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Why should a firm go international?

Abstract

Sumy pharmaceutical is an exclusive limited pharmaceutical making company. That has been manufacturing medicine for approximately six years from now. The business wishes to be one of the leading pharmaceutical companies in Nepal. But in order to take action they need to expand and increase their sales and market share, but how? However if the management/ company do opt to increase their business, want to increase their business internally or externally, or they want to go international, which of these solutions or other solution is the best expansion option for Sumy Pharmaceutical. Therefore, desire to or the objective of this easy is to answer the question. "Would going international be the best expansion option for Sumy pharmaceutical?

In this record, I've written both ways of broadening their business and other ways of growing their business. Going right through the companies SWOT and Infestation examination with the development option and other types of increasing to.

Methodology:

In the examining the development option of the company, sales accounts and the income statement of the Sumy pharmaceutical. These reviews shows exactly weather heading international is the best answer to expand the business. In the same way, it also shows all the types of growth solution to be able to grow or growth the business.

By comparing all these data alongside one another, this newspaper will analyze exactly to what ought to be the best progress factor/option for Sumy pharmaceutical. A substantial upsurge in the growth implies the success of great profit

The use of income claims also assesses the expansion strategies by checking the income assertions by any reduction in the cost of products sold implies successful use of economics of range. Sales report also determines the potency of growth.

Introduction

In Nepal, there are about 42 industries producing allopathic treatments and out of the 42, 16 of these was already awarded the World Health Firm Good Developing Practice qualification and Sumy pharmaceutical private limited is one World Health Company Good Making Practice certificate positioning manufacturing company. The corporation has added an impetus in the development of the pharmaceuticals market sectors in the country. The company has been producing allopathic medicines going back 6 time covering wide amounts of Tablets, tablets, liquids, ointments, eyes/ ear drops. The company has latest GMP (Good making practice) INFRASTRUCE. The company has implemented the most advanced, sophisticated modern tools in all departments. The business has updated legal status and the work renewed yearly to be concerned authorities. The company has been making medicine ever since it was established. The company has well thought-out its pharmaceutical quality system sufficient. Furthermore, it's been following a effective pharmaceutical quality system to enhance the quality and option of medicine within the different general population health sector. The business has been manufacturing numerous varieties of allopathic medicine in a wide range comprising Tablets, Capsules, Water, Ointment, and Eyesight/Ear Drop. The business is committed to the creation quality medicines through the execution of quality environmental and safety management with a higher production capability. Pursuing are the total annual production capacity

Tablets: 70 millions

Capsules: 25 millions

Inject able: 100 kiloliters

Liquid: 520kiloliters

Ointment: 1. 5 millions tube

Dry syrup : 10 million containers.

In addition, the company has been advertising their product in the home market throughout Nepal. The business main centers in the home market and they have wide physical coverage in the domestic market place. Syndication to the consumer is being done through a network of intermediaries' like distributers, wholesalers and merchants throughout Nepal similarly company also participates in institutional resource like army resource, police supply, federal government supply through tender.

Apart from developing medicine, The Company is committed to making a confident contribution to the city. The company has been sponsoring two students for education yearly to complete their studies. The business has also been doing many cultural works like offering free medical checkup, free drugs syndication for needy people. The business in addition has been distributing juice and water to the public in Buddha jayanti every.

Sumy pharmaceutical main purpose is to create the best qualitative drugs in Nepal so that everyone can live a happy life. The management of the Sumy pharmaceutical has matter about how exactly to increase their sales, want to expand their business internally or externally, or they would like to go international, and continue to grow and how to reach their customers. Their goal is to increase market stocks plus they want to known if they should try to go international or increase/ extend their business. This paper therefore aims to research the type of growth the business should use to be able to increase their business, hence question is, "Would going international be the best development option for Sumy pharmaceutical?"

Why go international?

There are numerous type of development option according to our course e book and each development option is split into two categories, externally development and internally expansion. Other growth option for the company might be going international. However, my research is approximately whether the company should go international or go for other growth option and stay nationwide. However, if you ask why heading international might be the best expansion option? Then here's your answer, as everybody knows that many company/ businesses want to go international and the reason why that provoke them to go international is broadly because of the pull factors and the push factors.

The take factors, mostly are proactive reasons, are those pushes of appeal, which pull the business enterprise to the international market in other word many companies are determined to internationalize as a result of elegance of the overseas market. Furthermore, such attractiveness involves broadly the comparative success and the expansion prospects.

The force factors, mostly identifies the compulsions of the local market, like saturation of the market, which fast companies to internationalize. A lot of the push factors tend reactive reasons.

In addition, below are a few other known reasons for why Sumy pharmaceutical is going international like

Profit advantage

Growth opportunities

Domestic market constraints

Profit benefits:

As we realize that within an international business revenue is one of the primary reason for company to move international to earn more money/ income than they certainly as a business does indeed in a domestics market. Like occasionally where 100 per cent of the full total profit of a company is manufactured in the international market. So if Sumy pharmaceutical opt to go international than they could be getting more income than what they manage reselling their product in the home market. Furthermore, even when the international business is less profitable than the local could it be could improve the total earnings.

Growth opportunities:

Another important reason behind going international is to use the advantage of the business opportunities in other countries. Multinational companies (MNCs) are receiving increasingly enthusiastic about a number of growing countries as the income and people are rapidly increasing in these countries. At this time, many companies could achieve the progress they came to the realization only as a result of foreign markets.

Foreign marketplaces, in both developed country and developing country, provide gargantuan growth opportunities to both the companies. Like example in recent yr, lots of Indian pharmaceutical organizations have achieved a considerably faster progress of their overseas business than that of the local market.

Therefore, if the business decides to go international they company can have the growing opportunities' for both internationals and the local market.

Domestic market constraints:

Due to Household, demand constraints many companies have influenced towards expanding the market beyond the countrywide border. There is numerous amounts of product on the market that appears to saturated or drop in the move forward countries. This is because of the market potential which includes been almost totally been caught. The technology advances have increased the size of operation substantially in many establishments making it essential to have foreign market, in addition to the domestic market, to have benefit of the scale economies. It is the thrust directed at export that empowered certain countries like South Korea to set up economic size plant

This is the SWOT and Infestation analysis of the company if the business decides going international.

S. W. O. T analysis

The S. W. O. T means Advantages, weakness, opportunities, and Threats

Strengths

Team work

Economy

Proper paperwork, management rules and reporting system

Access way too many bankers and finances

Sound technology, infrastructure and specialized Manpower

Fair geographical market coverage

High production capacity installed.

Cheap labor/more man power

Weaknesses

Over investment

Inadequate market share

Under capacity utilization

Recovery of sales collection

Competitor's/rival company

Political situation

Bands/curfew/strike

Scarcity of light

Opportunities

Government positive policies

Feasibility of enlargement of its new product is highly potential

Larger potential market

New market (go international)

Work experience

Threats

Unfair competition in the market

Non conducive government policy

New government policy

New compatriots

New style/new customers

Due to the company's highly effective technical, physical and development capacity, and developing quality confidence are one main advantage of the company and cheap plus much more labor that mean there will be an increase career ratio. This will not only be good for the company also for the economics of the united states.

P. E. S. T

Stands for Politics, Economic, Sociable and Technology

Political:

The current politics status of Nepal is very unpredictable after the reduction of monarchy in 2008. There is no stability with the existing government because the government still has not formed properly and there's a lot of have difficulties for electric power. The constitution has yet to draft and there is absolutely no consensus with the major politics parties. This may cause stay/curfew in the country which will decrease the production or stop the production for a while that may eventually influence the production which mean later delivery of source. In addition, due to poor/less popularity Nepal hasn't yet given the specialists or the license to sell their product beyond your country by the government itself. Furthermore, even if the company manages to have the qualification or the regulators to sell their product beyond your country they might not have the ability to pay in the registration charge to the specialists due to poor economic of our own country.

Economic:

Economically Nepal is slowly but surely growing even as we can easily see but very slowly but surely but acceptable development in the country's GDP. Based on the surveys and statistics in 2006, the country's GDP (US $ Bn. ) (current prices) (c) was 9. 0 while presently it reaches 15. 1 around. This statistics shows that there's a slow go up in people's purchasing electricity. This would benefit the business. Sumy pharmaceutical's drugs is aimed at people all across the united states with various drugs that helps them get rid of different diseases, with the economical growth, people's throw-away income would increase and investing on a drugs would be possible. As monetary status of the united states develops, it helps in the development cost of new medication and amount of specialized medical trial can be reduced just because a clinical trial needs less topics, it also helps in the replacing of the new drug on the marketplace before because the development period can be shortened.

Also with the increase in the corporate houses in Nepal, the sales of medication to increase are predictable as the service delivers "advanced functionalities and extensive network and enables business people and businesses equally to deliver results successfully and effectively. " Almost thirty-six commercial finance institutions, sixty development banking institutions, over seventy-two boat loan companies and many hundred cooperatives are creating ahead full steam. Currently, there are 160 accredited deposit-taking institutions with least twenty-four finance institutions including five A-class commercial bankers coming in the marketplace.

Social:

Being an international company is of this prestige and as an international company it could give the company a great deal of opportunity. In Nepal, medicines are like drugs that demonstrates person's social position. Also, most the Nepalese is below the poverty line. With a National Poverty Rate of 42. 0%, almost half of the population is under poverty range. Socially, a medication would sell in the metropolitan market but less quantity of medicines can be purchased in rural areas because of the lack of transportations, which constitutes only a small proportion. The company must pay duty to the government to that country as well as our at exactly the same time. They have to change their environment to be able to market their product.

Technology:

To make good and standard medication there is the need of high qualities machinery and technology. Which specializes the machine to give/provide non-defective medicine too their consumers. If they machine are in good shape then the product will also be of high quality and better technology better the products.

Nevertheless, if the business does indeed want to go international it appears to be quite profitable. But in the other side if the business want does indeed want to international but just want to stay national and sell their product in the home market by simply broadening their business. A company can expand in two ways: either by merging with or acquiring other firms (external development), or by Increasing its own assets or end result through the reinvestment of its cash moves in existing businesses (Inside progress). Both types of progress strategies are regularly used simultaneously, and have Advantages and drawbacks. External expansion creates synergies and market ability, but additionally, it may damage value if the management reinvests the firm's resources or free cash moves in inefficient assignments for their own personal interest. Alternatively, internal development provides more corporate control, Encourages internal entrepreneurship, and defends organizational culture, but it often is a slower way of development in comparison to M&A since it requires the introduction of new resources internally. Therefore, the managerial choice between those two types of expansion will have a consequential impact on the Firm's functional and market performance.

Internally progress/strategy:

When a company wants to expand, its existing procedures without outside source of funding, expansion are produced by the money flows maintained by the business. An internal expansion strategy is one mostly designed to achieve progress in sales, resources, earnings or a mixture of most. A company can grow internally by widening its procedures both globally and domestically.

Labour/man power

New technology

Labour/man electricity:

Employment skilled labour compared of more unskilled labour, because if there are skilled labour than the work would be easier and faster cause unskilled labour would be the need of training which is very frustrating and there will be less work than.

New technology:

Recruitment of new technology will not only help the business to finish their work on time but also increase their production very quickly. And due to the new machineries you will see fewer work forces. That may reduces internally coat.

Externally progress/strategy:

When a company grows by merger, takeover or joint endeavors, alternatively than by growing naturally through its own internal development is an external growth. Expansion that is employed by companies as it can provide greater acceleration in obtaining its corporate targets than inside development is known as external expansion. Typically, businesses can increase their market talk about by merging with or overtaking competitor in the same field. Restructuring of mixed operations can lead to cost savings by which a firm may seek to get increased control of its growth. An external expansion strategy is one suitable for the same purposes as interior growth but consists of also acquiring market talk about, international popularity, and acquiring advantages to compete better and eliminate its opponents through mergers, acquisitions and tactical alliances.

Types of exterior growth:

Mergers

Acquisitions

Takeover

Mergers:

When several firms incorporate voluntarily to form one business so that they can enhance their success, efficiency or position on the market is called mergers.

Acquisitions:

When one-business gains control of part of another business a company may be inclined to market off one part of its business which is no more to keep or which is no more to fit into the objective of the business in the foreseeable future.

Takeover:

When one-business profits control of another business scheduled to mergers then, takeover is usually to be considered. If controlling interests are bought without, the consent or blessing of the management of the business it is usually to be the main topic of management.

Why do businesses tend to join collectively?

A business tend to incorporate to make saving because of this of its upsurge in size. Growing in size can be gained by merging. In addition, joining imply more recruiting and labour mean more progressive idea and fast decision making. Few companies also have managed to develop minus the resources. AS AN American company (Microsoft) has grown by the incredible success of the product. However, this is very much indeed the exception as opposed to the rule. The main reason why a business merges is to get the benefits from economies of range.

Economies of scale

Economics of size refers to the cost advantages that a business obtains scheduled to extension. Factors that cause a producer's average cost per product to land as the range of outcome is increased. Economic of scale is an extended run theory and identifies reduction in device cost as how big is a center and the usage degrees of other inputs increase.

If Sumy pharmaceutical chooses, any one of the above mentioned option you don't have of the business to travel international. As a few of the options are quite good and it could help, the business not only increases internally but also externally, the company will also have a tendency to enjoy the economics of size. In addition, the company will have a tendency to grow big and have a great market value.

Existing medicine situation of Nepal :

In Nepal about 250 international pharmacy industries mostly Indian are taking major market share almost 61% of total market talk about. Nepali market sectors can source only 39% of domestic market. Annual growth of these establishments is 16%. The creation of modern medicine started by a private sector by Chemi drug industries. Ten years later the federal government owned Business, royal drugs limited made an appearance in the field around in BS 2029. There has been a lot of development have up to now been manufactured in the medicine and pharmaceutical sector following the enactment of medicine act 1979 accompanied by the establishment of team of drug administration. Within a framework of Primary Health Care (PHC) and Health Advertising (HP), the focus of this paper is on integrating traditional and modern health care in the remote control section of Bashkharka, Nepal.

Several companies have been setup in Nepal in order to enhance the health of the united states and for the expansion of the economy. In addition, one of the companies is the Sumy pharmaceutical.

The existing market composition of pharmaceutical product in Nepal is generally divided into general public and private sector. The private sector is the most important from the commercial viewpoint. Pharmacy industry is not clear of threats. The problem of unethical promotion of medicine acts as a significant deterrent to the development of these sectors as the investment is not up to the mark. The competition not only within Nepal but also with international companies. Nepalese market sectors need support of authorities support as with India, Bangladesh, and Vietnam. These countries do not allow medicine from international countries which they can produce by own. That why this is also one of the primary reason why these country are doing so well in comparison to Nepal. Even thou the united states hasn't yet meet the standard compared of other country but nonetheless there's an rapid extension of health services from coast to coast which mean the united states has installed, more and more health services which of course means that there will be a demand/need of plenty of treatments. Therefore, there is a serious need of building new pharmaceutical industry in Nepal but not and then support the services program but also to swap import from foreign country and increase our financial. Now day's health is becoming one of the main needs in our life and Nepal has been trying very difficult to provide these facilities to the people but still it is beyond restriction for some common people of the country. Despite the fact that modern treatments has been routines for a long time and the annals of modern, medicine is not so very good for Nepal as well. The country has already began managing modern service and was initially established in 1890 A. D. (Bir clinic) to provide the people with modern drugs. The requirements for medications are usually imported from India and oversea.

This is the SWOT and the PEST analysis of the business if they decide to stay local.

S. W. O. T analysis

The S. W. O. T stands for Strengths, weakness, opportunities, and Threats

Strengths

Team work

Economy

Proper paperwork, management rules and confirming system

Access too many banks and finances

Sound technology, infrastructure and technical Manpower

Fair physical market coverage

High development capacity installed.

Weaknesses

Over investment

Inadequate market share

Under capacity utilization

Recovery of sales collection

Competitor's/rival company

Opportunities

Government positive policies

Feasibility of extension of its new product is highly potential

Larger potential market

New market

Threats

Unfair competition in the market

Non conducive authorities policy

By the merges mutually then there will be the necessity of land and since the company develops you will see the huge requirements of employees that will assist the economic expansion of the country. This will likely be good thing about the business as well as the financial status of the united states. The company's can offer good qualitative medicines to the consumers. If the company is victorious the trust of the consumers, that'll be the power for the united states because the consumers will continue steadily to choose the product from the business and will it eventually stop buying overseas medicine, which can only help the country current economic climate grow.

P. E. S. T

Stands for Politics, Economic, Friendly and Technology

Political:

Economic:

Social:

Technology:

To make good and standard remedies there is the necessity of high attributes equipment and technology. Which has specialized the machine to give/provide non-defective medication too their consumers. If indeed they machine are in good condition then the product will also be of high quality and better technology better the products.

Conclusion:

Analyzing the business's SWOT and PEST of the business for both the situation I believe the company should stay local for some time till enough time they came increase bigger by adapting other resources of extending or using other growth option as the SWOT of the company heading international is good but their Infestations has plenty of negative impact. One of the primary negative impacts is the fact the government will not allow or doesn't have the authority to market their product outside the country because Nepal is not certified to multiply their business all over the world. The business's SWOT and PEST for staying domestic and increase their business positive impact on it

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