This is a solution of business information analysis assignment which discuss the Boots company and its different types of business methods. It is also include the recommendation regarding Boots Company.
1. Business Information
Background of the company:
John Boot established the company in discussion, that is, Boots during the year 1849. John Boot had inherited the title Baron Trent from his father. Jesse Boot, the successor who inherited the company, sold Boots to the famous American United Drug Company during the year 1920. But with a grave economic and financial situation in North America was instrumental in selling of Boots which was eventually sold back to the British family which originally held the company during the year 1933. The new head of the company was the grandson of the original founder of Boots, John Boot.
During the year 1968, Timothy Whites and Taylors Ltd chain was acquired by the company. For the cause of expansion of its business, the company, in the year of 1982, opened a new manufacturing plant in Cramlington, Northumberland. The decade of 90s saw Boots starting to diversify its business to cater to the ever evolving need of a changing market and customers. It started with the acquisition of a famous bicycle and car parts maker Halfords In 1991. Though later in 2002 it went on to sell the same company which they had acquired 11 years before. Working under the diversification spree the company also developed a business named Children’s World early in the decade of 1990s. But it had the same fate as Halfords as Boots sold Children’s World to Mothercare in the year of 1996.
Boots also ventured into the field of dentistry. In the year of 1998, the company opened up several stored throughout its domestic market which started offering dentistry service. In the year 1998, Boots sold its Do-It-All home furnishings chain to Focus. In an urge for diversifying, Boots not only ventured into dentistry or bicycle manufacturing but also “Wellbeing” services. These services used to offer different customers treatments. Amongst these treatments were facials, homeopathy, nutritional advice, laser eye surgery and Botox. But most of these services were abandoned in the year 2003. Optical Express bought the Laser eye surgery services from Boots in late 2004. Boots also ventured into the field of drug researching and manufacturing. The research team of Boots was successful in developing a painkiller named Ibuprofen. During the year 1994 Boots divested its production unit to BASF.
In the year 2006 they sold their famous Nurofen brand to one of its competitor, Reckitt Benckiser. In the year of 2005 Boots also thought of selling sex toys which they cancelled in the same year due to various reasons. Speculations started on 1st October 2005 regarding a possible merger between Boots and Alliance UniChem. Though there were no official words regarding it from any of the two companies involved. On 3rd of October the Chairman of the Boots Group, Sir Nigel Rudd, officially announced about the possibility of a merger between Boots and Alliance UniChem, which was subsequently confirmed on 3rd of October, 2005. The name of the merged entity, which became effective from 31st of July 2006, was decided to be Alliance Boots plc. On a spectacular turn of events the company was made private through the process of buying the new group by Kohlberg Kravis Roberts and Stefano Pessina, the deputy chairman of Alliance Boots.
As far as the international market is concerned, since the year 1936, Boots have opened their retail stores in places other than the UK. During 1980s decade most of the stores were all closed which belonged to different geographically dispersed countries like New Zealand, Canada and France. In 1997 new chains of stores were opened in the countries like Netherlands, Thailand, Taiwan and Japan out of which the chain only survived in Thailand.
In the year 2008, new pharmacies were opened by Boots in Norway that was one of the emerging markets of that time. Currently there are around 120 outlets of Boots in Norway. These outlets are called Boots Apotek, which means Boots Pharmacy in the native language of Norway. In some other countries like USA, Kuwait, Hong Kong and Switzerland there are in store ‘implants’ in various department stores and other drugstores from which the Boots products are retailed. Some of the famous chains which keep Boots products are Watson’s and Target. Boots have also been successful in opening new shops in Dubai, United Arab Emirates and Qatar.
The industry sector:
Boots is amongst the most famous retail companies of the UK. Apart from retailing, Boots is one of the fastest growing players in the market of OTC (over-the-counter) consumer drugs and healthcare and safety products. The business unit which looks after this particular activity is named Boots Healthcare International. BHI (Boots Healthcare International) has three most important business areas, namely Analgesics (e.g. Nurofen), Cough/cold (e.g. Strepsils) and Skincare (e.g. Clearasil).
BHI not only researches and develops but also markets the above mentioned self-medication brands mostly for OTC sale in more than as many as 130 countries. The three categories it has been concentrating, they together account for around 50 percent of the OTC market. Core brands which are already mentioned make up for around 70 per cent of BHI’s total sales.
Main competitors of Boots are the following:
- Reckitt & Benckiser
- Smith & Nephew
- Marks and Spencer
In the three core product areas of Boots Healthcare, those are, Analgesics (e.g. Nurofen), Cough/cold (e.g. Strepsils) and Skincare (e.g. Clearasil), it is a market leader.
|Year ended||Revenue (£m)||Profit before tax (£m)||Net profit (£m)||Basic eps (p)|
For having a good share in the over the counter drug market it is very essential for a company to do new product development. Boots Healthcare International did exactly that and subsequently held to its market leader place by launching 60 new products and line extensions in the last year. They successfully re-introduced very famous Strepsils for cough and cold but in a sugar free version. The basic product categories of Boots Healthcare International are as follow:
- The number of items dispensed crosses 85 million per year.
- Number of pharmacist employees is more than 4,000.
- 25 percent of all nursing and residential homes in USA are supplied by the medicine of this company.
- In the market of for vitamins minerals and supplements Boots Healthcare International is the leader.
- 25% of all the OTC medicines sold in the market are supplied by Boots Healthcare International.Beauty
- In the market of cosmetics, fragrances, dental and hair care Boots Healthcare International is the market leader.
- The most famous products of BHI in this segment are Nurofen and Strepsils.
- Skincare products manufactured by Boots Healthcare International are E45, Lutsine, Onagrine, Balneum and Clearasil.
- Other BHI leading brands include Optrex and Sweetex.
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2. Additional Information
Problem with Quality Control in Boots Healthcare International
One of the predominant problems of all the drug manufacturing and healthcare company of the developed countries are the different control policies for them which are governed by the Government of the country. The quality of the new drugs which a company is bringing to the market, apart from the efficacy and safety, is subject to the approval by the governing body for the drug manufacturers. These overtly stringent rules and regulations have always been a cause of problem for the drug manufacturing companies. Boots Healthcare International is also suffering from this problem of total quality control. Not only the manufactured drugs but also the different drug manufacturing facilities the company owns in different countries possess a great threat for it. Since BHI has its manufacturing facilities across several countries, they need to comply with different sets of rules and regulation laid down by the different governing bodies of different countries. This not only adds to the cost of the production for the company, but also causes a huge amount of distress when integrating the production units of the company. Specially a company like BHI which specialises in the sector of over the counter medicines, the drugs developed by the company have to pass through a more rigorous testing.
Quality control in the field of medicine tries to standardize the process of drug manufacturing all over the world. This is quite hard for the companies like BHI to achieve since their geographically dispersed production units. But BHI needs to ensure constant reproducible characteristics of drugs throughout its global existence which will make sure that pharmacodynamic effect for all the drug users are samein the whole universe.
Total quality management in the field of healthcare also has great involvement in the research and development of new drugs. The rules and regulations stated elaborate, define and refine the quality specifications and appropriate testing methods for new drug development. These stringent policies have, in past, failed many new drugs developed by the research and development team of Boots Healthcare International.
There was a research done which published the fact that the analgesic ibuprofen based Nurofen manufactured and marketed by Boots Healthcare International and used by worldwide patients, can enhance the chance of breast cancer amongst the women consumers of the drug. Due to this problem Boots had to miss the global pharmaceutical giant GlaxoSmithKine’s offer for merger.
Problem with Project Planning in Boots Healthcare International
It has been seen hat though the business domain of Boots Healthcare International is providing care and wellness treatment for the patients and common people, but the managers have failed to identify different projects going within the company and therefore not giving enough importance to this field which have caused some setback for the company in long term. These days a health care company despite its field of work, be it serving emergencies or chronic diseases has to implement the state of the art supply chain initiatives to provide their customer with a better and varied point of contacts. Due to the immense improvement in the field of information and other technologies, the quality standards those are expected by the patients in any developed country calls for better quality and that too at a at a cheap cost. The most important aspect is the speediness of delivery. Thus, a project where an efficient supply chain management can be successfully implemented is needed for Boots Healthcare International. They haven’t been able to achieve this goal due to their faulty project planning.
For Boots Healthcare it is very important to reduce their global operation costs. This they can achieve with the help of project planning and management techniques. This will help them in cutting the costs of providing world class drugs and healthcare and.
They have not been able to design a project which will be able to deliver the correct kind of patient care in their healthcare facilities at a proper time which will cost the customer something within an affordable limit. The main failure of the company is that they haven’t been able to implement a project planning team which will be able to understand and influence the problems which very frequently occur in different healthcare facilities.
The process of project planning and control in healthcare industry and for Boots Healthcare International involves the aspects which are same across different types of industries. These are marketing, accounts and finance, communications, human resources management, risk management, and having a bird’s eye view of project scope. The managers of BHI must show some concern to these factors and must also be wary of the quality of care and patient outcomes in their healthcare facilities. Different systems of credentialing and continuing education of professional staff such as doctors, nurses, research and development teams and lab technicians and technologies have to be updated in due course of time which will enable the company to offer better kind of products and services to its ever evolving customer base.
Problem with Organizational Culture in Boots Healthcare International
It can be said the basic problem with Boots Healthcare International which have already been discussed can’t be done away without redefining its organizational culture where scopes are there to make it more efficient. Fisher & Alford have opined that despite the size, industry or age of the organization, the culture prevalent in the organizational influences many of the decisions and changes which in turn have positive or negative effect on the performance of the organization. These performances include financial accounting, customer and employee satisfaction, and innovation. Boots have not been able to compete with its close rivals in exactly these points.
A big healthcare organization like BHI has got an organization culture which is by definition multicultural. The leaders of such companies need to work with several teams and departments which do not belong to same kind of culture or language. Hence they need to concentrate on the short term and long term goals of the company and act according to those without getting influenced by this multicultural environment.
It has been identified that the organization culture of Boots Healthcare International is such that the company can be characterized by the three self-perpetuating elements of culture that run counter to quality given by Reason in 2001. These are:
- Blaming frontline individuals,
- Denying the existence of systemic error-provoking weakness and
- Blindly pursuing productivity and financial indicators.
This needs to change from the point of view of BHI as soon as possible.
Problem with Change Management in Boots Healthcare International
From the beginning of 90s decade Boots have tried to change the line of its business by diversifying the company in many related and unrelated fields. An example of this is chief executive officer James Blyth’s decision in late 80s – early 90s to diversify Boots into several other businesses of retailing which did not pay off adequately and the company had to face some losses. During the year of 1990 the Payless chain of BHI was merged with the Do It All chain which was a result of joint venture with famous W.H. Smith. But in a turn of events, the then sector of United Kingdom housing went into a depression which lasted for five long years. This caused some serious cuts in DIY sales, which made both Do It All and FADS loss makers for the companies.
The management philosophy of Boots which was to acquire other unrelated companies for changing the nature and shape of the organization also caused some headache for the company during early 1990s. This was caused by the pressure the company had to face due to high debt it incurred for acquiring Ward White.
For remaining competitive in the future given the pressures on the industry sector, Boots Healthcare International needs to take some steps towards rectifying its past mistakes and heralding new changes within the organization.
Among many other options, the company may choose to remain competitive with the help of Information Technology. Health care has perpetually found its place among the top three concerns of the global policymakers. The basic reasons for these concerns are high costs for healthcare, faulty medical coverage which tends to be gap-ridden and unsystematic quality.
But with the change of the healthcare industry which will start the trend of emphasizing on managed care and implementation of a delivery system which is integrated, a new innovation will be highly valued in the healthcare industry as well as different companies like Boots Healthcare International. The innovation which is so required should be done in the field of administrative systems, clinical information systems, and other strategic information systems which can be instrumental in improving the delivered quality of health care to the patients as well as the cutting down of costs for them.
For effectively starting successful business changes with the help of information technology, the companies in the business of medicine and healthcare, especially BHI have to stop only investing in technology which they think will better the performance of the traditional functions of the business. What they actually need to do is to ensure that the implemented technology works to bring in meaningful changes in organizational functions and processes which may provide them with long term competitive advantage in the face of increased pressure from competition.
The leaders in BHI have to manage their project in such a way so that information technology can help the researchers and physicians to come out with correct solution at the right time in the proper circumstances. The think tank of Boots Healthcare International needs to understand that the next big thing in the field of healthcare is not about medicine. They need to identify that use of customer data and information technology to cater to different needs of customers and make their services patient-centric, safe and efficient will be adding to the competitive advantage of the company in next decades.
They have to come up with different kind of offerings for their customers. A company like BHI which is into manufacturing and marketing of medicines have to make provisions so that they can offer health care plans. The product offering of the company has to be altered in such a way so that more importance is given to prevention than post symptom treatments. BHI has to concentrate on the fact of supply chain and sufficient supply of their flagship products to their loyal consumers for meeting the ever growing demand of the industry.
The most important thing that needs to be achieved by BHI is more prompt real-time responsiveness from the company to changing disease pattern of the world population as well as from their in house staffs of medical facilities. They need to cut down the time needed for diagnosis and get into treatment of the patient as soon as possible. This will help in improving the quality of care. These measures will not only add to the competitive advantage of Boots Healthcare Industry but also keep the company ahead of its competitors for a longer period of time.
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