Strategic Management and Sustainability: An Analysis of AstraZeneca

This report provides a comprehensive strategic analysis of AstraZeneca, a multinational pharmaceutical company. It begins with an introduction to strategic management and AstraZeneca's background, including its focus on developing medicines for various health issues. The main body delves into the company's strategic directions, external business environment using PESTEL analysis, industry analysis with Porter's Five Forces and strategic group analysis, and strategic positioning. It also explores the internal business environment through SWOT analysis, identifies sustainable competitive advantages, and examines strategic growth choices. The report evaluates the company's strategy and concludes with recommendations, emphasizing the importance of adapting to the external environment and maintaining a competitive edge in the pharmaceutical industry. The report also touches upon sustainability theories like corporate social responsibility and green strategy.

Strategic Management
and Sustainability

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Company's background and its strategic directions.....................................................................1
External Business Environment...................................................................................................2
Industry Analysis.........................................................................................................................4
Strategic position.........................................................................................................................5
Internal Business Environment....................................................................................................6
Sustainable competitive advantages..........................................................................................10
Strategic Growth Choices..........................................................................................................11
Evaluating strategy.....................................................................................................................12
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................16
.......................................................................................................................................................17

INTRODUCTION
Strategic management in context of an organisation can be defined as using the resources
available within the organisation to attain goals and objectives. It is an important aspect within
an organisation because it helps the management in developing plans as well as policies and
implement plans effectively. Strategic management allows the management of a firm to make
informed decisions and formulate effective strategies (Alikhani, Torabi and Altay, 2019)
Organisation chosen for this report is AstraZeneca, which is a multinational pharmaceutical
company. The company is headquartered in Cambridge, England and was founded in the year
1999. The company is mainly focussed on developing and commercialising medicines for
healthcare. The health issues include cancer and respiratory disease, autoimmune diseases,
cardiovascular disease etc. The main aim of the company is to deliver the best medicines and
operates in nearly 100 countries.
The medicines manufactured by the company are used widely by patients worldwide. The
report evaluates the UK as well as global pharmaceutical industry with the help of related
frameworks like PESTEL analysis. An analysis of the industry is also included in the report
along with an evaluation of the chosen company's competitive environment. Models like Porter's
Five Forces model, strategic group analysis have been used for this. The report also includes the
key business strategies of the company and its capabilities over the last five years. An evaluation
of how can the company implement various environment sustainability theories like practising
corporate social responsibility, green strategy is also included in the report in order to facilitate a
better understanding.
MAIN BODY
Company's background and its strategic directions
AstraZeneca is a multinational pharmaceutical company that develops medicines for
different areas of healthcare. The company operates in two segments Clinical Trial and
Healthcare (Baumgartner and Rauter, 2017). The company was founded in the year 1999 and is
headquartered in Cambridge, England. The medicines offered by the company are both
innovative as well as effective and used by millions of patients across the world. The company
aims to become the first company that is most innovative and implements new ideas in their
products. The drugs that are manufactured by the company are basically focussed on seven areas
1

(AstraZeneca PLC - Company Profile, Information, Business Description, History, Background
Information on AstraZeneca PLC, 2020). These include cardiovascular, anaesthesia and pain
control, central nervous system, oncology, infection, respiratory etc. The company started off as
in the year 1913 through an initiative by nearly 400 doctors who came together to become the
company's first shareholders.
Strategic direction can be referred to as all those actions that a company takes in order to
attain its goals and objectives. It includes plans and actions that the company has put in place in
order to achieve them. AstraZeneca is currently delivering medicines to patients across world
with the help of innovation. In order to be successful in the long-term, the company aims to
deliver its business strategy in a way that the products actually deliver value (Gianni, Gotzamani
and Tsiotras, 2017). The main focus of the respective company is on a biopharmaceutical
strategy that is based on innovation. The company strives to deliver the best possible medicines
to the patients.
External Business Environment
The external business environment comprises of various factors like economic, political,
social, technological, competitive etc. It is important for the managers of a company to
understand and analyse the impact of all these factors on the overall performance of the
company. An external business environment comprises of various factors that are outside the
company and can have an impact on the overall performance of the company. The different
factors in the external environment can either have a positive or a negative influence on the
company. Therefore, a PESTEL analysis helps in analysing all these factors and allows the firm
to make informed decisions. Different frameworks have been explained below to analyse the UK
and global pharmaceutical industry effectively.
PESTEL Analysis
It is a strategic framework that is used to identify the different macro environment factors
that can influence its overall performance. The results of this model can help in formulating
effective strategies. A PESTEL analysis allows a company to improve its overall effectiveness
by aligning the business processes with the strategies of the company. The PESTEL analysis of
UK is described below -
2

Political Factors – The United Kingdom is a politically stable country that offers a
variety of opportunities for businesses operating within them (Missimer, Robèrt and Broman,
2017). But Brexit has created some uncertainties.
Economic Factors – The UK has a strong economic position across the world and since
the population of the country is very large, even the smaller businesses are profitable. The
company is still recovering from the recession of 2008.
Social Factors – There are various social factors that the company should take into
account before offering products. These factors can include age, gender, income and education
level of the people etc. People who belong to different age groups and gender have different
medical requirements and thus, AstraZenaca should consider these factors.
Technological Factors – Advancements in technology can also have an impact on the
business operations of the company. The United Kingdom has people who have an expertise in
IT as well as science (An Example PEST Analysis of The UK, 2020). They possess effective
innovation skills. Therefore, it is important for the respective company to implement the latest
technology in the manufacture of its products.
Environmental Factors – Various environmental activities can harm the environment,
but the United Kingdom has made significant improvements in order to reduce the impact
(Moutinho and Vargas-Sanchez, 2018). It is important for the respective company, AstraZeneca
to develop products that are environment friendly.
Legal Factors – These are the factors that can affect the performance of the company in
a negative way, if it fails to adhere to the different legislation of the country. These legislations
include Equality Act 2010 etc.
Industry Life Cycle
The industry life cycle comprises of different stages which include start up, growth,
shake out, maturity and decline. The pharmaceutical industry is among the largest growing
industries. The different stages of industry life cycle are described below-
Start up Stage – This is the initial stage of the life cycle wherein the demand of
customers is limited because they are not familiar with the company's products, their features and
performance. At this stage, a company usually generates very less revenue.
3

Growth Stage – During this stage, the product gradually attracts the customers and due
to this the profitability of the company starts increasing. Improvements that are made to the
products increase the value to the customers.
Shake out Stage – During this stage, some businesses get eliminated naturally as they
fail to grow within the industry (Industry Life Cycle, 2020). Some businesses even merge
themselves with the competitors in order to increase their market share.
Maturity Stage – This is the stage wherein most of the company have been well-
established. This is when the industry reaches a saturation point and the companies try to
moderate the competition.
Decline Stage – This is the last stage of the cycle and in order to deal with this stage,
some companies choose to focus on their product lines that have been successful in the market so
as to enhance their profits (Rego, Cunha and Polónia, 2017). Large companies try to acquire
smaller businesses in order to dominate in the market. Companies that are left with no choice,
divest themselves.
Industry Analysis
Industry analysis can be defined as an important business function that is undertaken by
the management of a company in order to understand the current business environment. It helps
organisations in making effective decisions and formulating strategies in order to gain a
competitive advantage. The different models that AstraZeneca can use in order to analyse the
industry are explained below -
Porter's Five Forces Model
This model is used to analyse the competition within the industry and consists of five
forces. It also helps in analysing the intensity of the different forces. The same are described
below -
Threat of New Entrants – New entrants within the pharmaceutical industry can create
pressure on the respective company. They can offer products at lower prices, offer products with
increased value for the customers etc. But since AstraZeneca is a well established company, this
is a weak force.
Bargaining Power of Suppliers – All companies operating in the pharmaceutical
industry purchase their raw materials from different suppliers (Wijethilake, 2017). Suppliers that
4

are powerful can use their bargaining power to incur high prices for the materials. But, due to
presence of a lot of suppliers, this is a weak force.
Bargaining Power of Buyers – Buyers keep demanding different products based on their
needs. They want products that are not very expensive but are of high quality. Respective
company has a strong base of customers and its products are used by millions of patients across
the world. Therefore, this is a strong force.
Threat of Substitute Products – This is a relatively weak force because the company is
trusted by people. Also, if any company attempts to offer substitute products to the customers
that are of high value, it will need to invest in a significant amount of capital.
Rivalry among Existing Competitors – If the rivalry among the existing competitors
will be high, the prices of the products will go down and vice versa. AstraZeneca operates in a
highly competitive and dynamic business environment. Therefore, in order to reduce this force,
the company can implement the strategy of sustainable differentiation.
Strategic Group Analysis
This analysis outlines the position of the company within the competitive environment,
along with the factors that determine its overall profitability. The strategic group analysis aims to
indicate the strategies of the company's competitors (Noe and et. al., 2017). Although
AstraZeneca has a strong position in the market, it still needs to work on its position in some
countries. This will help it in performing effectively and attracting potential customers from
different markets.
Strategic position
Competitor Analysis
A competitor analysis refers to assessing the strengths as well as weaknesses of the
competitors. This helps in providing an understanding about any opportunities or potential
threats that can affect the overall performance of a firm. AstraZeneca is one of the leading
pharmaceutical companies that operates in a highly competitive environment. The top
competitors of the company include Seroquel, GSK and Amgen. Respective company should
study the performance of its competitors in order to formulate effective strategies. A competitor
is a company that either offers similar solution to the customers or has the same customer base as
that of another company. AstraZenaca offers medicines that are used by millions of patients
across the world. The company markets its products through its official website and is able to
5

attract potential customers to try out its medicines. Therefore, it can be said that the respective
company operates in a highly competitive environment and has to constantly differentiate its
products in order to stay competitive.
Market Segments
A market segment can be defined as a group of people who share common characteristics
and each market segment is different from each other. There are five types of market segments,
demographic, psycho graphic, geographic and behavioural. Respective company, AstraZenaca
segments its target market demographically. This means that the segment includes people based
on their age, gender, income and education levels and location. This is because different age
groups require different doze of medicines. AstraZenaca also operates through through other
segments like pharmaceuticals as well as vaccines.
Internal Business Environment
SWOT analysis- It is a proven administration framework that enable a brand like AstraZeneca
to benchmark its business and execution in comparison to the rivals and industry (Moutinho and
Vargas-Sanchez, 2018). It is a strategic tool which is used by the management of company to
determine the capability, weaknesses, growth options and risks regarding the establishment.
Strengths Weaknesses
 The firm has global presence and by
making expansion in China, it
growing their business by over 200%
over the past five years.
 Along with this, the firm is a member
of the Pharmaceutical Research and
Manufacturers of America.
 Cefotan products have been in short
supply cause of production issues and
there came a point when the firm had
reached zero supply.
 Legal proceeding associated to patents
and pricing conflicts also influence the
image of firm unfavourably.
Opportunities Threats
 The establishment is the developing
need for innovative and creative
drugs, especially in diseases that are
recently hard to cure such as cancer
and diabetes.
 The main risk and threat of the firm is
that Seroquel their blockbuster drug is
suffering issue of copycat generic
drugs (Sroufe and Gopalakrishna-
Remani, 2019).
6

 By making investments m Biotech,
the firm can also gain significant
opportunities for the development of
business.
 Another risk of the organisation is that
the advertising campaigns to
consumers become unclear, providing
out inadequate information about their
products.
Value chain analysis
Primary activities Distinctive
competences
Supporting activities Competitive
advantages
Inbound logistic Centralised
warehousing
Procurement Minimised cost
Operations Large centralised
switching servers
Technological
advancement
Improved
productivity
Outbound logistics Pharmacy distribution Organisational
infrastructure
Effective quality
facility
Services Online service and
support
Infrastructure Minimised switching
Marketing & sales Online sales and
marketing
Human resource
management
Improved brand
equity
Inbound logistic- It is crucial to develop immense relation with dealers as their support is
important to receive, store and allocate the commodity. Without determining the inbound
logistics the respective firm can suffer diverse issues in product development stages (Durand,
Paugam and Stolowy, 2019). By monitoring inbound logistics, the establishment can concentrate
on each aspect of transformation from raw material to final product.
Operations- It is essential for determining operation activities of converting raw material
in to finished good and launch in the market. It includes both production and service operations.
The determination of this process is crucial to develop productivity, increasing the effectiveness
and assuring the rivalry growth of AstraZeneca.
Outbound logistics- It considers the processes that deliver the commodity to the
consumer by passing by diver intermediaries. AstraZeneca can monitor and optimise the
7

outbound logistic to explore rivalry benefits sources and accomplish its business growth
objectives (Barnett, Henriques and Husted, 2018). The respective firm should pay specific
importance to its outbound activities when it provided commodities are consumable and need
fast delivery to the end consumer.
Marketing and sales- In this phase, AstraZeneca will highlight the advantages and
differentiation points of provided commodities to convince the consumers that its giving is better
than rivals. The marketing and sales processes are sales force, advertising, promotional
processes, pricing, channel selection and many more. However, AstraZeneca must avoid making
false commitments about product features that cannot be satisfied by the manufacturing division.
Services- The pre-sale and post sale facilities provided by AstraZeneca will pay an
essential role in improving consumer loyalty. The modern consumers include post sale serviced
as crucial as marketing and promotional processes (Calabrese and et. al., 2019). The firm must
determine its support actions to avoid damaging brand reputation and instead utilise it like a
spread positive word of mouth cause of fast, timely and effective support facilities.
VRIO analysis
Resources Valuable Rare Imitable Organisation
Brand image Yes No No No
Financial
resource
Yes Yes No No
Technological
resource
Yes No No No
Human
resource
Yes Yes No Yes
Brand image- The brand image of the company’s valuable as it assist the firm to provide
an effective market position in global business market in particular business sector. It is not rare
because each firm has its own image. It is not imitable as it can be copied by others cause of its
own uniqueness and it cannot be organised by the business administration.
Financial resources- The financial resource of the firm are also valuable and rare for the
firm because they support the venture to operating and developing its business particular
8

business area (Macchion and et. al., 2018). Whereas these resources can be also used by other
establishments and cannot be organised by others.
Technological resource- The company use effective equipments, instruments and
machineries in its production. These resources are valuable and rare for the organisation because
they run the manufacture process. They can use by other companies and the organisation of these
resources is not hard.
Human resource- Each and every individual has unique and specific skills and ability
and the employees of AstraZeneca have unique skills, knowledge and experience so cause of
which they are valuable, rare and inimitable. They can be managed and organise by the
administration by offering training and setting specific rules.
SAFe criteria
Sustainability- In reference to efficient analysis of the sustainability, it is important that it
is evaluated with the help of SWOT analysis defined as exceeding. In AstraZeneca, the
capabilities of the firm are effective global presence and a member of Pharmaceutical Research
and Manufacturers of America. These components assist respective form to make growth in its
business and gaining competitive edge.
Acceptability- It is crucial for enterprise to efficiently measure the strategic tool and plan in
form of adoptability from stakeholder of the firm (Çankaya and Sezen, 2019). There are several
shareholders of the establishment that are defined below stakeholder control indicator:
Investors play an important as key stakeholder by investing fund for running the business
operations and activities of venture. Employees directly influence the strategies formation,
implementation and review process. They are the one who use the several administration plans
and offer the immense outcomes by involving their effectiveness. Suppliers are the back of
business as because they manage constant supply of the products to the business for efficient
consumer deliverables.
9

Feasibility- The respective firm operate its production process with the assistance of its
effective economic and technological components (Stevens and et. al., 2018). Feasibility check
of the plan of action will consider the entire benefits to the firm and stakeholder also provide
their effective contribution in operating business of firm. This maintains the viability of the
respective firm.
Sustainable competitive advantages
Porter’s generic strategy- There are three major streams for Porter’s generic plan of actions that
are utilised and implemented by multinational firms like AstraZeneca to accomplish the growth
objectives.
Cost leadership- This strategy considers gaining a competitive benefit by lowering the
cost. It is the key generic strategy that AstraZeneca utilises in diverse customer markets. In
respective firm, this strategy is to preserve the market leadership position through effective value
chain administration. This tool permits respective firm to expand the market share by targeting
the middle class that devises the largest proportion of entire customer market mix in most of the
nations. Middle class people normally provide high importance to the pricing factor and cost
leadership is the best tool to organize the requirements of this target customer segment. Apart
form this, charging low costs by lowering manufacturing cost and developing supply chain
effectiveness, the respective firm basically provides discounts and coupons to attain sales targets
and handle the rivalry pressure by its closest rival. The intended result of these discount and
advertising campaigns is to maximise brand popularity and encourage utilization.
Differentiation- It is another most ordinary utilised generic tool to generate a rivalry
benefit. The acceptance of this strategy permits AstraZeneca to make expansion in number of
customer by underlining over the unique product features. The strategic aim of utilising and
implementing this tool is to differentiate by inserting the creation and innovation as well as
address the customer’s developing heath concerns (Alikhani, Torabi and Altay, 2019). With the
assistance of this tool, the respective firm positions its product offerings in a form to stand out
and be dissimilar from the accessible options.
Focus strategy- AstraZeneca accepts and implements this strategy in both in terms of low
cost and offering the best value. The low cost concentration plan is accepted by serving the
demands of a nice market segment at the lowest potential cost. Whereas, best value focus tool is
adopted by highlighting over the size and design of the product that could best match the
10