Summary - Essay Example

Summary Table of Contents Executive Summary 3 Detailed Summary of the Article 3 Consequences for the Company 4 Implication for Competitors 4 Consequences for Pharmaceutical Industry 4 Conclusion 5 Work Cited 6 Executive Summary The paper contains information regarding layoffs which is being used by a UK based pharmaceutical company, AstraZeneca. The company reported 8.3% decline in ‘fourth-quarter net profit’ in the fiscal year 2011-2012 (Whalen & Stovall, “AstraZeneca Plans to Cut 7,300 Jobs).

With regards to this problem, the company has made the pronouncement of using layoff which may have certain consequences as addressed in this paper. Detailed Summary of the Article AstraZeneca has decided upon massive layoffs by eliminating 7,300 jobs with a purpose of cutting costs as it reported that the net profit of the company was steeply declining by around 8.3% per quarter. Notably, in the previous year i.e. 2011 the revenue in the fourth quarter was $8.66 billion which declined to $8.

62 billion in the last quarter of 2012. The factors such as frugal insurers, generic competition and a dearth of new medicine motivated the company in terms of stiff reduction in jobs. Due to massive reduction in jobs, AstraZeneca further noticed to be forced to outsource their drug research from Europe and North America and forging more implicit research alliance with academic associations and diminutive biotech companies. Moreover, the company is also focusing on cheap digital-marketing tools instead of traditional representatives to retrench costs.

Additionally, AstraZeneca is losing its patent rights on products such as Seroquel and Nexium along with cholesterol-lowering drug which in turn tends to support the decision of the management for layoffs (Whalen & Stovall, “AstraZeneca Plans to Cut 7,300 Jobs). Consequences for the Company The executives of AstraZeneca are looking for apt strategies that will enable it to survive and potentially grow. With regard to this, it is using layoffs for increasing their revenue and cutting costs. Although, the incidence of announced layoffs materialized to have little effect on the AstraZeneca financial performance, it will take several years to make its financial health strong and re-emerge.

Implication for Competitors AstraZeneca is applying new methods and techniques for reducing its operational cost such as digital marketing tools, cost-efficient telemarketers as well as online marketing tools. This in turn automatically increases the level of competition in the markets since the company can easily sell their drugs in lower prices. As a result, the competitors will also be forced to use cheap marketing tools and operational methods to provide their products in competitive prices.

Consequences for Pharmaceutical Industry With concern to the pharmaceutical industry, the innovation of new tools and techniques will make them more competitive in lieu of the strategies of AstraZeneca. The use of advanced and modern technologies will increase even though there is a chance of lower investment. The advanced technologies will certainly make production, operations and other related processes more robust and will enhance quality of products. Conclusion AstraZeneca may face certain problems concerned to their quality since it is outsourcing the drug research services causing an effect to the patient risking the customer satisfaction.

Considering these factors it can be questioned that whether the layoffs were the only option for the company to reduce costs? Similarly, if the industry is not concentrated, will the strategies taken by AstraZeneca affect the competition at all? Work Cited Whalen, Jeanne & Stovall, Sten. “AstraZeneca Plans to Cut 7,300 Jobs”. February 11, 2012. Wall Street Journal, 2012.