CAPSTONE PROJECT REPORT BUILDING BUSINESS STRATEGY FOR ALTIPYRETIC AND ANALGESIC INJECTIONS OF VINH PHUC PHARMACY JOINT STOCK COMPANY IN THE PERIOD 2010 – 2015 Nguyen Nhu Quynh Dong Thi Phuong Dao Anh Thai Bach Thu Phuong Class: MBA01.X02 HANOI, 2010 2 GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM CAPSTONE PROJECT REPORT BUILDING BUSINESS STRATEGY FOR ALTIPYRETIC AND ANALGESIC INJECTIONS OF VINH PHUC PHARMACY JOINT STOCK COMPANY IN THE PERIOD 2010 – 2015 Group No: 10 Student’s name: Nguyen Nhu Quynh Dong Thi Phuong Dao Anh Thai Bach Thu Phuong HANOI, 2010 1 COMMITMENT We would like to commit that this report is the group’s research result. Data and results stated in the report are honest with a clear origin. We would like to declare that analyses in the subject belong to the whole group based on reference materials and the trained theories. Analyses of this subject are not the speech of any individual in the group as a cadre working for their organization.
Hanoi, October 2010 AUTHOR GROUP 1 ACKNOWLEDGEMENTS We would like to express our sincere gratitude to Representative of Griggs University in Vietnam for having guided us during our research. We would like to express our special gratitude to Direction Board and cadres, employees of the Vinh Phuc Pharmacy Joint Stock Company for having provided us with whole-hearted support and assistance during data and figure collection as well as organizing working sessions to help us have a practical view in building strategy for antipyretic and analgesic injections of the company. Besides, we would like to have the honor of expressing our gratitude to professors, doctors for having provided us with skills and knowledge on business administration during the whole course. We especially would like to thank A/Professor Ngo Kim Thanh for her valuable comments.
These pieces of knowledge are the bases for us to make the capstone project report and apply to the practical work. AUTHOR GROUP 2 TABLE OF CONTENTS CONTENTS Page COMMITMENT 1 ACKNOWLEDGEMENT 2 TABLE OF CONTENTS 3 LIST OF TABLES, DIAGRAMS 9 FOREWORD 10 CONTENT PART CHAPTER 1: BASIC THEORIES 12 1. Definition, position and role of business strategy 12 12 1.1 Definition of business strategy 1.2 Definition, position, role of business strategy 13 1. Competition in business and types of competitive strategy 14 1.1 Overview of competition 14 1.2 Types of competitive strategy 14 1.3 Strategy for differentiating products 15 1.1 Concept of products 15 15 1.2 Concepts of products strategy 1.3 Strategy for differentiating products 16 1.
Recognizing factors that affect competing strategy of an enterprise 16 1. Sector environment model with five competition pressures by 18 M.3 Enterprise’s internal environment analysis 19 1.4 SWOT analysis to define internal and external environment 19 1. Business strategy model 20 CHAPTER 2: CURRENT BUSINESS SITUATION OF ANTIPYRETIC AND 24 3 ANALGESIC INJECTIONS OF VINH PHUC PHARMACY JOINT STOCK COMPANY AND ITS COMPETITIVENESS 24 2.1 Overview of antipyretic and analgesic injections and its market 24 2.1 Introduction of antipyretic and analgesic injections 24 2.1 Concept of antipyretic and analgesic injections 24 2.3 Manufacture and distribution features of antipyretic and 25 analgesic, anti-inflammation injections 25 2.2 Antipyretic and analgesic injection’s market 26 2.3 Antipyretic and analgesic injection’s potential market 26 2.2 Current business situation of antipyretic and analgesic injection of Vinh Phuc Pharmacy Joint Stock Company (VINPHACO) 2.1 Overview of VINPHACO 26 2.2 Function and mission 29 2. Business situation of the company 29 2.
Business situation antipyretic and analgesic injection of 32 the company 2.3 Study on business environment of enterprises 34 2.1 Political, legal elements 34 2.3 Socio-cultural elements 35 2.2 Environment of pharmaceutical sector (operational environment) 39 2.4 Customer’s demand and market segment in Vietnam 39 2.3 Forecasts on market demand by 2015 41 2.5 Analysis on internal power and competition abilities of the company 41 2.1 Managing and directing abilities 41 2.2 Effectiveness of management 41 2.2 Human resources potential 42 2.1 Analysis on organizing structure 42 2.2 Ability of personnel staff 43 2.2 Effectiveness of capital spending 44 2.2 Effectiveness of usage 46 2.5 Research and development (R& D) 5 46 2.1 Choosing target market 48 2.2 Ability of market segment 49 2.5 Distribution and sale policies 50 2.6 Policy of sale promotion 51 2.7 Trade mark creation and development 52 2.6 Result summary from analysis on business environment and internal 52 ability of the company according to SWOT model in order to identify the strengths, weaknesses as well as opportunities and challenges to the enterprise CHAPTER 3: SELECTING A STRATEGY AND METHODS TO IMPLEMENT 59 THE STRATEGY FOR ANITIPYRETIC AND ANALGESIC INJECTION 59 3.1 Continue developing antipyretic and analgesic injection 62 holding particular advantage of technology and being the specific medicine 3.2 Maintaining and developing target markets in 64 important area and potential customers 6 3.3 Ever-increasing product differentiation on quality and 65 customer service 65 3.1 Invest in manufacturing facility 3.2 Research and Develop products 66 67 3.3 Promote international cooperation activities 69 3.1 Human resource recruitment and treatment 72 3.2 Training and re-training 74 3.1 Operate distribution channels 77 3.8 Broadcast, extend VINPHACO trademark, products trade mark 80 3.1 With Government and relating ministries 81 3.2 Ministry of Health CONCLUSION 81 LIST OF MATERIALS 83 1. Website 84 LIST OF TABLES, FIGURES Name of tables, figures Page TABLES 8 2.1 Company’s market share 30 2.2 VINPHACO’s financial report from 2007-2009 31 2.3 Summary of products and services carrying VINAPHACO 33 trademark 2.4 Strengths and Weaknesses of Vidipha and Bidipha 37 2.5 VINPHACO’s analysis on competition capacity 37 2.6 Market portion of antipiretic and analgesic injections 40 2.8 The degree of trademark creation and development of VINPHACO 51 2.9 Matrix diagram of SWOT for VINPHACO 53 2.10 Internal factors evaluation of VINPHACO (IFE) 55 2.11 External factors evaluation of VINPHACO (EFE) 57 FUGURES 1.1 Three-level factors affect on enterprises operating 17 1.2 Business strategy model 21 2.1 Profitability of injection 25 2.5 Growth chart authorized by Pharmacy management office 30 2.6 Revenue chart from 2005 - 2009 31 2.7 Model of five competitive pressures according to M.8 Synthesis table of internal and external factors of 58 VINPHACO 3.1 Strategy itinerary (GANTT graph) 80 9 FOREWORD Medication market in Vietnam is seen an active and potential market and attractive to investors. According to a report from the Ministry of Health, in the past 10 years, the market has kept on developing, around 20% per year. This is higher than the average growth of ASEAN market (about 13%).
Besides, the amount of money spent on medication also goes up, from 7.5 USD per person per year (2005) to 19.77 USD per person per year (2009). It is estimated that this would reach 38.8 USD per person per year in 2014. That means Vietnam would be one of the most attractive markets in the area and grow very fast in near future. “Although it is seen an appealing field, pharmacy investment isn’t focused and corresponding to potentiality.
Currently, the local-made medicine meets only 50% of total need” (recognised by the health sector in the conference on orienting investment in pharmacy to 2020, held on July 26th in Hanoi). It is because there are so weaknesses obtaining in enterprises. They have not paid enough attention to demand of the market and had effective business strategy. They have no creativity, i.e they manufacture some types of medicine repeatedly such as some common pharmacy, while almost of specific remedies or special medicines are still imported with high price.
Pharmacy in Vietnam has advantage in diverse drug resources with huge reserves but it is in shortage of equipments, technology and planning, thus, exploiting the drug is limited. So, 90% of pharmaceutical chemistry is imported. This is the reason that medicine’s price in Vietnam is too high for the local people to afford. At the present, the pharmacy sector is planning “Specific scheme for developing Pharmacy Industry in Vietnam in the period to 2015 and vision to 2020” in order to plan and distribute medicine factories inside the country to encourage cheap medicine.
On the other hand, medicine should be supplied enough to balance "supply - demand" in pharmacy market by increasing foreign enterprises trading in medicine or 10 manufacturing medicine in Vietnam and improving the quality and quantity of local- made medicine… In this context of fierce competition among pharmacy enterprises, the mission of studying business strategy for all enterprises in general and Vinh Phuc Pharmacy joint stock Company in particular is vital. In the near future, when people are aware of economic and effective local medicine, it will gain an advantage over foreign one. Consumers can buy cheap local medicine whose uses and ingredients are similar to foreign one’s. In order to achieve the goal, enterprises need to campaign actively and determine their core competence, more importantly, work out a judicious and successful business strategy.
Being aware of this, we, group 10, supported by Vinh Phuc Pharmacy joint stock Company choose to study “Building business strategy for antipyretic and analgesic injections of Vinh Phuc Pharmacy joint stock Company” as the capstone. The aim is to help the company to analyze factors affecting its business situation, find out strengths and weaknesses and choose a strategy to invest a product that can compete in the market, antipyretic and analgesic injections. This is the target product of the company so the capstone focuses only on issues relating to the company’s activities and these objects. While conducting the research, we collected and studied data on macro and industry environments and current competence of the company, then applied theory about strategic management to analyse and define strengths and weaknesses, from that, finally, we decided a judicious and decisive business strategy for the company.
Because of the limit of time and poor access to information, our report may contain some mistakes. We would be grateful to teachers and friends who give comments on this project in order to make it valuable to the company. We present the project with the following order: Chapter 1: Basic theories Chapter 2: Current business situation of antipyretic and analgesic injections of Vinh Phuc Pharmacy joint stock company and its competitiveness 11 Chapter 3: Selecting a strategy and methods to implement the strategy for antipyretic and analgesic injection CHAPTER 1: BASIC THEORIES 1.1 Definition, position and role of business strategy 1.1 Definition of business strategy In the context of economic globalization, many companies did define their position and brand name. The factor that leads them to the success is business strategy and effective competitiveness.
No companies, successful or not, can manufacture all products that meet all demand of the buyers. Thus, to survive and develop sustainably as well as compete fiercely against business rivals, the company should determine the strategic products and markets and special business plans. This is a decisive factor to any business in any field. There are many ways to define strategy but generally “Strategy is ideas, plans to support an enterprise to compete against its rivals".
Chandler described strategy is “defining long-term and basic targets of an enterprise and applying activities as well as allocating needed resources to reach the targets”. Johnson and Scholes seemed to define strategy more general, "strategy is orientation and scale of an enterprise in long term to gain competitive advantage through defining resources in changing environment, to meet demand of the market and expectations of interested parties” Definitions of strategy are different depending on different levels: Strategy at the company level is toward its general targets and scale. Strategy at the unit level is the way a company compete successfully in certain markets. It is related to strategic decision to choose a product, satisfy customers’ need, gain the competitive advantage over rival companies and create new opportunities.
Functional strategy is the one supporting business strategy and effective operation strategy. These reflect how each unit in the company is organised to implement and strategic orientation at the company and unit levels. 12 There are also different concepts of business strategy.