Bayer Pharmaceutical is the only company among the world’s leading companies such as Johnson&Johnson, Sanofi, and Pfizer, which operates in four market sectors: healthcare, chemicals, agriculture, and polymers. It has some very positive indicators for economic success and growth since experts forecast positive tendencies in the pharmaceutical market in the next few years.
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Bayer Pharmaceutical has to further develop its strengths and use opportunities as based on the SWOT analysis. At present the company has the following strengths: 1. Leadership in the international market. 2. Diversified business portfolio (healthcare, chemicals, agriculture, and polymers).3. A positive image of a large global employer. 4. It is one of the largest investors in R&D. And it possesses the following opportunities: 1. Positive economic tendencies for the pharmaceutical market in the next few years. 2. High barriers for the new companies entering the market. At this point, it is recommended to make the following steps in order to strengthen the company’s position and competitive advantages.
Firstly, it is vital to increase investments in R&D in the area pharmaceutics and make them at least 9% of the company’s revenues, increasing them later to 10%. That will allow development of new products with a more rapid rate plus would ensure a wider range of products in the market. A study should be conducted in order to identify cost-ineffective sectors that make least profit and eliminate them. That would free additional funds for investments. In this regard, it is also advisable to review the organizational structure in order to remove redundant work positions to release funds for investments. Those are two ways to find investment sources not violating the company's current budget. Investments in R&D would also allow developing perspective but not yet profitable sectors such as new agricultural technologies, nature-friendly chemicals and new polymers for various industries.
Secondly, to reduce costs it is strongly recommended to move some of the productions to the areas with lower production and workforce costs. For that reason it is better to choose countries with mild climate to avoid high expenses for heat insulation, energy and construction costs. It is necessary to find areas with present qualified personnel. The selected areas should not be in remote regions of the world to reduce transportation costs. It is recommended to diversify production areas for each region. Thus, Brazil would be the most acceptable area for South America due to the above factors, Greece or Turkey would be very suitable for Europe and India - for Southern and Southeast Asia. Due to some factors associated with stability South Africa may be an interesting area for the region of Africa. And some coastal areas of China would be best suited for China proper and Southeast Asia, while Northern Mexico would be an ideal place for North America.
The two above recommendations are key factors that will ensure strengthening of Bayer Pharmaceutical’s position in the global market.
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