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Table 2.9: Matrix to assess internal factors (IFE) ....................................................50

Table 2.9: Matrix to assess internal factors (IFE) ....................................................50

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Figure 2.1: The organizational chart of the company..............................................21

Figure 2.2: Products of Mekophar.......................................................................... 33

Figure 2.3: Some pictures of the company’s machines and equipments.................37

Capstone Project Report


1. The necessity of the research

Throughout the 20-year long of the country’s renovation, Vietnam's economy has gained

many important achievements, especially in the early years of the 21st century. The

economic growth of Vietnam has maintained relatively high with a GDP of 6.7% to

7.2%, which made Vietnam become one of the countries with fastest economic growth,

just behind China. Vietnam's economy increases integrated with the world’s economy, its

trade volume has exceeded the total domestic product, and foreign direct investment to

GDP is also increasing.

Together with great achievements in economic development, Vietnam’s health care sector

has won many achievements under the Government’s supports and investment. Some

dangerous diseases and epidemics are initially controlled and eliminated, the rate of

infections and deaths declined substantially. Vietnam was the first country in the world

successfully controlled the SARS epidemic. Grassroots health networks are strengthened,

especially the formation of village health care systems, they are closer to the people and

creating favorable conditions to access health care services. Pharmaceutical sector has

developed a very steady foundation of organizing, managing, manufacturing and

supplying. Basically, pharmaceutical industry has met the people’s demand for drugs in

term of quantity and quality.

Besides the basic achievements it has achieved in recent years, pharmaceutical industry

is also facing difficulties and challenges. The development of pharmaceutical industry

and antibiotics is almost insignificant. One of the hardest difficulties is that the raw

materials are mainly imported. Apart from that, the supply networks, the distribution of

drugs develop slowly, dispersedly and monopoly. Businesses and distributors are

functioning in a very small scale with weak capacity and lacking of experience in the

market mechanism.



Pharmaceutical market




unfair competition,


required government’s intervention - this has changed the business environment. In order

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Capstone Project Report

to survive and develop in that severe context, Mekophar Chemical Pharmaceutical JSC

needs a better business strategy.

For that reason, our group has chosen “Develop business strategies for Mekophar

Chemical Pharmaceutical JSC in the period of 2010-2015” as our capstone research.

We really hope that the jury member, our classmates as well as the professors of business

strategy will support us with your comments and suggestions to make the Capstone

become more persuasive and applicable.

2. Objectives of the research

The Capstone focused on researching the following issues:

- Basic theories about strategy and strategy management


Analyzing useful models used for the implementation and selection of the



The real situation of strategy implementation at Mekophar Chemical

Pharmaceutical JSC


Analyzing internal and external factors that affected the company’s strategy

implementation phase


Suitable solutions for setting up the development strategy of Mekophar Chemical

Pharmaceutical JSC

3. Beneficiary, scope and mode of researching

- Beneficiary and scope: The capstone focuses on researching strategic activities for

Mekophar’s products and proposes solutions and suggestion in the future.

- Mode of researching: The capstone uses two main form of information: primary and

secondary information. The secondary information was collected from different

sources, but mainly from Mekophar’s reports on business and marketing activities as

well as open resource on the internet.

4. Structure of the Capstone

Chapte 1:

Theoretical foundation on business strategy

Chapter 2:

Business and Manufacturing Activities of Mekophar Chemical

Pharmaceutical JSC.

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Capstone Project Report

Chapter 3:

Business Strategy for Development of Mekophar Chemical

Pharmaceutical in the period of 2010-2015


Briefly evaluating analyzing results and naming all major contents

of the research

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Capstone Project Report



1.1. Definition of Dertermining Strategy in Business

1.1.1. Defintion of Strategic Management

“Strategic Management can be defined

implementation and



achieve its


management focuses

of decisions

art and



science establishment,

related functionality

assigned goals. In

on integrating

accounting, manufacturing, research

as an



that allow an

definition, strategic

marketing, finance

development, and information


systems to

achieve success for the organization”. (Fred R. David).

1.1.2. The roles of Strategic Management in Business

It helps the business to:

 Achieve the organization’s proposed goals

 Take care of concerned parties in a larger aspect

 Integrate the short-term development in a long-term context

 Focus on outcome and productivity

1.2. Competitive Strategies according to Michael Porter:

1.2.1. Low-cost leadership strategy

This strategy creates competitiveness by:

 Low appreciating competitors in the industry, attracting target customers, who

care about pricing in order to increase profit.

 Control without fully reducing the price, satisfy with the current market share and

using lower-cost tools in order to gain higher actual margin over each item sold.

1.2.2. Differentiation Strategy

This focuses on manufacturing specific products or providing specific services in the

industry, aiming at customers who are not sensitive with price difference.

1.2.3 Segmentation Strategy

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This focuses on manufacturing products and services that meet the need of a small group

of customers. This narrow segment can be determined by geographical region, product

and customer types.

1.3. Planning Company’s Strategy Process

There are four main steps in this process

1.3.1. Determining the business task

Reports on business task are declarations the “existing reason” of an organization

(Drucker). Therefore, the company needs to determine its business activities, goals to

achieve, and finally planning a suitable business strategy of it.

1.3.2. Analyzing External Factors

Environment of an organization are the factors, forces and institutions, etc, outside the

businesses that the administrators could not control but has tremendous impact on the

operation and performance of


organization. External environment of an

organization can be divided into two levels:

- Macro environment: has impact on ever kinds of business for instance economic

environment, legal environment, social and cultural environment.

- Micro environment (or industry environment) is determined through specific

sector or business. It can consist of (1) Competitors, (2) Customers, (3) Providers,

(4) Potential Competitors, (5) Substitute products.

Analyzing external factors will help the Company find out what its Opportunity (O) is

and which is the Threats it has to face.

1.3.3. Analyzing Internal Environment

The situation of the enterprise is often assessed through functions of Departments such as

Finance, Human Resources, Executive Management, Organizational Structure,

Marketing and Information Technology. The analysis of external factor will help the

business identify its Strengths (S) and Weaknesses (W) in order to have an appropriate

business strategy.

1.3.4. Analyzing and Selecting Strategy

Based on strategic objectives, vision and core values of the company as well as analyzed

internal and external information, the company will evaluate and selecting the most

feasible business strategies.

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1.4. Tools to develop business strategies:

According to Fred R. David, there are three phases in developing business strategies, and

therefore, different tools are used.

* Phase 1: Collecting and Systemizing Information

This phase summarizes all collected information and then systematizes them in

order to develop business strategies. This phase uses three tools: The EFE Matrix,

The Competitive Profile Matrix (CPM) and the IFE Matrix.

- The EFE Matrix is built following these five steps

 List factors: Gather a list of external factors. Divide factors in to two groups:

Opportunities and Threats.

 Assign a weight to each factor. The value of each weigh should be between 0

and 1. 0.0 means the factor is not important. 1.0 is very important. The total

value of all weighs should equal 1.0.

 Assign a rating to each factor. Rating should be between 1 and 4. Rating

indicates how effective the firm’s current strategies respond to the factor. 1=

the respond is poor, 2= the respond is below average, 3= above average, 4=


 Multiply each factor weight with its rating. This will calculate the weighted

score factor.

 Add all weights scores for each factor. This will calculate the total weighted

score for the company.

- The CPM Matrix

This matrix shows a clear picture to the Company about their strong points and

weak points relative to their competitors in the same industry. This matrix is the

extension of EFE Matrix with the weight for each factor, meaning of each weight

and total weights score.

- The IEF Matrix is set up through 5 steps:

 List from 10 to 20 factors including strengths and weakness that affect the


 Classify the weight of each factor base on a scale 0.0 – 0.1.

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 Identify the weigh for each factor base on a scale from 1 to 4

 Multiply the weight of each factor with its rating to have the weighted score

 Sum the weighted score for each factor to have to total weighted score

If the total weighted score of the Matrix is below 2.5: the company is weak at

internal factors and if it is above 2.5: the company is strong at internal factors.

* Phase 2: Combination

This phase selects, organize and combines external factors and internal factors to

come up with a feasible strategy. This phase uses tools such as: The SWOT Matrix,

The SPACE Matrix.

- The SWOT Matrix: is a tool combines Strengths (S), Weaknesses (W),

Opportunities (O) and Threats (T) to come up with four kinds of strategies as




Listing all the Strengths

Listing all the Weaknesses

S-O Combination

W-O Combination

S-T Combination

W-T Combination


Listing all the



Listing all the Threats

In order to set up the SWOT Matrix, the Administrator has to go through eight (8)

following steps:

Step 1: Listing all main Opportunities from external environment (O1, O2…)

Step 2: Listing all main Threats from external environment (T1, T2…)

Step 3: Listing all Company’s Strengths (S1, S2…)

Step 4: Listing all Company’s Weaknesses (W1, W2…)

Step 5: Combination of Strengths and Opportunities (SO)

Step 6: Combination of Weaknesses and Opportunities (WO)

Step 7: Combination of Strengths and Threats (ST)

Step 8: Combination of Weaknesses and Threats (WT)

- Strategic Position and Action Evaluation Matrix (SPACE)

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SPACE Matrix shows what strategy a Company should choose: Aggressive,

Conservative, Defensive, or Competitive. The axes mean as follows:

- FS

: The Company’s Financial Strengths

- CA

: The Company Competitive Advantages

- ES

: Environment Stability

- IS

: Industry Strengths

In order to set up a SPACE Matrix, these steps need to be followed:


Step 1: Choose a set of variables to be used gauge the competitive advantage

(CA), industry strength (IS), environmental stability (ES), and financial strength



Step 2: Rate individual factors using rating system specific to each dimension.

Rate competitive advantage (CA) and environmental stability (ES) using a rating

scale from -6 (worst) to -1 (best). Rate industry strength (IS) and financial strength

(FS) using rating scale from +1 (worst) to +6 (best).


Step 3: Find the average score for competitive advantage (CA), industry strength

(IS), environmental stability (ES), and financial strength (FS).


Step 4: Plot values from step 3 for each dimension on the SPACE Matrix on the

appropriate axis.


Step 5: Add the average score for the advantage (CA), industry strength (IS)

dimensions. This will be your final point on axis X on the SPACE Matrix.


Step 6: Add the average score for the SPACE Matrix environmental stability (ES),

and financial strength (FS) dimensions to find your final point on the axis Y.


Step 7: Find intersection of your X and Y points. Draw a line from the center of

the SPACE Matrix to your point. This line reveals the type of strategy the

company should pursue.

- The Quantitative Strategic Planning Matrix (QSPM):

This matrix used to evaluate the ranking of feasible strategic plans; therefore we have

foundation to choose the best strategy. This matrix uses all the inputs from all developed

matrices (EFE & IFE Matrix, competitive image matrix, SWOT Matrix, SPACE Matrix).

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Capstone Project Report

Weighted score

of the important



from 1 to 4:

4: very important,

3: important, 2: relatively important, 1: unimportant.

The scores of attraction in each strategy are given on a scale rank from 1 to 4;

1: completely unattractive, 2: less attractive, 3: fairly attractive, 4: very attractive.

Success factors’ affecting the choice of strategy has no point.

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2.1 Introduction about MEKOPHAR Chemical Pharmaceutical JSC

2.1.1 General Introduction:

 Name of the company: MEKOPHAR Chemical Pharmaceutical JSC

 Abbreviation: MEKOPHAR

 Logo:

 Charter Capital: 92,100,000,000.00 VND

 Headquarter:297/5 Ly-Thuong-Kiet street, Ward 15, District 11, Ho-Chi-Minh City

2.1.2 Main business line:

- Producing and exporting pharmaceutical products and materials, raw materials for

medicals, medical equipment

- Producing pharmaceutical packages (plastic bottles, boxes, cartons)

- Producing and trading technological food (except producing and processing raw food)

- Leasing buildings and offices

- Leasing apartments

2.1.3 History of establishment and development

Mekophar was founded in 1975 with the initial name “National Pharmaceutical

Enterprise 24”, a subsidiary of Vietnam Pharmaceutical Corporation

On 19th December 2001, Mekophar was equities officially changing its name to

Mekophar Chemical Pharmaceutical Joint Stock Company (JSC)

In 2003, our company funded to build AN SINH hospital and the hospital came into

operation on 7th May 2006.

In June 2006, our company first issued Initial Public Offerings (IPO).

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Table 2.9: Matrix to assess internal factors (IFE) ....................................................50

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