Essay paper on Game Theory

Nowadays, many pharmaceutical companies tend to expand their traditional markets. This trend is particularly strong among companies operating in developed countries. In terms of this paper, a pharmaceutical company entering the market of a developing country will be discussed. Notably, the paper is focused on the ways of distribution of the products of the company in the new market. In fact, the problem is that the company is totally new in the market and does not have its own network.

Obviously, this problem is very important nowadays since the number of companies starting their operations in new markets worldwide grows constantly and it is very important to choose efficient strategies of distribution of their products. Actually, the question of distribution is to a significant extent the question of survival and competitiveness of the company in the new market.

Basically, there are several possible strategies that could be applied in the situation discussed. First of all, the company could cooperate with some local pharmaceutical company which has already got a nationwide network.

Secondly, it is possible to start building up its own network of pharmacies where the new products could be sold.

Also, it is possible to start retail sales in some a large city and use local companies as distributors of the products supplied in this country.

Naturally, each of the strategies suggested above has its advantages and disadvantages. In order to properly evaluate and choose the most efficient one it is necessary to briefly discuss each of them. The main advantage of the first strategy is the possibility to rapidly distribute the products of the pharmaceutical company in the national market using the widely spread network of the local company. On the one hand, it will provide the opportunity to gain certain share of the pharmaceutical market. On the other hand, the company will be extremely dependent on its local partner. Moreover, regardless immediate profits the company can receive from sales through the local network, it will be unable to distribute its products independently in the future. Anyway, the company will have to share the revenues with its local partner.

As for the second strategy, it seems to be more attractive in terms of the higher degree of the independence of distribution. In fact, the perspective to distribute products in the company’s network is the main advantage but it also has a number of very serious drawbacks. Firstly, the realization of this strategy needs additional investments and time. Secondly, it is necessary to employ well qualified personnel. Thirdly, there are no guarantees that the company will succeed in the local market and, thus, the failure in the local market will be extremely harmful for the company’s financial position if substantial investments in the development of the network in the new market are made.

Finally, the last strategy is actually a kind of compromise between the two strategies mentioned above. In fact the start of the retail sales from is store in a large city seems to be quite efficient solution of the problem. On the one hand, the company will use local distributors as its main customers and they will spread its products throughout the country, while the company will have an opportunity to gradually develop its own network starting from larger cities and spreading its branches nationwide. In such a situation, the company can easily define whether its products are competitive in the local market, whether there is sufficient demand and what products are particularly popular in the local market. Consequently, starting with retail sales the company can gradually get acquainted with the local market, research it thoroughly and develop the most efficient strategies on the basis of the existing realities and real opportunities the company has in the market. Moreover, at the beginning the company may employ the experienced personnel that may be sent to the developing country from its own trained staff. In the course of time, it is possible to employ the local personnel and provide special training for them. In a long-term perspective it is possible to train the local personnel within the local branches of the company which will spread nationwide.

Thus, taking into consideration all above mentioned, it is possible to conclude that the distribution of products of a pharmaceutical company in the new market of a developing country is quite problematic but extremely important.

This is why it is possible to recommend starting with retail sales gradually developing the company’s own network nationwide on the basis of profound knowledge of the local market.

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