Professional Documents
Culture Documents
skills and resources to provide a platform for delivering strong growth in todays rapidly
changing health care environment.
The pharmaceuticals company in Bangladesh is accountable for the health of the people; since
the products are the fundamental right of all human being. The pharmaceutical industry is
different from other industries related to consumer centered businesses.
The industry has a fundamental social responsibility towards the society and their users. The
pharmaceutical industry depends on their target market- the society of Doctors who decide which
medicine to prescribe.
Objective of the study:
This study titled as Square Pharmaceutical company leading market by follow cost leadership
strategy is aimed to know the business level and functional level strategy.
Specific objectives:
The specific objective of the report is mainly focused on business level strategy of Square
Pharma. There are mainly some functional level strategies of business level strategy. To findings
the business level strategy, following are required:
competes. This means that business level strategy is the core strategy the strategy that the firm
forms to describe how it intends to compete in a product market.
Customers are the foundation of successful business level strategies and should never be taken
for granted. Information about customer that is relevant to choosing a business level strategy. In
terms of customers when selecting a business level strategy the firm determines the following
terms,
1. Who will be served?
2. What needs those target customers have that it will satisfy.
3. How those needs will be satisfied?
Selecting customers and deciding which of their needs the firm will try to satisfy as well as how
it will do so, are challenging tasks. Global competition, which has created many attractive
options for customers, is one reason for this. In the current competitive environment effective
global competitor have became adept at identifying the needs of customers in different cultures
and geographic regions as well as learning how to quickly and successfully adapt the
functionality of the firms good or service to meet those needs.
Descriptions of the purpose of business level strategies and of the five business level strategies
follow the discussion of customers. The five Generic strategies are as follows,
1. Cost leadership.
2. Differentiation.
3. Focus cost leadership.
4. Focus differentiation.
5. Integrated cost leadership/differentiation.
6. Spin price
Square pharmaceuticals follows cost leadership strategies:
Above of these strategies we find that square pharmaceuticals follows cost leadership strategies.
Because cost leadership strategy is an integrated set of actions taken to produce goods or services
with features that are acceptable to customer at the lowest cost, relative to that of competitors.
Firms using the cost leadership strategy sell no-frills, standardized goods or services to the
industrys most typical customers. Cost leaders goods and services must have competitive levels
of differentiation in term of features that create value for customers. Indeed emphasizing cost
reductions while ignoring competitive levels of differentiation is ineffective. At the extreme,
concentrating only on reducing costs could find the firm very efficiently producing products that
no customer wants to purchase.
Cost leaders also carefully examine all support activities to find additional sources of potential
cost reductions. Developing new systems for finding the optimal combination of low cost and
acceptable quality in the raw materials required to produce the firms goods.
Square pharmaceutical follows Business- Level Strategies:
The main concepts of Business-Level Strategies are based on three (3) criteria and these are:
Cost leadership: Cost leadership based attaining, then using the lowest total cost basis as a
competitive advantage. On the above, we are discussing how square pharmaceuticals using their
cost leadership strategy.
Differentiation: Differentiation refers to the using product features or services to distinguish
the firms offering from its competitors. In this regard square pharmaceutical follows these rules
properly. Square pharmaceuticals maintains their performance on every side such as,
Equal Quantity
Comfortable Price
Product Advertising
Market niche focus: Market niche focuses Concentrating competitively on a specific market
segment. In this regard square pharmaceuticals achieve a good reputation on this sector such as
medicine sector. It is achieving their goal and customer reputation by their medicine together.
Square pharmaceutical follows functional-level strategies:
Functional strategy concerns the managerial game plan for running a major functional activity or
process within a business- Research and development, production, marketing, customer service,
distribution, finance, Human resources, and so on; a business needs as many functional strategies
as it has major activities. In this regard square pharmaceutical maintains fully their performance
such as square pharmaceuticals products are fully high qualified without any doubt. Their
marketing strategy is so nice. They collect their raw materials from U.S.A, India, and Germany
and so on. Those are highly qualified. Every product of square pharmaceuticals is examined by
the expert researcher and trying to make better qualified product.
Square pharmaceutical follows Global-level Strategies:
1985: Achieved first position in the Pharmaceutical Market of Bangladesh among all
national and multinational companies.
1998: Agro-chemicals & Veterinary Products Division of Square Pharma starts its
operation.
2001: US FDA/UK MCA standard new Pharmaceutical factory goes into operation built
under the supervision of Bovis Lend Lease, UK.
2004: Secured the top position for the best published accounts and report for 2003 in the
manufacturing category for transparency and excellence in corporate reporting.
2005: New State-of- the-Art Square Cephlosporins Ltd. goes into operation; built under
the supervision of TELSTAR S.A. of Spain as per US FDA/ UK MHRA requirements.
2007: Square Pharmaceuticals Ltd., Dhaka Unit gets the UK MHRA approval.
2008: New SVPO (Small Volume Parenteral and Ophthalmics) plant starts operation in
Dhaka Unit.
CORPORATE GOVERNANCE:
Corporate Governance involves decision making processes for any corporate body as a going
concern for The benefit of all concerned, present and future. These decisions may be categorized
as policy & strategic, operational and executing, performance & evaluation and sharing of
the accretion assets between present & future cohorts. The involvement of the entrepreneur in
all these areas invokes decision making governance on a continuous basis, the degree of
involvement being variable with the extent of delegation of authority top down and
reporting for accountability bottom up of the Management echelon. These aspects of
governance are shared by the Board of Directors, Executive Management, operational
participants and workers and others in fulfillment of the common goals that converge in
increasing the benefits of all stakeholders. To this end entire corporate governance efforts are
blended with good governance practices as ethically and morally acceptable standards
under a given socio politico environmental phenomenon of our society in which we work, live
and exist.
The organisms through which the corporate governance functions are carried out are:
BOARD OF DIRECTORS:
(a) Constitution:
The Board of Directors, the top Management echelon, consisting of the founding
entrepreneurs/ successors and an Independent Director, provides the policy and strategic
support and direction for the entire range of the corporate activities. The Board of Directors
consist of nine (9) members including the Independent Director with varied education and
experience which provides a balancing character in decision making process. The Board is
re-constituted every year at each Annual General Meeting when one-third of the members retires
and seeks re-election. A director is liable to be removed if the conditions of the Articles of
Association and the provisions of the Companies Act 1994 are not fulfilled.
(b)Role & Responsibilities:
The main role of the Board of Directors, which is the highest level of authority, is to
provide general superintendence, oversee the operations and control the affairs of the
company through appropriate delegation and accountability processes via the lines of
command. However the Board of Directors hold the ultimate responsibility & accountability
with due diligence for conducting the activities of the company as per provisions of law in
the interest of the shareholders, the stakeholders, the state and the society. The Board of
Directors, in fulfillment of its responsibility hold periodic meetings, at least once a quarter
and provide appropriate decisions/directions to the Executive Management. Such meetings
usually consider operational performance, financial results, review of budgets, capital
expenditure proposals for BMRE or new projects/divisions/product lines, procurement of
funds by issue of shares or borrowing, procurement of raw materials, plant & machinery,
pricing of products/discounts, recruitment, training and promotion of officers, approval of
audited accounts and distribution of dividends and other interest of the stakeholders including the
employees and workers. The Board of Directors take special care in designing and articulating
productivity and compensation plans of employees and workers and rewarding them
appropriately on the basis of quality and quantity of performance as an incentive. Board also
remains responsible for removal of operational hazards to life and health of workers,
friendly environmental work condition and social relationship as demanded of good citizen in a
country.
(c) Relationship with Shareholders & Public:
The shareholders as owners, are required to be provided with material information on the
companys operation half-yearly and annually, the latter at the AGM. They are also provided
routine services by the Company Secretary in matters of transfer of shares, replacement in
case of loss or damage of shares, payment of dividends etc. The Board is however
responsible to the public for publication of any price
Sensitive information as per SEC regulation. A qualified Chartered Secretary is in charge for all
these responsibilities as Company Secretary.
(d) Relationship with Government:
In its role on accountability to the government, the Board of Directors ensure payment
of all dues to government in the form of import duty, custom duty and port charges, VAT,
Corporate Taxes and other levies as and when they become due on the basis of actual operations
and make sure to avoid corruption.
This has enabled the company to enhance its contribution to the National Exchequer on a
progressive rate year after year.
(e) Relationship with Financers/Bankers:
The Board oversees the financial transactions and ensures to meet companys
commitments to the lenders without default. This has resulted in securing lower interest rates
from them.
(f) Relationship with Suppliers:
As the company has to import plant and machinery and almost all the raw materials
from abroad, it maintains cordial and mutually beneficial interest with its international as well
as local suppliers. This has enabled the company to avoid any legal disputes in
international/local courts and enhanced the companys image as a good customer.
(g) Corporate Social Responsibilities (CSR):
The Board of Directors is also awoken of the Corporate Social Responsibilities (CSR)
especially in the areas of gender equality, race-religion-regional equality, non-employment of
child labor, human rights, environmental pollution, social-marketing, social activities
(promotion of sports & culture, health care and population control Programs, elimination of
Myanmar
Nepal
Kosovo
Kenya
Libya
Mauritius
Malawi
Yemen
Tanzania
Sri Lanka
Somalia
Vietnam
Afghanistan
Ukraine
Uzbekistan
Ghana
Iraq
Benin
Botswana
Bhutan
Cambodia
Comoros
Island
Tajikistan
Mozambique
Gambia
Niger
Rwanda
Papua New
Guinea
Sierra Leone
Macau countries
Survival:
Companies pursue survival as their major objective if they are plagued with overcapacity, intense
competition, or changing consumer wants. To keep the plant operating and the inventories
turning over, they will cut prices. Profits are less important than survival. As long as prices cover
variable costs and some fixed costs, the companies stay in business. However, survival is only a
short-run objective. In the long run, the firm must learn how to add value or face extinction.
Many companies try to set the prices that will maximum current profits. They estimate the
demand and costs associated with alternative prices and choose the price that produces
Maximum current profits, cash flow, or rate of return on investment.
There are problems associated with current profit maximization. This strategy assumes that the
firm has knowledge of its demand and cost functions; in reality, these are difficult to estimate.
Also, by emphasizing current financial performance the company may sacrifice long-run
performance, ignoring the effects of other marketing-mix variables, competitors reactions, and
legal restraints on price.
Factors that affecting pricing strategy:
The company has to consider many factors in setting its price. A companys pricing decisions are
affected by both internal company factors and external environmental factors.
Square Pharmaceuticals has retained the top position with its local sales figure reaching Tk 10.70
billion in 2009 in the countrys Tk 55.0 billion pharmaceutical market followed by Incepta
Pharma, according to IMS data released a few days back.
IMS is a US-based and the worlds number one market research organization, which has been
providing pharma market intelligence to more than 100 countries over the past 50 years.
The market share of Square Pharmaceuticals, established in 1958 in the countrys pharma
market, was 19.48 per cent in 2009, the data prepared by IMS said. Industry insiders said Square
Pharmaceuticals has retained the number one position in local sales thanks to its better market
penetration and good product basket. Sales of Incepta Pharma, established in 1999, stood at Tk
4.52 billion in 2009 and it grabbed a market share of 8.24 per cent during the period. Leading
local pharma players are clients of the market research organization IMS. Meanwhile, the growth
of Beximco Pharma, which suffered much during the immediate-past caretaker governments
tenure, was much better in 2009 than that of the 2008 and 2007.The Company has grown by
27.15 per cent in 2009 taking a market share of 7.72 per cent. Beximco Pharmas position in the
countrys top 10 pharmaceutical companies was the third in terms of sales. Its total sales were Tk
4.2 billion in 2009.Pharma experts said that both Beximco Pharma and Incepta are now in neckand-neck position as both the companies have attained around 27 per cent growth in the
countrys pharma market. An insider working for Incepta said: The business growth of local
pharmas has remained worse during the second and the third quarters, but it regained during the
fourth quarter.Acme Laboratories took the fourth position in ranking. Its sales were Tk 2.64
billion in 2009. Opsonin Pharma Ltd., established in 1956, ranked the fifth by local sales worth
Tk 2.61 billion in 2009 and its market share of 4.76 per cent. Opsonins growth during the period
was 29.34 per cent. Eskayef took the sixth position with sales of worth Tk 2.52 billion and it
grabbed a market share of 4.59 per cent. The sales of pharmaceutical products of Reneta Pharma
were nearly Tk 2.50 billion in 2009 and its market share was 4.54 per cent. The pharma company
has grown 25.63 per cent in 2009. Advance Chemical Industries (ACI) ranked the eighth in the
countrys pharma market with local sales worth Tk 2.46 billion taking a market share of 4.48 per
cent. Aristopharma and Drug International took the ninth and the tenth positions respectively in
the countrys pharma market, the data added. The sales of Aristopharma products were Tk 2.23
billion and Drug Internationals were Tk 2.13 billion. Industry insiders said: The individual
market shares of local pharma companies including Acme, Opsonin, Eskayef, Renata, ACI,
Aristopharma and Drug International remained almost the same during the 2009 period. They
also said: The market shares of the seven companies fluctuate frequently, but ironically they
remained almost the same at the end of the year. However, the growth and sales of multinational
pharmaceutical companies remained steady during 2009. Sanofi-Aventis (market share 2.97 per
cent) ranked the top among the multinational pharmaceutical companies followed by
GlaxoSmithKline (2.24 per cent). Sandoz (1.65 per cent) took the third position. The market size
of Bangladesh, with nearly 250 pharmaceutical companies, has grown by 16.83 per cent in 2009
to Tk 54.93 billion coming above the same period in 2008. The pharma market was Tk 47.02
billion in 2008, and during the period the market growth was 6.68 per cent.
Major Competetors
Major competitors of Square pharmaceutical are given below,
ACI Pharmaceuticals
Aristopharma Ltd
Amico Laboratories
Gaco Pharmaceuticals
Ganashastha Pharmaceuticals
Navana Pharmaceuticals
Orion Pharmaceuticals
Pharmadesh