Perrigo Company
1. What are the dynamics of the store-brand industry in context of Porter's five forces model? The risk of entry by potential competitors in the store-brand industry is low. This constitutes a high barrier to entry. Incumbent companies try to discourage potential competitors from entering the industry, since the more companies enter the more difficult it is for established companies to hold their share of the market. The greater the costs that potential competitors must bear to enter and industry, the greater are the barriers to entry. The store-brand industry has brand loyalty, absolute cost advantages, economies of scale, and government regulation. All of these features help to raise the entry barriers, thus decreasing the threat of new competitors. The rivalry among established companies is strong. The store-brand industry is highly fragmented; however, the pharmaceutical industry is consolidated. Fragmented industries usually have low barriers to entry and offer co!mmodity-type products that are hard to differentiate. The result is a store-brand pharmaceutical industry that has high entry barriers and difficult to differentiate products. The bargaining power of buyers is not as high as that of the pharmaceutical in
5. What other distinctive competencies does Perrigo have? Currently, they are the leading manufacturer of store-brand items and are developing a presence in the international market as well. They also lead the industry in OTC pharmaceuticals and nutritional products, which is now their main focus since the divestment of Cumberland Swan. Perrigo also offers a diverse product line of more than 400 items. Their specialized OTC operation offers over 300 products in seven categories and introduces 25 new products each year. In addition, they are the nation's largest producer of aspirin, second largest prouder or ibuprofen, second largest producer of acetaminophen tablets, and the second largest producer of psyllium-based fiber laxatives. ion program has also proved successful. By working closely with their suppliers, they have managed to improve quality, save time, and eliminate duplication of efforts, thus reducing costs. Perrigo's research and development (R&D) team is key because they are able to concentrate their efforts on developing store-brand equivalents of national brands and in reformulating existing products instead of trying to develop new products that have not been previously sold to consumers. The introduction of the Improshare plan has managed to not only improve productivity among workers, but also introduce a change in the company's culture. Some other strengths are Perrigo's high packaging standards, their focus on developing products that are bio-equivalent to the comparable national brands, keeping a well defined customer universe, and their maintenance of state-of-the-art manufacturing through the use of a manufacturing resource planning (MRP II) system and a JIT/TQC system. One of Pe! dustry. This is because the cost to the retailer of a store-brand product is generally significantly lower than that of a national brand product. However, this is not to say that their bargaining power is low. The store-brand industry does rely heavily on retailers for a large percentage of its total orders. Retailers buy in large quantities and, thus, can use their purchasing power as a leverage to bargain for price reductions. The bargaining power of suppliers is dependent on the company. In Perrigo's case, the suppliers of the chemicals required for production have a high bargaining power because they supply all of Perrigo's chemicals. However, the bargaining power of some of their other suppliers is lowered due to ! 4. What functional level competencies and strategies does Perrigo have? Perrigo's functional-level competencies and strategies have allowed them to remain and industry leader in cost and quality. Functional-level strategies are those directed at improving the effectiveness of basic operations within i.e., production, marketing, materials management, R&D, and human resources. Perrigo has proven itself to be effective in this area. Their marketing stands out by keeping the relationships with its customers very well defined. They do business in some way, shape, or form with almost every retailer in the country. The department uses both primary and secondary market research, monitors data and trends for products and categories, provides product mix analysis, and provides market information and educational training aids to its customers. The MIMS program has allowed the company to better improve their relationship with its retailers by monitoring and managing their inventory ! rrigo's current weaknesses includes its financial
Some common words found in the essay are:
, CS Perrigo, Administration FDA, II JIT/TQC, Swan Perrigo, Perrigo Perrigo's, MRP II, Executive Officer, Cumberland- Swan, Perrigo's R&D, store-brand industry, bargaining power, national brands, nutritional products, personal care, critical decisions, pharmaceuticals nutritional products, materials management, value chain, pharmaceutical industry, net sales, personal care business, bargaining power suppliers, reformulating existing products, existing products instead,
Approximate Word count = 2352
Approximate Pages = 9 (250 words per page double spaced)
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