Economics for a Sustainable World: CSL Limited Business Report

This report provides an economic analysis of CSL Limited, a biotechnology company. It begins with an introduction to the company, its market structure (transitioning from monopoly to oligopoly), and its sustainability practices. The report examines CSL's business environment, including its product offerings (blood plasma, vaccines), competitive landscape, and production costs, considering factors of production like land, labor, and capital. It delves into the macroeconomic environment of Australia, evaluating political stability, economic conditions (inflation, unemployment, interest rates), and exchange rates. The analysis also considers the nature of CSL's products as inelastic and neutral goods. The report concludes by discussing CSL's sustainability practices and the positive externalities associated with its biotechnology, particularly in the context of vaccine and plasma development. The report highlights CSL's role in the biotechnology field, its contributions to human health, and its impact on sustainable development.

ECONOMICS FOR A
SUSTAINABLE WORLD

Contents
Introduction...........................................................................................................................................2
Introduction to the business and general business environment.............................................................2
Production costs and scale.....................................................................................................................5
Macro business environment.................................................................................................................6
Sustainability practice of the business.................................................................................................12
Positive externality with the biotechnology.....................................................................................13
References...........................................................................................................................................15

Introduction
CSL limited is a biotechnological organisation, which develops, researches, and markets the
therapies with an aim to treat serious diseases. The company has 97th rank in the world`s
sustainability report. The nature of the business has remained monopolistic until 2006 due to
special availability of product and now with the passage of time, it has converted into
oligopoly (CSL limited, 2018). The report brings out as discussion on business environment
of CSL limited, which elaborates what the company offers, in which market structure it
operates, scale of production, and its sustainability practises. The impact of CSL`s operations
is quite positive when comparing it to the other companies. The company serves people in an
efficient way. Furthermore, the company`s products are demand inelastic as these items are
necessity of people needing blood plasma, and vaccination. The report also indicates how
effectively the organisation operates in political and economic environment of Australia.
Introduction to the business and general business environment
CSL limited is a Bio therapeutics leader, which deliver and develop medicines such as
vaccination to prevent health issues and assisting people in saving their lives from threatening
conditions. This group aims to create a sustainable impact on the stakeholders. The
organisation was established in 1916 with an aim to provide various services to needy people.
Currently, the organisation is well known for biotechnology, which develops researchers to
make medicines to prevent serious medicines. The organisational products include cell
culture, blood plasma, vaccines, manufacturing appliances, and other genetic researches (CSL
limited, 2018).

(Source: CSL limited, 2018)
The current profitability score is related to evaluation of stock attractiveness as the
profitability of CSL limited is profitable and the score is eight. The top competitors in the
CSL limited include Shire, B. Braun, Grifols, Johnson & Johnson, and Medtronic. Together,
they have an employee base of 849.5k people. The patients are quite focused and they are
passionate regarding the meeting the wants of customer that start with listening to them and
healthcare providers (CSL limited, 2018). The top most competitor is Baxter international,
which is listed in New Zealand stock exchange. The company does not operate in perfect
competition market. The organisation operates in imperfect competition where it is closest to
oligopoly. This market structure is the market, which is dominated by few large
organisations. These organisations prefer not to compete through price wars. This market
structure result in several forms of collusion with reduced competition leading to higher
prices for consumers. It has several barriers such as high investment needs, economies of
scale, and stronger consumer loyalty for the existing brands. CSL limited exists in perfect
competitive model, which is not much important to the customers. Oligopolies fluctuate from
the price participants and they examine for best price output arrangement (Brown, 2017).

Immunoglobulin is the biggest seller with CSL`s Hizentra and Privigen items among the
biggest drivers of the sales growth. CSL limited operates in increasing number of blood
plasma collections, which often ensure that the organisation can generate needed supply to
meet the customer`s demand. This is the direct contributor to CSL`s growth accomplished
with product sales and constraining with lack of supply (Auer, & Schoenle, 2016).
As the company faces perfectly inelastic in regards to demand curve. Substitute items are
very few in the industry where CSL limited operates. In regards to consider the substitution,
there are several items available who produces low profit earning companies. CSL limited
can focus on availing better quality in products. Purchasers can indicate the items that can
avail superior excellence at subordinate price. Moreover, CSL limited offer-differentiated
items, which can ensure unique and it do not shift quickly to substitute items easily with their
unique benefits. The company can mark-up its marginal cost. Marginal cost includes the cost
of additional inputs wanting them to produce them at next level. Marginal costs will include
increasing cost of labour and items needed for automatic additional automobile, which do not
consider fixed cost as it does not change.

Production costs and scale
Factors of production for CSL limited include land, labour, capital, and entrepreneurship. The
company has its own property to operate, which is estimated at $US 2942.7 in 2017 and $US
3551.4 in 2018 (CSL limited, 2018). Land, plant, equipment assets, buildings, and capital
(work in progress). Operating leases entering into predominately to the lease land and the
rental properties.
As the factor of production, the company employs nearly more than 20000 employees. The
company identifies the right of employee to seek for representation from trade labour and
employee link without the fear of coercion, and harassment. The act guarantees that
employees can accept fee when exceeding minimum wage in jurisdiction (Brown, 2017).
Capital includes the proportion of debt and equity employed in the operation. CSL limited
has issues ordinary shares as issued capital of 452400784 in 2018. The organisation focuses
on enhancing the operational cash flows and maintaining strong balance sheet so it maintains
capital structure without affecting credit margins applying to Group`s debt funding (Hojnik,
2017).
(Source: CSL limited, 2018)

Macro business environment
Political system/government stability
(Source: Trading economics, 2020).
The overall stability of the political system of Australia in which the business operates is
declining in the year 2018 as compared to previous years. It is addressed that in Australia, the
political system has not always been a two-party system but nor has it always been as
internally constant as in current decades. The Australian labor party is a self-illustrated social
democratic party. This party is left learning that has a tendency with respect to social welfare
as well as, government assistance initiatives. Australia regulatory body is one of most
transparent as well as, efficient that highly supports the biotechnology companies (Trading
economics, 2020).
Economic condition

(Source: Trading economics, 2020).
It is identified that the inflation rate was 1.2% in 2018 that is increased in the year 2019 by
1.90%. The 2019 inflation rate is higher as compared to the last 5 years in the nation of
Australia (Trading economics, 2020).
(Source: Trading economics, 2020).
It is illustrated that the unemployment rate of Australia is declining in the year 2019 as
compared to last 5 years (Trading economics, 2020).

(Source: Trading economics, 2020).
It is also addressed that interest rate of Australia is declining in the year of 2019 as compared
to previous years (Trading economics, 2020).
(Sources: The Guardian, 2020).

The economy of Australia is slowed in the year 2018-19 because of the housing downturn,
severe drought, and lack of water resources. However, financial growth is predicted to
increase on the back of fiscal and monetary incentives that is possible to increase domestic
incomes as well as, spending of consumers. This growth has slowed due to a number of
reasons. For instance, the stoppage in worldwide financial growth, resulting through US-
China trade disagreement has gained insecurity for dealings as well as, weigh up on prospect
recovery within investment at home (Trading economics, 2020). Moreover, sizeable fall
within housing rates in two largest markets i.e. Melbourne and Sydney had become
transmissible. It leads to falling new building construction as well as, weakening housing
sentiments elsewhere in Australia nation. This reduction in the value of their biggest asset
housing has enabled consumer for increasing wary of slackening their money for other
purchases. The reduction in housing rates has also overlapped with a prolonged period of
weak income progress of households that is also weighing the outgoings of consumers (The
Guardian, 2020).

(Sources: XE.com, 2020).
If business would export the product to China then it could be not favorable for business
because the Chinese exchange rate is declining in current time although it was good in the
year of 2017-18 (XE.com, 2020).

(Sources: XE.com, 2020).
If business would export the product to the UK then it could be not favourable for business
because GBP exchange rate is increasing in the current time as compared to the last 5 years
(XE.com, 2020).
From the above information, it can be stated that the overall macroeconomic condition of
Australia is more favourable for CSL Limited. Because, in spite of no political stability and
less economic growth, there is a reduction in the unemployment rate, inflation, and interest
rate. And, it could positively impact business growth in coming years because the company
can get easy loans with a low interest rate as well as, availability of skilled labor is higher that
aids the company to get positive results.
While considering the concept of inferior goods and normal goods. Inferior good is product
whose demand declines when the earnings of the consumer rises. On other hand, normal