This case asks students to price a new drug which is in Stage II of its clinical trials. It contains detailed estimates of the time required and costs for all the steps needed to commercialize a drug in the U.S.
Swot Analysis of "ABC Pharmaceuticals" written by Regina E. Herzlinger, Erik R. Sparks includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Drug Commercialize facing as an external strategic factors. Some of the topics covered in ABC Pharmaceuticals case study are - Strategic Management Strategies, Budgeting, Business models, Collaboration, Entrepreneurship, Health and Finance & Accounting.
Some of the macro environment factors that can be used to understand the ABC Pharmaceuticals casestudy better are - – central banks are concerned over increasing inflation, geopolitical disruptions, there is backlash against globalization, there is increasing trade war between United States & China, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing household debt because of falling income levels, digital marketing is dominated by two big players Facebook and Google,
increasing transportation and logistics costs, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of ABC Pharmaceuticals
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in ABC Pharmaceuticals case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Drug Commercialize, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Drug Commercialize operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of ABC Pharmaceuticals can be done for the following purposes –
1. Strategic planning using facts provided in ABC Pharmaceuticals case study
2. Improving business portfolio management of Drug Commercialize
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Drug Commercialize
Strengths ABC Pharmaceuticals | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Drug Commercialize in ABC Pharmaceuticals Harvard Business Review case study are -
Successful track record of launching new products
– Drug Commercialize has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Drug Commercialize has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Strong track record of project management
– Drug Commercialize is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Highly skilled collaborators
– Drug Commercialize has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in ABC Pharmaceuticals HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Innovation driven organization
– Drug Commercialize is one of the most innovative firm in sector. Manager in ABC Pharmaceuticals Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Diverse revenue streams
– Drug Commercialize is present in almost all the verticals within the industry. This has provided firm in ABC Pharmaceuticals case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Superior customer experience
– The customer experience strategy of Drug Commercialize in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Organizational Resilience of Drug Commercialize
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Drug Commercialize does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Operational resilience
– The operational resilience strategy in the ABC Pharmaceuticals Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Effective Research and Development (R&D)
– Drug Commercialize has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study ABC Pharmaceuticals - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Cross disciplinary teams
– Horizontal connected teams at the Drug Commercialize are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Training and development
– Drug Commercialize has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in ABC Pharmaceuticals Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Drug Commercialize digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Drug Commercialize has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Weaknesses ABC Pharmaceuticals | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of ABC Pharmaceuticals are -
Lack of clear differentiation of Drug Commercialize products
– To increase the profitability and margins on the products, Drug Commercialize needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to strategic competitive environment developments
– As ABC Pharmaceuticals HBR case study mentions - Drug Commercialize takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Aligning sales with marketing
– It come across in the case study ABC Pharmaceuticals that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case ABC Pharmaceuticals can leverage the sales team experience to cultivate customer relationships as Drug Commercialize is planning to shift buying processes online.
High bargaining power of channel partners
– Because of the regulatory requirements, Regina E. Herzlinger, Erik R. Sparks suggests that, Drug Commercialize is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Low market penetration in new markets
– Outside its home market of Drug Commercialize, firm in the HBR case study ABC Pharmaceuticals needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the ABC Pharmaceuticals HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Drug Commercialize has relatively successful track record of launching new products.
High operating costs
– Compare to the competitors, firm in the HBR case study ABC Pharmaceuticals has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Drug Commercialize 's lucrative customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study ABC Pharmaceuticals, is just above the industry average. Drug Commercialize needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Slow decision making process
– As mentioned earlier in the report, Drug Commercialize has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Drug Commercialize even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Workers concerns about automation
– As automation is fast increasing in the segment, Drug Commercialize needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Increasing silos among functional specialists
– The organizational structure of Drug Commercialize is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Drug Commercialize needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Drug Commercialize to focus more on services rather than just following the product oriented approach.
Opportunities ABC Pharmaceuticals | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study ABC Pharmaceuticals are -
Loyalty marketing
– Drug Commercialize has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Drug Commercialize in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Drug Commercialize is facing challenges because of the dominance of functional experts in the organization. ABC Pharmaceuticals case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Better consumer reach
– The expansion of the 5G network will help Drug Commercialize to increase its market reach. Drug Commercialize will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Drug Commercialize can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Drug Commercialize can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Using analytics as competitive advantage
– Drug Commercialize has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study ABC Pharmaceuticals - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Drug Commercialize to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Learning at scale
– Online learning technologies has now opened space for Drug Commercialize to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Developing new processes and practices
– Drug Commercialize can develop new processes and procedures in Finance & Accounting industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Drug Commercialize can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, ABC Pharmaceuticals, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Drug Commercialize can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Drug Commercialize can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Leveraging digital technologies
– Drug Commercialize can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Drug Commercialize can use these opportunities to build new business models that can help the communities that Drug Commercialize operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Threats ABC Pharmaceuticals External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study ABC Pharmaceuticals are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Drug Commercialize with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Increasing wage structure of Drug Commercialize
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Drug Commercialize.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Drug Commercialize can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study ABC Pharmaceuticals .
Shortening product life cycle
– it is one of the major threat that Drug Commercialize is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Drug Commercialize.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study ABC Pharmaceuticals, Drug Commercialize may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Drug Commercialize will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Consumer confidence and its impact on Drug Commercialize demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Drug Commercialize in the Finance & Accounting sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Drug Commercialize can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Drug Commercialize needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Weighted SWOT Analysis of ABC Pharmaceuticals Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study ABC Pharmaceuticals needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study ABC Pharmaceuticals is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study ABC Pharmaceuticals is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of ABC Pharmaceuticals is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Drug Commercialize needs to make to build a sustainable competitive advantage.