GROUPS AND ORGANISATIONS AFFECTING THE PROFIT ABILITY OF RET AIL PHARMACIES

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CHAPTER 2 THE DEVELOPMENT OF A STRATEGIC MANAGEMENT MODEL FOR RET AIL PHARMACIES

INTRODUCTION

The purpose of this chapter is to develop a strategic management model – based on the literature on strategic management – for retail pharmacies. The first step is therefore to review strategic management models. Numerous strategic management models are described in the literature, but it was decided to study three particular models, namely those of Byars ( 1987: 16), Harvey ( 1988: 19) and Pearce and Robinson (1991: 12). These models were selected for the following reasons:
I. The models are representative of general thinking on strategic management.
2. The steps involved in each of the models are set out logically and emphasise planning, implementation and control.
3. The models provide an exposition of the relationship between the principal components of the strategic management process.
The reasons for studying these strategic management models are:
1. to put the discussion on external, uncontrollable variables in chapter 3 into perspective
2. to serve as a basis for the functional strategies which will be discussed in chapter 4
3. to illustrate the value of a strategic management approach for a retail pharmacist who has to manage in a dynamic and competitive environment

AN OVERVIEW OF STRATEGIC MANAGEMENT MODELS

Each of the strategic management models will be discussed in terms of their main components. The models are discussed in alphabetical order of the proponents’ surnames, starting with Byars’ model.

Byars’ strategic management model

The strategic management model of Byars (1987: 16) is presented in figure 2.1. According to Byars (1987: 16) the word strategy comes from the Greek word « strategos », which means « a general ». Originally, strategy literally meant the art and science of directing military forces. Today, the term is used in business to describe the process implemented by an organisation to achieve its objectives and mission. The main components of the strategic management process described by Byars are strategic planning and strategy implementation. Strategic planning involves:
– establishing an organisational philosophy
– defining the organisation’s mission
– an objective-setting process
– strategy selection
Strategy implementation involves:
– matching strategy and organisational structure
– the use of functional strategies, budgeting, leadership and motivation
– the use of strategic control systems
Aspects of strategic planning will be considered first.

Establishing an organisational philosophy

An organisational philosophy establishes the values and beliefs of the organisation, and guidelines for the manner in which it is going to conduct its business. It establishes the relationship between the organisation and its stakeholders. I Exam pies of organisational philosophy are the following:
a respect for people as individuals
– a belief in being the best
– a belief in superior quality and service
– a belief in informality to enhance communication
If an organisation’s philosophy is to have any meaning it must be adhered to in all situations. The organisational philosophy is a valuable guideline for the management of any organisation during decision making in crisis situations. It is either confirmed and strengthened by the day-to-day decisions and actions of management or becomes meaningless words on paper (Byars, 1987: 11).

CHAPTER 1 INTRODUCTION
1.1 BACKGROUND
1.2 OBJECTIVE, RESEARCH HYPOTHESES AND GOALS OF THE STUDY
1.2.1 Objective of the study
1.2.2 Research hypotheses
1.2.3 Goals of the study
1.3 IMPORTANCE OF THE RESEARCH
1.4 RESEARCH METHOD
1.5 LIMITATIONS OF THE STUDY
1.5.1 The literature study
1.5.2 The questionnaire
1.5.3 The analysis of the data
1.6 OUTLINE OF THE STUDY
CHAPTER 2 THE DEVELOPMENT OF A STRATEGIC MANAGEMENT MODEL FOR RET AIL PHARMACIES
2.1 INTRODUCTION
2.2 AN OVERVIEW OF STRATEGIC MANAGEMENT MODELS
2.2.1 Byars’ strategic management model
2.2.2 Harvey’s strategic management model
2.2.3 Pearce and Robinson’s strategic management model
2.2.4 A strategic management model for South African retail pharmacies
2.3 SUMMARY
CHAPTER 3 GROUPS AND ORGANISATIONS AFFECTING THE PROFIT ABILITY OF RET AIL PHARMACIES
3.1 INTRODUCTION
3.2 A BACKGROUND DISCUSSION OF THE PHARMACEUTICAL INDUSTRY
3.3 GROUPS THAT ARE MEMaERS OF THE DISTRIBUTION CHANNEL FOR PHARMACEUTICAL PRODUCTS
3.3.1 Pharmaceutical manufacturers
3.3.2 Pharmaceutical wholesalers
3.3.3 Doctors
3.3.4 Competing retail pharmacies
3.3.5 Medical treatment provided by the State
3.3.6 The consumer
3.4 GROUPS THAT ARE NOT MEMBERS OF THE DISTRIBUTION CHANNEL FOR PHARMACEUTICALS
3.4.1 Medical schemes
3.4.2 Clearing houses
3.5 SUMMARY
CHAPTER 4 THE INFLUENCE OF FUNCTIONAL MANAGEMENT STRATEGIES ON THE PROFITABILITY OF RETAIL PHARMACIES
4.1 INTRODUCTION
4.2 THE GENERAL MANAGEMENT FUNCTION
4.2.1 Concise overview of the general management function
4.2.2 Global strategy as part of the general management function
4.2.3 Research on general management aspects of South African retail pharmacies
4.2.4 Implications for the profitable management of retail pharmacies
4.3 FUNCTIONAL STRATEGIES
4.3.1 The marketing function
4.3.2 The personnel function
4.3.3 The purchasing function
4.3.4 The financial management function
4.4 APPROACHES TO THE EVALUATION OF MANAGEMENT
STRATEGY
4.4.1 Budgets
4.4.2 Time-related control methods
4.4.3 Management by objectives (MBO)
4.4.4 Audits
4.5 SUMMARY
CHAPTER 5 EVALUATING THE FUNCTIONAL STRATEGIES OF RET AIL PHARMACIES
5.1 INTRODUCTION
5.2 CRITERIA FOR THE EVALUATION OF FUNCTIONAL
MANAGEMENT STRATEGIES
5.2.1 The general management function audit
5.2.2 The marketing function audit
5.2.3 The purchasing function audit
5.2.4 The personnel function audit
5.2.5 The financial management function audit
5.3 SUMMARY
CHAPTER 6 RESEARCH METHODOLOGY
6.1 INTRODUCTION
6.2 SOURCES OF DATA
6.2.1 The collection of primary data
6.3 THE POPULATION AND SAMPLE SIZE
6.3.1 The population
6.3.2 The sam pie size
6.4 DISTRIBUTION OF THE QUESTIONNAIRE
6.4.1 Notification concerning the forthcoming questionnaire
6.4.2 Distribution of the questionnaire
6.5 THE RESPONSE
6.6 PROCESSING OF THE DATA
6.7 ANALYSIS OF THE DATA
6. 7.1 Data analysis techniques
6.7.2 The use of multiple regression analysis in this study
6.8 SUMMARY
CHAPTER 7 STATISTICAL ANALYSIS AND DISCUSSION OF
THERESULTS
7.1 INTRODUCTION
7.2 FEATURES OF THE RESPONDENTS
7 .2.1 Features of the respondents’ pharmacies
7.2.2 Demographic features of the pharmacists
7.3 RESULTS OF THE EXPLORATORY MODELS
7.3.1 Exploratory model for general management
7.3.2 Exploratory model for the marketing function
7.3.3 Exploratory model for the personnel function
7.3.4 Exploratory model for the purchasing function
7.3.5 Exploratory model for the financial function
7.4 RESULTS OF THE COMPREHENSIVE MULTIPLE REGRESSION ANALYSIS MODELS
7.4.1 Regression model for gross profit margin
7.4.2 Regression model for gross profit per square metre
7.4.3 Regression model for net profit margin
7.4.4 Regression model for return on assets (ROA)
7.5 SUMMARY
7.5.1 Findings concerning gross profit margin
7.5.2 Findings concerning gross profit per square metre
7.5.3 Findings concerning net profit margin
7.5.4 Findings concerning return on assets (ROA)
CHAPTER 8 FINDINGS AND RECOMMENDATIONS OF THE STUDY
8.1 INTRODUCTION
8.2 AN EVALUATION OF THE RESEARCH FINDINGS
8.2.1 Findings concerning the first research hypothesis
8.2.2 Findings concerning the second research hypothesis
8.3 RECOMMENDATIONS
8.3.1 A strategic management approach
8.3.2 Marketing management
8.3.3 Purchasing management
8.3.4 Personnel management
8.3.5 Financial management
8.4 SYNTHESIS
8.5 FURTHER RESEARCH
8.6 CONCLUSION
BIBLIOGRAPHY