Strategic assignment v1
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SPIMACO is a large Saudi pharmaceutical company with over $1.2 billion in capital. A SWOT analysis identified strengths like revenue growth and new product introductions, but also weaknesses such as declining earnings per share, gross profit margins, and net profit margins. Opportunities exist in mergers and acquisitions, utilizing local Saudi workers, and data analytics to improve customer insights. Threats include investor resistance due to low EPS, ensuring local workers are adequately trained, and competitive product pricing. Recommendations include focusing on top customers, reducing costs, innovating products, strengthening customer relationships, and using digital transformation to improve efficiency.
Strategic assignment v1
- 1. Executive MBA (CRKC7001) Mid-Term Assessment (C ) Deadline date: Oct 10th, 2021 STRATEGIC MANAGEMENT
- 2. Table of Contents Introduction..................................................................................................................................... 2 SWOT............................................................................................................................................. 2 Detail SWOT Analysis.................................................................................................................... 3 Recommendations........................................................................................................................... 7 List of references............................................................................................................................. 7 Introduction Saudi Pharmaceutical Industries & Medical Appliances Corporation (SPIMACO) is a Saudi Joint - Stock company with a fully paid capital of SR 1,200,000,000. It was founded in 1986. SPIMACO Addwaeih's core business is the pharmaceutical and pharmaceutical industry, which includes the development, production and marketing of pharmaceutical products and medical equipment. In addition, SPIMACO also owns joint venture companies with limited liabilities within and outside the State. SPIMACO has developed a strong position in Saudi Arabia and is well positioned to sustain its growth and has a sound platform for working in export markets. SPIMACO believes that resources are the most important resources that have the greatest impact on production and are regarded as the cornerstone in organizing organizational strengths and help to develop needed skills and increase capacity to deal with current and future challenges. In addition, it helps to find the best use of the current and expected personal component, which contributes significantly to achieving the company's goals and objectives. SWOT
- 3. Let us try to understand more about the organization through SWOT matrix which is a simple tool for a systematic analysis and are considered internal influences while opportunities and threats are considered external factors. Here based on the SPIMACO financial reports, income statement and comparing them to their competitors give us valuable insights in line to the SWOT matrix. S - Strength Revenues New Products Global Recent Business deal W – Weakness Decrease in EPS (Earnings Per Share) Subsequent decrease in the Gross Profit Margin Lower Net Profit Margin O – Opportunities Merger & Acquisitions Saudization – Locals Workers Data Analytics –To know customer behaviour for better insights to increase the sales T – Threats Resistance of Investor Local workers Readiness Competitive Product Cost Detail SWOT Analysis S - Strength Given that Consistency is the Master of Business and earnings, keeping debt low, growing payroll from time to time and spending less money on any business are good news. In addition, cutting costs means more money in the shareholder's pocket.
- 4. However, in terms of Revenue, which exceeds the growth rate in terms of the 2020 financial results which is a good indicator of the company's financial health and strengthening SPIMACO's key role across the state while maximizing the contribution of local pharmaceutical industry to the state's 2030 vision. Introduction of a new product used to treat Rheumatoid arthritis, Psoriasis, and other autoimmune diseases. The drug is registered with the US Food and Drug Administration (FDA) and the European Medicines Agency (EMA) and has been successfully marketed in many European countries, which will lead to future commercial sales and financial stability. The Saudi medical giant expects the agreement to reflect positively on its future financial results because of the recently concluded international trade agreement. W - Weakness We have seen in reports that SPIMACO Q1 2021 EPS (Riyals) is lower than 2020. It shows that a higher EPS shows a higher value because investors will pay more for the company's shares if they think the company has a higher profit in terms of its share price. This means that the company needs to focus on strategies to increase its EPS by increasing revenue or decreasing the total number of remaining shares. In addition, the maximum amount of revenue will depend on rising revenue or the lower costs associated with that income. The revenue generated from each share is an important metrics for investors because it can be used primarily to track company performance and profits over time. In addition, EPS plays its role as part of the PE measurement, which is one of the most common price metrics, which investors use to assess stock value.
- 5. The ratio of each share can be very flawed because it can be easily diverted to various accounting methods or shared through repurchase plans. As most companies know that investors tend to look at the revenue generated by each business share over time, businesses can always try their best to increase EPS over time, even if that can lead to negative consequences over time. The company's Gross Profit Margin is low which is 31.23% which is certainly not a good sign as Margin Gross over 40% is a good indicator as a sixth rule. Simply put, more sales mean more revenue. The Q1 2021 profit margin is 5.74% which is also lower than the sixth control if the net margin is generally 20%, says the strongest financial statement. These are the top three reasons when we see that a company should prioritize to improve as soon as EPS, Gross Profit and Net Profit Margin. O- Opportunities Merger & Acquisitions is a hot topic in today’s market; indeed, it is in the minds of all business leaders. Opportunities help and benefit the organization whether in acquiring high- level employees or additional skills, knowledge of your field or sector and other business skills. Access fees or essential assets for a new development will improve a business if the business is not performing well. Acquiring a broad customer base and increasing your market share will help and enhance the financial well-being of the organization. With data analysis, it is a good idea to know how to conduct customer behavior and increase overall productivity through analytics, digital collaboration, and technological advances.
- 6. Opportunities for local people in Saudi Arabia will also increase with the use of new technologies and business growth practices. Threats As we have seen in the financial reports that the EPS is low which is why there will be resistance for the Investor because when the PE Ratio is more than 50 the company is ranked higher which means the investor will show resistance to the investment. The company also needs to see the potential of local workers which could be a barrier if local people are not properly trained in the future challenges they will take and ensure the growth of the organization because foreign workers will cost. Competitive company costs will also be important because the company must keep this cost factor in mind and offer the product at cheaper prices than its competitors as their global competitors will try to bypass their footsteps in local markets.
- 7. Recommendations As we have done an in-depth analysis of SWOT analysis to better understand the organization, we would like to recommend that the company needs the following to increase the total profit margin. 1. Customers Top 100 customers identified to increase sales 2. Enhance a complete margin by reducing costs (e.g., obtaining cheaper resources) 3. Reduce operating costs and increase profits. In addition, I would like to recommend that Increasing the market share of sales and improving the company's competitiveness 1. Product Innovation or introducing new technologies to the market that competitors will still offer. 2. Strengthening customer relationships by focusing on customer satisfaction. 3. Promote high quality standards By using Digital Transformation Technology and IT to develop commercial services to the highest standards, marketing and distribution standards that will improve the efficiency and quality of the process to ensure consumers receive high quality products. List of references https://www.argaam.com/en/company/financial-updates/ http://www.spimaco.com.sa/investors/financial_reports