Strategic Management for Competitive Advantage: AstraZeneca Project

This project provides a critical evaluation of AstraZeneca's sustainability and corporate social responsibility (CSR) initiatives, alongside an analysis of its financial performance. It emphasizes the importance of organizational sustainability in creating meaningful values and shaping strategic decision-making. The analysis incorporates the triple bottom line concept (financial, environmental, and social factors) to assess AstraZeneca's performance and attractiveness to investors. The project also examines the company's CSR policies, which aim to contribute positively to society and the environment. Furthermore, it delves into AstraZeneca's financial performance by analyzing key financial statements and ratios, including return on equity, debt-equity ratio, net profit margin, operating profit margin, cash flow margin, return on capital employed, and return on assets. The analysis highlights AstraZeneca's strategic decisions, such as investing in COVID-19 vaccine research and development, and their impact on the company's financial health and competitive positioning. The project concludes with an outlook on AstraZeneca's future prospects based on its past and present actions.

Strategic Management for
Competitive Advantage
Project C

Table of Contents
MAIN BODY...................................................................................................................................1
Critical evaluation of the organization sustainability and CSR, alongside the financial
performance............................................................................................................................1
REFERENCES................................................................................................................................6

MAIN BODY
Critical evaluation of the organization sustainability and CSR, alongside the financial
performance
Organizational sustainability basically involves the creation of meaningful values that
helps in building a culture or shaping a strategic decision making that helps in reinforcing the
desired behaviour. In context to Astrazeneca, the organisation in order to maintain sustainability
helps in making the most useful impact where the society and surroundings need that and the
main motive of the organisation is to be always moving towards greater sustainability. In context
to Responsible decision making it basically includes the ability to make choices which are
highly constructive related to the social interactions and personal behaviour and also involves
consideration of the well being of others and oneself(Turulja and Bajgoric, 2018). In context to
organizations it uses a triple bottom line concepts that involves a framework of the accounting
and is divided into three different parts which includes financial, environmental and social
factors. Various organisations have adopted the triple bottom line concept in order to evaluate
their performance for the purpose to create greater business value in terms of the broader
perspective(O'Dwyer and Gilmore, 2018).
In context to Astrazeneca, the concept of triple bottom line helps in attracting the
investors in a easy way as it believes that organisations who have higher ESG score helps in
delivering the superior returns as compare to the competitors in the long term and medium
term(Urabe, 2018). Through focusing on the Triple Bottom Line, it helps the organisation to
attract more and more investors and also helps in focusing on the long term and medium term
success of the organization. Corporate Social Responsibility basically focuses on contributing
towards the societal goals of the charitable nature, philanthropic and activist by supporting or
engaging in ethically oriented practices.
In context to Astrazeneca, the organisation corporate social responsibility policy involves
the company's vision to make a positive difference to the society and also contributing its share
towards the betterment and social cause of the area and society in which the organisation
basically operates. In context to the corporate social responsibility, the organisations have made
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various policies that helps in encompassing the company's philosophy in order to delineate its
overall responsibility as a corporate citizen and also helps in laying down the mechanism and
guidelines for conducting useful social programmes for the sustainable development and welfare
of the community(Ketprapakorn,2019). The financial performance basically involves the
subjective measure of how well the organisation is capable of using assets from its primary mode
and also generating revenues. In context to investors and analysts, they uses financial
performance for the purpose to compare sectors in aggregate and comparing similar firms across
the same industry. In context to Astrazeneca, the organisation involves a team of highly
experienced senior executive team and board team. The board is fully responsible for the Group's
corporate governance that involves the group's policies and strategies. The board have the overall
responsibility for handling the risk and also monitoring various responsibilities that involves
preparation of the annual plans and various strategic objectives. In context to the financial
statements, it basically involves the various records of activities of the organisation and position
of the various business entity, person and business(Kakoty, 2018).
These basically involves the formal records of the position of the organisation and
financial activities of a particular entity, business or individual person. In context to Astarzeneca,
the financial statements plays a very important role and is very important for the stock investors.
In order to make smart investment choices, the organisation do the analysis and interpretation of
the income statements, cash flow statements and balance sheets. In context to Astra zeneca, in
order to evaluate the financial performance of the company it is important to take into
considerations the various key financial statements of the company and also using various
manageable number of financial ratios. Astra Zeneca's future can be predicted through looking
at present and past actions of entity. It is one of the renowned medical manufacturer across the
globe(Schaltegger, 2020). The enterprise of Astra Zeneca has been expeditious and effective and
organization always look for construction to bring new innovations through methods of huge
defrayment on research and development in their commodity. In context to the departed trends
in their profits over the years tells they are earning regular net profit during regular intervals
handling ups and downs in trends. The Covid-19 pandemic brought a lot of possibleness for
AstraZeneca as they endowed a lot in research and development of vaccine for the new
happening. The strategy adopted by AstraZeneca is that they join forces with various local
medicine manufacturers of different countries and purchase doubled vaccines using available
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resources and also with the help of research. They made a lot of profit from the sale of these
various vaccines which are priced other than in countries and this made entity stand out in
planetary industry of medicine manufacturers(Cohen, 2018). As general is ongoing, it can be
said that commercial enterprise is yet to do better in manufacture for a longer period of time if it
keeps investing in research and development to prevent such virus. The AstraZeneca's future is
brighter as alikeness to their state of affairs as it is the only industry whose vaccines are
developed and apportioned world-wide and numerous studies have called their vaccines much
effective and efficient to prevent the spread of the virus.
Investment Ratios: These ratios elation how much business enterprise is earning on their
investment funds and what return the steady is able to make for their stakeholders who have
endowed in form of capital. These ratios are also best-known as financial ratios. It also display
how an entity is bring off their investment funds proposals and what income tax return they are
creating way of net income and interest defrayal(Goyal and Howlett, 2020).
Return On Equity = Net Income / Shareholder's Equity
2019 = 1,227 / 14,596 = 0.084%
2020 = 3,144 / 15,638 = 0.201%
Debt Equity Ratio = Total Debts / Total Equity
2019 = 46781 / 14,596 = 3.20 times
2020 = 51091 / 15,638 = 3.26 times
Interpretation:
1.Return On Equity: -From above calculations it can be determined that AstraZeneca's return
on equity have been enhanced in level to some extent from 2019 to 2020. It shows how a
arrangement is able to pull off capital to execute their business endeavour operations. There is
an upwardly trend in return on equity of Astra Zeneca that indicates shareholder’s belie fare
fulfilled(Xie and Zhu, 2020).
2.Debt-Equity Ratio: - It shows how a system is holding back dimension among debt and
equity structure. The visionary debt artifact for a enterprise is 2:1. Astra Zeneca's debt equity
ratio is reflective that they are at hazard as comparability to their challenger because owner’s
funds are little as compare to take over funds in descriptor of loans in two sequential years. It
must have concentration on composition their capital cognition and should not hike funds
through methods of loans from banks and debenture holders.
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Net Profit Margin Ratio = Net Profit / Revenue * 100
2019 = (1,227/24384) * 100 = 5.03%
2020 = (3,144/26617) * 100 = 12.82%
Operating Profit Margin Ratio = Operating Profit / Revenue * 100
2019 = (2,924/24384) * 100 = 11.99%
2020 = (5,162/26617) * 100 = 19.39%
Cash Flow Margin Ratio=Cash flow from Operating Activity/Revenue*100
2019=2969/24384*100=12.18%
2020=4799/26617*100=18.03%
Return On Capital Employed (ROCE) = EBIT / (Total Assets – Current Liabilities)
2019 = 2,924 / (61377 -18117) = 6.76%
2020 = 5,162 / (66729 -20307) = 11.12%
Return On Assets Ratio=Net Income/Total Assets*100
2019= (1227/61377) *100=1.99%
2020= (3144/66729) *100=4.71%
Note: The above figures are in $ Million($M)
Interpretation: From the above, it had been determined that execution of undertaking over the
period of two years time has been formulated and it shows development in pharmaceutical
sector considering pandemic situation also.
1.Net Profit Margin Ratio: It reflects how much profit is created through firms per 1$
of sales. By comparing above figure’s it can beunderstood that Astra Zeneca Net Profit
Margin has been plication from 2019 to 2020 by 7.79%(12.82-5.03) that shows that on 1$
of sales they are component profit higher than 7.79% as compare to past years. Far
alteration in ratio also shows that Astra Zeneca is efficaciously dominating its cost
through selling their commodity at high cost as compare to monetary value(Lee and
Kohler, 2018).
2.Operating Profit Margin Ratio: It shows that how much net income a project would
make through cost of variable of production that includes raw material cost, wages etc.
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The ratios indicate operating profit of Astra Zeneca has crimp by 7.38% in 2020 compare
to 2019 due to increase in operating profits by 2238 $M by way of Reduction in R&D
cost and increase in revenues by 2238 $M.
3.Cash Flow Margin Ratio: It shows that how impelling the steady converts their selling
into currency. There is momentous gain in Astra Zeneca’s ratio in 2020 that is 18.03% as
analyze to 2019 that is 12.18%. It tells that the organisation is able to fitting out its short
term obligation and working capital necessitate Further it shows that Payment to
providers and other individual has been made on well-timed fundament.
4.Return On Capital Employed: It depicts how much sum of monetary system the
method is earning for every $ of capital employed. From the above investigation in can be
understood that Astra Zeneca is bring forth higher net income as alikeness to superior
they have endowed. Further they are earning higher profit for their neutral in year 2020 as
compare to 2019. It shows that they are coming together shareholder’s prospect which
consequence in addition in price of portionof Astra Zeneca in activity.
5.Return On Total Assets Ratio: It shows that how efficaciously an organisation is
employ its assets for making profit. On the basis of ratios , it can be understood that
organisation is efficaciously apply their possession in year 2020 as analyze to premature
year because their net financial gain is twice that is 3144$M as comparability to year
2019 which implies that possession are being utilized to accomplish the impersonal of
entity only(Alamri, 2019).
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REFERENCES
Books and Journal
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Cohen, B.J., 2018. Beyond EMU: the problem of sustainability. In The political economy of
European monetary unification (pp. 179-204). Routledge.
Goyal, N. and Howlett, M., 2020. Who learns what in sustainability transitions?. Environmental
Innovation and Societal Transitions, 34. pp.311-321.
Kakoty, S., 2018. Organizational design thinking for sustainability. In CSR and Climate Change
Implications for Multinational Enterprises. Edward Elgar Publishing.
Ketprapakorn, N., 2019. Toward an Asian corporate sustainability model: An integrative
review. Journal of Cleaner Production, 239, p.117995.
Lee, M. and Kohler, J. C., 2018. 5. Benchmarking and Transparency: Incentives for the
Pharmaceutical Industry’s Corporate Social Responsibility. In Access to Medicines as a Human
Right (pp. 93-124). University of Toronto Press.
O'Dwyer, M. and Gilmore, A., 2018. Value and alliance capability and the formation of strategic
alliances in SMEs: The impact of customer orientation and resource optimisation. Journal of
Business Research, 87. pp.58-68.
Schaltegger, S., 2020. Unsustainability as a key source of epi-and pandemics: conclusions for
sustainability and ecosystems accounting. Journal of Accounting & Organizational Change.
Turulja, L. and Bajgoric, N., 2018. Information technology, knowledge management and human
resource management: Investigating mutual interactions towards better organizational
performance. VINE Journal of Information and Knowledge Management Systems.
Urabe, K., 2018. Innovation and the Japanese management system. In Innovation and
management (pp. 3-26). de Gruyter.
Xie, X. and Zhu, Q., 2020. Exploring an innovative pivot: How green training can spur corporate
sustainability performance. Business Strategy and the Environment, 29(6). pp.2432-2449.
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