BBE ASM 1: Business & Business Environment Assignment 1 - Distinction

Table of Contents


I.

INTRODUCTION

The precursor of Traphaco Joint Stock Company (JSC) was a governmental
medicine production group established in 1972. After a few decades, Traphaco
Pharmaceutical & Medical Equipment JSC officially started operating in 2000 as a
joint stock company with 45% state capital. In 2001, the company changed its name to
Traphaco JSC. Traphaco's main business activities include: manufacturing and trading
pharmaceuticals, chemicals and medical supplies; purchasing, cultivating and
processing medicinal herbs; importing and exporting raw materials and supplements to
make products (Traphaco, 2019).

Picture 1: Logo of Traphaco (Source: Traphaco)

The company currently has 28 branches nationwide, 4 subsidiaries and
associated companies, serving over 27,000 loyal customers. In terms of production,
Traphaco owns 5 planting and collecting medicinal herbs that meet GACP-WHO
standards, 1 medicinal plant extracting factory and 4 factories meeting GPs - WHO
standards. The headquarter of the company is located in Hanoi (Traphaco, 2019).
During the process of development, Traphaco always encountered with many
competitors in the domestic pharmaceutical market. Especially, when Traphaco
recently started producing new medicines related to the digestive system, the company
faced competition from a small but emerging competitor, Tam Binh Pharmaceutical
Company. In addition, with the trend of globalization and integration of Vietnam’s
economy, Traphaco will also have to have a good business strategy to compete with
foreign pharmaceutical companies that are gradually entering the Vietnamese market,
typically Abbott Laboratories from the United States.

The Tam Binh Pharmaceutical Company is a very young company. It was
founded by pharmacist Le Thi Binh in 2010. Tam Binh has established its brand in the
Vietnamese pharmaceutical industry with products made entirely from herbs through
the construction and development process. Tam Binh has a large GMP-WHO standard
factory in the suburbs of Hanoi, equipped with modern machinery and technology. The
company owns several herbal crops to supply raw pharmaceutical materials directly to
the factory, therefore the company can make sure the medicinal sources are natural and
quality (Tam Binh, 2019).
On the contrary, Abbott Laboratories was founded in 1888 and has been wellknown all over the world for producing nutritional and pharmaceutical goods for over
80 years. The company mainly focuses on research, development, manufacture and
distribution of healthcare and pharmaceutical products and services. Abbott established


the first office in Vietnam in 1995. Abbott provides all Vietnamese with food products,
pharmaceuticals and advanced diagnostic equipment (Abbott, 2019). It can be seen
that Abbott is a major competitor of Vietnamese pharmaceutical companies in general
and Traphaco in particular. Recently, Abbott is tending to buy many shares of large
pharmaceutical corporations, such as Domesco JSC or Glomed JSC. This can be
considered as an opportunity but also a difficulty for Vietnamese pharmaceutical
companies like Traphaco.


II.

MAJOR FINDINGS

1. Vision, mission, goals, objectives and core values.
1.1.

Vision

Traphaco’s vision is to be the number one pharmaceutical company in Vietnam
in terms of revenue growth, profits and market capitalization (Traphaco, 2018).
According to Vietnam Report, in 2018, Traphaco ranked second in the ranking of the
most prestigious pharmaceutical companies in Vietnam, just behind DHG Pharma.
Indicators such as financial score, media coding or survey score of Traphaco are
almost superior to the companies ranked below.
On the other side, Tam Binh creates the vision to develop and to be one of the
most successful pharmaceutical companies with the main products made from
traditional herbs and medicines with good quality and fair prices. (Tam Binh
Pharmaceutical, 2018)
The vision of Abbott is to be the largest healthcare and pharmaceutical
company in the world. The company wants to be the best employer, the best provider
of healthcare and pharmaceutical industry, the best business partner and the best
investment. Abbott aims to become a leading company with the slogan: "Scientific
achievement for the quality of life" to offer comprehensive healthcare services based
on scientific achievement (Abbott, 2018).
1.2.

Mission

The mission of Traphaco is to lead the creation of Green pharmaceutical
products to protect and improve human health (Traphaco, 2018). It can be seen that in
the process of manufacturing, circulating and consuming pharmaceuticals, it requires
processing a large amount of toxic chemicals. Those substances will directly cause
great harm to the environment and indirectly affect human health. Thus, to build a
successful and sustainable business, Traphaco will develop and apply scientific
research to produce pharmaceutical products with natural ingredients to both prevent
and cure diseases but also to protect the environment and human.
Tam Binh’s mission is committed to providing consumers with high-quality

medicines as well as good service at affordable prices to protect patients’ health. The
company also wants to make a positive contribution to the healthcare and
pharmaceutical industry of Vietnam to create a great social value (Tam Binh, 2018)
For a long time, Abbott has developed with a saying: "Live the best life, now
and in the future". Abbott's mission is to always create solutions to protect customers’
health, to strengthen their body in every moment of their life. The company commits
to provide customers with many new knowledge on health issues and medications so
they can better manage their health condition (Abbott, 2018).


1.3.

Goals

In the pharmaceutical industry nowadays, the impact of Industrial Revolution
4.0 are very huge. Thanks to the development of technology and science, the works in
production and distribution stage of pharmaceutical industry are now becoming easier.
Nevertheless, pharmaceutical companies also have to face increasing numbers of
challenges. They are external challenges come from rivals, suppliers of medications,
administrators of health care and internal challenges like opting for marketing costs,
research and development of new products, product management, and comprehensive
reliability.

Picture 2: 4.0 Pharmaceutical Industry (Source: ISPE.org)

To follow the general trend of the world pharmaceutical industry, Traphaco has
set several goals to catch up with the trend of industrial revolution 4.0. Specifically,
the company has planned to manage the construction and application of the latest
technologies for a new "smart" western-medicine manufacturing plant and also aspires
to gradually digitize the management system (Traphaco, 2018).

Tam Binh tries to achieve the aim of prioritizing product quality, along with the
goal of developing many new products to meet the health needs of people and
sustainable development (Tam Binh, 2018).
Abbott's goals in the following years are to accelerate the development of
research and discover more ingredients to create more products for medicine and
healthcare. The company also wants to develop the healthcare treatment and help the
hospital to cure all kinds of diseases (Abbott, 2018).
1.4.

Objectives

After the year 2019, Traphaco aims to achieve the revenue of 2,160 billion
VND (growth 15% compared to 2018) and net profit after tax of 205 billion VND
(Growth 30% compared to 2018), thereby becoming the number one green
pharmaceutical company in Vietnam (Traphaco, 2018).
In fact, the total net profit after tax of Traphaco has now only reached over 65
billion VND after the first 6 months of 2019, equals to 38%. In the coming year, it will
be very difficult for the company to approach the set plan without any development in
marketing and business strategy. Therefore, the objectives are still achievable if
Traphaco follow the right track.


In order to evaluate the objectives of an organization, the popular method is to
use the S.M.A.R.T criteria which was created by George T. Doran in 1981. It specifies
an ideal objective should be Specific, Measurable, Assignable (later changed to
Attainable), Realistic (later changed to Relevant) and Time-bound.
Criteria

Expression

Evaluation

Specific

The objectives are mainly focus on finance

Meet this criteria

Measureable

The objectives provide the detail number of
revenue and profit

Meet this criteria

Attainable

After 6 months, Traphaco has completed 38% of
the progress.

Meet this criteria

Relevant

The objectives were set to fulfill the vision of
Traphaco to become the largest pharmaceutical
company in Vietnam.

Meet this criteria

The objectives require Traphaco to achieve in the
year of 2019.

Meet this criteria

Time-bound

Based on the S.M.A.R.T criteria evaluation, it can be concluded that the
objectives of Traphaco are ideal and smart.
In fact, as a limited liability company, Tam Binh does not provide much
information about their objectives to the public. However, according to Dr. Le Thi
Binh (2018), the owner of the company, Tam Binh always aims to increase revenue,
profit and market share in the following years but also to contribute more to the
society.
In recent years, Abbott is very successful in selling its products in Vietnam
market, the revenue. For the following years, the company will set a new objectives to
hit $1.5 billion in total revenue at Vietnam market, which is 30% increased compared
to the last period. (Abbott, 2018)
1.5.

Core values

The core values of Traphaco can be listed in 4 words (Traphaco, 2018):
●

Pioneer: Taking the lead in green value management, creating and applying
new technologies and knowledge.

●

Creation: Creating perfect quality products and services bearing the pride of
Traphaco's knowledge.

●

Responsibility: Committing and fulfilling the responsibilities to society,
shareholders, customers, partners and employees on the principle of mutual
benefit.


●

Identity: Representing Traphaco's culture and people in three ways:
Aspiration, Passion and Dedication.

The core values of Tam Binh is contained in 4 sentences (Tam Binh, 2018):
●

Having a heart for the production.

●

Having a heart for the patients.

●

Having a heart for the employees.

●

Having a heart for the society.

Abbott's core values are expressed in 5 things (Abbott, 2018):
●

Client-centricity in mindset.

●

Integrity in professionals.

●

Intellectual honesty for clients.

●

Diversity in business.

●

Collaboration in workplace.

2. Legal forms, Size and scope
1

Legal form

Under the Law on Enterprises, there are several legal forms of companies that
are allowed by the Government of Vietnam, including: Private business, Limited

liability company (LTD or LLC), State-owned enterprise, Joint stock company (JSC)
and Partnership. In fact, most of the large pharmaceutical companies in Vietnam like
Traphaco nowadays are joint stock companies. JSC is a business entity where
shareholders can buy and sell shares of the company's stock. Every shareholder owns a
proportionate share of the company, as evidenced by shares. In the past, many of them
were state-owned, but for the following reasons, they were equitized.
The first reason is due to the state's policies on divesting from companies to
collect budget. After 1986, under the impact of economic reform policies,
pharmaceutical companies that were previously wholly state-owned would have to
divest their state capital by listing on the stock exchange to expand the scale of
production as well as enhance stability in organizational structure. Linked to the vision
of Traphaco to become the largest pharmaceutical company in Vietnam, the
equitization is necessary for the company to achieve it and Traphaco actually did this
in 2000. However, this is only a partial divestment, it can be seen that at the moment
State Capital Investment Corporation (SCIC), which is a state agency that is
responsible for investing with the government budget, still holds a large number of
shares in company at 35.7%.


Secondly, the pharmaceutical industry is a specific industry that needs to follow
the standards and update the research trends of the world in order to find medicines,
especially in the integration stage of Vietnam as well as the globalization trend of the
world. The Government of Vietnam has set an ambition to make Vietnam a major
center for manufacturing generic medicine in Southeast Asia by 2020 with many
supportive policies.
The cooperation with foreign companies will bring more capital, technology
and high quality human resources to domestic pharmaceutical companies, aiming to
produce higher standards products (such as EU-GMP, PIC/S ...); the connection with
major retailers will help improve the distribution chain and expand the product
consumption network (Scherer, 2000). For Traphaco, with the goals to catch up with

the Industry 4.0 technology, this is a great opportunity to develop and finish the
objectives.
In the opposite direction, the purpose of foreign companies entering the
Vietnamese market is to take advantage of cheap labor, thereby reducing product costs,
setting up facilities in Vietnam to produce medicine and then deliver to other markets
(. Therefore, the trend of purchasing stocks of domestic pharmaceutical companies by
foreign companies is becoming more popular. This is also the strategy that Abbott is
applying in Vietnamese market.
The Abbott Laboratories did initial public offering (IPO) in 1929 for the first
time in the USA. According to the USA Government, Abbott’s legal form is a
Corporation which is pretty similar to the JSC in Vietnam. Although there are many
differences between American and Vietnamese pharmaceutical background, the main
reason why Abbott turned into public is to raise the capital to invest in research and
development.
On the other hand, Tam Binh is a limited liability company (LTD) and it only
has one owner is pharmacist Le Thi Binh. This company doesn't want to share its
information to the public in order to ensure the confidentiality of the medicine
formulation that Mrs. Binh has been researching with many scientists for years.
1.6.

Size and scope

According to Decree 39/2018/ND-CP, the Government of Vietnam regulates
that large-scale industrial enterprises are enterprises having more than 200 employees,
over 200 billion VND in total revenue and over 100 billion VND in total capital.
According to the 2018 Annual Report of Traphaco, which is an industrial company
specializing in manufacturing and processing pharmaceutical products, with about
1,000 employees, the company has a total capital of 1560 billions VND and has a net
revenue of 216 billions VND. Thus, it can be concluded that Traphaco is a large-scale
industrial company in Vietnam market.

The market share of Traphaco in Vietnam pharmaceutical market is now
accounting for 1.3% (IMS Health Vietnam). Traphaco's main market is totally in the
domestic market, with a special focus on the market in the South. Traphaco's main
customers are pharmaceutical distributors, hospitals and nearly 23,000 pharmacies
nationwide (Traphaco, 2018). In addition, Traphaco also has its own distribution


channels to directly sell its products to customers who have the interest. In order to
achieve the objectives of profit and revenue, the large number of distribution channels
is necessary.
Currently, in Vietnam market, Abbott owns more than 3,400 employees with a
huge revenue of more than half a billion USD per year (equivalent to more than 12,000
billion VND) and holds many shares in major pharmaceutical companies (Abbott,
2018). Although there is no exact figure of the company's profits, it can also be partly
seen that Abbott is really a large-scale company in Vietnam.
Abbott is an international company so it has many markets, including Vietnam.
This company is on the way to achieve a dominant market share in Vietnam. It can be
denied that the Vietnam market contribute a lot for the total global revenue of Abbott
Laboratories. The company sells the products to customers via numerous retail stores
across the countries. Similar to Traphaco, Abbott needs many branches and
distribution channels to reach its goals.
Because Tam Binh is Limited Liability Company so they do not provide much
information about their revenue and profit. They only public the information about
their workforce with nearly 200 employees (Tam Binh, 2018). Therefore, there is not
enough information to identify the size of Tam Binh.
Also due to the lack of information, the scope of Tam Binh cannot be exactly
defined. The only thing may be true about the scope of Tam Binh are: it totally focuses
on the domestic market and it sells the products via many pharmacies and also on its
own website.

3. Key stakeholders
Stakeholders are people, communities, or organizations that are influenced by the
company's outcome. They are involved in the company's business from inside or
outside and may be benefited from the business result (Freeman, 1999). To analyze
and evaluate the stakeholders of pharmaceutical companies, it is common to use the
Stakeholders Mapping, which divides the key stakeholders into 4 groups with different
levels of interest and power. Each of the stakeholders has different interests and
expectations, which lead to several conflicts between the stakeholders. Therefore, the
companies have to take responsibility to reduce those conflicts in reasonable ways.

High

Group 2: Keep Satisfied

●

●

Power

Group 4: Manage Closely

Vietnam Ministry of
Health
Media

Group 1: Monitor

●

Major Shareholders

●

Management Board

●

Government

Group 3: Keep Informed

(Minimum Effort)

●

Patients

●

Hospitals & Clinics

●

Pharmacies

●

Manufacturing

●

Suppliers

●

Scientists

●

Employees

Low
Low

Interest
Stakeholder mapping of Traphaco

High


Initially, in the first group with the lowest level of power and interests,
stakeholders such as factories, suppliers, insurers, and retailer stores are almost always
focused on making a profit from the products of Traphaco. Similarly, patients as well
as hospitals and clinics desire to purchase products with good quality and reasonable
price. Therefore, to meet the interests of these stakeholders, Traphaco needs to enhance
the quality of the products and create suitable price.
In the second group having more powerful stakeholders with low interests that
Traphaco need to satisfied, the Vietnam Ministry of Health is responsible for managing

the pharmaceuticals quality, pharmaceutical information, pharmaceutical prices and
pharmaceutical business. The media can bring very serious consequences for Traphaco
if any unfavorable information is leaked. Thus, Traphaco must have good strategies to
maintain relationships with both of them.

Picture 3: Scientists take part in the R&D (Source: Vietnamnet)

In the third group of stakeholders which Traphaco need to keep informed,
scientists take part in the R&D (Research and Development) and they are interested in
new technology and drugs formula of the company. However, they cannot manage the
budget to do research or run projects. Employees work to get paid and want the
company to grow so they can increase the salary.
The key players of Traphaco’s stakeholder analysis in the fourth group include
shareholders, management boards, and government. The most important factors are the
major shareholders. In general, the shareholders mostly care about the profit and how
much they can earned from the business activities. The largest shareholder of Traphaco
is State Capital Investment Corporation (SCIC) with 35.7%, which the main reason
explains why government is included in the key players of this company. In most of
pharmaceutical companies in foreign countries, government is only put in the second
group of stakeholders because they are only responsible for monitoring and collecting
taxes, not really involving in the companies' business. However, when running
business in Vietnam with a different economic system, Traphaco received a deeper
involvement of the state, typically SCIC's presence as a major shareholder. Thus, the


government not only requires Traphaco to pay taxes and comply with the law but also
provides capital as well as benefits directly from the company's business.
Traphaco's management board is the ones who guide and plan the company's
development strategies. They directly control the financial budget and make decisions
to use it effectively. The interests of the company's management will be closely linked

to the company's profits. Therefore, their goal will be to develop the company rapidly
and sustainably.

Picture 4: Tax payment - a problem for large company (Source: livemint.com)

The most common problem of big company like Traphaco is between the
government and the management. Despite playing a big role in Traphaco as a major
shareholder, tax collecting is still the most important task of the government. However,
managers always want to reduce every costs to maximize the profit, even try to avoid
paying too much tax. Moreover, as a large-scale company, Traphaco's financial data is
very complex, so the accounting system face many difficulties and will lead to a delay
in tax declaration and payment. In order to solve the conflict between these two key
players, Traphaco has to obey the law and is required to fulfill its tax obligations to the
state. In addition, the company also need to enhance the accounting part to ensure the
balance of spending to comply with the regulations of the state but still make a stable
profit.
Another obvious conflict of Traphaco is between the managers and the
scientists. This conflict is directly linked to the goals of the company. Scientists who
do R&D need to have up-to-date machines and equipment to produce more qualified
products that meet higher standards. Unfortunately, the cost of upgrading facilities is
very expensive and the manager does not want to raise the production costs. Therefore,
to satisfy the needs of the R&D part, managers will have to calculate wisely and
carefully to measure the profitability of changing technology. In case the change is
found to be unprofitable, managers can completely refuse and find a different solution.

Power
Low


High

Group 2: Keep Satisfied

Group 4: Manage Closely

●

Government

●

Owner

●

Media

●

Management Board

Power

Group 1: Monitor

Group 3: Keep Informed

(Minimum Effort)

●

Patients

●

Hospitals & Clinics

●

Pharmacies

●

Manufacturing

●

Suppliers

●

Scientists

●

Employees

Low
Low

Interest

High

Tam Binh stakeholder mapping

The differences of Tam Binh Pharmaceutical Company compared with
Traphaco are the shareholders and the government. Because Tam Binh is a Limited
liability company, there is no shareholder and only one owner. This owner invested
most of the capital in the company and she wants the company to make a profit and
follow the vision and core values that she created. Similarly, in Tam Binh’s stakeholder
mapping, without the state appearance as a shareholder, the government doesn’t
directly involvement in the business of company like Traphaco and they only care
about taxation and legal management. Therefore, in order to satisfy the government,
Tam Binh only needs to finish the tax payment as well as produce and does business
sticking with legal regulations.

Power
Low

Low

Interest

High


High

Group 2: Keep Satisfied

Group 4: Manage Closely

●

Government

●

Holding company

●

Media

●

Management Board

●

Shareholders

Power

Group 1: Monitor

Group 3: Keep Informed

(Minimum Effort)

●

Patients

●

Hospitals & Clinics

●

Pharmacies

●

Manufacturing

●

Suppliers

●

Scientists

●

Employees

Low

Low

Interest

High

Stakeholder mapping of Abbott

About Abbott, there are also 2 differences to Traphaco. Firstly, because this
company is an international company in Vietnam market, the interest of government in
the company is only about tax and regulation, which is not directed to the business
work. Secondly, the headquarter of Abbott is in the USA so there is another
stakeholder called holding company, which manage the activities of Abbott in Vietnam
and other countries. This stakeholder more or less have the interest like the
management board but slightly have higher power.


4. Organization structure of Traphaco
4.1.

The organization chart, advantages & disadvantages

Hospital

Traphaco Organization Chart

The term organizational structure refers to the hierarchical assignment of duties,
obligations and authority within the organization between individuals and groups
(Greenberg, 2011). Organization structure is made to achieve the goal of the
organization. These goals are broken down into many jobs. The jobs are divided into

departments. Departments are linked to form the framework of the organization. The
structure of the organization gives it the shape to fulfill its function in the business
(Nelson & Quick, 2011). According to Traphaco’s organization structure is a mix of
hierarchical and divisional structure. Its structure is also organized by two factors:
functions and geography.


Traphaco's management structure, including General Assembly of Shareholders,
Board of Supervisors, Board of Director and Chief Executive Officer (CEO), is
completely hierarchical system. Standing at the highest position is the General
Assembly of Shareholders, who will directly elect the Board of Directors. The Board
of Directors will operate for a 5-year term, responsible for deciding the company's
strategy, development plan and annual business plan. The Board of Directors also
appoint and supervise the CEO and the Deputy Director General (DDG) in the
company's business. However, the board cannot and should not interfere with the dayto-day operations of the CEO and the DDG. Board of Directors along with the CEO
are supervised by the Board of Supervisors, who is appointed and directly managed by
the Shareholders. This supervisory board is responsible for monitoring and ensuring
that system administrators perform their work transparently and always follow with
the business strategy and core values of the company.
This management structure is pretty common in Vietnam companies. There is
an advantage is that the company's key positions are selected and supervised closely.
The General Assembly of Shareholders can fully cover, appoint and adjust the
management positions when it is necessary with the help of the Board of Supervisory.
Moreover, the position of the CEO will not be affected in the work too much from the
Board of Directors so he can have more freedom in running the company.
The fact is that this management structure is very simple and clear in most of
joint stock companies in Vietnam so there are almost no disadvantages. However, this
structure requires the Board of Directors to maintain and manage their high power to
avoid putting too much executive authority in the hands of the CEO. If the CEO has
too much power, the company may separate itself from the original strategy and core

values set by the Directors.
Below the management board, Traphaco's system of departments and divisions
is very well-described. This structure is a combination of hierarchical and divisional
structure, mostly divided by functions but also has some parts which are divided by
geography. There are 4 DDGs and other 4 main directors who are responsible for
different divisions of the company. In the sale division and branches, the geographical
structure is used to set up branches system across Vietnam.
According to Malone and Smith (1988), the functional structure is the most
popular form of organization all around the world. The hierarchy of this function in
Traphaco is very obviously. The CEO is at the top and DDGs along with directors of
divisions are below. Therefore, this structure benefits the company a lot because every
staff knows their responsibilities and limits so the chain of command is very clear. In
addition, each role in the organization is highly specialized. For instance, the
marketing director, the product director or chief accountant director are highly
qualified professionals with in-depth knowledge of the work they do. Specialist jobs at
various levels of work helps the company to develop according to the needs of the
situation. In fact, the directors of Traphaco will provide suitable strategy for
development and production.
In this structure, the jobs will be transferred from one division to another in
several different steps the main jobs can be completed quickly. Every single tasks will


be solved quickly because each division only has to do a specific task. Therefore, the
company can be benefited by the huge increase in productivity (Bravoco & Yadav,
1985).
Although this structure provides many advantages, there are still some
weaknesses. The company is inflexible due to the high specialization of each position,
with little opportunity to promote workers into a higher role. Since the management
positions are filled with fixed staffs, employees can feel less motivated to succeed
because there is no higher position they may interested in (Malone & Smith, 1988).

For example, the staffs in production workshop of Traphaco always have to do the
same task everyday and may not have any promotion if the position of director is
fixed.
The second drawback is that if the company create a large project with a wide
range of products and services, each division may become overworked and
overwhelmed without any transition of tasks to other departments (Stormer, 2008). In
Traphaco, when the management board want to create new strategy to increase the sale
and production, the workload of division like marketing or production will be very
heavy.
About the geographic structure in sale division and branches, this structure will
allow the sale team to respond flexibly to the changing of markets (Dalton, Todor,
Spendolini, Fielding & Porter, 1980). Especially in Vietnam, where customers in each
region has its own purchasing power and culture, Traphaco has to divide the sale
system into 4 separate parts. However, the geographic structure requires the company
to divide division and department into small specified groups so it will be more
difficult to manage and operate. With Traphaco, only one DDG is responsible for the
whole sale system, which means he may carry a lot of work.


4.2.

The interrelation of organization’s functions

The interrelation of different divisions and departments with different functions
in Traphaco’s organization chart can be illustrated by several ways. The process of
making a new pharmaceutical drug is a great example to show this connection.
First of all, the Marketing and Planning division will propose a project with
fully-detailed strategy and a reasonable timeline to the Directors, DDGs and CEO. The
management then consider whether this new drug project is practical, feasible and
benefits the company. If all the criteria are met, the management will hold a meeting

with Financial and Accounting (F&A), HR, Risk Management and Marketing division
and discuss about the financial budget and expenditure for the new project. After that,
it will be allotted to R&D division to be built and examined.

Risk Mgt
Planning Div

Quality Mgt
Quality Mgt

Marketing

R&D Div

Marketing

Production
workshops

Creating a project

R&D

Fully licensed

Mass production

Final products

Managers

Material
Supply

Managers

Material
Supply

Sale Div

Directors

Directors

Marketing

Hospital Sale

Branches

F&A
HR
Production process of Traphaco (Traphaco, 2018)

In the R&D phase, the active ingredients and formulas of the new drug will be
studied and undergone a series of tests to ensure its safety and effectiveness. After that,
if successfully developed, the new drug will be further tested at the Quality
Management to check if the product meets the internal standards before being taken to
the Production Workshop to conduct mass production. The R&D will then hold

another meeting with Marketing and Finance managers to discuss and agree on the
quantity and cost of raw materials that will be needed to produce new drugs at the
factories. This figure will then be transferred to Import - Export Material Supply
Management to purchase the required amount of materials.
In the middle of this process, a sample of the final product will be sent by the
company to prestigious research institutes for approval of the Ministry of Health's
quality assurance license. When this new drug passes all the most stringent inspection
processes, Traphaco will be able to apply for a business license for this drug product.


After being manufactured, large quantities of new drugs will be delivered to the
Hospital Sales division, Sale division and branches nationwide to be distributed and
sold. Finally, post-marketing issues and concerns will be recorded by the Marketing
and R&D division for research and reference purposes.
In order to analyze and evaluate the performance of an organization, the
balanced scorecard (BSC) is often used by managers. BSC is a graphical tool used to
keep track of the tasks carried out by workers and control the implications of these
acts. In strategic planning, BSC are often used to ensure that the actions of the
organization are consistent with overall strategy and vision. The BSC demonstrates
four perspectives to describe the indicators to be used to track the strategy's
implementation. The four perspectives including financial, customer, internal business
process and learning and growth (Kaplan & Norton, 1992). For this reason, it is
necessary to use the BSC to assess Traphaco’s efficiency and evaluate the
interrelationship of the company’s functions.


Vision

Be the number one pharmaceutical company in Vietnam in terms of revenue growth, profits and
market capitalization.

Mission

Lead the creation of Green pharmaceutical products to protect and improve human health
Goals

Objectives
By year 2020,
achieve
revenue of
4,000 billion
VND and
profit of 500
billion VND.

Indicators

Initiatives

Result

Implement
the
Net revenue;
Sustainable
Development
Financial
Strategy;
statement

Complete 37%
of revenue &
36% of profit
progress after 6
months (+0.3%
over the same
period in 2018)

Maintain and
expand the
Marketing;
market share in Sales;
Vietnam
pharmaceutical
market

% Market
Share Index;
%
Customer,
patients &
health
facilities
satisfaction
index.

Appoint
Marketing
Director;
Develop the

distribution
system; Hold
528 PR
meetings.

Account for
1.2% of
Vietnam's total
pharma market
(Increased);
Partner with
more than
23,000
pharmacies

Internal
Process

Apply the
technology of
industrial
revolution 4.0;
Develop many
new Green
pharmaceutical
products.

Create the
latest
pharmaceutical

manufacturing
infrastructure
in Vietnam and
being worldclass.

Number of
factories
meet the
strict
international
standards of
pharmaceuti
cal like
USFDA 21,
GMP, GSP,
GDP,...

Start building
modern smart
pharma
factory;
Digitize
business
management
and
distribution
management
systems.

1 medicinal

plant extracting
factory & 4
factories
meeting GPs WHO
standards

Learning
&
Growth

Improve the
quality of
human
resources;
Building longterm values for
workers.

By the year
2020, will
become one of
the leading
working
environments
in Vietnam.

Number of
employees
with
university or
higher

degree;
Resignation
rate.

Organize
training and
coaching
courses inside
and outside
the company.

40,52%
employees
have bachelor
degree &
higher;
Resignation
rate : 3.96%

Financial

Increase the
revenue,
increase the
profitability &
reduce the
production
cost.

Divisions

Increase the
sale of
domestic
market,
especially the
Customer
southern
Vietnam;
Improve end
user
experience.

Marketing;
Finance &
Accounting;
Risk Mgt;
Mgt Board

R&D;
Quality Mgt;
Production
workshops;
Marketing

HR; Admin
division;
Planning;
R&D

Net profit;

Balanced Scorecard of Traphaco (Data is from: Traphaco Annual Report 2018)


Vision

Be the number one pharmaceutical company in Vietnam in terms of
revenue growth, profits and market capitalization.

Mission

Lead the creation of Green pharmaceutical products to protect and
improve human health
Business goals and Strategy Map

Financial

Customer

Increase the revenue

Increase the profitability Reduce the production cost

Increase the sale

Improve end user experience

Internal
Processes

Apply 4.0 technology

Develop Green Product

Learning
& Growth

Improve human resource

Build worker value

Business goals and strategy map of Traphaco Balance Scorecard

By the Balanced Scorecard, it can be seen that the objectives of Traphaco are
gradually being completed. Most of the 4 perspectives results have almost been
achieved or completely achieved. Therefore, it can be conclude that there is an
effectiveness Traphaco’s operation. With the investments in human resource and
technology, there will be a little cut in production cost for a long-term and this really
lead to a slight increasing in revenue and profit of Traphaco. It means there is an
efficiency in operation of Traphaco. However, those investments also show that
Traphaco have been using the profit it earned to enhance the productivity and quality
of the products. Thus, there is no economy in the company’s performance.


III. CONCLUSION
Report on types, sizes and other business information of Traphaco and 2 of its
competitors in the pharmaceutical market which are Abbott and Tam Binh has shown
some clear detail about the overview, vision, mission, goals, objectives, core values,
legal form, size and scope of them. Moreover, the report has also illustrated the

stakeholders mapping and organization chart to explain the different responsibilities
and interrelation of the company’s different parts
According to the report, Traphaco is a Joint Stock Company with large size,
Abbott is a Joint Stock Company (Corporation) that was IPO in USA and Tam Binh is
a limited liability company. Their scope may be a little bit different but all of them are
focused on the created goals and objectives. Those companies all have stakeholder
mapping that looks nearly similar but there are some differences about the government
and shareholders.
The report also provides many information about the structure of Traphaco.
Traphaco’s organization structure is a mix of hierarchical and divisional structure. Its
structure is also organized by two factors: functions and geography. The report points
out some advantages and disadvantages of this structure and the interrelation of
different business functions.
Finally, the report creates a Balanced Score Card of Traphaco and shows the
company’s performance. It can be concluded that there are an effectiveness and an
efficiency in the operation but there is no economy.


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