Definition of Strategy

Definition of Strategy:
Strategy is a method or plan by which long term objectives will be achieved. Long term
objectives are the specific result that an organization seeks to achieve in pursuing its
basic mission. Business strategies may involve geographic expansion, diversification,
acquisition, product development, market penetration, retrenchment, divestiture,
liquidation and joint ventures.
Strategies are potential actions that require top management decision and large amount
of farm’s resources. Additionally strategies affect an organization’s long term prosperity,
typically for at least five years, and thus are future oriented. Strategies have
multifunctional and multidivisional consequences and required consideration of both
the external and internal factors facing the firm.

Most Strategic Management Model

There are several Strategic Models are available and used in different organizations but
following are the most used strategic models:

• PEST analysis
• STEER Analysis
• Five Forces Model
• Strategic Group Map
• SWOT analysis
• Blue Ocean Strategies
• Open innovation
• McKinsey seven S model

Company Detailed Profile including mission & vision

and Organogram
Company Detail Profile

Square pharmaceutical is now the most leading company in Bangladesh since 1985 and
is now on its way to becoming a high performance global player. Today it has achieved a
state of mind among consumers. This company has founded in 1958 and since then with
hard work and dedication among employees and top management, it has reached the
position where every pharmaceutical company wants to reach. Square went public in
1991 and is currently listed on the Dhaka Stock Exchange and Chittagong Stock
Exchange. Square Pharmaceuticals Ltd., the flagship company, is holding the strong
leadership position in the pharmaceutical industry of Bangladesh since 1985 and it has
been continuously in the 1st position among all national and multinational companies
since 1985. Square Pharmaceuticals Ltd. is now on its way to becoming a high
performance global player.

Today Square has one of the largest sales force and distribution networks of its own.
This large distribution network operated 18 different locations across the country.
Square is no longer limited in domestic arena. From 1987, it entered to global
marketplace meaning they started to export their antibiotics and other pharmaceutical
products.
Based on the latest annual report some key highlights of Square Pharmaceutical Ltd are-
• Turnover (Gross) BDT 24,193 million, growth 16.64%
• Turnover (Net) BDT 20,911million, growth 16.43%
• Export BDT 846 million, growth 5.92%
• Contribution to National Exchequer BDT 5,113 million, growth 17.63%
• Gross profit BDT 9,182 million, growth 17.34%
• Net profit after tax BDT 4,031 million, growth 17.90%
• EPS BDT 8.36, growth 17.75%
• Dividend payout (cash) BDT 1,445 million, growth 56.00%
• Net asset value BDT 22,227 million, growth 16.92%

Board of directors:
Mr. Samuel S Chowdhury (Chairman)
Mrs. Ratna Patra (vice chairman)
Mr. Tapan Chowdhury (Managing Director)
Dr. Kazi Harunar Rashid (Director)
Mr. Anjan Chowdhury (Director)
Mr. Kazi Iqbal Harun (Director)
Mr. M. Sekander Ali (Independent Director)
Mrs. Nihad Kabir (Independent Director)

Vision:
We view business as a means to the material and social well being of the investors,
employees and society as a large, leading to accretion of wealth through financial and
moral gains as a part of process of the human civilization.

Mission:
Our mission is to produce and provide quality & innovative healthcare relief for people,
maintain stringently ethical standard in business operation also ensuring benefit to the
shareholders, stakeholders and society at a large.

Objectives:
Our objectives is to conduct transparent business operation based on market
mechanism within the legal and social frame work with aims to attain the mission
reflected by our vision.

Corporate Focus:
Our vision, our mission and our objectives are to emphasize on the quality of product,
process and services leading to growth of the company imbibed with good government
practices.

Logo of Square pharma

 PESTEL Analysis of Square Pharmaceutical
V

PEST Analysis: PEST analysis stands for "Political, Economic, Social, and
Technological analysis" and describes a framework of macro-environmental factors
used in the environmental scanning component of strategic management.

Political
1.Recent political turmoil is affecting
operation and distribution of all industries
including pharmaceutical industry.
2. With the change of government power,
export- import policies changes.
3. More than 27% tax is charged on
pharmaceutical products.
4. For pharmaceutical industry, government
do not allocate proper budget through fiscal
policy.
Social
1.Population in Bangladesh is continuously
increasing which boost this industry.
2. In urban area, people are not conscious
and sufficient enough to use pharmaceutical
products.
3. Culture has huge impact on
pharmaceutical industry.
Economical
1.Currency fluctuation has significant impact on
pharmaceutical industry.
2. Cheap labor cost lead to a increase in profit
margin for this industry.
3. Rate of inflation in Bangladesh is not that
much of high.
4. Pharmaceutical industry play a very vital role
in Bangladesh’s GDP growth.
Technological
1.Square is trying to upgrade and adopt new
technology in production, quality control,
distribution and administration of its products.
2. Pharmaceutical is a high-tech industry.
3. During the year 2013-14, Square has invested
an amount of TK 108,086,342 in improving its
laboratory.

4. Meditation is now becoming very popular.

It affects on Pharmaceutical product’s sale.
Environmental
1.According to UN, business should support
a precautionary approach to environmental
challenges.
Legal
1.According to UN, business should eliminate
discrimination in terms of employment and
occupation.

2. According to UN, business should 2. According to UN, child labor must be

undertake initiatives to promote greater stopped.
environmental responsibility.
3. In Bangladesh, legal issues are not followed
3. According to UN, business should
encourage development and diffusion of
environmental friendly technologies.
SWOT Analysis of Square Pharmaceutical Ltd
Strengths
1.In 2013, Square’s growth rate is
16.43% against market growth rate of
8.12%.
2. Square has highly efficient sales
force and large own distribution
channel.
3. Square has good brand image to its
consumers.
4. For last 29 years, Square has
maintained its number one position in
market.
5. Square maintains high quality
standards for its products.
6. Both their current and non- current
liability is decreasing and shareholder’s
equity is increasing.
Opportunities
1.Square has the opportunity to export
its products to giant India and USA
market.
2. Large population in Bangladesh
creates an opportunity to Square to
serve more in domestic market.
3. People now have more affordability
as their income is increasing.
4. Square should emphasize on
innovation more and more.
5. Although Square has strong
distribution channel, this need to be
improved more.
strictly.
4. They follow Companies Act 1994.
Weaknesses
1.Square has made delay in introducing
some injections that Incepta has introduced
earlier and now those are popular.
2. Square do not spend adequate money for
R&D sector compared to the nature of
industry.
3. Selling & distribution costs are increasing.
4. Compared to the MNCs, Square has lack
of resources.
5. They import their plants and raw
materials from abroad, which is costly.
Threats
1. Recent political turmoil is affecting
operation and distribution of all industries
including pharmaceutical industry.
2. With the change of government power,
export- import policies changes.
3. More than 27% tax is charged on
pharmaceutical products.
4. Rapid currency fluctuation has significant
impact on pharmaceutical industry.
5. There is a huge competition from MNCs.
6. Recent good performance of Incepta and
Beximco pharmaceutical is posing a threat
to Square Pharmaceutical.
 Porter’s Five Forces
For industry analysis Porter’s Five forces play a vital role. Because through this Five
forces analysis organization can understand the competitiveness as well as the
attractiveness of the industry. Five forces analysis looks at five key areas namely the
threat of new entrants, the power of buyers, the power of suppliers, the threat of
substitutes and competitive rivalry.

Power of Suppliers

• Numerous suppliers-switching cost is low

• Some inputs are available locally
• Suppliers can go for forward integration
• Some raw materials import from abroad.
• Square has image as a good customer.

Industry Competition

Highly competitive. Top five players have mere 18% of market share. Lower fixed cost and high
working capital.

Barriers to entry
• Very low barriers to entry
• Government Policies supportive for entry
• price regulation exists
• Economies of scale exist
Threats of Substitutes
• No substitutes for the medicines
• Biotechnology is a treat to synthetic pharma product

Degree of Rivalry
• Industry growth is high.
• Number of Intermediate is low.
• Brand identity is quite strong

Power of Buyers
• End consumers do not have bargaining power.
• Brand identity exists but is in the hands of influencer (Doctors)
• Price Sensitivity is less
• Highly fragmented market,

SWAN Analysis
Strengths:
1.In 2013, Square’s growth rate is 16.43% against market growth rate of 8.12%.
2. Square has highly efficient sales force and large own distribution channel.
3. Square has good brand image to its consumers.
4. For last 29 years, Square has maintained its number one position in market.
5. Square maintains high quality standards for its products.
6. Both their current and non- current liability is decreasing and shareholder’s equity is
increasing.

Weaknesses:
1.Square has made delay in introducing some injections that Incepta has introduced
earlier and now those are popular.
2. Square do not spend adequate money for R&D sector compared to the nature of
industry.
3. Selling & distribution costs are increasing.
4. Compared to the MNCs, Square has lack of resources.

Actions:
1.Square should try to control over its non manufacturing costs specially selling and
distribution costs.
2. With the amount of retained earnings, Square should invest on R & D sectors.

Next Step:
Square should look forward to innovation.
TWOS Matrix
Internal
Strengths:
1.In 2013, Square’s growth rate is
16.43% against market growth rate of
8.12%.
2. Square has highly efficient sales force
and large own distribution channel.
3. Square has good brand image to its
consumers.
4. For last 29 years, Square has
maintained its number one position in
market.
5. Square maintains high quality
standards for its products.
6. Both their current and non- current
liability is decreasing and shareholder’s
equity is increasing.
Opportunities
1.Square has the opportunity to export
its products to giant India and USA
market.
2. Large population in Bangladesh
creates an opportunity to Square to
serve more in domestic market.
3. People now have more affordability
as their income is increasing.
4. Square should emphasize on
innovation more and more.
5. Although Square has strong
distribution channel, this need to be
improved more.
External
CPM
Score
Weaknesses:
1.Square has made delay in
introducing some injections that
Incepta has introduced earlier and
now those are popular.
2. Square do not spend adequate
money for R&D sector compared to
the nature of industry. 3.55
3. Selling & distribution costs are
increasing.
4. Compared to the MNCs, Square
has lack of resources.
Threats
1. .Recent political turmoil is
affecting operation and distribution
of all industries including
pharmaceutical industry.
2. With the change of government
power, export- import policies
changes.
3. More than 27% tax is charged on
pharmaceutical products. 2.95
4. Rapid currency fluctuation has
significant impact on pharmaceutical
industry.
5. There is a huge competition from
MNCs.
6. Recent good performance of
Incepta and Beximco pharmaceutical
is posing a threat to Square
Pharmaceutical.
EFE Score
 Value Chain Analysis

Value Chain of a Pharmacetucal Company is a bit different than other company. There
Research is much more important. Researchers research on the disease and then
formulate the medicine. Later on they go for the manufacturing and Marketing and the
product line extension of that medicine.
There companies had to invest more in the research division. Because, only through
research they can bring the new product as well as the solution of a diseases. All the
activities of the research come from the diseases. Researchers find out how to prevent
the diseases and there they find out what to produce as well as what will be the
ingredients of the production and later on they go for the marketing and other works,
although the pharmaceutical companies spend less money for marketing as it is
prohibited to go through media like TV, billboard, news paper etc.

ViSA MODEL

Vi Vision Squar’s Vision: we view business as a means to the material and

social well being of the investors, employees and society as a large,
leading to accretion of wealth through financial and moral gains as
a part of process of the human civilization

S Strategy

• Maintain the top quality health care products at the least

cost reaching the lowest rungs of the economic class of
people in the country.

• Maintain the environment friendly business operation.

• Innovation of new products.

• Square consider their employees as the back-bone of the

management and that’s why they provide best
compensation to all the employees.
 • The Board of Directors, hold periodic meetings, at least
once a quarter and provide appropriate decisions/directions
and check the improvement and take necessary action.

• Work on the brand image.

• Last few years, they are on the leading position in the

market and they are trying to maintain it.

• 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

A Action Plan Set of actions which required implementing strategies to achieve

vision :
 More focus on Research and Development.
 Ensuring and delivering of product quality.

SMARTER MODEL

Specific Targets and goals should be specific. Square Pharma set their target
and point out the specific agenda which needed to be clearly
communicated with the employees to achieve their mission and vision.
Measurable Goals and targets have to be logical and measurable, so that it can be
well communicate to employees. Every year Square Pharma measure
how far they have achieved their goals and targets.
Achievable Mission, vision, target or goals all of them set by management has to
be achievable and to achieve company’s vision strategies are set
accordingly. Square has taken several strategies as guidance to achieve
this long term vision.
Realistic Mission or Vision must have to be realistic, not ambiguous. Square has
set their vision, which is realistic and achievable “We view business as
a means to the material and social well being of the investors,
employees and society as a large, leading to accretion of wealth
through financial and moral gains as a part of process of the human
civilization.”
Time There is always a specific time period to achieve Mission, vision or any
strategy. Square also set any strategy to support any project wise goal
or objective in a time frame
Encompassi In respect to identify so far achievements evaluation of any strategies
ng is very essential. Square pharma evaluate their employee’s
performances as well as the strategy set by management to find out
whether there is anything going wrong or not.
Reviewed Square publish their information quarterly, half yearly and yearly.
That means they reviewed their performance as well as the strategy
after a specific period of time, which is necessary to find out their
progress and obstacle.

The BCG chart

BCG basically deals with two variables- 1. Relative market share and 2.Industry growth.
In our term paper we showed Square is in the Star position. According to a data of 2013
stock market, Square has captured the highest market share in pharmaceutical industry
which is worth of TK 1,378 crore. It signifies the dominant position of Square’s in stock
market. Besides in 2013, the national market growth of pharmaceutical industry is
8.12% whereas Square’s growth rate is 16.43%. It indicates a positive outlook as GDP
growth rate of fiscal year 2013-14 was 6.25%. From all this information we have found
that Square Pharma fall into the Star category.

Square Pharma

PURE OBJECTIVE

P Positive Square Encourage the development and diffusion of

environmentally friendly technologies.
U Understood Square hold periodic meetings, at least once a quarter and provide
 appropriate decisions/directions and check the improvement,
performance, and clarify what is expected from employees as well
as how it is to be achieved.
R Recorded Square usually records all financial statements in their archive as
well as it is available on their web site.
E Ethical Square believe that, business should work against corruption in all
its forms, including extortion and bribery.

GREAT Model

G Goals Square strive for top quality health care products at the least
cost reaching the lowest rungs of the economic class of people
in the country.

R Roles/ Results Square set all the strategies according to achieve their goals like
focusing on R&D, provide specific role to specific employee.
E Expectations / Square measures their performance quarterly and let the
Performance employee know about the expectation from them.

A Accountabilities / Square Pharma always set the goal in such a way which is able
Abilities to achieve by the employee.
T Timing There always should be time frame to achieve the goal within
that time, that Square pharma maintain to have the better
result.

Market Analysis

Like other sectors, Pharmaceutical Industry also becoming an important Industry for
Bangladesh economy. Although there was a time when this industry was much
neglected, but now it plays a vital role in GDP growth in Bangladesh. Now there are
about 250 pharmaceuticals firms in Bangladesh. Among them some companies are
small sizes and traditional qualities. But a few companies dominate the whole medicine
market like Square, Beximco, Incepta etc. Compare to others, these companies are quite
big and huge number of product which is enable to meet the local demand as well as
some medicine is being exported.
Now, the leading Pharmaceutical Companies are expanding their business with the aim
to expand export market. Recently few new industries have been established with hi
tech equipments and professionals which will enhance the strength of this sector. There
are several sectors on which Bangladesh can be proud of and undoubtedly the
pharmaceutical sector is one of these sectors, rather it is the sector, which is the second-
largest contributor to the government exchequer. There are about 231 companies in this
sector and the approximate total market size is about Taka 76,500 million per year of
which about 94% of the total requirement of medicines is created by the local companies
and the rest 6% is imported. The imported drugs mainly comprise of the cancer drugs,
vaccines for viral diseases, hormones etc. Of the total pharmaceutical market of
Bangladesh, the local companies are enjoying a market share reaching around 75%,
while the MNCs are having a market share of 25%.

CPM Analysis of Bangladesh Pharmaceutical Industry

Square Beximco Incepta

Pharmaceutica Pharmaceutical Pharmaceutical
l
Critical Weight Rating Score Rating Score Rating Score
Success Factor

Advertising .05 3 .15 2 .10 2 .10

Quality of service .15 4 .60 3 .45 3 .45

Price .15 2 .30 3 .45 4 .60

competitiveness

Management .10 4 .40 3 .30 3 .30

Financial .20 4 .80 3 .60 3 .60

position
Global expansion .10 3 .30 3 .30 4 .40

Customer loyalty .15 4 .60 3 .45 3 .45

Market share .10 4 .40 3 .30 3 .30

Total 1.00 3.55 2.95 3.20

4= Major strength; 3= Minor strength; 2=Minor weakness; 1=Major weakness

Breakeven Point: Break-Even is a situation where total revenue of a company is

exactly equal total cost that the company has incurred. It is the point of balance between
making either a profit or a loss. The term originates in finance, but the concept has been
applied widely. The Break Even General Equation (BEP),

Total Revenue = Total Cost;

[Where, Total Cost = Total Fixed Cost + Total Variable Cost]

Breakeven Analysis of Square Pharma

Analysis and Discussion: According to the Financial report (2013-2014) of Square

Pharma the total Revenue is Tk. 24,96,42,23,232 and the total cost is (4,17,39,64,752+
11,72,79,92,671)= 15,90,19,57,423. So the Company is in above the breakeven point as
the revenue is (24,96,42,23,232 -15,90,19,57,423) Tk. 9,06,22,65,809 more than the
cost.

Competitor analysis
 Square Incepta BEXIMCO
Competitive factor pharmaceutical pharmaceutical pharmaceutical

Market position 1 2 3

Turnover 1,511.53 (Cr) TK 740.96 (Cr) TK 703.86 (Cr) TK

Growth rate 22.03 % 29.17 % 33.14 %

Market share (100) 18.78 9.21 8.75

Customer’s Choice of 38 16 24
Brand, Respondent
(in %)

Strength diversified products Backward linkage diversified products

and dosage forms support , price is and dosage forms
competitive

Weakness do not spend Insufficient working R&D, absence of

adequate money for capital. international
R&D sector standard quality
control and testing
laboratory

Price High Above average Above average

Quality High high Above average
Advertising High Average Average
Management Average Average Average
Financial position High Above average Above average
Global expansion High High Average

KSF Analysis (Industry Key Success Factors)

1. Customer-related: Square Pharma has Effective distribution, strong brand name,
customer loyalty, market analysis, customized solution.
2. Product-related: Square Pharma is much more conscious regarding their product
Quality, laboratory, customer oriented product, product development.
3. Production capability: performance measurement, visualization of result,
maintenance& operation.
4. Cost structure: scheduling, expenses, revenue, reporting, and procurement.
5. Vertical integration: To gaining control of their entire supply chain Square Pharma
may have gone for Vertical integration. This integration help to reduce cost, maintain
quality and gain more controlling power over the business.
6. Corporate social responsibility: Through the Square pharma’s mission and vision
statement we have came to know about their social responsibility, performance culture,
sponsorship, donation, scholarship, financial aid, public relations.
7. Financial strength: Financially Square Pharma is much more stronger compare to
other competitors.
8. Research and development: In the Pharmaceutical industry Research and
development department play a vital role and Square Pharma is quite conscious about
this as well as their laboratory is technically upgraded.

Strategy Evaluation and Contingency Plan

Strategy Evaluation is as significant as strategy formulation because it throws light

the efficiency and effectiveness of the comprehensive plan in achieving the desired
results. Evaluation is the final phase of Strategic Management.
Strategic Evaluation consists the following steps:
• Fixing benchmark of performance
• Measurement of performance
• Analyzing Variance
• Taking Corrective Action

Square Pharma fix the benchmark of performance and after a certain time period like
quarterly or yearly, they measure the performance and take corrective action and even
go for the research if needed. Some time they provide incentive to their employee for
greater performance.
Although Strategy evaluation is necessary for a company but there is some difficulties as
well in Strategy Evaluation:
• Increase in environment’s complexity
• Difficulty predicting future with accuracy
• Increasing number of variables
• Rate of obsolescence of plans
• Domestic and global events
• Decreasing time span for planning certainty

Strategy Evaluation Should –

• Initiate managerial questioning
• Trigger review of objectives & values
• Stimulate creativity in generating alternatives

Contingency Planning is the development of alternative plans to be placed in effect if

certain unexpected events occur.
As Square pharma is a large size firm they may have to face a lot of obstacle. There for
they concerned about the Contingency Planning, because unexpected events can occur
in any time.

There are four reasons for or advantages to contingency planning:

• It helps the firm get into a better position to cope with unexpected
developments
• Indecision, uncertainty and delays are reduced when something unusual
happens
• the firm's responses are likely to be better thought out and more rational;
and
• Managers are forced to think in terms of possible outcomes, rather than
just the most likely outcome.

Recommendation
Although Square Pharma is operating successfully in the market, there we have got
some recommendation for Square Pharma-
1. They should invest more in R&D sector.
2. They should be more careful in terms of pricing of their product.
3. As the market is so much competitive, Square Pharma should be more concern
regarding their product quality.
4. They can go for Backward or forward integration support to reduce
production and distribution cost.
5. They should more focus on customer oriented product
6. They need to Emphasize on high technology

Conclusion

Square Pharmaceuticals Ltd. was established as a partnership firm in 1958. In 1991 it

was converted into a public limited company. Square Pharmaceuticals Limited is the
largest pharmaceutical company in Bangladesh and it has been continuously in the
1st position among all national and multinational companies since 1985. Since 1987
Square has taken aggressive measures to explore new countries as potential export
market. It pioneered exports of medicines from Bangladesh in 1987 and has been
exporting antibiotics and other pharmaceutical products. More & more countries are
getting confidence in Square’s product every year. But it’s true that in the competitive
global environment Square is still struggling to ensure firm footings in global market.
Square is the flagship Parma Company in Bangladesh, wants to be a global player.
SQUARE Pharmaceuticals Limited has extended its range of services towards the
highway of global market. This extension in business and services has manifested the
credibility of Square Pharmaceuticals Limited