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Square Consumer Bangladesh Limited
Square Consumer Bangladesh Limited
Definition of Strategy:
Strategy is a method or plan by which long term objectives will be achieved. Long term
objectives are the specific result that an organization seeks to achieve in pursuing its
basic mission. Business strategies may involve geographic expansion, diversification,
acquisition, product development, market penetration, retrenchment, divestiture,
liquidation and joint ventures.
Strategies are potential actions that require top management decision and large amount
of farms resources. Additionally strategies affect an organizations long term prosperity,
typically for at least five years, and thus are future oriented. Strategies have
multifunctional and multidivisional consequences and required consideration of both
the external and internal factors facing the firm.
Today Square has one of the largest sales force and distribution networks of its own.
This large distribution network operated 18 different locations across the country.
Square is no longer limited in domestic arena. From 1987, it entered to global
marketplace meaning they started to export their antibiotics and other pharmaceutical
products.
Based on the latest annual report some key highlights of Square Pharmaceutical Ltd are
Board of directors:
Mr. Samuel S Chowdhury (Chairman)
Corporate Achievements:
Year of Establishment (Initially as a Partnership)
: 1958
: 1964
: 1975
Pharmaceuticals of Belgium
(A subsidiary of Johnson & Johnson International
Ltd.)
Technical Collaboration Agreement with F.Hoffman-La : 1984
Roche & Co. Ltd.
Converted into Public Limited Company
: 1991
: 1994
: 1995
: 1996
: 1998
Business Lines
: Manufacturing and
Marketing of
Pharmaceutical Finished
Products, Basic Chemicals,
AgroVet Products and
Pesticide Products, small
volume parental Opthalmic
products and insulin
Authorized Capital
products.
: TK 10,000 Million
Paid-up Capital
Vision:
We view business as a means to the material and social well being of the investors,
employees and society as a large, leading to accretion of wealth through financial and
moral gains as a part of process of the human civilization.
Mission:
Our mission is to produce and provide quality & innovative healthcare relief for people,
maintain stringently ethical standard in business operation also ensuring benefit to the
shareholders, stakeholders and society at a large.
Objectives:
Our objectives is to conduct transparent business operation based on market
mechanism within the legal and social frame work with aims to attain the mission
reflected by our vision.
Corporate Focus:
Our vision, our mission and our objectives are to emphasize on the quality of product,
process and services leading to growth of the company imbibed with good government
practices.
Organization Chart:
Square Pharma has an organogram with modern features ensuring clear lines of
delegation of authority and reporting for accountability for effective decision making.
PEST Analysis: PEST analysis stands for "Political, Economic, Social, and
Technological analysis" and describes a framework of macro-environmental factors
used in the environmental scanning component of strategic management.
Political
1.Recent political turmoil is affecting
operation and distribution of all industries
including pharmaceutical industry.
2. With the change of government power,
export- import policies changes.
3. More than 27% tax is charged on
pharmaceutical products.
4. For pharmaceutical industry, government
do not allocate proper budget through fiscal
policy.
Social
1.Population in Bangladesh is continuously
increasing which boost this industry.
2. In urban area, people are not conscious
and sufficient enough to use pharmaceutical
products.
Economical
1.Currency fluctuation has significant impact on
pharmaceutical industry.
2. Cheap labor cost lead to a increase in profit
margin for this industry.
3. Rate of inflation in Bangladesh is not that
much of high.
4. Pharmaceutical industry play a very vital role
in Bangladeshs GDP growth.
Technological
1.Square is trying to upgrade and adopt new
technology in production, quality control,
distribution and administration of its products.
2. Pharmaceutical is a high-tech industry.
Legal
1.According to UN, business should eliminate
discrimination in terms of employment and
occupation.
Strengths
1.In 2013, Squares growth rate is
16.43% against market growth rate of
8.12%.
Weaknesses
1.Square has made delay in introducing
some injections that Incepta has introduced
earlier and now those are popular.
Threats
1. Recent political turmoil is affecting
operation and distribution of all industries
including pharmaceutical industry.
2. With the change of government power,
export- import policies changes.
3. More than 27% tax is charged on
pharmaceutical products.
4. Rapid currency fluctuation has significant
impact on pharmaceutical industry.
5. There is a huge competition from MNCs.
6. Recent good performance of Incepta and
Beximco pharmaceutical is posing a threat
to Square Pharmaceutical.
For industry analysis Porters Five forces play a vital role. Because through this Five
forces analysis organization can understand the competitiveness as well as the
attractiveness of the industry. Five forces analysis looks at five key areas namely the
threat of new entrants, the power of buyers, the power of suppliers, the threat of
substitutes and competitive rivalry.
Power of Suppliers
1.
2.
3.
4.
5.
1.
2.
3.
4.
Industry Competition
Barriers to entry
Very low barriers to entry
Government Policies supportive
for entry
price regulation exists
Economies of scale exist
1.
2.
3.
4.
Power of Buyers
End consumers do not have bargaining
power.
Brand identity exists but is in the hands of
influencer (Doctors)
Price Sensitivity is less
Highly fragmented market,
SWAN Analysis
Strengths:
1.
2.
Threats of Substitutes
No substitutes for the medicines
Biotechnology is a treat to synthetic
pharma product
1.
2.
3.
Degree of Rivalry
Industry growth is high.
Number of Intermediate is low.
Brand identity is quite strong
1.In 2013, Squares growth rate is 16.43% against market growth rate of 8.12%.
2. Square has highly efficient sales force and large own distribution channel.
3. Square has good brand image to its consumers.
4. For last 29 years, Square has maintained its number one position in market.
5. Square maintains high quality standards for its products.
6. Both their current and non- current liability is decreasing and shareholders equity is
increasing.
Weaknesses:
1.Square has made delay in introducing some injections that Incepta has introduced
earlier and now those are popular.
2. Square do not spend adequate money for R&D sector compared to the nature of
industry.
3. Selling & distribution costs are increasing.
4. Compared to the MNCs, Square has lack of resources.
Actions:
1.Square should try to control over its non manufacturing costs specially selling and
distribution costs.
2. With the amount of retained earnings, Square should invest on R & D sectors.
Next Step:
Square should look forward to innovation.
TWOS Matrix
Internal
CPM
Score
Strengths:
1.In 2013, Squares growth rate is
16.43% against market growth rate of
8.12%.
2. Square has highly efficient sales force
and large own distribution channel.
3. Square has good brand image to its
consumers.
4. For last 29 years, Square has
maintained its number one position in
market.
5. Square maintains high quality
standards for its products.
6. Both their current and non- current
liability is decreasing and shareholders
equity is increasing.
Weaknesses:
1.Square has made delay in
introducing some injections that
Incepta has introduced earlier and
now those are popular.
2. Square do not spend adequate
money for R&D sector compared to
the nature of industry.
3. Selling & distribution costs are
increasing.
4. Compared to the MNCs, Square
has lack of resources.
Opportunities
1.Square has the opportunity to export
its products to giant India and USA
market.
2. Large population in Bangladesh
creates an opportunity to Square to
serve more in domestic market.
3. People now have more affordability
as their income is increasing.
4. Square should emphasize on
innovation more and more.
5. Although Square has strong
distribution channel, this need to be
improved more.
Threats
1. .Recent political turmoil is
affecting operation and distribution
of all industries including
pharmaceutical industry.
2. With the change of government
power, export- import policies
changes.
3. More than 27% tax is charged on
pharmaceutical products.
4. Rapid currency fluctuation has
significant impact on pharmaceutical
industry.
5. There is a huge competition from
MNCs.
6. Recent good performance of
Incepta and Beximco pharmaceutical
is posing a threat to Square
Pharmaceutical.
External
3.55
2.95
EFE Score
Value Chain of a Pharmacetucal Company is a bit different than other company. There
Research is much more important. Researchers research on the disease and then
formulate the medicine. Later on they go for the manufacturing and Marketing and the
product line extension of that medicine.
There companies had to invest more in the research division. Because, only through
research they can bring the new product as well as the solution of a diseases. All the
activities of the research come from the diseases. Researchers find out how to prevent
the diseases and there they find out what to produce as well as what will be the
ingredients of the production and later on they go for the marketing and other works,
although the pharmaceutical companies spend less money for marketing as it is
prohibited to go through media like TV, billboard, news paper etc.
ViSA MODEL
Vi
Vision
Strategy
Action Plan
SMARTER MODEL
Specific
Targets and goals should be specific. Square Pharma set their target
Measurable
Achievable
Realistic
Time
Encompassi
ng
Reviewed
8.12% whereas Squares growth rate is 16.43%. It indicates a positive outlook as GDP
growth rate of fiscal year 2013-14 was 6.25%. From all this information we have found
that Square Pharma fall into the Star category.
Square Pharma
PURE OBJECTIVE
P
U
Positive
Square
Encourage
the
development
and
diffusion
of
Understood
Recorded
Ethical
GREAT Model
G
Goals
Square strive for top quality health care products at the least
cost reaching the lowest rungs of the economic class of people
in the country.
Roles/ Results
Square set all the strategies according to achieve their goals like
focusing on R&D, provide specific role to specific employee.
Expectations /
Performance
Accountabilities /
Abilities
Square Pharma always set the goal in such a way which is able
to achieve by the employee.
Timing
Market Analysis
Like other sectors, Pharmaceutical Industry also becoming an important Industry for
Bangladesh economy. Although there was a time when this industry was much
neglected, but now it plays a vital role in GDP growth in Bangladesh. Now there are
about 250 pharmaceuticals firms in Bangladesh. Among them some companies are
small sizes and traditional qualities. But a few companies dominate the whole medicine
market like Square, Beximco, Incepta etc. Compare to others, these companies are quite
big and huge number of product which is enable to meet the local demand as well as
some medicine is being exported.
Now, the leading Pharmaceutical Companies are expanding their business with the aim
to expand export market. Recently few new industries have been established with hi
tech equipments and professionals which will enhance the strength of this sector. There
are several sectors on which Bangladesh can be proud of and undoubtedly the
pharmaceutical sector is one of these sectors, rather it is the sector, which is the secondlargest contributor to the government exchequer. There are about 231 companies in this
sector and the approximate total market size is about Taka 76,500 million per year of
which about 94% of the total requirement of medicines is created by the local companies
and the rest 6% is imported. The imported drugs mainly comprise of the cancer drugs,
vaccines for viral diseases, hormones etc. Of the total pharmaceutical market of
Bangladesh, the local companies are enjoying a market share reaching around 75%,
while the MNCs are having a market share of 25%.
.40
.15
.60
.05
.15
.10
.30
.15
.45
.10
.10
.20
.80
.05
.15
THREATS
Total
Rating
1.00
2.95
Critical
Success Factor
Weigh
t
Square
Pharmaceutica
l
Rating Score
Beximco
Pharmaceutical
Rating
Score
Incepta
Pharmaceutical
Rating
Score
Advertising
.05
.15
.10
.10
Quality of service
.15
.60
.45
.45
Price
competitiveness
.15
.30
.45
.60
Management
.10
.40
.30
.30
Financial
position
.20
.80
.60
.60
Global expansion
.10
.30
.30
.40
Customer loyalty
.15
.60
.45
.45
Market share
.10
.40
.30
.30
Total
1.00
3.55
2.95
1=Major weakness
3.20
Strengths
1 In 2013, Squares growth rate is 16.43%
against market growth rate of 8.12%.
2. Square has highly efficient sales force
and large own distribution channel.
3. Square has good brand image to its
consumers.
4. Square maintains high quality standards
for its products.
Weaknesses
1.Square has made delay in introducing
some injections that Incepta has
introduced earlier and now those are
popular.
2. Square do not spend adequate money for
R&D sector compared to the nature of
industry.
3. Selling & distribution costs are
increasing.
4. Compared to the MNCs, Square has lack
of resources.
Sum weights
Opportunities
1. Square has the opportunity to export its
products to giant India and USA market.
2. Large population in Bangladesh creates
an opportunity to Square to serve more in
domestic market.
3. People now have more affordability as
their income is increasing.
4. Square should emphasize on innovation
more and more.
Threats
1..Recent political turmoil is affecting
operation and distribution of all industries
including pharmaceutical industry.
2. More than 27% tax is charged on
pharmaceutical products.
3. There is a huge competition from MNCs.
4. Recent good performance of Incepta and
Beximco pharmaceutical is posing a threat
to Square Pharmaceutical.
Sum Weight
Sum Total Attractiveness Score
Alternative-1
Investment in R&D
Weight
Attractivene
ss score
.15
Alternative-2
Investment in promotional activities
Weight
Attractivene
ss score
Total
Attractivene
ss score
.15
.05
Total
Attractivene
ss score
.00
.05
.00
.20
.60
.20
.60
.15
.30
.10
.10
.10
.20
.15
.45
.15
.00
.20
.80
.05
.00
.05
.00
.20
.60
.10
.20
.10
.10
100%
.05
.00
100%
.10
.10
.10
.10
.20
.40
.15
.00
.15
.00
.20
.60
.05
.00
.05
.05
.20
.40
.10
.00
.10
.10
.20
.15
3
1
.60
.15
.15
.05
1
0
.15
.00
>
2.95
100%
100%
3.80
Attractiveness Score:
1 = not acceptable
2 = possibly acceptable
3 = probably acceptable
4 = most acceptable
0 = not relevant
From QSPM Analysis we have got that Square Pharma should go for investment in R&D
as the score for 1st alternative is grater than 2nd alternative.
Formula
2013-14
2012-13
1. EPS
=4,031,811,268/481999263
= 8.36
=3,419,785,256/481,999,263
= 7.10
2. ROE
=4,031,811,268/19,052,891,818 =3,419,785,256/16,396,669,41
= 21.16%
6
= 20.86%
3. ROA
=4,031,811,268/23,734,742,93
3
= 16.99%
=3,419,785,256/21,637,553,544
= 15.80%
Competitor analysis
Square
Incepta
BEXIMCO
Competitive factor
pharmaceutical
pharmaceutical
pharmaceutical
Market position
Turnover
1,511.53 (Cr) TK
740.96 (Cr) TK
703.86 (Cr) TK
Growth rate
22.03 %
29.17 %
33.14 %
18.78
9.21
8.75
16
24
Customers Choice of 38
Brand,
Respondent
(in %)
Strength
linkage diversified
products
Weakness
do
not
absence
international
R&D sector
standard
of
quality
High
Above average
Above average
Quality
High
high
Above average
Advertising
High
Average
Average
Management
Average
Average
Average
Financial position
Global expansion
High
High
Above average
High
Above average
Average
Factors)
Production
capability:
performance
measurement,
visualization
of
result,
maintenance& operation.
4. Cost structure: scheduling, expenses, revenue, reporting, and procurement.
5. Vertical integration: To gaining control of their entire supply chain Square Pharma
may have gone for Vertical integration. This integration help to reduce cost, maintain
quality and gain more controlling power over the business.
6. Corporate social responsibility: Through the Square pharmas mission and vision
statement we have came to know about their social responsibility, performance culture,
sponsorship, donation, scholarship, financial aid, public relations.
Measurement of performance
Analyzing Variance
Square Pharma fix the benchmark of performance and after a certain time period like
quarterly or yearly, they measure the performance and take corrective action and even
go for the research if needed. Some time they provide incentive to their employee for
greater performance.
Although Strategy evaluation is necessary for a company but there is some difficulties as
well in Strategy Evaluation:
1
It helps the firm get into a better position to cope with unexpected
developments
the firm's responses are likely to be better thought out and more rational;
and
Recommendation
Although Square Pharma is operating successfully in the market, there we have got
some recommendation for Square Pharma-
to reduce
Conclusion
Square Pharmaceuticals Ltd. was established as a partnership firm in 1958. In 1991 it
was converted into a public limited company. Square Pharmaceuticals Limited is the
largest pharmaceutical company in Bangladesh and it has been continuously in the
1st position among all national and multinational companies since 1985. Since 1987
Square has taken aggressive measures to explore new countries as potential export
market. It pioneered exports of medicines from Bangladesh in 1987 and has been
exporting antibiotics and other pharmaceutical products. More & more countries are
getting confidence in Squares product every year. But its true that in the competitive
global environment Square is still struggling to ensure firm footings in global market.
Square is the flagship Parma Company in Bangladesh, wants to be a global player.
SQUARE Pharmaceuticals Limited has extended its range of services towards the
highway of global market. This extension in business and services has manifested the
credibility of Square Pharmaceuticals Limited
23. References:
Primary source: