Accounting and Finance for Decision Making - AstraZeneca Case Study

This report is a situation analysis of AstraZeneca, a global medical business, and its impact from Covid-19. It discusses the company's investment decisions, the use of qualitative and quantitative information, and the potential impact of diversification on financial outcomes. The report concludes with a recommendation for diversification to help the company flourish in the post-Covid-19 environment.

Accounting and
Finance for Decision
Making

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
The asset's intended motivation.......................................................................................................1
Diversified Covid-19...................................................................................................................1
Investments are evaluated using both quantitative and qualitative information..............................2
Qualitative factors determine AstraZeneca's investment decisions.............................................2
Numerical variables affect investment appraisal.........................................................................3
Risk and return, and also their potential impact on AstraZeneca's financial outcomes..................5
Risk and return.............................................................................................................................5
Diversification lessens or eliminates instability in the accompanying directions.......................5
Impact on financial outcomes......................................................................................................6
Conclusion and recommendation:...................................................................................................6
REFERENCES................................................................................................................................8

INTRODUCTION
This report is a situation analysis of a selected industry and its impact from Covid-19
(Firouzjah, 2018). This case study is about AstraZeneca, a global medical business which is one
of the biggest in the United Kingdom. AstraZeneca, a worldwide pharmacological and research
company, appears to have had such a significant effect on Covid-19. AstraZeneca has indeed
added to its diversity portfolio. AstraZeneca's present danger and effectiveness have also been
subjected to qualitative and quantitative methods.
The asset's intended motivation
Diversified Covid-19
Diversification is a promotional tool that comprises targeting a potential sector that
AstraZeneca doesn't really currently offer and producing a unique product or expanding into new
areas. It is used to extend the capabilities of a current structure. This technique is beneficial in
rerouting hazards and remaining in the industry for a prolonged amount of duration during Covid
19. It takes thorough market research, and AstraZeneca is a well-established and competent
company. 2 choices are restructurings and partnerships. A range of strategies, spanning
intergenerational, economic, and sector diversification, can be used to promote diversification.
Diversification will help AstraZeneca become more resilient, offer massive savings, and increase
business value whilst still boosting employee engagement. The technique of designing a plan that
comprises a diverse wide array of products in an effort to decrease instability is known as
diversification. Treasury and currency trading, as well as mutual funds and stocks making
investments, might assist AstraZeneca reduce risk and diversify its holdings (Guo and Li, 2019).
Diversification decreases dangers while also lowering portfolio danger. It additionally
improves income payout capacity, protects against unfavourable macroeconomic movements,
and lowers costs. Since the Covid 19 outbreak has a negative influence on almost all enterprises
and industries, as well as the nation's closure and limitations, every firm should adjust its
intention of meeting legal requirements. Covid 19 causes adverse business conditions; therefore
diversification helps the corporation and defends business. As the Accountant of the AstraZeneca
multinational company, I suggest that the competent authority adopt a marketing concept by
undertaking globalism or by Financial system Ramifications to reduce business risks and plan to
initiating into investing in several funding that would enable the organisation to build and

preserve in the bigger picture, as well as offer additional AstraZeneca with a diverse range of
industries. For example, a company can invest in another country and therefore expand its
company around the world.
Investments are evaluated using both quantitative and qualitative information
There seem to be essentially two types of research used to evaluate investment evaluation.
The first is measurable, whilst the second is qualitative. There appear to be several standard
methods for calculating and assessing investment appraisal in measurable parameters (Kalkavan
and Ersin, 2019). In the qualitative procedure, there seem to be a number of non-numerical
factors that influence evaluation processes. Both issues are covered in greater detail further
below-
Qualitative factors determine AstraZeneca's investment decisions
 Societal ramifications as the cultural component in the case of AstraZeneca are the
assumption of a skills shortage, the impact of eliminating, or transfer concerns. As a
result, it cannot account for the directors' and managers' specific goals. As a consequence,
qualitative factors might be crucial in assessing the impact of new intended audiences or
customers on a company. Any customer, either from an existing or new sector, is
valuable, and their thoughts, excitement, and gratification have had an influence on the
firm.
 Every firm's activities are commonly selected to maintain and improve its image in the
eyes of all of its clients. The company's branding and image are vitally significant once it
has achieved a certain level of popularity on a domestic and international level.
 AstraZeneca's capacity to overcome it on time dependent on its capacity to manage
international vulnerability as a threat. Since AstraZeneca has assets in several countries,
determining the degree of risk is difficult. An outbreak might affect any country (Killins,
2017).
 One of the most essential quantifiable factors is product quality and customer service as a
means of determining the quality of a company's products or operations. Sustaining
dependability coefficient and customer assistance is important in such an outbreak, and
Covid 19 does have a substantial consequence on the company's sales and revenue. At
this time, any minor blunder made by AstraZeneca, or any breach of any mandatory rule

for this pandemic, may lead people to lose faith in the company, harming AstraZeneca in
the long run.
Numerical variables affect investment appraisal
There appear to be several techniques (measurable parameters) for analysing the effect of
investment, with NPV and payback period being the most effective. As a consequence, the
following is the AstraZeneca company's evaluation of both procedures.
Payback period
Year
Annual
Cash
Inflow
Annual Cash
Outflow
Annual Net Cash
flows
Cumulative
Cash
Inflows
0 0 180000 180000 0
1 100000 800000 -700000 -700000
2 400000 200000 200000 -500000
3 500000 0 500000 0
4 800000 0 800000 800000
5 800000 100000 700000 1500000
Calculation of Net Present Value
Years Net Cash
Inflows Discounting @ 8% PV of Cash Inflows
1 -180000 0.926 -166680
2 -700000 0.857 -599900
3 200000 0.794 158800
4 800000 0.735 588000
5 900000 0.681 612900
Net Present Value 593120
Calculation of Internal Rate of Return
Discounting Factor @8%
Years
Cash
inflows
Discounting Factor
@8%
PV value of cash
inflow
1 -180000 0.926 -166680
2 -700000 0.857 -599900
3 200000 0.794 158800
4 800000 0.735 588000
5 900000 0.681 612900
Total Cash inflows 593120
Discounting Factor @15%

Years
Cash
inflows
Discounting Factor
15%
PV value of cash
inflow
1 -180000 0.87 -156600
2 -700000 0.756 -529200
3 200000 0.658 131600
4 800000 0.572 457600
5 900000 0.497 447300
Total Cash inflow 350700
SWOT analysis-
Strengths Weaknesses
Fast choices are taken, and thorough
inspections are carried out. There is a lot of
advertising and R&D effort in emerging
nations.
Component removal has an influence on
efficacy. Image is impacted by copyright
lawsuits and pricing concerns.
Opportunities Threats
It might reap the benefits of its significant
global fiscal condition. The global population
is ageing.
Drug study guidelines are in specifics. The
pharmaceutical sector is developing effective
treatments.
PESTLE analysis-
Political Economic
BREXIT has caused uncertainty. As a
consequence of health efforts, government
investment on healthcare has increased.
Cost-cutting measures by the national
government. In the pharmaceutical industry,
profits from R&D spending are declining.
Social Technological
As the population grows older, there could be
greater opportunities for growth. The
proportion of people suffering from diseases
brought on by city life has risen dramatically.
Developing a technological framework that
promotes higher standard manufacturing.
Technological computing and surveillance
technology could improve study and
development in this field.
Environmental Legal
AstraZeneca is a frontrunner in the fight
against global ecological degradation.
Regulatory agencies have refused to grant
medicinal approval. Changes to the taxes of
businesses in the American Republic.

Risk and return, and also their potential impact on AstraZeneca's financial
outcomes
Risk and return
The return calculated as a percentage of the initial investment is known as return on
investment (Li, Kou and Peng, 2016). It might be in the form of a numeral or a sign. Profits
comprise both revenue and capital gain. Both the real earnings from an enterprise and the
increase in the value of money are considered incentives. The basic component of the
agreement's ongoing operating revenue, which might be in the form of royalties or dividends;
and the shift in the currency's price, which is commonly referred to as the economic gain or
decrease. The amalgamation of AstraZeneca and 4D Pharma PLC has raised multiple issues.
Wealth creation, asset allocation, and the rise of skilled competitors are one of them. As drafted,
the International Treaties has been unlikely to address the problem of mergers and acquisitions
right away. Removing such worldwide champions will be detrimental to civilization in the long
run. An additional risk signal for the regulatory machinery is the combination of 4D Pharma PLC
and AstraZeneca.
The eventual aim, he says, is to ensure "fair and equal rivalry." To push certain goods
above all others, unethical competitive practises are used. AstraZeneca's expenditure is becoming
more obvious as the company tries to get entrance to and expand its operations in Asia. Putting
up management in a distant nation and studying the working culture and administrative
procedures requires awhile. Asia faces several challenges, both financial and cultural in nature,
as is widely acknowledged. As part of that agreement, AstraZeneca would be obliged to pay
taxes, which could be a significant financial challenge. There are various challenges, but
depletion of natural assets is a major lure for any venture (Liu, Liu and Chen, 2017).
Diversification lessens or eliminates instability in the accompanying directions
The primary action AstraZeneca can do is to resolve workplace issues and improve Hrm
management processes. AstraZeneca has far more opportunities to spend its cash in Asia by
raising its stake in 4D Pharma PLC. Asia is a thriving market for new products and services to be
launched. AstraZeneca may make a major impact by proactively implementing environmentally
conscious methods. AstraZeneca's principal course of action may be to resolve worker issues and
improve corporate HR operations. AstraZeneca must now boost its digital commerce homepage

and resolve technological issues in order to advance the company. In a well-diversified stock,
each purchase contains a tiny part of the total. As a consequence, any weakness that causes the
cost of a specific product or group of products to rise or fall will have a modest impact on the
overall investments (Phan, Rieger and Wang, 2019).
Firm-specific activities may have a favourable or detrimental impact on the value of some
commodities in a portfolio over time. The probability reduces as the expenditure gets larger. As a
result, it's acceptable to believe that in additional funds, positive and negative characteristics will
equal out and have no impacts on the entire risk level. Moreover, diversifying a trade reduces the
instability associated with it. Diversification is a method of reducing volatility by mixing a
number of monetary options within a portfolio. It has the potential to be spread both inside and
between commodities kinds. It can also be geographically diverse by working in both nationally
and internationally sectors (Shelton, Smith and Panisch, 2019).
Impact on financial outcomes
Diversification has a positive link with organisational effectiveness, meaning that
diversification contributes to the team's operations. Similarly, there is indeed a correlation
between firm success and overall diversification, implying that excellent results lead to even
more diversification. Diversification has a positive association with a firm's financial
performance, implying that diversification adds value to the business. Similarly, there is a
beneficial relationship between firm prosperity and overall variation, meaning that good results
would contribute to greater diversification. AstraZeneca's following move could be to alleviate
personnel issues and improve HR management requirements. As a result, AstraZeneca must
enhance its email advertising platform and address any difficulties that arise. Important
accountancy indicators like total asset ratio, dividend yield, firm efficiency, net income, and so
on can be used to assess financial achievement (Slade, 2017).
Conclusion and recommendation:
As the accounting team of the AstraZeneca company, I made this evaluation and idea for a
potential fundraising effort to benefit the organisation flourish in the post-COVID-19 context. As
all of the predictions and statistics indicate, diversification is one of the most successful
strategies for surviving in the post-Covid-19 environment, and it also boosts acceptable incomes.
The Covid-19 outbreak does have a detrimental influence on worldwide industry, particularly job

creation, revenue, and profitability. The bulk of companies are changing their marketing and
selling tactics. Branding, finance, and business diversification are all factors in sales promotion.

REFERENCES
Books and journals
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