FernFort University’s (2017) article ‘AstrazenecaPlc Porter Five (5) Forces & Industry Analysis Strategy’ has studiedthe strategic factors of AstraZeneca’s M&A through the (5) forces analysisto understand why AstraZeneca have M&A over the years. They state that totackle the threat of new entrants, M&A allows innovation in new productsand services. This brings in new customers and building on R&D. Habeck(2000) mentions that the price earnings ratio on AstraZeneca’s products wouldbe high in comparison to competitors, as M can provide immediate earningsper share (EPS) on the acquired company.
Thearticle also state that the bargaining power of suppliers allow AstraZeneca togain an efficient supply chain with multiple suppliers, with the bargainingpower of buyers allowing the company to build a larger customer base, providingopportunities in streamlining its product portfolio and creating new products.Customers may possibly want exclusive discounts on AstraZeneca’s olderproducts, and by creating a new product portfolio, this will limit thebargaining power of suppliers. Lager (2007) has written that a form of productdiversification can increase along their existing products for example, whereAstraZeneca may have done R&A on a product, a company that they M&A withmay have the sufficient R&D to create a new product. The article understoodthat this is the threat of substitutes as AstraZeneca understand the needs ofthe customer rather than what they are buying, and the reason as to why theyM&A is seen as a strategic factor when considering the threat of productsubstitution. Ternby (2007) has stated that AstraZeneca’s M is necessarysuch as if the patent on their product portfolio runs out, they can use theR of the company which they have M. This has been seen with theirproduct Losec, which expired but was quickly replaced with Nexium of a companywhich they acquired, which became a very successful medicine (Ternby.
, 207).Thearticle exclaims as to why AstraZeneca M is to tackle intense rivalryamong existing competition. By building a sustainable differentiation in theirproduct portfolio, M would allow AstraZeneca to compete better,collaborating with competitors to increase the size in market rather than justcompeting for a small percentage of market share (Fern Fort University., 2017).