Partnership's External Issues and Trends
Document Type:Case Study
To begin with, one of the factors that can drive such partnership is to have both of the companies reaching the new market to distribute and sell their product (Beamish & Lupton, 2016). In business, in order for one to grow and expand their production and sales, they are required to try and explore new markets geographically. For instance, the partnership between this two pharmaceutical firms ensures that they share their sales market, thus, opening up a new market for the firms to explore and market their product. This increases sales and enhances productivity. Further, strategized partnership provides the partners the ease of accessing new services and products they did not have initially. Conversely, the corporation between the two pharmaceutical firms will bring respect in the international pharmaceutical markets due to the increased innovations and productivity for a healthier and safer world.
The partnership paves way for both of the companies to transform from being manufacturers of Active Pharmaceutical Ingredients (API) and become established companies that are generically branded. This will benefit most of the patients with medicines that are of high quality and are priced at a low cost through advanced technology in production and management systems that are compatible internationally (Beamish & Lupton, 2016). Actually, this will facilitate the development of both of the countries pharmaceutical industries advance the manufacturing and innovation of drugs and establish a foundation that is rigid enough for other companies to easily venture to the international market. Moreover, in order for a conducive and a good business environment to be established, there must be government involvement. In this case, both of the companies aim at selling their medicine to the global market and together they help each other ion climbing the global market and make the highest sale for profit maximization.
Besides, on matters concerning joint venture partnership, both of the companies considered the legal aspects that need to be fulfilled to have an effective partnership (Shah, 2015). For instance, in the US, a joint venture partnership requires signing agreements that are drawn by a lawyer. Therefore, this company followed the legal laws and ensured that all international laws concerning trade are followed. Further, for the two companies to make the joint venture type of partnership a success, they had to set down objectives that were clear and were compatible with the partners. partnership with Hospira, Inc. has seen both of the companies acquire tremendous benefits. The partnership has seen the usage of modern technology in the production of medicine resulting in the manufacturing of quality drugs.
(Motiwalla et al. , 2017) Besides, this type of partnership is similar to that of Pfizer Inc. Further, the firm needs to know the recommended strategy it needs to employ in order to fit in the competitive marketplace. With this, the organization should strive towards ensuring that they commit to the expected result and what they are really hoping to achieve at the end of it all (Shah, 2015). This will reduce their cultural clashes and gradually fit in the foreign market with a lot of ease. Moreover, the firm will work towards the most effective strategy that will foster its relevance in the market. After the realization of the strategy, the firm will be fit with the cultural practices of the new market both corporate and national culture.
In this breath, the effect of depreciation in the exchange rate will result in increased in the profit margins or cause a reduction in the foreign price. A reduction in a countries price would cause an increase in quantity sold and increase in the number of exports (Chkili &Nguyen, 2014). Besides, a firm can also decide to retain its current price and just enjoy the bigger profit margin, which is usually recommended to exporters, further, the firm can decide to sell more keeping the price constant in order to make the bigger margins in profit. Depreciation has an impact on raw material importers where these people will be affected by the increased cost of buying of the raw materials (Patel et al.
For instance, if a company is buying its raw materials from another country, they will have to pay more in order to acquire the raw materials. The exchange rates are of two different runs, firstly, the long run where operation exposure is considered during setting strategy and planning of products globally (Patel et al. Secondly, the short run where operating exposure improves the decisions on operating. Therefore, the operating exposure is frequently variability in profits operations and good understanding depends on the decisions made. The operating exposure of currency is exposed to risks such as transaction exposure that arises from fluctuations effects on the exchange rate in foreign currency on payments making or receiving under obligations. Major fluctuations affect the business profits and expense in balancing the business on the way forward.
The risks may further end up a corporation losing transfer profits and home country money to hosting country money. The trend of growing on the way to economic nationalism makes the present international political background to achieve the global business. Terrorism and kidnapping is another political risk affecting business globally. A terrorist attack may result to the political situation of instability. The terrorist groups mostly target International Corporation for kidnapping and captivating hostages. The exchange rate is another impact, this because different countries with similar products but one of country currency has more value compared to the other one may result to inflation of price, and thus, the corporation has to adjust the prices. During price setting with different companies or countries, the national regulations must be considered related effectively to their products.
High price and low price is set regardless of the more preferred of a product and the Consideration of product distribution. Price setting on products and services differs from the value of the products this because a more valuable good will have a high price compared to less valuable good thus, creating or developing its importance (Chkili & Nguyen, 2014). Its significant impact on a corporation will have to ensure the competitive rate on the market thus, during price setting it will have to ensure it is gaining profits. 7% has led it to be the world’s largest market for car manufacturing (Yan &Luo, 2016). The unexpected change of climate in countries, for example, United Kingdom has led to emergence rise of cars that are friendly to the environment.
New markets brought and introduced into the EU by new countries joining the organization thus, trade is strengthening. Threats Business done in China might be difficult because of communism partnership they adopt with other countries. Furthermore, the government of France may avoid PSA for it brings loss thus preventing from losses they may encounter (Deuchars, 2017). This helps to adopt the eco-friendly technology. Apparently, adoption of eco-friendly technology is a legal and ethical business requirement within the international market settings. However, the hybrid technology adopts requires high investments in research and development as well as its widespread application. Five Forces The PSA exists in an industry that faces various threats including entry threat, supplier, and buyers’ power. Entry threat involves high cost and resources such as time and labor required to enter the market.
It requires the deployment of advanced technology that adopts real-time concepts in producing quality products and services in the Medicare-health environment between China and France (Chkili &Nguyen, 2014). Value chain has earned PSA partnership a reinforced business benefits and advantages related to increased profits, which positions the two pharmaceutical companies in a competitive advantage within international markets. Moreover, through the application of value chain concepts, the partners acquired the capability to solve health problems across the globe thus transforming the Medicare industry. VRIN Analysis table VRIN analysis helps to establish whether the PSA partnership has been able to achieve its core competencies which pharmaceutical industry identifies as sustainable proficiencies (Yan &Luo, 2016). Competency rare valuable Inimitable Non sustainable Conclusion Supply chain with IT no yes No yes Competitive advantage Superior logistical system Yes yes No Yes Temporally competitive advantage Large sales volume ability Yes Yes No Yes Temporary competitive advantage Strong culture Yes Yes Yes yes Sustainable competitive advantage HR Yes Yes Yes no Temporary competitive advantage Management competency yes Yes Yes Yes Sustainable advantage References Beamish, P.
From $10 to earn access
Only on Studyloop