CASE STUDY ANALYSIS

Case Study Analysis

Executive Summary

There are main factors for success in the pharmaceutical industry. These factors include the manufacturing efficiency in which the pharmaceutical companies produce products efficiently which results in low cost production. The second main factor is the economies of scale that enable the cost of the product to decrease when the volume increases. The third main factor is the inventory turnover that measures how quickly the company is able to sell and replace its inventory. These factors have a deep implication on both large and generic drug manufacturers.

The large pharmaceutical companies try to pursue the economies of scale due to which they can manufacture products at lower cost. In case of the generic manufacturers, they need to achieve high inventory turnover and manufacturing efficiency.

GSK has competitive advantage in its large size and its research on the pharmaceutical products. The company has been able to sustain its competitive advantage in both these areas because it is continuously making efforts for merging and acquiring pharmaceutical companies and by forming smaller teams that has increased the number of products that the company introduces in the market. The organizations from other industries can also benefit by learning from the pharmaceutical industry as the strategies for having and sustaining a competitive advantage are similar across all industries.

Case Study Analysis

Case Question 1

Key Factors for Success

The main key factors for the success factors in the pharmaceutical industry are as (www.google.co.uk):

Manufacturing Efficiency

Through the manufacturing efficiency, the companies can produce more products efficiently which leads to manufacturing the products at a lower cost. It is a very critical factor in the pharmaceutical industry as there are many companies in the industry. In order to gain efficiency through manufacturing, the companies follow the cost based strategies. In order to have maximizing efficiency in the operations, the pharmaceutical companies educate and engage the employees for ensuring continuous improvement in a structured, controlled and rigorous manner. These companies also focus on technological innovation for controlling the operations.

Economies of Scale

The economies of scale are the factors that enable the cost of a product to decrease as the volume increases. It is one of the main reasons due to which the size of the company plays a very important role. These costs savings helps the firms to increase their profitability. These economies of scale can be in many areas, for the big companies in the pharmaceutical industry research and development are very important. However this innovation is very expensive and it is one of the main reasons why companies merge. The various mergers are done to spread the expenditure of R&D on a greater volume of sales. Through the economies of scale the companies can reduce the internal cost by decreasing the cost per unit. This can take place when due to increase in production (www.economist.com).

Inventory Turnover

It is the measure of how quickly the company can sell and replace the inventory. It is the ratio of annual cost to the level of ...