Describe about the Competitive Strategy for The Pharmaceutical Industry.
The project focuses on the pharmaceutical industry and the food and beverage industry of Australia. In order to understand the competitive strategy of the company two companies from each of the industries has been chosen. The chosen companies for analysing the pharmaceutical industry are Alphapharm and AstraZeneca, while the companies for the food and beverage industry are Fonterra Co-op Group and Lion Nathan National Food in Australia.
Alphapharm is one of the largest generics and specialty pharmaceutical companies over the globe. The company manufactures more than 1,400 different products to wholesale, retail, government and institutional customers (Mylan.com.au. 2016). AstraZeneca is a global pharmaceutical company that deals with research, development, manufacturing and supplying of medicines (Astrazeneca.com. 2016). One the other hand, Fonterra Co-op Group is a global cooperatively owned company in New Zealand. The company aims to source secure, high quality milk to add real value to the customers all over the world (Fonterra.com. 2016). The Lion Nathan National Foods is a beverage and food industry operating in Australia and New Zealand and produces beer, wine, dairy, juices, RTDs and spirit (Lionco.com, 2016). The study therefore discusses the elements of the AAA framework to evaluate the adaptability, aggregation and arbitrage strategy of all the chosen four countries of the pharmaceutical industry and the food and beverage industry of Australia. The ways of using the elements of the AAA framework are also discussed to obtain detailed knowledge about the industry analysis of the company.
Industry level analysis is one of the tools that support a company to understand the position of the company in the market with respect to its competitors. The AAA framework is an effective framework that helps to analyse the market of the industries. In the opinion of (Cusumano, Kahl and Suarez 2015), the three A’s of the framework represents the adaptation, aggregation and arbitrage of the organisation. The industry analysis of the chosen 4 companies is performed using the AAA framework.
Adaptation: AstraZeneca implements various strategies that help the organisation to increase the market share and the revenue of the company. In order to enter into the new customer base, the company adapts practices and measures that help to attract the customers towards the brand. AstraZeneca has globally introduced the Young Health Programme that supports the vulnerable young individuals to understand and have a positive impact to handle the issues regarding health faced by them. Furthermore, in 2012, the company launched three-partnership with the George Institute for Global Health to improve the health conditions of the people over the world through research and development.
Aggregation: The Company adopts strategies that help to achieve economies of scale by creating global efficiencies. The products offered by AstraZeneca are set at reasonable price that helps to attract more customers. Cost effective approaches and pricing strategies are used to achieve centralize purchasing of the raw materials, producing final products etcetera. AstraZeneca believes that the business will grow if the public are kept updated about the information regarding the medicines sold by the company (Teeratansirikool et al. 2013).
Arbitrage: AstraZeneca implements strategies in the workplace that helps to create global value by profiting through margin of difference in different supply chain. The partnering process of AstraZeneca aims to be flexible, responsive and honest with the partners to provide equal value to both the parties. Hollensen (2015) mentioned that the company tries to establish long-term partnership to allow full participation in the development decision about the products.
Adaptation: Alphapharm applies global quality standards across the product line and the facilities despite the market. During the process of manufacturing and packaging, the company implies advanced and innovative technology and system that supports the company to meet the products with the specification. According to Bayraktaret al. (2016) the methods help the company to influence a wide network of both local and international channel of access that includes the institutions, physicians, government, retailer and wholesalers of the company.
Aggregation: Alphapharm offers generic products to the customers as the generic medicines are more affordable and preferred by the patients. The sustainability of the government subsidised Pharmaceutical Benefit Schemes (PBS) is ensured with the help of the savings made due to the generic medicines.
Arbitrage: In order to achieve global value the company intends to educate the government all over the world about the effectiveness of the generic medicines (Pulaj, Kume and Cipi 2015). The oral solid dose manufacturing capacity of the company grew about 65 billion and 80% of the products of the company are manufactured internally.
Adaptation: As the demand, for the dairy products have been increasing globally over the days, the company tries to grab more of the available opportunities in order to increase its revenue and profit. The company therefore takes decisive steps that help to meet the nutritional needs of the market. The seven key strategic paths of the company that is adopted by the company are optimising the New Zealand milk, build and grow beyond the current customer position. Deliver on foodservice potential, grow the anlene business, develop leading position in the paediatrics and maternal nutrition, invest selectively in the milk pools and align the business to enable the proper implication of the strategies (Lechner and Gudmundsson 2014).
Aggregation: In order to offer high quality products to the customers all over the world,Fonterra Co-op Group collaborates with other companies that help to complement the focus of the company. Recently in 2015 march, Fonterra Co-op Group completed a partial Beingmate tender offer that helped to achieve a global partnership and meet the growing demand for infant formula in China (Devlin 2013).
Arbitrage: Fonterra Co-op Group further implies strategies and open innovation policies that help to encourage the external partners to contribute in the development of new products and technologies. The company intends to achieve global value for which it has active research partnership with a number of universities and research facilities all over the world (Barotoet al. 2012).
Adaptation: In order to adapt with the changing market of Australia, Lion Nathan National Food implements strategies that helps to understand the needs of the stakeholders in order to operate in partnership with the stakeholders. This helps to increase the productivity of the employees and thereby earn higher profit for the company (Rashidirad, Soltani and Syed 2013).
Aggregation: As per the notion of the company, the culture of the market in Australia can be measured and influenced. When the culture is focused with constructive, inclusive and achievement, the employees are offered with great experiences and underpin success of the business in the long-run (Barei, Le Pen and Simoens 2013).
Arbitrage: Lion Nathan National Food creates value for the products in the market by supporting better choice for the products. In order to increase the brand name, the company tries to improve the food and beverage choices of the individuals in Australia and New Zealand.
The study focuses on the pharmaceutical industry and the food and beverage industry of Australia. The companies of both the industries use the AAA framework that helps them to analyse the industrial level of the companies. The companies are able to evaluate the strategies used to deal with the competitive market with the support of the AAA framework elements.
The pharmaceutical industry of Australia uses the elements of the AAA framework to develop competitive advantage for the company that helps to achieve a high position in the market. In order to incorporate the AAA framework in the business, the use of the authentication is the first process that provides the users a way to identify the systems used in the workplace. AstraZeneca uses all the three elements of the AAA framework, however, main focus is made on the adaptability and the arbitrage strategies of the company. The company introduces to the Young Health Programme to minimise the health issues from which a number of citizen suffer. Further, the company unites with the George Institute for Global Health to improve the health condition of the individuals. The company uses the cost effective strategies for cost minimisation, which is not that satisfactory. Thus, it can be inferred that the two elements of the company are used well that is the adaptability and the arbitrage strategy of the company.
The Alphapharm uses the first two elements of the AAA framework effectively that helps the company to achieve competitive advantage in the market of Australia. The company uses the adaptation element of the framework during the manufacturing and packaging process. The innovative and new technologies are implemented by the company.
The Fonterra Co-op Groupuses all the three elements of the AAA framework to achieve an effective competitive advantage for itself. It uses the seven strategic path for itself that helps the company to perform as per the need and demand of the market. Moreover, the company Beingmate tender that helped to gain the aggregation strategy for the company. In order to use the third element that is the arbitrage the company includes open innovation policies.
The Lion Nathan National Foods company in Australia pays attention towards the stakeholder’s need which can be referred as the use of the adaptation strategy in order to survive in the competitive market (Perry and Pyatt 2015). The company has been unsuccessful in using the elements of the AAA framework effectively.
|
Elements |
AstraZeneca |
Alphapharm |
Fonterra Co-op Group |
Lion Nathan National Foods company |
|
Adaptation |
· Young Health Programme · Three-partnership with the George Institute for Global Health |
· Innovative technology |
· Seven key strategic paths · Increase revenue |
· Strategies to understand the need of stakeholders and improve sales |
|
Aggregation |
· Cost effective approaches · Pricing strategies |
· Alphapharm offers generic products · Sustainability of the government subsidised Pharmaceutical Benefit Schemes (PBS) |
· Beingmate tender offer |
· Culture is focused with constructive, inclusive and achievement |
|
Arbitrage |
· Long-term partnership |
· Educate the government about the generic medicines |
· strategies and open innovation policies · active research partnership with a number of universities and research facilities |
· Supporting better choice for the products |
Conclusion
From the above industry level analysis of the four chosen company it can be inferred that the AAA framework is an effective tool to measure the adaptability, aggregation and arbitrage strategy of the companies. The organisation are able to analyse their competitive advantage with the help of the AAA framework. The more a company is able to use the elements of the AAA framework the more is the company able to become competitively strong. The organisations gain a competitive advantage over its competitors that help them to earn higher market share and better market position.
It can be therefore recommended that Fonterra Co-op Group needs to pay more focus on the utilization of the elements of the AAA framework. The maximum utilization of the elements will help the company to focus on the main objectives of the company that will in turn help to increase the market position of the company. The competitive strategies will help the industries and the companies to understand the industry in a better manner. Appropriate knowledge about the industry and the market supports the development of strong action plan. The organisational goals are effectively communicated that helps to achieve the goals in a smooth manner. Therefore, the proper use of the elements of the AAA framework (Adaptation, Aggregation and Arbitrage strategy) helps Alphapharm, AstraZeneca,Fonterra Co-op Group and Lion Nathan National Food in Australia to gain improved opportunity for success.
References
Astrazeneca.com. (2016). AstraZeneca – Research-Based BioPharmaceutical Company. [online] Available at: https://www.astrazeneca.com/ [Accessed 26 Sep. 2016].
Barei, F., Le Pen, C. and Simoens, S., 2013. The generic pharmaceutical industry: moving beyond incremental innovation towards re-innovation.Generics Biosimilar J.
Baroto, M.B., Abdullah, M.M.B. and Wan, H.L., 2012. Hybrid strategy: A new strategy for competitive advantage. International Journal of Business and Management, 7(20), p.120.
Bayraktar, C.A., Hancerliogullari, G., Cetinguc, B. and Calisir, F., 2016. Competitive strategies, innovation, and firm performance: an empirical study in a developing economy environment. Technology Analysis & Strategic Management, pp.1-15.
Cusumano, M.A., Kahl, S.J. and Suarez, F.F., 2015. Services, industry evolution, and the competitive strategies of product firms. Strategic management journal, 36(4), pp.559-575.
Devlin, J.F., 2013. Adding value to retail financial services. International Journal of Bank Marketing.
Fonterra.com. (2016). Fonterra – About Fonterra. [online] Available at: https://www.fonterra.com/global/en/About [Accessed 26 Sep. 2016].
Hollensen, S., 2015. Marketing management: A relationship approach. Pearson Education.
Lechner, C. and Gudmundsson, S.V., 2014. Entrepreneurial orientation, firm strategy and small firm performance. International Small Business Journal,32(1), pp.36-60.
Lionco.com, (2016). [online] Available at: https://www.lionco.com/ [Accessed 26 Sep. 2016].
Mylan.com.au. (2016). Mylan – Seeing Is Believing. [online] Available at: https://www.mylan.com.au/ [Accessed 26 Sep. 2016].
Perry, C. and Pyatt, R., 2015. Network theory’s contribution to the development of marketing research. In Proceedings of the 1995 World Marketing Congress (pp. 188-196). Springer International Publishing.
Pulaj, e., Kume, v. and Cipi, a., 2015. The impact of generic competitive strategies on organizational performance. The evidence from albanian context. european scientific journal,11(28).
Rashidirad, M., Soltani, E. and Syed, J., 2013. Strategic alignment between competitive strategy and dynamic capability: Conceptual framework and hypothesis development. Strategic Change, 22(3â€Â4), pp.213-224.
Teeratansirikool, L., Siengthai, S., Badir, Y. and Charoenngam, C., 2013. Competitive strategies and firm performance: the mediating role of performance measurement. International Journal of Productivity and Performance Management, 62(2), pp.168-184.
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