

 

 

2

 

3

 

4

 

5

 

6

technological

superiority

 

 

 

 

      √

 

 

 

Human resources department

 

 

 

 

 

 

    √

 

 

Advertising

 

 

 

    √

 

 

 

 

 

Research and development

 

 

 

 

 

 

 

    √

Sales and distribution

 

 

    √

 

 

 

 

TOTAL

Add each column to complete the exercise

 

 

2

0

1

1

1


2.3 Ranking Narrative:

Discuss each of the total rankings above. Why was one higher than the other? How did the relationship between KSFs and the capability influence your answer?

The most rated capability was related to advertising and sales and distribution as Home pharmaceuticals is working hard with its innovated technique to expand its business out of Malaysia. The answer is influence by the KSF and capability relationship as they both are working with combined efforts for strengthening the growth of the company. 

 

3.0 Gap Analysis III

3.1 Choose five strategies:

1. Digital marketing strategies: Home pharmaceuticals for increasing its market share and availing the opportunities provided by the government should work to become technologically advanced. It should increase the efficiency and effectiveness of its marketing strategy by using digital and social media and make their marketing efforts more integrated (Youndt, 1996).  By doing so they can reduce the cost of advertising and even costs related to other overheads and become more effective in being constant touch with the customers. By using this strategy even their sales channels will become more effective.
 
2. Sales representative approach strategy: Under this kind of strategy the sales representatives of the company conducts regular visits to the doctors, chemists and hospital with free samples of the products produced in their companies. Pharmaceutical companies all over the world are adopting this technique for increasing the number of their clients and even for promoting their brands (Freeman, 2010). Other promotional approach adopted by companies is providing the clients with expensive foreign trips and meals etc.
 
3. Mobile sales platform strategy: This strategy allows a continuous interaction between the company and the physicians. It is quite an interactive approach conducted through the use of social media platforms through which companies use social media forms for e-detailing. These platforms offer sales integration techniques which results in building strong customer relationships. It even allows the companies to maintain its customer relationship management data which can be very useful in dealing with clients spread worldwide (BurgeSmani, 2004).
 
4. Market assessment and commercial strategy: This strategy will work with an approach of combining the knowledge of pharmaceutical sector with the future market trends to have a proactive approach for dealing with future scenarios in which the clients of the company will be operating in the near future (Rugman, 2005). This approach will help in laying a base of solid foundation for building factors that will result in the success of business in the market.  Leverage is provided by prioritising present assets of the company for maximizing their value and the ways that will fill the gaps between the desired and the actual performances of the company.
 
5. Product and portfolio management through the life cycle: In this strategy the advice and recommendations are provided for the effective management of the assets of the company. The advice is provided on both on single product basis and even for an overall portfolio with the utilization of intense experience of the company on value management in pharmaceutical sector (Atuahene, 1996). This discussion helps the company in the accurate identification of product or overall portfolio assets strategy which will offer the perfect fit and value adding options for various assets of the company in future.

3.2 Prepare Matrixes:

Corporate Level Matrix

 

 

Products/services

 

 

Existing

New

Markets

Existing

Market penetration

Providing its services in the domestic market of Malaysia with its various products.

New products/services

 Health –food supplements, Hearing devices and OTC drugs

New

Market development

More research and development in the production of generic drugs and hearing devices.

Diversification

 

In global markets and even expanding its operations in Australia.

 

Business Level Matrix

 

 

Competitive advantage

 

 

Lower Cost

Differentiation

Competitive

Scope

Broad Target

Cost Leadership

To enter the global market with standardized products at reasonable prices.

Differentiation

Innovative products with high quality standard.

Narrow Target

Cost Focus

For the customers of Malaysia and Australia.

Differentiation Focus

For the valued customers of Malaysia but more concern for Australia as from there it has prospects of entering into business in different countries.


3.3 The 5 questions:

1. Does the organisation plan to grow?

Home Pharmaceuticals is using the approach of innovation and being proactive he laid the foundation stones of innovative culture in the Home Pharmaceuticals with an aim of expanding itself worldwide. The company is progressing through its research and development into new and innovative products that includes bio-medical and health food supplements (HFS). In recent years it has also worked for manufacturing of radically innovative hearing devices (HD). 

2. What product & services does it plan to produce?

The home pharmaceuticals for now are manufacturing products like health food supplements, OTC drugs and are working for the manufacture of Hearing devices. The company has a potential of manufacturing other products also which are allowed in Malaysia such as prescribed medicines, over the counter products, medicines that are being manufactured in the country since many years. Home Pharmaceuticals also manufactures proprietary drugs and generics that are manufactured locally by the company as these are generally imported in the country (Pearce, 2000).

3. What customers does it plan to service?

Home pharmaceuticals with its core products is not targeting any specific segment but due to its varied range of products the such as food-health supplements is for all age people as due to extra health consciousness people are diverting their interest towards food health supplements instead of intake of food in real. The company can easily serve customers of various classes and age groups as the government also is extending its schemes for basic health insurances (Teece, 1997).  Home pharmaceuticals can even expand its operations by taking active part in the research and development activities conducted by Australian pharmaceutical industry.

4. Which generic strategies will it follow?

5. i) Cost leadership strategy: This strategy works with a principle of being a low cost producer with the high quality product in a particular industry.  The basic of firms adopting this strategy is attaining market share by keeping the prices of the product of the company lower than the prices of the competitors (Ansoff, 1990). The other way of using this strategy successfully is selling the products at averages prices in an industry for having higher profits than the competitors in the industry.

ii) Differentiation strategy: This strategy works on the phenomenon of providing the customers with different products with unique attributes that are not being offered by any one especially the competitors in the industry. Due to the unique features of the product the company can charge premium prices with the customers if the customers feel that the product offered is better than the products offered by any other company.  In this way the firms can cover the extra costs incurred by them in the manufacture of the products on the basis of the unique features of the product.

iii)  Focus Strategy: This strategy works with an aim of focussing on a small segment from the large market and within that market segment the companies can attain a situation of cost advantage or differentiation.  This strategy if adopted by the firm leads to higher customer loyalty and higher costs can be charged from the customers due to non-availability of any close substitute in the market (Keller, 2011).  The success achieved through this strategy will lead the firm in making products of broad range with high level development of products in terms of its qualities and prices. 5. What position in the industry will it occupy?

The Home Pharmaceuticals is having a strong position in the domestic market of Malaysia as the company is offering its services to the customers since many years. It has a relatively flat structure of working with a small SBU staff that quickly responds to the attacks of competitors. Home pharmaceutical is holding a different position as it provides major manufacturing facilities in Kuala Lumpur with facilities of manufacturing and product distribution.   

 

References:

ANSOFF, H. I., & MCDONNELL, E. J. (1990). Implanting strategic management (Vol. 2). New York: Prentice Hall.

ATUAHENE‐GIMA, K. (1996). Differential potency of factors affecting innovation performance in manufacturing and services firms in Australia. Journal of Product Innovation Management, 13(1), 35-52.

BurgeSmani, R. A., & Wheelwright, S. C. (2004). Strategic management of technology and innovation. READING1(1).

FREEMAN, R. E. (2010). Strategic management: A stakeholder approach. Cambridge University Press.

HENDRY, K., & KIEL, G. C. (2004). The role of the board in firm strategy: integrating agency and organisational control perspectives. Corporate Governance: An International Review, 12(4), 500-520.

JENNINGS, D. F., ARTZ, K., GILLIN, L. M., & CHRISTODOULOY, C. (2000). Determinants of trust in global strategic alliances: AMRAD and the Australian biomedical industry. Competitiveness Review: An International Business Journal incorporating Journal of Global Competitiveness, 10(1), 25-44.

KELLER, K. L., PARAMESWARAN, M. G., & JACOB, I. (2011). Strategic brand management: Building, measuring, and managing brand equity. Pearson Education India.

MAHONEY, J. T., & PANDIAN, J. R. (1992). The resource‐based view within the conversation of strategic management. Strategic management journal, 13(5), 363-380.

PEARCE, J. A., & ROBINSON, R. B. (2000). Strategic management: Formulation, implementation, and control. Irwin/McGraw-Hill.

RUGMAN, A. M. (2005). The regional multinationals: MNEs and'global'strategic management. Cambridge University Press.

TEECE, D. J., PISANO, G., & SHUEN, A. (1997). Dynamic capabilities and strategic management.

YOUNDT, M. A., SNELL, S. A., DEAN, J. W., & LEPAK, D. P. (1996). Human resource management, manufacturing strategy, and firm performance. Academy of management Journal, 39(4), 836-866.

WHEELEN, T. L., & HUNGER, J. D. (2011). Concepts in strategic management and business policy. Pearson Education India.

ZUTSHI, A., & SOHAL, A. S. (2005). Integrated management system: the experiences of three Australian organisations. Journal of Manufacturing Technology Management, 16(2), 211-232.

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