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Case Study One (1) Savior Box Limited (SBL), a private limited liability company, was established in 1974 by James Mensah, a Chemist who had spotted the opportunity to distribute Over Counter (OTC) drugs in his local area. James had no ambition to extend the business, seeing it as a means of making enough money to enjoy life with his family. When James retired, his son Edwin Mensah who has been associated with the business since childhood, took over. Edwin has known most of the staff, suppliers and local customers for much of his life. In the last ten years Edwin took over, the business has grown into a pharmaceutical empire with manufacturing, retailing & wholesale distribution and export. It still focuses on pharmaceutical products but supplies companies across West Africa and beyond. In recent years, he has appointed six directors, including his father, to help him run the increasingly complex organisation after retirement as a non-executive director. Edwin is aware that the business world is changing rapidly around him, and he needs to update the culture, structure and technology used in the business. His decision to appoint the directors two years ago resulted in a different approach to business and a change in the business culture. But, unfortunately, it did not improve the bottom line and profit. As a result, Edwin and the directors agreed at an earlier board meeting that some strategic review was needed. In 2020, the pharmaceutical industry in Ghana was valued at GH¢1.15 billion. It is expected to witness a compound annual growth rate (CAGR) of 21.4% and generate a revenue of GH¢2.06 billion by the end of 2023. SBL accounted for 5.65% of the entire Ghanaian pharmaceutical industry’s revenue in 2020 because of its large size, while others accounted for the remaining 94.35%. The pharmaceutical industry in Ghana is fragmented. In 2020, the generic pharmaceutical segment represented the highest revenue share of 51%, while the branded pharmaceutical segment represented the least. The over-the-counter (OTC) pharmaceutical segment is considerably large in Ghana, constituting 59.34% of the entire pharmaceutical industry, attributable to many local manufacturers, particularly in the anti-infectives, analgesics, and multivitamins product segments. In 2020, the anti-infectives therapeutic segment accounted for the highest revenue share of 30.02% of Ghana’s pharmaceutical industry. It is expected to witness a high CAGR from 2021 to 2024 and remain the most significant therapeutic segment during the forecast period. Although the oncology therapeutic segment accounted for the smallest revenue share in 2020, it is expected to be the fastest-growing segment during the forecast period, given the increasing awareness about cancer in Ghana. In addition, the recent achievement of 84% National Health Insurance Scheme (NHIS) coverage in Ghana in 2020 is expected to result in high growth of the pharmaceutical industry, particularly the prescription pharmaceutical (generic and branded) segment, because of the easy accessibility and affordability of medicines. Furthermore, the reasonable efforts of the Food and Drugs Authority (FDA) in Ghana to control parallel trading and imports of counterfeit drugs are expected to contribute to the growth of Ghana’s legitimate pharmaceutical industry. Furthermore, the government is also encouraging the local production of essential medicines to improve capacity utilisation and reduce imports. Question one (1) (i) What key areas did Edwin focus on to conduct internal analysis for Savior Box Limited? (ii) How can Edwin integrate strategy with the internal analysis he focused on? (ii) What growth strategy would you recommend to Savior Box Limited and why?
Answer:
Based on the information provided in the case study, here are my answers to your questions:
(i) What key areas did Edwin focus on to conduct internal analysis for Savior Box Limited?
From the case study, it is clear that Edwin recognized the need to update the culture, structure, and technology used in the business. He appointed six directors, including his father, to help him run the increasingly complex organization. It can be inferred that Edwin’s internal analysis focused on the following areas:
- Organizational structure and culture
- Staffing and personnel management
- Technology and IT infrastructure
- Business processes and operations
- Marketing and sales strategies
- Financial management and accounting practices
(ii) How can Edwin integrate strategy with the internal analysis he focused on?
To integrate strategy with the internal analysis, Edwin needs to take a step back and consider the overall direction and goals of the business. He should use the internal analysis to identify the strengths, weaknesses, opportunities, and threats (SWOT) facing the business. Based on this analysis, he should develop a clear and focused strategy that leverages the company’s strengths and addresses its weaknesses. The strategy should be communicated to all employees and stakeholders and should guide decision-making across all areas of the business.
(ii) What growth strategy would you recommend to Savior Box Limited and why?
Based on the information provided, I would recommend that Savior Box Limited pursue a combination of horizontal and vertical growth strategies. Horizontal growth involves expanding the company’s existing product lines or entering new markets with existing products. Vertical growth involves expanding into new areas of the value chain, such as manufacturing or distribution.
Here are some specific growth strategies that Savior Box Limited could consider:
- Diversifying into new product categories: Savior Box Limited could expand its product lines to include new categories of pharmaceutical products, such as medical devices or diagnostic tools.
- Expanding into new geographic markets: Savior Box Limited could explore opportunities to expand its distribution network beyond West Africa and into other markets, such as Europe or Asia
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Acquiring or partnering with complementary businesses: Savior Box Limited could consider acquiring or partnering with companies that offer complementary products or services to its existing business, such as a company that specializes in medical equipment or a contract manufacturing organization. Investing in research and development: Savior Box Limited could invest in research and development to develop new products or improve existing ones, which would help the company stay ahead of competitors and maintain its position as a leading pharmaceutical company in Ghana. Improving supply chain efficiency: Savior Box Limited could focus on improving its supply chain efficiency by investing in technology and optimizing its logistics operations, which would help the company reduce costs, increase productivity, and better serve its customers.
Overall, Savior Box Limited should choose growth strategies that are aligned with its strengths and capabilities, while also taking into account the changing dynamics of the pharmaceutical industry in Ghana and beyond. By pursuing a combination of horizontal and vertical growth strategies, the company can continue to grow and expand its market share while remaining competitive and profitable.
(iii) What steps can Edwin take to ensure successful implementation of the growth strategy?
To ensure successful implementation of the growth strategy, Edwin should take the following steps:
- Develop a clear plan: Edwin should develop a clear plan for implementing the growth strategy. This plan should outline the specific actions that need to be taken, who is responsible for each action, and the timeline for completion.
- Communicate the plan: The growth plan should be communicated to all employees and stakeholders in the organization. This will ensure that everyone is aware of the goals and objectives of the growth strategy and is working towards the same goal.
- Align the organization: Edwin should ensure that the organization is aligned with the growth strategy. This involves ensuring that the organizational structure, culture, and processes are designed to support the implementation of the growth strategy.
- Invest in resources: Edwin should invest in the necessary resources to support the growth strategy. This may involve hiring new staff, investing in new technology or equipment, or expanding the company’s facilities.
- Monitor progress: Edwin should monitor the progress of the growth strategy on an ongoing basis. This will enable him to identify any challenges or obstacles that arise and take corrective action as needed.
- Adjust the plan: Finally, Edwin should be willing to adjust the growth plan as needed. This may involve revising goals or timelines, reallocating resources, or changing the approach to implementation based on new information or changing circumstances.
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