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Planning and its impact on Ibn Sina Pharmaceuticals

Course: Management Principles Prepared for: Ms Sutapa Bhattacharjee (details)

Prepared by: Mazharul Islam Oinek () Aaboshesh() Dayeen () Fariha() Saleh ()

Company Overveiw Ibn Sina Pharmacueticals Limited

Ibn Sina Pharmaceutical is among the top 15 pharmaceutical companies in Bangladesh.It has been established in 22 December 1983. Since then on it has prospered in its Sales, Production and Human Resource departments. It aims to fulfill the fundamental need of the people by
making the best quality medicines available to all in terms of price and availability in stores. It has a manufacturing plant in Gazipur and 16 sales Depot spread throughout the country where it stores about 311 different types of medicines. Ibn Sina Pharmaceutical has 2700 employees who contributes to the success of the company. It manufactures products under strict guidelines to ensure quality that complies with WHO-GMP standards. It spends about 20% of its profit behind CSR activities. The mission of Ibn Sina is to be the premier Pharmaceutical company by serving humanity. While their vision is to ensure sustainable growth by providing a balance between profitability and quality ensurement to the people. The employees of Ibn Sina have ingrained in their minds the motto Quality, Ethics and Reliability for the people.

Summary of the Management Practice

The key ingradient of success behind Ibn Sina Pharmacys stunning progress is its planning. The goals are set up by the board of directors and then passed on to the lower levels of management. The organizational goal is always challenging one that spurs on its employees to work at their best level. The goals are achievable yet challenging at the same time. The strategies that it develops to achieve the goals are always developed keeping in mind the welfare of employees, the benefits of customers and the success of the company. Its co ordinates and schedule its work activities among its employees so that projects are completed efficiently. Ibn Sina Pharmaceutical places strong emphasis on the values of Ethics. Each managerial function starting from planning to organizing to leading to controlling keeps in mind the ethical business values. The company values its employees more than it values profitability. This is primarily because it knows that its employees are its biggest asset and they will work for sustainable development if they are satisfied with the workplace. Each employees voices are heard and if it is practical for development than that changes are carried out. The brief organogram to show the structure of the company is as follows:

Planning- core management function of Ibn Sina

Planning is the management fuction that begins it all or lays down the groundwork for the other managerial practices. In the planning stage of Ibn Sina goals are set, the methods by which the resources of the company will be used are set and standards which will be later on used for controlling are set. The organization essentially caries out two types of plans: strategic and operational. Strategic plans or overall plans are set by the board of directors and then passed on to successive lower levels who carries out the plans. The operational plans or departmental planning are seldom carried out by the individual departments specially by those that have very small or superficial effects on the profitability of the company, like the export department which contributes less than 5% to the profitability of the organization as a whole. The strategic plans of Ibn Sina Pharmaceutical are long term and often susceptible to changes. The company usually considers four years as long term and places five to six plans to cover the period. To achieve its goal it communicates its plan to each departments who form their individual plans to reach the overall goal of the company. The structure of the company is traditional as all its goals and objectives are set by the directors. There is almost zero influence of the employees in setting up the goals. However if any employee can contribute a different strategy which is helpful then it is more than likely that the new strategy will be adopted.

The planning of Ibn Sina Pharmaceutical leaves its traces primarily on three of its sectors Production, Sales and Research and Development. These effects will now be explained in a detailed manner.

Effects of planning on production department:

Before indulging in production Ibn Sina Pharmaceutical assess all its current resources or factors of production. Then we carry out a market survey to find out the opportunities for our product. Based on these we set up goals to achieve a desired production level, otherwise if there is over production the company will incur huge losses as medicines are perishable products. The production level that we target is high enough to challenge workers so that there is no scope of inefficiency. We plan to divide the workforce in groups and pay the employees accordingly to their work performance. We plan to provide our workers quantity based incentives so that the more they produce the more the more they are likely to earn. This can create a probem with quality which is our main concern. So to offset this we carry out checks on the products at regular intervals so that they meet quality standards set by WHO and GMP and also by the Food and Drug Administration of Bangladesh. Our production has been disrupted many times during the past few years due to severe power outages in our factory in Gazipur. In 2007 we have faced a power crisis which lasted for three and a half days. It led to a major disruption in our production and hence had an impact on our sales as well as we have very high inventory turnover ratio. But now we plan to cover such future losses by creating a contract with the government which will ensure continuous supply to our factory if and only if we export atleast $102000 to other countries. This amount is arrived at by including in the assumption the relative newness of our pharmaceutical company and the need for government to promote export oriented industries. In the coming years there is a likelihood of establishing patent laws for medicine which might be disastrous for us. We will have to pay for the ingredients list of the medicines we produce that have been invented by other companies. This will lead to huge rises in production cost. To recover perfectly from such large scale debacle we plan to enhance our Research and Development department.

Effects of planning on Sales Department:

The goal of our sales department is simple. We will ensure a sustainable and consistant rise in our company sales each year. In 2010 we targeted sales of Tk 1.5 billion for the year. Then for 2011 we had targeted sales of Tk 2 billion. However rarely does our result meet with the projected outcome. In such cases we take out contingent plans. Before planning for sales we keep in mind the contingency factors so that we can take decisions based on the situations. Our main contingency factors are the sales decisions of our competitors as we operate in an

oligopolistic market. Last year although sales target was Tk 2 billion we saw a sudden rise in imports of medicines and an aggressive marketing strategy by our competitors. Thus we had to reduce our target to Tk 1.5 billion so that employees do not get over worked. For sales we first employ marketing research agencies who carry out a survey to find out the opportunities for our product. Based on the expected sales figure we produce medicines which are stored among the sixteen depots around the country. From there the medicines are distributed throughout the country. Our goal is to make our produces available to all. The prime factors in our plans are doctors and medicine retailers. Our field agents go to doctors and inform them about the quality and the affordability of our products. The doctors in turn prescribe the medicines to patients the medicines they see fit. Our second aim is to ensure that all retailers stock our products. We carry out the plan by giving them discounts and use our distribution services to carry our products to those retailers who wish to stock them. We do not charge for any of the distribution services. In the future we will increase our field level employees so that more doctors can be informed about our products. Finally we plan to undertake informative campaign about health awareness for the next four years. With the campaign we will associate our products extensively so that our brand image is promoted and people are informed about our product. This will yield effective results and will increase our sales for many more years to come.

Effects of planning on Research and Development:

RnD is one of our most important sectors. We have invested heavily on this department. About 7% from our gross income is spent behind this sector. We plan to make it our strongest department in the coming years. We have employed the best scientists available by offering them excellent compensation packages and benefits. The better RnD department is the better will our position in the market will be. This department is mainly responsible for bringing new and better medicines in the market. Through this department we ensure the best quality medicines with the lowest production cost which is passed on to our consumers. We try to develop medicines that have negligible side-effects. The RnD department will once again give us an edge in the coming years when patents laws will be established. At those times we will try to develop our own medicine formula so that we do not have to pay for permission to produce patented medicines. Developing new formulas will also benefit us in other ways. We will be able to earn huge revenues by selling our patented formulae to other companies. This will create a huge entry barrier for new entreants which will mean less market competitors. Finally we plan to charge high amounts for our patented products to existing competitors so that they will find it hard to survive in the market. All of these we will accomplish with the help of the RnD department.

Concluding Remarks:
The significance of planning in the Ibn Sina Pharmaceuticals can be understood by deeply contemplating the fingerprints it leaves on the other managerial activities. Without planning the organization would not have been able to be as successful as it is today which is 29 years after its establishment