Corporate Strategies of Renata limited: Strategy is the fine art of creating value for

stakeholders. On the other hand, corporate strategy is the finest art of crating
competitive value in favor of one’s company over its true competitors (Thomson,
Petaref, Gamble & Strickland, 2016). In modern corporate world, corporate strategies
are the prerequisites to be successful in the arena of business. Now, we are going to
evaluate Renata’s competitive corporate strategies by which Renata is creating superior
value over its true competitors like Square pharmaceutical, Incepta pharmaceutical and
Beximco pharmaceutical. The corporate strategies of Renata’s are as follows:
 Forming Strategic Alliance to Fight Against Counterfeit Drugs: Strategic
alliance refers to two or more firms form alliances through contractual
agreements given to a company to supply, produce or distribute a firm’s goods or
services with or without equity sharing (share ownership). There are three types
of strategic alliance namely 1) joint venture, 2) equity strategic alliance and 3)
non-equity strategic alliance (Thomson, Petaref, Gamble & Strickland, 2016). Due
to high popularity of Renata’s pharmaceutical brands like Maxpro and Rolac,
some immoral businesspeople started copying the products shamelessly by
making products with the same interface, same logos just like the original (Salim,
2016). Counterfeit products are so dangerous that it can be the cause of death.
So, to solve this problem, Renata has teamed up with award winning Start-up
Company “PANACEA” in the form of non-equity strategic alliance to fight
against counterfeit drugs (Ahmed, 2016).

How PANACEA Works:

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Panacea helps Renata’s customers to check authenticity of medicines with Short
Message Service (SMS) or mobile app for their Maxpro and Rolac tablets. Panacea gives
every medicine a unique identity with a unique printed code (Panacea.live, 2017).
Strategic Advantages of Strategic alliances with Panacea:

In favor of Renata limited, the strategic advantages of doing a strategic alliance with
Panacea are as follows:

1) Operational Excellence: Panacea is assisting Renata in achieving higher levels of

efficiency and productivity in resolving the problem effectively (Laudon &
Laudon, Strategic Business Objectives of Infirmation Systems, 2016). For
instance, Panacea uses two important yet widely available tools of
communication, the smartphone and internet by which customers can check
authenticity of medicines both online and offline.
2) Establishing as “Trustworthy” brand: This alliance has enabled Renata to further
strengthen their brand image as a trustworthy brand in the arena of
pharmaceutical industry by redefining their concerns to the society and its
customers. In addition, this strategic alliance has increased the overall customer
satisfaction than before which means better customer retention for the company.
3) Competitive Advantage: Renata is using information system of Panacea to gain
competitive advantages over other pharmaceutical companies. For instance,
 Product Differentiation: Renata is differentiating its product like Max
Pro and Rolac by providing unique customer service of checking
authenticity of aforementioned drugs.
 Synergy: Renata shares mutual concern with Panacea in omission of
counterfeit drugs. Both companies are exchanging market expertise with
each other to gain competitive benefits (Laudon & Laudon, Synergies,
2016).
4) Superior Decision Making: The information system of Panacea allows the
management of Renata to see patterns in data. By data mining, Renata
management can easily find out the areas those are most affected by counterfeit
drugs most in comparison with other areas and can take action accordingly
(Laudon & Laudon, Strategic Business Objectives of Infirmation Systems, 2016).

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 5) Fight Against Counterfeit Drugs: As of today; Renata is the only company, which
is working, in pharmaceutical industries to solve the problem of counterfeit
drugs proactively (Salim, 2016).

 Focus on Foreign Export: An export is a function of international trade whereby

goods produced in one country are shipped to another country for future sale or
trade. The sale of such goods adds to the producing nation's gross output. If used
for trade, exports are exchanged for other products or services in other countries
("Export", 2017). According to the Chairman’s report (Renata Annual Report,
2017), the company is focusing seriously on exporting in foreign countries by
minimizing the dependency on current business model that we have in
pharmaceutical industry, which revolves around the doctors. The fact is such
business practices are deficient and won’t yield sustainability in the long run. On
the other hand, exporting strategy can usher a new era of prosperity and success
for Renata limited simply by entering into new international markets. Such
sustainable completive strategies are most likely to facilitate Renata limited with
sustainable growth and good performance by going global (Soriano and Dobon,
2008).

Advantages of going global corporate strategy (Exporting): Exporting is a less

resource intensive foreign market mode of entry with minimum operating cost in
comparison with other foreign mode of entries. In addition, Renata limited is enjoying
several benefits out of internationalization process. Such as;

1) Increase sales and improve profits: By going global proactively, Renata limited
can exploit new market demands more than before. And, by meeting those
demands, Renata can easily increase their total sales. As a result, this course of
action surely will lead them to higher profits than usual. Moreover, it creates
scope for the economics of scale and economics of scope, as they have to
produce a lot of medicines to meet foreign demand. This simply means that the
cost of production for producing medicines will decrease drastically over time.
Above all, overall cost of production will be low, as fixed cost will drop due to
high volume of medicine production. So, Renata would be able to enjoy low cost
advantage over rivals (Thompson and Kaspersen, 2012).

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 2) Re-distribution of risk: By going international more, Renata can allocate their
resources evenly among all its locations more effectively. For example, if there
is a loss in Bangladesh market, then, Renata can cover up that loss from foreign
markets. Above all, Renata would be more economically sound in dealing with
difficult economical situations (Johnson, n.d.).
3) Competitive advantage: Then, internationalization will pave the path of success
for Renata by providing core advantages both home and abroad. First of all,
internationalization process turns Renata a prominent international brand by
boosting its brand image globally. In addition to this, Renata easily can blend
acquired global management expertise with its local comprehension of
expertise. This sharing of information will further strengthen their superior
aptitude in managerial proficiencies. And lastly, Renata would be able to access
advanced technologies which may lead them to even more efficient in their
production process without compromising the product quality (Hellensen, n.d.).
4) Globalization & Internet: Globalization inspires internationalization whereas
nowadays internet connects companies seamlessly across different geographical
locations at ease. And it is would be easier for Renata Limited to do business now
across globe due to the technological advancement around the world (Johnson,
n.d.).

 Corporate Governance & leadership: The corporate governance and

leadership style of Renata limited is creating strategic value better than its
competitors. To understand it even better, lets see how Renata is crafting
competitive value over its rivals by simply blending its corporate governance
with its leadership practices.

Corporate Governance: Corporate governance is the system of rules, practices and

processes by which a company is directed and controlled. Boards of directors are
responsible for the governance of their companies. Corporate governance essentially
involves balancing the interests of a company's many stakeholders, such as
shareholders, management, customers, suppliers, financiers, government and the
community.

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Indicators to measure Renata’s corporate governance performance: The corporate
governance performance indicators are as follows:

1) The Board of Directors: Renata’s board is comprised of inside and independent

outside members. Insiders are major shareholders, founders and executives
whereas independent directors do not share the ties of the insiders and they
dilute the concentration of power and help align shareholder interest with those
of the insiders. The board has 10 members, including the CEO. Renata has one
audit committee where two outside independent directors work with the CEO
directly. Out of 10 boards of directors, 7 are industry-related directors whereas 3
are non-industry-related directors. Only 2 boards of directors are independent
out of 10. On other hand, the board has 3 female directors on board which
accounts for 30% of the total board members (Renata Annual Report, 2017).
2) Ownership Composition: Renata limited has around 60,896,541 shares, in which
around 85% are corporate owned and 15% are private owned. The Sajida
Foundation group is the substantial shareholder, which owns a staggering 50%
of total shares of Renata Limited. After Sajida Foundation, a foreign company
named Business Research International Corp. Inc. is the second highest
shareholder, which owns 22% shares. On the other hand, general public only
own 15% of total shares.

Shareholders Composition, June 2017

Dir
Public ectors
15% 50% Directors
Foreign
Ins
titute Institute
13% Public

Foreign
22%

Source: RENATA ANNUAL REPORT, 2017

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 3) Transparent Senior Executive Remuneration System: Renata limited has a
transparent executive remuneration system to motivate the senior executives to
work with dedication as well as with motivation. On an average a director is paid
around 2,50,000 taka monthly. According to the Annual Report of 2017, the
payments for senior executives were as follows:

Payments to directors and officers (For 2017)

Directors Officers
Remuneration / salary 9,693,817 374,785,301
House rent 5,910,591 283,147,056
Bonus 4,039,091 177,587,845
Contribution to provident fund 969,382 37,817,119
Gratuity 1,211,727 229,565,567
Conveyance allowance and transport 2,956,420 181,920,111
Other welfare expenses 4,240,207 34,474,990
29,021,235 1,319,297,989

Source: RENATA ANNUAL REPORT, 2017

Leadership: Leadership helps to implement corporate governance effectively. The

leadership style of the managing director, Syed S Kaiser Kabir is really remarkable in
the development of Renata strength to strength. Management is doing things right
whereas leadership is doing the right thing. A true leader is the managerial frame of
reference for other managers. And an honest leader sets the standard by showing
everyone how it should be done (Thomson, Petaref, Gamble & Strickland, 2016).

Strategic leadership is the ability to anticipate, envision, maintain flexibility &

empower others to create strategic change as necessary. The strategic leadership is
multi-functional. It is complex & requires an understanding of how to influence
human behaviour. In addition, it deals with one’s the ability to manage the firm’s
operations effectively & sustain a high performance over time (Thomson, Petaref,
Gamble & Strickland, 2016).

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The three interdependent activities of leadership are as follows:

3) Nurturing a culture
dedicated to excellence
& ethical behaviour

2) Designing
1) Setting a
the
direction organisation

The leadership style of Syed S Kaiser Kabir: The managing director of Renata limited
has the following leadership skills;

 True Visionary: In stead of focusing on “Human Pharmaceutical” only, Syed S

Kaiser Kabir also has given equal importance on not so popular animal
pharmaceutical products since Renata’s inception in 1993.Due to his endless
dedication and sheer will, Renata limited is no. 1 in the Animal Health market for
the last 20 consecutive years.
 Creative insights and innovative: Renata limited promotes innovation in every
walk of its business. Thanks to Syed S Kasier, Renata is pushing the envelope
everyday in the field of R&D. Moreover, Renate recently introduced an android
mobile app named “APPothecary” for reminding the medications as and when
needed. Anyone can browse their medicine library, save prescriptions, set
appointment reminders, keep track of his/her vitals, etc. Simply put, it's a one-

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 stop solution to your medical needs ("APPothecary for Android - APK
Download", 2017).
 Great Strategist and risk taker: Mr. Syed S Kaiser is a fine strategist. He has put
so much emphasis on contract manufacturing with different business entities.
For example, Renata is by far the largest manufacturer/supplier of oral
contraceptives in Bangladesh by proudly producing two-thirds (66%) of the oral
contraceptives used in government programs. In addition, they are also the
largest manufacturer of ORS and works in coloration with SMC. In addition,
Renata also produces general products for UNICEF (Renata Limited, 2017). On
the other hand, Mr. Syed S Kaiser is a risk taker with a big heart. The fact is any
other companies except Renata wouldn’t have dared to form such a strategic
alliance with a small start-up company like “Panacea”.
 A man of integrity: Mr. Syed S Kaiser is a man of integrity who is committed to
highest ethical standards as well as operational excellence. Under his leadership,
Renata has developed “Health, Safety and Environment” policy for its
stakeholders ("Health, Safety & Environment", 2017). In recognition, Renata
limited has been awarded the “Climate Champion in Green Operations” by
HSBC and The Daily Star (Renata Limited, 2017).

 Corporate Social Responsibility (CSR): At Renata, corporate social

responsibility means caring for its employees, assisting disadvantaged members
of our society, and building a sustainable community and environment. In 2017,
Renata’s total expenditure on CSR activities was 63,828,157 taka, which
account for 2.43% of its net profit (Renata Limited, 2017). Renata is helping the
society in the following ways;
1) Healthcare For Employees And Their Families: The Renata health program
covers all permanent employees, their spouses, and children. This
comprehensive program includes surgery, hospitalization, as well as routine
doctor visits.

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2) Support To Charitable Organizations: Renata supports the following charitable
organizations by donating money.

Title/Organization Taka
BRAC 1,000,000
Society for Assistance to Hearing Impaired Children 300,000
Centre For Policy Dialogue 300,000
Sahera Hasan Memorial Trust 300,000
Helping Organization for Promising and Energetic 200,000
Students
Neuro science Research Centre of Dhaka University 100,000
Centre for Cancer Prevention and Research 90,000
Total 2,290,000

3) Treatment for doctors with life-threatening illnesses: As in the past, Renata

Limited continues to fund treatment for doctors diagnosed with cancer and other
life-threatening illnesses.
4) Financial Assistance To Ex-Employees And Their Children: Renata limited also
provides financial assistance to ex-employees and their children.

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