Shefaa Company Business Strategy - Case Study Example

Case Study: Shefa’a Business Strategy Name: Institution: Case Study: Shefa’a Business Strategy Introduction Shefa’a Company has come up with Herball, a drug that has been investigated and found to cure liver cancer and lab rats. This has been realized through an invention that was made by the company, and a lot of money and efforts have already been spent in the process. The company has had to enter into debts for the sake of the commitments that it has given to the development of Herbal. This report analyses the strategy that will be used to deal with this issue by the company. Summary Herball has not yet been tested for human use, and if it passes that test, the company will benefit a lot. The strategy that has been chosen by the corporation is the combination of beginning human testing which must be preceded by equity investment to fund the process. However, there are some concerns by the stakeholders of the company who are the employees and the board members who have been loyal to Shefa'a throughout the ten years. Also, some potential risks and disadvantages are likely to come along with this initiative (Casadesus-Masanell & Ricart, 2010). Strategy Analysis The plan selected for bailing out the company from is a combination of two strategies. These two are the option by the corporation to begin human testing and equity investment which involves signing up with investors. This is the ultimate combination that will see the company out of financial problems as it is now facing burden due to the many financial obligations that it has to fulfill (Casadesus-Masanell & Ricart, 2010). The invention of Herbal cannot be just allowed to disappear by whichever means because the firm has already invested enough resources in it and also time. The most amazing thing is that it can heal liver cancer and Lab rats. This is no doubt a solution that has been lacking in the market for many years and will, therefore, be most need due to the urgent requirement in many areas of the economy, especially in the medical field. First, Herball cannot just be given out freely as part of philanthropy. Although the organization had already made promises that it shall be giving free medicine regardless of economic conditions of those who are in need of it, this is out rightly impossible considering the present financial position. It is no doubt that was Shefa’a able to make this offer available; it would have done so through the policies and strategies that were laid down regarding this. It would have cost Shefa'a close to $1 billion to carry out this operation in a favorable manner, but now it cannot be implemented because of the bankruptcy that everyone can see the organization is facing. Also, there is the option of cashing out which cannot be applied because the company has already spent a lot and also invested a sum of money that cannot be underestimated. It is due to this that the firm has to make sure that it gets the real value for money that this project is worth. It is a significant invention that cannot be sold out to pharmaceutical companies as it will weaken the business only because these enterprises cannot buy out the idea and its progress at the required market value that it ought to be sold (Chesbrough, 2010). This would, therefore, be wastage of resources of the company by selling out what can be used to boost it financially and give it a permanent stronger financial position that would leave every employee satisfied of the progress. Therefore, cashing out is not an important choice to make. To this point, the company remains with only the option that gives the combination of the two options that had remained among the list of choices that were available before the inapplicable ones were eliminated. The advantage of inviting investors is that they would come in and buy shares, which are simply units of capital in the firm. This would help the organization make as much money as possible which would help it to begin human testing for the clinical application of the drug. This is the ultimate goal of the firm; to make sure that it grows to be a big deal in the industry with the use of inventions, especially in the medical field. This would eliminate the company's financial woes, placing it at a right position that would enable it to compete with its competitors firmly in the industry (Chesbrough, 2010). Therefore, the invention will give a competitive edge. The advantage that will be acquired by Shefa’a due to the innovation will be an unusual one, having no close substitutes that it will act as if this is a monopoly. The best thing that has ever happened to the company is getting to a position that would place it somewhere unchallenged in the market, giving it some protection (Chesbrough, 2010). This protection is the shielding from extreme competition against the endeavors of Shefa’a Company in the market, giving it some freedom to enable it to practice some bit of domination that cannot be challenged anyhow. There are patent and copyright laws that protect the invention in the market from duplication by any other firm or individual and using it for commercial purposes without express authority of Shefa’a. The biggest part of the deal would be the money that it would bring. All the characteristics associated with monopoly shall be accruing to Shefa'a at the start of the launching of the product Herball. The supernormal profits that will be realized will be used to pay financial debts that Shefa'a is now facing and also top up for the deficits and losses that have financially strangled the company in the recent years. The investor funds will be used to build a good backbone of the initiative to begin the human testing. This can only be done in a way that the company will have to finance all the initiatives that will be done in the testing. It is also vital not to forget that the idea is entirely being owned by Shefa'a and cannot be used by any other individual firm. This applies even to all associates such as the hospitals and laboratories that the company will be collaborating with in the process of testing and justification that Herball is a drug that cures cancer and lab rats and has no side effect (Stevenson & Hojati, 2007). Therefore this means that Shefa’a will have to bear all the financial burden alone. To this point, the investors are fundamental in helping to fund the project and give it a boost regarding sponsoring it. However, it cannot be assumed that there are no disadvantages associated with the carrying out of this project. There are potentially harmful implications that will come with the strategy that has been chosen. First, investors may not be entirely convinced that the idea will work out and so they may not fund the project as initially intended. This is because they may fear that their funds will go to waste and the success of the plan is in doubt (Stevenson & Hojati, 2007). Therefore there is a problem in accessing the funds. There must be a clear presentation of the plans by the company to the investors in an attempt to woo them to invest in the company and the Herball plan by buying some shares in the project that will see a deal established between Shefa’a and them. Also, there is some consideration that there must be hired a good lawyer to see the demands of the company and the sealing of deal between Shefa’a and the investors completed successfully. This is also an additional expense that will come along. Other risks involve the failure by the investors to support the plan; this will be a total failure of the initiative that may mark the end of the company. It is also worth to note that the firm will have to pay out its financial dues that it owes other creditors and banking institutions. Without having to pay out the dues, also it may be difficult to convince investors to input their money in the Herball initiative (Teece, 2010). Together with the financial problems that this action may put the company in, there is also the 50 employees and scientist that must have their salaries, yet Shefa’a is struggling with financial problems. This is also another risk that may affect the running of the company during this period that we want to start the testing of Herball. There is also the risk that the organization may find Herball not well suitable for human use. This would be a big blow and is the greatest fear that the business is having regarding having regarding the initiative to invest further funds and effort in this project. If the drug is found to be unsuitable for human use, it means that the company will have to close down and dissolve in an attempt to pay its creditors and workers (Teece, 2010). In conclusion, Shefa’a stands a chance of having its financial problems solved through the use of this strategy that is at its disposal. References Casadesus-Masanell, R., & Ricart, J. E. (2010). From strategy to business models and onto tactics. Long range planning, 43(2), 195-215. Chesbrough, H. (2010). Business model innovation: opportunities and barriers. Long range planning, 43(2), 354-363. Stevenson, W. J., & Hojati, M. (2007). Operations management (Vol. 8). Boston: McGraw- Hill/Irwin. Teece, D. J. (2010). Business models, business strategy and innovation. Long range planning, 43(2), 172-194. Read More