Ranbaxy Laboratories Limited (Ranbaxy), India's largest pharmaceutical company, is an integrated, research based, international pharmaceutical company, producing a wide range of quality, affordable generic medicines, trusted by healthcare professionals and patients across geographies. Ranbaxy today has a presence in 23 of the top 25 pharmaceutical markets of the world. The Company has a global footprint in 46 countries, world-class manufacturing facilities in 7 countries and serves customers in over 125 countries.In June 2008, Ranbaxy entered into an alliance with one of the largest Japanese innovator companies, Daiichi Sankyo Company Ltd., to create an innovator and generic pharmaceutical powerhouse. The combined entity now ranks among the top 20 pharmaceutical companies, globally. The transformational deal will place Ranbaxy in a higher growth trajectory and it will emerge stronger in terms of its global reach and in its capabilities in drug development and manufacturing.
The Company's business philosophy based on delivering value to its stakeholders constantly inspires its people to innovate, achieve excellence and set new global benchmarks. Driven by the passion of its over 12,000 strong multicultural workforce comprising 50 nationalities, Ranbaxy continues to aggressively pursue its mission to become a Research-based International Pharmaceutical Company.
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A business does not function in a vacuum. It has to act and react to what happens outside the factory and office walls. These factors that happen outside the business are known as external factors or influences. These will affect the main internal functions of the business and possibly the objectives of the business and its strategies.
The main factor that affects most business is the degree of competition - how fiercely other businesses compete with the products that another business makes.
The other factors that can affect the business are:
Social - how consumers, households and communities behave and their beliefs. For instance, changes in attitude towards health, or a greater number of pensioners in a population.
Legal - the way in which legislation in society affects the business. E.g. changes in employment laws on working hours.
Economic - how the economy affects a business in terms of taxation, government spending, general demand, interest rates, exchange rates and European and global economic factors.
Political - how changes in government policy might affect the business e.g. a decision to subsidise building new houses in an area could be good for a local brick works.
Technological - how the rapid pace of change in production processes and product innovation affect a business.
Ethical - what is regarded as morally right or wrong for a business to do. For instance should it trade with countries which have a poor record on human rights.
Changing External Environment
Markets are changing all the time. It does depend on the type of product the business produces, however a business needs to react or lose customers.
Some of the main reasons why markets change rapidly:
Customers develop new needs and wants.
New competitors enter a market.
New technologies mean that new products can be made.
A world or countrywide event happens e.g. Gulf War or foot and mouth disease.
Government introduces new legislation e.g. increases minimum wage.
Business and Competition
Though a business does not want competition from other businesses, inevitably most will face a degree of competition.
The amount and type of competition depends on the market the business operates in:
Many small rival businesses - e.g. a shopping mall or city centre arcade - close rivalry.
A few large rival firms - e.g. washing powder or Coke and Pepsi.
A rapidly changing market - e.g. where the technology is being developed very quickly - the mobile phone market.
A business could react to an increase in competition (e.g. a launch of rival product) in the following ways:
Cut prices (but can reduce profits)
Improve quality (but increases costs)
Spend more on promotion (e.g. do more advertising, increase brand loyalty; but costs money)
Cut costs, e.g. use cheaper materials, make some workers redundant
Social Environment and Responsibility
Social change is when the people in the community adjust their attitudes to way they live. Businesses will need to adjust their products to meet these changes, e.g. taking sugar out of children's drinks, because parents feel their children are having too much sugar in their diets.
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The business also needs to be aware of their social responsibilities. These are the way they act towards the different parts of society that they come into contact with.
Legislation covers a number of the areas of responsibility that a business has with its customers, employees and other businesses.
It is also important to consider the effects a business can have on the local community. These are known as the social benefits and social costs.
A social benefit is where a business action leads to benefits above and beyond the direct benefits to the business and/or customer. For example, the building of an attractive new factory provides employment opportunities to the local community.
A social cost is where the action has the reverse effect - there are costs imposed on the rest of society, for instance pollution.
These extra benefits and costs are distinguished from the private benefits and costs directly attributable to the business. These extra cost and benefits are known as externalities - external costs and benefits.
Governments encourage social benefits through the use of subsidies and grants (e.g. regional assistance for undeveloped areas). They also discourage social costs with fines, taxes and legislation.
The strategy of an organization is affected by the various challenging business environment factors.
The environment plays a major role globally. Every aspect is very much affected by its environment. The environment refers to the one's own surrounding. The business too has its own surrounding. The business environment is classified into two types:
The internal environment consists various factors such as the physical assets, human resources, technology, finance and the marketing resources. The physical assets are in tangible form and possess some exchange value. The different types of physical assets that an organization possess are the cash, equipment, inventory, land and buildings, plant and the machinery. The machinery that is used in the manufacturing section. The machinery should not be an outdated one. The organization must take utmost care in the maintenance of its own physical assets.
The Merriam Webster dictionary defines the technology as "the practical application of the knowledge especially in a particular area". Thus, technology is also used by the various organizations to make their tasks simpler and to conduct their business activities faster than it takes them to conduct those activities manually.
This refers to how people are managed in an organization. The humans are considered as the vital part of an organization. They are the personnel who make the things happen in an organization. They use their potentials and the capabilities which is helpful for the achieving of the objectives.
The finance offers a wide range of information about the financial markets, financial products and the financial services which the organization is in need of.
The marketing concept is associated with the promoting of the products and services manufactures by the organization in the market place. The customers come to know about various products and the services in the market and which help them to satisfy their needs.
The external environment is divided into two types.
The term micro refers to smallest particle. The external environment consists of the micro environment.
The micro environment consists of the raw material suppliers, customers, employees, intermediaries, competitors and the general public.
The micro environment plays an equal an important role as the macro environment.
Many organizations consider these internal factors lightly and do not pay much attention to them. The players of the micro environment do not affect in the same way. Their decisions and the actions often vary in accordance with the size capability of strategies of each company.
Until recently no action was taken against the organizations though they were posing health hazards. But now environmentalists are taking up their cause. In democratic societies public have assumed important role and their presence in the micro environment is often a threat.
The macro environment refers to all the economic and non-economic factors. The term "economics" is derived from the Greek term "oikonomikos" which means study of the household activities. The economic environment consists of the national and the global environment.
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The non-economic environment is concerned with the political, social, demographic, cultural, technological and the natural environment.
The growth of an organization largely depends on its political environment. The organization should abide by the various political policies which the ruling government follows. If they fail to do so then they land up in various problems and have to face the political risk. They should strictly follow the foreign investment policies set up by the government if they are taking part in the globalization.
The business and the society are dependent on each other. As a result of this the organizations in the modern era are not only concentrating on the profit maximization which used to be the only goal of the business they are also concentrating for the welfare of the society. The organization should manufacture the goods and the services based on the society's interests, tastes, preferences and the culture.
The demographic environment forms the various factors such as the age, sex, birth rate, mortality rates, population and the climatic or the geographical area of the place where they would like to sell their products and the services.
Each and every country has a set of beliefs, customs. The organizations who plan for opting globalization should concentrate on the cultural factors. The products and the services thus manufactured should not damage the cultural factors of the place.
The technological factors are concerned with the technology. The organization should update itself with the latest technology and must keep an eye on the technological changes that take place. They can take the assistance of the various technologists if they are not able to use a particular technology. This helps them to carry out their business activities at a faster pace and saves much time.
The natural environment refers to the changes that take place naturally. Such as the earthquakes, droughts, fire accidents, etc. The organization can take preventive steps against these factors but they are out of the control of the organization.
Apart all these factors the organization conducts the SWOT ANALYSIS to evaluate the strategy formulation. The swot analysis helps the organization to identify the strength, weakness, opportunity and the threats of the organization. The strength of an organization depends upon the availability and the adaptability features of an organization. The availability factor refers to the availability of the various resources that are required by the organization. The organization should be in a position to provide the required raw materials by its personnel. The adaptability feature refers to the flexible nature of the organization. This means that to what extent the organization can adjust itself to its surrounding or the changes that are taking place. The weaknesses of the organization often refer to the failure cases of the organization. These failures are a result of the improper management, lack of the resources, not achieving of the targets by the personnel, etc. The swot analysis helps the organization to identify such cases. The strengths and the weaknesses identified by the organization should the perfect and true. These two features of the swot analysis form the internal environment of the swot analysis. The other two features namely the opportunity and the threats are the external factors. These factors are considered as uncontrollable. The opportunities that are available to the organization are often considered as the weakness of the competitors. The organization should get to know about its competitors weaknesses and try to resolve them and achieve success. The various threats that hamper the organization arise from the various political factors, social factors, economic factors and the technological factors.
SWOT analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieve that objective. The technique is credited to Albert Humphrey, who led a convention at Stanford University in the 1960s and 1970s using data from Fortune 500 companies.
A SWOT analysis must first start with defining a desired end state or objective. A SWOT analysis may be incorporated into the strategic planning model. Strategic Planning, including SWOT and, has been the subject of much research.
Strengths: attributes of the person or company that are helpful to achieving the objective(s).
Weaknesses: attributes of the person or company that are harmful to achieving the objective(s).
Opportunities: external conditions that are helpful to achieving the objective(s).
Threats: external conditions which could do damage to the objective(s).
Identification of SWOTs are essential because subsequent steps in the process of planning for achievement of the selected objective may be derived from the SWOTs.
First, the decision makers have to determine whether the objective is attainable, given the SWOTs. If the objective is NOT attainable a different objective must be selected and the process repeated.
The SWOT analysis is often used in academia to highlight and identify strengths, weaknesses, opportunities and threats . It is particularly helpful in identifying areas for development.
The aim of any SWOT analysis is to identify the key internal and external factors that are important to achieving the objective. These come from within the company's unique value chain. SWOT analysis groups key pieces of information into two main categories:
Internal factors - The strengths and weaknesses internal to the organization.
External factors - The opportunities and threats presented by the external environment to the organization. - Use a PEST or PESTLE analysis to help identify factors
The internal factors may be viewed as strengths or weaknesses depending upon their impact on the organization's objectives. What may represent strengths with respect to one objective may be weaknesses for another objective. The factors may include all of the 4P's; as well as personnel, finance, manufacturing capabilities, and so on. The external factors may include macroeconomic matters, technological change, legislation, and socio-cultural changes, as well as changes in the marketplace or competitive position. The results are often presented in the form of a matrix.
SWOT analysis is just one method of categorization and has its own weaknesses. For example, it may tend to persuade companies to compile lists rather than think about what is actually important in achieving objectives. It also presents the resulting lists uncritically and without clear prioritization so that, for example, weak opportunities may appear to balance strong threats.
It is prudent not to eliminate too quickly any candidate SWOT entry. The importance of individual SWOTs will be revealed by the value of the strategies it generates. A SWOT item that produces valuable strategies is important. A SWOT item that generates no strategies is not important.
Use of SWOT Analysis
The usefulness of SWOT analysis is not limited to profit-seeking organizations. SWOT analysis may be used in any decision-making situation when a desired end-state (objective) has been defined. Examples include: non-profit organizations, governmental units, and individuals. SWOT analysis may also be used in pre-crisis planning and preventive crisis management. SWOT analysis may also be used in creating a recommendation during a viability study.
SWOT - landscape analysis
The SWOT-landscape systematically deploys the relationships between overall objective and underlying SWOT-factors and provides an interactive, query-able 3D landscape.
The SWOT-landscape grabs different managerial situations by visualizing and foreseeing the dynamic performance of comparable objects according to findings by Brendan Kitts, Leif Edvinsson and Tord Beding (2000).
Changes in relative performance are continually identified. Projects (or other units of measurements) that could be potential risk or opportunity objects are highlighted.
SWOT-landscape also indicates which underlying strength/weakness factors that have had or likely will have highest influence in the context of value in use (for ex. capital value fluctuations).
An organization should follow the steps that have been formulated while designing the strategy of its organization. It is very important to follow the same as it helps in achieving of the set objectives. The organization should carefully evaluate the strategy at various stages. Whatever tasks the organization opts to perform it should keep in view that what impact it would pose to the market in which it markets its products and services and on its stakeholders who form the major criteria. The organization should also keep in mind the various challenging business environmental factors. All these steps should be faced and surpassed by the organization if it wants to sustain in the market for long run. It should also aim at proper utilization of resources and maintain the required management tasks to carry out its activities in an effective and efficient way. The organization is ought to perform all these activities to satisfy the needs of the market and fulfil the expectations of its stakeholders. Whatever activities the business plans to do it should not damage the society in turn its activities should prove beneficial to the society and cater to the societal development and its long term existence in the market is possible only because of its customers and its stakeholders alone. The stakeholders always play an important role in all the organizations.