Lv Entering Japan

8/6/2019 Lv Entering Japan

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1. INTRODUCTION

The objective of this coursework is to analyze, using different tools, an organization looking

towards analyzing its strategy and making conclusions of it. this implicates to, in the first place,

make an in deep investigation of the organization to gain all the knowledge needed to apply

these tools and, in the second place, to make a good use of this information and a better use ofthe tools given , being able to reach some critical and subjective conclusions.

the organization I have chosen is the one I started working for three months ago , which is called

Phoenix Ophthalmic S.A. here, looking towards maintaining it anonymous due to the information

which is given about it in this coursework. That's the reason why, also, some of the figures and

specific details have variations in them. In any case, these modifications don't alter the reality of

the work done, and the validity of the conclusions taken. All the focus of this work will be in the

strategies followed by the organization more than giving specific details and information about

the organization.

the reason why I choose this organization is because I find it very interesting, and I have a

personal interest in the realization of this coursework because I think that it helps me in my work

to know better the organization that I'm working for. Lots of the culture that works in this

organization can be seen here, and having a deeper knowledge of the organization you are

working within contributes to a better adaptation to this new laboral environment. Also, knowing

the objectives of my organization, it will be easier for me to join my personal objectives with their

objectives, as well as working harder looking towards achieving both, my personal interests and

the interests of my organization.

I think that all the objectives that I wanted to achieve with this coursework have been

successfully achieved, and that's why I feel proud and satisfaction of the research andinterpretation work done.

2. PHOENIX OPHTHALMIC S.A.

It was created in 1991 with this definition of its activity: Phoenix Ophthalmic S.A.'s main activities

consist on the fabrication of intraocular lens, on other words, artificial crystalline for their

substitution in operations of cataracts.

The mission is the starting point for the formulation of the strategy in an organization. In this case

it is defined like: to maintain the position of the main intraocular lens manufacturing organization

for the substitution of the crystalline in cataracts operations all over Spain, combining the

product quality with a continuous improvement and costumer satisfaction.

Phoenix Ophthalmic S.A. is positioned in its market like the personalized supplier of maximum

quality lens for the cataracts operations.

It is situated in the technological park of zamudio which is a privileged situation. It is very well


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communicated and so, this will help us for exportation to foreign countries and the rest of Spain.

Zamudio is situated from 30 minutes to the bay, just three kilometres to the airport and has a fast

connexion with the European railroads. This can be a competitive advantage.

So the products sold by Phoenix Ophthalmic S.A. are: intraocular lens of PMMA, intraocular lens

of HEMA and capsular rings used in cataracts surgery. There are many different models of eachproduct depending on its depth and the dioptres needed, as well as its shape. this are elite

products which go through an exhaustive quality control, with the totality of our lens evaluated,

which will be a competitive advantage from our competitors

In the year 2003, 350.000 lenses were implanted. This figure will implement a 15 % in the

following years, taking into account its evolution during the last years. We have between the 85%

and 90% of the market in Spain. We are the main distributor of lens in Spain. Our market never

will be formed by the final consumer of the product but by an intermediate consumer. The 70 %

of the lens were sold to the public sector and 30 % to the private sector.

3. MACROENVIROMENTAL ANALYSIS

It analyzes the external factors to the organization, and how they can affect to it.

3.1. CORE ANALYSIS

COMPETITORS

The competitors in this sector are big multinationals who take advantage of their size to force

some of their conditions to their costumers. This gives us the perfect competitive advantage

providing a better and more flexible service to our costumers.

their resources are bigger than ours with big capitals and power, as well as R+D, that allows them

to reduce costs; being more competitive in prices than us. We have to focus in differentiation to

make them the competence.

The big size of our competitors make them diversify, allowing us to exploit our niche of the

cataracts lens in Spain.

Some of our main competitors in this market are: Alcon, Allergan, Pharmacia, Santen and Merck.

All of this will be studied in details on the competitor's analysis.

COSTUMERS

Phoenix Ophthalmic S.A. is orienting its product towards those centres doing cataracts operations.

From big hospitals to clinics, and smaller private ophthalmic centres. Our costumers won't be the

final consumer (the person being operated) but the professional doing this operation.


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In the case of the public hospitals it is necessary to now how the sanitary contest work in order to

win them. They go out every year to access to serving them. Regarding to the particular doctors,

which are of big interest of us due to the impossibility of being satisfied by the big multinationals?

We can give answer to their punctual petitions with the last objective of gaining their fidelity, so

that it will be easier to us to win in the sanitary contests. Remember, the private sector is a 30 %of our sales but the public one is the 70 %.

In conclusion, we are speaking about costumers very sensitive to the service provided and the

quality of our products. This makes them less sensitive to prices.

SUPPLIERS

We are in a very difficult situation regarding to our suppliers. They are big multinationals which

have a duopoly over the market: BENZ and VISTA OPTIC. They provide us with the raw materials

needed to produce our lens: buttons or brute lens. Because of this duopolistic situation, they

have a strong hold on the market trying to impose very hard conditions.

The situation is difficult because we don't have any bargaining power in front of these big

companies and, also, the cost of our final product is much related to the price of our raw

materials.

We try to negotiate the better possible conditions: less price, better delivery conditions,

preferential service, personalized attention

3.2. PEST ANALYSIS

POLITICAL

The wages for sanity are being implemented by the government in our country. Racing the public

investments in sanity means also to implement the demand in cataracts operations.

Also, politic affect us because the 70 % of our sales are made to public hospitals. For selling to

them it is made a public contest regulated by the governmental laws. If those laws change this

process it can mean a big threat to us. In this process we fight against the affiliates of the

multinationals in Spain. The main point taken into account for the competition is the quality of

the product, where we are leaders. the process consist in one or various persons visiting our

facilities and making a technical inform of our organization paying special attention to the quality

of our final product. The organization which wins this contest is the one with the highest

punctuation achieved.

All of this said, it is very difficult for this system to change and if the system changes we will find

the way to adapt to it so we will continue providing to the public hospitals.


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ECONOMICAL

The economy won't affect us as much as it can affect to others because our products are of first

necessity. This means than even in the case of crisis in the economy our products will continue

being sold by our costumers.

All of that said, there is good perspectives for the 2004, and this will beneficiate us.

The global economy seems to be reactivating.

In the USA the 2003 finished with a rate growth for their GNP of the 3 %. They also have

predicted a bigger growth for the year 2004.

Here in Europe, it is growing to levels higher than the 2, 5 %. The previsions are not as favourable

as the American ones but it is also expected a growth.

To all of this, we can add that Greenspan has said that the USA is going to raise the interest rates

for this summer. This will influence the equivalence Euro/dollars to decrease a little bit. This will

be profitable for our exportations because we will find a more favourable stage in foreign

countries where our products will be cheaper, being the American ones more expensive for the

national market.

SOCIAL

The ageing of the population in Spain is making grown the demand of the cataracts operations.

This is the most frequent cirugy practised in the developed countries. Most of the cataracts are

produced by ageing and it is one more symptom of getting old. Ageing is the main reason that

generates this type of pathologies.In the following chart we will see how the demographic evolution brings in our country a bigger

ageing of its population. The children rates decrease and the ancient's rates increase.

TECHNOLOGICAL

At last place but very important for us, the Spanish economy is predicted to have the biggest

growth in European Union. This will favour to the enterprises manufacturing products for inner

consumption to the Spanish market, like Phoenix Ophthalmic S.A..

Regarding to the technology there isn't any possibility of substitution of the existing technology

regarding to the cataracts operations, which consist on implanting a lens. Anyway, it is true that

these lens and their characteristics can be implemented and new materials or new procedures

can make a big change in this market. If this occurs we will have to adapt to the change due to

our strategy of technology followers.

Anyway, we have a lack and a big disadvantage in this area due to our poor policies in R+D which

are a direct consequence of our smaller wages. The amount of money allocated to R+D projects


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by the big multinationals are far bigger than the one we can allow ourselves to. This is a problem

that will be studied in deep later on, trying to take away our reactivity regarding to the changes in

technology.

4. PORTER'S 5 FORCES OF COMPETITION

4.1. THREAT OF SUBSTITUTES

the potential for profit in an industry is determined by the maximum price that the costumers are

willing to pay and it depends on the propensity that the buyers have to substitute (which is this

case there won't be none) and the price performance characteristic that our substitutes have

(which in this case doesn't matter, in the first place because there is no substitutes and in the

second place because what our costumers really look for is service and quality).

There is no threat of substitutes due to the fact that there are no possible substitutes for the use

of lens in the cataracts operations, for the moment.

4.2. THREAT OF ENTRY

The easier it is for new companies to enter the industry, the more cutthroat competition there

will be. Factors that can limit the threat of new entrants are known as barriers to entry

Our organization is very profitable. That's the main reason why new competitors would have a

reason for trying to come into our market. But also there are many barriers to these new entries

like the sunk cost which doesn't allow recovering the total value of the investment on exist.

In the first place I will comment some barriers which affect in a very small degree to our niche

but in a bigger degree to the entire medical and pharmaceutics market.

The capital requirements are not a big deal for any new companies trying to enter in the niche

where we are specialized but it would definitely be to enter in the whole market of the medicine,

where it would be almost impossible to enter due to the high investments needed in all the

areas.

Also, economies of scale can b e applied regarding to the global market of the medicine with

bigger amounts of units being sold which allows the amortization of the fixed costs lowering the

unit cost and the prices. This won't be any barriers to enter our niche.

There will be a small degree of absolute cost advantage over this new entrants, due to our know

how, the big amount of time spent looking towards optimizing the cost of our outputs and

reducing costs in the process. This advantage will really be absolute to the big pharmaceutics

companies which have a very big know how and economies of learning due to their experience.


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We definitely will have our two big barriers that almost assure that there won't be new entrants

in our niche, in the product differentiation, the access to channels of distribution and the

governmental and legal barriers, being these three barriers very close related.

the quality levels achieved by our company, as well as the service differentiation and productdevelopment with the doctors, has given to Phoenix Ophthalmic S.A. such a good reputation that

we own the 90 % of the market being more expensive than our competitors. The relationships

that we have established, allow us to win all the sanity contests which are governmentally

regulated, satisfying the particular needs that the doctors may have. We own the channels of

distributions due to this.

Retaliation would be a possibility if somebody would be crazy enough to try to enter this niche

having to fight against all the barriers that have been exposed before. The retaliation would

consist on a heavier policy of satisfying to the doctor's necessities.

4.3. INDUSTRY RIVALRY

The industry rivalry describes the intensity of competition between existing firms in an industry.

Highly competitive industries generally earn low returns because the cost of competition is high.

A highly competitive market might result from:

Concentration: there are many companies in this area with big size, so it is supposed to be a high

level of concentration. It would seem that this would play against a smaller company like Phoenix

Ophthalmic S.A., but, instead it plays to its favour like a competitive advantage due to the

diversification that these competitors make centring their attention in other sectors.

Diversity of competitors: the big competitors are very similar, big multinationals with similar

objectives, but different from our company, which allows us to exploit our niche and fulfil our

own objectives of profitability without having to fight against the objectives of our competitors.

Product differentiation: while our competitors have very similar standardized products having to

fight in prices, our product and service differentiation allows us to sell at higher prices having a

competitive advantage.

Excess capacity: there is no excess capacity in our niche because the demand is implementing

every year due to the ageing of the population. We always have high profitability.

Cost conditions: We can't fight to our competitors in cost, so we don't take into account, but they

have big fights between them looking towards selling as much as possible so their fixed costs will

be covered before allowing them to reduce their cost per unit.

So, in conclusion, our competitors have a very intense industry rivalry fighting for the medical and

pharmaceutics market share, allowing us to be in a very quiet situation in a niche which only


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means an infinitesimal percentage of their business and their objectives.

4.4. BARGAINING POWER OF BUYERS

The bargaining power of the buyers is how much pressure customers can place on a business. If

one customer has a large enough impact to affect a company's margins and volumes, then theyhold substantial power

our strategically advantage when dealing with our buyers will be that they are not so much price

sensitive as they are quality and service sensitive.

This is due to, in the first place, the big differentiation that our product and services have from

the one of our competitors. in the second place, due to importance that the quality on a lens, as

well as the service giving to them, has for the final service that they are giving to their costumers

and the advantages that our service gives them for doing their work. Also, the price of the lens

won't be the most expensive part of the operation, which means that they won't be very

sensitive to the price, because they are far more concerned about quality and service. in the last

place, the competition between buyers is not a big deal with work for all of them: this is a first

necessity service, and there will be people that has to go through the social security, and there

will be people that won't want to wait so long and, having the necessary money for the operation,

will do it in a private centre. In most of the cases, the doctors operating in the social security and

in the private centres will be the same.

our disadvantage regarding to the bargaining power of buyers, specially taking into account the

size of the public sector (70 % of our sales), will be the big bargaining power that they will have,

being bigger than us, having many other possibilities of substitution with cheaper prices, having a

very low switching cost and being absolutely informed of all the products, prices and costs of themarket. Strategically, we will have to respond to all their particular needs of quality and service.

4.5. BARGAINING POWER OF SUPPLIERS

The bargaining power of the suppliers is how mu ch pressure suppliers can place on a business. If

one supplier has a large enough impact to affect a company's margins and volumes, then they

hold substantial power.

We have no bargaining power in dealing with our supplier. They are two big multinationals that

have established a duopoly in the market imposing all the conditions that they want and with

prices as high as possible. This is one of the reasons why we can't be competitive in costs towards

our competitors. We are very sensitive to price, because it is a big percentage of the total cost of

our product.

The vertical integration is not a possibility for us, since we need the raw materials that they

provide us, and we don't have any other supplier or way to have these needed raw materials

(buttons or brute lens).


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The only possible course of action regarding to the suppliers are the long term relationship that

we have established with them. This way we will have the advantage of being their regular

costumers, and there will some negotiated conditions which won't be changed.

5. COMPETITORS ANALYSIS

Cheaper than us but us better quality

Our competitors are big multinationals, most of them American, with a big bargaining power due

to their big volume. Their resources will be bigger than ours due to their capacity, but a lso, they

will have different objectives, as well as less flexibility and less differentiation, especially in

service and selling standardized products.

In the first place, analyzing the competitors I must point out that PHOENIX OPHTHALMIC S.A. just

has direct competitors, other enterprises which have among their activities the manufacturing of

intraocular lens. We don't have any indirect competitors at all because there isn't any product or

service able of substitute the function of this type of lens.

These big multinationals are organizations with a long trajectory in the medical sector. Most of

them have various decades of existence and they have offices all over the world with staff of

thousand of employees. This gives them many advantages, like a big experience curve and know

how.

One of our advantages is that, due to their big size, the percentage of market of the Spanish

intraocular lens business will be minimum for them, so that it is easy for us to mantain our

market share. Mainly due to our good sales policy and our intensive support to our costumerswhich gives us a strong and established position in the Spanish market.

In the second place, I'd like to point out that these organizations, due to their big volume and

long establishment, have followed strategies of diversification, not only in the ophthalmic ambit,

but also in other pharmaceutics sectors, which means that our business means a very small part

of their sales volume. The bad thing about this is that other pharmaceutics organizations have

entered our sector due to this diversification strategy.

in the last place, I must point out that these organizations follow a strategy very based in R+D

developments where our strategy consist on a creative technological following.

I will mention 5 of the most important competitors that we can find:

ALCON: American organization (Boston) that operates in more than 100 countries. They

have an affiliate in Spain, in Barcelona.

ALLERGAN: (California) Created in 1945, it has a staff of 11000 workers in 60 offices all over

the world. It is dedicated specially to treating glaucoma's, psoriasis and conjunctivitis.

PHARMACIA: (New Jersey) Created in 1950, it has a volume even bigger of staff (59000),


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sales, and number of business where it operates. They have affiliates in all the fields of

pharmaceutics and medical products. Its affiliate in the ophthalmic field is called XALATAN.

MERCK

SANTEN: It is a Japanese organization (created in Osaka in 1890). They make products for

every kind of ocular affection.

6. SEGMENTATION

We are going to start segmentating the medical market in Spain based in the two main variables

that differentiate us from our competitor: quality required to be competitive and price.

Segmentation

Matrix Quality Required to be competitive

Price higher lower

higher Ophthalmic lens

Phoenix Ophthalmic SA

lower Pharmaceutics Medical Tools Other Prosthesis

Big Multinationals

As it can be seem in the segmentation matrix, the only segment that can be profitable for us is

the one of the ophthalmic lens. That's why we are going to divide this segment. It's where we are

working and it is quite illogical even to consider other segments such as pharmaceutics, medical

tools or other type of prosthesis because we can't fight against he big multinationals. This would

go against the niche strategy that we have. It is said that when something works don't change it.

We will make a deeper segmentation analysis, regarding the type of costumers that we have, inorder to analyze the different strategies that will better work. In the case of Phoenix Ophthalmic

S.A., the service offered to our costumers, it will be quite similar regarding to prices and product.

But there will be distinctions between some kind of costumers and others, due to their different

exigencies regarding to their different necessities which we will need to satisfy. That's the reason

why we will need to have different strategies depending upon the following segmentation that

will we done.

In the first place we will separate our demand depending on the country it comes from. In this

aspect we will segmentate in national costumers and the foreign ones. Our products and demand

is mainly oriented to the national sector. The big difference that we can find internationally is that

we are not cost leaders and our price becomes even less competitive taking into account the high

transport expenditures. also we loose some of our competitive advantages from being national

such as the possibility of visiting us, having direct contact with our commercials, the feeling of

buying something made in your own country our strategy going international consist in having

deals with the main transport agencies like DHL or TNT and trying to improve the service as much

as possible.


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Regarding to our way of satisfying the demand we will distinguish between public hospitals,

clinics and private ophthalmic centres.

The strategy regarding to the first team, the public hospitals, is to have the maximum quality

possible so we will we chosen in all the public contests that appear. They are quality based. Also

we will need to manage the stock of their hospitals.

At last, we will join in the same group to the clinics and private ophthalmic centres. We will need

to have better prices and conditions to serve them. Specially, taking into account that many of

them are our door of entry to the public sector.

In conclusion, where Phoenix Ophthalmic S.A. better works is in the national sector

7. STRATEGIC GROUPS

It is different of the segmentation. In the segmentation you analyze the different market or

segments and the product located in them, in the strategic groups we will study similar company

to our company in their characteristics. These organizations in the same strategic group will

develop very similar strategies.

In the national market or segment where we are operating ther aren't any organizations with

similar characteristics to our. All of this said, we find other companies in foreign countries which

are following the same niche strategy as us in their national markets with high levels of success.

Some of these similar strategy companies can be found in Israel, France, Italy (Lintra) or Greece.

I will talk later on the benchmarking chapter about the opportunities that these organizations can

mean to us.

8. INTERNAL DEVELOPMENT STRATEGY: RESOURCES & CAPABILITIES

I have dedicated an entire chapter of this coursework to this internal development strategy due

to the big importance that it has had in making Phoenix Ophthalmic S.A. the leader in a segment

of a very competitive sector.

The big success of this strategy has consisted on centring in the development of internal

resources and capabilities to satisfy our costumer's particular needs, instead of fighting with our

competitors in such issues as prices, where we would always loss. This way, we have centred in a

differentiation strategy developing our competitive advantages.

This way, we have modified the industry conditions and competitor behaviour moderating the

competitive pressures that they had over us, such as cost advantage, thanks to a strategic

management which has gained market power with favourable industry structures as the primary

basis.

As it is know, there is only two ways of having competitive advantages: cost advantage and


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differentiation. The only way we had was with differentiation, and that is why we have oriented

our resources and capabilities to build these competitive advantages.

To orientate our resources and capabilities towards the competitive advantage, we have tried to

gain as much self-knowledge as possible to better understand them. This is also the way to

implement them, to select a strategy exploiting them, to ensure that they are exploited to thelimit and to build the company's resource base. If we know what we are and we are going, we will

be able to gain the resources and capabilities which will allow us to be who we want to be.

9. RESOURCES

The basic unit of analysis of the resources of the firm are: items of capital equipment, the skills of

individual employees, patents, brand names, and so on.

But to analyze how our organization can create competitive advantage we should see the bigger

picture, analyzing how this resources fit together generating capabilities.

9.1. TANGIBLE RESOURCES

These resources are the easiest ones to identify and measure. The strategy followed by PHOENIX

OPHTHALMIC S.A. regarding to the tangible resources must try to use the opportunities for

economizing the use of their financial resources and physical assets, as well as exploiting to the

limit of its possibilities their assets in the more profitable possible occupations.

The financial resources of Phoenix Ophthalmic S.A. are very good due to the social capital that

they dispose of being a SA thanks to the reserves which haven't been delivered among their

actionists and, instead, have been reinvested in the company. These reserves come from the highturnover levels that the organization registered during the year 2003 which translated in a high

level of profit.

The main physical assets that PHOENIX OPHTHALMIC S.A. has are its investments in machinery.

This machinery is completely paid in the moment of buying it has an expected life of 10 years and

that's the reason why it is amortized by a 10 % yearly.

The machines are:

2 torns

2 fresators

2 machines for the quality control

2 machines for a second quality control

2 cleaners

9.2. INTANGIBLE RESOURCES

These kind of resources are the most subjective one to measure, and the most difficult to define


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because of their abstraction nature.

We are in an industrial market, and not a consumption one. This makes such things as image,

trade, or even publicity have less importance and are less valuable than for products oriented to

the consumption market. All of this said, we have a good trade with a good image in the Spanish

market with the problem that it is not know outside Spain.

Where we are leaders having a competitive advantage is in the reputation. We have had a very

good and positive evolution, always serving to our costumers in the best way possible without

ever failing to them (we can't allow ourselves to fail to them). This is the reason why be have the

best reputation in the market and all our costumers look for us when making their deliveries.

Our technology is a standardized one because we are followers in technology. Anyway, there

aren't big technological developments made in this area and that's the reason why this doesn't

suppose a problem for us. In any case, it would be good for us to try to improve our R+D.

9.3. HUMAN RESOURCES

These are the main objectives followed by Phoenix Ophthalmic S.A. managing their human

resources:

to have a complete integration of the personnel in the organization

to have a good policy of motivation and job satisfaction

to motivate to the employee to achieve its participation and feedback

To obtain the fidelity of the personnel so it will stay on the organization.

When speaking about human resources, the most difficult part may be how to measure them.

knowing that this is a difficult but important matter, in Phoenix Ophthalmic S.A. what is done is aperformance appraisal once a year (we know that it should be done with a mayor frequency but

being a small company we don't have resources or time for doing it in any other way). For doing

this performance appraisal it is fundamental to have a good job description done of all the

positions in the staff defining their tasks and what objectives they must reach. This performance

appraisal is good to evaluate to our employees (it will be taken into account for future ascends),

motivating them, and knowing which their specific necessities will be for the training. the training

will be done trying to implement those deficiencies that they may have developing their tasks

and trying to prepare them for the change in the organization (which is located in a constantly

changing environment) and the new tasks that they will have to do.

the good know how of our technology and the specialization in running it allow us to have a very

clearly defined job positions in the same way that task and objectives are established.

The flexible culture of Phoenix Ophthalmic S.A. is also a valuable resource that the organization

has. Because of their small size, being a familiar organization, their proactivity and the motivation

and active participation of their employees, it is a competitive advantage from its competitors.


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10. CAPABILITIES

They are the capacities that a firm has to develop a particular activity.

We have to identify the core competences that we have, that add value to the costumer and

differentiates us from our competitors. They are competitive advantages (differentiation or costadvantage). They must well define in the structure and the performance of the firm.

So the question which needs to be answered in these chapters is: what can Phoenix Ophthalmic

S.A. do better than its competitors?

10.1. VALUE CHAIN ACTIVITIES

The value chain is a systematic approach to examining the development of competitive

advantage. The chain consists of a series of activities that create and build value. They culminate

in the total value delivered by an organisation. The margin which appears is the same as added

value. The organisation is split into primary activities and support activities.

Primary Activities

Inbound Logistics

We always have different models of lens in stock, looking towards satisfy ing our demand jut-

in-time.

Operations

This is where goods are manufactured. We transform the raw materials changing them into high

quality and specialized lens for our costumers.We also have an exhaustive quality control system controlling the quality of our entire lens, so

that all of them will go out of the laboratory with a 100 % quality.

Outbound Logistics

We have a very good delivering service for our costumers. We have deals with big companies of

transport such as DHL and SEUR which give us special conditions of delivery due to our long term

relationship with them. There is a just in time system delivering the lens wherever they are

needed. Also, if they are very urgent and the space allows us to, an employee of Phoenix

Ophthalmic S.A. will at the moment make the delivery.

Also, we have an informatics system with a data base of our best costumers allowing us to know

fast and constantly which is their situation of lens stock and when their stocks need to be refilled.

Marketing and Sales

We have a marketing department which is constantly looking how to promote our products and

how their design can be better. They are always trying to find new necessities of our costumers to

cover.

We have a very good and efficient sales force with commercials all over Spain. They visit to the

costumers providing them with all the information they need and giving to them special


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attentions. They are the best final image of Phoenix Ophthalmic S.A. for its costumers.

Service

We offer personalized TAYLOR MADE products offered to the doctors which they can design with

us.

Due to our 100 % quality guarantee, we give a post sales service changing any lens which isn't inperfect state.

Support Activities

Procurement

We don't add any value in the purchasing of our raw materials because we have a low bargaining

power with our suppliers.

Technology Development

Technology is an important source of competitive advantage. Anyway, we are technology

followers and that's the reason why we don't add any value in this aspect.

Human Resource Management (HHRR)

As it has been analyzed in the resources of the firm, we have excellent and motivated personnel

which do the best work possible. Also, their attention to the costumers is very good, with

personalized visits to his installations and always answering any doubt that they may have. This is

an advantage of being a smaller company.

We can't forget about our sales force which gives very good image of the organization thanks to

the professionalism of our sympathetic sellers.

Firm Infrastructure

Phoenix Ophthalmic S.A. has a Management Information System (MIS) and other mechanisms for

planning and control such as the accounting department.

10.2. BENCHMARKING

The benchmarking is a toll used to measure and develop the o rganisationalcapability through

detailed comparisons with other firms and organizations.

In the first place we need to identify the activities or functions that need to be improved. One of

our main weaknesses towards our competitors is that, being multinationals, they have more

resources than us, having big research and development departments which suppose a possible

future technological advantage over us, as well as an implementation of their cost advantage.

The strategy followed until this moment is one of following and copying the technology that they

develop. That makes us followers in technology.

The benchmarking strategy that we can follow is to join forces with other companies in foreign

countries which are following the same niche strategy than us. The objective is to acquire a

technological advantage over the big multinationals which would also suppose an

implementation in our cost disadvantage. For doing so, we can create our own R+D department

specialized in materials and special lens sharing knowledge and costs with our colleagues. Some

of these similar strategy companies can be found in Israel, France, Italy (Lintra) or Greece.


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11. COMPETITIVE ADVANTAGE

When two or more firms compete for a market share, one organization has a competitive

advantage over the rest when it earns more than the others or has the potential to do so.

The external sources of competitive advantage in our organization will be:

a strong reputation in the ophthalmic sector in Spain

A good adecuation of our product life cycle to our products: where we won't have many

problems due to the fact that our lens have a large life in their product life cycle. Anyway, bigger

investments should be done in research & development to acquire a big competitive advantage,

having a good innovation in our products which would better satisfy our costumers.

Other sources of competitive advantage depending more directly on our resources and

capabilities are: stability, flexibility of the organization, good workforce and a structure of the

organization where no fails will be allowed (every fail cost us money and being a small company

we can't afford it) to ensure success in every activity.

The flexibility will be a core competitive advantage. It is derivate from the factor that we are a

small familiar organization. It is easier to reaction to the external changes for us than for our

bigger competitors. This is of big importance because we are working in a hard and changeable

environment which makes to constantly evolve and change to the industry, the market and all the

stakeholders that are affected by this. Our resistance to change is smaller and easier to manage

due to this flexibility and being a small company (where everybody is informed of the situations

and work in teams giving feedback about the organization). We can assure that we have a bigresponsiveness or ability to respond to the external change.

11.1. COST DISADVANTAGE

We will be in cost disadvantage having worst prices than our competitors due to the fact of our

smaller size. This will have us having a higher price per unit and having to differentiate if we want

to have competitive advantages to overcompensate this competitive disadvantage.

We are going to analyse Phoenix Ophthalmic S.A. related to the different factor that influence in

the cost advantage.

In the first place, we have the experience curve. Our experience curve is quite good with

experienced personnel, which translates in a faster and more accurate production. We have been

manufacturing since 1991 and most of the staff has working in Phoenix Ophthalmic S.A. since

there. The only problem is that most of our competitors have been in the market for long time

before us and they also have good experience curves and may even be in a more advanced stage

of their experience curve. Also, because of our lack in R+D, there is a serious risk of somebody


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inventing a reengineering process which would give them a better experience curve.

Regarding to economies of scale, this is one of the bigger disadvantages that we can find in our

sector. All our competitors have big series of production reducing their cost a lot thanks to the

fast covering of fixed cost. Their rate fixed cost / variable cost is far lower than the one that we

have. From the point of view of the cost it is the main disadvantage that we have. Anyway, wecan't forget about the advantage that these scale economies of our competitors will give us later

on, in the differentiation. Because of their scale economies, our competitors have standardized

products with no product differentiation, low flexibility and problems of low motivation and

more difficult coordination.

Being small company we have very good economies of learning. Most of the employees which

started working for Phoenix Ophthalmic S.A. in 1991 continue working for the organization with

all the know how and expertise that this bring to the organization. The new employees that enter

in the organization fastly learn how it works thanks to the practical training giving by their

partners by observation. Also, the culture of the organization and the good climate which you can

find in Phoenix Ophthalmic S.A. allows this flow of information from the senior employees to the

new ones to develop in the best way possible.

Regarding to the capacity utilization, it is already being used to the maximum with to different

production shifts squeduled looking towards optimizing the use of the machinery. A third

production sift could be included during the nigh, but it is not necessary because all those units

wouldn't be sold at the moment taking into account the average units sold by Phoenix

Ophthalmic S.A. to the market. Bigger companies than us would use this third shift and produce

bigger quantities than us because they sell for the global market.

The product design is done by Phoenix Ophthalmic S.A.. they have specialists in the area whichcan do different designs in very little time, following the given specifications.

One of our big disadvantages regarding to the cost is our cost in inputs. It is very high due to our

low bargaining power with our suppliers, and higher in relation to the one that our competitors

may achieve being big multinationals. Also, the input cost is a good part of our final cost.

Our production techniques are very flexible, adapting to the delivery orders and the demand

previsions that we have. Depending on those, our staff will be ordered to produce more units of

one model or other.

The managerial efficiency in Phoenix Ophthalmic S.A. is very high. Being a familiar business, most

of the main managers are the owners of the company and that's why they are so focused in

having the organization managed in the best way possible. This makes an organized and tidy

enterprise, which works smoothly. Also, the managers of Phoenix Ophthalmic S.A. have a big

entrepreneur vision and are in touch with the market knowing it very well and reacting

proactively to every change that it may have.

11.2. DIFFERENTIATION STRATEGIES


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Product quality and offered service, because lost in price.

We are in a very specialized and standardized sector which gives many possible sources of

differentiation: innovations in technology which can give us cost reductions or the introduction of

an innovative new characteristic that carries advantages in the operation. Due to the fact that weare technology followers, and our technology is already known and used by our competitors,

these possibilities of differentiation are reduced.

This is the reason why we have to differentiate in these two big areas that are: the quality of our

product and the quality of our service.

Regarding to the product, we base the differentiation of our offer in its excellent quality. The

lenses manufactured by Phoenix Ophthalmic S.A. are exhaustively controlled to have maximum

quality. We can assure that our lens have a quality of the 100%. Our entire lenses don't have any

deformation or failure in their composition. These 100% quality controls aren't as rigorous in our

competitors who only check one of every five units, due to their big volumes of fabrication. The

smaller manufacturing volume of PHOENIX OPHTHALMIC S.A. makes possible to do so and means

a big differentiation against the big multinationals.

Regarding to the service, Phoenix Ophthalmic S.A. is differentiated from its competitors due to

the degree of personalization that it has. The high quality of our lens goes by hand of a high

flexibility service, fast and particularized; that allows to our costumers access to added value

impossible to achieve by all the big multinationals.

1. The first differential feature given by Phoenix Ophthalmic S.A. consists on the possibility

offered to the professionals of the medical medicine to develop a personalized product madefollowing their own specifications (TAYLOR MADE). The doctors can visit the manufacturing plant

and design with the professionals at Phoenix Ophthalmic S.A., a lens with the characteristics that

they may desire; so that it will adjust to the particular way of operating of the doctor or to the

particular form of the eye of the patient. It can look like this kind of lens can't have any variations

or shades, but they can be really important and the doctors would have this advantage counting

with a maximum quality product made to their own use. This is a service impossible to be given

by the big multinationals that work with big amounts of units all over the world which are highly

standardized.

2. The way of ordering the delivery is generally done by telephone. Anyway, we have an

informatics system with a data base of our best costumers allowing us to know fast and

constantly which is their situation of lens stock. This informatics integration of the information

allows us to make an automatic reposition of the stocks without our costumers having to make

the delivery.

3. The delivery of the lens to our costumers is another differential factor. As I have said before,

the multinationals and their affiliates have big volumes of manufacturing basing their competitive


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advantage in their price. This is the reason why they are only interested in serving deliveries

which surpass a minimum number of units. Our costumers may find that if they want to be

served by them, they may find two problems: that our competitors don't have the lens with the

characteristics needed by the doctor or that they have to ask for a minimum number of units. We

always serve them when they need it, with the number of units needed and with the

characteristic needed.

4. Also, the delivery will be made fast, accurately and taking care. PHOENIX OPHTHALMIC S.A.

works with Just-in-time. This differentiates us from the multinationals which aren't interested in

satisfying urgent deliveries and have established periods of delivery that must be followed.

Phoenix Ophthalmic S.A. adapts completely to our costumers necessities carrying their deliveries,

even if it is just one lens, where it is needed and in the time needed as fast as possible. The

transport is usually made by transport organizations such as DHL, SEUR or TNT. Also, when the

urgency is maximum and the geographic distance allows it, one of the own workers in the staff of

Phoenix Ophthalmic S.A. will travel to make the delivery.

5. Taking profit of the 100% quality that our lens have from the exhaustive control over them,

Phoenix Ophthalmic S.A. offers total guarantee over its products during undefined time. This

guarantee means the free reposition of the entire lens which would have any damage due to any

situation. We know that this situation can't be produced by the manufacturing but during the

transport or when the lens is being manipulated by the doctors. All of this taken into account,

Phoenix Ophthalmic S.A. changes the lens completely free.

Another differentiation, outside the product and the service, is the fact of Phoenix Ophthalmic

S.A. being a Spanish organization. It can look like costumers don't pay attention to this kind of

things but, in my opinion, they really do. Bargaining with an organization from your own country

is an attraction and a psychological advantage. When the situation of an organization is good, thiskind of psychological aspects can have the most important relevance.

12. CONCLUSION

Phoenix Ophthalmic S.A. is a competitive organization that has achieved success due to its good

strategies and to its positioning in a niche like cataract lenses in the Spanish market is.

After all the research work don e and all the analysis tools used during this coursework, we have

taken a picture of the organization and made an analysis of its strategies, as well as outlining

which areas would need a different strategic approach. This is called the strategic reflection of

the organization.

With all of this, the next step on the process would be to make the strategic plan. Some strategic

basic lines would be defined in the form of a SWAT analysis. This way, we would classify the

possible strategic basic lines in function of them being part of the strengths and weaknesses of

our organization, and in function of their appliance in case of possible opportunities and possible

threats for our organization.


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Once that this is done, we would allocate specific action for each strategic line with a particular

timing and allocating the necessary resources. To establish a who, a what and a when is of

maximum relevance.

After the strategic plan, an annual plan must come, and then a monthly control.

It will always be fundamental to join our mission, objectives, vision and valors looking towards

going in the good direction.

BIBLIOGRAPHY

KOTLER, PHILIP "Marketing Management"

CONSULTED WEB PAGES

Alcon

www.alcon.com

Allergan

www.allergan.com

Pharmacia

www.pharmacia.com

Santen

www.santen.com

Japan Ministery of Economy, Trade and Industry - METIhttp://www.meti.go.jp/english/index.html

Web Japan Statistics

http://web-japan.org/stat/index.html

CIA World Factbook - Japan

http://www.cia.gov/cia/publications/factbook/geos/ja.html

Japan in the world

http://www.iwanami.co.jp/jpworld/top.html

Information about countries and world rankings

http://www.aneki.com/Japan.html

Japan - A Country Study

http://lcweb2.loc.gov/frd/cs/jptoc.html


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Japan Information Network

http://web-japan.org/factsheet/index.html

1. INTRODUCTION

The objective of this coursework is to analyze, using different tools, an organization lookingtowards analyzing its strategy and making conclusions of it. this implicates to, in the first place,

make an in deep investigation of the organization to gain all the knowledge needed to apply

these tools and, in the second place, to make a good use of this information and a better use of

the tools given , being able to reach some critical and subjective conclusions.

the organization I have chosen is the one I started working for three months ago , which is called

Phoenix Ophthalmic S.A. here, looking towards maintaining it anonymous due to the information

which is given about it in this coursework. That's the reason why, also, some of the figures and

specific details have variations in them. In any case, these modifications don't alter the reality of

the work done, and the validity of the conclusions taken. All the focus of this work will be in the

strategies followed by the organization more than giving specific details and information about

the organization.

the reason why I choose this organization is because I find it very interesting, and I have a

personal interest in the realization of this coursework because I think that it helps me in my work

to know better the organization that I'm working for. Lots of the culture that works in this

organization can be seen here, and having a deeper knowledge of the organization you are

working within contributes to a better adaptation to this new laboral environment. Also, knowing

the objectives of my organization, it will be easier for me to join my personal objectives with their

objectives, as well as working harder looking towards achieving both, my personal interests and

the interests of my organization.

I think that all the objectives that I wanted to achieve with this coursework have been

successfully achieved, and that's why I feel proud and satisfaction of the research and

interpretation work done.

2. PHOENIX OPHTHALMIC S.A.

It was created in 1991 with this definition of its activity: Phoenix Ophthalmic S.A.'s main activities

consist on the fabrication of intraocular lens, on other words, artificial crystalline for their

substitution in operations of cataracts.

The mission is the starting point for the formulation of the strategy in an organization. In this case

it is defined like: to maintain the position of the main intraocular lens manufacturing organization

for the substitution of the crystalline in cataracts operations all over Spain, combining the

product quality with a continuous improvement and costumer satisfaction.

Phoenix Ophthalmic S.A. is positioned in its market like the personalized supplier of maximum


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quality lens for the cataracts operations.

It is situated in the technological park of zamudio which is a privileged situation. It is very well

communicated and so, this will help us for exportation to foreign countries and the rest of Spain.

Zamudio is situated from 30 minutes to the bay, just three kilometres to the airport and has a fast

connexion with the European railroads. This can be a competitive advantage.

So the products sold by Phoenix Ophthalmic S.A. are: intraocular lens of PMMA, intraocular lens

of HEMA and capsular rings used in cataracts surgery. There are many different models of each

product depending on its depth and the dioptres needed, as well as its shape. this are elite

products which go through an exhaustive quality control, with the totality of our lens evaluated,

which will be a competitive advantage from our competitors

In the year 2003, 350.000 lenses were implanted. This figure will implement a 15 % in the

following years, taking into account its evolution during the last years. We have between the 85%

and 90% of the market in Spain. We are the main distributor of lens in Spain. Our market never

will be formed by the final consumer of the product but by an intermediate consumer. The 70 %

of the lens were sold to the public sector and 30 % to the private sector.

3. MACROENVIROMENTAL ANALYSIS

It analyzes the external factors to the organization, and how they can affect to it.

3.1. CORE ANALYSIS

COMPETITORS

The competitors in this sector are big multinationals who take advantage of their size to force

some of their conditions to their costumers. This gives us the perfect competitive advantage

providing a better and more flexible service to our costumers.

their resources are bigger than ours with big capitals and power, as well as R+D, that allows them

to reduce costs; being more competitive in prices than us. We have to focus in differentiation to

make them the competence.

The big size of our competitors make them diversify, allowing us to exploit our niche of the

cataracts lens in Spain.

Some of our main competitors in this market are: Alcon, Allergan, Pharmacia, Santen and Merck.

All of this will be studied in details on the competitor's analysis.

COSTUMERS


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Phoenix Ophthalmic S.A. is orienting its product towards those centres doing cataracts operations.

From big hospitals to clinics, and smaller private ophthalmic centres. Our costumers won't be the

final consumer (the person being operated) but the professional doing this operation.

In the case of the public hospitals it is necessary to now how the sanitary contest work in order to

win them. They go out every year to access to serving them. Regarding to the particular doctors,which are of big interest of us due to the impossibility of being satisfied by the big multinationals?

We can give answer to their punctual petitions with the last objective of gaining their fidelity, so

that it will be easier to us to win in the sanitary contests. Remember, the private sector is a 30 %

of our sales but the public one is the 70 %.

In conclusion, we are speaking about costumers very sensitive to the service provided and the

quality of our products. This makes them less sensitive to prices.

SUPPLIERS

We are in a very difficult situation regarding to our suppliers. They are big multinationals which

have a duopoly over the market: BENZ and VISTA OPTIC. They provide us with the raw materials

needed to produce our lens: buttons or brute lens. Because of this duopolistic situation, they

have a strong hold on the market trying to impose very hard conditions.

The situation is difficult because we don't have any bargaining power in front of these big

companies and, also, the cost of our final product is much related to the price of our raw

materials.

We try to negotiate the better possible conditions: less price, better delivery conditions,

preferential service, personalized attention

3.2. PEST ANALYSIS

POLITICAL

The wages for sanity are being implemented by the government in our country. Racing the public

investments in sanity means also to implement the demand in cataracts operations.

Also, politic affect us because the 70 % of our sales are made to public hospitals. For selling to

them it is made a public contest regulated by the governmental laws. If those laws change this

process it can mean a big threat to us. In this process we fight against the affiliates of the

multinationals in Spain. The main point taken into account for the competition is the quality of

the product, where we are leaders. the process consist in one or various persons visiting our

facilities and making a technical inform of our organization paying special attention to the quality

of our final product. The organization which wins this contest is the one with the highest

punctuation achieved.


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All of this said, it is very difficult for this system to change and if the system changes we will find

the way to adapt to it so we will continue providing to the public hospitals.

ECONOMICAL

The economy won't affect us as much as it can affect to others because our products are of firstnecessity. This means than even in the case of crisis in the economy our products will continue

being sold by our costumers.

All of that said, there is good perspectives for the 2004, and this will beneficiate us.

The global economy seems to be reactivating.

In the USA the 2003 finished with a rate growth for their GNP of the 3 %. They also have

predicted a bigger growth for the year 2004.

Here in Europe, it is growing to levels higher than the 2, 5 %. The previsions are not as favourable

as the American ones but it is also expected a growth.

To all of this, we can add that Greenspan has said that the USA is going to raise the interest rates

for this summer. This will influence the equivalence Euro/dollars to decrease a little bit. This will

be profitable for our exportations because we will find a more favourable stage in foreign

countries where our products will be cheaper, being the American ones more expensive for the

national market.

SOCIAL

The ageing of the population in Spain is making grown the demand of the cataracts operations.This is the most frequent cirugy practised in the developed countries. Most of the cataracts are

produced by ageing and it is one more symptom of getting old. Ageing is the main reason that

generates this type of pathologies.

In the following chart we will see how the demographic evolution brings in our country a bigger

ageing of its population. The children rates decrease and the ancient's rates increase.

TECHNOLOGICAL

At last place but very important for us, the Spanish economy is predicted to have the biggest

growth in European Union. This will favour to the enterprises manufacturing products for inner

consumption to the Spanish market, like Phoenix Ophthalmic S.A..

Regarding to the technology there isn't any possibility of substitution of the existing technology

regarding to the cataracts operations, which consist on implanting a lens. Anyway, it is true that

these lens and their characteristics can be implemented and new materials or new procedures

can make a big change in this market. If this occurs we will have to adapt to the change due to

our strategy of technology followers.


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Anyway, we have a lack and a big disadvantage in this area due to our poor policies in R+D which

are a direct consequence of our smaller wages. The amount of money allocated to R+D projects

by the big multinationals are far bigger than the one we can allow ourselves to. This is a problem

that will be studied in deep later on, trying to take away our reactivity regarding to the changes in

technology.

4. PORTER'S 5 FORCES OF COMPETITION

4.1. THREAT OF SUBSTITUTES

the potential for profit in an industry is determined by the maximum price that the costumers are

willing to pay and it depends on the propensity that the buyers have to substitute (which is this

case there won't be none) and the price performance characteristic that our substitutes have

(which in this case doesn't matter, in the first place because there is no substitutes and in the

second place because what our costumers really look for is service and quality).

There is no threat of substitutes due to the fact that there are no possible substitutes for the use

of lens in the cataracts operations, for the moment.

4.2. THREAT OF ENTRY

The easier it is for new companies to enter the industry, the more cutthroat competition there

will be. Factors that can limit the threat of new entrants are known as barriers to entry

Our organization is very profitable. That's the main reason why new competitors would have a

reason for trying to come into our market. But also there are many barriers to these new entries

like the sunk cost which doesn't allow recovering the total value of the investment on exist.

In the first place I will comment some barriers which affect in a very small degree to our niche

but in a bigger degree to the entire medical and pharmaceutics market.

The capital requirements are not a big deal for any new companies trying to enter in the niche

where we are specialized but it would definitely be to enter in the whole market of the medicine,

where it would be almost impossible to enter due to the high investments needed in all the

areas.

Also, economies of scale can b e applied regarding to the global market of the medicine with

bigger amounts of units being sold which allows the amortization of the fixed costs lowering the

unit cost and the prices. This won't be any barriers to enter our niche.

There will be a small degree of absolute cost advantage over this new entrants, due to our know


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how, the big amount of time spent looking towards optimizing the cost of our outputs and

reducing costs in the process. This advantage will really be absolute to the big pharmaceutics

companies which have a very big know how and economies of learning due to their experience.

We definitely will have our two big barriers that almost assure that there won't be new entrants

in our niche, in the product differentiation, the access to channels of distribution and thegovernmental and legal barriers, being these three barriers very close related.

the quality levels achieved by our company, as well as the service differentiation and product

development with the doctors, has given to Phoenix Ophthalmic S.A. such a good reputation that

we own the 90 % of the market being more expensive than our competitors. The relationships

that we have established, allow us to win all the sanity contests which are governmentally

regulated, satisfying the particular needs that the doctors may have. We own the channels of

distributions due to this.

Retaliation would be a possibility if somebody would be crazy enough to try to enter this niche

having to fight against all the barriers that have been exposed before. The retaliation would

consist on a heavier policy of satisfying to the doctor's necessities.

4.3. INDUSTRY RIVALRY

The industry rivalry describes the intensity of competition between existing firms in an industry.

Highly competitive industries generally earn low returns because the cost of competition is high.

A highly competitive market might result from:

Concentration: there are many companies in this area with big size, so it is supposed to be a high

level of concentration. It would seem that this would play against a smaller company like PhoenixOphthalmic S.A., but, instead it plays to its favour like a competitive advantage due to the

diversification that these competitors make centring their attention in other sectors.

Diversity of competitors: the big competitors are very similar, big multinationals with similar

objectives, but different from our company, which allows us to exploit our niche and fulfil our

own objectives of profitability without having to fight against the objectives of our competitors.

Product differentiation: while our competitors have very similar standardized products having to

fight in prices, our product and service differentiation allows us to sell at higher prices having a

competitive advantage.

Excess capacity: there is no excess capacity in our niche because the demand is implementing

every year due to the ageing of the population. We always have high profitability.

Cost conditions: We can't fight to our competitors in cost, so we don't take into account, but they

have big fights between them looking towards selling as much as possible so their fixed costs will

be covered before allowing them to reduce their cost per unit.


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So, in conclusion, our competitors have a very intense industry rivalry fighting for the medical and

pharmaceutics market share, allowing us to be in a very quiet situation in a niche which only

means an infinitesimal percentage of their business and their objectives.

4.4. BARGAINING POWER OF BUYERS

The bargaining power of the buyers is how much pressure customers can place on a business. If

one customer has a large enough impact to affect a company's margins and volumes, then they

hold substantial power

our strategically advantage when dealing with our buyers will be that they are not so much price

sensitive as they are quality and service sensitive.

This is due to, in the first place, the big differentiation that our product and services have from

the one of our competitors. in the second place, due to importance that the quality on a lens, as

well as the service giving to them, has for the final service that they are giving to their costumers

and the advantages that our service gives them for doing their work. Also, the price of the lens

won't be the most expensive part of the operation, which means that they won't be very

sensitive to the price, because they are far more concerned about quality and service. in the last

place, the competition between buyers is not a big deal with work for all of them: this is a first

necessity service, and there will be people that has to go through the social security, and there

will be people that won't want to wait so long and, having the necessary money for the operation,

will do it in a private centre. In most of the cases, the doctors operating in the social security and

in the private centres will be the same.

our disadvantage regarding to the bargaining power of buyers, specially taking into account thesize of the public sector (70 % of our sales), will be the big bargaining power that they will have,

being bigger than us, having many other possibilities of substitution with cheaper prices, having a

very low switching cost and being absolutely informed of all the products, prices and costs of the

market. Strategically, we will have to respond to all their particular needs of quality and service.

4.5. BARGAINING POWER OF SUPPLIERS

The bargaining power of the suppliers is how mu ch pressure suppliers can place on a business. If

one supplier has a large enough impact to affect a company's margins and volumes, then they

hold substantial power.

We have no bargaining power in dealing with our supplier. They are two big multinationals that

have established a duopoly in the market imposing all the conditions that they want and with

prices as high as possible. This is one of the reasons why we can't be competitive in costs towards

our competitors. We are very sensitive to price, because it is a big percentage of the total cost of

our product.


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The vertical integration is not a possibility for us, since we need the raw materials that they

provide us, and we don't have any other supplier or way to have these needed raw materials

(buttons or brute lens).

The only possible course of action regarding to the suppliers are the long term relationship that

we have established with them. This way we will have the advantage of being their regularcostumers, and there will some negotiated conditions which won't be changed.

5. COMPETITORS ANALYSIS

Cheaper than us but us better quality

Our competitors are big multinationals, most of them American, with a big bargaining power due

to their big volume. Their resources will be bigger than ours due to their capacity, but a lso, they

will have different objectives, as well as less flexibility and less differentiation, especially in

service and selling standardized products.

In the first place, analyzing the competitors I must point out that PHOENIX OPHTHALMIC S.A. just

has direct competitors, other enterprises which have among their activities the manufacturing of

intraocular lens. We don't have any indirect competitors at all because there isn't any product or

service able of substitute the function of this type of lens.

These big multinationals are organizations with a long trajectory in the medical sector. Most of

them have various decades of existence and they have offices all over the world with staff of

thousand of employees. This gives them many advantages, like a big experience curve and know

how.

One of our advantages is that, due to their big size, the percentage of market of the Spanish

intraocular lens business will be minimum for them, so that it is easy for us to mantain our

market share. Mainly due to our good sales policy and our intensive support to our costumers

which gives us a strong and established position in the Spanish market.

In the second place, I'd like to point out that these organizations, due to their big volume and

long establishment, have followed strategies of diversification, not only in the ophthalmic ambit,

but also in other pharmaceutics sectors, which means that our business means a very small part

of their sales volume. The bad thing about this is that other pharmaceutics organizations have

entered our sector due to this diversification strategy.

in the last place, I must point out that these organizations follow a strategy very based in R+D

developments where our strategy consist on a creative technological following.

I will mention 5 of the most important competitors that we can find:

ALCON: American organization (Boston) that operates in more than 100 countries. They

have an affiliate in Spain, in Barcelona.


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ALLERGAN: (California) Created in 1945, it has a staff of 11000 workers in 60 offices all over

the world. It is dedicated specially to treating glaucoma's, psoriasis and conjunctivitis.

PHARMACIA: (New Jersey) Created in 1950, it has a volume even bigger of staff (59000),

sales, and number of business where it operates. They have affiliates in all the fields of

pharmaceutics and medical products. Its affiliate in the ophthalmic field is called XALATAN.

MERCK SANTEN: It is a Japanese organization (created in Osaka in 1890). They make products for

every kind of ocular affection.

6. SEGMENTATION

We are going to start segmentating the medical market in Spain based in the two main variables

that differentiate us from our competitor: quality required to be competitive and price.

Segmentation

Matrix Quality Required to be competitive

Price higher lower

higher Ophthalmic lens

Phoenix Ophthalmic SA

lower Pharmaceutics Medical Tools Other Prosthesis

Big Multinationals

As it can be seem in the segmentation matrix, the only segment that can be profitable for us is

the one of the ophthalmic lens. That's why we are going to divide this segment. It's where we are

working and it is quite illogical even to consider other segments such as pharmaceutics, medical

tools or other type of prosthesis because we can't fight against he big multinationals. This wouldgo against the niche strategy that we have. It is said that when something works don't change it.

We will make a deeper segmentation analysis, regarding the type of costumers that we have, in

order to analyze the different strategies that will better work. In the case of Phoenix Ophthalmic

S.A., the service offered to our costumers, it will be quite similar regarding to prices and product.

But there will be distinctions between some kind of costumers and others, due to their different

exigencies regarding to their different necessities which we will need to satisfy. That's the reason

why we will need to have different strategies depending upon the following segmentation that

will we done.

In the first place we will separate our demand depending on the country it comes from. In this

aspect we will segmentate in national costumers and the foreign ones. Our products and demand

is mainly oriented to the national sector. The big difference that we can find internationally is that

we are not cost leaders and our price becomes even less competitive taking into account the high

transport expenditures. also we loose some of our competitive advantages from being national

such as the possibility of visiting us, having direct contact with our commercials, the feeling of

buying something made in your own country our strategy going international consist in having


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deals with the main transport agencies like DHL or TNT and trying to improve the service as much

as possible.

Regarding to our way of satisfying the demand we will distinguish between public hospitals,

clinics and private ophthalmic centres.

The strategy regarding to the first team, the public hospitals, is to have the maximum quality

possible so we will we chosen in all the public contests that appear. They are quality based. Also

we will need to manage the stock of their hospitals.

At last, we will join in the same group to the clinics and private ophthalmic centres. We will need

to have better prices and conditions to serve them. Specially, taking into account that many of

them are our door of entry to the public sector.

In conclusion, where Phoenix Ophthalmic S.A. better works is in the national sector

7. STRATEGIC GROUPS

It is different of the segmentation. In the segmentation you analyze the different market or

segments and the product located in them, in the strategic groups we will study similar company

to our company in their characteristics. These organizations in the same strategic group will

develop very similar strategies.

In the national market or segment where we are operating ther aren't any organizations with

similar characteristics to our. All of this said, we find other companies in foreign countries which

are following the same niche strategy as us in their national markets with high levels of success.

Some of these similar strategy companies can be found in Israel, France, Italy (Lintra) or Greece.I will talk later on the benchmarking chapter about the opportunities that these organizations can

mean to us.

8. INTERNAL DEVELOPMENT STRATEGY: RESOURCES & CAPABILITIES

I have dedicated an entire chapter of this coursework to this internal development strategy due

to the big importance that it has had in making Phoenix Ophthalmic S.A. the leader in a segment

of a very competitive sector.

The big success of this strategy has consisted on centring in the development of internal

resources and capabilities to satisfy our costumer's particular needs, instead of fighting with our

competitors in such issues as prices, where we would always loss. This way, we have centred in a

differentiation strategy developing our competitive advantages.

This way, we have modified the industry conditions and competitor behaviour moderating the

competitive pressures that they had over us, such as cost advantage, thanks to a strategic

management which has gained market power with favourable industry structures as the primary


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basis.

As it is know, there is only two ways of having competitive advantages: cost advantage and

differentiation. The only way we had was with differentiation, and that is why we have oriented

our resources and capabilities to build these competitive advantages.

To orientate our resources and capabilities towards the competitive advantage, we have tried to

gain as much self-knowledge as possible to better understand them. This is also the way to

implement them, to select a strategy exploiting them, to ensure that they are exploited to the

limit and to build the company's resource base. If we know what we are and we are going, we will

be able to gain the resources and capabilities which will allow us to be who we want to be.

9. RESOURCES

The basic unit of analysis of the resources of the firm are: items of capital equipment, the skills of

individual employees, patents, brand names, and so on.

But to analyze how our organization can create competitive advantage we should see the bigger

picture, analyzing how this resources fit together generating capabilities.

9.1. TANGIBLE RESOURCES

These resources are the easiest ones to identify and measure. The strategy followed by PHOENIX

OPHTHALMIC S.A. regarding to the tangible resources must try to use the opportunities for

economizing the use of their financial resources and physical assets, as well as exploiting to the

limit of its possibilities their assets in the more profitable possible occupations.

The financial resources of Phoenix Ophthalmic S.A. are very good due to the social capital that

they dispose of being a SA thanks to the reserves which haven't been delivered among their

actionists and, instead, have been reinvested in the company. These reserves come from the high

turnover levels that the organization registered during the year 2003 which translated in a high

level of profit.

The main physical assets that PHOENIX OPHTHALMIC S.A. has are its investments in machinery.

This machinery is completely paid in the moment of buying it has an expected life of 10 years and

that's the reason why it is amortized by a 10 % yearly.

The machines are:

2 torns

2 fresators

2 machines for the quality control

2 machines for a second quality control

2 cleaners


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9.2. INTANGIBLE RESOURCES

These kind of resources are the most subjective one to measure, and the most difficult to define

because of their abstraction nature.

We are in an industrial market, and not a consumption one. This makes such things as image,trade, or even publicity have less importance and are less valuable than for products oriented to

the consumption market. All of this said, we have a good trade with a good image in the Spanish

market with the problem that it is not know outside Spain.

Where we are leaders having a competitive advantage is in the reputation. We have had a very

good and positive evolution, always serving to our costumers in the best way possible without

ever failing to them (we can't allow ourselves to fail to them). This is the reason why be have the

best reputation in the market and all our costumers look for us when making their deliveries.

Our technology is a standardized one because we are followers in technology. Anyway, there

aren't big technological developments made in this area and that's the reason why this doesn't

suppose a problem for us. In any case, it would be good for us to try to improve our R+D.

9.3. HUMAN RESOURCES

These are the main objectives followed by Phoenix Ophthalmic S.A. managing their human

resources:

to have a complete integration of the personnel in the organization

to have a good policy of motivation and job satisfaction

to motivate to the employee to achieve its participation and feedback

To obtain the fidelity of the personnel so it will stay on the organization.

When speaking about human resources, the most difficult part may be how to measure them.

knowing that this is a difficult but important matter, in Phoenix Ophthalmic S.A. what is done is a

performance appraisal once a year (we know that it should be done with a mayor frequency but

being a small company we don't have resources or time for doing it in any other way). For doing

this performance appraisal it is fundamental to have a good job description done of all the

positions in the staff defining their tasks and what objectives they must reach. This performance

appraisal is good to evaluate to our employees (it will be taken into account for future ascends),

motivating them, and knowing which their specific necessities will be for the training. the training

will be done trying to implement those deficiencies that they may have developing their tasks

and trying to prepare them for the change in the organization (which is located in a constantly

changing environment) and the new tasks that they will have to do.

the good know how of our technology and the specialization in running it allow us to have a very

clearly defined job positions in the same way that task and objectives are established.

The flexible culture of Phoenix Ophthalmic S.A. is also a valuable resource that the organization


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has. Because of their small size, being a familiar organization, their proactivity and the motivation

and active participation of their employees, it is a competitive advantage from its competitors.

10. CAPABILITIES

They are the capacities that a firm has to develop a particular activity.

We have to identify the core competences that we have, that add value to the costumer and

differentiates us from our competitors. They are competitive advantages (differentiation or cost

advantage). They must well define in the structure and the performance of the firm.

So the question which needs to be answered in these chapters is: what can Phoenix Ophthalmic

S.A. do better than its competitors?

10.1. VALUE CHAIN ACTIVITIES

The value chain is a systematic approach to examining the development of competitive

advantage. The chain consists of a series of activities that create and build value. They culminate

in the total value delivered by an organisation. The margin which appears is the same as added

value. The organisation is split into primary activities and support activities.

Primary Activities

Inbound Logistics

We always have different models of lens in stock, looking towards satisfy ing our demand jut-

in-time.Operations

This is where goods are manufactured. We transform the raw materials changing them into high

quality and speci

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