Problem statement
Parkin laboratories are selling their products at premium prices higher than government products. With the arrival of new government policy regarding the pricing scheme for the pharmaceutical products, none of the pharmaceutical laboratories would sell their products above the ceiling set by government in terms of pharmacy product prices. Now they need to cut down their product prices, according to the government policy which in turn will reduce their selling profits.
Situation Analysis
The company is currently facing sales downturn due to the implementation of the Drug Price Control Policy (DPCO) by the government. Due to this policy all pharmaceutical companies must sell their products at the prices lower than government pharmaceutical products institutions. This Policy restricts pharmaceutical laboratories to keep their prices lower than the products produced by the government institutions this has reduced Parkin laboratory sales badly. The general manager of the firm is concerned about their declining sales, this is an alarming situation that ask the company to revise its selling strategies with low price policy implementation.
Currently the manager is focusing on the various alternatives to increase their sales rapidly and to have a sustainable growth. These alternatives include sales force effective program and realignment of the company’s product. Through the sales force effectiveness program the company will invest on its sales force to increase its market share, along with the increase in the productivity to produce more, to fulfill the demands of a huge market share. This will also enable the company to achieve economies of scale and reduce their operational cost. The general manager is concerned about that whether these alternatives would be operative to grow its market share that will ultimately furnish the company with higher sales or not.
Objectives and Goals
The sole objective of every company is to maximize their profit either through increased sales or by reducing costs. Initially Parkin laboratories were making profit through their premium priced products which will no longer supports them to maintain their current level of sales. Parkin’s revenue was growing swiftly with a growth rate of 21.4% in 2012. By achieving these positive results, the company has targeted to expand its sales revenue from $511mill in 2012 to $611 mill in 2013.
The company was heading towards its sales goals successfully, but the drug price control order policy has hit them with a great loss in sales revenue. Parkin laboratories were already struggling to overcome their expenditure that resulted in their sales decline since 2010. Although the company had well performed in 2010 and had grown 29 %, but afterwards due to a continuous increase in the operating expenses and selling cost Parkin laboratories net income has declined after 2010.
One of Parkin’s evaluative points over these preceding years was the increase in their sales force from 378 in 2010 to 682 in 2013. This element has increased the income growth of the company and has made them able to plan for an effective sales force. The current goal of the company is to increase the effectiveness of its sales forces for which they are planning to launch a training program that in turn will make the company able to increase its market share.
BACKGROUND CURRENT SITUATION
The government imposed policy has affected all pharmaceutical companies negatively in terms of revenues. To come out from this revenue stagnation era, Parkin laboratories are working in a separate direction to increase its net sale which ultimately will increase company’s profitability. The company is applying the strategy by increasing its sales force effectiveness and investing huge amount on the training and development of its sales staff. In the preceding years the company has also experienced average sales performance which reveals that the company must focus highly on its promotional strategies. If the company has not worked out its selling strategy then it will continue to experience a sales turndown.
SWOT
Strengths
Historically the company has performed well as a result of which it’s financial becomes stronger and served as its strength. Parkin’s current product line has also maintained its edge in the market. Currently the company is providing 80 medications with a vast distribution network. Parkin Company’s Financials reveals their net income that was 610 in 2013......................
This is just a sample partial case solution. Please place the order on the website to order your own originally done case solution.
Related Case Solutions & Analyses:
Asias World City: Hong Kongs New Identity
Becton Dickinson Division: Marketing Organization
Larson in Nigeria
Reboot Systems’ Refurbished Computers: A Frugal Solution for Digital Divide
Mother Dairy: Creating a National Footprint
Strong Ties Ltd
Philips NV: Dealing with a Global Financial Crisis
Conroy’s Acura: Customer Lifetime Value and Return on Marketing
Jabong.com: Balancing the Demands of Customers and Suppliers
Telenor in Bangladesh : The Prospect of Doing Good and Doing Well? (A)
