This section reviews the issue of the Canadian company on how it should go about manufacturing and distributing the goods that they produce. The first option available is that of manufacturing the good at the home country and letting the distribution to be carried out by some middle people. It should be taken into consideration that the biotechnology company wishes to venture into a new region and as such there is the need to for the company to get an intermediate who best understands the market dynamics of the new place that they wish to open their products to. The following is an analysis of this option in terms of the advantages and disadvantage:
The sales agents will only provide needed expertise for the specific job giving it high flexibility on whether to establish a long term consulting relationship- in this manner it becomes easy and convenient to handle such kind of expansion. Another advantage which is likely to accrue from the use of agents is that there will be a great field of experts to make a choice from. Furthermore the experts will be wiling help out in case of some unforeseeable situations concerning the distribution of the goods. It will cut down on the costs because the distributors are hired on a “as needed basis.” This will ensure that paid services are made use of when they are extremely needed. Lastly, it will be of great significance because the agents can be recalled in case of some advise concerning further distribution of the goods thus they will like a resource to the biotechnology company (Kuglin and Hook, 2002).
If the company decides to manufacture the product at home but set up a wholly-owned subsidiary in Europe to handle marketing this will provide better coverage of local issues as well as an “on the ground presence” for developing future business in Europe. The advantages and disadvantages associated with this kind of manufacture –distribution strategy is covered below.
Making the manufacturing process to be based at the home grounds will make it easy for monitoring of the manufacturing process to be properly carried out. In most cases the technology and production mechanism are based at the home grounds of a company; this will act as an assurance that the goods will be produced will be exclusively of the right standards and which will meet the customer requirements. This will create customer satisfaction and will ensure that the customer remain loyal to the firm’s goods. Though it can be argued that the distribution might be problematic due to the factor of distribution expenses but this can be overlooked for the sake of satisfying the customers. Meeting the customer requirements and expectation can be viewed as the top priority at this point of the company since it is venturing into new markets where there is a need for the creation of a market presence.
Setting the manufacturing units at the home grounds has couple of disadvantages: the manufacturing units being far from the market will incur transportation. It might not be possible for the firm to take advantage of abrupt short term demands for their goods. There is a likelihood of missing out on cheap labor at the distribution region (Kuglin and Hook, 2002).
If the company decides to go into a joint venture with a large European pharmaceutical company, it will not be involved in the large overhead of setting up and maintaining a branch office (Glover and Wasserman, 2003). This brings about the following advantages and disadvantages:
Mainly the Biotechnology Company will take advantage of the economies of scales. The company will not have the overhead involved with direct hires. It can argued that there are fewer bureaucratic constrains on hiring oversees persons as consultants rather than as full-time employees (Culpan, 1993). Forming a joint venture with the large company positions the Canadian biotechnology at a gaining position. There is likelihood that the company will gain more and new skills in the pharmaceutical world. The Canadian company is also to be introduced into new markets.
Forming a joint venture with a large company also has its limitations. Due to the fact that the large company will more at stake, it is likely to dominate in the issues of major decision making. At times this might lead to making of decisions which might contradict the business policies of the Canadian Biotechnology; it can be argued that joint ventures sign memorandum of understandings but also it should be noted that the loarge will have more responsibility to making of decisions (Badertscher & Reese, 2007).
There are numerous reasons, benefits, and pitfalls available to the company whichever path it takes, but I will recommend that it goes into a strategic alliance, because besides the pros given this will boost its credibility in the eyes of its customers and also it will enjoy economies of scale. It will also be able to expand its geographic reach. Strategic alliance can be quite beneficial to a corporation especially if the company trying top form an alliance is not established yet. Through an alliance, a company is stretched to maximize its potentials