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Technophar in Vietnam

Paper type: Essay
Pages: 4 (929 words)
Downloads: 45
Views: 210

This purpose of this assignment is to identify the issue based on Case Study 4: Technophar in Vietnam. This assignment start with a brief introduction of Technophar Equipment & Services Ltd (Technophar), as the case study company and follow by the issue as presented in the case study. As evaluation, tools is being applied, with Strength Weakness Threat and Opportunity (SWOT) to evaluate the subject company internal environment, and Political Economic Social Technology Environment and Legal (PESTEL) to evaluate the subject company external environment, thus to substantiate argumentation in the conclusion segment.

This assignment end with recommendation segment with idea to improve the subjected company from the discussed issue. INTRODUCTION TO TECHNOPHAR Technophar is established in 1988 by Mr. Herman Victorov who has extensive experience in gelatin capsule production and pharmaceutical industry. Victorov starts as an employee of Scherer and has developed process modification to increase capsule production. Victorov then established Multi-Motion Engineering Inc. which is purchased by Cherry Burrell in 1985. Technophar is a spin-off from Cherry Burrell.

Technophar main business is machine and process suppliers to manufacturer of gelatin capsule. By 1995, Technophar has achieved market share of 80% mostly in developing countries. Technophar main business: Main business for Technophar is turnkey projects in developing countries in developing countries. The sale of a turnkey project is often time consuming to negotiate and not all effort is translate into contract. Plus, the duration to perform each contract requires long period of time and the company revenues will depend on the project progress, which often varies in time by projects.

In general, one turnkey plant by Technophar values at USD600K and Technophar order book yearly with five turnkey projects is considered healthy. Figure 1 below show the time and payment schedule for Technophar projects, in general, from negotiation to project completions. Figure 1: Time and payment schedule for Technophar turnkey projects Technophar secondary business: Technophar has maintained close relationship with its existing client to service and maintain their machine in a form of service contract. This service contracts includes servicing, repairing, and upgrading existing capsule machine.

There is also market for retrofitting contract for old installation but Technophar is not certain for the size for this market. Technophar other business: To support its main business, Technophar is involved in design and manufacture machine to produce gelatin. Technophar is also involved in manufacturing of various mechanical system for firms in metallurgical, chemical, and automation industries. It is also mentioned that Technophar is involved in developing machines to extract gelatin and machines to extract sugar, as a diversification from its main business.

To support Technophar main business for turnkey projects, Technophar has established joint ventures with key partners. In process manufacturing industry, reference is a key to promote the products, hence Technophar has build a reference plant in Romania with its joint venture for prospective client visit. Technophar also entered in two others joint venture, one for engineering and trading and the other for manufacturing facilities to produce components for its machine. This joints venture serve as a key component move Technophar forward to execute its turnkey projects.

Technophar, as part of China government policy towards pharmaceutical industry and healthcare, coupled with increasing local demand, has expanded rapidly in China and it has become its key customer / country. To support this key country, Technophar has enter into two joint ventures, one at Qingdao, China to assist Technophar projects in China and the other at Guong Dong, served as a manufacturing facilities. To approach its market, often in developing countries, Technophar relied on the experience of its management team in pharmaceutical industries for contracts and opportunity.

Their evaluation of each countries opportunity is based on the local demand, the type of local government and its policy towards local pharmaceutical industry and healthcare, mostly relied on the “gut-feel” from its management team. Other source of contracts is from unsolicited orders, from non company contacts and agency, which in case of contracts, these parties is rewarded in a form of commission. Figure 2 below shows a mapping for Technophar strategic formation.

THE ISSUE: The issue as in this case study is about the a contract for USD4million turnkey project in Vietnam for four gelatin capsule machines, signed with Cuulong Pharmaceutical Import and Export company (Cuulong) and despite signed contract, Cuulong has not paid the payment yet. From figure 1, the procurement and manufacturing for the machine and equipment will not proceed without the downpayment because in turnkey business, companies do not stock inventory due to specification varies contract by contract. Technophar took a risk to secure this contract through an unsolicited contact, Mr. Ly Van Phi, a Viet Kieu, based on Montreal, and negotiation went on smoothly towards signing of contracts. There is no prior experience for Technophar in Vietnam plus at that moment, Technophar has sizeable order books prior to signing of this contract and are in negotiation for contracts in others developing countries, hence there is no risk for loss of contract. This has resulted in Technophar indecision to either re-negotiate the contract, cancel the contract, or continue to wait for the downpayment.

Each decision will have implication to Technophar with its reputation in question if the contract is cancelled or resources may be wasted if Technophar choose to re-negotiate a contract with Cuulong showing no commitment on its financial resources, or risk of costing inflation if Technophar decide on waiting on the downpayment. These issue will be further evaluated by performing SWOT analysis to examine Technophar internal environment and PESTEL analysis to examine Vietnam, a new external environment to Technophar.

Cite this essay

Technophar in Vietnam. (2020, Jun 02). Retrieved from https://studymoose.com/technophar-in-vietnam-new-essay

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