Strategic Management of Novo Nordisk Corporation

This paper discusses the strategic management of Novo Nordisk Corporation, a Danish multinational pharmaceutical corporation. It includes an analysis of the external and internal environment, SWOT analysis, corporate and business level strategies, and strategic issues.

Running head: Strategic management
Strategic management

Strategic management
Table of Contents
Introduction.................................................................................................................................................3
Part A...........................................................................................................................................................3
Background of the organization..................................................................................................................3
External environment analysis.....................................................................................................................3
General environment...............................................................................................................................4
Industry environment...............................................................................................................................5
Opportunities and threats.........................................................................................................................6
Internal environmental analysis...................................................................................................................6
Intangible and tangible resource capabilities...........................................................................................6
Core competencies...................................................................................................................................6
Value chain analysis................................................................................................................................7
Strengths and weaknesses........................................................................................................................7
Part B...........................................................................................................................................................7
Summary SWOT.........................................................................................................................................7
Corporate and business level strategies.......................................................................................................8
Strategic issues............................................................................................................................................9
Recommendations.....................................................................................................................................10
Conclusion.................................................................................................................................................11
References.................................................................................................................................................12
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Introduction
The main aim of this paper is to explain business activities and operations of the firm.
Novo Nordisk Corporation has been selected in the report. It is the biggest pharmaceutical
company which renders pharma and drugs products to the customers. Apart from this, it provides
brief information about the external and internal environment of the company. It depicts how the
firm is overcoming on the competitors by using porter five forces analysis, corporate and
business level strategies. Internal and external environment play a significant role in the
organization. No company can survive its activities without evaluating and analyzing the macro
as well as micro environment. Further details of the task have been detailed below.
Part A
Background of the organization
Novo Nordisk A/S is a Danish multinational pharmaceutical corporation with it’s
headquarter is located in Bagsvaerd, Denmark. The corporation was incorporated in 1989
through a merger of two companies. The firm provides its products in more than eight countries
and its offices are situated in approx 75 countries. The organization manufactures and delivers
pharmaceutical products and services such as diabetes care medications and devices (Novo
Nordisk, 2018). The firm manufactures enormous brands under the various brand names which
include Novoseven, Victoria, Levemir, Novoeight and Novolin R. There are approx 40000
employees employed in the firm. The organization is a member of the Europeon federation of
pharmaceutical industries and associations (EFPIA).
External environment analysis
An external environment is composed of all the outside elements that influence the
business activities and operations (Brandon, 2014). An organization cannot control on external
environment. There are two types of external environment such as micro environment and macro
environment.
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General environment
There are various external factors such as political, economic, social, technological, legal
and environmental that influences the growth and success of the firm (Chitour, 2013). These
external factors have been discussed below.
Political: Nono Nordisk (A Danish pharmaceutical) company is facing various challenges due to
political instability. Political factors are major challenges for the pharmaceutical industry.
Political factors include bureaucracy, trade control, corruption level, education law, and antitrust
law. These factors are became a cause of worry for the drug distributors, investors and drug
makers who are worried that under increasing pricing pressure. The firm needs to focus on
political factors to beat the competitors in the global market (Hannigan, 2014).
Economic: Economic factors also influence the business activities and operations of Nono
Nordisk (A Danish pharmaceutical) company. The growth and success of the pharmaceutical
company is connected with GDP. It is assumed that economic situation of several countries has
not yet fully recovered. Furthermore, the condition of the healthcare industry is not good. The
economic factors include employment rate, interest rate, exchange rate, inflation rate, and foreign
exchange rate. The firm is trying to improve the rate of employment and economic situation of
the country.
Social: The socio-cultural elements present opportunities and threats as well. These factors
include customs, values, beliefs, culture of the people. These factors affect the growth rate of the
company. Some other problems such as obesity which is common problem across the world,
affects the all age groups. Social factors also influence the demand of the company’s products
(Epstein and Buhovac, 2014).
Technological: Technology can bring several opportunities for the Novo Nordisk Company as
well as healthcare sector. Increasing of social networking has given several new and innovative
opportunities for the pharmaceutical industry. In addition, social media also plays a significant
role in healthcare sector. Innovative technologies help to reduce production costs of the firm.
Environmental: There are enormous environmental risks are connected with pharmaceuticals.
Several types of pharmaceutical residues may pollute the environment of the country. In
addition, people are getting ill due to low quality of environment such as water pollution, as well
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as air pollution. It also influences the hygiene environment of the country (Van Wormer and
Besthorn, 2017).
Legal: The legal factors are one of the biggest challenges before the Novo Nordisk Company. In
today’s era, financial penalties on pharma companies have also become more frequent. Along
with this, corruption laws are also challenges before this sector. The other challenges include
cyber security, abuse of sales, anti corruption and antitrust issues.
Industry environment
Industry analysis is important to overcome the competitors in the global market. Porter
five forces analysis is done to evaluate and measure the strategies, policies and plans of the
rivalries (Rothaermel, 2015). The porter five analysis has been discussed below.
Competitors in the industry: There are various competitors exist in the market such as Eli
Lilly, Biocon, AstraZeneca and Abbott Laboraties. Therefore, their ability is a threaten for the
company. If the buyers and suppliers are unable to receive an appropriate deal, they seek out the
competitors of the firm. If the firm wants achieve higher profits and sales, it should focus on the
marker rivalries (Frynas and Mellahi, 2015).
Potential of new entrants into an industry: Nono Nordisk power and authority is also
influenced by the force of new competitors in the marketplace. Government regulations also
affect the operations and activities of the organization (Lidstone and MacLennan, 2017).
Power of suppliers: The bargaining power of supplier is considered low competitive force. The
power of suppliers address that how suppliers can increase the price of products and services.
Suppliers hold higher power and authority, thus the firm depends upon the suppliers (Tukdeo et
al, 2016).
Power of customers: The bargaining of power of customers is low competitive force in the
global market. This power focuses that how buyers can decrease the prices of product and
service. Nono Nordisk needs to analyze and identify the wants, desires and requirements of the
customers to maximize the revenue and returns.
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Threats of substitutes: Threats of substitutes is a biggest challenge for the organization because
it affects the financial image of the company in the marketplace. The firm needs to differentiate
the products from the competitors to stay in the competitive market.
Opportunities and threats
The opportunities and threats of external environment have been stated below.
Opportunities
 Acquisition of direct competitors and expansion in internal as well as domestic market
are biggest opportunities for the firm.
 Along with this, the company can provide innovative products to the customers.
Threats
 Immense competition, high tax rate, interest rate are major challenges for the
organization which affect the growth of Novo Nordisk adversely.
 Rapid changes in technology are another threat for the company.
Internal environmental analysis
The Company’s internal environment is composed of the various factors within the
organization including management, employees, and culture of people (van Wijngaarden,
Scholten and van Wijk, 2012). All these elements influence the business operations in the global
market.
Intangible and tangible resource capabilities
Organization resources play an integral role in each and every firm. The tangible
resources include financial assets and physical assets while intangible assets include company’s
reputation, skills, and human technology (Gassmann, Reepmeyer and von Zedtwitz, 2013). No
company can survive its business operations without resources and technologies.
Core competencies
The core competencies of Nono Nordisk include integrity, collaboration, patient focus,
innovation and superior performance. These core competencies help to improve and enhance the
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image of the firm and it will also help to attract more and more candidates in the international
market (Kongstvedt, 2012).
Value chain analysis
Value chain may be defined as a set of activities that a company operating and managing
in a specific industry performs in order to deliver attractive and valuable products and service for
the customers. It is an effective and flexible strategy which is used by Novo Nordisk Company
for looking at the competitors and business. This analysis helps to gain competitive advantages
in the global market. Along with this, it also provides much understanding of strengths and
weaknesses of the firm.
Strengths and weaknesses
Strengths
 The company keeps deep knowledge about diabetes and experience in its treatment.
 The culture and working environment of the firm is unique and dynamic.
Weaknesses
 Novo Nordisk is suffering from negative brand image due to its failure to provide
information and knowledge about the side effects of Victoria.
Part B
Summary SWOT
SWOT analysis stands for strengths, weaknesses, opportunities and threats. SWOT
analysis is done to identify and evaluate the strengths, weaknesses, opportunities and threats of
the competitors in the marketplace. SWOT analysis has been discussed below.
Strengths Weaknesses
 There are approx 33,000well trained
employees working in the organization.
 It is one of the biggest most suitable
companies in the world.
 High and immense competition exists
in the market.
 Past legal actions also influence the
image of the firm.
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 The firm maintains great senior
management team within the
organization.
Opportunities Threats
 Increasing number of health conscious
people.
 Biosimilar market is the biggest growth
opportunity in the market.
 Rising public debt in European
countries.
 Negative consequences of healthcare
reforms in major markets.
Corporate and business level strategies
The corporate level and business level strategies play a vital role in the organization to
meet its long term goals and objectives (Wheelen et al, 2017).
Corporate level strategies: The corporate level strategies are initiated in the firm to gain
revenue and returns. The corporate level strategies have been stated below.
Growth strategy: The main aim of the growth strategy is to win a large market share in the
global world. The growth strategies include product development, diversification, market
development and market penetration. This strategy focuses on the profits and sales of the
company. By using this strategy, Novo Nordisk has been able to control the quality, supply needs
and requirements.
Diversification strategy: This strategy looks at the company’s products and services and the
firm manufactures diversify and dynamic products in the marketplace. There are two types of
diversification strategy such as single business strategy and dominant business strategy (Benito-
Osorio et al, 2012).
Stability strategy: This strategy is used by the firm to sustain a good image in the global market.
It provides an effective and unique platform to the workers to attain optimal market share.
Stability strategy also focuses on the customer retention.
Business level strategies: The business level strategy may be defined as a detail action taken by
the company to provide value to customers and to gain competitive benefits by rendering core
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competencies in individual, specific products and service markets (Drnevich and Croson, 2013).
The business level strategies have been discussed below.
Cost leadership strategy: This strategy is based on the pricing factors in the market. This
strategy helps to minimize the cost structure of the firm by maintaining control on the prices.
Cost leadership strategy is based on the internal efficiency of the employees (Peng, 2013).
Differentiation strategy: The main objective of this strategy is to differentiate the company’s
products and services from the rivalries products and services in order to maintain goodwill in
the international market. It focuses on the quality, customer service and products of the
competitors globally (Vanderstraeten and Matthyssens, 2012).
Focused low cost: This strategy focuses on the prices of the products that are being provided by
the company to its potential customers in the market. In this strategy, the company needs to focus
on the requirements, desires and wants of the consumers to reduce the prices of the products and
services.
Focused differentiation strategy: By using focused differentiation strategy, Novo Nordisk has
been able to meet the needs and requirements of the target market in a more efficient and
effective manner. In this way, this strategy plays an integral role to understand the preferences
and choices of the target market.
Integrated low cost differentiation strategy: This strategy is adopted by many companies to
maintain the low and appropriate prices of the pharmaceutical products and services. By using
this strategy, the firm can provide attractive products and services to consumers at minimum
price. Now it is assumed that business level strategies help to grow and explore the business
activities in the global market (Kim and Mauborgne, 2014).
Strategic issues
There are several issues are faced by Novo Nordisk company in the world. These issues
affect goodwill and financial position of the firm internationally. The strategic issues are
discussed below.
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New technologies impact on pharma: It is ongoing issue in pharmaceutical industry which will
direct impact on the commercialization and drug development. New and innovative technologies
reduce manufacturing costs in the market. Therefore, the company needs to focus on the
innovative technologies to maintain a good position in the market.
Management of change: It is one of the biggest issues for the Novo Nordisk firm which is
influenced the efficiency and productivity of the employees. The employees do not accept new
technologies and other rapid changes within the organization. As a result, absenteeism is
increased in the firm (Hayes, 2014).
Slowing growth in emerging markets: Lower economic growth in emerging markets is the
biggest challenge for the pharmaceutical industry. Due to slowing growth in emerging markets,
the firm has not been able to gain maximum profit and outcome in the market.
All these issues influence the growth and success of the Novo Nordisk adversely. To
satisfy the needs and requirements of the consumers, the company should focus on these
strategic issues in the marketplace.
Recommendations
There are various suggestion have been given to improve the financial position and to reduce
the issues of the firm globally that have been stated below.
 Although, Novo Nordisk focuses on the corporate and business level strategies but still
the firm the firm should focus on the advantages and disadvantages of these strategies in
order to increase the growth in the world.
 The company should make unique and dynamic policies to reduce absenteeism and to
attract more applicants in the marketplace.
 Training and development coaching shall be provided by the organization to retain the
workers in the firm. It will enhance and increase employee’s performance and they will
do work in a hassle free manner.
 Along with this, the organization should focus on the threats and challenges of the market
to gain good opportunities in the market.
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 Advertisement and promotional programs shall be done by the company to attract more
and more clients in the international market.
 Along with this, SWOT analysis and PESTLE analysis must be done by the organization
to analyze and identify the challenges and risks. It will help to conduct business
operations and activities effectively.
 Moreover, the organization should focus on the strategic issues to stand out against the
rivalries in the marketplace.
Conclusion
On the above mentioned analysis, it can be concluded that Novo Nordisk(A Danish
pharmaceutical) is a multinational company which provides pharma products and services to the
customers globally. SWOT analysis, pestle analysis and porter’s five analysis are done by the
firm to control and manage the activities and plans of the competitors. Apart from this, business
and corporate level strategies are implemented by the corporation to determine the progress and
growth of the firm. On the other hand, here is the discussion about the strategic issues that are
being faced by Novo Nordisk in the marketplace. At the end, some recommendations have been
given to reduce the strategic issues of the management.
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