TECHNOPHAR

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TECHNOPHAR

• In Viet Nam

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Group Members

• Ben Barber
• Dan Campanella
• Trung Doan
• Chris Longaphy
• Brent McLinton
• Nate Whalen

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Table of Contents

• Summary
• Problem
• Problem Symptoms
• Problem Analysis
• Alternatives
• Solution and Implementation

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Summary

• Founded by Herman Victorov in 1988
• Supplier of machines turn key plants for hard
  and soft gelatin capsule production
• Considered technologically superior in design and
  operating performance
• Industry leader with 80 market share

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Summary continued

• Technophar simplified and standardized automated
  capsule production
• Saw opportunity because capsule production was
  labour intensive and low productivity
• New demand in less-developed countries with low
  cost labour

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Summary continued

• Sales slow initially
• 7 sales in 1988-1990
• Dramatic increase to 20 sales in 1994
• Developed machines for metallurgical, chemical
  and automotive

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Summary continued

• Average capsule consumption
• 40 billion in Europe
• 50-55 billion in North America
• 100-200 billion worldwide
• Growth 3-5

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Summary continued

• Reputation extremely important to Technophar
• Good reputation for honesty, integrity and
  reliability
• In past, has gone to great lengths to preserve
  reputation

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Summary continued

• New machines designed and tailored to each
  companys needs
• Components are interchangeable between different
  designs
• Easy to adapt
• Cost of 535,000-635,000 per machine

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Summary continued

• Turn-key plants
• Many years to court contract
• Need 10-15 deposit letter for credit of
  balance in order to start project
• When shipped balance less 10 due
• Final 10 due when plant certified as operational

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Problem

• Due to Viet Nam being such a lucrative
  opportunity,Technophar must decide whether to
  cancel the contract or proceed with the current
  one

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Problem Symptoms

• Deposit has not arrived
• Steel prices (input prices) have increased
• Nine other Business opportunities to pursue
• Contract is signed and therefore considered
  binding (North American Culture)

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Problem Analysis

• Technophar is a small company in Stage One of the
  globalization process
• Large investment already undertaken
• Technophar operates under time constraints
• Technophars global experience
• Do they understand the Vietnamese business
  culture?
• Market inroads and profit considerations

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Alternatives

• Be patient
• Cancel contract
• Renegotiate contract
• Inquire

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Alternative 1(Be Patient)

• Research culture
• Delay may be cultural
• Concentrate on back-up plan
• Weigh alternative options
• Focus on other segments/ventures

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Alternative 2(Cancel Contract)

• Could be focusing on other opportunities
• Loss of possible profit
• Already invested money in contract
• Could tarnish relationship with Vietnamese
  partner and reputation of Technophar

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Alternative 3(Renegotiate contract)

• Renegotiate an alternative payment plan
• Deposit amount, installments, etc.
• Renegotiate entire contract
• Steel prices have increased, foreign exchange,
  etc

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Alternative 4(Inquire)

• Contact Cuulong Pharmaceutical import and export
  Company regarding delay
• Apply pressure to complete deal
• May strain relationship

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Solution and ImplementationAlternative 1 Be
Patient

• Be patient, understand that the Asian culture is
  not the same as North Americas
• Asians cultural norms include relaxed attitudes
  toward contract agreements
• Technophar is still making a profit from the
  contract

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Thanks for paying attention!

• Any questions?