Analyzing Strategy Implementation: The Eli Lily Case Study

This case study provides a comprehensive analysis of Eli Lily and Company's strategy implementation. It employs external analysis tools such as PESTLE to evaluate the political, economic, social, technological, environmental, and legal factors impacting the pharmaceutical industry, with a focus on government regulations, environmental concerns, and technological advancements. Porter’s Five Forces model is used to assess the competitive landscape, including the bargaining power of suppliers and buyers, the threat of new entrants and substitutes, and the intensity of competitive rivalry. Internal analysis focuses on Eli Lily's core competencies, emphasizing research and development, customer-centric approaches, and cross-functional teamwork. Additionally, the study uses value chain analysis to examine the primary and support activities that contribute to the company's competitive strategies. The study highlights Eli Lily's efforts to adapt to market demands, leverage its core capabilities, and maintain a competitive edge in the pharmaceutical sector.

Implementing Strategy

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Answer 1
External Analysis
PESTLE Analysis
PESTLE Analysis is a tool which is used by marketers to analyse the macro-environment of
the company. The factors which affects the organisation is also analysed by this tool so that
the company can take the decision as per the environment. PESTLE stands for political,
social, economic, environmental, legal and technological which states the external
environment of the company. These points are described below as per the case study of the
company.
As per the case study, Eli Lily and company were situated in United States. Lily is the
pharmaceutical company which is able to safeguard its problems by looking internally to the
core capabilities.
Political
In the case of Eli Lily and company, the external factors are supporting the industry for the
future success. It has been seen that the government and the company decision for the
medicine is somewhere different such as the decision taken by the individual for the use of
Rx therapy is different the decision taken by the government. The decision taken by the
government is affected the company. The company has lack of productivity due to pressure
of pricing and the restriction of government as per the healthcare systems. Lack of
productivity is a big issue for the company because it is difficult to produce the new products
for the therapist in the limited budget. The government financed healthcare system restricts
the company in the terms of pricing. The new products are available globally; to purchase
that product the government payers has to pay the premium demanded by manufacturer. It is

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observed that the government has the responsibility towards the society in the terms of
medical services (Rastogi, and Trivedi, 2016). The government expands Medicaid eligibility
so that the all American can afford the health insurance and even those who have low-
income. The low prices are not beneficial for the company; the company earned the less
amount of profit by serving the services at the low prices.
Environmental
The pharmaceutical business affects the environment; as the Americans claim that the
industry includes the aliments which cause the diseases. It is harmful for the society as well
as the environment because manufacturing new drugs consumer more natural resources and
chemicals. The services based model of the company provides the total customer solutions
and manage the overall healthcare cost which is positive factor for the company as well as the
society. It is a noble effort in the today environment which helps the society in saving the cost
(Samsatli, Samsatli, and Shah, 2015).
Social
It has been seen that medicines helps in recovering the patient from the diseases. It is
beneficial for the society and it can be said that the company saves the lives of people. As per
the case study, it is observed that the drug companies promote the diseases by matching their
drugs. The people of Americans believes that the companies have dubious aliments which
helps in one diseases but causes the other one such as generalised anxiety disorder. Some of
people also believe that the company also invest on prescription of drugs and its result to
protect the people from side effects.
Technological

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The company is required the machines to manufacture the new products for the therapies, and
the other diseases. In the case of Lily, it has been seen that the conventional technologies of
drugs was a challenge for the company at the time of explosion of time. As the time passes,
the machines are necessary for the company to manufacture the new products. After the many
years the pharmaceutical industry used advance technologies in proteomics, genomics. The
other technologies are used by the industry on the research and development of output so that
they can produce the new products that improve the therapies. The company use the high
technology for the production of new products (Singh, 2016).
Economical
It has been evaluated that the global sale of the industry were approximately $550 billion in
2004 in which 42% of this total has been taken by the Pharmaceutical industry for the
research and manufacturing the drugs (Henderson, 2007). The industry produced the new
drugs which consume the high investments. After a time, the production of new drugs is
falling due to high investment and many other reasons. The industry grows with the low rate
such as 7% and the branded pharmaceutical expected to lose patent protection due to which
the company came under the financial pressure. Now, the company introduce the new drugs
at a rate in the every two years (Adamo, et al., 2016).
Legal
It is observed that the food and drugs is directly consumed by the consumer that is why the
government enter the drugs under the DTC regulation in 1997(Henderson, 2007).
Porter’s Five Forces
It is a model which identifies and analyse the five competitive forces which helps to
determine the weaknesses and strength of the company. It is also used to analyse the industry

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structure which helps to determine the corporate strategies. The model includes the five
forces which help to analyse the company structure so that the company can develop the
corporate strategies such as bargaining power of suppliers, bargaining power of buyer, threat
of competitors, threat of substitute and threat of new entrants. These forces are described as
below:
Bargaining Power of supplier
It has been seen that the bargaining power of suppliers is less due to high competition among
suppliers. There is large number of suppliers in the market which compete each other to grab
the large market share (E. Dobbs, 2014). Due to large number of supplier the company can
easily switch from one supplier to other supplier. The switching cost is low so that the
companies can easily deal with the other suppliers. The company uses the IT tools to develop
a global network of suppliers who can provide the services at the lowest price. Due to
develop the network; the company has high power to switch with the other suppliers.
Bargaining power of buyer
The industry has high competition as well as large number of customers in the market. It has
been evaluated that the every human needs medicine to stay well and healthy (Yunna, &
Yisheng, 2014). The industry has the large number of customers and has high demand. To
attain the large market share the company reduces their prices as compare to the other
competitors. It is an advantage for the customers because they get the services at the lowest
cost. Thus, it can be said that the bargaining power of buyer is high. The border portfolio is
also a reason of high negotiation power of central buyer.
Threat of substitute

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The company has less threat of substitute products because there is no substitute for the
drugs. But if the requirement of a drug is low then the yoga, meditation and the other
therapies are the substitute for the company (Porter, and Heppelmann, 2014). Homeopathic
and herbals treatments are also the substitute of the company but these drugs are also made
by the pharmaceutical industries at the certain level. Healthier lifestyle such as balanced diet,
exercise and other physical activities are the substitute products of the drugs.
Threat of new entrants
It has been seen that the threat of new entrants is high because of large number of customers.
Nowadays, every human requires drugs for cure or to stay healthy that is why the demand of
the industry is high. The new companies enter in the market due to high demand of customer
towards the services. The new entrants came with the new therapies and treatments which is
also a biggest threat for the company.
Threat of competitors
The pharmaceutical industry is comes under the most competitive industries in the world.
Most of the companies have high reputation in the market just because of high quality of
services. The profit margin of the company is high because it comes under the companies
who have good reputation in the market. The company faces the large competition in the
market due to high goodwill value. The company create the key capabilities to gain the
competitive advantage but the competitors always put their efforts to gain the market share.
Merck, Gilead, Pizers, and Genentech are the main competitors of the company. It can be
said the company has high threat in the market.

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Internal Analysis
Core competencies
Core competencies are a concept of multiple resources and skills that distinguish a firm in the
marketplace and their activities which helps them to compete with the competitors (Zhao,
Zuo, Wu, Yan, and Zillante, 2016). Eli Lilly is a research based company which is based on
Pharmaceutical Corporation. It provides the creating and innovative services to the customer
which is based on the health care solutions. The innovative services of the company help the
people to live longer and healthier. The pharmaceutical business has been the core of the
company for more than 100 years. It has been seen that the resources, capabilities reflects the
unique personality of the company (Takata, 2016). The company services reflect the
experience for more than ten decades. As per the case study, it is observed that the company
change their core strategies to achieve the competitive advantage in the market. The company
divided its work into three interrelated phases in which the scenario planning, business model
and core capabilities assessment. It focuses on its core capabilities so that it can provide the
services to the customer. The company was able to safeguard its independence by looking
internally for core capabilities. The core capabilities of the company develop and exploit by
improving speed to market, narrowing its R&D focus from right to five therapeutic areas,
spinning of its non-core medical device. The other concept of core competencies of the
organisation is R&D and Marketing. Research and development department of the company
focuses on the demand of the consumers and trend of the market to satisfy the consumer
needs (Li, and Liu, 2014).
The core competencies of the company are based on the satisfaction of consumer needs and
its main motive is to provide the service to the consumers so that they can stay healthy. The
top management facilities provide the full support to the superior management so that they
can develop the core competencies. The company introduce the new products and therapies

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style to make the treatment more flexible. The every part of the company plays a role in
strengthening its position and the spirit of cross-functional teamwork which helps the
company in producing the new products in numerous ways (Barney, 2017).
The core competence of the company is qualified in the core competencies test which is
given below:
Tests Conformance to gtest of core competence
Customer value Reduce the cost of treatment with the
effective result
Competitor differentiation Implemented patient focused and process
oriented approach.
Extendibility Enables the company to transfer its growing
stream into global markets and create new
competitive space
(Tech Target, 2018)
The management of the company belives that the process involving everything to introduce
the new products such as technologies. The company is commited to developing and utilizing
the talent and energies of all its employees worldwide. The success of the company depends
on the employees who put their efforts on the innovation of the product.
VALUE CHIAN Analysis
Value chain is a set of activities in which a firm operates in a specific industry in order to
deliver the services and products for the market. The idea of value chain is based on the

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process of view of organisation to achieve the competitive strategies. The model is classified
into the two segments such as primary and support activities.
Primary Activities
Primary activities include the functions that are related to the conversion of input into output
and distribution activities of the company are called the primary activities. It includes
inbound logistics, operations, outbound logistics, services, marketing and sales. These
functions of the company are described as below as per the case study of Eli Lilly.
Inbound Logistics
The company follow the “Fully Integrated Pharmaceutical Company Model” (FIPCO) in
which each company has its own discovery, development, marketing, and sales functions.
The blockbuster model helps the company in distribution of small number of drugs due to
which the global sales is increases by the $ 1 billion annually (Christopher, 2016).
Operations
The company is in the stage in which the raw material in finally prepared into the final
product for consumes. The company manufacture the pharmaceutical product of the highest
quality to protect the consumer. The company also follow the DTC regulation at the time of
delivering the product (Mudambi, and Puck, 2016).
Outbound Logistics
The company distribute the products with the help of retailing channel. Retailers distribute
the product and will reach at the customers. The company also sold the product to the
hospitals in bulk quantity which is used in the treatment of patients (Lilly, 2018)
Marketing and sales

IMPLEMENTING STRATEGY 9
The company promote the drugs through the advertisement on television and Internet. In the
early age, the company spent the huge money on marketing as compare to the PepsiCo spent
the money on its Pepsi product. The companies consume fewer amounts on research and
development but the company consume high amount in the marketing. It has been seen that
the marketing and sales efforts of the company fall the stock price with the percentage of
19% in a year (Darmawan, Putra, and Wiguna, 2014). The company continuously raise the
marketing amount with the passing year. As per the case study, the company invest 3424
billion in marketing but in 2004 the company invest 4284.2 (Henderson, 2007).
Service
The company improves its performance by its highest standard of honesty, ethical behaviour,
and moral character. These factors help the company in the new way to improve the
performance. The company improves its therapies by obtaining the price premium for new
products. New product use in therapies consumes high price that is why the price premium is
required to improve the services. The company also use the advance technology to improve
the current therapies. The new products is depends on the same target as the existing
therapies; it just improve the safety in the therapies (Atighechian, Maleki, Aryankhesal, and
Jahangiri, 2016).
Support Activities
Support activities are those activities that assist the primary activities of the company for the
smooth work or to achieve the objective. It also includes infrastructure, procurement,
technology development, and human resource management. These functions are described as
per the case study of Eli Lilly to described that how the company perform these functions.
Infrastructure

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The company is divided its work into the three phases such as Business model evaluation,
core capabilities and scenario planning. There are different departments in the firm which
makes the work easy and every department perform their work according to their
responsibilities. The cost structure of the company is same as the Indian pharmaceutical
manufacture companies; the cost structure of the company is low with the sales and
marketing expenses with the rate of 40-50% of prices (Jaberidoost, et al., 2015). The
company achieve success not by cost cutting only but also by taking decision in a completely
different framework with costs at its core.
Human Resource Management
Employees are the valuable asset for the company. It has been seen that the company have
42000 employees with the help it operates in 142 countries. The company provides the
private health insurance plans which are beneficial for the employees (Lilly, 2018).
Procurement
The company follow the Low Cost Innovative FIPCO model which is depend on the external
prices of the services such as raw material. It uses the sophisticated IT tools to develop a
global network of suppliers who can provide the services at the lowest prices. It states that the
company get the raw material in the low prices from the suppliers. The company also take
care of their suppliers by providing those benefits (Lin, 2016).
Technologies Development
Technology helps the company in making the new products and improves the therapies.
According to the case study, the conventional technologies of drugs were a challenge at the
time of developing the machines by using the advance technologies (Henderson, 2007). After

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the many years, the pharmaceutical industry used the technology in proteomics, and
genomics. The company used the other technology which is based on the research and
development of output so that it can produce the new products which helps the company in
improve the therapies. The company use the technologies in producing the new drugs or to
improve the therapies (Ho, Zheng, Yildiz, and Talluri, 2015).
Answer 2
Theory of changes defines the vision and mission of the company. The theory of change is a
diagram that describes the outcomes of an organisation which develops through their work
and the relationships between those outcomes. The theory of change defines the objective and
the procedure to achieve the objective of the organisation.
Vision theory is the proposal which is accomplished by eye dreams emitted by the eyes. This
theory comes from something representative of the object entering the eyes. In the other
words, it can be said that the objective of the company is set by the organisation is called the
vision. The statement given by the company to describe the objective is called the vision
statement. As per the case study, it has been seen that the vision of the company is to get the
leadership position in the pharmaceutical industry (Henderson, 2007).
To reach at the vision the company has to take the steps towards it. The good mission
statement describes the benefits of an organisation and the process to achieve the success.
The mission of the company is making the medicines that help people to live longer, healthier
and more active. For this the senior manager of the company divides the work into the three
phases such as scenario planning, core capabilities assessment, and business model
evaluation.