Introduction
Genzyme Corporation did not take the beaten track and decided to diversify its products to tailor the needs of a market that had poor product range. Their strategic plan has resulted in great profitability, the almost exclusive right for selling, and a market that had no competitors. The purpose of this paper is to review and analyze the strategy of this enterprise.
Competition
It should be noted that the company concentrated on the production and distribution of rare medications. Due to the nature of these products, the competitors did not have their interest in attaining the same market share and, therefore, the rivalry within this industry was weak (Schilling 2012). Also, Genzyme’s idea required heavy money investments since all the finance had to be spent on research and development (R&D) of new commodities. Moreover, the enterprise was able to patent its pharmacological products, which ensured that there would be no rivalry for seven years (Schilling 2012). This situation has resulted in the fact that customers were left with no choice but had to buy Genzyme’s drugs. Therefore, the bargaining power of customers was decreased.
Resources and Capabilities
Importantly, the focus on this category of medication was favorable for the company because the government had introduced such policies and regulations, which were advantageous for it. In particular, tax breaks on R&D were introduced for those enterprises that would take these drugs to the market. Therefore, the company was doomed to gain a competitive edge. Taking into consideration the complex and expensive nature of orphan drug production, the conditions in which the company had to operate required spending a lot of money (Schilling 2012). To be more precise, Genzyme had to direct its resources and capabilities at producing the medication while sustaining a decent number of workers to make the drug. By following this strategy, Genzyme utilized its resources and capabilities efficiently – it invested in R&D and reduced production costs while making greater profits.
Focus on Orphan Drugs
The company’s strategic decision seems indeed reasonable due to the low levels of rivalry in this market and the poor options that were available to customers. Its market focus enabled the enterprise to gain privilege in producing rare drugs, which were in demand among people with uncommon diseases. In terms of the strategic intent, it can be assumed that it is long-term because uncommon diseases are experienced by many individuals, and medication assortment is poor (Schilling 2012). Genzyme has an exquisite right for producing medication for this market, thus the marketability of its products will be high for a long time taking into account that the company has also divided the operations into different healthcare areas.
Diversification
It can be surmised that the company has resorted to diversification to attain a greater market share, to reach sustainability, and to prevail in the market with its medicine for uncommon illnesses (Walker 2015). Nevertheless, despite the obtained market dominance and competitive edge, Genzyme will have to continue investing heavily in R&D to evaluate the effectiveness of the proposed medications. Therefore, the greatest disadvantage of this strategy is the constant need for resource allocation.
Recommendations
Due to the possibility of the emergence of generic drugs, Genzyme is likely to face a certain increase in competition. For that reason, it is advisable that the company expands its product lines and introduces other medications aimed at aiding people with common diseases. Importantly, when introducing other medicine, the company will have to spend more money and resources for such operations as productions, marketing, selling, and so on, which will inevitably lead to increased costs (Humphries & Gibbs). Therefore, it would be rational to concentrate on developing the medication and to give away the responsibility for other operations to partners. This way, the enterprise will boost its main competencies, sustain decent production costs, and enhance profits.
Reference List
Humphries, A & Gibbs, R 2015, Enterprise relationship management, Gower Publishing, Aldershot.
Schilling, M 2012, Strategic management of technological innovation, McGraw-Hill, New York.
Walker, O 2015, Marketing Strategy, McGraw-Hill, New York.