Provide a brief description of your company and identify 3 general terms for each of the 6 categories of the value chain which could apply to your organization and explain how they are relevant to this analysis (18 items).
Pfizer, Inc. is a pharmaceutical corporation with annual revenue of $ 67.8 billion (2010 Annual Report). It is traded on the New York Stock Exchange (NYSE) under the symbol PFE. It is also Dow Jones Component Company. The company is based in New York City, New York with its research headquarters in Groton, Connecticut. Some of its well know products include Lipitor (atorvastatin, used to lower blood cholesterol), the neuropathic pain/fibromyalgia drug Lyrica (pregabalin), the oral antifungal medication Diflucan (fluconazole), the antibiotic Zithromax (azithromycin), Viagra (sildenafil) for erectile dysfunction, and the anti-inflammatory Celebrex (celecoxib).
Value Chain Analysis (VCA) refers to the process whereby a firm determines the cost associated with organizational activities from purchasing raw materials to manufacturing products to marketing these products. VCA can enable a firm to better identify its own strengths and weaknesses, especially as compared to competitors’ VCA and their own data examined over time. A VCA was performed on Pfizer based on its 2010 Annual Report. Three items from each of the six VCA categories are listed below.
Extensive research was conducted to obtain actual costs for the VCA. However, all costs within each category could not be found. Reasonable assumptions were made to populate the following VCA. VCA is a process whereby a firm determines the costs associated with organizational activities from purchasing raw materials to manufacturing products to marketing those products. Low cost advantages and disadvantages can be identified along the value chain by benchmarking costs with competitors. VCA can enable a firm to better identify its own strengths and weaknesses, relative to its competitors’ value chain analyses and their own data examined over time. In Pfizer’s case, it has the lowest earning per share as compared to its rivals – Merck and Novartis. Pfizer can use its value chain analyses with others to see where it can cut costs in the areas of supplier costs, production costs, distribution costs, sales & marketing costs, customer service costs, and management costs.
|CATEGORY |SUBCATEGORY |COST | |Supplier Costs |Raw Materials |$ 406 million | | |Energy |$ 100 million | | |Warehouse |$ 25 million | |Production Costs |Inventory |$ 8,597 million | | |R&D |$9,379 million | | |Cost Accounting |$ 100 million | |Distribution Costs |Shipping |$ 50 million | | |Internet |$ 5 million | | |Maintenance |$ 25 million | |Sales and Marketing Costs |Website...