an assignment on business level strategies and its impact on the performance of an industrial company in bangladesh: a case study on square pharmaceuticals limited

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An assignment on
Business level strategies and its impact on the Performance of an
Industrial company in Bangladesh: A Case Study of Square
pharmaceutical Limited.
By
Rabeya akter
ID No. 18021
BBA program, 18th Batch
8th semester, 2015
MGT: 410 (Strategic Management)
Department of management
University of Dhaka
Dhaka, Bangladesh
2015

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Table of Contents
Topic page
1. Historical background 03
2. Product profiles of the enterprise 03
3. Market status 05
4. Business level strategy pursued 05
5. Performance trends (productivity and profitability
analysis) 06
6. SWOT analysis 08
7. Possible measures to improve performance 09

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Historical Background
Square Pharmaceuticals Ltd. Bangladesh is a major pharmaceutical company based in
Bangladesh. It is part of the Square Group of Companies. Mr. Samson H. Chowdhury
with his three friends ventured the company in 1958 as a private partnership firm. When
asked why the name SQUARE was chosen he remembers - "We named it SQUARE
because it was started by four friends and also because it signifies accuracy and
perfection meaning quality" as they committed in manufacturing quality products
It went public in 1991 and is currently listed on the Dhaka Stock Exchange 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.
As per vision, mission and objectives; they are to emphasize on the quality of product,
process and services leading to growth of the company imbibed with good governance.
Product Profiles
Square Pharmaceuticals has lot of products and they are updating their products as well
as introducing new products almost every period. Their products are now not only for
human but also they are producing herbal products, animal and agro products. Antibiotics
of Square Pharma are highly known to every one and they are exported in many
countries. These products have made the company the market leader. Square has
production plants at Pabna and at Kaliakoir of Gazipur.
The formulation plants are producing wide range of dosage forms like -
Tablets : Non-Coated (plain, chewable, dispersible, vaginal)
Coated (sugar coated, film coated, enteric coated)
Sustained/Extended Released (coated, non –
coated)
Capsules : Granulated Material filled Pellets Filled

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Suppositories : Suppocire based
Injections : Vials containing Dry Powder for Injections
Small Volume Liquid Parenterals
Liquids : Oral Syrups (Sugar based, Non-Sugar based) Oral
Suspensions Topical Liquids
Spray, Drops,
Ointment, Cream
and Powder :
Small Volume Sterile Eye & Ear Drops
Small Volume Nasal Drops & Sprays
Topical Ointments & Creams Topical Antibiotic
Powder
Oral Dry Powders
:
Dry Suspensions (Antibiotic & Anti Infectives)
Dry Syrups (Antibiotics)
Dry Powder
Inhalers :
Partial Filled (Premix) Capsules for Respiratory
Tract Application with a Device
Metered Dose
Inhalers :
Pressurized Canisters for Oral use with an Actuator
Chemical Division started commercial production in 1995. From the year 1997 it started
it’s full-fledged production and marketing to all top pharmaceuticals within the country
including Aventis Pharma, Novartis Bangladesh Ltd., Glaxo Smith Kline, ACI Ltd., Reckitt

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& Colman, Beximco Pharmaceuticals Ltd., The Acme Laboratories Ltd, Eskayef
Bangladesh Ltd., Opsonin Chemicals, Renata Ltd., Essential Drugs Co. Ltd. etc. with good
reputation and loyalty.
Market status
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. It was established in 1958 and converted into a public limited
company in 1991. The sales turnover of SPL was more than Taka 11.46 Billion (US$
163.71 million) with about 16.43% market share (April 2009– March 2010) having a
growth rate of about 16.72%.
SQUARE Pharmaceuticals Limited has extended its range of services towards the
highway of global market. It pioneered exports of medicines from Bangladesh in 1987
and has been exporting antibiotics and other pharmaceutical products. This extension in
business and services has manifested the credibility of Square Pharmaceuticals Limited.
Business level strategy pursued
An organization's core competencies should be focused on satisfying customer needs or
preferences in order to achieve above average returns. This is done through Business-
level strategies. Business level strategies detail actions taken to provide value to
customers and gain a competitive advantage by exploiting core competencies in specific,
individual product or service markets. Business-level strategy is concerned with a firm's
position in an industry, relative to competitors and to the several forces of competition.
Target market- rather than common people, main target market of square pharmaceuticals
is the doctor. SPL takes doctors as the opinion leaders because the major innovative
drugs cannot be purchased without the prescription of the doctors.
Value proposition- SPL has presently been offering its products to its market segments
with the value proposition “utmost quality, excellent efficacy”,
Place- SPL has the strongest domestic distribution network for smoothing distribution of
medicine to all parts of the country. These are situated in Dhaka, Pabna, Rangpur, Bogra,

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Sylhet, Rajshahi, Noakhali, Mymensingh, Sylhet etc. It uses own transportation system to
distribute the products.
Promotion- SPL strictly depends on personal selling through rapport building and
maintaining. A team of sales representative has been employed to meet the physicians to
explain the merit, demerits, necessity of the medicine.
Upgrading- SPL’s another strategy is to upgrade and take new technology for its
production plants so that it can produce quality product.
Performance trends (productivity ratio and profitability analysis):
Productivity ratio measures efficiency of current assets in producing sales. Profitability
ratios measure the earning ability of a company. Productivity ratio and Profitability
Ratios for the year 2014-2015 of Square pharmaceuticals ltd. Company are estimated
below.
Productivity ratios:
1. Current ratio =
𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠
𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
=
9739782495
2390847961
= 4.07 times
Interpretation: The current ratio is one of the most commonly cited financial ratio. It
measures the firm’s ability to meet its short term liabilities. A current ratio of 2.0 is
occasionally cited as acceptable. In 2014-2015 the current ratio is 4.07 which is
acceptable if the square pharmaceutical company maintain that ratio it may good for
further investment.
2. Quick ratio: =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠−𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦
𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
=
2684259324
2390847961
= 1.12 times
Interpretation: We calculate quick ratio to see the real picture of liquid asset. Quick ratio
is always less than current ratio. Quick ratio is more stringent than current ratio. In 2014-
2015 ratio is1.12 that means the company has enough liquidate money, because it is more
than 1.
3. Inventory turnover: =
𝑐𝑜𝑠𝑡 𝑜𝑓 𝑔𝑜𝑜𝑑𝑠 𝑠𝑜𝑙𝑑
𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦
=
14370872099
2684259324
= 5.35 times
4. Total asset turnover =
𝑛𝑒𝑡 𝑠𝑎𝑙𝑒𝑠
𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠

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=
30281713746
31354182244
= 0.97 times
Interpretation: The asset turnover ratio simply compares the turnover with the assets that
the business has used to generate that turnover. Here we see that, in 2014-2015 it is 0.97
times that refers the company able to proper utilize its assets.
5. Fixed asset turnover =
𝑛𝑒𝑡 𝑠𝑎𝑙𝑒𝑠
𝑓𝑖𝑥𝑒𝑑 𝑎𝑠𝑠𝑒𝑡
=
30281713746
21614399749
= 1.4 times
Profitability analysis:
1. Net Profit Margin: =
𝑁𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒
𝑁𝑒𝑡 𝑠𝑎𝑙𝑒𝑠
*100
=
5743623832
30281713746
*100 = 18.97 %
Interpretation: Net profit margin measures the percentage of each operating
incomerevenue (TK) remaining after all costs and expenses. The higher the firms net
profit margin, the better position a company are.
2. Gross profit margin =
𝐺𝑟𝑜𝑠𝑠 𝑝𝑟𝑜𝑓𝑖𝑡
𝑁𝑒𝑡 𝑠𝑎𝑙𝑒𝑠
*100
=
11841989969
30281713746
*100
= 39.11%
Interpretation: Gross profit margin indicates that how efficient the management is in
using its labor & raw materials in the process of production.
3. Return on equity: =
𝑁𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡 𝑏𝑒𝑓𝑜𝑟𝑒 𝑇𝑎𝑥
𝑇𝑜𝑡𝑎𝑙 𝑒𝑞𝑢𝑖𝑡𝑦
*100
=
7595901234
28031892107
*100
= 27.09%
Interpretation: The return on equity (ROE) is a measure of the rate of return flowing to
the banks stockholders. It approximates the net benefit that the stockholders have
received from investing their capital in the bank. Generally higher this return, the better
of this owner.

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SWOT Analysis of Square pharmaceuticals
Strength:
1. Most important strength is product quality.
2. No compromise with quality of raw materials.
3. Machineries and technologies come from Germany, U.S.A, and India.
4. Very skilled and efficient pharmacists.
5. Competitive price with the one of the bests product quality.
Weaknesses:
1. Competitors are aggressive.
2. Insufficient suppliers for their raw materials.
3. Most of the theory of medicine is imported from abroad.
4. Some products prices are very high.
5. Problems faced while importing raw materials from abroad like U.S.A, Germany,
and India.
Opportunities:
1. Still Square is the no. one pharmaceuticals company in our country.
2. Square already has a goodwill and a large market in home and abroad.
3. Square can develop their market value by cutting down product price.
Threats:
1. Competitors are main threat for Square.
2. Pharmaceuticals firms are growing largely.
3. Competitors come with new technology.
Possible measures to improve performance
When any company faces any problem or weaknesses, it is essential to overcome the
problems. Square Pharmaceuticals Ltd takes the action to overcome the problem by the
ways:
 The decision fully incorporates all known costs and a benefit of internal
versus external resources is under consideration.
 Costs are clearly documented and all formulas for deriving costs are
identified. This enables you to see what costs are included.
 Identifying priorities and weights will help when including qualitative
costs and benefits in the analysis.
 Do the planning at the start to identify the purpose of the project, the
agency resources available for the project, and the specific type of
outsourcing that would match the project.

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 Technology are to be transferred from other countries that is with fast-
changing pharmaceutical manufacturing processes, such knowledge is
important to make the local industry more efficient in the domestic and
overseas markets.
 Local regulatory authorities' reluctance must be reduced to allow multiple
active drugs in the country.
 Allow sufficient time to research the project fully, contacting any internal
or external experts available to the pharmaceutical.
 Conducting a cost-benefit analysis of the internal and external alternatives
 It is to have ownership and control over resource and personnel asset.
Conclusion:
Square pharmaceutical ltd maintains its position in Bangladesh. The strategies have been
proven to be one of the effective solutions for drug companies to quickly turn the
situation around as it provides them with the desired efficiency, flexibility and agility.