Diagnosing growing pains at a pharma-cosmetics company more than 10 years old

Context

A manufacturer and distributor of cosmeceuticals and dietary supplements, operating for more than 10 years with revenue of 500 to 700 billion dong a year. It grew steadily, but only in single digits, mainly because it invested little in research and technology.

Its core business led the market about ten years ago thanks to a proprietary technology. Around five years ago that business began to slow, and recently it has been losing share as competitors arrived with newer technology and lower prices. The company had not yet found a new business to take its place.

At the same time, it invested in a large factory for OEM supplement manufacturing before demand was clear. Tighter rules on registering and advertising supplements, along with weak spending after Covid-19, put pressure on cash flow.

What Weraki found

Strategy, business model and business plan

A three-to-five-year direction and new strategic pillars existed, but the business plan had not been broken down and tracked by department and business unit.

Capability and culture

The organization ran on a delegation model and lacked alignment on direction and thinking. There was no core capability framework to find gaps and plan talent development. The culture had no clear identity.

Processes, policies and decision rights

Decision rights were concentrated in the executive team rather than delegated to functions. Key supply-chain processes such as integrated business planning (IBP), demand planning and supply planning were missing. Quality control of work and risk management were unclear.

Reporting and measurement

Reporting was fragmented and missing at several levels. There was no agreed protocol for who reports to whom and how often. Information was inconsistent.

Read through the three areas of growing pains

1. StrategyThe company invested in manufacturing, the lowest value-added step in the chain, while its business model and growth direction were still uncertain. The core business had run its course with nothing ready to follow it.
2. OperationsWithout end-to-end supply-chain processes, coordination between teams fell on managers.
3. Management and cultureAlmost every decision had to go through senior leadership; the culture still worked like a family business.

The company’s name is withheld. Weraki presented this case at its workshop “Growing pains in startups and SMEs”, the BNI 15th Anniversary Summit, 9 March 2024.