Financial Analysis / Growth Rates
The financial statements of Eli Lilly and Company are used to help the managers to be able to summarize the financial information. It is essential for them to know the numbers because each number/ratio/data matter when it comes to any company. Also, finding the financial strength helps the business to provide information that is used by the industry and investors. However, Eli Lilly is doing good compared to the pharmaceutical industry. The table below shows a remarkable increase in its sales in the past four years in the market. According to Nasdaq Annual Report,
Eli Lilly sales in the year of 2017 was 23,113.10, net income of 4,684.80, and an EPS of 4.32. This growth was excellent compared to the years from 2014-2016. Therefore, in 2017 Eli Lilly and Company improved its sales by 7.77%. Also, according to the MSN Money key statistics that industry sales (revenue) was -1.83 which meaning that the industry is on a descending direction., Net Income 0.83, Sales (Revenue) for the 5-Year Annual Average was 4.78 whereas Eli Lilly sales revenue for 5-year annual was 0.24, Dividends for the industry was 0.10 and for Eli Lilli was 1.20 (5-Year Annual Average). However, Eli Lilly and Company is achieving great compared to the Pharmaceutical industry (MSN, 2018).
Eli Lilly sales in the year of 2017 was 23,113.10, net income of 4,684.80, and an EPS of 4.32. This growth was excellent compared to the years from 2014-2016. Therefore, in 2017 Eli Lilly and Company improved its sales by 7.77%. Also, according to the MSN Money key statistics that industry sales (revenue) was -1.83 which meaning that the industry is on a descending direction., Net Income 0.83, Sales (Revenue) for the 5-Year Annual Average was 4.78 whereas Eli Lilly sales revenue for 5-year annual was 0.24, Dividends for the industry was 0.10 and for Eli Lilli was 1.20 (5-Year Annual Average). However, Eli Lilly and Company is achieving great compared to the Pharmaceutical industry (MSN, 2018).
Financial strength
Eli Lilly and Company holds a financial strength while analyzing inventory turnover. Eli Lilly inventory turnover declined from 2014 to 2016 but then somewhat developed from 2016 to 2017. However, inventory turnover estimates how fast a business is marketing inventory. A low turnover indicates low sales and a higher rate means that the company has some steady sales. Moreover, Eli Lilly had an encountered good inventory turnover rate in the past four years while matching to the market average.
Financial Weaknesses
Eli Lilly's current financial ratio was improved from 2014 to 2015 but then it got decreased from 2015 to 2016. Moreover, the current ratio is primarily practiced in providing an idea of the business's ability to pay back its short-term and long-term obligations/debts. The higher the current rate, the abler the industry is about paying back its liabilities. However, Eli Lilly is above rating one that is 1.32 or 132% which means that the organization is capable of paying its obligations. But sometimes a high rate does not indeed determine that a business is in a position of financial well-being either. A high current ratio could advise that organization is not handling its current assets smoothly, and it is not maintaining its working assets well. To accurately decide whether or not those numbers are ongoing, a liquidity rate more precise than the current ratio is required to determine whether the company can pay back its debts or not. According to MSN, the current industry ratio is 1.27 which means that Eli Lilly’s current ratio is higher than the industry rate. Therefore, Eli Lilly is capable of paying back its debts as well as maintain its working assets.
Price Ratios
Price ratios are associated with the stock business. The shareholders have the chance to get in companies by buying shares, or goods. The price ratios support us to know where market holds about its importance in the industry.
The Current Price Earnings (P/E) ratio indicates analyst the amount that the investor in common stock will pay for the shares of the company. According to Investopedia, "the price-earnings ratio indicates the dollar amount an investor can expect to invest in a company to receive one dollar of that company’s earnings”. However, Eli Lilly’s P/E ratio decreased from 2014 to 2016 and from 2016 to 2017. And its current P/E is -416.67, whereas the industry average is at 33.22 (MSN, 2018). However, earnings never remained fixed. If a business can expand its revenues, it needs several years for the firm to get back the price they give for the stock. According to Guru Focus that lower-P/E rates are more attractive than higher P/E stocks so long as the P/E ratio is positive. Also, for stocks with the same P/E ratio, the one with faster growth business is more attractive (Guru focus, 2018).
According to Investopedia. The Price/Sales Ratio is a valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the value placed on each dollar of a company’s sales or revenues (Investopedia., 2018). Eli Lilly and Company PSR are currently at 3.61 which is less than the industry average of 4.03 (MSN, 2018). This indicates that the buyers were not ready to pay well for Eli Lilly's stocks as they did to others in the industry.
Short-Term Capital
Eli Lilly has excellent results of short-term capital compared to the industry average for other companies. Eli Lilly must maintain its short-term gain and expand its earnings to develop fluidity. According to Investopedia, "The difference between long- and short-term capital gains lies in the length of time the investment is held. Simply put, long-term capital gains are those derived from investments held for more than one year." Therefore, in the short-term capital is essential to assuring the advantages of your investment selection of the production costs.
Long-Term Capital
Eli Lilly and Company currently has a debt-to-total-assets rate of 0.30. This ratio means that 30% of Eli Lilly financial assets financed via liability/debts. However, capital expenses of Eli Lilly have been 70% (100%-30%) supported by its common shareholders. The company uses this method because the cost of supplies and raw materials that are required to spend in the capital in the Pharmaceutical business is very high. According to Market watch, the total debt to total assets of Eli Lilly is currently at 3.34 (Market Watch, 2018). Therefore, putting significant amounts of money into the market by getting debt can be costly to Eli Lilly in such a profound profited business. And Eli Lilly needs to have a financial, strategic plan to minimize the business’s debt and use its earnings to invest in the market.
Working Capital
Working Capital is a method to measure the company's short-term liquidity to be able to satisfy short-term obligations. Its determined by the difference between a business's liabilities, assets and current assets. However, Eli Lilly and Company working capital have declined from 2014 to 2015 but then somewhat changed from 2015 to 2017. The total of current assets is 19,202,100 and the total of current liabilities is 14535900 as for the year of 2017 (Nasdaq, 2018). Therefore, the working capital is about 4.6 Billion for Eli Lilly and Company.
Capital Structure
The capital structure is the way that business funds it’s all progress and growth by utilizing various sources of funds. According to Market Watch, Eli Lilly and Company capital structure are as follows: Total Debt to Total Equity is 117.73 which indicates that the Eli Lilly debt-to-equity ratio has declined from 2014 to 2015 and from 2015 to 2017. However, A high debt to equity rate usually shows that a business has been advancing in funding its production with debt. This can happen to unstable profits because of the extra interest cost. Whereas, according to Nasdaq that "The company must have a low Debt/Equity ratio, which indicates a strong balance sheet. The Debt/Equity ratio should not be greater than 20% or should be less than the average Debt/Equity for its industry of 141.49%". and Eli Lilly Total Debt/Equity of 117.73% is considered reasonable.
Dividend Payout Ratio
Dividend payout ratio measures the rate of the business's profits paid out as dividends. According to Dividends analysis, that Eli Lilly highest dividend ratio was 6.8% over the past of 12 years and today's dividend payout ratio is 2.83%, and in 2017 it was 0.52%. Moreover, in dividends funding, the payout rate and the dividend increase ratio are the two critical variables to review. A lower payout rate means that the business has extra opportunity to improve its dividends. However, the highest Dividend Payout Rate of Eli Lilly in the best of three years was 2.83 the lowest was 0.53 which means that the dividend is safer than the common capital in the market. If Eli Lilly can accomplish their strategy and the current drug production matches its expectations, the business's dividends payout ratio will continue to grow.
Investors and Shareholders
According to Lilly analysis, if Eli Lilly and company has maintained the $0.51 EPS quarterly dividend for the fourth part of 2017 as we anticipate, then the business's payout ratio would be about 57% for 2017. According to Lilly Investor that the company’s earnings per share in the fourth quarter of 2017 has increased 20%, to $1.14. And net income developed 19%, to $1.207 billion compared with $1.013 billion and $0.95, individually, in the fourth quarter of 2016. The increase in net earnings per share was affected by the higher operating income in, which means that the shareholders are in excellent relationships with Eli Lilly.
Financial Managers/Strategies
Eli Lilly and Company financial administrators have significant experience and skills in both business management and the pharmaceutical industry. According to Forbes, Eli Lilly as the 10th most significant pharmaceutical business in the world with $94.1 billion market capitalization. Since Lilly concentrated, it worked in the fields of drug analysis, development and marketed in the areas of endocrinology, neuroscience, cardiovascular disease, oncology, and women's health. The business made a significant improvement in the 1990's, because of its successful antidepressant Prozac. But Eli Lilly has faced a possible loss in profits with its patent early expiration. The issue was not just the early expiration of copyright on Prozac, but the point that Prozac valued for as considerably as 30% of total income. According to the Fortune article, "Since it was launched in early 1988, Prozac has been one of the biggest-selling drugs in history; its $21 billion in sales represents some 30% of Lilly's revenues in that period. It's not too much to say that Lilly is the house that Prozac built." Therefore, Lilly appeared to have both purposely or accidentally chosen to spend their works in the field of neuroscience for the top seller drug of patented products Zyprexa and Prozac. Its unbalanced responsibility and delaying global businesses were the result of its dependency on only several medicines. This kind of an approach with a center for neuroscience only was not well satisfied to the foreign countries whose center was the treatment of many different illnesses. Therefore, Eli Lilly needs to develop a strategy where it can increase its development for each drug to maintain their stability in the market and to gain success in foreign markets as well.
Eli Lilly and Company holds a financial strength while analyzing inventory turnover. Eli Lilly inventory turnover declined from 2014 to 2016 but then somewhat developed from 2016 to 2017. However, inventory turnover estimates how fast a business is marketing inventory. A low turnover indicates low sales and a higher rate means that the company has some steady sales. Moreover, Eli Lilly had an encountered good inventory turnover rate in the past four years while matching to the market average.
Financial Weaknesses
Eli Lilly's current financial ratio was improved from 2014 to 2015 but then it got decreased from 2015 to 2016. Moreover, the current ratio is primarily practiced in providing an idea of the business's ability to pay back its short-term and long-term obligations/debts. The higher the current rate, the abler the industry is about paying back its liabilities. However, Eli Lilly is above rating one that is 1.32 or 132% which means that the organization is capable of paying its obligations. But sometimes a high rate does not indeed determine that a business is in a position of financial well-being either. A high current ratio could advise that organization is not handling its current assets smoothly, and it is not maintaining its working assets well. To accurately decide whether or not those numbers are ongoing, a liquidity rate more precise than the current ratio is required to determine whether the company can pay back its debts or not. According to MSN, the current industry ratio is 1.27 which means that Eli Lilly’s current ratio is higher than the industry rate. Therefore, Eli Lilly is capable of paying back its debts as well as maintain its working assets.
Price Ratios
Price ratios are associated with the stock business. The shareholders have the chance to get in companies by buying shares, or goods. The price ratios support us to know where market holds about its importance in the industry.
The Current Price Earnings (P/E) ratio indicates analyst the amount that the investor in common stock will pay for the shares of the company. According to Investopedia, "the price-earnings ratio indicates the dollar amount an investor can expect to invest in a company to receive one dollar of that company’s earnings”. However, Eli Lilly’s P/E ratio decreased from 2014 to 2016 and from 2016 to 2017. And its current P/E is -416.67, whereas the industry average is at 33.22 (MSN, 2018). However, earnings never remained fixed. If a business can expand its revenues, it needs several years for the firm to get back the price they give for the stock. According to Guru Focus that lower-P/E rates are more attractive than higher P/E stocks so long as the P/E ratio is positive. Also, for stocks with the same P/E ratio, the one with faster growth business is more attractive (Guru focus, 2018).
According to Investopedia. The Price/Sales Ratio is a valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the value placed on each dollar of a company’s sales or revenues (Investopedia., 2018). Eli Lilly and Company PSR are currently at 3.61 which is less than the industry average of 4.03 (MSN, 2018). This indicates that the buyers were not ready to pay well for Eli Lilly's stocks as they did to others in the industry.
Short-Term Capital
Eli Lilly has excellent results of short-term capital compared to the industry average for other companies. Eli Lilly must maintain its short-term gain and expand its earnings to develop fluidity. According to Investopedia, "The difference between long- and short-term capital gains lies in the length of time the investment is held. Simply put, long-term capital gains are those derived from investments held for more than one year." Therefore, in the short-term capital is essential to assuring the advantages of your investment selection of the production costs.
Long-Term Capital
Eli Lilly and Company currently has a debt-to-total-assets rate of 0.30. This ratio means that 30% of Eli Lilly financial assets financed via liability/debts. However, capital expenses of Eli Lilly have been 70% (100%-30%) supported by its common shareholders. The company uses this method because the cost of supplies and raw materials that are required to spend in the capital in the Pharmaceutical business is very high. According to Market watch, the total debt to total assets of Eli Lilly is currently at 3.34 (Market Watch, 2018). Therefore, putting significant amounts of money into the market by getting debt can be costly to Eli Lilly in such a profound profited business. And Eli Lilly needs to have a financial, strategic plan to minimize the business’s debt and use its earnings to invest in the market.
Working Capital
Working Capital is a method to measure the company's short-term liquidity to be able to satisfy short-term obligations. Its determined by the difference between a business's liabilities, assets and current assets. However, Eli Lilly and Company working capital have declined from 2014 to 2015 but then somewhat changed from 2015 to 2017. The total of current assets is 19,202,100 and the total of current liabilities is 14535900 as for the year of 2017 (Nasdaq, 2018). Therefore, the working capital is about 4.6 Billion for Eli Lilly and Company.
Capital Structure
The capital structure is the way that business funds it’s all progress and growth by utilizing various sources of funds. According to Market Watch, Eli Lilly and Company capital structure are as follows: Total Debt to Total Equity is 117.73 which indicates that the Eli Lilly debt-to-equity ratio has declined from 2014 to 2015 and from 2015 to 2017. However, A high debt to equity rate usually shows that a business has been advancing in funding its production with debt. This can happen to unstable profits because of the extra interest cost. Whereas, according to Nasdaq that "The company must have a low Debt/Equity ratio, which indicates a strong balance sheet. The Debt/Equity ratio should not be greater than 20% or should be less than the average Debt/Equity for its industry of 141.49%". and Eli Lilly Total Debt/Equity of 117.73% is considered reasonable.
Dividend Payout Ratio
Dividend payout ratio measures the rate of the business's profits paid out as dividends. According to Dividends analysis, that Eli Lilly highest dividend ratio was 6.8% over the past of 12 years and today's dividend payout ratio is 2.83%, and in 2017 it was 0.52%. Moreover, in dividends funding, the payout rate and the dividend increase ratio are the two critical variables to review. A lower payout rate means that the business has extra opportunity to improve its dividends. However, the highest Dividend Payout Rate of Eli Lilly in the best of three years was 2.83 the lowest was 0.53 which means that the dividend is safer than the common capital in the market. If Eli Lilly can accomplish their strategy and the current drug production matches its expectations, the business's dividends payout ratio will continue to grow.
Investors and Shareholders
According to Lilly analysis, if Eli Lilly and company has maintained the $0.51 EPS quarterly dividend for the fourth part of 2017 as we anticipate, then the business's payout ratio would be about 57% for 2017. According to Lilly Investor that the company’s earnings per share in the fourth quarter of 2017 has increased 20%, to $1.14. And net income developed 19%, to $1.207 billion compared with $1.013 billion and $0.95, individually, in the fourth quarter of 2016. The increase in net earnings per share was affected by the higher operating income in, which means that the shareholders are in excellent relationships with Eli Lilly.
Financial Managers/Strategies
Eli Lilly and Company financial administrators have significant experience and skills in both business management and the pharmaceutical industry. According to Forbes, Eli Lilly as the 10th most significant pharmaceutical business in the world with $94.1 billion market capitalization. Since Lilly concentrated, it worked in the fields of drug analysis, development and marketed in the areas of endocrinology, neuroscience, cardiovascular disease, oncology, and women's health. The business made a significant improvement in the 1990's, because of its successful antidepressant Prozac. But Eli Lilly has faced a possible loss in profits with its patent early expiration. The issue was not just the early expiration of copyright on Prozac, but the point that Prozac valued for as considerably as 30% of total income. According to the Fortune article, "Since it was launched in early 1988, Prozac has been one of the biggest-selling drugs in history; its $21 billion in sales represents some 30% of Lilly's revenues in that period. It's not too much to say that Lilly is the house that Prozac built." Therefore, Lilly appeared to have both purposely or accidentally chosen to spend their works in the field of neuroscience for the top seller drug of patented products Zyprexa and Prozac. Its unbalanced responsibility and delaying global businesses were the result of its dependency on only several medicines. This kind of an approach with a center for neuroscience only was not well satisfied to the foreign countries whose center was the treatment of many different illnesses. Therefore, Eli Lilly needs to develop a strategy where it can increase its development for each drug to maintain their stability in the market and to gain success in foreign markets as well.
Quantitative Strategic Planning Matrix (QSPM) of Eli Lilly and Company
AS = Attractiveness Score; TAS = Total Attractiveness Score
The Quantitative Strategic Planning Matrix (QSPM) is an essential strategic management method for assessing potential strategies. In the QSPM, the opportunities, threats, strengths, and weaknesses evaluate the importance to every factor of the EFE and IFE analyses, and selects an attractive rate according to the outcome and need. Therefore, this gives a reasonable way for comparing possible alternative actions. Also, the two alternative approaches were examined in the QSPM are: Increase the market research globally and expand the R&D for each drug development. The weighted score sum for each strategy is a total attractive score (AS) which is the amount that defines the various useful ways to be understood by the highest amount. However, every plan has the possibility of providing opportunities that will increase the consumer satisfaction and the earnings of Eli Lilly and Company.
The first strategic alternative as shown in the QSPM above is the opportunity of increasing in the market research globally because the international market in developing new medicines has proven a steady increase in the industry. With the rise of different diseases in many countries. Eli Lilly should build its market research based on the need for drugs that treats different illnesses. According to CNBC, "David Ricks, Eli Lilly CEO, talks about the company's quarterly results and new product launches driving profits, including drugs for diabetes and cancer treatments. And Ricks addresses the challenge of keeping drug prices lower while implementing innovation". Also, Eli Lilly Q4 EPS of $1.14 beats by $0.07 and revenue of $6.16B beats by $220. They are also putting out some diabetes treatment and new product launches that have dominant performance globally.
Furthermore, Rick's stated that consumers shouldn't pay much more for their medications and it needs to have real changes. So, there is no reason why a consumer should be paying much more for their prescription than they do for other health products because the medication is the sufficient part of the system in everyone's life. Therefore, the development of market research globally strategy weighted a score of 2.44. This strategy proves that the demand for marketing worldwide is essential for the company.
The second alternative strategy evaluated in the above QSPM was the increase in R&D for each drug. This strategy includes focusing on the development of new medicines by an effective R&D strategy. According to Business Facilities, "Eli Lilly and Company will expand its global research and development (R&D) headquarters in Indianapolis, IN, adding 130,000 square feet to the company’s existing complex. The new $70 million building will feature a multi-disciplinary laboratory that facilitates collaboration across multiple research functions. The new building is part of Lilly’s continued growth of its Indianapolis footprint, which included a $400 million expansion initiated in 2013 to increase its insulin manufacturing capacity." However, the new research and development building will allow organic experts and engineers to operate together in a teamwork workspace with analytical and formulation specialists. The key to this strategy success will be by having manageable labs that accommodate as analysis and technology requirements evolve, as well as, having conference areas that are intended to enhance the creativity and problem-solving. However, this strategy weighted a score of 2.40.
Furthermore, Since Eli Lilly is a global company that offers products to a different place and managed very creatively from other pharmaceutical business's, Porter’s Type 3 generic strategy of differentiation would be the most useful strategy. According to our text, Porter's Type 3 generic strategy is different, a plan aimed at producing products and services considered unique industry-wide and directed at consumers who are relatively pricing insensitive (David, 2012). Therefore, both approaches must be considered because both can benefit the business and the consumers positively.
Recommendations
The strategic choice with the highest Total Attractiveness Score is the increasing market research globally., This strategy benefits the business to create potential consumers, supplier, and increase its selling products in many other nations. It essential to provide the satisfaction for the customer as well as making them feel that Eli Lilly is there to support their needs to treat their diseases. However, this alternative holds the highest Total Attractiveness Score, as well as supports to satisfy several of the parts that were mentioned before in the IFE and EFE matrices. According to Statista, “Eli Lilly is one of the top global pharmaceutical companies and the world's largest manufacturer and distributor of psychiatric medications. In 2011, the company generated some 2.25 billion U.S. dollars of its revenue in Japan.” However, this strategy will increase the working capital situation of the business. By increase, the market research globally will also create a diversity in the workplace. Employees will have the chance to build and develop new ideas that help the firm to grow stronger in the market.
The Markkula Center for Applied Ethics
The Markkula app is a tool that is used to determine how ethical are the choices as it relates to utility, rights, justice, common good and virtue produced different results for each recommendation. Each group will have its benefit based on how the company rates them and the choices they make. Also, the company will benefit from the measurements of a good outcome and how it could potentially impact the business financially, how the action will affect others, and how the actions will affect the company regarding others. Therefore, the decisions that must be considered based on the Markkula process is by looking at each, group, and change the scale rating and based on how it will affect the industry and apply those results to how the change might affect the whole outcome. Evaluating each group is not easy, sometimes the company must set up a new goal plans for each group and then that group must follow the new goals and then business will hopefully make a positive change. As for Eli Lilly and Company, the Markkula app evaluation gave the value of 83, which is probably ethical.
Recommendations based on the Markkula app; 1. Eli Lilly must increase their market research to provide many alternative medicines for many consumers. 2. Employing or hiring people from different places create the diversity in the workplace to improve its strategies and plans for its future market. 3. these marketing methods will enhance the company’s vision, purposes, and it will increase the awareness about different health problems among many consumers/suppliers as well. However, all the above recommendations need to be recognized, and then Eli Lilly will be able to develop the different concerns of their marketing research.
In conclusion, Eli Lilly and Company should utilize the options, like working globally and testing each drug to improve its developments must be considered. All the strategies and recommendations mentioned above will develop the local economies and enhance the image of Eli Lilly more than employing marketing techniques.
The Quantitative Strategic Planning Matrix (QSPM) is an essential strategic management method for assessing potential strategies. In the QSPM, the opportunities, threats, strengths, and weaknesses evaluate the importance to every factor of the EFE and IFE analyses, and selects an attractive rate according to the outcome and need. Therefore, this gives a reasonable way for comparing possible alternative actions. Also, the two alternative approaches were examined in the QSPM are: Increase the market research globally and expand the R&D for each drug development. The weighted score sum for each strategy is a total attractive score (AS) which is the amount that defines the various useful ways to be understood by the highest amount. However, every plan has the possibility of providing opportunities that will increase the consumer satisfaction and the earnings of Eli Lilly and Company.
The first strategic alternative as shown in the QSPM above is the opportunity of increasing in the market research globally because the international market in developing new medicines has proven a steady increase in the industry. With the rise of different diseases in many countries. Eli Lilly should build its market research based on the need for drugs that treats different illnesses. According to CNBC, "David Ricks, Eli Lilly CEO, talks about the company's quarterly results and new product launches driving profits, including drugs for diabetes and cancer treatments. And Ricks addresses the challenge of keeping drug prices lower while implementing innovation". Also, Eli Lilly Q4 EPS of $1.14 beats by $0.07 and revenue of $6.16B beats by $220. They are also putting out some diabetes treatment and new product launches that have dominant performance globally.
Furthermore, Rick's stated that consumers shouldn't pay much more for their medications and it needs to have real changes. So, there is no reason why a consumer should be paying much more for their prescription than they do for other health products because the medication is the sufficient part of the system in everyone's life. Therefore, the development of market research globally strategy weighted a score of 2.44. This strategy proves that the demand for marketing worldwide is essential for the company.
The second alternative strategy evaluated in the above QSPM was the increase in R&D for each drug. This strategy includes focusing on the development of new medicines by an effective R&D strategy. According to Business Facilities, "Eli Lilly and Company will expand its global research and development (R&D) headquarters in Indianapolis, IN, adding 130,000 square feet to the company’s existing complex. The new $70 million building will feature a multi-disciplinary laboratory that facilitates collaboration across multiple research functions. The new building is part of Lilly’s continued growth of its Indianapolis footprint, which included a $400 million expansion initiated in 2013 to increase its insulin manufacturing capacity." However, the new research and development building will allow organic experts and engineers to operate together in a teamwork workspace with analytical and formulation specialists. The key to this strategy success will be by having manageable labs that accommodate as analysis and technology requirements evolve, as well as, having conference areas that are intended to enhance the creativity and problem-solving. However, this strategy weighted a score of 2.40.
Furthermore, Since Eli Lilly is a global company that offers products to a different place and managed very creatively from other pharmaceutical business's, Porter’s Type 3 generic strategy of differentiation would be the most useful strategy. According to our text, Porter's Type 3 generic strategy is different, a plan aimed at producing products and services considered unique industry-wide and directed at consumers who are relatively pricing insensitive (David, 2012). Therefore, both approaches must be considered because both can benefit the business and the consumers positively.
Recommendations
The strategic choice with the highest Total Attractiveness Score is the increasing market research globally., This strategy benefits the business to create potential consumers, supplier, and increase its selling products in many other nations. It essential to provide the satisfaction for the customer as well as making them feel that Eli Lilly is there to support their needs to treat their diseases. However, this alternative holds the highest Total Attractiveness Score, as well as supports to satisfy several of the parts that were mentioned before in the IFE and EFE matrices. According to Statista, “Eli Lilly is one of the top global pharmaceutical companies and the world's largest manufacturer and distributor of psychiatric medications. In 2011, the company generated some 2.25 billion U.S. dollars of its revenue in Japan.” However, this strategy will increase the working capital situation of the business. By increase, the market research globally will also create a diversity in the workplace. Employees will have the chance to build and develop new ideas that help the firm to grow stronger in the market.
The Markkula Center for Applied Ethics
The Markkula app is a tool that is used to determine how ethical are the choices as it relates to utility, rights, justice, common good and virtue produced different results for each recommendation. Each group will have its benefit based on how the company rates them and the choices they make. Also, the company will benefit from the measurements of a good outcome and how it could potentially impact the business financially, how the action will affect others, and how the actions will affect the company regarding others. Therefore, the decisions that must be considered based on the Markkula process is by looking at each, group, and change the scale rating and based on how it will affect the industry and apply those results to how the change might affect the whole outcome. Evaluating each group is not easy, sometimes the company must set up a new goal plans for each group and then that group must follow the new goals and then business will hopefully make a positive change. As for Eli Lilly and Company, the Markkula app evaluation gave the value of 83, which is probably ethical.
Recommendations based on the Markkula app; 1. Eli Lilly must increase their market research to provide many alternative medicines for many consumers. 2. Employing or hiring people from different places create the diversity in the workplace to improve its strategies and plans for its future market. 3. these marketing methods will enhance the company’s vision, purposes, and it will increase the awareness about different health problems among many consumers/suppliers as well. However, all the above recommendations need to be recognized, and then Eli Lilly will be able to develop the different concerns of their marketing research.
In conclusion, Eli Lilly and Company should utilize the options, like working globally and testing each drug to improve its developments must be considered. All the strategies and recommendations mentioned above will develop the local economies and enhance the image of Eli Lilly more than employing marketing techniques.
Implementation Plan
Eli Lilly and Company will have a well-defined implementation strategy, which will involve communicating with global businesses through using technology (online meetings) and in-person meetings to gain their trust and to discuss the critical marketing plans that will increase research and development of new medicines for many people. Also debating different marketing plans such as the financial relations that might influence the company when operating locally and globally, even the business will address how these economic relations will help the company to obtain more business share in the global market.
These meetings will be managed by David A. Ricks, Chairman and Chief Executive Officer of Eli Lilly. Ricks will be the best person who will handle these meetings because he served Eli Lilly in many international locations. According to Lilly, Ricks was president of Lilly in the USA, the company’s most significant member, from years 2009 to 2012. He worked as president and worldwide manager of Lilly China, working in one of the world’s fastest-growing developing businesses, from the years of 2008 to 2009. And he was general director of Lilly Canada from the years of 2005 to 2008 as well. Therefore, Ricks focus will be on the elements of the implementation that handles the discovery of new ways and strategies as well as constant and viable growth. This method will be a crucial part of making Eli Lilly and company employees, suppliers, and customers to help in enforcing the implementation of the necessary plans.
Below are the explanations of Ricks first plans that will cover the financial, research, and development strategies that will focus towards the organization's success locally and globally. However, the Chief Financial Officer of Eli Lilly named Jamere Jackson will go over these specific strategies. Also, the plans will describe the center of the elements and requirements for each of the different departments of Eli Lilly.
Eli Lilly and Company will have meetings every five months to address significant concerns such as the present situation of the plan that is required and the real agenda, financial planning, and any changes as well as any suggestions as to how these parts might influence the policies. Eli Lilly managing team will also take these conferences as possibilities to consider any additional problems concerning the plans.
Eli Lilly and Company will develop a useful organizational system that will split the responsibilities according to the company's departments, to expedite development performed. The useful management system will encourage the business to expand the outcomes of the plans. The responsibilities or tasks will be distributed to the following areas, as explained in the section below; Administrators, Financial Analysis, Marketing, Research and Development and Human Resources.
Administrators:
Research and Development
However, managers and employees will be aware of any new or change about a product or service that Eli Lilly offers. This method encourages the employees to work in a teamwork environment. The financial manager will also make sure that all employees will be awarded for their hard work and commitment to the business. Therefore, Eli Lilly and Company will do its best to work on implementation different plans into its administration department to enhance its work performance for all.
Another critical element is for the global market development to have the clear communication and presentation of the company's image for every customer. Each consumer must feel that they are safe when buying our products. Eli Lilly will provide them a whole description of our products and services using different methods of communication. These communications can be done through using different ways to reach out to many customers easily. Eli Lilly will assure that social media will be the primary focus when it comes to advertising its new products or medical drugs. Also, the business will use the social media website to inform its consumers about health news, weekly business newsletter, and to also work with consumers in expanding the company's ideas to develop better ways of communicating with them.
Furthermore, research and development of new medications are one of the critical aspects. Many people need to have an awareness of many different diseases or illnesses. But they don't have the access or the source to get this useful information. Eli Lilly will work on developing different ways to show the consumers that Eli Lilly research and development department gets its results based on accurate testing from patients/volunteers. However, the research and development department will need to be expanded in many locations around the world and need to have its testing done on healthy people to get the right outcomes of the experiment. On the other hand, consumers can get involved in these testing by volunteering and being part of our business's success. With that said, the financial part also plays a significant role in making the research and development services occur. The financial manager can contract with the patients, customers or volunteers to pay them for working and getting involved in these testing areas.
However, each of the tasks of the above plan will be carried out by Jamere Jackson of each department, and all the functions will be managed by the human resources department to assure that each department is delivering the right information, maintain its excellent performance, and developing its operation for better ways. Eli Lilly and Company HR department will be accountable for managing the daily tasks and all other indications of the plan, such as getting and maintaining experienced workers and working with any difficulties that might occur.
Moreover, the timeframe for implementing this plan will take about one year to get it developed. These objectives and goals are assumed to cost estimates amount of 2 million dollars. Therefore, Eli Lilly and company will consider each idea to expand and built more research and development department in many places to help people live better and healthier life.
Financing
There are three options for Eli Lilly and Company to support its funds: equity, debt or a combination of both of debt and equity. To consider the funding opportunities of developing the Eli Lilly global markets; the following assumptions of EPS/EBIT analysis below must be considered:
These meetings will be managed by David A. Ricks, Chairman and Chief Executive Officer of Eli Lilly. Ricks will be the best person who will handle these meetings because he served Eli Lilly in many international locations. According to Lilly, Ricks was president of Lilly in the USA, the company’s most significant member, from years 2009 to 2012. He worked as president and worldwide manager of Lilly China, working in one of the world’s fastest-growing developing businesses, from the years of 2008 to 2009. And he was general director of Lilly Canada from the years of 2005 to 2008 as well. Therefore, Ricks focus will be on the elements of the implementation that handles the discovery of new ways and strategies as well as constant and viable growth. This method will be a crucial part of making Eli Lilly and company employees, suppliers, and customers to help in enforcing the implementation of the necessary plans.
Below are the explanations of Ricks first plans that will cover the financial, research, and development strategies that will focus towards the organization's success locally and globally. However, the Chief Financial Officer of Eli Lilly named Jamere Jackson will go over these specific strategies. Also, the plans will describe the center of the elements and requirements for each of the different departments of Eli Lilly.
Eli Lilly and Company will have meetings every five months to address significant concerns such as the present situation of the plan that is required and the real agenda, financial planning, and any changes as well as any suggestions as to how these parts might influence the policies. Eli Lilly managing team will also take these conferences as possibilities to consider any additional problems concerning the plans.
Eli Lilly and Company will develop a useful organizational system that will split the responsibilities according to the company's departments, to expedite development performed. The useful management system will encourage the business to expand the outcomes of the plans. The responsibilities or tasks will be distributed to the following areas, as explained in the section below; Administrators, Financial Analysis, Marketing, Research and Development and Human Resources.
Administrators:
- Eli Lilly will provide reasonable goals/purposes to all its employees and managers, allow clear ways of communication, assuring all the employees are entirely understanding their responsibilities, and objectives.
- Maintain efficiency and improvement of the plans.
- keep the employees and the managers aware of any updates or changes that could be concerning the project.
- Obtain the funds that are needed to create and complete new areas that are concentrating on expanding the research and development departments in every place.
- Obtain any required permits for medical drugs and maintain the needed agreements that are necessary for the implementation of the plan.
- Manage the business development areas to control the situation and to proceed forward with the development of the business’s strategy.
- Perform analysis to define the best potential markets.
- Establish marketing plans to start focusing on advertisements parts. The idea should be developed according to accurate results that formed by the research and development department, so it can provide the customers the right information about its products.
- Create awareness in many countries/cultures so people can learn about different diseases that might cause problems in their health’s.
- Use different modern methods to advertise the business's products such as TV ads, social media, coupons, and rewards points. But most important is the social media since many people nowadays are using social media website. This method will bring the business and the customers closer and together to develop new products and get the company’s research and development on medications expanded.
Research and Development
- Analyze and decide the requirements and needs of the target business, such as the locations, the assets, and the beneficial parts of the market.
- Use advertisements techniques to attract volunteers while doing the testing in a medical drug to get accurate results.
- Also, providing reward points program for customers will encourage the customers to purchase their required products from Eli Lilly brand.
- Make sure that all workers have the same information and data about the company.
- Ensure that all employees are qualified, experienced, and educated in the essential fields of the business.
- Maintain communication and surveys every month to analyze and develop the performance of the workers within the workplace to help in the implementation of the project.
However, managers and employees will be aware of any new or change about a product or service that Eli Lilly offers. This method encourages the employees to work in a teamwork environment. The financial manager will also make sure that all employees will be awarded for their hard work and commitment to the business. Therefore, Eli Lilly and Company will do its best to work on implementation different plans into its administration department to enhance its work performance for all.
Another critical element is for the global market development to have the clear communication and presentation of the company's image for every customer. Each consumer must feel that they are safe when buying our products. Eli Lilly will provide them a whole description of our products and services using different methods of communication. These communications can be done through using different ways to reach out to many customers easily. Eli Lilly will assure that social media will be the primary focus when it comes to advertising its new products or medical drugs. Also, the business will use the social media website to inform its consumers about health news, weekly business newsletter, and to also work with consumers in expanding the company's ideas to develop better ways of communicating with them.
Furthermore, research and development of new medications are one of the critical aspects. Many people need to have an awareness of many different diseases or illnesses. But they don't have the access or the source to get this useful information. Eli Lilly will work on developing different ways to show the consumers that Eli Lilly research and development department gets its results based on accurate testing from patients/volunteers. However, the research and development department will need to be expanded in many locations around the world and need to have its testing done on healthy people to get the right outcomes of the experiment. On the other hand, consumers can get involved in these testing by volunteering and being part of our business's success. With that said, the financial part also plays a significant role in making the research and development services occur. The financial manager can contract with the patients, customers or volunteers to pay them for working and getting involved in these testing areas.
However, each of the tasks of the above plan will be carried out by Jamere Jackson of each department, and all the functions will be managed by the human resources department to assure that each department is delivering the right information, maintain its excellent performance, and developing its operation for better ways. Eli Lilly and Company HR department will be accountable for managing the daily tasks and all other indications of the plan, such as getting and maintaining experienced workers and working with any difficulties that might occur.
Moreover, the timeframe for implementing this plan will take about one year to get it developed. These objectives and goals are assumed to cost estimates amount of 2 million dollars. Therefore, Eli Lilly and company will consider each idea to expand and built more research and development department in many places to help people live better and healthier life.
Financing
There are three options for Eli Lilly and Company to support its funds: equity, debt or a combination of both of debt and equity. To consider the funding opportunities of developing the Eli Lilly global markets; the following assumptions of EPS/EBIT analysis below must be considered:
- Amount needed: $3 billion
- Tax Rate: 30%
- Interest Rate: 5%
- Stock Price: $77.54 per share
- EBIT Range is between $200 billion and $600 billion.
- Common Stock Shares Outstanding: 1,092,700,000
EBIT/EPS analysis supports the investors to know how a business is doing regarding stockholders. After seeing the above opportunities, the report above indicates that each of the four financing choices contains many similar EPS results. At 70% debt and 30% stock, EPS is $380.26. When you look at 30% debt and 70% stock, the EPS only drops at $375.04 in the booming economy. Therefore, Eli Lilly and Company need to look at things from the shareholder's point of view and work on doing the best financially for the business.
Conclusion
In conclusion, Eli Lilly and Company recommended strategy, to expand its research and development, is possible in working hard to provide the best commitment and focus on each part of the plan. Implementing active marketing operations and knowing the purpose and needs of customers will further increase the success of the critical project.
Providing the best quality products and services will help Eli Lilly to be one of the most top pharmaceuticals in the world. Also, the business needs to assure that employees will provide the right information for its consumers to gain their loyalty and trust that will eventually develop further growth and profits for Eli Lilly. Therefore, with the remained commitment of managers, employees, customers, and the growth of business share, the business plan and strategies will succeed.
Conclusion
In conclusion, Eli Lilly and Company recommended strategy, to expand its research and development, is possible in working hard to provide the best commitment and focus on each part of the plan. Implementing active marketing operations and knowing the purpose and needs of customers will further increase the success of the critical project.
Providing the best quality products and services will help Eli Lilly to be one of the most top pharmaceuticals in the world. Also, the business needs to assure that employees will provide the right information for its consumers to gain their loyalty and trust that will eventually develop further growth and profits for Eli Lilly. Therefore, with the remained commitment of managers, employees, customers, and the growth of business share, the business plan and strategies will succeed.