Essay on Industry Analysis of Nucleon, Inc.

4938 Words Dec 3rd, 2010 20 Pages
Nucleon, Inc.
Final Case

Table of Contents I. Executive Summary……………………………………………………………………………………………………………………3 II. Strategy Identification……………………………………………………………………………………………………………..…4 ▪ Key Issues and Problems III. Strategy Evaluation…………………………………………………………………………………………………………………….4 ▪ Industry Analysis – Porter’s 5 Forces ▪ Market Positioning Graph (Figure 1) ▪ Competitor Analysis – VRIO (Table 1) IV. Strategic Option Development……………………………………..………………………………………………………….12 ▪ Option A ▪ Option B ▪ Option C o Option C Flowchart (Figure 2) V. Strategic Option Evaluation………………………………………………………………………………………………………14 ▪ Trade-Offs Between Options (Table
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Nucleon, along with about another 200 firms, is considered a new entrant into the industry. Extremely large amounts of resources are required to start-up a pharmaceutical company. For example, just the manufacturing plant can cost more than $20 million.[viii] Also, the cost of skilled labor also has to be considered. Other times if the firm is smaller than their competitors, it can be difficult for them to produce the desired volume to overcome the economies of scale barrier. Next, product differentiation is another barrier to entry into an industry. Product differentiation means that incumbent firms possess brand identification and customer loyalty that potential entrants do not.[ix] Brand identification and customer loyalty definitely exist in the pharmaceutical industry. The main customers in the pharmaceutical industry are the doctors in the clinics, who later prescribe certain drugs to their patients. Of course, if a doctor knows and trusts a certain manufacturer or pharmaceutical company, he or she will definitely stick with that company for future drug needs. In addition to the above barriers, existing firms may have a whole range of cost advantages, independent of economies of scale,

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