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Pest Analysis On Baxter International Inc.

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Pest Analysis On Baxter International Inc. - December 3rd, 2010

Pest Analysis On Baxter International Inc. : Baxter International Inc. (NYSE: BAX), is an American health care company with headquarters in Deerfield, Illinois. The company primarily focuses on products to treat hemophilia, kidney disease, immune disorders and other chronic and acute medical conditions. The company had 2009 sales of $12.6 billion, across three manufacturing divisions: BioScience (producing recombinant and blood plasma proteins to treat hemophilia and other bleeding disorders; plasma-based therapies to treat immune deficiencies and other chronic and acute blood-related conditions; products for regenerative medicine; and vaccines); Medication Delivery (producing intravenous solutions and other products used in the delivery of fluids and drugs to patients, as well as inhalation anesthetics and contract manufacturing services); and Renal (providing products to treat end-stage renal disease, or irreversible kidney failure, including solutions and other products for peritoneal dialysis and hemodialysis).[2]

The company was involved in several controversies. In 2001, malfunctioning dialysis machines resulted in several deaths; in 2008 the company supplied contaminated heparin; in 2009 lethal H5N1 avian flu virus was delivered to laboratories across Europe mixed with seasonal influenza vaccines; also, the company was charged with excessive billing of Kentucky Medicaid.

Baxter International is recognized leader in environmental controls and commitments.

Michael Porter believed that a firm can choose between two options. These are cost advantage and differentiation. There are according to Porter three generic strategies that a company can employ. These are cost leadership, differentiation and focus.

Cost Leadership

Overall, cost leadership requires a firm to develop vigorously an optimally efficient scale of operation and to control tightly the firm’s cost in all activities (Reid et al 1993).

Focus Strategy

A focus strategy requires a firm to concentrate on a particular market segment which may be dictated by factors such as the buyer, the product, or the location rather than the overall market. The strategy is predicted on the notion that a firm that devotes its entire energies to a niche or target can better achieve competitive advantage than those rivals which broadly compete across the market (Reid et al 1993).


Firms that follow the generic differentiation strategy seek to exploit firm-specific assets by producing goods or services, which are almost unique compared to those offered by rivals. Differentiation is not limited to the physical nature of the product. Other significant dimensions of differentiation include distribution channels, marketing efforts, after sales service and so on. Essentially a firm seeks to establish itself as unique within its industry. Effective differentiation is generally resistant to the forces of competition. Potential and existing rivals must overcome the uniqueness of the product and try to erode customer loyalty. Customers are less likely to switch because of a perceived lack of similar alternatives (Reid et al 1993).

Imperative Strategic Choices

Zara employs different strategies to gain competitive advantage over its competitors. In order to become the leading fashion retailer in the world, Zara employs a combination of both differentiation and cost leadership strategies. This imperative strategic choice is achieved through:

1. Distribution Channels

One of the possible threats to the company and a potential source of failure is its Spain-centric production and distribution. Majority of the company’s processes are being done in Spain and the company’s two distribution channels are in Spain. If the external environment is subjected to drastic changes such as political unrest, economic flux, weather changes, calamities, and terror attacks the company will be vulnerable. In order to avoid this and to strengthen the company’s presence in other locations, the company can develop distributions channels in strategic locations in Asia and in America.

Complimentary Sales Channels

In order to reach the consumers and to fully utilize technology, Zara can make use of the internet as an alternative sales channel where customers can shop online. Catalogues can also be used as an alternative sales channel. Zara can choose to grow in three sales channels – stores, internet and catalogue. Although the stores are Zara’s primary sales channel, internet and catalogue sales can strengthen Zara’s profile and increase the level of service to customers, thereby making Zara even more accessible.

Expansion in Europe, South America and Asia

One strategic choice that is pertinent to the strategic positioning of Zara is expansion.

Zara continues to expand to new markets. In 2006, Zara entered markets such as Croatia, Slovakia, Colombia, Guatemala and Oman (Annual Report 2007). The chain continued its expansion process with openings in the main commercial areas of large cities. In line with the company’s strategy of growth, in 2007 Zara opened up in Peking with the first store of the Chain in the Chinese capital, and continued growth in the Russian market with openings in Moscow, Kazan, Rostov and Novosibirsk. In Europe, stores opened in such places as Bologna and Naples (Italy), Frankfurt (Germany), Gotenborg (Sweden) and Oslo (Norway). What is more, the chain began to operate in five new markets: Croatia, Slovakia, Guatemala, Colombia and Oman

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