The strategic management perspective of the business planning process and entrepreneurial characteristics

1.0 Introduction

As Barney (2010) notes, the business planning should be founded on a solid framework in order to ensure that the entrepreneur remains objective in their strategic management processes.  The most critical part of the entire process is the market research. The entrepreneur needs to understand the market in order to know how best to counter the prevailing market forces and develop a formidable business strategy (Barney, 2010). The business plan provides the right framework for ensuring that the business planning process remains objective and comprehensive. The elements of the business plan shall therefore be used as a guide to explain the business planning process with the importance of each of these elements explained properly. A well though out business plan enables the entrepreneur to run their businesses smoothly without unnecessary hitches and it can be a significant determinant for whether or not a business succeeds (Coulthard, 1996).

2.0 The elements of a business plan and their contribution to the creation of a successful venture

2.1 Introduction to the business planning process

Various crucial elements must be taken into consideration for a business planning process to be reliable and produce the desired results. These elements include the vision of the organisation, the mission and the objectives of the business (Zacharakis, 2011). These elements indicate to the entrepreneur what the business should be about. The rest of the elements which include strategic management, marketing strategy, environmental analysis, and the financial plan are supporting elements whose goal is to ensure the success of the first three elements (Zacharakis, 2011). The latter three require thorough research in order to play their role in the creation of a successful venture. These elements have been discussed in detail in the following sections: 

2.2 Vision

The vision is basically the basal idea that expresses what the entrepreneur intends to present to the market (McDaniel, 2002). It provides the overall guidance for all strategic management planning and implementation processes. Where more than one owner is involved, it takes the form of a shared ideology that binds them to an enterprise. It describes the organisation’s long term goal and it mainly tells of where the organisation would like to be in the long run (Barney, 2010). For instance, a new business would have the vision of becoming the leader in the provision of certain services in the economy. It gives a business the reason for its existence and the basis on which all other strategies must stem from. Vision statements are normally short statements which must be clear enough to express the desires of the owners of a business. 

2.3 Mission

The mission explains how a business intends to achieve the vision specified (Karlson, Johansson and Stough, 2006). It edges more towards the operational aspects of the strategic management process. In most cases, it will describe the organisational values to be embraced and the philosophies that are to be adhered to while conducting the business. Good mission statements must address three main issues: the elements of the products or services to be offered to the consumers; the internal organisational values to guide their operations; and the financial goals of the organisation (Barney, 2010). The mission helps in painting a picture of what a business is all about and how they intend to go about their daily operations.

2.4 Objectives

The vision and the mission are broad ideas that need to be broken down into actionable steps that the organisation can embark on fulfilling. Objectives do just that: they simplify the vision and mission in a manner that allows for the monitoring of the amount of progress made (Rod and Jim, 2009). They break down the strategic management goals set into actionable and measurable goals that can be gauged for success or failure. There are several characteristics that objectives should have. For instance, objectives must be time bound. Unlike the vision and the mission which are open ended, an objective is something that must be achieved within a specific time (Rod and Jim, 2009). They must also be specific. The avoidance of ambiguity is important to any business. Objectives must also be achievable, measurable and realistic (Rod and Jim, 2009). The inclusion objectives into a business plan helps in putting the plan in motion. It provides a sense of urgency and a motivation to begin the real action within the specified timelines.

2.5 Industry analysis: microeconomic environment analysis

External environment scoping is a very important part of the strategic management process. It is very critical that the entrepreneur conducts a thorough research on the industry in which they intend to operate. A thorough analysis of prospective competitors must be done in order to ascertain their strengths, weaknesses and their strategies. It is only the knowledge of these competitor characteristics that can enable the entrepreneur to can come up with a formidable strategy (Rod and Jim, 2009). One can either to out-compete other market players by exploiting an identified weakness or tapping into arising opportunities that the current market players may either be aware of or deliberately ignoring. This is where the importance of market research comes in. The entrepreneur must avoid making assumptions based on their limited knowledge. Most people tend to think that they know more than they actually do and this is a reality that the entrepreneurs must take cognisance of (Galindo and Miguel, 2008).

Apart from the competitor analysis, other industry factors such as suppliers and buyers must be taken into consideration. It is important to establish how easy or difficult the acquisition of raw materials would be and how suppliers behave in the market (Galindo and Miguel, 2008). Their pricing must also be taken note of in order to accurately estimate the cost of production. The knowledge of the target customers is also very important. They are the principal objects of any business and their perceptions, attitudes and habits must be taken into consideration. A good market analysis demonstrates that the consumers have been thoroughly scrutinised and this determines how reliable a business plan is (McGarty, 1989). The porter’s five forces model is an ideal tool for analysing the micro environment.

2.6 Macro-economic analysis

This section takes note of the developments in the entire economy and how they may impact the business about to be started (King, 2000). The political, economic, socio-cultural, technological, legal and environmental factors are noted and their likely impact analysed. Entrepreneurs are advised to make use of strategic management models such as the PESTEL model to ensure that their external analysis is comprehensive. Opportunities and threats arising from the environment are detected through such analyses hence their importance.

2.7 Core competencies

After analysing the environment, focus must be turned to the proposed business and its core competencies determined. Core competencies are the internal capabilities that the business could use to take advantage of the opportunities identified in the environment (Barney, 2010). Strategic management plans should revolve around the existing core competencies or the need to develop new ones. The entrepreneur must be clear in their minds as to what strategic capabilities they intend to build in their businesses that would help them have a competitive advantage in the market. These core competencies help in giving meaning to the business plan by making a reflection on its potential (King, 2000).

2.8 Marketing strategy

The business plan should be clear as to who are the target customers and provide a rationale for this choice by elaborating on their characteristics that make them a viable target. The business plan should also contain a comprehensive marketing plan which provides insights on what the business wishes to offer as well as how they intend to bring them to the customers (Williams, 1983). A marketing strategy is a component of the organisations strategic management blue print that contains the product or service description and how it is to be communicated to the target customers. It describes the product characteristics and how such products are different from the ones in the market and the benefits that the product is intended to provide are also highlighted (King, 2000). The strategy should also explain how the business intends to ensure that the products reach the targeted clients. The general approach to distribution should be provided (King, 2000). The general approach to pricing for the products must also be provided and explained clearly. Market characteristics that support such an approach should be highlighted as well. The promotional strategy is also an integral part of the marketing strategy and it describes the approach to be taken in getting the target market aware of the product. The approaches of advertising, personal selling, marketing campaigns and others should be elaborated clearly in the business plan (Rod and Jim, 2009). The entrepreneur could also choose to mention their estimated budget for the first year in this section.   

2.9 SWOT analysis

The swot analysis wraps up the business strategy section by providing a pictorial presentation of the firm’s strategic positioning. It is an important part of the business plan.

2.10 Operation plan

The operation plan provides a breakdown of activities to be undertaken before the commencement of the business (King, 2000). It is an important guide for helping entrepreneurs to stick to the agreed timelines and launch operations on time.

2.11 Financial Pan

The financial plan is perhaps the most important part of the business plan. Indeed, the effectiveness of any strategic management plan lies on its financial viability. It provides the figures which provide the basis for the decision on whether or not to invest in the business. This section, like all others must be completed after a thorough research to ensure accuracy (Zacharakis, 2011). It details the amount of capital to be used in starting the business as well as the expenses to be incurred. It also provides a projection of sales revenues as well as the profit projections hence forming the basis for investment in a plan. Entrepreneurs go into a business to create wealth and they tend to be more interested in establishing the worth of the business before studying the specific provisions of business strategy hence the importance of this section (Zacharakis, 2011).

3.0 Entrepreneurial characteristics

Even though entrepreneurs can have varying characteristics and succeed, research shows that certain traits are extremely important in guaranteeing the success of an entrepreneur (Audretsch, Litan and Strom, 2009). These traits are as discussed below:

3.1 Attention to detail

The process of planning for a business is one that requires that utmost care be taken when coming up with the necessary estimations. When judging the viability of a business, details such as the prices of raw materials, statutory fees, rent rates, and other relevant expenses must be taken into consideration (Audretsch, Litan and Strom, 2009). The entrepreneur must conduct a thorough market research in order to ensure that their estimations remain realistic at all times. Being attentive to details is a trait that also helps in analysing market characteristics. This is an important strategic management trait. An entrepreneur needs to understand the consumption habits of the target market and the reason why they behave as they do (Audretsch, Litan and Strom, 2009). Paying attention to detail when researching and putting down a plan ensures that there is a reliable basis drawing appropriate conclusions (Meyer, 2011). This attention to detail must however not be mistaken for obsession with perfection. Perfectionists are in many cases known to waste valuable time in pursuit of details whose significance may not be justifiable. The entrepreneur must remain attentive to detail while bearing in mind the acceptable variability in decision making. 

3.2 Discipline

In order to run a business, one must be disciplined enough to see it through. Entrepreneurs must have the discipline to do whatever is needed in a timely manner (Meyer, 2011). As opposed to other occupations where people are supervised or provided with targets which they must meet, the entrepreneurs sets the yardsticks on their own with no one to ensure that such yardsticks are adhered to (Meyer, 2011). The ability to work without supervision and in consistency with the plans established is the essence of discipline. It also entails the recognition of certain tasks that may appear to be unimportant and ensuring that they are carried out. For instance, routines such as bookkeeping may appear boring and less important than activities like meeting potential clients and others. However, it is a routine whose significance may determine how successful the business may become by providing the information needed to accurately assess the performance of the business. 

3.3 Objectivity

Being objective means that one should always have the whole picture in mind before making a decision (Galindo and Miguel, 2008). Variables in business tend to change from time to time with some appearing to be more important than others. The temptation on the part of business people is the reaction to such factors without taking time to analyse the importance of such factors in relation to other relevant variables in the environment. For instance, where they may be natural disasters, the reaction of most investors is to keep off the markets until the conditions stabilise. An objective investor would however be able to assess the market fundamentals and make their investment decisions based on the overall picture. Objectivity is also important at the business formation stages where the investor is required to weigh all relevant factors before making a decision on what strategies to embrace in the pursuit of their goals (Galindo and Miguel, 2008). An entrepreneur should have the ability to weight specific factors in their order of importance before relying on them to make their decisions.

3.4 Calmness

Calmness is a trait that many entrepreneurs lack. Most entrepreneurs are known to be inpatient and hot tempered and this perhaps contributes a little to the high level of failure among start up businesses (Casson, 1995). Markets are often volatile with sporadic changes happening quite frequently where factors that could adversely affect a business appear and disappear without notice (Galindo and Miguel, 2008). An entrepreneur must be aware that such undesired eventualities are bound to happen and remain prepared. Seasoned business managers tend to hold the view that there is always a perfect solution for every situation (Meyer, 2011). Most arising threats can be turned into opportunities if the right strategies are embraced. The important thing is to remain calm and evaluate the strategic options at the disposal of the organisation. Calmness provides the entrepreneur with the opportunity to remain creative even at the height of all crises. Decisions made in panic are often detrimental to the business and it may potentially lead to its demise (Galindo and Miguel, 2008). However, calmness must not be mistaken for slowness or complacency. Many occurrences in the business world require entrepreneurs to make quick decisions in order to realise the potential benefits. Calmness denotes the absence of panic and hasty decision making. However, entrepreneurs should be able to tell where there is need for a swift decision and where they can take more time to evaluate their options.

3.5 Flexibility

A certain level of flexibility is necessary for the success of the entrepreneur: they must be able to monitor the goings on in the environment and make quick adjustments where need be (Casson, 1995). This flexibility must be balanced with the need to standardise procedures as well as ensuring operational discipline. However, the core functions of the organisations should remain the principal focus and all other procedures realigned to them. Rigidity in business in most cases relates to the procedure of service and payment as well as the approach to core functions such as promotion. The market environment is constantly changing and businesses must keep adopting the changing preferences in order to remain relevant (Entrepreneur, 2011). For instance, marketing messages are only effective at a given time and the moment market perceptions change; the messages must follow suit. Failure to do so would render them largely ineffective.  

3.6 Autonomy

The character of being autonomous means that one can function to the optimum without supervision (Nair, 2006). Entrepreneurs are their own bosses and they are the ones who set the rules which they then enforce on their own. They must be able to hold themselves accountable and follow their own rules without fail in order to succeed.

3.7 Goal oriented

Organisational management requires a clear focus with the end in mind. Everything an entrepreneur undertakes to do should in one way or another be aimed at achieving the set goals (Meyer, 2011). Being goal oriented enables them to avoid wasting time and resources on activities that may be deemed as unnecessary. This clarity of vision is easily transmitted to other members of the organisation hence leading to the growth of a desired organisational culture.

3.8 Tolerance to risk

Everything in business bears some levels of risk. The business environment can be very volatile and this means that no plan in business can be full proof (Meyer, 2006). An entrepreneur must have some level of tolerance to risk for them to be able to commence any business operations.

3.9 Personal assessment based on the characteristics mentioned

My personal assessment on the level to which the 8 characteristics named above are possessed can best be done using a matrix with scores from 1 to 5 with 5 being the highest. This is as illustrated below:

	Abundance Score
Character trait	1	2	3	4	5
Calmness
Attention to detail
Tolerance to risk
Goal oriented
Autonomous
Flexibility
Objectivity
Discipline

My strongest attributes are personal discipline, goal orientation and my preference for independence. These attributes are complimentary in the sense that high discipline levels are necessary for the enhancement of results under autonomy. I am also quite attentive to detail even though this is not my strength. My level of objectivity is also reasonably high. I am generally calm in most situations and I exude a significant level of flexibility. This may be useful in business as some level of strictness must be tampered with flexibility to avoid losing focus. My weakest point is the tolerance to risk. However, I consider the level of trait possessed as adequate for engaging in business while avoiding recklessness by ensuring proper market research before embarking on any venture. In my own assessment, I can make a very successful entrepreneur.

4.0 Conclusion

A business plan is the blue print that details what an entrepreneur intends to do with their new venture. It must therefore be well researched and written with elements such as vision, mission, strategic positioning and approach to strategy clearly spelt out. Accurate estimates of financial estimates should also be provided to ensure that the profitability prospects of the business are well reflected. In order to successfully implement the business plan, an entrepreneur must bear some characteristics. These traits include personal discipline, attention to detail, flexibility and objectivity among others. The personality of the entrepreneur is central to the success of a business venture and entrepreneurs should be keen to invest in themselves and acquire the required traits in order to increase their chances of success.  

References

Audretsch, D.B., Litan, R.E., Strom, R.J., 2009. Entrepreneurship and openness: theory and evidence. Cheltenham, UK: Northamton, MA

Barney, J.B., 2010. Strategic Management and Competitive Advantage. 3rd Ed. Boston: Prentice Hall

Casson, M., 1995. Entrepreneurship and business culture. Hants, England: Brookfield

Coulthard, M., 1996. Business planning: the key to success. South Melbourne: Macmillan Education Australia

Entrepreneur, 2011. 25 Common characteristics of Successful Entrepreneurs. (Online) Available at: http://www.entrepreneur.com/article/200730 (Accessed 18 November 2011)

Galindo, M., Miguel, A., 2008. Entrepreneurship and Business: a regional perspective. Heidelberg: Springer Berlin Heidelberg

Karlson, C., Johansson, B., Stough, R.R., 2006. Entrepreneurship in the knowledge economy. New York: Routledge

King, J.B., 2000. Business plans to game plans: a practical system for turning strategies into action. Los Angeles, Calif: Silver Lake Publishers

McDaniel, B.A., 2002. Entrepreneurship and innovation: an economic approach. London: M.E Sharpe

McGarty, T.P., 1989. Business plans that win venture capital. New York, Toronto: Wiley

Meyer, M.H., 2011. Entrepreneurship: an innovator’s guide to start-ups and corporate ventures. Los Angeles: SAGE

Nair, K.R.G., 2006. Characteristics of Entrepreneurs: an empirical study. Journal of Entrepreneurship, 15 (1), pp. 47-61

Rod, B.M., Jim, B., 2009. Entrepreneurship and globalisation. London: SAGE

Williams, E.E., 1983. Business planning for the entrepreneur: how to write and execute a business plan. New York: Van Nostrand Reinhold

Zacharakis, A., 2011. Business plans that work: a guide for small business. 2^nd Ed. New York: McGraw-Hill

Strategic analysis of Sanofi A

1.0 SANOFI A: Overview of the company’s strategies

1.1 Company background

Sanofi A is a multinational company that deals with the manufacture and distribution of pharmaceuticals. The giant pharmaceuticals producer is known to be among the largest pharmaceutical companies in the world is it was ranked 4^th on the basis of the sales revenue (IMAP, 2011). The products are made both for the prescription market and over-the-counter market (Sanofis, 2011). The areas of focus for this company include the central nervous system, cardiovascular, internal medicine, diabetes, thrombosis, oncology and vaccines. The company is headquartered in France and has active operations in over 130 countries around the world (IMAP, 2011). Given that the company has largely been successful, it is important to evaluate its strategies and the strength of its shared vision, mission and goals.

1.2 Strategic overview

The formulation of the vision statements, mission statements, goals and objectives is a crucial part of the strategic management process. These crucial statements help in not only explaining the organisation’s reason for existence but also how the members of organisation view themselves and how they intend to operate in consistency with the shared vision (Johnson, Whittington and Scholes, 2011). Focus on the above mentioned statements helps the organisations to have a clear understanding of where they stand and this is crucial in enabling them to formulate strategies that can effectively take them to their desired destinations.

The vision defines how the organisation intends to be seen in future and it takes a long term view (Johnson, Whittington and Scholes, 2011). It prescribes what the overall intention of the organisation is. It is the highest level of strategy and basically explains the reason for existence of a given organisation. Sanofi A’s vision reads as follows: to become a diversified global healthcare leader, focused on patients’ needs (Sanofi, 2011). From this vision alone, it is clear that the organisation’s existence is purely for the provision of healthcare products. It is also clear from this vision that the organisation has every intention of entering and dominating the international markets. The vision statement also portrays the intention of the company to ensure that they not only take a diversified approach but they also become the global leaders. This implies the intention to be innovative and more effective than the competition. Finally, the vision makes it clear that the company will at all times remain focused on the needs of the patients.

The formation of the mission statement is another important process in the strategy formulation process and must be done very carefully. Like the vision statement, the mission statement also explains the reason for the existence of the organisation (Grant, 2007). This statement provides a general overview of how the organisation intends to achieve its vision. The vision is therefore the basis on which the mission statement is formed. It mostly presents the answer to the question: this is our vision, what do we do about it? (Grant, 2007) The mission statement can either be a single statement or it may be a combination of sentences aimed at portraying the company’s way of achieving their vision. This statement must be devoid of any ambiguities and must leave any reader with a clear picture of the company’s commitments. Sanofi A mission statement draws focus on three areas: innovation and patients’ needs; commercialisation and financial success; and internal capacity building (Ansari, et al., 2010). In relation to the first dimension the company’s mission is to rapidly launch innovative pharmaceuticals that satisfy the unmet patients’ needs.

On the financial performance front, the mission states that the company will channel resources on strategic branding and also use existing global brands to maximise their value and drive sales (Sanofi, 2011). To ensure that the company continues to have the ability to innovate and function efficiently, the company’s mission outlines its intention to aggressively recruit and retain top talent in order to enhance their capacity for drug innovation and commercialisation (Sanofi, 2011). A good mission statement covers all the crucial aspects of the organisation’s strategy and the Sanofi A’s mission statement does just that. The most critical business aspects for the company are in ensuring that the organisation can provide products of value to the customers through continuous innovation aimed at satisfying arising needs. The second aspect has to do with the financial performance. The organisation must give the investors the confidence that their investments in the company will pay off. Sanofi A reiterates its commitment to good financial performance by ensuring that the commercial aspects of the vision are clearly articulated (Sanofi, 2011). The company has clear intentions of ensuring good financial performance while serving the patients’ needs around the world.

Goals and objectives are shorter term items which are aimed at breaking down the vision and mission in actionable steps with measurable results (De Wit and Meyer, 2010). The goals and objectives can either be medium term or short term. For instance, an organisation can set out to achieve a given target within five or so years. This is medium term. For instance, Sanofi A implemented a R&D transformation in 2009 and this new outset was expected to produce the desired results within 5 years (Sanofi, 2011a). This is a medium term objective. Another medium term goal relates to the enhancement of shareholder value where the company intends to ensure that payout is raised to 50% in 2015 from the rate of 35% in 2010 (Sanofi, 2011a). Goals and objectives can also be short term. Typical short term objectives involve year on year sales targets and so on. For instance, Sanofi A has set a target of 5% sales growth in the next 12 months (Sanofi, 2011a). This is a short term objective.  Certain rules must be followed if the set objectives are to be of value to the organisation. To start with, the objectives must be time specific and must be measurable. They must also be realistic and achievable in order to ensure that employees are adequately motivated. More importantly, there must be a fit between the goals and objectives; and the vision and mission. Sanofi A’s goals and objectives have consistently remained well formulated and have partly been responsible for the organisation’s remarkable success.

2.0 Key stakeholders of Sanofi A

The corporate organisations operate in the society and are widely expected to have in mind the interests of all stakeholders when going about their business. Stakeholders can be described as persons or groups of persons whose lives are affected directly or indirectly by the presence or the activities of a given organisation (Phillips, 2003). Organisations must be keen to ensure that stakeholders are factored in. Sanofi A identifies their key stakeholders quite clearly and lists them down. These stakeholders include the investors, the government, the non governmental organisations, healthcare economists, patient advocacy associations, employees, business partners, and suppliers (Sanofi, 2011b). Each of these stakeholder groups have special interests which they expect the organisations to attend to as comprehensively as possible.

For instance, the investors are mostly interested in the financial performance and the value of the organisation and the managers must ensure that their activities are profitable. The government on the other hand is interested in ensuring that the organisations adhere to the set rules on taxation and operational procedures. The health sector is one area that most governments around the world take keen interest in due to the fact that drugs affect the health of the masses (Castner, Hayes and Shankle, 2007). Rules on safety, operation, and manufacturing standards are therefore explicit and it is important that the organisations adhere to them. The non governmental organisations, the healthcare economists and the patient advocacy groups on the other hand tend to be more interested on the pricing of the products and the willingness of the pharmaceutical companies to take part in campaigns aimed at alleviating human suffering as a result of existing ailments (Castner, Hayes and Shankle, 2007). Employees on the other hand tend to be more interested in the pay packages which they need to have in consistency with their own financial objectives (Phillips, 2003). Other employee interests include the provision of a healthy working environment, having a supportive organisational culture and fairness in the appraisal and promotion opportunities. Suppliers on the other hand expect that the organisations will at all times honour their commitments in relation to making payments and other relevant aspects. In addition to the specific stakeholder interests, the general public tends to have the expectation on companies to take measures aimed at improving their general welfare (Phillips, 2003). Global concerns such as environmental conservation, affordability of education and healthcare, and alleviation of human suffering are some of the concerns requiring support from these organisations. These varied interests must be taken care off for the organisation to enjoy the support needed to assure sustainable results.  

The most relevant theoretical basis for analysing the company’s stakeholder interest is the stakeholder theory. A contrasting view is the input-output model of the corporation whose main emphasis is that organisations exist solely to serve the interest of the shareholders. Under this model, the inputs are brought in by the investors who put their funds into the business (Haberberg and Rieple, 2007). The employees and suppliers execute the function of providing the value addition needed and the customer makes their purchases to return the capital and its returns to the investors. The model therefore focuses on the parties involved in this process with an aim to maximise the shareholder value. However, the stakeholder theory takes a much broader overview and factors in many other groups which include the public at large, the government, trade unions, lobby groups, political groups and all other parties who get affected in one way or another by the presence or the actions of the organisation (Clarkson, 1995).

It is important to note that stakeholders can play a role in determining whether a business fails or succeeds (Phillips, 2003). Businesses generating vast amounts of negative sentiments tend to be at a disadvantage. Stakeholders can easily tarnish a company’s brand name and lead to a complete failure of its marketing and business processes (Grant, 2007). This is why the stakeholder interests must be taken into account. Various strategies have been generated for dealing with different stakeholders depending on how these stakeholders relate to the organisation. It must be appreciated that not all stakeholders remain friendly to organisations. Some can be out-rightly non-supportive irrespective of the commitment of the corporate bodies to involve them (Friedman and Miles, 2001). The offensive strategy involves the effort to stakeholder perceptions and objectives to suit both the organisation and the stakeholder in question (Friedman and Miles, 2001). This strategy works best when the stakeholder in question is highly supportive. The defensive strategy can be adopted for the non supportive stakeholders and it involves the efforts to reinforce the current belief in the organisation and its programs (Hemmati, et al, 2002). Such stakeholders may even be allowed to conduct some of the relevant programs on their own. The swing strategy works for stakeholders who can be a mixed blessing with the approach given depending on their position and the circumstance. The most passive strategy is the hold strategy which is used for stakeholders that are viewed as marginal (Hemmati, et al, 2002). In this case, the organisation simply carries on with their strategies.

Current trends around the world have revolutionised the way people view organisations. They are increasingly being viewed as corporate citizens who have a duty to play their role in the society as ‘good citizens’ (Barney, 2010). This implies that they are expected to take actions that can lead to the betterment of the societies which are hosting them. This expectation involves the proper treatment of all relevant stakeholders and the society in general. It must be noted that the average consumer is increasingly aware of the goings on around them and is quite interested in noting how businesses treat the stakeholders (Barney, 2010). Any wrong moves by an organisation could lead to reprisals from its customers who may resort to avoiding their products. The factoring of stakeholder interests is therefore crucial to the performance of the organisations. Statistics have shown a trend which concurs with the views of the proponents of the stakeholder theory: the most successful organisations around the world are those who enjoy the greatest support from the public and other relevant stakeholders (Wheelen, 2008).   

This paper adopts the view that organisations cannot exist for the sole reason of maximising value for the shareholder. The stakeholders for the organisations are equally important and their interests must also be factored in. This is the only way to ensure that sustainable performance is assured.

3.0 Environmental analysis for Sanofi A

For strategy to be effective there must be a clear understanding of the environment in which an organisation operates. This can be done through some of the most useful strategic tools such as the PESTEL model and the Porter’s 5-Forces analysis.  The PESTEL analysis provides an overview of the macro environment and takes into consideration dimensions such as the political, economic, social, technological, environmental, and legal factors (Drejer, 2002). The 5-forces analysis on the other hand is industry specific and it measures the level of rivalry in the relevant industry with an aim to enable the managers to determine what strategies would serve them best (Drejer, 2002).

3.1 PESTEL analysis for Sanofi A

3.11 Political

The political factors that affect the pharmaceutical companies are many. Healthcare is a sensitive political issue in most countries with most governments showing great concern for ensuring that the ailments affecting their populations can be sorted out effectively using the drugs available (Earnst & Young, 2011). The disadvantage of this is in the fact that the pharmaceuticals are constantly under pressure to embrace a pricing strategy that allows for the affordability of their drugs. This is despite the high standards for product development and testing procedures required of them. However, this interest is a source of advantage in that governments tend to be quite supportive in allowing renowned pharmaceutical companies to set up operations in their countries with the aim to ensure more affordable healthcare to their citizens. It is with this support that Sanofi A has been able to achieve rapid international expansion with the company being represented in most countries around the world (Ansari, 2010).

3.12 Economic

The world is recovering from a serious economic recession whose effects are still being felt globally. The effect of this crisis has mainly been manifested in the decline of the purchasing power by the average consumer (Barney, 2010). This must have put pressure on Sanofi to review their prices downwards. However, as recovery continues, it is expected that this purchasing power will improve in future and lead to better results for the company. 

3.13 Socio-cultural

The number of ageing people is on the rise globally and this presents good news to Sanofi due to the fact that the ageing persons tend to require frequent medication (Ansari, 2010). This is likely to lead to an increase in the demand for drugs. The society also increasingly prefers to administer their own medication when they are adequately informed of their condition. This may be an indication that the demand for over-the-counter drugs is set to rise.

3.14 Technological

The world is currently experiencing the highest levels of technological advancements and this is enabling competing pharmaceuticals to better deal with the patients’ needs (IMAP, 2011). This is a threat to Sanofi which must boost its R&D functions to keep ahead of the competition. This comes at a cost and it certainly denotes an impact on the company’s bottom line with no assurance that the gains will be realised before competitors catch on with similar innovations.

3.15 Environmental

The requirements for environmental standards are much lower in the developing world than in the developed world and this makes it easier for pharmaceuticals to set up operations in these developing countries (Castner, Hayes and Shankle, 2007). The occurrence of frequent global calamities such as floods which are often accompanied by epidemic outbreaks also leads to a higher demand for the pharmaceuticals’ products.

3.16 Legal

Understandably, the healthcare sector is highly regulated (Castner, Hayes and Shankle, 2007). This regulation threshold is important due to the fact that the health of people is concerned. However, these additional regulations come at a cost to pharmaceuticals who which must invest in ensuring the regulations are adhered to.

3.2 Porters 5-Forces Analysis of the pharmaceutical industry

3.21 Rivalry among current industry players

The level of competition in the industry is intense. Global pharmaceutical companies are increasingly fighting to gain and retain market share with price competition becoming a common trend (IMAP, 2011). The drugs on offer tend to offer similar benefits and this makes it easy for customers to substitute the drugs for others. In addition, the market players have adequate technological knowhow and cannot be easily out-done in innovation (Ansari, 2010). Sanofi must however ensure they remain up to date with their innovations while ensuring fair pricing and a great brand value. In view of the fact that the ease of expansion into emerging markets is assured, the level of industry rivalry can be said to be moderate.  

3.22 Threat of new entrants

The cost of setting up new pharmaceuticals is very high in view of the standards already set by the existing market players and the government rules and regulations (Castner, Hayes and Shankle, 2007). Concerns over hygiene and the health of the people demand that the latest state-of-the-art machinery be used and this drives up the cost. This reduces the threat of entry. The industry is also people driven with medical practitioners being the best distributors for the drugs. It may be quite difficult to procure their support and this makes it difficult for new entrants (IMAP, 2011). On the whole the threat of entry is low.

3.23 Threat of substitutes

Technological advancement is making it easier for competing pharmaceuticals to come up with effective but cheaper drugs and this has the potential to bring down the profitability in the industry (Castner, Hayes and Shankle, 2007). The industry is also under threat from the increasingly popular natural remedies sourced from herbs and tree roots. Substitutes can also be found in counterfeit drugs which are increasingly flooding the market and with very low prices. Governments around the world have been unable to counter their presence effectively and this spells doom for the industry (IMAP, 2011). Sanofi A and other producers should in response to the presence of these counterfeits ensure that the customers are adequately informed of the product features and insist on the original drugs. On the whole, the threat of substitute is high and this limits the profitability levels for Sanofi A.

3.24 Bargaining power of buyers

The bargaining power of buyers is low due to the fact that buyers are many and do not come together to bargain as groups (Ansari, 2010). The buyers can therefore not influence the pricing of the drugs: except through the forces of supply and demand.

3.25 The bargaining power of suppliers

The bargaining power of suppliers is moderate as they are relatively few and can to a limited extent dictate the pricing to the pharmaceuticals (Ansari, 2010). Sanofi A can dissipate this power by embracing the act of sourcing for materials from a variety of suppliers and from the international markets. 

On the whole, the industry is worth staying in with the application of strategies such as innovation and brand building.

4.0 Internal analysis

Sanofi A can be said to possess exceptional human resources with a large number of top scientists and a committed staff (Saofi, 2011). The company dedicates itself to ensuring that top talent is engaged in the company and has partly been the reason why it has proven to be so successful. Moreover, the company operates with a strong financial position and this enables them to make timely investments into desirable innovations (Sanofi, 2011). This makes enables them to serve the arising patients’ needs earlier than the competition hence giving strength to their brand. The internal processes in the organisation which include their handling of stakeholders and other internal processes are well established and largely reflective of an efficient system (Ansari, 2010). This presents them with the opportunity to focus outwards without having to waste time and resources fixing their internal processes. It is on the basis of the proper utilisation of these tangible and intangible resources that the company has been able to rise to be one of the largest pharmaceutical companies in the world.

The core competencies at Sanofi A may be listed as: having a strong and well equipped research and development facilities; its ability to produce effective vaccines; its state of the art manufacturing plants; and its ability to mount effective marketing and sales campaigns (Ansari, 2011).

4.1 Research and Development

The company dedicates a huge part of its annual budgets to research and development with a focus on finding solutions for ailments that have largely been ignored (McKinney, 2011). In order to enhance this competency, the company launched a transformation program aimed at making R&D more creative and effective (Sanofi, 2011). The program has been in place since 2009. This focus on research and development is ongoing and it is expected that more effective and long lasting solutions for stubborn conditions such as diabetes will be found. Another manifestation of the company’s strong R&D program was experienced in 2009 when the company undertook to find means of avoiding cases of blindness among diabetic patients (Sanofi, 2011a).

4.2 Vaccine production

In order to ensure that their production of vaccines remained unrivalled, Sanofi A operates a subsidiary, Sanofi Pasteur whose sole responsibility is to provide vaccines for humans (Sanofi, 2011). This is the largest company in the world which is devoted solely to the production of vaccines for humans (IMAP, 2011). Vaccines are very crucial pieces of medication and they help in boosting the body immunity to reduce the danger of contacting some of the deadliest diseases in the world. This company provides a wide range of vaccines for over 20 diseases with continued efforts to constantly develop more effective vaccines (Sanofi, 2011). Some of the diseases whose vaccines are currently being sought include Type B Meningitis, dengue fever, Chlamydia, cytomegalovirus, and other pneumococcal infections among others. In combination with the R&D capabilities, this vaccinations wing remains the world leader in the production of effective vaccines.

4.3 State of the art manufacturing plants

To ensure that they produce high quality products under the best conditions, Sanofi A has invested in the instalment of high quality machinery whose efficiency enables mass production without any lapses in quality (Ansari, 2010). Despite their boosted capacity, the company continues to be above board as far as the quality of the products is concerned. The efficiency with which these machines operate also help in reducing the cost of producing every unit of drug and this enables them to price their products competitively in the market.

4.4 Marketing and sales campaigns

Sanofi A has continues to be committed to its mission of ensuring that they can provide value to their shareholders. In line with this commitment, the company invests heavily in ensuring that the marketing and sales campaigns are conducted extensively and effectively (Sanofi, 2011c). The uniqueness of these campaigns can best be explained by how they are conducted. As opposed to traditional sales campaigns whose sole intention is to ensure that products get sold, Sanofi concentrates in creating awareness about the existing ailments and the remedies that exists for them (Sanofi, 2011c). The company concentrates in demonstrating to the public that their drugs are effective and this earns them remarkable levels of credibility in the market. Their commitment to include patients and doctors in these awareness campaigns further enhance the effectiveness of these programs.

4.5 How Sanofi’s competencies compare to those of competitors

Some of the large global pharmaceuticals include Pfize, GlaxoSmithKline and Norvatis (IMAP, 2011). In addition to these multinationals, the company faces significant competition from local pharmaceuticals in the hosting economies (Ansari, 2010). These companies, some of which have been better performers than Sanofi tend to have one thing in common: a strong management system and an equally formidable research and development capabilities. Their keen attention to an aggressive approach to international expansion has also been quite similar (IMAP, 2011). However, Sanofi continues to have an edge in the research and development capabilities due to its transformation programme whose ability to discover more effective solutions to existing human ailments seems to be better than its competitors’ (Sanofi, 2011). Moreover, the company continues to enjoy great results from its unique approach to sales and marketing- a strategy whose results is highly hinged on the passion and the knowhow of the employees involved. It must be noted that the internal processes and management practices deliver to the employees of Sanofi A satisfaction levels that are hard to replicate in any other organisation (Sanofi, 2011). The future continues to look bright due to these capabilities.

5.0 Strategic Capabilities

5.1 VRIN Framework

The VRIN framework is used in analysing the strategic capabilities of an organisation by conducting an internal analysis and determining which resources are likely to provide it with a competitive advantage (De Wit and Meyer, 2010). This framework is an extension of the resource based view of the organisation. This theory views the organisation as a bunch of resources which must be utilised correctly in order to yield the desired results for the organisation. For resources to be able to yield a competitive advantage for the organisation, they must be VRIN (Valuable, Rare, Inimitable, and Non-substitutable) (De Wit and Meyer, 2010). If a competency can certify the given thresholds, it becomes a competitive advantage. Some of the resources that the company can use to reach their goals include the financial resources, the exceptional machinery, and their employee. The organisation continues to have a strong financial position which is supported by their exemplary performance on the global stage with the company being ranked 4^th in terms of sales revenues (IMAP, 2011). This financial muscle is important in the sense that it gives the organisation the muscle to sustain research and development efforts; and this makes them remain ahead of the competition due to their ability to demonstrate superior innovations.

The second strategic resource they possess are the state-of-the art machinery which enable them to out-produce their competitors with high quality drugs which they are able to produce at relatively low unit costs and this enables them to compete effectively in the market. The third and perhaps the most important resource is the human resource (Ansari, 2010). Sanofi has managed to instil a culture of excellence among their employees with many of them remaining diligent in their quest to ensure that the company achieves the desired results (Sanofi, 2011). Having equipped itself with a large team of formidable scientists, the organisation continues to have the highest potential for innovation in the market and this also forms the reason for its remarkable performance in the area of vaccine production (Ansari, 2010). The unique contribution of the employees is the biggest source of a competitive advantage for Sanofi. The special relationship between the employees and the company yields high motivation and passion for achievement in a manner that cannot be replicated elsewhere.

5.2 The value chain analysis

The pictorial presentation of Sanofi’s value chain is as below:

5.3 Raw materials

Sanofis conducts a thorough analysis of the materials being supplied before settling on their suppliers. This helps assure quality. Where possible, the company sources for raw materials for functions such as packaging from the hosting economies in order to save on costs (Sanofi, 2011). The company makes use of independent suppliers in many instances and this exposes to the risk of interruption due to supplier inefficiencies. To guard against this risk, the most critical supplies are sourced from their own affiliates which are mostly based in France (Ansari, 2010). This strategy ensures uninterrupted supply of drugs to the market. The procurement procedures are also efficiently executed to ensure timely ordering and proper storage.

5.4 Operations

The productive operations designs at Sanofis are sophisticated and designed to ensure productivity and accuracy of procedures (Ansari, 2010). These operations designs also enable the observance of stringent safety regulations while keeping the production costs at the bare minimum. The health and safety of workers is also assured and this makes the employees feel well taken care of; a fact which contributes to their high motivation levels (Ansari, 2010). The company also runs a quality control system whose threshold tends to be higher than the authorities’ (Sanofi, 2011). This helps ensure that only the quality drugs are availed for consumption in the market. The company also works at ensuring continuous improvement by focusing on different production processes in line with the concept of total quality management (Ansari, 2010).

5.5 Distributors

The company ensures efficient distribution of the products in the markets by making use of exclusive distributors as well as independent distributors (Sanofi, 2011). In addition, public health bodies and hospitals are also supplied with sufficient stocks for distribution along the healthcare systems in the various national economies.

5.6 Sales and marketing

The company maintains a highly qualified sales team which consists of employees with enough training to explicitly explain the product features and their benefits to doctors and other consumers (Ansari, 2010). The process of forming the sales teams is carefully planned out in order to ensure that those who make the team are not only qualified, but are also result driven and capable of delivering on the set targets (Ansari, 2010). The marketing exercises are normally intense and they take the form of an informative campaign in most of the cases.

5.7 Retail function

The company ensures compliance with government regulation on the retail of drugs (Sanofi, 2011). This helps in ensuring that prescription drugs are not wrongfully used and thereby cause harm to the patients. The main focus of the sales teams is to convince doctors to prescript their drugs.

5.8 Support activities

The support activities include research and development, human resource management, technology development, and general administration (Sanofi, 2011). These support activities are essential in ensuring that the organisation runs efficiently thereby affecting the cost of production indirectly. Other functions like research and development help in ensuring that the organisation can remain innovative at all times.

5.9 Comments on the effectiveness of Sanofi’s capabilities

The robust performance of this multinational is evidence that they have a good understanding of their core competencies and that they are using them well to sustain their competitive advantage in the market. Sanofi continues to have a commanding presence in the industry with its drugs known to be of high quality, effective and reasonably priced. The internal processes are refined to ensure quality while keeping the cost of production at bay. The quality is also assured through the rigorous inspections that raw materials are taken through. The quality of drugs must be kept high and this is the essence of the intense regulation by governments around the world. Sanofi’s standards have in most cases surpassed the threshold set by the regulators and this has been a contributing factor to the rapid strengthening of its brand. Sanofi’s market share has been increasing steadily since 2009 and it is likely to continue rising if the good utilisation of the company’s core competencies is sustained.

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