Question:
Discuss about the Market of Square Pharmaceuticals Limited.
The business strategy Square Pharmaceuticals Limited adopted to gain major share of the pharmaceutical industry in Bangladesh consists of several strategies like an efficient product strategy, financing strategies, human resource management strategy and stakeholder management strategy. The previously mentioned stated strategies are being elaborated in detail as follows:
Square Pharmaceutical Limited manufactures finished pharmaceutical products, pesticides, herbal products and agro-veterinary products. The products of the company are available in various forms like tablets, capsules, suppositories, injections, liquids and dry oral powder. One can infer that product line of the company enables it to cater to the needs of various types of customers like domestic people, agriculturist and pet owners. The intermediate customer base of the company consists of various wholesalers and retailers of the medicine who stock its products. Farmers and agriculturists use the agro-products like pesticides. Veterinary laboratories and people having animals demand the veterinary products. This extensive product line helps it to cater to large variety of customers and earn huge revenue, which gives it the high market position.
Square Pharmaceuticals Limited has adopted very efficient financing strategies, which ensure steady flow of funds to support its vast operations. The company is a public limited company listed on the stock exchanges of Dacca and Chittagong. This allows the company to generate huge amount of capital by issuing shares in the securities market. Square Pharmaceuticals Limited has a extensive product line which the company price differentially to reach both the rich and the poor people. This allows the company to generate huge amount of fund by catering to the large consumer group. The public limited company also started exported its products from 1987 which allows it to earn foreign currency. Thus, a combination of its public limited status, an extensive product line and overseas market help the company it earn huge revenue and dominate the pharmaceutical markets in Bangladesh.
One of the most spectacular strategies Square Pharmaceuticals Limited adopted to dominate the pharmaceutical market in Bangladesh is its efficient human resource management policies, particularly pertaining to supply chain management. The human resource department conducts an extensive and rigorous interview process to ensure that the company is able to acquire high standard supply chain managers and executives. The HRM also arranges of training and induction of the newly hired staffs to ensure that they learn and improve their job roles. This efficient talent management strategy of Square Pharmaceutical enable to acquire, manage and retain highly efficient employees which gives it more advantage in the Bangladeshi pharmaceutical market.
The above discussion clearly shows that efficient stakeholder management and is one of the key factors behind the top position of Square Pharmaceuticals in the pharmaceutical market in Bangladesh. Firstly, the company manufactures high quality products, which benefit business and individual customers. Secondly, the company earns huge profits and ensure capital maximisation of the shareholders. The company gives salary increment to its internal stakeholders like employees, which increases their job satisfaction. The case study mentions that Square Pharmaceuticals exports products to overseas. It can be inferred, from the statement that the company can comply with the policies laid down by its home country government, Bangladesh as well as host countries governments. This analysis shows that the power of Square Pharmaceuticals to benefit a large number of stakeholders like customers, shareholders, employees and governments has led to the growth and dominance of the company in the Bangladeshi pharmaceutical market.
The vision and mission of Square Pharmaceuticals are well aligned with the business objectives, which the company can aim to achieve in the long-run. The vision of the company is to obtain leadership in the pharmaceutical market in Asia and carry out aggressive research and development in the medical science. The mission of the company is to operate responsibly and manufacture high quality products. The pharmaceutical company can adopt three objectives based on its vision and mission namely, more rapid foreign, acquisitions and mergers and strengthening marketing and brand power. Square Pharmaceuticals Limited can aim to achieve the following long-term business objectives based on its mission and vision:
The mission Square Pharmaceuticals Limited is to gain leadership in the Asian pharmaceutical market and the company needs to enhance its foreign expansion strategies in order to achieve this mission. The pharmaceutical market in Asia is dominated by China, India, Japan and Singapore, all of which have more developed pharmaceutical sectors compared to Bangladesh (genengnews.com 2017). These economies have their own pharmaceutical companies, which have expanded globally and hold far stronger position than Square Pharmaceuticals. For example, the revenue earned by China National Pharmaceutical in the year 2014 is USD 37340000000. The Indian pharmaceutical multinational company Ranbaxy Limited earned revenue of USD 591262.49 in 2014 (Sunpharma.com. 2017). Square Pharmaceuticals earned revenue of USD 111286.86, which is very low compared, to its Chinese and Indian counterparts (squarepharma.com.bd. 2017). It must also be noted that Indian and Chinese pharmaceutical companies have evolved into biggest pharma-conglomerates in the world and Square comes nowhere close to them. Hence, the first long term objective of Square Pharmaceuticals Limited (SPL) should be rapid foreign expansion to gain higher competitive advantage in the Asian market.
The mission of SPL is to acquire top position in Asia while its vision is to manufacture high quality products. It must be noted that the top Asian pharmaceutical markets like Japan, India and China have presence of American and European pharmaceutical companies like Pfizer. The Asian pharmaceutical companies too have acquired subsidiaries in the western markets. This collaboration between the western and emerging Asian pharmaceutical markets facilitate huge flow of information and resources between them (sunpharma.com 2017). This encourages huge amount of innovation and research, which has led to development of India, China, Japan and Singapore into medical research hubs. An analysis of this discussion shows that SPL should also acquire companies and laboratories in the overseas to carry out open innovation and offer more advanced medical products (Jones et al. 2016).
SPL must strengthen its marketing and brand power in order to gain competitive position in the Asian pharmaceutical market. Pharmaceutical companies from Singapore, India, China, Malaysia and Japan dominate the pharmaceutical market of Asia. The Asian pharmaceutical market also experience presence of subsidiaries of western companies like Pfizer. These two groups of companies carry out robust marketing activities to strengthen their brand value (Jary and Wileman 2016). Square Pharmaceutical Limited should carry out aggressive marketing and brand strengthening activities to strengthen its market position. The company would have to make its marketing strategies strong and that would take years because it has to grow financially to be able to compete with the powerful companies of China and Japan. This would require several years and the top management should adopt marketing and brand strengthening as the third important long-term objective (Manzoli et al. 2016).
Square Pharmaceuticals Limited would face several problems if it fails to realise the importance of linking its departments like accounts & finance, marketing & sales, administration & human resources, supply chain and production. Each of these departments is interrelated and collaborates towards making the company operate smoothly and earn revenue. If the apex management of Square Pharmaceuticals Limited fails to coordinate between these departments, there would be problem in smooth operation of the company, which may disrupt its very existence in the competitive market of Asia. For example, the accounts departments allocate funds to all the other departments like marketing and HR (Owen et al. 2013). The marketing and sales department markets the products in the market and obtains orders for delivery. It forwards the details of the orders to the production department, which in turn passes the information to the supply chain department. The supply chain department uses the funds allocated to it by the accounts department to acquire the raw materials. The production department uses the raw materials to produce the finished goods, which the marketing and sales department sells to the customers. This operation of the sales and marketing department generates revenue, which is recorded by the accounts and finance departments. The administration department manages the operations of all these departments while the human resource department provides them with staff. This explanation clearly shows that the coordination between these departments contributes towards smooth functioning and generation of revenue (Listou 2015). Thus, if the apex management of Square Pharmaceuticals fail to integrate these departments, it would face the problem of carrying out its smooth business operations, which would in turn jeopardize its productivity, profitability and very existence in the pharmaceutical markets of Asia (Sallnäs 2016).
The given case study draw comparison between two companies namely, Square Pharmaceuticals Limited and its competitor Watson Pharmaceuticals, now a part of the Irish multinational pharmaceutical company, Actavis Generics. The organisational chart of Square Pharmaceutical Limited shows that the assistant general manager (AGM) and the executive director of administration (EDA) reports to the managing director. The HR manager, marketing manager and the supply manager reports to the AGM. The production manager, quality control and finance manager reports to the EDA. A CEO to whom the general manager (GM) and director of administration (DA) report heads the organisational structure of Watson Pharmaceuticals. The assistant HR manager and the industrial relation officer report to the HR manager. The assistant finance manager and budget officer report to the finance manager (Närman, Johnson and Gingnell 2016). The HR manager and the finance manger in turn report to the GM. The sales and the marketing officer of Watson report to the marketing and sales manager while quality control officer and the assistant production officer report to the production manager. The production manager and the marketing and sales manager report to the DA. The following section would compare between the two companies on the grounds of the organisational structure discussed above:
Square Pharmaceutical Limited follows flat structure where the span of control of one post spreads over a larger area. For example, AGM directly controls the HR, marketing and the supply chain managers. The MD is the skip level officer of these three managerial posts and hence exercises indirect control over them (West 2014).
Watson compared to Square, follows a tall structure where the top managers have limited span of control. For example, the CEO can exercise direct span of control over GM and DA. He has indirect control over HR manager, finance manager, marketing and sales manager and production manager. However, the CEO has no direct control over the lower rung managers of the company (Sundararajan, Bhasi and Vijayaraghavan 2014).
The above discussion shows that Square follows flat structure and the span of control of manger is larger. Watson, on the contrary follows a tall structure where the span of control of a manger is restricted to a small number individuals.
The chain of command practiced at Square Pharmaceutical as pointed out is shorter and more direct. Watson, on the other hand follows a tall structure which multiple chains of command. For example, the AGM directly controls the HR manager, the finance manager and the supply manager. The tall organisational structure of Watson more complicated. A chain of command consists the assistant HR manager, HR manager, GM and the CEO. A second chain consists of the industrial relationship officer, the HR manager, GM and the CEO. Thus, it is evident that compared to Square, the chain of command at Watson is multiple and more complicated (Mi?kiewicz 2017).
The lines of communication at Square are shorter and more direct due to its flat organisational structure. The lines of communication at Watson are more complicated and indirect due to its tall organisational structure.
Decision-making at Square is more dynamic and direct owing to shorter lines of communication. The decision-making at Watson is more lengthy and complicated because of several posts and the need to take their approvals before implementing decisions.
Square follows a flat structure while Watson follows a tall structure. However, it can be pointed out that the tall organisational structure adopted by Watson resembles the pharmaceutical MNCs like Pfizer (D’Alessandro and Mohtadi 2016).
The supply chain department supervises its human resource needs by human resource plan. The following are some of the factors, which can affect the human resource planning of the department:
The case study clearly points out that the employees of the supply chain management are hired to procure the raw materials and maintain relationship with the suppliers. It also has mention about exporting of finished but has no clear mention about sourcing of raw materials from abroad. Assuming that the supply chain and the business span of Square is not big as its other Asian counterparts, the human resource planning of the supply chain department is limited to Bangladesh. This limited span of business and raw material acquisitions lead to the supply chain department recruit less number of employees (Ahearne, Lam and Kraus 2014).
The selection process of Square mentions about interviewing candidates while the training and induction clearly mentions about on-job training. One can point out that these procedures are more appropriate for candidates who are fresher or have less experienced. However, all departments need to acquire experienced employees from multinational companies in the same field for strategic positions. The case study does not mention acquisitions of employees with experience of working at other multinational pharmaceutical companies. It can pointed out that the weaker brand equity of Square compared to its Asian counterparts prevent it from attracting employees having rich experience of working in other pharmaceutical MNCs (Godman et al. 2014).
The company must aim to recruit and select employees having experience of serving and making decisions at multinational pharmaceutical companies preferably from leading companies like Pfizer. This would enforce more dynamic and aggressive decision making processes, which would boost the business operations of Square in the Asian market.
The company should extend its training programmes to accommodate both inexperienced and experienced candidates. The training provided to inexperienced candidates can consist of induction and on the training but they are not sufficient for experienced candidates. The experienced should be provided more detailed training and induction, like a formal conversation with the regional head and other departmental heads. This would enable newly hired managers to be more acquainted with the strategic positions of Square and help in taking decisions that are more dynamic (Sung and Choi 2014).
The performance appraisal of Square involves top bosses making decisions regarding appraisals of their subordinates. However, it has no scope of junior employees giving feedback about their bosses, which would be considered during appraisal of the latter. This empowerment of the subordinates would make the senior employees more responsible towards their subordinates. This would minimise ill-treatment and exploitation of subordinates in the hands of their superiors. This would contribute towards a more ethical and equable organisational culture within Square (Jones et al. 2016).
It is recommended that Square should diversify its employee motivational and compensation rewards. The case study speaks about financial rewards like gratuity while healthcare benefits at discounted rates in the only nonfinancial motivational rewards. The compensation scheme should be extended to accommodate financial rewards like incentives, earned leaves and share of profits. The non-financial rewards can be flexible timings, social functions and work from home facilities. These additional motivational and compensation rewards would motivate the employees to work harder to achieve their targets (Lu et al. 2015).
The human resource strategies and the business strategies are linked moderately to achieve its business objectives. The case study shows that the objective of Square Pharmaceuticals is to acquire leadership in the pharmaceutical market of Asia and to bring about new innovative products to earn more revenue. Considering these two business objectives, the human resource strategies are not fully equipped to achieve the objectives. The human resource policies are fixed by the human resource department after consulting with the other departments like finance and marketing. This strategy is appropriate for an expanding pharmaceutical company (Martins et al. 2014). The recruitment process consists of advertising vacancies on online job portals. The selection process is about written examinations and medical tests. These processes are appropriate for inexperienced candidates but not for experienced candidates. The HR department must frame more area specific recruitment process like an experienced employee appearing of a managerial post interview, should be given technical examinations to test his actual knowledge and decision-making power. The training and induction is restricted to on-job training and induction (Mehralian and Shabaninejad 2014). This is once again appropriate for executives but not for managers who require a more detail induction like introduction to the top managers to whom they would report on daily basis. Hence, in the light of the above discussion it can concluded that the human resources strategies of Square are moderately consistent with the business requirements.
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