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Transcription of this question: 5.At their last meeting, the board Of directors Of N-Pharma decided that expansion outside Japanis essential. The Japanese pharmaceutical market has decreased over the last year The recessionis affecting incomes and spending patterns. Consequently drug prices in Japan are falling.The directors are divided about the expansion. Some support market development in Europe(Option 1) and others prefer market penetration within China (Option 2).The financial director and the director Of corporate and social responsibility (CSR) favour marketdevelopment in Europe through the acquisition Of several small pharmaceutical companies(Option I(b)), despite the European Union (EU) Commission having strict legislation ontakeovers and mergers. They believe that strict quality controls in Europe will enable N-Pharmato establish brand loyalty. Competition from cheaper substitute drugs is Of a lesser problem in theEuropean market. The greater availability Of well-qualified staff and the well-establisheddistribution channels will reduce the time for product development by two years compared to anequivalent operation in an emerging market. The director Of CSR argues passionately that locatingN-Pharma in the European market will also ensure that N-Pharma’s products are manufacturedand distributed to the highest ethical standards.The marketing manager supports the expansion in Beijing, China (Option 2). He reports highforecasted growth in emerging countries (Item I). He said: “we’ve got to be in these markets,it’s a great opportunity”. He backs up his view with reference to reports by the businessconsultancy firms McKinsey & Company (Item l) and IMS (Item 2). McKinsey & Company estimatesthat the value Of the Chinese pharmaceutical market will grow from IJSS15 billion in 2010 toUSS35 billion in 2015. The marketing manager argues that the growth in sales Of generic drugswill continue as the recession develops (Items 2 and 3) and that competition will require N-Pharmato significantly reduce its costs.Either expansion option will require some senior and middle managers to relocate to Europeor China. The human resources manager knows that some employees have mixed feelings aboutrelocating and may resist a move.(This question continues on the following page)(Question 5 continued)(a)(b)(c)(d)Identify two secondary sources Of market research that the marketing managercould use to understand the Chinese pharmaceutical market.With reference to Lewin’s force field analysis model, explain why ‘ ‘someemployees have mixed feelings about relocating and may resist a move”while others may be keen to relocate.Analyse the European market and the Chinese market using a PEST analysisframe work.Applying your PEST analysis and using information contained in the case studyand Items 1 to 4, recommend to the board Of directors whether N-Pharmashould develop the market within Europe through the acquisition Of severalsmall pharmaceutical companies (Option 1 (b)), or penetrate the market withinChina (Option 2).[2 marks][7 marks][9 marks][12 marks]

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