Novartis Environmental Analysis - Case Study Example

Novartis Environmental Analysis Technology Factors Companies within the pharmaceutical industry are increasingly employing technology in research and development (Datamonitor 8). As a result of this Novartis has also adopted and implemented information and communication technologies to foster its business activities such as marketing, management of its global business and research (Novartis AG SWOT Analysis 5). With the rise in globalization and the forces of technology, many companies have concentrated their research and development within their local operation and decentralized their international operations (Novartis AG 152). In order for Novartis to achieve excellence in its international markets, it has employed technology to foster innovation in drug manufacturing and promotion. As a result, the company has been able to adapt effectively to the technological environment for excellence and effectiveness in achieving its goals and objectives in the market. International Factors Since Novartis’ pharmaceutical business is internationalized, global or international factors have a significant impact on its operations (Pharmawatch 15). This includes the forces of globalization which has made international companies to comply with the changes in international markets. In this regard, it is reflective that the developments and changes in the pharmaceutical businesses across the world have an influence on the operations of the company. As a result of the international factors, Novartis has been able to form mergers with international companies (Novartis AG 154). In addition, the international forces in the labor market have an impact on the recruitment and employee retention practices of the company. Political Factor Political risk is related to all forms of international business. This is due to the political forces which are likely to have an impact on the operations of a company in its international market. For example, changes in governments would have a negative or positive impact on the business activities and success in a specific market and economy. Because of the inevitable political forces, Novartis has engaged in political risk assessment in the international markets and economies in which it intends to venture into (Global Pharmaceuticals 129). The assessment of political risk is aimed at allowing the company to be able to determine the possible changes in the political environment which are likely to lead to negative implications on its business activities (Andreas 1). Through this assessment, accurate and informed strategic decisions are made in the company’s internationalization program for its pharmaceutical business (PR Newswire 1). Social Factors The social environments which comprise of the culture, religion, beliefs and practices of a society significantly affect the success of an international company within a specific market (Fair Disclosure Wire 1). The pharmaceutical business in characterized by inevitable implication from the social environment which includes the beliefs of a society on the use of conventional drugs as opposed to the religious traditional approaches to healing (Novartis AG SWOT Analysis 7). It is in this sense that it is evident that the success of Novartis in various drug markets across the world depends on the social factors. It is therefore reflective that Novartis employs socially, culturally and religiously acceptable forms and strategies of marketing communication for its drugs so that it would conform to the values and beliefs of the society within which it operates its business (Datamonitor 5). Ecological Factors There are ecological risks which internationalized pharmaceutical companies face in their operations. These include possible eco-toxicity and degradation of forests in the extraction of raw materials for the production of the environment (Franchini 6). Novartis has therefore employed chemical analysis processes to ensure that its products are not harmful to the environment in which it operates (Herper 35). In addition, Novartis has practiced ecologically friendly procedures and adhered to its corporate social responsibility to ensure that it is in conformity with the environmental conservation policies and regulations of the economy and societies that it operates its industries (Herper 32). Energy Factors Energy is related to the forces of power supply and energy conservation of manufacturing industries. The generation of energy by an international manufacturing company depends on the economy of its operation. Some economies are characterized by self-generation of energy while others depend on the energy generated by a government regulated body. Novartis is affected by the energy factor because disruption of its energy or power supply implies that its pharmaceutical industries are likely to suffer negative implications (Whalen 12). In order to avoid losses related to loss of energy, Novartis has invested in backup systems within its industries to ensure that its drug manufacture, testing, research and business processes goes uninterrupted when there are energy failures (Donohue 140). Economics Factors The economic forces which affect the operation of Novartis in its international drug business include inflation, economic growth rate, wages, unemployment, poverty, income, economic stability and economic regulations such as tariffs and quotas (Simonian 18). It is for this reason that Novartis normally conducts an economic analysis of the economy into which it plans to venture into so that it could not suffer losses associated with unstable and poorly performing or regulated market (Henry 725). The economic factor such as wages and income defines the purchase power of the market for the company’s products and it consequentially affects the pricing of its products (Capell 1). Depending on the economy of its operation, Novartis is also affected by the legal framework which affects economic activities such as employment and extraction of raw materials for the manufacture of its drug products (Lentz 85). Competition Factors Novartis’ competitiveness in the market determines its success in attainment of business objectives, goals and mission (Novartis AG SWOT Analysis 8). The international pharmaceutical business in characterized by a lot of competition. This is due to the globalization of the world economy and the demand for pharmaceutical companies to compete with other companies across the world (Robertson 17). The completion factor has a significant impact on the success of Novartis especially in its new markets which have already established drug companies (Gorst 1). In order to overcome this competition, Novartis has engaged in competitive marketing, pricing and compensation for its human resource (Novartis AG 153). Ethics Factors The pharmaceutical industry especially in the manufacture and testing of drugs is composed of numerous researches which are governed by ethics and standards of practice into which companies such as Novartis must adhere to (Hoffman 30). Failure to adhere to the ethics of drug research and experimentation will have legal consequences and negative implications on the image of a drug company within the market (Novartis AG SWOT Analysis 4). In this regard, Novartis has engaged its business activities with ethical consideration to the environment, employment, working environment, research and development and testing for the potency and efficacy of its drugs (Datamonitor 3). Works Cited Andreas Wean. "Novartis Net Soars 43% to $3.52 Billion, but Nutrition Business Raises Concerns." Wall Street Journal: 1. Mar 18 1998. ABI/INFORM Complete. Web. 13 Sep. 2012. Capell, Kerry. "Novartis: Radically Remaking Its Drug Business. (Cover Story)." Businessweek 4136 (2009): 030-035. 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