Strategic Management Assignment: Business Case Analysis Of AstraZeneca

Question

Task:
Strategic Management Assignment Task:
A listed company’s CEO appointed you as his Strategic Management Coach and asked you to prepare a detailed and complete report emphasizing the value and process of strategic management in the listed company (or group of companies). And asked you to prepare this Consultation Report to the readers of non-management background stakeholders.

In addition to familiarizing with new subject matter, you are expected in the report to integrate and apply their prior learning to strategic decision making in organisations. This Strategic Management consultation report is designed to explore an organisation’s vision, mission, examine principles, techniques and models of organisational and environmental analysis, discuss the theory and practice of strategy formulation and implementation such as corporate governance and business ethics for the development of effective strategic leadership.

Upon completion of this consultation report, students will be able to:
1. Define and explain concepts, frameworks, and techniques of international strategic management.
2. Illustrate the types of Strategic Formation
3. Execute the Strategic Implementation

Answer

1. Introduction
This report on strategic management assignment will explain the concepts of international strategic management using AstraZeneca, a medical company based in the United Kingdom, as an example and will emphasise the value and process of strategic management of the company. This consultation report will attempt to explain the value of strategic management to the stakeholders without a relevant background in management.

2. Concepts, Frameworks, and Techniques of International Strategic
Management
2.1 Strategic Management: Creating Competitive Advantages
According to research data, AstraZeneca has performed well in the past and study reveals that they are aiming for a more strategic management in the future. But being a medical industry there are risks involved with their business. Patent risks are high and marginal product returns are low (Hauser, Eggers and Güldenberg, 2020). AstraZeneca must implement a strategy to decrease any inefficiency in their organisational structure and deflate their offered prices which will help them perform well in the current day market competition. Unfortunately for the company, AstraZeneca’s products which had been approved in the past are frequently getting discontinued which causes their resources to get wasted. The United States reports that AstraZeneca holds a geographical presence of over sixty per cent of Pfizer’s market area. This is an advantage over other competing firms and AstraZeneca can use it to increase their revenues as much as they can while other competitors are lagging behind.

Figure 1: AstraZeneca Strategic Plan
(Source: Buehring and Bishop, 2020)

According to the argument of Buehring and Bishop (2020), GlaxoSmithKline, Pfizer, and Merck & Co. have been AstraZeneca’s prominent competitors in the past five years. With so many industries in the same market are performing well, the competition becomes extremely intense until one or more companies shut their business down and exit the market. In this context, AstraZeneca is consistently performing decently and plans to do so in the future, not withdrawing itself or being intimidated by the large number of other competitors. There are regular customers who are demanding their products and the individual economy of the company is maintaining an equilibrium, and the company has favourable opportunities for itself.

2.2 The External Environment of the Firm
AstraZeneca’s PEST analysis will examine the external environment of the company. This analysis examines the political, economic, social and technological factors which have a direct impact on the company’s environment.

2.3 The Internal environment analysis
The internal factors which have an impact on AstraZeneca’s environment are its strengths, weaknesses, threats and opportunities:

Figure 2: AstraZeneca’s environmental analysis
(Source: Spensley and Tam, 2018)

Employees
Spensley and Tam (2018) argued that AstraZeneca currently has about sixty-two thousand employees in their company. AstraZeneca’s employment strategy is to hire the right candidates for their job and train them so that they can perform their assigned role effectively and efficiently. AstraZeneca regularly motivates their employees and by doing so keeps them engaged in their job. Taking employee satisfaction seriously is an essential part of any organisation and AstraZeneca is performing well in this aspect.

Shareholders and Stakeholders
Shareholders and stakeholders invest significantly to the company and as a result have relevant expectations (David, David and David, 2017). AstraZeneca’s strategy here is to actively deal with the marketing environment to ensure a decent amount of return on shareholder’s investments. It emphasises equally on both macro and micro environment and adapts to the changes accordingly.

Customers
AstraZeneca places customer satisfaction on an equally important level, primarily because of the high competition in the market. Without doing so, the competitors will bypass AstraZeneca in the market.

2.4 Recognising AstraZeneca’s Intangible Assets
Intangible assets refer to an attribute that an organisation holds which will prove to be beneficial for it and not have any implications attached. One example of intangible asset is Goodwill. Goodwill refers to the extra revenue earned by the company on account of its good reputation (Knight et al., 2020). AstraZeneca’s goodwill as of the current year amounted up to thirty-two point seven nine billion dollars which is a one point three seven per cent increase from the goodwill that amounted in the last year. But in the year 2018 there was a huge rate of reduction the goodwill of about eleven point four per cent than of the value of the year 2017.

As far as intellectual assets are concerned, AstraZeneca provides incentives to its employees for additional research that do to develop a new drug which can be further implemented for the creation of new medicines and vaccines. As per Barney and Hesterly (2019), AstraZeneca admits that developing a new medicine requires a lengthy span of duration, which may take up to ten to fifteen years and may cost up to two billion dollars. Hence, they focus on utilising their intellectual property to both speed up the development process and reduce investment and failure costs. The company trusts their intellectual asset to the extent that they believe it may completely eradicate any and all disease. AstraZeneca claims to have a sustainable framework of research and development operations that may create medicines which can even save a person from a near-death experience and save his life.

3. Types of Strategic Formation
Below the report will discuss about the strategic formations of the company.
3.1 Business Strategy
To gain a competitive business advantage, AstraZeneca’s Vice President of Quality Assurance Lena Vagberg stated that since all the individuals involved with the business, whether employees, shareholders or executives were so focused on the quality, that a separate faction for auditing the quality of the products was not crucial to the business in the long run. Lena believes that merely a group of quality auditors was not sufficient to sustain competitive advantage (Falko, Maykova and Molchan, 2018). As a measure, the quality assurance team of AstraZeneca now first advices the employees on better quality rather than directly auditing it. The second measure that they took was associating external advisors with their business operators to facilitate and incorporate quality building structure into their organisation. The team also informed the workers that sudden inspections will take place anytime without any prior notice so they must be ready with the product quality at all times.

The other business strategy of AstraZeneca is to focus on therapy from serious diseases, such as cancer, cardiovascular diseases, gastrointestinal diseases, infections, neurological diseases, respiratory diseases and inflammation. As per Rizal, Suhadak and Kholid (2017), the company continually works to produce cure for these diseases, and had created a new drug which they named Nexium. They claimed the drug would cure cardiovascular diseases, more specifically a heartburn. The creation of this drug gave a formidable competition to other companies in the same industry. Nexium is also believed to cure gastrointestinal disease and the company created another drug Arimidex. Arimidex is believed to cure low severity levels of Cancer.

3.2 Corporate Strategy
AstraZeneca’s corporate strategy is ‘return to growth’ and ‘achieve scientific leadership’. The chief executive officer of the company, Pascal Scoriot claimed that company is devoted to achieving developments in the industry of medicines through the use of innovation in science and technology (Shatilo, 2019). He added on that the goal of the company is to focus on serious diseases, such as cancer or aids, the permanent cure of which will bring about a revolution in the planet. He listed AstraZeneca’s corporate strategic priorities as such: to drive the platforms which facilitate the growth of the market for growth as the validity of patents expire and deadlines are reached, launching exclusive products for specialty care, and balancing it with the primary care, rebuilding the research and development structure by innovating the science and technology used and support remote working of the teams and improve the access to science clustered recognised worldwide, simplification of the business structure by improving productivity and implementing an organisational structure that facilitates long-term success, leveraging the business acquisitions to deliver AstraZeneca’s base plan.

Figure 3: Corporate Plan
(Source: Suryana, Sudirman and Rusliati, 2017)

AstraZeneca is also devoted to achieve scientific leadership by focusing their innovation on the medical industry by the use of biotechnology. These technologies help rewrite the patient’s DNA from a cellular to a molecular level (Suryana, Sudirman and Rusliati, 2017). The company claims to actively create infection control and vaccines, thereby driving the neurological aspect of bio science. AstraZeneca strategized to maximise return on growth by increasing the potential of the assets of the company in the current period.

3.3 International Strategy
AstraZeneca’s international strategy is to focus on oncology, new cardiovascular, renal and metabolism, and respiration. The therapy for diseases in these areas are not readily available to the international medical industry by other companies hence AstraZeneca is performing better than any other country in the entire planet. To reach the worldwide international market, AstraZeneca has strategized expansion (Barney and Hesterly, 2019). In their expansion strategy, it aims to reach more patients by selling their medicines in countries where their services were initially not allowed. It sells their portfolio in other countries and build up an international brand awareness. They allow other countries to access their markets remotely either through import and export or digitally through electronic means. Its second strategy to reach the international market is to implement innovation of unparalleled quality and creativity which no other medical company has implemented in their organisation till date. These new medicines launched by AstraZeneca give consumers a reason to prefer investing in its company over others. Its services are also oriented towards the patients, focusing on the improvement of their health and condition and providing services quickly to ensure their speedy recovery. The last strategy that AstraZeneca uses to reach the international market across the globe is partnership. AstraZeneca partners with different brands from different countries to associate itself with that country. It maintains relations with the central and local government and the government of the home country of the partnered company. This develops their business and provides healthcare to patients all across the world regardless of their nation.

3.4 Entrepreneurial Strategy
AstraZeneca’s entrepreneurship strategy involves creating value and assuming risk factors. The company considers start-up ventures, major corporations, businesses owned by families, non-governmental and non-profit organisations and established institutions as the opportunities for creating value. AstraZeneca acquires opportunity from its existing customers, supplier suggestions and developments in technology. AstraZeneca takes the following factors and considers them critical for entrepreneurship success: an opportunity, allocation of resources, qualified manpower, an entrepreneurship strategy, a tangible office space, adequate funds, sufficient investors, practical and realistic ideas, an awareness sharing program and a proper management system (Bogdan and Dombrowski, 2019). AstraZeneca believes that opportunities should be recognised as such timely. This involves discovery of a new entrepreneurship concept and evaluation of the feasibility of the plan and whether the entrepreneurship structure can be developed further. To create and spread awareness, the company seeks for new venture opportunities and plans a creative solution to overcome the entrepreneurship obstacle. To evaluate and analyse the opportunity, AstraZeneca communicates with potential consumers of their market, researches and determines the requirements for the operation and assesses whether the idea is applicable and practical to be applied. AstraZeneca believes that an applicable opportunity should be attractive, achievable, durable and must create value. The company also considers financial resources, human resources, social capital and government resources as factors crucial for the success of the entrepreneurship. Leadership is also a quality that is needed by the enterprise leader, and the leader must be courageous, determined, self-assured, visionary, dedicated and committed to both the entrepreneurship and the overall business.

4. Manufacturing and Service Operations
Below the report will discuss the key decisions and trade-offs involved in the management of manufacturing and service operations.

4.1 Strategic Control and Corporate Governance
Because AstraZeneca is a British company, it is compulsive for the company to disclose how its corporate governance practices differ from the ones that the companies in the United States of America follows under Nasdaq’s corporate governance listing standards. AstraZeneca claims to have a highly experienced board with a qualified senior executive team. Its board takes the responsibility of the company’s corporate governance strategy, plans the tactics and policies and is responsible for vigilantly monitoring the risk and assessing it. AstraZeneca’s board also continually monitors the operation progress and targets to meet the strategic goals and yearly plans (Milanesi, Runfola and Guercini, 2020). These responsibilities are delegated by a series of formal meetings and yearly auditing of the business strategy. AstraZeneca’s board also evaluates if the organisation’s shareholders and stakeholders are properly communicated with and understood properly and to what extent has this been achieved. The board regularly reviews the company’s financial performance and the other relevant business issues.

The non-executive director has the same general legal responsibilities of the company as any other director of AstraZeneca. He is expected to perform his duties while adhering to the law faithfully and diligently and standardise the functions of his role and apply his knowledge, skills and experience. The NED is required to exercise his duty while simultaneously prevailing the Companies Act 2006, the United Kingdom’s corporate governance code the listing authority of the United Kingdom’s listing, prospectus, disclosure and transparency policies. Part Ten Chapter Two of the Companies Act 2006 lists out the duties of the director which he must follow.

4.2 Creation of Organisational Designs
AstraZeneca announced the designs that it will implement in its organisation to continue its innovation in science and technology as well as the commercial success. One of its organisational design is for the research and development units to focus on the therapy and cure of diseases. These therapies are focused in the Bio Pharmaceutical area which includes cardiovascular, renal, metabolism and respiratory related health issues and also includes oncology, which allocates dynamic resources through AstraZeneca’s pipeline. Spensley and Tam (2018) opines that the company created mirrored commercial units for both bio pharmaceuticals and oncology. These commercial units correlate production strategy and commercial delivery across cardiovascular, renal and metabolism and respiratory issues. The research and development unit of AstraZeneca are represented on the senior executive team of the company and they are answerable to the chief executive officer of AstraZeneca, Pascal Soriot. These units will share a common platform for simple biology and science and coordinate with production and supply operations, manufacturing operations and the information technology structure to speed up the operations of the company. The company’s former Innovative medicine and early development biotech unit developer, Mene Pangalos will lead the current research and development unit of the company for bio pharmaceuticals. For oncology, Doctor Baselga will lead the research and development unit. Doctor Baselga has a comprehensive experience in developing innovative cures for cancer. He has also been the physician-in-chief at Memorial Sloan Kettering Cancer Center and professor of Medicine at Weill Cornell Medical College. These organisational designs have been implemented by the company AstraZeneca.

4.3 Strategic Leadership
According to Barney and Hesterly (2019), in the medical industry, leadership and learning and interrelated, and this applies to AstraZeneca too. AstraZeneca believes that opportunities should be recognised as such timely. This involves discovery of a new entrepreneurship concept and evaluation of the feasibility of the plan and whether the entrepreneurship structure can be developed further. To create and spread awareness, the company seeks for new venture opportunities and plans a creative solution to overcome the entrepreneurship obstacle. To evaluate and analyse the opportunity, AstraZeneca communicates with potential consumers of their market, researches and determines the requirements for the operation and assesses whether the idea is applicable and practical to be applied. AstraZeneca believes that an applicable opportunity should be attractive, achievable, durable and must create value.

5. Conclusion
It is concluded from the report that AstraZeneca admits that developing a new medicine requires a lengthy span of duration, which may take up to ten to fifteen years and may cost up to two billion dollars. Hence, they focus on utilising their intellectual property to both speed up the development process and reduce investment and failure costs. The company trusts their intellectual asset to the extent that they believe it may completely eradicate any and all disease.

6. Reference List
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Barney, J.B. and Hesterly, W.S., (2019). Strategic Management and Competitive Advantage. Pearson Education, Limited.
https://korean.solbridge.ac.kr:449/site/main/down/MBA/BUS611%20Strategic%20Management.pdf
Bogdan, A.R. and Dombrowski, A.W., (2019). Emerging trends in flow chemistry and applications to the pharmaceutical industry. Journal of medicinal chemistry, 62(14), pp.6422-6468. https://pubs.acs.org/doi/abs/10.1021/acs.jmedchem.8b01760
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Falko, V.I., Maykova, V.P. and Molchan, E.M., (2018, November). Ecology of External and Internal Environment in the Socio-natural System. In Proceedings of the International Conference on Contemporary Education, Social Sciences and Ecological Studies (CESSES 2018). Series “Advances in Social Science, Education and Humanities Research (pp. 953-957). http://spf-vshni.ru/upload/medialibrary/c40/10-Sciences-Ecology-of-External-and-Internal-Environment-in-the.pdf

Hauser, A., Eggers, F. and Güldenberg, S., (2020). Strategic decision-making in SMEs: effectuation, causation, and the absence of strategy. Small Business Economics, 54(3), pp.775-790. https://link.springer.com/article/10.1007/s11187-019-00152-x Judge, W.Q. and Talaulicar, T., (2017). Board involvement in the strategic decision making process: A comprehensive review. Annals of Corporate Governance, 2(2), pp.51-169. https://asset-pdf.scinapse.io/prod/2604690227/2604690227.pdf

Knight, E., Kumar, V., Wójcik, D. and O’Neill, P., (2020). The competitive advantage of regions: economic geography and strategic management intersections. https://www.tandfonline.com/doi/pdf/10.1080/00343404.2020.1739262 Marques, C.M., Moniz, S. and de Sousa, J.P., (2018). Strategic decision-making in the pharmaceutical industry: A unified decision-making framework. Strategic management assignment Computers & Chemical Engineering, 119, pp.171-189. https://www.sciencedirect.com/science/article/pii/S0098135418309645

Milanesi, M., Runfola, A. and Guercini, S., (2020). Pharmaceutical industry riding the wave of sustainability: Review and opportunities for future research. Journal of Cleaner Production, 261, p.121204. https://www.sciencedirect.com/science/article/pii/S0959652620312518

Rizal, O., Suhadak, M. and Kholid, M., (2017). Analysis of the influence of external and internal environmental factors on business performance: A study on micro small and medium enterprises (MSMES) of food and beverage. Russian Journal of Agricultural and Socio-Economic Sciences, 66(6). https://cyberleninka.ru/article/n/analysis-of-the-influence-of-external-and-internal-environmental-factors-on-business-performance-a-study-on-micro-small-and-medium

Shatilo, O., (2019). The Impact of External and Internal Factors on Strategic Management of Innovation Processes at Company Level. Ekonomika, 98(2), pp.85-96. https://www.zurnalai.vu.lt/ekonomika/article/download/14734/14513

Spensley, K.J. and Tam, F.W., (2018). Renal and Vascular Inflammation Section, Department of Medicine, Imperial College London, Hammersmith Hospital, London, UK* Correspondence to f. tam@ imperial. ac. uk Disclosure: Prof Tam has received research project grants from AstraZeneca UK, Baxter Biosciences, Boehringer Ingelheim, GlaxoSmithKline, MedImmune, Rigel Pharmaceuticals, and. EMJ, 3(4), pp.70-78. https://emj.emg-health.com/wp-content/uploads/sites/2/2018/12/From-Renal-Biomarkers-to-Therapeutic-Targets....pdf

Suryana, T., Sudirman, I. and Rusliati, E., (2017). External and Internal Environment, and Business Ethic on Business Partnership and its Implication on Small Enterprise Performance in West Java. TRIKONOMIKA, 16(1), pp.8-20. https://www.journal.unpas.ac.id/index.php/trikonomika/article/download/416/231