Study the Case below and Answer all the questions .

POLYDAV PHARMA LTD

Polydav Pharma Ltd is a private limited liability company that was established in 1990 by Mr. Jalosene, a Chemist, who identified an opportunity to sell Over the Counter (OTC) drugs in Erussi trading Centre in Nebbi district in Uganda. Upon his death in 1996, his son Macky took over the business and in the last twenty years the business has grown into an East African pharmaceutical empire with four divisions: Over the Counter products (OTC), Generic Products (GP), branded products and Alternative Medicine (AM). The AM is the most recent business unit founded in 2019 that has great potential for growth but where the company has stills a very low market share. It is followed by the branded products division where the market continues to grow and the company enjoys a 5% market share as a large percentage of the growing middle class increasingly prefers branded medical products. The OTC division is one of the oldest businesses who market share has dropped and is in decline as the East African Medical Council continues to push for legislation against sales of medicine over the counter. Today the company has branches in Uganda, Kenya, Rwanda, South Sudan and Burundi.

In 2022, Macky, upon realizing that the business needed strategic re-alignment appointed Zacchaeus, a renowned consultant to undertake strategic analysis of the company and provide strategic direction. The strategic analysis exposed a number of factors at work in the competitive environment. Polydav's three main competitors included Cipla Quality Chemicals Ltd, MK Chemists Ltd, and BW Pharma Ltd. The market for pharmaceutical industry in Uganda is estimated at about UGX 1.9 trillion and the per capita consumption was estimated at a paltry UGX 34,600. However, the market has great potential for growth, with a compounded annual market growth rate of 20%. Government is committed to developing the sector and this is boosted by the discovery of oil and gas in Uganda that is likely to increase levels of disposable income in the economy, boost prosperity and uptake of pharmaceutical products. Large and increasing burden of disease suggests a significant unmet demand for pharmaceuticals. The government has in place a policy to attract foreign direct investment in the sector and to protect pharmaceutical manufacturers from foreign competition not resident in the country. The regulatory environment is friendly and supportive and provides for low tax on pharmaceutical products. Perhaps the most significant development is the planned roll-out of the Universal Health Insurance Scheme in 2024 that promises to boost uptake of pharmaceutical products. Moreover, the demand-supply dynamics in the industry shows an upward trend that favours pharmaceutical companies. The availability of high-tech machinery and the required servicing personnel remains a major constraint for the industry. However, several threats remain. Two global investors are in the process of starting factories in Kampala that has potential to cut into Polydav market share. The enactment of a series of stricter regulations regarding the testing of new drugs considerable increases the time-market of new Research and Development (R & D) products.

Polydav's internal environment is quite promising. The company exhibited considerable strength in the sector in 2022. In an industry where product quality followed by price are the most important success factors, Polydav has the best quality products at most affordable prices. This was in part due its dynamic team of highly competent scientists trained by Johnson and Johnson in the U.S. In decreasing order of importance, other critical success factors in the East African pharmaceutical industry include market share, financial capital, and sales volume of the generic pharmaceutical products. It is significant that Polydav has dominant presence in the market, controlling 11% of the market with the hundreds of competitors sharing the remaining 89%. Although demand for branded and generic pharmaceutical products declined in the year 2022, the OTC products experienced a 50% increase in turnover, generating over 30% of total revenue. The surprising performance of OTC was partly due the prevalence in Uganda of self-medication in the aftermath of COVID -19 pandemic and the expansion of the distribution networks by contracting three new regional distributors that catered for the predominantly rural market segments. The company had huge financial capital, accumulated over two decades of its operations. This financial position was characterized by high levels of liquidity, declining debt- total assets ratio of 10% and relatively low levels of Return on Investment (ROI) and Cash flow. These low levels were partly caused by the huge capital outlay that accompanied the expansion into EAC markets during the year.

The above notwithstanding, the company also experienced severe challenges in the year 2022. As indicated earlier, sales in the critical generic pharmaceutical products business declined by 10%. Limited supply of raw materials for the recently founded manufacturing business frequently led to stock-out of some of the company's branded products. The short product life cycle of pharmaceutical products and the stricter regulations on time-to-market negatively impacts on Polydav's ability to quickly develop and market new products. The location of the company on 7^th street in Kampala and along River Road in Nairobi and resulting traffic jams in these locations have been negatively affected sales of branded products. While the Democratic Republic of Congo (DRC) has opened its market to companies from the East African Community (EAC), Polydav's business has shrunk in Tanzania where new and tougher regulations have led to decline in sales of generic Ugandan made pharmaceutical products.

In a strategy planning meeting held in December 2022, Zacchaeus offered to Senior management two alternative tools to generate and select appropriate strategies, that is, SWOT and SPACE matrices. In relation to the latter, he asserted that the most important the critical factors affecting the financial strength of the company are capital and debt-to-total asset ratio taken together and followed by liquidity, Cash flows and Return on Investment, in the order of decreasing importance. In relation to competitive advantage, product quality and product pricing were together rated as the most critical factors and they were followed by market share and lastly product life cycle in that order. Zacchaeus also rate the external environment as follows. He considered potential for growth and potential for profit as the most critical industry strength factors. These were followed by ease of entry into the industry and availability of raw materials in that order. In the same vein, he rated disposable income and low taxation as the most critical environmental stability factors followed by demand supply dynamics and availability of technology and technology servicing personnel in the industry in EAC.

Required:

1. From analysis of the situation above, construct an EFE matrix that best describes the situation of Polydav Pharma Ltd. Use your own weightings and ratings that you consider relevant to the situation described in the case above. (NB: We do not expect two students to have same weights and ratings).

2. Construct an IFE matrix that highlights the situation in Polydav Pharma Ltd. Use your own weightings and ratings that you consider relevant to the situation described in the case above. (NB: We do not expect two students to have same weights and ratings).

3. From the information in the IFE and EFE matrix above identify four Strategic Goals that Polydav should address in its strategic redirection

4. Select two of the strategic Goals above and for each suggest two strategic objectives that Polydav can rightly pursue.

5. With the aid of SWOT Matrix identify one example of the following types of strategies that Polydav may successfully pursue to achieve the strategic objectives in:

Strength - Opportunity Strategy

Strength - Threat Strategy

Weakness - Opportunity Strategy

Weakness - Threat Strategy

6. Given the information above construct a SPACE Matrix for Polydav.

7. From the SPACE matrix in 5 above, suggest two strategies that Polydav should pursue.

8. With specific reference to a sentence in the Case study above, name one example of the following types of business units in Polydav Pharma Ltd:

Question Mark

Cash Cow

Dog

Star