TABLE OF CONTENTS TOC \o "1 3" \h \z \u INTRODUCTION PAGEREF Toc306205734 \h 1 Chapter 1 THEORETICAL BACKGROUND OF MANAGING DISTRIBUTION CHANNELS OF PHARMACEUTICAL ENTERPRISES PAGEREF Toc306205736 \h[.]
TABLE OF CONTENTS (làm lại Table of Contents) INTRODUCTION CHAPTER 1: THEORETICAL BACKGROUND OF MANAGING DISTRIBUTION CHANNELS OF PHARMACEUTICAL ENTERPRISES 1.1 DISTRIBUTION CHANNEL OF PHARMACEUTICAL ENTERPRISES 1.1.1 DEFINITION OF DISTRIBUTION CHANNEL 1.1.2 ROLES OF DISTRIBUTION CHANNEL 10 1.1.3 FUNCTIONS OF DISTRIBUTION CHANNEL 11 1.1.4 FLOWS IN DISTRIBUTION CHANNEL 12 1.1.5 STRUCTURE OF DISTRIBUTION CHANNEL .13 1.1.6 MEMBERS OF DISTRIBUTION CHANNEL 15 1.2 MANAGEMENT OF DISTRIBUTION CHANNEL OF PHARMACEUTICAL ENTERPRISES 16 1.2.1DEFINITION OF MANAGEMENT OF DISTRIBUTION CHANNEL MANAGEMENT 16 1.2.2 OBJECTIVES AND CRITERIA TO EVALUATE MANAGMENT OF DISTRIBUTION CHANNEL MANAGMENT .18 1.2.3 ORGANIZATION CHART OF DISTRIBUTION CHANNEL MANAGEMENT 21 1.2.4 CONTENTS OF DISTRIBUTION CHANNEL 22 1.2.4.2 ESTABLISHING THE MANAGEMENT POLICY OF DISTRIBUTION CHANNEL 25 1.2.5 FACTORS IMPACTING ON MANAGMENT OF DISTRIBUTION CHANNEL MANAGMENT 29 CHAPTER 2: CURRENT MANAGEMENT OF DISTRIBUTION CHANNEL MANAGEMENT OF TRUONG GIANG COSMETIC PHARMACEUTICAL CO., LTD 2.1 INTRODUCTION OF TRUONG GIANG COSMETIC PHARMACEUTICAL CO., LTD .1 2.1.1 HISTORY OF ESTABLISHMENT AND DEVELOPMENT OF TRUONG GIANG COSTMETIC PHARMACEUTICAL CO., LTD 2.1.2 BUSINESS LINES OF TRUONG GIANG COSMETIC PHARMACEUTICAL CO., LTD .3 2.1.3 ORGANIZATION CHART OF TRUONG GIANG COSMETIC PHARMACEUTICAL CO., LTD 2.1.4 BUSINESS RESULTS OF TRUONG GIANG COSMETIC PHARMACEUTICAL CO., LTD IN 2011 – 2014 2.3.2 EVALUATION DUE TO ??? MANAGING CONTENT OF DISTRIBUTION CHANNEL ( WHAT'S THIS SENTENCE MEAN?) 31 CHAPTER 3: RECOMMENDATIONS TO ENHANCE ON THE DEVELOPMENT OF MANAGEMENT OF DISTRIBUTION CHANNEL MANAGEMENT OF TRUONG GIANG COSMETIC PHARMACENTICAL AND TRADE CO., LTD 36 3.1 ORIENTATION OF ENHANCING MANAGEMENT OF DISTRIBUTION CHANNEL OF TRUONG GIANG COSMETIC PHARMACENTICAL AND TRADE CO., LTD BY 2020 36 3.1.2 ORIENTATION TO ENHANCE OF ENHANCING MANAGEMENT OF DISTRIBUTION CHANNEL MANAGEMENT OF TRUONG GIANG COMPANY BY 2020 .36 3.2 RECOMMENDATIONS TO ON THE DEVELOPMENT OF ENHANCE MANAGEMENT OF DISTRIBUTION CHANNEL MANAGEMENT OF TRUONG GIANG COSMETIC AND PHARMACEUTICAL CO., LTD 37 3.2.1 SOLUTION OF TO ENHANCING ORGANIZATION CHART OF DISTRIBUTION CHANNEL 37 LIST OF REFERENCES 58 INTRODUCTION CHAPTER 1: THEORETICAL BACKGROUND OF MANAGING DISTRIBUTION CHANNELS OF PHARMACEUTICAL ENTERPRISES 1.1 DISTRIBUTION CHANNEL OF PHARMACEUTICAL ENTERPRISES .7 1.1.1 Concept of distribution channel 1.1.2 Role of distribution channel 10 1.1.3 Functions of distribution channel 11 1.1.4 Flows in distribution channel 12 1.1.5 Structure of distribution channel 13 1.1.6 Members of distribution channel 15 1.2 MANAGEMENT OF DISTRIBUTION CHANNEL OF PHARMACEUTICAL ENTERPRISES 16 1.2.1 Concept of distribution channel management .16 1.2.2 Objective of distribution channel management .17 1.2.3 Criteria for evaluating the results of the distribution channel management 19 1.2.4 Structure of distribution channel 21 1.2.5 Designing the management policy in distribution channel 24 1.3 FACTORS IMPACT ON DISTRIBUTION CHANNEL MANAGEMENT 29 1.3.1 Macro environment factors 29 1.3.2 Industrial Factors 30 1.3.3 Company Factors 32 CHAPTER 2: CURRENT MANAGEMENT OF DISTRIBUTION CHANNEL OF TRUONG GIANG COSMETIC PHARMACEUTICAL CO., LTD 34 2.1 INTRODUCTION OF TRUONG GIANG COSMETIC PHARMACEUTICAL CO., LTD 34 2.1.1 Milestones .35 2.1.2 Product lines 36 2.1.3 Organization chart 36 2.1.4 Business results of Truong Giang Cosmetic Pharmaceutical Co., Ltd from 2011 to 2014 37 2.2 DISTRIBUTION CHANNEL STRUCTURE OF TRUONG GIANG PHARMACEUTICAL CO., LTD 41 2.2.1 The company distribution workforce 41 2.2.2 Structure of current distribution channels .42 2.2.3 Direct sale channel 44 2.2.4 Whole sales channel 46 2.2.5 Referent group channel 48 2.3 DISTRIBUTION CHANNELPOLICIES 50 2.3.1 Selecting members of distribution channels policies 50 2.3.2 Incentive policies for distribution channel members 53 2.3.3 Regulating dispute amongst distribution channel policies 57 2.3.4 Evaluating members’ operation policies .61 2.4 EVALUATING THE MANAGEMENT OF PHARMACEUTICAL DISTRIBUTION CHANNEL OF TRUONG GIANG COMPANY 62 2.4.1 Evaluation by criteria 62 2.4.2 Strengths and weaknesses of distribution channels management 65 2.4.2.1 Strengths .65 2.4.2.2 Weakness 66 CHAPTER 3: RECOMMENDATIONS ON THE DEVELOPMENT OF DISTRIBUTION CHANNEL MANAGEMENT OF TRUONG GIANG COSMETIC PHARMACENTICAL AND TRADE CO., LTD 69 3.1 FORECAST OF PHARMACEUTICAL MARKET IN VIETNAM BY 2020 69 3.2 RECOMMENDATIONS ON THE DEVELOPMENT MANAGEMENT OF DISTRIBUTION CHANNEL OF TRUONG GIANG COSMETIC AND PHARMACEUTICAL CO., LTD 70 3.2.1 Implement training programs 70 3.2.2 Improving structure of distribution channel 72 3.2.3 Strengthening policies of managing distribution channel .74 3.2.4 Other solutions 81 3.3 SOME PROPOSALS TO THE AUTHORITIES 84 CONCLUSION 87 LIST OF REFERENCES .88 LIST OF TABLE Table 2.1 Business results of Truong Giang Co., Ltd (Pharmaceutical) .39 Table 2.2 Qualification of staffs of distribution channel .42 Table 2.3 Revenue of Channel Type of Truong Giang Co., Ltd in 2012-2014 45 Table 2.4 Geographic distribution of intermediaries (up to 01/09/2015) 47 Table 2.5 Revenue of distribution channel type of Truong Giang Company in 2012-2014 .47 Table 2.6 Revenue of distribution channel type of Truong Giang Company in 2012-2014 .49 Table 2.7 The selection criteria of the channel member of Truong Giang Company 52 Table 2.8 Results of selecting distribution channel members in 2011-2014 53 Table 2.9 Policies of encouraging distribution channel member of Truong Giang Company 54 Table 2.10 Member’s evaluation to the policies of encouraging in Truong Giang Company in 2014 56 Table 2.11 Conflict in distribution channel of Truong Giang Company in 20112015 60 Table 2.12 Survey result on policies of solving distribution channel’s conflict of Truong Giang Company in 2014 61 Table 2.13 Market share of pharmaceutical products of Truong Giang Company in some major markets ( in terms of revenue) 62 Table 2.14 Market Coverage of Truong Giang in 2011-2014 .63 Table 2.15 Evaluating the satisfaction of members of distribution channel in Truong Giang Company in 2014 64 LIST OF FIGURE Figure 1.1 Structure of distribution channel 14 Figure 1.2 Benefit of Intermediaries .19 Figure 1.3 Process of evaluating activities of channel members 28 Figure 2.1 Organization chart 37 Figure 2.2 Growth of total drug consumption and average for pharmaceutical products in Vietnam 38 Figure 2.3 Business results of Truong Giang Co., Ltd (Pharmaceutical) 40 Figure 2.4 Organization chart of the distribution channel .41 Figure 2.5 Structure of pharmaceutical distribution channel of Truong Giang Co., Ltd 43 Figure 2.6 Revenue of channel type in 2012-2014 .45 Figure 2.7 Revenue of channel type in 2012-2014 .48 Figure 2.8 Revenue of channel type in 2012-2014 .49 Figure 2.9 Selection procedure of distribution channel members in Truong Giang Company 50 Figure 2.10 Results of selecting distribution channel member in 2011-2014 .53 Figure 2.11 Member’s evaluation to policies of encouraging .56 Figure 2.12 Survey result on solving conflict in distribution channel 61 Figure 3.1 Proposed vertical link in pharmaceutical distribution of Truong Giang Company 72 Figure 3.2 System of internal applications 78 INTRODUCTION Rationale of the research In business operation of each enterprise such as manufaturing and trade trading companies, the production distribution process is one of the most important steps to achieve their business goals In the period era of globalization associated with high competition, enterprises are now more focus on strengthening the capability of distribution channel management which creates differences in competition competitive advantages Pharmaceutical industry has many special characteristics which are different withfrom other sectors in managing distribution channel Globalization and economic integration influence every businesses, especially pharmaceutical enterprises, facicreating many opportunities as well as challenges Currently, Vietnam drug market is mainly supplied by two main sources including domestic and imported drugs In recent years, the pharmaceutical industry in Vietnam has made significant progress Domestic production could meets 50% of demand of drugs users However, the domestic pharmaceutical industry is still facing many challenges because foreign drugs account for 60% of the market share While The local firms are not able to produce the therapeutic class; mostly common drug categories are still used In the context of market expansion, Vietnam has implemented made great progress in order to open Pharmaceutical market as committed while joining World Trade Organization (WTO), there are more and more foreign medical enterprises entering the market According to the commitments of Vietnam to WTO, since 1st September 2009, foreign pharmaceutical companies are entitled to establish branches in Vietnam and are engaged directly to in importing drugs Therefore, foreign companies now have more chance to access medical market in Vietnam In the past, most of the enterprises with foreign direct investment (FDI) invested in medical factories However, there is about 70% to 80% of FDI companies changed to pharmaceutical distribution field This is a great pressure to strengthen the distribution channel of Vietnamese manufacturing companies Truong Giang Cosmetic Pharmaceutical and Trade Co., Ltd is now specializing in distribution of pharmaceutical products, and cosmetics in Hanoi and some provinces /cities nearby (The company's operation is bearing highly competitive pressure from both domestic and foreign enterprises) In fact, the highly competitive pressure from both domestic and foreign enterprises has borne heavily on company’s operation In recent years, the operation of medical distribution channel of the company has been slowing down, the profit is not as expected Thus, company needs to improve the management of distribution channel in order to improve the effectiveness and efficiency of the business activities From the above analysis, along with the desire to contribute to the operational efficiency of pharmaceutical product distribution of the company, the author came up with the topic “Enhancing management of distribution channel management of Truong Giang Cosmetic Pharmaceutical and Trade Co., Ltd” for the study Literature Review There are many researches on distribution channel management including a number of typical papersresearch such as: - "Managing distribution channels" (Truong Dinh Chien, 2012) addressed in a systematic way the content of managing distribution channel from the viewpoint of manufacturing enterprises The thought and content of the book is consistent with Phillip Kotler’s approach about managing distribution channel Those approaches are considered as an important guideline for Vietnamese manufacturing companies to establish and manage the distribution channel - Scientific research at ministry level( xem lại từ này): "Assessment of the status and orientation of organizing distribution channels for some major items in our country up to 2015" Code: 2005-78-009 Ministry of Commerce (now known as Ministry of Industry and Trade), of Assoc.Prof.Dr Dinh Van Thanh In the research, the author assessed general situation of major items in Vietnam as well as analyzed models of organizing distribution channel and management policy in order to recommend solutions which can remedy to the limitations - "The pharmaceutical distribution market in Vietnam"(E-commerce, 2012) noted that there are two main pharmaceutical distribution markets including wholesale and retail Most of products in wholesale market are imported by foreign distributors whose have good relationship with oversea manufacturers As commitments of Vietnam to WTO, foreign firms have the right to import directly medical products but they cannot enter the retail market in Vietnam;, thus, Vietnam companies can occupy exclusively in this market At present, the pharmaceutical retail market can be divided into segments: manufacturers operatinge distribution activities, pharmacy chains and private retail pharmacies - "The solution to perfect the system of distribution of pharmaceutical enterprises in Vietnam in the context of international economic integration" (Nguyen Thanh Tung, 2010) studied theories and circumstances of medical distribution system as well as the development of the channel in a number of drug firms in Vietnam Based on the study results, the author suggested resolutions in order to improve the efficiency of distribution system in the context of international economic integration The above researches, especially the micro perspective studies have contributed to enhance management progress the management of drug distribution channel Therefore, the topic of managing medical distribution channel is not a new issue;, however, there is not any study which has been done there are no studies which have been done Pharmaceutical and Trade Co., Ltd in Truong Giang Cosmetic Objectives of the research The main objective of this study is base d on to analyzinge theories and current status of distribution channel management in Truong Giang Cosmetic Pharmaceutical and Trade Co., Ltd to provide appropriate solutions which improve the company’s distribution system in the future To achieve the above objectives, the thesis identifies several specific tasks as follows: - Identify Formulate the theoretical framework on the management of distribution channels - Analyze circumstances of distribution channels of Truong Giang Cosmetic Pharmaceutical and Trade Co., Ltd; Illustrateidentify strengths and weaknesses and possible causes of the weaknesses in the management of distribution channel - Propose solutions in order to improve to the distribution channel management in Truong Giang Cosmetic Pharmaceutical and Trade Co., Ltd Scope of research - Research object: Distribution channel management of Truong Giang Cosmetic Pharmaceutical and Trade Co., Ltd - Research scope: + Content: Analyze management activities of the pharmaceutical distribution channel of Truong Giang Cosmetic Pharmaceutical and Trade Co., Ltd, the cosmetic distribution system is not included in this research + Location: Truong Giang Cosmetic Pharmaceutical and Trade Co., Ltd + Time period: Data is collected in the period of 2011-2014; and solutions to be proposed up to 2020 Research Questions To accomplish the goals, the following questions must be answered: - What are the role, structure and organization of distribution channels ... 32 CHAPTER 2: CURRENT MANAGEMENT OF DISTRIBUTION CHANNEL OF TRUONG GIANG COSMETIC PHARMACEUTICAL CO. , LTD 34 2.1 INTRODUCTION OF TRUONG GIANG COSMETIC PHARMACEUTICAL CO. , LTD 34... GIANG COSMETIC PHARMACENTICAL AND TRADE CO. , LTD 36 3.1 ORIENTATION OF ENHANCING MANAGEMENT OF DISTRIBUTION CHANNEL OF TRUONG GIANG COSMETIC PHARMACENTICAL AND TRADE CO. , LTD BY 2020 36... the distribution channel of Vietnamese manufacturing companies Truong Giang Cosmetic Pharmaceutical and Trade Co. , Ltd is now specializing in distribution of pharmaceutical products, and cosmetics