Name
Institutional Affiliation
Betapharm Case Synopsis
Betapharm is a company specialized on drugs for depression, pneumonia and antibacterial. According to Kulp and Randall (2005), Betapharm was enjoying a 10% market share in the pharmaceutical industry. However, the company’s patent was due for expiry in two years. After then, the market would be filled with generic drugs and Betapharm would lose its market share. The company had to reduce on its procurement spending in order to continue with its growth trend. Betapharm sought to reduce its procurement cost by using the Emptoris ePass system when outsourcing.
The primary decision problem in the Betapharm case is about the appropriate way to reduce the procurement costs through the outsourcing strategy.
The key organizations include:
- Hotels used by Betapharm employees while they are on business trips. They include chains of international hotels such as Hilton or boutique hotels.
- Tao pharmaceuticals- the firm provides Malic acid
- Chun Wu, Liou Laboratories, Chemlab Pharmaceuticals, Zhang Huang and Yu Sheng- Asian companies bidding the tender to supply Malic acid.
Initially, employees booked hotel rooms based on their preferences. However, if the firm will adopt the electronic bidding system, the plan will have 100 reverse auctions and 120 eRFQs that will cover the 40 countries and 1500 hotels (Kulp & Randall, 2005). However, the main constraint for this plan would be numerous hotel preferences for the employees. It will require a lot of manpower to put them into consideration.
The plan by Betapharm to computerize its outsourcing program is an excellent way to cut down on procurement costs. The company can now get the best deals after analyzing a wide range of potential suppliers. However, Betapharm’s decision to outsource Malic acid from Asia may turn costly in the end. The inconsistencies of sea travel may cause delivery delays and loss of business.
Reference
Kulp, S. L., & Randall, T. (2005). Procurement at Betapharm Corp. (A), Case Document, Harvard: Harvard Business School, August, 25, 2005, 9-105-030