This matter has to be sorted out by the Korean partner as the workers are more likely to trust him than Australians. He may also find it possible to offer the workers the same perks that are offered to his employees in other concerns. The hours of working and such details may also be fixed up early so that future conflicts of this are avoided in the future. The difficulties in culture will be very high for any Australian to come and work here, so the responsibility of recruiting the workers may be left to the South Korean partner. The only aspect that one can check is that he does not end up employing only his relatives and friends. This had cost many banks a lot of money as their loans had not been returned. For this purpose, a consultant may be appointed at the cost of the Australian company who will act as their representative during all such actions and send reports to the company. There are also some methods to be innovative and thus get the sympathy of local workers. These have been listed and may be discussed with the Korean partner before implementation, if thought appropriate.
Conclusion:
The entire analysis can be summarized in the following statements:
It is not in the interest of the organization to set up a unit for catering to the requirements of the South Korean market immediately. It should be used for fulfilling the requirements of other markets initially and the product distributed in South Korea for awareness about the brand name. After the name becomes familiar, then the product may be sold in South Korea to any high levels.
It is also in the interest of the joint venture to have facilities for R&D as in South Korea 12% of the employees in South Korean pharmaceutical firms are in R&D. The pharmaceutical industries in South Korea are also interested in joint development as they feel it will be beneficial to them in the long run.
A very important part of getting quality and high production in South Korea is to continually provide a lot of training to the workers. This should be provided for.
Details of working hours and working days, perks in various forms should be decided at the earliest stage possible.
Appendix
First Assessment: Information on South Korea
Pharmaceutical Industry
This is in an interesting position due to certain changes that have been carried out in Korean laws regarding medical practice. The law is called "Separation of Dispensary and Medical Practice. This has started from August 2000 and required many changes in hospitals and pharmacies. In the case of hospitals, the earnings have dropped by 35% as compared to previous years as they are no longer permitted to sell medicines to outpatients. The pharmacies have also lost sales by over 30% as they can not prescribe medicines without a prescription from doctors for the medicine. Further, the types of medicine that they have to store is from only one company under the previous rules and now there will have to be at least 10 times of brands of the same medicine and the doctors will be free to prescribe whatever they want to. (Survival strategy for pharmaceuticals) Thus the situation of existing manufacturers in South Korea is poor and they are finding it difficult to survive.
Regarding the producers in the industry, there are hundreds of medicine manufacturers in Korea who have almost the same product mix and rely on low prices to sell their products. When an analysis of the return on invested capital is done for the top 10 manufacturers in Korea, it reflects a return of only 7% and that is much lower than the international norm of 10%. The low returns are resulting in more and more manufacturers being unable to raise more money for the required research and development in the industry. When the competition is expected to intensify further, then this will certainly hurt the industry in Korea. The risks for a new entrant is even higher as the type of competition that goes on in Korea will be unknown to the new entrants and this will also make their situation even more difficult.
In future, the doctors will not concentrate on the price but will consider the quality and brand awareness, as writing one particular brand name will not provide more money to the doctor. These are reasons to cause a lot of pressure to the existing pharmaceutical companies as they will have to improve their total image and quality of their products. The separation of brands from doctors will cause a lower demand for particular...
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