Discuss about the Competitive Strategy for Science Policy and Practice.
Globalization Era has brought a high level of changes in the recent times. The uplifting of globalization has made various types of people from different country closer by permitting different variety of business possible globally (Beck 2015). The globalization era has incorporated positive impact and minimized the negative effect in the daily lives of all the people round the world. The globalization effect has exposed various types of business in new challenges. The improvements of the framework of globalization significantly control all challenges regarding globalization and generate competitive advantages all over the world. ‘’
The report presented will discuss AAA strategies of Pharmaceutical Industries considering the companies Sun Pharmaceutical Industries and Pfizer Inc. The ICT industries are also taken for doing the project considering the companies IBM and Proctor& Gamble.
The challenges as well as the complexities faced by global economy were controlled by the theory developed by Pankaj Ghemawat. The theory developed by Pankaj Ghemawat is AAA triangle. The AAA stands for Adaption, Aggregation and Arbitrage. The three strategies developed by the famous economist were believed that it has the significant potential to successfully face the challenges introduced by globalization. Adaption includes the adjustments as well as the adoptions required for a company to make the operations and services appropriate for the local markets (Ford and King 2015). Aggregation helps the company in generating economy scale with the help of creation of business operations and simultaneously existing in the local markets. Arbitrage helps the company of achieving advantages in cost, currency differences and price.
The pharmaceutical companies are having a rapid growth. The growths of the pharmaceutical companies are due to the up-gradation of the research and the advancement of the technologies that helps them in upcoming with the new drugs. The pharmaceutical companies undergoes certain processes like patenting, safety, testing, efficacy and marketing before the company finally launch the product. The invention of new drugs includes lot of investments of funds for the company (Frynas and Mellahi 2015). Therefore, the companies have to be very much sure about the feasibility of the products. The company must follow the strategies of AAA to gain competitive advantages over the rival company. The model followed for the strategic comparison is given below
|
Industry |
Adaption |
Aggregation |
Arbitrage |
|
Pharmaceutical Industry |
Adaption |
Aggregation |
Arbitrage |
|
Sun Pharmaceutical Industries |
This company is the world’s fifth largest country. The company for having a global richness incorporates changes that are suitable according to the requirements of the country. The chemical composition they adapted also depends on the requirements of the specific countries. The ingredients used and the style of packaging was adapted according to the needs of the country. The style of packaging helps in holding the market and increase the face value of the company (Yeung 2015). The strong research of the company and the better implementation strategy gives the competitive advantage to the company over others. The company over the past ten years has been successfully challenging the patents consistently. The challenging on the patents are on the costly products in US. This helps in introducing cheaper products and good quality of generic versions to gain the share in the market. |
The company understood the significance of having a global richness to attain a significant growth. The company has successfully gained competing business globally. The company has still now extent nineteen branches globally that increase its global richness (Li et al. 2013). Being a pharmaceutical company having 19 companies globally is a great achievement of the company. |
The company has successfully constructed capability of research in the developed countries. This reduces the substantial cost that has greatly increased the capability of supplying the products at a much lower price. The company has most of the facility of manufacturing that reduces the cost of production (Contractor, Kumar and Dhanaraj 2015 ). This made the exports of the products in developing countries to sell at much more higher prices. |
|
Pfizer Inc |
The product to be sold at different countries other than the base countries needs modification of the products. Pfizer strategy for sale follows the above strategy in Latin America. The company abided by the differences of the cultural, regulatory and economic. These facts are taken into accounts for marketing the products. The specific steps taken by Pfizer are the extensive building of brands by outreaching the programs of community (Wachinger and Reuter 2016). The resourced devoted to work by the help of the pharmacists who plays a significant role in providing the medications to the patients. |
This company is an example, which shows administrative aggregation. If the company wants to sale the drug in the market of Europe for meeting the requirements of the countries where they want to sell the drug and get qualified for the registration of the drug (Thangakani et al. 2016). The registration for the qualification in different countries requires meeting their requirements according to their country and the sale of the products depends on the marketing in the respective country. |
The arbitrage of the company provides an example of Tax arbitrage. This benefits the company to have a cut off in the taxes. The company takes over the UK based company Astra Zeneca. The company is benefited as being a UK based company it does not have to pay any taxes on earning being a overseas company. The tax rate becomes lower. The rate of taxes on the patent products of UK is also very less (Baioao 2015). Therefore, the company is making much profit. |
The significant goal of global strategy is the control the differences that are been responsible for creating larger borders. Considering an IT firm the adaptation includes seeking for boosting revenues and maximizing the share of the market considering the local relevance. It states that creation of local units in the national markets. This is considered the good job done if all the steps are been carried out following the supply chain. Aggregation aims to deliver the scale economics with the help of regional and global operations. This strategy contributes in standardization of the products or the offered service and integrating the development as well as the production process. Arbitrage relating to IT firms is defined as exploitation the difference of national markets and regional markets. It is done by identifying different parts of the supply chain in various locations like call centers in China, factories in Australia and retail shop in Europe. The companies those are been extending globally need to formulate the strategies of AAA to developed a standardized framework globally. The AAA those are correlated with various organizations (Campbell et al. 2015). When the company is focusing on adaptation, it becomes organization centric. When aggregation is the main aim of an organization crossing the border of the country to achieve global richness is the focus of the organisation. The enlightment of arbitrage is followed through a vertical and a functional explicit that pays attention in balancing the supply as well as demand in the boundaries of the organization. The AAA triangle is been applied for the software companies IBM and Proctor & Gamble.
|
ICT Industries |
Adaptation |
Aggregation |
Arbitrage |
|
IBM |
The first path of globalization was done by Nestle. The company started making small branches outside the home market. The following of the Adaptation strategy could expose the company to certain challenges. After that IBM followed the adaptation strategy. They started serving the markets in the overseas by constructing mini IBM in the country they targeted. Every people of this companies started operating a local model of business on a large basis, which permitted them to adapt the local differences as per the requirements (Franco et al. 2016). Therefore, to gain competitive advantages the company started building mini IBM that was a major adaptation strategy taken by them. The company has invested a lot of fund especially for the country centric marketing, which is an advantage for the organization. This also boost the appeal, which make the company to obtain focus form he clients. |
The company started aggregating the countries. The countries are been aggregated to regions. This improves the co-ordination and in turn helps in generating more economies of scale all over the world. The company started exploiting the differences globally. The company aims in achieving the balance within the AA strategy. The AA strategy includes Aggregation and Arbitrage. The company in obtaining the advantages and benefits of aggregation has laid a high emphasis on the delivery model of the global network. This helps in building a rational delivery structure, which includes three different software development centers (Kim et al. 2016). The development centers helps in servicing a large customer with a great depth in skill assisting with mature coding and high level of quality control processes. The regional centers gave importance on medium scales and laid focus on the local languages and the challenges regarding cultural distance. The centers in the near-shore are having small case and started focusing on obtaining the comfort of the customers by proximity. |
The effort of the company to exploit wage differential by maximizing the number of total employees. A report suggested that the employee number goes on increasing from nine thousand to forty three thousand from the year of 2004 to the mid of 2006. The planning done on the huge additional growth helps in gaining such an arbitrage. In 2005 TCS declared that they are going to sign a five year contract with ABN AMRO. TCS thought that they are going to produce approx 200 million. On the other hand, IBM had already done a bigger deal with the great Dutch Bank. The recent initiatives for the arbitrage are the matching of algorithm. This laid to optimizing of the assignments of the people dynamically through all the located branches of IBM globally. Krisha Nathan who is the director of IBM Research lab in Zurich gave a vivid description on the reasons of delivering an advanced model on the rocket science. Nathan describes that the resultant assignments patterns turned out to be 75% global and 25% domestic (Buehlmaier and Zechner 2016). This matching devices are effective for arbitrage as a massive power shift is been noticed in the company. |
|
Proctor & Gamble |
The company started following the strategy of IBM in the case of adaptation strategy. The adaptation strategy marked with the opening of mini P&G branches to get a nicely fit in the local market. The planning of these strategies evolved out in a different way for the company. The units of global business of the companies are selling with the help of market development of the companies, which is aggregated to the regional level (Payaud 2014). The CEO of the company A.G.Lafley described that the company wants to adapt in the significant markets and the main goal of the company is to outplay the competitors. |
The main aim of the company is to beat the competitors by focusing on the country oriented multinationals. The aggregation strategies followed by the company includes installation of the structure of matrix. The significant interfaces of GBU/MDO broke in many functional areas. The company gained many success under the CEO Lafley as the CEO was successful in achieving the stability in between the adaption and aggregation. It gave the scope for the company for gaining the differences in the units of general business as well as markets. The structure of MDO helped in gaining the profit for the markets that is emerging (Yang et al. 2014). The decision grid of the company also plays a significant role as it is been formulated after years of negotiation. The protocols that are been designed for various decisions for the units of general business and constructing it. |
Lafley the CEO of the company stated that the arbitrage strategy is important for the company. The main scope for the arbitrage of the labor is based on the consumer goods that should be fast moving. The business for this company has a tendency of clustering at the top quartile (Jones, Siemsen and Balasubramanian 2015). This promotes the integration as well as helps in promoting the mutual understanding. The unit of the global business regional headquarters is integrated with the regional MDO headquarters. |
Conclusion
The report focuses on the rapid growth of the major industries in the sector of pharmaceutical and ICT by applying the framework of AAA. The figure below suggested the strategy of the managers and the map they should follow.
The percentage spent on advertising to sales is for the benefit of the company. The percentage spent for R&D shows the significance of aggregation. The percentage of fund spent for the labor helps to understand the significance of arbitrage. The managers should start paying attention when the score is above median as these areas are the strategy for merit. The company should manage the differences of the cross border when the company is aiming for the global richness. The major factors the company should focus are on the technology and the policies of the trade. These factors help the company in restructuring. The company depends on the factors like the history of the globalization and financial statement. The company may face tough challenges in implementing AAA at the same time. Therefore, the recommended way by which the company could implement this strategy is by taking AA at one times and implementing them successfully.
Reference List
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Beck, U., 2015. What is globalization?. John Wiley & Sons.
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Li, B., Sun, B., Qian, X., Li, W., Wu, Z., Sun, Z., Qiao, M., Duke, M. and Zhao, D., 2013. In-situ crystallization route to nanorod-aggregated functional ZSM-5 microspheres. Journal of the American Chemical Society, 135(4), pp.1181-1184.
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