The Competitive Environment Of Astra Zeneca Business Essay

The Competitive Environment Of Astra Zeneca Business EssayAs say briefly in critical success factors (1.4) AstraZeneca has done quite well historically and analysis reveals that they atomic second 18 looking to position themselves strategically for the future. But in the pharmaceutical industry there is currently increased patent risks and low marginal ingathering returns, pharmaceutical starchys like AstraZeneca must reduce structural inefficiencies, repel costs which is required to enable them compete better in the changing spheric surround. Due to its enormous RD push, AstraZeneca suffers a relatively high rate of discontinuation in pre-approval products there is also a required to reduce re fount wastage.AstraZenecas balance geographical presence (the US accounts for over 60% of Pfizers commercialize area) may be an advantage potential compare to different competitors geographic limitations and can help a good gross growth should another(prenominal) competitors lag b ack in expanding their territories.1.2 Life Cycle AnalysisIn this contribution, an analysis of AstraZeneca position in the life cycle has led the connection to adopt some decisions which we make mainly in the last 5 years. I have defined the terms, explaining where AstraZeneca stands in the life cycle management and also the strategic implications for its possible in the stage where it is in. Supported by the evidence mentioned in the sections aboutFig 1 Industry Life CycleAt the stage where AstraZeneca is the market is actually competitive, and this trend continues into the early period of the maturity stage. Besides many more competitors offering their products, other companies continue the product-differentiation branch which begun in the growth stage.In the old 5 years there have been many competitors such as GlaxoSmithKline, Pfizer and Merck Co. who were doing what AstraZeneca is doing, and this is one of the characteristics of the maturity stage. With the large tally of firms producing products, the competition for customers becomes quite intense the outline 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 companys products and the competitors products.1.3 Porters Five Forces AnalysisFive Forces Analysis a technique which I have used to for aiming the forces which affect the level of competition in pharmaceutical industryFig. 2 Five Forces DiagramsOverall, AstraZeneca shows a very strong 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 increased competition and some of the patent expiry the industry still shows a chronic upward sustainable growth. Below is the analysis on what makes AstraZeneca success and survive in the inter nal competition with its rivals.1.4 Critical Success Factors and Competitive AdvantageThis section identifies get a line areas in which AstraZeneca must out do other competitors in order to succeed. In the year 1990 The Core Competence of the Corporation, Prahalad and Gary Hamel painted to the potential for capabilities to be the competitiveness, source of new products, and foundation for strategy.1.4.1 Research and DevelopmentAstraZeneca makes a major contribution to total UK research and development (RD) expenditure and is amongst the most RD-intensive companies in the UK. As discussed preceding(prenominal) 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 every 20 of all UK business RD. Looking at AstraZenecas global business as a whole, it is now standing as the 13th largest investor in ranks in RD in the world and ranked the second largest investor amongst businesses which are headqua rtered in the UK (Investing in UK PLC Article, 2004)Research Development is central to AstraZenecas business. It is vital to the identification and development of new therapies to advance homo 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, making it the twenty-fourth largest investor in RD in the world and ranked the second largest investor amongst businesses which are headquartered in the UK.1.4.2 Knowledge WorkersAstraZeneca employs a large outlet of scientists and researchers from a wide range of disciplines, as well as livelihood the interlocking of others by its supply stove. At least 1,200 of AstraZenecas staff (or one in every 10 employees) have a PhD, whilst at least 600 have Masters 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 qualificatio n).Given AstraZenecas need for highly qualified scientific and technology graduates, it is an active sponsor of graduate and post-graduate studies. It funded approximately 110 graduate studentships in 2004 with an estimated value of 750,000, as well as funding significant levels of PhD students at a number of higher education institutions, either individually or through strategic agreements with Research Councils.1.4.3 Science BaseAstraZeneca also plays an important role in supporting the wider development of science in the UK through links with institutions at all levels. AstraZeneca is also an active ally 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 primary and secondary winding schools.The AstraZeneca Education Liaison Programme and sponsorship of the Creativity in Science and Technology (CREST) Awards (through the British Association for the Adva ncement of Science) for project work among 11-19 year olds. AstraZeneca is a key in growing economy in the UK this is characterised by the recognition of friendship 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.2. Key business strategies of the company over past five years.Fig. 3 Bowmans ClockAstraZeneca has differentiates its products, it is often able to charge a premium price for its products or services in the market. Some general examples of differentiation include better service levels to customers, better product performance etcetera in comparison with the be competitors. Porter (1980) has argued that for a company employing a differentiation strategy, there is an scanty cost that the company would have to earn. Such scanty costs may include high marketing spending to promote a differentiated brand image for the product, which in fact can be c onsidered 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 segment and copy the differentiated product (Lynch, 2003).2.1 Strategic Groups AnalysisThis section of Strategic Group Analysis (SGA) aims to identify organizations with similar 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 same 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 AstraZ enecaBelow is the analysis of AstraZenecas unique resources and dynamic 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 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 own revenue and borrow power, AstraZeneca has generated 11.8 billion and produces an operating profit of 2.6 billion.Fourth, there is intellectual capital, which carries the reputation, goodwill, corporate image as whole, through the world and UK in particular medicine 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 buyer 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. Dynamic 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 conduct 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 develops manufacturer and sells a range of modern drugs and therapy to combat different medical conditions. Secondly, research and development carried out at 11 research and development facilitie s located in seven countries among them there are 6 in the UK. Also, manufacturer takes place at 30 sites found in 20 countries, and 9 are in the UK. Dynamic capability its localisation principle in the UK example companys European business service office located in North West Chorlton-cum-hardy which is near the close to the centre of ManchesterOn the other hand, AstraZeneca spends development stage of each medicine of cost over 500 million pounds, in additional 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 meet 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 envi ronment 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 amongst 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 revitalize 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 result 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 trey 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 competitive 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 c ontinents. AstraZeneca has increasingly focused 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 coverage 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 collaborationsglobalisation 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 close to or in front 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/strat egy_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 Journal, 24, 145-159.Puerta, J. (2004) British Journal of Management, 15, 219-245.4.3 BooksPorter, M. E. (1976) Interbrand Choice, Strategy, and Bilateral Market Power, Harvard University Press, Cambridge, Massachusets.Porter, M. E. (1980) Competitive Strategy. Techniques for Analyzing Industries and Competitors, Free Press, unfermented 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 World Pharmaceutical Industry, Routledge, New York.6 Appendices