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However, the term business environment refers to the External Factors. The external environment has two components i.e. business opportunities and threats to business.Definition of Business environment by Davis Keith “The Aggregate of all conditions events and influences that surround and affect business.”
Similarly, the organizational environment has two components i.e. Strengths and weaknesses of the organization. A SWOT analysis is thus the first step in strategy formulation.
Mission/objective, company image
Human resources, financial capabilities,
Technological capabilities, marketing capabilities,
Internal power relationship
Macro environment Business environment of the any organization:-
Now let’s see the business environment of Ranbaxy Laboratory ltd.
Ranbaxy laboratory ltd. is research based pharmaceutical company Ranbaxy is 1st pharmaceutical company in india in term of retail. It working in 49 countries across and it ranked on top ten generic companies in world. And manufacture different products
In 1961, ranbaxy was incorporated. Ranbaxy went public entered in international market in 1973; in 1987, ranbaxy started its production at Punjab and become india’s largest production of antibiotics. In 1988 ranbaxy plant got US FDA approval Ranbaxy launch its headquarters in UK and USA and listed on Luxemburg stock exchange in 1995 ranbaxy take over ohm laboratory ltd. In 1997, ranbaxy crosses its turnover of 1billion in term of sales. Ranbaxy entered in world’s biggest pharmaceutical market of USA in 1999 .ranbaxy take over BE Tabs pharma company of SA in 2006 and also entered in spain, italy, japan, Canada, brazil.
Micro environment of the Ranbaxy Laboratories Ltd.:-
There are two types of the micro environment that are (i) internal micro environment (ii) External micro environment.
Internal micro environment involves factor that affecting by the internal sources like company mission, company image, objective, Technological capabilities, marketing capabilities, financial capabilities, human resource etc.
Whereas external micro environment involves supplier, customer, labor union, media, financier, competitor.
Internal micro environment:-
The image of the company is very good in world wide. And well known trusted brand among the doctors. There for company earn 70% of their total revenue from abroad country like USA, Japan and African country.
In the year 2009 was characterized by change and management transition, with the landmark deal between Ranbaxy and Daiichi Sankyo resulting in the formation of a powerful Hybrid Business Model. The Ranbaxy Executive Leadership was reconstituted and the organization structure realigned, for building a more robust and integrated global business model. Along with facilitating this transition, HR has a renewed focus on increasing alignment with business and delivering organizational expectations. Reward and recognition is yet another critical component in Ranbaxy’s HR strategy.
Ranbaxy is a multination company and well establish worldwide today therefore recently they archived their 1$ billion vision in year 2003. So it is well financial capable and Ranbaxy’s performance in such challenging times improved with turnaround in profit in 2009. Consolidated sales during the year stood at Rs. 73,441 Mn, which reflects a modest growth over 2008 sales of Rs 72,555 Mn. There was a turnaround in the profitability of the company with Earnings before Interest tax Depreciation and Amortization (EDITDA) for the year at Rs. 11,991 Mn against a loss of Rs. 2,626 Mn for previous year. At the pofit after tax (PAT) level, the current year profit was at Rs. 3,107 Mn against a loss of Rs. 9,349 Mn in the previous year.
Market capabilities by product review
Central Nervous System (CNS)
The worldwide population with CNS disorders is on the rise driven by an ageing population. In 2001, CNS market in global was at US$ 52 Bn, In 2007 expected to be around US$ 77 Bn, representing an average annual growth of 6.8%.
Celica (Citalopram), a new anti-depressant, emerged as a leading brand in the segment, clocking sales of US$ 5.9 Mn. Other brands that contributed to this strategically important segment were Fortwin (Pentazocine: US$ 5.6 Mn), Calmpose (Diazepam: US$ 2.94 Mn), Ranflutin / Fluran (Fluoxetine: US$ 2.32 Mn) and Serlift (Sertraline Hcl: US$ 1.7 Mn).
Gastro Intestinal (GI)
Gastro Intestinal emerged as the second largest therapeutic category in 2002, with total sales of US$ 50.1 Mn. Histac (Ranitidine) with earnings of US$ 31.9 Mn, contributed immensely to this category. The other brands in the GI portfolio included Omesec / Romesec (Omeprazole: US$ 4.5 Mn), Gesdyp (Digestive Enzyme: US$ 2.6 Mn) and Pylobact (H.Pylori Kit: US$ 1.7 Mn). Raciper (Esomeprazole DR Tablets), launched this year, captured 26% of the market share in the category and ranked a close second.
Ranferon / Fenules (Iron supplement), Revital and Riconia (Micronutrients) are the Company’s flagship brands in this category. Ranbaxy launched the Global Consumer Healthcare business in October 2002, to capitalise on the immense opportunity offered by the Over-The-Counter segment. In the first phase, Revital, Pepfiz, Gesdyp and Garlic Pearls were brought under the new business to be promoted and marketed as OTC brands. More new products are scheduled for launch in 2003, to strengthen Ranbaxy’s foray in the OTC segment.
According to IMS forecasts, the overall sales of non-steroidal Anti-rheumatics will rise by 20% in the US market, as a result of the launch of COX-2 inhibitors. This equates to revenues in excess of US$ 2.5 Bn by 2008. Currently, these drugs account for over 20% of the Arthritis market.
Romilast (Montelukast) emerged as the brand leader in Oral Solids Respiratory market, recording sales of US$ 1.6 Mn, with a market share of 53%. This successful entry in the Asthma segment will be sustained by new product introductions in this market in 2003. Chericof (Cough preparation) and Altiva (Fexofenadine) were the other two key brands in the respiratory segment.
The Dermatology segment was a key focus area in 2002, and with a dedicated team of professionals, sales worth US$ 21.82 Mn was achieved. The key contributors were Diprovate range (Betamethasone and combinations: US$ 4.82 Mn) and Cecnoin / Isoacne (Isotretinoin: US$ 4.05 Mn).
The Genito-Urinary segment, including men’s health, was another prime focus area for Ranbaxy in 2002. Caverta registered sales worth US$ 3.08 Mn in the Sildenafil Citrate market in India. Cifran, Cifran OD, Zanocin and Zanocin OD continued to be among widely prescribed products by Urologists.
External micro environment
Ranbaxy made better relationship with its exporter supplier. Therefore Ranbaxy’s global supply chain is on way to the company’s 2012 global vision. The distribution and storage of goods has also benefited from advance in technology. The company comes to trust on its IT system, any problems with its system can have effect on financial and logistic operations.
The economy and business activity have always been covered by the media because these topics affected so many people. Today, thought, mass communication allow increasingly extensive and supplicated coverage, ranging from general news reports to feature articles to in depth investigative exposes. When news spread out that Ranbaxy merge into the Daiichi and this news made highly impact on the Ranbaxy’s market share. Same situation made when news came that US FDA band the medicine that made in the Toansa plant in India and within these news their market share suddenly fall down.
To inches its market share of the market, an organization must take advantage of the one of two opportunities: (1) it must gain additional customers, either by garnering a garter market share by finding ways to increase the size of the market itself; or (2) it must beat its competitors in entering and winning in an expanding market. Ranbaxy do well in both these opportunities and give strong fight to their competitor in all the field. The top competitors of the Ranbaxy lab. Are Glaxosmithkline Pharmaceuticals Limited, lupin limited, Nicholas Piramal India limited, Cipla Limited, Dr. Reddy’s laboratories Limited.
Personnel specialists generally deal with an organization’s labor supply, sometimes supplemented by other manager with specific hiring and negotiating responsibilities. When the organization employs labor union members, union and management normally engage in some form of collective bargaining to negotiate wages, working conditions, hours and so on. But in the Ranbaxy these such thing does not happened because in the organization all the employee are very satisfied with company and Ranbaxy also take care of their employee like family.
Customers exchange resources, usually in the form of money, for an organization’s products and service. A customer may be an institution, such as a school, hospital, or government agency or another firm. A marketing manger analyzes the potential customers and market conditions and directs a marketing campaign based on that analysis.
The Diagnostics division identified two key areas for business growth – Customer Needs and Service, with focus on product groups. The division restructured its business into three Strategic Business Units (SBUs): Chemistry & Haematology, Immuno-diagnostics and Channel Partners. The restructuring resulted in increased sales and customer satisfaction and growth in all the three segments.
A strategic decision to focus on value-added product lines enabled Ranbaxy Fine Chemicals Limited (RFCL) to achieve sales of Rs. 329 Mn (US$ 6.85 Mn) for the year 2002. The division ranked 4th in the industry and captured 11% of the market share. The core Reagents business grew by 15% during the year as against a market growth of 10%. The HPLC Solvent product line achieved a 25% increase in volumes. RFCL presently has a 27% share in the HPLC solvents market.
Organizations depend on verity of financial institutions, including commercial banks, investment banks, and insurance companies, to supply funds for maintaining and expanding their activities. Organization may rely on short term loans to finance current operations and on long term loans to build new facilities or acquire new equipment. For that company keep touch with bank like ABN AMRO Bank, Barclays Bank of Kenya Ltd., Citi Bank, The HongKong & Shanghai banking Corporation, Standbic Bank, IDBI Bnk, State Bank of India, Federal Bank, Punjab National Bank.
The economic environments are depending upon demand, supply situation, profitability, and competitiveness and pricing factor.
The Government of india spend a very little part of GDP on healthcare (about 1.2%).that means demand of health care industries increases. India has very low per capita income (Rs12,890)that’s why most of Indian are not affordable the medicine. RBI (reserve bank of india) credit policy also affect on business. Ranbaxy is multination company therefore change in forex rate may effect on company. Many products of Ranbaxy like vaccine, medicine made by commodity. So commodities price effect on business.
The political environment refer to the act upon apply by three political institution directing, developing and controlling the business. If change industry and finance minister are threat of industries because they change the polices and regularities as well as price control.
In 2005 January, the Indian government established the IPR(intellectual property rights). this rules effect on most pharma company. Ranbaxy apply this rules on invert-engineering ways. This also support competing company who are manufacturing same drug. and government changes Excise duty on manufacturing drug so that making of drug more costly. Factors that may influence an organization’s activities as a result of the political process or climate. Banned of the drug that is manufacture in Tonasa plant by US FDA effect the image of the company worldwide.
Technologist and pharmacist are most important role in Pharma Company. Ranbaxy has improve in advanced biomedical equipment which increase output and decrease cost. Invent new drug delivery system. Ranbaxy has research on AIDS drug, hepatitis B vaccine and many other molecules drug. Ranbaxy also research on cheapest drug so poor people can buy it.
Ranbaxy is a multination company. It is basically oriented from india. In india, about 1million children age of under five are use polluted water and poor sanitation. Increasing pollution as result more health care problem. In the Ranbaxy, its manufacture plant is situated in the SEZ (Special Economical Zones) area therefore well availability of the labor supply and their distribution network available in the all the part of the country.
Ranbaxy is on top 10 global generic pharmaceutical companies.
59 % No. of employee increase in last ten year
187 % sales increase in last ten year
283% of the exports increase in last ten year
Billion $ company
In the year their profit after tax is 10,448 Mn
Share capital ; In the year 2009 ->2, 101.9 Mn
70 % of Ranbaxy’s revenues come from abroad.
Well known brand in the world market
Highly risk takers because they believe in high risk high return policy
Recently they facing problem with US FDA for their Toansa plant.
In india low level of biotechnology and new drug discovery system
In Generics Drugs
Herbal drug research for potential therapeutic interventions for multigenic complex diseases, such as diabetes and inflammation.
New delivery system
Consumer litigation in the US
In Country like India people now day shifted Allopathic to the Ayruveda, Yoga, Unani, Homoeopathy
High entry cost on newer market
Competitive Structure of Industries (porter’s model)
In business environment competitive structure of industries is most important.
Identification of forces affect the competitive industry is very useful in making strategies.
As per Micheal porter’s model , industries competition depends on
Rivalry among Existing firms:
Pharma industry are mutually dependent. there are lots of pharma industries in the country are fighting for same pie. The top company in the country has only 6% market share, and top five company has nearly18% market share.
So, the concentration ratio is low in pharma industries and because of high growth prospects in the industries attracts new company.
Another factor which makes industry competition more tough is low barriers to enter in the pharma industry. The working capital is high but the fixed cost is low.
Threat of Entry
pharmaceutical industries is profitable so potential competition tend to be high that’s why threat of new company entering the pharma sector. The fund requirement for company is very low So, develop brand name and relation with doctor are the main factor for long term survival. Government policies are must be follow by pharma industry.
Threat of substitutes
One benefit in pharma industry is demand of pharma product continues.Because of good long future of this industry there is a big threat of high competition.
Because of innovations in biotechnology in recent times is the big drawback to the synthetic pharma industry.
Bargaining power of buyers
The bargaining power in pharmaceutical company is quite low, because customer have to buy what to doctor says. So there is only effect of the product price.
The buyers in the pharma industry is scattered so there is not much effect of power in product’s price. However the government plays important role in pricing.
Bargaining power of supplier
The pharma industry use many chemicals to make their products. The chemical market for pharma industry is like a commodity. So there is less bargaining power for the suppliers because company can change supplier if they are making more bargaining.
7S model of Ranbaxy
Strategy:-Ranbaxy looked the marketed product demands, competitors and value then he entered the global market. The main strategy of Ranbaxy is to maintain the drug and focused diversified drugs.
System:-all the staff of Ranbaxy strictly followed and maintains a maximum effectiveness and Ranbaxy modernizing their process to make better quick decision.
Structure:- Dr. tsutomu uno and mr.atul sobti are the chairman and managing director of company respectively
Shared value:-the managements of company are focused on company profit and all the employee of company are working together and achieve goal.
Staff:-Ranbaxy has over 60,000 employees across different countries. The Ranbaxy being looking for more generates people in business field and recruit a fresh mind staff.
Style/culture:- Ranbaxy started with very small pharmaceutical company and now it’s marked capitalization over billions.
Skill:- Ranbaxy have skill on enhance learning effective are of research and have knowledgeable management.
Ranbaxy should continue to improve its generic drug. Ranbaxy should watch in the market product price, patient, demand than decided to launch in the market. In U.S Ranbaxy should develop its own infrastructure rather than his partner Ranbaxy more invest in research& development. Ranbaxy have to arrange medical seminar as well as medical camp also they have to provide free medical camp, which makes generate good image for company. Ranbaxy deliver more project of value
There are lots of ways to business organization can achieve success in the market. Analysis of The Ranbaxy I conclude that the main aim of Ranbaxy is to maintain the high quality of drug. There is most effect on company to growing Glaxosmithkline Pharmaceuticals Limited, lupin limited and cipla pharmaceutical ltd. Ranbaxy company has a very strong microenvironment factor. Ranbaxy grew diversified global business.
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