Luận văn thạc sĩ quản trị kinh doanh quốc tế MBA (49)

Capstone project Global Advanced Master of Business Administration CAPSTONE PROJECT ESTABLISHMENT OF BUSINESS STRATEGY OF THANH HOA MEDICAL MATERIALS PHARMACEUTICAL JOINT STOCK COMPANY (THEPHACO) IN THE PERIOD 2021 - 2025 TABLE OF CONTENTS ACKNOWLEDGEMENT LIST OF ABBREVIATIONS LIST OF TABLES AND GRAPHS Capstone project FOREWORD I Necessity of the topic II Purpose of research of the topic III Object, scope and method of research IV Structure of the topic CHAPTER 1: THEORETICAL BASIS OF BUSINESS STRATEGY 1.1 Concept of business strategy 1.1.1 Concept of business strategy 1.1.2 Classification of business strategy 1.2 Role of business strategy 1.3 Business strategies in reality 1.4 Process of establishing business strategy 1.4.1 Environmental research 1.4.1.1Analysis of macro environment 1.4.1.2Analysis of micro environment 1.4.2 Analysis inside the enterprise 1.4.2.1Analysis and evaluation of resources: 1.4.2.2Analysis of operation of functional divisions of the Company 1.4.2.3Internal factor evaluation matrix (IFE) 1.4.3 Establishment and selection of strategy CHAPTER 2: ANALYSIS OF BUSINESS ENVIRONMENT OF THANH HOA MEDICAL MATERIALS PHARMACEUTICAL JOINT STOCK COMPANY 2.1 General introduction about Thanh Hoa Medical Materials Pharmaceutical Joint Stock Company 2.1.1 Formation and development 2.1.2 Organizational structure of Thephaco 2.1.3 Operation result of Thephaco over the past years 2.1.3.1 Business result and market share 2.1.3.2 Growth 2.2 Analysis of external environment impact on the operation of Thephaco Capstone project 2.2.1 Analysis of macro environment 2.2.1.1 Political and law factor 2.2.1.2 Socio-cultural factor 2.2.1.3 Economic factor 2.2.1.4 Natural factor 2.2.1.5 Inhabitant factor 2.2.1.6 Technological factor 2.2.2 Operation environment of the company (micro) 2.2.2.1 Economic characteristics of the industry 2.2.2.2 Pressure from the suppliers 2.2.2.3 Customers 2.2.2.4 Competitors 2.2.2.5 Pressure and threat from potential competitors 2.2.2.6 Substitute products 2.2.3 Competitive image matrix 2.2.4 External factor evaluation matrix (EFE) 2.3 Analysis of internal environment impact on the business activities of Thephaco 2.3.1 Analysis of Management Model 2.3.2 Analysis of human resources 2.3.3 Marketing activities 2.3.4 Financial - accounting analysis 2.3.5 Manufacturing 2.3.6 Technology 2.3.7 Market research and development 2.3.8 Internal factor evaluation matrix (IFE) CHAPTER 3: ESTABLISHMENT OF BUSINESS STRATEGY OF THANH HOA MEDICAL MATERIALS PHARMACEUTICAL JOINT STOCK COMPANY (THEPHACO) IN THE PERIOD 2011 - 2015 3.1 Establishment of development objective to 2015 Capstone project 3.1.1 Determination of position, vision and objective of Thephaco 3.1.2 Basis for objective determination 3.2 Analysis of business strategies 3.2.1 According to SWOT matrix 3.2.2 According to strategic posturing and action evaluation (SPACE) 3.2.3 According to internal - external factor matrix (IE) 3.3 Preliminary selection of strategy schemes 3.4 Quantitative strategic planning matrix (QSPM) 3.5 Follow-up of strategies 3.5.1 Thephaco market development strategy 3.5.2 Product development strategy 3.5.3 Marketing and communication strategy 3.5.4 Human resources management strategy: 3.5.5 Capital source development strategy 3.5.6 Production technology strategy CONCLUSION REFERENCES Capstone project ACKNOWLEDGEMENT! First of all, our group would like to present our most sincere thanks to the Program Leadership, lecturers of the Center for Educational Technology and Career Development, Postgraduate Faculty - Vietnam National University - Hanoi; USA Griggs University for creating favorable conditions and helping us during the course as well as completing our Graduation assignment with the assigned research topic to the best result At the same time, we are also thankful to the Leadership and related Departments of Thanh Hoa Medical Materials Pharmaceutical Joint Stock Company for enthusiastically providing necessary figures and creating all favorable conditions for us to this topic However, due to limited time, shortcomings in the analysis of the topic are inevitable For this very reason, the group 11 does wish to receive contributive ideas from the Lecturers so that our topic is better and applied effectively in the reality of the Company We hereby undertake that this topic is our independent research The figures and results included in the Assignment are true and of clear origin GROUP OF AUTHORS Capstone project LIST OF TABLES - CHARTS Table 1-1 Chart 1-2 Phases in the strategy construction process SWOT matrix Table 1-3 Table 2-1 Table 2-2 Table 2-3 Chart 2-4 Chart 2-5 Chart 2-6 Chart 2-7 Chart 3-1 Table 3-2 Table 3-3 Chart 3-4 Table 3-5 Table 3-6 Table 3-7 Space matrix Management apparatus diagram of Thephaco Analysis of financial targets through years Competitive image matrix in the field of pharmaceutical products of Thephaco External factor evaluation matrix of Thephaco Product distribution market ratio Production capacity of groups of products of Thephaco Internal factor evaluation matrix of Thephaco Objectives for each year in the period 2011 - 2015 SWOT matrix of Thephaco Space matrix of Thephaco Overall shape of Space matrix Internal - external factor matrix (IE) Strategy proposals in each matrix QSPM of pharmaceutical products - Centralized growth strategy group LIST OF ABBREVIATIONS In this work, terms are understood as follows: Thephaco Thanh Hoa Medical Materials Pharmaceutical Joint Stock Company DN Enterprise Capstone project IFE Internal factor evaluation matrix EFE External factor evaluation matrix SPACE Strategic posturing and action evaluation matrix QSPM GMP Quantitative strategic planning matrix Good Manufacturing Practice GLP Good Laboratory Practice GSP Good Storage Practice GDP Good Distribution Practice GPP Good Pharmacy Practice WHO World Health Organization TRAPHACO TRAPHACO Joint Stock Company PHARBACO Central Pharmaceutical Joint Stock Company No - PHARBACO DHG Hau Giang Pharmaceutical Joint Stock Company Capstone project FOREWORD I Necessity of the topic Vietnam has approached the market economy for more than 20 years, a sufficient period for the enterprises to adopt management methods of market mechanism Strategy management has been regarded as one of the important business philosophies that help the enterprises to gain successes in the long term However, the adoption of this theory must still be considered with most Vietnamese enterprises Thanh Hoa Medical Materials Pharmaceutical Joint Stock Company (Thephaco) was formerly known as Thanh Hoa Pharmaceutical Company, established in 10/4/1961, designed to produce, trade, import and export medicine all over the province and the country For many years of formulation and development, with the motto of highlighting product quality, Thephaco has invested and built the factory to the standard GMP - WHO, GLP and created confidence in the national market The trademark THEPHACO is increasingly firm in the pharmaceutical market, some articles have been exported to Russian and Laos Yet, in the present competitive context, especially the participation of foreign companies, Thephaco realizes that it is necessary to prepare necessary resources to adapt to change and sustainable development With such significance, the topic “Business strategy in the period 2011 - 2015 of Thanh Hoa Medical Materials Pharmaceutical Joint Stock Company” is selected the group 11 for the graduation assignment of Master of Business Administration We hope to receive contributions from the Lecturers in the council and all of classmates so that the strategy is actually persuasive and can be applied into real life II Purpose of research of the topic The topic focuses on researching the following issues: - Basic theories about strategy and strategy management - Useful analysis models for strategy formation and selection - Actual performance of strategy of Thephaco Capstone project - Analysis of internal and external environment factors that impact the strategy performance of the company - Appropriate solutions to establish development strategy of Thephaco III Object, scope and method of research - Object and scope: The thesis focuses on researching present strategy management activities for the products of Thephaco and putting forth solutions in the coming time - Method of research: The thesis uses two main types of information, namely primary information and secondary information Secondary information is collected from various sources, remarkably reports on operation and marketing supplied by Thephaco Besides, secondary information coming from open sources in the Internet is also used in the report IV Structure of the topic Chapter 1: Theoretical basis about business strategy Chapter 2: Analysis of business environment of Thanh Hoa Medical Materials Pharmaceutical Joint Stock Company Chapter 3: Establishment of business development strategy of Thanh Hoa Medical Materials Pharmaceutical Joint Stock Company in the period 2011 - 2015 Capstone project CHAPTER 1: THEORETICAL BASIS ABOUT BUSINESS STRATEGY 1.1 Concept of business strategy: 1.1.1 Concept of business strategy: There are many different definitions of strategy, each of them has many different points depending on the viewpoint of each author According to traditional viewpoint, “Strategy is the direction and scope of an organization in the long term: strategy will bring about advantage to the organization through optimal arrangement of resources in a competitive environment in order to meet the market demand and expectation of the capital contributors” According to Alfred Chandler (1): “Strategy includes long-term basic objectives of an organization, concurrently choosing way or process of action, allocating essential resources to carry out such objectives” According to Fred R David (2): “Strategy is defined as means to achieve long-term objectives Business strategy may include geographical development, activity diversification, ownership, product development, market penetration, cost reduction, liquidation and joint venture” According to Michael E Porter (3): “Strategy is the art of establishing stable competitive advantages for defense” 1.1.2 Classification of business strategy: There are many kinds of strategies used in an organization, yet basically, there are three applicable levels of strategy: - Strategy at company level: Putting forth objectives and business activities of the company, creating basic policies and plans to achieve objectives - Strategy at business level: Determining business market of the company, dividing segment and product for each type of market - Strategy at functional level: Determining solutions and plans for each field of business 1.2 Role of business strategy: The management of business strategy will enable the Enterprises: Capstone project centralized growth strategies (market penetration, market development, product development); integration strategy (front vertical integration, back vertical integration, horizontal integration); diversification strategy (concentric diversification, horizontal STRATEGY POSITION EXTERNAL STRATEGY POSITION INTERNAL diversification and mixed diversification) Financial strength (FS) Return on investment Debt leverage Solvency Business risk Average mark Environmental stability (ES) Increased demand for pharmaceutical consumption Industry penetration barrier Competitive pressure in the industry Demand expansion by price Mark 5 4,25 distributors Average mark Mark Industry strength (IS) -3 Future growth capacity of the Change in foreign exchange rate Average mark TOTAL AVERAGE MARK Competitive advantage (CA) Distribution channel Product quality Manufacturing capacity Good R&D capacity Good marketing Ability to control suppliers & -2 -2,16 Mark industry -1 -4 Capital scope -2 Technological know-how in -5 -3 pharmaceutical industry Capacity use rate Average mark 1,25 TOTAL AVERAGE MARK Table 3-3: SPACE matrix 46 Mark -2 -2 -2 -3 -2 3,5 1,34 Capstone project Chart 3-4: Overall shape of SPACE matrix: Financial strength FS Attack Prudence -6 -5 -4 -3 -2 -1 Industry strength -2 -1 Competitive advantage IS CA (1,34 ; 1,25) Competition -5 -4 -3 Defense -6 ES Environment stability 3.2.2 According to internal - external factor evaluation matrix (IE) From external factor evaluation matrix EFE (EFE = 3.04); internal factor evaluation matrix EFE (IFE = 3.17), our group works out internal - external factor evaluation matrix to determine the position of Thephaco in the present business environment as follows: Total importance mark of IFE matrix Strong Average Weak 3.00 to 4.00 2.00 to 2.99 1.00 to 1.99 High 3.00 to 4.00 Average Thephaco I III II IV V 2.00 to 2.99 47 VI Total importance mark of EFE matrix Capstone project Low 1.00 to 1.99 VII VIII IX Table 3-5: Internal - external factor evaluation matrix (IE) Comment: Thephaco stays at position II in the good management area by “Development and construction” strategies With its present capacity, Thephaco should use centralized strategy: - Market penetration strategy - Market development strategy - Product development strategy Front combination strategy, back combination strategy and horizontal combination are not carried out in this phase because Thephaco has strong financial potential and trademark 3.3 Preliminary selection of strategy plans Through the above analysis, the group has pointed out strategies formed from SWOT, SPACE and IE matrixes as shown in the following table: MATRIX NO SWOT SPACE IE X X X Market penetration strategy Market development strategy X X X Product development strategy X X X STRATEGY 48 Capstone project Marketing strategy X Human resources management X strategy Technological investment strategy X Table 3-6: Proposed strategies in each matrix 3.4 Quantitative strategic planning matrix (QSPM) QSPM for group of centralized growth strategies for pharmaceutical products This matrix is aimed at evaluating and ranking feasible strategies to choose the best strategy This matrix uses all input information from all the established matrixes (EFE, IFE, competitive image matrix, SWOT and SPACE) Weighted mark of important factors is given as per the mark scale from to 4: 4: very important, 3: important, 2: relatively important, 1: unimportant The attraction mark of each strategy is given as per the mark scale from to 4: 1: totally unattractive, 2: less attractive, 3: relatively attractive, 4: very attractive Mark is not given to the successful factor that doesn’t affect strategy selection Important factors Internal factors Ability to control stable materials source Quality and safe product Intensive and extensive product distribution channel Ability to research and develop new medicine Good marketing Manufacturing capacity Financial capacity Imported materials External factors Change in exchange rate exerts bad impact on the import of pharmaceutical materials Weight (mark) Domestic market penetration AS TAS 4 16 Product development AS TAS 12 0 4 16 12 12 3 4 12 12 6 12 2 49 Capstone project Domestic consumers still favor foreign medicine Competition pressure from foreign enterprises increases The domestic demand for pharmaceutical products tends to increase WTO joining expands cooperation relationship to access advanced technology in the world Highly skilled human resources are inconsiderable and fail to meet the requirement Industry joining barrier remains high Investment in R&D technology remains limited Faked medicine occupies a great quantity in the market Total 0 3 12 4 16 12 3 12 2 2 2 120 113 Table 3-7: QSPM of pharmaceutical products - Group of centralized growth strategies Comment: From the above table, we can see that the most attractive strategy is domestic market penetration (TAS = 120) and the least attractive strategy is product development (TAS = 113) Because integration strategy only has back vertical integration strategy, this strategy will be selected without evaluation by QSPM  Evaluation on strategy selection: After comparing with vision and mission, core capacity and professional skill of the company together with development objective of the pharmaceutical industry, the selected group of strategies includes: Market development strategy 50 Capstone project Product development strategy Marketing promotion strategy Human resources management strategy Investment strategy 3.5 Follow-up of strategies: 3.5.1 Thephaco market development strategy: Domestic market penetration  Strategy implementation way: Increasing market share by attracting customers of competitors,  Strategy implementation methods: - Marketing division: Conducting survey to understand present customers and potential customers The Company may carry out the strategy by increasing quantity of sales staff, changing promotional measures, changing means and mode of advertisement, changing, adding and expanding distribution channel - Manufacturing division: Being well prepared to increase manufacturing yield - Financial division: Preparing sufficient capital to carry out the strategy 3.5.2 Product development strategy: THEPHACO is a pharmaceutical enterprise with many experiences in the industry and one of the leading enterprises in equitization of Vietnam pharmaceutical industry So far, Thephaco has been licensed to sell nearly 300 products, allocated in many groups such as antibiotic, neurology, digestion - liver & bile, cardiovascular, pain relief - fever relief, ENT, eye Products of Thephaco are distributed at pharmacies and hospitals throughout the country and gain the confidence from the consumers Among them, there are many famous products that achieve noble titles, for example, tonic medicine Biofil 10ml and capsule Hydan achieved Creative award for Science and Technology Vietnam (VIFOTEC) Besides, tonic medicine BIOFIL also received the Bronze medal at Seoul Economic and Technical 51 Capstone project Exhibition - Korea in 2004; rheumatism medicine HYDAN received the Bronze medal at the Scientific and Technological Application Exhibition in Malaysia in May 2010; In the coming time, like long-term development strategy, Thanh Hoa Medical Materials Pharmaceutical Joint Stock Company will pay attention to developing different products bearing own identity of the company such as tonic medicine Biofil, tonic medicine Bio-Amine, rheumatism medicine Hydan, Hydan 300 and Hydan 500 Besides, the company is also expanding its product line, investing in more modern equipments, planning clean materials area, researching and producing more traditional medicine with specificity, high economic value and good treatment quality such as Thien Su Thephaco, Hoa Da Thephaco As scheduled, at the beginning of the first quarter of 2012, the Company will complete and put into use a traditional medicine manufacturing factory to the GMP - WHO standard This is one of the factories with the top-ranking modern traditional medicine manufacturing standard in Vietnam After this factory goes into stable operation, this is one of the production lines that bring about many modern and traditional product as well as high revenue and profit to the company as well as solving many jobs for the employees, contributing to the country industrialization and modernization in the present WTO integration period Strategy implementation way: The Company can develop product by: - Developing product features by improving the diversification, safety and quality, developing product design - Developing list of products by expanding the list of products upwards by adding products with higher quality - The enterprise can develop new product by: Researching and manufacturing product contract with external companies, integrating horizontally, consolidating, acquiring or forming a joint venture with other manufacturer  Strategy implementation methods: - Marketing division: Regularly collecting information and analyzing data about customers to understand their attitude towards products of the enterprise and competitors for the present products and potential products If necessary to change products, 52 Capstone project marketing division should coordinate with R&D division to carry out the new product development process - Manufacturing division: In the market economy with increasingly fierce competition, creation of competitive advantage is very difficult but maintenance of long-term competitive advantage is much more difficult According to the economists, competitive environment not only creates strength, orientate behavior of the enterprises to productivity, quality and efficiency from the objective in which winning in competition will gain benefit In the competitive environment, strength of the enterprises is not only measured by intrinsic capacity but also, more importantly, measured in the correlation among subjects Therefore, achieving strong competitive position in the market is the vital requirement of the enterprise The most specific and necessary: Evaluation on the ability to manufacture and estimate product cost In terms of quality control: as we know, quality control is very important For product and service, quality is vital to the enterprise The continued improvement of service quality is based on enhancing qualifications of the employees, applying quality control system under the international ISO standard The company has strategic orientation in personnel, infrastructure investment, technical facilities, modern and uniform technologies and techniques Carefully researching steps of the manufacturing of services to work out correct guidelines and seize competitive advantage in product and service quality Getting associated with the customers, studying and working out correct solutions to provide maximum assistance to the customers in order to maintain the customers stably and create good relationships, thereby creating motive force for the company development “Sustainable development; Quality - Confidence” is always the top objective throughout the operation and development of the Company In 2008, the Company was honored to win the “Gold Prize - Vietnam Quality” In 2009, the Company’s products were elected by the consumers as “High quality Vietnamese goods” This is the result of the effort to keep enhancing product quality of the Leadership and all employees in the Company Product quality of Thanh Hoa Medical Materials Pharmaceutical Joint Stock Company is increasingly affirmed and gains trademark in the Pharmaceutical market - Financial division: Different angle of reviewing competition requires different methods of analyzing factors constituting competitiveness and factors affecting competitiveness 53 Capstone project Analysis of competitiveness is a quite complicated In every aspect, we can see there are many subjects impacting one another in order to influence competitiveness Analyze, evaluate investment demand to prepare necessary capital source for product planning - Human resources management division: Working out talent attraction policy to support the product research and development strategy 3.5.3 Marketing and communication strategy: To achieve present result, Thanh Hoa Medical Materials Pharmaceutical Joint Stock Company has established manufacturing and business strategy by periods and times Combining available internal strength and partners, creating overall strength in the manufacturing and business in order to develop the Company quickly, strongly and stably No satisfied with the achievements gained by the Company, the Leadership is always worried to find out the most appropriate and effective marketing strategies in manufacturing and business, make the Company develop increasingly stably to meet the expectation of thousand employees and deserve the title of Labor Hero conferred by the State Present marketing strategy of the Company focuses on the following issues: - Enhancing Trademark, product, service and image of the Company all over the country, paying attention to manufacturing goods with high profit and big sales - Stabilizing and developing market inside and outside the province to export to other countries Taking initiative in goods supply in business and materials source in manufacturing - Regarding science and technology as the center, basing on market to orientate, regarding growth as motive force, regarding quality as commitment with the customers - Developing multipurpose, taking notice of scientific research, training and developing human resources - With slogan “Sustainable development; Quality - Belief”, confirming sustainable and consistent strategy and viewpoint of manufacturing and business of the Company with the partners and customers - From the above marketing strategy orientation, the Company Leadership realizes the need to seize initiative in business by establishing steady distribution system and 54 Capstone project enhancing product and service quality 3.5.4 Human resources management strategy: - The C should continuously attract talents, including foreigners - Managers and key personnel must have actual ability - Salary, share and bonus for key positions should be placed at higher level than the market to stabilize this force - Salary, share and bonus for non-key positions are placed at average level of the market - Besides, the company should create Thephaco culture: solidarity, affection, openness and creativity Exchanging initiatives and contributive contributions under the model “Flat world” (for example, a good solution or opinion may be directed to the professional Leadership) 3.5.5 Capital resource development strategy Mobilizing domestic capital resource - The Company should adopt more forms of capital mobilization so as to bring the most benefit to the company and harmonize interests of the employees and shareholders - Professional financial consultancy companies should help the company analyze cash flows, manage finance and mobilize capital in accordance with the turnover of investment and business projects of the company Attracting foreign investment The Company should also plan to consider developing foreign strategic shareholders to work more professionally and reach out to foreign market The invited partners must meet the following criteria: - Having financial potential, - Having appropriate business lines that can bring about experience and technology to the company - Desiring to stand side by side with the company in a long term 55 Capstone project - Understanding Asian and Vietnamese culture 3.5.6 Manufacturing technology development strategy - Continuing investment to complete the Traditional medicine manufacturing factory in the Northwest Industrial Park under the resolution adopted by the General Shareholder’s Meeting in 2010 with total investment for project of 51 billion VND, putting the factory into operation at the end of the 4th quarter and at the beginning of the 1st quarter in 2012 - Investing in another injection manufacturing line to meet the market demand (at present meeting 40% only) Total investment is 10 billion VND, operating in the rd quarter of 2011 - Investing in upgrading all branches inside the province to meet GSP, GDP and GPP standards (cities, towns and townships) under the route of the Ministry of Health Investing in a branch in Hai Phong and means of transport Total estimate is 10 billion VND - Investing in some equipment for manufacturing workshops, laboratories and research rooms to renovate technology 56 Capstone project CONCLUSION After analyzing external environment and internal environment of Pharmaceutical sector of Thanh Hoa Medical Materials Pharmaceutical Joint Stock Company, we have found out opportunities and threats to this sector as follows: The change in exchange rate exerts bad influence on importing pharmaceutical materials; Domestic consumers still favor foreign medicine; Competition pressure from foreign enterprises increases; WTO joining expands cooperation relationship to access advanced technology in the world; Highly skilled human resources are inconsiderable and fail to meet the requirement; Pressure from customers is inconsiderable; Vietnam consumers have more requirements on pharmaceutical quality; Challenge from the dependence on importing foreign materials; Industry joining barrier remains high Concurrently, pointing out strengths and weaknesses of the company including: 80% materials are imported from foreign countries; Stable ability to control materials source; Quality and safe product; Good distribution channel; Ability to research and develop new product; Good marketing; Good manufacturing and financial capacity Next, the research has adopted strategic planning tools at business unit level to this business line The research puts forth strategic conclusion to help the company develop this business line and achieve the objective of increasing profit and net revenue to the pharmaceutical sector at about 25% from 2011 to 2015 The proposed strategy is domestic market penetration, product development and back vertical integration The research focuses on analyzing pharmaceutical sector but Thephaco trades in other goods such as packing, tourism, pharmaceutical products, dietary food and some other goods Due to limited time and lack of data bout competitors, this research doesn’t analyze many competitors but choose some main competitors of the company 57 Capstone project REFERENCES Strategic management, Statistics Publishing House 2009 (Assoc Prof Dr Le The Gioi - Dr Nguyen Thanh Liem - MA Tran Huu Hai) Strategic management, FREDR.DAVID, Statistics Publishing House 2009 (translated by Truong Cong Minh - Tran Tuan Thac - Tran Thi Tuong Nhu) Slide of Strategic management of the Global Advanced Master of Business Administration Program (Hanoi, 2010) Summary operation statement of Thephaco in 2010, annual report of Thephaco in 2008, 2009 and 2010 www.thephaco.com.vn www.traphaco.com.vn 58