Decision-Making of an AstraZeneca Company - Essay Example

Introduction to Company AstraZeneca is one of the largest pharmaceutical companies in United Kingdom however, it was found by the merger of AstraAB of Sweden and Zeneca Group of UK. Listed on London Stock Exchange, AstraZeneca specialize in producing medicines for cardiac, gastrointestinal, respiratory, oncology, infection and psychiatric problems. Decision Making Decision making is a complex process and research studies so far have not focused on clearly defining the different factors which are required to make effective decisions. Though a set of universal principles have been outlined but the process as a whole still lack a coherent framework. (Nutt) Strategic Decisions Strategic decision making is one of the most critical tasks in organizations as it has became increasingly important to consider strategic decision making more from a transaction costs as well as behavioral point of view. (Papadakis, Lioukas and Chambers). One of the strategic decisions which company might make is market development i.e. to enter into new markets such as Asia or South American market. Enter into a new market is a strategic decision because top management of the firm, considering the overall mission of the firm, may decide to exapnd into new markets in a bid to reduce costs and achieve differentiation in terms of cost. It is also critical to know that in order to make strategic decisions, it is not necessary that the information required to make such decisions shall be coherent and complete in all respects as strategic decisions are often based on fuzzy information. Tactical Decisions Tactical decisions involve the "How "of strategic decision making because by making tactical decisions, organizations basically decide how to materialize strategy. Tactical decisions need to support the strategy and are of medium term in nature with moderate level of consequences. A tactical decision for AstraZeneca might include deciding on how to enter into new market The question therefore would be directed in terms of whether a Greenfield project shall be started, whether the firm should enter through exporting, franchising etc. In terms making a strategic decision of entering into new market, taking tactical decisions would involve how to enter into those markets. The information at this stage is more formalized however, information requirements are still not formalized in nature. Operational Decisions Operational decisions are the common and routine decisions which managers take in their day to day affairs. These decisions often require access to technical information and tend to support tactical decision making. For example, if AstraZeneca make a tactical decision of entering through a Greenfield project in one of the Asian Markets than operational decisions might involve the decision making process of how to acquire land, plant, machinery and hire labor to start production. Further, operational decisions are critical in the sense that they are the basic decisions which are taken to materialize or give shape to the overall strategic management decision making of the organization. Overall, the specific dynamics of each category of decision making may vary as each level of decision making require different set of information and information needs vary. Information required As discussed above that the information requirements vary with each decision making category therefore the information needs as well as its form varies differ in each case. Strategic Decisions Strategic decision making process is dependent on behavioral decision theory as well as transaction cost economics (Papadakis, Lioukas and Chambers) therefore in order to clearly outline the information required to make strategic decisions would require consideration of above set of factors. Considering the dynamics of the behavioral decision making, it is critical to mention that research studies have particularly concentrated on individual as well as group decision making processes. (Dean and Sharfman) therefore on individual level, strategic decision making process may require information which is often abstract and in raw form. For example, on decision to enter into a new market, strategic decision makers may require to evaluate following information which is often used during PESTLE or SWOT analysis. PESTLE analysis would include gathering and using information regarding the political structure of that market or country i.e. whether the political structure is supportive of new and foreign businesses or not. A socialist or communist country, for example, may not allow ownership of private property therefore entering into market with such political system may not be wise. Similarly, in order to make a strategic decision, top management may also require information about economic environment of that country. Knowing about economic environment would enable top management to know whether the economic environment within the country is supportive or not. For example, strategic decision makers may require knowing what kind of restrictions, trade barriers, tariff structures are in place in the target market. Similarly, AstraZeneca's top management may also require understanding the social dynamics of that society. For example, Top Management may need to know what the demographical characteristics of the target market are and what different social patterns are. For a pharmaceutical company, it is of great importance to know the life expectancy because selling of medicines may be directly correlated with the life expectancy. Tactical Decision making information As discussed above that the tactical decisions are made to support the overall strategy of the firm therefore as the firm formulate tactical decisions, its information requirements become more formalized and arranged as compared to strategic decision making. At the tactical decision making level, managers often tend to evaluate different strategic or tactical alternatives by using judgment, bargaining or analysis approach. (Nutt) For example, once a strategic decision is made to enter into a new market, the tactical decisions would involve whether to enter the market through exporting, franchising or making an outright into the market by forming a new subsidiary in target market and build up new manufacturing facilities. For example, if firm decide to build up new manufacturing facilities and make a direct entry into the market them. Operation Decision making information Operation decision making require more logical and structured information therefore in order to make operational decisions, information requirements is more formal and structured. For examples, what are costs of land to be acquired for setting up plant, whether to import the plant or buy it locally, how raw materials will be obtained, what will be the modes of transportation etc Competitor Intelligence The process of gathering competitive intelligence requires collecting, analyzing and subsequently applying that information about the different characteristics of the competitors in any given market. Following are some of the examples regarding the documented examples of Competitor intelligence: Products AstraZeneca specializes in producing medicines which are best for cancers, cardiac, gastrointestinal, respiratory, oncology, infection and psychiatric problems therefore the competitor intelligence would include knowing about the medicines taken to cure such problems. Therefore this would also include information on brands, their chemical composition, market share as well as their sales patterns. Customers Information regarding the nature of customers is another very important factor in gathering competitor intelligence. Knowing about what segment of the market is served by the competitors, how they are reached and what are the specific characteristics of the target market i.e. customers is of great importance for the firm. Understanding how competitors approach their customers is therefore critical. Distribution Channels To know about what distribution channels are used by the competitors is of great importance too because in order to successfully sell the product, it is critical for AstraZeneca to get how competitors are using the distribution channels, what are major players involved in distribution channels as well as what are some of the incentives offered by the competitors to the distributors to sell the products. Demographics AstraZeneca may also be interested into understanding how the demographics are exploited by the competitors i.e. what geographical areas are served, which age and income groups are targeted, which doctors are being continuously used to prescribe the products of the competitors etc. B2B e-Commerce Since AstraZeneca works in an industry which is more of B2B in nature i.e. medicines are not directly sold to the consumers by AstraZeneca itself but different distribution channels such as pharmacy shops and hospitals are used to sell the products therefore the expansion into B2B e-Commerce would be of great importance to the overall success of AstraZeneca into its new market. By adopting a B2B e-Commerce platform firm will be able to save good amount of money in terms of reducing the distribution costs because by directly facilitating hospitals especially to buy directly through B2B channels would provide them a quick and most efficient way to maintain their inventories as well as reduce costs. Thus B2B model for AstraZeneca may work in best possible way if it focuses on highlighting what benefits B2B can provide to the hospitals and pharmaceutical shops. However, there are also some ethical issues involved in this model as it has been increasingly realized that through B2B e-Commerce channels, formation of cartels is easier and manipulation of prices can be easily done. Conclusion Information is like lifeblood for any organization. Flow of appropriate information to each level of management would greatly facilitate the process of decision making. Works Cited 1) Dean, James W. and Mark P. Sharfman. "Does Decision Process Matter A Study of Strategic Decision-Making Effectiveness." The Academy of Management Journal 39.2 (1996): 368-396. 2) Nutt, Paul C. "How Decision Makers Evaluate Alternatives and the Influence of Complexity." Management Science 44.8 (1998): 1131-1147. 3) Nutt, Paul C "The Identification of Solution Ideas during Organizational Decision Making." Management Science 39.9 (1993): 1071-1085. 4) Papadakis, Vassilis M., Spyros Lioukas and David Chambers. "Strategic Decision-Making Processes: The Role of Management and Context." Strategic Management Journal 19.2 (1998): 115-147. Read More