The Competitive Environment Of Astra Zeneca Business Essay

The hawkish Environment Of Astra Zeneca Business EssayAs stated briefly in critical succeeder factors (1.4) AstraZeneca has d 1 quite well historically and analysis reveals that they argon looking to position themselves strategically for the future. But in the pharmaceutical industry in that respect is currently change magnitude patent risks and low marginal product returns, pharmaceutical firms like AstraZeneca essential reduce structural inefficiencies, cut exist which is required to enable them repugn offend in the changing global environment. Due to its enormous RD push, AstraZeneca suffers a relatively high rate of discontinuation in pre-approval products there is in like manner a required to reduce resource wa put.AstraZenecas balance geographical comportment (the US accounts for everywhere 60% of Pfizers grocery area) may be an payoff potential compare to other competitors geographic limitations and can help a good revenue produce should other competitors la g behind in expanding their territories.1.2 Life Cycle analysisIn this section, an analysis of AstraZeneca position in the life pass has led the play along to adopt some decisions which we make mainly in the last 5 course of instructions. I halt define the terms, explaining where AstraZeneca stands in the life cycle management and also the strategic implications for its achievable in the stage where it is in. Supported by the evidence mentioned in the sections astir(predicate)Fig 1 Industry Life CycleAt the stage where AstraZeneca is the market is very free-enterprise(a), and this trend continues into the early period of the maturity stage. in addition many much competitors offering their products, other companies continue the product-differentiation process which begun in the growth stage.In the past 5 historic period there obtain been many competitors such as GlaxoSmithKline, Pfizer and Merck Co. who were doing what AstraZeneca is doing, and this is one of the charac teristics of the maturity stage. With the bulky chassis of firms producing products, the disceptation for customers becomes quite intense the scheme for firms during the maturity stage becomes one of survival, as many competitors will eventually withdraw from the market. In this climate AstraZeneca has continued differentiating their models so that the market is aware of the differences in the familys products and the competitors products.1.3 Porters Five Forces AnalysisFive Forces Analysis a technique which I have apply to for identifying the forces which affect the direct of competition in pharmaceutical industryFig. 2 Five Forces DiagramsOverall, AstraZeneca shows a very immobile position in the market. The company remains highly valued there are favourable market positions with strong financial growth.So far, its demand has been positive and despite change magnitude competition and some of the patent expiry the industry still shows a continuing upward sustainable grow th. Below is the analysis on what makes AstraZeneca success and survive in the internal competition with its rivals.1.4 Critical Success Factors and Competitive AdvantageThis section identifies key areas in which AstraZeneca must outperform other competitors in order to succeed. In the year 1990 The Core Competence of the Corporation, Prahalad and Gary Hamel particoloured to the potential for capabilities to be the competitiveness, source of naked as a jaybird products, and foundation for strategy.1.4.1 Research and readingAstraZeneca makes a major contribution to total UK research and instruction (RD) disbursal and is amongst the most RD-intensive companies in the UK. As discussed above in life cycle analysis, it invested an average of 749 million on RD since 2004, which represents around 18% of turnover in 2007 alone and 1 in each(prenominal) 20 of all UK personal line of credit RD. Looking at AstraZenecas global business as a whole, it is at present standing as the 13th largest investor in ranks in RD in the globe and ranked the second largest investor amongst businesses which are headquartered in the UK (Investing in UK PLC Article, 2004)Research ontogenesis is central to AstraZenecas business. It is spanking to the identification and development of new therapies to heighten kind healthcare and of course a strong RD base is also vital to the long term success of the Company. In 2004 AstraZenecas global investment was 1.9bn, devising it the 24th largest investor in RD in the military man and ranked the second largest investor amongst businesses which are headquartered in the UK.1.4.2 Knowledge WorkersAstraZeneca employs a large tot of scientists and researchers from a childlike range of disciplines, as well as supporting the employment of others with its supply chain. At least 1,200 of AstraZenecas staff (or one in every 10 employees) have a PhD, whilst at least 600 have know Degrees. Therefore, at least 16% of AstraZenecas workforce is qualified to postgraduate level (this compares to 6% of all employees in employment in the UK with a post-graduate qualification). habituated AstraZenecas need for highly qualified scientific and engineering graduates, it is an active giver of graduate and post-graduate studies. It funded approximately 110 graduate studentships in 2004 with an estimationd value of 750,000, as well as funding prodigious levels of PhD students at a number of higher education institutions, either individually or through strategic agreements with Research Councils.1.4.3 attainment BaseAstraZeneca also plays an important role in supporting the vastr development of recognition in the UK through links with institutions at all levels. AstraZeneca is also an active partner in the development of UK science and education policy. AstraZeneca also supports development of the teaching of Science, Technology, Engineering, and Mathematics (STEM) skills in primeval and secondary schools.The AstraZeneca Educa tion Liaison Programme and sponsorship of the Creativity in Science and Technology (CREST) Awards (through the British Association for the Advancement of Science) for project work among 11-19 year olds. AstraZeneca is a key in growth economy in the UK this is characterised by the recognition of knowledge as a source of competitiveness, the importance of science, research, technology and innovation in knowledge creation, and the white plague of ICT to generate, share and apply knowledge.2. mainstaybone business strategies of the company over past five years.Fig. 3 Bowmans quantifyAstraZeneca has differentiates its products, it is often able to charge a premium price for its products or profits in the market. some(a) general examples of differentiation include better service levels to customers, better product performance etc. in equation with the existing competitors. Porter (1980) has argued that for a company employing a differentiation strategy, there is an extra cost that the company would have to earn. Such extra costs may include high trade spending to promote a separate brand image for the product, which in fact can be considered as a cost and an investment.Differentiation has many advantages for AstraZeneca because it makes use strategy. Some problematic areas include the difficulty on part of the firm to estimate if the extra costs entailed in differentiation can actually be recovered from the customer through premium pricing. Moreover, successful differentiation strategy of a firm may attract competitors to enter the companys market department and copy the differentiated product (Lynch, 2003).2.1 strategical Groups AnalysisThis section of strategic Group Analysis (SGA) aims to identify organizations with connatural strategic characteristics, following similar strategies or competing on similar bases. As put by Porter, A strategic group is the group of firms in an industry following the homogeneous or a similar strategy along the strategic dimensions (Porter, 1980, p.129) For more details, See Appendix 13. resources, capabilities and business strategies in the past 10 years.3.1 Resource Based View of the AstraZenecaBelow is the analysis of AstraZenecas unique resources and energizing capabilities and how the company has managed to align its resources and capabilities to fit its business strategy. This analysis has supporting evidences that dates back 10 years.Firstly, Physical resources these types of resources can be assessed in the form of buildings, equipment. At AstraZeneca they have development facilities in several countries, there are 30 sites for manufacturing in 20 countries and among those SEVERAL are in the UK.Secondly, there is human beings capital that is embodied in the skills and knowledge of employees of the firm, there is a large number of scientists who are employed by AstraZeneca. Financial capital these can be assessed through access to funds that can include the firms aver revenue and borrowin g power, AstraZeneca has generated 11.8 billion and produces an operating profit of 2.6 billion.Fourth, there is knowing capital, which carries the reputation, goodwill, corporate image as whole, through the world and UK in grouchy euphony made by AstraZeneca are recognized as world class or world leading treatments. Last but not least, Social capital also accounts in the way the companys relations with emptor and suppliers and other stakeholders social capital, its two main sites act as significant link in the companys global supply chain -north west of the UK3.2. propellent Capabilities of AstraZenecaBelow is the analysis of AstraZenecas dynamic capabilities, this analysis has supporting evidences that dates back 10 years ago. Capabilities can be thought of as routines that firms perform to tolerate their business (Nelson and Winter 1982). These are firm specific (non tradable), Capabilities can be both explicit and implicit (Conner and Prahalad 1996)Firstly, AstraZeneca dev elops manufacturer and sells a range of advance(a) drugs and therapy to combat different medical conditions. Secondly, research and development carried out at 11 research and development facilities located in seven countries among them there are 6 in the UK. Also, manufacturer takes place at 30 sites base in 20 countries, and 9 are in the UK. combat-ready capability its location in the UK example companys European business service office located in North West Chorlton-cum-hardy which is around the completion to the centre of ManchesterOn the other hand, AstraZeneca spends development stage of each medicine of cost over 500 million pounds, in spare to that AZ continue research and development treatments in the serious diseases. In additional to that, HR, marketing, sales are located at the same facility near satellite sites, Tytherington and Macclesfield, On the hand, the Brixham laboratory lab medicines and manufacturing process to ensure that they learn stringent environment safety and regulations requirement3.3 Strategic FitStrategic fit expresses the degree to which an organization matches its resources and capabilities with the opportunities in the external environment or its existing business strategy. For AstraZeneca the benefits of good strategic fit include cost reduction, due to economies of scale, and the transfer of knowledge and skills.In AstraZeneca position, the business fit between resources and capabilities creates a demand for opportunities that address specific strategic needsopportunities that strengthen competitive advantage, that explore the use of new technologies, or create new markets and reclaim existing markets.Based on the analysis of resources (3.1) and capabilities (in 3.2) on previous sub-chapters,I can compose a list of existing capabilities that support new objectives.On the other hand, Development of differentiated product and technology alternatives, this recognises that AstraZeneca have used technology advancement to enhance their RD in conjunction with differentiated product. Development of differentiated product profiles and business plans, this has been generated as a go forth of enormous amount of money which is spent on research and development as describes in previous topics.AstraZeneca is a key in growing economy in the UK this is characterised by the recognition of knowledge as a source of competitiveness, the importance of science, research, technology and innovation in knowledge creation, and the use of ICT to generate, share and apply knowledge. This advantage is couple with sponsorship of different education programmes in school to produce knowledge based company. AstraZeneca is the as UKs third pharmaceutical company and a lead in RD of medicine this capability has successfully carried it to a wide range of medicines and drugs.Finally, AstraZenecas actions a resource/competence based analysis of its instinctive capabilities, those characteristics that give AstraZeneca distinct com petitive advantage over its industry rivals.3.4 AstraZeneca SWOT AnalysisAstraZeneca since its merger in 1999 (Astra and Zeneca) has grown a global enterprise with over 64,000 employees on six continents. AstraZeneca has increasingly pore its efforts on RD and this remains its core business strategy. AstraZenecas strengths lie in its strong as a knowledge based organisation and strong marketing capabilities. AstraZenecas performance is characterized not only by size, but also by growth. In 2007, AstraZeneca achieved 18% revenue growth. AstraZeneca has also set records in each of the past seven years to 2007 with the biggest investment in RD.AstraZeneca strength in RD, marketing, and sales has made them a partner of choice for many companies in the pharmaceutical industry and they are involved in a wide range of research collaborations and a large number of licensing agreements with universities, institutes and organizations.StrengthRD advance with a broad therapeutic exposureWide geographical reportage and therapeutic areasExisting Patent protection for a number of years on key productsWeaknessDiscontinuation of products in the latter stages of developmentIncreased size and operational complexity makes AstraZenecaa less responsive companyOpportunityreducing development time through complimentary RD collaborationsglobalization for new products/drugs/medicineMarketing agreements with companieswishing to capitalize on AstraZenecas marketing Strengths,providing AstraZenecarevenue growth in the processThreatsPatent expiry in 2009 and other due this year 2010Competition from products similar to AstraZenecas in RD that reach the market virtually to or before AstraZenecas productsThe new economic emergency in China, India and competition in diverse regional markets.4. References4.1 Websiteshttp//www.csuchico.edu/mgmt/strategy/module8/index.htmhttp//ir.lib.sfu.ca/retrieve/2190/etd1838.pdfhttp//www.astrazeneca.com/investors/strategy/http//college.hmco.com/hjinstruct/ powerpt/ch03/sld020.htmhttp//university-essays.tripod.com/porters_generic_strategies.htmlhttp//www.marketingteacher.com/Lessons/lesson_bowman.htmhttp//ivythesis.typepad.com/term_paper_topics/strategy_clock/4.2. journal Articlehttp//www.mindtools.com/pages/article/newSTR_93.htmhttp//lexicon.ft.com/term.asp?t=strategic-fitNair, A. and Filler, L. (2003) Strategic Management diary, 24, 145-159.Puerta, J. (2004) British Journal of Management, 15, 219-245.4.3 BooksPorter, M. E. (1976) Interbrand Choice, scheme, and Bilateral Market Power, Harvard University Press, Cambridge, Massachusets.Porter, M. E. (1980) Competitive Strategy. Techniques for Analyzing Industries and Competitors, Free Press, New York.Warren, K. (2002) Competitive Strategy Dynamics, John Wiley Sons, Chichester. Zuniga-Vicente, J. A., Fuente-Sabate, J. M. d. l. and Rodriguez-5. BibliographyOster, S. M. (1994) Modern Competitive Analysis, Oxford University Press, New York.Porac, J. F., Thomas, H. and Baden-Fuller, C. W. F. (1989) Journal of Management Studies, 26, 397-416.Porac, J. F., Thomas., H. and Baden-Fuller, C. W. F. (1994) In Strategic Groups, Strategic Moves and Performance (Eds, Daems, H. and Thomas., H.) Elsevier Science Ltd, Oxford, pp. 117-137.Redwood, H. (1988) The Pharmaceutical Industry Trends, Problems and Achievements, Oldwicks, Felixstowe.Taggart, J. (1993) The humanness Pharmaceutical Industry, Routledge, New York.6 Appendices