Strategic Plan for BPL

Prepared By:

MD. Ariful Hossain Majumdar ID# 052 451 030

Samsuszoha Hoque ID# 052 216 030

Mirza Jahidul Amin ID# 052 517 530

Sayed Mahmud Saiful Amin ID# 033 244 030

Rajib Hasan Mahmud Bin Azam ID# 021 047 030

Strategic Plan for

Beximco Pharmaceuticals LTD

Prepared For

M. Moniruzzaman

Instructor; MGT 489.4

School Of business

North South University

LETTER OF TRANSMITTAL

5th September, 2009 M. Moniruzzman Instructor, MGT 489 School of Business, North South University Subject: Submission of Strategic Plan for Beximco Pharmaceutical LTD. Sir, We are pleased to inform you that we have completed our final report on the “Beximco Pharmaceutical LTD” as a partial fulfillment of the course Strategic Management (MGT489). We have tried the best of our ability to complete the report properly and to produce a meaningful paper within our limit. Notwithstanding all the difficulties faced while doing our report, we found the whole time and endeavor worth spending. Above all, this report has helped us to gain valuable information and knowledge required for a strategy formation about to how to establish a Strategic plan for a company and maintain it. In spite of the various difficulties faced in preparing the report, we have given our utmost care to be as thorough as possible. Now, it is our performed pleasure to put forward our effort for your prudent perusal. Yours truly, MD. Ariful Hossain Majumdar ID# 052 451 030 ----------------------

Samsuszoha Hoque ID# 052 216 030 ----------------------

Mirza Jahidul Amin ID# 052 517 530 ----------------------

Sayed Mahmud Saiful Amin ID# 033 244 030 ----------------------

Rajib Hasan Mahmud Bin Azam ID# 021 047 030 ----------------------

i

At first we would like to thank our honorable faculty Mohammad Moniruzzaman who

has the attitude and the substance of intelligence. His believe in us encourage us to

work through the whole semester, continually and influentially conveyed a spirit of

adventure in regard to our research, and an excitement in regard to teaching. Also we

want to recall his help about providing sufficient information about Beximco

Pharmaceutical Limited Bangladesh Limited, with the help of those information we

completed our report smoothly. Without his guidance and determined help this thesis

would not have been possible for us to complete.

We would like to express the deepest appreciation to Mr. Nazmul Hassn (CEO,

Beximco Pharmaceutical Limited) and Mr. Ali Nawaz (CFO, Beximco

Pharmaceutical Limited) for helping us providing valuable information about their

company and sharing their strategic view with us. Their vision and future plan has

guided us towards this accomplishment.

We also would like to express gratefulness to all our classmates of MGT 489 course,

for being there to support us in every step and they are always besides us, whenever

we need any help. We have learned a great deal from each of our classmates. Finally

we would like to give a special thanks to our family for being so kind, loving and

supportive towards us.

ii

The entire project has been designed and conducted based exclusively on the notes

and frameworks or models provided by Mohammad Moniruzzaman. Data with

regards to the steps in strategic analysis were provided Mr. Nazmul Hassn (CEO,

Beximco Pharmaceutical Limited) and Mr. Ali Nawaz (CFO, Beximco

Pharmaceutical Limited)

iii

This project is about designing a strategic plan for Beximco Pharmaceutical Limited for

the period over 2008-2009; this study entails strategic analysis of the forces both

external and internal to the company which includes analysis of KPIs (Key

Performance Indicators), analysis of the intervening conditions, identification of the

KSF (Key success factors), F/D analysis and analysing the strategic implications. This

plan also includes strategy formulation of corporate, business and functional level

strategies of Beximco Pharmaceutical Limited, along with strategy implementation and

strategic control with evaluation.

The aim of the project was to learn how a strategic plan is devised; it would serve as a

guide to Beximco Pharmaceutical Limited for effective and efficient strategic

management. This project report informs about the current external and internal

situations and factors that are affecting the strategies of Beximco Pharmaceutical

Limited. It also shed light on the future planning process of the company and

recommends on the challenging areas. Finally it provides strategic options and

implication of the suitable strategies along with effective process for strategic control.

Mainly the data was collected by a face to face interview that was administered both

by the researchers and the respondents based on the questionnaire provided by our

honorable faculty Mohammad Moniruzzaman. The data collected were analyzed

based on template analysis, categorization as well as correlation techniques. The

frameworks or models provided by Mohammad Moniruzzaman were very effective

tools that helped us to analyze and come with entire strategic plan.

iv

List 1

Acknowledgement I

Declaration II

Abstract III

Table of contents IV

References 220

v

LIST 2

CHAPTER 1: INTRODUCTION TO THE PROJECT 1

1.1 Introduction 1

1.2 Aim and Rational of the Project 2

1.3 Methodology 2

1.4 Report Structure 3

CHAPTER 2: STRATEGIC ANALYSIS 5

2.1 Introduction 5

2.2 Analysis of the KPIs 6

2.3 Analysis of the Intervening Conditions 16

2.4 Identification of the Key Success Factors 27

2.5 F/D analysis of the Beximco Pharma’s Key Success Factors 34

2.6 Relative F/D Analysis 140

2.7 Analysis of the Strategic Implications 143

CHAPTER 3: STRATEGIC DEVELOPMENT 147

3.1 Introduction 147

3.2Setting Generic strategic Objective and Initiatives 147

3.3 Build and Hold 148

3.4 Implementations of the Strategic Action 150

3.5Confrontation or Competitive 151

3.5.1 To Build 151

3.6 Capture: Acquisition 156

3.6.1 Vertical Integration 156

vi

3.6.2 Horizontal Integration 161

3.6.3 Alliances and Joint Ventures 165

3.6.4 Merger 166

3.6.5 Care: Parenting 167

CHAPTER 4: STRATEGIC IMPLEMENTATION 175


4.2 Resource Planning 176

4.3 Budgeting 177

4.4 Recruitment and selection 180

4.5 Training and Development 181

4.6 Organizational Structure 181

4.6.1 Vertical Coordination 181

4.6.1.1 The Chain of Command 181

4.6.1.2 The Concepts in chain of command 182

4.6.1.3 Span of management or span of control 182

4.6.1.4 Delegation 183

4.6.2.1 Lateral Relation 185

4.6.2.2 Information Sharing 185

4.6.2.3 Sharing Resources 185

4.6.3 Organization Chart or Organogram 186

4.6.3.1 Functional Structure 188

4.6.3.2 Divisional Structure 189

4.6.3.3 Hybrid Structure 191

4.6.3.4 Matrix Structure 192

4.6.3.5 Process Structure and the networked Structure 195

4.7.1 Mckinsey's 7's 196

4.7.2 The Five approaches to implement 197

vii

4.7.2.1 The Commander Approach 197

4.7.2.2 The Organizational Change Approach 198

4.7.2.3 The Collaborative Approach 199

4.8 Motivation and Compensation 200

4.9 Setting Sales Targets 201

4.10 Determining the sales force size 203

CHAPTER 5: STRATEGIC EVALUATION AND CONTROL 205


5.2 Monitoring Marketing Performance 206

5.3 Monitoring Profitability 207

5.3.1 Profit 208

5.3.2 Net Contribution 208

5.3.3 Cash flow 209

CHAPTER 6: SUMMARY 210

6.1 Summary of strategic analysis and its outcomes 210

6.2 Summary of Strategic Formulation 211

6.3 Summary of Implementation 213

6.4 Strategic of Control 217

viii

LIST 3

EXHIBIT

Exhibit 1: Environments & Strategic Analysis 5

Exhibit 2: Tables depicting primary research data 27

Exhibit 3: Tabular calculation of F/Ds 28

Exhibit 4: Table depicting Favourable 30

Exhibit 5: Table depicting Detrimentals 31

Exhibit 6: Phenomenon model depicting international standard manufacturing facility 35

Exhibit 7: Phenomenon model depicting quality 49

Exhibit 8: Phenomenon model depicting Qualified Employees 57

Exhibit 9: Phenomenon model depicting Relationship with Physicians 73

Exhibit 10: Phenomenon model depicting global acceptance 83

Exhibit 11: Phenomenon model depicting Financial Strength 88

Exhibit 12: Shareholder’s earnings per share 95

Exhibit 13: BPL’s Value Added Statements 96

Exhibit 14: BPL’s Credit Rating 97

Exhibit15: BPL’s return on common stock 98

Exhibit 16: BPL’s Key Operating and Financial Data 99

Exhibit 17: BPL’s Net Sales Revenue 101

ix

Exhibit 18: Phenomenon model depicting export facilities 103

Exhibit 19: Phenomenon model depicting goodwill 112

Exhibit 20: Phenomenon model depicting marketing skills 122

Exhibit 21: Phenomenon model depicting national wide distribution network 132

Exhibit 22: Depicting BPL's Relative Rating 140

Exhibit 23: A Diagram of Specific Strategic Actions for Growth 148

Exhibit 24: A Diagram of 4C’s of Strategic Management 150

Exhibit 25: A Diagram of Attack Strategies to Build 153

Exhibit 26: A Diagram of DEFENCE STRATEGIES 153

Exhibit 27: A Diagram of Backward and Forward Integration 158

Exhibit 28: The Parenting Advantage Formula 168

Exhibit 29: The Parenting Style 170

Exhibit 30: The Parenting Influences 171

Exhibit 31: The Parenting Fit Matrix 172

Exhibit 32: The Parenting Management 174

Exhibit 33 BPL’s organogram 187

Exhibit 34: A sample of geographic divisions 190

x

LIST 4

Appendix A 221

Appendix B 224

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1.1 Introduction

Beximco Pharmaceutical Limited (BPL) was established in Bangladesh in 1976 and its commercial

production was started in 1980. It is one of the leading Pharmaceuticals Company in Bangladesh.

Beximco Pharmaceuticals Ltd. is producing world class medicine by following the requirement of

the World Health Organization (WHO) in order to improve the health, happiness and the quantity of

life. BPL is the export leader of drugs in the pharmaceutical industry of Bangladesh. As a publicly

listed company, Beximco Pharmas shares are traded on AIM (London Stock Exchange), Dhaka and

Chittagong Stock Exchanges. The main objective of this report is to entails strategic analysis of the

forces both external and internal to the company, analysis of KPIs (Key Performance Indicators),

analysis of the intervening conditions, identification of the key success factors (KSF), f/d analysis

and analyzing the strategic implications. This plan also includes strategy formulation of corporate,

business and functional level strategies of Beximco Pharmaceuticals Limited (BPL), along with

strategy implementation and strategic control and evaluation.

The strategic plan is solely based on the frameworks or models provided by Mohammad

Moniruzzaman from which analysis and implication strategies are developed. Phenomenon model

was used to describe the Favorable/Detrimental of the strategic analysis.

In this project, we assess the future planning process of BPL and recommends on the challenging

areas. Finally it provides strategic options and implication of the suitable strategies.

Page | 2

1.2. Aim and Rational of the Project

The aim of this report is to design a strategic plan for Beximco Pharmaceutical Limited (BPL) for

the period over 2009. It would enable us to enrich our knowledge regarding the pharmaceutical

industry of Bangladesh and also we can able to develop full strategic plan for a full fledged SBU like

BPL. We have also learnt extensively how to apply phenomenon model (Moniruzzaman 2005) in

real world scenario and describe the favorable and detrimental of BPL. Last but not the least it would

help to develop us future strategic analysts in both local and global context.

1.3. Methodology

Primary Sources: A face to face interview questionnaire designed by our honorable faculty Mr. Mohammad

Moniruzzaman was used (2008) to conduct personal interview with Mr. Ali Nawaz, the CFO of

Beximco Pharmaceuticals Limited (BPL). From this, we got valuable insight i.e. strategic view,

vision, and tactical plan about Beximco Pharmaceutical Limited (BPL) and with us.

The part one of the interview questionnaires were designed to find out major objective of BPL has

set for the next financial year, exact measures that BPL would use to determine the success/ of each

objective and whether the objectives meet shareholder’s objective. The second part includes the

measure of success relative to competing firms, relative to competing firms and product/service. Part

three includes identification of the external and internal conditions and status of occurrence and

probability of impact of factors like economic, technological, government, customers, competitors,

resources and capabilities. Then identification of key success factor (KSF) and the importance of

each KSF in relation to the objectives to be met and specification of the actions you are

Page | 3

implementing/would implement to attain the objectives mentioned above, compatibility of each KSF

based on the extent to which actions of BPL are with it.

The frameworks or models provided by Mohammad Moniruzzaman (2005) were the tools that we

used to analyze and come with solution and implication strategies.

Secondary Sources: For secondary research, the annual reports of Beximco Pharmaceutical Limited for the year of 2006

and 2007 as well as 2008 were used. In addition the website of BPL has provided much useful

information to us.

1.4. Report Structure

This report covers all the steps of strategic plan (Moniruzzaman 2005) i.e. strategic analysis, strategy

formulation, strategy implementation and strategy evaluation and control.

The chapter two namely Strategic analysis, is based on the analysis of the key performance

indicators of pharmaceutical industry such as sales, market share, and brand awareness, analysis of

macro-environment, micro-environmental and internal issues and forces which could be act as a

potential intervening condition for BPL. Also identification of key success factor i.e. global

acceptance, product quality, financial policy and subsequently find out of favorable and detrimental

and analysis of them through using phenomenon model.

Page | 4

As strategic analysis allows us to embark on the subsequent initiatives of strategic management

(Moniruzzaman 2005); so strategy formulation (Chapter three) has covered the process of

determining appropriate courses of action for achieving the objectives of BPL has and thereby

accomplishing its long term goal. Here, corporate level, business level and functional level strategies

are mentioned. In chapter four, the implementation process of Beximco Pharmaceuticals Limited

needs take courses of actions like, resource planning, budgeting, selecting and recruiting suitable

individuals, train individuals who would implement the actions, designing an organisation structure

compatible with the actions and so forth.

In chapter five namely evaluation and control (Moniruzzaman, 2005) after the implementation of all

the strategies, BPL should evaluate and control its plans from time to time. When BPL would

implement the plan, it is necessary to measure and evaluate actual performance to find out if the

expectations are being fulfilled. The first stage that BPL can take in the control process should

involve the selection of relatively few appropriate objectives. From these objectives, BPL can derive

suitable targets so that pressure can be created for effective strategic performance.

And finally in chapter six, a brief summary of all the strategic management process has been

provided to give a bird eye view of the whole project as a whole.

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Company

Microenvironment

Macro environment

Legal

Natural

Technological

Social

Economic

Suppliers Customers

Distributors Competitors

STRATEGIC ANALYSIS

STRATEGY DEVELOPMENT

STRATEGY IMPLEMENTATION

STRATEGIC EVALUATION & CONTROL

International

2.1. Introduction

This chapter entails the strategic analysis of the project. So this chapter is enthusiastic to Strategic

analysis. This chapter is designed according to Strategic analysis steps prepared by M.

Moniruzzaman. Analysis is based on

Analysis of the key performance indicators

Identification of key success factor

F/D Analysis of all key success factors whichever it is favorable or detrimental and

Finally an analysis of strategic implementation and it followed by the strategic implications.

“Strategic analysis is the engine which drives the strategic management and planning processes”, (Moniruzzaman, 2005)

EExxhhiibbiitt 0011:: EEnnvviirroonnmmeennttss && SSttrraatteeggiicc AAnnaallyyssiiss ((MMoonniirruuzzzzaammaann,, 22000055))

Page | 6

2.2 Analysis of the KPIs

“The success measures or performance indicators are benchmarks against which firm’s actual

performance is evaluated. These measures or indices, in fact, allow the firm to determine if and the

extent to which its objectives have been met. There are many factors that firms take account of when

determining success measures. Shareholders’ expectations, managers’ willingness to satisfies,

competitive considerations, industry standards, customer factors, and internal resources and

capabilities are some of these factors. Most firms use the SMART (SPECIFIC, MEASURABLE,

ATTAINABLE, REALISTIC AND TIME-BOUND) principle to set objectives”, (Moniruzzaman,

2005).

Objective type: Financial (Profitability and growth)

Objective level: (1) Profit of Tk. 80 Core at the end of year 2009

(2) A growth of 17% in year 2009

Measures:

Profit: Beximco Pharmaceutical Limited is a huge profitable company when it is measured

by profit scale. Profit generally is the making of gain in business activity for the benefit of

the owners of the business. Profits are generally shown in the Profit and Loss Account of an

Annual Report of an organization. In generally, we will deduct COGS, all administration

expense, operational expense, financing cost, other expense and tax from sales revenue then

we get net profit. Beximco Pharmaceutical Limited gets its profit after tax which is to be

transferred to retain earning. For year 2009 Beximco Pharmaceutical Limited is expecting to

get profit of Tk. 80 core. Beximco Pharmaceutical Limited will measure its success in

fulfilling its target of making profit of Tk. 80core in year 2009.

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Profit as percentage of sales: Beximco Pharmaceuticals Limited does not take into account

profit as a percentage of sales greatly as a measure of financial objective. In year 2009

Beximco Pharmaceutical Limited expecting sales of Tk. 500 core and profit of Tk. 80 core.

Profit as percentage of sales for Beximco Pharmaceutical Limited will be:

= Profit / Total sales

= 80 cores / 500 cores

= 0.16

= 16%

So, Beximco Pharmaceutical Limited wants 16% profit as percentage of sales for year 2009.

Contribution margin: Contribution margin is the unit sales price deducted by the unit variable

cost. As Beximco Pharmaceutical Limited produces thousands of different pharmaceutical

products so finding out contribution margin for each and every product is quite impossible

and time consuming. So, Beximco Pharmaceutical Limited does not use it as a measure of

Financial (Profitability/ Growth) objectives.

Market share (percentage): Market share is the percentage or proportion of the total available

market or market segment that is being serviced by a company. It can be expressed as a

company's sales revenue (from that market) divided by the total sales revenue available in

that market. It can also be expressed as a company's unit sales volume (in a market) divided

by the total volume of units sold in that market.

Market share in term of ($) = sales revenue of the company / Total sales revenue available in

the market or

Market share in term of (Volume) = Company’s units sales volume / Total volume of units

sold in the market

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To find out the market share in many cases BPL uses the Prescription share. Prescription share for

BPL can expressed as total pharmaceutical products of BPL are prescribed by physician divided by

total pharmaceutical products of all companies prescribed by the physicians. For year 2009,

Beximco Pharmaceutical Limited is not trying to increase the prescription share rather than retaining

it. The target is 10% - 12% prescription share. So, we can assume the targeted market share for year

2009 is 10% - 12%. This is an approximate figure due to unavailability of proper information gained

from market research.

ROI (RETURN ON INVESTMENT): Return on Investment (ROI) is the ratio of money gained or

lost (realized or unrealized) on an investment relative to the amount of money invested. The

amount of money gained or lost may be referred to as interest, profit/loss, gain/loss, or net

income/loss. The money invested may be referred to as the asset, capital, principal, or the

cost basis of the investment. ROI is usually expressed as a percentage rather than a fraction.

ROI does not indicate how long an investment is held. Beximco Pharmaceutical Limited

expects Return on Investment (ROI) to be same as year 2007 for year 2009 which is 2.95%.

RONA (Return on Net Assets): Return on Net Assets is another measure of financial

objective. It is a measure of financial performance of a company which takes the use of

assets into account.

RONA = Profit after tax / (Fixed assets + Net working capital)

Again, Beximco Pharmaceutical Limited does not use Return on Net Assets to a great extent.

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ROE (Return on Equity): The Return on Equity (ROE) measures the return earned on the

owners (Preferred and Common Stock Holders) investment in the firm. Generally, the higher

these returns, the better off are the owners. ROE is viewed as one of the most important

financial ratios. It measures a firm's efficiency at generating profits from every dollar of net

assets (assets minus liabilities), and shows how well a company uses investment dollars to

generate earnings growth.

ROE = Net income / Common equity

Like ROI and RONA, Beximco Pharmaceutical Limited expects Return on Equity (ROE)to

be same as year 2007 for year 2009 which is 4.28%.

Sales: The amount of return which we get by selling our product considered as a sales of any

industry.Sales imply the total revenue derived from selling of pharmaceutical products of

Beximco Pharmaceutical Limited. It comes from the price which Beximco Pharmaceutical

Limited to the pharmacy not the end users (patients). For 2009, Beximco Pharmaceutical

Limited is expecting sales of Tk. 500 core.

Percentage change in sales: Percentage change in sales is the percentage change in sales form

one year to another. From year 2008 to year 2009 Beximco Pharmaceutical Limited is

expecting a growth (positive change) of 15%.

Objective type: Competitive centered

Objective level: To become market leader in Cardiovascular, Gastro intestinal, Anti-respiratory,

Vitamin A achieve 30%-40% market share for becoming the market leader.

Measures:

Price (% difference): Price difference is the gap between the price of competitors’ products

and the company’s products. There will be no price change for the end users (patients). The

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prices for all pharmaceutical products are fixed by the government. So there are no scopes for

Beximco Pharmaceutical Limited there will be no price difference relative to competitors in

any products. But government can change the price.

Market share (Relative): Beximco Pharmaceutical Limited wants to gain relative market

share of 30% - 40% in four products such as Cardiovascular, Gastro intestinal, Anti-

respiratory, Vitamin A. Cardiovascular, Gastro intestinal, Anti-respiratory, Vitamin A wants

to be the market leader in those four products by achieving 30% to 40% market share.

Brand awareness (%): Brand awareness is a marketing concept that refers to a consumer

knowing of a brand's existence; at aggregate (brand) level it refers to the proportion of

consumers who know of the brand. Brand awareness consists of brand recognition and brand

recall performance where brand recognition relates to customers’ ability to confirm prior

exposure to the brand when given the brand as a cue. On the other hand brand recall relates

to consumers’ ability to retrieve the brand from the memory when given the product

category, the needs fulfilled by the category, or a purchase or usage situation as a cue.

Beximco Pharmaceutical Limited does not expect any change in percentage of Brand

awareness as a measurement of competitive centered objectives.

Brand preference (%): Brand preference means selective demand for a company's brand

rather than a product; the degree to which consumers prefer one brand over another. A strong

brand preference can be established by doing proper advertisement. In an attempt to build

brand preference advertising, the advertising must persuade a target audience to consider the

advantages of a brand, often by building its reputation as a long-established and trusted name

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in the industry. Beximco Pharmaceutical Limited does not expect any change in percentage

of Brand preference as a measurement of competitive centered objectives.

Objective type: Customer level

Objective Label: For any technical or professional support the doctors should first think of Beximco

Pharmaceutical Limited.

Awareness (%):

Every company wants to increase awareness of its brand among the customers. Beximco

Pharmaceutical Limited targets 75% awareness among the physicians.

Liking (%):

Increase in liking is most of the time leads to purchase. Beximco Pharmaceutical Limited targets

15% liking of the products of Beximco Pharmaceutical Limited among the physicians.

Preference (%):

Preference is another step closer to complete a purchase for a brand. Beximco Pharmaceutical

Limited uses preference and liking interchangeable. So, the target is the same. Like liking, Beximco

Pharmaceutical Limited expects 15% preference of the products of Beximco Pharmaceutical Limited

among the physicians.

Reductions of complaints (%):

Beximco Pharmaceutical Limited does not take into account reduction of complaints as a measure of

customer cantered objectives. But most of the time Beximco Pharmaceutical Limited expects no

complaints from the physicians.

Satisfaction (%):

Satisfaction can be used as another measure of customer centered objectives. Beximco

Pharmaceutical Limited targets 5% to 10% increase in satisfaction among the physician as a

customer centered objectives.

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Objective type: Product based

Objective label: (1) Further improvement in quality and packaging.

(2)Achieve international standard in all areas of business.

Measures:

Quantity: Maximum: Beximco Pharmaceutical Limited wants to improve packaging of

maximum of 100 types of pharmaceutical products in year 2009.

Minimum: Beximco Pharmaceutical Limited expects to improve packaging of minimum of 75 types

of pharmaceutical products in year 2009.

Quality:

A. (No. of Defects): Upper limits: Beximco Pharmaceutical Limited does not use number of

defects as a measure of product based objective.

B. (No. of complaints): Upper limits: Beximco Pharmaceutical Limited does not use number of

complaints as a measure of product based objective.

Objective Type: Others.

Objective Label:

(1) To establish itself as leading Bangladeshi exporter of medicine in US, UK , Middle East

and Europe market.

(2) From employee perspective, improve the skill level of the employees and make them

more motivated and satisfied at their work place.

Measures:

Fixed assets as percentage of sales: Fixed asset as a percentage of sales indicate the

efficiency which the firm has been using its fixed, or earning, asset to generate sales. It is

calculate by dividing the firm’s sales by its net fixed asset.

Fixed asset as percentage of sales=sales/net fixed asset.

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Beximco Pharmaceutical Limited does not use fixed assets as % of sales as a measure of any

objectives.

Net assets as percentage of sales: Net asset as a percentage of sales indicate the efficiency the

firm has been using its net asset, or earning, asset to generate sales. It is calculate by dividing

the firm’s sales by its net asset.

Net Asset as Percentage of Sales=Sales/Net Asset

Beximco Pharmaceutical Limited does not use Net assets as % of sales as a measure of any

objectives.

Percentage of capacity utilisation: It tells us that how much capacity a company can

effective and efficiently use during the production process. Beximco Pharmaceutical Limited

does not use percentage of capacity utilisation as a measure of any objectives.

Earnings per share: The firms earning per share (EPS) are generally of interest to present or

prospective stock holder and management. The earnings per share represent the number of

BDT earn on behalf of each outstanding share of common stock.

Earnings per share=earnings available for common stock holders/number of share of

common stock outstanding.

Beximco Pharmaceutical Limited does not use earning per share as a measure of any objectives

Price/ Earnings ratio: The PE ratio is commonly used to assess the owner’s appraisal of share

value. P/E ratio represents the amount the investors are willing to pay for each BDT of firm’s

earnings.

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Price earnings Ratio: Market price per share of common Stock/ EPS

Beximco Pharmaceutical Limited does not use price earnings ratio as a measure of any objectives.

Employees: As we all know that human resource is strength for any organization and it’s

especially true for service industry where employees are very important. To most private

employees every organization takes some initiative to retain their employees. Beximco

Pharmaceutical Limited will spend 1 core for the employee training and development.

Types of training programs: Now in every organization training program is essential part for

organization success, because it helps the employees to cope up with new challenges which

they have to face in continuously changing business process. Beximco Pharmaceutical

Limited expects to implements training program like sending employees to outside to attend

seminars, executive training, and external training.

Promotion (%): Promotion is a crucial factor for developing the career path of existing

employee of any organization. It motivates the employees to stay in one company rather than

switch to others. Its increase the employee’s job satisfaction as well. Beximco

Pharmaceutical Limited targets no promotions (0%) for employees in year 2009.

Salary change (%): Salary is an important component of compensation package offered by an

organization. It is a form of periodic payment from an employer to an employee, which may

be specified in an employment contract. Today, the idea of a salary continues to evolve as

part of a system of all the combined rewards that employers offer to employees. With the

increase in workload and experience organizations need to increase the salary of its

employees to satisfy them. Otherwise employees will be de-motivated which will leads to

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possible job switching. Beximco Pharmaceutical Limited is expecting to change the salary of

the employees with the range of 10% to 12%.

Turnover (percentage change desired): Turnover is the rate at which an employer gains and

losses employees. Simple ways to describe it are "how long employees tend to stay" or "the

rate of traffic through the revolving door." Turnover is measured for individual companies

and for their industry as a whole. Beximco Pharmaceutical Limited desires no change (0%

change) in turnover for year 2009.

Absenteeism (percentage change desired): Absenteeism means an individual remain absent

without any information or intimation to his superior, whether it is one day or more.

Absenteeism can at mass level also. It has a serious negative impact on company’s

performance because it’s reduced productivity. Organization needs maintain a strict policy to

handle this issue properly. Beximco Pharmaceutical Limited does not use Absenteeism as a

measure of any objectives.

Contribution: Beximco Pharmaceutical Limited targets to contribute Tk. 1 core for Human

Resource Development.

Growth in employment: Growth in employment refers to the rate at which an organizations

number of employees increase from its previous year. A positive growth is always expected

by both the country and the organizations. Beximco Pharmaceutical Limited is expecting a

negative growth of 1% in employment in year 2009.

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2.3 Analysis of the Intervening Conditions

Intervening condition defines the overall condition that exist when the company is running their

business and this condition recognized as a blessing or problematic for their company. When

company makes any decision they need to have clear cut idea about this condition because it related

with company long term existence.

A representative of Beximco Pharmaceutical Limited was asked to rate several intervening

conditions in terms of the probability of impact (as in high, medium or low) and the state of

occurrence (i.e. present, potential or uncertain) and the results were plotted in matrices. The

intervening conditions that are relevant for Beximco Pharmaceutical Limited are the ones which fall

in the present-high, present-medium, present-low, potential-high, and finally potential-medium

categories and present-high being the intervening conditions with the highest degree of priority.

Factors in accordance with their status of occurrence:

There are certain factors that will create an impact on our actions, which are designed for

attaining our objectives. These factors are following:

Economic Factor

Technological factor

Government/Political/Legal Factor

Customers

Competitors

Resources and capabilities

Page | 17

THE ECONOMIC FACTORS Economic factors like inflation, exchange rates, GNP and unemployment rate could have significant

affect on BPL’s operating profits. We can further divide the economic factors in few parts based on

their type. These are following:

1) Change in inflation

2) Change in exchange rates

3) Change in interest rates

4) Change in GNP

5) Change in unemployment rate

Present Potential Uncertain 1. CHANGE IN INFLATION 3 2 1 2. CHANGE IN EXCHANGE RATES 3 2 1 3. CHANGE IN INTEREST RATES 3 2 1 4. CHANGE IN GNP 3 2 1 5. CHANGE IN UNEMPLOYMENT RATE 3 2 1

CHANGE IN INFLATION:

We know that inflation is a persistent increase in the level of consumer prices or a persistent decline

in the purchasing power of money. At present we are dealing with the change in inflation. The

change in inflation can create an impact on our actions in various ways and it is a present scenario. If

Bangladesh has higher inflation than the rest of the world, it will lose price competitiveness in

international markets. This assumes a given exchange rate. If the exchange rate depreciates, this may

help to restore some of the lost competitiveness. It will also affect our investment or spending

decision as the interest rate goes up during the inflation period. A potential rise in inflation rates

would mean that the cost of raw materials would increase thus decreasing the profit margin of BPL.

On the other hand, if there is an increase in inflation this would translate in increased products

prices, and BPL’s imports could decrease since buyers may go elsewhere looking for competitive

Page | 18

prices and BPL would the suffer adverse consequences given the amount of resources employed in

increasing production capacity. So, it has present status of occurrences.

CHANGE IN EXCHANGE RATES:

If we consider the status of occurrence of the change in exchange rates, we can see that it’s

potential. Change in exchange rate put some significant impact on our actions. As Beximco

Pharmaceutical Limited is operating their business all around the world, so this create problem in

their decision making process. Exchange rates would play a major role. For instance, in BPL wants

to import machinery but the Taka depreciates heavily against the major world currencies; this would

make the same procurement cost much more

CHANGE IN INTEREST RATE:

Change in interest rate is a potential factor. Business might be directly affected by a change in

interest rates. Interest rate changes also affect individuals and individuals are customers! If interest

rates change, the incentive for individuals to take out loans to buy goods will also change. As a

organizations profitability depends on the customers and their buying decision so change in interest

rate plays an important role in the decision making process.

CHANGE IN GNP:

If we consider the status of occurrence of the change in GNP, we can see that it’s a potential factor.

The Gross National Product (GNP) is the total taka value of all final goods and services produced for

consumption in society during a particular time period. Its rise or fall measures economic activity

based on the labor and production output within a country. If GNP increases it means the total taka

value of all final goods and services produced for consumption in society increases and vice versa. It

is a present factor for BPL while taking an action in Bangladesh.

Page | 19

CHANGE IN UNEMPLOYMENT RATE:

The unemployment rate represents the number of people unemployed as a percent of the labor force.

The status of occurrence is present. The actions of BPL may not get affected by change in

unemployment rate.

TECHNOLOGICAL FACTORS

In the technology aspect BPL is well equipped and is usually way ahead of most the

pharmaceutical industry players as it continuously invests in its plant facilities to upgrade its

manufacturing processes and make them more effective and efficient. Therefore competitors’

advancement in technology usually does not worry BPL. We can further divide the technological

factors in few parts based on their type. These are following:

• Advancements in technology

• Growth in R & D in the industry

Present Potential Uncertain 1. ADVANCEMENTS IN TECHNOLOGY 3 2 1

2. GROWTH IN R & D IN THE INDUSTRY 3 2 1

Advancement in technology:

If we consider the status of occurrence of the advancement in technology, we can see that it’s a

uncertain factor.

Growth in R & D in the industry:

Growth in R & D in the industry is an uncertain factor for Beximco Pharmaceutical Limited. As

most of the competitors of Beximco Pharmaceutical Limited are investing a lot of money for R & D

purpose in recent times so it has become a vital factor for Beximco Pharmaceutical Limited as well.

Page | 20

GOVERNMENT/ POLITICAL/ LEGAL FACTORS

The political environment is really not much of an issue regarding Beximco Pharmaceuical’s

business operations. As of now, Bangladesh is being governed by the political government. Before

this government took over the power, Bangladesh saw unprecedented political unrest for quite some

period. These types of political calamities spoil country’s reputation as a whole and subsequently

foreign authorities become reluctant to inspect the pharmaceutical companies.

We can further divide the Government/Political/Legal factors in few parts based on their type.

These are following:

• Anti-trust legislations

• Export/import policies

• Political unrest

Present Potential Uncertain 1. ANTI-TRUST LEGISLATIONS 3 2 1

2. EXPORT/IMPORT POLICIES 3 2 1

3. POLITICAL UNREST 3 2 1

Anti-trust legislation:

Anti-trust legislation is legislation designed to break up existing monopolies and prevent the

formation of new monopolies to increase competition and societal welfare. This is a low uncertain

factor for Beximco Pharmaceutical Limited in Bangladesh while making any move in order to

achieve the designed objectives.

Page | 21

Export/Import policies:

The export and import policy of a country greatly affect any organizations decision making process

that are somehow related with any business purpose with that country. The status of occurrence of

this matter is low uncertain.

Political Unrest:

If we consider the status of occurrence of political unrest, than we can see that it’s a low potential

factor. Political unrest can greatly affect the decision making process of Beximco Pharmaceutical

Limited. Political disturbance has a potential impact on the actions of an organization.

CUSTOMERS

For the customers quality had meaning to them in terms of quantity, purity, stability, safety, efficacy,

packaging and presentation of the product. Lately there has been a change in the customers’

definition of quality i.e. there has been a change in their choice criteria and relative importance of

choice criteria as well. Today’s sophisticated customers make informed decisions based on their

choice criteria. Today’s “new” definition of quality includes the quality of the manufacturing process

as well, in that the customers want to see eco-friendly processes in addition to eco-friendly finished

products. We can further divide the customer centered factors in few parts based on their type. These

are following:

Change in choice criteria

Change in relative importance of choice criteria

Change in preferences

Informed decision making

Page | 22

Present Potential Uncertain

1. CHANGE IN CHOICE CRITERIA 3 2 1

2. CHANGE IN RELATIVE IMPORTANCE 3 2 1

OF CHOICE CRITERIA

3. CHANGE IN PREFERENCES 3 2 1

4. INFORMED DECISION MAKING 3 2 1

Change in choice criteria:

The change in choice criteria of the customer has a present impact over the actions or strategies of

Beximco Pharmaceutical Limited. As all the product of Beximco Pharmaceutical Limited are doctor

centered and they are designed mainly based on the doctor’s choice criteria, so change in choice

criteria has an impact on the action that are designed to attain the objective of Beximco


Change in relative importance of choice criteria:

The change in relative importance of choice criteria has a present impact on the actions taken by

Beximco Pharmaceutical Limited that are designed to attain the objectives.

Change in preference:

Customer preference refers to the selection process of the customer where they select one over

another. If we consider the status of occurrence of the change in preference, than we can see that it’s

a Potential factor.

Page | 23

Informed decision making:

At present Beximco Pharmaceutical Limited is dealing with the informed decision making. Informed

decision making is an important part for attaining the objective.

COMPETITORS

While BPL makes it a point to always strive to stay ahead in the game it does however acknowledge

that it is not the only big player in market. Therefore from a strategic stance BPL is always weary of

its main competitors’ actions (namely Square Pharmaceuticals, etc) in terms of adoption of new

technologies and their relative investments activities particularly in the production processes. We

can further divide the competitor centered factors in few parts based on their type. These are

following:

Increase/decrease in number of competitors

Adoption of new technologies

Change in investment in marketing/production initiatives


1. INCREASE/DECREASE IN NUMBER OF

COMPET 3 2 1

2. ADOPTION OF NEW TECHNOLOGIES 3 2 1

3. CHANGE IN INVESTMENTS IN

MARKETING/PRODUCTION INITIATIVES 3 2 1

Page | 24

Increase/Decrease in number of competitors:

Increase or decrease in number of competitors plays a powerful role while taking any action and it’s

true for every organization. The status of occurrence of the increase/decrease in number of

competitor is a potential factor.

Adaption of new technologies:

Adaption of new technologies by the competitors also plays a vital role on the actions taken by

Beximco Pharmaceutical Limited. Here the status of occurrence is present.

Change in investment in marketing/production initiatives:

Change in investment in marketing/production initiatives taken by competitors also push Beximco

Pharmaceutical Limited to change or modify their actions in order to compete with the marketing or

production initiatives taken by the competitors. Here the status of occurrence is present.

BPL’s products are designed and engineered in such that their overall presentation, size, shape,

color, flavor, viscosity, coating etc. are completely different from those of the competitors. It is

important that BPL makes sure it is aware of its competitors’ actions. For instance currently BPL is

focuses on the packaging and presentation of its products in preparation for more sophisticated

international markets meanwhile its main competitors e.g. Square Pharmaceutical may be thinking

along the same lines as well.

RESOURCES AND CAPABILITIES BPL’s most important core competence lies in its business process inter-linkages that tie together, in

a secret formula, its Advanced Technical Manufacturing Processes with other key ingredients like its

Page | 25

talented Human Capital. . Given the current saturated domestic market BPL wants to increase its

manufacturing capacity in order to increase its export volume and continue growing as a company.

To make this increased capacity BPL is investing its resources in making its manufacturing facilities

are continually upgraded with the latest in the technological revolution. We can further divide the

competitor centered factors in few parts based on their type. These are following:

Existence of core competence

Adequacy of skills and resources

(HR/Marketing/Distribution/Operations/R&D/Finance)

Employee relations

HRD initiatives


1. EXISTENCE OF CORE COMPETENCE 3 2 1

2. ADEQUACY OF SKILLS AND RESOURCE 3 2 1

(HR/MARKETING/DISTRIBUTION/OPERATIONS/R&D/FINANCE)

3. EMPLOYEE RELATIONS 3 2 1

4. HRD INITIATIVES 3 2 1

Existence of core competence:

The status of occurrence of the existence of core competence is present. Existence of core

competence can change or put an impact on the actions taken by Beximco Pharmaceutical Limited in

order to attain the objectives.

Page | 26

Adequacy of skills and resources:

Adequacy of skills and resources is a Potential factor that can play a great role on the actions taken

by Beximco Pharmaceutical Limited. As adequacy of skills consists of so many things like HR,

Marketing, Distribution, Operations, R & D, and Finance

Employee Relations:

Employee relation is a present factor that can affect the decision or actions taken by Beximco

Pharmaceutical Limited to attain the objectives. Good employee relationship ensures good

coordination among the team members so the probability of success increases.

HRD Initiatives:

The status of occurrence of this factor is present. That means it plays a medium role on the actions

taken by Beximco Pharmaceutical Limited.

Page | 27

2.4 Identification of the Key Success Factors

KSFs for Beximco Pharmacy Limited:

MODERATELY EXTREMELY

IMPORTANT IMPORTANT

1. International standard manufacturing facility 1 2 3 4 5

2. Highly qualified employee 1 2 3 4 5

3. National wide distribution network 1 2 3 4 5

4. Relationship with the physicians 1 2 3 4 5

5. Financial Strength 1 2 3 4 5

6. Global acceptance 1 2 3 4 5

7. Marketing skills 1 2 3 4 5

8. Goodwill/ Positive Brand image 1 2 3 4 5

9. Quality of the product 1 2 3 4 5

10. Export facilities 1 2 3 4 5

Rate each KSF based on the extent to which actions of BPL are compatible with it. INCOMPATIBLE PRECISELY COMPATIBLE 1. International standard manufacturing facility 1 2 3 4 5

2. Highly qualified employee 1 2 3 4 5

3. National wide distribution network 1 2 3 4 5

4. Relationship with the physicians 1 2 3 4 5

5. Financial Strength 1 2 3 4 5

6. Global acceptance 1 2 3 4 5

7. Marketing skills 1 2 3 4 5

8. Goodwill/ Positive Brand image 1 2 3 4 5

9. High product quality 1 2 3 4 5

10. Export Facilities 1 2 3 4 5

EExxhhiibbiitt 0022:: TTaabblleess ddeeppiiccttiinngg pprriimmaarryy rreesseeaarrcchh ddaattaa

Page | 28

F/D analysis: Favourables and Detrimentals of BPL

EExxhhiibbiitt 0033:: TTaabbuullaarr ccaallccuullaattiioonn ooff FF//DDss

Here, the upper limit of the weighted score for the KSF is 0.60, lower limit of the weighted score is

0.30 and the mean score is 0.464.

If the weighted average score is greater than 0.464, then it will be regarded as Favourables (F) and if

the score is below 0.464then it will be regarded as Detrimental (D). As no KSF has score of 0.464

(average score), so no KSF has the probability of becoming either F or D.

Index KSFs Weight Score Weighted

Score

F/D

1 International standard

manufacturing facility

0.12 5 0.60 F

2 Highly Qualified Employees 0.12 4 0.48 F

3 National wide distribution

network

0.10 5 0.50 F

4 Relationship with the physicians 0.10 5 0.50 F

5 Financial Strength 0.10 4 0.40 D

6 Global acceptance 0.12 4 0.48 F

7 Marketing skills 0.10 3 0.30 D

8 Goodwill/ Positive Brand Image 0.10 3 0.30 D

9 High product quality 0.12 5 0.60 F

10 Export Facilities 0.12 4 0.48 F

Total 4.64

Mean 0.464

Page | 29

The absolute total score (0.464) clearly indicates that the firm is performing rather well overall.

However, individual assessment reveals that it has three detrimentals (KSFs 5, 7, &8) that need closer

investigation. The absolute F/D analysis has a shortcoming since it is not conducted in a comparative

perspective and thus, does not identify firm’s performance across the KSFs in relation to its major

competitors. (Moniruzzaman, 2005)

Calculation for International standard in manufacturing facility:

We assign weight in following way,

We assign weight in following way,

1. If importance of KSF is 5 then weight is 0.12




1. For a KSF weight = 0.12 and Score = 5

Weighted Score = 0.12 * 5 = 0.6 (>0.4648); F/D result: F (Favourable)


Weighted Score = 0.12 * 4 = 0.48 (0.4648); F/D result: F (Favourable)




Weighted Score = 0.10 * 5 = 0.50 (<0.4648); F/D result: F (Favourable)


Weighted Score = 0.10 * 4 = 0.40 (<0.4648); F/D result: D (Detrimental)

Page | 30




Weighted Score = 0.10 * 3 = 0.30 (< 0.4648); F/D result: D (Detrimental)


Weighted Score = 0.10 * 3 = 0.30 (< 0. 0.4648); F/D result: D (Detrimental)


Weighted Score = 0.12 * 5 = 0.60 (< 0.4648); F/D result: F (Favourable)


Weighted Score = 0.12 * 4 = 0.48 (< 0. 0.4648); F/D result: F (Favourable)

Here, the weighted score of International standard manufacturing facility is 0.60 which is greater

than mean score (0.464). It clearly indicates that International standard manufacturing facility is a

favourable (F) key success factor for Beximco Pharmaceutical Limited. All the remaining KSF

factors have been calculated in this way. So, other calculations for the KSFs have not been shown.

After calculating and observing the KSFs the Favorables (F) are:

International standard in manufacturing facility

Highly Qualified Employees

National wide distribution network

Relationship with the doctor

Global acceptance

High quality product

Export facilities

EExxhhiibbiitt 0044:: TTaabbllee ddeeppiiccttiinngg FFaavvoouurraabblleess

Page | 31

The Detrimentals (D) are: Marketing skills,

Goodwill/Positive Brand image

Financial Strength

EExxhhiibbiitt 0055:: TTaabbllee ddeeppiiccttiinngg DDeettrriimmeennttaallss

INTERNATIONAL STANDARD MANUFACTURING FACILITY:

International standard in manufacturing facility is a favourable key success factor for Beximco

Pharmaceutical Limited. According to the Beximco Pharmaceuticals authority, they have done fair

job in maintaining the international standard in manufacturing plant. So, management of Beximco

Pharmaceutical Limited should try to keep and reinforce this success factor for sustainability.

HIGHLY QUALIFIED EMPLOYEES:

It is paramount of importance to have quality employees who can give right direction to the firm and

can work accordingly. The employees of Beximco Pharma are qualified and dedicated to their work

and they have been recruited through a lot of screening. As a result, qualified employees are one of

the favorable key success factors for the Beximco Pharma.

DISTRIBUTION NETWORK:

No matter how quality medicine a pharmaceutical manufactures, if the medicine is not available to

right place at the right time and at right quantity then it is failure for that firm. However, this is

certainly not the case for Beximco Pharma. Beximco Pharma has such a strong channel and

intermediary group that its products are widely available. Consequently, distribution network is a

favorable key success factor for Beximco Pharma.

Page | 32

RELATIONSHIP WITH THE PHYSICIANS:

The main target customer of a pharmaceutical firm is not the end consumer but the physicians. It is

the certified doctors who prescribe the medicines to the patients and persuade them to purchase. It is

important to convince and familiarize the doctors to the new or existing medicines of the respective

pharmaceuticals so that the doctors can work as spokes person of that medicines. In this regard,

Beximco has done fair job and has able to convince the doctors though its traditional value and as

such relationship with physicians is the key success factor for the Beximco Pharma.

FINANCIAL STRENGTH:

As a key success factor financial strength is a detrimental factor of Beximco Pharmaceuticals

Limited. As in recent years the revenues has fallen down and also the share price has gone down so

financial strength is a detrimental key success factor for Beximco Pharmaceuticals Limited.

Beximco Pharmaceuticals Limited should try to improve its financial strength.

GLOBAL ACCEPTANCE:

For export potentiality perspective, global acceptance is a must for Beximco Pharma. According to

the Beximco Pharmaceuticals authority, global acceptance is the favorable KSF and the SBU should

further improve or at least maintain the acceptability for time to come.

MARKETING SKILLS:

The overall marketing skill of a firm is a key to its success. However, Beximco Pharma lags behind

in marketing skill. The marketing skill of Beximco Pharma is a detrimental factor for them and there

is plenty of scope to improve in this factor.

GOODWILL/ POSITIVE BRAND IMAGE:

Goodwill of a firm is an important factor for a firm to prosper in this highly competitive era of

business. Beximco Pharma authority is not satisfied at their goodwill and termed it as a detrimental

Page | 33

factor for their business. So, they need to find ways to improve the goodwill up to level from where

they can cash on.

QUALITY OF THE PRODUCT:

Even though the brand image of Beximco Pharma is a detrimental factor, the quality of the product

is just the opposite. It is a strong favorable KSF for the Beximco Pharma and the SBU should keep it

up.

EXPORT FACILITIES:

For export potentiality perspective, a proper export facility is a must for Beximco Pharmaceutical

Limited. According to the Beximco Pharmaceuticals authority, export facilities are detrimental key

success factor. So Beximco Pharmaceutical Limited has plenty of scope to improve in this factor.

Page | 34

2.5 F/D Analysis of Beximco Pharma’s Key Success Factors

The following pages analyze the Key Success Factors of Beximco

Pharmaceuticals with an F/D analysis.

Each of the favourables and detrimental will be analyzed by

applying the phenomenon model. The use of the phenomenon model

would reveal information on the 5Ws and the H.

Therefore, it would be possible to know the following by conducting

the analysis:

what the F/D actually is,

why it has occurred and

who and what resources are involved

what the context and intervening conditions are

what the actual and desired outcomes are, and

How an F should reinforced or how to overcome a D.

Therefore, this analysis aids the strategist in deciding on the

appropriate strategic and tactical actions as well as ways to

implement, and evaluate and control these actions.

“‘PHENOMENON’ model states that any phenomenon is a result of a condition or

conditions (causal conditions). This explains why the phenomenon has

occurred. Such phenomenon is linked to certain

consequences that are desired by the individuals or

organisations. We take actions so that the

phenomenon occurs and desired consequences

materialise. But it may well be possible that the desired outcome is different from actual consequence. All

these components occur in a context. In the context,

there are conditions (intervening conditions) that influence the ‘why’ and in

effect, influence all the components within the

context, in turn.” (MONIRUZZAMAN, 2005)

Page | 35

IIInnnttteeerrrnnnaaatttiiiooonnnaaalll SSStttaaannndddaaarrrddd MMMaaannnuuufffaaaccctttuuurrriiinnnggg FFFaaaccciiillliiitttyyy

EExxhhiibbiitt 0066:: AA ddiiaaggrraamm ooff pphheennoommeennoonn mmooddeell ((MMoonniirruuzzzzaammaann,, 22000055)) ddeeppiiccttiinngg iinntteerrnnaattiioonnaall

ssttaannddaarrdd mmaannuuffaaccttuurriinngg ffaacciilliittyy aass aa ffaavvoouurraabbllee

WHAT? Facilities that satisfy

International requirements

HOW? Reinforce by upgrading manufacturing facilities

Intervening conditions Customers, Competitors, Resources & Capabilities

WHY? Prerequisite to Product acceptance

WHAT Consequences? Expected: Enter Developed markets

Actual: Excelling domestically and in a few developing markets

Context Stringent requirements in developed markets

WHO? Business

stakeholders

Page | 36

‘PHENOMENON’ model states that any phenomenon is a result of a condition or

conditions (causal conditions). This explains why the phenomenon has occurred. Such

phenomenon is linked to certain consequences that are desired by the individuals or

organizations. We take actions so that the phenomenon occurs and desired

consequences materialize. But it may well be possible that the desired outcome is

different from actual consequence. All these components occur in a context. In the

context, there are conditions (intervening conditions) that influence the ‘why’ and in

effect, influence all the components within the context, in turn. ((MMoonniirruuzzzzaammaann,,

22000055))

Page | 37

INTERNATIONAL STANDARD MANUFACTURING FACILITY Beximco Pharmaceuticals Ltd. is a leading edge pharmaceutical company based in Dhaka,

Bangladesh and is acclaimed for its outstanding product quality, world-class manufacturing

facilities, product development capabilities and outstanding professional services. Beximco Pharma

is the pioneer in pharmaceutical export from Bangladesh and has received National Export Trophy

(Gold), the highest national accolade for export, for record three times.

Beximco Pharmaceuticals Ltd. has international standard manufacturing facilities where it produces

world class pharmaceutical products following current Good Manufacturing Practice ; as per the

World Health Organization (WHO) requirements. BPL’s manufacturing facilities are spread across a

20 acres site located in and around Dhaka, Bangladesh. The property, buildings and equipment are

entirely owned by the company and approximately 13 of the 20 acres of land are currently in use.

The site includes the research laboratory, several warehouses, facilities for manufacturing

intravenous fluids, etc. The plant and equipment throughout the site was designed, procured and

installed by partners from Germany, Switzerland, Sweden, Italy and the United Kingdom, amongst

others. The site even has its own utility infrastructure intended to ensure the adequate generation and

distribution of pure water at all times. There are also water purifying and liquid nitrogen generation

facilities on site. Recently BPL’s manufacturing facilities have been approved by:

• Became first Bangladeshi pharmaceutical company to enter Latin America

• Received GMP Certification from GCC

• Received GMP Clearance from TGA, Australia

• 45 new products registered in 10 countries and entered into 7 new countries

Page | 38

• Entered into a Long Term Arrangement (LTA) with the Global Supply Division

(Copenhagen, Denmark) of the United Nations Children’s Fund (UNICEF), to supply

metered dose inhaler products

Regulatory Capabilities and International Recognition

BPL’s regulatory team has a good understanding of international regulatory requirements and has

received a number of international regulatory approvals, including approvals from highly regulated

markets. After commissioning of the new US FDA standard Oral Solid Dosage (OSD) plant in late

2007, BPL’s started the regulatory approval process for certification from stringent regulatory

authorities of the developed countries. Within the very short span of time our trained and committed

team has been able to add a number of key regulatory approvals to its credit. Among others, BPL’s

have received GMP Clearance from Therapeutic Goods Administration (TGA) of Australia and from

Gulf Central Committee for Drug Registration, Executive Board of the Health Ministers' Council for

Gulf Cooperation Council (GCC) states (representing Saudi Arabia, Kuwait, Bahrain, United Arab

Emirates, Qatar and Oman). BPL’s is also in the process of obtaining approvals from several other

regulatory authorities including National Health Surveillance Agency (ANVISA) of Brazil,

Medicine and Healthcare Regulatory Agency of United Kingdom (UK MHRA), US FDA etc.

IV Fluid Manufacturing Plant BPL’s intravenous (IV) fluid manufacturing plant is one of the most technologically advanced plants

in the world. The plant was designed and installed in collaboration with Pharmaplan of Germany, a

sister concern of Fresenius AG of Germany. In designing the process, special care has been taken

ensuring absolute hygienic manufacturing conditions, in a class 100 clean room. Even the air inside

this room is cleaned up to 100 particles per cubic feet passing it through HEPA (High Efficiency

Page | 39

Particulate Air) filters. Thus, an advanced sterile environment is maintained in manufacturing the IV

fluids in order to avoid the entry of bacteria, pyrogen and inert particles into products. This ensures

the highest standards of quality and purity in order to ensure the highest level of safety. The plant is

ISO 9001: 2000 certified.

State of the art MDI Plant The Metered Dose Inhaler (MDI) manufacturing plant is one of the finest facilities in the world to

produce Ozone benign HFA based MDI products. The plant was designed, procured and installed by

Pamasol, Switzerland, a world renowned equipment supplier for Inhaler product manufacturing The

facility has specialized areas for dispensing, manufacturing, canister and valve cleaning, canister

filling, quarantine storage area, spray testing, packaging, propellant storage and in process control.

The state-of-the-art Quality Control laboratory has been equipped

with equipment like HPLC, Karl Fischer Titrator, Andersen

Cascade Impactor etc.

New Oral Solid Dosage (OSD) Plant BPL has invested over US $ 50 million the Oral Solid Dosage

(OSD) plant complying with guidelines of highly regulated markets (for example, USFDA,

UKMHRA, TGA Australia etc.). This state-of-the-art facility incorporates modern technological

advancements. The building finishes and equipment have been made to comply with global

standards (e.g. non shedding materials, etc.). The manufacturing and packaging facilities have been

designed to minimize generation and maximize containment of dust particles using closed transfer

system and clean in place facility. All practicable measures have been taken to ensure that members

BPL’s MDI facility is the only approved

outsourced facility of GlaxoSmithKline for their Ventolin®

Page | 40

of the staff are not exposed to unacceptable concentrations of dust particles. Process area, cubicles,

storage area are connected to the vacuum dust cleaning. The design of the plant ensures automated

materials handling systems and multilevel designs to enable gravity feed between processing stages.

The building design has also allowed maximum engineering maintenance access without entering

into the production areas. Precise selection of equipment is also critical to improve process

capability and ensure process robustness. A wide range of equipment has been procured from world

renowned companies like Glatt, Romaco, Noack, Korsch and Nicomac. A state-of-the-art chemical

laboratory and dedicated microbiological laboratory equipped with a wide range of equipment

facilitate the quality control activities. The major equipment include HPLCs, UV spectrophotometer,

FTIR spectrophotometer, AA Spectrophotometer, Karl Fischer titrator etc.

Causal Conditions In the pharmaceutical industry a manufacturing facility that meets international standards is a

prerequisite to quality product. BPL cannot sell its product unless its facilities meet the stringent

criteria. This is where the current Good Manufacturing Practice (cGMP) comes into the big picture.

BPL has to implement GMP. GMP is designed to minimize the risks involved in any pharmaceutical

production that cannot be eliminated through testing the final product. The main risks are:

unexpected contamination of products, causing damage to health or even death; incorrect labels on

containers, which could mean that patients receive the wrong medicine; insufficient or too much

active ingredient, resulting in ineffective treatment or adverse effects. GMP covers all aspects of

production; from the starting materials, premises and equipment to the training and personal hygiene

of staff. Detailed, written procedures are essential for each of BPL’s processes that could affect the

quality of the finished product.

Page | 41

Therefore, it is critical that BPL has systems to provide documented proof that correct procedures

are consistently followed at each step in the manufacturing process - every time a product is made.

WHO has established detailed guidelines for good manufacturing practice and meeting these criteria

are absolutely mandatory if BPL is ever to enter the developed markets like the US and European

markets.

BPL understands the importance of having international standard facilities. After all skimping on

quality in this respect is not really an option. Making poor quality products does not save BPL

money. In the long run, it is actually more expensive to find mistakes post production rather than

preventing them in the first place. GMP is designed to ensure that mistakes do not occur. Making

and distributing poor quality medicines would only lead to loss of credibility for BPL in the eyes of

the general public and the health care industry.

Environmental Factors Context:

Product Manufacturing Process requirement:

The manufacturing processes of certain products need to be backed by advanced technology which

can be found only in international standard facilities. For instance, due to the potential risk to the

environment posed by CFCs, the technology shift in MDI industry is currently towards using

hydrofluoroalkane (HFA) as propellants. Considering this changing trend in pulmonary drug

delivery technologies, the company has already developed the HFA based MDIs which inevitably

requires very high level of expertise and sophisticated technology. BPL is among the very few

companies in the world manufacturing CFC-free HFA MDIs. Another example is the inhaler

manufacturing operation which requires stringent control of humidity and temperature, automatic

Page | 42

monitoring equipment are in use to continuously record temperature and relative humidity in areas

like dispensing room, suspension manufacturing room, filling room, quarantine room etc.

Developed International Markets:

For a while now BPL has been exporting its MDI brands to various markets including Singapore,

Kenya and Pakistan. However, due to its previously CFC based formulation BPL was not allowed to

enter the most attractive US and EU markets. Therefore BPL had to find a way to work around the

problem. CFCs are generally used as propellants in MDI formulation. They are safe for human use

but are not environment friendly and the “Montreal Protocol on Substances that deplete ozone layer”

(1987) urges to all manufacturers to implement a gradual phase out of CFC usage globally. This

global phase out of CFC production and formidable challenge to develop alternative ozone friendly

inhalers placed the country like Bangladesh in a difficult situation to continue the supply of essential

MDI to millions of asthma and COPD patients. Many major pharmaceutical companies in the world

are undertaking extensive research and development works to produce CFC free MDIs, by replacing

CFC propellant with Ozone-benign HFA (Hydrofluoroalkane) propellant. But, manufacturing HFA

MDIs is a big challenge as it involves high level of expertise and sophisticated technology and for

companies in developing and least developed countries it seemed to be a technology far beyond

reach

However the good news is that recently, BPL came up with a new and improved HFA based

formulations which should take BPL one step closer to entering the highly regulated markets of the

US and EU which represents the major share of the world MDI market worth more than US$ 10

billion.

Page | 43

Intervening Conditions:

Economic:

Economic factors like inflation, exchange rates, GNP and unemployment rate could have significant

affect on BPL’s operating profits. For instance, a potential rise in inflation rates would mean that the

cost of raw materials would increase thus decreasing the profit margin of BPL. On the other hand, if

there is an increase in inflation this would translate in increased products prices, and BPL’s imports

could decrease since buyers may go elsewhere looking for competitive prices and BPL would the

suffer adverse consequences given the amount of resources employed in increasing production

capacity. Exchange rates would play a major role. For instance in BPL wants to import machinery

but the Taka depreciates heavily against the major world currencies; this would make the same

procurement cost much more

Technological & Political:

In the technology aspect BPL is well equipped and is usually way ahead of most the pharmaceutical

industry players as it continuously invests in its plant facilities to upgrade its manufacturing

processes and make them more effective and efficient. Therefore competitors’ advancement in

technology usually does not worry BPL. BPL also does not fret about the political environment

much either since it is mostly neutral or slightly positive.

Customers:

With global warming on everyone’s mind, today’s customers are much better informed and therefore

much more demanding. The customers not only demand for quality at competitive pricing they are

also concerned about the environmental cost. This concern for the environment is a relatively new

choice criterion and this choice criterion has also caused a shift in the relative importance of choice

Page | 44

criteria as eco-friendliness takes on more and more importance particularly in the mind set of the

sophisticated customers in the developed markets. So the latest trend in customer preference has

been to opt for quality and cost effective but also eco-friendly brands.

Competitors:

While BPL makes it a point to always strive to stay ahead in the game it does however acknowledge

that it is not the only big player in market. Therefore from a strategic stance BPL is always weary of

its main competitors’ actions (namely Square Pharmaceuticals, etc) in terms of adoption of new

technologies and their relative investments activities particularly in the production processes.

Resource & Capabilities:

BPL’s most important core competence lies in its business process inter-linkages that tie together, in

a secret formula, its Advanced Technical Manufacturing Processes with other key ingredients like its

talented Human Capital. . Given the current saturated domestic market BPL wants to increase its

manufacturing capacity in order to increase its export volume and continue growing as a company.

To make this increased capacity BPL is investing its resources in making its manufacturing facilities

are continually upgraded with the latest in the technological revolution.

Product Improvement (Additional):

It is true that BPL has earned quite a name for its product offering however to keep its reputation and

enhance it, BPL needs to continually improve it products by improving its manufacturing facilities.

Page | 45

Beximco Pharma CEO Mr. Nazmul Hasan said: “In our long history of more than 25 years, Beximco Pharma has always been the leader…In achieving GMP Clearance from a globally recognized regulatory authority like TGA Australia; BPL has crossed a very important milestone in its journey to become a global pharmaceutical company. This TGA approval puts Beximco Pharma in an elite group of manufacturers world-wide…enabling the Company to manufacture and export medicines to Australia and other countries in the developed world which recognizes the standard.”

Performance

Actual Achievements:

With its state-of0the-art facilities BPL has joined world league

of CFC free inhaler manufacturers. BPL is now the leading

manufacturer of pressurized Metered Dose Inhalers (MDIs) in

Bangladesh and is among the few pharmaceutical companies in

the world manufacturing CFC (Chlorofluorocarbon) free MDIs,

used in asthma and COPD.

Desired Achievements:

BPL attained GMP clearance from TGA Australia and also

came up with CFC-free HFA based MDIs; these two

achievements should pave the road to the world’s most coveted

markets the US and the EU which represent the major share of

the world MDI market worth more than US$ 10 billion. Under

Mutual Recognition Agreements (MRA), TGA’s Certificates of

GMP Compliance are recognized by over 20 developed

countries including Austria, Belgium, Canada, Denmark,

Switzerland, etc. After the substantial increase in

manufacturing capacity BPL would want to serve these

markets.

Page | 46

BPL’s facilities will enable it to manufacture its own brands and contract manufactures other

pharmaceutical companies' branded products at a standard suitable for commercial scale in

developed countries. BPL can offer an extremely cost effective solution to manufacturing quality

drugs, enjoying significant cost advantages due to the low labor and energy costs in Bangladesh.

People and Resources involved

The people concerned with BPL’s facilities would include its business stakeholders; namely its

• Shareholders

• Employees

• Customers

• Physicians

• End-users

• Suppliers

• Government agencies

• Other groups

Shareholders would want to know whether the resources are properly employed. Top level

employees would be concerned with the strategic implications of appropriating more resources for

the facilities while the technical employees would be concerned with productivity and the safety

issues. Customers (e.g. clients of BPL’s contract manufacturing), physicians and patients would be

concerned with the facilities outputs. Suppliers would need to be familiar with BPL’s facilities’

capacity so that the supply chain can work in sync. Government agencies and other groups (e.g.

Therapeutic Goods Administration (TGA), etc) would be concerned with resources employed in the

Page | 47

facilities, the actual processes (as in whether they are in compliance the regulations) and the final

facility outputs.

Initiatives BPL’s international standard facility turned out to be a “favourable”. Therefore BPL needs to

continuously reinforce and improve it manufacturing facilities in order to gain and maintain

sustainability. BPL understands these implications very well and is acting accordingly. For instance,

in 2005 BPL had a growth rate of around 10-15%. BPL has then set an ambitious goal of doubling

Page | 48

its sales revenue by 2010. To achieve this revenue goal is focusing on custom manufacturing

partnership with the global giants in pharmaceutical industry. Aligned with this strategy, BPL has

significantly increased the capacity of its Oral Solid Dosage (OSD) product. BPL is gearing up its

facilities in preparation for the developed markets’ expectations.

Page | 49

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ffaavvoouurraabbllee

WHAT? Quality in quantity, purity, stability, safety, efficacy,

packaging and presentation

HOW? Reinforce by upgrading product manufacturing

processes, presentation and packaging


WHY? Acceptance in developed markets

WHAT Consequences? Expected: acceptance in developed markets

Actual: acceptance in domestic and developing markets

Context Stringent requirements in developed markets

WHO? Business

Stakeholders

Page | 50

Quality At Beximco Pharma, BPL believe that being in the business which deals with human health makes

more responsible. This sense of responsibility compels them to keep the highest standards of BPL

products. Through BPL products we seek to deliver clear health benefits and higher values to the

patients. With this in mind BPL have commissioned state-of-the-art manufacturing facilities with

innovative new technologies. BPL use the most modern equipment for quality control and stringent

quality assurance procedure and BPL manufacturing process conforms strictly to the current Good

Manufacturing Practices. Over the years the trust and reliability on our products has emerged as one

of our core competencies. BPL’s relentlessly ensuring quality in terms of quantity, purity, stability,

safety, efficacy, packaging and overall presentation of the products. Our business processes and

practices are designed to achieve quality results that would meet the expectation of patients and

physicians through getting highest quality products, of shareholders and stakeholders through

achieving returns. When it comes to manufacturing, in each and every step including mixing, filling,

testing, labeling, batch printing and other procedures BPL ensures world class products. For

instance, Formula E is formulated with an excellent chocolate taste. Ascobex and Carocet are the

best tasting drugs in their respective categories. Aristovit B and Aristovit M are the most elegant

drugs in their categories in the country. Whatever may be the dosage form or packaging – blister,

strip, bottle, cartons, labels etc., BPL’s presentations are widely recognized for their best aesthetic

look among all competitive brands.

Page | 51

Causal Conditions Product Quality in BPL’s line of business is practically what makes the difference between life and

death every day. Therefore it is crucial that BPL maintains culture, which is fully

committed to the continuous creation of superior customer value. While the

level of quality BPL has been providing since its inception was good

enough for the domestic market the expectations and demands of the

developed markets is a different ballgame all together. This is why BPL

has been gearing up its manufacturing facilities so that that it can

significantly improve its products’ quality. For this very same reason BPL

is a company that is continuously searching for the next treatment

advancements. BPL’s R & D has been divided into two teams. Team-I is responsible for the

improvement of existing formulations and team-II is engaged in the development of new

formulations.


Developed International Markets:

In developed markets, it takes a lot of rigorous processes to comply with the registration

requirements for getting the approval from the concerned Regulatory Agencies, starting from Raw

Material Sourcing to all production processes, quality control processes and quality assurance

processes, finally leading to the total quality-checks of the quality of the finished products and of

course its presentation and packaging are just as important.

Page | 52


Economic:

For the end product to be of premium quality, the inputs have to be premium quality as well.

Therefore the economic environment needs to be considered since it could affect the procurement of

raw materials. . For instance, a potential rise in inflation rates would mean that the cost of local raw

materials would increase thus decreasing the profit margin of BPL. On the other hand if BPL needs

to import its raw materials, in this respect, exchange rates would play a major role. For instance if

the Taka depreciates heavily against the major world currencies; this would make the same volume

of raw materials more expensive.

Technological & Political:

Changes in the technological and political environment can be ignored since according to the

intervening conditions matrix these factors are not key issues for Beximco Pharma.

Customers:

There used to be time when it was only the quality of the finished product and indirectly the quality

of inputs that mattered to the customers. For the customers quality had meaning to them in terms of

quantity, purity, stability, safety, efficacy, packaging and presentation of the product. Lately there

has been a change in the customers’ definition of quality i.e. there has been a change in their choice

criteria and relative importance of choice criteria as well. Today’s sophisticated customers make

informed decisions based on their choice criteria. Today’s “new” definition of quality includes the

quality of the manufacturing process as well, in that the customers want to see eco-friendly processes

in addition to eco-friendly finished products.

Page | 53

Competitors:

BPL’s products are designed and engineered in such that their overall presentation, size, shape,

color, flavor, viscosity, coating etc. are completely different from those of the competitors. It is

important that BPL makes sure it is aware of its competitors’ actions. For instance currently BPL is

focuses on the packaging and presentation of its products in preparation for more sophisticated

international markets meanwhile its main

competitors e.g. Square Pharmaceutical may

be thinking along the same lines as well.


BPL offers such high quality because of its

business process inter-linkages which are

supported by its core competences. In order to

participate in developed markets BPL needs to upgrade its quality by improving its value-creating

processes and to improve in this capacity BPL will need to employ it resources appropriately.


At Beximco Pharma, product improvement efforts are an ongoing process. BPL has set a target of

improving the packaging with the minimum limit on the number of products to get a makeover being

75 while the upper limit being 100.

Page | 54

Performance


Product Quality: The quality and efficacy of the products being exported from Bangladesh have been

highly appreciated in the domestic market and in foreign developing markets.

Packaging & Presentation: The packaging and presentation of pharmaceutical products of products

sold locally and exported from Bangladesh are comparable to international standard and are highly

appreciated by the doctors, chemists & patients of all the countries being exported to.


BPL has now set its eyes on the much coveted US and EU markets. BPL’s R&D is focusing on

innovations of some high-value, high-margin new products in the hopes that with its high-value

product offerings, it will attain a competitive edge in the years to come.

People and Resources involved The people concerned with BPL’s product quality would include its business stakeholders; namely

its

Shareholders

Employees

Customers

Physicians

End-users

Suppliers

Government agencies

Other groups

Page | 55

Shareholders know how strongly and positively correlated

BPL’s product quality and sales revenue would care.

Therefore shareholders would want to be assured that

proper measures are taken to ensure quality. Top level

employees would be concerned with the strategic

implications e.g. whether the quality is good enough for

the developed markets. Customers (e.g. clients of BPL’s

contract manufacturing), physicians and patients would be

concerned with the effectiveness of the products. Suppliers

would need to be familiar with BPL’s quality standards so

that the raw materials they supply are acceptable.

Government agencies and other groups would be

concerned with the quality because they have the interest

of the general populations’ wellbeing in mind.

Initiatives

The KSF “Quality” for Beximco Pharma is a

favourable. BPL needs to reinforce and improve this KSF

and currently BPL is certainly on the right track. BPL

continuously strives to reinforce this KSF by taking

measures to achieve “zero defect”.

At BPL, total quality control refers to the process of

producing a perfect product by a series of systematic

Excellence In Execution

In 2005, BPL adopted the “excellence in execution” in everything it does from manufacturing to marketing with its highly motivated and inspired people. In 2005, its excellence in execution approach helped in better identifying new products and reduced time requirement from concept to product launch significantly.

(MONIRUZZAMAN, 2005)

Page | 56

measures. It requires an organized effort by the entire company to prevent or eliminate errors at

every stage in production. It is supported by brilliant team effort. BPL’s quality assurance establishes

control or checkpoints to ensure the quality of the products during and post production.

It starts with raw materials and component testing and includes in-process, packaging, labeling and

finished product testing as well as batch auditing and stability monitoring. A highly dedicated

academically sound and professionally competent team comprising of pharmacists, chemists,

biochemists, microbiologists, engineers & others is making relentless efforts to offer the best in

terms of product quality. In every step, from the procurement of raw materials to the manufacturing

of finished products, the latest World Health Organization (WHO) approved current Good

Manufacturing Practices (cGMP) are followed. There are written Standard Operating Procedures

(SOPs) for every process and step involved which are closely monitored to ensure that all concerned

personnel are complying with these procedures. BPL’s Quality Control lab is well equipped with

most modern and sophisticated equipment like, High Performance Liquid Chromatography (HPLC),

Infrared (IR) Spectrophotometer, Ultraviolet (UV) Spectrophotometer, Homogenizer, In-vitro

Bioavailability Tester, Lung Simulator, Disintegrator, Dissolution Tester & many other latest

computer aided instruments & accessories to ensure the highest quality products.

Improving efficiency:

From the very beginning, Beximco Pharma has always been a pioneer in adopting innovative

technologies intended to take the organization to a standard which would match other reputed global

pharma companies. In the recent years BPL has undertaken various projects of upgrading our

existing process in operations with new technology to drive greater productivity in quality control,

warehouse, and production lines. Several initiatives are also ongoing to improve its overall

manufacturing efficiencies, including reduction in wastage and operational costs.

Page | 57

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EEmmllppooyyeeeess aass aa ffaavvoouurraabbllee

WHAT? Most Important Resource

HOW? Proper Recruitment, training and

retention

Intervening conditions Economic,

Government, Customers, Competitors,

WHY? Gain competitive edge

WHAT Consequences? Expected: Better Performance

Actual: Contribution from top to bottom.

Context High Competition in

Market

WHO? Capital to invest, Human Resource

Department

Page | 58

Qualified Employees

According to our F/D Analysis the Qualified Employees of Beximco Pharmaceuticals Limited (BPL)

is a Favourable KSF of Beximco Pharmaceuticals Limited (BPL) People make a company. Beximco

Pharma’s success is based on attracting, developing and retaining talented and motivated employees.

They share both their desire to excel and their commitment to improving the lives of the people.

They (BPL) have highly educated white-collar employees comprising of approximately 76% of total

BPL's workforce. They are the people who are responsible for all the activities that go on in an

around BPL. It is the Human Resource department of BPL that keeps the record of all the employees

that are being hired from different fields. Self-help attitude acts as a motivational factor as they are

highly professional in doing their jobs. It is Beximco Pharmaceuticals Limited (BPL)’s people who

make them different from their competitors. The secret of Beximco Pharmaceuticals Limited

(BPL)’s success story lies in their people.

Causal Conditions

Training of workers in an organization is essential in laying a strong foundation for the development

of the organization, which cannot be built without the help of technically skilled workers. The need

of training is a universal one. Each and every worker should be given training according to their

nature of the job; training differs from person to persons. Training means to impart information or

skill through drill. It is nothing but applications of knowledge with specific views and brings

awareness among the people of what procedures to follow for that job in the organization. In general,

education is 'mind preparation' and is carried out remote from the actual work area, training is the

systematic development of the attitude, knowledge, skill pattern required by a person to perform a

given task or job adequately and development is 'the growth of the individual in terms of ability,

Page | 59

understanding and awareness'. Beximco Pharmaceuticals Limited (BPL) also believes in the same

definition of training of employees as that ensures Qualified Employees. That is why in Beximco

Pharmaceuticals Limited (BPL) Employee training program is simply a way of developing and

improving the knowledge, skills and attitude (KSA) of employees.

The company considers the most valuable asset it has, is the Qualified Employees who work for the

company for its 'successes' built to last. This Qualified Employees’ focused culture, indeed, makes

Beximco Pharma unique compared to others. So it makes sense for the management of the company

to do everything possible to ensure that every member of stuff enjoys the friendly and welcoming

atmosphere in the company that encourages the employees to be themselves. Here, the workplace

has evolved to be a very close community of co-workers where employees take pride in their job,

their team, and their company. They celebrate the successes of their peers and cooperate with others

throughout the organization. Here, communication is open and accessible, hiring and rewarding are

impartial and decisions are taken together with the employees in a free and fair process. Here,

everyone is treated and cared for as an individual with personal life and respected of their

professional life by encouraging and supporting professional development. Today, Beximco Pharma

is not just a great workplace but is a great way of life. It has made itself a great company to work

with where the company and its people 'grow together'.

There are various reasons for which Beximco Pharmaceuticals Limited (BPL) has chosen employee

training program as a part its key success factor Qualified Employees.

Less number of trained personnel:

The main reason for the Employee Training Program in Beximco Pharmaceuticals Limited (BPL) is

the scarcity of trained employees in the labor market of Bangladesh especially for the

Page | 60

pharmaceutical industry.It is impossible to find trained and technically skilled professionals for all

the vacancies in the concern. This forces the managements to recruit persons who have little

knowledge or no knowledge about the profile of the current job. So it is necessary for Beximco

Pharmaceuticals Limited (BPL) to choose quality persons and give them training for that particular

position

Suitability of organization needs:

Even when a worker is assigned to a new job he or she has to be given training which would be

helpful for him to adapt to new working environments. The worker would feel comfortable in the

new job to which he was assigned. Therefore he can utilize his thoughts in a right way and can

complete his work within the time limit. That is why Beximco Pharmaceuticals Limited (BPL)

New technology developments:

Employee Training Program in Beximco Pharmaceuticals Limited (BPL) enables employees and

workers for higher grade tasks.Due to rapid growth in new technologies it is necessary for the

personnel to know these new improvements in business fields. Thus the training program makes the

human resource of Beximco Pharmaceuticals Limited (BPL) more efficient and effective. In the

absence of proper training facilities in latest methods the workers of that enterprise will face stiff

challenges from other competitors in the business field and high pressures from higher-level

authorities within the enterprise.

Risk Management:

The objective of risk management is to reduce different risks related to a pre-selected domain to the

level accepted by organization. It may refer to numerous types of threats caused by external and

internal environmental factors. On the other hand it involves all means available for humans, or in

particular, for a risk management entity (person, staff, and organization). Risk management is a

Page | 61

structured approach to managing uncertainty related to a threat. In a pharmaceutical company like

Beximco Pharmaceuticals Limited (BPL) it is very crucial to maintain the product quality and safety

standards as people’s life depends on this. Any kind of mistake in manufacturing process can end up

in fatal results. So they need to train their people through employee training program properly to

ensure they do not make such mistakes.

Diversification:

Beximco Pharmaceuticals Limited (BPL) has now completed new projects to manufacture

Respirator solutions, Ophthalmics and Small Volume Parenterals (SVP). Entering into these three

segments will boost our local and international market share significantly. Products (e.g. Azmasol

respirator solutions) from this plant have already started rolling out into the market. Like all other

products, BPL is committed to introduce quality ophthalmic products very soon. This will help the

Ophthalmologists to treat the patients in a better way. At present the value of ophthalmological

market is Tk. 542 Mil with a growth rate of 6.55%. The market has consistent growth over the last 4

years. As a growth strategy for coming years we are also going to launch Small Volume Parenterals

(SVP) during this year. This segment will also help consolidate our market presence in the parenteral

market.

Environmental Factors Context: The employees of BPL believe in collaborative spirit. They appreciate that working as a team

multiplies the strength of the individuals involved as well as the impact of the results. Skill

acquisition and development for all staff is the key to a company's growth through innovation. In this

regard, Beximco Pharmaceuticals Limited (BPL) is always on the look out to identify training needs

of our employees in order to enable them to carry out the entrusted responsibilities. Training

Page | 62

programs undertaken, not only address skills relating to the specialty of the individuals concerned,

but also improving leadership, management and project coordination abilities.

The current number of employees of Beximco Pharmaceuticals Limited (BPL) is 4520 which is still

growing. Having enough funding for training is an important factor affecting employee training. In

the year 2007 Beximco Pharmaceuticals Limited (BPL) spent Tk. 659, 591 which is not enough for

the employee pool of Beximco Pharmaceuticals Limited (BPL). The other factor is what the skill

need of the company. That means the skill inventory of the organization is needed to be determined.

Beximco Pharmaceuticals Limited (BPL)’s purpose is not simply to explore the potential of today’s

new technologies but unleash the creativity in every person engaged with the company. Because

Beximco Pharmaceuticals Limited (BPL) believes the real measure of their success is not the power

of technology but the power it unleashes in people.

Employee benefit programme of Beximco Pharmaceuticals Limited (BPL) is one of the factors that

attract talented pool of employees to work for BPL and motivate them. The company has accounted

for and disclosed of employee benefits in compliance with the provisions of IAS 19: Employee

Benefits. The cost of employee benefits is charged off as revenue expenditure in the period to which

the contributions relate.

Page | 63

The company's employee benefit includes the following:

Defined Contribution Plan

This represents recognized contributory provident fund for all its permanent employees. Assets of

provident fund are held in a separate trustee administered fund as per the relevant rules and are

funded by contributions from both the employees and the company at pre-determined rates.

Defined Benefits Plan

This represents unfunded gratuity scheme for its permanent employees. Employees are entitled to

gratuity benefit after completion of minimum five years of service in the company. The gratuity is

calculated on the latest applicable basic pay and is payable at the rate of one month basic pay for

every completed year of service. Though no valuation was done to quantify actuarial liabilities as per

the IAS 19: Employee Benefits, such valuation in not likely to yield a result significantly different

from the current provision.

Contribution To Workers' Profit Participation/ Welfare Funds

This represents 5% of net profit before tax contributed by the company as per provisions of the

Bangladesh Labor Law, 2005 and is payable to workers as defined in the said scheme.

Insurance Scheme

Employees of the company are covered under group life insurance scheme.

Intervening Conditions: Economic:

Change in the economic conditions does not have major effect on the qualified employees of

Beximco Pharmaceutical Limited. Change in economic factors like, change in inflation, change in

Page | 64

exchange rate, change in interest rates, change in GNP, change in unemployment rate do not reflect

any changes in the situation of qualified employees of Beximco Pharmaceutical Limited.

Technological

Like change in economic conditions, change in technological condition also does not have any major

impact on qualified employees of Beximco Pharmaceutical Limited. Change in technological factors

like, advancements in technology, growth in R & D in the industry do not replicate any changes in

the situation of qualified employees of Beximco Pharmaceutical Limited.

Political:

Similar to change in economic conditions and change in technological conditions, change in

Government, political and legal conditions do not have any impact on the condition of qualified

employees of Beximco Pharmaceutical Limited. Change in anti-trust legislation, export/import

policies and political unrest do not imitate any changes in the situation of qualified employees.

Although Bangladesh is a country full of political unrest, but political unrest has a very little impact

on qualified employees of Beximco Pharmaceutical Limited.

Customers:

The main customers of Beximco Pharmaceutical Limited are physicians rather than the end users

(patients). Change in various customers factors have high to medium impact in the qualified

employees of Beximco Pharmaceutical Limited. Change in Choice criteria, change in relative

importance in choice criteria, informed decision making among physicians, which have present

status of occurrence, have high impact on Beximco Pharmaceutical Limited can positively or

negatively change criterion of qualified employees. On the other hand, change is preference of the

physician, which has potential status of occurrence, has medium impact on qualified employees of

Beximco Pharmaceutical Limited.

Page | 65

Competitors:

Changes in the situations of the competitors of Beximco Pharmaceutical Limited have low impact on

the qualified employees of Beximco Pharmaceutical Limited. Increase/ Decrease in number of

competitors is potential but has low impact on qualified employees of Beximco Pharmaceutical

Limited. Adaption of new technology among the competitors is present and has low impact on

qualified employees of Beximco Pharmaceutical Limited. Changes in investments in marketing/

production initiatives are present among the competitors but, has very low impact on the qualified

employees of Beximco Pharmaceutical Limited.


Most of the cases changes in resources and capabilities are present and a good number cases have

medium impact on the qualified employees of Beximco Pharmaceutical Limited. Existence of core

competence is present and has medium impact on the qualified employees of Beximco

Pharmaceutical Limited. Adequacy of skills and resources (Human resource/ marketing/ distribution/

operations/R & D/ finance) is potential and has medium impact on the qualified employees of

Beximco Pharmaceutical Limited. Like, existence of core competence, employee relations is present

and has medium impact on the qualified employees of Beximco Pharmaceutical Limited. HRD

initiatives are also present but have low impact on the qualified employees of Beximco

Pharmaceutical Limited. As, changes in resources and capabilities can strengthen or weaken the

efficiency qualified employees, so for Beximco Pharmaceutical Limited, resources and capabilities

has medium to low impact on the qualified employees.


Product improvement is present and can have a medium impact on the qualified employees of


Page | 66

Performance

An organization is as good as its human resources. Based on this very basic fundamental philosophy,

Beximco Pharma believes that human beings are its most valuable assets and prime movers. BPL

also believes that the potential of human resource is limited only to the extent to what one can put to

use. Realizing this, BPL makes considerable investments in attracting and developing talented and

dynamic professionals, not only to do their job flawlessly, but also to give them an environment

which fosters innovation and entrepreneurship. The extent of empowerment that is enjoyed by our

people at various levels of the organization enables each employee, from the very bottom to the top,

to contribute to the overall momentum of the company. The employees of Beximco Pharma are

differentiated not just on the strength of their professional competence, but also on the basis of

individual resilience of character and the spirit of enterprise. In the face of today’s competitive

business environment, BPL develops and retains high achievers and a motivated workforce.

Beximco Pharmaceuticals Limited (BPL) create an excellent working environment for them that

reflects and promotes a high level of loyalty and commitment, both to our employees and from our

employees.


The ever-changing market place has fuelled BPL’s determination to keep up with the changing times

by constantly strengthening the information base, exploring new lines of business and expanding

domestic as well as its overseas marketing network. This prompted the company to undertake

infrastructural development to build competitive advantage in order to retain its position as a leading

pharmaceutical company. BPL is committed to developing individual human, technical and

conceptual skills through various educational and a wide range of internal and external human

resource development and job related training programs each and every year. At BPL, a well

Page | 67

planned and structurally designed in-house training activity involving sales, marketing,

manufacturing, QC, QA etc. is conducted throughout the calendar year.

These training programs are conducted by in-house resource persons on a regular basis and as per

schedule. BPL employees also received training from faculties of Kellogg Business School, USA

and London School of Business, UK on the following topics:

• Strategies for excellence in manufacturing management,

• Supply chain management,

• Negotiation and decision making,

• Finance for senior managers,

• Competing in a global economy,

• Leadership skills for top management,

• Strategic brand management,

• Marketing strategies in a competitive environment.

Apart from these, BPL employees also participated in a month-long training program on TQM in

Japan.


At BPL, good work is always expected and rewarded. Over the years, the company has been

successful in providing an environment and culture that nurtures individual growth and

development, and allows people to attain personal fulfilment as well as achieve company objectives.

It is our competent workforce that provides us with every reason to be optimistic about the future.

Page | 68

The employees are involved in determining the knowledge, skills, and abilities to be learned

The employees are participating in activities during the learning process

The work experiences and knowledge that employees bring to each learning situation are

used as a resource

A practical and problem-centered approach based on real examples is used

New material is connected to the employee's past learning and work experience

The employees are given an opportunity to reinforce what they learn by practicing

The learning environment is informal, safe and supportive

The learning opportunity promotes positive self-esteem

Increased job satisfaction and morale among employees

Increased efficiencies in processes, resulting in financial gain

Increased capacity to adopt new technologies and methods

Page | 69

Increased innovation in strategies and products

Reduced employee turnover

Enhanced company image, e.g., conducting ethics training

Risk management


Personnel and major items of equipment, supplies, and facilities that are available for assignment to

incident operations. Resources are described by kind and type; their status is maintained until

released by supervisory personnel. A resource is any physical or virtual entity of limited availability,

or anything used to help one earn a living. In most cases, commercial or even ethic factors require

resource allocation through resource management. So Beximco Pharmaceuticals Limited (BPL)

needs resources to run their employee training program. The kinds of resources needed for employee

training program depends on the fact whether the training is On-The-Job Training or Off-The-Job

training. As training in Beximco Pharmaceuticals Limited (BPL) is an ongoing process, On-The-Job

training is a very common thing there. This type of training is common in management level. So for

this what Beximco Pharmaceuticals Limited (BPL) needs is trained and expert supervisors which

they already have for coaching and mentorship.

Page | 70

Off-The-Job training programs are useful for manufacturing plant where Beximco Pharmaceuticals

Limited (BPL) have to be most effective and efficient. In Beximco Pharmaceuticals Limited (BPL)

the Off-The-Job training is basically based on classroom training. They have specialist trainers for

employees and workers of manufacturing plant to ensure product quality, safety and health,

production rate, required amount of production and production of newly introduced product.

Continuous learning had been enforced as a motivation tool to upgrade current level of knowledge

and skills of the employees. BPL also ensures an atmosphere that offers a better learning ground for

its employees and believes in upgrading its personnel through continuous education program.

At BPL, extended and enhanced in-house & external training programs are being conducted round

the year. BPL employees participated in various training programs that include -

Pharmaceutical marketing situation beyond 2005

Company formation, regulatory compliance and company meeting

Industrial control and mechatronics

Continuous improvement (Kaizen) and changing behavior

10 Commandments of GMP

Presentation skills

General guidelines of SOP

Sanitation, hygiene and environment control

Maintenance of equipments, calibration and validation

Fire prevention and safety

Industrial automation

Coating technology

Technology transfer

Page | 71

Initiatives Attracting qualified employees is a major challenge in today's competitive labor market, and

companies without commuter benefits can be at a competitive disadvantage. Attracting and retaining

employees, while constantly uttered in the same breath, are two completely different things. So when

approaching the subject, one must divide and conquer: find out how the best are attracted to a

company, and then, only then, figure out how an employer can and does keep them there. Mentoring

is another trend being implemented across the industry, though it still has yet to get a real foothold in

management's collective conscious. With mentoring, someone is always there to answer questions on

company culture, responsibilities, promotional opportunities and the like. Stock options are another

enticement to keep employees. They are the ideal way for an employee to have short- and long-term

motivation to do what's best for the good of the company, and develop loyalty. Some companies give

them a break on prices, while others give stock as end-of-year bonuses to top performers.

Advice in this arena can be hard to come by, so these suggestions should be so kept in mind:

Hire slow and fire fast, says Butcher. The company should not just hire a warm body to fill a

space. They must wait for the right person. It they see that the hired person is not serving

their goal they must fire te employee immediately.

Beximco Pharmaceuticals Limited (BPL) has to make sure the management makes time for

the employees. They should keep a social calendar that the employees can schedule for the

manager, ensuring that managers will spend time with the employees. It could just be a day

or two a month for lunch or bowling or something. Of course, Beximco Pharmaceuticals

Limited (BPL) has to be sure the employees are on board, but let them drive it.

Page | 72

Beximco Pharmaceuticals Limited (BPL) has to listen to their people. There is a line drawn

between the employee and management, and companies should work through that to allow

for cross-company communication.

Beximco Pharmaceuticals Limited (BPL) should expend the energy and time to help the

salespeople to reach their goals. Beximco Pharmaceuticals Limited (BPL) help them focus on

the right things all year and the dividends will pay off for them, and so will they for Beximco

Pharmaceuticals Limited (BPL). Beximco Pharmaceuticals Limited (BPL) should not

demotivate them with anything.

Once again, Beximco Pharmaceuticals Limited (BPL) has to treat them as they do their

customers. A company that doesn't work to retain their customers is on the road to failure.

Employee learning process should be introduced. Learning is the acquisition of new

knowledge, skills, and attitudes. Learning is seen as happening in a cycle made up of four

stages: concrete experience, reflective observation, abstract conceptualization, and active

experimentation

To put it simply, first the learner must experience something directly - concrete experience.

Next the learner reflects on the experience, comparing it to what s/he already knows -

reflective observation. The learner then thinks about his or her observations and develops

some new ideas about how things work - abstract conceptualization. Finally, the learner acts

on what has been observed and thought about - active experimentation. The active

experimentation stage then becomes the basis of future learning. Complete learning happens

when learner moves through all four stages and the new knowledge, skills, and/or attitudes

become the basis for new behavior.

Page | 73

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WHAT? Liaison with the registered

physicians

HOW?

Maintain product quality and provide incentive to physicians

within ethical boundary

Intervening conditions Economy & Competition, Technology, Customer, Resource & Capabilities

WHY? Product Positioning and

Promotion

WHAT Consequences?

Expected: Positioning of Products in Doctors mind so that they prescribe the medicines

Actual: Increase of Product Sales

Context Doctors Chamber,

Hospitals & Pharmaceutical Industry

regulation

WHO?

Medical Promotional Officer, Sales &

Marketing Department

Page | 74

Relationship with Physicians The interaction between doctors and medical representatives or Medical Promotion Officers is

almost as old as the medical profession itself. The basic role of a medical representative is to apprise

the doctor about Beximco Pharmaceuticals Limited (BPL)’s products such as the drugs. This can be

referred as Physician Relationship Management.

The pharmaceutical promotion and marketing expenditure average 20-30% of sales turnover. Every

pharmaceutical company employs and trains medical representatives to promote and sell drugs,

using printed product literatures, drug samples and gifts. While doctors uniformly deny that their

understanding of drug is influenced by the activities of industry, there is considerable evidence to

support the efficacy of the personal encounter with a medical representative in shaping doctors'

attitude towards drugs.

Causal Conditions Through the Relationship with the Doctors or Physician Relationship Management Beximco

Pharmaceuticals Limited (BPL) inform the doctors about their products and their qualities. As the

doctors get the idea about those medicines they prescribe their patients those products. This

increases the sales of the products of Beximco Pharmaceuticals Limited (BPL).The ultimate

beneficiary of this information is the patient. After all, continued professional development is an

essential component of a good health care system. Beximco Pharmaceuticals Limited (BPL)

interacts with doctors in order to promote their medical products. They reach out to almost all

concerned doctors to attain their goals. The doctors are compensated adequately in the form of gifts

Page | 75

and other incentives by drug companies. Consequentially, both the parties are benefited from this

interaction with potential consequences for patients.


Doctors Chamber or Hospitals

The Medical Promotion Officers have to go to the doctors’ chambers or hospitals to visit the doctors

in person to maintain Physician Relationship Management. The MPOs have another option of

reaching them. That is by arranging presentations or seminars outside these areas. But most of the

times the doctors do not prefer to go to another place as they have nothing to gain from there. The

hospital authority do not like Medical Promotion Officers to come to meet the doctors in the hospital

as they come during the daytime when there is rush time in hospitals and they think the MPOs waste

the precious times of Doctors which the doctors could use to serve the hospital and the patients For

example in an article of the Daily Star it was published that, in. a large number of medical

representatives of different pharmaceutical companies crowd the Chittagong Medical College and

Hospital (CMCH) during office hours causing a dislocation in medicare services there. A section of

doctors entertain the medical representatives reportedly to get free supply of sample medicines and

other gifts, sources said. Most of the doctors get convinced by those salesmen and prescribe the

drugs manufactured by their companies. CMCH Director Brigadier General Toufiqul Alam said the

salesmen of pharmaceutical companies were asked not to enter the hospital premises to meet the

doctors before 12 noon. Now the authority is thinking imposing total ban on the entry of Medical

Promotion Officer into CMCH. This will affect the Physician Relationship Management of Beximco

Pharmaceuticals Limited (BPL).

Page | 76

Pharmaceutical Industry Regulations:

Traditional marketing tools like TVCs are not appropriate for medicine sales or promotion.

Medicines which cannot legally be sold or supplied to the public otherwise than in accordance with a

prescription, or which are legally limited to promotion for sale or supply only on prescription, must

not be advertised to the general public.


Economic:

Change in the economic conditions does not have major effect relationship with doctors. Change in

economic factors like, change in inflation, change in exchange rate, change in interest rates, change

in GNP, change in unemployment rate do not bring any changes in the doctor’s perception

regarding the products of BPL .

Technological:


impact on the relationship with physicians of the marketing personnel of Beximco Pharmaceutical

Limited.

Government/ Political/ Legal:

Change in Government, political and legal conditions have moderate impact on the relationship

between BPL and physicians. When any political government change, they actually directly interfere

in BMA (Bangladesh Medical Association) and as such many physicians who recruited by

government are transferred. So, these may hamper some continuous flow of communication with the

same physicians with the same medical information officer of BPL.

Page | 77

Customers:


(patients). Change in various customer factors has high impact on the relationship between BPL and

physicians. Change in Choice criteria, change in relative importance in choice criteria, informed

decision making among physicians, which have present status of occurrence, have high impact on

the BPL.

Competitors:


the relationship with physicians. Increase/ Decrease in number of competitors is potential but has

low impact.

This is unlikely that any physician would completely avoid prescribing BPL’s medicine to the

patients. Still there are some reasons when they might have negative impression about BPL which

are:

• They felt BPL’s pricing was too high or unfair.

• They took a competitors offer.

• They left because they felt BPL didn't care about the patients.

Resources and Capabilities:


medium impact on relationship with physicians of the employees of marketing department of BPL.

Existence of core competence is present and has medium impact on the relationship with physicians.

Adequacy of skills and resources (Human resource/ marketing/ distribution/ operations/R & D/

finance) is potential and has medium impact on relationship with physicians.

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Additional – Product improvement: Product improvement is present and can have a medium

impact. As the physicians will be more tempted to prescribe the high quality medicine to their

patients. So, if BPL can deliver high quality product with reasonable cost, then the physicians will

tend to prescribe the medicine to the patients at a higher rate.

Performance


Beximco Pharmaceuticals Limited (BPL)’s product is medicine which by law can not do any

promotional activities for public. So doctors’ prescription is the only way to increase profitability.

The current prescription share of Beximco Pharmaceuticals Limited (BPL) is 10% compared to the

expected level of prescription share 12% is quite satisfactory. The actual performance indicates the

actual sales figures. In 2007, the sales of the formulation products increased by 2.55%


BPL would like to see that most of the registered doctors would prefer BPL’s drugs compared to its

competitors. Prescription share for Beximco Pharmaceutical Limited can expressed as total

pharmaceutical products of Beximco Pharmaceutical Limited are prescribed by physician divided by

total pharmaceutical products of all companies prescribed by the physicians. In calculating market

share, in many cases Beximco Pharmaceutical Limited uses the Prescription share. For year 2009,

Beximco Pharmaceutical Limited is not trying to increase the prescription share rather than retaining

it. The target is 10% - 12% prescription share. So, we can assume the targeted market share for year

2009 is 10% - 12%.

Page | 79

The expected outcome of Relationship with Doctors is to Positioning of Products in Doctors mind so

that they prescribe the medicines. To do so the medical representatives does the followings:

Contact doctors and find out the needs of the doctors

To uphold about the product to the doctors and try to satisfy the needs

Be concerned about the opinion of the doctors after introducing the product

Arrange appointments with medical teams, doctors and pharmacists.

Making presentations to the medical professionals like: doctors, pharmacists, nurses, practice

staffs and to all the necessary personnel related to the sector. Presentations should take place

to a suitable time and place for all thus the targeted people can come conveniently. Like: the

presentation may take place during the day time or may be in the evening or at a hotel’s or

restaurant’s conference venue.

Build and maintain positive connections and working relationships with medical personnel

and also with the supporting administration.

Each representative is allotted for each area. Thus each representative of each area can survey

the needs of the area people and can make up a forum of their needs and future targets. The

representatives along with the area people and area doctors and other medical professionals

make a plan for their better living, better future and better healthcare services.

Presenting and discussing the present which is supplied by the company with healthcare and

medical professionals during conferences and presentations.

Monitor what are the competitive companies doing and about their products and how are they

taking steps for taking the market and defeating others.

Page | 80

Monitor and anticipate positive and negative affects and impacts of the market to the product

and adapting proper strategy to prevent that.

Developing strategies even though there is not a threat or a negative impact on the product.

But the strategies should be kept developing all the time for the increment of the

opportunities to meet the needs of the people for a stable market value and reputation.

Getting information about the after effect of the product and how the users and consumers

reviewed about the product to the doctor.

Present and sell our range of pharmaceutical products to medical practitioners and allied

healthcare professionals.

Provide timely sales forecasting to support budget management.

Manage customer relationships to achieve both business objectives and market leading

reputation for customer excellence.


The medical promotional officers MPOs are responsible for keeping relationship with the doctors.

They increase their connections with the medical stores and hospitals and all kind of medical

services to lounge their product and for the maximum use of them. To sell their product or to lounge

a product they sometimes also arrange conferences and do presentations with medical professionals.

For the purpose they also organize events for medical professionals.

A marketing program in order to be successful must have a right mixture of marketing mix, not to

mention market research, a quality product, extensive distribution network acceptability, strong dose

of promotion coupled with a right price. A unique feature of the pharmaceutical market is that it is

one of the most fragmented markets in the country. The maximum market is held by small

Page | 81

companies, the largest pharmaceutical company Beximco Pharmaceuticals Limited (BPL) holding

12 percent of the market share. This leads to unique marketing mixes.

Initiatives To reinforce successful relationship with the doctors or Physician Relationship Management,

Beximco Pharmaceuticals Limited (BPL) must focus on the Medical Promotional Officers MPOs as

it is them who maintain the bridge between the doctors and Beximco Pharmaceuticals Limited

(BPL). For or Physician Relationship Management the the following must be done:

Medical Representatives must be adequately trained and possess sufficient medical and

technical knowledge to present information on the Beximco Pharmaceuticals Limited (BPL)'s

products in an accurate and responsible manner.

Medical Representatives should at all time maintain a high standard of ethical conduct in the

discharge of their duties.

The requirements of the Code which aim at accuracy, fairness, balance, and good taste apply

to oral representations as well as printed material.

Unfair or misleading comparisons must be avoided by Medical Representatives. Medical

representatives must not employ any inducement or subterfuge to gain an interview. No

payment of a fee should be made for the grant of an interview.

Claims made for products by medical representatives must be limited to the indications

permitted by the product license.

Medical representatives must ensure that the frequency, timing and duration of calls on

doctors, or on hospitals, together with the manner in which they are made, do not cause

Page | 82

inconvenience. The wishes of an individual doctor, or the arrangements in force at any

particular establishment, must be observed by medical representatives.

Medical Representatives must take adequate precautions to ensure the security of medical

products in their possession.

Medical Representatives must not use the telephone to promote products to the medical

profession unless prior arrangement has been made with individual doctors.

When discussion about a product is initiated by a medical representative, he should be able to

place before the doctor for reference, on request by the doctor, the approved data sheet of the

product. BPL should prepare detailed briefing material for medical representatives on the

technical aspects of any product which the medical representative is to promote

Medical representatives should not make a claim for a product based on the regulatory

management of that product, or of competing products, or based on any warnings issued in

relation to other products, unless in accordance with a specific requirement. However, a

medical representative may refer to such matters in answer to a specific question.

Gifts in the form of articles designed as promotional aids, whether related to a particular

product or of general utility, may be distributed to members of the medical and allied

professions provided the gift is not unreasonably expensive and relevant to the practice of

medicine or pharmacy.

Entertainment or other hospitality offered to members of the medical and allied professions

for purpose of sales promotion should always be secondary to the main purpose of the

meeting. It should not extend beyond members of the professions. The level of hospitality

should be appropriate and not out of proportion to the occasion.

Page | 83

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WHAT? (International recognition)

HOW? Improve in manufacturing

process & quality control system.

Intervening conditions (Customers, Competitors, Resources & Capabilities)

WHY? (Acquiring foreign market)

WHAT Consequences? Expected: Export drugs to every major foreign market

Actual: Leading exporter, but still not every market served.

Context (Different foreign

markets i.e Myanmar)

WHO? (Expert team,

pharmacists, etc)

Page | 84

Global Acceptance - International recognition of a company: The satisfactory level of standard in manufacturing plants and products, for that, foreign party can

authorize medicines to import from the perspective pharmaceutical company.

Causal Conditions

For any company which wishes to export in foreign countries acceptance of its plants and products is

important since it gives immense confidence to the buyers and importers. It is very important for

Beximco Pharma to acquire and snatch the market share of foreign market through export of

medicine. For example, if Beximco Pharmaceutical can earn good reputation in GCC (Gulf Co-

Operation countries) countries, then within a short period of time US authorities will move towards

the medicines of Beximco Pharma and give authorization. As a result, global acceptance of the

pharmaceuticals would be increased.


From foreign authority perspective, high-level delegation of Ministers, expert teams, Drug

Regulatory authority, Ministry of Health, Therapeutic Goods Administration (TGA) etc are worth

mentioning.

In addition, the top level manager to pharmacists, production manager, line manager and supervisors

all are involved in this process.

Manufacturing plant and all the raw materials, work-in process materials and finished products, the

physical environment of the plant would be regarded as physical resources.

Page | 85

Environmental Factors Intervening Conditions:

Competitors:

Beximco Pharma is the largest exporter of medicine in Bangladesh. Still it faces stiff competition

from growing pharmaceutical companies. Square Pharmaceuticals, Eskayef, ACI, Incepta Pharma,

Renata are all big players in the pharmacy industry of Bangladesh and have entered in the foreign

market which limit the export opportunity of Beximco Pharmaceutical.

Resource and capabilities:

The technological knowhow of manufacturing medicine through using formula is one of the core

competences of Beximco Pharma. As there might be situation that Beximco Pharma fail to utilize the

core competence or stretch too much beyond its core competence then its global acceptance would

be adversely affected.

Customers:

In foreign countries, the patent laws of medicine are getting tougher day by day. The authorization

bodies are increasingly stringent in allowing import from any new pharmaceutical company. The

customers preference shifted quickly and demand of the medicine do not remain stable. Also, in

different geographical areas many medicines may not work as effectively as it supposed to be. In

that case, recognition of the medicine of Beximco Pharma may be hampered.

Government:

Political unrest is a macro-environmental factor that has low impact on the global acceptance of

Beximco Pharma. Currently, Bangladesh is governed by the army backed caretaker government.

Before this government took over the power, Bangladesh saw unprecedented political unrest for

quite some period. These types of political calamities mar country’s reputation as a whole and

subsequently foreign authorities become reluctant to inspect the pharmaceutical companies.

Page | 86

Context:

Global acceptance is a lengthy process and no company can achieve it in quick manner. The

overseas offices and associates of Beximco Pharma exist in Australia, Bhutan, Cambodia, Chile,

Ghana, Hong Kong, Indonesia, Jordan, Kenya, Malaysia, Myanmar, Nepal, Pakistan, Philippines,

Singapore, Sri Lanka, Vietnam and Yemen. Beximco Pharma started export operations in Myanmar

in 1996 as the first company of Bangladesh. Myanmar is one of the most important export markets

for Beximco Pharma and so far the company has registered about 94 products in Myanmar.

Performance Actual Achievements:

Beximco started its first exports to Sri Lanka from 1st January 2005, with six versions of four

generics. The company planned to increase it imports to Sri Lanka, following a visit by Sir Lanka's

Health Minister to the firm's plant at Tongi, in Gazipur, on 27th January 2005. Beximco commented

that it plans to gain registration in Sri Lanka for another 28 drugs. In October, 2005 BPL became the

first Bangladeshi company to trade on the London Stock Exchange (LSE) with its opening price

clocking as much as 12.5 percent higher than the issue price. So, it suggests that global reputation of

Beximco Pharmaceuticals is important as it will be reflected by its share price. In March 2005,

Beximco announced it was also concentrating on selling products to Burma. The company began

trading with Burma in 1997, and has since become a major player in the country's pharmaceutical

market.

Philippine is the fifth ASEAN (Association of Southeast Asian Nations) country after Singapore,

Vietnam, Cambodia and Myanmar where Beximco Pharma has started exporting. The ASEAN is

one of the fastest growing economies of the world and the Philippines is the third largest country in

Page | 87

the region with a population of more than 80 million. The Philippines' pharmaceutical market,

estimated to be worth US$1.30 billion in 2007, is mostly dependent on imported medicines.

The leading edge pharmaceutical manufacturer and exporter of Bangladesh has commenced exports

to Chile, after receiving marketing authorization for a number of products from “Instituto de Salud

Publica de Chile” (Drug Regulatory authority in Chile).Chile is one of the Latin America’s better

economic performers and is the sixth largest pharmaceutical market in the region. In 2007, Chilean

pharmaceutical market was valued at US 1.5 billion dollar. The market is presently dominated by

global brands of reputed MNCs as well as strong generics from domestic pharmaceutical companies.

Finally in November 2008, receipt of approval from the Ministry of Health of Gulf Cooperation

Council (GCC) countries for BPL to commence export of medicines into the GCC. BPL is the first

company from Bangladesh to receive this approval.


The Beximco Pharma is in the process of drawing up plans to enter the US and European markets by

2008. Beximco has already entered to Center America but not captured the whole US markets. It is

highly prestigious for a renowned pharmaceutical company like BPL is not that much welcomed in

these regions which BPL wants to enter dearly.

Initiatives As global acceptance is key success factor for a pharmaceutical company to increase sales in foreign

market; as far as Beximco Pharma is concerned global acceptance is a favourable factor for them.

Still there are a lot of scopes to become more globally accepted company.

Global reputation can be enhanced through focusing more on plant and product quality, skillful

negotiation and business relationship with the foreign delegates and buyers.

Page | 88

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SSttrreennggtthh aass aa DDeettrriimmeennttaall

WHAT? Criteria on which a

corporation choose financial decisions

HOW? Remove by more efficient working

capital management.

Intervening conditions

Economic, Government, Customers, Competitors

WHY? Maximize the shareholder’s wealth

WHAT Consequences?

Expected: Substantial growth of BPL

Actual: Many intervening factors halted BPL’s growth in recent times.

Context AGM, Board Meeting,

New projects

WHO? CFO, Banks, Suppliers, Shareholders

Page | 89

Financial Strength Financial position is the criteria on which a corporation choose financial decisions regarding its

debt/equity mix (capital structure of a firm), maturity structure (maturity of assets and liability),

method of financing investment projects (project appraisal or capital budgeting) and other decisions

with a goal of maximizing the value of the firm i.e. the value of the shareholders’ wealth.

Causal Factors The importance of having a sound financial policy for any corporation or SBU in today’s world can’t

be described in words. The main reasons why the corporations put so much effort on financial

decisions are as followed:

• To get sufficient fund for running the company.

• To make use of the obtained finance in an efficient manner.

• To maximize the profit by minimizing the cost.

• To enable sufficient fund flow to gain shareholder’s confidence and thus maximizing their

wealth.


CFO and his Co.:

First of all, the Chief Financial Officer (CFO) of BPL Mr. Ali Nawaz and all the employees who

works directly under him actually made the decision or give valuable input to the decision.

Even though, the strategic decisions are also approved by the Chief Executive Officer, Mr. Nazmul

Hasan , the board of directors and the chairman Mr. A S F Rahman.

Page | 90

Banks:

BPL took short term loan from Janata Bank, Citi Bank NA, Standard Chartered Bank and IPDC.

From Bank’s perspective, the principal and interest of offering loan or rescheduling of loan is

depended on the financial condition of BPL. In addition, when BPL needs to import machineries or

raw materials from abroad, it needs to open LC. Citi Bank NA and Standard Chartered Bank are the

two major banks that facilitate BPL the LC opening facility. So the bank officials have to monitor

the overall financial condition of BPL and take action according to it.

Suppliers:

Suppliers are the parties that provide raw materials and other equipments to BPL. They would offer

extended credit term and discount to the customers who is financially solvent to pay dues on time.

Shareholder:

The composition of Shareholders of BPL consists of 51% of sponsor, 05% of foreign investor, 18%

of ICB investor and 26% of general public and institution. They want dividend and capital gain from

BPL. No wonder shareholders’ confidence about BPL’s financial performance is the top notch

concern of the top authorities of BPL.

Government:

Government set corporate, withholding tax and o tax on dividend. So, the tax policy of government

and other rules and regulations have a profound impact on the financial policy of BPL.

Resources:

Financial asset i.e. stocks, and real asset such as machinery, land; in fact all financial and physical

resources are involved.

Page | 91

Environmental Factors

Context: The Annual General Meeting (AGM) is the key event for BPL to declare dividend to the

shareholders and making important decisions regarding investment projects.


Economic:

Economic factors like inflation, exchange rates, GNP and unemployment rate can significantly affect

BPL’s operating profits. For instance, a potential rise in inflation rates would mean that the cost of

raw materials would increase thus decreasing the profit margin of BPL. On the other hand, increased

inflations would translate in increased products prices and if this happens BPL’s imports could

decrease since buyers may go elsewhere looking for competitive prices. Exchange rates would play a

major role. For instance in BPL wants to import machinery but the Taka depreciates heavily against

the major world currencies; this would make the same procurement cost much more. In addition, if

inflation rate goes up higher than what BPL anticipated the weighted average cost of capital would

go up which would result in lower than expected net present value of a project.

Technological:

Like change in economic conditions, change in technological condition has any major on financial

resources. In this era of industry convergence and technological advancement, BPL needs to be

updated to procure the latest technology within its budget constraint for efficient production and

higher quality of product.

Page | 92


Change in Government, political and legal conditions have moderate impact on the relationship

between BPL and physicians. When any political government change, they actually directly interfere

in BMA (Bangladesh Medical Association) and as such many physicians who recruited by

government are transferred. So, these may hamper some continuous flow of communication with the

same physicians with the same medical information officer.

Customers:

BPL forecast demand of the customer. However, if the demand of the customer fluctuates too much

then BPL’s sales would be affected. Customers may switch to competitors’ products and thus can

have adverse impact on the bottom line of BPL.

Competitors:

If BPL’s competitor has smarter financial policy than Beximco do then they can offer the generic

types of medicines with lower price than BPL do. So, it is important for BPL to monitor their

competitor’s financial policy and adjust it according to the situation.


Cost of medication is becoming a major concern even in the developed countries. This particular

issue coupled with severe price competition from the generic manufacturers has prompted a number

of giant multinational companies to shift or outsource their production from developed to developing

and less developed countries, because of huge cost advantage. It is believed that the world

pharmaceutical market will continue to see more consolidation than ever across the entire value

Page | 93

Beximco Pharma CEO Mr. Nazmul Hasan said: “The Bangladesh economy during the period has grown at a rate slower than expected with inflation and the resulting overall price index significantly moving upward during this period. Despite these factors, the Company has continued to progress well, increasing sales and successfully launching 11 new products. We have showed encouraging expansion with our international business entering four new geographic strategic markets and we look forward to the completion of our pMDI plant and SVP projects adding increased capacity and products. We are confident that we can continue our promising growth into the second half of the year.

chain of the pharmaceutical business. Big companies will

continue to look for suitable partners in their supply chain

management in order to reduce their cost of production.

Hence, if BPL can manage the cost structure of the operation

through its resources and capabilities then it would be stay

ahead form competitors, if not these resources and capabilities

might be a intervening factor for BPL.

Performance


BPL passed through a very difficult year in 2008. The company

achieved a sales revenue of Tk. 7441.0 million and pre-tax

profit of Tk. 5453million, as compared to Tk. 3996.3 and Tk.

5232.2 million respectively of 2007. While any pretext is

neither enough nor desirable to justify this below expected

achievement. For long, BPL’s working capital facilities

provided by banks were lagging behind the pace of the business

growth that it achieved over the past years. The biggest of the

constraints was the letter of credit limit. BPL’s long initiative to

extend that limit was hindered by a number of factors including

the regulatory restrictions of the bank itself, which BPL

Page | 94

successfully negotiated with the bank and came close to a solution in early 2007. To worsen the

situation, BPL had to pay off our PAD and LIM- two short term credit facilities that they hoped for

renewal/extension. All these factors have seriously affected their supply chain and they had to de-

prioritize and in certain cases, suspend production and sales of certain products as a strategy to reap

the most out of the situation. Consequent to this, sales of BPL’s infusion products and Active

Pharmaceutical ingredients (APIs) were down by Tk. 114.1 million and Tk. 78.1 million

respectively. These have pulled down our overall sales by 2.84%. The least expected performance in

sales however should not overshadow BPL’s achievement in certain key areas. Despite the difficult

operating situation, BPL was able to achieve growth in our core formulation business and export.

BPL continued to maintain its key market focus, strengthened customer relationship and persuaded

appropriate marketing and promotional strategies. As a result, BPL has successfully retained its

market position despite temporary problem at supply end. Furthermore, BPL tried to maintain

performance in the overseas markets. Export sales during the period increased by 6.7% despite

product shortages. In 2007, BPL has entered into nine new international markets in Asia, Middle

East, Pacific Islands, Africa and Central America and have registered 107 products in different

markets. During the first quarter of 2008, BPL has entered into 3 new international markets- namely,

Afghanistan, kiribati and Solomon Islands. There is a rising trend of prices of materials in the

international market. This along with the lower sales has pulled down the achievement of profit

target. BPL has however, effectively persuaded for containment of operating expenses to minimize

the effect of fall in gross profit. The bank related issues have been successfully resolved by the first

quarter of 2008. The letter of Credit limit and the working capital facilities have been increased. BPL

has maintained our dividend rate despite lower earnings and sales in 2007. Board of directors has

Page | 95

recommended 10% stock and 5% cash dividend -same as in prior year to ensure better yield on the

investment of the valued shareholders.

Financial Data:

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Year Earnings per

share

Net Asset Value

Per Share

Net Profit After Tax

(mn)

Year End P/E % Dividend

2000 9.00 85.06 398.30 5.42 20.00

2001 9.08 94.14 401.78 4.59 15.00

2002 7.72 100.36 341.68 13.39 5.00,15%B

2003 4.41 91.25 224.64 5.12 10.00,10%B

2004 5.26 88.87 294.30 16.30 5.00,25%B

2005 6.36 61.01 489.26 6.87 15.00

2005 4.67 77.37 470.66 11.50 5.00, 10%B

2007 3.08 73.56 353.07 19.12 5.00, 10%B

2008 4.89 75 510.04 36 10, 20%B

Page | 96

EExxhhiibbiitt 1133:: CChhaarrtt ddeeppiiccttiinngg BBPPLL’’ss VVaalluuee AAddddeedd SSttaatteemmeennttss ffoorr FFYY 22000055 aanndd FFYY 22000077

Page | 97

Credit Rating Report:

REPORT: RR/206/08

Rating Long Term Short Term

Entity Rating A- ST-3

Date of Rating July 20, 2008

EExxhhiibbiitt 1144:: TTaabbllee ddeeppiiccttiinngg BBPPLL’’ss CCrreeddiitt RRaattiinngg

Credit Rating Information and Services Limited (CRISL) has assigned A- (Pronounced as single A

minus) rating in the long term and ST-3 rating in the short term to Beximco Pharmaceuticals

Limited. The above rating has been done on the basis of its fundamentals such as sound equity based

capital structure, sound production facilities, franchise value, wide product range, strong marketing

channel, integrated operational facilities, good corporate management and others. However the

above rating was moderated to some extent by its marginal debt servicing capacity, substantial

unadjusted capital work in process, political risk, contingent liability for corporate guarantees etc.

Entities rated in this category are adjudged to offer adequate safety for timely repayment of financial

obligations. This level of rating indicates a corporate entity with an adequate credit profile. Risk

factors are more variable and greater in periods of economic stress than those rated in the higher

categories. The short term rating indicates good certainty of timely payment. Liquidity factors and

company fundamentals are sound. Although ongoing funding needs may enlarge total financing

requirements, access to capital markets is good. Risk factors are small.

Page | 98

Working Capital Management:

Among all the problems of financial management, the problems of working capital management

have probably been recognized as the most crucial one. It is because of the fact that working capital

always helps a business concern to gain vitality and life strength.

The most important of all the liquidity responsibilities of the financial manager is the managing of

cash, both flows and balances. Cash is the benchmark of liquidity. This underscores the fact that the

most important test of a financial manager is to maintain an adequate reserve of cash for all times so

as to absorb the shocks of sporadic receipts and payments and meet the needs of emergency

situation, otherwise paucity of cash even on a temporary phase may be cause a trouble.

Return on Equity (ROE)

Return on common stock ratio indicates the amount of, which the company is capable to exchange in

service income into an after tax income that finally can be maintain by the investor. It is a helpful

ratio for investigate the capability of the company’s administration to understand a sufficient come

back on the capital invest by the proprietors of the company.

Return on common stock equity = Net income / Common stockholders equity

Year 2005 2007

Return on Common

Stock

5.92% 5.45%

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Page | 99

For the same revenue in this case also the ratio has decreased because the increasing rate of total

equity 1.04 is higher than the decreasing rate of net income.

Page | 100

EExxhhiibbiitt 1166:: TTaabbllee ddeeppiiccttiinngg BBPPLL’’ss KKeeyy OOppeerraattiinngg aanndd FFiinnaanncciiaall DDaattaa ffrroomm FFYY 22000033 ttiillll FFYY

22000077

Authorized capital:

Up to the year of 2008 the Beximco Pharmaceuticals Ltd. Company has its authorized capital of

2,000,000,000 Taka.

Paid up capital:

The last 5 years paid up capital is constant (BDT) 1,259,577,000 Taka.

Net profit:

The company earned a net profit of 545, 341,00 in 2008, 353,068,000 in 2007 as against the 2005

profit of 470,659,000. If we have a 100 TK on the five years trend of net profit from this graph, we

can easily understand the profitability of this company.

Shareholders’ Equity:

Total shareholders' equity at the end of 2003 was 4,596,421,000, and at the end of 2004 it was

4,836,013,000. In 2007 and 4,005,112,020 in 2008 total shareholders' equity stands at the

12,250,940,000.

Dividend:

During the financial year Beximco Pharmaceuticals Ltd. Company declared a 30% dividend to its

shareholders compare to last year it is 10% same.

Page | 101

Earnings per share:

Earnings per share decreased to compare last year, that also indicate the fluctuate growth of this

Beximco Pharmaceuticals Ltd. Company.

Desired Performance:

As BPL is listed in Dhaka Stock

Exchange (DSE), Chittagong Stock

Exchange (CSE) and also in London

Stock Exchange (LSE) so its

foremost plan would be give

appropriate dividend yield and

capital gain to the shareholder. For

2009, Beximco Pharmaceutical

Limited is expecting sales of Tk.

500 core with profit of Tk. 80 Core

at the end of year 2009 and growth of 15% in year 2009. BPL expects its Return on Investment

(ROI) to be same as year 2007 for year 2009 which is 2.95%.

EExxhhiibbiitt 1177:: CChhaarrtt ddeeppiiccttiinngg BBPPLL’’ss NNeett SSaalleess

RReevveennuuee ffrroomm FFYY 22000033 ttiillll FFYY 22000077

Page | 102

Initiatives In this particular period of financial debacle, when the demand of everything falls, BPL needs to take

cautious financial strategy regarding expansion of business. Even though, BPL has planned to

explore the foreign market which needs a lot of hard cash, BPL needs not be aggressive. The past

two years, the Chairman of Beximco has faced some tough time as anti corruption case filed against

him, the Beximco Limited as a whole lost some reputation as this also passed to BPL. In addition the

local pharmaceutical market is saturated so sales are declining for BPL. In order to overcome

financial policy as a detrimental BPL needs to put more focus on short term financial management

i.e. working capital and also BPL needs to find way cut its production cost.

Page | 103

EEExxxpppooorrrttt FFFaaaccciiillliiitttiiieeesss

EExxhhbbiitt 1188:: AA ddiiaaggrraamm ooff pphheennoommeennoonn mmooddeell ((MMoonniirruuzzzzaammaann,, 22000055)) ddeeppiiccttiinngg eexxppoorrtt ffaacciilliittiieess

aass aa FFaavvoouurraabbllee

WHAT? (Export opportunities)

HOW? Skilful negotiation, trade show etc

Intervening conditions Government, Customers, Competitors, Resources &

Capabilities WHY? Increase sales and capture

foreign market

WHAT Consequences? Expected: Export drugs to every major foreign market

Actual: Leading exporter, but still not every market served.

Context Foreign markets

WHO? Government,

regulatory body, top management of BPL

Page | 104

Export Facilities – The overall export opportunities: The overall export opportunities i.e. governmental rules and regulations, facilities provided by

financial institution and competitive advantage over other local and foreign drug manufacturer.

Causal Conditions A pharmaceutical company can capable of exporting bulk amount of drugs but still may face

stringent obstacle for which the company might end of with reduced amount of exporting. The local

and foreign governmental policy, facilities provided by the financial institutions can have profound

impact on the export opportunities to other foreign countries. It is very important for Beximco

Pharma to acquire and snatch the market share of foreign market through export of medicine. As the

pharmaceutical market of Bangladesh is saturated, so it is paramount of importance for Beximco

Pharmaceutical to maximize the sales from foreign countries.


The regulatory body and respective ministries of both local and foreign countries i.e. Ministry of

Finance and Planning, Ministry of Health, Export promotion Bureau etc are involved. In addition,

the top level manager of Beximco Pharmaceuticals, industry experts all are involved in this process.

Manufacturing plant and all the raw materials, work-in process materials and finished products, the

physical environment of the plant would be regarded as physical resources.

Page | 105



Competitors:

Recently, a number of industries equipped with modern infrastructure facilities are maintaining

international standard. Packaging of the produced pharmaceutical items is also developing

simultaneously. Bangladesh is exporting pharmaceutical items to 69 countries of the world. Among

those, the main countries are The USA, The UK, The Netherlands, Hungary, Greece, Spain, Brazil,

Hong Kong, Venezuela, Germany, Finland, Belgium, Pakistan, Iran, Ukraine, Vietnam, Sri Lanka,

Myanmar and Yemen. Some of the companies namely, Beximco Pharmaceutical Ltd., Square

Pharmaceutical Ltd., Novartis (Bangladesh), Aristo Pharma Ltd., Eskayef Bangladesh Ltd. Renata

Ltd., Acme Laboratories, Opsonin Chemical Industries Ltd., Ziska Pharmaceutical Ltd., Jayson

Pharmaceutical, Hudson Pharmaceuticals Ltd., Globe Pharmaceuticals Ltd., Beacon Pharmaceuticals

Ltd. etc., have established reputation in the global export market.

Resource and capabilities:

The technological knowhow of manufacturing medicine through using formula is one of the core

competences of Beximco Pharma. As there might be situation that Beximco Pharma fail to utilize the

core competence or stretch too much beyond its core competence then its export would be adversely

affected.

Page | 106

In last couple of years the company got market access to 28 more countries, most of which remained

unutilised due to fund constraints. The Letter of Credit limit has been increased from Tk. 250 million

to Tk. 500 million. Cash Credit Limit has also been increased from Tk. 570 million to Tk. 930

million. Beximco Pharma is further negotiating for additional working capital funding to support

export growth beyond 2009. But if they fail to do that, it would be a major obstacle to export.

Customers:

In foreign countries, the patent laws of medicine are getting tougher day by day. The authorization

bodies are increasingly stringent in allowing import from any new pharmaceutical company. The

customers preference shifted quickly and demand of the medicine do not remain stable. Also, in

different geographical areas many medicines may not work as effectively as it supposed to be. In

that case, recognition of the medicine of Beximco Pharma may be hampered.

Government:

Political unrest is a macro-environmental factor that has high impact on the export opportunities of

Beximco Pharma. Currently, Bangladesh is governed by the army backed caretaker government.

Before this government took over the power, Bangladesh saw unprecedented political unrest for

quite some period. These types of political calamities mar country’s reputation as a whole and

subsequently foreign authorities become reluctant to inspect the pharmaceutical companies. It is not

just import restrictions that have troubled Beximco Pharma this year. The company has been forced

to suspend its second phase fund collection from the London Stock Exchange as the government

arrested Beximco Pharma's vice chairman Salman F Rahman. His brother, another director of the

company, Sohel F Rahman, has had his bank accounts frozen. Beximco Pharmaceuticals had been

Page | 107

forced to cut production and exports due to restrictions on the import of key raw materials. As

Beximco Pharma could import one third of the raw materials they did last year as the government

has instructed them to strictly comply with the limits imposed by their permits. The current import

limit had been set eight years ago but had not previously been enforced. The limit was expected to

be increased in January; however this did not happen due to the political upheavals. Since, the

company was able to meet only 10 percent of overseas orders; Beximco has suspended export to

some countries despite having orders.

Context: Saturation of Domestic markets:

The Bangladeshi Pharmaceutical industry is becoming saturated which translates to lower

profitability for BPL. Keeping this in mind, BPL started to look for profit-making opportunities

abroad.

Globalization:

A new force is affecting the pharmaceutical industry and is rapidly changing international

marketplace. Globalization has resulted in an extremely competitive international market with firms

seeking low-cost manufacturing sources. Multinational corporations (MNCs) in developed countries

are closing expensive excess capacity and searching for new, less expensive suppliers of active

pharmaceutical ingredients (APIs) or for developing countries in which to undertake the entire

manufacturing process. Due to cost constraints in the European and US health markets and a narrow

product pipeline from innovative firms, generic drug companies are growing faster than innovative

research companies. This provides Bangladeshi pharmaceutical companies like Beximco Pharma

with a golden opportunity given its significantly lower cost structure.

Page | 108

Trade Related Aspects of Intellectual Property:

Trade Related Aspects of Intellectual Property (TRIPS) grants Bangladesh domestic manufacturing

opportunities and limited export advantages. Pursuing TRIPS’ opportunities must be carefully

considered for the following reasons: they are time-sensitive, require up-front investments, are likely

influenced by international political pressures, provide unclear benefits; meanwhile countries like

China and India, the world leaders in low-cost pharmaceutical manufacturing, are still extremely

competitive.

Export policy:

Products sent as sample on free of cost; but for medicine the conditions are:

1) Maximum US$ 10,000 if there is no export L/C (letter of credit),

2) Against each L/C, medicine worth of 1% of the total value of the L/C or US$ 1000, whichever is

the lesser

Contract Manufacturing for Developed Markets:

Because of cost advantage, major MNCs of highly regulated markets are now shifting towards LDCs

and developing countries for Contract Manufacturing. Bangladesh also has huge opportunity to go

for Contract Manufacturing

Page | 109

Beximco Pharma CEO Mr. Nazmul Hasan said: Beximco was a pharmaceutical manufacturer based in a least developed country, it could legally reverse-engineer patented products and sell them in the domestic market as well as in other least developed countries, non-WTO member countries and countries where the originator product is not patented.

Performance


BPL received the Export Gold Trophy in 1994-95 for its

exports of these two basic chemicals making it the first

pharmaceutical company in Bangladesh to win the Export

Trophy. Beximco started its first exports to Sri Lanka from 1st

January 2005, with six versions of four generics.

The company planned to increase it imports to Sri Lanka,

following a visit by Sir Lanka’s Health Minister to the firm's

plant at Tongi, in Gazipur, on 27th January 2005. Beximco

commented that it plans to gain registration in Sri Lanka for

another 28 drugs.

In March 2005, Beximco announced it was also concentrating

on selling products to Burma. The company began trading

with Burma in 1997, and has since become a major player in

the country's pharmaceutical market. Philippines is the fifth

ASEAN (Association of Southeast Asian Nations) country

Page | 110

after Singapore, Vietnam, Cambodia and Myanmar where Beximco Pharma has started exporting.

The ASEAN is one of the fastest growing economies of the world and the Philippines is the third

largest country in the region with a population of more than 80 million. The Philippines'

pharmaceutical market, estimated to be worth US$1.30 billion in 2007, is mostly dependent on

imported medicines.

Bangladesh being one of the least developed countries (LDC), it enjoys exemption from the WTO

regulatory regime (Trade Related Intellectual Property Rights - TRIPS) on exporting patented

medicines which includes about 600 generic drugs, in 8000 registered brands having 8,300 different

presentations of dosage forms and 237 registered companies including 5 multinationals manufacture

strengths. Before 1982, when a new Drug control ordinance restricted wholesale production and

marketing of many non-essential drugs, the local manufacturers produced only 20% of the total

needs, which is now completely changed. The local companies are reportedly now producing such

advanced drugs as anti-cancer, anti-HIV/AIDS and anti Bird Flue drugs including Kidney dialysis

preparations According to the industry experts, low labour and power costs, depreciation of US

dollar against most currencies and comparative advantages for Bangladesh under the WTO’s

agreement on Trade-Related Aspects of Intellectual Property Rights have inspired many global

pharmaceutical giants to set up their contract manufacturing base in the country. Domestic

pharmaceutical companies including Square Pharmaceuticals and Eskayef Bangladesh Ltd have

slowly made inroads into the lucrative business of contract manufacturing of bulk drugs and

formulations for global clients. The four top companies including Beximco Pharmaceutical are

Page | 111

eyeing exports of about $10 million this fiscal through contract manufacturing deals with European

pharmaceutical majors.


The Beximco Pharma is in the process of drawing up plans to enter the US and European markets by

2008. However, still Beximco have not managed to enter in US and European market. The ultimate

aim of BPL would try to capture all lucrative regions of the world.

Initiatives

As export facilities is key success factor for a pharmaceutical company to increase sales in foreign

market; as far as Beximco Pharma is concerned export facilities is a favourable factor for them. Still

there are a lot of scopes to become more export oriented company. The UK’s MHRA is one of the

toughest registration processes for pharmaceutical products in the world. Beximco Pharmaceutical

should try to achieve Medicines and Healthcare Products Regulatory Agency (MHRA) accreditation

very soon. Renata Limited has already received the MHRA accreditation last year and has sent its

first consignment to the UK recently. There is no scope for Beximco to sit idly. Many trade shows

such as Asia Pharma Expo (APE) opened up a new dimension for displaying pharmaceutical

products of both local and foreign companies, bulk drugs, processing plants and equipment's,

packaging machinery and materials, research & development (R&D), environment control

equipment and services. It has also paved the way for offering a common platform for the South

Asian pharmaceutical industry professionals to interact, update and exchange the new technology

and concepts. The leading pharmaceutical companies across the world participate in the mega show.

This is the place that Beximco Pharma can show its variety of products and earn reputation.

Page | 112

Pharmaceuticals manufacturing opportunities in for Beximco Pharma is brighter because of the

country’s Least Developed Country (LDC) status until 2016.

GGGoooooodddwwwiiillllll

WHAT? Positive perception, intrinsic

value

HOW? Promotion of CSR, high

media coverage


WHY? To build strong, favorable, and unique association to the brand imemory of the customers share

acceptance

WHAT Consequences? Expected: Positive word of mouth and increase in

sales Actual: No increase in sales because of goodwill

and positive brand image

Context Lack of media coverage,

negative publicity

WHO? Founders, managers,

media employee, customers

Page | 113

EExxhhiibbiitt 1199:: AA ddiiaaggrraamm ooff pphheennoommeennoonn mmooddeell ((MMoonniirruuzzzzaammaann,, 22000055)) ddeeppiiccttiinngg ggooooddwwiillll aass aa

DDeettrriimmeennttaall

Goodwill Goodwill or Positive Brand Image is the positive perception about the brand or a company from the

customers’ point of view. Goodwill can be considered as “intrinsic value" beyond its assets

Goodwill/Positive brand image implies that the brand or company is satisfying the customers. It is

fulfilling the customers’ needs, wants and demands such a way that customers are satisfied about the

brand or company. Goodwill is seen as an intangible asset on the balance sheet because it is not a

physical asset such as buildings and equipment. Goodwill typically reflects the value of intangible

assets such as a strong brand name, good customer relations, good employee relations and any

patents or proprietary technology. Brand image can also be described as the qualities that consumers

associate with a specific Brand, expressed in terms of human behavior and desires, but that also

relate to price, quality, and situational use of the brand For Beximco Pharmaceutical Limited

although goodwill or brand image is positive but according to F/D analysis Goodwill or positive

brand image is a detrimental for Beximco Pharmaceutical Limited.

Causal Conditions A positive brand image or goodwill is created by marketing programs that links strong, favorable,

and unique association to the brand in memory of the customers and for the case of Beximco

Pharmaceutical Limited in the mind of the physicians. For any brands or companies goodwill or

positive brand image influences the customers to buy their products in bulk amounts, involve in

repeat purchase and positive words of mouth. For Beximco Pharmaceutical Limited it will like

physicians are prescribing medicine products of Beximco Pharmaceutical Limited to their patients in

a regular basis and they are spreading positive word of mouth about Beximco Pharmaceutical

Page | 114

Limited among other physicians. Goodwill and positive brand image is very important for Beximco

Pharmaceutical Limited as it has a direct connection with the sales and market share of Beximco

Pharmaceutical Limited. The more goodwill or positive brand image Beximco Pharmaceutical

Limited will acquire the more its sales will increase along with market share. As, Beximco

Pharmaceutical Limited is capturing market of many developing and developed markets; goodwill

and positive brand image is very important for Beximco Pharmaceutical Limited. If Beximco

Pharmaceutical Limited loses its goodwill and positive brand image then its sales and market share

in both domestic and international market will go down. Share price will also fall. So, goodwill or

positive brand image is vital for big companies like Beximco Pharmaceutical Limited. Goodwill or

positive brand image also helps the employees to be motivated. Beximco Pharmaceutical Limited is

the first and only company in Bangladesh to introduce anti AIDS medicine in Bangladesh which

works really well as a goodwill or positive brand image for Beximco Pharmaceutical Limited.

A corporate social responsibility also helps a company to gain goodwill or positive brand image.

Beximco Pharmaceutical Limited has various kinds of corporate social responsibilities. The product

Beximco Pharmaceutical Limited produces are for the health and well being for human body. So the

business itself is part of corporate social responsibilities. Good products however are only one side

of the expression of commitment for Beximco Pharmaceutical Limited. Beximco Pharmaceutical

Limited believe that their responsibility lies even more in ensuring that the society’s well being.

Corporate social responsibility is an integral part of the business strategy of Beximco Pharmaceutical

Limited which is reflected in the mission statement Beximco Pharmaceutical Limited. Keeping

partnership with NGOs and working for AIDS patients, in supporting and in raising disease

awareness among the people is one part of corporate social responsibilities of Beximco

Page | 115

Pharmaceutical Limited. Beximco Pharmaceutical Limited also donates medicines worth millions of

taka to victims in National and International calamities as corporate social responsibility.

Signing an agreement with the Dutch Bangla Bank Limited (DBBL) in 2005 to supply ARV (Anti-

retroviral) drugs among AIDS patients of Bangladesh despite knowing the fact that it will not

increase their sales value significantly was another major example of corporate social responsibility

of Beximco Pharmaceutical Limited. These ARV drugs were distributed through Ashar Alo and

Mukto Akash, two NGO’s working for the treatment of HIV/AIDS patient in Bangladesh.

Introduction of generic bird-flu drug in Bangladesh is sign of another footstep for Beximco

Pharmaceutical Limited regarding corporate social responsibilities. Beximco Pharmaceutical

Limited believes in the theory that “prevention is better than cure” and that is Beximco

Pharmaceutical Limited is keen in corporate social responsibilities.

Beximco Pharmaceutical Limited has also organized and sponsored corporate cricket league as a

component of corporate social responsibilities.

But Beximco Pharmaceutical Limited might have major problems with promoting its corporate

social responsibilities among the physicians and end users to make it as a favorable factor.

Although Beximco Pharmaceutical Limited has completed various activities related with corporate

social responsibilities but the image of the founder and Chairman of Beximco Group A S F Rahman

and founder and Vice Chairman of Beximco Group Salman F Rahman are controversial in

Bangladesh because of their unethical conducts. The image of those two persons is negative among

huge numbers of Bangladeshi. Many newspapers, magazines, television news have portrait those

Page | 116

two persons as infamous, notorious character among Bangladeshi people. So, gradually many

Bangladeshi people have negative feelings and mind set against Beximco group and Beximco



Context: Media:

Beximco Pharmaceutical Limited has very low and negative media coverage. Many of the activities

of corporate social responsibilities are not shown in the television and not published or highlighted

in the news paper. One of the main competitors of Beximco Pharmaceutical Limited, Square

Pharmaceutical Limited has very good relationship with Television and newspaper media which

always helps Square Pharmaceutical Limited to promote its activities. Founders of Beximco Group

also have negative publicity in television and print media which hamper the goodwill and positive

brand image of Beximco Pharmaceutical Limited.

Intervening conditions:

Economic:

Change in the economic conditions does not have major effect on the goodwill or brand image of

Beximco Pharmaceutical Limited. Change in economic factors like, change in inflation, change in

exchange rate, change in interest rates, change in GNP, change in unemployment rate do not reflect

any changes in the situation of goodwill or brand image of Beximco Pharmaceutical Limited.

Technological:

Page | 117

Like change in economic conditions, change in technological condition also does not have any

major impact on goodwill or brand image of Beximco Pharmaceutical Limited. Change in

technological factors like, advancements in technology, growth in R & D in the industry do not

replicate any changes in the situation of goodwill or brand image of Beximco Pharmaceutical

Limited.



Government, political and legal conditions do not have any impact on the goodwill or brand image

of Beximco Pharmaceutical Limited. Change in anti-trust legislation, export/import policies and

political unrest do not imitate any changes in the situation of goodwill or brand image. Although

Bangladesh is a country full of political unrest, but political unrest has a very little impact on

goodwill or brand image of Beximco Pharmaceutical Limited.

Customers:


(patients). Change in various customers factors have high to medium impact in the goodwill or brand

image k of Beximco Pharmaceutical Limited. Change in Choice criteria, change in relative

importance in choice criteria, informed decision making among physicians, which have present

status of occurrence, have high impact on Beximco Pharmaceutical Limited can positively or

negatively change the values of goodwill or brand image. On the other hand, change is preference of

the physician, which has potential status of occurrence, has medium impact on goodwill or brand

image of Beximco Pharmaceutical Limited. The reason behind the high to medium impact is, if there

are any changes in choice criteria, changes in relative importance of choice criteria, changes in

Page | 118

preference, changes in informed decision making among the physicians, there will be direct impact

on the demand of the medicine products of Beximco Pharmaceutical Limited. If demand for

medicine products of Beximco Pharmaceutical Limited increases or decreases, goodwill value or

brand image should be change accordingly.

Competitors:


the goodwill or brand image of Beximco Pharmaceutical Limited. Increase/ Decrease in number of

competitors is potential but has low impact on goodwill or brand image of Beximco Pharmaceutical

Limited. Adaption of new technology among the competitors is present and has low impact on

goodwill or brand image of Beximco Pharmaceutical Limited. Changes in investments in marketing/

production initiatives is also present among the competitors but has very low impact on the goodwill

or brand image of Beximco Pharmaceutical Limited.



medium impact on the goodwill or brand image of Beximco Pharmaceutical Limited. Existence of

core competence is present and has medium impact on the national goodwill or brand image of

Beximco Pharmaceutical Limited. Adequacy of skills and resources (Human resource/ marketing/

distribution/ operations/R & D/ finance) is potential and has medium impact on the goodwill or

brand image of Beximco Pharmaceutical Limited. Like, existence of core competence, employee

relations is present and has medium impact on the goodwill or brand image of Beximco

Pharmaceutical Limited. HRD initiatives are also present but have low impact on the goodwill or

Page | 119

brand image of Beximco Pharmaceutical Limited. As, changes in resources and capabilities can

strengthen or weaken the efficiency goodwill or brand image, so for Beximco Pharmaceutical

Limited, resources and capabilities has medium to low impact on the goodwill or brand image.

Product improvement (Additional):

Product improvement is present and can have a medium impact on the goodwill or brand image of

Beximco Pharmaceutical Limited. Because product improvement is always a good thing for a

company and by introducing improved product in the market Beximco Pharmaceutical Limited can

increase its goodwill or positive brand image.

Performance


The actual outcome is, Beximco Pharmaceutical Limited does not have much of goodwill and

positive brand image among many end users. So, positive words of mouth are not spreading and the

publicity of various activities related with corporate social responsibility is very low in the media.

No advantage in increase in sales because of goodwill and positive brand image of Beximco



The desired outcome of having goodwill and positive brand image for Beximco Pharmaceutical

Limited is by using goodwill and positive brand image Beximco Pharmaceutical Limited can

maximize its sales, market share. Because if Beximco Pharmaceutical Limited able to gain or

improve goodwill and positive brand image then physicians will prescribe more products of

Beximco Pharmaceutical Limited to their patients. Patients might involve in repeat purchase. So,

company will rip more profit out of it. Positive word of mouth will be spread among the physicians

Page | 120

and both physicians and end users (patients)will be satisfied after using pharmaceutical products of

Beximco Pharmaceutical Limited. So, market share will be retained or will be increased.


People:

People are the employees who design and make decision about the promotional campaign of

Beximco Pharmaceutical Limited. By promotional campaign goodwill and positive brand image can

be gained and improved. From the other part physicians and end users are also people. Because they

are the ones who have to be satisfied and involved in repeat purchasing and spreading of positive

word of mouth. Top level managers who take decisions about the corporate social responsibilities

are also part of the people. Beximco Pharmaceutical Limited also has to invest in people who can

come up with unique or creative ideas for promotions or corporate social responsibilities. Various

television and print media people are also involved in this. Also the founders of Beximco group are

also involved.

Resources:

Mainly monetary resources are needed for improving goodwill and positive brand image. Various

promotional campaigns need huge amount of money. Sponsorships and organizing various events

also need lump sum amount of money. Various other corporate social responsibilities also incur

huge amount of cost. Salaries of the employees are also part of monetary resource.

Page | 121

Initiatives Although goodwill or positive brand image of Beximco Pharmaceutical Limited is a very important

key success factor for Beximco Pharmaceutical Limited but still it is a detrimental factor for them.

To overcome the condition Beximco Pharmaceutical Limited can take various steps. Beximco

Pharmaceutical Limited should train its employees well so then can work on increase in goodwill

and brand image. Beximco Pharmaceutical Limited needs to find out innovative ways of

implementing corporate social responsibilities. Beximco Pharmaceutical Limited also needs to

promote its corporate social responsibilities among physicians and end users (patients). Beximco

Pharmaceutical Limited maintains good and well established partnerships with the world’s top

pharmaceutical companies. Beximco Pharmaceutical Limited started its journey partnering with

Bayer AG of Germany and Upjohn Inc. of USA. Beximco Pharmaceutical Limited had also

partnered with the Roche of Switzerland and Pharma Italia Carlo Erba of Italy. Today, Beximco

Pharmaceutical Limited contract manufacture world’s number one inhaler brand Ventolin for

GlaxoSmithKline, and also have contract manufacture liquid, cream, ointment and suppository

products for Novartis. On the other hand, Beximco Pharmaceutical Limited had outsourced two of

their injectable products from Sanofi Aventis. These partnerships with world’s leading

pharmaceutical companies have enabled Beximco Pharmaceutical Limited to acquire enormous

goodwill and positive brand image. Beximco Pharmaceutical Limited also needs to promote those

achievements in various media like, television, newspaper, magazines, press release etc.

Page | 122

MMMaaarrrkkkeeetttiiinnnggg SSSkkkiiillllllsss

EExxhhiibbiitt 2200:: AA ddiiaaggrraamm ooff pphheennoommeennoonn mmooddeell ((MMoonniirruuzzzzaammaann,, 22000055)) ddeeppiiccttiinngg mmaarrkkeettiinngg

sskkiillllss aass aa ddeettrriimmeennttaall

WHAT?

Skills to implement marketing strategies and

coordinating marketing mix

HOW?

Training, motivation and

recruitment

Intervening conditions

Customers, Competitors, Resources & Capabilities WHY?

Increase in sales

WHAT Consequences?

Expected: Increase in sales, and serve more end users (patients)

Actual: Stability

Context Market segment and

government regulation

WHO?

Top level managers, marketing manager

Page | 123

Marketing Skills Marketing skills are the performance based on the combination of all the marketing mix. Elements of

marketing mix are generally product, price, promotion and distribution. To combine all the elements

and implements those competently we need special skills. That skill can be considered as marketing

skills. Marketing skills create a linkage among the marketing mix. Marketing skill is an essential

constituent for implementing marketing strategies. For Beximco Pharmaceutical Limited marketing

skills in different sectors of marketing departments are crucial skills to implement the marketing

strategies of Beximco Pharmaceutical Limited. Without proper marketing skills marketing strategies

are impossible to implement and marketing mix are impracticable to coordinate perfectly. For

Beximco Pharmaceutical Limited marketing skills is a detrimental factor.

Causal Conditions Beximco Pharmaceutical Limited needs to sales its products because earning profits is the ultimate

goal for Beximco Pharmaceutical Limited like any other companies. To sale a product efficiently we

need marketing strategies with marketing mix. Marketing skill is needed for implementing the

marketing strategies. Every year Beximco Pharmaceutical Limited has goals and objectives. To

implement the goals and objectives Beximco Pharmaceutical Limited needs marketing strategies.

How proficiently the marketing strategies will be implemented, whether the outcome will be

matched with the estimated outcome, what will be the backup plans if there is a gap exist between

the actual and estimated outcome which have a negative impact on the company, how the marketing

mix interact with each of the elements, Beximco Pharmaceutical Limited needs a great deal for

marketing skills from its marketing managers to manage all the stuffs and stay focused with goals

and objectives of the company. Without proper marketing skills everything will be fallen apart for

Beximco Pharmaceutical Limited. Beximco Pharmaceutical Limited needs to know the demand for

Page | 124

its producers. They need various types of marketing research and forecasting methods for it. Those

forecasting methods can be qualitative and quantitative. After forecasting they need to let the

production department know how much medicine products to produce.

Meanwhile, marketing managers need to find promotional strategies for those medicine products for

sales according to the expected demand. Now they have to create demand among the customers.

They need to give the doctors reasons for prescribing medicine products of Beximco Pharmaceutical

Limited. Various kinds of promotional activities will take place to influence the doctors. There will

be a range of promotional effort starting from providing gifts, professional supports to ending up

with organizing, sponsoring various events. Beximco Pharmaceutical Limited needs marketing

managers with great marketing skills to implement those perfectly.

The tasks for marketing managers are not stopping here. They need to keep an eye on the

distribution network. Distribution network need to deliver the product at the right time at the right

place with minimum distribution cost. Well, Government might have fixed the price for

pharmaceutical products but still marketing managers of Beximco Pharmaceutical Limited need

pricing strategies. Bangladeshi Government has only fixed the selling price, the end price, for

pharmaceutical products which will be paid by the end users (patients). But marketing managers of

Beximco Pharmaceutical Limited need to decide how much price they should charge to those

retailers. The profit margin from one unit of a product is the difference between the price charged to

the pharmacy and the cost of producing that one unit of that product. Here, marketing managers of

Beximco Pharmaceutical Limited need to decide how much to charge to those medicine product to

sell those to the pharmacy. Here, marketing managers need to consider about competitors’’ pricing

Page | 125

policies, market situation, cost of productions, marketing objectives of Beximco Pharmaceutical

Limited etc.


Context:

Market Segment:

Marketing skills are not required to influence the end users (patients) of the pharmaceutical products

of Beximco Pharmaceutical Limited. Rather the target market segments for practicing marketing

skills are the physicians and the pharmacies. Medical Promotional Officers (MPO) of Beximco

Pharmaceutical Limited need to influence the physicians to prescribe the pharmaceutical products of

Beximco Pharmaceutical Limited to the end users (patients). Then Medical Promotional officers

need special marketing skills to influence those physicians to prescribe the pharmaceutical products

of Beximco Pharmaceutical Limited. Front level marketing managers like Sales Representatives

(SR) of Beximco Pharmaceutical Limited need to push the sales person or shop owners of numerous

pharmacies to stock the pharmaceutical products of Beximco Pharmaceutical Limited. If the

pharmacies do not stock the pharmaceutical products of Beximco Pharmaceutical Limited then there

will be not many sales take place although there would be demand for pharmaceutical products of

Beximco Pharmaceutical Limited. So Sales Representatives (SR) with their special marketing skills

need to push the sales person or shop owners of numerous pharmacies to stock the pharmaceutical

products of Beximco Pharmaceutical Limited.

Page | 126

Prohibition in certain Traditional Promotional Methods:

According to regulation of Bangladeshi governments pharmaceutical industry cannot go for any kind

of direct promotions directed the end users (patients) for selling the pharmaceutical products. So,

Beximco Pharmaceutical Limited cannot promote its pharmaceutical products directly to its end

users (patients) to sell the pharmaceutical products. That is the reason why Beximco Pharmaceutical

Limited needs to use unusual and special type of marketing skills to implements the marketing

strategies.


Economic:

Change in the economic conditions does not have major effect on marketing skills of the employees.

Change in economic factors like, change in inflation, change in exchange rate, change in interest

rates, change in GNP, change in unemployment rate do not reflect any changes in the success or

failure of marketing skills of the employees of Beximco Pharmaceutical Limited.

Technological:


impact on marketing skills of the marketing personnel of Beximco Pharmaceutical Limited. Change

in technological factors like, advancements in technology, growth in R & D in the industry do not

replicate any changes in the success or failure of marketing skills of Beximco Pharmaceutical

Limited.



Government, political and legal conditions do not have any impact on the marketing skills of the

employees of marketing department of Beximco Pharmaceutical Limited. Change in anti-trust

Page | 127

legislation, export/import policies and political unrest do not imitate any changes in the effectiveness

of marketing skills. Although Bangladesh is a country full of political unrest, but political unrest has

a very little impact on effectiveness of marketing skills of the employees of marketing department of


Customers:


(patients). Change in various customers factors have high to medium impact in the national wide

distribution network of Beximco Pharmaceutical Limited. Change in Choice criteria, change in

relative importance in choice criteria, informed decision making among physicians, which have

present status of occurrence, have high impact on the Beximco Pharmaceutical Limited are most of

the time due to the marketing skills of the employees of the marketing department of Beximco

Pharmaceutical Limited. On the other hand, change is preference of the physician, which has

potential status of occurrence, has medium impact on Beximco Pharmaceutical Limited. The reason

behind the high to medium impact is, if there are any changes in choice criteria, changes in relative

importance of choice criteria, changes in preference, changes in informed decision making among

the physicians, there will be direct impact on the demand of the medicine products of Beximco

Pharmaceutical Limited. The increase in the demand of medicine products of Beximco

Pharmaceutical Limited depends on the successful implication marketing skills of the employees of

the marketing department of Beximco Pharmaceutical Limited. On the other hand decrease in the

demand of medicine products of Beximco Pharmaceutical Limited means there is a failure in the

practice of marketing skills of the employees of the marketing department of Beximco


Page | 128

Competitors:


the marketing skills of the employees of marketing department of Beximco Pharmaceutical Limited.

Increase/ Decrease in number of competitors is potential but has low impact on marketing skills.

Adaption of new technology among the competitors is present and has low impact on marketing

skills of Beximco Pharmaceutical Limited. Changes in investments in marketing/ production

initiatives are also present among the competitors but have very low impact on Beximco

Pharmaceutical Limited if we consider the marketing skills.



medium impact on marketing skills of the employees of marketing department of Beximco

Pharmaceutical Limited. Existence of core competence is present and has medium impact on the

marketing skills of the employees of marketing department of Beximco Pharmaceutical Limited.

Adequacy of skills and resources (Human resource/ marketing/ distribution/ operations/R & D/

finance) is potential and has medium impact on marketing skills of the employees of marketing

department of Beximco Pharmaceutical Limited. Like, existence of core competence, employee

relations is present and has medium impact on marketing skills of the employees of marketing

department of Beximco Pharmaceutical Limited. HRD initiatives are also present but have low

impact on the marketing skills of the employees of marketing department of Beximco


Page | 129

Product improvement (Additional):

Product improvement is present and can have a medium impact on the marketing skills of the

employees of marketing department of Beximco Pharmaceutical Limited. Marketing managers can

use their skills to grab more market share by promoting the improved product in an efficient way.

Performance


Marketing skills of the marketing managers of Beximco Pharmaceutical Limited are not of as high

standard as expected from a huge pharmaceutical company like Beximco Pharmaceutical Limited.

So, Beximco Pharmaceutical Limited in reality is not looking for any increase in the market share in

the pharmaceutical industry with any aggressive marketing effort where it can use great deal of

marketing skills. So, retaining the market share, remain stable is the actual achievements of

marketing skills of the marketing managers of Beximco Pharmaceutical Limited.


Desired outcome of excellent marketing skills of the employees of marketing department of

Beximco Pharmaceutical Limited can be retaining market share, increase in sales, and serve more

end users (patients). Beximco Pharmaceutical Limited has national wide distribution network, it will

help Beximco Pharmaceutical Limited to deliver medicine products all over Bangladesh. So, there is

no chance to lose market share to competitors if brilliant marketing skills of the employees of

marketing department exist in Beximco Pharmaceutical Limited. As Beximco Pharmaceutical

Limited is serving the whole nation, marketing skills needs to be competitive thus Beximco

Page | 130

Pharmaceutical will not lose market share to its competitors anywhere in Bangladesh. With

magnificent marketing skills of the employees of marketing department of Beximco Pharmaceutical

Limited can increase the sales as marketing skills is directly related with increase/ decrease in

demand of pharmaceutical products. If any competitors fail to maintain their market share, if there is

any gap created by the competitors, there is always a chance for Beximco Pharmaceuticals to grab

that market share with its marketing skills of the employees of marketing department.


People:

Top level managers to front line managers of marketing departments of Beximco Pharmaceutical

Limited are mainly involved in it. Top level managers like Chief Executive Officer (Nazmul

Hassan), Director, Marketing (Rabbur Reza), Director, Sales (Zakaria Seraj Chowdhury) and other

top level managers take decision about the marketing strategies. Then via middle level managers like

Brand managers, marketing executives, deputy manager those marketing strategies are being

implemented through front line managers like Medical Promotional Officer (MPO) and sales

representatives.

Physicians and sales person from pharmacies are also involve from other side. Medical Promotional

Officers influence the physicians to prescribe pharmaceutical products of Beximco Pharmaceutical

Limited. If Medical Promotional Officers are unable to influence the physicians then physicians will

not prescribe the pharmaceutical products of Beximco Pharmaceutical Limited. If physicians do not

prescribe medicine products of Beximco Pharmaceutical Limited then Beximco Pharmaceutical

Limited will lose its market share as the sales will trembled. So getting the good portion of the

prescription share from the physicians is important for Beximco Pharmaceutical Limited because it

is directly related with the sales of medicine products of Beximco Pharmaceutical Limited. Sales

Page | 131

representatives play their roles to deliver the products to the pharmacies and influence the sales

person to keep as much products of Beximco Pharmaceutical Limited as possible. Altogether top

level managers, middle level managers, front line manager of marketing department along with

physicians and sales person of the pharmacies are the main people related with marketing skills.

Resources:

Beside people we need resources like money. Human resource department need to hire marketing

personnel with competitive marketing skills. To keep the managers and other employees of

marketing department Human Resource of Beximco Pharmaceutical Limited need to spend money

as salaries and benefit packages. To influence physicians Medical Promotional Officers need to give

them gifts. To purchase those gifts Beximco Pharmaceutical Limited needs to spend huge amount of

money as Beximco Pharmaceutical Limited have to influence physicians from all over the country.

To influence the sales persons of the pharmacies sales representative needs to provide discounts. So,

various types of monetary resources are required for gathering and improving marketing skills.

Process

Although marketing skills of the employees of marketing department of Beximco Pharmaceutical

Limited is a very important key success factor for Beximco Pharmaceutical Limited but still it is a

detrimental factor for them. To overcome the condition Beximco Pharmaceutical Limited can take

various steps. Beximco Pharmaceutical Limited should train its employees well so then can have

excellent marketing skills. Beximco Pharmaceutical Limited can motivate them to improve their

marketing skills. Goals and objectives must be set such a way that employees can achieved those

but it will not be easy be easy for them to achieve neither impossible for them to achieve. While

recruiting people Human Resource Management of Beximco Pharmaceutical Limited also should

hire those people for marketing department who has higher level of marketing skills.

Page | 132

NNNaaatttiiiooonnnaaalll WWWiiidddeee DDDiiissstttrrriiibbbuuutttiiiooonnn NNNeeetttwwwooorrrkkk

EExxhhiibbiitt 2211:: AA ddiiaaggrraamm ooff pphheennoommeennoonn mmooddeell ((MMoonniirruuzzzzaammaann,, 22000055)) ddeeppiiccttiinngg nnaattiioonnaall wwiiddee

ddiissttrriibbuuttiioonn nneettwwoorrkk aass aa ffaavvoouurraabbllee

WHAT? Distribution network that

serves patients from all over Bangladesh

HOW? Reinforce by training

employees and intrigation


WHY? maintain a sustainable market

share acceptance

WHAT Consequences?

Expected: Retaining market share and increase in sales

Actual: About 12% market share

Context 147,570 square-km with

over 150 million population

WHO? Various distributors

and employees

Page | 133

National Wide Distribution Network Distribution network is a network that connects manufacturer with customers via various channel

members. Intermediaries between manufactures and customers are called as channel member. With

proper distribution network goods and services become available to the end users. Distribution

network depends on distribution strategy. Distribution strategy deals with the marketing activities

and institutions involve in getting the right goods and services to the right customers of the

company. Beximco Pharmaceutical Limited has a distribution network which covers whole

Bangladesh. Bangladesh has area of 147,570 square-km with over 150 million populations. So,

national wide distribution Network serves a huge number of target customers and end users

(patients). National wide distribution network is definitely a favorable key success factor for


Causal Conditions Beximco Pharmaceutical Limited has target customers consists of end users of medicine products all

over Bangladesh. Beximco Pharmaceutical Limited needs to maintain relationship with physicians

all over the countries and have to provide medicine products to almost all the pharmaceutical shops

or pharmacies of Bangladesh. To ensure the supply and distribution of the medicine products,

Beximco Pharmaceutical Limited needs a very strong distribution network which will cover all the

rural and urban areas of Bangladesh and will be able to maintain relationship with the physicians and

end users of medicine products.

Beximco needs a national wide distribution network to maintain a sustainable market share in

Bangladeshi market. If Beximco Pharmaceutical Limited did not have national wide distribution

network or does not maintain national wide distribution networks Beximco Pharmaceutical Limited

Page | 134

will easily lose connection with the doctors and customers and ultimately will lose market share to

the competitors or competitive edge over the main competitors.


Context: Bangladesh

Bangladesh has area of 147,570 square-km with over 150 million populations. Beximco

Pharmaceutical Limited has the distribution network all over the country. Beximco Pharmaceutical

Limited is serving people from all the urban and rural areas of Bangladesh. So, it is not easy for

Beximco Pharmaceutical Limited to keep track on distribution network of all the areas all over

Bangladesh. Maintaining distribution network all over Bangladesh is also very costly. As,

competitors are also operating their distribution network and selling all over Bangladesh so Beximco

Pharmaceutical Limited has no option left but to operate distribution network all over Bangladesh


Economic:

Change in the economic conditions does not have major effect on the national wide distribution

network. Change in economic factors like, change in inflation, change in exchange rate, change in

interest rates, change in GNP, change in unemployment rate do not reflect any changes in the

situation of national wide distribution network of Beximco Pharmaceutical Limited.

Technological:


impact on national wide distribution network of Beximco Pharmaceutical Limited. Change in

technological factors like, advancements in technology, growth in R & D in the industry do not

Page | 135

replicate any changes in the situation of national wide distribution network of Beximco




Government, political and legal conditions do not have any impact on the national wide distribution

network of Beximco Pharmaceutical Limited. Change in anti-trust legislation, export/import policies

and political unrest do not imitate any changes in the situation of national wide distribution network.

Although Bangladesh is a country full of political unrest, but political unrest has a very little impact

on national wide distribution network of Beximco Pharmaceutical Limited. The reason behind this

is, during political unrest, Pharmacies are allowed to keep open and there are no disturbances in the

transportation of medicine products.

Customers:


(patients). Change in various customers factors have high to medium impact in the national wide

distribution network of Beximco Pharmaceutical Limited. Change in Choice criteria, change in

relative importance in choice criteria, informed decision making among physicians, which have

present status of occurrence, have high impact on the national wide distribution network of Beximco

Pharmaceutical Limited. On the other hand, change is preference of the physician, which has

potential status of occurrence, has medium impact on national wide distribution network of Beximco

Pharmaceutical Limited. The reason behind the high to medium impact is, if there are any changes in

choice criteria, changes in relative importance of choice criteria, changes in preference, changes in

informed decision making among the physicians, there will be direct impact on the demand of the

medicine products of Beximco Pharmaceutical Limited. If demand for medicine products of

Page | 136

Beximco Pharmaceutical Limited increases or decreases, capacity of the distribution network should

be change accordingly. Supply of medicine products to specific areas should be changed in order to

maintain efficient national wide distribution network.

Competitors:


the national wide distribution network of Beximco Pharmaceutical Limited. Increase/ Decrease in

number of competitors is potential but has low impact on the national wide distribution network of

Beximco Pharmaceutical Limited. Adaption of new technology among the competitors is present

and has low impact on national wide distribution network of Beximco Pharmaceutical Limited.

Changes in investments in marketing/ production initiatives is also present among the competitors

but has very low impact on the national wide distribution network of Beximco Pharmaceutical

Limited.



medium impact on the national wide distribution network of Beximco Pharmaceutical Limited.

Existence of core competence is present and has medium impact on the national wide distribution

network of Beximco Pharmaceutical Limited. Adequacy of skills and resources (Human resource/

marketing/ distribution/ operations/R & D/ finance) is potential and has medium impact on the

national wide distribution network of Beximco Pharmaceutical Limited. Like, existence of core

competence, employee relations is present and has medium impact on the national wide distribution

network of Beximco Pharmaceutical Limited. HRD initiatives are also present but have low impact

on the national wide distribution network of Beximco Pharmaceutical Limited. As, changes in

resources and capabilities can strengthen or weaken the efficiency and intensity of a distribution

Page | 137

network, so for Beximco Pharmaceutical Limited, resources and capabilities has medium to low

impact on the national wide distribution network.

Additional – Product improvement:

Product improvement is present and can have a medium impact on the national wide distribution

network of Beximco Pharmaceutical Limited. Because, improved products always have more

demand and thus influence the distribution network as the delivery of the improved products are

usually high to fulfill the market demand.

Performance

Actual Achievement:

Beximco Pharmaceutical Limited has national wide distribution network, it will help Beximco

Pharmaceutical Limited to deliver medicine products all over Bangladesh. So, there is no chance to

lose market share to competitors in terms of losing geographical segment. As a result Beximco

Pharmaceutical Limited has a health market share of about 12% in pharmaceutical products market

of Bangladesh.


The consequences or expected outcome of having a national wide distribution network of Beximco

Pharmaceutical Limited can be retaining market share, increase in sales, and serve more end users

(patients). Beximco Pharmaceutical Limited has national wide distribution network, it will help

Beximco Pharmaceutical Limited to deliver medicine products all over Bangladesh. So, there is no

chance to lose market share to competitors in terms of losing geographical segment. As Beximco

Pharmaceutical Limited is serving the whole nation, so competitors will not be able to find new

target market in terms of geographical segment. With national wide distribution network of Beximco

Page | 138

Pharmaceutical Limited can increase the sales if they can increase the demand. If any competitors

fail to maintain their market share, if there is any gap created by the competitors, there is always a

chance for Beximco Pharmaceuticals to grab that market share with its national wide distribution

network.


People:

Mainly distributors are involved in national wide distribution networks. To maintain national wide

distribution network Beximco Pharmaceutical Limited needs distributors of various type at various

locations. All the distributors are exclusively employed by Beximco Pharmaceutical Limited to

maintain high quality although the distribution process. Beximco Pharmaceutical Limited needs

distributors for movements of medicine products from manufacturing plants to warehouses. From

warehouse Beximco Pharmaceutical Limited need to send the medicine products to Division or Zone

specific distributors. Then those Division or Zone specific will send the medicine products to

District specific distributors. From district specific distributors, through sales representatives (SR)

medicine products are delivered to retail shops, mostly known as pharmacy. From those pharmacies,

end users (patients) are able to buy the medicine products which were prescribed by authorized

physicians. Among the distribution channels there are also supervisors and Medical Promotional

Officer (MPO). Medical Promotional Officers try to promote medicine products among physicians

of specific location and maintain constant contact with sales representative. Medical Promotional

Officers usually have good knowledge about the demand of medicine product of a specific location

as they influence the physician directly to prescribe the medicine products of Beximco

Pharmaceutical Limited to their patients. Patients will ultimately be the end users although they do

not have any involvement in the decision making process of purchasing medicine products. To

Page | 139

purchase the medicine products, end users (patients) solely depend on the physicians who have

prescribed them the specific medicine products of specific companies.

Resources:

To maintain a strong national wide distribution network, Beximco Pharmaceutical Limited needs

various types of resources. Those resources can be divided into two broad categories: Monetary

resources and Physical resources. Monetary resources include salaries and wages of distribution

channel members, handling and bulk packaging cost, transportation (fuel and other) costs etc.

Physical resources can be warehouses, tracks, delivery vans and other vehicles for delivering the

products from one location to other locations etc. In our country, most of the Medical Promotional

Officers and sales representative usually ride on motor bikes to visit physicians and pharmacy.

Those motor bikes are generally provided by the companies. So, Beximco Pharmaceutical Limited

has to incur cost for purchasing and maintenance of those motor bikes which are provided to the

Medical Promotional Officers and sales representatives.

Process

Beximco Pharmaceutical Limited needs to reinforce or improve the key success factor national wide

distribution network because it is a favorable factor for Beximco Pharmaceutical Limited. They can

train their distributors well thus they can perform in efficient manner. Beximco Pharmaceutical

Limited can also try vertical integration like backward integration or forward to increase

coordination, ownership, and specialization in a cost minimizing way.

Page | 140

2.6 Relative F/D Analysis

Index KSFs BPL SPL Incepta Acme

1 International standard manufacturing facility

5 5 3 3

2 Highly Qualified Employees

4 4 3 3

3 National wide distribution network

4 4 4 4

4 Relationship with the doctor

4 5 4 3

5 Marketing skills 4 5 4 3 6 Export facilities 5 5 4 3 7 Goodwill 4 5 4 3 8 High product

quality 4 5 4 4

9 Global acceptance

5 5 3 3

10 Financial Strength

5 5 4 4

Exhibit 22: Depicting BPL’s Relative Rating

The relative ratings reveal that Beximco Pharmaceuticals Ltd is doing well on a comparative note in

some areas while performing relatively poorly in others in relation to its top competitors, Square

Pharmaceuticals, Incepta and Acme.

Page | 141

International standard manufacturing facility

KSF 1 is possibly one of Beximco Pharmaceutical’s strongest favourables. It comes as no surprise

that BPL is way ahead of most of the players in the industry. Taking into accounts the recent events

where BPL achieved GMP Clearance from a globally recognized regulatory authority like TGA

Australia BPL is now a among the world’s elite pharmaceutical companies.

Highly Qualified Employees

BPL certainly knows how to pick the right people and how to retain its talented HR which is clearly

reflected in the fact that BPL has an unusually low employee turnover. In this respect, the relative F/D

analysis reveals that BPL is a clear winner in the Bangladeshi Pharmaceutical industry.

National wide distribution network

Again BPL is found to be performing much better than most others in the industry. Beximco Pharmaa

distribution network is relatively more extensive in comparison to the top industry players. It covers

whole Bangladesh. Bangladesh has area of 147,570 square-km with over 150 million populations. So,

national wide distribution Network serves a huge number of target customers and end users (patients).

National wide distribution network is definitely a strong favorable key success factor for Beximco

Pharmaceutical Limited on its own and also relative to its rivals.

Relationship with the doctor

When it comes to physician relationship management, BPL is performing better than most but is still not

performing well enough to take the number one position in this respect. Square Pharmaceuticals Limited,

BPL‟s biggest competitor has taken the lead in this respect.

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Marketing skills

While BPL has better marketing skills than most top players in the industry like Incepta and Acme, it still

is performing relatively poorly in this respect when compared to Square Pharmaceuticals Ltd. For

Without proper marketing skills marketing strategies are impossible to implement and marketing mix are

impracticable to coordinate perfectly. For Beximco Pharmaceutical Limited marketing skills is an area

that requires improvement.

Export facilities

Beximco Pharma is one of the largest exporters of medicine in Bangladesh. Although it does face stiff

competition from other pharmaceutical companies like Square Pharmaceuticals, Incepta and Acme, are

all big players in the pharmacy industry of Bangladesh, BPL has still managed to continue to be a top

performer.

Goodwill

Right here is an area that needs immediate attention. Given that fact that BPL has achieved so much in

absolute terms as well as in relative terms by delivering excellent quality in both domestic and

international markets, and yet BPL’s goodwill does seem to do it justice meanwhile it looks as though

Square Pharmaceuticals definitely knows its way around the industry and media .

High product quality

When it comes to product quality BPL is performing wonderfully well both in absolute terms and also in

relation to its completion. Over the years, BPL has instilled the trust and reliability in its customers by

delivering superior quality which is one of BPL’s core competencies. BPL’s provides quality in terms of

quantity, purity, stability, safety, efficacy, packaging and overall presentation of the products

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Global acceptance

In terms of achieving global acceptance, BPL is doing relatively well in comparison to most of the big

shots in the Bangladeshi Pharmaceutical Industry however; Square Pharmaceutical, BPL’s main

competitor, is also performing just as well.

Financial Strength

BPL has considerable financial strength in comparison to most but Incepta is not far behind while Square

Pharmaceuticals has substantial financial strength as well. Relative Financial strength is something that

BPL should always try to monitor after all this the criteria on which corporations choose financial

decisions regarding its debt/equity mix (capital structure of a firm), maturity structure (maturity of assets

and liability), method of financing investment projects (project appraisal or capital budgeting) and other

decisions with a goal of maximizing the value of the firm i.e. the value of the shareholders wealth.

2.7 Analysis of the Strategic Implications

Strategic Implication for Financial Strength

As global recession creeps on and banks are becoming reluctant to extend loan, cost of financing is going

up day by day. So, it would be difficult for BPL to find out project with appropriate rate of return. BPL

continues to explore in foreign market and as such they need to keep their improvement in product

quality and manufacturing facility. In short, efficient cost structure should be followed in global market

expansion while taking conservative financial approach.

Strategic Implication for Global Acceptance

Global acceptance is an outcome of product quality, manufacturing facility, and goodwill of BPL,

relationship with physicians, healthy financial condition and so forth. If Beximco can have competitive

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edge on these key factors and set up a benchmark for other to follow, then foreign authorities would

obviously be interested to import drugs from BPL. Beximco Pharmaceutical Limited should have a

strategic plan to expand its business in Myanmar, ASEAN region, GCC countries (Bahrain, Kuwait,

Oman, Qatar, Saudi Arabia and the United Arab Emirates), Latin America in coming years. Also, USA

and European market would be very lucrative regions for exporting of medicine in there.

Strategic Implication for Export Facilities

Beximco should have a strategic plan to improve its exporting opportunities in terms of coverage and

quantity. USA and European market would be very lucrative regions for exporting of medicine in there.

At the same time, Beximco Pharma should ponder the consequence of termination of the exemption from

abiding by the patent laws on January 01, 2016.

Strategic Implication for Goodwill

Beximco Pharmaceutical Limited should focus on promoting its various corporate social responsibilities

in various medium. If some top level managers have negative public image then Beximco

Pharmaceutical Limited should try to replace their positions. Beximco Pharmaceutical Limited should try

to highlight their positive activities and try to bring trust among the Bangladeshi people that the kind of

business Beximco Pharmaceutical Limited is conducting is ethically and legally right.

Strategic Implication for qualified Employment

One of the driving forces of Beximco Pharma is its highly skilled human resources. BPL is continuously

striving to explore the core competencies of the employees to face the challenges of the competitive

environment. This is a favorable Key Success Factor for Beximco Pharmaceuticals Limited (BPL). So

they should try to maintain their current level of qualified employees and improve this Key Success

Factor where ever possible.

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Strategic Implications Quality

In order to attain and maintain sustainability BPL needs to focus on quality in terms of quantity, purity,

stability, safety, efficacy, packaging and presentation of the product along with the quality of the

processes that transform the inputs into outputs. It also needs to keep track of customers increasing

expectations.

Strategic Implication Marketing Skills

Beximco Pharmaceutical Limited should try to enhance the marketing skills of the managers of

marketing department. As marketing managers like Medical Promotional officers (MPO) and Sales

Representatives (SR) are directly involves in promotions and sells so they should be trained properly to

gain proficient marketing skills. Other marketing managers should also improve the marketing skills to

come up with better marketing strategies and ways of implements the strategies.

Strategic Implication National Wide Distribution

Beximco Pharmaceutical Limited should use its national wide distribution to run its operation smoothly

and maintain a healthy market share in Bangladesh. Beximco Pharmaceutical Limited should try to catch

if any gaps are being created by the competitors. Beximco Pharmaceutical Limited also tries to increase

sales with its strong distribution network.

Strategic Implication for International Standard Manufacture facility

With its state-of-the-art facilities, the BPL needs to work at obtaining marketing approvals from stringent

regulatory authorities of the coveted developed markets like the US and the EU. Since these stringent

regulations evolve with time and technological advancements, BPL needs to continually upgrade its

facilities as well.

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Strategic Implication for Relationship with the physicians

BPL should maintain more customary relationship the physicians both home and abroad. As loyalty is

difficult to establish among the physicians so BPL should try to devise more proactive tactics in the short

run and aggressive strategy in the long run. BPL as a SBU should try to introduce more environmental

friendly as well as highly effective medicines so that the doctors can prefer the BPL’s medicine. In short,

BPL should try to make a group of medicine so popular that whenever the doctors prescribe medicine

they will recall back to BPL’s product. Beximco Pharmaceutical Limited should maintain healthy

relationships with the physicians to run its sales smoothly and maintain a healthy market share in

Bangladesh. Beximco Pharmaceutical Limited should try to catch if any gaps are being created by the

competitors. Beximco Pharmaceuticals Limited should also try to increase sales with its strong

relationship with the physicians.

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3.1 Introduction

This chapter focuses on strategy development Using Analytical Framework for Strategy

development provided by Professor Moniruzzaman (2005), this chapter has organized the strategy

development step in strategic management into the following four generic strategic choices BUILD,

PERSIST, HARVEST, And DIVEST. Finally after discussing a rich range of strategic choices and

relating them with BPL context, this section concludes with our preference for BP based on our

understanding by using PHENOMENON Model.

3.2. SETTING GENERIC STRATEGIC OBJECTIVES AND INITIATIVES:

There are four generic strategic choices:

I. BUILD

II. PERSIST

III. HARVEST: Firm has to allow sales to fall but try to maximize unit profit margins,

particularly, in a mature and declining market or even in growth market where the costs of

building or holding exceed benefits. Main actions: (i) Eliminate R & D expenditure; (ii) Must

cut marketing support; and (iii) Increase price

IV. DIVEST: The firm may divest itself of a strategic business unit (SBU) or products making

losses. The costs of turning around a product exceed benefits. Main actions: (i) sell the

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product quickly to minimize costs and social damages (e.g., negative reputation for other

brands or even the firm itself).

3.3 BUILD & HOLD A build objective is typically achieved by means of growth. Not surprisingly a hold objective may

also be achieved by means of growth. Just to hold on to the current position a firm may have to

grow.

Specific strategic actions for growth EXISTING NEW/RELATED

EExxhhiibbiitt 23: A Diagram of Specific Strategic Actions for Growth

a. Market penetration/expansion: Current product-Current market:

1. Penetration: new users within the same segment; and 2. Increase frequency of purchase:

encouraging customers to buy or use more of the product.

Market Penetration Market Development Or Market Expansion Product Development Diversification

PRODUCTS

MARKETS

EXISTING

NEW/RELATED

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b. Market Development: Current product-New market: reposition the product.

Horlicks/Glucose was initially targeted at ill customers but now it’s used by athletes or

regular customers as nutrients or source of energy. Baby lotion being used as facial cleanser

by women.

c. Product Development: New product-current market: it is used to increase sale by improving

present product or developing a new product. Most new car models are new versions (or

modifications) of the old model. Ford Mondeo is just a modification of Ford Sierra. All new

drugs are examples of new product development.

We believe Beximco Pharmaceutical Limited should introduce some new offer to attract the

customers as well as modification of existent offer. Now they are going to lunch some new drug

whose demand is extremely high in the market. For this action will increase their profit much higher

in next Year. We have now completed new projects to manufacture Respirator solutions,

Ophthalmics and Small Volume Parenterals (SVP). Entering into these three segments will boost our

local and international market share significantly. Products (e.g. Azmasol respirator solutions) from

this plant have already started rolling out into the market.

Diversification: New product-New Market: Dunhill’s perfume, pen are examples of new products

(from Dunhill’s standpoint) aimed at different markets (new for Dunhill).

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3.4 Implementation of the Strategic Actions:

The growth strategies above may be dimensionalized as the 4C’s (confrontation, cooperation,

capture and care) of strategies. This means a firm may implement the four specific strategic actions

by means of the 4C’s.

EExxhhiibbiitt 24: A Diagram of 4C’s of Strategic Management (Moniruzzaman, 2005)

GROWTH CONFRONTATION COOPERATION

C A R E

C A P T U R E

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3.5 Confrontation or Competitive

Confrontation strategies refer to competitive strategies and include:

3.5.1 To Build:

FRONTAL ATTACK:

Taking the defender head-on in its main segment(s) with regards to pricing, distribution, promotion

and branding strategies. This is suitable when the attacker has: (i) competitive advantage and knows

it can outperform the defender; and/or (ii) no other option but to face the defender face to face.

We think front attack will be the best strategy for BPL because now day’s market is becoming

more matured that’s why number of competing firms also increases. To beat these competitors BPL

needs to go for head to head competition in every attributes of the offering products of competitors.

FLANKING ATTACK:

This involves attacking unguarded or weakly guarded market segments. The reason flanking may

succeed is that the defender usually ignores such attack since the segment/market is not its main

focus. Honda’s attack on Harley Davidson in the US in the small motorbike segment that was

discounted by HD completely is an example of flanking attack. The reason flanking may succeed is

that the defender usually ignores such attack since the segment/market is not its main focus.

However, it is possible for the attacker to achieve market-wide penetration based on its success in

the defender’s flank (s). Honda in the Motorbike market is one of the biggest cases.

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ENCIRCLEMENT:

Encirclement means attacking defender in all segments. Every segment is hit with every

combination of product features. Seiko who produces over 2000 designs worldwide is an

example. A variant on this strategy is cutting-off supplies to the defender. This could be achieved

by the acquisition of its major supply companies.

BYPASS ATTACK:

This circumvents the defender’s position. A bypass attack may change the rules of the game, usually

by technological leapfrogging, as Casio did when bypassing Swiss analogue watches with digital

technology. It can also be achieved by diversification.

Bypass attack may be one of the most dominant strategies that BPL often used in its business

life. There can be several cases pointed out where BPL introduced completely new Drug or

technological advancements and outrun the competitor.

GUERRILLA ATTACK:

This hurts the defender by pin-pricks rather than blows. Underdogs may use unpredictable price

discounts, sales promotions or heavy advertising on Tele-channels are useful. Defender, however,

may seriously retaliate with a full frontal attack if sufficiently provoked.

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EExxhhiibbiitt 25: A Diagram of Attack Strategies to Build (Red font Indicates BPL Chosen Strategy)

3.5.2 TO HOLD

Exhibit 26: A Diagram of DEFENCE STRATEGIES

ATTACKER

P O S I T I O N

MOBILE DEFENCE

PRE-EMPTIVE DEFENCE

COUNTEROFFENSIVE

DEFENDER

FLANKING

ATTACKER (Bank Asia)

DEFENDER

(Other Competing

bank)

BYPASS

FLANKING

FRONTAL

ENCIRCLEMENT

GUER I LLA

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POSITION DEFENCE:

This involves building a fortification around the existing product. In other words, this is applied to

protect a product. If the product is good and cannot be easily copied it may work rather well. But it

may dangerous when competitors attack with a superior product. Ever ready competed with their

zinc-carbon battery that had a shorter life against Duracell’s alkaline battery and invested £2 million

in promotions. This is a perfect example of ‘position defense’.

BPL has several product lines that have reached to a relatively matured level. For those kinds of

products, BPL sometimes goes for position defense through lots of promotional activities.

FLANKING DEFENCE:

This is characterized by the defense of a hitherto unprotected market segment. If the segment is left

unprotected, it will provide a beachhead for new entrants to gain experience in the market and later

attack the main market later. Harley Davidson ignored the small motorbike segment completely in

the 60s and 70s. Honda entered this unprotected segment in the bike market, succeeded and achieved

market wide penetration.

PRE-EMPTIVE DEFENCE:

The best of defense is to attack first. This involves continuous innovation and new product

development, a situation characteristic of the camcorder market. It is a good idea for a leader to

dissuade a would-be attacker by, for instance, cutting its price, thereby reducing its profitability.

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Would-be attackers typically fear that the market may have become unattractive or else why would

the leader encounter a reduction in margins.

This is more likely strategy for BPL. As BPL has a huge competitive advantage over other

companies in most of its product lines, it can easily go for this strategy.

COUNTEROFFENSIVE DEFENCE:

When attacked a defender may choose three strategies: (i) head-on counterattack; (ii) hitting the

attacker’s cash cows; or (iii) encircle the attacker. Head-on may involve price reduction or

aggressive promotions or even innovation as Apple counterattacked IBM in the personal computer

market with its Macintosh. Hitting the attacker’s cash cows is striking the attacker’s resource supply-

line. IBM counterattacked Xerox’s cash cow (the medium-range photocopier) when Xerox attacked

IBM in the mainframe market. IBM offered a Limited range of low-priced photocopiers.

MOBILE DEFENCE:

The major strategic option is: (i) diversification. Imperial tobacco responded to the health threat to

their cigarette business by diversifying into food and leisure market. Warner Brothers redefined their

business as entertainment providers rather than film makers per se, they moved into television,

gambling and theme parks. Sony has adopted a similar strategy with a lot of success.

We think that Mobile Defense can be another productive strategy for BPL to achieve growth

in different market segments. Since competition is very strong in the market identifying new business

opportunity through providing new product to new market is highly required for BPL to retain its

profitability.

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3.6 CAPTURE: ACQUISITION (TAKE OVER)

3.6.1 Vertical Integration

(Moniruzzaman, 2005) Vertical integration involves movement into other parts of the production

chain by which raw materials are converted into final products; some of these activities may be

related, others totally unrelated. There are potential costs and benefits associated with vertical

integration. The car company which takes over a steel rolling business is an example of backward

integration, but it is unlikely that the steel company will only produce steel for the car company

itself, the further into other parts of the production chain the company moves the less likely it will be

to produce only for, or buy only from, itself, and it may find it owns a series of companies each

supplying a different market, of which the supply to the company itself at each stage may only be a

relatively small part. The vertical integration thus starts to present similar types of problem as related

and unrelated options; the company may benefit in some ways from the integration, but the benefits

may be swamped by the costs of unrelated diversification.

(Moniruzzaman, 2005) The degree to which a firm owns its upstream suppliers and its downstream

buyers is referred to as vertical integration. Because it can have a significant impact on a business

unit's position in its industry with respect to cost, differentiation, and other strategic issues, the

vertical scope of the firm is an important consideration in corporate strategy.

(Moniruzzaman, 2005) Forward Integration involves the company carrying out the functions of its

customers; a typical example is when a company distributes its output instead of using contractors,

or opens its own retail outlets. Much the same considerations apply as in backward integration. For

example, it is unlikely that the company is currently the only supplier for the forward customer, and

integration can again have the characteristics of an unrelated diversification.

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(Moniruzzaman, 2005) A variation on this strategy is to adopt the role of a captive company, where

a large proportion of output is purchased by a single customer, and that customer actually performs

some of the functions which would normally be carried out by the company itself. Whether the

captive company is an economically sound organisation, or whether being captive is a sign of weak

management, depends on the circumstances; for example, in the car components industry many

profitable captive companies have existed for a long time. The crucial question which must always

be borne in mind is whether, taking everything into consideration, the company would add value by

controlling other parts of the productive chain.

(Moniruzzaman, 2005) Two issues should be considered when deciding whether to vertically

integrate is cost and control. The cost aspect depends on the cost of market transactions between

firms versus the cost of administering the same activities internally within a single firm. The second

issue is the impact of asset control, which can impact barriers to entry and which can assure

cooperation of key value-adding players. For Beximco Pharmaceuticals Limited (BPL) vertical

integration will reduce transportation costs, improve supply chain coordination, increase entry

barriers to potential and facilitate investment in highly specialized assets in which other players may

be reluctant to invest. This will ultimately increase the cost of Beximco Pharmaceuticals Limited

(BPL) a bit but ultimately this will benefit the company. As a medicine producer Beximco

Pharmaceuticals Limited (BPL) must follow backward integration. The external and inter factors

affecting Beximco Pharmaceuticals Limited (BPL) supports vertical integration for Beximco

Pharmaceuticals Limited (BPL).

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No Integration

Raw Materials

Intermediate

Manufacturing

Assembly

Distribution

End Customer

Backward Integration

Raw Materials

Intermediate

Manufacturing

Assembly

Distribution

End Customer

Forward Integration

Raw Materials

Intermediate

Manufacturing

Assembly

Distribution

End Customer

Exhibit 27: A Diagram of Backward and Forward Integration

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The following benefits and drawbacks consider these issues.

Benefits of Vertical Integration

Vertical integration potentially offers the following advantages:

Reduce transportation costs if common ownership results in closer geographic proximity.

Improve supply chain coordination.

Provide more opportunities to differentiate by means of increased control over inputs.

Capture upstream or downstream profit margins.

Increase entry barriers to potential competitors, for example, if the firm can gain sole access

to a scarce resource.

Gain access to downstream distribution channels that otherwise would be inaccessible.

Facilitate investment in highly specialized assets in which upstream or downstream players

may be reluctant to invest.

Lead to expansion of core competencies.

Drawbacks of Vertical Integration

While some of the benefits of vertical integration can be quite attractive to the firm, the drawbacks

may negate any potential gains. Vertical integration potentially has the following disadvantages:

• Capacity balancing issues. For example, the firm may need to build excess upstream capacity

to ensure that its downstream operations have sufficient supply under all demand conditions.

• Potentially higher costs due to low efficiencies resulting from lack of supplier competition.

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• Decreased flexibility due to previous upstream or downstream investments. (Note however,

that flexibility to coordinate vertically-related activities may increase.)

• Decreased ability to increase product variety if significant in-house development is required.

• Developing new core competencies may compromise existing competencies.

• Increased bureaucratic costs.

Factors Favoring Vertical Integration

The following situational factors tend to favor vertical integration:

• Taxes and regulations on market transactions

• Obstacles to the formulation and monitoring of contracts.

• Strategic similarity between the vertically-related activities.

• Sufficiently large production quantities so that the firm can benefit from economies of scale.

• Reluctance of other firms to make investments specific to the transaction.

Factors against Vertical Integration

The following situational factors tend to make vertical integration less attractive:

• The quantity required from a supplier is much less than the minimum efficient scale for

producing the product.

• The product is a widely available commodity and its production cost decreases significantly

as cumulative quantity increases.

• The core competencies between the activities are very different.

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• The vertically adjacent activities are in very different types of industries. For example,

manufacturing is very different from retailing.

• The addition of the new activity places the firm in competition with another player with

which it needs to cooperate. The firm then may be viewed as a competitor rather than a

partner.

3.6.2 Horizontal Integration

The acquisition of additional business activities at the same level of the value chain is referred to as

horizontal integration. This form of expansion contrasts with vertical integration by which the firm

expands into upstream or downstream activities. Horizontal growth can be achieved by internal

expansion or by external expansion through mergers and acquisitions of firms offering similar

products and services. A firm may diversify by growing horizontally into unrelated businesses.

Some examples of horizontal integration include:

• The Standard Oil Company's acquisition of 40 refineries.

• An automobile manufacturer's acquisition of a sport utility vehicle manufacturer.

• A media company's ownership of radio, television, newspapers, books, and magazines.

Acquisitions

(Moniruzzaman, 2005) Instead of undertaking internal action through the mobilisation of the

company's own resources to achieve objectives, the company can undertake external action by taking

over or merging with another company. This is an activity most associated with Britain and the US,

but in a world of rapidly developing capital markets company ownership and control is always

subject to change. Some of the more important reasons for considering acquisition are unrealized

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value potential, buying into markets, reducing competitive pressures, the quest for synergy,

balancing the portfolio and developing core competence.

Recognizing Unrealized Value

(Moniruzzaman, 2005) Some chief executives have a skill in identifying companies which have not

fully exploited their value opportunities. The activities of such a company may be unrelated to the

current business of the potential acquirer, whose competence is perceived to be in adding value

independent of the type of business. It is instructive to try to identify the areas in which the

company's performance might be inadequate, because unless these can be identified it is difficult to

understand the rationale for a take-over in the first place. At its simplest level, the rationale for a

take-over depends on whether the current share value of the company could be increased by a

reallocation of resources. Reasons for a company being undervalued include:

Development Expenditure has been inefficiently spent

The predator may feel that because of inadequate expenditure on product development, the potential

market share is lower and unit cost higher than they should be.

Marketing strategy has not pursued opportunities

The predator may spot opportunities for product differentiation and market segmentation which he

considers will transform the profitability of products which are currently poor cash generators.

Resource management has been poor

The predator may conclude that unit costs are higher than in similar companies, and that

opportunities exist to reduce costs simply by improving resource management.

Expected increase in demand

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The predator may expect an upturn in the demand for the company's products because of an

improvement in general economic condition.

Weak Products

The predator may identify products which do not contribute to shareholder wealth; divesting them

will release resources for more productive purposes.

(Moniruzzaman, 2005) All the research studies in this field come to the conclusion that take-overs

rarely create value. In the majority of cases it has been found that the value of the bidder's shares

falls after the take-over, while many studies point to longer term negative effects on the profitability

of the acquired business units. Even in Japan, where take-overs and mergers have only become

important since the mid 1980s, there is no evidence that the activity has improved profitability or

growth. Porter's famous study-9 found that about 75 per cent of all unrelated acquisitions were

divested within a few years, as were 60 per cent of acquisitions in entirely new industries.

(Moniruzzaman, 2005) In fact it is not sufficient in itself to conclude that a company has not realised

its value potential; certain other conditions also need to be satisfied. First, it is important that no

other potential acquirer has arrived at the same conclusion; if a competitive bidding situation results

then it is likely that all potential gains will be captured in the purchase price. Second, it is necessary

to realise tile potential gains, and this can clearly be very difficult. The potential benefits of

parenting were discussed earlier (pp. 25-34), and each of these was associated with a paradox which

raised serious doubts about the ability of a parent corporate organization to add value in the long run.

It may be possible to add value on a once for all basis by remedying managerial weaknesses; but

whether there is any gain to be had beyond that from retaining ownership of the company is open to

question.

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Advantages of Horizontal Integration

The following are some benefits sought by firms that horizontally integrate:

Economies of scale - achieved by selling more of the same product, for example, by

geographic expansion.

Economies of scope - achieved by sharing resources common to different products.

Commonly referred to as "synergies."

Increased market power (over suppliers and downstream channel members)

Reduction in the cost of international trade by operating factories in foreign markets.

Sometimes benefits can be gained through customer perceptions of linkages between products. For

example, in some cases synergy can be achieved by using the same brand name to promote multiple

products. However, such extensions can have drawbacks, as pointed out by Al Ries and Jack Trout

in their marketing classic, Positioning.

Pitfalls of Horizontal Integration

Horizontal integration by acquisition of a competitor will increase a firm's market share. However, if

the industry concentration increases significantly then anti-trust issues may arise.

Aside from legal issues, another concern is whether the anticipated economic gains will materialize.

Before expanding the scope of the firm through horizontal integration, management should be sure

that the imagined benefits are real. Many blunders have been made by firms that broadened their

horizontal scope to achieve synergies that did not exist, for example, computer hardware

manufacturers who entered the software business on the premise that there were synergies between

hardware and software. However, a connection between two products does not necessarily imply

realizable economies of scope.

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Finally, even when the potential benefits of horizontal integration exist, they do not materialize

spontaneously. There must be an explicit horizontal strategy in place. Such strategies generally do

not arise from the bottom-up, but rather, must be formulated by corporate management

3.6.3 Alliances and Joint Ventures

Alliances and joint ventures take many forms, including licensing agreements, franchise agreements,

relational contracting, relational management, consortia, virtual corporations, virtual functions and

joint ventures. It is not the details of these which are important as much as the underlying rationale

for strategic alliances in the first place. The success rate of mergers and take-over’s has been low; it

is therefore important to determine whether or not this form of cooperative action leads to better

results. Although in Porter's study the rate of divestment of joint ventures was lower (50 per cent

compared with 75 per cent), other research has found no significant long term effects of joint venture

activity on profitability in any industrial sector. Given this, the real issue is why companies should

choose an arm's-length contract rather than entering into a full merger. This is of particular

importance given the problem of the prisoner's dilemma discussed later; no contract can cover all

eventualities, and one side always has an incentive to cheat in some way.

One View is that a Strategic Alliance is a Poor Substitute for a Merger: There have been plenty of articles in the last few years about all the cross-border mergers in Europe.

In fact, the more interesting issue is why there have been so few. There should be hundreds of them,

involving tens of billions of dollars, in industry after industry. But we're not seeing it. What we're

seeing instead are strategic alliances and minority investments. Companies buy 20 percent of each

other's shares.

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3.6.4 MERGER:

A corporate merger is the combination of the assets and liabilities of two firms to form a single

business entity. In a merger of firms that are approximate equals, there often is an exchange of stock

in which one firm issues new shares to the shareholders of the other firm at a certain ratio. For the

sake of this discussion, the firm whose shares continue to exist will be referred to as the acquiring

firm and the firm whose shares are being replaced by the acquiring firm will be referred to as the

target firm.

Excluding any synergies resulting from the merger, the total post-merger value of the two firms is

equal to the pre-merger value. However, the post-merger value of each individual firm likely will be

different from the pre-merger value because the exchange ratio of the shares probably will not

exactly reflect the firms' values with respect to one another. The exchange ratio is skewed because

the target firm's shareholders are paid a premium for their shares.

Synergy takes the form of revenue enhancement and cost savings. When two companies in the same

industry merge, such as two Pharmaceuticals firms, combined revenue tends to decline to the extent

that the businesses overlap in the same market and some customers become alienated. For the

merger to benefit shareholders there should be cost saving opportunities to offset the revenue

decline; the synergies resulting from the merger must be more than the initial lost value.

To calculate the minimum value of synergies required so that the acquiring firm's shareholders do

not lose value, an equation can be written to set the post-merger share price equal to the pre-merger

share price of the acquiring firm as follows:

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Pre-merger value of both firms+ Synergies

Pre-merger Stock Price =

Post-merger number of shares

The above equation then can be solved for the value of the minimum required synergies.

The success of a merger is measured by whether the value of the acquiring firm is enhanced by it.

The practical aspects of mergers often prevent the forecasted benefits from being fully realized and

the expected synergy may fall short of expectations.

3.6.5 Care: Parenting:

“One of the critical questions for internal assessment in multi-business firms is to assess how the

parent or HQs adds value to its subsidiaries.” (Moniruzzaman, 2005). Parenting practice can be

considered as one of the core strategies of BPL business. It has expanded its business to almost

all the countries of the world. In most of these courtiers BPL has deployed subsidiaries to do

extended business.

The “Parenting Advantage Statement”:

• The parent’s “Value-creating insights”

• Distinctive parenting characteristics

• Target (“heartland”) businesses that match the parent’s competencies

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The Parenting Advantage Formula:

The Parenting Advantage Formula:

1. Successful parents not only focus on relevant opportunities; they have unusual insights about how to create value for them 2. These statements are not generalized comment about “good management” they have focused ideas and how companies can create more value. 3. Different parents have very different

1. AKA “Corporate Competencies” 2. These are specific competencies that allow a parent to realize its value from the insights. 3. Successful parents are distinguished by their competency of execution. 4. These competencies need to be distinctive and superior to other parents. 5. They are developed over time.

1. The parents need to understand the critical success factor in the business. 2. Critical success factors are very different form sector to sector. 3. There must be a strong correlation between critical success factors and the parent’s “Distinctive parenting characteristics”

EExxhhiibbiitt 2288:: TThhee PPaarreennttiinngg AAddvvaannttaaggee FFoorrmmuullaa

Page | 169

Value-Creating Insight:

Types of value creating insights are-

• Enforcing market leadership

• Cost control in mature businesses

• Linking country-based engineering businesses into international players

• Manufacturing operating systems

• Large investment deals in a capital intensive industry

• Entrepreneurial management style and selection of CEO’s

• Linkages and cross-fertilization between technologists and market needs

Distinctive Parenting Characteristics:

AKA “corporate competencies”

These are the specific competencies that allow a parent to realize value from its insights

Successful parents are distinguished by their competency of execution

These competencies need to be distinctive and superior to other parents

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They are developed over time

“A parent with an exciting value creation insight but no practical means of putting it into

effect will fail to create value.”

EExxhhiibbiitt 2299:: TThhee PPaarreennttiinngg SSttyyllee ((MMoonniirruuzzzzaammaann,, 22000055))

Page | 171

Selecting the Right Business:

• The parent needs to understand the critical success factors in the business

• Critical success factors are very different, sector to sector

• There must be a strong correlation between critical success

factors and the parent’s “distinctive parenting characteristics”

EExxhhiibbiitt 3300:: TThhee PPaarreennttiinngg IInnfflluueenncceess ((MMoonniirruuzzzzaammaann,, 22000055))

Page | 172

Making Portfolio Decisions:

• Examine the critical success factors for the business

• Document areas where performance can be improved

• Review characteristics of the parent

• Assess the match

• Conduct ongoing “success and failure analysis”

Opportunities to Add Value:

• Redefining the Business

• Changing the business size

EExxhhiibbiitt 3311:: TThhee PPaarreennttiinngg FFiitt MMaattrriixx ((MMoonniirruuzzzzaammaann,, 22000055))

“A parent that does not

understand the critical

success factors in a business

is likely to destroy value,”

(Moniruzzaman, 2005).

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• Improving the management team

• Avoiding predictable errors

• Creating linkages

• Sharing common capabilities

• Providing special expertise

• Managing external relations

• Making major decisions

• Driving major change

Summary of Corporate Parenting Principles:

• Parents must create value and avoid value destruction to justify their role.

• The resources, skills and other characteristics of the parent must fit the needs and

opportunities of the businesses.

• Parents should seek to create more value in their portfolios than other parents could.

• Parents need superior “value creation insights” to avoid destroying value.

• Parents need distinctive parenting characteristics to implement their insights more effectively

than other parents.

• Parents should concentrate on businesses where they can create high net value --their

“heartland” businesses.

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EExxhhiibbiitt 3322:: TThhee PPaarreennttiinngg MMaannaaggeemmeenntt ((MMoonniirruuzzzzaammaann,,

22000055))

Page | 175

4.1. Introduction

(Moniruzzaman, 2005) For Beximco Pharmaceuticals Limited the implementation stage is visualized

as starting after the choice of strategy has been made. Once implementation gets under way it is to

be expected that there will be a constant process of feedback with earlier stages. As resources are

gather together it may become apparent that the original objectives are unattainable, that predicted

costs were too low, that likely competitive reaction was overestimated and that the full range of

strategy choice was not realized. This may make it difficult to isolate implementation as an

independent activity in practice. However, by treating implementation as an independent part of the

strategy process, the manager is forced to recognize that no matter what sophisticated analysis has

been undertaken to arrive at a strategic choice, at the time the choice is made it is possible that

nothing has been produced and nothing has been sold. In other words, choosing strategy is not an

end in itself; unless there is a mechanism for making it happen it is a somewhat pointless activity.

The process of strategy implementation involves:

I. Resource planning

II. Budgeting III. Selecting and recruiting suitable individuals IV. Train individuals who would implement the actions

V. Designing an organization structure compatible with the actions: These are the people who

have the experience and skills required to handle the actions

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VI. Distributing tasks among these individuals using the organisation structure and allocating

resources needed to accomplish each task. Hence, resources include money, time,

technology, and son.

VII. Setting sales targets

VIII. Determining the sales force size

4.2. Resource Planning

As Beximco Pharmaceuticals Limited is going to achieve a competitive advantage, it must set up

procedures to ensure that resources are used efficiently. A fundamental requirement in effective

resource planning is that the production department knows what it is meant to produce; this means

setting up communications between marketing and production so that each can understand the

other's viewpoint. For example, it is often found in Beximco Pharmaceuticals Limited that the

production department is frustrated by continuously changing volumes of orders, and as a result

cannot always react with fast delivery times; the marketing department may feel that reasonable

notice of orders is always given, and that the production department is inefficient and not really

interested in fulfilling the needs of hard won customers or the production department is getting

overestimated demand and producing more than the demand. Effective communication between

marketing and production would reveal the likely incidence of bulk orders, provide guidance to

production on how much inventory the marketing department feels that it can reasonably live with,

and enable the marketing department to appreciate the difficulties of capacity utilization and

inventory control, and the benefits of a relatively stable production schedule.

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Resource planning has implications for all aspects of the performance of Beximco Pharmaceuticals

Limited. The application of sophisticated just-in-time approaches can reduce inventory costs

significantly, the smoothing of peaks and troughs in production schedules can create the stable

environment necessary to develop a company culture, the introduction of new technology at

appropriate times can enable Beximco Pharmaceuticals Limited to make use of new skills and

techniques, and a systematic approach to resource planning is the foundation for monitoring costs.

So, Beximco Pharmaceuticals Limited should emphasis in just-in-time approach, smoothing of peaks

and troughs in production schedules, and introduction to new technology for more efficient resource

planning.

4.3. Budgeting

The problem of allocating budgets is encountered at many levels, but for strategy purposes these can

be reduced to two for Beximco Pharmaceuticals Limited: the corporate and SBU or functional levels

of Beximco Pharmaceuticals Limited. At the corporate level the overall budget is rationed among

competing alternatives, typically on the basis of proposals submitted by Beximco Pharmaceuticals

Limited. At the functional level of Beximco Pharmaceuticals Limited, it is necessary to allocate

funds to individual managers so that they can carry out the tasks which are required to achieve the

objectives of each investment; the investment appraisal which revealed that the net cash flows

generate a positive Net Present Value (NPV) does not usually take into account uncertainty as to

how costs will actually be incurred and resources deployed.

There are many reasons why Beximco Pharmaceuticals Limited may be unable to raise money on

the market to finance investments. The most obvious one is when the market does not agree with the

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company's estimate of future returns; the track record of the managers of Beximco Pharmaceuticals

Limited may be such that the market views their plans with considerable reserve. Another reason is

that Beximco Pharmaceuticals Limited may be unwilling to reveal its intentions to competitors. The

desirability of an investment may depend on achieving a competitive advantage which would be

impossible if competitors knew what the strategy of Beximco Pharmaceuticals Limited was likely to

be. In fact, strategic options are often difficult to define with tile precision which will attract

investors. It is one thing to use investment appraisal to attempt to estimate the relative value

implications of alternative strategies, but it is quite another to translate this into a convincing

investment plan.

It therefore seems likely that Beximco Pharmaceuticals Limited will be faced with a budget

constraint when allocating available funds among competing investments. The theory of finance can

provide a solution to the capital rationing problem of determining which combination of investments

will add most to shareholder wealth of Beximco Pharmaceuticals Limited within the context of the

chosen strategy. However, the application of sophisticated capital rationing techniques does not

necessarily resolve the budget allocation problem. This is because the formal capital rationing

solution is in terms of a combination of investments, and may exclude some investments with higher

NPVs than those included. It may be difficult to explain to a manager of

Beximco Pharmaceuticals Limited that his proposed investment, with a relatively high NPV, has

been excluded because of the application of an obscure financial technique. It is obviously important

to use appropriate financial techniques to identify the most profitable budget allocation for Beximco

Pharmaceuticals Limited; whether it is feasible is another matter.

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One way to avoid the difficulties associated with capital rationing for Beximco Pharmaceuticals

Limited is to set across-the-board budget limits; this has the advantage that Beximco

Pharmaceuticals Limited is treated in the same way, and in turn Beximco Pharmaceuticals Limited

can set across-the-board limits, since this is consistent with corporate policy. However, such an

approach is inconsistent with principles of efficient resource allocation. The whole emphasis of the

strategic planning process has been on the identification of activities with different potential pay-offs

and directing resources accordingly. For example, if the objective of Beximco Pharmaceuticals

Limited were to increase the market shares of products currently being produced, it would make

little sense to increase the research budget of Beximco Pharmaceuticals Limited at the same time

simply because the marketing budget was to be increased. On the other hand, if there is no sensible

budgetary control, when Beximco Pharmaceuticals Limited is faced with adverse market conditions

and decide to follow a retrenchment strategy the first thing that is usually done is to cut back on

those budgets which can be manipulated without affecting current performance. Training, research

and maintenance budgets are often pruned to achieve an immediate increase in ROI without proper

consideration of the overall resource allocation implications of Beximco Pharmaceuticals Limited.

This is often justified by senior management on the grounds that survival is the primary concern and

refinements can come later. This reaction is probably inevitable when senior management of

Beximco Pharmaceuticals Limited concentrates attention on short term cash flows rather than on the

concept of shareholder wealth, which puts short term cash flows into context.

At the functional level the managers of Beximco Pharmaceuticals Limited are confronted with many

imponderables. If a new market is being entered they have to decide how much to allocate to

marketing and over what period. The marketing manager of Beximco Pharmaceuticals Limited has

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to decide how much to allocate to market research, advertising, promotions and so on. By the time

the original funds have been parceled up and allocated to the various functions, it may be difficult to

identify specific expenditure with the original project. The original investment appraisal assumed

that the cash would be used efficiently at the functional level of Beximco Pharmaceuticals Limited.

The management problem at this level is to ensure that this happens, but there may be relatively few

guidelines to assist managers who are in the front line of Beximco Pharmaceuticals Limited. An

ostensibly attractive strategy may flounder because budgets are disseminated throughout the

organization in a haphazard fashion.

4.4. Recruitment and Selection

Beximco Pharmaceuticals Limited conducts recruitment and selection of people who have the

aptitude and motivation for success. Beximco Pharmaceuticals Limited should pursue following

steps.

1. Set selection criteria that must be met by the candidates (e.g. education, experience, age, ability to

work own or in a team, communication skills, physical requirements such as speech, appearance)

2. Invite applications

3. Shortlist candidates based on the criteria

4. Interview candidates

5. Conduct test centers to determine applicant’s individual abilities as well as ability to work in a

team

6. Hire the individuals who score best overall in accordance with the criteria.

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4.5. Training and Development

Beximco Pharmaceuticals Limited can pursue following three steps for training and development.

1. Analyze employee’s performance

2. Identify his/her strengths and weaknesses

3. Train him/her to overcome weaknesses and maximize strengths

Training programmers such as on-the-job training as well as formal training courses (both in-house

and at other institutions) must be arranged to develop personnel of Beximco Pharmaceuticals

Limited.

4.6. Organizational Structure

4.6.1 Vertical Coordination

Beximco Pharmaceuticals Limited can go for coordination of activities vertically in a top down or

bottom up fashion or both.

The means of Vertical coordination are following.

4.6.1.1. The Chain of Command

For Beximco Pharmaceuticals Limited the chain of command is the unbroken line of authority that

ultimately links each individual with the top organizational position thorough a managerial position

at each successive layer in between.

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4.6.1.2. The Concepts in Chain of Command

1. UNITY OF COMMAND: Every employee of Beximco Pharmaceuticals Limited will have only one boss

For example, marketing manager of Beximco Pharmaceuticals Limited reports to marketing director

of Beximco Pharmaceuticals Limited.

2. SCALAR PRINCIPLE: Every employees of Beximco Pharmaceuticals Limited report to their bosses in

a linear fashion. For example, marketing manager of Beximco Pharmaceuticals Limited will report

to marketing director of Beximco Pharmaceuticals Limited, marketing director reports to the

managing director of Beximco Pharmaceuticals Limited.

4.6.1.3. Span of Management or Span of Control

For Beximco Pharmaceuticals Limited Span of control is the number of subordinates who report

directly to a specific manager. Spans of management or control of Beximco Pharmaceuticals Limited

determine the number of hierarchical levels in Beximco Pharmaceuticals Limited.

Very tall organization structure can have adverse effect on Beximco Pharmaceuticals Limited .If

Beximco Pharmaceuticals Limited becomes very tall organizations then it will raise administrative

overhead, slow communication and decision making, make it more difficult to pinpoint

responsibility for various tasks, and encourage the formation of dull, routine jobs.

There also ways to resolve the problem associated with very tall span of control of Beximco

Pharmaceuticals Limited. Mainly in two ways Beximco Pharmaceuticals Limited can resolve the

problem.

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Downsizing can be used for Beximco Pharmaceuticals Limited. Downsizing is the process of

significantly reducing the layers of middle management, expanding the spans of control, and

shrinking the size of the work force.

Restructuring can be used for Beximco Pharmaceuticals Limited. Restructuring is the process

of making a major change in organization structure that often involves reducing management

levels and also possibly changing some major components of the organization through

divestiture and/or acquisition.

4.6.1.4. Delegation

Beximco Pharmaceuticals Limited can use delegation. Delegation is assignment of part of manager’s

work to others along with responsibility and authority. Managers of Beximco Pharmaceuticals

Limited can be delegated in two ways: Responsibility and Authority.

Responsibility is the obligation or expectation to perform and carry out duties and achieve

goals related to a position.

Authority is the right inherent in a managerial position to tell people what to do and to expect

them to do it, right to make decisions and carry out actions to achieve organizational goals.

While part of a manager’s work may be delegated in Beximco Pharmaceuticals Limited, manager

remains accountable for results.

There are two types of authority. One is Line authority and another one is Staff authority. The

differences between the Line authority and staff authority are, a line position is a position that has

authority and responsibility for achieving the major goals of the organization; on the other hand, a

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staff position is a position whose primary purpose is providing specialized expertise and assistance

to line positions.

The result of delegation for Beximco Pharmaceutical Limited is managers delegated with authority

and responsibility become accountable to the senior managers. Accountability is the requirement of

being able to answer for significant deviations from duties or expected results.

How much authority should Beximco Pharmaceutical Limited delegate will be determined by extent

of centralization or decentralization. Centralization is the extent to which power and authority are

retained at the top organizational levels. Beximco Pharmaceutical Limited will be centralized if

decisions made at lower levels are governed by a restrictive set of policies, procedures, and rules,

and if situations not explicitly covered are referred to higher levels for resolution. Decentralization is

the extent to which power and authority are delegated to lower levels. Beximco Pharmaceutical

Limited will be decentralized depending on to the extent that decisions made at lower levels are

made within a general set of policies, procedures, and rules, with decisions not covered left to the

discretion of lower-level managers.

Centralization offers various advantages for Beximco Pharmaceuticals Limited like, it is easier to

coordinate the activities of various units and individuals; top managers have more experience and

may therefore make better decisions; top managers have a broader perspective on decision

situations; duplication of effort by various organizational units can be avoided and strong leadership

is promoted.

Decentralization also offers various advantages for Beximco Pharmaceuticals Limited like, top

managers can concentrate upon major issues; the jobs of lower-level employees are enriched by the

challenge of making decisions; decisions can be made faster; individuals at lower levels may be

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closer to the problem and may be in a better position to make good decisions and relatively

independent units emerge as divisions, with more easily measured outputs.

Beximco Pharmaceuticals Limited should move toward a decentralized structure when Beximco

Pharmaceuticals Limited is so large that top managers do not have the time or the knowledge to

make all the major decisions; operations are geographically dispersed; top managers cannot keep up

with complex technology; and the environment is increasingly uncertain.

4.6.2. Horizontal Coordination

For Beximco Pharmaceuticals Limited horizontal coordination is the coordinating activities across

the departments of an organization. The means of horizontal coordination for Beximco

Pharmaceuticals Limited can be following:

4.6.2.1. Lateral Relations

Lateral relation for Beximco Pharmaceuticals Limited is the relationships between people across

departments of Beximco Pharmaceuticals Limited. For example, relationship between people in

marketing, production, human resource departments of Beximco Pharmaceuticals Limited.

4.6.2.2. Information Sharing

In Beximco Pharmaceuticals Limited, sharing of information between people in different department

regarding tasks, progress made in terms of tasks, departmental policy changes.

4.6.2.3. Sharing Resources

People in different departments of Beximco Pharmaceuticals Limited share resources, specially,

slack (extra) resources. For example, in Beximco Pharmaceuticals Limited IT manager is helping out

managers from accounting department.

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4.6.3. Organization Chart or Organogram

For Beximco Pharmaceuticals Limited organization chart or organ gram is a line diagram that depicts the

broad outlines of the structure of Beximco Pharmaceuticals Limited. Organization charts show the major

positions or departments in Beximco Pharmaceuticals Limited, the way positions are grouped together,

reporting relationships for lower to higher levels, official channels for communications, and possibly the

titles associated with major positions in the organization.

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Exhibit 33: BPL’s organogram

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4.6.3.1. Functional Structure

Functional structure is a type of departmentalization in which positions are grouped according to

their main functional (or specialized) area. The functional form of organization has several major

advantages for Beximco Pharmaceuticals Limited like,

In-depth development of expertise is encouraged.

Employees have clear career paths within their function.

Resources are used more efficiently.

Economies of scale may be possible because of specialized people and equipment.

Intradepartmental coordination is facilitated.

Specialized technical competencies may be developed and may constitute a competitive

advantage.

The functional form of origination can bring several disadvantages for Beximco Pharmaceuticals

Limited like

Response time on multifunctional problems may be slow due to coordination problems.

Major issues and conflicts between departments may have to be resolved by top

management, with resultant delays.

Bottlenecks due to sequential tasks.

Over specialization may lead to a restricted view of the department’s and the organizations

needs.

Performance may be difficult to measure because several functions are responsible for

organizational results.

Managers may be trained too narrowly in a single department.

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The functional form of departmentalization will be more appropriate under certain circumstances.

Like, if Beximco Pharmaceuticals Limited is small or medium-sized, which is not relevant as

Beximco Pharmaceuticals Limited is a huge company. There are a limited number of related

products or services, or a relatively homogeneous set of customers or clients, the organization is

large and diverse, but the environment is stable. So we can assume functional form of

departmentalization will not be suitable for Beximco Pharmaceuticals Limited.

4.6.3.2. Divisional Structure

Divisional structure is a type of departmentalization in which positions are grouped according to

similarity of products, services, or markets. There are various types of divisional structure which can

be used for Beximco Pharmaceuticals Limited:

Product divisions are divisions created to concentrate on a single product or service or at

least a relatively homogeneous set of products or services. Beximco Pharmaceuticals Limited

can use product divisions.

Geographic divisions are divisions designed to serve different geographic areas. Beximco

Pharmaceuticals Limited can also use geographical division as it is exporting pharmaceutical

products to various developed and developing countries.

A sample of geographical division for Beximco Pharmaceuticals Limited can be following:

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Exhibit 34: A sample of geographic divisions

Customer divisions are divisions set up to service particular types of clients or customers.

Divisional structure can bring several major advantages to Beximco Pharmaceuticals Limited. Those

advantages are:

Divisions can react quickly to changes in the environment.

Coordination across functions is simplified.

Each division can focus upon serving its customers.

The division‟s goals can be emphasized.

Performance is more easily measured.

Managers can be trained in general management skills.

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Divisional structure does not come up with only advantages for Beximco Pharmaceuticals Limited.

It can bring several disadvantages for Beximco Pharmaceuticals Limited like followings:

a. Duplication of resources in each division often occurs.

b. In-depth expertise may be sacrificed.

c. Divisions may compete for limited resources.

d. Expertise across divisions may not be shared.

e. Innovations may be restricted to single divisions.

f. Divisional goals may take priority over overall organizational goals.

The divisional structure is suitable for large organizations like Beximco Pharmaceuticals Limited

where substantial differences exist among products or services, geographic areas, or customers

served.

4.6.3.3. Hybrid Structure

Hybrid structure is a form of departmentalization that adopts parts of both functional and divisional

structures at the same level of management. Hybrid structure can also be used for Beximco

Pharmaceuticals Limited. Usually hybrid structures are adopted by large organizations to gain the

advantages of functional and divisional structures as functional departments are created to take

advantage of resource utilization efficiencies, economies of scale, or in-depth expertise and

divisional departments are usually created to benefit from a stronger focus on products, services, or

markets.

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The hybrid structure can bring several advantages for Beximco Pharmaceuticals Limited like,

Corporate and divisional goals can be aligned.

Specialized expertise and economies of scale can be achieved in major functional areas.

Adaptability and flexibility may be achieved in handling diverse product or service lines,

geographic areas, or customers.

The hybrid structure has also several disadvantages which can affect Beximco Pharmaceuticals

Limited like,

Conflict may arise between departments and divisions.

Hybrid organizations tend to develop excessively large staffs in the corporate-level

functional departments.

There may be a slow response to exceptional situations requiring coordination between a

division and a corporate functional department.

The hybrid structure can be used for Beximco Pharmaceuticals Limited for following conditions.

Beximco Pharmaceuticals Limited faces environmental uncertainty best met by a divisional

structure.

Beximco Pharmaceuticals Limited functional expertise and/or efficiency.

Beximco Pharmaceuticals Limited has sufficient resources to justify the structure.

4.6.3.4. Matrix Structure

A matrix structure is a type of departmentalization that superimposes a horizontal set of divisional

reporting relationships onto a hierarchical functional structure. Beximco Pharmaceuticals Limited

can also consider matrix structure. There are several characteristics of a matrix structure like,

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An organization with a matrix structure has a functional and a divisional structure at the same

time.

Employees who work in a matrix organization report to two “bosses,” thus, the unity-of-

command principle is violated.

Organizations that adopt a matrix structure usually go through several identifiable structural

stages:

Stage 1 is a traditional structure, usually a functional structure, which follows the unity-of-command

principle.

Stage 2 is a temporary overlay in which managerial integrator positions are created to handle issues

of finite duration that involves coordinating across functional departments.

Stage 3 is a permanent overlay in which the managerial integrator positions become permanent.

Stage 4 is a mature matrix, in which matrix bosses have equal power.

As an organization passes through the matrix stages, horizontal integration increases at the

cost of greater administrative complexity.

If Beximco Pharmaceuticals Limited follow the matrix form then it wil achieve several advantages

such as,

a. Decision making for Beximco Pharmaceuticals Limited will be decentralized.

b. Horizontal coordination of Beximco Pharmaceuticals Limited will be strengthened.

c. Environmental monitoring will be improved for Beximco Pharmaceuticals Limited.

d. Responses to environmental changes will be quickly made for Beximco Pharmaceuticals

Limited.

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e. Functional specialists can be added to or resigned to projects as needed for Beximco

Pharmaceuticals Limited.

f. Support systems can be allocated to projects as needed for Beximco Pharmaceuticals

Limited.

Matrix designs can bring several disadvantages for Beximco Pharmaceuticals Limited like,

Administrative costs of Beximco Pharmaceuticals Limited will be increased.

Lines of authority and responsibility may not be clear to individual employees due dual

authority.

Possibilities of conflict can increase in Beximco Pharmaceuticals Limited.

Individuals can become preoccupied with internal relations at the expense of clients and

project goals in Beximco Pharmaceuticals Limited.

All decisions may become group decisions, leading to gross inefficiency

Reactions to change may be slowed in Beximco Pharmaceuticals Limited if interpersonal

skills are lacking or top management fights for control.

Matrix designs will be appropriate for Beximco Pharmaceuticals Limited when the following three

conditions are met:

The considerable pressure from the environment that necessitates a simultaneous and strong

focus on both functional and divisional dimensions in Beximco Pharmaceuticals Limited.

The demands placed on the Beximco Pharmaceuticals Limited are changing and

unpredictable, making it important to have a large capacity for processing information and

coordinating activities quickly.

There is pressure for shared resources in Beximco Pharmaceuticals Limited.

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4.6.3.5. Process Structure and the Networked Structure

Of particular interest are two new types of organizational structure that have recently emerged: the

process structure and the networked structure. Thos structures can also be considered for Beximco


A process structure is a type of departmentalization which groups positions into process team which

are given beginning-to-end responsibility for that process or that specified work flow. The process

structure is sometimes called the horizontal organization.

The networked structure is a form of organizing in which many functions are contracted out to other

independent firms and coordinated through the use of information technology networks. Sometimes

the networked structure is called the virtual corporation because it performs as virtually one

corporation.

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4.7. Strategic Implication by Some Broad Strategies

4.7.1. Mckinsey’s 7’s

Beximco Pharmaceuticals Limited can use McKinsey’s 7S as a guide implementation McKinsey and

Company have developed a model known as, "the seven elements of strategic fit, or the 7-S.

7-S includes:

1. Strategy (the coherent set of actions selected as a course of action);

2. Structure (the division of tasks: the organization structure/chart);

3. Systems (the processes and flows that show how an organization gets things done: chain of

command, delegation, communication etc.);

4. Style (how management behaves);

5. Staff (the people in the organization);

6. Shared-values (values shared by all in the organization); and

7. Skills (capabilities possessed by the organization).

The underlying concept of the model is that all seven of these variables must "fit" with one another

in order for strategy to be successfully implemented. However, shared values (based on common

purpose) are central to the framework because they pull the hearts and the minds together.

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4.7.2. Five Approaches to Implement

4.7.2.1. The Commander Approach

The strategic leader concentrates on formulating the strategy, applying rigorous analysis. The leader

either develops the strategy himself or supervises a team of planners charged with determining the

optimal course of action for the organization. He typically employs such tools as experience curves,

growth/share matrices, and industry and competitive analysis.

This approach addresses the traditional strategic management question of "How can I, as the

strategist, develop a strategy for my business which will guide day-to-day decisions in support of my

longer-term objectives?" Once the "best" strategy is determined, the leader passes it along to

subordinates who are instructed to execute the strategy. The leader does not take an active role in

implementing the strategy. The strategic leader is primarily a thinker/planner rather than a doer.

Three conditions must exist in Beximco Pharmaceuticals Limited for the approach to succeed:

The leader in Beximco Pharmaceuticals Limited must brandish enough power to command

implementation; or, the strategy must pose little threat to the current management, otherwise

implementation will be resisted.

Accurate and timely information must be available and the environment must be reasonably

stable to allow it to be assimilated in Beximco Pharmaceuticals Limited.

The strategist (if he is not the leader) should be insulated from personal biases and political

influences that might affect the content of the plan of Beximco Pharmaceuticals Limited.

A drawback of this approach is that it can reduce employee motivation of the employees of Beximco

Pharmaceuticals Limited. If the leader creates the belief that the only acceptable strategies are those

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developed at the top, he may find himself in an extremely unmotivated, un-innovative group of

employees.

However, several factors account for the Commander popularity. First, it offers a valuable

perspective to the chief executive. Second, by dividing the strategic management task into two stages

-"thinking" and "doing" -the leader reduces the number of factors that have to be considered

simultaneously. Third, young managers, in particular, seem to prefer this approach because it allows

them to focus on the quantitative, objective elements of a situation, rather than with more subjective

and behavioral considerations.

Finally, such an approach may make some managers feel as an all-powerful hero, shaping the

destiny of thousands with his decisions in Beximco Pharmaceuticals Limited.

4.7.2.2. The Organizational Change Approach

This approach starts where the Commander Approach ends or is not appropriate. The organizational

Change Approach addresses the question "I have a strategy - now how do I get my organization to

implement it?" The strategic leader again decides major changes of strategy and considers the

appropriate changes in structure, personnel, and information and reward systems if the strategy is to

be implemented effectively. Beximco Pharmaceuticals Limited can also consider the organization

change approach.

The most obvious tool for strategy implementation is to reorganize or to shift personnel in order to

lead the firm in the desired direction. The role of the strategic leader is that of an architect, designing

administrative systems for effective strategy implementation. The Change Approach is often more

effective than the Commander Approach and can be used to implement more difficult strategies

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because of used the several behavioral science techniques in Beximco Pharmaceuticals Limited. This

technique can introduce change in Beximco Pharmaceuticals Limited includes such fundamentals as:

using demonstrations rather than words to communicate the desired new activities in Beximco

Pharmaceuticals Limited; focusing early efforts on the needs that are already recognized as

important by Beximco Pharmaceuticals Limited; and having solutions presented by persons who

have high credibility in Beximco Pharmaceuticals Limited.

However, the Change Approach might not help managers of Beximco Pharmaceuticals Limited to

stay abreast of rapid changes in the environment. It can backfire in uncertain or rapidly changing

conditions in Beximco Pharmaceuticals Limited. Finally, this approach can call for imposing the

strategy in a "top-down" fashion and is subject to the same motivational problems as the Commander

Approach in Beximco Pharmaceuticals Limited.

4.7.2.3. The Collaborative Approach

Beximco Pharmaceuticals Limited can think about the collaborative approach as well. This approach

extends strategic decision-making to the organization's top management via the question "How can I

get my top management team to help develop; and commit to a good set of goals and strategies?"

The lower level manager/leader and his senior managers like, divisional heads, business unit general

managers or senior functional managers, meet for lengthy discussion with a view to formulating

frameworks for strategy implementation. In this approach, the leader employs group dynamics and

"brainstorming" techniques to get managers with differing points of view to contribute to the

strategic management and implementation process.

The Collaborative Approach overcomes two key limitations inherent in the previous two approaches.

(i) It can increase the quality and timeliness of the information incorporated in the strategy by

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capturing information contributed by managers closer to operations in Beximco Pharmaceuticals

Limited. (ii) It improves the chance of efficient implementation since the greater degree of staff

participation enhances their commitment to the strategy in Beximco Pharmaceuticals Limited.

Although the Collaborative Approach may gain more commitment than the previous approaches, it

may also result in a poorer outcome in Beximco Pharmaceuticals Limited. The negotiated aspect of

the process brings with it several risks that the strategy will be more conservative and less visionary

than one developed by a single person or team in Beximco Pharmaceuticals Limited. And the

negotiation process can take so much time that an organization may miss out on opportunities and

fail to react adequately to changing environments.

4.8. Motivation and Compensation

Design of an attractive compensation and reward package is needed to attract, retain and obtain

substantial effort from good personnel of Beximco Pharmaceuticals Limited. To accomplish this,

Beximco Pharmaceuticals Limited needs to decide the following:

Type of compensation (example, straight salary, or commission only or salary and

commission)

Level of compensation (example, amount of salary)

Type and amount of non-financial rewards including the opportunity for advancement

(example, promotion)

Incentives should be related to the value creating activities of Beximco Pharmaceuticals Limited; in

other words, the incentive system should reward individuals for adding value. But, given the

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difficulty of determining value for Beximco Pharmaceuticals Limited as a whole, it is clearly

impossible to parcel out the components of added value to managers and employees. On the other

hand, it should be possible to recognise when the incentive system is at odds with the value creation

objective of Beximco Pharmaceuticals Limited. For example, a production manager who is rewarded

for minimising inventories can cause havoc with a marketing strategy aimed at achieving an

increased market share.

It is important for managers in Beximco Pharmaceuticals Limited to recognise that the incentive

system may be at fault when the performance of individuals does not match expectations. In fact,

one of the barriers to change is that incentive systems are not reviewed to ensure that they are

consistent with revised company and individual objectives; what is perceived as being unwillingness

to change may be partly due to the fact that individuals can see that a proposed change is not to their

advantage given the existing system of incentives. It is a basic fact of life that managers and

employees will be unwilling to change their behaviour if the benefits of doing so are perceived as

being lower than the costs to themselves. A change in the incentive system can go a long way

towards easing the implementation of change in Beximco Pharmaceuticals Limited.

4.9. Setting Sales Targets

The allocation of resources to selling is a basic determinant of strategic success, given that the

mechanism by which target market share is achieved is by setting sales targets to Beximco

Pharmaceuticals Limited and to individual salespeople. Beximco Pharmaceuticals Limited can use

sales targets to give the sales force an idea of what is expected of them, and to serve as part of an

incentive system. But what criteria can be used to determine what the target market share should be,

or how many units should be sold by a particular sales group in a particular segment of the market is

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a question than Beximco Pharmaceuticals Limited needs to find an answer. Attention is usually not

directed towards how much should be sold, but on how much can be sold by the sales force;

however, concentrating on the maximisation of sales with existing sales resources does not address

the underlying resource problem. The resource allocation question can be trained in the following

fashion using the concept of marginal analysis for Beximco Pharmaceuticals Limited:

Is Marginal Revenue > Marginal Cost in Beximco Pharmaceuticals Limited?

If the additional revenue associated with the last unit sold is greater than the additional cost incurred

in making the sale for Beximco Pharmaceuticals Limited, then it is worthwhile aiming for that level

of sales. While it is important to bear this principle in mind, it is difficult to apply in practice because

the information available is in terms of expectations of revenues and costs:

Is Additional Expected Net Revenue > Additional Expected Cost in Beximco Pharmaceuticals

Limited? Furthermore, the evaluation cannot be made simply in terms of the price versus the unit

cost because an increased sales effort which results in a higher market share can contribute to long

term competitive advantage for Beximco Pharmaceuticals Limited. For example, a higher market

share could lead to the ability to set higher prices in the future, and to a lower unit cost because of

economies of scale and experience effects. While the expected revenues and costs are difficult to

estimate with precision for Beximco Pharmaceuticals Limited, it is useful to attempt an

approximation which will make explicit how the sales target fits into the general goal of value

creation. In the absence of information on expected revenues and costs many managers set the

objective of maximising sales as a second best; this may be a reasonable basis for ongoing decisions

on sales for Beximco Pharmaceuticals Limited, but it has the potential to promote a serious

misallocation of resources.

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The trade-offs can be put in context in a similar fashion to the determination of target market share

by applying the basic income and cost model:

Net Income = Total Market x Market Share X (Price - Unit Cost)

Sensitivity analysis can be used for Beximco Pharmaceuticals Limited to project different scenarios

over the product life cycle; the discounting approach can be used to evaluate different scenarios in

NPV terms. This can help indicate the appropriate level of sales, and provide managers with a degree

of confidence that the revenue from selling the last unit is at least as high as the cost of producing

and selling it.

A further dimension of marginal cost relates to the opportunity cost, rather than the financial cost, of

additional sales when the product is sold in a number of segments. If the resources available to

allocate to selling the product are limited, they should be allocated among different segments of the

market such that the marginal benefit equals the marginal cost in the different segments. If this

condition did not hold for Beximco Pharmaceuticals Limited, net revenue could be increased by

allocating resources from those activities where marginal cost was greater than marginal benefit to

those where marginal cost is less than marginal benefit.

4.10. Determining the Sales Force Size

For determining the sales force of Beximco Pharmaceuticals Limited, one method is called the

workload approach that follows eight steps can be taken in consideration. Eight steps are following:

1. Customers are grouped into categories according to the value of goods bought by them and their

potential for future.

2. Determine the call frequency for each group to Beximco Pharmaceuticals Limited.

3. The total required workload per year is computed by multiplying the call number (or frequency)

by the number of customers in each group.

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4. Add all workloads for all customer groups and you will get total workload for Beximco

Pharmaceuticals Limited in a year.

5. Estimate the average calls expected per week per salesperson.

6. Determine the actual number of weeks adjusting for holidays, illness, training and so on. In other

words, deduct the weeks not used from the total number of weeks in a year.

7. Compute the average calls per year per salesperson by multiplying the average expected calls per

week per salesperson of Beximco Pharmaceuticals Limited.

8. Divide the total annual workload by the average sales calls per year per salesperson to get the total

number of salespersons required for Beximco Pharmaceuticals Limited.

Beximco Pharmaceuticals Limited can follow this model and by following those eight steps

Beximco Pharmaceuticals Limited can find the optimum size of sales force.

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5.1. Introduction

After the implementation of all the strategies, BPL should evaluate and control its plans from time to

time. The strategic management approach is initially based on expectations. When BPL would

implement the plan, it is necessary to measure and evaluate actual performance to find out if the

expectations are being fulfilled. When the component parts of BPL’s plan have been made explicit,

the plan provides a benchmark against which actual outcomes can be compared, so that when

variations between expected and actual outcomes occur their causes can be investigated. For

example, BPL may find that the net contribution from cardiovascular product line is lower than

anticipated in the plan. This could occur for a variety of reasons. For example, the selling price may

turn out to lower than predicted, or because productivity was lower, or because market share turned

out to be harder to win. The reason for the shortfall will suggest whether action should be taken to

achieve the original objectives, or whether the plan itself needs revision in the light of events; it is

essential to identify whether the deviation from the plan is due to causes within the control of the

BPL. This process contributes to the conversion of the plan from wishful thinking to a means by

which the BPL is helped to exert control over its performance.

The steps in evaluation and control are:

Decide what is to be measured. (What to measure?)

Decide how it is to be measured. (How to measure?)

Interpret the outcomes.

Convert into policies.

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BPL can exercise strategic control through the following ways:

The first stage that BPL can take in the control process should involve the selection of relatively few

appropriate objectives.

From these objectives, BPL can derive suitable targets so that pressure can be created for

effective strategic performance. However, BPL should achieve it without setting up a

bureaucracy.

BPL can identify a series of milestones which are tracked over time. These serve as

benchmarks for evaluating strategic performance and provide early warning of deviations

from expected outcomes.

The concerned authorities of BPL should know that a narrow set of financial measures

cannot provide the overall strategic view which is necessary; on the other hand, many of the

objectives and targets cannot be measured with accuracy, and a great deal of subjective

evaluation is necessary.

5.2. Monitoring Market Performance

(Moniruzzaman, 2005) The part of the overall strategy relating to market share was based on

expectations about the comparative advantage accruing from specified market shares, portfolio

analysis and corporate objectives. For example, the objective of marketing department of BPL is to

achieve sales in accordance with the plan, but as events unfold it is likely to be found that the costs

and benefits of attempting to perform strictly in accordance with the plan's objectives will change

significantly. For example, at the outset it will be decided that achievement of a 12 per cent target

market share requires a particular combination of increases in marketing expenditure and price

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reductions; as time progresses experience will tell whether the marketing effort has been effectively

directed, and whether prices have been set low enough. It may turn out that the strategy was correct

in its general approach, but that market share is currently 10.5 per cent and a much more aggressive

pricing policy is necessary to achieve the planned objective of 12 per cent. Hence arise the dilemma

that whether BPL should revise the plan in the light of events.

The issue can be put in perspective by recourse to the basic income and cost model, which can be set

out as:

Net Income = (Total Market * Market Share * (Price - Unit Cost)) - Marketing Expenditure

It is then a relatively simple matter for BPL to investigate different scenarios of the impact of

variations in price and marketing expenditure on net income streams. This type of scenario

evaluation would already have been carried out during the strategy choice stage, and it is now

possible to update the scenarios on the basis of additional market information.

5.3. Monitoring Profitability

(Moniruzzaman, 2005) There are many ways of measuring the profitability of a company, and

different answers can be obtained depending on which approach and which set of conventions is

used. It would clearly be folly to track a profitability measure which generated misleading

information on BPL‟s performance. On the other hand, profit measures should not be discarded just

because they are imperfect; each profit measure conveys a different set of information.

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5.3.1 Profit

(Moniruzzaman, 2005) The accounting definition of profit concentrates on the difference between

income from sales and costs of production. There are many ways of arriving at the accounting figure,

depending on what is included in production costs. For example, some methods allocate overheads

according to the value of sales, and others according to wage costs; machinery costs may be

allocated over time by straight line depreciation, or by using a decay curve. Thus the profit

calculated for BPL depends on how such costs are calculated.

Since there is considerable discretion involved in arriving at a profit figure, trends in profit may be

of limited use as a performance measure if arbitrary cost allocation is involved in the calculation.

There is very little point in managers attempting to maximize a profit measure which is generated by

obscure accounting conventions and which conceals rather than reveals the performance of BPL.

5.3.2. Net Contribution

(Moniruzzaman, 2005) One of the simplest measures of product performance is net contribution

(also known as gross profit), which is defined here as:

Net Contribution = Sales Revenue - Cost of Goods Sold

= Total Market x Market Share x Price - Unit Cost x Sales

Net contribution is an indicator of how effectively inputs are being converted into outputs. However,

it may not be a good indicator of cash flows from current production. This is because not all output

is necessarily produced in the period in which it is sold. For example, a large proportion of sales in a

period may be from inventory, and despite the fact that net contribution may be low, actual cash

flows could be much higher because the costs were actually incurred in previous time periods. It is

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unlikely that output and sales will be perfectly matched in a particular period; this is because of the

difficulties of controlling production and estimating demand.

But even if output and sales are reasonably well correlated over a period, net contribution on its own

cannot be used to decide whether or not to abandon a product. For example, net contribution can be

expected to vary over the product life cycle, as demand for the product increases and decreases, and

as BPL moves up the experience curve. The BCG portfolio model provides a basis for interpreting

net contribution by products. The cash flows show how the BPL’s resources might be allocated to

maintain and develop its portfolio. This, of course, has to be viewed in the light of BPL’s access to

capital markets, dividend policy, and gearing.

BPL can use the matrix approach to classifying the net contribution of products which is remarkably

powerful as a diagnostic tool. In the first instance it enables variations in net contribution among

products to be put in perspective. Second, the matrix provides a basis for prescribing action. For

example, if a 'cash cow' is not producing a positive net contribution then investigation might reveal

reasons such as inadequate cost control, competitive pressures being greater than anticipated, or that

a larger market share is required to generate competitive advantage.

5.3.3. Cash Flow

(Moniruzzaman, 2005) Cash flow is an aggregate view of profitability which looks at all inflows and

outflows. In principle, the calculation of cash flow takes into account only actual income and

expenditure, does not impute profitability by allocating costs, and ignores the net contributions of

individual products.

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6.1. Summary of Strategic Analysis and its Outcomes

The key performance indicator for BPL with regard to its financial objective is profit, Profit as

percentage of sales, Contribution margin, Market share (percentage), ROI (Return on Investment),

RONA (Return on Net Assets), ROE (Return on Equity), sales and Percentage change in sales. BPL

sets target profit of Tk. 50 Core at the end of year 2009 and growth of 15% in year 2009. Among the

other targets, sales of Tk. 500 corer, 10% - 12% prescription share, ROI of 2.95% and ROE of

4.28% are worth mentioning.

In competitive centered objective, Price (% difference), Market share (Relative), Brand awareness

(%), Brand preference (%), Reductions of complaints (%),Satisfaction (%) are the key performance

indicator for BPL. Among other KPI’s, Fixed assets as percentage of sales, Net assets as percentage

of sales, Percentage of capacity utilization, Earnings per share, Price/ Earnings ratio, Employees,

Types of training programs are worth mentioning.

Economic, technological and political, customers, competitors, resources and capabilities are the

main intervening condition for BPL. The intervening conditions that are relevant for BPL are the

ones which fall in the present-high, present-medium, present-low, potential-high, and finally

potential-medium categories and present-high being the intervening conditions with the highest

degree of priority.

International standard manufacturing facility, Highly Qualified Employees: Distribution Network,

Relationship with the physicians, Financial strength, Global Acceptance, Marketing Skills,

Goodwill/ Positive Brand Image, Quality of the product and Export facilities are the key success

factor (KSF) for BPL.

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In F/D analysis what the F/D actually is, why it has occurred, who and what resources are involved

,what the context and intervening conditions are, what the actual and desired outcomes are, and how

an F should reinforced or how to overcome a D was analyzed according to the phenomenon model.

Moniruzzaman (2005)

Beximco Pharmaceutical Limited has some strategic implication regarding each of the KSF.

Efficient cost structure should be followed in global market expansion while taking conservative

financial approach. Beximco Pharmaceutical Limited should have a strategic plan to expand its

business in Myanmar, ASEAN region, GCC countries and Latin America in coming years. BPL

should try to make a group of medicine so popular that whenever the doctors prescribe medicine

they will recall back to BPL’s product.

6.2. Summary of Strategic Formulation

This chapter focuses on strategy formulation Using Analytical Framework for Strategy Formulation

provided by Professor Moniruzzaman (2005), this chapter has organized the strategy formulation

step in strategic management into the following three hierarchical levels: Corporate-Level Strategy,

Business Level Strategy, and Functional or Specific Strategy. The generic strategies are: Stability,

Expansion, Parenting and Retrenchment. Therefore if an F/D analysis illustrates that Beximco’s

desired and actual states are converging (without any significant change to its various policies) and

stability approach in the guise of “no change” would be the strategy.

Beximco Pharma’s priority to become a global player through contract manufacturing establishing

itself as a reliable partner through expansion as it diversifying Risk, Searching for Competencies,

Economies of Scale and Building Advance Capacity. BPL should retrench its activities in Pakistan

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and shift those efforts to more politically stable nations. Retrenchment is strongly advised includes

the product markets which involve the usage of CFC.

On observing BPL’s overall stance, it appears as if Beximco Pharma’s decision makers would fall

under the “prospector” category because of its relentless pursuit of finding its way into international

markets, but this observation is by no means absolute. The overall generic strategy may be stability

or expansion, depending on the markets into which the company is diverting resources”,

(Moniruzzaman, 2005).

The BPL’s strength lies in its diversified products and dosage forms from producing solid products

like tablets and capsules, to liquid products like syrup, suspension and solution, as well as semisolid

products like cream and ointment. Therefore as a parent, Beximco Pharmaceuticals Limited, can use

the financial resources earned by the brilliantly performing children. CFC. Therefore it is necessary

that BPL prepares its MDI plant and replace any technology that uses CFC and if the new

technology and this might men pouring in more resources in this plant than the others. The four main

generic strategies are overall cost leadership, differentiation, focus and no distinctive strategy or

“stuck in the middle”. For BPL to successfully implement overall cost leadership strategy would

require continual, exceptional efforts to reduce costs -- without excluding the product features

considered to be essential. There is very little scope for differentiation in the manufacturing of

generic medicine. At most BPL’s attempt at differentiation would be to offer superior presentation

and packaging of its products.

Given Beximco Pharma’s massive manufacturing capacity it needs to high volumes of outputs to

recover the overhead fixed costs and therefore the focus strategy is not recommended for Beximco


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As a medicine producer Beximco Pharmaceuticals Limited (BPL) must follow backward integration.

The external and inter factors affecting Beximco Pharmaceuticals Limited (BPL) supports vertical

integration for Beximco Pharmaceuticals Limited (BPL).

Beximco Pharmaceuticals Limited can go for various forms of alliances and joint ventures like

licensing agreement, franchise agreements, relational contracting, relational management, consortia,

virtual corporations, virtual functions and joint ventures.

Beximco Pharmaceuticals Limited needs to pick suitable countries for international expansions

where there will be low exposure to exchange rate risk, government regulations are appropriate.

Long term benefits should also be considered. Beximco Pharmaceuticals Limited also needs to think

about getting competitive advantage by international expansion

6.3. Summary of Implementations

The implementation process of Beximco Pharmaceuticals Limited needs take courses of actions like,

resource planning, budgeting, selecting and recruiting suitable individuals, train individuals who

would implement the actions, designing an organization structure compatible with the actions,

Distributing tasks among these individuals using the organization structure and allocating resources

needed to accomplish each task, setting sales targets and determining the sales force size.

Beximco Pharmaceuticals Limited needs to set up procedures to ensure that resources are used

efficiently. A fundamental requirement in effective resource planning is that the production

department knows what it is meant to produce; this means setting up communications between

marketing and production so that each can understand the other's viewpoint. Resource planning has

implications for all aspects of the performance of Beximco Pharmaceuticals Limited. The

application of sophisticated just-in-time approaches can reduce inventory costs significantly, the

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smoothing of peaks and troughs in production schedules can create the stable environment necessary

to develop a company culture, the introduction of new technology at appropriate times can enable

Beximco Pharmaceuticals Limited to make use of new skills and techniques, and a systematic

approach to resource planning is the foundation for monitoring costs.

At the functional level of Beximco Pharmaceuticals Limited, it is necessary to allocate funds to

individual managers so that they can carry out the tasks which are required to achieve the objectives

of each investment; the investment appraisal which revealed that the net cash flows generate a

positive Net Present Value (NPV) does not usually take into account uncertainty as to how costs will

actually be incurred and resources deployed. The desirability of an investment may depend on

achieving a competitive advantage which would be impossible if competitors knew what the strategy

of Beximco Pharmaceuticals Limited was likely to be. In fact, strategic options are often difficult to

define with tile precision which will attract investors. It therefore seems likely that Beximco

Pharmaceuticals Limited will be faced with a budget constraint when allocating available funds

among competing investments. The theory of finance can provide a solution to the capital rationing

problem of determining which combination of investments will add most to shareholder wealth of

Beximco Pharmaceuticals Limited within the context of the chosen strategy. However, the

application of sophisticated capital rationing techniques does not necessarily resolve the budget

allocation problem. The marketing manager of Beximco Pharmaceuticals Limited has to decide how

much to allocate to market research, advertising, promotions and so on. By the time the original

funds have been parceled up and allocated to the various functions, it may be difficult to identify

specific expenditure with the original project. The original investment appraisal assumed that the

cash would be used efficiently at the functional level of Beximco Pharmaceuticals Limited.

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Beximco Pharmaceuticals Limited should pursue various steps for recruiting and selection. Steps are

such as set selection criteria that must be met by the candidates; invite applications; shortlist

candidates based on the criteria; interview candidates; Conduct test centres to determine applicant’s

individual abilities as well as ability to work in a team; and hire the individuals who score best

overall in accordance with the criteria.

For training and development Beximco Pharmaceuticals Limited can pursue three steps like, analyze

employees performance; identify his/her strengths and weaknesses; train him/her to overcome

weaknesses and maximize strengths. Training programmers such as on-the-job training as well as

formal training courses must be arranged to develop personnel of Beximco Pharmaceuticals Limited.

Beximco Pharmaceuticals Limited can use various kinds of organization structures like vertical

coordination, horizontal coordination, and organization chart or organogram. Under vertical

coordination Beximco Pharmaceuticals Limited can consider chain of command, Span of

management or span of control, and delegation. Under horizontal coordination Beximco

Pharmaceuticals Limited can take into account lateral relations, information sharing, and sharing

resources. Under organization chart or organogram Beximco Pharmaceuticals Limited can consider

functional structure, divisional structure, hybrid structure and matrix structure.

Beximco Pharmaceuticals Limited can also use McKinsey’s 7’s as a guide implementation.

McKinsey and Company have developed a model known as, "the seven elements of strategic fit," or

the "7-S ". The 7-S includes strategy, structure, systems, style, staff, shared-values, and skills. The

underlying concept of the model is that all seven of these variables must "fit" with one another in

order for strategy to be successfully implemented.



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incentive system and can also think about other approaches for implementation like the commander

approach, the organizational change approach, and the collaborative approach.





incentive system. Beximco Pharmaceuticals Limited needs to find out whether marginal revenue is

greater than the marginal cost. If the additional revenue associated with the last unit sold is greater

than the additional cost incurred in making the sale for Beximco Pharmaceuticals Limited, then it is

worthwhile aiming for that level of sales. A further dimension of marginal cost relates to the

opportunity cost, rather than the financial cost, of additional sales when the product is sold in a

number of segments. If the resources available to allocate to selling the product are limited, they

should be allocated among different segments of the market such that the marginal benefit equals the

marginal cost in the different segments.

For determining the size of sales force Beximco Pharmaceutical Limited can follow eight steps like,

(1) customers are grouped into categories according to the value of goods bought by them and their

potential for future; (2) determine the call frequency for each group to Beximco Pharmaceuticals

Limited; (3) compute total required workload per year by multiplying the call number (or frequency)

by the number of customers in each group; (4) add all workloads for all customer groups and you

will get total workload for Beximco Pharmaceuticals Limited in a year; (5) estimate the average calls

expected per week per salesperson; (6) determine the actual number of weeks adjusting for holidays,

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illness, training and so on. In other words, deduct the weeks not used from the total number of weeks

in a year; (7) compute the average calls per year per salesperson by multiplying the average expected

calls per week per salesperson of Beximco Pharmaceuticals Limited; (8) divide the total annual

workload by the average sales calls per year per salesperson to get the total number of salespersons

required for Beximco Pharmaceuticals Limited.

6.4. Strategy of Control

The first stage that BPL can take in the control process should involve the selection of relatively few

appropriate objectives. From these objectives, BPL can derive suitable targets so that pressure can be

created for effective strategic performance. BPL can identify a series of milestones which are tracked

over time. A great deal of subjective evaluation is necessary. It is then a relatively simple matter for

BPL to investigate different scenarios of the impact of variations in price and marketing expenditure

on net income streams. Profit measures should not be discarded just because they are imperfect; each

profit measure conveys a different set of information. Since there is considerable discretion involved

in arriving at a profit figure, trends in profit may be of limited use as a performance measure if

arbitrary cost allocation is involved in the calculation. One of the simplest measures of product

performance is net contribution which is an indicator of how effectively inputs are being converted

into outputs. The BCG portfolio model provides a basis for interpreting net contribution by products.

Cash flows have to be viewed in the light of BPL's access to capital markets, dividend policy, and

gearing. The ultimate constraint on the operations of BPL is the availability of cash. When the

market disagrees with BPL about the desirability of an investment program, it follows that BPL will

have to finance it from internal cash. Cash flows can be negative in the short run, but in the long run

it is should be positive in order to maximize the shareholder’s wealth.

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Broad Strategic Management Step Specific Steps

Analysis of KPIs

Analysis of intervening conditions

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Strategic Analysis

Identification of KSFs

F/D Analysis

Strategic Implications Analysis

Strategy Development

Generating Alternative Strategies

Evaluating Alternative Strategies

Choosing the best Strategy for Bank Asia

Strategy Implementation

Implementation of Plans

Resource Allocation

Strategy Evaluation & Control

Monitor the all the Necessary Actions of Strategy

Implementation through Monitoring Market

Performance and Profitability

Compare Actual Performance to Specified Standards

Take Corrective Measures if Necessary

Broad Strategic Management and its specific step

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Moniruzzaman, M. (2005), Strategic Management: The Phenomenon Approach to be published in

September/October 2009.

Nawaz, A. (2008). Beximco Pharmaceuticals Limited, Data collected through face to face interviews

based on both semi-structured and structured questions.

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Appendix: A

(Consent Form)

INFORMATION SHEET

Your name:

Designation:

Organisation:

Address:

Research topic: DEVELOPMENT OF A STRATEGIC PLAN FOR YOUR FIRM

Page | 222

Brief introduction: The interview would use semi-structured as well as rating questions that are

designed to get answers to the research questions. The interviewer would adopt a flexible

approach in order to get complete and clear answer to each question. If needed, a question

would be modified or even asked earlier or later. Two additional interviews would be needed;

and would be arranged between the interviewee and the researcher. If the interviewee permits,

audio tape recorders, pens, pencils and papers would be used during the interviews. The

interviewee may be requested to act as a source of ‘snowball sampling’ for selection of

additional respondents.

Terms and conditions:

1. Date: To be agreed mutually by the interviewee and the researcher

2. Duration:

a. 10 minutes before the interview to introduce each other and brief the interviewee.

b. 60 to 90 minutes for the actual interview.

3. Place: A mutually agreed place. However, it should be as quiet and secure as possible to

ensure effective communication and confidentiality.

4. Devices: Audio tape-recorders

5. Data recording: Audio tape recording and note taking

6. At any time, the interviewee may withdraw from the process without any penalty

7. Interviewee may decline to answer any question at any point over the interview session.

8. Interviewee or his/her firm would never be identified with the information that would be

collected from him/her to ensure strict confidentiality.

9. Tape recorders would always be kept in a very secure place to ensure that no one other than

the researcher has access to them under any circumstances. All tapes would be destroyed upon

completion of the study.

10. All interviewees would be provided a ‘consent form’ to be filled in and returned by them to

the researcher before interview. INFORMED CONSENT FORM (INTERVIEWEE)

Your name:

Designation:

Organisation:

Address:

Page | 223

Research topic: DEVELOPMENT OF A STRATEGIC PLAN FOR YOUR FIRM

I_________________________________________ have read the ‘Information Sheet’ and have

had the details of the study explained to me. My questions have been answered to my

satisfaction, and I understand that I may ask further questions at any time.

I understand I have the right to withdraw from the study at any time and to decline to answer

any particular questions.

I agree to provide information to the researcher(s) on the understanding that my name will not

be used without my permission (The information will be used only for this research and

publications arising from this research project.)

I agree/do not agree to the interview being taped.

I understand that I have the right to ask for the audio tape to be turned off at any time during

the interview.

I agree to participate in this study under the conditions set out in the Information Sheet.

Signed…………………….. Name………………………… Date……………..”

Page | 224

Appendix B

(Blank Questionnaire)

INTERVIEW GUIDE: 1st Round of interviews

Thanks ever so much for sparing some of your precious time. The first section of this interview

would include a range of semi-structured questions. We may probe if an answer is incomplete

or ambiguous. Sections 2 and 3 are relatively straightforward and based, mostly on pre-

Page | 225

specified answers. You’d be requested to circle your responses. Please feel free to ask if you

have a query of any sort.

PART 1:

1. Would you kindly specify the major objectives (preferably five) your organisation has set for

the next financial year?

INTERVIEWER WORKSHEET:

OBJECTIVES: TYPE OBJECTIVES:

LABEL (WRITE IN

FULL)

OBJECTIVES: SCOPE

(DELETE AS

APPLICABLE)

FINANCIAL

(PROFITABILITY/GROWTH)

CORPORATE/SBU/FUNCTIONAL

COMPETITIVE-CENTRED CORPORATE/SBU/FUNCTIONAL

CUSTOMER-CENTRED CORPORATE/SBU/FUNCTIONAL

PRODUCT/

SERVICE-BASED

CORPORATE/SBU/FUNCTIONAL

OTHERS (Innovation/Social/Employee/Shareholder value/Utilisation of resources)

2. Please tell us the exact measures/indicators you would use to determine the

success/effectiveness of each objective


OBJECTIVE TYPE OBJECTIVE LABEL MEASURES/INDICE

S

FULLY

CONCEPTUALISED

OBJECTIVES

PROFITABILITY/

GROWTH

Profits, TK.____________________

Profit as % of sales _________

Contribution margin

TK.____________________

Market share (%)___________

ROI_______ RONA_________

ROE__________

Sales,

Page | 226

TK. _________________

Unit Sales__________________

% Change in sales__________

COMPETITIVE-CENTRED Price (% difference)__________

Market Share

(Relative):__________________

Brand awareness (%)________

Brand preference (%)________

CUSTOMER-CENTRED Awareness (%)____________

Liking (%)________________

Preference (%) ____________

Reduction in complaints

(%) _____________

Satisfaction (%) ___________

PRODUCT/

SERVICE-BASED

Quantity (Units):

Maximum____________

Minimum____________

Quality

A. (No. of Defects): Upper

limits_____________

B. (No. of complaints): Upper

limits______________

Page | 227

OTHERS Fixed assets as % of sales____

Net assets as % of sales______

% Capacity utilisation_______

Earnings per share

TK.________________________

Price/earnings ratio____________

HRD:

Employees (%)________

Type/Number of training

programmes (e.g.,

MBA)_________/____________

Promotions (%)_______________

Salary change (%) _____________

Turnover (% change

desired)____________________

Absenteeism (% change

desired)__________

TK. Contribution_________________

Growth in employment

(%)________________

3. To what extent (and why) were these objectives dictated by the expectations of the

shareholders?

4. Please specify five main factors you considered when designing these objectives.

(LIST):

1.

2.

3.

4.

5.

Page | 228

PART 2:

1. Please indicate, from what you know, how successful these objectives would be, using the

following criteria:

CRITERIA: A financial failure A financial success

(Less than the measures in 2/1) (Greater than the measures in 2/1)

Profitability -5 -4 -3 -2 -1 0 1 2 3 4 5

Relative to competing firms

Far Far

Less Greater

Profits:

-5 -4 -3 -2 -1 0 1 2 3 4 5

Sales/Revenues

-5 -4 -3 -2 -1 0 1 2 3 4 5

Market shares

-5 -4 -3 -2 -1 0 1 2 3 4 5

Customers

Awareness -5 -4 -3 -2 -1 0 1 2 3 4 5

Liking -5 -4 -3 -2 -1 0 1 2 3 4 5

Preference -5 -4 -3 -2 -1 0 1 2 3 4 5

Product/Service

Quantity -5 -4 -3 -2 -1 0 1 2 3 4 5

Quality -5 -4 -3 -2 -1 0 1 2 3 4 5

PART 3

1. INTERVENING CONDITIONS:

1. Please identify the external and internal conditions (present, potential and uncertain), and

the degree to which they would impact your actions that are designed to attain the objectives

mentioned above.

a. Please rate the following factors in accordance with their status of occurrence:

ECONOMIC:

Page | 229


1. CHANGE IN INFLATION 3 2 1

2. CHANGE IN EXCHANGE RATES 3 2 1

3. CHANGE IN INTEREST RATES 3 2 1

4. CHANGE IN GNP 3 2 1

5. CHANGE IN UNEMPLOYMENT RATE 3 2 1

TECHNOLOGICAL:

1. ADVANCEMENTS IN TECHNOLOGY 3 2 1


GOVERNMENT/POLITICAL/LEGAL:

1. ANTI-TRUST LEGISLATIONS 3 2 1



CUSTOMERS:



OF CHOICE CRITERIA



COMPETITORS:


COMPETITORS 3 2 1


3. CHANGE IN INVESTMENT S IN


RESOURCES & CAPABILITIES:


2. ADEQUACY OF SKILLS AND RESOURCES 3 2 1

(HR/MARKETING/DISTRIBUTION/

OPERATIONS/R&D/FINANCE)


Page | 230


ADDITIONAL:

1. 3 2 1

2. 3 2 1

3. 3 2 1

b. Please rate the following factors in accordance with their probability of impact:

HIGH MEDIUM LOW

ECONOMIC:

1. CHANGE IN INFLATION 3 2 1

2. CHANGE IN EXCHANGE RATES 3 2 1

3. CHANGE IN INTEREST RATES 3 2 1

4. CHANGE IN GNP 3 2 1

5. CHANGE IN UNEMPLOYMENT RATE 3 2 1

TECHNOLOGICAL:

1. ADVANCEMENTS IN TECHNOLOGY 3 2 1


GOVERNMENT/POLITICAL/LEGAL:

1. ANTI-TRUST LEGISLATIONS 3 2 1



CUSTOMERS:



OF CHOICE CRITERIA



COMPETITORS:


COMPETITORS 3 2 1


3. CHANGE IN INVESTMENT S IN

Page | 231


RESOURCES & CAPABILITIES:


2. ADEQUACY OF SKILLS AND RESOURCES 3 2 1

(HR/MARKETING/DISTRIBUTION/

OPERATIONS/R&D/FINANCE)



ADDITIONAL:

1. 3 2 1

2. 3 2 1

3. 3 2 1


The issues are plotted in a matrix (OCCURRENCE/IMPACT MATRIX) based on their

ratings:

STATUS OF OCCURRENCE

PRESENT POTENTIAL UNCERTAIN

HIGH

MEDIUM

LOW

B. Rate the importance of each KSF in relation to the objectives to be met.

MODERATELY EXTREMELY

IMPORTANT

1. 1 2 3 4 5

2. 1 2 3 4 5

3. 1 2 3 4 5

4. 1 2 3 4 5

5. 1 2 3 4 5

6. 1 2 3 4 5

7. 1 2 3 4 5

8. 1 2 3 4 5

Page | 232

9. 1 2 3 4 5

10. 1 2 3 4 5

11. 1 2 3 4 5

12. 1 2 3 4 5

3. Please specify the actions you are implementing/would implement to attain the objectives

mentioned above.

A. STRATEGIC INITIATIVES (E.G., CROSS-FUNCTIONAL TEAMS ARE

FORMED/INVESTMENTS IN A NEW PLANT/BRANCH /HAVE BEEN/WOULD BE

UNDERTAKEN):


ACTION LABEL ACTION DESCRIPTION

4. Rate each KSF based on the extent to which you believe the actions are compatible with it.

INCOMPATIBLE PRECISELY

COMPATIBLE

1. 1 2 3 4 5

Page | 233

2. 1 2 3 4 5

3. 1 2 3 4 5

4. 1 2 3 4 5

5. 1 2 3 4 5

6. 1 2 3 4 5

7. 1 2 3 4 5

8. 1 2 3 4 5

9. 1 2 3 4 5

10. 1 2 3 4 5

11. 1 2 3 4 5

12. 1 2 3 4 5

THANK THE INTERVIEWEE, ASK IF HE/SHE HAS ANY QUERIES, RESPOND AND

CLOSE

Evaluation By coordinator

Strategic Management (MGT 489) Sec 4 Final Report (BPL)

Name: M Ariful Hossain Majumder

(Coordinator)

ID: 052 451030

Score: 10

Name: Samsuszoha Hoque

ID: 052 216 030

Score: 10

Name Mirza Jahidul Amin

ID: 052 517 530

Score: 10

Name Rajib Hasan Mahmud Bin Azam

ID: 021 047 030

Score: 10

Name Sayed Mahmud Saiful

ID: 033‐244‐030

Score: 8

Name: ‐ M Ariful Hossain Majumdar. ID: 052-451‐030

Samsuszoha Hoque ID: 052‐216‐030

Beximco Pharmaceutical Ltd

As per course requirement of the Strategic Management we are going to submit a report

on Beximco Pharmaceutical Limited and after discussions inside the group we were assigned to

do the strategy Analysis part. In this part we has deliberated the various means of strategy

Analysis as well as rationalizing those means based on the phenomenon model (Moniruzzaman,

2005). The goal of this report was to analysis a strategic plan for Beximco Pharmaceutical based

on the information provided by our honorable faculty and we strictly adhered with the

phenomenon model (Moniruzzaman, 2005).The strategic Analysis part starts after introduction to

the project. We have considered analysis of the intervening conditions, determining the key

performance indicators (KPIs), analysis of the success factor (KSFs), F/D analysis, and

analysis of the strategic implications.

Finally we are giving thank to Mr. M. Moniruzzaman for teaching us his phenomenon

model of Strategic Management which increases our knowledge to become an invaluable

resource for the lifetime.

Name: ‐ Mirza Jahidul Amin. ID: 052‐451‐030


According to the course Strategic Management I am submitting a report on Beximco

Pharmaceutical Limited and after discussions inside the group I was assigned to do the strategy

Development part. In this part I has deliberated the various means of strategy formulation as

well as rationalizing those means based on the phenomenon model (Moniruzzaman, 2005) The

goal of this report was to formulation a strategic plan for Beximco Pharmaceutical based on the

information provided by our honorable faculty and we strictly adhered with the phenomenon

model (Moniruzzaman, 2005).The strategic development part which contains generics

strategies(Build, Hold…), Setting Generic strategic Objective and Initiatives,

Implementations of the Strategic Action and evaluation.

Finally I am giving thank to Mr. M. Moniruzzaman for teaching us his phenomenon

model of Strategic Management which increases our knowledge to become an invaluable

resource for the lifetime.

Name:- Rajib Hasan Mahmud Bin Azam. ID: 021 - 047 – 030


As per course requirement of the Strategic Management we had to submit a report on Beximco


implementation part. In this part I have deliberated the various means of strategy

implementation as well as rationalizing those means based on the phenomenon model

(Moniruzzaman, 2006) The goal of this report was to formulate a strategic plan for Beximco

Pharmaceutical based on the information provided by our honorable faculty and we strictly

adhered with the phenomenon model (Moniruzzaman, 2006).The strategic implementation part

starts after choice of strategy is made. I have considered resource planning, budgeting, selection

and recruiting process, training process, designing an organization structure compatible with the

actions, distribution of tasks and allocating resources, setting sales targets and finally

determining the sales force size

I have discussed on compensation as it can contribute to motivation hence having a strategic

value. Next sales targeting was discussed using the concept of marginal analysis. Inadequate

sales force can affect any company adversely. The workload approach was presented to

recommend way to avoid such threats. I end this section by thanking DR. Moniruzzaman for

teaching us his phenomenon model which increases our knowledge which I think shall be a

invaluable resource for the lifetime.

Name: ‐ Sayed Mahmud Saiful. ID: 033‐244‐030


According to the course Strategic Management I am submitting a report on Beximco


evaluation and control.

Documents

Strategic Plan for BPL