BMG872 Global Strategy & Development and Implementation Assignment Sample 2024
Introduction
The strategy for globalisation is a process of different organisations to improve and expand their business. Annual turnover of AstraZeneca is around £25.89 billion and has around 76000 employees around the world. AstraZeneca primarily works in the UK and the company can expand its business at Bangladesh to earn greater profits.
The company comes under the pharmaceutical industry which is not much developed in Bangladesh compared to many well developed countries. Better performance of an organisation and high growth accelerate the expansion of business. Besides, organisations also expand through better customer engagement and satisfaction because customer engagement is dependent on consumer satisfaction.
Competitor analysis using Porter’s diamond model
Porter’s diamond model helps to improve customer’s satisfaction by the numerous strategies.
Porter’s diamond model is useful to understand the overall competitors of the business and there are most important factors that improve business organizations’ performance. As per the opinion of Bash-Taqiet al. (2020), this model helps to definition of the business and helps to understand the overall factors of the business. Efficiency level and performance growth is the most essential part of the business and that helps to improve numerous business goals by the broad sales volumes.
Porter’s Diamond Model is extremely useful in order to form an analysis of current scenario of AstraZeneca in its home country (Pearl and Barnard, 2020). AstraZeneca started its operations originally from Britain. Currently this company serves as a joint venture between Britain and Sweden. Analysis of this country through Porter’s diamond model is going to create an understanding to understand the strategically situation of this firm in the British market.
Firm Structure
Firm structure of this organisation is quite developed as it has access to numerous high class resources that are available in this country. Being located in Britain gives this country an advantage to access resources from nearby European markets as well.
Demand
Demand for various vaccines and other associated products have been quite high especially during times of COVID-19-19. AstraZeneca has been a leading firm to supply vaccines and other medical stuff during COVID-19-19 and other times of crisis.
Supporting Industries
Britain has got numerous ancillary industries dealing with that of raw materials for the medical industry as well as other associated stuff. As per the opinion of Cerf (2019), this country also possesses a good amount of talented knowledge pool that tends to drive certain key researches that are extremely essential for this industry that is associated with medical supplies.
Factor Conditions
Factor conditions in terms of man, material and money are all present at satisfactory levels in the home country of this company. This is thus extremely beneficial for this organisation to operate from such a location.
Strategy to internationalize
Concepts
Globalisation is a process of internationalisation of business from one country or the origin of business from one country to another. There are different modes of globalisation of business nevertheless organisation’s follow anyone mode to globalize their business industry.
It depends on the size and nature of the business. As opined by Fichtneret al. (2018), mainly two types of globalisation are followed by organisation one is a joint venture and the other is individual.
Performance of organisation
In this context, AstraZeneca is considered to describe the process of globalisation and set new markets to expand business operations. It is a UK based organisation performing business operations in the medical field. The Organisation performed well over the past few years and the performance of the organisation is too good during a COVID-19 pandemic. The organisation is also successfully developing a COVID-19 vaccine named “Covishield”.
The revenue of the organisation is $26,617million that is increased from $24,384million in 2019. This indicates that the organisation’s financial performance is good and the organisation is able to expand its business. Besides, the operating profit of the organisation is $5,162m. It is also improved from $2,924m that is recorded in the year 2019. The organisation also performed work on overall 171 projects in different countries.
Service range
AstraZeneca provides healthcare services as well as is involved in the manufacture of medicine and different types of vaccines to save human beings’ lives. The organisation also provides their services in government organisations as well as private parties of different countries. It indicates that the organisation’s service range is too high. There are nearly 2 million including government and private parties.
Position in market
AstraZeneca has a big portion in the international market through their effective strategy and mode to perform business activities. The organisation is ranked 6th position in the global market to manufacture medicine and vaccines for consumers. As opined by Pearl and Barnard, (2020), the organisation has some competitors in the market nevertheless that organisation also effectively affects the organisation’s business operation.
The main competitors of the organisation are “Daiichi Sankyo, BoehringerIngelheim, Sanofi, Novartis, GSK and Amgen” out of them GSK is the most affected organisation. These organisations are also manufacturers and suppliers of medical services. The organisation set up a new market in Bangladesh where demand for the organisation’s medicines and vaccines is too high.
Country analysis
PESL framework
PESL analysis briefly explains the external environments of an organization such as economic, political, legal, sociological, technological, and legal environments. PESL analysis is an accurate tool to understand the external environments of a business.
| Political | Political factors such as environmental regulations, tax policy, trade restrictions, and tariffs factors are political stability. Political factors are focused on numerous government policies and it helps to understand the overall external factors of business organizations.
As per the study of Zakarija-Grkovićet al. (2020), tax policy, labour laws, laws of environmental and trade restrictions depend on the stability of the local governments. Political condition of Bangladesh sometimes tends to pass through a period of turbulence. This has to be kept in mind by Astra Zeneca before starting its operations. |
| Economical | Economic factors describe the financial environments that include interest rate, economic growth, inflation rate as well as an exchange rate.
As per the opinion of Jinet al. (2017), the macro economy helps to understand the overall demands and costing, which helps to evaluate global strategy implementation. The current economic status of Bangladesh suggests that the current GDP of this country is 32,423.92 crores USD as per the financial analysis of 2020. GDP per capita is 1,968.79 USD, growth rate of its GDP is 2.4%, and the gross national income of this country is 87,499.76 crores PPP dollars in 2020 financial year (Worldbank.org, 2020). |
| Social | Social factors describe the cultural norms of the business such as health consciousness, growth rates, age distribution, career attitude, and population growth rates.
As per the study of Pedi (2019), social factors include sociological factors that help to identify numerous difficulties of global strategy implementation. Bangladesh has got a complex social structure with people from different ethnicities. This is a key point of consideration before policy formulation. |
| Legal | Legal factors include numerous business laws that help to identify easy platforms of a business. Business operations are increased by exploration and they can easily be controlled by the legal factors of a business.
As cited by Cerf (2019), the government’s rules and regulations always describe the laws and this can have a positive impact on a business. In global strategy implementation, there are some rules and regulations such as consumer law, health and safety law, copyright law, fraud law, and import-export laws that help to recognize numerous difficulties. Laws in Bangladesh are different to that of the United Kingdom and other parts of Europe. Bangladesh’s laws re4garding business operations require to be integrated. |
Table 1: PESL analysis
(Source: Created by a researcher)
Porter’s 5 forces
Porter’s five forces analyse the five competitive forces that help to create an accurate shape of every industry. The globalization strategy is an accurate process and that also controls the overall management performance of an industry.
| Competition in the industry | Low competitive forces are the main factors and it helps to prevent companies’ growth, profitability. Suppliers and buyers of the company can deal with lower prices. Pharmaceutical industry is facing increased competition because constant entry of new companies. |
| Potential of new entrants into the industry | High threats of entrants make the industry less attractive. These create a barrier to reducing the potential profits of the industry.New entrants who are entering the market these days are technologically advanced and pose serious threats to already established brands like Astra Zeneca. |
| Bargaining power of suppliers | The high bargaining power of suppliers has the power to deal with the lower price and high bar suppliers are to improve every business strategy. Suppliers have a goods bargaining power in this industry because of a presence of many purchasing firms. |
| Bargaining power of customers | The high bargaining power of a business creates numerous competitors. As per the opinion of Gravittet al. (2020), business negotiation is sometimes controlled by a third party and bargaining power is beneficial to determine the outcome of business negotiation. Customers do not have a huge bargaining power in the pharmaceutical industry as certain life-saving drugs is made by particular firms. |
| Threats of substitute products | The low threats on substitute products make the industry more attractive and it also increases the potential profits of the industry or specific firm. This is a very prevalent threat as substitute products are getting increased with every passing day in the pharmaceutical industry. |
Table 2: Porter’s five forces
(Source: Created by a researcher)
Mode of entry and the possible consequences
Foreign Direct Investment (FDI)
FDI refers to the direct investment by an organization on the facilities of an internationalbusiness market. In this case, AstraZeneca is supposed to understand its scope of establishing a successful business in the market of Bangladesh and earning more profit from that.
As stated by Latief and Lefen(2018), in case an organization is interested to apply the foreign direct investmentmode of market entry it needs to acquire an existing business in its home country. In the case of AstraZeneca, this organization has its organizational headquarters in the United Kingdom. It suggests that this organization has met one of the eligibility requirements to enter the market of Bangladesh.
However, this mode of market entry requires a huge amount of investment for covering different costs such as organizational premises, required technology, and employees to manage the entire business operations.
AstraZeneca can acquire an organization in Bangladesh to provide its pharmaceutical products to the consumers of Bangladesh. This organization has successfully provided its COVID-19 vaccines and other medicinal products for various crit6iucal diseases to the consumers of the UK. Besides that, in India also this country has successfully sold its products for the well-beings and betterment for the people in India and the UK.
In this aspect, this organization has an opportunity to enter the market of Bangladesh as it is the neighbourhood country of India. In terms of having enough capital to enter the market of Bangladesh, it can be stated that AstraZeneca’s current revenue is US$25.890 billionand its net income from the UK isUS$3.144 billion(Astrazeneca.com, 2021).This financial performance of this organization suggests that financially this organization is capable enough to choose FDI as its market entry mode.
Potential problems and issues
Every organisation has some potential through their effective strategy and plan for business activities nevertheless have some minerals problem which occurs due to high competition in the market and new trends and innovation is introduced by the organisation Urbano and Aparicio, (2017). The AstraZeneca has face some potential and managerial problems to establish business in Bangladesh these are as follow
Political issue: political issue is one the most effective issues of any organisation when establishing new business in any host country. Besides, AstraZeneca is setting up a new business industry in Bangladesh where any government has the maturity to control the government of the country. As argued by Buhejiet al.(2020), the government has introduced different schemes to promote business activities. As a ground result it seems that these schemes are not too effective and support business organisations.
Corruption: corruption is a significant problem of any country and sometimes due to its organisation not interested in establishing business operations in the host country. Bangladesh is also suffering from corruption and it is conducted by different higher persons of different organisations. The company may face problems in obtaining permission to conduct different business operations in country. Poor organization structure is a major area of concern for AstraZeneca since it can create problems in corruption due to effective communication among management.
Low literately: literature is pillars for any country’s future and development. The literature of Bangladesh is 74.68% nevertheless it is not enough for a country to develop properly (Astrazeneca.com, 2021). The low literacy rate of Bangladesh is a major issue and it has become quite complicated for the people of this organization to explain the requirements of getting vaccinated for the prevention of COVID-19.
Poor literacy and lack of education have also created major issues for this organization to convince its population for this vaccination process. Maximum population of Bangladesh belong to Muslim community and this community considers Alcohol as ‘haram’ (Svensson, 2021). However, convincing for the maintenance of hygiene measures during this tough situation was a great challenge for this organization in Malaysia. In this aspect, it can be stated that there is a possibility that AstraZeneca can face this similar issue in Bangladesh also.
Hofstede cultural model
The high score of dimensions indicates the competition level of a business. Compared to the UK the power distance of Bangladesh is 80 and the UK is 35. The power distance level is high. On the other hand In Bangladesh individualism is 89, as compared to the United Kingdom individualism are 20 which mean individualism is poor.
The masculinity is 66 in Bangladesh and 55 are in the United Kingdom. As per the opinion of Jinet al. (2017), this individual process is useful to measure the power distance of two countries. It helps to compare individualism, masculinity, and power distance between the two countries peoples.
This specific comparison is useful to compare the two countries’ power distance. The high score of dimension recognized the organizational life between two countries. As per the study of Pedi (2019), the fundamentals of social issues are recognized by the masculine and it is also useful to understand numerous social issues of a business. For long term orientation, 51 for the United Kingdom and 47 are for Bangladesh.
Recommendation and solutions
AstraZeneca wants to set up a new industry in Bangladesh that is a critical process. Bangladesh is an underdeveloped country and medical equipment is not available in this country so there is a high business opportunity for the healthcare industry. People of Bangladesh visit India to get health equipment that implementing a medical business in Bangladesh will give a large amount of revenue to AstraZeneca.
There are few competitors in Bangladesh and they do not have sufficient infrastructure in the medical sector. The government of Bangladesh also supports this company to develop the healthcare industry. A large number of people of Bangladesh died due to lack of medical facilities and there is a high demand for healthcare facilities.
There are some other factors that are also considered by the organisation as follows. As opined by Pour and Oja, (2020), the company needs to identify the availability of resource and different supporting factors for manufacture or performed business operation in that place of setting new business branches. That means organisations consider the source of raw materials for the organisation.
Performance of any organisation is dependent on primacy factors of the manufacturing process to properly maintain demand of services and goods. Besides organisation must be considered man power and electricity that is the main resource for set up business and run required operation for performed business operation.
As opined by PARK, (2020), organisation must consider the economic condition of those countries where organisations want to set up new business operations. Economic conditions are an important factor for any organisation to continue business operations in those countries. Economic condition refers to the “per capita income” and GDP growth rate of Bangladesh. The GDP of Bangladesh is 5.4% which indicates that organizations can establish their business in Bangladesh.
An organisation must ascertain the transaction cost of an organisation’s different process that is a part of expanding business. The organisation easily expands their business activities as well as growth of business in those countries. An organisation has easily improved their business operation in those countries through acquiring raw materials at low cost.
Thus considering the price of raw materials is an important factor for organisations to accelerate the process of business expansion. Beside the process of production is a part of the stage and organisation needs to acetify modes of production and provide a clear and economical process that is reduce overall cost of production as well as increased produce goods and services for organisation at a large level.
In this context AstraZeneca is also manufacturing service at a large scale as the company maintains demand at a global level. The current government of Bangladesh also introduced so0me new schemes to promote new business operations in Bangladesh. Future organisations may also coincide these above factors to manufacture services in Bangladesh.
Conclusion
It can be concluded based on the above discussion that AstraZeneca has a huge potential of expanding its business in Bangladesh. The growth in the GDP and huge manpower along with rich sources are the major reasons behind the priority of the country for business expansion. In order to demonstrate the strategy of business development in Bangladesh, ‘Three Stage Theory of Internationalization model’ has been analysed.
It has been found from the analysis of the study that joint venture is the most appropriate method for AstraZeneca to expand its business in Bangladesh. The study has further suggested that corruption, political barriers and low education would be major challenges for the company in business expansion in Bangladesh.
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