Achieving Competitive Advantage In The Biotechnology Sector Commerce Essay

Achieving agonistical Advantage In The biotech Sector Commerce EssayBiotechnology shtup be gener t unwrap ensembley defined as the workout of liveness things to create increases or to do tasks for human beings. Biotechnology or biotech is utilisation in assiduity, medicine and cultivation to produce foods, medicine, and test for diseases and remove wastes. (Biotechnologyonline, n.d) As such(prenominal), there ar different types of biotech such as green technology, going technology, and clear technology and Bio supplys.In this report, we lead stir an insight into wholly(prenominal) of these branches of biotech and use various analytical tools to evaluate how familiarity c atomic number 18 is acting a fibre in creating private-enterprise(a) reward for companies in the welkin. In so doing, we shall look at the Green biotech, Red biotech, White biotech and bio send away respectively.Green BiotechnologyGreen technology, separatewise known as constitute or agricu ltural technology is a branch of biotechnology (biotech) which involves the basis of foreign genes into economically great species, resulting in tramp improvement and the drudgery of novel products in plants. (123biotech, n.d.).To violate understand the determination of familiarity management in harnessing a agonistical value in this branch of biotechnology, we go out take Monsanto as case sample. Monsanto is the humankinds lead green technology community ahead of rival such as DuPont. (SmartM iodiny, 2009). The fel let looseship specialises in spawn (improving the genetic base finished technology of make fors thence increase comport and genetic engineering (by enhancing generic traits in crops such as louse resistance, herbicide tolerance and drought-tolerance). (SmartMoney, 2009 and Monsanto, n.d.)As with its sister braches such as bioinformatics, white technology(industrial biotechnology), red technology( pharmaceuticals) as well as biofuels, green technology and companies associated with it inter qualifying adequate to(p) Monsanto, argon non left unscathed by critics. For instance, Monsanto and its counterpatrs , through its use of plant technology has been criticised of s reverse awayangering human, the environment and socio-economic.( Friends of the earth, 2006).Signifi idlerce of Green technologyHowever, the adjacent usefulnesss be beign celebrated by its supportersProtection of Crops for instance, the AT-DBF2 gene from Arabidopsis Thaliana crop injected into plants to en equal to(p) them withstands Osmotic stress such as drought, salt and stress. (PNAS, n.d.) breeding Crop yield during the teething years of biotechnology in boundary of Genetically Modified Food, there has been a vast riddle criticism of GMO claiming that GM Crops do not increase crop yield, that on the contrary it, reduces it. (Truth astir(predicate) Trade and Technology, 2009). These claims were dismissed by the then USA president jimmy Carter who sta ted that, responsible biotechnology is not the enemy starvation is. (Biotechnology fabrication Organisation, n.d.)His favourable stance towards green biotechnology because of organisms bid the Bacillus Thuringiensis employ to produce the BT-corn. Introduces in 1996, the Bt corn has the potential to simplify management and in effect control corn borers throughout the season thus increasing its yield. (College of Agriculture, n.d.) amend Food Quality an example of this was the invention of the Golden Rice by Prof Potrykus and Prof. Beyer of ETH-Zurich and University of Freiburg respectively. The Golden rice is believed to alleviate Vitamin A deficiency in young people especially in the developing existence. (Golden Rice, n.d.) Another example is the Maltogenic Amylase employ for Retardation of staling in baked food, such as pelf and cakes. (Food and Agriculture Organisation, 1997)Having had an insight al roughly how green technology functions, its pros and cons, it is now infi xed to discover how companies analogous Monsanto use intimacy management in harnessing and safeguarding diversity in order to create a sustainable warlike benefit against rivals like DuPont.Knowledge centering as a competitive advantage vehicle.To understand the role knowledge management in achieving competitive advantage for biotech companies such as Monsanto, lets apply the Resource-Based View of schema coined by knuckle under (1991citied in heat content, 2008). This analysis seeks to analyse how a connection exploits its resources to hand a sustainable competitive advantage against its rivals in the diligence. (Henry, 2008)A resource-based view of strategy analysisConsumer Confidence, First Mover Advantage, Tap blue Oceans,CAPABILITY fund expensive RD, New Product DevelopmentRESOURCESFinances, Experts, humans Capital competitive ADVANTAGEKnowledge power, Experience carouseSTRATEGYDifferentiation( generate 1991 cited in Henry 2008)Step 1 Resources Biotech industrie s such as Monsanto go beyond the ordinary in Identifying and attaining young endowment because technology female genital organ soft be rendered obsolete, there is always the never-ending necessity to pool talent and innovate. Thus, biotech companies like Monsanto argon in collaboration with renowned sciences universities like Truman render University to recruit outstanding students with sound sciences background. (Monsanto, n.d.).Further much, with their immense finance capability, they ar able to fund and exploit these talents.Step 2 Capability with their finance abilities, these biotech companies are able to fund rigorous Research and Development Monsanto reported dribble $2.6m dollars a day in research and development on how elevation and genetic engineering could develop corn, cotton and soybean seeds that yield more bountiful and nutritious crops and protect against bugs and weeds. (SmartMoney, 2009)This p tutelages off has the company as been able to develop leading bran ds such as Acceleron, Roundup Ready,Asgrow and Yieldgard for plant resistance to osmotic stress as well as De Ruiter Seeds,Dekalb and Deltapine(Monsanto, n.d.)Step 3 competitive Advantage consequently, Monsanto is able to acquire a sustainable competitive advantage due to its ability to create Knowledge power and experience curve on producing competitive and fast selling products like its renowend leading brands like , Acceleron and Roundup ReadyStep 4 Strategy as a result, Monsanto espouse a differentiation strategy. This diferentiation strategy is typic of biotech companies with exception to biofuel companies as they end result fuel, once drilled and refined is standard worldwide.Step 5 Bridging any resources Gaps this calls for proactiveness from the part of the company as it involves identifying where the company is weak and formulating adequate strategy to address such weaknesses or resource deficeincies. For instance, tapping blue oceans or untouched markets to increase the companys economies of shield (Henry, 2008)Knowledge Protection in Biotech theatrical role of copyright and licensing to safeguard knowledge and construct the company licenses seed germplasm or biotechnology traits to approximately 200 seed partners in the United States. (Monsanto, 2009)In summary, it stinker be argued that because of the level of technological innovation that occurs in the biotechnology such as green technology, its both a key and hypercritical success factor for company to effectively and efficiently management knowledge by harnessing and protecting its knowledge thus maintain a competitive edge. This we accept evaluated using the resourced-based view of strategy analysis coined by Grant (1991 citied in Henry 2008).Red TechnologyIntroductionThe term biopharmaceutical path that developing medicines from using living cells, proteins and nucleic acids. None of the two biopharmaceuticals so-and-so be same. Over the past decade world has seen enormous developmen t in this sector.Part 2.The look upon ChainProcurementTechnology DevelopmentHuman Resource ManagementFirm InfrastructurePost Sales aidInbound LogisticsRD merchandisemarting SalesMARGINMARGIN select from Micheal E. doorman Competitive Advantage Creating and sustaining Superior Performance. (1985 p.37)A gage of researchers like Porter (1985, p36) Henry (2008, p103) have emphasized the importance and application of Value chain analysis. We tail assembly assess the strength and weaknesses of any biotechnology company by looking at its resources. It expresses historic information about strategy and focus of a particular company. By identifying key focus areas, companies dirty dog foreshorten in achieving competitive advantages.Biotech companies tend to elongate their value chain by getting into alliance with the telephone circuit partners this can each be done by incorporating the concept of upstream or downstream value. Henry (2008, p103) depicts the importance and benefits of adopting this strategy. By exploiting the resources of partners, a biotech company can maximize usable efficiency. This operational efficiency leads to achieve competitive advantage.Each industry sector is unique in terms of function. Biotechnology industry, mostly being a manufacturing industry always works differently as compared to a proceeds industry because of the fact that primary and support activities vary from industry to industry. Porter (1985, 38-40) too supports this fact. Like most of other industries, knowledge management plays a vital role in biotechnology sector and is considered to be a primary activity.Prusak as cited in Young (2008, p5) states that knowledge management is all about the information that is in the brain of individuals as an plus and how it is apply to leverage into corporate asset. In biotechnology, explicitly it can be alter into a corporate knowledge paradigm. This idea is besides supported by Gorelick, April and Milton. (2004).In biotec hnology sector, notwithstanding if you look at any sub-sector of biotechnology, industry innovation is the foremost weapon to achieve competitive advantage. Cooke and Mayes (1996, p.13-15) also constituted kin of innovation and competition. This mean that by innovation biotech companies achieve competitive advantage and in turns get increased market shares with mettlesomeer return rates. The innovation is leading to saucy effective products thus enabling biotech companies to achieve competitive advantage.By looking at the value chain analysis of biotech industry we shape up to know that the most valued activity is innovation and knowledge management. That is why biotech companies confide heavily in research and development (RD). For biotech industry RD part of value chain is much more rivet and valued. In biofuel, biofood and bioagri the value chain is more or the less same, barely when we look at biopharmaceutical and bioinformatics, the value chain tends to alter itself a minuscule bit. The activity that also partakes biophrmaceuical is that the phase of clinical trial demands a lot of time, capital and management.ProcurementTechnology DevelopmentHuman Resource ManagementFirm InfrastructurePost Sales ServiceInbound LogisticsRDProductionMarketing SalesMARGINMARGINClinical TrialsA typical value chain for biopharmaceutical company.Knowledge is a scarce resource and that is why there are very few biotechnology companies in the market.adoptive from Tzokas, N. and Saren, M.By looking at the above figure it is clear that knowledge management is unwieldy to achieve. Companies transform their knowledge-based and skills-based information with equipment-based knowledge to create competitive advantage. Theses factors build an organizational culture of innovation and the stake holders like employee and customers top executive company to come up with impertinent ideasWe need to investigate about the potential contri stillion of each stakeholder-based knowl edge pool to the strategic investments, plots and projections undertaken by the biotech planetary houses. The long term development effort needs trust relationship from stockholders that the deliverable of RD can result in to a competitive advantage.This can be done by making multidimensional plans linking knowledge requirements and knowledge pools, thus evolving a knowledge space in which the strategic issues of the firm and its stakeholders can be positioned. As such knowledge space and associated distances can be apply as navigational instruments for knowledge utilization.White TechnologyBiotechnology is now used as a very wide term, but we can say that in general term that it the use of organisms by human . In recent years and past also researchers all over the world got modernistic techniques and ideas to develop biotechnology and ever-changing the future. the most known invention of biotechnology is cloning of animal as well as of name. This amazing technology works at opti cal as well as molecular(a) level.INDUSTRIAL BIOTECHNOLOGYindustrial biotechnology is recognized everywhere in the world weather to take a shit consumer goods, material, chemical.( www.liebertpub.com,1204) industrial Biotechnology is the premier forum for this critical field and the exactly publication bridging biotechnology RD with later-stage commercialization for all industrial and environmental applications . it take fooding items ,textiles, automobiles, pharmaceuticals, cosmetics and body care products and many other products which we use in our unremarkable life. The growth companies in many countries are taking help of biotechnology. By this companies conduct promise to the public to deliver new(a) and improved products to their customers.Industrial biotechnology is of two types red and white. Red technology is now ignore by the companies and very less companies are dedicated with white biotechnology. fella ANALYSISPOLITICAL FACTORSThe first and the foremost factor to go through in pest analysis is the political factor. Researchers has emphasizes a lot on this factor. One such researcher is Jobber (2007, p79) who is of the opinion that Political and intelligent issues can influence merchandising decisions by setting the rules by which blood line can be conducted. Union Laws, Collusion, Abuse of market dominance, acquisitions and mergers, state aid and national laws are few of the political factors that reshape the companies.This factor includes all the political effects which affect the company or an organization. In about business political issues are much higher than any other companies but in case of industrial biotechnology political science supports it and make policies to amend it or to improve it so that the future of a farming can get improved and standard of living can be increased. All those organizations which do experiments on different methods of industrial biotechnology, government gives rabbet from taxes pass legislations a nd create new departments to look at their working procedures. vigorous legislation makes theThrough legislation biotech companies are getting their products and processes unornamenteded. The biotech companies usually invest heavily in RD and come up with innovative products these deliverables are end result of knowledge management. By getting the patent biotech companies make real that their intellectual property right is secured and hence they achieve competitive advantage as no other company can imitate that.In the case of biopharmaceutical, the main governing body is FDA (Foods and Drugs Administration, USA). FDAECONOMIC FACTOR scotch environment is the second most important factor in pest analysis.Factors that affect consumer buying power and spending patterns Kotler et al (1999, p158)As discernible from the various researchers, monetary policy, interests and exchange rates, income distribution, change in purchasing power, change in spending patterns, availability and risin g follow of energy, labor and earthy material has lead to significant changing in business world. humans economy is in recession, so is the case of UKs. Unemployment ratio has gone up peoples purchasing power is going down with a less savings. multitude are naturally focused more on spending towards necessities. Incomes are low.In this case consumer will move toward those products which saves their money and bio-products are one of those products which are cheap and reusable without damaging the envoirment and causing pollution. Envoirment issues are to be considered when it comes to shopping point of view and traveling.LegislationBanerjee, (1998) as cited in take and Polonsky (1999, p31), states that The threat of tougher legislation and the rising costs of complying with environmental regulations are potential motivating factors for firms to incorporate environmental concerns in their strategies.Tougher legislation can affect a firm in two ways first the cost of compliance bec omes prohibitive, second, legislation can require substantial changes in product or package design or distribution channels. (Taking back used thing)Public ConcernAnother important reason for firms to develop an outside(a) orientation and strategy is the rise in public concern for the environment. thither are literally hundreds of opinion polls on the environment conducted in Europe, Asia and USA. Charter and Polonsky (1999, p32)The need to maintain a good public icon and respond to public concerns can lead to firms adopting corporate environmentalism. Charter and Polonsky (1999, p33) contain for competitive advantageThere are numerous cases where the installation of new environmentally friendly technologies has reduced costs for firms Charter and Polonsky (1999, p35) genial factorsSocial / cultural factors include Demographics forces, World Population growth, Age distribution, household structures and social factors.According to Kotler et al (1999, p153) the European and the Sta tesn societies are evidencing huge demographic shifts.Technological FactorsKotler et al. (1999, p165) Forces that create new technologies, creating new product and market opportunities. Those companies which have good knowledge about the new products can develop those and can attract new and existing customers. By this method apart from new technology awareness among public will also able to increase. Companies with better knowledge will develop new products in order to spread awarness among all sectors of consumers.Bibliography?BiofuelsIntroductionBiotechnologyBiotechnology is the use of biological processes, organisms, or systems to manufacture products intended to improve the quality of human life. Biotechnology is an important innovative tool to attainThe target the various levels example Bio fuels Bio informative, Bio medics, agriculture Biotechnology proficiency can serve to increase biomass yield, improve crop quality, and convert agriculture waste into bio fuels. (whatistech target n.d)Bio fuelIt is also knows as agro fuel, these fuels are mainly derived from Biomass or Bio waste. Its often derived from plants and animals. Bio fuel is used faster growing modern technology for transporting sector. Liquid form of fuel is required for most vehicles is this convenient for storage and delivery, hence the bio mass is converted to liquid form. Bio fuel plays a virtual role in modern fuel manufacturing as they are renewable source of energy. Ethanol is the most commonly used Bio fuel in the world particularly in Brazils and largest exporters Asia, Europe and America are the roughly study producer of bio gases Lleading fuel companies like bps and Shells company they involved in research and development in bio fuels. (biofuel,n.d)generic strategiesPorters alter the system by reducing its down to three best strategies. general Cost leadershipDifferentiation strategiesFocus strategy strategies general cost leadershipA firm produced standard product by low cost and also take responsibility of economic scale and experience curve effect. market share is advantage.Differentiation strategiesA company is aimed at broad market. the product must some(prenominal) special blow like advance technology, brand image, etcFocus strategiesIn this focus strategies a firm concentrated in market and particular group of consumer.(Reference)Overall cost leadership ?Bio fuel are the cheapest form of fuel you can ever get they dont need big investment in new distribution system but just the basic establishing plant is plenty to produce them bio fuel mostly involves in long term investment. accordingly Initial investment is very crucial. Its been assessed that share holders all over the world show keen interest in investing huge come in of money in this upcoming promising sector.Differentiation strategies?Bio fuel is renewable source of energy unlike others fuels they have less emission of blood pollutants. Hence they are environment friendly they are very low cost so they can match all the price of leading fuels. The impact of Hybrid cars and green cars with play a massive role in decreasing global warming.Focus strategies?Bio fuel industry will create a big employment opportunities all over the world and helps the countrys economy to develop as well. They provide jobs at all levels even form farmers to scientists. This industry has been welcomed by all countries and they are trying to be innovative to improve this sector all over the world. Most government offer discount and tax reduction on green cars thus encouraging people to buy them. This difference makes the bio fuel market to be more competitive in the fuel market. In forward supply about the global warming all nation now concentrate on bio fuel as they play a vital role in helping to control the pollution.APPLICATION OF PORTERS THEORY TO BIOTECHNOLOGY laborBiotech industry has a varied range of applications like in agriculture, molecular biology, health care, pharma secto r, chemical industry, environment related and so on.Porters five dollar bill forces hypothesis helps us to understand and interpret the business processes. This knowledge can be translated to gain a competitive edge over the competitors. This theory is also used to assess the profits that can be generated in the proposed business scenario or the services or products.According to this theory, the five forces that root the competitive power of the firm in the industry are as follows,Threat of new entrantsIn the biotech industry, intellectual property is the most important asset. The firms in this industry are heavily dependent on support to sustain the research and development activities. And very negligible revenue is generated by the firm till the product is developed. So finance is one of the major barrier that keeps away new entrants from the industry.Another barrier that deters the new entrants is the hope of specialized knowledge in the area of research or development. shee r rights and proprietary rights also act as barriers to some extent.In some cases where knowledge and patent rights are easily overcome, many small players come into the picture. Although entry is easy for smaller companies, sustenance would be very difficult in this industry.SuppliersAs discussed earlier, intellectual property is the most important asset in this industry. The biotech firms usually do not heavily rely on the suppliers. The tools, kits, equipment, chemicals and all other requirements are highly specialized.However small companies who either fail to explore new channels of distribution or who cannot kick in the traditional channels of distribution, are at a loss, as they are compelled to enter into marketing alliances.BuyersThe power of buyers is not uniform throughout the biotech arena. Earlier, the pharma companies were not affected by the buyers as the customers did not have or had a very little say about the product. The pharma companies had marketing alliances w ith the hospitals, pharmacists and agents. So the buyer power was less.In case of firms where the major purchasers are the governments or the hospitals, the buyers are strong. But now the health care companies, redress companies and common man have entered the arena. The increasing price sensitivity of this new group of buyers is forcing the biotech companies to cut the prices and therefore the profit margin is becoming less.In addition to this, governments in some developing countries are pressurizing the biotech companies to take some social responsibility. ( as in the case of providing vaccines for epidemics at an economical price.)So there is a clear shift and the buyers power is increasing.SubstitutesThe availability of substitutes also depends on the kind of bitech firm/product.If the knowledge and patent rights are not properly protected, the investment in Research and Development (R D) cannot be recovered. If the patent can be easily overcome, some other company can simply copy the formula/application to offer the product at a much cheaper price. So the formulae/knowledge are to be conservatively guarded through patenting and Intellectual Property (IP) rights.In some cases, cheaper chemical product alternatives may be available to the sophisticated and more finished biotech products.RivalryThe competition rivalry is too intense in the biotech industry. Market analysis shows that only 1% of the biotech firms manage to make a profit. Biotech industry is largely dominated by few large firms although there are hundreds of smaller companies. All the firms are struggling to translate their RD efforts into a find innovation/product. This innovation could potentially change the fate of the firm overnight. So the Intellectual Property is carefully guarded and the rivalry is extremely high in this industry.For example, In U.S, 82 % of biotech firms make 0 % profit, 76 % of firms have less than 50 employees and only 30 companies have more than three hundred employees.Porters five forces theory certainly helps in understanding the pros and cons, the opportunities and threats in the business situation. This theory definitely aids in evolving a business strategy. but this theory may not be of great help in assessing the degree of ease or difficulty or profitability in dealing with the business situation.In this context, this theory does not consider the future(a) strategic influences like,Industry merges and acquisitions have become the norm of the day and the consequences of such deals cannot be assessed and is not taken into consideration.Research and innovation has the potential to dramatically change the face of the industry. As new discoveries/innovations occur, many new threats/opportunities jump out up. This makes the biotech industry a highly vulnerable one. This aspect is left out by the theory.