Business Strategy of Nicomed Pharmacy - Case Study Example

Business Plan for Nicomed Pharmacy The Company Nicomed Pharmacy is situated in Happyland, Southampton and engages in prescription medications at reduced prices to members of the community both to customers walking in and out and by mail order. Nicomed Pharmacy is a Mwangaza Limited liability having Nyakeri Nicholas as the leading shareholder. Description of the Business Opportunity Nicomed Pharmacy majorly aims at offering prescriptions of medicine to community members at the lowest prices possible on the market. The pharmacy shall sell prescriptions at the lowest prices members of the community can find on the market by maintaining effectively cautiously in business operations as well as aiming at reaching particular sections of the market. These parts entail those clients who cater for their prescriptions without external support. This section of the market shall Nicomed Pharmacy extra efficiency because the pharmacy will be able to keep of disruptions that emanate from the flow of cash often associated with issues in insurance payments. Business activities at Nicomed Pharmacy will be under one store with the capacity to serve customers walking in and out as well as mail orders. The business expects to perform well in the market by hiring professionals with excellent customer-relation skills that in addition to the low prices offered, will create and maintain a competitive advantage over competitors in the market (Jones, 2007, p. 12). The management of Nicomed Pharmacy projects that the price of drugs will continue to shoot retrogressively and the business will capitalize on the same to appeal more to the clients by creating a sense of value and remaining the best option for convenience. The main medium of advertising for Nicomed Pharmacy will be in magazines targeted at the over-75 crowd, especially those interested in saving on costs. Nyakeri Nicholas will lead Nicomed Pharmacy because he holds an Msc in Pharmacy and Pharmaceutical Technology with vast experience of working in Level Five hospitals. The business will only recruit one pharmacist with pharmaceutical technologists filling into the other slots to minimize labor costs. The management of Nicomed pharmacy expects to break-even in the second of doing business generating adequate sales the subsequent year. 1.1 Objectives The management and shareholders of Nicomed Pharmacy is specific that over the next three years business objectives are Work towards increasing the quantity of client base by more than forty percentile every year Apply superior pricing making it difficult for customers to avoid or reject Build and maintain a business running on its own cash flow 1.2 Mission Nicomed Pharmacy aims at providing clients with the most affordable prices on the market on all prescriptions. The business targets offering convenience and excellent customer service relations exceeding expectations held by clients. 1.3 Values to Success The business holds the following aspects as important to the success of Nicomed Pharmacy: Excellent service to customers making Nicomed Pharmacy their chemist of choice Maintaining both operating and overhead costs at the lowest possible level Provision of exemplary prices in the market difficult for competitors in the market to match 2.0 The Company 2.1Summary for Start-up The following equipment costs constitute the start-up costs for the company: Overall equipment for the office that includes file cabinets, chairs, as well as desks among many more Storage bins, front office counter, and the register for cash recordings Three terminals for the computer Chief server for the computer that comes together with a laser printer and the back-up structures (Khanh, 2011, p. 51). The software includes among others QuickBooks Pro, Microsoft Office, medicine interaction software as well as doctor’s desk reference software that encompasses effects in addition to specific information to the client Boxes, mixed bottles, and envelopes used in supplying drugs and shipment of the same wherever necessary Intercom connection system Extended front on the building for packaging and loading for huge orders Utility bills, rent, and insurance schemes It is important to understand at this point that the identified costs are capital and therefore, will be used for more than twelve months qualifying them as long-term assets. The items will only undergo depreciation through the G.A.A.P, which constitutes the certified straight-line depreciation. 2.2 Products Nicomed Pharmacy sells a variety of prescription medicines to patients based in Southampton and the United Kingdom at large (Great Britain, 2007, p. 63). The company sells both original drugs also referred to as name brands and generic drugs as well. For a client to buy products through mail, then he or she must take the initiative to contact Nicomed Pharmacy on phone from his or her location. Three options are available to the customer after making the call over the phone and include mailing the order, using the fax, or mail in the prescription. When Nicomed Pharmacy receives the order payment arranges follow and after completion, the company then sends the drugs to the customer using either U.P.S or U.S.P.S. On the other hand, members from the local community have an opportunity to get in the shop at the front office and pick medications as prescribed. It is necessary to comprehend that the company will offer medications only to customers who pay for drugs themselves. The low prices at which the prescriptions sell will serve as the attracting factor to this group of clients. Prices will remain to a level that even competitors in the market would not match. For most residents in Southampton and across the nation without medication plans among them most of the elderly running over sixty-five years old, lower prices become the greatest relieve they can get considering the increasing monthly expenditure (Jack, 2007, p. 41). Operating efficiency will be at the centre of survival for Nicomed Pharmacy achieved via mail orders from the national front and avoiding insurance covers dealing with drug plans of action that mainly interfere with cash flow. Another measure to maintain efficiency to be applied by Nicomed Pharmacy entails saving money keeping off the unlimited access to a pharmacist. The pharmaceutical technologist answers questions raised by clients and in the process eliminating consultation costs that would hurt clients. The business will only recruit one Pharmacist acting as the last resort to complex issues (Aiken, 2010, p. 116). The company will print medical literature for use by the pharmaceutical technician when answering questions. A sure fact is that failure to provide unlimited access to a pharmacist will succeed because majority of clients will interested in buying drugs they know well because of time taken on the same. This is different from new prescriptions that would require fresh prescriptions on the dosage and usage. The company will draw the interest of customers because of its inexpensive nature as a source medication. There will be a printout for every order dispatched to offer directions on ways of using the medication, drugs to avoid while on the prescribed dose in addition to other essential information. Another aspect of reducing costs is cutting down on paperwork. The business will use computer receipts from within the industry software when giving information (Mikler, 2009, p. 31). The company applies the term self-pay to refer to a customer paying for his drugs at the front office desk irrespective whether he or she has an insurance cover or not. This is as opposed to the concept that the customer must pick money from his pocket without a cover from the insurance schemes (Burns, 2010, p. 53). Customers at ad liberty to pay for the money even if they are on insurance schemes, receive the receipts, and later apply for re-imbursement from their policy providers. 3.0 Analysis of the Market The target market for Nicomed Pharmacy falls into two different categories constituting customers making orders through the mail and the second category entails local clients who walk in and out of the store to buy their drugs (Kurson, 2002, p. 19). To reach, attract, and retain these customers, the company will employ various tactics. 3. 1Market Segmentation Customers making orders by mail fall in the first category of mail order clients and do so through this means to save money that would go to postages. The management projects that most them would be aged, mainly people with more than fifty years. Statistics show that overall, elderly people use more drugs compared to people in the young generation. Only maintenance medication will available on mail orders. These are directions on people on treatment that calls for regular medication. New patients must walk into the shop for proper guidelines (Warner, 2010, p. 22). It is likely that customers in the mail order segment would buy drugs for use over several months. This means that most of them engage in bulk buying. Customers walking in and out of the store shop are also interested in purchasing medications at lower prices. Contrary to mail order clients, customers in this group have a tendency of buying drugs on monthly basis and mainly at higher prices. One characteristic of this group customers is that they do not have a particular demographic description apart from the fact that they most of them would consist of residents of Southampton. In addition to those paying for medication out of pocket, the other segment will submit insurance policy claims for re-imbursement after paying for medication in cash. 3.2. Segment Strategy for Target Market To attract the two different segments, Nicomed Pharmacy will apply two different strategies. The management at the company estimates that customers interested in mail orders will outdo the other group walking in and out of the store shop. The business will use advertisements in magazines to reach this group of the market in addition to newsletters covering an over-55 crowd (Van Wart, 2011, p. 78). This class is always in need of drugs and spends lot of money on the same. The clients are also always informed before their problem strikes because they treat an ailment they are used. The company will put adverts in monthly newsletters and magazines as part of this strategy. The local weekly and daily newspapers will be at hand to serve local clients. 3.3 Buying Patterns and Competition Within the pharmacy industry competition is high and takes various forms. They include chain stores, internet pharmacies, local pharmacies, as well as international pharmacies. 3.4 Financial Forecasts PRODUCTION ESTIMATES Planned Sales 18,000 Expected Ending Inventory 1,400 Total Units 19,400 Less starting Inventory (3,000) Planned Production 16,400 BUDGET for MATERIALS Drug stores require 25 square yards of space and installations estimated to costs $ 10.00 per yard. Materials required = 15,500 x .25 = 3,875 yards. Production Materials 3,875 Likely Ending Inventory 375 Total Materials 4, 250 Less starting Inventory (500) Total Materials Required 3,650 Unit Cost for Materials x $ 5.00 Total Materials Purchased $ 17,500 BUDGET for LABOR Stalls require .50 hours to produce one unit. 16, 400 units x .50 = 8,550 hours The expected hourly labor rate next year is $ 12.00. Approximate hours of production 8, 550 Hourly Labor Rate x 12.00 Total Costs for Labor $ 102, 600 BUDGET for OVERHEAD matters Approximates for every line item: Indirect Labor Costs * $ 13,000 Utilities 6,000 Depreciation 4,000 Maintenance 2,000 Insurance and Taxes 5,000 Total Overhead Costs $ 30,000 Works Cited Aiken, C. (2010). Transformational Leadership. Chicago: McGraw-Hill Publishers. Burns, J. (2010). Leadership. New York: Harper Perennial. Great Britain. (2007). Success and failure in the UK car manufacturing industry. London, The Stationery Office. Jack, W. (2007). 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