Bayer's Globalisation: Business Environment and Strategies

This report provides a comprehensive analysis of Bayer's globalisation strategy, with a specific focus on the business environment in Finland. The introduction highlights the significance of globalisation for business growth and outlines the structure of the report, focusing on Bayer, a leading pharmaceutical company. The main body delves into the background of Bayer, discussing its history and evolution. It then examines the Finnish business environment, emphasizing its safety, educated workforce, and openness to foreign investment. The report utilizes PESTLE analysis to assess political, economic, social, technological, legal, and environmental factors impacting Bayer's operations in Finland. Furthermore, it applies Porter's five forces to evaluate the competitive landscape within the pharmaceutical industry, considering the threats of new entrants, substitutes, and the bargaining power of customers and suppliers. The report also touches upon the demand-supply scheme within the context of Bayer's operations. The conclusion summarizes the key findings and insights. This report is a valuable resource for students studying business, strategy, and international markets, offering a detailed examination of a real-world business case.

Business Globalisation

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Background of company.............................................................................................................1
Discussion about allocated business environment......................................................................1
PESTLE Analysis........................................................................................................................2
Porter's five forces.......................................................................................................................5
Demand-supply scheme..............................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Globalisation is undertaken as the prominent issue as it is the process that tends to
eliminate the hurdles of connecting people, things and ideas all over the world. As most of the
companies has global presence in order to grow in an effective way regarding the growth of
company. For this, the term business organisation tends to depict the structure and culture of
business which is useful in meeting with goals and objectives (Cramer, 2017). In regard of this,
business designs tends to focus on creating profit and also focus on enhancing their profitability.
To carry forward this report, Bayer is considered which is the German multinational
pharmaceutical and life science company as it is the largest pharmaceutical organisation in
world. It is founded in Barmen in 1863 and best known for its product aspirin. Moreover, the
report is going to cover the development of company within the specified country and for the
expansion of current organisation considering various frameworks and approaches.
MAIN BODY
Background of company
Bayer is the German pharmaceutical company and it is one of the largest company in
world, headquarter in Leverkusen. As the business area of Bayer include human and veterinary
factors undertaking the healthcare products. Company is founded in Barmen in 1863 and in 1898
it is trademarked as the name from Heroin and marketed it as the cough suppressant as the
substitute for morphine. In 1925, Bayer is one of the six chemical company who is merged to
form IG farben which is the largest chemical and pharmaceutical company. Moreover, Bayer
healthcare need acquire over the counter pharmaceutical division of Roche as it is announced as
the agreement to acquire the portfolio and OTC division for privately owned Sagmel which is
US based company. The headquarters and most of the production facilities move from Barmen to
the larger area in Elberfeld in 1866.
Discussion about allocated business environment
The business environment of Finland is quite safe as business owners consider various
practices and standards before entering into dynamic business environment by identifying
suitable features and practices in terms of exist within the business environment. Finland is
considered as one of the less corrupted country in world and individuals are more educated her
and also aware about their rights. Moreover, the business environment is unpredictable and it is
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dynamic and frequent changing as the businessman tends to concentrate on the smooth running
and functioning of actual business operations. Hence, it is important for Finland as a country in
order to rely on its exports. Finland is considered as the well functioning society that tends to
include government who maintain transparency and also tends to impact state institutions.
Finland is the successful country and highly industrialised and considered as the innovative
company which is based on the free trade and openness to investment within the globalised
economy. Furthermore, the business climate of Finland is very attractive regarding the foreign
investment as international organisations are beneficial from the infrastructure of Finland. The
corporate tax rate of Finland is around 20% which is the lowest in European Union.
PESTLE Analysis
PESTLE analysis is useful in terms of identifying and examining the external factor that
has prominent impact on the overall running and functioning of company. This tool is helpful in
terms of starting a new business or entering into new market area as it tends to collaborate with
each other as the analytical business tool including STEEP, Porter's five forces and so on. It is
helpful in order to identify the existing risk factor which can become barrier in the successful
running and functioning of company and for this, significant strategies are identified which is
useful in terms of overcoming those barriers (Bradford, Guzmán and Trujillo, 2017). Political: These factors are important as they tends to impact the legal frameworks of
business. It depicts the current political conditions that tends to influence the
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Illustration 1: Finnish business environment

development in market. In regard of Bayer AG these forces are altered and influence the
government for the infrastructure of country. As the political factors include environment
regulations, tariffs, tax policies, trade restrictions and so on. In various terms, cases
depicts the proper dealing with the well known business that include current research as it
is available at the time of proper composition. In regard of this, it include five years to
prepare for the development of innovation that was initiated by the government which
include proper development of laboratories for the development considering prominent
duties (Gooberman, 2018). The federal government depicts the continual working
direction of bringing proper direction for Bayer to expand in Finland as the climate,
culture and other policies are easy in terms of expanding the business considering the
technological change. Economical: These factors consider the interest rates, inflation, growth of economy,
wage rates and so on. The prominent combination of these factors are inevitable and also
has impact on the company. As Finland has strong GDP growth which represent that
Southeast European region in which economy has positive transformation including low
labour cost, favourable tax environment, increase in GDP and so on (Michie, 2019). It
depict the trend for the continuous enhancement of per capita income and eliminate the
unemployment rates. Moreover, the excess supply of goods in market is complied with
the rate which is less than the expense of Bayer. For this, the economic downturn depicts
the important issues in industry and also depicts the prominent improvement in the
efficiency that tends to bring increased production which depicts the economic crisis. Social: It depicts the culture and social influence for the certain business that vary from
country to country as it is important to consider these elements and it include health and
safety consciousness considering various areas, population growth rates and cultural
aspects and so on (Hanson and et. al., 2016). These are the factors who added towards the
growth of Bayer in Finland. Moreover, the Finnish government also concentrated on the
human resources department in market by providing proper training in order to boost the
understanding of sources in market. It depicts that innovation was also imported in terms
of getting resources more knowledgeable regarding the innovation which is doe by the
government. In terms of respective company, it depicts the social efforts in terms of
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enhancing the quality of products in Finland and also seen as the fact in which only
industry is developed by the labour worldwide. Technological: This factor is more important in terms of being competitive in the market
area. It depicts the globalisation which include environmental aspects and the available
services including products and services. For this, company need to innovate and also
become more compatible with the technologies (Saraswathy, 2017). As there are some
concern for the Bayer products and industry including the manufacturers in Finland as the
do not have their own technology and for this they also depend on the foreign
technological partners. In terms of this, the participation of government in market is
concentrating on altering respective company in terms of eliminating the reliance.
Moreover, these factors tends to dismantle the price structure considering the competitive
landscape in the industry for the short amount of time and due to which it become
important to regularly innovate in order to increase possible profit and also become the
leader of market. Legal: These factors consider the prominent laws and norms that might impact the
business operations for the company and also include the current legislations and leads to
impact the industry in various areas considering employment, safety and health and
competition (Cherunilam, 2020). In terms of this, Bayer need to consider the impact of
international and national laws in which company originate for the business operations.
In relation with Bayer, it tends to include the lawful atmosphere and prominent issues
considering the opportunities and the type of Intellectual property rights and the lawful
agreements. In regard of this, company has the legal security to safeguard the processing
and technology that can boost the dependence of others. The market area of Bayer tends
to offer effective significance to the legal agreements undertaking the interest that might
not appear as the outcome for the previous business legal contract.
 Environmental: These factors include those who has long lasting impact on the
surrounding environment and also determine the environmental factors. It also include
the awareness about the climate and seasonal change. This identification of environment
consider the external and internal components which is important for the company as it
has major impact on the performance of company. It depicts the overall review of the
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atmosphere which is recommended in Finland and it is highly favourable for the Bayer
regarding the production and the ability development.
Porter's five forces
It is undertaken as the strategic management tool and model which is useful in
determining the competitive landscape for an industry. It depicts that each force becomes the
strength which is helpful as the strategic planner in order to understand the inherent profit and
potential in an industry. It include the strengths of various forces across the industry which
include different facts regarding the profitability and attractiveness. Few forces are mentioned as
under: Threat of new entrants: Bayer has limited amount of threat from the new entrants as
there are various factors that restrict the arrival of new entrants in order to take entry in
market that already has big companies regarding its operations (Lee and Eckhardt, 2017).
Bayer tends to include customers from the food industry which is quite difficult for the
new entrants in order to analyse the market as per the needs of customers. Competition
among the existing organisations tends to depict the requirements of customers and also
develop customer base for the new entrants perform difficult task. Hence, accomplishing
economies of scale is considered as the difficult task for the new entrants. Threat of substitute: Within the pharmaceutical company, Bayer have low threats from
the substitute products as the fact behind this is the certain company is specialised in the
specific medicine and because of this, customers does not have right to switch from the
alternate product without the the prescription and recommendation (Nurhayati and et. al.,
2018). Therefore, there are many substitutes that are available in market for customers in
terms of Bayer. As company need to enhance its customer base and also work more
towards the diversification in regard of geographical areas. Bargaining power of customers: In this, the buyers in the pharmaceutical company is
also limited as in consumer goods they tends to moderate or high as per the number of
alternatives and consumer goods undertaking the low switching cost which offer proper
power to the customers in order to set prices (Podviezko, 2017). In terms of this,
customers do not take risk with their life and purchase medicines at any price that tends
to eliminate their control over the prices. In terms of this, different products has their own
pros and cons and also tends to increase the bargaining power of customers. Therefore, it
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is important for Bayer in order to set prices as per the demand and requirements of
customers and also assess customers that are willing to pay. Bargaining power of suppliers: Within this industry, Bayer has large market share that
need effective amount of supply chain and also tends to support good terms with the
suppliers. It also tends to trigger the purchase of suppliers as none of the supplier as ever
complain regarding the dealing of company, low prices and so on (Schisani and Caiazzo,
2016). It tends to improve the good terms with Bayer. Therefore, it is important for
company to enhance its suppliers list in terms of taking more control over the cost and
also enhance the long term profitability. Therefore, within the pharmaceutical sector,
suppliers have bargaining power as they use it for making medicines that have high
demand.
 Competitive rivalry: It depicts the rivalry among the pharmaceutical sector which include
biochemical, agriculture and products of consumers which is very intense. In terms of
this, company is useful in terms of identifying the industry as all the organisations tends
to compete in terms of maintaining the power and position in market (Li, 2019). For this,
the competition relies on the grounds of diversity, barriers of entries and exits and other
development sectors. In terms of this, various rivals include Novartis, Sanofi and so on as
they tends to offer advanced medicine and make competition more intense.
Demand-supply scheme
Supply and demand depicts the significant relationship among the quantity of product and
also consider the wish of manufacturers in order to sell products at the several prices and
undertake the consumers perspective to purchase. In terms of this, the price of product is
identified regarding the demand and supply within the market. In relation with this, the resulting
price considered as the equilibrium cost and represent the agreement among the consumer and
producer for the product (Rogers and Koh, 2017). It tends to consider the price of goods and the
demand regarding the prominent point of the customers. For this, both the demand and supply
curve is important as per the perspective of the producer of Bayer, and demand of customers. In
relation with this, Bayer fluctuate its supply as per the demand of customers and for this,
production as depends on the demand of customers.
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For this, if the prices increase then the demand of product is also expected to obstruct or
decrease. In regard of this, the growth of market is attributed for the growth of pharmaceutical
industry considering the emerging economies, growing demand for the delivery of drug and
blister the packaging (Sullivan and Robinson, 2017). In terms of this, the drug manufactures are
also bounded by the global compliance laws which is implemented and executed by the
prominent authorities that tends to retain the packaging which is the key component for the drug
delivery system which is for the final purchase point.
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Illustration 2: Understanding Help-to-Buy with Supply and Demand

CONCLUSION
By considering the above discussion, it is identified that globalisation refers to the
changes that occur in business environment in which the owners of business move away from
their self-contained countries. Globalisation of business tends to change regarding the form of
business by which company is more associated with the single country as it tends to operate in
various countries. This report covers various aspects in order to identify the needs and
requirements of customers with the help of PESTLE and Porter's five force analysis. Moreover,
it also identify the scheme of demand and supply which is useful in terms of identifying the
requirement of supply of product. It has major impact on the business as is classified in two
broad categories including market and production globalisation.
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REFERENCES
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