Cabunoc, Kuh Ivy Mae N.

Bus-102

Case 1: Generoso Pharmaceuticals & Chemicals, Inc.

I. The Facts of the Case

David Generoso established a company called Generoso Pharmaceuticals & Chemicals, Inc.
with Elizabeth and a business associate, Rafael Buenaventura who was a salesman like David.
GPC is engage in manufacturing of pharmaceutical products for both the domestic and
export markets and the Generic Bill came in. GPC was incorporated in 1982 as the
increased volume of operations needed a broader-based management. From its initial assets
of P300 in 1978, GPC had total assets of P12 million in 1983 and every year, extra hand to
peddle their goods are increasing. They put their own labels on their products and registered
it with the Bureau of Food and Drug (“BFAD”). GPC has different product lines which
Elizabeth initiated GPC’s reorganization this includes: Pharmaceutical Distribution Division,
Agrovet Division, Cosmetics Division, Raw Materials Indenting Division, and the Contract
Manufacturing Division. In 1988, the American, principal offered his plans to David of GPC
engaging in the contract manufacturing of pharmaceutical products for both the domestic
and export markets. The proposed project was to compound locally all products that it will
manufacture and sell, importing only the active ingredients and bulk materials that are
unable to produce locally. The proposed project would cost approximately P135 million.

II. The Problem/s

1. To determine possible action of GPC in order to continue in the competition.
2. How will they produce money to continue with the project?

III. The Causes of Problem/s

 The company has insufficient funds to accept the project because the expansion is
costly.
 The company has too many competitors in the business industry.

IV. Alternative Courses of Action

1. Accept the project and they can borrow additional capital from the banks or other financing
entities.

Advantage:
 Can implement the project early
  Long term payments
 Can support the project
 Higher quality of product should be obtained
 The company will remain competitive
Disadvantage:
 Has an interest
 The longer the period the debt is not paid the higher interest
 The borrower pledges some assets as collateral for the loan.
 Too costly

2. GPC can borrow money from banks or other financial intermediaries, and they can hire
Filipino chemist who is less expensive but still has the quality.

Advantages:

 It will be less risky

 It will cost less and support our Filipino chemists
Disadvantages:
 Its quality is at risk

3. Generoso Pharmaceuticals & Chemicals, Inc. should not accept the project and stay small.
Advantage:
 Less cost and risk
Disadvantage:
 The company will not be competitive.

V. Selection of Best Alternative/s

The best solution to the problem in alternative course of action is number #1 which is
Generoso Pharmaceuticals & Chemicals, Inc. should accept the project and they can borrow
additional capital from the banks or other financing entities. Though the company will have
an obligation and it can generate interest, the company will be able to pay its principal and
interest because it is expected that it will have an increase in sales given the new technology
with higher quality and lower cost incurred.

VI. Plans for Implementation

The Board of Directors should discuss thoroughly the project. Make a detailed plan. Borrow
money from banks or other financing entities. In case the project will fail, there should be a
contingency plan that can recover the loss. Find some business who wants to be part of GPC
and make some Marketing and Advertising strategy.