New Strategic Goals for Novartis - Assignment Example

of the of the of the Strategic Management Question One – New strategic goals for Novartis, a listed and global pharmaceutical company. The strategy of the organization is determined by the pattern of actions or decisions taken by its managers. A few of the strategy theorists are of the opinion that decision making should be deliberate and rational. In the words of Chandler, strategy constitutes the determination of the fundamental long-term goals of an enterprise, and the interventions and resource allocations necessary for achieving these goals (Grant, Butler and Orr). However, Burgelman states that strategy constitutes a theory regarding the reasons behind the previous and present success of the organization. Thus, strategy can be described as the reasons given by managers for the previous and current success, as it legitimizes their decisions. When an organization claims to possess a strategy, the implication is that it has control over its destiny (Grant, Butler and Orr). Moreover, strategy is necessarily dependent upon choice. In the words of Ostler, strategy constitutes a commitment to choose a particular class of actions. At the same time, every organizational decision or choice is not strategic. A strategic decision is seized with the organization’s long-term goals. Moreover, such decisions endeavor to attain an advantage over the competition. Finally, strategic decisions define the range of the activities of the organization and the achievement of correspondence between the environment and the organization (Grant, Butler and Orr ). This description of strategic decisions incorporates the commitment of substantial organizational resources. In addition to the economic, these resources include staff members, and information and physical resources. The greater the irrevocability, regarding the commitment of these resources, the more strategic the nature of the decision to commit these resources. Instances of irrevocable commitment are the notion of ‘burning your bridges’ employed in military parlance and ‘sunk costs’ used by the economists (Grant, Butler and Orr). It is the intention of Novartis to transform the practice of medicine. The term innovation, in this company, denotes the conveyance of medicines to patients, in addition to rapidly developing effective and targeted medicines. In order to ensure that patients benefit from new and effective drugs expeditiously, it undertakes certain initiatives. First, it prioritizes its research efforts on the basis of robust science and the requirements of the patients. Second, it adopts an integrated approach that involves physicians and customers, with a view to optimizing patient outcomes. Third, Novartis identifies biomarkers, so as to produce high-quality companion diagnostics to support its drugs in every therapeutic region (Novartis). With regard to Novartis, it is necessary to develop new sustainable development goals, as its strategic innovation has already made a mark upon the drug market. These goals can be attained by sharing between the practical, political and scientific agendas. Although, Novartis services reached many sick people, its goals have to prioritize the needs of the global poor. These goals have to provide future generations with the fruits of innovation. The recommended sustainable development goals for Novartis are; first, economic development, which will provide momentum between the various components of the development agenda, such as environmental, human and social factors. Second, institutional support, this should be established to ensure social inclusion, by addressing all communities with a pre-poor approach. Third, environmental stability, which requires a strong commitment towards environmental safety, as it affects the life of the poor. A broad development agenda is necessary, and it should involve international entities relating to environmental sustainability. This should establish local, national and international monitoring systems. A commitment should be made to compel international institutions to participate in its broad development agenda. Question Two – Strategies and techniques employed by the managers of Johnson and Johnson to affect the external environment. The effectiveness of the interface between the internal and external environments of an organization determines its success. In general, the external environment cannot be controlled by the individual organization. This renders the internal environment significant for adjusting activities, resources and skills to generate the necessary interface (Grant, Butler and Orr). Internal analysis is essential for strategic thinking. Specifically, it is essential to identify the core competencies of an organization and the crucial competencies that it lacks, vis-à-vis the extant external environment. Another detail to be identified is the resources possessed by the organization for competition (Grant, Butler and Orr). Moreover, it is necessary to identify the suitability of the organizational structure for engaging in its chosen area of competition. In addition, it is essential to compare its culture with its competencies and its external environment. Subsequently, such information can be employed for the purpose of comparing it with its external environment (Grant, Butler and Orr). This will enable it to alter its internal competencies, structure, resources and culture, and the opportunities that it might undertake in the future On occasion, the external environment can be controlled by the managers. Johnson & Johnson regards citizenship and sustainability as something greater than its Johnson & Johnson. This company has reiterated its strong commitment towards citizenship and sustainability. This company actively leads the mission to overcome the major healthcare challenges of the world. It also aims to protect the environment, and improve society (Johnson&Johnson). Most of the companies do not have daily relevance for the billions of individuals. Moreover, very few companies affect the health and well-being of individuals for generations, throughout the world. However, Johnson & Johnson has this influence and its employees engage in actions that affects billions across the world (Johnson&Johnson). Johnson & Johnson chiefly concentrates its efforts upon improving the life of women and children; preventing illness among the most vulnerable people; and adopting concrete measures to strengthen the health workforce. In conjunction with its partners, this company brings about life-changing and lasting differences to human health (Johnson&Johnson). Johnson & Johnson deals proactively with complex health issues. Thus, it works with community-based partners, in order to teach communities the means for preventing and diminishing the danger of HIV/AIDS, diabetes, obesity and other chronic diseases. It has also contributed to battling the stigma of mental illness and disease (Johnson&Johnson). This laudable endeavor has witnessed considerable progress with an appreciable reduction in the number of children acquiring the HIV/AIDS infection. At that juncture, the number of such infected children had been around 570,000. In addition, there has been a decline in the number of females dying during pregnancy, on account of AIDS related reasons. Specifically, in the year 2005 there had been 42,000 deaths of this type, whereas in the year 2010 this number reduced to 33,000 (Johnson&Johnson). Johnson & Johnson has undertaken ambitious collaborations with several partners, such as the Elizabeth Glaser Pediatric AIDS Foundation and mothers2mothers. During this exercise, Johnson & Johnson provided training to health leaders, helps women to comprehend the process of providing care for their families and the information necessary for determining when healthcare is to be accessed. It has also provided resources to enhance access to psychosocial support for new mothers and pregnant females living with HIV (Johnson&Johnson). Thus, Johnson & Johnson’s managers could control the external environment their business by making strategies that prioritized citizenship and sustainability. Moreover, this produced several internal decisions regarding healthcare that could cope up with the situation in the external environment. Question Three - Strategy consists of three integrated levels. The most significant of these levels, with respect to McDonalds. Stakeholder analysis is comprised of three levels, namely, rational, process, and transactional. These are described in the sequel. The rational level of such analysis necessitates an understanding as to who constitute the stakeholders of the organization and their perceived interests. It is essential to identify the interests of every stakeholder group. Thereafter, these stakes have to be analyzed and correlated to their relative power features (Grant, Butler and Orr). Another level of stakeholder analysis is that of the process level. At this level, the organization overtly or indirectly manages its associations with its stakeholders. Consequently, the processes, in question, have to be crafted in a manner that reflects the rationalé of the requirements of the stakeholders. At this stage, the extant strategic processes that function to a reasonably satisfactory extent, could be improved by including requirements for the multiple stakeholders (Grant, Butler and Orr). Finally, at the transactional stage, stakeholder negotiations are managed by the organization, in accordance with the policies and processes of the organization. A transaction with a stakeholder, to be successful, entails comprehension regarding the legitimacy and requirements of the stakeholder (Grant, Butler and Orr). Success in any enterprise is determined by a number of factors, and it would be incorrect to regard it as being purely a matter or luck. Moreover, success is not determined by environmental conditions in isolation. Decision makers can intentionally and successfully pursue success by undertaking effective strategic planning and management (Grant, Butler and Orr). In the words of Ostler, strategic planning is directed evolution. Therefore, the more experienced decision makers in an organization divert its activity in the direction that in their opinion will result in long-term success. These people do not believe in drifting along under the influence of environmental factors. Such direction of organizational activities necessitates the making of choices. As such, choice is crucial to strategy. It can be deemed to be selecting one set of actions instead of another (Grant, Butler and Orr). The stakeholder model is exemplified by McDonald’s. This is due to the inclusion of the interests of suppliers, governments, shareholders, environment, local communities, customers, employees, managers, franchisees and others. Undoubtedly, this company has considerable regard for its customers and the community. At the process level of stakeholder analysis, the organization controls and manages its relations with its stakeholders. The products have to be customer friendly, and designed and manufactured, keeping in view the requirements of the customers. During this process, McDonald’s can take into consideration, all its stakeholders, such as, employees, investors, franchisees, and the community at large. McDonald’s constitutes a group of franchised and company-owned restaurants. As a part of strategic innovation, its employees and franchisees develop a number of programs to make their company distinct in the local markets. McDonald’s strategic vision enables its workers to achieve perfection in their activities. In addition, it exhibits leadership qualities through its exemplary accountability. It also ensures respect for people on both sides of the business. Thus, McDonald’s attempts to produce an inclusive environment for employees, as well as its customers enables it to makes its mark at the global level. The process level of stakeholder analysis makes it possible to integrate the requirements of specific stakeholders into general programs that cater to the needs of multiple groups. As such, process integrative analysis proves effective in multiple situations and among multiple stakeholders. McDonald’s, per se, effectively prioritized the process level of integrative analysis, as a part of its strategic management. Question Four – 5 Forces analysis of the Australian gold mining industry. Corporate governance is the process of controlling and making strategic decisions. Modern corporations are founded upon corporate governance, which encompasses specific issues resulting from the interactions between the board of directors, senior managers, shareholders and other corporate stakeholders. Corporate governance aims to identify means to ensure greater effectiveness in the making of strategic decision. It is utilized in corporations, in order to bring in order between the senior managers of a company and its owners, whose interests could, on occasion, be in conflict (Porter). Michael Porter had introduced the Five Forces model. This constitutes a business unit strategy device that permits an analysis of an industrial structure’s value. The application of the Five Forces model to the Australian gold mining industry is as follows. First, the threat of new entrants. The local and central governments of Western Australia have provided support to the gold mining industry. Nevertheless, the threat from new entrants tends to be minimal. This is due to the following hurdles to entry. The gold mining industry is capital and real estate intensive. Moreover, it entails indispensable and substantial upfront investment in community infrastructure for work, permits and equipment (Mankala, Bosire and Ukstins). Furthermore, accommodation facilities and communities have to be provided to the miners. In addition, threats relating to local expertise, competence and credibility tend to arise, especially with regard to mass displacement and environmental pollution. Second, the bargaining power of suppliers. The gold mining industry relies upon a number of suppliers, for constructing infrastructure, accessing machinery, planning, labor and export. In addition, the nature of the work of suppliers extends beyond the gold mining industry, which denotes the superior bargaining position of suppliers. (Mankala, Bosire and Ukstins). Moreover, the function of suppliers who provide insurance, machinery and safety are crucial and are not to be jeopardized by other entities in the industry. This indicates the high bargaining power enjoyed by suppliers. Third, the bargaining power of buyers. With regard to the Australian supply side of the mining industry, a few, powerful companies tend to dominate the scene. However, the buyers of gold have to deal with the international commodity markets. These are distinguished by several options with respect to suppliers. As the raw mined products tend to be sold like commodities, the situation is subject to the rules of supply and demand (Mankala, Bosire and Ukstins). This to some extent, accords protection to buyers against threats. In other words, although the bargaining power of buyers could appear to be high, it is restricted by the power of suppliers. It is also limited by the struggles of the mining company relating to the access of vast resources, necessary for achieving success. Fourth, the threat of substitutes. With regard to the gold mining industry, the threat of substitutes is minimal, as metals cannot be substituted with other materials. Although, there are chemically altered forms of gold, these do not pose any serious threat of substitution. Moreover, any alloy to be used as a substitute, obtains its constituents from the base metals. Fifth, rivalry among existing buyers. Besides competing for the best workers and dealing with environmental challenges, rivalry among the existing companies tends to be comparatively quite low (Mankala, Bosire and Ukstins). Gold, as a metal, tends to be a commodity and value addition tends to be negligible, and there is not much distinction that can be conjoined to the base product. As such, the above discussion reveals the influence of Five Forces Model of Porter, regarding the Australian gold mining industry, in a detailed manner. Question Five – Initiating a novel global strategy. A perusal of several studies leads one to the conclusion that organizations do not, in general, rely upon a strategy that is solely planned or essentially emergent. Organizations tend to adopt a strategy that combines these two alternatives. The importance of the emergent component of the organization’s strategy is proportional to the rapidity of the rate of change of its external environment (Grant, Butler and Orr). Moreover, the planned component of the strategy becomes correspondingly less important. However, evidence demonstrating that an emergent or planned strategy provides an improved level of performance is not forthcoming. All the same, it has been illustrated that the extent of correspondence of the organization’s strategy with the external environment enhances business performance (Grant, Butler and Orr). The concern of corporate directors towards stakeholders involves significant consequences for corporate governance. One of the procedures for corporations to become more responsive to the interests of society, in its entirety, is to integrate the participation of stakeholders in their governing boards. The stakeholder approach to the functions of a governing board anticipates the corporate directors, senior managers and other leaders of the organization to undertake negotiations. In addition, these organizational leaders are expected to arrive at a compromise with the stakeholders, in order to promote the interests of the corporation in question (Grant, Butler and Orr). Companies can be assisted by their corporate directors, when the latter take appropriate actions. Some of the actions that can be so initiated are; the disclosure of pertinent information, the adoption of a code of ethics, respect for environmental concerns, and corporate social activities. This has been seen, in several instances, to exercise a positive influence upon the stakeholders (Grant, Butler and Orr). The concern by organization leaders towards the stakeholders, has been expected to exert significant influence upon the design and implementation of the mission and strategies of the company. These concerns have been seen to exert a significant effect on the manner in which the strategies of an organization that relate to multiple stakeholders undergo change (Grant, Butler and Orr). As such, the adoption of a strategy process, enables an organization to compete effectively. Strategy formulation admits of four approaches. These are; first sequential, in which, formulation is deemed to be a group of activities that are informed by others. Second, incremental and interactive formulation that entails interaction between the activities pertaining to analysis, choice and implementation. Third, hierarchical formulation that is chiefly information-driven by the outcomes of activities conducted at various levels of the organization. Fourth, revolutionary formulation, which is a process that is organic, innovation-driven, partially planning and part trial and error (Grant, Butler and Orr). The sequential strategy formulation is regarded as the benchmark. It consists of collecting information about the status of the organization and its environment; determining the measures to be adopted, on the basis of the available information; selecting a specific direction; adopting measures to implement a decision; and monitoring and controlling actions to achieve the necessary objective. The five essential questions to be asked, while expanding business in a new place are; Details of stakeholders in the new area. Expectations of stakeholders regarding the business. How do the national culture of that particular place influence the organization’s decisions? How to resolve any conflicting interests? How the organizational objective is to be reframed to include the above issues? These questions will enable me to analyze the stakeholder interests in the new region, which is essential for the development agenda. Moreover, familiarity with the culture enables me to take decisions that are relevant to the situation. Works Cited Grant, Robert, et al. Contemporary Strategic Management: An Australasian Perspective. John Wiley & Sons Australia, Limited, 2013. Print. Johnson&Johnson. Citizenship & Sustainability Report. 2013. Web. 18 August 2014. . —. Our Citizenship & Sustainability. 14 August 2014. Web. 18 August 2014. . —. Our Strategic Framework. 14 August 2014. Web. 18 August 2014. . —. Preventing Disease in Vulnerable Populations. 3 September 2013. Web. 18 August 2014. . Mankala, Kumar, et al. The Western Australia Metals Mining Cluster. 7 October 2011. Web. 18 August 2014. . Novartis. Innovation at Novartis. 2014. Web. 18 August 2014. . Porter, Michael. On Competition. Harvard Business Press, 2013. Print. Read More