Yunnan baiyao final version

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Yunnan baiyao final version

  1. 1. Group 27 091133, 091140, 091152, 091119, 091171YUNNAN BAIYAO STRATEGICRECOMMENDATIONS
  2. 2. PEST Analysis Factors So What?Political Reform of China social healthcare The market grew rapidly and system the competition escalatedEconomic China joined WTO and more Big MNC further escalated the MNC entered China competition, and the requirement for scale enhancedSocial Local Chinese has strong affinity Herbal medicine market in to herbal medicine and Baiyao, China is still promising, but not however the affinity is weakening guaranteed. The concept of among the younger generation “herbal drug” and “Baiyao” is great asset for brandingTech Western pharmaceutical New coherence in scale and methodology introduced into the product innovations can be herbal medicine system achieved.
  3. 3. Five Forces Analysis Competitor: few really powerful players from local and Suppliers: low abroad bargain power. For herbal resources, there are loose Purchaser: end regulation and few user not very price big private owners. sensitive but distribution channel, bargain power.Substitute: few.Despitetraditional Entry Barrier: high.non-drug several permits tomethods, manufacturedrugs prescription medicine.acceptable difficult to educate market and to convince channels and users to try)
  4. 4. SWOT AnalysisS: Wide brand awareness and strong brand fidelity W: The core product, Baiyao, is only for a very nicheGood relationship with government market, No international experienceR&D capability within herbal medicine industry The scale is small compared to MNCsO: Spending on healthcare growing fast, More western T: The brand is weakening among younger generation ofcustomers using herbal Medicines and MNCs are willing to Chinese, Big MNCs entered China, Over exploit herbalcollaborate to expand to other countries resources
  5. 5. Issues Identification More competitive market with local competitors and MNC Original YB for Niche, need to diversify products and services Products are reaching maturity
  6. 6. Focal Strategic Issues Rapid growth in scale becomes extremely important in pharmaceutical industry
  7. 7. Options Expansion  Product line diversification  On its own  Collaboration  Internationalization  On its own  Collaboration Integration the value chain  Industrialization of herbal resources  Vertical integration into distribution  Industrialization of R&D
  8. 8. Expansion Product Line Diversification  Increase our economy of scope and scale due to shared resources  Bring greater production and marketing efficiency and lower promotion costs  Further strengthen core business  Offers us the opportunity to build or own capabilities first and get on par with MNCs  Potential Product Cannibalism: toothpaste could be used for external purpose  Potential Brand Contagion: toothpaste is not our core competency; failure could damage overall reputation  Only few value chain activities could be shared and new production facilities would have to be built
  9. 9. Expansion International Expansion  Opportunity for product diversification  Opportunity for market diversification  Opportunity for internationalization of products  Increase market share and better serve customers needs  High marketing expenses and lack of international marketing experience  Cultural distance and different customer behaviors causes the need for scientific proof and education on products  Difficult to manage overseas sales force  Regulatory barriers could cause difficulties for entry
  10. 10. Integration Industrialization of herbal resources  Secure the supply of herbal resources to support its own growth  Industrialize this less-mature sector, build its influence power and make profit from the whole herbal medicine industry  BaiYao’s brand can help market the herbal resource  To help farmers plant herbs and establish quality assurance system is a different business
  11. 11. Integration Vertical integration into distribution  Get bigger share of the value chain and stronger control over the channel  Totally different business and BaiYao has little experience in it  Potential conflict with other brand Industrialization of R&D  Already has a strong position in herbal medicine R&D  It can help Yunan Baiyao to consolidate its leading position in the industry  Potentially It can generate better margin  It is technology-intensive and investment-intensive  The margin may be not as high as expected because of the intellectual property protection is weak in China
  12. 12. Recommendation First Priority: Product line diversification on its own Maximize the value of its brand and grow in scale Second Priority: Industrialization of herbal resources • Secure the supply of its own need • Enter this less-competitive market and make profit from other medicine companies Third Priority: Industrialization of R&D • Strengthen its competency Forth Priority: Internalization through Collaboration • Test-drive through collaborating with MNCs to gain valuable experience

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