Achieving Competitive Advantage In The Biotechnology Sector Commerce Essay

Biotechnology can be by and large defined as the usage of populating things to make merchandises or to make undertakings for human existences. Biotechnology or biotech is used in industry, medical specialty and agribusiness to bring forth nutrients, medical specialty, and trial for diseases and take wastes. ( Biotechnologyonline, n.d ) As such, there are different types of biotech such as green engineering, ruddy engineering, and white engineering and Bio fuels.

In this study, we will hold an penetration into each of these subdivisions of biotech and usage assorted analytical tools to measure how knowledge direction is playing a function in making competitory advantage for companies in the sector. In so making, we shall look at the Green biotech, Red biotech, White biotech and bio fuel severally.

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Green Biotechnology

Green engineering, otherwise known as works or agricultural engineering is a subdivision of biotechnology ( biotech ) which “ involves the debut of foreign cistrons into economically of import species, ensuing in harvest betterment and the production of fresh merchandises in workss ” . ( 123biotech, n.d. ) .

To better understand the function of cognition direction in tackling a competitory advantage in this subdivision of biotechnology, we will take Monsanto as instance illustration. Monsanto is the universe ‘s taking green engineering company in front of rival such as DuPont. ( SmartMoney, 2009 ) . The company specialises in engendering ( bettering the familial base through engineering of harvests therefore increase output and familial technology ( by heightening generic traits in harvests such as insect opposition, weedkiller tolerance and drought-tolerance ) . ( SmartMoney, 2009 and Monsanto, n.d. )

As with its sister braches such as bioinformatics, white engineering ( industrial biotechnology ) , ruddy engineering ( pharmaceuticals ) every bit good as biofuels, green engineering and companies associated with it like Monsanto, are non left unscathed by critics. For case, Monsanto and its counterpatrs, through its usage of works engineering has been criticised of jeopardizing human, the environment and socio-economic. ( Friends of the Earth, 2006 ) .

Significance of Green Technology

However, the undermentioned advantages are beign celebrated by its protagonists:

Protection of Crops: for case, the AT-DBF2 cistron from Arabidopsis Thaliana harvest injected into workss to enable them withstands Osmotic emphasis such as drouth, salt and emphasis. ( PNAS, n.d. )

Increase Crop output: during the teething old ages of biotechnology in term of Genetically Modified Food, there has been a widespread unfavorable judgment of GMO claiming that GM Crops do non increase harvest output, that on the contrary it, reduces it. ( Truth about Trade and Technology, 2009 ) . These claims were dismissed by the so USA president Jimmy Carter who stated that, “ responsible biotechnology is non the enemy ; famishment is. ” ( Biotechnology Industry Organisation, n.d. ) His favorable stance towards green biotechnology because of beings like the Bacillus Thuringiensis used to bring forth the BT-corn. Introduces in 1996, the “ Bt maize has the possible to simplify direction and efficaciously command maize bore bits throughout the season ” therefore increasing its output. ( College of Agriculture, n.d. )

Improved Food Quality: an illustration of this was the innovation of the Golden Rice by Prof Potrykus and Prof. Beyer of ETH-Zurich and University of Freiburg severally. The Golden rice is believed to relieve Vitamin A lack in immature people particularly in the underdeveloped universe. ( Golden Rice, n.d. ) Another illustration is the Maltogenic Amylase used for “ Retardation of staling in baked nutrient ” , such as staff of life and bars. ( Food and Agriculture Organisation, 1997 )

Having had an penetration about how green engineering maps, its pros and cons, it is now indispensable to detect how companies like Monsanto usage cognition direction in tackling and safeguarding invention in order to make a sustainable competitory advantage against challengers like DuPont.

Knowledge Management as a competitory advantage vehicle.

To understand the function cognition direction in accomplishing competitory advantage for biotech companies such as Monsanto, Lashkar-e-Taiba ‘s use the Resource-Based View of scheme coined by Grant ( 1991citied in Henry, 2008 ) . This analysis seeks to analyze how a company exploits its resources to accomplish a sustainable competitory advantage against its challengers in the industry. ( Henry, 2008 )

A resource-based position of scheme analysis

Consumer Confidence, First Mover Advantage, Tap blue Oceans,


Fund expensive R & A ; D, New Product Development


Fundss, Experts, Human Capital


Knowledge power, Experience curve



( Grant 1991 cited in Henry 2008 )

Measure 1: Resources: Biotech industries such as Monsanto go beyond the ordinary in Identifying and achieving immature endowment ; because engineering can easy be rendered disused, there is ever the ceaseless necessity to pool endowment and innovate. Therefore, biotech companies like Monsanto are in coaction with celebrated scientific disciplines universities like Truman State University to enroll outstanding pupils with sound scientific disciplines background. ( Monsanto, n.d. ) .Furthermore, with their immense finance capableness, they are able to fund and work these endowments.

Measure 2: Capability: with their finance abilities, these biotech companies are able to fund strict Research and Development: Monsanto reported spend $ 2.6m dollars a twenty-four hours in research and development on “ how genteelness and familial technology could develop maize, cotton and soya bean seeds that yield more big and alimentary harvests and protect against bugs and weeds ” . ( SmartMoney, 2009 ) This paids off has the company as been able to develop taking trade names such as Acceleron, Roundup Ready, Asgrow and Yieldgard for works opposition to osmotic emphasis every bit good as De Ruiter Seeds, Dekalb and Deltapine ( Monsanto, n.d. )

Measure 3: Competitive Advantage: accordingly, Monsanto is able to get a sustainable competitory advantage due to its ability to make Knowledge power and experience curve on bring forthing competitory and fast merchandising merchandises like its renowend taking trade names like, Acceleron and Roundup Ready

Measure 4: Scheme: as a consequence, Monsanto adopt a distinction scheme. This diferentiation scheme is typical of biotech companies with exclusion to biofuel companies as they end consequence ; fuel, one time drilled and refined is standard worldwide.

Measure 5: Bridging any resources Gaps: this calls for proactiveness from the portion of the company as it involves placing where the company is weak and formulating equal scheme to turn to such failings or resource deficeincies. For case, tapping bluish oceans or untasted markets to increase the company ‘s economic systems of graduated table ( Henry, 2008 )

Knowledge Protection in Biotech

Use of right of first publication and licensing: to safeguard cognition and invention the company licenses seed germplasm or biotechnology traits to about 200 seed spouses in the United States. ( Monsanto, 2009 )

In drumhead, it can be argued that because of the degree of technological invention that occurs in the biotechnology such as green engineering, it ‘s both a key and critical success factor for company to efficaciously and expeditiously direction cognition by tackling and protecting its cognition therefore keep a competitory border. This we have evaluated utilizing the resourced-based position of scheme analysis coined by Grant ( 1991 citied in Henry 2008 ) .

Red Technology


The term biopharmaceutical means that developing medical specialties from utilizing populating cells, proteins and nucleic acids. None of the two biopharmaceuticals can be same. Over the past decennary universe has seen tremendous development in this sector.

Part 2.

The Value Chain


Technology Development

Human Resource Management

Firm Infrastructure

Post Gross saless Service

Inbound Logisticss

R & A ; D


Marketing & A ; Gross saless



Adopted from Micheal E. Porter Competitive Advantage: Creating and prolonging Superior Performance. ( 1985 p.37 )

A batch of research workers like Porter ( 1985, p36 ) Henry ( 2008, p103 ) have emphasized the importance and application of Value concatenation analysis. We can measure the strength and failings of any biotechnology company by looking at its resources. It expresses of import information about scheme and focal point of a peculiar company. By placing cardinal focal point countries, companies can concentrate in accomplishing competitory advantages.

Biotechnology companies tend to stretch their value ironss by acquiring into confederation with the concern spouses ; this can either be done by integrating the construct of upstream or downstream value. Henry ( 2008, p103 ) depicts the importance and benefits of following this scheme. By working the resources of spouses, a biotech company can maximise operational efficiency. This operational efficiency leads to accomplish competitory advantage.

Each industry sector is alone in footings of map. Biotechnology industry, largely being a fabrication industry ever works otherwise every bit compared to a service industry because of the fact that primary and support activities vary from industry to industry. Porter ( 1985, 38-40 ) besides supports this fact. Like most of other industries, knowledge direction plays a critical function in biotechnology sector and is considered to be a primary activity.

Prusak as cited in Young ( 2008, p5 ) states that cognition direction is all about the information that is in the encephalon of persons as an plus and how it is used to leverage into corporate plus. In biotechnology, explicitly it can be transformed into a corporate cognition paradigm. This thought is besides supported by Gorelick, April and Milton. ( 2004 ) .

In biotechnology sector, even if you look at any sub-sector of biotechnology, industry invention is the first arm to accomplish competitory advantage. Cooke and Mayes ( 1996, p.13-15 ) besides established relationship of invention and competition. This mean that by invention biotech companies achieve competitory advantage and in turns get increased market portions with higher growing rates. The invention is taking to new effectual merchandises therefore enabling biotech companies to accomplish competitory advantage.

By looking at the value concatenation analysis of biotech industry we come to cognize that the most valued activity is invention and cognition direction. That is why biotech companies invest to a great extent in research and development ( R & A ; D ) . For biotech industry R & A ; D portion of value concatenation is much more focussed and valued. In biofuel, biofood and bioagri the value concatenation is more or the less same, but when we look at biopharmaceutical and bioinformatics, the value concatenation tends to change itself a small spot. The activity that besides affects biophrmaceuical is that the stage of clinical test demands a batch of clip, capital and direction.


Technology Development

Human Resource Management

Firm Infrastructure

Post Gross saless Service

Inbound Logisticss

R & A ; D


Marketing & A ; Gross saless



Clinical Tests

A typical value concatenation for biopharmaceutical company.

Knowledge is a scarce resource and that is why there are really few biotechnology companies in the market.

Adopted from Tzokas, N. and Saren, M.

By looking at the above figure it is clear that cognition direction is hard to accomplish. Companies transform their knowledge-based and skills-based information with equipment-based cognition to make competitory advantage. Theses factors build an organisational civilization of invention and the interest holders like employee and clients force company to come up with new thoughts

We need to look into about the possible part of each stakeholder-based cognition pool to the strategic investings, secret plans and projections undertaken by the biotech houses. The long term development attempt needs trust relationship from shareholders that the deliverable of R & A ; D can ensue in to a competitory advantage.

This can be done by doing multidimensional programs associating cognition demands and cognition pools, therefore germinating a cognition infinite in which the strategic issues of the house and its stakeholders can be positioned. As such cognition infinite and associated distances can be used as navigational instruments for cognition use.

White Technology

Biotechnology is now used as a really broad term, but we can state that in general term that it the usage of beings by human. In recent old ages and yesteryear besides research workers all over the universe got new techniques and thoughts to develop biotechnology and altering the hereafter. the most known innovation of biotechnology is cloning of animate being every bit good as of name. This astonishing engineering plants at ocular every bit good as molecular degree.


Industrial biotechnology is recognized everyplace in the universe conditions to fix consumer goods, stuff, chemical. (,12:04 ) “ Industrial Biotechnology is the Prime Minister forum for this critical field and the lone publication bridging biotechnology R & A ; D with later-stage commercialisation for all industrial and environmental applications ” . it include fooding points, fabrics, cars, pharmaceuticals, cosmetics and organic structure attention merchandises and many other merchandises which we use in our day-to-day life. The turning companies in many states are taking aid of biotechnology. By this companies make promise to the populace to present new and improved merchandises to their clients.

Industrial biotechnology is of two types ruddy and white. Red engineering is now ignored by the companies and really less companies are dedicated with white biotechnology.


Plague Analysis

Political Factor

The first and the first factor to travel through in pest analysis is the political factor. Researchers has emphasizes a batch on this factor. One such research worker is Jobber ( 2007, p79 ) who is of the sentiment that Political and Legal issues can act upon selling determinations by puting the regulations by which concern can be conducted. Union Laws, Collusion, Abuse of market laterality, acquisitions and amalgamations, province assistance and national Torahs are few of the political factors that reshape the companies.

This factor includes all the political effects which affect the company or an organisation. In some concern political issues are much higher than any other companies but in instance of industrial biotechnology authorities supports it and do policies to amend it or to better it so that the hereafter of a state can acquire improved and criterion of life can be increased. All those organisations which do experiments on different methods of industrial biotechnology, authorities gives rebate from revenue enhancements pass statute laws and make new sections to look at their working processs.

Strong statute law makes the

Through statute law biotech companies are acquiring their merchandises and procedures patented. The biotech companies normally invest to a great extent in R & A ; D and come up with advanced merchandises ; these deliverables are end consequence of cognition direction. By acquiring the patent biotech companies make certain that their rational belongings right is secured and therefore they achieve competitory advantage as no other company can copy that.

In the instance of biopharmaceutical, the chief government organic structure is FDA ( Foods and Drugs Administration, USA ) . FDA


Economic environment is the 2nd most of import factor in PEST analysis.

“ Factors that affect consumer purchasing power and disbursement forms ” Kotler et Al ( 1999, p158 )

As evident from the assorted research workers, pecuniary policy, involvements and exchange rates, income distribution, alteration in buying power, alteration in disbursement forms, handiness and lifting cost of energy, labour and natural stuff has lead to important changing in concern universe.

World economic system is in recession, so is the instance of UK ‘s. Unemployment ratio has gone up ; people ‘s buying power is traveling down with a less nest eggs. Peoples are of course focused more on disbursement towards necessities. Incomes are low.

In this instance consumer will travel toward those merchandises which saves their money and bio-products are one of those merchandises which are inexpensive and reclaimable without damaging the envoirment and doing pollution. Envoirment issues are to be considered when it comes to shopping point of position and travelling.


Banerjee, ( 1998 ) as cited in Charter and Polonsky ( 1999, p31 ) , states that The menace of tougher statute law and the lifting costs of following with environmental ordinances are possible motivative factors for houses to integrate environmental concerns in their schemes.

Tougher statute law can impact a house in two ways: foremost the cost of conformity becomes prohibitory, 2nd, statute law can necessitate significant alterations in merchandise or box design or distribution channels. ( Taking back used thing )

Public Concern

Another of import ground for houses to develop an international orientation and scheme is the rise in public concern for the environment. There are literally 100s of sentiment polls on the environment conducted in Europe, Asia and USA. Charter and Polonsky ( 1999, p32 )

The demand to keep a good public image and react to public concerns can take to houses following corporate environmentalism. Charter and Polonsky ( 1999, p33 )

Need for competitory advantage

There are legion instances where the installing of new environmentally friendly engineerings has reduced costs for houses Charter and Polonsky ( 1999, p35 )

Social factors

Social / cultural factors include Demographics forces, World Population growing, Age distribution, family constructions and societal factors.

Harmonizing to Kotler et Al ( 1999, p153 ) the European and American societies are attesting immense demographic displacements.

Technological Factors

Kotler et Al. ( 1999, p165 ) “ Forces that create new engineerings, making new merchandise and market chances ” . Those companies which have good cognition about the new merchandises can develop those and can pull new and bing clients. By this method apart from new engineering consciousness among public will besides able to increase. Companies with better cognition will develop new merchandises in order to distribute awarness among all sectors of consumers.





“ Biotechnology is the usage of biological procedures, beings, or systems to fabricate merchandises intended to better the quality of human life ” . Biotechnology is an of import advanced tool to achieve

The mark the assorted degrees illustration Bio fuels Bio informative, Bio trefoils, agribusiness Biotechnology proficiency can function to increase biomass output, better harvest quality, and convert agribusiness waste into bio fuels. ( whatistechtarget n.d )

Bio fuel

It is besides knows as agro fuel, these fuels are chiefly derived from Biomass or Bio waste. It ‘s frequently derived from workss and animate beings. Bio fuel is used faster turning modern engineering for transporting sector. Liquid signifier of fuel is required for most vehicles is this convenient for storage and bringing, therefore the bio mass is converted to liquid signifier. Bio fuel plays a practical function in modern fuel fabrication as they are renewable beginning of energy. Ethanol is the most normally used Bio fuel in the universe peculiarly in Brazil ‘s and largest exporters Asia, Europe and America are the some major manufacturer of bio gases Lleading fuel companies like Bp ‘s and Shells company they involved in research and development in bio fuels. ( biofuel, n.d )

Generic schemes

Porters alter the system by cut downing its down to three best schemes.

Overall Cost leading

Differentiation schemes

Focus scheme schemes

Overall cost leading:

A house produced standard merchandise by low cost and besides take duty of economic graduated table and experience curve consequence. market portion is advantage.

Differentiation schemes:

A company is aimed at wide market. the merchandise must some particular characteristic like progress engineering, trade name image, etc

Focus schemes:

In this focal point strategies a house concentrated in market and peculiar group of consumer.

( Mention )

Overall cost leading?

Bio fuel are the cheapest signifier of fuel you can of all time acquire they do n’t necessitate large investing in new distribution system but merely the basic establishing works is adequate to bring forth them bio fuel largely involves in long term investing. Hence Initial investing is really important. It ‘s been assessed that portion holders all over the universe show acute involvement in puting immense sum of money in this approaching promising sector.

Differentiation schemes?

Bio fuel is renewable beginning of energy unlike others fuels they have less emanation of air pollutants. Hence they are environment friendly ; they are really low cost so they can fit all the monetary value of taking fuels. The impact of Hybrid autos and green autos with drama a monolithic function in diminishing planetary heating.

Focus schemes?

Bio fuel industry will make a large employment chances all over the universe and helps the state ‘s economic system to develop every bit good. They provide occupations at all degrees even form husbandmans to scientists. This industry has been welcomed by all states and they are seeking to be advanced to better this sector all over the universe. Most authorities offer price reduction and revenue enhancement decrease on green autos therefore promoting people to purchase them. This difference makes the bio fuel market to be more competitory in the fuel market. In frontward be aftering about the planetary warming all state now concentrate on bio fuel as they play a critical function in assisting to command the pollution.


Biotech industry has a varied scope of applications like in agribusiness, molecular biological science, wellness attention, drug company sector, chemical industry, environment related and so on.

Porter ‘s five forces theory helps us to understand and construe the concern processes. This cognition can be translated to derive a competitory border over the rivals. This theory is besides used to measure the net incomes that can be generated in the proposed concern scenario or the services or merchandises.

Harmonizing to this theory, the five forces that decide the competitory power of the house in the industry are as follows,

Menace of new entrants

In the biotech industry, rational belongings is the most of import plus. The houses in this industry are to a great extent dependent on support to prolong the research and development activities. And really negligible gross is generated by the house till the merchandise is developed. So finance is one of the major barrier that keeps off new entrants from the industry.

Another barrier that deters the new entrants is the privation of specialised cognition in the country of research or development. Patent rights and proprietary rights besides act as barriers to some extent.

In some instances where cognition and patent rights are easy overcome, many little participants come into the image. Although entry is easy for smaller companies, nutriment would be really hard in this industry.


As discussed earlier, rational belongings is the most of import plus in this industry. The biotech houses normally do non to a great extent rely on the providers. The tools, kits, equipment, chemicals and all other demands are extremely specialized.

However little companies who either fail to research new channels of distribution or who can non afford the traditional channels of distribution, are at a loss, as they are compelled to come in into selling confederations.


The power of purchasers is non unvarying throughout the biotech sphere. Earlier, the drug company companies were non affected by the purchasers as the clients did non hold or had a really small say about the merchandise. The drug company companies had selling confederations with the infirmaries, druggists and agents. So the purchaser power was less.

In instance of houses where the major buyers are the authoritiess or the infirmaries, the purchasers are strong. But now the wellness attention companies, insurance companies and common adult male have entered the sphere. The increasing monetary value sensitiveness of this new group of purchasers is coercing the biotech companies to cut the monetary values and hence the net income border is going less.

In add-on to this, authoritiess in some underdeveloped states are supercharging the biotech companies to take some societal duty. ( as in the instance of supplying vaccinums for epidemics at an economical monetary value. )

So there is a clear displacement and the purchaser ‘s power is increasing.


The handiness of replacements besides depends on the sort of bitech firm/product.

If the cognition and patent rights are non decently protected, the investing in Research and Development ( R & A ; D ) can non be recovered. If the patent can be easy overcome, some other company can merely copy the formula/application to offer the merchandise at a much cheaper monetary value. So the formulae/knowledge are to be carefully guarded through patenting and Intellectual Property ( IP ) rights.

In some instances, cheaper chemical merchandise options may be available to the sophisticated and more accurate biotech merchandises.


The competition competition is excessively intense in the biotech industry. Market analysis shows that merely 1 % of the biotech houses manage to do a net income. Biotech industry is mostly dominated by few big houses although there are 100s of smaller companies. All the houses are fighting to interpret their R & A ; D attempts into a breakthrough innovation/product. This invention could potentially alter the destiny of the house overnight. So the Intellectual Property is carefully guarded and the competition is highly high in this industry.

For illustration, In U.S, 82 % of biotech houses make 0 % net income, 76 % of houses have less than 50 employees and merely 30 companies have more than 300 employees.

Porters five forces theory surely helps in understanding the pros and cons, the chances and menaces in the concern state of affairs. This theory decidedly AIDSs in germinating a concern scheme. but this theory may non be of great aid in measuring the grade of easiness or trouble or profitableness in covering with the concern state of affairs.

In this context, this theory does non see the following strategic influences like,

Industry merges and acquisitions have become the norm of the twenty-four hours and the effects of such trades can non be assessed and is non taken into consideration.

Research and invention has the possible to dramatically alter the face of the industry. As new discoveries/innovations occur, many new threats/opportunities jumping up. This makes the biotech industry a extremely vulnerable 1. This facet is left out by the theory.


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