Applied Corporate Strategy: External Analysis, Resources & Competencies

This document provides insights into applied corporate strategy, focusing on external analysis, resources, and key competencies. It covers topics such as PESTLE analysis, VRIO theory, and Porter's Five Forces. The document explores opportunities and threats in the industry and evaluates the effectiveness of strategies.

Applied corporate
strategy

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK 1............................................................................................................................................3
1. Carry out external analysis to identify opportunity and Threat as well as assess industry
effectiveness?.........................................................................................................................3
TASK 2............................................................................................................................................8
2. Analyse the resources & key competencies of company...................................................8
............................................................................................................................8
TASK 3..........................................................................................................................................12
3. Evaluate the given strategy using the criteria related to SAFe with regards to selected
organisation? ........................................................................................................................12
CONCLUSION .............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Strategies is a plan that are developed and formulate by the company for short term or
long term. Before creating any plan, it is necessary for company to analyse the internal as well as
external environment. For that SWOT and PESTLE analysis is conducted by smart managers of
organisation. In this each element is deeply study so that effective policies & strategies
developed which helps in achieving the objectives on time. The organisation that was selected
for the project is Astra Zeneca as it is British -Swedish multinational pharmaceutical &
biopharmaceutical company. It has its headquarters in Cambridge, England. As the company
Astra Zeneca has great portfolio of products for major diseases such as cardiovascular, cancer,
heart disease, neuro disease, gastrointestinal, respiratory, inflammation and infection. The chief
Executive officer of the company is Pascal Soriot. The company has its headquarters in
Cambridge, United Kingdom. On 6th April, 1999 it was incorporated. The topics that are included
in this project are Description of PESTLE analysis along with opportunities and threat. Use of
two models such as VRIO and Value chain model. How the organisation gain advantage with the
theory is also explain in detail. Application of SAFe is also cover in this assignment (Bernard,
2020)
TASK 1
1. Carry out external analysis to identify opportunity and Threat as well as assess industry
effectiveness?
PESTLE Analysis
Political: Political factors plays an important role to determine the factors which make
impact on profitability . In more than twelve countries it operates their business in
pharmaceutical globally and expose itself to different type of political environment as well as
political system risk. The achieve success in respective dynamic pharmaceutical industry across
various countries is to diversify the systematic risk of political environment. Before taking entry
in specific competitive market, organisation can thoroughly analyse the factor before investing in
some market. Few examples of these factors are corruption level, political stability as well as
importance of pharmaceutical sector in the country’s economy, Intellectual property protection,
pharmaceutical related tariffs and trade regulations, anti-trust law which are based to health care,

taxation, mandatory workforce benefits, wage legislation, industry health & safety regulations ,
product labelling as well as other necessary requirements in context to health care (Lound ,
2018)
There is now growing political focus and pressure on healthcare authorities across the World.
Also there will be more harmonization of healthcare system across USA.
Opportunity Threat
 If the Inflation rate is low than it tends
to increase the purchasing power of
audience so Astrazeneca has great
opportunity for business to introduce
their new products in the market which
leads to increase the chances of
business growth and survival (Borner ,
2018)
 Unfavourable change in the tax rate is
the most common threat which
Astrazeneca business face because rate
of taxes are unpredictable as
governments regulation regarding
taxations may vary time to time
(Budsaratragoon and Jitmaneeroj,
2019)
Economical: Micro environment factor like competition norms make impact the competitive
advantage of the firm. Country's economic factor are used by Astrazeneca like inflation rate,
growth rate, exchange rate, intervention of Government in free market, labour cost and
productivity in the economy, economic growth rate, unemployment rate, inflation rate etc.
Due to the reason to make reduction in consumer disposable income will have an impact
on those countries who use health insurance model particularly where part payment is require.
As Respective economic pressure are seeing an increased growth in strategic buying group who
are forcing down prices.
Opportunity Threat
 If the cost of labour is low than it is
great chance for business expansions
for Astrazeneca because workforce to
perform the activity is easily available
at low cost.
 Threat of increase in interest rate
affects the business most. If company
Astrazeneca borrow money from banks
or Financial institutions and the rate of
interest is high than it is the liability to
pay large amount as interest as it makes

negative impact on business of the
company Astra Zeneca (Feng, 2017)
Social: Society culture as well as the method of doing things provides impact on the culture of
company. Shared belief as well as attitude of the audience plays a significant role to understand
that behaviour of audience in given market. And in what they develop or design marketing
message for customer of pharmaceutical industry (Akbari, 2017). For PESTLE analysis social
factors which leaders should analyse are attitudes in terms to health as well as environmental
consciousness, demographic, hierarchy structure in the society, leisure interest, attitudes,
education level as well as education standard in respective industry (González , 2021)
As there is problem of increasing obesity and its related health risk and issues. Now
expectations of patients change and they become more demanding.
Opportunity Threat
 If people are more health conscious
than it is great opportunity for Astra
Zeneca to expand business because
audience not to compromise with their
health in any condition so it is great
chance for organisation to create their
market in pharmaceutical sector
(Akmaeva and et. al., 2020)
 Threat of availability of their substitutes
at low prices because it tends to destroy
the business of Astra Zeneca (Gennari,
2018)
Technological: There are several technological advancements happening all around the world,
that is required to be adopted by the company to gain a strong competitive advantage. Hence, to
ensure adaptability in such dynamic business environment, flexibility and modifications for
continuous improvement are required Various factors are consider in context to technology by
marketers related to impact on value chain structure in healthcare sector, technological effect on
product offering, in pharmasuitical industry impact on cost structure. Technological development
by their competitors (Lee and Pati, 2017)

As technological advancement will create new business prospects with regards to latest
therapy system and provisions.
Opportunity Threat
 If level of innovation is great than it
leads to increase the business of
Astrazeneca. As due to this it has
good opportunity to introduce new
technology to produce medicines in
numbers in a minute. As advance
technology affects the business in
positive way.
 Threat of rapid change in
technology is generally face by the
company. Because to adapt new
technology large investment is need
to be made which affects the
profitability of Astra Zeneca
(Shahzad , 2017)
Legal: The institution & legal framework is not robust enough for the purpose to protect
intellectual property rights (Luthra, 2018). A firm should evaluate carefully before entering into
the market. Some factors which leadership must consider at the time of taking new entry in the
market are discrimination law, consumer protection & e commerce, health and safety law, data
protection, employment law, anti trust law etc.
The industry has so many legislative restrictions. The evaluation of internet is also
stretching the legislative boundaries with patients demanding more rights in their healthcare
products.
Opportunities Threat
 If Astra zeneca work according to
consumer protection law than it
safeguard the interest of people which
indirectly effects the business of it in
positive manner because people prefer
to adopt their product because it make
items as per the concept of consumer
protection.
 Threat of introduction of new strict
laws, which binds the company to
devote time to work as per the
provisions that are set by the
government are faced by Astrazeneca.

Environmental: This factor is related towards the ongoing environmental concerns in the world.
Hence, there is a high requirement for organisations in relation to how best they effective and
positive practices are performed by the organisation. This factor involves various elements such
as climate change, recycling, weather, waste management in sector of pharmacuitical, attitudes
towards as well as support for renewable energy.
Pharmaceutical companies is also an opportunity to incorporate it with their corporate
social responsibility programme.
Opportunities Threat
 Astrazeneca has opportunity to expand
business by producing number of
medicines by using different types of
leaves, herbs, plants.
 Failure with regards to waste
management in health care industry is
great threat that are most commonly
faced by pharmaceutical company
Astrazeneca
Porters Five Forces of Astrazeneca
Threat of new entrants: New arrivals in global pharmaceutical industry leads to bring
innovation , new method to perform activity as well as put pressure on Astrazeneca by reducing
pricing strategy, lowering cost & giving new value proposition to consumers. All these
challenges are manage by it and tend to develop effective barrier in context to safe guard their
competitive advantage. Example Eli lilly.
Bargaining power of supplier: In global pharmaceutical industry all the companies
purchase their raw material from different suppliers. But who are in most dominant position can
decrease the margins which earn by Astrazeneca. The powerful supplier in sector of
pharmaceutical use the negotiation power to extract higher prices from the firm in the field of
global pharmaceutical industry. However, the impact of high supplier bargaining power is that
overall profitability of global pharmaceutical industry is low.
Bargaining power of buyer: As the buyers are so demanding but they are interested to
purchase only if the product is available at low cost. In the long run it put pressure on
profitability of Astrazeneca. Smaller as well as more powerful customer base of Astrazeneca ,

the bargaining power of audience is high and their ability to seek increasing offers and discounts
are also become high.
Threat of Substitute product: IF a new product meets the similar audience needs that
profitability of the industry suffers the most. As it is observing that threat of substitute product is
quite high if competitors offer value preposition which is slightly differ from current items that
are offer by the country. Example generic and therapeutic is substitute of pharmaceutical.
Rivalry among existing competitor: If there is existence of intense rivalry among the
players that are already exist than it results to drive down the prices which indirectly effects the
overall profitability of company. As the organisation Astrazeneca operate the business in
competitive global pharmaceutical industry. Thus competition not affect the long term
profitability of company. Few example of existing competitor of astrazeneca are Pfizer Ltd,
Glaxosmithkline pharmaceutical Ltd, Abbott Ltd etc.
TASK 2
2. Analyse the resources & key competencies of company
VRIO Theory
The VRIO analysis of company Astrazeneca look their every internal resources one by
one so that to assess that as it provides sustainable competitive advantage or not. At each stage

Astrazeneca VRIO analysis mention whether these resources improved to gain greater
competitive advantage.
Valuable: The VRIO analysis of the company reflects that organisation Financial
resources are most valuable as it supports to invest in grasping external opportunities which
exist. It also helps in combating external threat. As per VRIO analysis it is observe that
Astrazeneca local products are valuable resource as these can be highly differentiated. The
makes the value of product high. It also shows that workforce in the organisation are valuable
resource to the firm. As new employees are highly trained so that it results as productive
outcomes. The employees are so loyal and the level of retention of workforce are high. VRIO
analysis of company shows that distribution channel of Astra Zeneca is valuable resource. It
became beneficial in reaching out to large number of customers. It ensures by VRO analysis that
promotion activities convert into sales because products are available easily. On the other hand,
their cost structure is not valuable resource because production cost is so high which affects
firms profit. Thus cost structure considers as competitive disadvantage so it is important to work
on it. As The factor research & development is not valuable resource because it gives less
benefits but needs high costing to innovation. So it is recommended that team of R& D must be
improve and for this cost cutting is to be done. Physical resources: It is concerned to various resources such as equipments, tools,
machines, infrastructure etc. As it plays a great value to any business. Also without
adequate physical resource it become not possible for company to run their business
smoothly and achieve target. Therefore, it is important to include all element in sufficient
quantity so that to avoid shortage of resources. If organisation has good place to operate
business with appropriate number of equipments, and advance technological machines
than only it can easily compete their competitors.
o Financial resources: As Astrazeneca Plc purchase Alexion Pharmaceuticals in
cash of around $ 39 Billion. The offer of their share is $ 175 as on Friday, it
serves 45% premium to closing price. In the year 2019, Solaris generate revenue
of approx. 4 billion $. At the ending of third quarter in the year 2020. Alexion had
earned $5.9 billion in sales during the year. It tends to improve growth rate with
24%. As these services shows that graph of company is tends to increase that
supports firm to compete the business which do similar operation and to gain

competitive advantage (AstraZeneca to Buy Alexion for $39 Billion in Rare-
Disease Push, 2020).
o Human resource: As Human resource is the most precious asset for any type of
organisation because without skilled or talented employees or workers it is not
possible for firm to achieve targets. Under as well as over staffing both create
issues and make negative impact on sales and revenues of the business which
leads to increase chances of business failure. On the other hand, if experienced
and skilled employees are there than they easily achieve the targets by taking help
of machinery, equipment etc. and compete rivals. So finally it concludes that
without sufficient staff company cannot gain completive advantage.
o Intangible resource: It is related to intellectual properties such as franchise,
trademark, patent, copyright, Good will etc. Many companies or individual make
investment in terms to purchase franchise, trademark etc. As company serve
quality product or services to their customers, client with the intension to develop
great goodwill in the competitive market so that compete with their competitors &
to gain competitive advantage.
Rare: According to VRIO analysis it is noticed that Astra Zeneca financial resources are
limited In the industry, few company have strong financial resource. As employees are rare
resources in the company. Their staff members are so skilled a swell as well trained that are not
in other firm case. As the good work environment and better compensation ensures that the
respective workforce do not leave for other organisations. Their patent is also a limited resource
because it is not available easily and not possessed by their competitors. On the other hand their
distribution network are rare resource because competitor need lots of time and investment to
come up with better distribution channel (Kim and Nguyen, 2020)
Imitable: Astrazeneca financial resources are costly to imitate as identified with the help
of VRIO analysis. As organisation obtain resources through prolonged profit over the year. As
competitor’s as well as new entrants need same profit for long term for the purpose to
accumulate same financial resources. It is also observe that local food items are not so much
costly to imitate as if sufficient amount is invested in Research and development than their
competitors than their competitor can also purchase these product. So Astrazeneca provides
temporary competitive advantage. It is very difficult to imitate patent because Astrazeneca not

legally allowed to imitate product that bare patented. It is very costly to imitate distribution
network. Gradually over the years it has been developed. Large amount is invested by competitor
if they imitate similar system of distribution.
Organisation: Financial resources are organised systematically so that the value can
easily be capture. To invest in appropriate place, the respective resources are use strategically so
that opportunities can easily be grasp and threat are combatting in most suitable manner.
Therefore, these resource prove as source of competitive advantage. Astra Zeneca patent is not to
be systematically organised. It means that company use their patent in full potential. As unused
competitive advance is present which can be convertible into sustainable competitive advantage.
The distribution network is organised in the company. To reach their clients thus network is
adopted by the firm by ensuring that on all their outlets the products are available.
Value chain model.
At the time of producing or converting raw material into finished product various
activities are performed by the company. As these are classified into two parts first one is
primary activity and other is secondary.
Primary activity
Illustration 1: Value chain Analysis. 2018

 Inbound Logistic: It include connection with suppliers and engaged all the activities that
are relates to store, receive as well distribution of output.
 Outbound logistic: In this all the task are tends to do to convert raw material or semi-
finished product to outputs.
 Operations: In this output collection, store and distribution are cover.
 Marketing & sales: In this activities related to create awareness is done by marketers. In
this regarding the product information is given to customers so that they show their
interest towards the product and purchase it which results as to increase sales & revenues
of the company. Service: Involve all activities that tends to ensure that product or services are effectively
work for the purchaser after it is delivered (Amoako, 2019)
Secondary activity Procurement: It is an activity of purchasing various different inputs or raw material and
equipment for producing or manufacturing for the firm. Human resource management: In this various activities related to hiring, recruiting,
developing, organising, staffing, controlling, directing, training, compensating,
performance appraisal, personnel lay off is done by HR team of the company. Infrastructure: it tends to server organisation requirements and ties their many parts
together, in this various departments or units and functions that are perform in it are
involved. As these functions are related to public affairs, quality assurance, planning,
finance, general management etc. technological development: It is linked to software, hardware, innovation, equipment,
technical knowledge that supports in transformation of raw material into finished product.
TASK 3
3. Evaluate the given strategy using the criteria related to SAFe with regards to selected
organisation?
Safe
In this focus is made on three elements such as Suitability, Acceptability, Feasibility.

Suitability: In SAF strategy model, it is most important factor as it helps the company to
check whether the strategy will do what organisations wants to do it or not able to do it.
Suitability is most assessed in various different criteria which are most important to the business
like expectation suitability, environmental suitability and at last capability suitability. These
following suit abilities categorised systematically for the purpose to really reflect the particular
needs of the organisation.
Acceptability: SAFe strategy model acceptability aspect is regarding risk, return,
stakeholder reactions for particular strategy. Calculation of return is done on the basis of benefits
which is expected by shareholder from the strategy. It can be financial or non-financial. As it is
deciding on the basis of shareholders decision making. With the help of various number of
method return can be ascertain. Some examples of these methods are profitability analysis,
stakeholder value analysis, cost benefit analysis, real option analysis etc. In context to risk,
strategy failure probability, financial losses as well as brand impact must be weighted up. On the
basis of liquidity impact, shareholders reaction, sensitivity analysis, measurement of risk is
perform and it is also concern that how acceptable strategy is.
Feasibility: The feasibility Portion of the model SAF is either to make or break the
strategy which is chosen. Whether the organisation has sufficient stock, resources, abilities &
aptitude to actually perform the strategy is key to their success. Thus by forecasting financial
feasibility needs to be assessed and for that cash flow analysis, break even analysis as well as any
other financial test are also analysed.
Once if marketers go through every area of SAF model and analyse which idea are most
suited to the company, than it become possible to reach towards criteria individually. Ultimately
is conclude that strategy that fit to suitability, acceptability & feasibility are most suitable
strategy for Business.
Risk: FCA’s liquidity calculated below is lower than the industry’s current ratio of 1.04
in 2019. This can be translated into higher levels of risk of not being able to meet current
obligations.
Current ratio=Current
assets/Current liabilities
(in € million)
2019 2018
Current assets 34,932 38,292
Current liabilities 43,354 46,474

Current ratio 0.81 0.82
the On the other hand, FCA had a Debt-to-Equity Ratio 0.86 in 2018 and 0.57 in 2019 (YCharts,
2020a). This shows a good financial health as it is more financed by its equity than creditors, and
it has the ability to meet its financial obligations. FCA has a lower degree of leverage compared
to industry’s ratio of 1.17 in 2018 and 1.14 in 2019 (Macrotrends, 2020). The overall level of
risk is acceptable as the group can easily access loans to meet its obligations.
Mendelaw's metrix
TOWS
For every combination of internal and external environment factors , consider the manner
to use to create good strategic option.
Astrazeneca is required to do more focus on promotion to social media and finding new method
to perform digital marketing. It tends to help to gain profit by increasing product demand. It main
concentration is on to improve sales as well generating large customer base which helps the
organisation to create brand image.

Strength
 In term to innovation
index it ranked in first
position
 It has very strong
financial performance
Weakness
 worst public relation
image
 Lack of inspirational
quality of leadership
Opportunities
 vast chance to expand
in the emerging market
SO strategies
 Due to the reason of
generic
WO strategies
It helps to create strong base in
the market and also is going to
be strengthen as it promotes
the item by using digital
marketing.
Threat
 High drug development
cost
 Acquisition by
financial bigger and
ST Strategies
As customer base can be
increase if social media
marketing is use as it tends to
reduce pressure in
WT strategies
Changing in marketing
techniques give broadness by
reducing manufacturing cost.
To all class products are

wealthier company competition. Control cost of
manufacturing can be done by
concentrating on digital
marketing. It helps in business
expansion also. Focus is also
on to retain competitive
advantage with the help of
social media.
introduce and accordingly
prices are tending to be set.
FCA management: It is facilitator group of stakeholders. The proposed strategy satisfies
the expectation of shareholders because they are concerned in terms to create smart new
strategies which tends to bring value to stakeholders. They protect best interest to their
shareholders and give surety that group is tends to profit and must be stable. Whereas merger in
the organisation also create great development opportunities, it also tends to combine profit
margin & balance sheet, for this consolidation statements are tending to be prepare. Broad brand
portfolio and €3.7 billion annual synergies, thus merger manager has best interest.
FCA shareholder: For merger these are consider as best facilitators as shareholders
votes their shares in favour of merger in the EGM of the company. It also helps to create
valuable organisation and it also take advantage to new development for the purpose to increase
their new global market share.
CONCLUSION
After deep study and analysis, it concludes that after analysis both internal and external
environment only it become possible for company to frame effective strategies so that they can
objectives of organisation can achieve easily by smart managers of the organisation. To
manufacture any product, it is necessary for all company to adopt value chain model first to
analyse various factor. With the objective to run business in profitable manner or for business

survival and growth purpose. It is necessary for business to frame smart strategies or policies
because with these it is not possible for company to gain profit.

REFERENCES
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Online:

AstraZeneca to Buy Alexion for $39 Billion in Rare-Disease Push. 2020. [Online] Available
through :<https://www.bloomberg.com/news/articles/2020-12-12/astrazeneca-to-buy-
alexion-for-39-billion-in-cash-and-shares>
Value chain Analysis. 2018. [Online] Available through
:<https://www.business-to-you.com/value-chain/>