Assignment On :

Identification of Porters diamond on the basis of

SQUARE Pharmaceuticals Limited

Identification of Porters diamond on the basis of SQUARE Pharmaceuticals Ltd.

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Assignment
Submitted to:-

Gouranga Chandra Debnath

Department of Business Administration Faculty of Business & Economics DIU

Submitted by:Ifteer Hossain Tonmoy Kumar Saha MD. Zahidul Islam Nazmin Naher 091-11-719 091-11-841 091-11-825 091-11-842 (A) (A) (A) (A)

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Date of submission: 1st March, 2012

Letter of Transmittal
Date: 1st March, 2012 Gouranga Chandra Debnath Lecturer, Department of Business Administration Faculty of Business & Economics Daffodil International University. 4/2, Sobhanbag, Mirpur Road, Dhanmondi. Dhaka-1207.

Subject: Application for submitting the project report.

Dear sir, We are very glad to submit the report on main subject of the topic of this report is Identification of Porters diamond on the basis of SQUARE Pharmaceuticals Ltd. We also so grateful to you for giving us the opportunity to prepare this report. We have tried our best to prepare this report properly according to the rules and regulation.

We hope you would be kind enough to consider for any of our mistakes in preparing this project report. Thanking you, Sincerely yours Ifteer Hossain

_____________

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091-11-719

Acknowledgement
We wish to express our indebtedness to our course instructor, Gouranga Chandra Debnath, Lecturer, BBA program, Department of Business Administration, Faculty of Business & Economics, DIU, for his valuable suggestions, continued encouragement and unfailing enthusiasm throughout the process of completing this report.

Objectives of the study

The objectives of this study areT o f i n d o u t w h e t h e r a l l t h e e l e m e n t o f P o r t e r s d i a m o n d a r e a v a i l a b l e i n o u r company, To find out our companys current condition in the market and also SPLs future potential, To analyze the current situation of our rivals BPL in particular, To discuss the demand condition & customer base.

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Table of Content
Particulars
1.1 1.2 1.3 1.4 1.5 2.1 2.2.1 2.2.A 2.2.B 2.2.B.1 2.2.B.2 2.2.B.3 2.3.A 2.3.B 2.3.C 2.3.D 2.4 2.4.A 2.4.B 2.4.B.1 2.4.B.2 2.4.B.3 2.4.B.4 2.4.B.5 2.5 2.6 2.7 3.1 3.2 3.3 Background Purpose Scope Mission Vision

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8 8 8 9 9 9 10 10 11 11 11 11 11 11 11 14 14 14 15 15 15 16 16 17 17 17 18 18 18 18

Chapter 2
Introduction Firm structure, strategy, rivets Company structure Company Strategy Long term vision Financial Condition Domestic Rivals Product Category Type of customer Present market status CSR activities Factors condition Basic factors Advance factors condition R & D Department Human resources Raw materials Distribution system Technology Related and supporting industry The condign two external factors Overall analysis of the company

chapter 3
Conclusion Recommendation Reference

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Michael Porter's Diamond Model?

Porter's diamond model suggests that there are inherent reasons why some nations, and industries within nations, are more competitive than others on a global scale. The argument is that the national home base of an organization provides organizations with specific factors, which will potentially create competitive advantages on a global scale. Porter's model includes 4 determinants of national advantage, which are shortly described below:

Factor Conditions
Factor conditions include those factors that can be exploited by companies in a given nation. Factor conditions can be seen as advantageous factors found within a country that are subsequently build upon by companies to more advanced factors of competition. Factors not normally seen as advantageous, such as workforce shortage, can also be seen as a factor potentially strengthening competitiveness, because this factor may heighten companies' focus on automation and zero defects. Some examples of factor conditions:
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Highly skilled workforce Linguistic abilities of workforce

Identification of Porters diamond on the basis of SQUARE Pharmaceuticals Ltd.

Rich amount of raw materials Workforce shortage

Demand conditions
If the local market for a product is larger and more demanding at home than in foreign markets, local firms potentially put more emphasis on improvements than foreign companies. This will potentially increase the global competitiveness of local exporting companies. A more demanding home market can thus be seen as a driver of growth, innovation and quality improvements. For instance, Japanese consumers have historically been more demanding of electrical and electronic equipment than western consumers. This has partly founded the success of Japanese manufacturers within this sector.

Related and Supporting Industries

When local supporting industries and suppliers are competitive, home country companies will potentially get more cost efficient and receive more innovative parts and products. This will potentially lead to greater competitiveness for national firms. For instance, the Italian shoe industry benefits from a highly competent pool of related businesses and industries, which has strengthened the competitiveness of the Italian shoe industry world-wide.

Firm Strategy, Structure, and Rivalry

The structure and management systems of firms in different countries can potentially affect competitiveness. German firms are oftentimes very hierarchical, which has resulted in advantages within industries such as engineering. In comparison, Danish firms are oftentimes more flat and organic, which leads to advantages within industries such as biochemistry and design. Likewise, if rivalry in the domestic market is very fierce, companies may build up capabilities that can act as competitive advantages on a global scale. Home markets with less rivalry may therefore be counterproductive, and act as a barrier in the generating of global competitive advantages such as innovation and development. By using Porter's diamond, business leaders may analyze which competitive factors may reside in their company's home country, and which of these factors may be exploited to gain global competitive advantages. Business leaders can also use the Porter's diamond model during a phase of internationalization, in which leaders may use the model to analyze whether or not the home market factors support the process of internationalization, and whether or not the conditions found in the home country are able to create competitive advantages on a global scale.
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Finally, business leaders may use this model to asses in which counties to invest, and to assess which countries are most likely to be able to sustain growth and development.

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Chapter: 1
1. Introduction
1.1 Background:
Pharmaceutical Industry has grown in Bangladesh in the last two decades at a significant rate and some companies have already attained international standards for the production of drugs Complying with international quality parameters. Among LDCs only Bangladeshi pharmaceutical sector have achieved its ability to meet almost 97% medicament needed for its by local manufacturing and Bangladeshi pharmaceuticals companies can produce the wide range of products in huge quantities that can be exported to the other countries after meet local demand and meet our company Square Pharmaceutical Limited (SPL)is one of the leading Pharmaceutical companies Bangladesh that can meet both local and international demand.

1.2 Purpose:
The purpose of our report is to show how SPL is maintaining its success as a leading company in Bangladesh and reaching for the international market.

1.3 Scope:
We have tried to analyze our company on the basis of Porters diamond model which suggests that there are inherent reasons why some nations, and industries within nations, are more competitive than others on a global scale. The argument is that the national home base of an organization provides organizations with specific factors, which will potentially create competitive advantages on a global scale.

1.4 mission:
As a leading pharmaceutical company our mission is to provide quality healthcare in Bangladesh as well in the international market also maintain the standard in business operation.

1.5 vision:
In order to meet increasing demand in the domestic as well as foreign markets, SPL has undertaken an ambitious expansion program. We made an assumption that the new plant will operate with 85% efficiency and after the year of completion.

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Chapter: 2
SQUARE Pharmaceuticals Limited (SPL)

2.1 Introduction
SQUARE Pharmaceuticals Limited (SPL) is the largest pharmaceuticals company in Bangladesh. Founded in 1958 and headquartered in Dhaka, Bangladesh, SPL develops manufacture and market drugs. The company owns and operation modern pharmaceutical factories mainly in Bangladesh and also has a separate division to operate modern chemical factory which produces and sells basic chemical products. It also has divisions to produce and sell agro vet and pesticide products. As we said before we studied our company based on Porters diamond which include four internal factors which are1. Firm Strategy, Structure, and Rivalry 2. Demand conditions 3. Factor Conditions (both basic and advance 4. Related and Supporting Industries And two external factors which influence the factors Mentioned above are1. Chance 2. Government

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2.2.1 Firm Structure, Strategy, and Rivalry

The Position in Bangladesh: In Bangladesh there are currently a total of 245 companies out of which 2 0 0 h a v e operations in the country. The market is totally dominated by the local companies and there are only 5 multi-nationals currently operating. The 245 companies together have5300 brands registered in Bangladesh. Among this companies SQUARE is the leader with almost 20% of the market share.

2.2(a) Company structure:

SQUARE gives highest importance to the principles of Corporate Governance and its implementation within the organization. In SPL we follow some rules like: 1.All new recruits at SQUARE undergo a mandatory training on Companys Code of Conduct. 2.From the very inception, SPL like the other Strategic Business Units ( S B U ) o f the Group maintains and upholds HR policies that are consistent with the Labor Laws of the country. 3.SQUARE Pharmaceuticals Ltd leads the Group in encouraging workers freedom of association and their right for collective bargaining. 4.The compant follows laws and encourages a work environment that w e l c o m e s diversity and fair treatment in the recruiting process and the workplace. 5 . S P L e n c o u r a g e s d i v e r s i t y a n d e q u a l e m p l o ym e n t o p p o r t u n i t y i n t h e r e c r u i t i n g process and the workplace. 6.the company pursues policies that proactively a d d r e s s a l l f o r m s o f discriminations in terms of minority, gender and cultural issues.

2.2(b) Company strategy:

For years our companys strategy is to capture the maximum share through customer satisfaction by quality product. In words we put our strategies in this way:

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1.In SQUARE we value, above all, for top quality health care products at the least cost reaching the lowest rungs of the economic class of people in the country. 2.We are obliged to our shareholders and strive for protection of their c a p i t a l a s well as ensure highest return and growth of their assets. 3. We try hard for best compensation to all the employees who constitute the back bone of the management and operational strength of the Company 4. SOUARE endeavor for best co-operation of the creditors & debtors the banks &financial institutions , the suppliers of raw material, the providers of utilities power, gas & water etc. and the customers 5. SPL fulfill her responsibility to the Government through payment of entire range of due taxes, duties, and claim to various public agencies. 6. We strive, as responsibilities citizen, for a social order devoid of m a l p r a c t i c e s , anti-environmental behaviors, unethical and corruptive dealings.

2.2.b(1) Long term corporate vision:

In order to meet increasing demand in the domestic as well as foreign markets, SPL has undertaken an ambitious expansion program to be completed in two phases. The first phase, which is already under way, is expected to be completed by 2012at a total cost of BDT 3.6 billion. We anticipate a 25% cost overrun for a final cost of BDT 4.5 billion. The first phase is expected to nearly double the current capacity. The second phase will start in 2014, completing in 2017 for a total cost of BDT 2.0 billion (including an estimated cost overrun of 25%).We expect the expansion programs contributing to revenue growth after 2012. We made an assumption that the new plants will operate with an 85% efficiency and after the year of completion, 25% of the capacity will come on line in each of the following four years. Second phase will also do the same.

2.2.b(2) Financial condition:

SQUARE Pharmaceuticals Ltd (SPL) is one of the two Public Limited Companies of the Group that is listed at the two stock exchanges of Bangladesh. And companys share is considered as Blue Chip at both the stock exchanges. SQUARE Pharmaceuticals is the stand out market leader with a market share of 19.3%and domestic revenues of BDT 11.2 billion in the
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four quarters from April 2009 to March 2010.Because of its dominating presence throughout the country, SPL has enjoyed steady growth in sales volume. Cost of sales as percentage of sales has also been declining gradually over the year, improving gross margin

2.2(c) Domestic Rivals:

As we said before SQUARE Pharmaceuticals is the stand out market leader with a market share of 19.3% and domestic revenues of BDT 11.2 billion in the four quarters from April 2009 to March 2010.SPLs nearest competitors are Incept Pharmaceuticals and Beximco Pharmaceuticals with market shares of 8.5% and 7.6% respectively. Incept and Beximco had BDT 4.9 billion and BDT 4.4 billion in domestic sales for the last four quarters. Although a number of MNCs are operational in Bangladesh, no MNC is among the top ten in terms of domestic sales. Between two top rivals we consider Beximco to be our arch rival though their market share is almost half compared to ours but here we have tried to find out there position in the market. Heres market study of BPL :If we analyze the present market condition of BPL we can clearly see that we are in agood position then our rival. We are almost two times bigger then our local competitor in market share and company size and from our steady growth rate we can say we are going to hold the number one position in the local market for long time. 2.3 Demand condition In Bangladesh we have huge demand for our products. The demand of local market has helped us to build a strong customer base and gave us the strength to go for international market. T h e h u g e d e m a n d o f o u r m a r k e t l e a d e d u s t o p r o d u c e l a r g e v o l u m e o f p r o d u c t . T h e medicines we are producing now are given bellow:

2.3(a) Products Category:

SPL offers a range of pharmaceutical products (594 types of medicine), which include: 1. Tablets 2. Capsules 3. Suppositories 4. Injections 5. Liquids 6. Spray, Drops, Ointment, Cream and Powder 7. Oral Dry Powders : 8. Dry Powder Inhalers 9. Metered Dose Inhalers
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2.3(b) Types of Customer:

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By maintaining the quality we set our price conveniently for the mass p o p u l a t i o n o f Bangladesh. We never compromise about our drugs quality thus we acquire the thrust of our customer.

2.3(c) Present Market status:

Besides Bangladesh demand of international market driven us to supply our product in these markets Europe: UK; Asia: Afghanistan, Bhutan, Cambodia, Hong Kong, Iraq, Macau, M a l a ys i a , Myanmar, Nepal, Papua New Guinea, Sri Lanka, Tajikistan, The Philippines, Vietnam, Yemen; Africa: Comoros Islands, Eritrea, Gambia, Ghana, Kenya, Libya, Malawi, Mauritania, Mauritius, Mozambique, Niger, Rwanda, Sierra Leone, S o m a l i a , Sudan, Tanzania; South America : Belize, Costa Rica, Guatemala And these are the market under there exploration: Asia: Iran, Iraq, Kuwait, Laos, Maldives, Mongolia, Qatar, Saudi Arabia, Thailand, UAE; Africa: Algeria, Botswana, Central African Republic, Chad, Ethiopi a, I v o r y Coast, Nigeria, Rwanda, South Africa; South America: Jamaica, Chili

2.3(d) CSR activities:

Square Pharmaceuticals Ltd. is one of the signatory of UN G l o b a l C o m p a c t i n Bangladesh. Our CSR activities helped us to increase our demand. Some examples of our activities are: SQUARE supports global business community to uphold social issues in business operations and being convinced of the benefits which will accrue out of voluntary adherence to universally recognized social values in transaction of businesses.

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SQUARE regularly interacts with the underprivileged segment of the society directly or through different NGOs. The Company assists the HIV positive/AIDS patients in gaining better access to medicine through donation of AIDS medicine to local NGOs. SPL has donated two ambulances to Pabna Municipal Corporation & Ishwardi Municipal Corporation for public use.

2.4 Factor Conditions (both basic and advance) 2.4(a) Basic factors:
Basic factors like natural resources, climate geography demography everything is in our favor in Bangladesh to produce and provide quality health care.

2.4 (b) Advance factors condition:

In the discussion bellow we tried c o n d i t i o n o f o u r company at present. to describe the advance facto rs

2.4.b.(1) R and D department:

With strong reverse engineering capability, we focus principally on developing high quality generic formulations, matching the profile of innovator products. O u r g r o w i n g i n n o v a t i o n i s e v i d e n t f r o m s u c c e s s f u l l a u n c h i n g o f a n u m b e r o f advanced formulations like multi -layer tablets, sustained release formulations, dispersible tablets, melt-in mouth tablets, chewable vitamins etc. In addition, we are also developing a number of APIs to ensure availability of raw materials across the range of therapeutic classes.
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Our capabilities to produce hi-tech, specialized niche products as well as drug delivery systems have been our core strength to transform SPL into an innovation-driven generic drug company. A d v a n c i n g R e s e a r c h & D e v e l o p m e n t P r o g r a m s : S P L i n c o l l a b o r a t i o n w i t h ICDDR,B (International Center for Diarrheal Disease Research, Bangladesh) produced 1.8 million zinc tablets for the center. This was under a project named SUZY (Scaling up Zinc Treatment for Young) aimed at advancing research on zinc therapy on Children with Diarrhea and Pneumonia.

2.4.b(2) Human recourse:

Strategic Human Resource Development Programs are the energy sources for SQUAREH R for running towards the peak of success. There are currently 4197 e m p l o y e e s working in SQUARE. We believe in company growth by increasing efficiency level of e m p l o y e e s a n d f o r t h a t o f f e r i n g e x c e l l e n t e n v i r o n m e n t a n d s u p p o r t f o r s k i l l a n d knowledge up gradation. Our HR department-- ensures the strong supporting role to develop & implement HR policy guidelines for ensuring uninterrupted operation and spontaneous participation to achieve organizational objective as well as fulfillment of employee needs.- maintain an effective way to deal with labor union and still no unrest has been recorded as dispute.

2.4.b(3) Raw materials:

We are proud to say that we are capable of producing raw m a t e r i a l s f o r o u r o w n medicines. Some info about our firms capability of production is given bellow:

(a) API unit

Established in 1992 and commercial production started in 1995. It is presently the largest qualit y-bulk drugs manufacturer in the country producing international s t a n d a r d b u l k p h a r m a c e u t i c a l s t o s a t i s f y m o r e t h a n h u n d r e d p h a r m a c e u t i c a l companies throughout the country.

b) Factory plants:

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SQUARE Pharmaceuticals has invested in state of the art formulation plants aligned to r e g u l a t e d m a r k e t s t a n d a r d s . F o u r p l a n t s b a s e d o n t h e D h a k a s i t e c a n p r o d u c e pharmaceutical products to the highest GMP specifications. These four plants are: General plant (approved by MHRA) Cephalosporin plant (quality systems aligned to MHRA requirements, plant being prepared for EU regulatory agencies and FDA inspections) BFS plant (quality systems aligned to MHRA requirements, plant being preparedfor EU regulatory agencies and FDA inspections) Biotech (insulin) plant under construction These plants have been designed by internationally recognized firms and equipped with t h e b e s t m a c h i n e s t h a t c a n c u r r e n t l y b e f o u n d o n t h e E u r o p e a n a n d U S m a r k e t s . SQUARE Pharmaceuticals has also created quality systems and SOPs according to FDA and EU regulatory agencies specifications.

2.4.b(4) Distribution system:

One of SPLs major strengths lies with its sales and marketing team. We got one the countrys best distribution system that helped us to reach our customer base effectively a n d e f f i c i e n t l y . T h e s a l e s f o r c e o f S P L , l e d b y a l a r g e n u m b e r o f m e d i c a l representatives, is one of the most forceful among all local manufacturers. In the table we can see SQUAREs distribution system

2.4.b (5) Technology:

Square Pharma has always been a leader in adopting ground -breaking technologies that introduced both skill and scale in the business processes. Our company focused on the quality of the product so that its product can compete with the top level pharmaceutical c o m p a n y i n t h e w o r l d . S P L i s t h e p i o n e e r c o m p a n y f r o m B a n g l a d e s h i n i n t r o d u c i n g technology driven (specialty) products in local and international markets. Such specialty p r o d u c t s i n c l u d e : S u p p o s i t o r i e s ; I n h a l a t i o n a e r o s o l s , i n c l u d i n g O z o n e - b e n i g n H F A MDIs ; Nasal sprays etc

2.5 Related and supporting industry:

Related and supporting industries like Hospitals and health c e n t e r s H e a l t h c a r e professionals Insurance and public health bodies Retail pharmacies and stores diagnostic c e n t e r s e t c a r e a v a i l a b l e t o s u p p o r t o u r b u s i n e s s f i r m . T o s u p p o r t o u r f i r m f u r t h e r SQUARE Group established a state of the art hospital

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named SQUARE Hospitals Ltd that went in to operation on December 2006. This is a 300bed hospital built at the cost of $ 50 million aimed to provide global standard healthcare services at an affordable cost. SQUARE hopes that this will bring changes in peoples attitude to seek better healthcare s e r v i c e s f r o m c o u n t r i e s l i k e T h a i l a n d , Singapore, India etc and in the proces s save i n v a l u a b l e f o r e i g n currencies for the country. Among others, SPL also provides institutional helps to build healthcare infrastructure.

2.6 The condition of two external factors:

Chance and Government: W e h a v e e n o u g h c h a n c e a n d g o v e r n m e n t s u p p o r t t h r o u g h o u t o u r c o m p a n y l i f e . T h e prove of it is the rate of our market share and growth in our country. Though we have some restriction from government about the advertising of our medicine in the media but except that we have our governments full support where we need it.

2.7 Overall analysis of the company position based on porters diamond:

Why Bangladesh is doing well in pharmaceuticals industry? The answer lies in the Porters diamond as we can see from our report the entire element that make a successful industries are there in the market. We have strong supporting industries that help us to stay firmly in our feet. We have got all the factors endowment both basic and advance. We got a study demand and customer base. And last but not the list our firms strategies structure is strong enough to face out rivals bluntly. Though we know SPL got strong competition in the market but the pace we are moving we know we are strong enough tony kind threat no matter from where its coming from.

Chapter: 3

3.1Conclusion
Square Pharmaceutical s Ltd, as part of a progressive business group, believe the advancement of good health occurs not only though the innovation, production and distribution of its products, but also though the creation and preservation Of a healthy environment Transparency is a core value of square pharmaceutical Ltd and other SUBs of the group and strictly followed at every step of the business process .Square Pharmaceutical Limited has extended her range of services towards t h e highway of global market. We believe the way we are leading towards our goal soon we will be known as one of the top leading pharmaceutical company on the world

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3.2 Recommendations
After analyze the whole report we can recommend that We have to give more emphasis on the technological support to compete in global market. Should pursue the government to established export cell to promote export of pharmaceuticals to grab and capitalized the huge export opportunity in LDCs. R&D activities of the company have to be improved if it wants to compete with global players. Patent Law which is valid up to 2016 least development countries like Bangladesh. After 2016 the advantage enjoyed by Bangladesh will evaporate so to face that condition we have to prepare ourselves. Though we have our own API plant still we have to imp ort the API equipments but We should try to produce our own API requirement.

3.3 References:
We used these references to prepare our study: International Business by Charles W.L. Hill International Business by Charles W.L. Hill www.squarepharma.com.bd www.bx c-hr ao ei opam. m m c
http://www.businessmate.org/Article.php?ArtikelId=49 1

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