pharma ceutical industry analysis of pakistan

Topics: Pharmaceutical industry, AstraZeneca, Pharmacy Pages: 14 (6240 words) Published: November 1, 2014
Porters five forces analysis is a framework for the industry analysis and business strategy development developed by Michael E. Porter of Harvard Business School in 1979. It uses concepts developed in Industrial Organization (IO) economics to derive five forces which determine the competitive intensity and therefore attractiveness of a market. Attractiveness in this context refers to the overall industry profitability. An unattractive industry is one where the combination of forces acts to drive down overall profitability. Porter referred to these forces as the micro environment, to contrast it with the more general term macro environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the marketplace. The overall industry attractiveness does not imply that every firm in the industry will return the same profitability. Firms are able to apply their core competences, business model or network to achieve a profit above the industry average. A clear example of this is the airline industry. As an industry, profitability is low and yet individual companies, by applying unique business models have been able to make a return in excess of the industry average. Strategy consultants occasionally use Porters five forces framework when making a qualitative evaluation of a firms strategic position. However, for most consultants, the framework is only a starting point or check-list they might use. Like all general frameworks, an analysis that uses it to the exclusion of specifics about a particular situation is considered naive. Porters five forces include three forces from horizontal competition threat of substitute products, the threat of established rivals, and the threat of new entrants and two forces from vertical competition the bargaining power of suppliers, bargaining power of customers. According to Porter, the five forces model should be used at the industry level it is not designed to be used at the industry group or industry sector level. An industry is defined at a lower, more basic level a market in which similar or closely related products and/or services are sold to buyers. Firms that compete in a single industry should develop, at a minimum, one five forces analysis for its industry. Porter makes clear that for diversified companies, the first fundamental issue in corporate strategy is the selection of industries (lines of business) in which the company should compete and each line of business should develop its own, industry-specific, five forces analysis. INCLUDEPICTURE http// MERGEFORMATINET Determinants of Supplier Power Differentiation of inputs High differentiation of input, give high supplier power. If PEEK is a high density plastic that has strategic quality compared with other plastics mechanical strength- self coating- long levity-noise friendly - reduced weight - acid tolerability it easily becomes a highly differentiated plastic Switching costs of suppliers and firms in the industry High switching cost of supplier, give low supplier power. Once launched a satellite, you cant do anything else with it but transmitting those signals at the programmed speed. Presence of substitute inputs High Presence of substitute inputs, give low supplier power. Petroleum is a bulk market, it has different raw qualities, but actually after that quantisation it doesnt matter who supplies you Supplier concentration Monopoly supplier gives high supplier power, typical for franchises. Free dealer, can select any supplier and has highest power Importance of volume to supplier If you are the biggest customer of your supplier, be sure you have the best price be sure you can squeeze your supplier Cost relative to total purchases in the industry Low cost relative to total purchases in the industry, give low...
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