Strategic Analysis of DDi makrocare: Industry and Competitive Forces

This report presents a strategic analysis of DDi makrocare, a global commercialization partner for the pharmaceutical industry. The analysis begins with an executive summary and introduction, followed by an overview of DDi makrocare's role in the pharmaceutical sector. The core of the report involves a comprehensive examination of both the external and internal environments. The external environment is assessed using PESTEL analysis, industry life cycle analysis, scenario planning, five forces analysis, and competitor analysis. The internal environment is evaluated through customer analysis and SWOT analysis. The report also explores strategic groups and blue/red ocean thinking. The analysis identifies key factors affecting the company's growth, including political, economic, social, technological, legislative, and environmental influences. The report concludes with recommendations based on the identified problems and issues, providing insights into DDi makrocare's strategic positioning and future prospects within the dynamic pharmaceutical landscape. This report aims to critically evaluate the external and internal environment of DDi makrocare using various analytical tools to provide a clear understanding of the company's current state and potential future strategies.

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Executive Summary
The basic overview provides the details of working of the company chosen for evaluation, DDi
makrocare. The PESTEL analysis has given overall accurate analysis of several factors including
the political, social, technological, economic and environmental as well as the legislative factors
affecting the overall industry. The life cycle of the total industry is given in a descriptive industry
life cycle, showcasing different stages of the industry. The five forces analyses as well as the
evaluation of the competitors have given an important insight into the factors affecting the
growth of the chosen firm both positively and negatively. The customer analysis has given
knowledge regarding the levels of satisfaction as well as the complaints that the main customers
of the chosen organization have. Evaluation of the internal resources gives the strengths,
weaknesses, opportunities and threats (SWOT) analysis of the company, which provides a
glimpse of the current strengths and state of affairs of the company along with the weaknesses
and scope of future improvements.
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Table of contents
Introduction......................................................................................................................................4
Overview..........................................................................................................................................4
Analysis of the external environment..............................................................................................5
PESTEL Analysis............................................................................................................................5
Industry life cycle............................................................................................................................7
Scenario planning............................................................................................................................8
Five forces analysis..........................................................................................................................9
Competitors....................................................................................................................................11
Customer analysis..........................................................................................................................11
Strategic groups.............................................................................................................................12
Blue/red ocean thinking.................................................................................................................13
Evaluation of the internal resources..............................................................................................13
Recommendations..........................................................................................................................14
Conclusion.....................................................................................................................................14
Reference list.................................................................................................................................16
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Introduction
The strategic management is basically the responsibility of the management to optimize the
internal resources and capture the external opportunities by avoiding the threats. This is done for
the purpose of achieving a competitive advantage in the market. In this report, the factors
affecting the environment of the pharmaceutical industry will be studied. The aim of the study is
to critically evaluate the external evaluation of the external and the internal environment of the
DDi (makrocare) which provides services to the pharmaceutical industries.
The analysis will be done with the help of the different analytical tools which play specific roles
in the analysis of specific factors. The PESTEL analysis will be used for the monitoring of the
macro-environmental factors of the company. The industry life cycle as well as the scenario
planning of the industry will be analysed. The competitive advantage of the industry will be
studied with the help of the five force analysis and the blue ocean thinking will be used for the
analysis of the value innovation. The internal factors of the industry will be evaluated with the
help of the SWOT analysis. The problems and the issues will be analysed based on the
evaluation and the likely consequences will be anticipated. Finally, the recommendations based
on the problems will be provided.
Overview
The pharmaceutical industry provides direct employment to more than 72,000 people and
contributes a considerable amount to the GDP of the country. The industry provides a number of
benefits to the economy of the country along with the provision of employment, expertise and a
noticeable amount of investment.
Figure 1: Logo of Makrocare
(Source: Makrocare.com. 2017)
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The DDi makrocare is the global commercialization partner for the pharmaceutical industry. It is
also an expert in providing the strategic development to the industry. This company holds a firm
position in meeting the demands of the needs of the portfolio of the products which are
undergoing expansion. This company deals with the development of the e-clinical tools. The
market value of the company was recorded to be worth 71.5 billion pounds (Makrocare.com.
2017). As per the analysis of the pattern of the growth, therefore the company is expected to
witness a considerable hike in the overall growth.
Analysis of the external environment
PESTEL Analysis
According to Balasopoulou et al. (2016, p.6), the PESTEL analysis of the industry is done by the
analysis of the several; factors including the political, social, technological, economic and
environmental as well as the legislative factors affecting the industry.
Figure 2: PESTLE analysis
(Source: Grünig and Kühn, 2015, p.89)
Political factors
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The growth of the political focus on the pharmaceuticals and the interference of the government
bodies exert the unexpected pressure on the cost and the pricing. This ultimately affects the
business of the industry.
Economic factors
The economic issues like the crisis in the global economy and the reduction in the individual
income of the people has a negative impact on the business as the people become reluctant on
spending high amount on the health care. As the DDi (makrocare) is involved in the e-clinical
tools, the cost of the services increases with the implementation of the technologies. In that case
the balance needs to be maintained in between the cost and the income which ultimately affects
the price.
Social or cultural factors
The increase in the population leads to the arising of the threats as well as opportunities to the
industry. The expectations of the people have increased to a great deal in regard to the quality of
the services. The demands of the patients are facing a substantial growth and they have become
far more active than what they were earlier. The awareness of the patients leads to a higher
pressure on the customer service and the need of the price transparency also increases. The better
activeness of the patients leads to the need of better level of gathering of the intelligence. In this
case the E-clinical facilities can serve as a better means to serve the customers and provide them
a higher level of satisfaction.
Technological factors
The advancements in the technologies facilitate the creation of the new aspects of business
including the new therapies and the provision of the new services. This also helps in providing
the customized treatments to the patients. The provision of e-clinical facilities helps in the
achievement of these factors. The new digital opportunities are created using this service. The
communication with the patients is also easier with the help of the services provided by the DDi
(makrocare). The advertisement of the services also becomes convenient with the help of the
technologies and the patients are able to provide better response to the company.
Legislative factors
There exist a number of regulatory bodies which deal with the laying down of the laws and
regulations with respect to the pharmaceutical industries. As per Grünig and Kühn (2015, p.89),
the emergence of the new technologies is leading to a stretch in the boundaries of the
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legislations. There are several impacts of these factors on the environment of the firm. The focus
on the education needs to be increased and the quality of the services needs to be made the key
factor.
Environmental factors
The environmental agenda is growing day to day and the awareness is increasing within the
stakeholder which makes it necessary to increase the proactive participation of the business. The
economic opportunities need to be identified and the promotion of the services need to
accordingly done.
Industry life cycle
The growth of the sales of the industry can be used for the analysis of the life cycle of the
industry. There are different stages of the life cycle of the industry. The different stages are
named as introduction stage, growth stage, maturity stage and the decline stage.
Figure 3: Industry life cycle
(Source: Meissner and Wulf, 2013, p.802)
Introduction
This stage is the time of the evolution of the industry into the market. This is done by the
introduction of a new product into the market (Murphy et al. 2015, p.135). A focussed strategy is
used by the firm to emphasise on the production of a unique product which is designed for a
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specific group of targeted customers. At this stage, the profit of the firm or the industry is
considered to be negative as the cost incurred for the creation and the production of the new
product is to be put up by the company itself. The makrocare came up with the new ideas into the
market and was focussed to incorporate the technology for the treatment of the people.
Growth
Karniouchina et al. (2013, p. 1011) mentioned that, this stage of the cycle deals with the
differentiation of the service of the firm with the similar services provided by other companies
which are in competition in the market. There were several companies existing in the market like
the Vectura and the Selvita which provide different services within the same industry. However,
the unique product of the makrocare achieved certain advantage in the market.
Maturity
In this stage, the growth of the company is often found to slow down as the company tries to
create its position in the market. The efforts of the marketing should be kept stronger at this stage
so that the firm is able to survive in the market.
Decline
In case of the company being unable to keep in pace with the competition in the market, the
position of the firm starts facing deterioration in its position and the company is likely to get
obsolete. The strategies of merger can be implied for the revival of such firms.
In case of the makrocare, the company is in the stage of maturity at present as it has successfully
created a position in the market with the unique service it provides.
Scenario planning
The scenario planning is the analysis which is carried out in order to make the long term plans
which are flexible and the changes can be made as per the requirements in the future. As per
Schoemaker et al. (2013, p.816), this planning basically deals with the amalgamation of the
different factors and analysis of the working of the factors in collaboration with each other. The
process of the scenario planning consists of a sequence of actions. The steps of the planning are
as follows.
· Specification of the scope of the plan and the time frame needs.
· The development of clear understanding of the present situation so that the scenarios can have a
common point of departure.
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· Identification of the elements which are predetermined and their occurrence is virtually certain.
· Identification of the critical uncertainties which are liable to occur in the variables of the
environment.
· Identification of the drivers which are considered to be more important.
· Consideration of possible values for each of the variables. The range of the values should be
extreme and the values which are highly improbable need to be avoided.
· The analysis of the interaction of the variables with each other and the development of a matrix
of the scenarios with the use of two important values and the possible values which can be
associated with them.
· Creation of stories which represent different possible scenarios which start from the present
situation.
· The basic motive of these stories is to develop the useful strategies with the help of those scenarios.
· Quantification of the impact of the scenarios and the formulation of the strategies which are
appropriate (Meissner and Wulf, 2013, p.802).
Five forces analysis
The Porter’s five forces analysis is the technique of the analysis of the degree of competition
within a specified industry. This is often done with the help of some checklists. This analysis
deals with the qualitative evaluation of the strategies. The five forces are discussed here:
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Figure 4: Porter’s Five Forces
(Source: Rothaermel, 2015, p.21)
Threat of new entrants
The entry of the new firms into the market may be a problem to the existing company as the
increase in the number of firms leads to the decrease of the profit of the individual firms.
The amount of the threat posed by the new entrants depends on the several factors like the
existence of the barriers to their entry, policies of the government, absolute cost as well as the
customer loyalty.
Threat of substitutes
The presence of the substitutes of the products in the market may be another threat to the
business. The example of such a substitute is the mobile phone which is used instead of the
landline phones. The factors affecting this aspect are the standard of the product, depreciation of
the quality and the availability of the substitutes.
The customer’s bargaining power
As per Rothaermel (2015, p.21), the ability of the customers to create pressure on the firms
which also has an impact on the sensitivity of the customers to the change in the price is known
as the bargaining power.
The power of the buyers is said to be higher if there are alternatives available to the buyers.
The factors affecting the bargaining power are force down prices and the total trading amount
along with the price sensitivity of the buyer. The customers may switch to the different brand or
the services of the different companies if they feel that they have to pay a lower price for the
other company.
The supplier’s bargaining power
The suppliers of the components, raw materials, services and the labours are considered to be
source of power upon the firm at the time of the presence of a few substitutes. There are several
factors which create an impact on this aspect. These factors are the level of the differentiation of
the products and the presence of the substitute of the inputs. The competition within the different
suppliers also affects the bargaining power of the suppliers.
Industry rivalry
As stated by Araujo et al. (2015, p. 77), the intensity of the competition from the rivals is one of
the important determinants of the competitiveness. The potential factors are the level of the
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expense of advertisements, level of the transparency and the powerful strategies of the
competition. With the advancement of the technology, it is very likely that the makrocare faces a
very high competition in the market as a lot of companies may come up with the similar ideas
Competitors
According to Hollensen (2015, p.13), the competitor analysis is one of the most essential
elements of the corporate strategy. This deals with the evaluation of the strengths and the
weaknesses of the existing competitors. This analysis can be done with the help of the
construction of the competitor array. The following steps need to be followed for the
construction of this array.
· Defining the industry in terms of the nature and the scope.
· Determining the competitors
· Determining the customers and their expectations of the benefits
· Determining the key strengths
· Ranking of the success factors by providing a weighting to each of them
· Rating the competitors
Along with the analysis of the existing competitors the estimation of the competitors which may
arrive in the future is also necessary. This estimation can be done based on the sources like the
companies which follow the similar technology as well as the companies at distant location
which provide the same service or products. The new companies are likely to enter when the
profit margin of the industry is very high and when the demands of the customers are not met by
the existing companies. Grant (2016, p.13) mentioned that, with the rapid growth in the
technologies, there are possibilities that more companies come up with the software which can
provide similar facilities to the industry. The makrocare needs to analyse the situation and needs
to find out the solutions to the problems which are likely to arise due to the emergence of those
companies.
Customer analysis
The customer analysis is very important for all the companies as this analysis helps on the
identification of the best customers for the specific business. As per Hämäläinen et al. (2015,
p.58), the analysis of the customers can be done on the basis of the demographic profile of the
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customer and the customer buying behaviour. This helps in the proper segmentation and
targeting of the customers so that the companies can provide the services as per the demands of
the customers. This also helps in the development of the retention plans in relation to the
customers. This is also greatly helpful in the purpose of the improvement of customer services.
The campaign planning can be made more effective after the evaluation of the customers. The
proper analysis of the buying behaviour of the customers helps in increasing the degree of the
satisfaction of the customers. This in turn helps in the increase of the sales and the revenue of the
company. As stated by Liang and Pei-Ching (2015, p. 551), the overall productivity of the
company is enhanced which leads to an enhanced profitability. The makrocare has a vast range
of customers as the health care services are required by all people irrespective of the different
segregation categories.
Strategic groups
The analysis of the strategic groups deals with the determination of the organizations which exist
in the same industry and make use of the similar strategies and the similar principles (Gutierrez
Leefmans and Holland 2015, p.10).
There are several uses of the strategic group analysis. They can be listed as follows.
· It helps in the identification of the two immediate competitors and the basis of the competition
· It evaluates the likeliness of the organization to change the strategic group.
· It also helps in the identification of the opportunities.
· It helps in the evaluation of the strategic problems.
The creation of the strategic groups can be done on the basis of the different dimensions like the
specialization, channel selection, vertical integration as well as the position of the cost. As
mentioned by (Lozano et al. 2013, p. 2096), the major basis of the differentiation is the method
of the competition and the area of the competition. The characterization of the strategic groups is
done depending on the barriers to the entry of the business and the level of the difficulty of
changing the strategic groups. With the help of proper evaluation of the competitions, the
company will be able to plan the strategies to overpower the companies in competition.
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Blue/red ocean thinking
The blue ocean strategy is the strategy which is followed by the companies for the sustainable
survival in the market with the existence of the competitors (Kim and Mauborgne, 2015, p.235).
The basic points of the strategy can be stated as follows:
It helps in the creation of a brand which lasts for a long period of time.
The differentiation is pursued at a relatively low cost.
The boundaries of the industry can be increased to gain an advantage over the industries which
are in competition with the firm. The makrocare has made use of this strategy and it has stretched
the boundaries of the pharmaceutical industry by introducing the software services into the
industry instead of coming up with the conventional products of the industry. The use of the
software tools has overpowered the companies which are still dependent on the conventional
methods. The blue ocean strategy provides a step by step process for the creation of the further
strategies. It also helps in the minimizing of the risks and maximising of the opportunities and
the ideas can be refined based on these evaluations.
The appropriate use of this strategy helps to a great extent in the creation of the win-win situation
for the company as the company is able to analyse the problems and mitigate them.
Evaluation of the internal resources
The chosen organization is one of those that provide proper services in regards with the job of e-
clinical facilities. These sorts of services are of tremendous importance to the other companies
and firms of the financial scenario, in this case the companies of the pharmaceutical industry.
The strength of the workings of this company is the fact that it provides support to the workings
of the big organizations that are a part of the pharmaceutical financial scenario. Another positive
point of this particular firm’s work is the fact that it is cost efficient. The bigger and more tiring
work loads are rewarded with higher pay and higher rewards. The bigger rewards have provided
motivation for many a company, including the organization that has been chosen in this study.
The motivations and cost benefits provide the biggest strength points for the chosen firm.
The points that can provide the basis of the strength can also provide a glimpse of the
weaknesses. The utter dependency of the pharmaceutical companies on the chosen firm provides
them with the opportunity to blame the company in times of dire situations. Just as cost can be a
factor of strength, so too is it a factor of weakness in another form. The creation, manufacturing
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and providing of the equipments and instruments come at a very high cost. Most of the
instruments that are used in this industry are extremely costly and rare.
The chosen firm has the opportunity to expand its territories in the market using proper corporate
strategies. According to Abdolshah et al. (2017, p.170), the diverse range of products that it
manufactures provides a potential for expansion in regions other than the ones it is currently in.
Many pharmacy products are in accordance with the medicines and compounds that are used in
the medical and chemical industries. The company has the potential to provide the common
products to financial entities and corporations of these industries. The potential profits and
revenues generated are enormous.
The most obvious threats are the other corporations in the same field. The other e-clinical
organizations in the same region have the potential to take away the clients and customers of the
chosen firm. This takes away potential revenue, jobs, customers and profits. Customers once
taken away are very hard to get back.
Recommendations
On the basis of the analysis done with the help of the different analytical tools, it has been
analysed that the pharmaceutical industry has a considerable position in the market. The creation
of the e-clinical tool by the makrocare has proved to be a great idea as there are several benefits
of the use of the technologies in the health care firms. However there are several problems which
need to be mitigated. These problems along the possible solutions are discussed here.
The use of the software must be done in proper collaboration with the acts and the regulations
put up by the legislative bodies.
The degree of the satisfaction of the customer’s needs to be maintained because the
dissatisfaction of the customers leads to the downfall of the overall profit of the company.
The scenarios were not properly planned in case of the makrocare. This has to be rectified for
achieving the proper identification of the risks and finding the solutions of the same.
Conclusion
It is concluded that the proper strategic management tactics and theories are of paramount
importance in the optimization of the internal resources and capturing of the external ones. Most
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of the tactics that have been successfully implemented in the market have managed to provide
the chosen organization a competitive advantage in the market. Critical evaluation of the external
and internal environments has revealed a trove of knowledge on the workings and satisfaction of
the employees within the firm. Different kinds of analysis into the workings and the descriptive
overview of the various aspects of the chosen company have provided a valuable insight into its
strengths and weaknesses. Hence it is concluded that while the workings and marketing
strategies implemented by the chosen organization has proved to be beneficial and fairly
successful, there is a need for overcoming the weaknesses and capturing the presented
opportunities in order for achieving future successes.
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