M III

Radhika Agarwal

MBA07105 C 09/03/2022

Management Information System

Managers Professor Ram Kumar Dhurkari

Declaration:
1. I have submitted faculty feedback 30 minutes prior to appearing in the End-Term Exam.
2. I have not copied the answer/matter in this answer booklet from my classmate, internet
and any other sources.

Signature of the Student

Question 1: Explain in your own words how the mergers and acquisitions of
pharmaceutical companies have impacted the various players in the Indian pharmaceutical
distribution and NDPL in particular.

Mergers and acquisitions are important for a company's customer base as well as its market
share.

It is one of the most powerful and versatile growth tools used by businesses of all sizes and
across all industries. Mergers and acquisitions have played a critical role in the growth of Indian
companies, particularly pharmaceutical companies, in recent years.

M&A can be a source of capital, productivity, and innovation, but it can also jeopardise the
Indian pharmaceutical industry's ability to provide 'Access to Medicines,' which is one of the
health system's major goals. In this context, "access" refers to the availability of high-quality,
low-cost existing and new essential medicines in India and other countries, particularly
developing economies. As a result, an objective quantitative evaluation of the effect of M&A is
required to suggest safeguards against the same without denying domestic players access to
capital and technology.

Pricing

One of the most important aspects of access to medicines is pricing or affordability, which can
be explained in terms of the patients' ability to pay for the medicines.

The following indicators represent the impact of M&A on drug prices: -

• Price level changes across the portfolio: Companies have shown a decrease in price
growth across the portfolio during the post-acquisition period. –

• Change in Therapeutic Area (TA) price for acquired company in comparison to market:
During the post-acquisition period, the price levels in the therapeutic area have decreased
in the overall context.

• Price change trends for molecules where acquired companies have a high market share:
M&A has had a negative impact, with price growth of molecules where acquired
companies have a high market share being higher during the post-acquisition period.

Availability

The availability of required medicines by patients at the appropriate time is a critical component
in ensuring access to medicines in India and other developing countries.

The following parameters are considered when evaluating the impact of M&A on medicine
availability.
 • Product Profile (Focus on API): Sales of APIs increased in the post-acquisition period at
a faster rate than in the pre-acquisition period. This can be crucial in reducing reliance on
raw materials.

• Domestic vs. export focus: For companies undergoing acquisition, both domestic sales
and exports have increased in the post-acquisition period.

• Product discontinuation: The impact of M&A on product discontinuation has been

positive. The number of overall and essential medicine discontinuations has decreased
since the acquisition. The discontinued products had a small market share and thus had
no impact on availability.

Research & Development

One of the most important aspects of 'access to medicine' is investment in R&D and innovation.

To better understand the impact of mergers and acquisitions on research and development, the
following parameters for companies were studied both before and after the acquisition:

R&D Expenditure: The overall impact of M&A on R&D is negative during the post-acquisition
period, as most companies have reduced their share of R&D investment.

R&D - Local market orientation: While the impact of M&A on R&D orientation has not been as
anticipated, it can still be characterized as positive due to the extremely low/negligible base of
previous locally oriented innovations.

Technology transfer: One of the critical expectations when allowing FDI into a specific sector is
the potential technology gain that local companies will receive from global acquirers. However,
in the case of Pharma M&A, there is no evidence that the acquiring company transferred process
improvement, operational management practices, IT systems, and quality control measures to
Indian companies after the acquisition.

Social Consequences

M&A causes a structural change in the organisation, which has ramifications for individuals,
productivity, and quality.

The following parameters have been studied to better understand the social impact of M&A in
the Indian pharmaceutical industry:

• Job Creation: The impact of M&A on job creation has been found to be positive.
Following the acquisition, companies created new job opportunities and hired Indian
labour, which had a positive impact.
 • Salaries and other employee-related expenditure per employee: Following acquisition,
employees' average salaries increased, but employee expenditure per employee
decreased. As a result, the overall impact was determined to be neutral.

Question 2: Prior to the IT intervention in NDPL, what were the issues associated with the
manual system?

The manual system at NDPL was plagued by numerous issues. For example, the time required
to complete a task was significantly increased, and billing errors occurred as a result of
excessive human intervention, among other issues.

One of the major issues was the large amount of expired medicine in the NDPL's stock. The
system in use was entirely manual, which resulted in employees being unable to track stocks of
expired medicine in a timely manner.

The manual system was deemed extremely unsuitable for expansions. The expansions increased
resources, including human resources, making resource management more difficult. As a result,
the NDPL suffered massive profit losses. Between 2007 and 2009, the company expanded and
introduced fifty new IBM servers with data and applications that were previously on the same
server, slowing system performance.

Other issues include business and IT managers having different objectives, a lack of
communication, and a lack of knowledge of each other's capabilities.

Question 3: While the NDPL management was right in believing that the capital
expenditure can reduce by adopting cloud computing what expenditure can increase and
why?

NDPL decided to implement cloud computing technologies after careful consideration and
keeping previous failures in mind.

The ability to store and access data and programmes over the internet rather than on a hard drive
is referred to as cloud computing. This means that businesses of any size can use powerful
software and IT infrastructure to grow larger, leaner, and more agile, and compete with much
larger companies.

Overall, NDLP was correct in believing that cloud computing could reduce capital expenditure
because it aids in reducing infrastructure costs, which were extremely high in the case of NPDL,
enabling remote collaboration, eliminating redundancy, disaster recovery, and increasing overall
system efficiency.

However, additional expenditures were incurred as a result of the adoption of cloud computing
technologies. As an example:
 • Using cloud computing systems necessitated the use of skilled labour. The company may
also require external expertise in the form of consultants, new hires, and vendor support.
This adds to the costs, which are not always obvious or predictable in advance.

• Networking costs, which include hardware setup, labour maintenance, storage costs, and
computing costs, are considered when pricing cloud computing software.

• Despite the best efforts of vendors, cybersecurity risks may jeopardise the security of
some customers. The resulting data loss or service outage may result in financial losses,
expensive lawsuits for failing to protect sensitive end-user information, and brand
reputation damage.

Question 4: Apart from the economics of adopting cloud-based solution over on-premise
solution mention any one major advantage and any one major concern in adopting cloud
computing.

Cloud-based solutions allow a company to leverage computing resources without having to

invest in infrastructure. The software is hosted on the vendor's server and is accessed via a
browser. These vendors offer a variety of cloud models, including Infrastructure as a Service
(IaaS), Platform as a Service (PaaS), Software as a Service (SaaS), and Network as a Service
(Network as a Service) (NaaS).

The benefit of cloud computing is that it is less expensive and easier to implement. It is highly
scalable and saves money because the company does not require large amounts of technical
support or a large IT support system. Cloud computing has a lower startup cost than
implementing local software solutions. It is more secure than local servers and reduces data loss.
The vendor handles the software upgrade, which saves the firm time. Cloud computing was
thought to be a potential solution for lowering capital IT expenditure. It would help to streamline
the IT infrastructure by avoiding the department's use of multiple software packages that were
difficult to maintain and upgrade.

The primary concern in adopting cloud computing is the technological constraint that it entails.
Problems such as Network Down because the server is unable to perform or is undergoing
maintenance exacerbate the situation. No cloud provider can guarantee that you will not
experience service outages, which will prevent you from accessing your data or files. Because
cloud computing is entirely reliant on an Internet connection, if that goes down, so will your
cloud services. The lack of expertise on the vendor's end exacerbates the situation. Kahyap's
analysis suggested cloud computing-based Enterprise Resource Planning, but the CEO had an
unsatisfactory cloud experience. The cost of converting their 47 retail outlets to a cloud platform
was significant, but the company was unable to manage the changes that occurred in the system.
Stores were experiencing issues such as a lack of barcode scanning, which forced employees to
rely on manual billing.
Question 5: One of the essential characteristics of cloud computing as defined by NIST
(refer footnote in page 8 of the given case) is “rapid elasticity or expansion”. How do you
differentiate between elasticity and expansion / scalability as far as cloud services are
concerned? What is your understanding of the need at NDPL – do they need rapid
elasticity or rapid expansion/ scalability?

Cloud Elasticity:

Elasticity is the ability to dynamically grow or shrink infrastructure resources as needed to adapt
to workload changes in an autonomic manner, maximising resource utilisation.

Cloud Elasticity is defined as "the ability to acquire resources as needed and release resources as
needed."

When done correctly, capitalising on elasticity can result in overall infrastructure cost savings.
However, not everyone can benefit from elastic services. Environments that do not experience
sudden or cyclical changes in demand may be excluded from the cost savings offered by elastic
services. The term "Elastic Services" implies that all resources in the infrastructure are elastic.
This includes, but is not limited to, hardware, software, QoS and other policies, connectivity, and
other elastic application resources. This could become a negative trait if the performance of
certain applications is required to be guaranteed. It is dependent on the circumstances.

Cloud Scalability:

Scalability refers to the ability to increase workload size while maintaining performance on
existing infrastructure (hardware, software, etc.). The resources needed to support this are
typically pre-planned capacity with some headroom built in to handle peak demand. Scalability
also includes the ability to add more infrastructure resources without hitting a hard limit in some
cases. Scalability can be vertical (scale-up within a system) or horizontal (scale-down outside of
a system) (scale-out multiple systems in most cases but not always linearly).

As a result, applications can scale up or scale out to avoid performance issues caused by a lack
of resources. In some cases, the IT manager recognises that he or she will no longer require
resources and will scale down the infrastructure statically to support a new smaller environment.
This is a planned event and static for the worst-case workload scenario, either increasing or
decreasing services and resources.

If NDPL wishes to use cloud computing, they must ensure that the platform shared by the
internet provider and the cloud vendor is the same in order to avoid connectivity issues.

Furthermore, cloud elasticity will not be a viable option for NDPL because it is only useful in
scenarios where resource requirements fluctuate abruptly for a specific time interval. It is not
suitable for use in situations where a persistent resource infrastructure is required to handle a
heavy workload.
Rapid expansion/scalability would be a better option for NDPL as it seeks to expand, as cloud
scalability is used to handle the growing workload where good performance is also required to
work efficiently with software or applications. Scalability is commonly used when persistent
resource deployment is required to handle the workload statically.

Question 6: As a way forward, will a cloud-based ERP be the right solution for NDPL?
Provide a detailed justification for your recommendation.

The cloud-based ERP is the right solution for NDPL. The reasons can be listed as follows:

1) An ERP system can integrate data throughout the organization's value chain and integrate
external data with internal organisational data, allowing NDPL to make decisions more quickly
and optimise the entire operation. In 2012, all departments in NDPL used automated processes,
which means that all employees can become accustomed to this type of working method, which
is highly efficient and self-contained. The use of ERP can solve problems caused by the
implementation of a formal information system, such as the potential for errors to affect the
entire system if some errors occur.

2) A cloud computing system makes use of the Internet to provide shared computing resources
as well as record or document storage. It is especially beneficial to small and medium-sized
businesses because it provides access to full-function applications at a reasonable cost, without
requiring significant operating expenditure for hardware and software. It is also easy to cause
problems between different vendors. Cloud-based ERP, on the other hand, allows a company's
accounting, operations management, and reporting to run in the cloud. Because ERP cloud
vendors can have few things in common other than hosting an application and utilising the
Internet to provide connectivity, the cloud ERP system allows various vendors to collaborate
who operate different functions or provide different services. It can avoid the problems that
occurred in 2010 and improve operational efficiency.

3) Gain of large revenue: Sales revenue increased significantly following the implementation of
the information system, particularly between 2010 and 2012. The sales revenue in 2009-2010
was 891 INR million, but it increased to 1676.4 INR million in 2010-2011 and 1583.4 INR
million in 2011-2012. The implementation of actually propels NDPL to a new level. There are
more reliable customers who are willing to pay for NDPL's products, and the company's
operating efficiency can reach a high level. However, there was a decrease in sales revenue as a
result of some technical system issues. It may be a good opportunity for NDPL to correct these
errors and maintain the high revenue generated by the previous foundation; it is easier to keep
the business than to create a new platform or habit. Furthermore, as the company grows, it
requires a more logical and fully equipped system to support its data base.

4) Comply with the company's development strategy: NDPL intends to expand in the future, so
an increase in IT expenditure is on the horizon. The use of a cloud-based ERP system can assist
NDPL in meeting its objectives. The CEO should consider implementing a cloud-based ERP
system. When deciding when to implement this system, two major factors must be considered:
First, locate a suitable vendor with cloud computing or ERP system experience.
Second, research the cloud-based ERP system user market and bring some experience to NDPL.
Once the preparation work is completed, NDPL will be able to implement the system as soon as
possible and acquire another landscape in the market.