Report On
“Implementation of Porter Diamond theory in Beximco Pharmaceuticals Ltd”
Course Title: International Business
Course Code: BUS-302
Semester: Fall’12
PREPARED FOR:
Gouranga Chandra Debnath
Senior LECTURER,
Department of Business Administration
FACULTY OF BUSINESS & ECONOMICS (DIU)
PREPARED BY:
Esteak Ahmed
ID: 091-11-809
Contents Chapter 1 2 Introduction 2 Background of the Report: 2 1.5 Overview of the Porter Diamond Theory: 4 Chapter 2 6 2.2 Firm Structure, Strategy, and Rivalry 6 2.3 Demand condition 8 2.4 Factors of Endowments: (both basic and advance) 10 2.5 Related and supporting industry: 12 2.7 Overall analysis of the company position based on porter’s diamond: 13
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Porter and his team looked at 100 industries of 10 nations. Like the work of new trade theorists, Porters work was driven by a belief that the existing theories of international theory told the half of the story. For Porter the essential task was to explain why a nation achieves international success in a particular industry.
Porter argues that four broad attributes promote or impede the creation of competitive advantage. These attributes are: * Factor of Endowments * Demand Condition * Relating and Supportive Industries. * Firm strategy, structure, and rivalry.
Porter maintains two additional variables that can influence international business: * Government * Chance
1.6 Overview of the Pharmaceutical Industry in Bangladesh:
Pharmaceutical sector is technologically the most developed manufacturing industries in Bangladesh and the third largest industry in terms of contribution to government’s revenue. The industry contributes about 1% of the total GDP. There are about 250 licensed pharmaceutical manufacturers in the country; however, currently a little over 100 companies are in operation. It is highly concentrated as top 20 companies produce 85% of the revenue. According to IMS, a US-based market research firm, the retail market size is estimated to be around BDT 84 billion as on 2011.
Bangladesh pharmaceutical companied focus primarily on branded generic final
Write the Key and Critical Success factors prior to 2010 and 2014-15 . Why these factors changed ? Competitive profile matrix.
Porters Generic Competitive Strategies: The relative position of a company within its industry concludes whether the profitability of the firm is above or below the industry’s average. The above average profitability of the firm is fundamentally showing the sustainable competitive advantage in its long run. According to Michael Porter, competitive advantages originate from the value of a firm and there are two types of competitive advantages, which a company can own. These are low cost or differentiation. For any company, in
Porter, Michael. 1998. “Competitive Advantage: Creating and Sustaining Superior Performance.” 26 Dec, 2011. Free Press, 1998.
Michael Porters Five Forces analyse the internal and external factors that determine the competitiveness of an industry. The five areas that are examined by Porter
Competitive advantage – competitive advantage is the ability of one organization to outperform other organizations because it produces desired goods or services more efficiently and effectively than its competitors. The four building blocks of competitive advantage are superior efficiency, speed, flexibility, innovation, and responsiveness to customers.
There are advantages of starting a pharmaceutical firm in India. It has emerged from being an enzyme-producing firm to a biotech powerhouse under the guidance of Ms Kiran M. Shaw. They have a well-established pharmaceutical industry that has been growing since 1947. After the purchase of Hindustan Antibiotics Ltd. and India Drug and Pharmaceuticals Ltd. they were able to compete with the MNC’s (Multi National Corporaton) from overseas (Kalegaonkar, Locke, Lehrich, 2008, p. 2). In the beginning the pharmaceutical industry saw substantial growth. “By the beginning of the 21st century, over 20,000 pharmaceutical companies were operating in India” (Kalegaonkar, Locke, Lehrich, 2008, p. 2). “The pharmaceutical industry in India is ranked third
According to Bureau of Labor Statistics, the pharmaceutical industry plays a major growing role in the United States economy, with both the consumption and the production of its products. Total value of U.S. consumption of pharmaceutical drugs in 2009 was $300 billion, or about 40 percent of the worldwide market share, and reflected a 37-percent increase since 2003. (Statistics, U.S. Bureau of Labor, 2011). Also, the projected growth rate is 6% per annual.
He suggested that sustained competitive advantage derives from the resources and capabilities a firm controls that are valuable, rare, imperfectly imitable, and not substitutable. He further added that the resources and capabilities can be viewed in form of tangible and intangible assets. There are four different categories of resources financial, physical, human, and organization.
Michael Porter investigated why nations have a competitive advantage in specific industries his findings saw two basic types of competitive advantage that firms could pose low cost or differentiation. If you combine the two types of competitive advantage and allow room for a way in which firm wish to achieve them this will lead to three generic strategies which will achieve higher average performances in industries: cost leadership, differentiation and focus.
Porter’s Five Competitive Forces Analysis is a framework developed by Michael E. Porter of Harvard Business School for study of industry analysis by analyzing five competitive forces which define industry and its business strategy. These five competitive forces determine the competitive advantages, disadvantages and attractiveness or profitability of industry.
The Indian pharmaceutical industry has been growing rapidly at the rate of 8-9% every year as per our analysis. It stands in the 4th position in terms of volume and 13th in terms of values. The industry has been seeing the rapid growth in infrastructure, technology and various range of
After World War II, with the appearance of multinational corporations, intra-industry trade and the increase of horizontal trade within developed countries, some situations can no longer be explained by traditional theory. Such as why United State who is abundant in capital imports more capital-insentive goods than its export of that (known as Leontief Paradox). During that time, new international trade theory enslaved the global market, among which, new trade theory points out that a firm’s ability to attain economies of scale and to enter an new market first gain advantage of trading abroad over other countries. Following that, Porter’s new comparative advantage theory states that the competitiveness of a firm in an industry bases on the combination of four mutually reinforcing attributes containing firm characteristics, demand condition, factor endowment, related and supporting industries. New trade theory stresses the role of luck and capacity of innovation, while Porter’s theory states that a firm’s competitive performance results from four components
Capabilities refer to the firm 's ability to utilize its resources effectively. Capabilities according to Porter are embedded in the routines of an organization. They are not easily documented as procedures and this makes it difficult for competitors to replicate. A firm 's resources and capabilities together form its distinctive competencies. These competencies Porter Explained enable innovation; efficiency, quality, and customer responsiveness, all of which can be leveraged to create a cost advantage or a differentiation advantage. Porter further argued that in order for a firm to develop a competitive
Pharmaceutical industry is one of the largest industries in our country. Every year a huge amount foreign currency comes from this sector. Square Pharmaceuticals Ltd., the flagship company, is holding the strong leadership position in the pharmaceutical industry of Bangladesh since 1985 and is now on its way to becoming a high performance global player.
Internal rivalry: Porter believes that the power and size of market rivals goes a long way to show the strength a business. If a firm has a much larger market share then any of its market rivals it may not incur as much competition on price or non-price dimensions of the product/service in question and therefore will be a much more powerful business compared