Haw Par Corporation Limited: Traditional Business Sector
1. PART ONE
1.1 Introduction
Haw Par Corporation Limited is a multinational corporation engaged in healthcare, leisure businesses securities and real estate investment, among which we will mainly focus on Haw Par’s traditional business sector-the healthcare segment, which includes 9 subsidiaries (Annual report, 2010). Based on revenues generated and locations of manufacturing facilities, two prominent geographical markets, Asia and America, are selected for discussion. We will look into the competitive environment of the corporation, and the generic strategies adopted to survive in the environment. Then we will investigate operations within Haw Par by analyzing its value chain activities, and propose improvements to enhance its competitive advantages. Lastly, we will identify the top risks imposed to the corporation.
1.2 Competitive Environment – Michael Porter’s Five-Forces Model
1.2.1 Threat of New Entrants
Initial capital requirement of entering the healthcare industry is high, including investment in property, plant, equipment and research and development. Moreover, compliance burden with various regulations is heavy, as illustrated by the warning letter received by Haw Par from the Food and Drug Administration (FDA) in the US. Besides, its scale of business, well-establish brand and distribution network are difficult to imitate. Thus, the threat of new entrant is low.
1.2.2 Threat of Substitute
Currently, Haw Par's healthcare products mainly consist of traditional herbal medicines and newly developed chemical products. The substitutes of herbal medicines are mostly western chemical medicines. We can see that Haw Par is actively responding to the challenge of chemical medicines. However, the existing pharmaceutical companies are very strong, and their products are more competitive on the whole. Therefore, the threat of substitutes is medium.
1.2.3 Bargaining Power of Buyers
The products of healthcare division are mainly traditional Chinese medicine oil
1.1 Introduction
Haw Par Corporation Limited is a multinational corporation engaged in healthcare, leisure businesses securities and real estate investment, among which we will mainly focus on Haw Par’s traditional business sector-the healthcare segment, which includes 9 subsidiaries (Annual report, 2010). Based on revenues generated and locations of manufacturing facilities, two prominent geographical markets, Asia and America, are selected for discussion. We will look into the competitive environment of the corporation, and the generic strategies adopted to survive in the environment. Then we will investigate operations within Haw Par by analyzing its value chain activities, and propose improvements to enhance its competitive advantages. Lastly, we will identify the top risks imposed to the corporation.
1.2 Competitive Environment – Michael Porter’s Five-Forces Model
1.2.1 Threat of New Entrants
Initial capital requirement of entering the healthcare industry is high, including investment in property, plant, equipment and research and development. Moreover, compliance burden with various regulations is heavy, as illustrated by the warning letter received by Haw Par from the Food and Drug Administration (FDA) in the US. Besides, its scale of business, well-establish brand and distribution network are difficult to imitate. Thus, the threat of new entrant is low.
1.2.2 Threat of Substitute
Currently, Haw Par's healthcare products mainly consist of traditional herbal medicines and newly developed chemical products. The substitutes of herbal medicines are mostly western chemical medicines. We can see that Haw Par is actively responding to the challenge of chemical medicines. However, the existing pharmaceutical companies are very strong, and their products are more competitive on the whole. Therefore, the threat of substitutes is medium.
1.2.3 Bargaining Power of Buyers
The products of healthcare division are mainly traditional Chinese medicine oil