Essay on Pharmaceutical Firm- Business Idea

Added on - Sep 2019

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Diversification is a process in which a firm leaves its core industry and market to enter anentirely new market with new customers and opportunities. A marketer plans to diversify itsbusiness in order to manage risks by simply minimizing the potential harms to the expandingbusiness in times of economic downturns. There are times when the current business activitiesstop responding in a positive manner to the economic turmoil situations. In such a condition, it isrecommended to shift over such a business that doesn’t reacts negatively in times of adversesituations. Diversification is also helpful in times when one of the businesses of the company isfacing failures in the markets. The other businesses will help the profits and sales to rise for thecompany and even keep it viable for a long time. Sometimes Diversification is also used by acompany as one of its growth strategy. In this a company can rely upon other sources of incomederived from other business ventures[ CITATION JSu16 \l 1033 ].In the following essay, a step has been taken forward to suggest a new business idea to apharmaceutical firm and even analyze the potential risks associated with this diversification andexpansion process. In this essay, the selected pharmaceutical firm will diversify its business andinvest in Coffee shops to have an entirely new experience of dealing with coffee lovers. Theessay will evaluate the potential risks of diversifications along with suggestions andrecommendations to mitigate them in all possible ways. The company that has been chosen forthis assignment isValeant Pharmaceuticals International.It is a multinational pharmaceuticalcompany based in Canada. The company entered the Pharmaceutical business in the year 1994,under the name ICN Pharmaceuticals Inc. by merging with three leading companies of that time.In the year 2003, the company got its new name as the Valeant[ CITATION Val161 \l 1033 ]. Theadverse condition rose when the firm was involved in a controversy related to drug price hikes inthe year 2015. This year marked a great setback in the sales and profit rates of the firm.This2
economic downturn has bought up with a suggestion of expansion cum diversification throughwhich the firm could seek new markets and customer base to compensate the ongoing loss. Forsuch a purpose the expansion could be towards coffee shop business in Canada.Out of 80countries, Canada stood up at first position in the survey, which was conductedto evaluate how many liters of coffee is consumed in cafes and coffee shops. The prime reasonbehind this heavy consumption is the prolonged cold weather. Apart from this only reason, thereare a number of other small reasons too[ CITATION Cof161 \l 1033 ]. Among them, one of the mostreliable reasons is the ample of best coffee brands in the country which are serving coffee cups tomeet the tempting demands of the customers.Either outside or at workplace, most of theCanadians enjoy on an average 3.5 cups of coffee per week in cafes and restaurants. Thesestatistics suggest that this diversification of the firm facing a great economic turmoil could yielda number of lucrative results in the coming future. The Canadians already have a great affinitytowards Caffeine and hence an investment in this business is always a profitable decision. TheCafes and the Coffee shops will not only offer myriads of Coffees but to complement it, theymay also offer tempting recipes that could easily lure more and more customers towards this newexpansion idea[ CITATION SMc13 \l 1033 ].The most apt and suitable approach of diversification for the selected firm could be investmentsin the Coffee Startups in Canada. This approach would allow the investors of the core business tohave a feel for the product they are going to launch and would even have an understanding andexperience about the venture from the beginning. Moreover, while learning from the staring the3
executives of the pharmaceutical firm could easily evaluate the hidden threat and opportunitiesassociated with the new business and target markets where the core business is going to expandand diversify[ CITATION IBu15 \l 1033 ]. Theinvestments in startups often allow the companieswith a core business to look for opportunities in a number of directions and hence invest inmultiple startups of same or different genre at the same time. The investments done throughdiversification often allows a company to seek long- term gains in the future and even providesmuch more security than putting all the money in one market and in one type of customer base.The company that plans to invest all its assets and resources in a single promising market, thenthere are chances that a company might face serious problems in times of losses. By diversifyingthe portfolio, the company could get a better chance to achieve long term goals by playing safelyalong the way[ CITATION Ciu08 \l 1033 ].While diversifying, there are a number of identified as well as unidentified problems thatare faced by the core business that is trying to expand into an entirely new business and newmarkets. The perception of a Pharmaceutical firm has been always to serve the bulk of customersat a single time irrespective of their personal needs. The core business has always produceddrugs that are in demand in the markets as a whole rather than serving those drugs and medicinesthat are particular towards certain sensitivities of the people. This habit of the company will posea great challenge in front of the executives who have to now manage customers with a specificset of tastes and choices in terms of Coffee and other eatables served in the cafes and coffeeshops. The customers visiting the coffee shops have different demands for their coffee and inorder to succeed in this business, the coffee shops need to meet the individual demands of thepeople and evaluate their perceptions towards the tastes that are being served. Also, the entry4
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