Geneva Pharmaceuticals Case Analysis

Geneva Pharmaceuticals Case Analysis - Section A Group 2...

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Section A, Group 2 October 21, 2008 Geneva Pharmaceuticals Case Analysis 1. At the time of the case, Geneva Pharmaceuticals faced a number of challenges. First, high profitability was hard to achieve in the generic drug industry. This industry is very fragmented and highly competitive; in 1996, Geneva was rated the second largest player in the industry but 2 years later it had dropped down to number 5. Generic products from different manufacturers were seen as identical substitutes, making them interchangeable. Buyers typically focused on getting the cheapest products. In addition, the margins on these products were low, which created pressure on Geneva to constantly reduce costs. The second challenge the company faced was matching its production schedules to consumer demand. Customers often focused on speculative buying which made it hard for Geneva to produce the right type and amount of drugs. The last challenge I want to mention is the company’s information systems. The IS consisted of different software programs for different critical processes. These included procurement, accounting, and sales. Each of their business unit’s applications was incompatible across other business units. This made the sharing of information very difficult; the same data had to be entered multiple times in different systems. Numerous entries caused a higher number of data entry errors, greater data inconsistency, and higher costs of error processing. The supply side processes were also very manual and labor intensive. Their current system, MacPac, did not fully support a formal DRP or MRP process which decreased efficiency. On the demand side, their current systems were unable to accommodate changes in the areas of customer sales and service. Geneva’s current systems were also unable to integrate the demand and the supply side which limited processes. A company that was in an industry with low margins could not afford to make these types of costly mistakes because they lowered its overall profitability. 2.
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This note was uploaded on 02/23/2012 for the course MGT 101 taught by Professor Staff during the Fall '10 term at Texas State.

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Geneva Pharmaceuticals Case Analysis - Section A Group 2...

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