The Case About Organizational Structure And Process Reengineering Of Beijing Tongrentang Co.,Ltd

Profound changes are taking place both in Beijing Tongrentang CO.,LTD andChina's market of Chinese traditional patent medicine. On the one hand, althoughTongrentang remains in the first group of the Chinese medicine industry, andincreases at a rate of 30% in recent years, its competitors, e.g. Huiren, Taiji, YunnanBaiyao, are also developing at a high speed and are pinching the traditional market ofTongrentang. Moreover, Tongrentang will have to face competition from home andabroad after January 2003, when foreign pharmaceutical enterprises will be permittedto enter the China's medicine retailing market. On the other hand, problems occur inthe internal management of the company -- more links and slow cooperation occursbetween the functional sectors and the sales sectors, the information feedback chainbreaks, high cost, and seasonal shortage in supply, with best-sold medicines fall shortwhile other medicines increase their stock year after year, and cost goes faster thanprofit. During the years between 1999 and 2001, while the net income of its mainbusiness increase at an annual average of 38.90%, the cost of its main businessincreases at an annual average of 44.67%, swallowing its profit. Since March 2002,with the strategic adjustment of the Tongrentang Group – the Group shall concentrateon the operation of capital and the business right was appointed to the shareholdingcompany, the shareholding company was clearly required to endeavor to promote itsmarket adaptation ability, flexibility and core competence to embrace both theopportunities and challenges brought about by the entry of the WTO. With greatchanges emerge in the operation system of the Beijing Tongrentang CO.,LTD, theoriginal organization structure shall be reviewed and designed, the organization andoperation methods shall be regulated and improved as soon as possible, the functionsand responsibilities of each sector and department shall be clearly defined, and bymeans of processes and system to make the whole company run efficiently, and tomake the Beijing Tongrentang CO.,LTD an factual business entity.