Term paper of Square Pharmaceuticals Ltd. Bangladesh
Submitted to
Prof. Dr. M. Mahmodul Hasan
Faculty of MBA program (AIUB)
Submitted by
BOOM-Al-Habibi
Sultana Sharmin 13-97251-3
Das, Amit 14-98030-3
Nishi Sonia Akhter 13-97254-3
Suravy, Nusrat Jahan 14-97783-2
Submission Date: 4/19/2015
April 19, 2014.
Prof. Dr. M. Mahmodul Hasan
Faculty of MBA program.
American International University- Bangladesh.
Subject: Submission of our report on Square
Pharmaceutical Ltd. Bangladesh.
Dear Sir,
We take the pleasure to submit our report
on the strategic analysis of Square Pharmaceutical Ltd. Bangladesh. The report
gave us the opportunity to understand how to conduct a strategic analysis in an
effective way.
Square Pharmaceutical Ltd. Bangladesh is
the leading pharmaceutical company in Bangladesh which helps to meet the
customer demand as well as contributing in the GDP growth of the country. Now a
days it is very much popular brand in the marker because of their product
quality. They are also conscious regarding the environment and their improving
of product quality.
We are truly grateful to you for giving
us this pleasant opportunity to work on this report. The entire group
contribution has led the successful completion of this report. Despite our all
possible attempts, certain deficiencies may reside and we sincerely regret
this. We are grateful to you
for your continuous guidance in preparing the group project.
Yours sincerely,
BOOM-Al- Habibi.
Acknowledgement
We are heartily thankful to our advisor Prof. Dr. Md.
Mahmodul Hasan whose encouragement, supervision and support from the
preliminary to the concluding level enabled us to write this term paper. It was a wonderful experience
while working on this topic.
A great
number of people have made significant contributions in preparing this paper. We are
heavily grateful to all of
them. We are expressing our
immense gratitude to all of them who have extended enormous support, guidance
and speared their valuable time in preparing this paper.
We also
extend our heartfelt thanks to our family and well wishers.
Definition of Strategy
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
farm’s resources. Additionally strategies affect an organization’s 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.
Most Strategic Management Model
There are several Strategic Models are
available and used in different organizations but following are the most used
strategic models:
1. PEST analysis
2. STEER Analysis
3. Five Forces Model
4. Strategic Group Map
5. SWOT analysis
6. Blue Ocean Strategies
7. Open innovation
8. McKinsey seven
S model
Company Detailed Profile including mission & vision and
Organogram
Company
Detail Profile
Square
pharmaceutical is now the most leading company in Bangladesh since 1985 and is now on its way to becoming a high
performance global player. Today it has achieved a state of mind among
consumers. This company has founded in 1958 and since then with hard work and
dedication among employees and top management, it has reached the position
where every pharmaceutical company wants to reach. Square went public in 1991 and is
currently listed on the Dhaka Stock Exchange and
Chittagong Stock Exchange. Square Pharmaceuticals Ltd., the flagship company,
is holding the strong leadership position in the pharmaceutical industry of
Bangladesh since 1985 and it has
been continuously in the 1st position among all national and multinational
companies since 1985. Square Pharmaceuticals Ltd. is now on its way to becoming
a high performance global player.
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-
Ø Turnover (Gross) BDT 24,193 million,
growth 16.64%
Ø Turnover (Net) BDT 20,911million, growth
16.43%
Ø Export BDT 846 million, growth 5.92%
Ø Contribution to National Exchequer BDT
5,113 million, growth 17.63%
Ø Gross profit BDT 9,182 million, growth
17.34%
Ø Net profit after tax BDT 4,031 million,
growth 17.90%
Ø EPS BDT 8.36, growth 17.75%
Ø Dividend payout (cash) BDT 1,445 million,
growth 56.00%
Ø Net asset value BDT 22,227 million,
growth 16.92%
Board of directors:
Mr.
Samuel S Chowdhury (Chairman)
Mrs.
Ratna Patra (vice chairman)
Mr.
Tapan Chowdhury (Managing Director)
Dr.
Kazi Harunar Rashid (Director)
Mr.
Anjan Chowdhury (Director)
Mr.
Kazi Iqbal Harun (Director)
Mr.
M. Sekander Ali (Independent Director)
Mrs.
Nihad Kabir (Independent Director)
Corporate Achievements:
|
Year
of Establishment (Initially as a Partnership)
|
:
|
1958
|
|
Incorporated
as a Private Limited Company
|
:
|
1964
|
|
Technical
Collaboration Agreement with Janssen Pharmaceuticals of Belgium
(A subsidiary of Johnson & Johnson International Ltd.) |
:
|
1975
|
|
Technical
Collaboration Agreement with F.Hoffman-La Roche & Co. Ltd.
|
:
|
1984
|
|
Converted
into Public Limited Company
|
:
|
1991
|
|
Initially
Public Offering (IPO)
|
:
|
1994
|
|
Stock
Exchange Listing (Dhaka & Chittagong)
|
:
|
1995
|
|
Agreement
with M/s. Bovis Tanvec Ltd. of UK for implementation of Dhaka Plant
|
:
|
1996
|
|
Awarded
ISO-9001 Certificate
|
:
|
1998
|
|
Awarded
UK-MHRA & TGA Certificate as well as “AA+” rating in the long term and
“ST-1” rating in the short term by CRISL
|
:
|
2007,
2012 and 2013
|
|
Business
Lines
|
:
|
Manufacturing
and Marketing of Pharmaceutical Finished Products, Basic Chemicals, AgroVet
Products and Pesticide Products, small volume parental Opthalmic products and
insulin products.
|
|
Authorized
Capital
|
:
|
TK
10,000 Million
|
|
Paid-up
Capital
|
:
|
Tk.
4819.99 Million
|
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.
Logo
of Square pharma
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.
PESTEL Analysis of Square Pharmaceutical
V
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.
|
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 Bangladesh’s GDP growth.
|
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.
3. Culture has huge impact on pharmaceutical
industry.
4. Meditation is now becoming very popular.
It affects on Pharmaceutical product’s sale.
|
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.
3. During the year 2013-14, Square has
invested an amount of TK 108,086,342 in improving its laboratory.
|
Environmental
1.According to UN, business should support
a precautionary approach to environmental challenges.
2. According to UN, business should
undertake initiatives to promote greater environmental responsibility.
3. According to UN, business should
encourage development and diffusion of environmental friendly technologies.
|
Legal
1.According to UN, business should
eliminate discrimination in terms of employment and occupation.
2. According to UN, child labor must be
stopped.
3. In Bangladesh, legal issues are not
followed strictly.
4. They follow Companies Act 1994.
|
SWOT Analysis of Square Pharmaceutical Ltd
Strengths
 1.In 2013, Square’s
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 shareholder’s
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.
5. They import their plants and raw
materials from abroad, which is costly.
|
| 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.
|
Porter’s Five Forces
For industry analysis Porter’s 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.
v |
|||||
|
|||||
|
|||||
SWAN Analysis
Strengths:
1.In 2013, Square’s 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 shareholder’s
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, Square’s 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 shareholder’s
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.
|
3.55
|
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.
|
2.95
|
External
|
EFE Score
|
|
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
|
Squar’s 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
|
S
|
Strategy
|
Ø Maintain
the top quality health care products at
the least cost reaching the lowest rungs of the economic class of people in
the country.
Ø
Maintain the environment friendly
business operation.
Ø Innovation
of new products.
Ø
Square consider their employees as the
back-bone of the management and that’s why they provide best compensation to
all the employees.
Ø
The Board of Directors, hold periodic
meetings, at least once a quarter and provide appropriate
decisions/directions and check the improvement and take necessary action.
Ø
Work on the brand image.
Ø Last
few years, they are on the leading position in the market and they are trying
to maintain it.
Ø
The Board of Directors take special
care in designing and articulating productivity and compensation plans of
employees and workers and rewarding them appropriately on the basis of
quality and quantity of performance as an incentive
|
A
|
Action Plan
|
Set of actions which
required implementing strategies to achieve vision :
More focus on Research and Development.
Ensuring and delivering of product quality.
|
SMARTER MODEL
Specific
|
Targets and goals should be specific.
Square Pharma set their target and point out the specific agenda which needed
to be clearly communicated with the employees to achieve their mission and
vision.
|
Measurable
|
Goals and targets have to be logical
and measurable, so that it can be well communicate to employees. Every year
Square Pharma measure how far they have achieved their goals and targets.
|
Achievable
|
Mission, vision, target or goals all of
them set by management has to be achievable and to achieve company’s vision
strategies are set accordingly. Square has taken several strategies as guidance to achieve this
long term vision.
|
Realistic
|
Mission or Vision must have to be
realistic, not ambiguous. Square has
set their vision, which
is realistic and achievable “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.”
|
Time
|
There is always a specific time period
to achieve Mission, vision or any strategy. Square also set any strategy to
support any project wise goal or objective in a time frame
|
Encompassing
|
In respect to identify so far
achievements evaluation of any strategies is very essential. Square pharma
evaluate their employee’s performances as well as the strategy set by
management to find out whether there is anything going wrong or not.
|
Reviewed
|
Square publish their information
quarterly, half yearly and yearly. That means they reviewed their performance
as well as the strategy after a specific period of time, which is necessary
to find out their progress and obstacle.
|
The BCG chart
BCG
basically deals with two variables- 1. Relative market share and 2.Industry
growth. In our term paper we showed Square is in the Star position. According
to a data of 2013 stock market, Square has captured the highest market share in
pharmaceutical industry which is worth of TK 1,378 crore. It signifies the dominant position of
Square’s in stock market. Besides in 2013, the national market growth of
pharmaceutical industry is 8.12% whereas Square’s 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.
|
PURE OBJECTIVE
P
|
Positive
|
Square
Encourage the development and diffusion of environmentally friendly
technologies.
|
U
|
Understood
|
Square
hold periodic meetings, at least once a quarter and provide appropriate
decisions/directions and check the improvement, performance, and clarify what is expected from employees as
well as how it is to be achieved.
|
R
|
Recorded
|
Square usually records all financial statements in
their archive as well as it is available on their web site.
|
E
|
Ethical
|
Square believe that, business should
work against corruption in all its forms, including extortion and bribery.
|
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.
|
R
|
Roles/ Results
|
Square set all the
strategies according to achieve their goals like focusing on R&D, provide
specific role to specific employee.
|
E
|
Expectations / Performance
|
Square measures
their performance quarterly and let the employee know about the expectation
from them.
|
A
|
Accountabilities / Abilities
|
Square Pharma
always set the goal in such a way which is able to achieve by the employee.
|
T
|
Timing
|
There always should
be time frame to achieve the goal within that time, that Square pharma
maintain to have the better result.
|
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 second-largest
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%.
EFE of Square Pharmaceutical Ltd
KEY
EXTERNAL FACTORS
|
Weight
|
Rating
|
Weighted
Score
|
|
OPPORTUNITIES
|
||||
1.Square has the opportunity to export its products to
giant India and USA market.
|
.20
|
2
|
.40
|
|
2. Large population in Bangladesh creates an
opportunity to Square to serve more in domestic market.
|
.15
|
4
|
.60
|
|
3. People now have more affordability as their income
is increasing.
|
.05
|
3
|
.15
|
|
4. Square should emphasize on innovation more and more.
|
.10
|
3
|
.30
|
|
THREATS
|
||||
1. .Recent
political turmoil is affecting operation and distribution of all industries
including pharmaceutical industry.
|
.15
|
3
|
.45
|
|
2. More than 27% tax is charged on pharmaceutical
products.
|
.10
|
1
|
.10
|
|
3. There is a huge competition from MNCs.
|
.20
|
4
|
.80
|
|
4. Recent good performance of Incepta and Beximco
pharmaceutical is posing a threat to
Square Pharmaceutical.
|
.05
|
3
|
.15
|
|
4= the
response is superior
3= the
response is above average
2= the
response is average
1= the
response is poor
|
Rating
|
|||
Total
|
1.00
|
2.95
|
||
CPM Analysis of Bangladesh Pharmaceutical Industry
Square Pharmaceutical
|
Beximco
Pharmaceutical
|
Incepta
Pharmaceutical
|
|||||
Critical Success Factor
|
Weight
|
Rating
|
Score
|
Rating
|
Score
|
Rating
|
Score
|
Advertising
|
.05
|
3
|
.15
|
2
|
.10
|
2
|
.10
|
Quality of
service
|
.15
|
4
|
.60
|
3
|
.45
|
3
|
.45
|
Price
competitiveness
|
.15
|
2
|
.30
|
3
|
.45
|
4
|
.60
|
Management
|
.10
|
4
|
.40
|
3
|
.30
|
3
|
.30
|
Financial
position
|
.20
|
4
|
.80
|
3
|
.60
|
3
|
.60
|
Global
expansion
|
.10
|
3
|
.30
|
3
|
.30
|
4
|
.40
|
Customer
loyalty
|
.15
|
4
|
.60
|
3
|
.45
|
3
|
.45
|
Market share
|
.10
|
4
|
.40
|
3
|
.30
|
3
|
.30
|
Total
|
1.00
|
3.55
|
2.95
|
3.20
|
|||
4= Major
strength; 3= Minor strength; 2=Minor weakness; 1=Major weakness
|
|||||||
QSPM of Square Pharmaceutical
Key Factors
|
Alternative-1
|
Alternative-2
|
||||
Investment in R&D
|
Investment in promotional activities
|
|||||
Weight
|
Attractiveness score
|
Total Attractiveness score
|
Weight
|
Attractiveness score
|
Total Attractiveness score
|
|
Strengths
1 In 2013, Square’s growth rate is 16.43%
against market growth rate of 8.12%.
|
.15
|
1
|
.15
|
.05
|
0
|
.00
|
2. Square has highly efficient sales force
and large own distribution channel.
|
.05
|
0
|
.00
|
.20
|
3
|
.60
|
3. Square has good brand image to its
consumers.
|
.20
|
3
|
.60
|
.15
|
2
|
.30
|
4. Square maintains high quality standards for
its products.
|
.10
|
1
|
.10
|
.10
|
2
|
.20
|
Weaknesses
1.Square has made delay in introducing some
injections that Incepta has introduced earlier and now those are popular.
|
.15
|
3
|
.45
|
.15
|
0
|
.00
|
2. Square do not spend adequate money for
R&D sector compared to the nature of industry.
|
.20
|
4
|
.80
|
.05
|
0
|
.00
|
3. Selling & distribution costs are
increasing.
|
.05
|
0
|
.00
|
.20
|
3
|
.60
|
4. Compared to the MNCs, Square has lack of
resources.
|
.10
|
2
|
.20
|
.10
|
1
|
.10
|
Sum weights
|
100%
|
100%
|
||||
Opportunities
1. Square has the opportunity to export its
products to giant India and USA market.
|
.05
|
0
|
.00
|
.10
|
1
|
.10
|
2. Large population in Bangladesh creates
an opportunity to Square to serve more in domestic market.
|
.10
|
1
|
.10
|
.20
|
2
|
.40
|
3. People now have more affordability as
their income is increasing.
|
.15
|
0
|
.00
|
.15
|
0
|
.00
|
4. Square should emphasize on innovation
more and more.
|
.20
|
3
|
.60
|
.05
|
0
|
.00
|
Threats
1..Recent political turmoil is affecting
operation and distribution of all industries including pharmaceutical
industry.
|
.05
|
1
|
.05
|
.20
|
2
|
.40
|
2. More than 27% tax is charged on
pharmaceutical products.
|
.10
|
0
|
.00
|
.10
|
1
|
.10
|
3. There is a huge competition from MNCs.
|
.20
|
3
|
.60
|
.15
|
1
|
.15
|
4. Recent good performance of Incepta and
Beximco pharmaceutical is posing a threat to Square Pharmaceutical.
|
.15
|
1
|
.15
|
.05
|
0
|
.00
|
Sum Weight
|
100%
|
100%
|
||||
Sum
Total Attractiveness Score
|
3.80
|
>
|
2.95
|
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.
Financial Analysis of Square Pharmaceutical
Items
|
Formula
|
2013-14
|
2012-13
|
1.
EPS
|
Net income after tax /number of shares
|
=4,031,811,268/481999263
= 8.36
|
=3,419,785,256/481,999,263
= 7.10
|
2.
ROE
|
Net income after tax/Equity
|
=4,031,811,268/19,052,891,818
= 21.16%
|
=3,419,785,256/16,396,669,416
=
20.86%
|
3.
ROA
|
Net income after tax/total assets
|
=4,031,811,268/23,734,742,933
= 16.99%
|
=3,419,785,256/21,637,553,544
=
15.80%
|
Breakeven Point: Break-Even is a situation where total
revenue of a company is exactly equal total cost that the company has incurred.
It is the point of balance between
making
either a profit or a loss. The term originates in finance, but the concept has
been
applied
widely. The Break Even General Equation (BEP),
Total Revenue = Total Cost;
[Where, Total Cost = Total Fixed Cost + Total Variable Cost]
Breakeven
Analysis of Square Pharma
Analysis
and Discussion: According
to the Financial report (2013-2014) of Square Pharma the total Revenue is Tk.
24,96,42,23,232 and the total cost is (4,17,39,64,752+ 11,72,79,92,671)= 15,90,19,57,423.
So the Company is in above the breakeven point as the revenue is (24,96,42,23,232
-15,90,19,57,423) Tk. 9,06,22,65,809 more than the cost.
Competitor analysis
Competitive factor
|
Square pharmaceutical
|
Incepta pharmaceutical
|
BEXIMCO
pharmaceutical
|
Market position
|
1
|
2
|
3
|
Turnover
|
1,511.53 (Cr)
TK
|
740.96 (Cr) TK
|
703.86 (Cr) TK
|
Growth rate
|
22.03 %
|
29.17 %
|
33.14 %
|
Market share
(100)
|
18.78
|
9.21
|
8.75
|
Customer’s
Choice of Brand, Respondent (in %)
|
38
|
16
|
24
|
Strength
|
diversified
products and dosage forms
|
Backward
linkage support , price is competitive
|
diversified
products and dosage forms
|
Weakness
|
do not spend
adequate money for R&D sector
|
Insufficient
working capital.
|
R&D,
absence of international standard quality control and testing laboratory
|
Price
|
High
|
Above average
|
Above average
|
Quality
|
High
|
high
|
Above average
|
Advertising
|
High
|
Average
|
Average
|
Management
|
Average
|
Average
|
Average
|
Financial
position
|
High
|
Above average
|
Above average
|
Global
expansion
|
High
|
High
|
Average
|
KSF Analysis (Industry Key
Success Factors)
1. Customer-related: Square Pharma has Effective
distribution, strong brand name, customer loyalty, market analysis, customized
solution.
2. Product-related: Square Pharma is much
more conscious regarding their product Quality, laboratory, customer oriented
product, product development.
3. 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 pharma’s mission and vision statement we have came to know about
their social responsibility, performance culture, sponsorship, donation,
scholarship, financial aid, public relations.
7. Financial strength: Financially Square
Pharma is much more stronger compare to other competitors.
8. Research and development: In the
Pharmaceutical industry Research and development department play a vital role
and Square Pharma is quite conscious about this as well as their laboratory is
technically upgraded.
Strategy Evaluation and
Contingency Plan
Strategy Evaluation is as
significant as strategy formulation because it throws light the efficiency and
effectiveness of the comprehensive plan in achieving the desired results.
Evaluation is the final phase of Strategic Management.
Strategic
Evaluation consists the following steps:
–
Fixing benchmark of performance
–
Measurement of performance
–
Analyzing Variance
–
Taking Corrective Action
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:
- Increase in environment’s complexity
- Difficulty predicting future with accuracy
- Increasing number of variables
- Rate of obsolescence of plans
- Domestic and global events
- Decreasing time span for planning certainty
Strategy Evaluation Should –
•
Initiate managerial
questioning
•
Trigger
review of objectives & values
•
Stimulate
creativity in generating alternatives
Contingency Planning is the development of alternative plans
to be placed in effect if certain unexpected events occur.
As Square pharma is a large size firm
they may have to face a lot of obstacle. There for they concerned about the
Contingency Planning, because unexpected events can occur in any time.
There are four reasons for or advantages
to contingency planning:
•
It helps
the firm get into a better position to cope with unexpected developments
•
Indecision,
uncertainty and delays are reduced when something unusual happens
•
the firm's responses are likely to be better
thought out and more rational; and
•
Managers
are forced to think in terms of possible outcomes, rather than just the most
likely outcome.
Recommendation
Although Square Pharma is operating
successfully in the market, there we have got some recommendation for Square
Pharma-
1. They should invest more in R&D
sector.
2. They should be more careful in terms
of pricing of their product.
3. As the market is so much competitive,
Square Pharma should be more concern regarding their product quality.
4. They can go for Backward or forward integration support to reduce production and distribution cost.
5. They should more focus on customer
oriented product
6. They need to Emphasize on high
technology
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 Square’s product every year. But it’s 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
References
Primary
source:
1.Text
Book Strategic Management concepts and cases 13th edition by Fred
R.David page 13
Secondary
sources:
Do you know square group of company which is the best toiletries product production company in Bangladesh.
ReplyDelete