LuẬN văn: Chiến lược phát triển thảo dược tại Công ty cổ phần
TraPhaCo

THESIS TOPIC
“STRATEGIC DEVELOPMENT HERBAL
MEDICINES OF TRAPHACO JOINT STOCK
COMPANY 2015-2020”


INDEX
CHAPTER I:...........................................................................................................5

1.1. The concept and the role of the business strategy to the enterprises:........5
1.1.1. Some concepts of business strategy:...........................................6

Figure 1.2: The process of planning.................................................10
Figure 1.3: The process of planning business strategy.......11
Figure 1.5: .Macro environment.........................................................14

Board of directors and executive directors.....................................................19
Members of board of directors:......................................................................19

Table 2.1: Remarkable Achievements:............................................22
Table 2.2: Growth speed 2006-2010.........................................................24
Figure 2.1:EPS and Growth of revenue at Traphaco............24
Table 2.3: Products portfolio:............................................................26
Figure 2.2: Revenue of consuming the pharmaceuticals
and average...................................................................................................33
Figure 2.3: Traphaco's market share in Vietnam's
pharmaceutical industry.....................................................................36
Figure 2.4: Traphaco's market share in Vietnam's

Figure 1.3: The process of planning business strategy.....Error: Reference source
not found
Figure 1.4: Four blocks create competitive advantage.. Error: Reference source
not found
Figure 1.5: .Macro environment......................Error: Reference source not found


Figure 1.6: BCG matrix.................................. Error: Reference source not found
Figure 1.7: SWOT Matrix................................Error: Reference source not found
Figure 1.8: Space matrix................................. Error: Reference source not found
Figure 1.9: Basic stages of strategic administration.......Error: Reference source
not found
Figure 2.1:EPS and Growth of revenue at Traphaco....Error: Reference source
not found
Figure 2.2: Revenue of consuming the pharmaceuticals and average........Error:
Reference source not found
Figure 2.3: Traphaco's market share in Vietnam's pharmaceutical industry.
.......................................................................... Error: Reference source not found
Figure 2.4: Traphaco's market share in Vietnam's pharmaceutical industry.
.......................................................................... Error: Reference source not found
Figure 2-5 Model of value chain....................Error: Reference source not found
Figure 2.6: Structure....................................... Error: Reference source not found
Figure 2.7:Revenuse structure by products. .Error: Reference source not found
Figure 2.8: Cost price structure and the average gross profit of products Error:
Reference source not found
Figure 2.9: BCG MATRIX............................. Error: Reference source not found
Figure 2.10: Space Matrix..............................Error: Reference source not found
Figure 3.1:Structure of Gross Profit according to the product. Error: Reference
source not found
Table

- The academic staff of the Griggs University who guided us in the process of
doing the research;
- The officers and staff of the ETC belonging to the Postgraduate Department,
Hanoi National University;
We also would like to send our sincerely thanks to Traphaco Corporation, the
leader board of the Corporation, especially Ms. Vu Thi Thuan, Chairman of
Manager Board and CEO of Traphaco Corporation who enthusiastically supported
us in the process of implementing the Capstone Project Report.
Group Members:
1. Nguyen Thi Muoi
2. Le Thanh Ha
3. Tran Dinh Dong
4. Tran Huong Giang

1


OVERVIEW
The 21st century marked the changing of the world in the fields of economy,
society, politics, science and technology ... many new technologies has
continuously launched, the regulations on controlling the quality are becoming
tighter and tighter, the environment has many unexpected changes, the impact of the
spread financial crisis causing severe consequences in many countries,... Besides,
the economy of the world is shifting to the trend of global integration, so the
operations of the enterprises must be suited to the trend of the global economy, and
the regional and international integration by searching and promoting comparative
advantages to win in an increasingly fierce and intensive competition in the nation,
international and global.
In that context, each enterprise has new opportunities to exploit; at the same
time they have to face much risk should be prevented and limited. Therefore, to

most of doctors can enjoys the commissions from the patient's prescription from the
foreign pharmaceutical corporations). Besides, the herbal medicines of the domestic
pharmaceutical corporations are limited and lack diversity that does not meet the
requirements of the patients.
According to the survey of WHO for seven groups of common western medicine
used in Vietnam, based on the criteria of the type, the name of specific medicine,
producer and supplier showed that medical prices in Vietnam are higher from 5 to 40
times compared with the general prices in the world (according to online dantri on the
26th of June 2010).
Besides, at present, the domestic medicine is only about 652/1.563 of active
ingredients, and according to the World Health Organization (WHO), Vietnamese
pharmaceutical industry is in development levels between 2.5 to 3 (in the
classification scale from 1 to 4), that means it only produces some of certain generic
medicines and exports some pharmaceuticals, the pharmaceutical enterprises mainly
invest in manufacturing the common and simple pharmaceuticals only, with much
overlapping, do not pay attention to invest in production of specialty medicines, or
special dosages, and generally the enterprises meeting the requirements of ASEAN
GMP and GMP-WHO are low.
With orientation to create breakthrough in technology to apply the products from
nature into the production creating higher value products with good effect from which
discovers and exploits the medicinal resources to serve the protection of public
health. The Traphaco Corporation - with 39-year experience in the pharmaceutical
sector has chosen the main business direction is to trade and manufacture the herbal
medicines

3


Through understanding the overview of the pharmaceutical industry of Vietnam,
the achievements and limitations of the pharmaceutical corporations in general, and

conclusion on any issue, we must be based on actual surveyed results combined with
the academic theories.
This Capstone Project Report mainly uses method of collecting secondary data
including:
- Internal data of Traphaco Corporation;
- Sources from books, internet;

4


- Using some references, documents specialized in domestic and foreign Strategic
Management.
In addition, our group also uses the method of statistical sample, survey, and
analyzing the questionnaires.
4. Structure:
Beside the introduction and the conclusion, the Capstone Project Report includes
3 main chapters:
Chapter I: General theory of business strategy
Chapter II: The current business situation of Traphaco herbal medicine
Chapter III: Strategy development herbal medicine of Traphaco Joint Stock
Company 2011-2015.

CHAPTER I:
GENERAL THEORY OF BUSINESS STRATEGY
1.1. The concept and the role of the business strategy to the enterprises:

5


1.1.1. Some concepts of business strategy:

6


Quinn introduced the concept: "strategy is a pattern or a plan integrating the major
objectives, policies and sequence of actions into a closely cohesive group". (Source:
Quinn. J. B. (1980).
Thus, the strategy is aimed at outlining the future image of the enterprise, and to
achieve that firmly, the enterprises need to have the appropriate decisions and the
consistent actions to achieve fixed goals. In other words, the business strategy is an art
to coordinate activities and control them to achieve long-term goals of the Company.
1.1.2. Kinds of strategy
Classify the strategy according to the level of strategy
There are three levels of strategy in the business those are: the strategy or general
strategy; corporate strategy and competitive strategy.

Figure 1.1:Three levels of strategy in the business
(Source: Text book of “Strategic Management”- Global Advanced Master of Business Administration, Hanoi, 2010)

- Sort by strategic-level strategy:
+ Corporate strategies (general strategy) level strategy towards corporate
objectives and overall scope of the organization. The objective of this strategy is that
the targets that the company wants to achieve a quick overview of the entire area
where the company operates.

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+ Competitive strategy: regarding how to successfully compete in specific
markets.
+ Functional strategy (or operational strategies) is strategies to help the

What do
Would do?
How will
Do?
Through this, the enterprise can find its strengths and promote them to create the
advantages and also find the weaknesses to reduce and overcome. By locating where
the enterprises currently, planning the business strategy will tell us where the
enterprise wants to get to and how will the enterprise get there. The business strategy
offers goals and orientations for the enterprise to operate effectively.

8


Strategy is the factor which helps to develop the enterprise. Thus, it will be better
if we start a strategy with the offering of the future perspective on the basic of correct
assess of the internal, identifying advantages and potentials to locate the enterprise
correctly and how to achieve the goals with a carefully planned strategy. With the
features of business strategy reflected in the process, business strategy always has the
spirit of offensive and winning in the market and usually planned in long term of 3, 5,
10 years or more, the decision to choose a suitable model will mark the changes from
the starting steps to success.
1.1.4. The models of business strategies:
1.1.4.1. Linear strategy model:
Linear strategy model focuses on the planning activity. This model is called linear
because it consists of the scheduled, oriented operations which follow logical order in
the planning process.
Linear model is less used since the strategic factors become increasingly complex,
not only because these factors relate to many different management aspects but also
because of the changes of technology, economy, and information variables
1.1.4.2 Adaptation strategy model

STRATEGIC
CHOICE

Functions, missions and strategic goals of the enterprise (1)
STRATEGIC
ANALYSIS

STRATEGIC
IMPLEMENTATION

Analysis of the internal
environment(S, W) (3)

Analysis of the business
environment (O, T) (2)

Figure 1.2: The process of planning
(Source: Text book of “Strategic Management”- Global Advanced Master of Business Administration, Hanoi, 2010)

1.2.1 Strategic planning (choosing missions and major targets of the enterprise)
the strategy
(4) a context to build the strategy.
The enterprise's missions Select
and major
targets offer
The missions describe the reason to exist of the organization and points out what it
will do. The major targets identify what the enterprise hopes to offer in medium and
Strategy of the whole enterprise level (5)
long term.
Strategy of business and functional departments

is set up separately and in more detail. Goals are identified in medium-term, long-term
or short-term
Usual long-term goals are:

profitability, productivity, competitive position,

employee development, technique leading or social responsibility, etc
Short-term goals (within 1 year) often are separate and specifically limited on
time. Requirements of short-term goals are detailed, measurable, available, and, most
basically, aiming towards long-term goals.
1.2.2Analysis and evaluation
1.2.2.1 External environment:
The goal of analyzing the external environment is to
realize the opportunities and challenges from the external
environment to the enterprise. The three types of external
environment linked together are: micro-environment,
national environment and industry environment in which
the enterprise is operating.
The enterprise identifies the opportunities and
challenges through the analysis of data about changes in the environments where the
enterprise is operating or intending to enter. Opportunities are market development
potential, market space, close to material resource, cheap and qualified human
resource, etc. Challenges are narrowed market, fierce competition, policy changes,
political instability in major markets or the new technology development making the
enterprise's facilities and production line become out-of-date.
1.2.2.2 Analysis of the enterprise's internal environment:
The goal of analyzing the internal environment is to find the strengths and
weaknesses of the enterprise.
The analysis of internal environment is for identifying the basic of competitive
advantage and explains why in an industry there are some corporations which operate

and capacity. Resources consist of: financial properties, material, personnel,
technology and organizational structure. The analysis of the enterprise's internal
environment and the strengths and weaknesses helps the enterprise to identify the
basic capacity to promote and the limits to overcome. So the enterprise can built the
suitable strategies to its capacity, to develop its strengths and overcome its
weaknesses, exploit the different ability
General summary: The results of the analysis of internal and external
environment of the enterprise are the results which study and evaluate the business
environment on a whole. They include the geographical (or political, economical,
social, environmental, cultural) business environment, trend of the industry (or
technology, science, supply source), the situation of the market (demand,
consumption, trend forecasting), the situation of the competition (major opponents,
potential opponents, advantages and disadvantages, current position and the pursuing
strategy).

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Political - Law

Economy

Potential
development of
substitute products

Global

Bargaining power
of suppliers

High

1.2.3.1 - BCG method:

Low
Average
Market growth

The criteria toGroup
evaluate
an enterprise's
Group 2attractiveness are the relative market share
1
and the market's ability to grow. Each operation will be located base on these criteria.
This matrix has two axes: the column is the market's ability to grow and the horizontal
Group 3

axis is the relative market share

Group 4

Relative market share

High

Average

Low

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(O)
Strengths(S)
Combination

Combination

(S/O)
Combination

(S/T)
Combination

(W/O)

(W/T)

Weaknesses
(W)

15


Figure 1.7: SWOT Matrix
(Source: Text book of “Strategic Management”- Global Advanced Master of Business Administration, Hanoi, 2010)

The strategy combining S/O is the result of the combination between the main
strengths and the opportunities. The important thing is that the enterprise has to use its
strengths to exploit the opportunities.
The strategy combining ST is the result of the combination between the main
strengths and the threats. In this strategy the enterprise uses its strengths to overcome

include: Effectiveness management, quality management, improvement management,
and customer satisfaction management
1.4. Using the strategy analysis techniques to Analysis the current situation of
the enterprise

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Because time is limited so that in the analysis of the enterprise's current
situation group 5 - M0709 will use some of the models and methods mentioned above
in the process of analyzing the situation, locating the enterprise and planning
management strategy for Traphaco Corporation, specifically are:
- PESTLE model in analyzing the macro environment.
- Michael Porter's five competitive factors in analyzing the business industry
environment.
- SWOT matrix in summary analysis of internal environment ( strengths and
weaknesses) and external environment (opportunities and threats) of the enterprise
(using score).
- Analysis the basic value chain so that the enterprise can locate its position and
identify the means usable to deploy the business strategy.
- BCG matrix to assess the enterprise attractiveness (relative market share and
the grow capacity).
- SPACE matrix method.

In short, the process of strategic management consists of the basic stages
like in the following figure:
Develop the
strategic
perspective and
mission


Redo
1,2,3,4 if
necessary

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Figure 1.9: Basic stages of strategic administration.
(Source: Text book of “Strategic Management”PGS.TS Lª ThÕ Giíi, TS. NguyÔn
Thanh Liªm, ThS. TrÇn H÷u H¶i-Statistical Publishing house 2009. Chapter I)
Conclusion: A good strategy is a strategy which has high feasible. Each enterprise
with different organizational structure has the different strategy deployment, but the
importance is that whether the enterprise can administrate well the chosen strategy
and deploy effectively the strategy and bring high values.
- Base of the function and mission as well as the analysis of the factors of the
internal and external environment, the enterprise can choose the suitable strategy to
itself. The analysis process use various analyzing models, tools and predictions will
help the enterprise to realize the strengths, opportunities, weaknesses, threats, and
then have the right strategic solutions.
-In the process of deploying strategy, the theoretical basic of strategy will be
applied in reality, but because of the usual change of the environment and other
hidden factors which cannot be predicted, assessed and Analysis. So, mistakes will
occur in the process of planning strategy. Then, we have to change and improve to
suit the real situation

CHAPTER II:
THE CURRENT BUSINEES SITUATION OF TRAPHACO HERBAL
MEDICINE
2.1. Overview of Traphaco joint stock Company:

4- Mr. Tran Tuc Ma:

Committee member

5- Mr. Hoang Thi Ruoc:

Committee member

6- Mr. Nong Huu Duc:

Committee member

Member of executive directors:
1- Ms. Vu Thi Thuan:

General Director (awarded KOVALEVSKAIA)

2- Ms. Nguyen Thi Mui:

Deputy of general director

3- Mr. Nguyen Huy Van: Deputy of general director
4- Mr. Tran Tuc Ma:

Deputy of general director

5- Ms. Hoang Thi Ruoc:

Deputy of general director


2.1.2.1. Major lines of business:
- Producing and trading in medicine, food, cosmetics, chemicals and medical
equipments;
- Consulting and producing the scientific and technical services, technology
transfer in the medical, pharmaceutical, cosmetics;
- Researching, collecting, growing and processing medicinal herbs
- Trading in, importing and exporting the medicines, the products of medicine;
- The other lines of business as registries.
2.1.2.2. Operational status:
TRAPHACO formerly Medicines production Group belonging to the Railway
Health Service was established on 28.11.1972, with the task of producing plasma,
fluids, distilled water for Railway Hospital in the

period of resistance against

American.
- 01/06/1993, Pharmaceutical Factory Railway (trading as Raphaco) was born,
has legal status, own seal, its own account, and operates independently under the
Government's Decree 388. Number of initial capital is 278 million VNĐ and a team of
over 100 employees. Enterprises began to invest and implement policies to attract
human resources with high quality; labor recruitment is pharmacist University
graduate with good, well at the Hanoi University of Pharmacy, along with the signing
of many contract technical staff, collaboration in scientific research, exploration of
market

research

and

business


construction

of

pharmaceutical

manufacturing plant in Hoang Liet , Hoang Mai, Hanoi and Drug Administration is
recognized as the standard system of GMP / GSP / GLP -ASEAN.
-01/2007, Hoang Liet plant was officially recognized GMP-WHO standards.
27/11/2007, TRAPHACO was the 35th anniversary of establishment of the company
and proud to receive second-class Labor Medal by the President of Socialist Republic
of Vietnam awarded.
26/11/2008, TRAPHACO shares were officially listed and traded on the HCM
City Stock Exchange, marking a turning point in the development of the Company.
For over 39 years of construction and development, TRAPHACO has really
grown and has made many contributions to the protection of human health and the
development of the pharmaceutical industry of Vietnam.

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Table 2.1: Remarkable Achievements:
(Source: Traphaco.com.vn)
Year

2009

2007


of Vietnam.

(Top 100 brands of
Vietnam)
Top 100

2007

in

By

products

of

Consumers vote

Vietnam
2006

Merit

2005
2003
2002

Merit
Merit
Merit

- Head office at 75 Yen Ninh, Ba Dinh, Hanoi area 800m2 uses
+ Factory:
+ Factory drug GMP-WHO medicines in Hoang Liet, Hoang Mai, Ha Noi 10.000m2
areas.

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