Vietnamese supplement manufacturing industry the effect of no marketing activities in giai canh pharma company limited

--- NGUYEN LO MINH DUC VIETNAMESE SUPPLEMENT MANUFACTURING INDUSTRY: THE EFFECT OF NO MARKETING ACTIVITIES IN GIAI CANH PHARMA COMPANY LIMITED MASTER OF BUSINESS ADMINISTRATION Ho C

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NGUYEN LO MINH DUC

VIETNAMESE SUPPLEMENT MANUFACTURING INDUSTRY:

THE EFFECT OF NO MARKETING ACTIVITIES

IN GIAI CANH PHARMA COMPANY LIMITED

MASTER OF BUSINESS ADMINISTRATION

Ho Chi Minh City – Year: 2017 – 2018

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NGUYEN LO MINH DUC

VIETNAMESE SUPPLEMENT MANUFACTURING INDUSTRY:

THE EFFECT OF NO MARKETING ACTIVITIES

IN GIAI CANH PHARMA COMPANY LIMITED

MASTER OF BUSINESS ADMINISTRATION

SUPERVIOR: PhD LE THI THANH XUAN

Ho Chi Minh City – Year: 2017 – 2018

TABLE OF CONTENT

EXECUTIVE SUMMARY 2

CHAPTER 1 BACKGROUND INFORMATION 4

1.1 I NTRODUCTION 4

1.2 C OMPANY B ACKGROUND 4

1.3 H ISTORY T IMELINE 6

1.4 S ERVICES 7

1.5 S LOGAN 7

1.6 V ISION – M ISSION 7

CHAPTER 2 SYMPTOM AND PROBLEMS 7

2.1 P ROBLEM F INDING P ROCESS 7

2.2 C OMPANY ’ S S YMPTOMS 8

2.3 P ROBLEM IDENTIFICATION 8

CHAPTER 3 SITUATION ANALYSIS 10

3.1 I NITIAL C AUSE – E FFECT MAP 10

3.2 L ITERATURE R EVIEW 15

3.3 T HE U PDATED C AUSE – E FFECT M AP 18

3.2 D EFINITION OF CORE PROBLEM 23

3.3 T HE E XISTENCE OF CORE PROBLEM 24

3.4 T HE IMPORTANCE OF CORE PROBLEM 25

3.5 F INAL CAUSE – EFFECT MAP 27

CHAPTER 4 POTENTIAL SOLUTION 30

4.1 M ARKETING AND S ALES P LAN S UMMARY 30

4.2 S ITUATIONAL R EVIEW 31

4.2.1 The market 31

4.2.2 User sign – up process 32

4.2.3 Competition section 32

4.3 S TRATEGIC O PPORTUNITIES AND T HREATS 33

4.4 G OALS 34

4.5 M ARKETING AND S ALES S TRATEGY 34

4.5.1 Target market 34

4.5.2 Positioning 36

4.5.3 Product 36

4.5.4 Service 38

4.5.5 Price 38

4.5.6 User sign – up 39

4.5.7 Promotion and Advertising 40

4.5.8 Marketing Control 42

CHAPTER 5 PROPOSED DATA AND RESOURCE PLAN 45

CONCLUSION 45

REFERENCE 46

APPENDIX 48

EXECUTIVE SUMMARY

This paper was delegated to examine why the sales volume of Giai Canh Pharma Company Limited has been too low in the first 7 months of 2017 and to recommend ways of increasing the volume

The paper draws attention to the fact that in the first 7 months of 2017, there are many employees taking over 10 days off within a month The peak of this situation happened

in July 2017 that there are 7 employees left over 10 days and staying at home waiting for jobs when company still had to pay full salary for them This symptom happened from the beginning of 2017 until now Further investigations reveal that Giai Canh Pharma Company Limited which is beginning its supplement outsourcing service had

no marketing department to do the business developing job, no publicity about their new business and no advertising initiatives to promote the business At the beginning, this company was planned to be the main factory for GPharm Company to produce their product This background can stay the same and happens no change until the newest announcement from Ministry of Health that any supplement manufacturing companies which cannot meet the GMP standards will be obliged to shut down the operation at the end of 2018 This urgent situation together with the symptoms at Giai Canh Pharma Company promoted to this research paper

Due to the finance limitation of Giai Canh Pharma Company and the urgency of GMP application, the saving cost and time solution is preferred The report evaluates this range and concludes that it would be ideal to have a marketing plan This plan will temporarily create a temporarily whole solution for causes investigated in problem finding process

It is recommended that:

• Target to the new borned or small – sized companies which want to create products and testing market with small quantity Companies which raises their own medicinal area are also preferred

• Create a sales team to do direct sales by recruiting temporarily from GPharm Company to immediately adopt to the job and save cost

• Do press release at the beginning and the end of 2018 with GMP archievement announcing purpose

• Create a website to do pay – per – click advertising on Google for introducing outsourcing service of Giai Canh Pharma Company Limited on the base of GPharm Company website to take advantage of their close relationship and cost saving priority

The whole work will be shown in more details after this summary

CHAPTER 1 BACKGROUND INFORMATION

1.1 Introduction

Giai Canh Pharma Company Limited previously is a manufacturing factory of GPharm Company The company has split from GPharm Company and became a separately busisness organization from January 1st 2017 After split, the manufacturing

performance of company continued going down and had to open the outsourcing

service to improve the situation to quickly meet the GMP standards before due date or being closed However, the firm performance has nothing changed Therefore, there is

a need of a research and investigating the problem behind the symptom to permanently improve the situation of the company

1.2 Company Background

This paper is about the Giai Canh Pharma Company Limited, which is a manufacturer

in supplement market However, to understand more about this company, the author will mention about the GPharm Company, the “older brother” of this company

GPharm Company is formerly a family – business store named Vinh Xuan, which focuses mainly on orientally raw and dry medicine locating in District 5 After over 35 years operating in a small family medicine store by his father, Mr D, the son of the business owner decided to establish an organization operating in Vietnamese

pharmaceutical market, specialized in supplement from natural ingredients The

company named Giai Canh was established in September 2005, located in District 5 until now

In 5 years of operating, the company mainly sold medicated oil and supplement

products which were outsourced by suppliers In 2010, the first manufacturing factory was set up at Binh Chanh with maximum capacity of 100 million capsules per year

Mr N, the deputy manager working in GPharm Company from the beginning was assigned to become the manager of the factory This factory proved the hope of being actively independent in manufacturing ability and widely expand the business on Vietnamese supplement market

Pharma Company Limited decided to begin outsourcing service to utilize the unused capacity, improve the manufacturing performance and also expand its own business This service is aimed to entrepreneurs, SMEs in pharmaceutical market, companies which have own raw material zone and want to develop their own supplement

products, with the latest technology and the highest quality

Giai Canh Pharma Company Limited, has 23 employees with 1 Manager, 1 Deputy Managing Supervisor and 21 other employees, in which 2 accountants and 19 common workers Mr N, the manager takes responsibility of all aspect in company The Deputy Managing Supervisor supports Manager to monitor the assembly and paperwork

procedures 2 accountants are in charge of doing accounting and general admin works The remaining 19 workers do their jobs in each functional department of assembly The whole organization structure can be seen below:

Figure 1: Giai Canh Pharma Company Limited organizational structure

1.3 History Timeline

• 2005: GPharm Company was established and began operating business in pharmacy market in Ho Chi Minh city, specialized in oriental medicine and supplement from natural ingredients

• 2010: The manufacturing factory is set up at Tan Kien, Binh Chanh, Ho Chi

Minh city with maximum capacity of 100 million capsules per year

• 2017: The manufacturing factory is split separately from GPharm Company

and named Giai Canh Pharma Company Limited

In November 2016, to manage the numbers of poor quality supplement products on the market, the Ministry of Health announced the decision of terminating operation of any supplement manufacturing organization which does not meet the Good Manufacturing Pratice This information will affect to thousands of companies that does not meet this standard

After 7 years of operation, in January 1st 2017, Mr D, the manager of GPharm

Company decided to split the manufacturing factory from GPharm Company and formed an individually business organization named Giai Canh Pharma Company Limited This company will manufacture the products for GPharm Company together with doing outsourcing supplement products from natural ingredients for other

customers to increase the outcome quantity to meet the most important standard of GMP certification, targeted manufacturing capabilities The urgency of meeting GMP standard in 2018 has led to this splitting initiative

After split, Giai Canh Pharma Company Limited became an independent organization and an eligible legal entity to operate in Vietnamese supplement market Mr N, the previous manager of the factory became the manager of Giai Canh Pharma Company Limited and took responsibility of all aspects in this organization The company is also finance independent and not influenced by GPharm Company, which is under

responsibility of the other boss However, this company is still under the same owner,

Mr D He is both the owner of GPharm Company and the Giai Canh Pharma

Company Limited Therefore, the relationship of 2 companies is brothers under the same father

At the beginning, Giai Canh Pharma Company Limited is in charge of manufacturing products for only GPharm Company to sell on Vietnamese market Howerver, the business result from GPharm company was not good and led to the manufacturing performance of Giai Canh Pharma Company Limited went down Furthermore,

Ministry of Health will oblige all supplement manufacturing organization to apply and meet the GMP (Good Manufacturing Practises) standards to be still remained on the market After the tentative date in 2018, any companies do not meet the GMP

Standards will be shut down the operation With this urgent situation, Giai Canh

1.4 Services

Giai Canh Pharma Company Limited specializes in manufacturing, outsourcing

supplement products Its main customer is GPharm Company In addition, the

company also do outsourcing for organizations which have raw materials and want to

do their own products, entrepreneurs or SMEs in pharmaceutical market

2.1 Problem Finding Process

At the beginning, the author tried to observe all the aspect of the company The

company is specialized in manufacturing so this was the part that the author mostly checked The finding process began with the accidental detection about the workers at company had to take many days off showed in July salary form In July, there were 7 employees had to take over 10 days off to wait for jobs The author checked other previous months and found that the same situation also happened from January to June, not only in July When checking again by asking informally with the manager,

he said employees “had to wait for jobs due to lack of jobs to do at the company”, as quoted from Interview 2 detailed in Appendix 2 There is no more order to

manufacture, so he decided to let employees take days off but still paid full salary for them It happened from the beginning of January of 2017 until now The first

symptoms found led the author to check the manufacturing performance of the

company from the established date until now and find the core problems at the

company at present The details about symptom will be shown after this part:

2.2 Company’s Symptoms

The table author shows under is the recording evidences about numbers of employees following the numbers of days off that they had to take due to lack of jobs to do from January to July in 2017:

Table 1: Recording numbers of employees taken days off in a month

26 However, the recording table shows that the number of employees takes over 10 days off are 6 in January, June and 7 employees in July That means there are from 6

to 7 employees just work half month when they are full – time employees

Furthermore, there are also number of employees takes under 10 days off in January, February, June and July The point is Giai Canh Pharma Company Limited still had to pay full salary for employees due to the Vietnamese labor force laws This situation will cause a huge lost to company labor cost when the labor force using is not

completely effective To make the symptom strongly clear and proved existence, the author quoted the manager words: “Company only had enough jobs for employees to

do under 20 days, the remaining days they had to be off to wait but company still pay full salary for them due to Vietnamese Labor Law” as quoted in Interview 1 detailed in Appendix 1 The question is “Which reasons led to this symptom?”

2.3 Problem identification

From the quote from the manager of Giai Canh Pharma Company Limited above, the reason led to “Employees take many days off” symptom due to “lack of jobs to do” for the employees “Company only had enough jobs for employees to do under 20 days, the remaining days they had to be off to wait but company still pay full salary for them

due to Vietnamese Labor Law” as quoted in Interview 1 The following reason for

“lack of jobs to do” is due to “low orders to manufacture” as quoted from manager’s

information in Interview 2 – Appendix 2 To be more specific, the manager explained:

“Previously, the orders from GPharm Company were over 10 orders per month

Gradually, the orders decrease to 4 or 5 per month together with numbers of products

were not much Even, there was no order at all within a month That is why we have to

find customers to do outsourcing” To prove clearly what manager said, the author has

recorded the manufacturing performance of from the time the factory separated into

individual organization The performance showed as the numbers of capsules that

company could produce in a month and then divided with the maximum capacity of

the factory to get the percentage The real record about numbers of capsules that

company has been produced can be shown in the table below:

Table 2: Manufacturing performance

Unit: Capsules

Month 7/2017 6/2017 5/2017 4/2017 3/2017 2/2017 1/2017 Performamce 420.000 780.000 300.000 1.860.000 2.952.000 1.280.000 131.040

July June May April March February January

Manufacturing Capabilities

Capsules

When finished setting up the factory in 2010, the maximum capacity of the

manufacturing assembly is about 8.333.333 capsules/month However, the maximum number in reality recorded is 2.952.000 capsules/month in March 2017, it means the performance in reality reached under 35% comparing with the maximum capacity Plusing all numbers in 7 months dividing with 7, the medium number can be counted

as 1.103.000 capsules/month which is 13.24% of maximum capacity These numbers showed the poor manufacturing performance of Giai Canh Pharma Company Limited and proved the “low orders to manufacture” problem happening with the company With the symptom and reasons found, the author investigated more the other reasons led to “low orders to manufacture” problem and choose the suitable route to solve that

3.1 Initial Cause – Effect map

a) To investigate the reason led to the “low orders to manufacture” led to employees

had to take many days off due to lack of jobs to do, the author took interviews with the manager of Giai Canh Pharma Company Limited Manager explained in Interview 2:

“Previously, the orders from GPharm Company were over 10 orders per month

Gradually, the orders decrease to 4 or 5 per month together with numbers of products were not much Even, there was no order at all within a month That is why we have to find customers to do outsourcing” It indicated the “low orders from GPharm

Company”, which is the main customer of Giai Canh Pharma Company Limited, led to the “low orders to manufacture” problem

- Author wondered the reason why the orders from the main customer was so low, manager said: “Due to the competitive market, the GPharm Company cannot do business well and so cannot cover our manufacturing ability” as quoted from Interview 3 in Appendix 3 He also gave the author more

information by an imformal talking with him that “From the beginning,

GPharm Company – the main customer now, had very high sale results but gradually there are more competitors attending the market From 2010 to 2013, there is a fair number of competitors in supplement market But after 2013, it

increases a lot and led to the numbers of products are also many Harsh

competition led to the sale results going down”, as quoted in Interview 1 – Appendix 1

- Not stop from there, author asked manager whether there is any more reason led

to low sale results from GPharm Company – the main customer of our

company He gave one more reason: “The competition in advertising is also harsh Many competitors do huge advertising on TV which cannot do from GPharm Company These competitors have an advantage about finance so they can invest huge money on advertising on television, which is GPharm Company disadvantage” It proved the limitation in finance resource is also a reason led to

“low sale result from GPharm Company – the main customer” and then led to they can make more orders with Giai Canh Pharma Company Limited which causes “low orders to manufacture” for our company

b) Finishing the first reason, the author tried to investigate if there is another reason

affecting to Giai Canh Pharma Company Limited “Low orders to manufacture”

problem Base on the information giving by the manager in Interview 1 that the

Ministry of Health obliges every organization manufacturing supplement on

Vietnamese market to meet the GMP standard in order to remain the business Or else, the operation must be shut down Therefore, with the urgent situation of upgrading the manufacturing factory to meet the GMP standard in 2018 and “GMP standard

basically requires an organization meet the high investment and highly productive output That is why we have to split from GPharm Company to push the

manufacturing by finding customers to do outsourcing” as quoted by the manager in Interview 1 The author went to collect data by asking information with manager about the situation of doing outsourcing business from the time that the factory split from GPharm Company

As recorded at the company, there are 2 outsourcing orders under operating from the beginning of 2017 until now These 2 orders are founded by the available relationship

of manager, as quoted from manager’s words in Interview 2 Therefore, author went to ask the manager that how many outsourcing orders could be found in a month and who

went to find the customers Manager answered that they depended on the sale team from GPharm Company to find the customer for them but “The number of outsourcing contracts was not many Sometimes we have, sometime we do not” as quoted by manager from Interview 3 It indicated “the lack of outsourcing orders to produce” situation at present time of the Giai Canh Pharma Company Limited after 7 months of splitting and jumping outsourcing busisness

- The manager shared: “When the sale team introduced us customers, we also did the consulting job, explained every procedure and stage for them But finally, there is no reply from them again” as quoted in Interview 3 He explained: “We

do not know exactly the reason, maybe they just ask for quotation, they are preparing to start up the business so they want to find service suppliers or other objective problems from them” Furthermore, in Interview 3, he also said: “The outsourcing orders introduced were not much and mostly we do not meet their requirement” Investigating deeply, the author accidentally asked the manager whether the limitation in manufacturing assembly or technology is the potential cause effecting to the reason that the company cannot meet customer’s

requirement led to they have no reply He answered as quoted in Interview 3 that “Yes, it could be We can not vary the product category so it is hard to find the customers Customers want to find a place that can provide all types of products so that they do not need to find many places” However, he continued

in Interview 3: “We has disadvantages in infrastructure about base ground and also finance resource So, we cannot invest spreadly like other big competitors Our disadvanctage is about making only 2 types of products It is because of the company previous policy that just built the factory for its own business”

- When the author asked manager whether he had any solution for increasing the outsourcing orders, he answered as quoted in Interview 3: “At present, we only depend on the sale team from GPharm Company to find customers for us

instead of actively going to find customers by ourselves” because “The sale team from GPharm Company had a various relationship and market”, as quoted from Interview 2 It indicated that there is “No marketing department” at Giai

Canh Pharma Company Limited This cause is proved by manager quote from Interview 3 that “At present, we depend on the sale team from GPharm

Company when we do not have any one or a department in our company to find the customers” Furthermore, when author asked manager whether he did “No marketing activities” at present, he explain by giving more information “We do not do introduce the outsourcing service widely because we are practicing on doing this business” as quoted from Interview 3 Also, the author asked

manager whether it is hard to find the customer to do outsourcing that we can meet their requirement and why they do not do marketing activities, he said: “It

is easy but at this time we do not have time to find customer”, “We do not have enough time because we just begin so that the result is not positive”, and

“Complicated procedures from the authorities also cause us much time to take care” as quoted from Interview 3 These reasons are the prove for the existence

of two causes “No advertising” and “No publicity” at Giai Canh Pharma

Company Limited at present In summary, “No marketing department”, No advertising” and “No publicity” are 3 causes led to “No marketing activities” and be the route to “Lack of outsourcing orders to produce” situation until now The whole pictures will be demonstrated as Initial Cause – Effect Map below:

Figure 3: Initial Cause – Effect Map

Following the company description, Giai Canh Pharma Company Limited mainly focuses on manufacturing In order to manufacture products and get jobs for

employees to work, the company has to have orders, and orders can be classified as the sales of the company Therefore, the consequences of lacking orders to

manufacture can be the same with low sales result of Giai Canh Pharma Therefore, the group of symptoms at the beginning from “Employees take many days off” to

“Lack of orders to manufacture” can be classified as “Low sale”

In next session, the author will do related literature reviews that are as the theory framework linking with the “low sale” symptom of the company Then the author will find out the core problem using data collected from depth interviews with the manager

of Giai Canh Pharma Company Limited

3.2 Literature Review

Marketing activities in organization

According to Janet Walsh 1, marketing activities is “A series of tools for promoting and informing users of resources and services through a mix of communication,

distribution, public relations, advertising, and motivation”

The importance of marketing to sales in an organization

According to Madhani PM 2, “sales and marketing integration has a direct and

significant impact on customers and the revenue-earning potential of the

organization” Leventhal RC 3 stated the importance of marketing efforts in

organization by “increase your return-on-investment, allow for more successful

innovation, lead to better branding efforts, increase the effectiveness of your

promotional efforts and strengthen your web marketing efforts.”

Moreover, Corstjens and Corstjens 4 also concluded that “a lack of cooperation

between sales and marketing has the potential to damage the overall success of the organisation” Le Meunier-FitzHugh and Piercy 5 also gave additional confirmation that “collaboration between sales and marketing has a positive and significant impact

on both market orientation and business performance” Therefore, “With sales and

marketing collaboration firms will outperform competiotion; create added value as well as customer satisfaction” as concluded by Madhani PM 6

Furthermore, in 2011 research, Lyus D, Rogers B, Simms C 7 proved that in small organization, high integration between sales and marketing, together with high market intelligence gathering and strategic reactivity will make companies grow better than large ones

Therefore, a company needs marketing activities to grow sales Madhani PM 6

concluded in his 2016 reaserch that

Sales and marketing must work together in order to achieve organization goals as sales and marketing integration is increasingly recognized as a key driver for improving financial and operating performance The absence of cross-functional integration may result in promises made by the organization's marketing department that have not been coordinated with sales, marketing promotions that are not synchronized with sales delivery schedules, and failure to deliver product by a firm in a specific, requested format because it is not the most efficient way

to do so Without sales – marketing cross-functional collaboration, firms cannot be expected to respond optimally and promptly to customers' requirements As suggested in this paper,

through an effective sales and marketing integration, firms could enhance overall efficiency by interlinking the sales and marketing operations, and at the same time meet the long-term

strategic goals and maximize customer value

Publicity and advertising: matter for sales

There are 2 elements of marketing activities that matter the most for sales: publicity and advertising according to 2014 study of Spotts H.E, Weinberger M.G, Weinberger M.F, 8

They have also shown the relationship between publicity, advertising activity and corporate sales of a company, Spotts H.E., Weinberger M.G., Weinberger M.F 8

proved that “Positive publicity is most important in distinguishing between firms with higher and lower sales” This term is especially for the new company on the market as proved by following quote from this study:

The effects of negative publicity and advertising are dependent on a firm's existing reputation For companies with weaker reputations, positive publicity in tandem with business-to-

consumer (B2C) advertising is most highly associated with higher company sales

Conversely, for firms with stronger existing reputations, advertising has a significantly

diminished role; positive and even negative publicity are most crucial in distinguishing between companies with high and low sales Negative publicity can be harmful to these firms though if it is not balanced by more positive publicity

It implies that with a company has new service on the market which is “weaker

reputations” should do more advertising and publicity to increase company sales

From the research of Spotts H.E, Weinberger M.G, Weinberger M.F, 8, the authors want to imply that:

This study focused on a set of durable goods and services companies to understand the

relationship between different forms of marketing communication and corporate reputation to determine what matters most when looking at sales results Broadly, we found the strongest relationship between garnering a high volume of net positive publicity and sales While advertising made an important difference, its influence was slightly more contingent Firms with weaker reputations and higher sales advertise more and have a higher volume of positive publicity across a range of topics That is potentially good news for managers of firms who may wish to invest in PR activities and advertising to better manage the balance between positive and negative publicity and overcome a weak reputation Managers of firms with stronger existing corporate reputations cannot expect more B2B or B2C advertising spending alone to elevate sales For these stronger reputation firms, continuing to garner positive publicity and avoiding a disproportionate balance of negative publicity is particularly

For weaker reputation firms, B2C advertising spending was second in importance to positive publicity when distinguishing between lower and higher sales groups For stronger reputation firms, advertising had a less important role in distinguishing between saleslevels

3.3 The Updated Cause – Effect Map

In this part, the author will conduct the verification which problem should be solved from the initial symptoms As can see in initial cause – effect map, there are 2 big problems causing “Lack of orders to manufacture”

• The problem about “Low orders from GPharm – the main customer”:

It happened due to “the highly competitive market, GPharm Company cannot do business well and so cannot cover our manufacturing ability” as quoted from

Interview 3 in Appendix 3 Also, he said: “GPharm Company provides the best

quality products, the market and customers still support us However, there are too many choices on the market” as quoted from Interview 3 This reason is objective and depending too much on the market Moreover, “the competitors have an advantage about finance so they can invest huge money on advertising on television, which is GPharm Company disadvantage” as quoted from Interview 3 is the objective reason from the GPharm Company, which is out of author’s scope of work Furthermore, mananer also said “With the small amount of product can make for GPharm Company – the main customer, we can not upgrade to meet GMP standard” as quoted from Interview 1 With the urgency of upgrading to meet GMP standards in 2018, there is a need of immediate solution to increase “numbers of orders and numbers of products can be produced”, “Therefore, we need more customers and then can upgrade the assembly to higher capacity” as quoted from Interview 3 Therefore, the author will not solve and eliminate the “Low orders from GPharm Company”

• The problem about “Lack of outsourcing orders to produce”

Facing the pressure of meeting GMP standard in 2018, the owner of GPharm

Company splitted the factory out from GPharm Company to form Giai Canh Pharma Company Limited is to “allocate all priorities for production to upgrade to meet GMP standard in 2018” as quoted from Interview 1 It led to the Giai Canh Pharma

Company Limited orientation is “upgrading the assembly to meet GMP standard and

to meet that standard, we have to response enough numbers of orders and numbers of product can be produced Therefore, we need more customers, from then, invest new assembly with the same types of product can make but at a higher level” as quoted from Interview 3 Moreover, the “low orders from GPharm Company” is expressed by

“Previously, the orders from GPharm Company were over 10 orders per month

Gradually, the orders decrease to 4 or 5 per month together with numbers of products were not much Even, there was no order at all within a month That is why we have

to find customers to do outsourcing”, as quoted from Interview 2 The importance and orientation of outsourcing service in meeting GMP standard led to the “Lack of

outsourcing orders to produce” will be chosen to solve

There are 2 sub-reasons led to “Lack of outsourcing orders to produce” are “No reply from customers” and “No marketing activities”

o With the reason “No reply from customer”:

As described in initial cause – effect map section, the manager of Giai Canh Pharma Company Limited said that “We do not know the exact reason they do not reply Maybe, they just ask for quotation, they are preparing to start up the business so they want to find service suppliers or other objective problems from them” as quoted in Interview 3 These reasons may be “objective from the customers”, quoted from

Interview 3 Therefore, the information is not enough and clearly to solve

Another reason for receiving “No reply from customers” is “Limitation in technology”

as analysis above However, the causes of this reason due to “Finance Resource

Disadvantage” and “Company Policy” proved by manager’s quote “We has

disadvantages in infrastructure about base ground and also finance resource So, we cannot invest spreadly like other big competitors Our disadvanctage is about making only 2 types of products It is because of the company previous policy that just built the factory for its own business” Moreover, in Interview 3, manager also confirmed that “Despite the disadvatages in types of products can make, we still do not invest spreadly due to lack of finance, base ground and human resources”, “We will not invest to vary the types of product can make and focus all the priorities to two ones we

can do the best For example, with filtered tea, we will do the best quality product, the best package instead” Therefore, the “Limitation in technology” will not be solved by the author and also eliminate the “No reply from customer” problem due to cannot be solved

o With the reason “No marketing activities”

The first cause led to “No marketing activities” have been shown above are “No

marketing department” due to the reason “We depend on GPharm Company to find customer for us when we do not have some one or department to be in charge” as quoted from manager in Interview 3 The other causes can be defined is “No

advertising” and “No publicity” The reason led to these lacking initiatives at Giai Canh Pharma Company Limited can be explained that “We did not actively do

advertising at this time We just begin practicing to do outsourcing Moreover,

complicated procedures from the authorities also cause us too much time to take care and we cannot cover all these procedures” as quoted from Interview 3 with the

manager The consequence can be seen that there were only 2 outsourcing orders from the beginning of 2017 until now and there is no successfully accepted order from GPharm sale team The potential of solving this problem can be shown through

manager’s comment that “After practicing by doing these 2 first orders, we will create

a marketing department to find customer This department is no need to be so

complicating, just go to find suitable customers that we need”, as quoted from

Interview 3 Moreover, he said: “Customers and us also want to know how and which products that the market is demanding From then, we can cooperate with the

customers more effectively to produce the product that can meet the needs of market”, also quoted from Interview 3 Manager also said: “First, GPharm Company cannot meet out output quantity to meet GMP standards led to we cannot solve the jobs for employees Second, facing the urgency of upgrading to meet GMP standard when the due date is coming, it is obliged to focus on pushing the manufacturing”, as quoted from Interview 1 This comment from manager showed the importance and “No

marketing activities” needs to be solved to help company have more customers to increase the output quantity Therefore, the author will choose to solve this problem

and “No marketing activities” is the core problem of the initial symptoms The update cause – effect map can be shown below:

Figure 4: Update Cause – Effect Map

Due to the due date of GMP is coming, the immediate solution can be created is an effectively temporary marketing plan to increase the numbers of orders to

manufacture From then, the assembly can be upgrade to meet the standard as what manager said

3.2 Definition of core problem

Karlícek and Drábik 9(p587) stated that:

Marketing is a fundamental business function Companies of all sizes and sectors have to answer basic strategic marketing questions, such as “who is their ideal customer”, “what is the value they propose”, “how do they ensure customers’ satisfaction” or “how do they retain

a competitive position” These marketing decisions are integral for every business model in a competitive market They represent a necessary condition for the company’s long-term performance

Moreover, Curt Clinkinbeard 10 also indicated in his paper that “it is advantageous to implement a "customer driven" mentality instead of one that is primarily

manufacturing driven A customer perspective leads to products and services that are more marketable and, ultimately, to greater manufacturing success.” They all proved the importance of marketing in an organization and organization needs marketing activities

Marketing activities, as described by Janet Walsh 11(p10) that “A series of tools for promoting and informing users of resources and services through a mix of

communication, distribution, and motivation.”

About the significant of marketing in an organization, O'Sullivan D, Abela AV 12 ‘s research contributed strong evidences to prove that

Where marketing is capable of providing meaningful performance measures, it commands significantly higher board level respect More compelling again is the strong impact that marketing has on the company's financial performance in companies that are successful in capturing marketing's contribution

Furthermore, Lee W, Rhee S, Oh J 13(p119) also stated in their research about the

linkage between marketing and manufacturing activities that:

To better match its manufacturing capabilities with the market demand, the current and the future as well, the manufacturing department requires market information about the

everchanging customer needs and competing products The marketing department, on the other hand, requires information about manufacturing capabilities, both existing and planned,

in order to identify a target market segment as well as develop a market offering or a set of feasible competitive priorities so as to outperform its competitors This simple fact

immediately signifies that the close cross-functional coordination between the two

departments will be one major key to success in manufacturing strategy and corporate strategy

as well

In addition, the outcome of Lee W, Rhee S, Oh J13(p131) research also proved that

“manufacturing organizations can improve plant performance by instituting and

implementing the practices of the three constructs” concluding manufacturing -

marketing integration (MMI) It partly showed the importance of manufacturing and marketing activities linkage can enhance the performance of manufacturing firms 3.3 The Existence of core problem

To prove the existence of core problem “No marketing activities” for the initial

symptoms, the author decided to take interview with the managers to find out if this problem is available at the company When the manager was asked about who found the outsourcing customer for the company, he said: “We mainly depended on the available relationship” When was asked that the company had no plan on focusing going to find outsourcing customer, he said: “Not yet, we have already had the sales team from GPharm Company to introduce for us depending on their availably

widespread market” He also continued: “At present, we just depended on sales team from GPharm Company to find for us the outsourcing customers so we did not

actively go to find customers or introduce publicly or do advertising” To explain this action, he said: “We do not do introduce the outsourcing service widely because we are practicing on doing this business”, “At this time, we do not have time to find customers we need but this searching section is easy, nothing is impossible and so hard Now, we depended on the sales team from GPharm Company to find us the outsourcing customer because they have already had the wide market and relationship

so we just took the advantages If they successfully find us a customer, they will

introduce that customer to us” as quoted from Interview 3 However, the result is not

as the manager expected To prove that, the author asked the manager whether the result from sales team introducing outsourcing customer to the company was good, he said: “The number of orders is exactly not many, just sometimes we had, sometimes

we do not” The exact numbers of orders that the Giai Canh Pharma Company

Limited has at present to do outsourcing as recording by the author are only 2

Therefore, with the information given from the manager, it can be seen that the

existence of core problem “No marketing activities” is presently available at the Giai Canh Pharma Company Limited

3.4 The importance of core problem

In theory aspect, the core problem “No marketing activities” is affecting negatively with the company are expressed through many research papers According to Madhani

PM.2, “sales and marketing integration has a direct and significant impact on

customers and the revenue-earning potential of the organization” Leventhal RC 3stated the importance of marketing efforts in organization by “increase your return-on-investment, allow for more successful innovation, lead to better branding efforts, increase the effectiveness of your promotional efforts and strengthen your web

marketing efforts” Madhani PM 6 also concluded in his 2016 research that “Sales and marketing must work together in order to achieve organization goals as sales and marketing integration is increasingly recognized as a key driver for improving

financial and operating performance The absence of cross-functional integration may result in promises made by the organization's marketing department that have not been coordinated with sales, marketing promotions that are not synchronized with sales delivery schedules, and failure to deliver product by a firm in a specific, requested format because it is not the most efficient way to do so Without sales/marketing cross-functional collaboration, firms cannot be expected to respond optimally and promptly to customers' requirements

In reality, with the situation of Giai Canh Pharma Company Limited, the “No

marketing activities” core problem has affected negatively to the company by those ways:

o Company continues to depend on “orders from GPharm Company” to

manufacture When the sale result from GPharm Company is not good at

present, the orders for Giai Canh Pharma Company Limited to do for this

“brother company” are still low and cannot “help us to cover the output of manufacturing and do not have enough jobs for our employees to do” as quoted from Interview 1

o Because of low orders from GPharm Company, Giai Canh Pharma has to do outsourcing However, if Giai Canh Pharma Company Limited do not focus on finding customers on their own, do not solve the core problem of “No

marketing activities”, Giai Canh Pharma will continue to depend on sales team from GPharm Company to find for them the outsourcing customers when the result of finding from sales team of GPharm Company is negative The proof is

“The number of orders is exactly not many, just sometimes we had, sometimes

we do not” as quoted by manager from Interview 3 The exact numbers of orders that the Giai Canh Pharma Company Limited has at present to do

outsourcing as recording by the author are only 2 If this problem cannot be solved, the company is still “low sales”, lack of orders to manufacture and cannot have enough jobs for their employees to do when still paying full salary

to them, which is a huge waste to labor cost and production capacity of

workers

o The most important reason and the worst consequence if the core problem of

“No marketing activities” cannot be solved is: Company cannot actively

control the output of their manufacturing process The sale will continue to be low It will lead to Giai Canh Pharma Company Limited cannot cover their cost when doing the GMP As the manager said: “GMP standard basically requires

an organization meet the high investment in assembly and highly productive output” as quoted from Interview 1 However, “First, GPharm Company cannot meet out output quantity to meet GMP standards led to we cannot solve the jobs for employees Second, facing the urgency of upgrading to meet GMP standard when the due date is coming, it is obliged to focus on pushing the manufacturing”, and “With the small production capacity at present, we cannot

standards Therefore, causes from the core problem “No marketing activities” should

be solved by a marketing plan with an effective direct sales plan to help the company solve not only the core problem but also the symptomps found at the beginning of the research The final cause – effect map is shown below for the whole problem and the research that the author did at Giai Canh Pharma Company Limited: