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Today, the business environment is highly competitive. This means that large corporations (such as ABC Company) should actively get involved in forecast-based or budget-oriented planning methods to enable them prosper and survive.
The firm should be in a position to engage in strategic planning that has the potential to define the objectives of the company and at the same time make a good assessment of internal and external situations (Cook 102). This will make it easy for the company to formulate and implement its strategies, make evaluation, and rectify any deviations.
When developing a strategic plan, the firm should take note of the key parts of a strategic plan such as the mission statement, industry analysis, SWOT analysis, and perceptual maps. This paper explores how ABC Company should undertake the strategic planning process in order to address the lackluster performance being witnessed in the company.
ABC is a large conglomerate corporation that has divisions in the pharmaceutical industry, auto industry, mass merchandiser industry, and home movie rental industry. Currently, the company is facing increased competition from other major players in the industry and changes in economic conditions. Specifically, this analysis focuses on ABC’s pharmaceutical industry division.
The mission statement helps in describing the business vision of a company. This includes both the purpose and unchanging values of the business alongside with visionary goals that enable the business to take advantage of the future opportunities.
For instance, ABC’s mission statement should be framed in such a way that it enables the company to become a global leader in the pharmaceutical industry. The company can achieve this through provision of quality solutions on various issues in the industry in order to help through adequate research and development. This will enable it to deliver appropriate medicinal products for treating various ailments (McCann 170).
Just like other industries that operate in a free market, the pharmaceutical industry is shaped by the environment in which it operates. The various strategies adopted by players in this industry are normally shaped by the external determinants and pressures. The external environment for the firms in pharmaceutical industry is grouped into two areas namely the remote and operating environments.
The firm’s remote environment normally contains the economic, social, technological, and political factors. Economically, the market for selling pharmaceuticals is largely associated with the various effects that pertain the normal economic cycles. This is can be attributed to the difficulties experienced in putting a particular price on good health or determining whether a given drug has the potential of alleviating or curing a given illness.
The international financial mechanisms and pressures also affect the industry. This results into the exchange rate operations and differentials in the rate of inflation among different countries.
Politically, the industry is grossly affected by national governments because they have a greater influence than the individual or group effect. Such influence may require doctors to prescribe drugs at lower prices by ensuring that they prescribe generic drugs rather than prescribing branded drugs.
In regards to the social factors, the population size can greatly affect the level of aggregate consumption as well as the consumption pattern. In addition, the change of individual lifestyles is also likely to increase the mode of demand. For example, some people would prefer to access drugs over-the-counter instead of going for a surgery.
It is worth to mention that these factors are responsible for major threats and opportunities faced by the firm. In addition, firms do not have control over these factors. The nature of impact caused by these factors to the firms in the industry is not similar since it depends on an individual firm.
On the other hand, the operating environment comprises of factors that link the suppliers, competitors, creditors, customers and the labor market. Thses links enable a firm to exert a certain level of indirect influence (Taggart 116).
Conducting a SWOT analysis within the pharmaceutical industry helps the upper management of a company to identify areas where the company is performing well.
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Through SWOT analysis, the management at ABC Company can pinpoint various areas that need improvement in order to facilitate the desired growth and development. This also helps the company to identify the preemptive strategies that should be adopted by the management so as to help in protecting both the value of the company and shareholders.
The strengths derived from the SWOT analysis of pharmaceutical industry reveals the internal components of the industry that provide quality goods and services, value and the desired level of excellence. Examples of components within the internal industry include human capital or features controlled by the industry, and the physical resources (Mishra and Nandita 181).
For example, ABC’s strengths may include reduced operating overheads, the fiscal management of the firm, lower levels of staff turnover, higher investment returns, use of advanced laboratory equipments and staff members who are especially trained in research.
In terms of weaknesses, the pharmaceutical industry has internal components that hinder the its ability to provide services with added value. This means that there is a dire need to engage in improvement activities to help overcome such challenges.
Examples of internal components of the industry include human capital and physical resources. Some of the weakness that can be faced in this industry include lack of economies of scale, inadequate branding styles, lack of motivation among employees and lack of good (Mishra and Nandita 182).
The opportunities of the industry refer to the external components of the industry that provide the industry players with a chance to realize the desired level of growth and gain competitive power over other industries.
The external components of the industry are mainly the aspects or factors that the industry is not in a position to control, and which reflect the marketplace of the business (Mishra and Nandita 183).
Some of the opportunities that ABC Company can take advantage of include increased level of health-consciousness among consumers as well as increase in demand for pharmaceutical products and services. Other opportunities might come through changes in drug and food administration standards or a reduction of costs incurred on employee health.
The threats of the industry refer to the functions of the pharmaceutical industry that can make players in the industry to decline in performance or reduce their competitive power. For instance, some of the threats that the company is likely to experience include control from local authorities, high operational costs for innovation and poor population growth.
ABC Company can address the current competition that is emanating from other players in the industry by using perceptual maps. A perceptual map is a form of marketing strategy used by a company to express the perception of a customer on the company’s products in relation to the products of the competitors.
Usually, a perceptual map represents the competitive product position using a set of dimensions that can be easily compared. Before engaging in the comparison process in a perceptual map, it is vital for ABC Company to undertake extensive market research in order to arrive at accurate findings.
Product comparison on such a map should not be based on the impressions of the product manager regarding how the customers are likely to perceive the company’s brand. For example, ABC Company can develop a two-dimensional perceptual map that focuses on gentleness and effectiveness.
ABC Company can also develop another perceptual map based on the support and nursing staff care in terms of their warmness and responsiveness.
In order to be able to use these dimensions effectively, the company should conduct an elaborate market research. This should be done using a sample of consumers preferably from the area where the company provides services. The reason for picking an effectiveness and gentleness perceptual map is due to the fact that the two are key factors that facilitate the selection when a company is making purchases.
On the other hand, the warmness and responsiveness dimensions enable the company to identify its competitors and the strategies used by the competitors. By so doing, ABC Company can then develop appropriate measures for addressing its current situation and put more efforts towards improved performance (Lidstone and Janice 40).
In conclusion, this analysis has revealed the importance of conducting a good strategic planning process especially in instances where the company is experiencing reduced performance and increased competition.
In the case of ABC Company, there is a dire need of developing an effective strategic plan that includes the company’s mission statement that identifies the strengths, weaknesses, opportunities, and threats in the industry.
Cook, Arthur. Forecasting for the Pharmaceutical Industry: Models for New Product and In-Market Forecasting and How to Use Them. Aldershot: Gower, 2006. Print.
Lidstone, John and MacLennan, Janice. Marketing Planning for the Pharmaceutical Industry. Aldershot: Gower, 1999. Print.
McCann, Peter. Strategy & Business Planning of Privately Held Companies. Victoria, B.C: Trafford, 2000. Print.
Mishra, Ragan and Sethi, Nandita. Rethinking India’s Growth Strategy: Services Vs. Manufacturing. New Delhi: Concept Pub. Co, 2008. Print.
Taggart, James. The World Pharmaceutical Industry. London u.a: Routledge, 1993. Print.