Adaptation Strategies in the Pharmaceutical Industry by Procter and Gamble
Discuss about the Strategy Development for Efficiency in Production and Reduction.
Competitive strategies are operational methods adopted by companies to gain a competitive edge against their competitors (Jose, 2010). These strategies make the company penetrate the market, gain a wide customer coverage and reduce the costs of their operations. The companies make attempts to adopt these competitive strategies to achieve the best in their activities regarding sales, customer coverage, efficiency in production and reduction of output and distribution costs.
The competitive strategies are divided into three components. These include; adaptation strategies, aggregation strategies and arbitrage strategies (Klyuver, 2010). The company must adopt these strategies to remain competitive.
Adaptation strategies are used by companies to achieve a higher competitive advantage against others; the aggregation techniques are used by businesses to gain economies of scale, whereas the arbitrage strategies are used by companies to reduce the cost of operations (Ghemawat, 2011). Therefore a company must use a combination of these three strategies in order to operate efficiently.
Most companies combine these strategies to form an AA model. They achieve this by either combining Adaptation and Aggregation, or Aggregation and Arbitrage (Javenic, 2010). This boosts the competitiveness of the company since the company will achieve a combined strategy and a wider range of competitive techniques. In this case, two industries have been selected, and in each industry, two companies have been discussed. The two industries include; the pharmaceutical industry and the computer industry.
To start with, Adaptation strategies have been used in the pharmaceutical industry by Procter and Gamble. The company has used these strategies to achieve a competitive edge in the market. These strategies include advertising and development of several operating branches in order to expand the customer coverage (Ju, 2011). This is exactly what the company has tried to do since it started its operations.
The P&G Company has developed several mini branches in more than twenty countries. This company started its operations in lower Mexico, where it manufactured and distributed Vicks cough syrup that contained honey as one of its ingredients. The company later extended to Latin American countries as the product gained a lot of popularity in the market. The company after stretching to Brazil rebranded the result from Vicks Cough Syrup to Vicks Castro. The company then developed a branch in Texas and California where the new brand was sold. This is a major adaptive strategy as it enabled P&G to stretch into the market and obtain a wider range of customers for its product.
Adaptation Strategies in the Pharmaceutical Industry by Novartis Company
It is also important to note that the company started selling its product to low-income earners. This enabled most people to achieve the result since the product was cheaper. The company used this strategy to avoid scaring away poor customers. The poor and middle-class people therefore developed preference for the product since it was affordable
P&G also majored in a unique product. This product was the only natural product as at that time. The customers, therefore, liked it. The honey content of the product was very vital in creating a market for the product as it showed that the product was a green one.
Another company in the pharmaceutical industry that uses this strategy is the Novartis Company. This is a healthcare company that is based in Switzerland. This company has used a unique strategy to remain competitive. This is the use of Spotfire. Spitfire is a product of TIBCO Software Company. The software is used to process transactions, track records, monitor employee performance and analyze the business operations. The company has used Spitfire to remain more efficient in processing its transactions, preparing and delivering market reports quickly and analysis of market information. This software has helped the company to visualize aspects such as days in the field, sick days, training, vacation days and various calls made by sales representatives. This has enabled sales managers to monitor their representatives effectively. This is a unique competitive strategy that this company has used to remain on top of other businesses in marketing its products.
The use of adaptive strategy in the computer industry has been shown by the International Business Machines (IBM) Company. This company manufactures computer software and hardware and distributes them into the market. It has also made major achievements in the field of technology through the invention of machines like Automated teller machine, hard drives, and floppy disks. The company has developed over one hundred and seventy branches worldwide. (IBM 2012) Development of many branches has enabled the company to distribute its products to a wider market. The company has been able to gain access to the global market through its principal branches. Advertisements techniques used by this company also form a major form of adaptation strategy. The company has achieved this by using media channels like newspapers, television, and several journals.
Another company in the computer industry that uses adaptive techniques is the Microsoft Company. Those are a company that manufactures and distributes computer software. It is known for several Windows versions, the latest one being windows ten. This company has used adaptive techniques to ensure it remains on top and beat its close competitors like Google. The best example to illustrate this is the introduction of Bing search engine in the market by Microsoft. Many people have been used to Google search as the only search engine. However, when Microsoft introduced Bing, it came up with unique advertising techniques. These included; use of slogans like ‘Bing it on the campaign,' developing of posters, employing and professional advertisers. This has made Bing to gain popularity in the market, as most people are now aware of Bing and are now using it as their search engine.
Adaptive Techniques in the Computer Industry by International Business Machines (IBM)
Although much money is used in advertising and promoting new products, these advertisements have been major contributors to enhanced awareness about Microsoft products. This is a unique adaptation strategy that has seen Microsoft grow faster in the market, compared to other companies.
The second strategy used by corporations is the aggregation strategy. The P&G Company has expressly used this strategy to achieve economies of scale. It has made this possible by constantly developing global operations. Apart from developing several branches, it has continuously rebranded the products that it distributes, to achieve customer tastes and preferences. The company started with Vicks Miel which it distributed in Mexico. It then rebranded its product to Vicks Castro and distributed it to Texas California. The company also charged lower prices for its product to favor middle-income earners. This was a great aggregative strategy that made this company achieve economies of scale.
Novartis Company has used aggregation techniques to ensure it achieves economies of scale. It has developed a variety of drugs. This company manufactures over fifty key products into the market. It has several divisions that include; generic medicines division and eye care division. The generic drugs division produces more than one thousand different types of affordable products across the globe. The eye care division is concerned with eye related drugs. Producing many varieties of drugs enables the company to tap a wider market since the customers will be able to choose their best drug from a variety of medications.
The IBM Company has used the aggregation strategy to increase the level of sales to its software and other products it manufactures. These techniques are essential to the company as they enable the companies to achieve economies of scale (Jose, 2010). This company has created standardized prices for its products making most customers able to afford them. It has also conducted many consulting services in areas of technology such as nanotechnology. The company has invented unique products like floppy disks, hard drives and automated teller machines, which are preferred by many customers. These inventions make the company’s products achieve preference in the market. This has led to increasing in sales.
The last company that uses aggregation techniques in business user industry is Microsoft. Microsoft has used this strategy by constantly improving its products. Microsoft improves its Windows products more often, with the latest being windows ten. The introduction of improved windows with unique features, like fewer bugs, high speed at the thought compatibility, makes most customers to prefer windows. This makes the sales for this product by the company increase making it achieve economies of scale. The company also produces a variety of unique search engines like Bing. Many people are always eager to test new products with unique features. This has made many people migrate from using Google search to using Bing.
Adaptive Techniques in the Computer Industry by Microsoft Company
The last strategy used by companies is the arbitrage technique. P&G has used this strategy by outsourcing some of its operations to other businesses. Some shoppers buy Vicks cough syrup in bulk then put them in different packages and resell them at retail prices. This is a uniquely direct way of outsourcing. This strategy has enabled the company to reduce advertising and selling costs. Outsourcing is a strategy that helps the company reduce both operating and selling costs (Dobni, 2011). This strategy has as well enabled the company to expand its supply chain in many countries.
Novartis is another company that uses arbitrage techniques. The company has outsourced some of its operations to other businesses to reduce operational costs. The latest being the plans to close its plant in Puerto Rico by the year 2019 and outsource its manufacturing activities to another company called Eli Lilly (Novartis, 2015). This is a plan that has been made due to the lifting of the tax incentives in Puerto Rico. The company uses this strategy to reduce costs and maximize its profits.
Another company that uses arbitrage techniques is the IBM. This company has outsourced some of its noncore activities to other businesses. It has also formed several labor intensive groups and expanded its supply chain in several countries. (Shijja, 2014). The company has also acquired some other companies like, the weather company which was acquired in 2016. In 2014, the company made plans to outsource all the manufacturing works to global founders. The company also outsourced its information and technology activities to Alpha works. (Salara, 2010). This has enabled the company to reduce the cost of manufacturing and distribution.
Microsoft is the last company that uses arbitrage techniques to cut its operating and marketing costs. In 2010, Microsoft outsourced all its IT operations to Infosys Technologies Ltd (Computerworld, 2010). This attempt by Microsoft enabled it to cut IT costs and the costs of managing the information technology help desk. The company is, therefore, able to concentrate on its key objectives and lower the costs of venturing into noncore activities.
The company is, therefore, able to enjoy reduced operational costs and concentrate solely on the core objectives (Jose, 2010). This ensures maximization of profits by the firm. Activities that consume funds for the enterprise are outsourced to other societies which conduct them as their main objectives.
In conclusion, it is a fact that companies must adopt competitive strategies. These strategies enable the businesses to compete fairly, expand their operations in the market and reduce the cost of their operations, according to Ghemawat, (2011). All businesses strive to gain a competitive advantage over their competitors. This is only possible if the companies adopt the high competitive strategies.
Most companies combine these strategies to be more efficient in their operations. Such companies grow faster in the global market regarding customer coverage, the volume of sales and customer preference. They also enable the companies to reduce operational selling and distribution costs. Companies should, therefore, adopt the competitive strategies to compete favorably in the local and global market.
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