Market Entry Of Chemist Warehouse Australia Essay

Question:

Elucidate on the market entry of Chemist Warehouse Australia within France and Singapore.

Answer:

Introduction

The Australian company, Chemist Warehouse is instrumental in the operation of a chain of retail pharmacies. It is the largest pharmacy retailer that has more than 8000 employees. The company is known for offering discounts in relation to pharmaceutical goods. It is also called “the McDonald of pharmacy” and it has a complex franchise structure that can circumvent the regulations of Australia. It limits the number of pharmacies that can operate within any particular area. The structure of the company allows it to control around 300 pharmacies within Australia that makes up around 20 % of market share. Business model that is made use of by the Chemist Warehouse involves minimal equity investment by that of the individual pharmacists complying to the trading terms (Paola 2016). The individual pharmacists who are working under that of Chemist Warehouse umbrella reap the benefit from that of bulk purchasing power. The individual pharmacists can thus take the advantage of being associated with Chemist Warehouse (Chemistwarehouse.com.au, 2017).

The company earns an average revenue of around $2.3 billion in a year. According to the Inside Retail Magazine, its position is number 16 among the 50 powerful retailer (Haggan 2015). It was founded in the year 2000 by Mr Gance along with that of his notorious secretive family. This reputed brand chain is mainly known for its special bright fluoro discount tag. The company also boasts of many chemist along with My Beauty Spot Store. Around two million Australians walk into the shop in each week thus helping in making its owners- Gances along with their partners extremely rich. They started the business without having the need of raising outside capital. It initially started with that of single store and has completely transformed the retail landscape of the nation. The Australian public are drawn to the brand for its discounted healthcare products. Pharmacy Guild have criticised their discount behemoth and stated that it threatens the healthcare standard along with employment condition within industry (Thai, Vitry and Moss 2014).

Macro-environmental and Geopolitical force

Macro-environmental and geopolitical force of France

According to the Code of Public Health, a medicinal product can be sold within France if it is registered and authorised for sale. They should have the marketing authorisation (MA) and medicines that are authorised in a different EU jurisdiction should have an import licence with the help of which it can be imported within France. The unauthorised medicinal products can be distributed with the help of a compassionate use programme. The medicinal product should obtain “temporary use authorisation” from that of National Security Agency of Medicines (Hayes 2016). There are exceptions in relation to authorisation requirement that is produced at a pharmacy and which was intended for a particular patient. Bertrand Law provides authorisation to the French Drug Agency to enforce new indication to that of a product that is already authorised. This happens when the new indication is already in use outside that of the official scope of indication. This is known as recommendation temporaire d’ utilisation. A temporary use authorisation helps in allowing early access to that of new promising drug or to that of old drugs that are not covered by that of marketing authorisation in France (Morse 2015). This occurs when there is an unmet need.

Political

Economic

The government is greatly centralized and has tight administrative control

It has heavy industries that can manufacture machinery and electronics and chains of supermarkets throughout out the world

Social

Technology

Income along with class disparity exists and the youth fall prey to the criminal activities

Health is a sector in which France is deploying its research budget


The government of France being greatly centralized does not encourage the market entry of other business. It acts as a barrier in relation to free trade. France is making use of the research budget in the sector of health so that it can develop the particular sector.

Macro-environmental and geopolitical force of Singapore

Singapore has undergone economic growth and the growth is on account of private consumption expenditure along with that of investments. The Singaporean economy is known for having an economy that is vibrant and based on free market policy. There is the prevalence of an environment that is corruption-free that greatly supports the sector of business (Gopinath, Helpman and Rogoff 2014). The legal along with financial framework bodes well for the market entry of new business. The government has provided a lot of investment in relation to diversifying the economy. On account of this kind of policy, the pharmaceutical along with other industries have greatly flourished. The geographical position of Singapore that is strategically very convenient facilitates trade and market entry.

Political

Economic

It is a democratic country and there is chance of lowest amount of political risk

It has a vibrant free market economy and has corruption free environment

Social

Technological

The people residing is hard working that has led to the prosperity of the place.

Internet has played a key role in the advancement of Singapore.

The vibrant free market policy of Singapore greatly facilitates the pursuing of trade with that of other countries. People working in Singapore are really hard working that has caused the place to prosper.

Trade and Business Policy

Trade and business policy of France

The member states of European Union (EU) have created a system of Community Integrated Traffic in which case duties are applied to that of imports from those countries that are non-EU. The Uruguay Round has implemented a single market program. It lays emphasis on the strengthening of the European market rather than that of creating new policy direction (Matsushita et al. 2015). The duty that is levied on imports from that of non-EU countries is of a moderate amount. The manufactured goods are burdened with a tax rate between that of 5 and 17 percent. The tariff schedule of the European Union is on the basis of Customs Cooperation Council Nomenclature also named as the harmonized system. This system was brought into practice in order to solve the purpose of providing standard tariff classification (Matusz and Tarr 2017).

Case duties are applied to the imports of other countries that are non-EU. The single market program of the place will hinder the entry of Chemist Warehouse Australia. Customs Cooperation Council Nomenclature helped in providing standard tariff classification.

Trade and business policy of Singapore

The policy of the government lays emphasis on economic restructuring from that of labour intensive growth to that of productivity. An incentive structure is encouraged that encourages skill-enhancing investment within the parameter of workforce. Openness in relation to trade along with investment is the main hallmark of the trade policy of Singapore (Rugman and Verbeke 2017). The goods and services trade becomes almost four times to that of the size of annual GDP. The trade of Singapore is corroborated by network of 21 regional along with bilateral trade agreement. Merchandise trade and preferential trading partner account for 80 % of the import of Singapore.


Skill enhancing investment in Singapore would prove to be a benefit for Chemist Warehouse Australia. Open relations in trade would greatly benefit a foreign country for carrying out trade. There is bilateral trade agreement that would greatly help Chemist Warehouse Australia.

Dangers and opportunities

Dangers and Opportunities of France

Dangers

Companies should be able to adapt themselves quickly so that they can successfully manage the unfavourable economic environment. The global companies that are doing business in France have to face the legal and administrative challenges that add a level of complexity. They also have to incur additional expense. The tax system of France is very generous owing to the research tax credit of France. France swept past all the European counterparts in order to become the leading country in relation to fast growing technology. There was an increase of around more than 230,000 active enterprises in the year 2014 that accounted for a 7.2 % rise (Matusz and Tarr 2017). It was the largest increase within that of the European Union and the manufacturing sector saw net enterprise creation of around 9.9 %. In the year 2015, France went ahead of other European cities in order to raise seed capital. France was second within the European venture capital by the amount of transaction numbers.

Opportunities

One of the strength of France lies on account of low business cost that it provides for the foreign companies. According to a Competitive Alternatives Survey that was conducted in the year 2016 the operating cost of business was 9.5 % lower in France as compared to United States. France has been struggling with economic crisis however the GDP growth recovered by around 1.3 % in the year 2015 that was driven by public consumption (Rugman and Verbeke 2017). The social climate in France is restless on account of labour law. Structural reforms can help the country to deal with the challenges. Reduction in relation to budget deficit and improving the productivity can help in the arena of promotion of industrial development. Financial crisis has given rise to unemployment along with that of economic uncertainty (Leih and Teece 2014).

Dangers and Opportunities of Singapore

Dangers

The open economy of Singapore makes it susceptible to that of external shock. Singapore faces regional along with global competition. The risks are posed by the fact that constraints are imposed on labour and credit will spoil growth (Blackburne and Buckley 2017).

Opportunities

Singapore has always acted as an advocate of multilateral trading system and it acts as a promoter of trade liberalization within the World Trade Organization. Singapore was among the first WTO member who deposited the instrument of acceptance to that of Trade Facilitation Agreement. Singapore operates the Trade Facilitation along with Integrated Risk-based system. Almost most of the products enter duty-free under that of applied MFN tariff regime. 70 % of the tariffs of Singapore are covered by that of are covered by that of tariff buildings that has a simple average bound rate of around 6.9 % (Gereffi and Sturgeon 2013). The transparency of the trade regime of Singapore is enhanced by that of regular notifications to the WTO committees. The export controls are put into force mainly in relation to health and safety. The export taxes are not applied by Singapore.

The performance of economy in Singapore is often seen as barometer in relation to world trade.

Conclusion

The economic success of Singapore is on account of open policy of trade. Singapore will be a favourable country for the market entry of Chemist Warehouse Australia. The openness of Singapore in relation to international trade is on account of measures undertaken.

  • Chemist Warehouse Australia can enter the market of Singapore very conveniently and the liberal financial framework will bode well for the business.
  • The economy of Singapore is vibrant and its free market policy will be advantageous for the entry of a business.
  • The corruption free environment prevailing in Singapore supports business greatly.
  • The very convenient geographical position of Singapore will prove to be favourable for market entry.
  • The trade regime is transparent that has been augmented by regular notifications of WTO committees.
  • Singapore has pursued trade liberalization on the regional level. The government policy of Singapore is supportive and it helps in regulation of economic activities that can prove to be promising for the entry of Chemist Warehouse Australia.

The companies that will do business in France have to encounter legal challenges that add an additional burden of complexity. The foreign accompanies also have to face additional expense in order to enter the market. The single market program of France is not conducive for business and acts as a barrier in case of market entry. The economic policy of France lays more stress on strengthening of market as compared to that of new policy direction. The goods that are produced have to face a tax rate between 5 and 17 %. France is facing consequences for the economic crisis that is not advantageous for the market entry. Social climate prevailing in France is very restless due to labour law (Thai, Vitry and Moss 2014). The company needs to undergo a lot of structural reforms that can facilitate trade and pave the path for a growing economy. Reducing the budget deficit can help in bringing about industrial development. The productivity should be improved so that it facilitates the running of a business. The financial crisis should be properly dealt with so that it emerge to become a country that supports business (Hayes 2016).


The research ecosystem of Singapore has enabled the companies in the arena of accessing multidisciplinary capabilities within a single location. A large number of leading biomedical science company have made use of Singapore as their key home base in order to drive innovation. The pharmaceutical industry of Singapore has flourished to a great extent and this can prove to be a positive factor for the market entry of Chemist Warehouse Australia. Singapore is the leading logistics hub and the fastest growing bio-cluster within Asia that makes conditions favourable for the entry of a business (Gopinath, Helpman and Rogoff 2014).

Singapore has strategic partnership with many research institutes and corporate labs that has helped in strengthening the pharmaceutical sector. The corporate hubs can help in developing new medicines and develop future therapy that has greatly strengthened the sector. Singapore lays great emphasis in developing a research ecosystem that is vibrant and the strong scientific foundation greatly helps in strengthening the pharmaceutical business. Singapore is mainly known for its clinical research facility within Asia and different initiatives like training of personnel have greatly helped the business to earn profit and grow (Leih and Teece 2014). Contract Research Organisations have established operations within Singapore in order to provide valuable support to the outsourcing needs of the firms. They provide different kinds of service and helps in validation of services in order to support the client. The clinical excellence of Singapore makes it hugely sought after and it is a potential market for business. The contract research organisations offer different kinds of services that help in the growth of the clinical business.

References:

Blackburne, G.D. and Buckley, P.J., 2017. The international business incubator as a foreign market entry mode. Long Range Planning.

Chemistwarehouse.com.au. (2017). Australia's Cheapest Online Pharmacy. [online] Available at: [Accessed 21 Dec. 2017].

Gereffi, G. and Sturgeon, T., 2013. Global value chain-oriented industrial policy: the role of emerging economies. Global value chains in a changing world.

Gopinath, G., Helpman, E. and Rogoff, K. eds., 2014. Handbook of international economics (Vol. 4). Elsevier.

Haggan, M., 2015. Mario Tascone-Chemist Warehouse: Success is all about relevance... AJP: The Australian Journal of Pharmacy, 96(1143), p.22.

Hayes, J.P., 2016. Making trade policy in the European Community. Springer.

Leih, S. and Teece, D., 2014. Market Entry Strategies.

Matsushita, M., Schoenbaum, T.J., Mavroidis, P.C. and Hahn, M., 2015. The World Trade Organization: law, practice, and policy. Oxford University Press.

Matusz, S.J. and Tarr, D.G., 2017. Adjusting to trade policy reform. In Trade Policies for Development and Transition (pp. 77-114).

Matusz, S.J. and Tarr, D.G., 2017. Adjusting to trade policy reform. In Trade Policies for Development and Transition (pp. 77-114).

Morse, E., 2015. Foreign policy and interdependence in Gaullist France. Princeton University Press.

Paola, S., 2016. CWH and guild go head to head. PS Post Script, (Nov 2016), p.3.

Rugman, A.M. and Verbeke, A., 2017. Global corporate strategy and trade policy (Vol. 12). Routledge.

Rugman, A.M. and Verbeke, A., 2017. Global corporate strategy and trade policy (Vol. 12). Routledge.

Thai, L.P., Vitry, A.I. and Moss, J.R., 2014. Discounting of medicines in Australian community pharmacies. Australian Health Review, 38(5), pp.517-522.

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