Monday, February 4, 2019
Sunday, February 3, 2019
Survey Methodology and Sampling Frame
Survey Methodology and Sampling Frame
Introduction
In the present years, the Food Discount Retailing in Greater London has risen to record levels. This has followed a time of gradual rise in the number of stores and also greater favorable trading conditions for the discounters which ultimately resulted in the global financial problem and recession during the late of the 20th century. The deep discounters have got attractive growth prospects though the market share has dropped slightly in these few months in the store networks of Greater London. The main aim of this paper is to see that where the discount retailers could expand in the future, basically by WM Morrison.Task 1
P1.1 collection of primary and secondary data
Data are considered to be the basic input in any decision making process in business. The collection of primary and secondary data is very essential in order to undertake proper business decision.
The data which is collected for the first time in order to conduct the research is called primary. The primary data helps a researcher to conduct the research by analysing the current data collected from the research. The primary data collected in the research will help to address the targeted problems. The primary data is useful for current as well as future studies. The primary data collected can be examined and interpreted by the marketing based on their needs. The primary data is considered to be a very essential tool as they are accurate for analysis. However, the collection of primary data requires great effort of the researcher and is quite time consuming. The primary data collection is also expensive
In the course of market research, the plan for collection of primary of consumer behaviour will involve survey questionnaire which is helpful in deriving knowledge on a matter or a process. We will get a number of solutions from the questions placed on the survey conducted, in a survey questionnaire. The questions will be asked to the people targeted and their responses will be counted for the purpose of reaching a decision and thereby after researching it will help the management of WM Morrison to set the plans and ideas thereby.
Different customer bases have been profiled in Yorkshire and London and the growth of the discounters has also been plotted in Greater London. This will help to throw questions on the target users and non-users regarding their primary food destination.
Secondary data can be defined as the data which has been gathered previously for some another purpose. Thus, secondary data is the data which is being reused. The collection of secondary data required less effort of the researcher. The collection of secondary data is time saving and is not expensive. The secondary data can be gathered from internet, books, magazines, journals.
In the current scenario, the management of Morrison’s can gather the secondary data from journals, internet and web about the different ways to provide food discount retailing that will be able to satisfy their customers.
P1.2 survey methodology and sampling frame used for a survey
In relation with the plan selected to undertake the Food Discount Retailing in Greater London, the management can decide to initiate a survey that will accumulate the opinions of the potential users or non-users of Discount Food Retailers. The survey will be initiated rigorously to accumulate and produce the unbiased views of the target people which in turn will help in getting an idea that whether undertaking the Food Discount Retailing in Greater London will be a helpful step to meet the price wars and also the edge of competition (Groves, 2004).
The management have decided to conduct the survey on nearly 200 people including users and non-users of Discount food retailers, and ask them the below selected questions face to face and their views will be accumulated as responses for the research and that will be used for future analysis by the company. A presentable questionnaire has been framed for carrying out the survey. A questionnaire has been prepared to pick the response of 100 randomly selected people. The survey questionnaire will be set in such a way that the people can easily answer them and the questions are not confusing to them.
Sample frame is said to be the selected quantity of the population upon whom the survey will be taken. The sample frame selected for the purpose of conducting the survey is 100 users and non-users (Mäkelä and Huhtanen, 2010).
P1.3 Questionnaire for a survey
A questionnaire is regarded as a set of questions that are mainly used for the purpose of conducting a survey. Designing a questionnaire requires a definite purpose. The questions that are included in a questionnaire are asked to a selected sample population in order to get their opinion, which are very vital for the market (Survey Questionnaire, 1981). The framing of a questionnaire include three important steps, which are mentioned below:
- Simple and easy to understand
- Direct
- Relevant to the issues.
Everything has its advantage as well as disadvantage. In this case, preparing a questionnaire also includes both the advantages and disadvantages. The advantage of using a questionnaire for conducting a survey is that one can ask various questions to the public over a single topic. On the other hand the disadvantage of using questionnaire is that it is a time consuming activity (Brace, 2008).
In this case, the management of WM Morrison is undertaking a survey with the use of questionnaire. It will contain various questions that will be asked to the selected population and mainly the purpose of the questionnaire is to gather the opinion of the sample population regarding their attitude and behavior of food discount retailing.
Saturday, February 2, 2019
Risk Management Committees
This is a solution of Risk Management Committees in which we discuss Developing business IT strategy can help your company cope with aging systems and limited resources that can lead to fragmented IT solutions.
Introduction
Risk management is one of the necessary elements of an organization, which ensures a safe environment for the employees who are working in it. It is necessary to have a risk assessment plan because, this plan will ensure that the potential threats are being mitigated and the company is having a proper development in the market where it is performing. There are many methodologies, which can be applied for mitigation of issues, but a proper evaluation is necessary before making any kind of approach. In this regard, it is important to have a plan for situational analysis and implementation of relevant methodologies for proper kind of development. The assignment is going to focus mainly on the aspects that are relevant in risk management and in the later part Walmart will be incorporated as risk management implementable organization.Mission of Risk Management Committees
The main mission of the company Walmart is to have a good growth in the highly competitive market. It is possible if the company makes sure that, the entire internal segment is working in accordance with the needs of the market. The risk factors that are present in the internal part of the company need to be checked strategically. The management needs to ensure that the entire company is working as a group to mitigate the risk factors that are present in the system (Speights, Downs, & Raz, 2017). In this context, one thing needs to be ensured and that is assessment of the risk finding measures. Therefore, the mission of the company should be mitigating the risk factors which are potent enough to harm an employee.
Vision
From the initiation phase, the company was focusing on the aspect that was related to proper kind of situational management. In this context, risk management is a necessary aspect and that is why the vision of the company is important to be highlighted. The company looks forward towards development and in this context; the company has to analyse the factors which might cause major risk to the entire internal environment (Kerzner & Kerzner, 2017). The company wants to keep the reputation of the company intact and in this regard, the company has to take necessary steps for a proper kind of risk management.
Goals
The main goal of the company is to earn more revenue and give customers what they need in the most affordable rate. In this process, the company has to minimize the costs that are occurring in the medium. There are many cases where it is seen that the company took revolutionary steps to mitigate the issues that were being faced by them. In this regard, the company has to make sure that the employees are working in a proficient environment without any risk factors. Therefore, it can be stated that the goal of the company is to find out the issues that might cause harm to the employees by causing fatal accidents. In this aspect this can be argued that the risk managementhas a good relationship with company background betterment and revenue generation.
Objectives
The main objective of the assessment is to address certain risk mitigating measures to the company so that it can have a better kind of effects on the development of the organization. There are few objectives that can be taken under consideration in this aspect. The development of the company ambience is one of the most necessary things, which can be taken as an objective (Patti et al., 2017). Another objective is ensuring a safe environment to the employees so that they can increase the productivity rate.
Stake holders
The main stakeholders of a company are those people who get affected due to implementation of different kind of organizational policies. In this regard, Walmart is one of the major companies, which have the effective customer affecting nature with its decision-making. In this context, the stakeholders are mainly customers, employees, stock holders, management, partners who are working with the company and many others. The main thing that needs to be focused is how the company is focusing on the different kind of approach strategies. The risk management process affects the stake holders too and in this case the stake holders can be divided into different kind of segments (Panmore Institute, 2015).
Management’s decision affects the employees who are working in a risk free environment. The decisions related to risk management raises the trust of an employee and this blows a great impact on the development of the entire organization. The employees have a good kind of communication within each other and this risk mitigating features helps in developing a proper communication with the customers too. Risk management helps in developing a proper kind of relationship that affects all the stake holders of the organization. Walmart needs to focus on ensuring sustainable growth in the stakeholders’ list to have an effective progress in the current market.
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Friday, February 1, 2019
Teacher premium should be limited to 2%, says the government
Teacher premium should be limited to 2%, says the government
Extremely Disappointing '
Monday, January 21, 2019
Taxation Assignment Help
Taxation Assignment Help
Institution
Question ONE
The Income Tax Assessment Act of 1997 provides several cases on how expenditure on some items is to be treated for tax accounting purposes. The various expenditures incurred by a business are treated differently, depending on theirclassifications. The following are few situations, and how they are treated:
- a) During project execution, machines may be moved. Some cost is incurred when moving machinery from one site to another. The cost incurred during such movement of machinery is known as expenditure on capital, or capital expenditure. According to section 8-1 of the Income Tax Assessment Act of 199797, there are no deductions on capital expenditure (Afshari-Jouybari, H., & Farahnaky, 2011). When these costs are involved, the depreciation of the asset increases, increasing the amount of depreciation included for the purpose of accounting.
- b) Revaluation of assets is sometimes needed in order to obtain insurance policies ( John Wiley & Sons, 2012). Sometimes, this process may incur some expenses in terms of paying the valuers and other associated costs. These kind of expenses results into increase in expenditure on fixed assets (Fritz, & Schiefer, 2009). Tax deductibility on these expenses occurs if the expenses result to reduction of the capacity of the entity to make profits. Under section 8-1 of the Income Tax Assessment Act of 1997, if the expenditure positively influences the capacity of earning revenue, then it is deductible for taxation purposes because such benefits are not to be experienced for a long period of time.
- c) Legal expenses incurred by a company opposing a petition for winding up.
Companies are legal artificial persons who have the capacity to enter into legal suits on its own without the involvement of the owners. As a result, it will require the services of legal personnel, which are paid for. During winding up, legal cases are involved, and there two factors that are considered when deciding on the taxation behavior of the expenses involve. These are the structure of the expenditure and effect on the ability of the business to earn income. If there is an interruption on the normal operations of the business, it means that the ability or capacity of the firm to make profit is negatively affected. In this case, the expense is a capital expenditure, hence no deductions made (Afshari-Jouybari, H., & Farahnaky, 2011). Looking into the other side, if the results of the case greatly influence the general process of the business operation, the expenditure involved is considered as revenue when accounting for taxation.
- d) Legal expenses incurred for the services of a solicitor in respect of a number of matters
Lawyer charges, litigation fees and many other legal expenses are incurred during the life of any business entity (Hoch, Roeding, Lindner, & Purkert, G. 2010). These kinds of expenses are known as investment or business expenses. They affect the normal operations of the business and are fully deductible. There are many business expenses, which include but not limited to the following: negotiating employment terms with order workers and wrongful dismissal expenses, defamation charges, evicting a tenant who has defaulted in rent payment, to mention but a few.
The following costs are also deductible:
Costs incurred in amending an existing employment agreement are deductible; however, costs associated with securing an employment agreement with a new employer are not deductible to the employee.
Costs incurred in arbitration; settling disputes arising out of employment agreements are deductible for both employers and employees. Costs of amending existing terms and conditions of employment with the same employer are also deductible, as well as the Costs of renewing or extending a contract of employment that have a fixed term (Gelinas & Dull, 2008).
There are other legal charges incurred by individuals, which do not amount to any effect on the business. Those incurred by individuals are not deductible, and include loan discharge expenses, borrowing expenses and expenses on lease payment valuation, the cost of negotiating employment contracts, defending driving charges, charges of sexual harassment in the workplace, eviction of a tenant after term expiry, etc. They are capital expenses in nature (Fritz, & Schiefer, 2009).
Section 8-1 of the Income Tax Assessment Act 1997 is the key provision which relates to general deductions ( John Wiley & Sons, 2012). This provides that one can deduct from their assessable income any loss or outgoing to the extent that it is incurred in gaining or producing the assessable income or it is necessarily incurred in the course of doing business with aim of gaining assessable income.
The section also provides cases when one cannot deduct a loss. These cases include if it is a loss or a capital nature or when it is a loss or outgoing of a private or domestic nature (Afshari-Jouybari, H., & Farahnaky, 2011). Finally, a loss or outgoing that can be deducted under this section is called a general deduction.
Moreover, the section allows the taxpayer to subtract all losses suffered in the process of acquiring assessable income. Taxpayers are not however permitted to deduct a loss of capital or domestic nature. Capital expenses are quite hard to claim an allowable deduction.
Question two
The total Expenditure incurred by the business = $ 1,650,000
Subtract cost incurred on advertisement through television = $550,000 (taxable)
Remaining amount which is not taxable= $ 1,100,000 (not taxable)
Let us assume the total amount of GST paid = $ 1,650,000 * 10/110 = $150,000
GST that was incurred on print media = $1,100,000 * 10/110 = $100,000 (this is exempted for taxation)
Expenditure amount on television media = $ 550000 * 10/110 = $ 50,000
The difference on print media is given by ($150,000- $50,000 =$100,000). This amount can be claimed as input tax credit
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Question Three.
One can claim the foreign income tax offset in his/ her income tax return. This is done in order to discourage double taxation. This is done excluding any penalties and interest and disregarding any tax offsets. In order to arrive at Angelo’s s foreign income tax that is offset, the limit is first computed using the following few steps:
First Step:
The first step will be to calculate the gross tax payable on his taxable income
Tax on $62,000 (note medical expenses are not deductible): $12,937 (includes Medicare levy of 2%)
Second Step: the second step will be computing the tax that would be payable depending on some factors:
- His assessable income is not inclusive of any amount where foreign income tax has been paid and his foreign income tax offset or other non-Australian source amounts, calculated as follows:
| Details | Amount ($) |
| Employment income from United States | 12,000 |
| Employment income from United Kingdom | 8,000 |
| Rental income from United Kingdom | 2,000 |
| Dividend income from United Kingdom | 1,200 |
| Interest income from United Kingdom | 800 |
| Total | 24,000 |
The difference between the foreign income tax that Aangelo has paid and the offset limit cannot be refunded or carried forward to a future income year (Afshari-Jouybari, & Farahnaky, 2011). It should be noted that foreign income tax is deducted from the person’s assessable income, and this provides an explanation as to why it was deducted from income at this step.
- Any expenses that are close to the amounts included in Aangelo’s assessable income on which foreign income tax has been paid, as long as the tax counts towards his foreign income tax offset, or other non-Australian amounts that are part of his assessable income (excluding debt deductions).
| Expense item | Amount ($) |
| Expenses incurred when obtaining employment income from United States | 900 |
| Expenses incurred when determining the amount of rental income from the United Kingdom | 500 |
| Total expenses | 1,400 |
*it is important to state that the deductions of $200 and $ 400 relating to the United Kingdom dividends and interest income are not disregarded. This is so due to the fact that Angelo does not have a permanent resident in the foreign country.
The calculation is as shown in the steps below:
| Total Assessable income (not including the amount in 2(a)above | $44,000 |
| Less allowable deduction (disregarding Step) | 4,600 |
| Taxable income under Step 2 assumptions: | 39,400 |
Tax on $39,400 (inclusive of a 2% Medicare levy) $5,140
Step 3; Get the difference in step 2 and 1 above gives us his foreign income tax offset limit.
$12,937 – $5,140 = $7,797
Since he had paid foreign income tax of $4,400, he is entitled to a full offset of that amount.
Question 4
Answer
The following is a table, showing how the calculations are done.
| Details | Amount $ |
| Assessable income: total amount of accessible income | |
| – sales: s.6-5 ITAA97 | 400,000 |
| – bank interest: ditto | 10,000 |
| – dividend: s.44 ITAA36 | 21,000 |
| – imputation gross up ($21,000 x 30/70 x 60%): s.207-20 ITAA97 | 5,400 |
| – bad debt recovered: s.20-30 ITAA97 | 10,000 |
| – exempt income: not assessable: s.6-20 ITAA97 | – |
| – capital gain: regarded as made by the partners individually: s.106-5 ITAA97 | – |
| Deductions made: | |
| – sales proceeds stolen by employee: s.25-45 ITAA97 | 3,000 |
| – partners’ salaries: not deductible: Scott | – |
| – FBT: s.8-1 ITAA97 | 16,000 |
| – interest on partner’s capital: not deductible | 2,000 |
| – interest on partner’s loan: deductible: s.8-1 ITAA97 | 4,000 |
| – travel expenses of Johnny between home and office: personal expenses: not deductible | 3,000 |
| – legal fees for office lease renewal: s.8-1 ITAA97 | 2,000 |
| – legal expenses for preparation of partnership agreement: capital expenses: ditto | 4,400 |
| – legal fees for new office lease: ditto | 700 |
| – debt collection expenses: ditto | 500 |
| – council rates: ditto | 500 |
| – staff salaries ($25,000 – 5,000): ss.8-1 & 26-35 ITAA97 | 20,000 |
| – purchase of trading stock: s.8-1 ITAA97 | 30,000 |
| – rent on shop: ditto | 20,000 |
| – provision for bad debts: not deductible until written off: s.25-35 ITAA97 | – |
| – business lunches: not deductible assuming the expenses are not subject to FBT: ss.32-5 & 32-20 ITAA97 | – |
| – excess of opening stock over closing stock ($20,000 – 16,000): s.70-35 ITAA97 | 4,000 |
| – net partnership loss last income year: not deductible, as the amount was attributed to partners last income year | – |
| Net income of partnership | 345,700 |
From the above computation, we obtain an income of $ 345,700 from the partnership.
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References
Afshari-Jouybari, H., & Farahnaky, A. (2011). Evaluation of Photoshop software potential for food colorimetry. Journal of Food Engineering, 106(2), 170-175.
Fritz, M., & Schiefer, G. (2009). Tracking, tracing, and business process interests in food commodities: A multi-level decision complexity. International Journal of Production Economics, 117(2), 317-329.
Gelinas, U. J. & Dull, R. B., (2008). Accounting Information Systems. s.l.:Thomson/South- Western.
Hoch, D. J., Roeding, C., Lindner, S. K., & Purkert, G. (2010). Secrets of software success (pp. 23-40). Boston: Harvard Business School Press
John Wiley & Sons, (2012). Accounting Information Systems: Understanding Business Processes. 4th ed. s.l.:John Wiley & Sons.
Johnson, S. (2013). Fresh Item Management: Lessons in DSS, ERP and SCM from a Grocery Bakery Department. AMCIS 2003 Proceedings, 415.
Microsoft, (2015). Microsoft Dynamics. [Online]
Maiden, N. A., & Ncube, C. (2008). Acquiring COTS software selection requirements. IEEE software, 15(2), 46-56.( Maiden, N. A., & Ncube, C. (2008).
Order, S. (2012). Sage 100 ERP.
Romney, M. B. & Steinbart, P. J., (2014). Accounting Information Systems. s.l.:Pearson.
Soliman, F., & Youssef, M. A. (2008). The role of SAP software in business process re- engineering. International Journal of Operations & Production Management, 18(9/10), 886-895.
Strategic Management MGT8002 Assignment Help
1. Introduction
Modern Pharmaceutical industry is known as one of the big revenue generation and profitable businesses in the world with an expected annual growth of 7.5% between 2014 to 2019.In 2014 pharmaceutical income of the world has reached up to one trillion U.S dollars for the first time of the history. Majority of this income has mainly generated from ten leading pharmaceutical companies located in North America, South America and Europe. (Global Pharmaceutical Industry – Statistics & Facts).They represent about 85% of the market share while United States remains as the leading market over 45% of the market share and GDP of 3%.(WHO 2015)Asia Pacific region is becoming a major player in the market having China as largest GDP contributor. While Japan and Australia competing with China as second and third largest, Malaysia is struggling to increase the market share because of large young population of about 32.2% out of 63.4% of age group between 15 and 64.Accordinly there is less need for medication compared to countries with large aged population such as Australia and Japan.
There are four different pharmaceuticals product lines in Malaysia: prescription medicines, over the counter products(OTC), traditional medicines and food/health supplements .Home Pharmaceutical (HP) is concentrate about three strategic business units (SBUs) namely over the counter products, hearing devices and health food supplements unit.OTC products line continue to grow because it generates a lot of savings for the health care systems in many countries specially in developing countries. Research has found out that in 2015,OTC line of business has generated about US$ seventy billion worldwide .(PharmExec.com)
There are some opportunities available in the Malaysian market with an expected growth of 13% p.a. Accordingly HP should be able to take advantages of the situation being 6 major local companies in the industry. However it will not be easy for HP to stay competitive and enter in to export markets because of the establishment of multinational pharmaceutical firms in the country. This has become one of the main reasons for capitalization need of US$70 million in 2016 alone in order to remain competitive.
2. Industry Analysis-PESTEL Analysis
PESTEL analysis helps to understand market growth or decline, and as such the position, potential and direction for a business (Miller; Vendome;McBrewster,2011) application of this analysis is as follows,
| Political
1. Government polices to encourage foreign investments.
2. Low government expenditure on health care sector compared to developed countries
| Economical
1. Health care sector as one of ten Key National Economic Areas (NKEAs)
2. Medical tourism has become another key factor
| Technological
1. Online opportunities and marketing
2. Tax incentives for innovation
|
| Legal
1. Off-Take agreement scheme under EPP 3
2. amendments to the ASEAN China frame work agreement
3. European Free Trade agreement
| Social
1. Growing elderly population
2. Suitable environment to do business
3. Eco system to grow clinical research
| Environmental
1. Corporate social responsibility
2. Health conscious population
|
PESTEL Narratives
Political
Political environment of Malaysia likely to have favorable situation for the foreign investments by encouraging the access of foreign product in local market. Malaysian Ministry of Health has introduced entry point projects, and international harmonization of the regulation under Drug Control Authority to promote multinational pharmaceutical companies by setting up licensing arrangements with local incorporated companies. Also government have recently introduced a procedure to inspect foreign manufacturing facilities compared with regular inspection of local firms. Local doctors chemist chains and hospitals are starting to favor medicines coming from global multinational international firms. Accordingly it doesn’t seems that government is taking initiatives to impose barriers for the entry of imported generic drugs to local market. These factors will certainly bring competition to HP.
On the other hand government does not budget same level of expenditure on public health compared to developed countries in the Asia Pacific region such as Australia. In Malaysia 55% of health care facilities is funded by government and 45% have fund by the patient.60% to 70% of patients go to public hospitals. If the drug is not listed in the hospital patient does not get access the innovative drugs. (PharmExec.com)
Legal
Malaysian government has entered in to several agreements with other countries in order to support and enhance trading activities of the country. Introduction of Off-Take agreement scheme under EPP 3 has created a lot opportunities to local pharmaceutical companies to export their products. (PharmExec.com)
Also amendments to the ASEAN China frame work agreement has enhanced economic corporation and free trade activities between Malaysia and China .This facilitates exports and imports of pharmaceutical products from and in to China without any duty. Similarly new European Free Trade agreement should reduce or remove the barriers of exports and imports of pharmaceutical products between countries. Accordingly this will lead HP to look at exporting opportunities seriously.
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Economical
Pharmaceutical market in Malaysia is registering a compound annual growth of 9.5% according to research and consulting firm global data (Cphl south East Asia).Malaysian government has identified health care sector as one of ten Key National Economic Areas (NKEAs) with the aim that health care sector would assist move forward Malaysia in to high income nation by 2020 (AIM2016).Medical tourism has become another key factor in Malaysian pharmaceutical and health care sector by increasing revenue in the sector by 51%.Accordinly by 2020 healthcare NKEA intend to generate US$ 10.15 billion Gross National Income and create 180,000 new employments. (PharmExec.com)
Social
Malaysia healthcare market has a huge potential for growth because of increasing elderly population in the country. Country is aiming an increase of aged population 65 and above at a rate of 7% in 2020.(Department of Statics 2013).Also according to world bank ranking country has ranked as 23th best country in the world to do business. Also Malaysia has ranked third largest recipient of foreign direct investment in the ASEAN nations. Malaysia government is considering an Entry Point Project (EPP 2) to support eco system by introducing 1000 clinical trials per year .
Environmental
Growing environment agenda in Malaysian business has become a key factor. There is also requirement for companies to comply with corporate social responsibility. Accordingly Pharmaceutical companies should work together with professional bodies and regulatory authorities to comply with those procedures in developing and marketing a new product to the market. Also people in Malaysia have started to become health conscious and this has contributed to increase the demand for OTC and food/health supplements which is a good sign of growth in HP’s business in future.
Technological
Online opportunities are available for people in Malaysia for channeling doctors, ordering OTCand food supplements ,healthcare programmers to name a few. Also government is encouraging companies for bio technology, technology acquisition and new drug discoveries by introducing investment tax allowance incentives which HP can work with government to get benefit out of it easily because of their established name for research and new product development .
3. Industry Analysis-Porter’s Five Forces
| Bargaining power of suppliers
High
· High switching cost
· High production cost of medicines and medical equipment
· Ability to integrate forward
|
Strategic Management MGT8002 Assignment Help
| Competitive rivalry
High
· There are about 234 players in the market
· Expansion in the industry
· Government incentives flexible investment and exchange policies.
|
| Threat of substitution
High
· Increase cost of medicine of MNEs
· Cheap medicines imported from China and Europe
· Physical herbal treatments
|
| Threats of new entrants
Low
· Low entry barriers
· Government incentives
· Constant growth
|
Strategic Management MGT8002 Assignment Help
| Bargaining power of customers
Low to medium
· High prices of branded medicines
· Easy to switch to substitutes
Porter’s Five Forces Narratives
|
According to Michael E Porter ,five forces analysis is a framework for analysis of industry structure and competitiveness of the companies. He identifies four other competitive forces apart from industry rival to analyse the competiveness which will support to achieve medium and long run profitability of a company .Accordingly five forces are; rivalry among existing competitors, bargaining power of customers, bargaining power of suppliers ,the treat of substitute, threat of new entrants.
The pharmaceutical industry in Malaysia is highly competitive because of existence of many local and overseas pharmaceutical companies .There about 234 companies registered under Drug Control Authority in Malaysia as traditional and modern medicine firms. The lack of entry barriers such as government incentives and tax savings ,liberal investment and exchange control policies quality of life, developed infrastructure, exemption from duty on raw materials, skilled workforce, vibrant business environment are inviting factors of foreign investors and low entry barriers in the industry (MIDA 2013)
This has caused to import or manufacture cheap medicine in the country and increase in the rivalry between companies. Further pharmaceutical industry has recorded a constant growth over the years and there is a high potential for industry expansion.
The threat of substitutes appear to be high because of increasing cost of medicine produced by multinational companies. This has led to higher demand of locally produced generic medicines which do not have high cost connected with research and development and superior marketing such as packaging. Also amendments to the ASEAN China framework agreement and new European Free Trade Agreement has lead to import cheap medicine in to the country to replace some generic and OTC medicines. Also Malaysia is well-known for message and spa treatments. Spending money on physical herbal treatments will act as a substitute for food/health medicine produced in the country.
Bargaining power of suppliers appears to be high because of high production cost of medicine and high switching cost due to cost of technology and long term investment . Generally MNC are powerful and they have become the main suppliers of medical equipments and technology of producing medicines and medical equipment because they are the only one able to incorporate high cost of production in to their economic of scales.(Linda Ge, 2011)
On the other hand bargaining power of customers appear to be low for generic products due to high prices of branded medicine. However with the increase of substitute displaying in the market doctors ,chemist chains and hospital are starting to favour global generic and getting more powerful in bargaining.
. Industry Analysis -Key Success Factors (KSFs)
| Key Success Factor | Current achievements’ | Future achievements |
|
Growth in population and health care sector
| · 1.2billion worth of Pharmaceutical market
· 585million worth of medical device market
· Healthcare expense represent 4.75% in GDP
| · 3.7billion worth of Pharmaceutical market by 2020
· Medical device market will constitute 25% of health care market by 2020
· Healthcare expense represent 10% in GDP by 2020
·
|
|
Medical tourism
| · The sector has represented USD 200milion in 2016
· Healthcare tourism market has increased by 63% in terms of patients in 2016
| · The sector will represent USD 530milion in 2016
· Healthcare tourism market expect to increase by 80% in terms of patients by 2020
|
|
Government Coverage for health care
|
· Government covers about 55% of public medical expenditure
|
· Government is planning to implement universal healthcare coverage by 2020.
|
|
Skilled work force
|
· Skilled workforce with low wage structure
|
· Become a high income country by 2020.
|
|
Government Incentives
| · Tax incentives,
· Duty exemptions on raw materials,
· Liberal exchange and investment policies
| · Malaysia to become Pharmaceutical hub in Southeast Asia region by 2020. |
Key Success Factors Narrative
High birth rate, low mortality rate and increased life expectancy has caused growth in population and health care revenue in Malaysia. In 2015 recorded population in Malaysia was about 31million with a constant growth over last 5 years, which is expected to continue in future. Pharmaceutical market of Malaysia was estimated at 1.2billion in 2008 however this is projected to increase up to 3.7billion by 2020.Also medical device market was estimated at $585million in 2010 however this has estimated to constitute 25% of healthcare expenditure by 2020 while health care expenses represent 10% of GDP compared to 4.75% in 2014.(AIM 2016).Accordingly this growth will certainly create an opportunity for HP for innovation of new drugs and exportation.
Another key success factor in the industry is medical tourism. In 2016,healthcare tourism market has increased by 51% and 63% in terms of revenue and foreign patients
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respectively.(MHTC
Press release 2016).This growth has mainly supported by government policies towards medical tourism and tax exemptions for hospitals. The sector has represented USD 200milion in 2016 and it is expected to increase up to USD 530miilion by 2020.Developed infrastructure, skilled medical practitioners and low cost structure on medical treatments have contributed to attract more overseas patients in the country. Growth in medical tourism creates an opportunity for marketing HPs medicine and medical equipments to the market and build up export market among tourist patients.
The third key success factor in the industry is government coverage for health care .Currently Malaysian government cover about 55% of medical cost on public healthcare leaving 45% for the patient. However most of the OECD countries except Mexico and the USA have universal health care coverage where government take care of all the medical expenditure of nation. Universal cover assist nation to be healthy and happy .It improves public health that will indirectly support many development factors in the country. It also helps corporate to stay stable .Malaysian governmentexpect to implement universal health coverage by 2020 which is under negotiation in parliament. (AIM 2016).Accordingly with the expertise and experience of sales team of HP ,company will be able to approach public and private hospital to distribute their medicine and medical equipment on regular basis.
Another key success factor of the pharmaceutical industry is availability of skilled workforce in the country. Malaysia fortunate to have English speaking highly educated competent workforce .Most of the medical clinics are operated by highly knowledgeable medical assistants rather than doctors. However due to low wage structure of the country Malaysia is losing a lot of skilled workers to highly paid countries like Australia, New Zealand, USA and Singapore. Government is now planning to adjust the wage level of the country to retain skilled workers. If HP is not satisfied with existing sales team this creates an opportunity for them to approach people from health sector with extensive experience and contact in the industry to join them to increase the sale.
lastly government incentives such as tax holidays ,liberal investment exchange policies for pharmaceutical industry is inviting many local and multinational companies to invest in the industry. Also Malaysia is located in the heart of Southeast Asia with a regional market over 636million people. Accordingly Malaysia is targeting to become pharmaceutical hub in the region by 2020.This situation creates a vast opportunity for HP to enter in to export market in the region.
. Value of the rational models in contemporary Strategic Planning
6. References
AIM 2016,Malaysia Healthcare ,regulatory and reimbursement landscape report 99assignmenthelp.com.businesswire.com/news/home/20170118006154/en/Malaysia-Healthcare-Regulatory-Reimbursement-Landscape-Report-2016-2020
Frederic P Miller, Agnes F Vandome, John McBrewster,2011,Pest Analysis,
Cphl south East Asia- freeassignmenthelp.com/sea/visit/news-and-updates/malaysian-pharmaceutical-market-forecast-see-impressive-growth
Global Pharmaceutical Industry – Statistics & Facts-https://www.statista.com/topics/1764/global-pharmaceutical-industry/
World Health Organization Statics 2013-99assignmenthelp.com.who.int/gho/publications/world_health
PharmExe.com-99assignmenthelp.com.pharmexec.com/country-report-malaysia
Linda Ge 2011 Porters Five Forces-99assignmenthelp.com.docstoc.com/docs/26731619/Porters-Five-Forces-%E2%80%93-Healthcare-Industry-Industry-Overview-The
MIDA 2013,Guide on Pharmaceutical industry in Malaysia freeassignmenthelp.commida.gov.my/home/administrator/system_files/modules/photo/uploads/20140214143120_Pharmacuetical_2013.pdf
Malaysia Healthcare, Regulatory and Reimbursement: New market research published in 2014. freeassignmenthelp.com/app/document/2533510;jsessionid=blBsXP3ljf0g1EM1cZh3OFeT.undefine
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