0 | P a g e STRATEGIC MANAGEMENT1 | P a g e TABLE OF CONTENTS STRATEGIC MANAGEMENT2 | P a g e STRATEGIC MANAGEMENT3 | P a g e Letter of Authorization Institute of Business Management Korangi Creek, Karachi-75190, Pakistan UAN (9221)111-002-004, Fax: (9221) 509-0968 Http://www.iobm.edu.pk April 13, 2011 Dear Reader, This report was authorized to us by the Lecturer of Strategic Management, Mr. Javaid Ahmed. The findings of the report were to analyze the working of Sanofi-Aventis Pakistan. Sincerely yours, Muhammad Talal Ansari7648 Yusra Ansari 8593 STRATEGIC MANAGEMENT4 | P a g e Letter of Acknowledgement Institute of Business Management Korangi Creek, Karachi-75190, Pakistan UAN (9221)111-002-004, Fax: (9221) 509-0968 Http://www.iobm.edu.pk April 13, 2011 Dear Reader, It was a learning experience for us to carry out our term project on The internal and external structureofSanofi-AventiswhichwasassignedtousbyourrespectedteacherMr.Javaid Ahmed.We wouldlike to thankyoufor providing the guidanceand the skills that helped usin preparing the report. It was an educational experience to carry out such a term project on a topicsoinformativeand practical, and which also plays an integral role in the formulation of strategies . Sincerely yours, Muhammad Talal Ansari7648 Yusra Ansari8593 STRATEGIC MANAGEMENT5 | P a g e Letter of Transmittal Institute of Business Management Korangi Creek, Karachi-75190, Pakistan UAN (9221)111-002-004, Fax: (9221) 509-0968 Http://www.iobm.edu.pk 11 April, 2011Mr. Javaid Ahmed, Department Head of Management, Institute of Business Management Karachi. Respected Sir, ThisresearchreportstopicwastoanalyzetheworkingofSanofi-AventisPakistan,thereports consists of a detailed analysis of the internal and external structure of the company. If you have any queries or doubts about the compilation of this report you may feelfree to contact any us at the email addresses below. Sincerely, Muhammad Talal Ansari (std_7648@iobm.edu.pk) Yusra Ansari (std_8593@iobm.edu.pk) STRATEGIC MANAGEMENT6 | P a g e Executive Summary STRATEGIC MANAGEMENT7 | P a g e LITERATURE REVIEW STRATEGIC MANAGEMENT8 | P a g e STRATEGY - WHAT IS STRATEGY Johnson and Scholes (Exploring Corporate Strategy) define strategy as follows: "Strategyisthedirectionandscopeofanorganizationoverthelong-term:whichachieves advantagefortheorganizationthroughitsconfigurationofresourceswithinachallenging environment, to meet the needs of markets and to fulfill stakeholder expectations". The strategic management process has 3 main components shown below. Strategic Analysis: Strategicanalysisisanalyzingthestrengthsofthebusiness.Itincludestheanalysisofthe internalenvironmentandtheexternalenvironment.Theseforcesinfluencethepositionofthe company, in the industry in which it operates. The process of Strategic Analysis can be assisted by a number of tools, including: PEST Analysis - a technique for understanding the "environment" in which a business operates1 FiveForcesAnalysis-atechniqueforidentifyingtheforceswhichaffectthelevelof competition in an industry

1 http://www.tutor2u.net/business/strategy/what_is_strategy.htm STRATEGIC MANAGEMENT9 | P a g e SWOTAnalysis-ausefulsummarytechniqueforsummarizingthekeyissuesarisingfroman assessment of a businesss "internal" position and "external" environmental influences. Strategic Choice: This process involves understanding the nature of stakeholder expectations (the "ground rules"), identifying strategic options, and then evaluating and selecting strategic options. Strategy Implementation: Thisis themost difficult step to be taken.Whena strategyhasbeen analyzed and selected, the task is then to translate it into the organizational action. VISION A vision is a statement about what an organization wants to become. Vision statement defines an organization'svalues(valuesareguidingbeliefsabouthowthingsshouldbedone.)Thevision statement communicates both the purpose and values of the organization. ELEMENTS OF VISION Managers have three tasks in forming a strategic vision Comingupwithamissionstatementthatdefineswhatbusinessthecompanyispresentlyin and conveys the essence of who we are, what we do, and where we are now. Usingthemissionstatementasabasisfordesigningonalong-termcourse,makingchoices about where we are going, and charting a strategic path for the company to pursue. Communicatingastrategicvisioninclear,excitingtermsthatarouseorganizationwide commitment. MISSION Mintzberg defines a mission as follows: A mission describes the organizations basic function in the society, in terms of the products and services it produces for its customers. STRATEGIC MANAGEMENT10 | P a g e Aclearbusinessmissionshouldhaveeachofthefollowingelements: Themissionstatementcommunicatesthefirm'scoreideologyandvisionarygoals,generally consisting of the following three components2: Core values to which the firm is committed Core purpose of the firm Visionary goals the firm will pursue to fulfill its mission The firm's core values and purpose constitute its core ideology and remain relatively constant. They are independent of industry structure and the product life cycle. The core ideology is not created in a mission statement; rather, the mission statement is simply an expression of what already exists. The specific phrasing of the ideology may change with the times, but the underlying ideology remains constant. CORE VALUES The core values are a few values (no more than five or so) that are central to the firm. Core values reflect the deeply held values of the organization and are independent of the current industry environment and management fads. One way to determine whether a value is a core value is to ask whether it would continue to be supported if circumstances changed and caused it to be seen as a liability. If the answer is that it wouldbekept,thenitiscorevalue.Anotherwaytodeterminewhichvaluesarecoreisto imagine the firm moving into a totally different industry. The values that would be carried with it into the new industry are the core values of the firm. Core values willnot change evenif theindustryin which the company operates changes. If the industrychangessuchthatthecorevaluesarenotappreciated,thenthefirmshouldseeknew markets where its core values are viewed as an asset. STRATEGIC MANAGEMENT11 | P a g e CORE COMPETENCIES Core competencies are the skills, knowledge or capabilities of a business in which it excels and through these skills it can differentiate itself from all other businesses and achieve an edge over itscompetitors.Corecompetencyisnotaskillthatisprerequisitefortheindustry;insteadit should be something that the competitors desire. The competency of the business should be such thatthebusinesscandifferentiateitselffromitscompetitorsbymakingitscorecompetency competitively unique. A corporations core competency should be very strong that it cannot be easily imitated by other businesses. CORE COMPETENCY: As a company gains experience it reaches a level where it can perform the activities consistently wellandatacceptablecostthenthatabilitybecomesatruecompetence.Mostoftenthecore competency of the firm resides in its people and intellectual capital, it is one of the most valuable assetsacompanyhas.Itisallabouthowwellyouareapplyingyourcapabilitiestoyour resources.Itcanleadtoworldleadership.Competitiveadvantageoccurswhenresourcesand capabilities are

Valuable to a companys chosen direction Rare CORECOMPETENCIES Costly to imitate Cannot easily be substituted 2When these four criteria are met, resources and capabilities become core competenciesAfirm canlose themif technology changes, suppliers entermarket andif the competency ofa firm is still evolving.

STRATEGIC MANAGEMENT12 | P a g e Core CompetencyAnalysis provides an opportunityfor theseniormanagement to take a closer lookattheskills,processesandsystemsofthecompany.Thebenefitoftheanalysistothe company includes the following: THE VALUE CHAIN Value chain is a high level model of how businesses receive raw materials as input, addvalue to the raw materials through various processes, and sell finished products tocustomers.3 Toanalyzethespecificactivitiesthroughwhichfirmscancreateacompetitiveadvantage,itis useful to model the firm as a chain of value-creating activities. Michael Porter identified a set of interrelated generic activities common to a wide range of firms. The resulting model is known as the value chain and is depicted below: Primary Value Chain Activities Thegoaloftheseactivitiesistocreatevaluethatexceedsthecost ofprovidingtheproduct or service, thus generating a profit margin. Inboundlogisticsincludethereceiving,warehousing,andinventorycontrolofinput materials. Operations are the value-creating activities that transform the inputs into the final product. Outboundlogisticsaretheactivitiesrequiredtogetthefinishedproducttothecustomer, including warehousing, order fulfillment, etc. Marketing&Salesarethoseactivitiesassociatedwithgettingbuyerstopurchasethe product, including channel selection, advertising, pricing, etc.

3 1 http://www.quickmba.com/strategy/value-chain/ INBOUND LOGISTICSOPERATIONSOUTBOUND LOGISTICSMARKETING AND SALESSERVICESTRATEGIC MANAGEMENT13 | P a g e Serviceactivitiesarethosethatmaintainandenhancetheproduct'svalueincludingcustomer support, repair services, etc. Anyoralloftheseprimaryactivitiesmaybevitalindevelopingacompetitiveadvantage.For example,logisticsactivitiesarecriticalforaproviderofdistributionservices,andservice activitiesmaybethekeyfocusforafirmofferingon-sitemaintenancecontractsforoffice equipment. Thesefive categories are generic and portrayedherein a generalmanner. Each generic activity includes specific activities that vary by industry. Support Activities Theprimaryvaluechainactivitiesdescribedabovearefacilitatedbysupportactivities.Porter identified four generic categories of support activities, the details of which are industry-specific. Procurement-thefunctionofpurchasingtherawmaterialsandotherinputsusedinthe value-creating activities. TechnologyDevelopment-includesresearchanddevelopment,processautomation,and other technology development used to support the value-chain activities. HumanResourceManagement-theactivitiesassociatedwithrecruiting,development, and compensation of employees. Firm Infrastructure - includes activities such as finance, legal, quality management, etc. Support activities often are viewed as "overhead", but some firms successfully have used them to developacompetitiveadvantage,forexample,todevelopacostadvantagethroughinnovative management of information systems. VALUE CHAIN ANALYSIS In order to better understand the activities leading to a competitive advantage, one can begin with the genericvalue chain and thenidentify the relevant firm-specific activities. Processflows can be mapped, and these flows used to isolate the individual value-creating activities. Oncethediscreteactivitiesaredefined,linkagesbetweenactivitiesshouldbeidentified.A linkageexistsiftheperformanceorcostofoneactivityaffectsthatofanother.Competitive advantage may be obtained by optimizing and coordinating linked activities. Thevaluechainalsoisusefulinoutsourcingdecisions.Understandingthelinkagesbetween activitiescanleadtomoreoptimalmake-or-buydecisionsthatcanresultineitheracost advantage or a differentiation advantage. STRATEGIC MANAGEMENT14 | P a g e Acompanyscostcompetitivenessdependsnotonlyonthecostofinternallyperformed activitiesbutalsoonthecostinthevaluechainsofsuppliersandforwardchannelallies. Suppliers value chain are relevant because suppliers perform activities and incur costs in creating anddeliveringthepurchasedinputsusedincompanysownvaluechain.Acompanyshould work closely with its forward channel allies to revise or reinvent their value chains in ways that enhance their mutual competitiveness. Value chain for products differ from that of services. We examinethathowwellacompanymanagesitsvaluechaininrespect toitsrivalsandwhatare thekeyareasofstrengthsandweaknessesinthevaluechainandwhatstepsneedtobe eliminated so that a company can have competitive advantage over its competitors. STRATEGIC MANAGEMENT15 | P a g e STRATEGIC COST MANAGEMENT Strategic costing is viewed as part of a larger business process to influence decisions on pricing and profitability across several dimensions: product, customer, region, and distribution channel. Strategic planning is a disciplined effort to produce fundamental decisions and actions that shape and guide what an organization is, what it does, and why it does it, with a focus on the future. Theprocessisaboutplanningbecauseitinvolvesintentionallysettinggoals(i.e.,choosinga desired future) and developing an approach to achieving those goals. Strategiccostmanagementnot onlyleadstoincrementalperformanceimprovementbutalso to transformationalchangeacrossthevaluechain.Strategiccostingisviewedaspartofalarger businessprocesstoinfluencedecisionsonpricingandprofitabilityacrossseveraldimensions: product, customer, region, and distribution channel. Learn how your costing process aligns with industrybestpractices,andbeontheleadingedgeofemergingpracticessuchasvaluechain costing,sharedservicescostingandoutsourcing.Managerialuseofcostinformationforthe purpose(s) of establishing organizational strategy, controlling the success methods to achieve the strategies, and evaluating the level of success in meeting the proclaimed strategies .18(18 John K. Shank and Vijay Govindarajan) Strategic planning is a management tool, period. As with any management tool, it is used for one purpose only: to help an organization do a better job - to focus its energy, to ensure that members oftheorganizationareworkingtowardthesamegoals,toassessandadjusttheorganization's direction in response to a changing environment. Inshort,strategicplanningisadisciplinedeffort toproducefundamentaldecisionsandactions that shape and guide what an organization is, what it does, and why it does it, with a focus on the future. Theprocessisaboutplanningbecauseitinvolvesintentionallysettinggoals(i.e.,choosinga desiredfuture) and developing an approach to achieving those goals. The processis disciplined in that it calls for a certain order and pattern to keep it focused and productive. The process raises asequenceofquestionsthathelpsplannersexamineexperience,testassumptions,gatherand incorporateinformationaboutthepresent,andanticipatetheenvironmentinwhichthe organization will be working in the future. Finally, the process is about fundamental decisions and actions because choices must be made in order to answer the sequence of questions mentioned above. The plan is ultimately no more, and noless,thanasetofdecisionsaboutwhattodo,whytodoit,andhowtodoit.Becauseitis impossibletodoeverythingthatneedstobedoneinthisworld,strategicplanningimpliesthat some organizational decisions and actions are more important than others - and that much of the strategyliesinmakingthetoughdecisionsaboutwhatismostimportanttoachieving organizational success. STRATEGIC MANAGEMENT16 | P a g e MICHAEL PORTER'S GENERIC STRATEGIES Thesecondcentralquestionincompetitivestrategyisafirm'srelativepositionwithinits industry.Positioningdetermineswhetherafirm'sprofitabilityisaboveorbelowtheindustry average.Afirmthatcanpositionitwellmayearnhighratesofreturneventhoughindustry structure is unfavorable and the average profitability of the industry is therefore modest. Each of the generic strategies involves a fundamentally different route to competitive advantage, combiningachoiceaboutthetypeofcompetitiveadvantagesoughtwiththescopeofthe strategictargetinwhichcompetitiveadvantageistobeachieved.Thecostleadershipand differentiationstrategiesseekcompetitiveadvantageinabroadrangeofindustrysegments, while focus strategies aim at cost advantage (cost focus) or differentiation (differentiation focus) inanarrowsegment.Thespecificactionsrequiredtoimplementeachgenericstrategyvary widelyfromindustrytoindustry,asdothefeasiblegenericstrategiesinaparticularindustry. Whileselectingandimplementingagenericstrategyisfarfromsimple,however,theyarethe logical routes to competitive advantage that must be probed in any industry.COST LEADERSHIP STRATEGY Costleadershipisperhapstheclearestofthethreegenericstrategies.Init,afirmsetsoutto becomethelow-costproducerinitsindustry.Thefirmhasabroadscopeandservesmany industrysegments,andmayevenoperateinrelatedindustries--thefirm'sbreadthisoften importanttoitscostadvantage.Thesourcesofcostadvantagearevariedanddependonthe structure of the industry DIFFERENTIATION STRATEGY Thesecondgenericstrategyisdifferentiation.Inadifferentiationstrategy,afirmseekstobe unique in its industry along some dimensions that are widely valued by buyers. It selects one or moreattributesthatmanybuyersinanindustryperceiveasimportant,anduniquelypositions itself to meet those needs. It is rewarded for its uniqueness with a premium price.FOCUS STRATEGY The third generic strategy is focus, This strategy is quite different from the others because it rests on the choice of a narrow competitive scope within an industry. The focuser selects a segment of groupofsegmentsintheindustryandtailorsitsstrategytoservingthemtotheexclusionof others.Byoptimizingitsstrategyforthetargetsegments,thefocuserseekstoachievea competitiveadvantageinitstargetsegmentseventhoughitdoesnotpossessacompetitive advantage overall.STRATEGIC MANAGEMENT17 | P a g e THEFIVECOMPETITIVEFORCESTHATSHAPE STRATEGY ThemodeloftheFiveCompetitiveForceswasdevelopedbyMichaelE.Porterinhisbook CompetitiveStrategy:TechniquesforAnalyzingIndustriesandCompetitorsin1980,since thattimeithasbecomeanimportanttoolforanalyzinganorganizationsindustrystructurein strategic processes. There are 5 forces that Porter has identified that shape the industry and the market. The objective ofcorporatestrategyshouldbetomodifythesecompetitiveforcesinawaythatimprovesthe positionoftheorganizationintheoverallindustryinwhichitoperates.Theseforcesshowthe attractiveness of the market and determine the competitive intensity. Attractiveness refers to the profitability of the overallindustry.An"unattractive"industryis onein which the combination of these five forces acts to drive down overall profitability. A very unattractive industry would be one approaching"pure competition",inwhich available profitsfor allfirms are driven down to zero. ThreeofPorter'sfiveforcesrefertocompetitionfromexternalsourcesandtheremaindersare the internal threats. The diagram below shows these five forces. STRATEGIC MANAGEMENT18 | P a g e PORTERSFIVEFORCESOF ANALYSIS RIVALRY-Exit barriers -Industry concentration -Fixed costs/Value added -Industry growth -Intermittent overcapacity -Product differences -Switching costs -Brand identity -Diversity of rivals -Corporate stakes BUYER POWER-Bargaining leverage -Buyer volume -Buyer information -Brand identity -Price sensitivity -Threat of backward integration -Product differentiation -Buyer concentration vs. industry -Substitutes available -Buyers' incentivesTHREAT OFSUBSTITUTES-Switching costs -Buyer inclination tosubstitute -Price-performancetrade-off of substitutesSUPPLIER POWER-Supplier concentration -Importance of volume to supplier -Differentiation of inputs -Impact of inputs on cost or differentiation -Switching costs of firms in the industry -Presence of substitute inputs -Threat of forward integration -Cost relative to total purchases in industryBARRIERSTO ENTRY-Absolute cost advantages -Proprietary learning curve -Access to inputs -Government policy -Economies of scale -Capital requirements -Brand identity -Switching costs -Access to distribution STRATEGIC MANAGEMENT19 | P a g e Competitive rivalry 4A starting point to analyzing the industry is to look at competitive rivalry. If entry to an industry iseasythencompetitiverivalrywilllikelytobehigh.Ifitiseasyforcustomerstomoveto substituteproductsforexamplefromcoketowaterthenagainrivalrywillbehigh.Generally competitive rivalry will be high if: Thereislittledifferentiationbetweentheproductssoldbetweencustomers. Competitorsareapproximatelythesamesizeofeachother. Ifthecompetitorsallhavesimilarstrategies. It is costly to leave the industry hence they fight to just stay in (exit barriers) Power of suppliers Suppliersarealsoessentialforthesuccessofanorganization.Rawmaterialsareneededto completethefinishproductoftheorganization.Suppliersdohavepower.Thispowercomes from: Iftheyaretheonlysupplieroroneoffewsupplierswhosupplythatparticularrawmaterial. If it costly for the organisation to move from one supplier to another (known also as switching cost) If there is no other substitute for their product. Power of buyers Buyersorcustomerscanexertinfluenceandcontroloveranindustryincertaincircumstances. This happens when: Thereislittledifferentiationovertheproductandsubstitutescanbefoundeasily. Customersaresensitivetoprice. Switching to another product is not costly. Threat of substitutes Are there alternative products that customers can purchase over your product that offer the same benefit for the same or less price? The threat of substitute is high when: Priceofthatsubstituteproductfalls. Itiseasyforconsumerstoswitchfromonesubstituteproducttoanother. Buyers are willing to substitute.

4 http://www.learnmarketing.net/porters.htm STRATEGIC MANAGEMENT20 | P a g e Threat of new entrant The threat of a new organization entering the industry is high when it is easy for an organization to enter the industry i.e. entry barriers are low. An organization will look at how loyal customers are to existing products, how quickly they can achieveeconomyofscales,wouldtheyhaveaccesstosuppliers,wouldgovernmentlegislation prevent them or encourage them to enter the industry. While conducting the analysis of Porters Five Forces, relevant factors for the companys market situation,andthencheckagainstthefactorspresentedforeachforceinthediagramabove. Dependingontheindustry,thefavorabilityandunfavorabilityisdecidedbyhowevermany factorswerepositiveandhowmanywerenegative,using+and-.Afteranalyzingevery force, the companys attractiveness is identified. STRATEGIC MANAGEMENT21 | P a g e ARTICLE 1 The Five Competitive Forces That Shape Strategy by Michael E. Porter EditorsNote: 5In1979, HarvardBusinessReview publishedHowCompetitiveForcesShape Strategy by a young economist and associate professor, Michael E. Porter. It was his first HBR article, and it started a revolution in the strategy field. In subsequent decades, Porter has brought hissignatureeconomicrigortothestudyofcompetitivestrategyforcorporations,regions, nations,and,morerecently,healthcareandphilanthropy.Portersfiveforceshaveshapeda generationofacademicresearchandbusinesspractice.Withproddingandassistancefrom HarvardBusinessSchoolProfessorJanRivkinandlongtimecolleagueJoanMagretta,Porter herereaffirms,updates,andextendstheclassicwork.Healsoaddressescommon misunderstandings, provides practical guidancefor users of theframework, and offers a deeper view of its implications for strategy today. In essence, the job of the strategist is to understand and cope with competition. Often, however, managersdefinecompetitiontoonarrowly,asifitoccurredonlyamongtodaysdirect competitors. Yet competitionfor profits goesbeyond establishedindustry rivals toincludefour other competitive forces as well: customers, suppliers, potential entrants, and substitute products. Theextendedrivalrythatresultsfromallfiveforcesdefinesanindustrysstructureandshapes the nature of competitive interaction within an industry. As different from one another as industries might appear on the surface, the underlying drivers of profitabilityarethesame.Theglobalautoindustry,forinstance,appearstohavenothingin commonwiththeworldwidemarketforartmasterpiecesortheheavilyregulatedhealth-care deliveryindustryin Europe. But to understandindustry competition and profitabilityineach of thosethreecases,onemustanalyzetheindustrysunderlyingstructureintermsofthefive forces. (See the exhibit The Five Forces That Shape Industry Competition.)

5 http://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy/ar/1 STRATEGIC MANAGEMENT22 | P a g e If the forces are intense, as they are in such industries as airlines, textiles, and hotels, almost no company earns attractive returns on investment. If the forces are benign, as they are in industries suchassoftware,softdrinks,andtoiletries,manycompaniesareprofitable.Industrystructure drivescompetitionandprofitability,notwhetheranindustryproducesaproductorservice,is emerging ormature, high tech orlow tech, regulated or unregulated. Whileamyriad offactors can affect industry profitability in the short runincluding the weather and the business cycleindustry structure, manifested in the competitive forces, sets industry profitability in the medium and long run. (See the exhibit Differences in Industry Profitability.) Differences in Industry Profitability Understandingthecompetitiveforces,andtheirunderlyingcauses,revealstherootsofan industryscurrentprofitabilitywhileprovidingaframeworkforanticipatingandinfluencing competition(andprofitability)overtime.Ahealthyindustrystructureshouldbeasmucha competitiveconcerntostrategistsastheircompanysownposition.Understandingindustry structure is also essential to effective strategic positioning. As we will see, defending against the competitive forces and shaping them in a companys favor are crucial to strategy. Forces That Shape Competition Theconfigurationofthefiveforcesdiffersbyindustry.Inthemarketforcommercialaircraft, fiercerivalrybetweendominantproducersAirbusandBoeingandthebargainingpowerofthe airlinesthatplacehugeordersforaircraftarestrong,whilethethreatofentry,thethreatof substitutes,andthepowerofsuppliersaremorebenign.Inthemovietheaterindustry,the STRATEGIC MANAGEMENT23 | P a g e proliferationofsubstituteformsofentertainmentandthepowerofthemovieproducersand distributors who supply movies, the critical input, are important. The strongest competitiveforce orforces determine the profitability of anindustry andbecome themostimportanttostrategyformulation.Themostsalientforce,however,isnotalways obvious. For example, even though rivalry is often fierce in commodity industries, it may not be the factor limiting profitability. Low returns in the photographic film industry, for instance, are the result of a superior substitute productas Kodak and Fuji, the worlds leading producers of photographic film,learnedwiththeadventofdigitalphotography.Insuchasituation,copingwiththe substitute product becomes the number one strategic priority. Industry structure grows out of a set of economic and technical characteristics that determine the strength of each competitive force. We will examine these drivers in the pages that follow, taking the perspective of an incumbent, or a company already present in the industry. The analysis can be readily extended to understand the challenges facing a potential entrant. STRATEGIC MANAGEMENT24 | P a g e PEST ANALYSIS PEST analysis stands for "Political, Economic, Social, and Technological analysis" and describes a framework of macro-environmental factors used in the analysis of the industry. 6PEST is useful whenacompanydecidesto enteritsbusinessoperationsintonewmarketsandnewcountries. TheuseofPEST,inthiscase,helpstobreakfreeofunconsciousassumptions,andhelpto effectivelyadapttotherealitiesofthenewenvironment.PESTforcesarebasicallyallthose forces that are present in a particular country that can affect the company.In conducting PEST analysis, it is required to consider each PEST factor as they all play a part in determining the overall business environment. Some examples of topics include the following: Political:(includeslegalandregulatory):elections, employmentlaw,consumerprotection, environmentalregulations,industry-specificregulations,competitiveregulations,inter-country relationships/attitudes,war, terrorism, political trends,governmentalleadership, taxes,and government structures. Economic: economicgrowth trends(variouscountries), taxation,governmentspendinglevels, disposableincome,jobgrowth/unemployment, exchangerates,tariffs, inflation,consumer confidence index, import/export ratios, and production levels. Social:demographics(age,gender,race,familysize,etc.),lifestylechanges,population shifts, education,trends,fads,diversity, immigration/emigration,health,livingstandards, housing trends, fashion, attitudes to work, leisure activities, occupations, and earning capacity. Technological:inventions,newdiscoveries,research, energyuses/sources/fuels, communications,ratesofobsolescence,health(pharmaceutical,equipment, etc.),manufacturing advances, informationtechnology, internet, transportation,bio-tech, genetics, agri-tech, waste removal/recycling, and so on.

6 Porter, M. (1985) Competitive Advantage, New York: Free Press STRATEGIC MANAGEMENT25 | P a g e WithaPESTanalysis,thecompanycanseealongerhorizonoftime,andbeabletoclarify strategicopportunitiesandthreatsthattheorganizationfaces.Bylookingtotheoutside environmenttoseethepotentialforcesofchangeloomingonthehorizon,firmscantake the strategic planning process out of the arena of today and into the horizon of tomorrow. STRATEGIC MANAGEMENT26 | P a g e IFEMATRIX(INTERNAL FACTOR EVALUATION) Internal Factor Evaluation (IFE) matrix is a strategic management tool for auditing or evaluating major strengths and weaknesses in functional areas of a business. IFE matrix also provides a basis for identifying and evaluating relationships among those areas. The Internal Factor Evaluation matrix or short IFE matrix is used in strategy formulation. Internal factors are yManagementyManpoweryMachineyMaterial andyMoney. STRENGTHS:is something that a company is good at doing, e.g. skill, valuable physical asset etc. companys strengths have diverse origin. WEAKNESS:issomethingthatcompanylacksorisbadatdoing.Howmuchtheweakness makes a company vulnerable depends on market place and on the strengths of the company. EFEMATRIX (EXTERNAL FACTOR EVALUATION) ExternalFactorEvaluation(EFE)matrixmethodisastrategic-managementtooloftenusedfor assessmentofcurrentbusinessconditions.TheEFEmatrixisagoodtooltovisualizeand prioritize the opportunities and threats that a business is facing. External factors can be grouped into the following groups: " Social, cultural, demographic, and environmental variables: " Economic variables " Political, government, business trends, and legal variables STRATEGIC MANAGEMENT27 | P a g e CPM (COMPETITIVE PROFILE MATRIX)Competitive profilematrixis essential tool usedinstrategicmanagement process,it containall theimportantcriticalsuccessfactorsofindustry.Successfactorcanvaryfromindustryto industry,everyindustryconsiderdifferentsuccessfactor,andallthecompaniesinCPMare measuredonsamescalebyconsideringthesamesuccessfactor.Criticalsuccessfactorsare extractedafterdeepanalysisofexternalandinternalenvironmentofthefirm.Ratingrefersto strengthandweakness,where4=majorstrength,3=minorstrength,2=minorweakness,and 1=majors weakness. TOWSMATRIX TOWSisanothernameforSWOTanalysis.SWOTanalysistheStrengths,weaknesses, opportunitiesandthreatsofbusiness.Withthehelpofthismatrixyouanalyzetheinternaland externalenvironmentandformulateastrategythatbestfitsthestrengthsandweaknesses internallyandopportunitiesandthreatsfromtheexternalenvironment.Themainobjectivesof this analysis are: Make the most of your strengths Circumvent your weaknesses Capitalize on your opportunities Manage your threats SWOTisatechniqueforanalyzingtheinternalandexternalenvironmentsofanorganization throughtheidentificationandassessmentofitsStrengths,Weaknesses,Opportunities,and Threats.SWOTanalysisentailsadistillationofthefindingsofaninternalandexternalaudit which draws attention, from a strategic perspective, to the critical organizational strengths and weaknesses and the opportunities and threats facing the organization (Kotler et al., 2005). STRATEGIC MANAGEMENT28 | P a g e SPACE MATRIX The SPACEmatrix isamanagementtoolusedtoanalyzeacompany.Itisusedtodetermine what type of a strategy a company should undertake. Thespacematrixhasfourquadrantsandeachofthesequadrantssuggestsadifferenttypeora nature of a strategy. Aggressive Competitive Defensive Conservative the SPACE matrix has two dimensions which are as follows: Internal strategic dimensions: Financialstrength(FS) Competitive advantage (CA) External strategic dimensions: Environmentalstability(ES) Industry strength (IS) The following are a few model technical assumptions: STRATEGIC MANAGEMENT29 | P a g e By definition, the CA and IS values in the SPACE matrix are plotted on the X axis. - CA values can range from -1 to -6. - IS values can take +1 to +6. The FS and ES dimensions of the model are plotted on the Y axis. - ES values can be between -1 and -6. - FS values range from +1 to +6. INTERNAL-EXTERNAL(IE) MATRIX) TheIEmatrixisanotherstrategicmanagementtoolusedtoanalyze workingconditionsand strategic position ofabusiness. The Internal External Matrix or short IE matrixisbased on an analysis of internal and external business factors which are combined into one suggestive model. The IE matrix is a continuation of the EFE matrix and IFE matrix models. How does the Internal-External IE matrix work? The IE matrix belongs to the group of strategic portfolio management tools. In a similar manner like the BCG matrix, the IE matrix positions an organization into a nine cell matrix.The IE matrix is based on the following two criteria: Score from the EFE matrix -- this score is plotted on the y-axis Score from the IFE matrix -- plotted on the x-axis The IE matrix works in a way that you plot the total weighted score from the EFE matrix on the y axis and draw a horizontal line across the plane. Then you take the score calculated in the IFE matrix,plotitonthexaxis,anddrawaverticallineacrosstheplane.Thepointwhereyour horizontal line meets your vertical line is the determinant of your strategy. This point shows the strategy that your company should follow. OnthexaxisoftheIEMatrix,anIFEtotalweightedscoreof1.0to1.99representsaweak internal position. A score of 2.0 to 2.99 is considered average. A score of 3.0 to 4.0 is strong. Ontheyaxis,anEFEtotalweightedscoreof1.0to1.99isconsideredlow.Ascoreof2.0to 2.99 is medium. A score of 3.0 to 4.0 is high.7

7 http://www.maxi-pedia.com/internal+external+IE+matrix STRATEGIC MANAGEMENT30 | P a g e BCG(BOSTON CONSULTING GROUP) 8TheBCGMatrixgraphicallyportraysdifferencesamongdivisionsintermsofrelativemarket share and industry growth rate. The BCG Matrix allows a multidivisional organization to manage itsportfolioofbusinessesbyexaminingtherelativemarketshareandindustrygrowthrateof each division relative to all other divisionsin the organization. Relativemarket shareis defined as the ratio of a divisions own market share (or revenues) in a particular industry to the market share (or revenues) held by the largest rival firm in that firm (FRED DAVID). QuestionMarksHavealowrelativemarketshare,theycompeteinahigh-growthindustry. Generally these firms cash needs are high and their cash generation is low. These businesses are calledQuestionMarksbecausetheorganizationmustdecidewhethertostrengthenthemby pursuinganintensivestrategy(marketpenetration,marketdevelopmentorproduct development). StarsRepresentstheorganizationsbestlong-runopportunitiesforgrowthandprofitability. Divisionswithahighrelativemarketshareandahighindustrygrowthrateshouldreceive substantialinvestmenttomaintainorstrengthentheirdominantpositions.Forward,backward and horizontal integration, market penetration, market development and product development are appropriate strategies for these divisions to consider. Cash CowsHave a high relative market share position but compete in a low-growth industry. CalledCashCowsbecausetheygeneratecashinexcessoftheirneeds,theyareoftenmilked. Cash Cows divisions should be managed to maintain their strong position for as long as possible. Product development or diversification may be attractive strategies for Cash Cows. DogsDogs have a low market share and a low growth rate and neither generate nor consume a large amount of cash. However, dogs are cash traps because of themoney tied upin abusiness that has little potential. Such businesses are candidates for divestiture.

8 a.dqzzb.gov.cn// /1113958416546.doc STRATEGIC MANAGEMENT31 | P a g e GRAND STRATEGY MATRIX The Grand Strategy Matrix has become a popular tool for formulating alternative strategies. All organizations can be positioned in one of the Grand Strategy Matrix's four strategy quadrants. A firm'sdivisionslikewisecouldbepositioned.Appropriatestrategiesforanorganizationto consider are listed in sequential order of attractiveness in each quadrant of the matrix. QUADRANT I Firmslocatedin Quadrant I of the Grand StrategyMatrix areinan excellent strategic position. Forthesefirms,continuedconcentrationoncurrentmarkets(marketpenetrationandmarket development) and products (product development) are appropriate strategies. When a Quadrant I organizationhasexcessiveresources,thenbackward,forward, orhorizontalintegrationmaybe effective strategies. QUADRANT II FirmspositionedinQuadrantIIneedtoevaluatetheirpresentapproachtothemarketplace seriously.Althoughtheirindustryisgrowing,theyareunabletocompeteeffectively,andthey need to determine why the firm's current approach is ineffectual and how the company can best change to improveits competitiveness. BecauseQuadrant II firms arein a rapid-market-growth industry,anintensivestrategy(asopposedtointegrativeordiversification)isusuallythefirst option that should be considered. QUADRANT III QuadrantIIIorganizationscompeteinslow-growthindustriesandhaveweakcompetitive positions.Thesefirmsmustmakesomedrasticchangesquicklytoavoidfurtherdemiseand possibleliquidation.Extensivecostandassetreduction(retrenchment)shouldbepursuedfirst. An alternative strategy is to shift resources away from the current business into different areas. If all else fails, the final options for Quadrant III businesses are divestiture or liquidation. QUADRANT IV QuadrantIVbusinesseshaveastrongcompetitivepositionbutareinaslow-growthindustry. These firms have the strength to launch diversified programs into more promising growth areas. QuadrantIVfirmshavecharacteristicallyhighcashflowlevelsandlimitedinternalgrowth needs and often can pursue concentric,horizontal, or conglomerate diversificationsuccessfully. Quadrant IV firms also may pursue joint ventures. STRATEGIC MANAGEMENT32 | P a g e QSPM)(QUANTITATIVE STRATEGIC PLANNING MATRIX) The QSPM is a tool that allows strategists to evaluate alternative strategies objectively, based on previouslyidentifiedexternalandinternalcriticalsuccessfactors.Likeotherstrategy-formulation analytical tools, the QSPM requires good intuitive judgment. TheQSPMcomesunderthethirdstageofstrategyformulationwhichiscalledTheDecision Stageandalso thefinalstageofthisprocess.TherearefourmaincolumnsinQSPM,theleft columnlistdownthekeyinternalandexternalkeyfactorswhicharesameasinEFEandIFE matrix. Adjacent column to key factors is Weight (relative importance of the factor) which holds the numeric value obtained from EFE and IFE matrix weight column. The next to weight is AS standsforattractivescoreassignprioritytokeyfactorsusingthenumericvalue4formost importanceand1forleastimportanceandthelastcolumnTAS(Totalattractivescore)isthe valuecalculatedbymultiplyingweightbyAS.Onethingimportanttonoteforeachstrategy separateASandTASvalueaddedinthetable,weightremainsameforallsetofstrategies mentioned in QSPM. STRATEGIC MANAGEMENT33 | P a g e BALANCE SCORE CARD Thebalancedscorecardsuggeststhatweviewtheorganizationfromfourperspectives,andto develop metrics, collect data and analyze it relative to each of these perspectives. The Learning & Growth Perspective Thisperspectiveincludesemployeetrainingandcorporateculturalattitudesrelatedtoboth individual and corporate self-improvement. The Business Process Perspective This perspective refers to internal business processes. Metrics based on this perspective allow the managerstoknowhowwelltheirbusinessisrunning,andwhetheritsproductsandservices conform to customer requirements (the mission). The Customer Perspective Recentmanagementphilosophyhasshownanincreasingrealizationoftheimportanceof customer focus and customer satisfaction in any business. Financial perspective Thefinancialperspectiveaddressesthequestionofhowshareholdersviewthefirmandwhich financial goals are desired from the shareholders perspective. STRATEGIC MANAGEMENT34 | P a g e ARTICLE 2 IT Industry in Pakistan: New Challenges by Quick Profit Seekers By Jamil Arif on March 8, 2010 Topics: IT Industry, Pakistan Computer Association (PCA) TheimportofusedITequipmenthasplayedavitalroleinthenationsdevelopment.The imported used andlow cost computers are used by IT educationalinstitutions,middle class and lower middle class students and families. Likewise, hospitals, clinics, departmental stores and all typesofsmallandmediumsizebusinessenterprises,evenalltypesofschools,evenmadrisas depend on used computers due to affordability for the middle and lower middle class. The IT and Computerindustryin Pakistan, despite havingimmense potential to grow, has been forced to struggle for its very survival due to ill-conceived and hostile official policies. Had the genuineissuesoftheindustrywouldhavebeenresolved;thecountrycouldhavereap tremendous benefits, especially in regard with earning precious foreign exchange. Itsironicthatwhenever,industryraisesthegenuineconcernsattopdecisionmakinglevels, somevestedinterestgroupderailtheprocessbyfloatingissuesbasedontheirvestedinterest. One of such issue has been raised by insensitive proposal to ban used IT equipment in Pakistan. The vested interest groups could not comprehend the fact that there are hundred of thousands of people are involved in used computer business. Similarly,majorityofpeoplebelongstomiddleclassandlowerstrataofthesocietycannot afford a new computer at a price of 25,000 to 45,000/ and they opt for a used desktop PC at an averagepriceof5,000to10,000/-.Thelaptopsmarketpresentssimilarpicturewhereaverage price of a Dual Core new laptop in HP/Dell/Acer is around 45,000 to 55,000/- whereas the same inusedisavailableatapriceof27,000to30,000/-andinCentrinotechnologyevenmore cheaper upto 22,000/-. We simply cannot ignore the fact that Pakistan is a third world poor country and majority of the people are living below the poverty line and it is not possible for them to afford a new PC. It has been observed that a great number of students and professionals are using these used computers and laptops. The initial users and beginners dont need a hi-fi computer rather a normal low-end PC works fine for this purpose. TheimportofusedITequipmenthasplayedavitalroleinthenationsdevelopment.The imported used andlow cost computers are used by IT educationalinstitutions,middle class and lower middle class students and families. Likewise, hospitals, clinics, departmental stores and all STRATEGIC MANAGEMENT35 | P a g e typesofsmallandmediumsizebusinessenterprises,evenalltypesofschools,evenmadrisas depend on used computers due to affordability for the middle and lower middle class. The industry is aware of the fact that the used IT equipment is not more than three years old and itstillhaveafunctionallifeof5+yearsandallavailablesoftwarecanbeoperatedonthese machinesandfulfillsbusinessandeducationneedsataverylowcost.Thus,resaleof used/RefurbishedPCsisnotonlypopularindevelopingcountrieslikePakistanbutalsointhe developednationslikeUSA,England,Europe,CanadaandAustraliaarewidelyusingthese computers. According to a conservative estimate, Pakistan can save a huge foreign exchange by encouraging usedcomputersandITequipmentasusedcomputercostonanaverageislessthan$40as comparetothecostofnewrangesfrom$300to$600.Currentlythereisnoindigenous production of IT equipment and its parts in the country. Therefore, import of such equipment by no means is threat to any local industry. As said earlier there are only assemblers, some are small onehavingoneshopandsomehavebiginstallation,butbothareassemblersandnothingis produced in our country. Not withstanding national needs and aspirations, some multinational firms engaged in computer hardware manufacturing are trying to get import of used IT equipment banned to make quick and bigmoney.However,thesittinggovernmentoughttoconsiderthatanysuchill-advisedstep would result in large public outcry and loss of precious foreign exchange. TheproposalofimposinganytypeofbanonusedITequipmentsisabsolutelyunnecessaryas Pakistan is not producing / manufacturing any computer then what industry we are talking about: thereareonlyassemblers.Asamatterofpolicyweshouldnotlookatsomeonespersonal businessorcarteloffewcompanies,ratherweshouldthinkaboutthewellnessofmajority, people at large and national interest. By Abdullah Malik ThewriterisPresidentofPakistanComputerAssociation(PCA)IslamabadChapter,a countrywide representative body of computer industry in Pakistan9

9 http://telecomnewspk.com/2010/03/it-industry-in-pakistan-new-challenges-by-quick-profit-seekers/ STRATEGIC MANAGEMENT36 | P a g e SANOFI-AVENTIS Sanofi-aventis, a global leader in the pharmaceutical industry, researches and develops medicines and vaccines to help improve the lives of the greatest possible number of people. Sanofi-Aventis, headquartered in Paris, France, is a multinational pharmaceutical company, the worldsfourth-largestbyprescriptionsales.[3][4]Sanofi-Aventisengagesintheresearchand development, manufacturing and marketing of pharmaceutical products for sale principally in the prescription market, but the firm also develops over-the-counter medication. Presentinmorethan100countries,witharound11,000scientistsandhavearound100,000 employees working to improve health and wellbeing.The Global headquarters are in Paris, France. Byvirtueofitscommitments,Sanofi-aventisconstantlyadaptsitsdevelopmentmodeltotheworld'semerging human and economic problems. The company's growth is attributable to a regional approach to business operations, backedbyacomprehensiveportfolioofinnovativeproducts,matureprescriptionmedicines,consumerhealth products, generics, vaccines as well as animal health. 7 MAJORS THERAPEUTIC AREAS Sanofi-aventis focuses its activities on 7 major therapeutic areas Cardiovascular Thrombosis Oncology Central Nervous System Metabolic Disorders Internal Medicine Vaccines STRATEGIC MANAGEMENT37 | P a g e HISTORY Sanofi-Aventiswasformedin2004when Sanofi-Synthlabo acquired Aventis.Inearly2004,Sanofi-Synthlabo made a hostile takeover bid worth 47.8 bn for Aventis. Initially, Aventis rejected the bid because it felt that the bid offered inferior value based on the company's share value. The three-month takeover battle concluded when Sanofi-Synthlabolaunchedafriendlybidof54.5bninplaceofthepreviouslyrejectedhostilebid.Frenchgovernment interventionalsoplayedanactiverole.The French government,desiringwhattheycalleda"localsolution",put heavypressureonSanofi-SynthlabotoraiseitsbidforAventisafteritbecameknownthat Novartis, a Swiss pharmaceutical company, was in the running. October 2010: Sanofi-Aventis SA will lay off 1,700 US employees due to restructuring triggered by growing generic competition and other factors. The cuts being completed throughout 2011 according to transition needs. The layoffs amount toabout25percentsoftheworkersinthecompany'sUSpharmaceuticalbusiness.Thecompanydenythe action is related with acquisition plan of buying US biotech firm Genzyme Corp. Sanofi-Synthlabo Sanofi-Synthlabo wasformedin1999when Sanofi (formersubsidiaryof Total)mergedwith Synthlabo (former subsidiary of L'Oral). The merged company was based in Paris, France. Aventis Aventiswasformedin1999whenFrenchcompany Rhne-Poulenc S.A.mergedwiththeGerman corporation HoechstMarionRoussel,whichitselfwasformedfromthe1995mergerofHoechstAG with Roussel Uclaf and Marion Merrell Dow. The merged company was based in Schiltigheim, near Strasbourg, France. STRATEGIC MANAGEMENT38 | P a g e GREAT MEDICINE FOR MILLIONS OF PATIENTS Thesanofi-aventisportfolioofmarketedproductsincludesseveralmedicinesthatareworld leadersintheirrespectiveclasses,intheareasofthrombosis,cardiovasculardisease,sleep disorders, epilepsy, diabetes and cancer. The Products Sanofi-Aventis produces are: Alfuzosin (Xatral)BiprofenedClopidogrel (Plavix, Iscover)Docetaxel (Taxotere)Enoxaparin (Lovenox, Clexane)Fexofenadine (Allegra, Telfast) and Triamcinolone (Nasacort) Glatiramer acetate (Copaxone) Insulin glulisine (Apidra) and Insulin glargine (Lantus) Irbesartan (Aprovel, Avapro, Delix, Karvea, Triatec, Tritace)Menactra Oxaliplatin (Eloxatin)Risedronic acid (Actonel) for Valproic acid (Depakine) and Valproate semisodium (Depakote)Zolpidem (Ambien, Ambien CR, Myslee, Stilnoct, Stilnox, Zolfresh, Zolt) The company also produces a broad range ofover-the-counter products, among them IcyHot for muscle pain, Gold Bond for skin irritation, and Selsun Blue dandruff shampoo (these three brands were acquired in 2010 when Sanofi-Aventis purchased Chattem). STRATEGIC MANAGEMENT39 | P a g e A HIGHLY PRODUCTIVE AND INNOVATIVE R&D Sanofi-aventisR&Dsmainobjectiveistoprovidepatientswitheffectivewell-tolerated medicines, at the earliest possible time. When it comes to diseases that are difficult to treat, such asAlzheimer'D5sordepression,oncologyordiabetes,weincreaseourchancesofdeveloping groundbreaking treatments that will provide realpatient benefit bymultiplying and diversifying pharmacological and scientific approaches. Thisis the reason why clinical trialsmaybe carried out simultaneously on different compounds to treat the same disease and indication. Furthermore,researchmusttakeintoaccounttheamazingcomplexityofthehumanbody. Divisionintotherapeuticareasisawayofisolatingsystemswhosefunctionsaresometimes interconnected.Cooperationandexchangebetweenthevariousteamsarecrucialintheearly stages as a way of identifying processes, which are common to different systems. For this reason, certaincompoundsmaysometimesbeunderstudyinprogrammesinvolvingtwodifferent therapeutic areas. Cardiovascular disease Thrombosis Cancer Neurodegenerative diseases Diabetes and metabolic disorders Allergies and infectious diseasesThesediseasesarecrucialpublichealthissuesbecausetheyaretheprincipalcausesofglobal mortality.ItisforthatreasonthatSanofi-aventishasconcentrateditsresearcheffortsonthose subjects for which the Group has developed world-renowned Expertise. STRATEGIC MANAGEMENT40 | P a g e Sanofi-aventis in Pakistan Sanofi-AventisPakistanLimitedisoneoftheleadingpharmaceuticalscompanyinPakistan.Itfocusesitsactivitiesonseven majortherapeuticareas:cardiovascular,thrombosis,oncology,centralnervoussystem,metabolicdisorders,internalmedicine andvaccines.Itsportfolioofmarketed products includesseveral medicinesintheareasofthrombosis,cardiovascular disease, sleepdisorders,epilepsy,diabetesandcancer.InPakistan,Sanofi-Aventis marketsActonel,Amaryl,Clexane,Eloxatin,Epilim,Lantus,Nasacort,Stilnox,Telfast,Taxotere,andTritaceamongother products. ThisreportaimstocoverathoroughanalysisofthestrategicmanagementofSanofi-Aventis.Italsoincludedthestudyof pharmaceutical industry of Pakistan, major competitors in the industry and various trends with respect to Sanofi-aventisispresentinPakistanthroughthepromotionofitsproductsbythecompanys ownmedical representatives. Thelocal distribution of Sanofi-aventis productsis ensuredby 15 distributions nationwide. Scientificallysupportedbyaregionalmedicalandmarketingstaffbasedinthroughoutthe Pakistan,Sanofi-aventisprovidespatientsandhealthcareprofessionalswithefficientand effective therapeutic responses to diseases. Sanofi-aventisinPakistanisnotonlycommittedtoprovidingthemostefficientandreliable medicines to patients, but also to improving their quality of life. The products available in Pakistan are Actonel,Amaryl(glimepirid),Apidra,Aprovel,Avil,Avomine,Brulidie,Cefrom,Cidomycin,Claforan,Clexane,CoAprovel,Cordaron,Daonil,Eloxatin,Epilim,Essentiale,Flagyl,Frisium,Granocyte,Haemaccel,,Idarac,Lantus,Largactil,Lasoride,Lasix,Nasacort,Neodipar,Nivaquine-P,No-Spa,Orelox,Peflacine,Phenergan,Phensedyl-P,Plavix,Profenid,Rulid,Secnidal,Stemetil,Stilnox,Targocid,Tarivid,Tavanic,Taxotere,Telfast,Tixylix,Triatec HCT, Tritace,Winstor,Xatral. AmongsttheseActonel,Amaryl,Clexane,Eloxatin,Epilim,Flagyl,Lantus,Nasacort, Stilnox, Telfast, Taxotere, Tritace are some famous brand of Sanofi-Aventis. STRATEGIC MANAGEMENT41 | P a g e INDUSTRIAL AFFAIRS The Sanofi-aventis Industrial Affairs organization in Pakistan is fully committed to providing the higheststandardofqualityandinnovativepharmaceuticalproductstoitscustomersontime, takingintoaccountallcurrentGoodManufacturingPractices(cGMP)fromitsplantsbasedat Karachi & Wah Cantt. The Karachi plant manufacturers tablets, sterile liquids & powder, and large volume Haemaccel infusions.TheWahplantexcelsinmanufacturingoralliquids,somesolids,ointments,creams and gels. While quality and productivity are given thehighest level ofimportance, great emphasisislaid on the Health & Safety of our workers and the protection of the environment. OVERVIEW 2005 During theyear 2005, IndustrialAffairs continuedits focus and commitment on providinghigh customervalueandqualitywhilemeetingallproductiontargets.Increasedsalesvolumeswere effectivelysupportedbythemanufacturingplantswhichproducedapproximately10%moreas compared to 2004. SPECIALTY UNITS Intheyear2005,SpecialityunitscomprisingofClaforan&Haemaccelplantsoperated effectively to support the business with production meeting all business needs. In the 2nd year of theClaforanplant,whichisregardedasastate-of-the-artfacilityinPakistan,therehasbeena significantincreasein productionvolumesfromapproximately 2.7million Vialsin 2004 to 3.5 million Vials in 2005. INDUSTRIAL QUALITY COMPLIANCE Inordertoachieveitsaim,theIndustrialQualityandCompliancefunctioniscommittedto ensureeffectiveandsafeproducts toitscustomers,manufacturedanddistributedbyourplants respectingthelocalregulatoryrequirementsandourvalues.Therefore,allproductsbeing produced at Karachi and Wah plants go through stringent quality control processes before being shipped to our valued customers. DISTRIBUTED CHANNELS WereceivestocksfromourWAHWarehouseandKARACHIWarehouseandsellthatto RetailersandWholesalersinlocalmarketthroughour16RegionalDistributors.Saletoall Institutions including Government and Private Hospitals all over the country. is done directly by the company but supplied through 12 Institutional Agents. STRATEGIC MANAGEMENT42 | P a g e GOODS FLOWS CHART STRATEGIC MANAGEMENT43 | P a g e COMPANY PROFILE Global CEOMr. Chris Viehbacher The management committee comprises: Tariq WajidGM and MD M.Z. MOIN Mohajir Director Finance and Administration Muhammad AmjadDirector IA Dr Amanullah KhanDirector Medical Shakeel MaparaDirector HR Mamoona FirdousDirector DRA Yaseer PirmuhammadHead of Audit and Compliance Laila KhanHead of Communication Masood A. KhanHead of Supply Chain Zubair Rizvi Head of Marketing Masaud AhmadHead of Sales HeadOffice inPakistan: Plot23,Sector22,KorangiIndustrialArea, Karachi. Manufacturing Facilities in Pakistan:Karachi. Website Address: http://www.sanofi-aventis.com.pk VISION To become a diversified healthcare leader, focused on patients needs Valued by patients & healthcare providers Sought-after as an employer Respected by the scientific community & our competitors STRATEGIC MANAGEMENT44 | P a g e MISSION Our core strategy is to: Create valueby rapidlylaunching andsuccessfullymarketinginnovative pharmaceuticals that satisfy unmet medical needs in large patient populations. Focus commercial resources on strategic brands to drive sales growth and maximize the value of existing and new global brands. Aggressivelyrecruitandretaintoptalent,enhancingourcapabilitiesindruginnovationand commercialization. Evaluating Sanofi Aventiss mission statement on 9 Elements: A good mission statement should comprise of the following elements: Customers Products and services Market Technology Survival, growth & profit Philosophy Self-concept Concern for public image Concern for employee RECOMMENDED MISSION STATEMENT Customers Sanofi-Acentisstrivestoserveitscustomersinauniqueandeffectivewayandfocuseson satisfying their unmet needs. 2. Products and services Manufacture a broad range of high quality and effective medicines and vaccines. 3.MarketSanofi-Aventisnotonlycaterstothehumanhealthsectorbutproduces medicines for animal health. 4. Technology Sanofi-Aventis posses state of the art technology to produce good quality medicines. 5. Survival, growth & profit Sanofi-Aventisaimstoachievecorporatesuccessthroughafirmcommitmenttoprovide customers with high quality products and utilize resources on strategic brands. STRATEGIC MANAGEMENT45 | P a g e 6. Philosophy Sanofi-Aventis strives to be the leading pharmaceutical manufacturer in Pakistan. 7. Self-concept Sanofi-Aventis believes in innovation and advancement in the field ofmedicine to prevent the consumers from diseases. 8. Concern for public image Sanofi-Aventisisanentitywithadeepconsciousnessofcontributingtothecommunitiesinwhichitoperates.Thereisafirm commitment to the alleviation of human suffering, whether the cause is illness or natural disaster. 9. Concern for employee Employees are themostimportant resourcefor Sanofi-Aventis, the talented pool which Sanofi-Aventis recruits is the key element for their success. The management at Sanofi-Aventis provides chances to employees to excel in their personal and professional lives and is concerned that their demands are met accordingly. STRATEGIC MANAGEMENT46 | P a g e Our values Valuesaretheheartandsoulofacompanyandformtheverypremiseonwhichacompany operates. They guide decisions, providing a clear roadmap for conducting business and achieving aspirations. At Sanofi-aventis, the values define their ethics and serve as the moral compass of the company. They are the DNA of the company and distinguish Sanofi-Aventis from other companies. ValuesarehowthepeopleatSanofi-Aventisthink,actandfeel.Itisthevaluestheyholdthat makes them the people and the company they are.Therefore,valuesdefinewhattheydoandhowtheybehave.Thesearethevaluesthatevery member of Sanofi-aventis, in every continent, in every country, in every part of the organization, lives day to day. INNOVATION Forward-Thinking Weencourageourpeopleandpartnerstoembracecreativesolutionsandexcelthrough entrepreneurship. CONFIDENCE Standing Out Weareconfident;standingupforwhatwebelieveinandpursuingourgoalspassionately. Always resilient, we dare to challenge the norm. RESPECT Embracing Difference We recognise and respect the diversityandneeds of our people, patients and partners, ensuring transparent and constructive interactions through mutual trust. STRATEGIC MANAGEMENT47 | P a g e SOLIDARITY Socially Responsible Weare unitedinshared responsibilityfor our actions, our people, the wellbeing of our patients and in achieving a sustainable impact on the environment. INTEGRITY Acting Ethically We commit to maintain the highest ethical and quality standards without compromise. STRATEGIC MANAGEMENT48 | P a g e REINFORCING RELATIONSHIPS STRATEGIC MANAGEMENT49 | P a g e ANALYSIS OF THE INDUSTRY USING MICHAEL PORTERS FIVE COMPETITIVE FORCES Threat of New Entrants Pharmaceutical industry is the industry that requires large amounts of capital to be invested because of the high cost of the state-of-the art machinery, with high setup costs to be competitive bearing in mind the competition. The requirement of the state-of-the-art machinery is because of the hygienic issues and sensitivity of the health of the customers. Currently there is a large number of firms operating in this industry that have cost and performance advantage in the industry, which include multinational firms as well as the local firms, which do not face high threat of entrant, as they do not provide quality products eliminating the high cost of state of the art technology. This industry is a people driven industry, as the target market is the doctors they are well aware of the ingredients in the medicine because they are highly educated, and the industry works on their influence. The other highest barrier is the regulatory body in Pakistan, which requires intense documentation for the registration of the company and the selling the medicine. Industry distribution channels are well established in the industry. Pest forces that effect Threat of New Entrants Political Factors One of the major threats a pharmaceutical industry faces is from the governmentregulatorybodies.Theregistrationofthecompanyrequiresintense documentation and the production of the medicines have high cost. Due to the current politicalinstabilityandsecurityreasonsthereareverylesschancesthatanyforeign investorwouldinvestsoheavilyinPakistan.Thereforethepoliticalfactorcreatesa threat for new entrant. EconomicFactorsTheindustryseemstobegrowingwellbetween12-13%onan average, but there has been a considerable increase in the cost of raw materials hence increasing the overall costs, but due to the high cost of documentation and registration of each change in a pharmaceutical product, it is difficult for companies to pass on the price to the end consumers easily. Hence the economical factor causes a threat to the new entrant. STRATEGIC MANAGEMENT50 | P a g e Social Factors Doctors are the main customers of a pharmaceutical company who act asaninfluencertotheendconsumers.Thereisassuchnochangeinthedecision criteria of doctors as they are well aware and informed about these medicines. TechnologicalFactorsThehightechnologyrequiredfortheproductionof pharmaceuticalproductshasreducedthethreatofentrantsbecauseof itshighcosts. More importantly the invention of new improved and higher productive capacities of new machines being adopted by the industry also tend to create unconventional barriers for competitors.

Bargaining power of buyers Pharmaceutical firms target doctors who then prescribed the medicine to the patients. The pharmaceutical companies do not sell directly to the end users & hence the number of buyers is not large, in fact it is limited. The products offered by Sanofi Aventis, with the exception of a few, are similar to the products offered by various other companies operating within the industry but, differ in branding adding to the switching costs of the suppliers. The buyer currently is not aware of the need for information while buying medicines but this trend is changing & Sanofi Aventis itself has established a Medical Marketing Department who provides knowledge to the end customers. Buyers are sensitive to the price changes because of the increasing role of media. Sanofi Aventis does not in any way try to influence the buyers rather it focuses on the quality of the products & care towards the customers to ensure the correct prescription is made. Overall the bargaining power of the buyers is low. Pest forces that affect bargaining power of buyers Political Factors Considering doctors to be our main customers. Any political instability or government actions are not affecting the decision or bargaining power of the buyers. Low ModerateHigh P E T STRATEGIC MANAGEMENT51 | P a g e EconomicFactorsPricesofpharmaceuticalproductsarewellregulatedbythe government,hencetheeffectofinflationisalmostnil,causingnoimpactinthe bargaining power of the buyer. Social Factors The life style of end consumers are changing and theyare becoming more concerned about the medicines being prescribed to them. This creates an impact on the doctor, to prescribe medicines of companies which provide high quality products and have a good history.Technological Factors There are more and more researches about new diseases and theircures,theseinformationarebeingprovidedtothedoctor,whoarekeeping themselvesupdatedthroughvariousseminars,journals,etc,whichincreasestheir bargaining power. Threat of substitutes Theonlyreasonforthesubstitutingisthedifferenceinthepricing.Therearealotof genericproductsemergingintheindustryloweringtheoverallprofitabilityofthe industry.Availabilityoftheherbalandhomeopathicmedicinesincreasescompetition andthethreatofsubstitutes.Genericproductsareinrise,aspeopletendtospend lesseramountonallopathicmedicationsbecauseofsloweconomy.Thereisa moderatetostrongthreatofsubstitutesbecauseofavailabilityoftheherbaland homeopathicmedicinesandcustomersilliteracyrate.Theygetthecurefromthese medicinesalongwiththistherehasbeenafailuretowardsthegovernmentsendto washout fake and smuggled medicines from the market. The other factors that affect the substitutabilityoftheproductdependontheprescriptionofthedoctor,area, affordability, price & education. Low ModerateHigh S T STRATEGIC MANAGEMENT52 | P a g e Pest forces that affect threat of substitute PoliticalFactorsTherearehigh importdutiesontherawmaterialofpharmaceutical products,ofwhichthelocalcompaniesbenefitbycharginglowerpricesthanthe multinational companies who charge high prices to cover up high raw material costs to givegoodqualityproduct.Thiscreatesanadvantagetothelocalcompaniesand increases the threat of substitutes. SocialFactorsOurcustomerbeingthedoctor,wouldprescribeamedicinetohis patient depending upon the profile of the patient, and keeping in mind other factors such as location, price etc. The pharmacist and medical stores usually self prescribe similar medicines to the consumers due to shortage or higher prices of the required medicine. Both of these social factors increase the threat of substitute. Technological Factors Research and development about new diseases and their cure helpdifferentcompanyingettinganadvantageovertheircompetitors,increasingthe threat of substitute. Bargaining power of Suppliers P S T Low ModerateHigh STRATEGIC MANAGEMENT53 | P a g e The bargaining power of suppliers in the industry is moderate. The inputs used by each company, such as various chemicals, glass, plastics, etc. are unique & differentiated. The method of a company selecting its supplier goes through a stringent selection process, in order to make sure the quality of inputs match the company specific criteria; this makes it a very cumbersome and costly process for companies, and therefore they intend to stick to limited amount of suppliers who have passed their selection criteria. The stringent process of selection reduces the number of potential suppliers. Overall it increases the bargaining power of suppliers. PEST forces that affect bargaining power of suppliers PoliticalfactorsPoliticalfactorshasnosignificanteffectonthebargainingpowerof suppliers. Economic factors Inflation may cause increase in cost of raw material, but the supplier offsets the increasing cost by passing on the entire burden to the producer due to high bargaining power. SocialFactorsSocialfactorshavenosignificanteffectonthebargainingpowerof suppliers. TechnologicalfactorsAdvancementintechnologybringsaboutchangeinbetter quality raw material, which the pharmaceutical companies demand from their suppliers, and hence it reduces the bargaining power to small extent. Low ModerateHigh E T STRATEGIC MANAGEMENT54 | P a g e Rivalry among existing competition Despite of the proprietary differentiation and unique selling proposition amongst the products of different pharmaceutical companies, rivalry in the industry is high. There is intense competition amongst the companies to gain a higher market share. Sanofi Aventis lies on the 5th position despite the fact that it is the only company which possesses the blood plasma technology in Asia. This shows the intense competition amongst the existing companies. Competition is moderately diversified and since the skills required are specialized it would be hard to get into the industry. Thus these factors increase the rivalry amongst the competitors. Pest forces that affect Rivalry Political factors The political factors plays little or no role in promoting or looking after competitiveness, quality and hygiene etc.EconomicFactorsGrowthpotentialandmarketdemandisveryhealthyforthe industry, as inflation causes rise in the cost of production, which cannot be passed on furthertotheconsumers,becauseofgovernmentregulations.Hencetherivalry increases between the competitors to gain greater market share of the growing industry. Social Factors Change in trend towards more information needed by the consumers about the medicine being consumed, make the competition between the company more intenseinrelationtocreatingapositiveimageforthecompanyandthereforeits products. TechnologicalFactorsTechnologycanenablefirmstoadoptnewerwaysof manufacturingandprocessingpharmaceuticalproducts.Keyindustryplayerstendto innovatewithprocessrestructuringandmachineswithmoreproductivecapacity,the basic fight is on capturing the market not penetrating into each others shares. Low ModerateHigh E S T STRATEGIC MANAGEMENT55 | P a g e Threat of New Entrants: Threat of new entrants is low as there are a number of proprietary differences which exist in theformofdifferentformulas&medicinesofferedbyvariouscompaniesinthe pharmaceutical industry. Added to that is the high capital requirement & established players in the market, make this a favorable factor for Sanofi Aventis. Yes (+) No effectNo (-) 1)Dolargefirmshaveacostorperformanceadvantageinyour segment of the industry 3 2)Are there any proprietary product differences in your industry? 3 3)Are there any established brand identities in your industry? 3 4)Do your customers incur any significant costs in switching suppliers? 3 5)Is a lot of capital needed to enter your industry? 3 6)Is serviceable used equipment expensive? 3 7)Doesthenewcomertoyourindustryfacedifficultyinaccessing distribution channels? 3 8)Does experience help you to continuously lower costs? 3 9)Doesthenewcomerhaveanyproblemsinobtainingthenecessary skilled people, materials or supplies? 3 10) Does your product or service have any proprietary features that give you lower costs? 3 11) Are there any license, insurance or qualifications that are difficult to obtain? 3 12) Can the newcomer expect strong retaliation on entering the market? 3 STRATEGIC MANAGEMENT56 | P a g e Bargaining Power of Buyers Yes (+) No effect No (-) 1) Are there a large number of buyers relative to the number of firms in the business? 3 2)Doyouhavealargenumberofcustomers,eachwithrelatively small purchases? 3 3)Doesthecustomerfaceanysignificantcostsinswitching suppliers? 3 4) Does the buyer need a lot of important information? 3 5) Is the buyer aware of the need for additional information? 3 6)Isthereanythingthatpreventsyourcustomerfromtakingyour function in-house? 3 7) Your customers are not highly sensitive to price. 3 8) Your product is unique to some degree or has accepted branding? 3 9) Your customer's businesses are profitable. 3 10) You provide incentives to the decision makers. 3 Thebuyershavealowtomoderatebargaining powerasSanofiAventishasexclusivedistribution rightsforproductssuchasInsulin.Also,thebuyerscannottakethefunctionin-houseduetothe technology & capital requirements. STRATEGIC MANAGEMENT57 | P a g e Threat of Substitutes Yes(+) No effect No(-) 1)Substituteshaveperformancelimitationsthatdonotcompletely offset their lowest price. Or, their performance is not justified by their higher price. 3 2) The customer will incur costs in switching to a substitute. 3 3) Your customer has no real substitute. 3 4) Your customer is not likely to substitute. 3 Thethreatofsubstitutesismoderateastherearenorealsubstitutesformedicinesbut customers can switch to homeopathic, organic (Hikmat) medicine, or even witch doctors. Bargaining Power of Suppliers Yes (+) No effect No (-) 1) My inputs (materials, labor, supplies, services, etc) are standard rather than unique or differentiated. 3 2) I can switch between suppliers quickly and cheaply. 3 3)Mysupplierswouldfinditdifficulttoentermybusinessormy customers would find it difficult to perform my function in-house. 3 4) I can substitute inputs readily. 3 5) I have many potential suppliers. 3 STRATEGIC MANAGEMENT58 | P a g e 6) My business is important to my suppliers. 3 7) My cost of purchases has no significant influence on my overall costs. 3

Thebargainingpowerofsupplierismoderatetohighastheinputsrequiredbyplayers withinthepharmaceuticalindustryaredifferentiated&switchingbetweensuppliersisa timeconsumingtaskastheselectionprocessisverythorough&requiresasignificant investment of time. Rivalry among Existing Competitors Yes (+) No effect No(-) 1) The industry is growing rapidly. 3 2) The industry is not cyclical with intermittent overcapacity. 3 3)Thefixedcostsofthebusinessarearelativelylowportionoftotal costs. 3 4)Therearesignificantproductdifferencesandbrandidentities between the competitors. 3 5) The competitors are diversified rather than specialized. 3 6) It would not be hard to get out of this business because there are no specialized skills and facilities or long-term contract commitments, etc. 3 7)Mycustomerswouldincursignificantcostsinswitchingtoa competitor. 3 8) My product is complex and requires a detailed understanding on the part of my customer. 3 9) My competitors are all of approximately the same size as I am. 3 STRATEGIC MANAGEMENT59 | P a g e Moderateamountofrivalryexistswithinthepharmaceuticalindustryasthe pharmaceutical industry is growing at the rate of 8-9% annually while exports are growing by 20% each year. The products are differentiated with strong brand loyalties towards the internationalbrands,howevermetoobrandsarealsogrowinginsales.Drugsrequire understandingofcompoundsanddosage,etcfromthesideofthechemistsbutsince manufacturers aim their push efforts towards the chemists, rivalry grows to get shelf space with retailers. Overall industry rating:FavorableModerateUnfavorableImplications 1) The threat of new entrants.813Favorable 2) Bargaining power of buyers.514Favorable 3) Bargaining power of suppliers.103Unfavorable 4) Threat of substitutes.304Unfavorable 5) Intensity of rivalry among competitors.513Favorable Total22 317Favorable STRATEGIC MANAGEMENT60 | P a g e Effect of pest on porters five forces Factor and Effect Opportunity or Threat Buyer Power Supplier Power New entry SubstituteRivalry Intense documentation ThreatLowModerateLowModerateLow Increase in the cost of raw materials ThreatLowHighHighHighModerate End Customer awarenessOpportunity HighLowLowLowModerate New DiseasesOpportunityLowLowModerateHighHigh High technologyOpportunityLowModerateLowLowHigh import duties on the raw material ThreatHighHighLowModerateHigh Research and development OpportunityLowModerateLowLowHigh Pricing policiesThreatHighLowLowLowHigh Interpretation AnalyzingPortersFiveForcesforthepharmaceuticalindustryleadstotheresultthat theindustryisarelativelyfavorableonetooperatein.Itprovidesanumberof opportunitiesforcompanieslikeSanofiAventis.Theopportunitiescanbecapitalized uponandhence,wouldleadtoanincreaseinthecompetitivenessofthefirmanda generallevelofprosperityoftheindustry.Theabovetableshowsthatresearchand developmentisSanofiAventissstrongestpillar,whichhelpsthecompanytoupgrade and improve its technology. Advanced technology makes the processes uncomplicated which utilizes less human resource and saves time. STRATEGIC MANAGEMENT61 | P a g e The companys internal structure is very strong, the onlythreat it is exposed to is from the external environment and that also from the political and economical factors which it doesnt have any control over. Company specific action Sanofi Aventis should concentrate on the threat of substitutes and bargaining power of suppliersextensivelytofurtherenhancetheattractivenessoftheindustryforitselfin both the short and long run.External Factor Evaluation OpportunitiesWeightRatingWeighted Average 1High population growth. 0.0830.24 2Emerging diseases.0.1540.60 3Customers preference for medicines produced by MNCs.0.1030.30 4Acquisition of local companies.0.1840.72 5Increasing awareness of the market about various drugs and diseases. 0.1530.45 Threats 1Slow down of the economic growth of the country.0.0320.06 2Heavy reliance on third parties for supplying of materials.0.0810.08 3Counterfeit products in the market.0.0520.10 STRATEGIC MANAGEMENT62 | P a g e 4Exchange rate fluctuations.0.0520.10 5Use of herbal and homeopathic medicines.0.0420.08 6Government fixing prices of pharmaceutical products.0.0910.09 Total1.002.82 The Total Weighted Score of 2.82 in the External Factor Evaluation (EFE) Matrix denotes that Sanofi Aventis is responding well to the existing opportunities and threats in Pharmaceutical Industry. In other words, the strategy Sanofi Aventis is implementing is taking advantage of the existing opportunities and minimizing the potential adverse effect of external threats in an appropriate way better than any of the competitors in the industry. However, the high pollution growth, emerging diseases, the preference for medicines produced by MNCs, acquisition of local companies, increased awareness about various drugs and diseases, slow down of the economic growth of the country, heavy reliance on third parties for the materials, counterfeit products in the market, exchange rate fluctuations, use of herbal and homeopathic medicines and the fixed prices by the government from the EFE give a clear picture of the opportunities and industry threats, which affect Sanofi Aventis.OftheopportunitiesSanofiAventiscantakeadvantagebyacquiringthelocal companiesandusetheirinfrastructureandcorecompetencieswhichcanhelpin producingtheremedyforthenewandemergingdiseases.Amajorthreatthatthe companyisfacingistheheavyrelianceonthethirdpartysuppliersfortheraw materials, the suppliers experience financial difficulties or are unable to manufacture a sufficientsupplyoftheproductsmeetingrequisitequalitystandards.Italsoincreases the risk of quality issues, even at the most scrupulously selected suppliers. Even though theyaimtohavebackupsourcesofsupplywheneverpossible,however,the organization cannot be certain if there will be sufficient sources unavailable. Company specific action: Sanofi Aventis should focus on the opportunity of acquiring local firms, in order to tap into new markets by taking over their production process and products. They should study all the potential local companies which are growing due to innovation in medicines. This strategy would even help them to cope with the threats of counterfeit STRATEGIC MANAGEMENT63 | P a g e products, by introducing new medicines for different diseases, further strengthening their product portfolio.Sanofi-Aventis should work more to create a differentiation between the medicines provided by the company and the remedies provided by the homeopathic and herbal medicines. Competitive profile matrix CPM SANOFI-AVENTISGSKABBOTT CRITICAL SUCCESS FACTORS WEIGHTRATINGSCORERATINGSCORERATINGSCORE Market Share0.0530.1540.2020.10 Price Competitiveness 0.1540.640.640.6 Financial Position 0.130.3030.3040.4 Product Quality0.0540.230.1520.10 Consumer Loyalty 0.1030.340.43 0.3 TOTAL1.01.551.651.5 Note: The ratings values are as follows: 1 = major weakness, 2 = minor weakness, 3 = minor strength, 4 = major strength. Interpretation: STRATEGIC MANAGEMENT64 | P a g e AccordingtothecompetitiveprofilematrixofthepharmaceuticalindustryinPakistan, the industry is lead by GSK as being the leader in Pakistan with the score of 1.65 and Abbott with 1.5, whereas Sanofi-Aventis is a bit stronger than Abbott as it scores 1.55.Therivalryamongstthefirmsisveryhigh,asthecompetitiveprofilematrixvalues portrays similar scores of all of them. Hence all the areas must be concentrated upon in order to stay in-line with the competition. Sanofi Aventis should not compromise on its quality as this would make them lose their customer base. The pharmaceutical companies cannot increase their prices because of the fixed prices by the Government, the organization does not has any other option to increasetheirmarketshareexceptforbuildingastrongcustomerbasewhichcanbe achieved b providing the customers good quality products. Source: http://www.medtrack.com/research/Istats.asp INTERNAL ANALYSIS From the internal analysis, we get the strengths and weaknesses of the company. Those are derived from the following four components: yFinancial Trends yValue chain Analysis yCore Competencies yStrategic Costs 1- Financial Trends The sales of the company were Rs 6.158million in 2010 compared to Rs 6.725 million in 2009. There was a decrease in sales revenue. But there was an overall growth in net sales over the last 2 years that is 2008 to 2009 of 54%. The gross profit of the company has increased by 7.8% largely because of decline in cost of goods. The operating cost of the company has decreased by 1.6%, implying that the company has controlled its expenses.Sanofi works mostly on cash basis because they are subject to the risk of non-payment by their customers which consist principally of distributors, pharmacies, hospitals and government institutions. In order to minimize the credit risk exposure they sell their products on cash basis to the distributors which comprise approximately 86% of their STRATEGIC MANAGEMENT65 | P a g e sales. The liquidity position of the company is sound. The company maintains flexibility in funding by maintaining availability under control committed credit lines. Overall the companys financial position is strong.2- Value Chain Analysis Suppliers of Raw Materials Sanofi Aventis selects its suppliers after a thorough inspection by a team of the suppliers. Suppliers are selected after inspection and testing their chemicals according to their quality standards and also approved by the FDA. Moreover, the company purchases its packaging material from local manufacturers. Aventis primarily gets its raw material from its own affiliated companies, most of them based in France. They are called inter company suppliers. Moreover, Aventis rely on third parties for the manufacturing and supply of a substantial portion of their raw material, active ingredients and medical devices. This exposes them to risk of supply interruption in the event that their suppliers experience financial difficulties or are unable to manufacture a sufficient supply of their products. It sometimes also increases the risk of quality issues. The supply chain department at Sanofi Aventis is performing under the supervision of highly qualified and experienced staff which caters the supply needs of the local market. Product Research & Development Human Resource ManagementTechnology DevelopmentGeneral AdministrationRaw Material OperationsDistributors Sales & Marketing Retail Pharmacists Final Consumers Final Consumers STRATEGIC MANAGEMENT66 | P a g e The department also helps to qualify the suppliers on basis of their previous business practices & market repo which helps Aventis to select the best suppliers. The management of inventories is handled by experienced staff which starts its action from the moment the raw material is received and is settled in the warehouse. The effective movement of raw materials from warehouse to quality control and production unit is the key to resource flexibility at Sanofi Aventis. The warehouses location plays a key role in managing the inventories efficiently and the management at Sanofi Aventis is fully aware of the long term assurance of material availability for the production that is why the warehouse is situated at the heart of the factory, linking the production processing belts and quality control department. Operations Operational activities are done at the plant located at Brooks Roundabout, Korangi industrial area, Karachi. Sanofi has recently closed down their plant at Wah and are in the process of transferring their machinery to the plant in Karachi. Sanofi Aventis has a sophisticated and productive operations design. The objective of the industrial affairs is to produce, pack and provide the highest standard quality medicines, meeting stringent safety conditions, at competitive costs to its customers. Beside this emphasis is also laid on the health and safety of their workers and protection of the environment. The production plants are clean and every effort is made to produce the best quality medicines. There are warehouses in the facility to keep the boxes of medicine. Moreover, for vaccines, there is a vaccine storage area where the vaccines are kept at the required temperature. In 2009, Sanofi-Aventis continued to make considerable investment in Pakistan. They completed a new liquid plant in Karachi and the renovation and up gradation of the Quality control lab, etc.The medicines are produced with the precise ingredients to make sure the customers get the best medicine. There are thousands of workers at the plant who check the medicine for any flaws before packaging. The sophisticated machinery helps to nullify any error to the greatest possible extent.Sanofi Aventis has an independent quality control system which is strictly in accordance with the world renowned authority regulations. Quality Control department of Sanofi is STRATEGIC MANAGEMENT67 | P a g e equipped with top-line branded equipment. In connection with good quality manufacturing facilities it also have well modernized and advanced equipment in its quality control department which is being headed by well qualified, skilled and experienced professionals.Continuous improvement at Aventis is achieved by applying the standards of sampling and testing of process and quality at different levels of production. This concept of continuous improvement at Aventis is in line with the concept of Total Quality Management. Distributors Sanofi receives stocks from the Karachi warehouse and sells that to Retailers and Wholesalers in local market through their sixteen Regional Distributors. Sale to all Institutions including Government and Private Hospitals all over the country is done directly by the company but supplied through twelve Institutional Agents. There is a risk of non payment by the customers of Sanofi which includes the distributors as well. So to tackle this problem, the company sells their products on cash basis to the distributors which comprise approximately 89% of the companys sales. Sales and marketing The sales team of Sanofi Aventis consists of well trained and educated personnel, which have the skills to inform its customers mainly the doctors about their products and identity its benefits.Aventis has formulated a sales team by a thorough and refined process which selects the best and most compatible sales force that achieves the objectives of the company. Every year Aventis conducts various seminars and workshops for its sales people which include: yThe importance of communication in an organization yCommunication channels yOvercoming the communication barriers, etc. STRATEGIC MANAGEMENT68 | P a g e Moreover, one of the strengths of the company is its extensive marketing on which it has capitalized. The marketing expenses of Sanofi Aventis have increased primarily due to the selling expenses pertaining to the addition of vaccines business. Many promotional and other activities were held by the company to educate people about disease such as dengue, etc and the use of vaccines to prevent/cure such diseases. Sanofi operates in major therapeutic areas like diabetes, cardiovascular, oncology, urology and many others. Each segment is focused through different medical marketing activities for increasing awareness of disease. Moreover, Sanofi has contracted with doctors, for example a Diabetes doctor, who travels to different cities in Pakistan and sometimes abroad as well to deliver lectures and conduct seminar. This promotes Sanofi-Aventiss image and promotes its brands. The cost incurred such as travelling, etc is also marketing expense. International and local scientific medical congresses and workshops are considered to be very valid source of updating the medical knowledge of clinicians disease area. The company assists the medical community to update their knowledge and skills to help the patient in a better way.RETAIL PHARMACISTS Retailers have to get registered and approved by the government to sell drugs. The main focus of pharmaceutical companies like Sanofi Aventis is to convince doctors through their sales team to prescribe their drugs. This sales team is on the companys payroll and especially trained. The distributors sales force is responsible for distributing medicines to chemists, retailer-cum-chemists and hospital pharmacies. Support activities Human Resource Management The principal to equal opportunity is central to the HR policies of Sanofi-Aventis and they are committed to equipping all employees with their job roles and support them to realize their full potential. The company places high regard in grooming talent as it believes that its employees are the sustainable competitive advantage for the future. Technology Development STRATEGIC MANAGEMENT69 | P a g e In line with their continuous endeavors to regularly upgrade information systems Sanofi-Aventis continued with their policy to invest more and more in IT and upgrade of related infrastructure, thereby enhancing both quantitative and qualitative aspects of management decision making. Sanofi-Aventis has continuously strived to seek excellence in process improvement. The organization has managed to improve various processes across the organization eliminating manual paper work as much as possible. Some of their business process projects have been very successful which include: Enterprise