Morepen: Game Strategy and Vertical Chains - Essay Example

Morepen: Game Strategy and Vertical Chains Game Strategy Game strategy is largely dependent upon the looking at what the competition is doing and then reacting to the actions of the competition. The firm’s own actions in such a case become connected with the idea of investments and expenditure that might have been undertaken in the past to guide its future course of action. For Morepen, the present level of diversification has meant that it has expanded its approach to the game with multiple fronts of play. This process of diversification has created strategic commitments for Morepen and as it is moving towards being a healthcare provider more than a pharmaceutical company, other companies are looking towards it with a greedy eye. The case study notes that a European manufacturer has approach the company to make a strategic partnership with the company which shows that some companies think that Morepen is ripe for taking a taking a stake in if not an outright takeover. The share price of Morepen shows a downward trend which means that investor confidence in the company has been eroding over the past few months. However, the firm shows healthy profit after tax figures which means that there could be some room for experimentation but not enough for the firm to engage in highly risky behavior. There is a substantial risk involved in the pharmaceutical business as noted by the case study since the behavior of other companies can lead to improved drugs coming to the market which can make older drugs obsolete. Morepen does not appear to have enough funds to conduct its own research and development into new drugs therefore sticking to generic drugs has led to the early success of the company. However, if Morepen wishes to remain competitive in the market with regard to other companies who are developing new drugs; it may have to make significant investments in research towards creating successful new drugs or improve upon older drugs. Luckily, since the company is located in India, the development cost of a new drug is substantially lower therefore it is possible that they can create drugs which let them remain competitive and avoid any attempts for takeovers. While the American and European markets remain lucrative for the company, the home market brings the bulk of their income and they can also focus on brining improvements to the home market drugs for a greater competitive advantage. It must be noted that all the recommendations which can be given to the company come with a high element of risk since the decisions are not easily reversible and the investment requirements are substantial. Keeping that in mind, the best recommendations for Morepen with regard to game strategy would be to keep a lean and hungry outlook and develop more drugs for use in the local and international markets. At the same time, the company should firmly establish itself as a healthcare provider with the aid of vertical integration and the development of its other avenues of business. Vertical Integration The company has a strong position with regard to vertical integration since it already controls channels for vertical distribution of their products. While the downward movement in the chain has met with success, the upward movement into active research and development of new drugs seems to be limited. For example, the case study shows how Morepen partnered with hospitals to provide an emergency ambulance service and how the company has created several brands for over the counter drugs. However, the company is ideally placed to create its own marketing and retail arm with outlets functioning as 24 hour drug stores since it already has links with hundreds of forwarding agents across the country. Such integration would give the company established locations for business and allow it to continually present itself to the public as a reliable manufacturer and seller of drugs. This vertical integration could be taken towards partnerships with health related businesses such as health and fitness centers with drugs that act as dietary supplements or those which help individuals seeking to improve their health with exercise and medicinal means. If the company chooses to go on this route, then the C-Sip brand could be diversified to something akin to C-Sip plus which is fortified with calcium, iron, Vitamin C or other vitamins and minerals to serve as a healthy alternative to other instant drinks. Similarly, the Lifestyle brand could be rebranded and could be named Health-style if the rehydrate is supported by those minerals which are supposed to be good for a person’s health. Since the brands and the chemical formulae have already been developed by the company, the technical side of improving these brands should not be very expensive but the marketing and awareness creation costs could be quite substantial. To help such goals, the company’s distributive arm could work as a key mechanism since the company has established both its production facilities and its distribution centers across the country. However, entering the retail market may require a considerable investment to be made in terms of advertising and securing the right locations. It is also possible for the company to take their partnership with the chain of Apollo hospitals a step further and convert the in-house pharmacies of the hospitals into Morepen pharmacies. The hospitals could also serve as guiding points close to where Morepen pharmacies could be located within the cities. It must be noted that vertical integration of any kind further than what the company already has would require large investments and the financial situation is perhaps not strong enough to justify such investment. Before the company decides to further integrate its vertical supply chain, it should consider the profitability of such a move and also see if outsourcing to other companies within the countries might be a cheaper alternative. However, considering the success that the company has met with in the past with regard to its ventures in vertical integration, it is easy to say that further integration should come without difficulties. If the management stays on the same footing as it has in the past, it is also very likely that such ventures would be profitable as well. Works Cited Sivaraman, V. et. al. 2007, ‘Morepen Laboratories Limited: Transforming to a Healthcare Company’, Journal of International Business Education, Vol. 3. Word Count: 1,058 Read More